HETAUDA, May 3: The fiscal equalization grant (FEG) allocated for the local governments in Makwanpur for the fiscal year 2023/24 has been reduced.

A Cabinet meeting on January 23 decided to reduce the budget to be allocated for the local governments. On the recommendation of the National Natural Resources and Fiscal Commission, the federal government has decided to reduce the budget by 25.89 percent for the local governments across the country in the budget approved for this year.

As a result, a total of Rs 317.4 million federal government grant will be cut across 10 local governments in Makwanpur.

The Financial Comptroller General Office (FCGO) issued a circular on April 24 to all district treasury offices nationwide, instructing them to ensure that the budgets they allocate in the final and fourth installments do not surpass 74.11 percent of the revenue target and progress achieved up to Chaitra (mid-March to mid-April) of 2080 BS.

Consequently, one sub-metropolitan city, one municipality, and eight rural municipalities in Makwanpur district will see a total budget reduction of Rs 317.4 million. 

The federal government had recommended a total FEG of Rs 1.22 billion to all municipalities in Makwanpur for the current fiscal year.

In terms of the reduction in budget size, Hetauda Sub-Metropolitan City will experience the largest decrease, with a reduction of Rs 8.63 million. Similarly, among the 10 municipalities in the northern region, Indra Sarovar Rural Municipality will have the smallest reduction, with a decrease of Rs 1.88 million.

Likewise, Thaha Municipality will see a reduction of Rs 32.2 million, Bhimphedi Rural Municipality will face a reduction of Rs 25.3 million, and Makwanpur Gadhi Municipality will undergo a reduction of Rs 25.2 million in equalization grants.

Furthermore, Bakaiya Rural Municipality will witness a reduction of Rs 31.6 million, Bagmati Rural Municipality Rs 23.3 million, Manahari Rural Municipality Rs 31.2 million, Kailash Rural Municipality Rs 23 million, and Raksirang Rural Municipality will experience a reduction of Rs 24.3 million in their budgets.

Among the four types of grants provided by the federal government to provincial and local governments, fiscal equalization grants are allocated without any conditions attached, allowing lower governments to utilize them as they deem necessary.

The Intergovernmental Fiscal Arrangement Act stipulates that the amount of grant received from the federal government should be spent only for specified purposes.

The reduction in grants is anticipated to impact the budgets of all local governments within the district. Prakash Neupane, head of the planning branch of Makwanpur Gadhi Rural Municipality, said that a decrease in grants would indeed have repercussions on the budget.

Thaha Municipality Information Officer Suraj Kumar Bhujel said that implementing the plans would become challenging following the federal government's reduction of the annual approved budget for the local governments.