The nitty-gritty of fiscal transfers

It is important to pay attention to why and for whom the grants are being channelised.

Under Nepal's federal system, the constitution has given many functional responsibilities to the sub-national levels, but most of the revenue raising rights to the federal government. And to reduce the gap between functional responsibilities and revenue raising rights, the constitution has established the provision of intergovernmental fiscal transfers. This allows the sub-national levels to receive four types of grants from the federal government—fiscal equalisation, conditional, special and matching grants.