Kathmandu: The National Planning Commission (NPC) has implemented a new system for resource distribution aimed at enhancing fiscal federalism in Nepal. This system focuses on equalization and special grants based on quality, ensuring a more equitable allocation of resources across the country. The NPC shared that it has incorporated this provision into the action plan for the 16th periodic plan.

Under the new system, resource classification will be based on the revenue capacity and physical infrastructure of local levels and provinces. Prof. Dr. Shiva Raj Adhikari, Vice Chair of NPC, explained that this classification is a key factor for the allocation of resources, ensuring that local levels receive more equalization grants from the central government.

The new approach prioritizes human development, job creation, and increased productivity. It also guarantees sub-national governments equitable access to resources, thus strengthening fiscal federalism and promoting sustainable growth.

The NPC emphasized that it is working on improving the projection of resources, budget ceilings, and the midterm expenditure framework (MTEF) to ensure that projects are well-managed and deliver expected results.

The 16th periodic plan also prioritizes the localization of the Sustainable Development Goals (SDGs) and the process for Nepal to transition from a least-developed country to a developing nation.

The implementation of the action plan aims to improve coordination between the federal, provincial, and local governments. The principle of "Leave No One Behind" has been integrated into the plan, ensuring that development reaches all corners of the country.

Additionally, the government has revised the work procedure for allocating special grants to sub-national levels, focusing on human development, employment, production, and livelihood. Previous allocations for infrastructure and training had not fully met the constitutional and legal aspirations due to unclear criteria.

The NPC is also working to update project banks to further enhance resource allocation efficiency.