Redistributive Resource Transfer

Redistributive Resource Transfer or RRT to a state (from the Centre) is defined as gross devolution to the state adjusted for the respective state’s share in aggregate Gross Domestic Product (GDP).

Differences between foreign aid and RRTs are as follows:

  • RRTs are intra-country transfers whereas foreign aid, as the name suggests, is an aid given by another country or international financial institutions such as WB, IMF etc.
  • RRTs are redistribution of the centre’s own finances, and do not augment the national disposable income. Foreign aid does.
  • RRTs are not tied to a particular purpose whereas foreign aid from institutions such as WB and others are usually for specific projects or initiatives and are thus tied.

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