Rural Infrastructure Development Fund - RIDF

RIDF full form refers to the Rural Infrastructure Development Fund. The Government of India established the Rural Infrastructure Development Fund (RIDF) in 1995-96 to fund ongoing rural infrastructure projects. The National Bank for Agriculture and Rural Development manages the finances released under the RIDF (NABARD). The fund's principal goal is to give loans to state governments and state-owned enterprises so that they can finish ongoing rural infrastructure projects. The Government of India provides these funds on a year-to-year basis.

An important point here to understand is the reason for the recent popularity of the RIDF (NABARD). The main reason is that the NABARD recently approved a loan to the Government of Goa under the Rural Infrastructure Development Fund (RIDF) for the construction of Phase II of the Goa Building, as well as a Dental College and Hospital.

The State-of-the-Art ‘Dental Hospital' for significant dental care will be the social infrastructure established as a result of the project approval.

The State Projects Department (SPD) administers the Rural Infrastructure Development Financial (RIDF), which provides low-cost fund support to state governments and state-owned corporations to encourage public sector capital investment in rural infrastructure. RIDF has grown into a significant source of public capital formation in the rural infrastructure domain over the years.

With an initial corpus of Rs 2,000 crore, the first tranche of the RIDF (RIDF-I) was launched. The government provided Rs. 28,000 crore under its twenty-fourth tranche (RIDF-XXIV).

The article is focused on the discussion of the RIDF full form, RIDF scheme, the article also focuses on the RIDF fund allocation system.  

Origin of RIDF (NABARD)

The establishment of the Rural Infrastructure Development Fund (RIDF) at NABARD in 1995 was a key policy move for rural infrastructure development. The RIDF was established to help states complete infrastructure projects that were left unfinished owing to a lack of financial resources. Banks were unable to channel their funding to agriculture in accordance with priority sector standards due to a lack of necessary infrastructure.

As a result, in the 1995-96 budget, the Indian government announced the establishment of the Rural Infrastructure Development Fund (RIDF), which would be administered by NABARD and used to fund ongoing rural infrastructure projects in the irrigation sector. Following that, the Rural Infrastructure Development Fund (RIDF) was established to fund new rural infrastructure projects, and its scope was expanded to include practically all significant components of rural infrastructure. Commercial banks are required by RBI to donate funds to RIDF due to a shortage in lending to priority sectors.

Functions of RIDF

As we have understood the origin of the organisation we must understand the functions of the organisation, this will help in developing an understanding of the  RIDF (NABARD) or RIDF scheme. The functions are summarized below.

• Assist the government in identifying essential projects and ranking them in order of importance.

• The sanctioning committee of NABARD is in charge of approving projects from the priority list.

• Provides the necessary fund support in a cost-effective manner.

• Monitors the entire process and, in the end, analyses it.

• In order to ensure timely delivery, it works in collaboration with the government.

Eligible Activities of RIDF

The activities or RIDF scheme can be categorized into three main groups, they are as follows. 

• Agriculture and related sector

• Social sector 

• Rural connectivity

There are now 37 RIDF - eligible activities that have been approved by the government under the RIDF scheme. The activities that are permitted in these three categories are classified into the list given below.

Agriculture and Related Sector

1. Micro Irrigation

2. Soil Conservation

3. Flood Protection

4. Watershed Development

5. Drainage

6. Forest Development

7. Marketing Infrastructure

8. Cold storage, Public or joint sector cold storage 

9. Plantation and Horticulture

10. Grading mechanisms; certifying laboratories

11. Community irrigation wells for the village as a whole

12.  Fishing harbour

13.  Riverine fisheries

14.  Animal husbandry

15.  Modern abattoir

16.  Medium Irrigation Projects

17. Small Hydel Projects 

18.  Village Knowledge Centres

19.  Desalination plants in coastal areas

20.  Infrastructure for Information Technology in rural areas

21.  Infrastructure works related to alternate sources of energy viz. solar, wind etc. and energy conservation

22. Solar Photovoltaic Power Plant

Social Sector

1. Drinking-Water

2.  Infrastructure for Rural Education Institutions

3.  Public Health Institutions

4.  Construction of toilet blocks in existing schools, especially for girls

5.  "Pay & use" toilets in rural areas

6.  Construction of Anganwadi Centres

7.  Setting up of KVIC industrial estates/centres

8.  Solid Waste Management and Infrastructure works related to sanitation in rural areas

Rural Connectivity

1. Rural roads

2. Rural bridges

RIDF Funds

NABARD provides financial assistance to state governments for initiatives. The State Governments prioritise eligible projects and submit them to NABARD's Regional Offices (ROs) through their Finance Departments. NABARD's Regional Offices evaluate the projects and submit them to the NABARD Head Office, where they are presented to a Project Sanctioning Committee (PSC) or an Internal Sanctioning Committee (ISC) for sanction consideration.

With an initial corpus of Rs 25 crore, the Rural Infrastructure Promotion Fund (RIPF) was established on September 1, 2011, with the goal of promoting capacity building among stakeholders as well as supporting innovative/experimental/promotional infrastructure, particularly in rural areas. The RIDF activities/projects are experimental prototype projects that are projected to have a positive influence on the promotion of sustainable infrastructure development in the rural and agricultural sectors.

Except for the first mobilisation advance of 30% for North Eastern and Hilly States and 20% for other states, the National Bank for Agriculture and Rural Development (NABARD) reimburses the sanctioned amount.

RIDF: Eligible Institutions

RIDF projects can be sanctioned by the four administrative bodies, they are listed below. It is important to remember that these RIDF projects must be presented through the state's nodal body, the Finance Department.

• State Governments / Union Territories

• State-owned corporations 

• State govt. Sponsored organisations

• Panchayat Raj Institutions like Self Help Groups (SHGs) and NGOs

Merits of RIDF Projects

There are the following merits of RIDF schemes which are summarized in the following points. 

• The commitment of cash under RIDF-approved projects has allowed state governments to move forward with implementation more quickly.

• Financing incomplete projects have resulted in the state governments' investments being unlocked, allowing them to reap the full advantages of the projects.

• The expansion of irrigation capacity, the generation of non-recurring employment, and the creation of jobs have all contributed to rural economic prosperity.

• Project monitoring has resulted in the majority of projects being completed on time, reducing time and expense overruns.

• Completion of projects with NABARD's RIDF assistance has aided in the expansion of rural core sectors by increasing demand for bank credit.

Long Term Irrigation Fund

Long Term Irrigation Fund is one of the most important RIDF (NABARD) projects in India. Here we provide a summarized concept of the project.

During 2016-17, NABARD established the Long Term Irrigation Fund (LTIF) to expedite the completion of 99 designated Medium and Major Irrigation projects across 18 states in mission mode by December 2019. Within the scope of the LTIF, the government approved funding for the Polavaram project in Andhra Pradesh, the North Koel project in Bihar and Jharkhand, the relining of Sirhind and Rajasthan feeders in Punjab, and the Shahpur Kandi Dam in Punjab.

Furthermore, the GoI approved the extension of the funding arrangement for the 99 prioritised projects under PMKSY-AIBP and CADWM until March 31, 2021, or until the continuation of the scheme is approved, whichever comes first, within the scope, nature, coverage, and size of the approved scheme, up to March 31, 2021, or until the continuation of the scheme is approved, whichever comes first, within the scope, nature, coverage, and size of the approved scheme.

NABARD's LTIF programme provides loans for both Central and State Shares with a 15-year duration. The National Water Development Body (NWDA), an agency under the Ministry of Jal Shakti, GoI, receives the Central share, while the State Governments receive the loan for the State part.

Extra Budgetary Resources (EBRs) in the form of Government of India backed fully serviced bonds are used to fund the Central portion of the loan, while market borrowings are used to fund the State share. The loans are granted to state governments at a rate of 6% per year, with the Government of India compensating the difference between NABARD's cost of funds and 6% through Interest Subvention.

In conclusion of the article, it can be said that we have learnt RIDF full form and RIDF schemes and projects are steps towards the development of the country. The State Projects Department (SPD) administers the Rural Infrastructure Development Financial (RIDF), which provides low-cost fund support to state governments and state-owned corporations to encourage public sector capital investment in rural infrastructure. RIDF has grown into a significant source of public capital formation in the rural infrastructure domain over the years.