Government Allocates Rs 148 Billion in Fiscal Equalization Grants; Subsidized Loans Reach Rs 22.39 Billion in Seven Months

The National Natural Resources and Fiscal Commission (NNRFC) has recommended that the federal government allocate fiscal equalization grants (FEG) totaling Rs 148 billion to sub-national governments in the upcoming fiscal year. This allocation, as per constitutional mandate, is intended to meet the expenditure needs and revenue capacity of provincial and local governments. Out of the proposed amount, Rs 60 billion is earmarked for distribution among the seven provinces, while Rs 88 billion is designated for the 753 local governments across the country.

Among the provinces, Karnali Province is set to receive the largest allocation of FEG, amounting to Rs 10.36 billion for the fiscal year 2024/25, as per the NNRFC's recommendations. Following closely, Koshi Province will be allocated Rs 8.94 billion, while Sudurpaschim Province and Lumbini Province are slated to receive Rs 8.72 billion and Rs 8.28 billion respectively. Meanwhile, Madhesh Province is allocated Rs 7.79 billion, and Gandaki Province is set to receive Rs 7.63 billion for the forthcoming fiscal year.

The NNRFC's evaluation of provincial performance in the previous fiscal year revealed varying degrees of accomplishment across regions. Koshi Province emerged with the highest work performance score of 40.89 points, followed by Madhesh Province and Bagmati Province with 37.31 points and 37.29 points respectively. However, Lumbini Province recorded the lowest work performance score of 26.99 points during the same period. Additionally, Madhesh Province excelled in revenue mobilization, securing the top position with 10.51 points.

Meanwhile, the government disbursed subsidized loans amounting to Rs 22.39 billion in the first seven months of the fiscal year, assuming financial liabilities in the process. A substantial portion of the total subsidized loans, totaling Rs 214 billion, was directed towards agriculture and livestock development. Notable allocations were also made towards women's entrepreneurship, textile industries, and initiatives targeting marginalized communities, such as Dalit Community Business Development Loans and housing loans for earthquake victims.