Rs 151.7 billion proposed for provinces, local units as fiscal equalization grants

KATHMANDU: The National Resources and Fiscal Commission has recommended that the government allocate Rs 151.7 billion in fiscal equalization grants to provincial and local governments for the upcoming fiscal year 2026/27, which begins in mid-July.

The commission has recommended that the government provide Rs 61.50 billion to seven provincial governments and Rs 90.20 billion to 753 local governments.

As per constitutional provisions, the government is required to distribute fiscal equalization grants from the federal consolidated fund to provincial and local governments based on their expenditure needs and revenue capacity.

Financial equalization grants to subnational governments are provided in the form of minimum, formula-based, and performance-based grants.

According to the recommendation, provinces will receive Rs 15.37 billion under minimum grants, Rs 43.66 billion under formula-based grants, and Rs 2.46 billion based under performance grants.

The commission has recommended providing Rs 9.11 billion to Koshi Province, Rs 7.84 billion to Madhesh Province, Rs 8.42 billion to Bagmati Province, and Rs 7.84 billion to Gandaki Province. Similarly, Rs 8.56 billion has been recommended for Lumbini Province, Rs 10.63 billion for Karnali Province, and Rs 9.06 billion for Sudurpashchim Province.