Financial Inclusion and Forest Conservation: Evaluating the Role of PVTGs Development Funds in India

Forests are an integral part of tribal development and livelihoods. Considering the deep interdependence of tribal communities on forest ecosystems, this study examines the impact of funds released for development schemes for Particularly Vulnerable Tribal Groups (PVTGs), crime rates and atrocities against Scheduled Tribes, power availability, and gross sown area under cultivation on forest cover in selected Indian states inhabited by PVTGs. The study period spans 2013 to 2021, representing the post‐REDD+ implementation era. Using data from 15 Indian states and applying multiple panel data estimation techniques including Driscoll–Kraay fixed‐effects regression and the Generalized Method of Moments, results reveal that funds allocated for PVTG development are connected with a rise in forest cover via implicit channels, namely declining forest dependence, displacements, and stringent state intervention, instead of through welfare promoting conservation mechanisms. Similarly, the findings indicate a positive correlation between crime and atrocities against Scheduled Tribes (STs) and forest cover, which could reflect patterns of displacement and reduced forest dependency linked to limitations on forest rights. The application of residual quantile regression further highlights heterogeneity in the relationship between released funds and forest cover across different states. Our findings underscore the importance of increasing budgetary allocations for PVTG development to enhance their financial and economic empowerment, which in turn contributes to improved forest cover. The results also advocate for stronger legislative measures that promote greater participation of these communities in the control and management of forest resources.