Thursday, 1 June, 2023

Funding The Provinces

Nepal’s new constitution, adopted in 2015, declared Nepal as federal, secular and republican state. This was a giant political step for the nation toward the democratisation and modernisation process. Monarchy that ruled the nation for over 240 years was abolished. In its place came the constitutional president. Federal governance system was embraced to overcome the imbalances in the sphere of development and administration. Its primary goal is to decentralise power, expand democracy up to the grassroots and ensure the judicious allocations of budget. Described as the self-rule and shared rule, federal arrangement provides political and fiscal instruments to bring the marginalised people, regions, ethnicities and social groups into the mainstream. The national charter has clearly outlined the exclusive list of powers of three layers of government – federal, provincial and local levels. Each level of government has been authorised to formulate and implement laws, policies, programmes and annual budgets and implement them. They can levy taxes and collect revenue within their respective jurisdictions.

Nepal’s federal set-up came into effect with the three-tier polls in 2017. One year later, governments were formed in seven provinces, which marked a big stride in the country’s federal journey. Federal system succeeds only when adequate resources are set aside for its implementation. It requires higher understanding in all three tiers of the governments. The distribution of natural resources among the provinces should be smooth and dispute-free because this is the tricky issue that risks the provinces falling into unnecessary conflict. Bearing in mind this fact, Article 60 (2) of the constitution states that the Government of Nepal shall make the necessary arrangements to equitably distribute the revenue it generates between the federal, provincial, and local levels. Article 60 (4) states that the government shall distribute fiscal equalisation grants to provincial and local units on the basis of their expenditure need and capacity to generate revenue.

Based on the constitutional spirit, the provincial governments have been active to discharge their duties. During the COVID-19 pandemic, the provinces and local governments played their role in preventing the pandemic and caring the COVID-19 patients. Development works have gathered steam in different parts of country with the federalisation of powers, rights and resources. Nonetheless, the provinces are still facing the scarcity of resources. As a result, their big projects like road, bridges and buildings have not been completed in time. The provincial governments have been demanding that the federal government provide them adequate budget to give momentum to development activities.

During his meeting with Prime Minister Sher Bahadur Deuba on Tuesday Gandaki Chief Minister Krishnachandra Nepali Pokharel asked the former to allocate sufficient budge to this province. In his response, PM Deuba assured that the provincial governments would get enough from the centre. Gandaki Province is facing budget deficit in the construction of Dumkibas-Triveni road section that includes the construction of 8-km long tunnel for which it looks up to the federal government. It has completed the DPR for the construction of 287 kilometres of roads to be built at the estimated cost of Rs. 14.35 billion. It requires Rs. 3 billion in the current fiscal year for multi-year projects. Out of the Rs. 7 billion required for the completion of the contracted projects, there is a shortfall of Rs. 4 billion for the current fiscal year. The people have pinned high hopes on the provincial government to meet their expectations and now the federal government needs to extend fiscal support to them.