On Provincial Budgets

Nepal’s three-tier administrative system is unique because each layer of government exercises exclusive rights and powers. The division of country’s administrative structure into seven provinces marks a drastic shift from the unitary system. The provinces have been guided by the principle of self-rule and shared rule. It is true that implementation of fiscal federalism poses a big challenge but federal and provincial governments have enhanced their institutional capacity to generate and spend the money for the overall development of the nation. On Wednesday, seven provinces unveiled their annual budget for the fiscal year 2022/23, giving priority to infrastructure, agriculture, industry, education, heath, tourism and social welfare. Learning from the past, they aim to make budget more result-oriented and productive so that the people can feel the change in their daily life.

The combined budget of seven provinces stands at Rs. 305.4 billion. The share of recurrent and capital expenditure in the provincial budget is Rs. 103.17 billion and 173.06 billion respectively – about 33.77 per cent and 56.65 per cent. Province 1 presented a budget of Rs. 39.75 billion, Madhes Province Rs. 46.88 billion, Bagmati Province Rs. 70.94 billion, Gandaki Province Rs. 35.90 billion, Lumbini Province Rs. 42.63 billion, Karnali Province Rs 32.61 billion and Sudurpaschim province Rs. 36.74 billion. Bagmati Province has the largest outlay and Karnali Province has the lowest one. Province 1 has devised a 10-year agriculture strategy to make the province self-reliant in agriculture, with focuses on development of micro, cottage and small enterprises and promotion of goods produced by using local raw materials. Madhes Province has also crafted provincial agricultural master plan with a view to expand irrigation projects and modernisation of agriculture.

Bagmati Province, where the nation’s capital lies, has laid empahasis on sustainable and high economic growth based on internal production. It has unveiled programmes for modernisation, mechanisation, and commercialisation of agriculture, placing priority on tourism, ecological conservation, utilisation of forest and natural resources, social protection, and good governance. Gandaki Province seeks to increase productivity of livestock and invest in infrastructure like road, irrigation, tourism and walking trails. Lumbini Province’s budget aims to promote agriculture, industry, tourism and education sector development, training, skill development, social empowerment and uplift of the deprived sector.

Karnali Province has given priority to infrastructure development such as road, irrigation, agriculture, health, education, reduction of multidimensional poverty, creation of investment-friendly environment and provincial development. Sudurpaschim government has announced tax discounts in agriculture and tourism sector. The provinces should wisely implement the budget, which critics have dubbed as being populist and distributive in nature. They have announced grants to farmers and ambitious infrastructure projects. However, they must develop their capacity to spend development budgets to achieve stated economic goals.

The recent local elections sent fresh leaderships to 753 local bodies. The local polls have added another milestone to the grassroots democracy. The country is set to hold the elections for federal and provincial parliaments due later this year. With the completion of new election cycle, three-layer governance system will get strengthened in term of building new institutions and providing effective service delivery to the people. Although federal system in economically expensive, it has been instrumental in decentralising powers and allocating resources in a judicious manner. The five-year implementation of the three-layer governments has shown that there is more room for improvement in fixing the problems that come with the implemental of federal constitution promulgated in 2015.