Kathmandu, December 1

To enhance economic and social status of municipalities, the National Planning Commission — the apex planning body of the country — is gearing up to classify all 293 municipalities of the country into five categories to discern their real condition of development and income level.

The NPC has started the preliminary study to classify municipalities into five categories on the basis of six sub-indices — governance status, infrastructure development, happiness of the people, environmental status, sources of revenue and social equity.

“We are preparing the Sustainable Urban Development Index, and all the municipalities will be categorised as per the number they secure in each sub-index,” said Sunil Babu Shrestha, a member of NPC.

NPC has hoped that the SUDI will promote competition among the municipalities, thereby aiding to accelerate the development process.

“We will also analyse the time that a municipality takes to upgrade to a higher category,” Shrestha added.

The planning body is targeting to finalise the study before the government tables the annual budget at the Parliament. As per the constitutional provision, the government has to present the annual budget around May-end.

Sub-indices for categorisation

• Governance status
• Infrastructure development
• Happiness of the people
• Environmental status
• Sources of revenue
• Social equity
• Sabin Mishra

As per the constitutional provision, local units will get four types of grants — fiscal equalisation, conditional, matching and special — from the central government. However, the government has allocated only equalisation and conditional grants in the current fiscal, as the Natural Resources and Financial Commission has not been formed yet.

“If the study is finalised before the budget is tabled, the government will be able to allocate the grant amount to the municipalities based on their development status and further needs,” Shrestha said. “After identifying the income sources, the NRFC would also be able to recommend grants for each unit.”

As per the provision of Intergovernmental Fiscal Transfer Act, local bodies will get 15 per cent of the income generated from value added tax and excise duties imposed on domestic products.

Local bodies will also get royalties obtained from use of natural resources, namely mountains, hydropower, forests, and mines and minerals.

The SUDI will also facilitate the government in dealing with the donor agencies to implement urban development programmes in the municipalities. A few days ago, the government had signed an agreement with Asian Development Bank to conduct Regional Urban Development Project in eight municipalities across the country.

Of the 293 municipalities across the country, there are six metropolitan cities (Kathmandu, Janakpur, Biratnagar, Bharatpur, Pokhara and Lalitpur), 10 sub-metropolitan cities and 277 municipalities.