Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The National Natural Resources and Fiscal Commission has recommended financial equalization grants amounting to Rs 1 trillion 49 billion 62 crore (Rs 149.62 billion) for distribution to provincial and local governments in the fiscal year 2082/83. The recommendation was presented to the President on Friday through the Commission’s seventh annual report.
Formed under Article 251 of the Constitution, the Commission is mandated to determine revenue sharing, fiscal equalization criteria, and conditional grant distribution between the federal, provincial, and local tiers of government. In line with this constitutional responsibility, the recommended equalization grants will be disbursed by the federal government to all provincial and local governments across the country.
According to the report, the Commission has formulated the grant allocation framework based on revenue generation capacity, population density, geographical accessibility, social development indicators, and service delivery capacity among local governments. The model aims to reduce disparities in public service delivery and ensure fair access to resources regardless of regional constraints.
The Commission has also advised the federal government to clearly define the criteria for conditional and special grants to ensure transparency, accountability, and uniformity in inter-governmental fiscal transfers. It noted that fiscal equalization grants are expected to support local governments in strengthening their financial capacity, improving essential public services, and minimizing economic inequality across regions.
Furthermore, the report emphasizes making future inter-governmental fiscal relations more transparent, measurable, and results-oriented. It has recommended adopting an outcome-based grant distribution approach and aligning resource allocation with federal fiscal equalization principles to enhance the effectiveness of public expenditure at the provincial and local levels.
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