Part 19 & 26: Local Finance and Fiscal Commission

Description

Overview

Part 19 (Local Finance) and Part 26 (National Natural Resources and Fiscal Commission) of the Constitution of Nepal govern inter-governmental fiscal relations, revenue distribution, and resource sharing among federal, provincial, and local levels.

Key Institutions & Articles

Article 228: States that no tax shall be levied or loan raised except in accordance with the law.
Article 229 (Local Consolidated Fund): Mandates that each local unit has a consolidated fund where all revenues, grants, and loans are deposited.
Article 250 (NNRFC): Establishes the National Natural Resources and Fiscal Commission (NNRFC), comprising a Chairperson and up to 4 other members.
Article 251 (Functions of NNRFC): Outlines duties including recommending formulas for distributing revenue and grants (equalization, conditional, etc.) across the three tiers of government.

Types of Inter-Governmental Grants

The Federal Government provides four types of fiscal grants to Provinces and Local Levels:

Fiscal Equalization Grant: Distributed based on development needs and revenue capacity.
Conditional Grant: Provided for implementing specific projects or programs.
Complementary (Matching) Grant: Involves shared funding for specific infrastructure or development projects.
Special Grant: Allocated for specific balanced development objectives or during national emergencies.

Key Exam Facts

The National Natural Resources and Fiscal Commission (NNRFC) recommends the formula-based distribution of revenues from the Federal Consolidated Fund to provincial and local levels.
The President appoints the NNRFC Chairperson and members on the recommendation of the Constitutional Council.

Part Number

Article Range

Art. 228–251

Category

Finance