KATHMANDU, March 22: The National Natural Resources and Finance Commission (NNRFC) has recommended to the government to allocate a grant of Rs 151.707 billion under the financial equalisation grant heading to provinces and local levels for the upcoming fiscal year.
The NNRFC has recommended providing the amount of financial equalisation grant to the provincial government at Rs 61.503 billion and to the local government at Rs 90.204 billion.
The NNRFC has been recommending for financial equalisation grants to be provided by the Federal Government to the provincial and local governments in accordance with Article 60 of the Constitution of Nepal, the National Natural Resources and Fiscal Commission Act 2074, and the Intergovernmental Fiscal Management Act 2074.
The NNRFC has recommended for financial equalisation grants in such a way that it classifies grants into minimum grant, formula-based grant, and performance-based grant.
NNRFC proposes fiscal equalization grant to province, local lev...
For the upcoming fiscal year, the minimum financial equalisation grant to be received by the provincial government has been set at Rs 15.375 billion. This will constitute 25 percent of the financial equalisation grant the provincial government will receive.
The NNRFC stated that the share of the minimum grant that a province will receive has been determined by giving equal 50/50 percent weight to population and area.
Accordingly, an amount of Rs 2.826 billion has been recommended for Koshi Province, Rs 1.906 billion for Madhesh Province, Rs 2.754 billion for Bagmati Province and Rs 1.882 billion for Gandaki Province under the title of minimum grant for the upcoming fiscal year.
Similarly, Rs 2.465 billion has been recommended for Lumbini, R 1.787 billion for Karnali, and Rs 1.813 billion for Sudurpaschim Province.
The NNRFC has stated that the minimum equalisation grant to be received by local levels for the upcoming fiscal year has been set at RS 30.83 billion. This accounts for 34.18 per cent of the total financial equalisation grant that local governments will receive.
Various bases and indices have been prepared for formula-based financial equalization grants and their weightage have been determined accordingly, reads the NNRFC’s recommendation.
As per the recommendation, 10 per cent weightage has been allocated to human development index, five per cent to socio-economic inequality, 15 per cent to infrastructure development and 70 per cent to expenditure requirements and revenue raising capacity.
The total financial equalization grant has been determined by separately calculating minimum grants, formula-based grants and performance evaluation-based grants.
The NNRFC recommended that the total grant amount of these three headings could be added to local levels by deducting formula-based amounts of metropolitan cities if their total grant amounts would be less than Rs 70 million.
Forty local levels would get less than Rs 70 billion under the minimum grants and formula-based grants, said the NNRFC.
