Follow Fiscal Rules

Nepal’s new constitution has envisioned the local level units as the vehicle of grassroots democracy. With a view to empowering the people at the local level, the national charter has granted 22 exclusive rights to 766 local units under the new federal setup. This marks the historic achievements of the local bodies, enabling them to deepen local democracy and institutionalise self-autonomy and self-rule. The statute, written by the elected Constituent Assembly, made these provisions to encourage the people to participate in development works and make the elected representatives accountable to them. It is worth mentioning here that the local units enjoy more powers than the provinces. The sole objectives of such constitutional arrangements are to buttress participatory and inclusive democracy by ensuring accountability, transparency, good governance and fiscal discipline in the local government. Even one year has not elapsed since the local polls were held in two phases in May and September 2017 but the reports of misappropriation of funds in the local bodies have begun to trickle in. This has dismayed the voters, who hope that the local units will be the real harbinger of development, prosperity and peace. They have flouted the rules and regulations related to the procurement of goods and spending of tax payers’ money.

According to a news report published in this daily, altogether 278 local bodies have spent Rs 228 million without any invoice or written records, and 207 local bodies have not collected Rs. 112 million of its internal income. Some of the unaccounted expenditures were made before the election of incumbent office-bearers of local units. But the report of the Office of the Auditor General (OAG) makes it clear that the newly formed local units have given short shrift to the fiscal discipline and transparency. The OAG report for the fiscal year 2016/17 stated that as many as 675 local bodies have made payment of Rs. 50.5 million without raising Tax Deductible at Source, and around 71 local units have not submitted Rs. 219 million to the treasury. Scores of local units in Bhaktapur, Paanchthar, Chitwan and some other districts paid for goods and services, such as public construction and furniture without competitive bidding process, violating the Public Procurement Act, 2008. It bars the local units from fragmenting the project or programmes while procuring the goods or paying for services. Even the Kathmandu Metropolitan City Office is not exception to this anomaly. The KMC has procured only one thirds of its goods through competitive bidding.

The OAG revealed that Rs. 221.6 million of the social security money has remained idle for more than a year in various bank accounts of the beneficiaries. As per the rule, if the account of any beneficiary does not make any transaction, the money should be withdrawn. Hetauda Sub-Metropolitan City had misappropriated Rs. 1.13 million by giving it away to 23 organisations and individuals against the law. Chhayanath Municipality and Saru and Mugumakarmarong Rural Municipality of Mugu also abused Rs. 2.1 million. In yet another instance of abuse of state’s coffers, property and liability of the erstwhile 3,157 Village Development Committees (VDCs) were not transferred to the newly created local units by the end of the last fiscal. The federal government has adopted zero tolerance on corruption and it must not delay in taking stringent measures to curb rampant irregularities at the local level units.


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