Kathmandu, April 26

Experts have sought early establishment of the Natural Resources and Financial Commission for the scientific allocation of government resources as per the development needs of local and provincial bodies as well as potential revenue mobilisation from the concerned bodies, as the country has already embarked on federalism.

The commission has been envisioned by the new Constitution for the allocation of resources in a justified manner based on their capacity and comparative advantages, among others. The envisioned commission would also be responsible to settle the disputes that could occur among local bodies and also among provinces during the utilisation of natural resources.

Speaking in a programme organised by IBN Media and Research, titled ‘Economy in Federalism’, Shankar Sharma, former vice chairman of National Planning Commission (NPC) said that the Natural Resources and Financial Commission needs to be set up as early as possible for the implementation of federal structure.

“As the Constitution has envisaged providing conditional, unconditional, counterpart and privileged grant to the local and provincial level bodies, the commission must be set up as early as possible to determine the grant amount,” said Sharma. “While formulating the budget, the NPC and Ministry of Finance (MoF) need to be advised by the Natural Resources and Financial Commission to allocate the grant amount as the local bodies have already been set up.”

Each province and local body may have their own development model and local advantages and there might be disputes among them in utilising the natural resources and collecting the revenues as local bodies will come into function after the local election, as per Sharma. “These issued would need to be defined and settled by the Natural Resources and Financial Commission.”

Citing the complexities in utilisation of natural resources and resource allocation to the local bodies with diverse dimensions — in terms of population size, geographical area, natural resources, among others — he opined that formation of Natural Resources and Financial Commission is already overdue.

According to him, in terms of revenue collection, central government collects 86.08 per cent of the total revenue, while province and local bodies collect 6.2 per cent and 7.7 per cent, respectively. However, in terms of expenditure, central government spends 47 per cent of the budget, province spends 25 per cent and local level spends 28 per cent.

He also opined that after formation of the commission, the grant amount would need to be allocated based on the special development needs and ability to collect revenue instead of providing equal quantum of grant to all local bodies.

The MoF had provided Rs 10 million grant to each of the 744 local bodies in this fiscal.