Contrary to Prime Minister Pushpa Kamal Dahal's repeated commitment, with two months left to the end of the financial year, the Ministry of Finance has cut the financial equalization grant under the approved budget for the current year. After the government decided to cut the equalization subsidy by about 26 percent, thousands of projects under construction across the country have come to a standstill.

After the completion of the plan, the construction businessmen and the consumers who come with the bill are also returning empty-handed, and the local people's representatives are preparing for the agitation. People's representatives say that if the subsidy amount is not released immediately, there is no option to gather and protest at Singha Durbar. The Association of Municipalities and the National Federation of Rural Villages have been requesting for months not to cut the subsidy, but they have been ignored and have warned that they will return the decision even if they protest. The president of the association Bhim Dhungana and the president of the federation Lakshmidevi Pandey have expressed their opposition to the union government for not sending the allocated funds after publishing a joint statement. They said that if the money is not released, there is no option to protest against the decision of the Union Government.

In point number 62 of the budget statement for the financial year 080/81, it is mentioned that 58 billion 67 million and 87 billion 35 million have been allocated to the state and local levels respectively on the recommendation of the Natural Resources and Finance Commission. But under the third installment to be sent to the local level, 7 percent of the 25 was disbursed. Currently, while sending the fourth and final installment, the Comptroller General's Office has sent a letter to the Office of the Controller of Finance and Accounts across the country and asked them to disburse 74.11 percent of the current year's total budget towards the equalization grant without increasing it. Based on the said letter, 25.89 percent of the budget will be cut for the equalization subsidy of the local level in the current year. 

had previously also sent a similar letter on January 26 asking to give 55.73 percent without increase. At that time, it was asked to reduce the amount based on the revenue collection till the end of December. Ritesh Shakya, Head of the Finance Ministry's Budget Division and Joint Secretary, says that the decision to disburse equalization grants has been made based on revenue collection till March. He informed that if there is an improvement in the revenue collection, the reduced amount will be sent again. "This is not the final decision, there may be a re-examination," he said. 

Budget cuts are the most affected municipalities in critical areas with low internal resources. Netraraj Shahi, the Chief Administrative Officer of Kalikot Sanni Triveni Rural Municipality, said that only 18 of the 62 schemes implemented under the equalization grant were paid in the current year. He says that they are under pressure of what to send to those who come to collect payment after completing the

plan. "Distressed municipalities that do not have internal resources cannot run without equalization grants sent by the Union Government," he said. Natural Resources and Finance Commission Chairman Balanand Poudel argues that equalization grants should not be cut. Reminding that the commission suggested not to cut the subsidy last year, Paudel said, "Instead, equalization should be kept as it is, even if the budget of other titles is reduced." 

Among the four types of budget titles provided by the federal government, the equalization grant is the amount that the local level can decide to spend on its own. "Whatever work is done is the amount of the equalization grant," said Dhungana, chairman of the municipal association. The union government asks for a 'ceiling' before the budget and gives the subsidy to the local level. He said that the plan is being implemented with the belief of getting the budget according to the ceiling. In the hope that the grant will be released, the people's representatives of the local government have come under the pressure of the builders and consumers when the payment of the work which has already been spent after a year has been formulated. Nimagyalzen Sherpa, chairman of Helambu rural municipality Sindhupalchok, says that it is against the constitution for one government to cut the budget of another government.

'This is irresponsible and anti-federal work,' President Sherpa said, 'What will they say to the builders and consumers who come after the work?' Sherpa argues that the case should be registered in court. Municipalities that do not have internal resources do most of their planning operations and current expenditure estimates based on equalization grants. The meeting of the Council of Ministers on January 9 decided to disburse equalization grants to provinces and local levels based on revenue collection. Based on the same decision of the Council of Ministers, the Accountant General has sent a letter saying not to disburse all the subsidy amount. So far, about 56 percent of the total revenue target for the current year has been collected, said Uttar Khatri, spokesperson and joint secretary of the Ministry of Finance. But compared to last year, compared to this period, he said, the revenue has increased by about 69 billion. 

 Ministry of Finance, Financial Federalization Coordination Division had advanced the proposal of subsidy reduction. According to Dhungana, the chairman of the municipal association, the union government has caused trouble to the local people's representatives by cutting the subsidy. He asked, "After the grant is cut, from where will the construction workers and consumers be paid for the work done?" Local level gets equalization, conditional, special, supplementary grants. The Finance Commission has suggested increasing the equalization subsidy and reducing the conditional subsidy. But Dhungana, the president of the association, who is also the mayor of Neelkanth Municipality, said that the government has taken the strategy of reducing the equalization subsidy rather than increasing it. 

The government sent only 7 percent of the 25 percent amount to be sent to the local level for the third installment. Pandey, president of the Rural Municipality Federation, says that now that the amount of the fourth or final installment will be cut, the people's representatives at the local level will have to protest. He argues that there is no budget to give equalization grants. "This kind of behavior does not strengthen federalism," she said. 

He says that the equalization subsidy is a budget guaranteed by the constitution and not given or taken by anyone. After the decision on the amount, the local people's representatives met the Prime Minister and Finance Minister and requested not to cut the subsidy.