Equalisation grant distribution to be based on four indicators


Kathmandu, June 5

The National Natural Resources and Fiscal Commission (NNRFC) has recommended distribution of equalisation grants based on four indicators – human development index, human poverty index, infrastructure development index and socio-economic discrimination (underdevelopment) index.

Due to lack of proper database, the NNRFC has used the disaggregated data to fix the grant amount for each province and local body.

NNRFC had fixed the threshold of minimum grant for each province at less than Rs 1.2 billion and Rs 60 million for each local body.

The NNRFC has given 60 per cent weightage to the need of development expenses of the provinces. The multidimensional poverty index of the provinces was another major criteria to allocate the grant amount and 15 per cent weightage was given to this index, according to NNRFC.

The socio-economic discrimination or underdevelopment index was given 15 per cent weightage on grant transfer citing that the intensity of such discrimination in provinces is high compared to the local units. Similarly, the infrastructure development index has weightage of 10 per cent in allocation of grants to the provincial level.

Likewise, a similar modality was adopted for allocating the equalisation grant to the local units. Assessing the revenue mobilisation capacity of the local units, 70 per cent weightage has been given to the expenses needs of the local units.

Similarly, human poverty index has been given 10 per cent weightage compared to 15 per cent of the provinces. Socio-economic discrimination (underdevelopment) index has been given five per cent weightage in allocating equalisation grant and 15 per cent weightage has been given to infrastructure index, according to NNRFC.

Written by Sandeep
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