Local governments perform poorly in revenue mobilisation

By A Staff Reporter

Kathmandu, Aug 16 : It seems that the local bodies have a long way to go to gain independence by improving their own revenue mobilization. 

The recent report of the Office of the Auditor General (OAG) said that the local governments could only earn 7.22 percent (Rs. 35.62 billion) of their total income in the Fiscal Year 2020/21. The 753 local bodies in the country received Rs. 493.03 billion including grants from the federal government that year. 

Their major income includes Rs. 75.63 billion from the savings of the previous year and Rs. 73.40 billion from revenue sharing. They had estimated to receive about Rs. 203.17 billion in income other than the grants from the federal government. 

According to the Auditor General, many local bodies have not clarified the reduced amount while transferring the funds from FY 2019/20 to 2020/21. It said that 167 local governments did not disclose the reasons for the reduced responsibility transfer of Rs. 2.27 billion. 

Likewise, their accounts show about Rs. 684 million less amount in the respective banks. The national auditing body has suggested controlling the practice to approve the budget with the unallocated amounts.

Such amount would be distributed by the decision of the executive of the respective local body, spent mostly on one-time projects and programs, and fiscal discipline is not maintained. 

The OAG audited Rs. 993.59 billion amount spent by 744 local bodies in 2020/21. Including the dues of the 55 local bodies from the previous year, the amount increased to Rs. 1051.9 billion. Of that amount, about Rs. 41.19 billion has remained in arrears. 

In that amount, Rs. 5.60 billion needs to be recovered, Rs. 30.79 billion needs to be accounted while Rs. 4.79 billion is the money taken in advance.