Improving Village Fiscal Productivity and Capacity to Accelerate Village Development

The implementation of Law No. 6/2014 on Villages has gone through the first five-year period (2015-2019), during which the fiscal capacity of the village has increased significantly by almost fivefold. Total village income for that period reached Rp 430 trillion, with a contribution from the Village Fund that reached Rp 258 trillion. The increase in fiscal capacity is, of course, expected to provide the impetus for village development so that they are able to independently accelerate the achievement of their village development goals as mandated by Article 78 of the Village Law. The goals are to improve the welfare of rural communities and the quality of human life as well as alleviate poverty.

This study tries to review critically and objectively how the productivity and capacity of the village’s fiscal resources contribute to the achievement of village development. In this context, this study focuses on three main aspects, namely: (i) how the APBDesa enhances productivity, especially in increasing sustainable sources of income for rural communities; (ii) the extent to which the village and supra-village synergies, both in spatial-based and non-spatial based rural area development have been implemented and its contribution to the achievement of village development goals; and (iii) the village’s fiscal independence through PADes. The results of this study are expected to contribute to policies that increase productivity and village fiscal capacity, especially through the three aspects that are the focus of this study-both from the perspective of lessons learned from the implementation of the first five years of the Village Law and the perspective of alternative implementation strategies for effectively and efficiently accelerating village development in the future.