The federal government has allocated Rs582.83 billion in financial transfers to provincial and local governments for the upcoming fiscal year 2025–26, Finance Minister Bishnu Paudel announced during the budget presentation at the joint session of Parliament on Wednesday.

According to Paudel, this amount includes funds to be distributed through revenue sharing and various grant mechanisms, including fiscal equalisation, conditional, special, and complementary grants.

Based on recommendations by the National Natural Resources and Fiscal Commission, Rs60.66 billion will be provided to provinces and Rs88.97 billion to local levels under fiscal equalisation grants. Additionally, Rs30.35 billion and Rs211.46 billion have been allocated as conditional grants to provinces and local governments respectively, totalling Rs241.81 billion under this category.

To support infrastructure development projects, Rs3.28 billion has been set aside for provinces and Rs10.06 billion for local levels as complementary grants. Moreover, special grants amounting to Rs3.27 billion for provinces and Rs9.78 billion for local bodies have also been provisioned.

Finance Minister Paudel further noted that these grants—conditional, special, and complementary—will be transferred based on performance. The estimated revenue sharing for the coming fiscal year is Rs165 billion, which will also be distributed among the subnational governments.

With these provisions, the total projected financial transfer from the federal government to the provinces and local governments through grants and revenue sharing will amount to Rs582.83 billion in fiscal year 2025–26.