June Analysis: Federalism


Timeline of key events:

June 15Provincial budget for FY 22/23 announced by all the 7 provinces.
June 22Election Commission directed to provide a list of the candidates who delivered or did not deliver the election expenses details for the expenses incurred for local level election held on May 13th 2022.
June 23The Sub-national Treasury Regulatory Application has been handed over to the Government of Nepal.
June 27Newly appointed council of ministers took an oath.

Completion of election of District coordination committee (DCC)

According to the constitution of Nepal, provision 220 provides that after the completion of local level election within 30 Days all the District Assemblies require to hold a meeting consisting of Chairperson and Vice-Chairperson of Village Executives and Mayors and Deputy Mayors of Municipal Executives within the district. Further, the district Assembly then has to elect members for the DCC consisting of 9 members. The EC had advised the Government of Nepal, provincial government and local government, all political parties, and concerned individuals not to interfere and influence the selection of the candidates for DDC through any training, meeting programs and seminars. It had further advised to keep the election process fair during the election process. Even in the DCC election, a 5-party coalition was decided among Nepali Congress, CPN-Maoist, CPN-Unified Socialist, People’s Socialist party and Rastirya Janamorcha. The selection of the candidates in the 77 districts is completed except for the Budiganga rural municipality where the local-level election is yet to be held on July 7th next month. The whole country has now elected their DCC members and many of the districts have accomplished to do so without any inconsistencies. It is of dire need that the government has proper laws and responsibilities placed out for the DCC to function and serve its purpose in a federal state for the next 5 years of the elected members tenure to be productive. The previous years have been badgering about the lack of laws, procedures and proper mechanism of DCC and even the members of the committee have stated their confusion on the position they hold.  Only in 2020 Federation, Province and Local Level (Coordination and Inter-relation) Act was enacted which provisioned for the provincial government to write to DCC in need of facilitation and coordination in matters required of coordination among the local levels within a district and carry out business as referred to by Provincial coordination council (PCC) and DCC to be responsive to PCC, but state law regarding DCC is yet not in place.

Photo: RSS

Budget Speech: Priorities and Predicament

On May 29, the federal government announced its budget of which dissatisfaction in the process has been stated when CPN-UML obstructed the proceedings of the House of Representatives in regards to the manipulation of the budget favouring certain business persons. It has been claimed that the Financial Minister met unauthorised people a day before the budget speech and has betrayed his people and manipulated tax rates for the benefits of certain people. The pointed-out accusation was based on altering tax, customs and meeting with unauthorised people Bishal Bhattarai, member of House of Representative, demanded for a parliamentary probe to investigate the matter. Bhanubhakta Dhakal, member of Parliament, also demanded for resignation of Minister Sharma. This has been elevated with the demonstration organised by the trade unions of Province 1 accusing Minister Sharma of creating policies that will lead to closing of many industries and increasing unemployment to favour few businesses. Minister Sharma has denied any such claims imposed by UML Chief whip Bhattarai.  Yet, the Minister’s word fails to persuade many as his past reflects controversies. Hence, it is important to clear the air, before the budget loses its accountability and the trust of the people towards the government completely fades.Provincial Government Budget announced: Fiscal transfer and priorities

On June 15, all the provincial governments announced their budget for FY 22/23. The overall budget of all the provinces combined is Rs. 306.46 billion, which is 17 percent higher than the budget allocated in FY 21/22. Federal government under the fiscal federalism has provided the provinces and local governments with Rs 51.43 billion and Rs 123 billion respectively. Under conditional grant, matching and special grant Rs. 240.17 billion Rs 13.57 and Rs 13.7 billion respectively have been provided to the provincial and local governments. The announced budget of the provinces for the FY 22/23 are Province 1- Rs 39.73 billion, Madhes province- Rs 46.88 billion, Bagmati province- Rs 70.93 billion, Gandaki – Rs 35.90 billion, Lumbini province- Rs 42.63 billion, Karnali province- Rs 32.61 billion and Sudurpaschim – Rs 36.74 billion. A large portion of the budget is through fiscal transfer from the federal government, which indicates low revenue generating capability of the provincial government. All the provinces main priority is boosting the collapsing economy through allocating budget in various plans and programs.  The budget of the provinces has mainly focused on infrastructure development, agriculture, health and social sector. Province 1 has the highest allocation of its budget to infrastructure development and health sector Rs. 13.2 billion and Rs. 3.25 billion respectively. The province has prioritised expanding its tax limits. Madhes province has given continuity to ‘Educate Daughter Campaign, and allocated a budget for farmers upliftment program, agricultural master plan, construction of agriculture roads and agriculture knowledge centre. Hence, Madhes has set its priority in the agriculture sector. Even Gandaki province has set its target on agriculture, health and tourism advancement. Karnali province in the next fiscal year has allocated 80% of the budget to fulfil the previous years programs and projects, and concludes that any new pretentious plans would be a burden. Supurpaschim has focused on agriculture as well, allocating a self-sufficient budget in the agriculture program and Chief Minister’s Agriculture Programme. The province has also allocated most of its budget on road infrastructure and health sectors.

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