Budget Of Provinces

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With the announcement of budget for the fiscal year 2081/82 B.S., all seven provinces have geared towards strengthening their economy and infrastructure. One of the important components of federal system, provinces have introduced their annual estimates of incomes and expenditures amidst the frequent change of the guards. The combined budgets of all seven provinces stand at more than Rs. 278 billion. They have accorded priority to infrastructure development, job creation, agriculture, poverty alleviation, tourism and social security, among others. All the provinces have promised to optimise the local resources but as one goes through the budget documents of all provinces, it becomes clear that they have not yet fully explored and tapped the local resources which enable them to stand on their own feet and pursue development works on their own. 


A common characteristic of all budgets is that all provinces largely rely on the federal grants. For examples, of the total Rs. 35.27 billion budget, the Koshi Provincial government said it would mobilise Rs 4.98 billion from the internal revenue. It expects to manage Rs 12.40 billion from revenue distribution of federal government, Rs. 8.94 billion as fiscal equalisation grant and Rs. 4.16 billion for conditional grants. Likewise, around Rs. 655 billion will be received from the federal government as supplementary grant and Rs. 780 million as special grant. In order to meet the remaining shortfall, it will spend Rs. 3.25 billion from cash balance and get Rs. 105.9 million from foreign grants.


Given that majority of Nepalis are engaged in the agriculture occupation, it is imperatives for all provinces to stress on enhancing the production and productivity of agriculture. The Koshi government has decided to give concessions on interest of agriculture loans but discouraged the subsidies on it.  Gandaki Province that has presented a budget of Rs. 32.97 billion for the next fiscal year proposed ‘Invest Gandaki Programme’ to boost agriculture and tourism. It plans to bring land use policy with a goal of attaining self-sufficient in food, vegetables and fruits and enforce law on marijuana cultivation and to operate the mobile soil hospital. 


Lumbini Province that unveiled Rs. 38.97 billion has allocated Rs. 100 million for the agricultural with the programme of ‘Provincial support to farmers’ and Rs. 51.6 million for soil management programme, and Rs. 140 million for organic fertilisers. The Karnali government has decided to give subsidies based on production to encourage farmers involved in cattle farming. Bagmati Province that brought the largest budget (Rs. 64.54 billion) is striving to realise the vision of a prosperous Bagmati Province. It has earmarked Rs. 7.78 billion to implement the provincial road master plan under which roads, highways and bridges are built. Madhes and Sudurpaschim provinces introduced budget of Rs.43.89 billion and Rs 31.62 billion respectively, with focus on agriculture, employment, infrastructure and tourism.


Ensuring a predictable stability has been a challenge virtually for all provinces while executing development projects and improve the delivery of services and goods. In order to support the provinces, the federal government has created four types of grants - fiscal equalisation, conditional, supplementary and special. The relevance and rationality of these grants will be justified only when they are meaningfully spent and yield positive changes in the economy of the provinces. Checking irregularity and ensuring transparency and accountability is equally important for the prudent use of taxpayers' money.

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