Formulation of budget in the framework of federalism

Citizens are dissatisfied with the province. Repeated power changes have also made a mess of it. Growing resentment towards the state is a failure of the constitution. It is important for stakeholders to be serious about the stability of the province. Improvement in the working style of the leaders is the first condition. However, there is no option to enter directly elected chief minister.

The country is in the process of drafting the budget. Nepal's federalism is vested in functional responsibilities and centralized in revenue rights. The intention of the constitution is to decentralize the centralized revenue through legislation. For this, the constitution has ensured financial transfer to the state and local levels. In the form of financial transfers, the constitution provides for four grants (financial equalization, conditional, special and supplementary). Equalization grant is an integral part of these grants.

Based on the financial year 2075/76 to 080/81, all the 7 provinces have received an average annual subsidy of 1 trillion 12 billion and the local level has received 2 trillion 61 billion. Annually, a province has received an average of 16 billion and the municipality about 350 million grants from the Government of Nepal. Overall, the subsidy that a municipality has received at the rate of 35 billion per year is positive.

The ratio of fiscal equalization grants to the total budget or GDP should increase. However, this has decreased. As such, the share of total equalization grants of state and local level in the total budget was 10.27 percent in 075/76, decreased to 8.34 percent in 080/81. This is a serious error in grant distribution. It needs improvement. The situation at the local level is even more critical. For example, the weighted percentage of the equalization grant in 075/76 was 41.38 percent and 53.74 percent of the conditional grant among the four grants received by the local level. In 080/81, the burden of equalization grant is 34.87 percent while that of conditional grant is 60.11 percent. This confirms the heavy burden of conditional grants at the local level. It is not fair to discuss this trend of

grant distribution. There is no improvement in the trend of seeking ministries for plans and programs. From municipal chiefs to federal parliamentarians, there is a crowd in the ministries. Many ministries allocate budgets on a discretionary basis. A large part of the budget goes to the constituencies of the Prime Minister and the Minister concerned. After this, where will the party's big leaders, powerful MPs, secretaries/staff etc. go? This was the situation before. However, earlier the size of the budget to be distributed on the basis of tajbij was a little bigger, now it is a little less. Regarding the plans and programs of some ministries, I made the comments in the parliament in the discussion of the ministerial budget of 080/81 that the level is lower than that of previous boroughs.

The thinking and mentality of most of the ministries of the federal government is not less than that of the Rana. Those who are ministers have allocated the budget only in their constituencies. I presented with the facts that the plans of thousands/lakhs have been sent to the provincial and local levels as conditional grants. In fact, this problem is not limited to the 080/81 ministerial budget, but from the beginning. Most of the federal ministers have the idea that states and local levels are not the government, they should obey/do what we say/send. Thousand/Lakh projects have also been sent to state and local levels. Like, Patharkala Water Supply Project Susta, Nawalparasi West, Swati Water Supply Project, Sunwal Parasi etc. There are about one and a half dozen such projects of thousands/thousands sent through the Ministry of Water Supply. There are about two dozen of 10/10 thousand for Wagmati province. Like, Churiamai Big Water Project, Hetaunda, Jagatpur Water Project Bharatpur etc.

There are some such ministries, even though they have a single jurisdiction at the provincial and local levels, they have not sent a single rupee down. The ministry's budget should have gone down as an equalization grant. Although there was a problem with the conditional grant, it should have been sent below, but they did not do that either. Keeping it at the center means not expanding its branches or handing over the institutional structure that should be handed over to the provinces and local levels. When discussing the ministerial projects of 080/81, such a situation exists in the Ministry of Women, Ministry of Law, Justice and Parliamentary Affairs, Ministry of Communication and Information Technology and Ministry of Culture, Tourism and Civil Aviation.

These ministries have not allocated a single rupee of budget to the state and local levels. Most of the Ministry of Women's jurisdiction is at the provincial and local levels. The Ministry of Law also has some judicial responsibilities at the local level. The Ministry of Communication is also responsible for FM/Radio in local and provincial areas. The Ministry of Tourism also has local and regional offices. The fact that these ministries do not allocate budget for the provincial and local levels is a devaluation of the provincial and local levels. It is not understanding the constitution. The

theory says that conditional grants should be gradually reduced to be distributed to the state and local levels. This means that the resources related to the grant (staff, budget, office, etc.) are transferred to the local or state government. That is, it means to close the program after completion of a specific national policy. It is certainly not good to centralize the resources and resources by piling up the institutional structure at the center under different names and under the guise of the constitution, where authority is vested in the local level or province. Resources and instruments that should have been transferred directly below were not transferred. Even though it was bad, it was not sent down in the name of conditional scheme. Since they are the subject of the single authority of the state and local level, they also maintain the structure related to it. Keeping the same structure of the government at all three levels is also a misuse of resources and means. Therefore, according to the constitution, it is necessary to establish a system to be done only by those who have the jurisdiction.

More than 60 percent of the work done by the government in the unitary system is at the provincial and local levels. There is a general principle that work should be followed by value. But this principle has not been followed. The local level is responsible for providing local services and social and economic infrastructure. Regarding the province, the constitution considers it to be the carrier of development. Inter-municipal level and provincial pride projects are conducted by the province. The role of the federal government is to implement inter-provincial game-changers and projects of national pride. But it is in the report of the constitutional commissions including the auditor general that the federal government has not followed the spirit and letter of the constitution.

A few weeks ago, the meeting of the Council of Ministers has announced the basis and criteria for project classification, 2080. According to the standards, the federal government will not conduct projects smaller than 30 crores and the state government will not undertake projects smaller than 10 crores. Similarly, the criteria has also classified game changers and projects of national pride on the basis of money. According to which, those with a cost of at least 10 billion and 50 billion are defined as game changers and projects of national pride, respectively. The criteria also categorize federal projects based on cost. According to which projects up to 100 million are defined as small projects, between 100 million to 500 million as medium and above 500 million as large projects.

Based on the analysis of the projects of the previous financial years including 080/81, it is right that the federal government will not carry out projects smaller than 30 million. However, it is not enough to assimilate the spirit and letter of the constitution. The federal government should not fall below billion. But the situation is like this, even if we consider only the limit of 1 crore, many ministries are locked. Like, in the 080/81 budget, there are 2829 plans and programs in the Ministry of Physical Infrastructure. The number up to one crore is 2473 (87 percent). Ministry of Urban Development has 7177. It has 7170 (99.90 percent) up to 1 crore. Similarly, there are 1527 from the Ministry of Water Supply. Of which 89 percent are up to 1 crore. Sports Ministry has 177, all of which are up to Rs 1 crore only. Not only this, 99 percent of the projects in the Ministry of Urban Development and Sports are up to 5 million. These are important federal ministries related to social, economic and physical infrastructure development. If it is calculated up to three crores, all but one of the 22 federal ministries will be locked.

The constitution considers the province as the carrier of development. It is not the federal ministry but the state that should lead the infrastructure development. Even if the intent of the constitution and the details analyzed here are to be considered as the basis, only 8/10 of the 22 ministries at the federal level will suffice. If the condition of the federal ministry is like this in the analysis of 1 crore, what will be the condition if the limit of 10 crore is kept? What will be the situation when 1 billion more? can be easily guessed.

Even if we talk about the four ministries mentioned here, 48 percent in the physical infrastructure ministry, 5 percent in the urban development, 50 percent in the water supply and 19 percent in the youth and sports are in the projects up to 5 lakhs. At present, most of the municipalities have decided not to propose projects smaller than 5 lakhs while giving a budget ceiling to the wards at the time of budget formulation. When the municipalities themselves are saying not to propose schemes smaller than 5 lakhs, most of the ministries of the federal government are running schemes of 5/10 lakhs, then why do we need many ministries at the federal level? There should be a serious review of this part in the policy and program and budget.

The Basis and Criteria for Project Classification, 2080 has set the federal scheme limit at Rs 3 crore. Whether this limit will be followed or not will be known only after the 081/82 budget. However, the standards of some projects approved in the budget of 079/80 were not implemented. Among the projects entered into the union in item 347 of the budget of 079/80, 10 million for drinking water, tourism and urban development, 20 million for irrigation and river control were transferred to the province and up to 50 million at the local level, for a total of 22 billion.

In parliamentary practice, the budget is called a law. Even the projects that were passed by the Parliament and sent to the state and local levels were later removed by the decision of the Council of Ministers. This experience also makes it doubtful that the standard of 3 crores will be fully implemented. But Prime Minister Pushpa Kamal Dahal has no choice but to believe in the situation that the federal government will not implement projects smaller than 30 million in public events.

Finally, the budget should be formulated with the understanding that work should be followed by cost, personnel and institutional structure. Which should help in the implementation of the rights of the state and local level granted by the constitution.