Central govt recommended to provide Rs 152.51 billion in fiscal equalization grants to provincial and local govts for next FY

KATHMANDU : The central government is allocating a total of Rs 152.51 billion in fiscal equalization grants to the sub-national governments in the budget of 2021/22.

The National Natural Resources and Fiscal Commission (NNRFC) has recommended to the central government to provide the aforementioned amount as unconditional grants to the provincial and local governments. The amount recommended for the next fiscal year is more than Rs 1.20 billion than the amount provided to the sub-national governments in the current fiscal year.

Of the amount recommended in the upcoming budget, Rs 57.95 billion will be given to seven provinces while 753 local governments will be receiving Rs 94.55 billion in total. According to the NNRFC, each local government will get at least Rs 65 million as a fiscal equalization grant.

The government provides the grant on the basis of human development index, economic and social inequality, status of infrastructure development and revenue sources and expenditure requirements of the local governments. After the implementation of fiscal federalism, the government provides funds to the sub-national governments under headings of conditional, special and complementary grants, besides the fiscal equalization grant.