Govt still undecided on allocation of resources for local units

May 16, 2017 01:20 AM Republica

KATHMANDU, May 16: Elected representatives of 283 local units will be ready to assume office and perform their responsibility within a week or two. But the central government has not yet decided the ratio of budget allocation that these units will get.

With National Natural Resources and Fiscal Commission still to be formed, experts say that the government has to decide the formula for resources distribution on its own.

Similarly, the government is unlikely to table the budget for the upcoming fiscal year on May 29, as specified in the constitution, as the main opposition CPN-UML has been saying that the budget would influence the second phase of polls for 461 units scheduled for June 14.

Though the National Planning Commission (NPC) and Ministry of Finance (MoF) have had budget discussions, such discussions have not become fruitful, knowledgeable sources say. 

There are two schools of thoughts on resources allocation for local units, according to NPC member Sunil Babu Shrestha. “One says that the central government should allocate the entire budget meant for local development to local units. Some say only 50 percent of budget set aside for local development should be allocated to local units in the current fiscal year,” he added. “Similarly, the second group argues that local units will not be able to manage large resources as they lack is human resources and the capacity to handle budget.”

Experts say that the government and the political parties, who enthusiastically decided to federate the country and devolve power and resources to local units, are now showing reluctance to implement the same. “It is already too late. The government and the political parties should work out a formula for resources distribution and seek public opinion on the formula before finalizing it,” Balananda Paudel, the chair of Local Bodies Restructuring Commission, which submitted its report to government in January, said.

The government decided to set up 744 units based on the commission's report. 

Ministers as well as lawmakers are lobbying to keep at least some portion of the budget at the center so that they can finance projects in their respective election constituencies like they have been doing so far.

According to the constitution, local units get four types of grants - general expenditure, sector-specific spending like in education and health, grant that should be matched by local resources for different projects, and special grants.

Previously, the government would publish a bulky book containing even small projects from the center. In most cases, budget allocation for such projects would be based on political and bureaucratic influences rather than local planning and priorities. 

In the absence of elected local bodies, project selected by all-party mechanisms in local bodies won't get much priority.

“The government should prepare a formula based on population, development index and existing infrastructure like roads and irrigation projects, among others," added Paudel.  

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