More than three years have elapsed since the country embraced the federal system. The three-tier federal governance is not just about attaining the political and administrative autonomy. The creation of provinces and local bodies is also meant to spur balanced economic development through the identification and mobilisation of local resources. The constitution has clearly defined the rights, power and responsibilities of the three-tier governments. The provinces and local units have been empowered to pursue economic development as per the local needs and priorities so that the people and their representatives meaningfully participate in the process of selection, execution and monitoring of development programmes. This will undoubtedly ensure the transparency, accountability and efficiency of development projects.

However, the federal and provincial governments have been unable to spend their budget as per their commitment largely owing to the lack of their efficiency in budgetary allocation and expenditure. Experts also cite other reasons such as the selection of projects without proper feasibility study, lack of coordination and cooperation between the line agencies, faulty bidding system, negligence of contractors, politicisation of projects, lack of transparency and obstacles in land acquisition behind the poor spending of budget. It is the matter of serious concern that this economic malaise has also pestered the subnational governments. According to the news report published in this daily on Sunday, the provinces have fared badly when it comes to the budget spending. It states that in the 10 months of the current Fiscal Year 2020/21, no province has utilised more than 40 per cent of their budget.

Karnali Province has estimated to spend only 46.2 per cent of its total budget (Rs 33.74 billion) for this fiscal year 2020/21. Bagmati, Lumbini and Sudurpaschim provinces are expected to register the highest budget mobilisation this year. Bagmati Province budget mobilisation estimate stands at about 74 per cent but it has utilised only 38 per cent of its budget in 10 months of the current FY. Lumbini Province has mobilised about 57.35 per cent of its budget by mid-June. Sudurpaschim expects to mobilise 72.6 per cent of the current year’s budget. Province 1 has mobilised 40 per cent of its budget in 10 months. Province 2 aims to spend 62.5 per cent, as mentioned in the budget speech of the coming Fiscal Year 2021/22 while Gandaki Province has mobilised about 37.76 per cent of the total budget in the 10 months of the current fiscal. Provincial governments have blamed the COVID-19 pandemic for their poor budget performance.

It is true that the pandemic disrupted the normal life and hit the economy but there are serious shortcomings hindering the effective allocation of budget. Newly functional provinces are yet to enhance their capacity to prepare, allocate and monitor budget expenses. They set lofty goals but lack credible foundation, organisational structures and competent human resources to mobilise and execute the budget. Like the central government, the provinces also tend to unveil distributive budget to make the concerned constituencies happy. As a result, it lacks focus for vital projects that create jobs and promote economic activities. The tendency to allocate budget randomly does not help implement the projects successfully. It has become imperative for the federal government to provide sufficient and able technical and administrative human resources to the provinces to enable them to effectively spend budget and achieve development goals.