The literature on India's National Rural Employment Guarantee Scheme (NREGS) has tended to focus on institutional and technical issues more than on the social relations of production. This paper argues for a class‐relational approach to NREGS and, by extension, to social policy more generally. By locating NREGS in a broader context of antagonistic class relations, it becomes clearer why, where, when and how it either contributes to pro‐labouring‐class change or to reproducing the position of the dominant class. This is particularly important in the South Indian state of Karnataka, where (i) national sample survey data indicates that NREGS has performed relatively badly and (ii) the recent rate of decline of poverty has been amongst the slowest in the country. Based on longitudinal fieldwork in villages in two North Karnataka districts, this paper's class‐relational approach explains significant differences in NREGS outcomes across time and place – primarily with regard to intra‐ and inter‐class relations, which are interlinked with caste and gender relations. In one fieldwork district, high levels of implementation have declined due to increased (but uneven) dominant class control over the scheme. In the other, initial subversion of the scheme has been partially challenged by collective labouring‐class action.