The National Planning Commission (NPC) has introduced an equity-based system for resource distribution through supplementary and special grants, aiming to strengthen fiscal federalism.
As the country’s highest authority for formulating development plans and policies, the NPC announced on Thursday, January 23, that it has developed an action plan to implement the 16th periodic plan effectively, incorporating the new resource distribution system.
Under the system, local governments and provinces are categorized based on their revenue capacity, prosperity levels, and physical infrastructure for resource allocation.
“Municipalities with weaker resources will receive comparatively higher supplementary grants from the central government,” said NPC Vice Chairperson Prof. Dr. Shiva Raj Adhikari. He added that the indicators reflect the autonomy levels of local governments in resource mobilization under fiscal federalism.
The guidelines for this system prioritize human development, job creation, productivity enhancement, and equitable access to resources.
The NPC has also emphasized the localization of Sustainable Development Goals (SDGs) and the graduation process from least-developed country (LDC) status as key priorities over the next five years. “The 16th periodic plan, SDGs, and the graduation process are interconnected and mutually supportive,” the commission noted.
During implementation, the focus will be on efficient resource utilization, technical expertise, and coordination among federal, provincial, and local governments.
Developed on the principle of “Leave No One Behind,” a core tenet of the SDGs, the plans aim to promote social justice, inclusive development, and sustainable economic growth, the NPC stated.
Special Grants and Project Bank Updates
To uplift marginalized communities, federal and provincial governments have been providing special grants to local governments. However, the working procedures for these grants have been revised, according to NPC for “not effectively contributing to human development, job creation, productivity, or improved living standards.”
A lack of clear criteria for special grants has resulted in much of the funds being spent on infrastructure development, workshops, and seminars, the NPC added.
“The previous working procedures for special grants did not align with the spirit of the constitution and laws,” said Adhikari. “The amendments aim to enhance service quality in areas requiring special attention.”
The NPC also announced updates to its “Project Bank”.
Projects scoring less than 70 points out of 100 will no longer be included. Of the total score, 70 points are based on fundamental criteria, while 30 points on sectoral criteria. Additionally, projects that remain inactive for three years will be removed from the list.
During the project identification process, ministries are required to provide preliminary information. Projects costing less than Rs 1 billion will require pre-feasibility studies, while detailed project reports would be required for those exceeding this amount to be eligible for inclusion in the bank.
The Project Bank currently has over 18,000 projects, with more than 11,000 added last year and 221 included this fiscal year. The Ministry of Urban Development oversees the highest number of projects—nearly 7,400—followed by the Ministry of Physical Infrastructure and Transport (around 5,300) and the Ministry of Water Supply (over 2,850).
Provinces have been categorized based on their economic, social, and infrastructure conditions, as well as revenue capacity. As a result, Karnali Province will receive the highest grant allocation at 70%, followed by Sudurpaschim (65%), Madhes (60%), Gandaki (50%), Lumbini (50%), Koshi (50%), and Bagmati (40%).
For supplementary grants under the cost-sharing structure, local governments in category "A" will receive up to 80% grants. Those in categories "B," "C," "D," "E," "F," and "G" will receive 70%, 60%, 50%, 40%, 30%, and 20%, respectively, according to NPC.
RSS
you need to login before leave a comment
Write a Comment
Comments
No comments yet.