The government is going to disburse aid under India’s Small Development Project Scheme (SDPS) to local governments after channeling resources to the national budget.
The cabinet – on December 23 – approved a proposal of the Finance Ministry about ways to implement the projects to be financed under the scheme that has been in the news for all the wrong reasons. The scheme had remained controversial due to its nature of direct funding to the projects through local governments from the Indian Embassy in Kathmandu without using the Federal budgetary system.
According to the new modality, SDPS will be brought under the federal budgetary system and channeled to the local governments as conditional grants, in line with the Development Cooperation Policy introduced in May.
Conditional grant is the type of grant provided to implement a specific project and the local government cannot spend it on other projects. The government can allocate the budget for the local level from the fiscal year 2020-21 after the federal government gets the Indian aid, according to the Finance Ministry. “Under the scheme, India has been providing up to Rs 50 million to implement small infrastructure projects through the local governments.”
Earlier the grant used to go to the local levels directly raising eyebrows. But after the new constitution promulgated in 2015 required foreign assistance to be channelled through the national budget to ensure transparency in aid, the Sher Bahadur Deuba-led government in November 2017 extended the tenure of the scheme with the caveat that funds pass through national budgetary system, The Federal government will decide which agency implements the project, according to the new rule.
A cabinet meeting – in July 2018 – made it mandatory for India to sign an agreement with Finance Ministry to implement the projects under the scheme and route funds through the central account.
Launched in November 2003, the projects are popularly known as ‘umbrella agreement’, on the basis of which the Indian Embassy in Kathmandu had been extending assistance to various projects.
But bringing the Indian aid under the small grant scheme will not only promote transparency but also helps keep tab on how much money has been spent under the scheme.
The cabinet – on December 23 – approved a proposal of the Finance Ministry about ways to implement the projects to be financed under the scheme that has been in the news for all the wrong reasons. The scheme had remained controversial due to its nature of direct funding to the projects through local governments from the Indian Embassy in Kathmandu without using the Federal budgetary system.
According to the new modality, SDPS will be brought under the federal budgetary system and channeled to the local governments as conditional grants, in line with the Development Cooperation Policy introduced in May.
Conditional grant is the type of grant provided to implement a specific project and the local government cannot spend it on other projects. The government can allocate the budget for the local level from the fiscal year 2020-21 after the federal government gets the Indian aid, according to the Finance Ministry. “Under the scheme, India has been providing up to Rs 50 million to implement small infrastructure projects through the local governments.”
Earlier the grant used to go to the local levels directly raising eyebrows. But after the new constitution promulgated in 2015 required foreign assistance to be channelled through the national budget to ensure transparency in aid, the Sher Bahadur Deuba-led government in November 2017 extended the tenure of the scheme with the caveat that funds pass through national budgetary system, The Federal government will decide which agency implements the project, according to the new rule.
A cabinet meeting – in July 2018 – made it mandatory for India to sign an agreement with Finance Ministry to implement the projects under the scheme and route funds through the central account.
Launched in November 2003, the projects are popularly known as ‘umbrella agreement’, on the basis of which the Indian Embassy in Kathmandu had been extending assistance to various projects.
But bringing the Indian aid under the small grant scheme will not only promote transparency but also helps keep tab on how much money has been spent under the scheme.
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