Sudurpashchim Province

Introduction: Sudurpaschim province

Sudurpaschim province is formed with the mountainous, hills and terai. The province occupies territory of 19,539 sq. Km. which is 13.27% of the land area of Nepal. Mountainous terrain occupies 7,932.83 sq. Km. (40.60%) of the province while hilly terrain occupies 6,748.7706 sq. Km. (34.54%) and remaining 4,857.3954 sq. Km. (24.86%) is lowland area. This province is located in the western part of the state of Nepal. It has 2 districts (Kailali and Kanchanpur) in the Terai region, 4 districts (Doti, Dadeldhura, Achham, Baitadi) in the hilly region and 3 districts (Darchula, Bajhang and Bajura) in the Himalayan region. There are three geographical features in this province: the Himalayan in the north, the Hilly in the middle and the Terai in the south. The river Karnali flows in the east and river Mahakali drains the border in the west. The province shares its borders with Surkhet, Dailekh, Kalikot and Mugu districts of Karnali province and Bardia district of the province 5 in the east, India is to the west and south, Humla district of Karnali province to the north and Tibet, an autonomous region of China. It is the second smallest province of Nepal. The major trade centers of this province are Dhangadhi, Dadeldhura, Mahendranagar, and Dipayal. According to the population census of 2011, Sudurpaschim province is home to 2,552,517 people with total household of 469,971. The population growth rate is 1.31% according to Population census 2011. The population density of the province is 131 per square kilometers. A large part of the population 48.08% lies in Terai, 33.78% lies in the hill regions and 18% resides in mountaineous region of the province. The province is mainly inhabited by Khas arya (60.02%), Dalit (17.29%), Tharu (17.21%), and other ethnic groups (3.61%), while Doteli, Nepali, Tharu, and Baitedheli are major languages spoken.

According to the Human Development Report 2014, the per capita income of the province is US $ 474 in the fiscal year 2074/75 according to the Province Planning Commission. The Human Development Index of the province is .49. The population below poverty line of the province averaged 42%. Average life expectancy for the province is 67 years and an overall literacy rate is 54.9%[1]. Sudurpaschim province contributes 7.05 % to the National GDP. The value of its GDP in the year 2075/76 remained at NPR 242.93 billion. Agriculture and forestry, education and construction are the three major contributions to the province level GDP whole percentage contribution are 33%, 11% and 9% respectively. Overall growth rates at basic prices remained at 6.66 %[2].

Administratively, the province is divided into 54 rural municipalities, 33 urban municipalities and 1 sub metropolitan cities with 734 total wards. There are 16 national level political constituencies and 32 province constituencies. These 88 local level units are divided into 9 districts as shown below.

Table 1: Number of local levels and wards across all districts of Sudurpaschim province

(Source: http://p7ocmcm.gov.np/)

1. Sudurpaschim province Government

The Sudurpaschim province government is formed by province council of ministers as the executive head, province assembly as the legislative head of the province government. The members of the Sudurpaschim province assembly select amongst themselves, the executive head of the government known as the chief minister. The chief minister forms the council of ministers among the members of the provincial assembly. The province government operates based on the provision of the Province Government (Allocation of Business) rules 2074.  There are 7 ministries in the province with various department and agencies. The current council of ministers was formed in February 17, 2018. The current council of ministers have conducted 85 meeting of the council of ministers until August 2020.

1. Institutional Profile (Ministries, departments, Units, service points, elected representatives, employees etc..)

There are seven ministries in Sudurpaschim province according to the provision of the Constitution of Nepal 2015. The article also provisions for division of responsibilities among different ministries. Following table give detail information about name, scope and department within each ministry of Sudurpaschim province.

Table 2: Ministries and their Departments

(Source: Sudurpaschim province portal, 2020)

Current Council of Ministers

Currently, there are 6 ministers who lead 7 ministries in Sudurpaschim province. Mr. Shankar Pokhrel is the Chief Minister and he also manages Ministry of Economic affairs and Planning. Portfolio of other ministers are given below:

Table 3: Porfolio held by Ministers in Sudurpaschim province

(Source: Office of Chief Minister and Council of Ministers, Sudurpaschim province, 2020)

Besides Ministries, The sudurpaschim province has also established offices for Province attorney General and Province Financial Comptroller Office.

Province Coordination Council

1. Province Assembly

The province assembly is an important institution for exercising the sovereignty of the people. Sudurpaschim province assembly performs important functions in the system of governance by policy making and laws formulation and supervising the functioning of the government. According to the Constitutional provision, the head of province convenes each session of the province assembly within twenty days from the date of the announcement of the final results of the election for the province assembly. It is also provisioned that the period between the end of one session and the beginning of another should not be more than six months. The province chief terminates the session. The province chief can also call the date and time of sessions if one-fourth of the total members of the Provincial Assembly make a written request that it is necessary to convene the session. Atleast one fourth members of total members are required inorder to make a proposal. Any proposal submitted to the State Assembly for decision shall be decided by a majority of the members present and voting. The Chief Minister may be challenged, at any time, for a vote of confidence. If the majority member’s donot stand with chief minister, he/she will be relieved of his post. In case of no confidence motion called by opposition party, achieves majority, the post of Chief Minister becomes vacant, the Chief Minister shall appoint the member of the Provincial Assembly as the Chief Minister in accordance with Section 168.

The province assembly of Sudurpaschim province has been constituted according to provisions set out in the Part 14 of the Constitution of Nepal, following principle of unicameral legislature. Sixty percent of the members of the assembly were elected from the first-past-the-post system and 40 percent from the proportional representation system. The number of constituencies is 32 according to the Constitution of Nepal. These 32 seats have been considered as 60% and rest 40% seats were allocated for members to be elected through proportional representation system. Proportional representation system has ensured that representatives from the Dalit, Indigenous Nationalities, Khas Arya, Madheshi, Tharu, Muslim, backward regions, and minority communities are represented in the assembly in proportion to their population. The province assembly members forms the province government, passes bills on state laws, government policies and programs and budgets, and conducts parliamentary oversight and control of government and government bodies. The province assembly is presided by the Speaker and Deputy Speaker in hi/her absence. Similarly, the Provincial Assembly made the Rules of Procedure of the Provincial Assembly, 2074 BS to conduct its work, maintain the order of the meeting and regularize the formation, work, action and other matters related to the committees. The Rules of Procedure of the Provincial Assembly, 2074 BS provides for various thematic and special committees, parliamentary party structures as well as committee chairpersons and office bearers such as Leader of Opposition and ruling party, Deputy Leader, Chief Whip, Whip. In addition to this, the rules of procedure of the meetings of the assembly has elaborate procedures for the question and answer, the procedure of floating bills/proposals, and arrangements for the dissolution of the government etc. Major works of province assembly are form the government, pronounce legislations, monitoring province agencies, and discuss and approve budget.

The first meeting of the province assembly of Sudurpaschim province was conducted on February 21 2018. There are 53 members of the province assembly who comes from 9 districts. There are 32 province assembly constituencies. 32 members of the provinces assembly are elected from these 32 constituencies in First-Past-the-Post system and another 21 members are elected on the basis of proportional system of election.

Table 4: Members according to electoral system and Gender

(Source: Province Assembly, Sudurpaschim province, 2020)

In the current province assembly, there are 39 members of Communist Party of Nepal, followed by 12 of Nepali Congress, and 2 members from Rastriya Janata Party Nepal. Following table shows the seats gained by political parties in the province assembly polls. The tenure of these members is 5 years from the election year of 2017/18.

Table 5: Members of Province Assembly based on Political Party

(Source: Province Assembly, Sudurpaschim province, 2020)

Geography and population were the two criteria for delimitation of the constituency with slightly higher weightage assigned to geography such that low population geography also has atleast sizeable representation in the province assembly. Sudurpaschim province assembly has also created four committees from amongst its members which work as mini parliament. Following table shows the number of committees and their scope of work.

Table 6: Thematic committees of Province Assembly with Scope

(Source: Province Assembly, Sudurpaschim province, 2020)

Until current fiscal year, the Sudurpaschim province assembly has conducted 6 sessions of the parliament. The parliament has promulgated laws to deliver services for the citizens. Following table details the information of various sessions:

Table 7: Information on various business of the Province assembly

There are altogether 22 employees in the secretariat of the Province Assembly in Sudurpaschim province. The secretariat has Work Procedures Department with 3 branches; Laws and Legislation Department and Administration Department with 3 branches. The secretariat of province assembly is engaged in support speaker of the house to conduct business of the house by publishing agendas of meetings; provide administrative, legal, and logistics support for various committees of the parliament and conduct research and study on parliament administration. Until Ashar 2077, the total number of bills registered is 42. Out of which 39 of these passed bills passed in the assembly and promulgated as acts and published in the province gazette while 3 bills are in the process of being tabled.

Legal Profile (Laws prepared, plans and policies etc..)

The Province has already formulated many laws to dispense important functions. Some of the important Laws are:

Table 8: Laws prepared by the province assembly by date of authentication

(Source: Ministry of Internal Affairs and Laws, Sudurpaschim province, 2020)

3. Fiscal Profile

3.1 Mid Term Expenditure Framework

3.2 Budgetary provisions for Sudurpaschim province

The constitution of Nepal 2015 has recognized National Natural Resources and Fiscal Commission (NNRFC) as the custodian of the fiscal federalism. Most important task of the commission is to recommend criteria and funds for inter governmental fiscal transfers to province and local level based on the principle of financial justice, objective assessment of needs and efforts of governments to raise revenues. The commission recommends basis/criteria for distribution of equalization grants, conditional grants, revenue sharing and internal loans. Two important legislations promulgated by federal government regarding implementation of the fiscal federalism are National Natural Resources and Fiscal Commission Act, 2017, and Inter- governmental fiscal management act 2017. The commission recommends basis for distribution of intergovernmental transfers for two consecutive years. The commission recommends basis of distribution of revenues, equalization grants, conditional grants and internal loans limits. Accordingly, the commission has recommended basis of distribution for two years 2075/76 and 2076/77 on the basis of different weightage assigned to factors such as Population distribution, Geography, Human Development Index, and Development indicators.

The distribution of benefits from the use of natural resources are also divided among different tiers of governments based on shares in investments in protecting natural resources and shares in benefits sharing by the respective level of governments.

The commission used indicators from variety of sources to determine the proportion of fiscal transfers. The commission conducted discussion programs with some province and local level governments to understand their projections on revenues, expenditures and resulting fiscal gaps. If indicators were not available, indicators of previous years was used as proxy. Following table shows the indicators and their sources.

Table 10: Sources of Indicators used by National Natural Resources and Fiscal Commission

(Source: Progress Report, Sudurpaschim province, National Natural Resources and Fiscal Commission, 2020)

The distribution of benefits from the use of natural resources are also divided among different tiers of governments based on shares in investments in protecting natural resources and shares in benefits sharing by the respective level of governments.

At the province level, following are the major sources of revenues for Sudurpaschim province as provisioned in the Inter-government Fiscal transfer Act 2074.

Table 11: Sources of revenues for Province Governments

(Source: Progress Report, Sudurpaschim province, National Natural Resources and Fiscal Commission, 2020)

The commission has also recommended that province and local level can raise internal loans which do not exceed 10% of the funds resulting from addition of revenue from revenues sharing (with other level of government) and revenue from internal sources. The fund raised from internal loans can only be used for projects which can be capitalized in the future and provide long term benefits.  Following table give detail information about fiscal transfers from one government to other.

Table 12: Basis for Distribution of fiscal transfers among different tiers of government

(Source: Progress Report, Sudurpaschim province, National Natural Resources and Fiscal Commission, 2020)

3.2.1 Equalization grants

The commission recommends amounts for fiscal equalization grants from federal to province and local level based on National Natural resources and fiscal Commission Act 2017 and Inter- Governmental Fiscal management Act 2017. According to these acts, each province and local government receive a minimum grants amounts and fiscal equalization grants based on certain criteria. For distribution at the province level, 25% of the total equalization grant of the federal government is considered as 100%. This 100% is distributed among seven provinces based on their population (50%) weightage and geography (50%) weightage. The resulting amount for a province is considered as a minimum grant. After calculating minimum grant amount to a province, a formula based weightage system is used to fix the fiscal equalization grants. According to the formula, 60% weightage is assigned to costs of services to be delivered, 15% is assigned to Multi Dimensional Poverty Index, another 15% weightage is assigned to economic and social disparity indicators of the province and another 10% weightage is assigned to Infrastructures related indicators. The infrastructure related indicators include road density, Information and Technology Accessibility, and Electricity accessibility. These indicators are derived from various government sources by the commission. In the fiscal year 2075/76, 37.12% of total equalization grant from federal government was allocated to seven provinces. Based on above formula, Sudurpaschim province received NPR 7.92 billion as equalization grants while the corresponding figure for Sudurpaschim province in the fiscal year 2076/77 is NPR 7.95 billion.

At the local level fiscal equalization transfers from province to local level is determined by  minimum grants (equal to all local level), formula based weightage system and performance evaluation grants. All local level governments received 60 million as minimum amount of equalization grants for the year 2075/76 and 65 million for the fiscal year 2076/77. According to the formula, 70% weightage is assigned to the gap between expenditure needs and revenue capacity of the local level, 15% weightage is assigned for Human poverty Index of the local level, another 5% weightage is assigned to economic and social disparity indicators of the local level and another 10% weightage is assigned to Infrastructure related indicators of the respective local level. Additionally, the work performance evaluation measures are also accounted for in case of equalization grants to local level. The work performance measures is composed of 40% weightage assigned to financial progress of the previous year, another 40% assigned to whether budget was brought on Ashar 10 of the current fiscal year and another 20% weightage is assigned to whether incomes expenses projections of the local level was shared with Ministry of Finance within Poush of the current fiscal year. The minimum amount of equalization grant from sudurpaschim province to its 88 local level was NPR 10 lakhs for fiscal year 2075/76 considering 25000 as population for a local level. For every 10,000 population added, the minimum amount was increased by NPR 2 lakhs. Same measure was also used to fix amount of equalization grants from sudurpaschim province to its local level in the fiscal year 2076/77 as well. In the fiscal year 2075/76, 62.88% of all equalization grants from federal government was allocated to local level. Sudurpaschim province has allocated NPR 620 millions as equalization for 88 local level units in 2075/76 while the corresponding figure for 2076/77 was NPR 622 million.

3.2.2 Conditional Grants

Conditional grants are given from federal to province level and from province to local level to accomplish projects and programs which are of national importance and which produces returns in the long run. The conditional grants supports programs which come under the shared responsibility areas of province and local levels of governments or programs which fall under federal responsibility areas but lower tiers of government are executing those programs. Emphasis is also laid on national level sectoral policy of the state while developing basis for conditional grants. Programs which correspond to schedule 6 and 8 of the constitution of Nepal 2015 concerning rights of province and local level are also included as basis for distributing conditional grants. Conditional grants are also given to programs which correspond to schedule 5 of the constitution of Nepal where the rights falls under jurisdiction of federal level but the programs should be implemented with the help of province and local level. This pertains to those projects executed with the support of foreign funds also. Sudurpaschim province received NPR 6.32 billion as conditional grants in the fiscal year 2075/76 while it received NPR 4.55 billion in fiscal year 2076/77. The NNRFC has developed basis for the distribution of conditional grants among different tiers of governments from the fiscal year 2076/77. The broad basis for the distribution of conditional grants is as follows:

• Support to implement national policies across country
• Programs which address infrastructural needs of the province and local level
• Programs which help realize commitments made at the national and international level

Much like the federal government, the province government can also develop basis of distributing conditional grants among local level governments ensuring that the conditional grants are directed towards implementation of province level sectoral policy, programs and meet development objectives and infrastructure needs of the province. The province government should analyze federal grants to local level before it provides conditional grants to local level. This way it can be ensured that none of the programs supported by conditional grants of the province overlap with programs supported by federal governments at the local level.

The basis for the division of conditional grants was suggested based on discussions with province governments and local level governments for the fiscal year 2075/76 and 2076/77[3]. The amount of conditional grants allocated for the fiscal year 2075/76 is NPR 47 million but the sudurpaschim province did not allocate any amount as conditional grants in the fiscal year 2076/77[4].

3.2.3 Raising Internal Loans

The NNRFC has recommended amount of internal loans which can be taken by federal, province and local level based on the assessment of existing financial settlements of the federal government, economic status of the country, and capacity to pay back loan by lower tiers of governments. The commission has also recommended that province and local level can raise internal loans which do not exceed 10% of the funds by adding amount received from revenues sharing and revenue from internal sources. The fund raised from internal loans can only be used for projects which can be capitalized in the future and provide long term benefits. Sudurpaschim province government has not mobilized internal loans in the fiscal year 2075/76 and 2076/77. Information regarding internal borrowings by local levels of sudurpaschim province for fiscal year 2075/76 and 2076/77 could not be ascertained due to lack of data.

3.2.4 Vehicle tax sharing among province and local level

The vehicle tax falls under shared jurisdiction of province and local level. The rates of taxes and collection procedures fall under province government. Province uses 60% of the total vehicle taxes and distributes rest 40% among local governments. Local governments receive part of the vehicle tax based on its population (45%) weightage, length of roads (50%) weightage and forest and greenery cover (5%) weightage respectively. The weightage are assigned by the NNRFC. Sudurpaschim province collected NPR 675.6 million as vehicle tax in the fiscal year 2075/76 out of which it received 60% of the sum while it distributed rest 40% among local governments in the province. The estimated vehicle tax for fiscal year 2076/77 is NPR 589.3 million for Sudurpaschim province which is 60% of the total collection. The distribution for among 88 local governments is NPR 235.7 million.

3.2.5 Revenue from royalties from Natural resources

The inter-governmental fiscal management act 2017 governs the distribution of royalties from natural resources among federal, province and local governments. The royalties from the mountaineering activities area shared among federal province and local level in the proportion of 50%, 25% and 25% respectively. This division ensures proportionate sharing of royalties. The division of royalties is concentrated among those province and local level governments whose population are affected by the presence or use of natural resources or the population contribute to the preservation of natural resources. For instance, incase of royalties from mountaineering, local government where the mountains exist are considered as core areas while local level which share boundary with core areas are considered as adjoining areas. The division of royalties from mountaineering activities is distributed among local governments based on weightage according to following table

Table 13: weightage assigned to different factors to derive distribution of royalties from Mountaineering

(Source: Progress Report, Sudurpaschim province, National Natural Resources and Fiscal Commission, 2020)

3.2.6 Royalties from Hydro power plants

The royalties from the hydro power plants are shared among federal, province and local level in the proportion of 50%, 25% and 25% respectively. This division ensures proportionate sharing of royalties. The division of royalties from hydro power plants is distributed among local governments based on weightage according to following table.

Table 14: weightage assigned to different factors to derive distribution of royalties from Hydro power

(Source: Progress Report, Sudurpaschim province, National Natural Resources and Fiscal Commission, 2020)

3.2.7 Royalties from forests and forests resources

The royalties from the forests and forests resources are shared among federal, province and local level in the proportion of 50%, 25% and 25% respectively. The basis of division of royalties from forests is contingent upon the affected local population and their role in preserving forests resources. Hence, the commission takes into account population in the catchment areas of the forests in addition to political boundaries of the local levels. This division ensures proportionate sharing of royalties. The division of royalties from national forests and conservation forest areas is distributed among affected local governments based on weightage according to following table.

Table 15: weightage assigned to different factors to derive distribution of royalties from Forests

(Source: Progress Report, Sudurpaschim province, National Natural Resources and Fiscal Commission, 2020)

3.2.8 Royalties from mineral resources

The Inter-governmental fiscal management act 2017 governs the distribution of royalties from mineral resources among federal, province and local governments. The division of royalties is concentrated among those province and local level governments whose population is affected by the presence or use of such mineral resources or population affected by extraction activities. The royalties from the mineral resources are shared among federal province and local level in the proportion of 50%, 25% and 25% respectively. This division ensures proportionate sharing of royalties. The division of royalties from mineral resources is distributed among local governments based on weightage according to following table.

Table 16: weightage assigned to different factors to derive distribution of royalties from minerals

(Source: Progress Report, Sudurpaschim province, National Natural Resources and Fiscal Commission, 2020)

3.3 Comparison of Annual Budget

The contribution of economic activities of Sudurpaschim province bears a sizeable impact in the overall economic life of Nepal. Its contribution to the national GDP ranges around 7.02%. The annual budget of the province for fiscal year 2018/19 was around NPR 25 billion which increased to more than NPR 28 billion in the fiscal year 2019/20 and it is estimated to be around NPR 33.38 billion in fiscal year 2020/21 largely due to contraction of economic activities because of covid 19 pandemic. As shown in the following tables, there is increase in the projected income from internal sources and cash in hands, while there is decrease in revenue sharing in 2020/21. The grants from central government are also decreasing yearly. The allocation of grants for local level is increasing yearly.

Table 17: Comparison of annual budgets of Sudurpaschim province

Sudurpaschim province government has allocated funds according to its areas of priority. As is true for most provinces, physical infrastructure and achieving economic growth are two most prioritized areas in the budget for fiscal year 2019/20 and 2020/21 as shown by following table. Information for the fiscal year 2018/19 was not available.

Table 18: Yearwise comparison of budgetary allocation in Priority areas by Sudurpaschim province

[1] https://nepalindata.com/data/province/

[2] Central Bureau of Statistics, Provincial Statistics, May 2020

[3] Progress Report of National Natural Resources and Fiscal Commission 2019

[4] Ibid