Overview of province budget for 2024/25

All seven provinces of Nepal have unveiled their fiscal plans for 2024/25, in line with the Intergovernmental Fiscal Arrangement Act 2017. A common theme across these budgets is a heavy reliance on federal grants, with a focus on infrastructure, education, healthcare, agriculture, and tourism.

The combined budgets for Koshi, Madhes, Bagmati, Gandaki, Lumbini, Karnali, and Sudurpaschim provinces total over Rs 278bn.

Koshi: Rs 35.28bn

Koshi Province aims to foster a ‘Clean, Happy, and Prosperous’ region with a budget of Rs 35.28bn. The province’s GDP is projected at Rs 903bn, with a significant rise in per capita income from $934 to $1,336. Electricity generation has increased sharply from 121 MW to 577 MW, ensuring access for 97.7 percent of the population. Priorities include agriculture, infrastructure, urban development, and energy sectors.

Madhes: Rs 43.89bn

Madhes Province has allocated Rs 43.89bn, with Finance Minister Bharat Prasad Sah designating Rs 16bn (36.45 percent) for recurrent expenses and Rs 27.89bn (63.55 percent) for capital expenses. This represents a slight 0.5 percent reduction from the previous year. The budget emphasizes education, health, agriculture, and tourism.

Bagmati: Rs 64.54bn

Bagmati Province’s budget of Rs 64.54bn marks an increase of Rs 1.83bn from the previous year. Economic Affairs and Planning Minister Jagannath Thapaliya allocated Rs 26.1bn (40.44 percent) for current expenditure and Rs 36.93bn (55.23 percent) for capital expenditure. Key sectors include education, healthcare, agriculture, and tourism. Additionally, Rs 1.5bn has been earmarked for fiscal management, and a ‘Skill Year’ program has been initiated.

Gandaki: Rs 32.97bn

Gandaki Province’s budget of Rs 32.97bn includes Rs 13.16bn for recurrent expenses and Rs 19.51bn for capital expenditures. Minister for Economic Affairs and Planning Takraj Gurung highlighted a focus on quality infrastructure, production, employment, social justice, and good governance. The province aims to collect Rs 5.17bn from internal sources and anticipates receiving Rs 7.64bn from federal financial equalization grants, among other sources. It also plans to raise Rs 1.7bn through domestic borrowing.

Lumbini: Rs 38.96bn

Lumbini Province has maintained its budget size at Rs 38.96 bn despite reduced federal grants. Minister for Economic Affairs and Planning Chet Narayan Acharya allocated Rs 11.24bn (28.87 percent) for recurrent expenses and Rs 23.58bn (63.09 percent) for capital expenditure. Funding sources include internal revenue, federal grants, and cash reserves. The province aims to collect Rs 7.51bn from internal revenue and anticipates receiving Rs 12.15bn from revenue sharing from the federal government, among other sources.

Karnali: Rs 31.41bn

Karnali Province has reduced its budget to Rs 31.41bn, with Rs 18.75bn allocated for capital expenditure and Rs 4.83bn for local-level fiscal transfers. Minister for Finance Mahendra KC stated the budget’s goal is to achieve ‘Prosperous Karnali, Happy Karnalis’. Priorities include physical infrastructure, employment programs, and cultural preservation. Notably, Rs 1.16bn has been earmarked for the Chief Minister Employment Program.

Sudurpaschim: Rs 31.62bn

Sudurpaschim Province has presented a budget of Rs 31.62bn, with Rs 11.72bn for current expenditure and Rs 17.53bn for capital expenditure. The budget aims to generate substantial revenue from internal sources and federal distribution, focusing on infrastructure development, education, and healthcare. The province aims to collect Rs 1.6bn from internal revenue and nearly Rs 10bn from revenue distribution.

‘Provinces struggle with budget cuts’

Uma Shankar Prasad, Economist and Member of National Planning Commission

Provinces face budget cuts due to limited internal revenue sources, increasing reliance on federal grants. The provincial budgets have decreased compared to previous years. Ideally, more funds should be allocated to provincial and local levels in a federal system, but in Nepal, the federal budget remains larger. This discrepancy indicates a gap between policy and practice.

‘Challenges in implementation’

Chandra Mani Adhikari, Economist

The budgets of all provinces focus on agriculture, infrastructure, and tourism, aligning with the federal budget. However, both provincial and federal levels face significant implementation challenges. Provinces struggle to increase income as the federal government retains 80 percent of major revenue sources and taxes. Grand slogans and projects are often announced without proper planning. No province has confidently declared they could spend 75 percent of their budget; in the current fiscal year, none have spent even 50 percent.