Local body resources
In the annual budget brought by the outgoing government of Pushpa Kamal Dahal, it committed to transferring some Rs 225 billion (or 17.6 percent of total budget) to local bodies. From the next fiscal, each village council will receive equalization grant worth between Rs 100 million to Rs 390 million, while each municipality will receive equalization grant ranging from Rs 150 million to Rs 430 million. Moreover, each local body will be entitled to a conditional grant ranging from Rs 12 million to Rs 783.9 million. Similarly, each village council has been given the right to implement projects of up to Rs 5 million on its own. While these are substantial sums, we are afraid that they are nearly not enough to meet the needs of local bodies. Up to 90 percent of the funds allocated for local units are expected to go towards covering recurrent expenditures like salaries and perks of their staff. There could thus be little for these units to spend on vital infrastructures like schools and irrigation canals. According to the outgoing Finance Minister Krishna Bahadur Mahara, the allocations were made in line with population, development status, cost of service delivery and geography of local units.
The erstwhile government might indeed have considered these factors while finalizing its budget. But why didn’t it consider covering the recurrent expenses of local bodies under a separate allocation, at least until these units are capable of generating their own income?
Although the new units have some tax-collection power, they might not be able to immediately collect enough to cover their daily expenses. For example, many local level representatives elected in the first phase of local election on May 14 that Republica talked to, say that they have little idea about how to operate their local bodies that have been given vast powers and responsibilities by the new constitution. It is clear that they need to be well trained before they can effectively carry out their duties. But who will provide this training? And what methods will it follow? Without it, there is a risk that the newly elected people’s representatives will have great difficulty in adapting to the new system. And if they can’t, service delivery will suffer. This in turn could defeat the whole purpose of local level restructuring.
Of course, new representatives will also learn on the job and the budgets for local bodies can always be tweaked as and when needed. So we don’t for a moment think that these local bodies will not be able to function at all. But the goal should be to minimize the inconvenience of service seekers at all times. It would be a tragedy if, instead of making it easier for people to access these services, as intended, the restructured local units end up doing the opposite, at least initially. It will thus be interesting to see how the new government of Sher Bahadur Deuba contributes to the empowerment and functioning of local bodies. For a start, it could think about providing more money to local units and adequately training local representatives, with foreign trainers if need be.