Fiscal discipline has taken a backseat in the provincial budgets for fiscal year 2025/26. Despite limited internal revenues and growing dependence on federal transfers, most provinces have prioritized populist, distribution-oriented programs over long-term economic strategies. From cash handouts and symbolic grants to ghee export subsidies and even a proposed tantric research center, the budgets reflect a tilt toward political expediency rather than development foresight.

To finance these programs, provinces are drawing heavily on unspent reserves and federal grants, often under vague and sweeping categories like support for the poor, Dalits, marginalized communities and martyr families. Yet none of the seven provinces have articulated a coherent development roadmap or actionable plans to boost productivity, employment or sustainable growth.

In contrast to the federal government, which has refrained from slogan-driven programs this year, provincial budgets are replete with flashy, populist titles. Several schemes are named after Chief Ministers or use catchy slogans clearly aimed at immediate political gain. The federal government, once criticized for branding programs after the Prime Minister or President, has shifted to using the more neutral term “national” in response to mounting public criticism.

Sudurpaschim Province leads the populist packaging, with nine schemes branded after the Chief Minister. Koshi, Bagmati and Madhesh provinces have also adopted similar strategies, aligning their budgets closely with local political priorities and electoral interests.

Koshi Province: Cash, Slogans and Symbolism

Koshi Province has tabled a Rs 35.87 billion budget for FY 2025/26—a modest 1.7% rise from the current fiscal year. Minister for Economic Affairs Ram Bahadur Magar allocated Rs 18.67 billion (52%) for recurrent expenditure, Rs 17.10 billion (47.7%) for capital spending and Rs 100 million (0.3%) for financial management. Transfers to local governments total Rs 4.70 billion.

The budget expects to raise Rs 5.50 billion from internal revenue, Rs 12.39 billion from federal revenue sharing and over Rs 10 billion in federal grants. The province is targeting an economic growth of 5.3%.

Key allocations include a Rs 20 million revolving fund to compensate cooperative depositors affected by mismanagement, a Rs 120 per kg subsidy for ghee exporters despite unmet federal promises to introduce national export subsidies. The province has also earmarked Rs 140 million for Manmohan Technical University and Rs 62.5 million for the Shailaja Acharya Heart Disease Center, both named after political figures.

One of the most unusual proposals is a new “Center for Astrological, Vastu and Tantric Research”. Although the project lacks funding details, it has raised eyebrows as an example of misplaced priorities.

Madhesh Province: Distribution First, Planning Later

Madhesh Province has presented a Rs 46.58 billion budget, up from Rs 43.89 billion in the current fiscal year. Economic Affairs Minister Sunil Kumar Yadav allocated Rs 16.72 billion (35.89%) for recurrent expenditure and Rs 30.26 billion (64.11%) for capital projects.

Revenue sources include Rs 9.50 billion in internally generated income, Rs 12.73 billion in federal grants, Rs 12.35 billion from federal revenue sharing, Rs 10.38 billion from cash in reserves and Rs 2 billion in borrowing.

Among key allocations are Rs 381 million for families of martyrs and funding for “farmer schools” aimed at promoting reduced pesticide use. Some proposals, however, appear misaligned with regional needs. They include funding to promote millet, rarely cultivated in Tarai. A program titled “Vehicle for Every Hand, Job in Every Household” proposes distributing auto-rickshaws as a form of employment support.

Bagmati Province: The Biggest Budget, But Mixed Signals

Bagmati Province has proposed the largest provincial budget—Rs 67.47 billion, up from Rs 64.54 billion in the current fiscal year. Minister for Economic Affairs Kundan Raj Kafle allocated Rs 26.04 billion (38.6%) for recurrent spending and Rs 41.43 billion (61.4%) for capital expenditure.

Funding sources include Rs 28.87 billion in taxes, Rs 6.79 billion in other internal revenue, Rs 14.81 billion in federal grants and nearly Rs 17 billion from savings and miscellaneous sources.

Flagship programs include poverty identification cards, the “Chepang, Chiuri and Honey” scheme, and “One Ward, One Enterprise” which has received Rs 51 million. Similarly, Rs 350 million has been allocated to the

Madan Bhandari Institute of Health Sciences, while a quality education initiative has been named after Bhim Bahadur Tamang.

However, the continuation of the Rs 30 million “Housewife Empowerment” program, despite underwhelming results, has drawn criticism. In a notable policy shift, Bagmati has decided not to open new road tracks in the upcoming fiscal year, signaling a more cautious approach to infrastructure development.

Gandaki Province: Downsized Budget, Conservative Approach

Gandaki Province has scaled back its budget to Rs 31.98 billion, a slight reduction from the current fiscal year’s Rs 32.97 billion. Minister for Economic Affairs Dr Takraj Gurung has allocated Rs 12.63 billion (39.5%) for recurrent expenses, Rs 19.09 billion (59.7%) for capital outlays and Rs 250 million for financial management.

The province expects to generate Rs 5.45 billion from internal sources, Rs 9.79 billion through federal revenue sharing and Rs 7.76 billion in various federal grants to fund its expenses. An additional Rs 1.75 billion will be raised through borrowing.

Though more restrained than other provinces, Gandaki’s budget lacks a clear emphasis on productivity enhancement or employment generation, raising concerns about its development vision.

Lumbini Province: Steady Spending, Focus on Organic Farming

Lumbini has proposed a budget of Rs 38.91 billion for 2025/26, slightly down from the current fiscal year’s 38.97 billion. Minister for Economic Affairs Dhanendra Karki has allocated Rs 12.01 billion (30.88%) for recurrent spending, Rs 23.47 billion (60.32%) for capital spending and Rs 3.42 billion (8.8%) for intergovernmental transfers.

The budget prioritizes agriculture, including a 10-year plan to transition six hill districts to organic farming, beginning with Rs 20 million in seed funding. It has also allocated Rs 150 million for livestock farming (goats, pigs and water buffaloes) and Rs 210 million for agricultural credit subsidies.

Programs supporting youth employment and training have been allocated Rs 40 million, while the Ministry of Agriculture has been allocated a total budget of Rs 1.5 billion.

Karnali Province: Modest Growth, Sectoral Focus

Karnali has raised its budget to Rs 32.99 billion, nearly a 5% increase from the current fiscal year. Minister for Economic Affairs Rajiv Bikram Shah has allocated Rs 7.79 billion (23.64%) for recurrent spending, Rs 19.98 billion (60.55%) for capital outlays and Rs 615 million for financial management. Similarly, Rs 4.59 billion will go as fiscal transfers to local governments.

The province aims to raise Rs 967 million in internal income, Rs 10.27 billion from federal revenue sharing and nearly Rs 10 billion in federal grants. It aims to draw Rs 5.69 billion from reserves to fund its programs.

Karnali has prioritized support for local industries and tourism. Notable allocations include Rs 250 million for a provincial investment fund, Rs 60 million for earthquake-hit entrepreneurs and Rs 140 million for commercial fruit farming under “One Village, One Commercial Orchard” program. Branding and promotion of local products will receive Rs 61.8 million.

Sudurpaschim Province: A Patchwork of Promises

Sudurpaschim has proposed a Rs 33.47 billion budget, up from Rs 31.62 billion of the current fiscal year. Minister for Economic Affairs Bahadur Singh Thapa has allocated Rs 10.21 billion (30.49%) for recurrent spending, Rs 19.83 billion (59.25%) for capital expenditure and Rs 3.42 billion for intergovernmental transfers.

The province expects to generate Rs 1.65 billion from internal sources, Rs 9.87 billion through revenue sharing, Rs 8.92 billion in equalization grants and Rs 7.66 billion from reserves.

The budget emphasizes agriculture and tourism, designating 176 farming zones and allocating Rs 704 million for crop promotion. Interestingly, Rs 9.8 million has been allocated to promote traditional ox plowing which goes against the farm mechanization trend. The province also plans to conduct feasibility studies for cable car lines to Khaptad, Badimalika and Ramaroshan to boost tourism.

Populist Rhetoric, Deficit Reality

While the 2025/26 provincial budgets reflect regional priorities and ambitious development rhetoric, they are also laden with populist promises and politically branded programs. With increasing dependence on federal grants, reserves and internal borrowing, fiscal discipline appears to be eroding.

Despite sizable capital outlays, the lack of concrete plans to strengthen implementation capacity, governance and transparency casts doubt on their long-term impact. Whether these budgets can catalyze meaningful transformation, simply function as short-term political tools will hinge largely on execution and accountability in the months ahead.

(This article was originally publihsed in  July 2025 issue  of New Business Age Magazine.)