MoFALD proposes Rs 387bn grant for local bodies

May 05, 2017

The Himalayan Times, Pushpa Raj Acharya, 5th May 2017, Kathmandu

A total grant of Rs 387 billion has been proposed for local units for the fiscal budget 2017-18.

The Ministry of Federal Affairs and Local Development has finalised the grant requirement for 744 local bodies — four metropolitan cities, 13 sub-metropolitan cities, 246 municipalities and 481 rural municipalities — and forwarded it to the Ministry of Finance to allocate resources accordingly, according to Dinesh Kumar Thapaliya, MoFALD secretary.

The Natural Resources and Financial Commission — an independent commission envisioned by the constitution — is supposed to finalise the grant amount. However, MoFALD has finalised the grant amount for the local bodies for this transitional period in the absence of the commission. The government has yet to frame the bill for the commission and table it at the Parliament.

According to Secretary Thapaliya, Rs 232 billion will be required for conditional grant. This grant is a sectoral grant and must be spent under the given headings, such as education, health and roads.

As the 744 local bodies are going to start functioning after the election of local bodies, Rs 25 billion will be provided as administrative grant, which will be spent on salaries and allowances of staffers and elected representatives.

As the social security allowance will also be distributed from the local units, a total of Rs 35 billion — if the allowance is at the same level as of this fiscal — will also be disbursed to the local bodies for distribution of social security allowance to elderly people, single women and those communities that the government has identified as endangered.

MoFALD has also proposed Rs 90 billion as unconditional grant that local units can spend under any heading of development as per their development needs.

This grant amount also includes development equalisation grant, because cost of development and development needs can vary among the local units, Thapaliya added.

Local units will also be provided privileged grant, especially for those local units conducting privileged programmes for specific purposes, such as for the uplift of marginalised communities and to eliminate forced labour.

Madhu Kumar Marasini, chief of the Budget Division under the Ministry of Finance, said the resource committee meeting led by vice chairman of the National Planning Commission would look into the proposal and the budget would be allocated in the next fiscal.

“The local bodies will receive the grant directly, which means the grant amount will not be channelised through ministries.”


  • Conditional grant for development: Rs 232 billion
  • Administrative grant: Rs 25 billion
  • Social security grant: Rs 35 billion
  • Unconditional grant (also includes development equalisation grant): Rs 90 billion
  • Privileged grant: Rs 5 billion
Source: MoFALD