Inadequacy of public investment has decelerated growth rate of agriculture and rural infrastructure sectors since the 8th Five-Year Plan. There are many infrastructure projects, which have been started but are lying incomplete for want of resources. Even though there is an urgent need of creating adequate employment opportunities in rural areas through development of infrastructure, there had been virtually no institutional arrangements for financing rural infrastructure. Against this background, the Government of India in the Budget of 1995-96 announced the scheme for setting up Rural Infrastructure Development fund (RIDF) to be operationalised by NABARD. This fund has emerged as a popular and effective scheme for financing rural infrastructure projects.