Village Funds Policy and its Impact on Improvement and Autonomy Status of Villages in Indonesia

Abstract

”End poverty in all its forms everywhere” is the ultimate goal and crucial element of the world’s SDGs 2030 transformative agendas, as well as in Indonesia. The COVID-19 pandemic has hindered Indonesia from achieving its SDGs targets and reducing poverty, including rural poverty. The village funds policy sourced from the state budget is one of the policies that aims to alleviate rural poverty; thus, there will be a reduction of disadvantageous villages and an enhancement of self-sustained villages in Indonesia. This study aims to investigate the impact of village funds on the improvement and autonomy status of villages in Indonesia. It utilizes a quantitative method, namely linear regression of panel data using the Village Building Index (VBI) as the dependent variable and village funds as the independent variable over 2018-2021 in each regency/city in Indonesia. The result suggests that the village fund policy, through the 10% allocation of the state budget, has a positive and significant effect on changes in the improvement and autonomy status of the villages in Indonesia. The finding using the model (lin-log) tells us that a 1% increase in village funds will raise the VBI by 0.0013. This indicates that the village funds policy has contributed to the achievement of rural poverty alleviation goals, or it could be a pro-poor policy in order to achieve the purpose of the 1st SDGs goal.
 Keywords: SDGs, poverty, village funds policy, improvement and autonomy status of villages