ABSTRACT
Village is relatively small entity occupied by homogeneous people and tied by local norms andcustom as well. In Indonesia, village has autonomus authority to manage and to govern dailyactivities since Government of Indonesia issued Indonesian Act Number 6/2014 about Village.The law mentions that village can get, search, and spend its village budget to accelerate villagedevelopment. In practice, use of village budget is questionable due to complex issues in field.One of important things in allocating village budget is aimed to accelerate villagedevelopment. Therefore, innovation is substantial to develop village sustainably, it comprisesa newness of product or process or organization or marketing. Therein, village budget isimportant to develop fresh ideas to innovation in one or more of innovation types mentionedabove. Whereas, innovation is an invention and its commersialisation to market, by which itis promoted by social-economic interest. In Indonesia, local innovation is promoted by Law ofGovernment Number 38/2017 about Local Innovation where village is part of localgovernment. This study is a descriptive-qualitative research method using secondary data. Theanalysis is content analysis technique with focusing on substance of local innovation andvillage budget of both laws. Due to this study is literature and act review only, analysis isdeveloped through innovation policy framework. And the significant result is that both lawsare appropriate to accelerate village development in Indonesia based on innovation,eventhough capacity of human resource and administrative management at villagegovernment level are necessarily considered.