Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: In a significant move to streamline federal spending and reinforce Nepal’s federal structure, the National Planning Commission (NPC) has announced that, starting next fiscal year, the federal budget will exclude retail projects costing less than Rs. 30 million.
This new rule, applied to the National Project Bank, aims to prevent the central government from managing small-scale, local-level projects, which are better suited for provincial and local governments under Nepal’s federal framework.
Shyam Prasad Bhandari, spokesperson for the Ministry of Finance, clarified that smaller projects may still receive funding but will be reclassified under operational or maintenance budgets, distinct from capital expenditure. This shift is intended to eliminate duplication of efforts across Nepal’s three tiers of government and ensure a more efficient allocation of resources. Prime Minister KP Oli emphasized that the policy will enhance the public’s sense of development by focusing federal resources on larger, high-impact projects.
However, the decision has sparked debate. Critics argue that the central government’s inclusion of small retail projects in past budgets has undermined fiscal federalism, encroaching on the autonomy of local and provincial authorities. Posts on X reflect public frustration, with users noting that the move, while a step toward decentralization, exposes ongoing tensions between federal and local governance. One user commented, “Stopping small projects is good, but the federal government must fully respect local authority.”
As Nepal prepares its upcoming budget, the NPC’s directive signals a push for fiscal discipline and adherence to federal principles. Yet, experts warn that without clear coordination between government tiers, the policy could strain local budgets. The Finance Ministry faces the challenge of balancing decentralization with effective resource distribution to ensure equitable development across Nepal.
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