Local governments in Nepal are very strong unit of governance in terms of their constitutional and legal rights coupled with financial resources with them. Let’s take example of Fiscal year 2020/21. In current fiscal year, the federal government has allocated about Rs. 262 Billion for fiscal transfer to local governments including conditional grant of Rs. 161.8 billion and fiscal equalization grant of Rs 90.05 billion. Seven provincial governments in total have allocated about Rs. 25 billion in the similar headings. Special and supplementary grants are also being processed. Moreover, different federal and provincial programs have also transferred to local governments including local government partnership programs popularly known as parliamentary development fund. Revenue sharing among three levels of governments and their own source revenue also adds on local consolidated fund. They can also take loans from financial institutions and specified fund of federal government.
