A Study on Regional Disparity of Devolution of Rural Infrastructure Development Fund - Evidence for India

The present paper attempts to examine the normative criteria of RIDF devolution by NABARD in reducing inter and intra state disparity in terms of sanction of per capita RIDF over the study period 1996 to 2010. Following Spiezia (2002), Adjusted Geographic Concentration index has been used to test the nature and sources of concentration of per capita sanction of RIDF. The empirical findings support a relatively high degree of concentrations in devolution of such fund among the states. The study also identifies the sources of such concentration. The underlying reasons behind such inter and intra state disparity in per capita sanction of RIDF is mainly the matching grant scheme applied to all the states and the twenty percentages reward formula under such devolution criteria. This study strongly recommended the review of the normative criteria for devolution of RIDF set by the NABARD by removing the matching grant scheme and restricting the twenty percentage reward formula, for the less developed states including the states in the north eastern region only for achieving the goal of balanced regional development of rural infrastructure.