Himal Press 
KATHMANDU: The Madhesh Province Government on Monday unveiled a Rs 41.13 billion budget for the fiscal year 2026/27, prioritizing agriculture, education, health and infrastructure development.
Presenting the budget in the Madhesh Provincial Assembly, Finance Minister Yubaraj Bhattarai allocated Rs 26.47 billion, or 64.36% of the total outlay, for capital expenditure and Rs 14.66 billion, or 35.64% of the total allocation, for recurrent expenditure.
The province plans to finance the budget through Rs 11.22 billion in revenue and other receipts, Rs 12.83 billion from federal revenue-sharing and royalties, Rs 9.49 billion in federal grants and Rs 6.08 billion in cash reserves. It aims to meet the Rs 1.5 billion shortfall through domestic borrowing.
The provincial government expects to receive Rs 17.59 billion from the federal government, including Rs 7.84 billion in fiscal equalization grants, Rs 8.1 billion in conditional grants, Rs 700 million in special grants and Rs 947.4 million in complementary grants.
The province will also transfer Rs 2.1 billion to local governments under various fiscal transfer mechanisms.
While the budget outlay of Rs 43.13 billion is 7.8% lower than Rs 46.78 billion allocated for the current fiscal year, there are concerns over the spending performance of the provincial government. The Madhesh government estimates that only Rs 27.79 billion, or 59.15%, of the Rs 46.78 billion budget allocated for the current fiscal year will be spent by year-end.
To address chronic underutilization of the capital budget, the provincial government has announced the establishment of a ‘delivery unit’ comprising experts to enhance project implementation capacity and expedite capital spending. It has also announced to set up a separate ‘Budget Execution War Room’ to monitor and expedite development projects. Similarly, the provincial government has said that it would set up an integrated provincial database covering education, health and employment sectors in coordination with federal and local governments to improve public service delivery.
In a bid to ensure continuity in development projects, the government has announced that civil servants will not be transferred before completing at least two years in their assigned postings. Frequent transfers of project chiefs will also be discouraged to prevent disruptions in project implementation.
The budget also includes a provision to raise basic salaries of provincial civil servants by 10%. Employees will also be eligible for a performance-based allowance of up to 10%. However, those receiving less than 75% in performance evaluations will not qualify for the performance allowance.
The provincial government has announced a full waiver of vehicle taxes for the fiscal year 2025/26 for the scrapping of vehicles destroyed during the September 2025 protests. It also imposed a 15% service fee on commercial firewood sales by community forest user groups.
Individuals selling timber and firewood from privately owned trees for commercial purposes will have to pay a fee of Rs 5 per cubic foot of timber and Rs 100 per bundle of firewood. The government has also revised fees on brick kilns to Rs 75,000 per chimney.
The budget places strong emphasis on education and human capital development. It has announced an intensive literacy campaign targeting children from poor and marginalized communities. To reduce school dropout rates, the provincial government will provide additional grants to complement the federal government’s school midday meal program. Volunteer teachers will be mobilized in schools facing teacher shortages, while the School Nurse Program will be expanded to the basic education level to ensure regular health checkups for students. Likewise, at least one school in each district will be upgraded into a Chief Minister Model School with residential facilities. They will have modern amenities like smart boards, e-libraries, science laboratories and computer labs.
The budget also includes provisions for the Madhesh Startup Fund, Innovation Madhesh Fund, and a 100-Day Youth Employment Guarantee Program.
In the cultural sector, the provincial government has pledged to strengthen the Madhesh Academy to preserve and promote Maithili, Bhojpuri and Bajjika languages, arts and culture. Likewise, the budget includes plans to establish a digital archive of endangered cultural heritage and organize an international cultural festival.
