Khusbu flags grant cuts as threat to federalism & local development

KATHMANDU: Rastriya Prajatantra Party (RPP) Chief Whip Khushbu Oli has drawn the government’s attention toward the reported reduction in fiscal equalization grants allocated to provincial and local governments, warning that such actions undermine constitutional principles and federal autonomy.

Speaking during Thursday’s session of the House of Representatives, Oli said the government’s “interventionist approach” is weakening the autonomy of constitutional bodies and striking at the core spirit of federalism.

She cited Article 251 of the Constitution of Nepal, which clearly defines the roles and authority of the National Natural Resources and Fiscal Commission, arguing that the reduction in grants raises serious questions over the commission’s relevance and effectiveness.

According to her, the government has cut fiscal equalization grant ceilings by 10 to 25 percent, resulting in halted payments for already completed projects and placing local governments under severe financial strain.

Oli also criticized what she called the government’s contradictory policies, pointing to the “no file” campaign on one hand and budget cuts on the other, saying these inconsistencies are obstructing good governance.

Emphasizing that fiscal equalization grants are not a matter of “charity or goodwill” but a constitutional right, she said their reduction is directly affecting essential public services at the local level. She noted that local governments are struggling to pay teachers’ salaries, manage health posts, supply medicines, maintain irrigation systems, rural roads, and handle disaster response.

“Payments for completed works are being delayed due to lack of funds. This has put local governments under pressure while also causing injustice to contractors and individuals awaiting payment,” she said.

Oli further criticized the tendency to centralize power while decentralizing responsibilities, urging the government to strengthen fiscal equalization grants and gradually reduce conditional grants that reinforce central control.

She stressed that the government’s claim of fiscal progressiveness must be reflected in real commitment to citizens rather than being used as a political slogan.