Local Budgets Focus On Employment


Local governments in Nepal, which are 753 in number, have presented their annual budget on Asar 10 (last Sunday) for the upcoming Fiscal Year 2080/2081 BS. This date for presentation of the local government budget has been fixed by the Intergovernmental Fiscal Arrangement Act 2017, and local governments had stepped up their preparedness for the last several months to present budget at the local parliament (municipal assembly) on the date prescribed by law. Needless to say, the Act has also fixed the similar dates for presentation of the annual budget for the federal and provincial governments too. This provision, according to law,  has been envisaged to ensure that the annual budgeting exercise was done in time to ensure that revenue resources estimate and allocation was done in a proper and objective way. This was also intended to warrant that the resource estimates and allocations matched with the real needs and aspirations of the local constituents.

According news reports, around 95 per cent of the local governments have already managed to ensure compliance with the legal provision related with budget planning and announcement whereas the remaining around five per cent have failed to meet the legally prescribed time line As per the news reports, Madhes Province has topped, like previous years, the list of those that have not succeeded to present their programmes and budget to meet the legally envisaged schedule. In fact, the local governments in Madhes Province have not been able for the last several years to improve their performance efficiency in terms of programme and budget formulation and implementation. It is expected that those local governments that have failed to present the budget would accelerate the process and ensure that their respective budget formulation and endorsement process completes before the onset of the new financial year that begins from mid-July. If not, this will hurt the process of implementing development activities at the local level.

Institutional regularity

The local governments have more or less completed the first year of their five-year term that began last year after the second democratic elections for the local governments was held.  A closer scrutiny of the policies and programmes of the local governments enshrined for the upcoming fiscal year demonstrate that these grassroots democratic institutions have achieved larger degree of institutional regularity and stability in carrying out their mandates and competencies. Moreover, local constituents have started to look to the local budgeting process more seriously and do repose heavy stakes into the way budgetary prioritisation and allocations are made and implemented.

The budget formulation is probably a local government’s most important work and the country's overall development rest on this local product. The annual budgeting serves a number of functions at the local level. At the most basic level, it is a legal document approved by the local assembly (legislature) that gives local government officials the legitimised authority to fulfill mandates and obligations, carry out target activities and mobilize resources and meet the   expenses involved in local development actions. Most importantly, it allocates resources to the key activities in line with the local policies and priorities.

It also sets limits on expenditures and allows expenses to incur only for those actions which are prioritised and selected through participatory democratic process. The statements of goals and objectives explicated in the budget convey how resource appropriation and allocation decisions relate to a wider vision for the future of the local government. A local budget is, therefore, an evaluation tool for the voters to compare commitments made in the previous year's budget with actual accomplishments.

Most importantly, local budget is an essential means by which people assess government’s efforts for the realisation of people's social and development aspirations which are broadly defined as economic, social and cultural rights of the people. Local governments in Nepal have been cast into the role of key actors in the realisation of the fundamental rights of the citizens. The constitution has made them responsible for meeting the right to education, health, food, shelter and clean environment among others. Since these local government obligations constitute the major components of the economic, social and cultural rights, local budgeting in the nation should be mindful of as to how these fundamental obligations are addressed in the budgeting. Similarly, if people are to hold their local governments to account for realising rights, they too need to know about the budget. This is particularly true for marginalised and excluded groups.

The marginalised groups are more dependent on government programmes and yet practice has been that government resources are often disproportionately directed to programmes that benefit the well off and articulate communities. Local budgeting should, therefore,   encompass efforts to ensure nondiscrimination and the advancement of equality through resource allocations with respect to women, children, the poor, minorities, indigenous peoples, older persons, persons with disabilities and other groups.


The local government budgetary allocations for upcoming fiscal year indicate that the capital expenditure has been a matter of priority which is important but concerted efforts for social development and employment generation is still a far cry. As physical infrastructures like road connectivity and telecommunications have reached out roughly to the majority of the local governments in the country save the remote and mountain terrains, there is a need for upgrading and consolidation of their quality of the physical infrastructures especially the road.  

Moreover, emphasis should be laid on raising agricultural productivity through use and utilisation of fallow and unitised land lying abandoned due to out-migration. This will ultimately provide job to the unemployed work force that has to out-migrate for hazardous employment opportunities for paltry salary. Moreover, increased local farm productivity makes the country self-reliant on basic food commodities which are also a matter of enhancing national interest and security.  

(The author is presently associated with Policy Research Institute (PRI) as a senior research fellow.  rijalmukti@gmail.com)

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