Kathmandu, August 18

Experts related to fiscal federalism have pointed out that the budget allocation for the local level bodies fall far short of the responsibilities delegated to them.

In a meeting of the Parliamentary Finance Committee in Singhadurbar today, experts opined that the local bodies should be granted budget for public expenditure as per their service delivery capacity.

“The government has devolved 53 per cent of its total functions to the local and provincial levels, however, up to 90 per cent of the government’s revenue remains centralised,” pointed out Khimlal Devkota, one of the fiscal federalism experts.

He also said that the government has allocated the budget of current fiscal year taking the size of the population  as the major gauge in determining the budget amount. “However, adoption of this model for budget allocation will be counterproductive for development, as the number of people residing in remote areas is far lower compared to urban centres but such areas need more funds to take the level of development at par with other areas.”

Economists and federalism experts like Pushpa Kandel, Krishna Prasad Sapkota, Mohan Banjade and Dormani Paudel also said that the government should disburse more revenue to the local bodies as per their work responsibilities. They also opined that the Ministry of Finance (MoF) should abandon the centralist mentality during revenue distribution.

Experts also underscored full autonomy of National Natural Resources and Fiscal Commission, which will be formed as per Constitutional provision. “There have been speculations of the commission being formed as a division of MoF, which would defeat the entire purpose of its establishment as it should be allowed to function independently,” Sapkota said.

Devkota also said that MoF should follow the recommendations of the commission during the budget-making process.

Experts also raised some issues related to the inter-governmental fiscal transformation process. They said that the central government should be liberal in revenue sharing with the local and provincial level bodies in line with the delegation of work to them.

The government has submitted Inter-governmental Fiscal Transformation Bill and National Natural Resources and Fiscal Commission Bill to the Parliament. The House panel has started to hold discussions with experts, lawmakers and government officials on the aforementioned bills, which are related to fiscal federalism.