State - Province Relations [Nepal]

Schedules 5, 6, 7, 8, and 9 list the powers and responsibilities allocated to each level:

Schedule 5: Federal Powers

Schedule 6: Provincial Powers

Schedule 7: Concurrent Powers (shared by both federal and provincial governments)

Schedule 8: Local Powers

Schedule 9: Concurrent Powers (shared by federal, provincial, and local governments)

##Provisions:

A. - Inter Provincial~

Article 234:

There shall be an Inter-Provincial Council to settle disputes of political nature between the Federation and Province and among the Provinces, consisting of a Chairperson and members as follows:

Prime Minister -Chairperson

Home Minister of Government of Nepal -Member

Finance Minister of Government of Nepal -Member

Chief Ministers of respective Provinces -Member

235. Coordination among the Federation, Provinces and local Levels

1. The Federal Parliament shall formulate necessary laws to maintain coordination between the Federation, Provinces and local levels.

2. The Provincial Assembly shall coordinate with District Coordination Committee to establish coordination between the Province and Village Council or Municipality and to settle disputes, if any, of political nature.

3. The method and procedure of settling disputes pursuant to Clause (2) shall be as provided for in the Provincial law.

236. Interprovincial Trade

No obstruction of any kind or levying of taxes or discrimination shall be made in the export and import of goods or services from one Province or local level to another Province or local level and in the transportation of any goods or services through the territory of any province or local level to another province or local level of Nepal.

B - National Resources and Fiscal Commission

251

1. The functions, duties and powers of the National Natural Resources and Fiscal Commission shall be as follows:

a. Determine extensive grounds and measures, regarding the distribution of revenue from the federal consolidated fund to the federal, provincial and local level governments according to the constitution and law,

b. Making recommendations, according to law, on distribution of the equalization grants to provincial and local governments from the federal consolidated fund,

c. Conducting research and studies with regard to making a basis for distribution of conditional grants to provincial and local governments in compliance with national policy and program and standards, and the state of infrastructure there.

d. Determine extensive grounds and measures regarding the distribution of revenue between provincial and local governments from the provincial consolidated fund.

e. Making recommendations regarding the measures of reforms on responsibilities of expenditures and revenue generation for the federal, provincial and local governments.

f. Making recommendations about the internal loans the federal, provincial and local governments may take, by analyzing the macroeconomic indices.

g. Reviewing the bases of revenue distribution between the federal and provincial governments, and making recommendations for reform.

h. Determine base for computing the share of investment and return for federal, provincial and local government while exploiting natural resources, and make necessary recommendations.

i. Making recommendations about coordination and mitigation of disputes likely to arise regarding distribution of natural resources between the federation and province, between the provinces, between a province and local level entity, or between local level entities.

C - Fiscal Federalism: Revenue Sharing, grants and loans, provincial revenue:

60. Distribution of sources of revenue

1. The federation, province and the local level entity shall impose tax on subjects within their fiscal jurisdiction and collect revenue from such sources. Provided that with regard to the source that are not included in the concurrent/shared list or in any list at any level, it shall be as determined by the Government of Nepal.
2. The Government of Nepal shall make necessary arrangements to equitably distribute the revenue generated by it from its sources, between the federation, province and the local level entities.
3. The amount of the fiscal transfer, the province and the local level entities are to receive shall be as recommended by the National Natural Resources and Fiscal Commission.
4. The Government of Nepal shall distribute fiscal equalization grants to province and local level entity on the basis of their need for expenditure, their capacity in generating revenue and the efforts made by them.
5. The province shall distribute fiscal equalization grants received from the Government of Nepal and the revenue generated from its sources, to the local level entities under it on the basis of need for their expenditures and their capacity to generate revenue, in accordance with provincial law.
6. The Government of Nepal shall make arrangements regarding conditional grants to be provided through the Federal Consolidated Fund, complementary grants, or the special grants for other purposes.
7. The distribution of revenue between the federal, provincial and the local level entity shall be transparent.
8. While enacting the Federal Act regarding revenue distribution, the matters that need to be included are: national policy, national needs, the autonomy of provinces and local level entities, the service delivery of the provinces and local level entities and the fiscal rights given to them; their capacity to generate revenue; feasibility and use of revenues; their contribution to development works; regional imbalance; poverty and inequality; exclusion, emergency works and the support of meet temporary needs.

D - Provincial Participation

175. Provincial Legislature

There shall be a unicameral legislature in a province which shall be called the Provincial Assembly.

62. Election of the President

An electoral college, consisting of voting members of the Federal Parliament and the members of Provincial Assembly, shall elect the President. It shall be done as provided for in law with the difference of weightage in voting of the members of the Federal Parliament and the members of Provincial Assembly.