Centre may revisit rural infrastructure fund allocation during half-yearly review

The RIDF, managed by the National Bank for Agriculture and Rural Development (NABARD), has had a budgeted allocation of ₹40,000 crore annually since it was raised from ₹30,000 crore in FY22.

Despite this, actual disbursements have consistently exceeded the budgeted amounts—reaching ₹42,799 crore during the first 11 months of FY25 and ₹49,400 crore in FY24—prompting discussions on whether formal allocations should better reflect ground-level demand.

Disbursements in FY22 and FY23 stood at ₹42,981 crore and ₹47,138 crore, respectively, according to data from the department of financial services, ministry of finance.

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The review is expected to take place around September–October, when the government typically reassesses its fiscal position and mid-year spending priorities, one of the two people cited above said.

"The RIDF allocations may need to be revisited given the consistent overshooting of disbursements," the first person cited above said, requesting anonymity.

"The mid-year review offers an opportunity to ensure funding keeps pace with on-ground demand for major schemes," the person added.

Slowing economic momentum

Even as headline growth shows a tepid rebound, rural India is beginning to feel the pinch.

A steady rise in demand for work under the government’s flagship rural jobs scheme over the past six months likely points to underlying stress in rural livelihoods.

According to the latest data from the ministry of rural development, as many as 26.6 million individuals sought employment under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in February—the second-highest monthly figure in FY25 —following a peak of 27.1 million in January.

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The uptick suggests that job opportunities in rural areas remain scarce, and household incomes are under pressure.

To be sure, the agriculture sector—averaging 4.2% growth over the past five years—is projected to rebound to 3.8% in FY25 after hitting a seven-year low growth of 1.4% in FY24.

This comes against the backdrop of a broader slowdown in India’s economic momentum. GDP growth in the December quarter stood at 6.2%, rebounding from a near two-year low in the previous quarter.

However, excluding the upward revision of Q2, FY25 growth to 5.6% from the earlier 5.4%, this still marks the slowest pace since Q4FY23.

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To meet the National Statistical Office’s revised full-year growth projection of 6.5%, the economy would need to expand by a steep 7.6% in the January–March quarter—an ambitious target amid lingering global uncertainties and subdued domestic demand.

Public spending to boost growth

The second person cited above said that strengthening rural infrastructure is a cornerstone of the government’s growth strategy, with the Centre’s focus expected to inject fresh momentum into the rural economy in FY26.

“Investments in rural roads, irrigation, and storage not only generate employment but also boost demand and enhance productivity—making them vital for sustaining economic momentum in the current environment," said the second person, requesting anonymity.

“Allocations to the Rural Infrastructure Development Fund are adjusted based on actual expenditure. If needed, a revision could be considered," the person added.

A spokesperson of the Ministry of Finance didn't respond to emailed queries.

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