Report on A Study to Identify Sources of Revenue ... - LGCDP

List of Acronyms and AbbreviationsADOAgriculture Development Office(r)AJDCCAdibashi Janajati District Coordination CommitteeCBSCentral Bureau of StatisticsDDCDistrict Development CommitteeDFODistrict Forest Office(r)DIMCDecentralization Implementation and Monitoring CommitteeDLSODistrict Livestock OfficeDRILPDecentralized Rural Infrastructure and Livelihood ProjectDTCODistrict Treasury Controller OfficeDUDCCDalit Utthan District Coordination CommitteeFCGOFinancial Comptroller General OfficeFGDFocus Group DiscussionsFYFiscal YearGDPGross Domestic ProductGoNGovernment of NepalHDIHuman Development Index

HPHealth PostHRHuman ResourceLBFCLocal Bodies Fiscal CommissionLBFARLocal Bodies'(Financial Administration) RegulationsLDFLocal Development FeeLDOLocal Development OfficerLGLocal GovernmentLGCDPLocal Governance and Community Development ProgrammeLSGALocal Self Government ActLSGRLocal Self Government RegulationLSGFRLocal Self Government Financial RegulationMCPMMinimum Condition and Performance MeasureMOACMinistry of Agriculture and CooperativesMOFMinistry of Finance,MOLDMinistry of Local DevelopmentMTMetric TonMWMegawattNERNational Enrollment Rate

NTFPNon-timber Forest ProductNGONon-governmental OrganizationOECDOrganization for Economic Cooperation and DevelopmentOSROwn Source RevenuePAFPoverty Alleviation FundRRRSDPRural Reconstruction Rehabilitation Development ProjectSHPSub-health PostTADATravel and Daily AllowanceTDFTown Development FundTORTerms of ReferenceUNDPUnited Nation Development ProgrammeVATValue Added TaxVDCVillage Development Committee

4.6.3 Analysis of District Level Expenditure 484.6.4 Expenditure in the Devolved sector. 484.6.5 Sectoral Public Expenditure in the Mountain Region 504.6.6 Sectoral Share District Level Public Expenditure by thegovernment in the mountain region4.6.7 Public Expenditure of MLD during 2061/62to 2066/66(National, Mountain Regions and Mountain Districts)51524.6.8 Expenditure in High Priority Sector in Mountain Region 524.6.9 Recurrent Expenditure in Total Public Expenditure inMountain Region.4.6.10 Poverty Alleviation Fund and Expenditure in theMountain Region53534.6.11 Government Grants to DDCs 545 Issues and Challenge 565.1 Issues on Revenue Mobilization 565.2 Major Problems in Revenue Mobilization 595.3 Major Issues and Challenge 606 Capacity Structure of Himalayan Districts in Expenditure62and Revenue Management6.1 Organization Structure of DDCs 626.2 DDC Revenue Administration in Sample Districts 656.3 Revenue Collection Procedures its Impact on65Compliance6.3.1 Revenue Compliance 656.3.2 Revenue Collection Procedures 666.3.3 Impact on Compliance 676.4 Capacity of Sample DDCs in Revenue Mobilization 677 Revenue Modeling and Projection717.1 Composition of Internal Revenue Source Revenue 717.2 Revenue Expenditure GAP of DDCs 727.3 Major Contributing Factors to Total Internal Revenue 727.3.1 Theory of Revenue Projection 727.3.2 Revenue Modelling 737.4 Internal Revenue Growth Modeling and Projection 748 Conclusion and Recommendation 778.1 Conclusion 778.2 Recommendation 828.3 Recommended Actions 83Bibliography 86

Annexes:Annex 1 a :Annex 1 :Annex 2:Annex 3:Annex 4 :Annex 5:Annex 6 :Annex 7:Annex 8 :List of Persons MetMountain Districts by development Regions and ZonesProjected Population 2010, Households Number, Population, Employment Status andPopulation Range in VDCs (2001) in Mountain Regions and NepalProjected Population 2007, Households Number, Population, Employment Status andPopulation Range in VDCs (2001) by DistrictsEthnicity (%) National, Mountain Belts and Mountain DistrictsPopulation of Religion by Development RegionTotal Area, Area of Holdings and Type of LandLand Use Pattern by Ecological Belts and Mountain DistrictsEcological and Physiographical Division of the Districts of NepalAnnex 9: Human development index by Region, 2001Annex 10: Human development index by Sellected Mountain Region, 2006Annex 11:Annex 12Annex 13:Annex 14:Annex 15:Annex 16 :Annex 17:Annex 18:Social and Economic Development Status National, Mountain Regions and MountainDistricts(Continued from Agriculture)(Continued from Literacy Rate)(Continued from Number of Work Force)(Continued from NER in Primary Level)Number of Cottage & Small Scale Industries Registered (Up to F.Y. 2065/66) by TypeNumber of District and Ilaka Post Offices 2008/09, Nationa, Mountain Regions and DistrictsNumber of Commercial Bank Branches, Finance Company and Development Bank (Mid-Jan2010) , National, Mountain Regions and DistrictsAnnex 19: Number of Cooperatives (2063 Chaitra, Registered in Department of Cooperatives) , ,Mountain Regions and DistrictsAnnex 20:Annex 21:Annex 22:Annex 23:Annex 24:Annex 25:Production of Cereal Crops, 2008/2009 National, Mountain Regions and DistrictsProduction of Cash Crops, 2008/2009 National, Mountain Regions and DistrictsProduction of Pulses Crops, 2008/2009 National, Mountain Regions and DistrictsProduction of Fruits, 2007/2008, National, Mountain Regions and DistrictsLivestock Production, 2008/2009 National, Mountain Regions and DistrictsContinued Livestock Population, 2008/2009 National, Mountain Regions and DistrictsAnnex 26: Public Revenue -Tax and Non Tax: 2005-2008Annex 27:Total Public Expenditure 2005-2009, National, Mountain Regions and Districts

Annex 28:Annex 29:Annex 30:Annex 31:Public Development Expenditure 2005--2009, National, Mountain Regions and DistrictsPublic Capital Expenditure 2005-2009, National, Mountain Regions and DistrictsPublic District Level Development Expenditure 2005-2009,National, Mountain Regions andDistrictsPublic Expenditure in Devolved Sectors 2005-2009,National, Mountain Regions and DistrictsAnnex 32: Sectoral Public Expenditure 2004/05 and 2007/08Annex 33: Sectoral Public Development Expenditure 2004/05 and 2007/08Annex 34: Public Capital Expenditure 2004/05 and 2007/08Annex 35: Sectoral District Level Public Development Expenditure 2004/05 and 2007/08Annex 36:Public Expenditure of MLD 2004/05-2008/09, National, Mountain Regions and DistrictsAnnex 37: Prioritized Development Expenditure 2004/05 and 2007/08Annex 38:Annex 39:Annex 40:Annex 41:Annex: 42Annex 43:Annex 44:Annex 45:Annex 46:Annex 47:Economic Head wise Public Expenditure 2007/08, National, Mountain Regions and DistrictsTable District wise Programs and Expenditures Carried out by Poverty Alleviation Fund(PAF)Annex 40: Total Revenue by Source of Selected DDCs of Mountain Region (Real)(revenue modeling) : Total Revenue by Source of Sample DDCs of Mountain Regionfor Revenue Projeciton : Total Revenue by Source of Sellected DDCs of Mountain Region(in Nominal Term)or Revenue ProjectionTax and Nontax Sources of revenue in Himali Districtsb. Nontax source – Service charges and FeesNontax source – SalesRevenue SharingRevenue SharingAnnex 48: Total revenue of Sample Districts (2062/63 - 2066/67)Annex 49:Annex 50 :Annex 51:Annex 52:Public Revenue Generation -Tax and Non Tax: 2005-2008 (In Million Rupees)DDC Expenditure from Internal Revenue (R2) in Himali DistrictsTotal District Level Development Expenditure projection Mountain Regions and DistrictsProjection of Resource Gap for Himali Districts for next 5 years

TablesTable 3.1: Revenue Sources of LGs 12Table 4.1: Major 5 sources of revenue 20Table 4.2: Main 5 stable sources of internal revenue 22Table 4.3: Unpredictable sources of local revenues 23Table 4.4: Unstable sources of local revenues 24Table 4.5: Revenue not yet collected by DDCs provisioned in the law 25Table 4.6: Least important sources of revenues in district in terms of yield 26Table 4.7: Administratively feasible own revenues sources 27Table 4. 8: Local revenues sources difficult to administer 28Table 4.9: Structure of revenue by sources 28Table 4.10: Own Source Revenue of Sample DDCs from Tax 31Table 4.11: Own Source Revenue of Sample DDCs from Service Charge and Fees 33Table 4.12: Own Source Revenue of Sample DDCs from Sale 34Table 4.13: Own Source Revenue of Sample DDCs from Other Sources 35Table 4.14: Own Source Revenue of Sample DDCs from Revenue Sharing 36Table 4.15: Structure of Revenue 40Table 4.16: GON Grants to Sample DDCs 41Table 4.17: Sample DDC Expenditure pattern and Trend from Internal Revenue (R2) 45Table 4.18: Public revenue from Mountain Region 46Table 4.19: Revenue -Tax and Non Tax : 2005-2008 46Table 4.20: Total Public Expenditure 2061/62-2056/66 47Table 4.21:, Public District Level Development Expenditure 48Table 4.22: Public Expenditure in Devolved Sectors 2005-2009, National, Mountain Regions and Districts 49Table 4.23: Sectoral Public Expenditure 2061/62 and 2064/65 50Table 4.24: Sectoral District Level Public Development Expenditure 51Table 4.25 Public Expenditure of MLD 52Table 4.26: Prioritized Development Expenditure 52Table 4.27:Public Expenditure by Economic Heads 53Table 4.28: District-wise Programs and Expenditures 54Table 4.29: District Development Committee Grant 55Table 5.1: Stated Problems in Revenue Collection in districts 57Table 5.2: Reasons for the deviations between budgeted and collected revenue 58Table 6.1: Major Mode of Revenue Collection in Sample District 66Table 6.2: Capacity Assessment of Revenue Administration in Sample DDCs 67Table 7.1: Internal Revenue (own plus revenue sharing) Composition 71Table 7.2: Internal Revenue Modelling 74Table 7.3: Revenue Projection of Sankhuwasabha District 76

Executive SummaryA Study to Identify Sources of Revenue, Revenue Mobilization, Capacity andExpenditure in Mountainous (Himali) Districts is being undertaken to analyze thetotal revenue for the last five years, analyze the internal revenue for the last fiveyears, analyze the total expenditure for the last five years and analyze the totalexpenditure from the internal revenue; and estimate total revenue, internalrevenue and expenditure for the next five years with identification of revenue andexpenditure gaps.A. Purpose and BackgroundThe overall objective is to undertake analysis of the existing situation regardingthe various aspects of internal revenue mobilization of DDCs in the Himalayanregion and recommend reform measures to make the revenue mobilization morereliable, transparent and taxpayer friendly with a view to enhance own-sourcerevenue generation.The study was undertaken by a team of professionals from Communication andManagement Institute with support and guidance from Ministry of Localdevelopment, Local Governance and Community Development Programme. Theapproach used was literature review, Focus Group Discussion, and visit to 4sample districts (Sankhuwasabha, Sindhupalchowk, Jumla and Darchula).B. Himalayan DistrictsOut of 75, 16 are Himalayan districts in Nepal. These districts are characterizedby limited accessibility, scattered settlements and low population density, slowpace of development and overall prevalence of mass poverty. This regionaccounts about 7% of total population of Nepal with an annual growth rate of 1.6percent. There are only two municipalities in the region. The HDI (0.361), lifeexpectancy (52.55), adult literacy (36.1%), and per capita GDP (1114 US $ -PPP) indicate the low level of socio-economic development of the region. Inaddition, Himalayan districts have very limited road access and four districtheadquarters have no road connectivity.C. Socio-economic ScenarioAgriculture farming and livestock rearing are main economic activity thoughsubsistence in nature and low productivity. Only 4% of land is cultivated foragriculture and 12 districts out of 16 have food shortages by about 20%.Agriculture land modernization and commercialization of the agriculture andlivestock sector is in infantry stage. Export of cash crops (in east), carpets, herbs,Yak cheese, fruits like apple, walnut is some of the products from farming.Livestock farming is an integral part of livelihood and has high number of stockper capita. Market accessibility is a major hindrance for commercializationfollowed by slow spread of technology and its adoptability by local farmers. Inrecent years, the non-timber forest products especially the collection and sale ofYarcha Gumba has remained seasonal economic activity in some of the districts.i

Other valuable herbs and aromatic plants are also available for supportinglivelihood of the people in this region. Low level of economic activity has alsoaffected the revenue generation of local governments in this region.D. Sources of RevenueInternal revenue generation is not uniform in terms of structure of source andamount within the region. Himalayan DDCs have very limited bases for revenuegeneration. Tax base is very limited due to accessibility and market for localproducts.Eastern mountain districts raise some amount of tax from the commercial exportof agricultural products (including aromatic product such as Rudrakshha). In midand far western districts (except Darchula), export tax on NTFP is a major sourceof tax revenue. Sindhupalchowk district which has access and market raisessignificant amount of tax from export of mine and river mine products.Sales are another source of revenue of the Himalayan districts but revenuegeneration opportunity is not evenly distributed. Sale of gravel, sand, boulder etcis one of the major sources to Sindhupalchowk, whereas it is almost non-existentin many of the Himalayan districts. No districts have been able to sale sweptwood in the region.Revenue sharing has remained the main source of internal revenue of Himalayandistricts. Revenue sharing from land registration and transfer is distributed to alldistricts and more predictable as well. The royalty sharing from tourism is limitedto some of the districts only (from mountaineering, national parks and restrictedarea). The royalty sharing from hydro-electricity revenue is not available in farwesterndistricts and irregular and very low in mid-west region. It is also very lowin eastern districts as well. The revenue sharing from forestry (timber and NTFP)is more significant and regular in mid and far west.E. Contribution of Internal Revenue in DDC expenditureThe expenditure pattern reflects that about 40 percent of DDC expenditure isrecurrent and 60 percent as capital investment. In recurrent expenses, about 10,19, and 8 percents expenses are incurred in employee, operating and dailyallowances. About 35% of capital investment is made in infrastructures. TheDDC budget allocation and disbursement in the devolved sector is less than 2%in the region.In the public revenue side, less than two percent is contributed by this region,whereas this region receives about 5.5% share of public expenditure. The trendof such expenditure in the region is increasing (22.3% per year) as againstnational average (20.8%).ii

F. Institutional and Human Resource CapacityDDCs of Himalayan districts have low level of institutional and HR capacity toeffectively manage revenue generation in more transparent manner. Though theLSGA has provided authority to raise revenue from tax and non-tax sources yetthe efforts so far made is transactional approach only. There is no serious effortin raising revenue in the districts. DDCs do not have systematic accounting,record keeping and reporting practices hence creating obstacle to projectrevenue potentials in the districts.G. Major Issues and ChallengesThe major issues and challenges in revenue mobilization in the Himalayandistricts are identifying new additional sources of revenues, supporting LGs fromthe centre to increase revenue by building their capacity, focusing towardspotential yielding revenue sectors, authorizing LGs to fix the tax rate based onsocio-economic conditions and suitability without limiting autonomy of the DDCsto fix tax rates, introducing practice of revenue planning, increasing attention andefforts on local revenue of the line agencies in their respective sectors (i.e.forests, mining and land registration), making LB revenue suggestion centralcommittee pro-active in resolving the issues of local revenue at central level,making attitude of LGs proactive in revenue administration, setting up properorganization for revenue administration, building capacity of human resourcesand maintaining revenue records.H. Expenditure ProjectionExpenditure has been projected on the basis of district expenditure data availablefrom the FCGO; and the stated growth rate of national expenditure and projectedinflation in the current Three Year Plan of the Government. The Governmentoutlay projection for capital expenditure (more or less analogues to developmentexpenditure) is being consistently maintained at 15%.Internal revenue source is a very small part in the mountain districts; they arelikely to have additional 1 to 1.5 % impacts in the total district level developmentexpenditure. Based on all these, a growth rate of 16% per year (in nominal term)has been applied for projecting the development expenditure at the district levelI. Internal Revenue Growth ProjectionApproaches applied for the growth projection are based on some smootheningframework and commonsense, as described belowi. Data were converted in real terms of 2010 price to take care of theinflation effects up to 2010ii. Application of the moving average growth rates for the period 2006/7,2007/8 and 2008/9 was applied.iii

iii. The projection base was built on the chosen moving average for 2006/7,2007/8 and 2008/9 as a base for 2010 as the expected base.iv.The study took a simple growth trend of 15% a year with an inflation ofabout 8% a year and real additional revenue effort of 7%, in general.v. In case of the land tax, the expected base revenue of 2010 has been putintact as an increase in the tax rate on land would not be practical and willnot be politically acceptable due to the high poverty in the region.vi.In case of the revenue sub-heads for which a tax was not raised by adistrict, a small starting amount of Rs 10000 is set as a target, for theprojection from the next year.J. Revenue Potentials of Sample DistrictsJumla: DDC Jumla has potential to raise export tax on fruits (organic apple) onceregular motor service to Surkhet and beyond is in operation. It has potential toraise revenue from export of goats and sheep. In sales, it has potential for sellingsand, gravel and boulders from rivers though in small amount. Another potentialsource is entry fee for herbs collectors for which mandatory provision of identity isrequired to implement. Fishing licensing is also potential in Jumla district.Darchula: DDC Darchula has to do proper administration of herbs such asYarcha Gumba. It has potentials to raise revenue from export tax on agricultureproducts and livestock. Besides regularization of mining and timber export is alsopossible to raise revenue. Swept wood sale could be another source of revenue.Sankhuwasabha: Export tax on timber from private forests is potential whenregular motor services to the Terai are available. Regularizing mining activity cangenerate income through revenue sharing with GoN. River mine sale from majorrivers have high potential for proposed Arun hydro-electricity project andassociated road construction.Sindhupalchowk: Regularization of mining (slate) and provisioning of fee fortourism related activities such as bungee jump and rafting. Export tax onagriculture products and livestock has also potential for revenue.K. RecommendationsRevenue management: All Himalayan DDCs needs to up-grade the status ofinternal revenue unit to a section with professional (officer level) staff. Districtspecific revenue potential study and revenue projection and revenue mobilizationplanning is required to enhance the revenue of DDC. Periodic research on taxbase and coverage has to be conducted in cooperation with line offices, privatesector and VDCs. Periodic interactions with multi-sectoral stakeholders includinglocal administration and Revenue Advisory Committee is required to get supportfrom them. Provide autonomy to DDCs in raising revenue from the bases that arenot under purview of Centre and LGs. DDCs have to revise the rates of tax, feeand charges in a regular interval considering inflation rate and market prices.Local bodies senior as well as staff involved in revenue generation have to beiv

trained on revenue mobilization, accounting and record keeping as perrequirement. Publish revenue mobilisation and expenditure details to seeksupport to enhance revenue generation in the districts that will promotetransparency and accountability, its administration and compliance.Partnership and Collaboration: Initiate partnership with privatesector/individuals for raising tax/fee/charge (e.g. toll tax, selling sand boulderfrom a small pocket, service charge in river-crossing) on benefit sharing basis.DDCs can promote public private partnership in income generating projects orother revenue raising spheres as well. DDCs can increase their revenue not onlywith increased base through inter and intra-district coordination in revenuegeneration. Update the valuation of land in accordance with changes in landvalue, infrastructure development in close collaboration with DistrictAdministration Office, Land Revenue Office, Cadastral Survey Office andVDCs/Municipalities for land ownership transfer purpose.Monitoring and inspection: DDCs have to emphasize in monitoring and alsoinspection of the revenue sources and bases in regular interval.Environmental assessment of potential resources as prescribed byenvironmental laws has to be conducted for sustainability and complying withregulations.Policy and Laws: Review the existing policies on local revenue generationauthority with a view to promote fiscal autonomy to the Himalayan districts.Regulate illegal export (timber to Tibet from the northern border):Inter-ministerial Coordination: Make clear about the revenue sharing (royaltysharing from tourist entry fee in buffer zones/conservation area, royalty raised byNepal Mountaineering Association, Nature Conservation Fund). Disburse royaltytimely from the hydro-electricity and tourism sector Establish strong coordinationamong ministries/departments with MoLD at the centre. The Ministry of Financehas to facilitate revenue sharing process in more predictable manner ensuringtimely disbursement of the revenue sharing.v

___________________________ Chapter OneIntroduction1.1 BackgroundLocal governments are the primary level government that imparts services to thepeople. According to the principle of subsidiarity, local governments are thosebodies that are easily accessible by the local people and easy for them toeffectively participate in governance matters and services they provide are easy,simple, prompt and transparent. On these bases, state devolves the workresponsibility and power to the local government. Whether they are countries ofUnitarian governance system or the Federal governance system, there is equalimportance attached to local self-governance and there are local governments inboth types of system.Decentralization in Nepal has a long history and the process has undergonesignificant changes over time. Post 1990s till 2003 period can be considered asthe landmark to the development of decentralization process in the country, whenvarious reform measures were initiated to strengthen the devolution. Amoresystematic attempt with a legal base was followed since 1999 after thepromulgation of Local Self Governance Act, 1999.LSGA provides basic framework for fiscal decentralization that covers expenditureassignment, revenue assignment, intergovernmental fiscal transfers and localborrowing. After the political change of 2006, the Interim Constitution, 2007clearly spelled out the structure and principle of local self governance in thecountry. It also focuses on the accountabilities of the local government in terms oflocal resource mobilization, revenue sharing, intergovernmental fiscal transfer,and accountability mechanism at local level. Similarly, the constitutionemphasizes a balanced and uniform development throughout the countryproviding special consideration to the advancement of socially and economicallybackward communities. In a similar vein, it recognizes the local self governancepractice that has been continuous since the enactment of Local Self GovernanceAct, 1999 (LSGA) and Regulation, 1999 (LSGR). The LSGA has clearlymentioned the fundamental principles of local governance, devolution of powers,roles, duties and responsibilities of the local governments linked with centrallyprovided and locally generated resources.However, the assigned revenues are inadequate to meet the local expenditurerequirements. Nepalese local governments (LG) often use too many unproductiverevenue sources that barely cover the costs of collecting them. On the otherhand, LGs in Nepal are giving little attention to explore and exploit localopportunities to raise more revenues rather looking centre for higher amount of1

esources. Similarly, the Government of Nepal (GON) continues to allocategradually higher budgets and revenue sharing to the local governments to meetthe gap of fiscal requirements at local level. GON also introduced formula andperformance based grant system and higher incentives for the LGs which deliverbetter performance as per the stated legal frameworks.The slow pace of socio-economic and infrastructure development in the Mountaindistricts demands higher amount of resources covering development needs of theHimalayan region. For this purpose, this study intends to explore revenuepotentials of the Himalayan districts 1 covering east to west (Taplejung toDarchula).1.2 Statement of the ProblemThe sources of funds of District Development Committees (DDCs) in theHimalayan Region includes annual block grants and conditional grants from GON,revenue sharing and contributions received from different donors and a smallproportion of this covered by locally generated tax and non-tax revenues. LSGA/Rprovides similar revenue tax and non-tax sources to all DDCs irrespective to theirlocation in the different geographical regions. These sources are mostly based onnatural resources like mine base, forestry base, and river base. The naturalresource sometimes can have a big economic value in one region if it is directlylinked with the market access; whereas, it may not have economic value if it doeslink with the market.The amount of revenue raised by Himalayan DDCs from the internal sourcestends to account for a small proportion of their annual budget. As a result, theability of these local governments to set and achieve their own developmenttargets and priorities are severely limited. One of the reasons pointed out for thelow level of revenue mobilization from internal sources is that the LSGA permitsmany sources of raising taxes for DDCs in the Himalayan region, but some ofthese are not potential revenue yielder in the true sense. On the other hand, it isalso found that the DDCs and VDCs have not collected revenues from thesources assigned to them even when the potential for raising revenue from suchsources is high. One of the reasons attributed to the low level of internal revenuemobilization is the inappropriate assignment of revenue sources, which are notpotential revenue yielder. The underlying principles behind any assignment ofrevenue sources to LGs is the ease in collection and administration and that thesource assigned should yield substantial revenue.1.3 ObjectiveThe overall objective is to undertake analysis of the existing situation regardingthe various aspects of internal revenue mobilization of DDCs in the Himalayanregion and recommend reform measures to make the revenue mobilization morereliable, transparent and taxpayer friendly with a view to enhance own-sourcerevenue generation. More specifically the objectives are:2

i. Analyze the total revenue for the last five years and estimate for next five yearsii. Analyze the internal revenue for the last five years and estimate for the next fiveyearsiii. Analyze the total expenditure for the last five years and estimate for the next fiveyearsiv. Analyze the total expenditure from the internal revenue and estimate for the nextfive years1.4 Expected OutputsThe outputs expected from this study are:i. Data collection on and analysis of the following aspects of the internal revenuemobilization system of DDCs carried out:a. Available tax and non tax sources,b. Bases and rates applied in these sources,c. Institutional capacity of revenue administration,d. Revenue collection procedures and its impact on compliance,e. System of revenue projection, andf. Trends in own-source revenue collectionii.iii.iv.Different aspects of existing system of revenue practiced in the DDCs assessed andevaluated and weaknesses in the functioning of the system identified.Trend of overall revenues and expenditures for the last five yearsInter LBs partnership, cooperation and collaboration explored.v. Possibilities for the enhancement revenue collection identifiedvi.Reform measures in the above areas recommended.1.5 MethodologyDuring the inception phase the study team developed the approach andmethodology for the study based on the Terms of Reference provided by theLocal Governance and Community Development Programme (LGCDP). Toanswer the provisions of the TOR a wide range of quantitative and qualitativedata was collated. Four districts (Darchula, Jumla, Sindhupalchowk andSankhuwasabha) were identified as sample districts for field visits and study.However, secondary data of all sixteen districts were consulted for socioeconomicanalysis and Macro analysis. For the analysis of the revenueexpenditure gaps and model building for revenue projection, the number of3

districts used varied depending on the availability of the data from the secondarysources. In addition, expert assisted participatory Focused Group Discussion(FGDs) was organised in Kathmandu with the politicians/ LDOs/planning officersof the Himalayan districts by using structured questionnaire. FDGs concentratedon the potential revenue sources, problems in raising revenue, expenditurepattern etc.The quantitative data was drawn from secondary sources, mainly the publishedand unpublished records of Government of Nepal (GON), revenue sharing entities(Land Reform, Forest, Tourism, and Electricity related agencies), FinancialComptroller General Office (FCGO) and local bodies associations. These enabledlevels of revenue flow, relationships between revenue and budget allocations andoperational factors to be assessed. In addition, policy and strategic trends anddecisions during the period were reviewed, as well as an assessment of results,again drawing on published material triangulated across a number of sources.The main data sources used were:• Official records of DDCs of the sample 4 districts.• <strong>Report</strong>s/publication of GON, local bodies associations and other professionalagencies related to Himalayan districts.• Publications and related database of the Central Bureau of Statistics (CBS),Ministry of Finance (MOF), Ministry of Local Development (MOLD), Ministry ofAgriculture and Cooperatives (MOAC), Local Bodies Fiscal Commission (LBFC),Poverty Alleviation Fund (PAF) and FCGO.• Key research publications.The documentary data was supplemented with qualitative information based on astructured questionnaire, semi structured interviews and Focus GroupDiscussions-FGDs (as mentioned earlier). Annex 1.1 lists all those who wereinterviewed or participated in the FGDs. The questionnaire was filled in by 32respondents including representatives of political parties, ex-DDC Executives,Local Development Officers (LDO), engineers and staff of local bodies. Semistructured interviews were held with 16 district level officials. The interviewsenabled key issues to be explored in greater depth and local bodies specificaspects. After the interviews study team members discussed the notes to ensurerespondents' responses were recorded correctly and in a comprehensive manner.FGDs were conducted in Kathmandu, Darchula, Jumla, Sindhupalchowk andSankhuwasabha districts with groups of DDC officials, political partyrepresentatives and civil society. The FGDs enabled wider views on the revenuemobilisation and on aspects of the questions to be explored, and allowedtriangulation with interview based and documentary evidence. The team hasspent considerable time analysing the interview notes and other data.Projection for the revenue and expenditure for next five years is based on acombination of judgmental and trend analysis methods.4

Data on real internal revenue of the sample districts were collected from thedistrict records and used for revenue forecasting. Whereas, published datasources has been used to forecast revenue for other Himalayan districts.Due to scanty, erratic and irregular nature of LGs data, moving average of thestable three years of past five years has been taken from the real revenue data toanalyse trends for the revenue projection for next five years. Similarly, growthforecast of the national periodic plan for the next three years and inflation ratepublished by Nepal Rastra Bank has been used to forecast next five years'expenditure needs of the Himalayan districts.1.6 Scope of WorkThe study specifically included the following tasks (as per TOR):• Consultative meetings with the key officials from various governmental andmultilateral/international organizations and professional organization of Localgovernments were carried out during sharing of inception report and in otheroccasions.• Designed a comprehensive questionnaire/data collection sheet in order to collectdata about internal resources generated by DDCs, trends in their collection, andto get feedback from the field with a view to assessing and identifyingweaknesses in the functioning of different aspects of the revenue system of theselocal bodies.• Carried out field missions in the selected sample DDCs.• Ascertained the causes leading to the high and low level of revenue generation ofsample DDCs.• Assessed and evaluated the existing system of revenue practiced in the DDCs onthe basis of analysis of available data and information collected from the fieldcovering aspects such as trends in own-source revenue collection (aggregatedand disaggregated), available tax and non tax sources, bases and rates appliedin these sources, institutional capacity of revenue administration, revenuecollection procedures and its impact on compliance, level of collection efficiencyand utilization of revenue sources assigned, status of the implementation of therevenue authorities, and possibilities of enhancement revenue collection.• Analyzed the overall revenues and expenditure trend for the last 5 years.• Identified weaknesses and possible measures of reform in the different aspectsof the functioning of revenue system of DDCs.• Explored revenue potentials and expenditure for next three years, and discussedthese with local stakeholders in order to check their level of realism during fieldconsultations.• Recommended policy reform and other practical measures with a view tostreamlining the overall system of revenue administration of these local bodies.5

1.7 LimitationsDespite the thorough methodology, and extensive use of available secondarydata for all the 16 districts by going beyond the four districts stipulated in TOR forthe analysis of various subcomponents, the study team would like to note anumber of limitations. Firstly, it was not possible to undertake primary datacollection in an extensive way and the quantitative assessment was dependent onthe secondary data available. This was not always comprehensive due to scanty,erratic and irregular nature of LGs data. Secondly, the time available restrictedthe number and depth of interviews and discussions and the depth of sectorcoverage. Thirdly, record of the revenue mobilization was limited in all the visiteddistricts and baseline data was not available as the LGs have not yet carried outstudy on revenue mobilization in the Himalayan region.6

___________________________Chapter TwoMacro Socio-economic Scenario of Himalayan Districts2.1 General Physical StructureSituated between 26 o 22' N to 30 o 27' latitude and 80 o 4' E to 88 o 12' E, Nepal is asmall country with area of 147181 Sq KM. It has varied climate and physiologicalstructure. Altitude of the country varies from less than 100 meter (m) to 8848meter. The country has been divided in three geographical regions i.e.Terai, Hills and Himalayan (Mountain). The Himalayan region contains highmountains and Himalayas with altitude ranging above 3300 meter above sealevel, which rises high with perpetual Himalaya snow above 5000 meter. Thecountry borders in North with China and in the rest of the three directions withIndia. The axis length of the country is 875 Km. North-south width varies between130 to 240 Km. The country is divided politically in 75 districts and five regions(Eastern, Central, Western, Midwestern, and Far Western) majority based onriver basins. The Himalayan districts (mountain region) which this study coversinclude 16 districts 2 and they are comprised in all regions. Four Himalayan districtheadquarters ( Humla, Mugu, Dolpa and Solukhumbu) are still not connected bymotor-able roads.Mountain Districts by Development RegionsDevelopment Region Districts NumberEastern Taplejung; Sankhuwasabha; and Solukhumbu 3Central Dolakha; Rasuwa; and Sindhupalchok 3Western Manang; and Mustang 2Mid Western Dolpa; Humla; Jumla; Kalikot; and Mugu 5Far Western Bajhang; Bajura and Darchula 3Total Mountain 16Nepal 75Source: Classification Used by NPC2.2 Population StructureHimalayan region constitutes about 7 percent of the population of Nepal.Currently, about 2.8 million people (projected for 2010 based CBS survey of 2010and a medium variant prescribed by CBS) live in the region. About a third of thatlives in central mountain region. Small number (1.5%) lives in western mountain7

egion. Other regions have the population between 18 to 24 percent. 95 percentof the total population of the Mountain Region lives in the rural areas. There aretwo small municipalities (Bhimeswor in Dolakha and Khandbari inSankhuwasabha district) holding about 5% of the population. Population growthin the mountain region is about 1.6% a year, much less than the national averageof 2.3 % over the last decade. Population growth in the Mountain Region is lowerdue to climate effects and out-migration from the region due to hardship.Ethnicity-wise, about a third of the populations are Chettri followed by Tamang(12%), Brahmin 10%, and Sherpa, Rai and Newar 4 to 5% each. About 70percent of the population are Hindu, and one fifth Buddhist, 9 percent Kirat andrest the others. Unemployment is about 5% and people going destination abroadis about 3%.Refer to Annex 2, 3 4 and 5 for details.2.3 Land UseMost of the land area of the region is a difficult terrain bone with about 35 %slope land and almost 60% high mountains with snow most of the time.Agricultural land constitutes of only 4% of the total area. Agricultural land area isabout 208 thousand hectares for population of 2.0 million in 2010. Per capitaland area is about 12% higher than the national average. However, the cropproductivity is very low and most of the districts are food deficit. Of the total landarea in the region, about one third is snow, one fourth forest, 10 percentagricultural and grass land (with about 60% grass land in it), barren land 24%and shrub 8%. Because of the presence of grass land in abundance, livestock isone of the agricultural occupations in high mountains. Refer to Annex 6, 7 and 8for details.2.4 Poverty and Social StatusGovernment of Nepal does not estimate separately the GDP and per capitaincome of the regions. UNDP estimate based on 2001 data indicates that HDI ofMountain district is much lower (0.386) compared to that of Nepal average(0.471). Among the 16 districts Jumla, Kalikot and Mugu in the Mid-westernregion and Bajhang and Bajura in Far-western region is the lowest (table 10).Likewise education index of the region is lower (0.296) than Nepal (0.385) and inthe CBS ranking of the districts compared to Kathmandu as 1 (table 3). Percapita income (PPP) of the region is Rs. 1114 (90%) as against 1310 of Nepal.However, the income of Manang, Mustang, Rasuwa and Solukhumbu is muchhigher than the Nepal average. If these four districts are separated, the situationof the region is further worst. Refer to Annex 9 and 10 for details.2.5 Rural InfrastructureRural infrastructure is very poor in the region. Irrigated Area is only about 3% ofthe agricultural land. Road infrastructures is about 1000 Km and constitutes only8

about 6% of the roads in the country despite mountain area being about one thirdin the country. Black topped road is only about 190 Km. Most of the parts areinaccessible. Still four districts headquarters are not connected by road. Refer toAnnex 11 for details.2.6 Poverty Incidence Food SurplusPoverty incidence is 42% as against 31 % percent in the country with maximumpoverty incidence ranging to 66% in some Ilakas (sub-district of Mugu). Povertyincidence is high in most of the districts, with highest in Kalikot followed byTaplejung and Rasuwa (Table 2.3). There is acute food shortage in the region.Twelve out of sixteen districts are in food deficit. Edible food grain production peryear per capita in the region is about 151 Kg. Food deficit is about 20% of therequirements. Stunting is high as 61% and underweight are almost half. Refer toAnnex 12 for details.2.7 Literacy and Schooling.Literacy in the region is only about 43% and is 10 percentage points behind thenational average (2001). Illiteracy in some villages goes high up to 99%.Midwestern and Far-western region have the highest illiteracy rate. Educationstatus 2009 shows that there are about 5600 schools in the region. Theyrepresent about 11 percent of the total schools in the country. Net enrolment hasprogressed well to 95%. Student per teacher at primary and secondary level is 43and 37 % respectively, not much different from national status. While thepopulation of the region is about 7%, student in the primary school is about 8% ofthe total students in the country implying that schooling is fairly distributed in theregion compared to the country. Refer to Annex 13 and 15 for details.2.8 Health and SanitationHousehold having access to toilet facility in the region is only about 41%; andaccess to the improved source of drinking water is for 73%. There are only alimited number of health institutions. 2007 national record has shown only about567 health care units in the region for a population of 2 million, implying about4000 population to be served by a health care unit. There are only 53 doctors (38thousand population per doctor), 821 Health assistants/AHW and only about 160nurses in the entire mountain region. District health status varies significantlyRefer to Annex 13 and 14 for details.2.9 Industrial Status, Communication, Banking and CooperativesMost of the industries are of small and cottage category. There are only 797manufacturing units registered in the region by 2009, representing only about 2%of the total industrial establishment compared to cottage industry in the country.9

Likewise, as manufacturing establishments is very low; revenue generation frombusiness taxes is nominal to DDCs. While mobile services and VSAT connectionare available in the district headquarters, postal services are still the major meansof communication. There are about 149 postal service office, 31 commercial bankbranches with at least one in each district, and 630 co-operatives in the region.Refer to Annex 16, 17, 18 and 19 for details2.10 Production and ProductivityMajor cereal productions in the region are Maize, Millet, and Wheat. Cash crop ismajorly potato. It serves also as the staple food crop. Productivity of the region islow due to lack of adequate fertilizers and irrigation access. Food deficit is about20%. There is also pulses production of about 11 thousand MT (about 4% of thenational production). Both the cereals and pulses are imported in the region tocater both the population and tourists. Fruit production is about 58 thousand MT(29 Kg per capita) and is majorly Deciduous (70%). Apples production has gainedpopularity in recent decade. However, marketing has been a major problem.Refer to Annex 20, 21, 22 and 23 for details.2.11 Livestock Population and ProductionCattle, Yak, sheep and goat raising are also a major among the occupations inthe region. High altitude regions are popular for yak, and goats raising for theirlivelihood. Moving down to the hill in winter and up in winter season with thelivestock population is the general culture in high attitude regions.Total milk production is 50 Kg per capita and meat production 9.5 kg per capita inthe region. Likewise, wool production is 121 kg. Egg production is 20 per head.The region is popular for cheese and wool production of high quality. Refer toAnnex 24 and 25 for details. Parts of them are also exported.2.12 Export and ImportTraditional carpets, herbs, Yarcha Gumba and Yak cheese are the general exportitems of the region. However, the actual data is very scanty. Foods, pulses andproductions of tourist items are the major export. There is high potential ofproduction and export of herbs, apples, yak cheese, wool and hydro-power fromthe region at present.10

__________________________Chapter ThreeLegislative Framework and Local Revenue Policies3.1 Local Self-Governance ActDecentralization based on legislative and political commitment is indispensable.In Nepal provision for decentralization and local governments is explicitlyprovisioned in the current Interim Constitution of Nepal. LSGA and Regulationsi.e. Local Self-governance Rules (LSGR), 2000 and Local Governments(Financial Administration) Regulation (LBFAR), 2007 are the main legal basis andprovide the rules for decentralization and local governance system and practicesin the country. The important features of these laws inter-alia are:• Principles of local self governance is clearly mentioned in article 3 of the Act,• Clear provision of LG's right to get grants from the centre,• Clear specification of expenditure, taxing and borrowing authorities to the localgovernments,• System of revenue sharing from the centre and among LGs,• Provision of a Decentralization Implementation and Monitoring Committee(DIMC) and Local Bodies Fiscal Commission (LBFC),• Provision for the creation of a Local Service,• Provision for the establishment of a sectoral (subject) section in the localgovernments, and• Partnership with civil society, NGOs and private sectorLSGA provides broader framework for fiscal decentralization by assigningdifferent roles and responsibilities to LGs followed by revenue raising authorityfrom different tax and non tax sources and central government grants to minimisevertical and horizontal fiscal imbalances. The LGs are authorized to levy taxes onvarious activities namely utilization of natural and other resources, land andbuilding, profession, entertainment, vehicles, property rental, etc. In addition tothe revenue from tax sources, the LGs are also empowered to impose differenttypes of fees and service charges on their service delivery.3.2 DDC Revenue StructureLSGA article 221 has provisioned the structure of DDC revenue. It comprisesdifferent internal and external sources that include GON grants and budget;amount collected from taxes, fees and charges; land revenues shared by VDCs11

and municipalities in the district; amount collected from sale or rent of DDC'smovable and immovable properties, and interests, amount receipt from gift,donation, grants or aid from any person or institution; foreign aids; amount receiptfrom revenue sharing, fine and penalties, and income generating activities;borrowings from bank or other financial institutions; and others if any.3.3 Existing Revenue Sources of LGsIn order to perform the roles assigned to LGs, the governments (national andlocal) have to collect revenues in an efficient and appropriate manner, andallocate those resources effectively and efficiently. DDC as an intermediary localgovernment can impose tax on the use of roads and bridges constructed from itsown source or those formally handed over to it, export tax on local raw materialsand tax on recyclable and waste materials. Another important source of internalrevenue of DDC is the income from the sale of sand, soil, stone, aggregate andwoods swept by river. Besides, DDCs could also collect different types of servicefees and charges. In addition to this, DDCs are entitled to get revenue sharingfrom different sources of revenue collected by the government in respectivedistricts on a derivative basis. The details of internal revenue authorities to alltiers of LGs are given in the table below.Table 3.1: Revenue Sources of LGsDDCs Municipalities VDCs• House and Land Tax• Land Revenue or LandTax (25% to be sharedwith DDC)• Integrated Property Tax• Tax on the Utilization ofNatural Resource (35 to50% to be shared withMunicipalities and VDCs)• Taxes on the use ofinfrastructures such asroads, bridges, etc.• Tax on the export ofgoods produced in thedistrict.• Tax on the recyclable andwaste materials• Tax on agricultural andanimal products• Service fee on the use ofguest house, library, cityhall and canals,embankments and dams• Licensing and renewalcharges on rafting,boating, and Tuins andfishing on rivers• Recommendation Fee• Vehicle Tax• Entertainment Tax(cinema hall, video hall,cultural show halls andtheatres)• Rental Tax on propertyrented• Advertisement Tax• Business enterprise taxon specified industry,trade, profession orvocation• Commercial video tax• Parking charges• Other charges includingthe charges for thevaluation of immovableproperties• Recommendation Fee• Charges on buildingpermits12• House and Land Tax• Land Revenue or Land Tax(25% to be shared with DDC)• Vehicle Tax• Entertainment Tax• (Cinema hall, video hall,cultural show halls andtheatres)• Rent and tenancy tax• Advertisement Tax• Business enterprise tax onspecified industries, trades,professions or vocations• Commercial video tax• Tax on commercial exploitationof natural resources.• Service Charges (sanitation,drainage/ sewerage, solidwaste mgmt., etc.)• Entrance charges (touristplaces, parks, gardens, etc.)• Approval and recommendationcharges• Licensing and Renewal Fees

DDCs Municipalities VDCs• Charge for the operationof cable car• Income from sale of sand,aggregate, boulders andwoods swept by river(Dahattar-Bahattar), etc.• Revenue Sharing fromthe DDC:• Tax earned from theexport of materials,recyclable and wastematerials (35 to 50percent)• Income earned on thesale of sand, soil,aggregate, boulders,woods swept by rivers.(35 to 50 percent)• Revenue Sharing fromthe centre• House and LandRegistration Fee*• Royalties from mines (50percent), forest products(10 percent), hydropower(50 percent)• Entrance fee and royaltiesfrom tourists on trekkingor visiting national parksand wild life conservationareas. (30 percent)• Royalties received fromthe mountaineers andentry fees charged totourists entering into theDDC territory. (30percent)Source: LSGA 1999, LSGR 2000.* Land and Building ownership transfer fee collected by Land Revenue Office.DDCs' authority to determine Tax and Non-tax Rates• Revenue Sharing from theDDC:• Tax earned from the export ofmaterials, recyclable and wastematerials (35 to 50 percent)• Income earned on the sale ofsand, soil, aggregate, boulders,woods swept by rivers. (35 to50 percent)Source with fixed rateService charges onirrigation cannel.Licensing and renewalcharges on river rafting,fishing and operation ofTuin and cable cars.Source in which maximumand minimum rates areprescribedInfrastructure utilization (vehicle)tax.Natural resource utilization tax.Recommendation fee.Tax on export of goods from thedistrict.Source in whichdiscretion of ratedetermination lies withthe local CouncilBones and horns of deadanimals not prohibited.Service charge for the use ofguesthouse, library, medicalclinic, inn and community hall.Tax on materials reusable byindigenous industries.Tax on non-reusable wastematerials.Tax on feathers on birds notprohibited.Source: LSGA,1999 and LSGR, 2000.13

3.4 Revenue Sharing ArrangementsThe revenue sharing among the level of governments is both vertical andhorizontal in nature. Firstly, the central government shares certain type ofrevenues with the DDC. Such a sharing arrangement applies to the followingtypes of revenues:House and land registration charge:DDCs receive amount of charges collected within district by GoN onaccount of Registration fee on House and Land purchase and sale inaccordance with LSGA and LSGR within the range of 5 percent to amaximum of 95 percent depending upon the amount of such charge.• Royalty from mines (50 percent);Royalty amount to be received by GoN from mining and petroleumproducts extraction.• Royalty from forest products (10 percent);Royalty amount received by GoN from forests sector (Timber and Nontimber).Hydro-electricity:50% of royalty received by GoN (12% to DDC having powerhouse and38% to DDCs within the concerned development region.Tourist entrance fee and royalties:50% of royalty amount and fee raised from tourist trekking, entry feeof tourist in National Parks and Wildlife reserves, 30% of royalty fromMountaineering and 30% of tourist district entry fee received by GoN.The arrangement of vertical sharing of revenues among local governmentsrequires the VDCs and Municipalities to share 25 percent of the total landrevenue collected by them with the DDC. On the other hand, DDC is obliged toshare 35 to 50 percent of the tax revenue collected from the export of differentmaterials beyond the district boundary and those imposed on recyclable andwaste materials with VDCs and Municipalities in a derivative basis. Similarly, theDDCs also have to share the revenue earned from the sale of sand, soil,aggregate, boulders and wood swept by rivers with VDCs and Municipalities inthe same ratio.14

Box 2.1: Inter-governmental Revenue Sharing ArrangementSources ofS.N.Revenue Sharing1. House and LandRegistration Fee(Article 220 A)2. Natural ResourceUtilization (Article220 B)3. Tourism entry fee(Article 220 C)DDC Municipality VDCAmount of fee receivedwithin district by GoN onaccount of Registrationfee on House and Landpurchase and sale inaccordance with Rule221(LSGR 2000), andthe rate as per annex26 (1) (minimum 5percent to a maximumof 95 percent) as follow:• 90% up to 5 million• 60% up to 10 million• 30% up to 20 million• 20% up to 30 million• 15% up to 50 million• 10% up to 100million• 5% above 100millionRoyalty amountreceived by GoN frommining, petroleum,forests, water resource,and other naturalresources in accordancewith Rule 221(LSGR2000, and the rate asper annex 26 no. 2,3and 4) as follow:Mining: 50%Forests: 10%Hydro-electricity: 50%of royalty to be receivedby GoN (12% to DDChaving powerhouse and38% to DDCs within theconcerned developmentregion.50% royalty amountand fee raised fromtourist trekking, entryfee of tourist in NationalParks and Wildlifereserves (in accordancewith annex 26- 5), 30%of royalty fromMountaineering inaccordance with annex26- 6) and 30% of15

S.N.Sources ofRevenue Sharing4. Resource Utilization(Article 215 -3)DDC Municipality VDCtourist district entry feereceived by GoN (inaccordance with annex26- 7)30 to 50% to be sharedto VDC and Municipalityaccording to derivation(origin of resourcecollection)5. Sales (Article 218) 30-50% to be shared toVDC and Municipality(according to derivation)6. Land revenue/Tax(Article 221 - 2 C)To be received 25% ofthe amount collected byVDC and MunicipalityFormula of calculating Hydro-electricity revenue sharing:a. On the basis of installed capacity:30 to 50% tobe receivedfrom DDC toaccording toderivation(origin ofresourcecollection)withinmunicipality(article 125-2)30-50% to bereceived fromDDCaccording toderivationfrommunicipalityarea (article125 - 2 C)1. Installed Capacity (KW) *Rs. 100 for first 15 years of operation2. Installed Capacity (KW) * Rs. 1000 after 15 yearsb. On the basis of sale:1. Total sold unit*average selling price* 2 percent for first 15 years2. Total sold unit *average selling price*1000 after 15 yearsSharing for first 15 years:GoN Royalty (installed Capacity royalty + selling price royalty) *0. 5%Example:30 to 50%to bereceivedfrom DDCtoaccordingtoderivation(origin ofresourcecollection)within VDC(article 60-2)30-50% tobe receivedfrom DDCaccordingtoderivationfrom VDCarea(article 60-2 A)Puwakhola Hydro-electricity Project (with the hypothesis of running in full capacity wholeround year)Installed capacity= 6200 KW16

Average price in the year = Rs. 6.00 (example)sharing percentage: 501. From installed capacity:Rs. (6200*Rs. 100)* 0.50 = 310,0002. Selling price basis:6200*24(hrs)*365 (days) *Rs. 6.00 = Rs. 325872000*0.02 = 6517440Sharing to DDCs:Rs. 6517440*0.5 = 3258720Total amount of sharing = Installed capacity royalty + Sale royalty(a +b above)= Rs. 310,000 + 3258720= Rs. 3568720.00Out of this amount, 12% is provided to district where plant is located andremaining 38% is distributed to other districts in the concerned developmentregion. Population size, HDI, geographical area of the district and costs factor isthe indicators for sharing among the districts in the region as determined by DDCpresidents or official of DDCs of the region.3.5 Local Revenue Administration ModelsThere are four traditional models for tax administration in a decentralized system.They are central government tax administration with sharing of revenues; centralgovernment tax administration with assignment of taxing powers at differentlevels of government; multilevel administration with revenue sharing; and selfadministrationby each level of government. Contracting out is another model,which can be applied with any of the above-mentioned mutually exclusivemodels. LSGA/R provides first, third and last models to LGs, though theseprovisions are not as options but as mandatory. Revenue sharing model is of firsttype, whereas land revenue and resource utilization tax are of third model.3.6 Revenue Advisory CommitteeLSGR has provisioned the formation of district level Revenue AdvisoryCommittee to advise the DDC and VDC on revenue matters under the convenershipof DDC president and members from internal revenue office or DistrictTreasury Controller Office, district chapter of federation of chamber of commerceand industries, chairperson of the district executive committee of villagedevelopment committee association. The DDC secretary or a person nominatedby DDC Secretary serves as the member secretary of this committee. Thismeasure is contributing to enhance the quality of actions and decisions of localgovernments in revenue matters and contribute to bring fairness andtransparency in the entire process.17

3.7 Central Level Revenue Advisory Committee:LSGR has provisioned the formation of a Local Bodies Revenue AdvisoryCommittee to advice the Ministry of Local Development on Base, Rate andcollection procedures of Local Taxes and Fees chaired by a Joint Secretary asdesignated by the MOLD Secretary. Other members of the committee includeSecretary of Local Body's Fiscal Commission, representative of FNCCI, Ministryof Finance, Industry, Commerce, Nepal Chamber of Commerce, and LB'sassociations. This committee should also address issues on revenue sharingbetween centre ministries and local governments.18

___________________________Chapter FourRevenue Mobilization and Expenditure PatternFiscal decentralization has two aspects i.e. revenue assignment and expenditureassignment. The revenue assignment deals with the authority to raise tax andnon-tax revenues where as expenditure assignment is concerned with the tasksassigned to lower tier of governance. Inter-government fiscal transfer is arrangedto meet the resource requirement of the lower tiers of government and also toequalize the financial resource among the tiers of government.Since the devolution mode of decentralization is not very matured in Nepal,additional efforts are needed to strengthen the fiscal decentralization process atlocal level. Moreover, the resource base are not equally distributed among thelocal levels, the generic law does not result in an equitable generation of revenuein local government level. The high mountain districts are devoid of natural andmanmade resources to raise their own revenues. Besides, there is not equaldistribution of resources, access and capacity among the high mountain districtsas well. The eastern districts are more endowed with resources, have moreaccessibility and advanced in their human development compared to western andfar-western region.Himalayan districts are characterized by limited accessibility, scatteredsettlements and low population density, slow pace of development and in overallprevalence of mass poverty. Agriculture farming and livestock rearing are maineconomic activity though subsistence in nature and low productivity.Modernization and commercialization of the agriculture and livestock sector is ininfantry stage. Market accessibility is major hindrance for commercializationfollowed by slow spread of technology and its adoptability by local farmers. Inrecent years, the non-timber forest products especially the collection and sale ofYarcha Gumba has remained seasonal economic activity in some of the districts.Other valuable herbs and aromatic plants are also available in supportinglivelihood of the people in this region. Low level of economic activity has alsoaffected the revenue generation ability of local governments in this region.4.1 Revenue SourcesHimalayan districts have limited items in internal revenue sources. Thedistribution of available sources is also not even across the districts. Revenuesharing from land and house registration fee and forest products (wood as well asnon-timber forest products) has remained the common sources for all districts.19

The revenue sharing from hydro-electricity royalty is significant in central andwestern development regions only. Likewise, revenue sharing of tourism sector isalso nil or insignificant other than in Taplejung, Solukhumbu, Rasuwa, Dolpa andHumla. All Himalayan districts raise income from internal sources provided tothem. Table 4.1 reflects the source in order of their importance in 12 Himalayandistricts as responded by DDC officials in focused group discussions (FGD). Inrecent years, sale of tender document and examination fee for service entry haveemerged as important source of income for DDCs that have generated moreresources compared to other sources.Table 4.1: Major 5 sources of revenue in terms of yield in HimalayandistrictsS.N.Main SourceTotal number ofrespondents -1220Number ofDistrictsName of Districtsnot regarded asmain source1. Land Revenue 10 All except 2 Sindhupalchowk,Sankhuwasabha2. Export Tax - NTFP 10 All except 2 Solukhumbu,Sindhupalchowk3. RecommendationFee4. D Class contract &NGO licensing andrenewal5. Tender DocumentSale6. Tourism SectorRoyalty10 All except 2 Solukhumbu,Sankhuwasabha10 All except 2 Solukhumbu,Sankhuwasabha9 All except 3 Sindhupalchowk,Solukhumbu,Sankhuwasabha6 Taplejung,Solukhumbu,Rasuwa, Dolpa,Mugu, Humla7. Service Charge 4 Sindhupalchowk,Rasuwa, Mugu,Darchula8. River Mine sales 3 Rasuwa,Sankhuwasabha,Darchula9. Hydro Elec. Royalty 2 Rasuwa, Dolakha10. Forest Royalty 2 Sankhuwasabha,Darchula11. Export Timber 2 Dolpa, Rasuwa12. Fee on Rivercrossing (Tuin andBoat)1 Sankhuwasabha,13. Export Mine product 2 Dolpa,Sindhupalchowk14. Tax on commercialagro product'stransaction2 Taplejung,Sankhuwasabha15. Apple. fee, Exam2 Darchula, RasuwaFee16. Toll tax 1 Sindhupalchowk17. Tax on live animalcommercial1 Darchula

S.N.Main Sourcetransaction18. Water source andMine registration &Renewal Fee19. Fee on Rivercrossing (Tuin andBoat)20. Property andAuction SaleTotal number ofrespondents -121 JumlaNumber ofDistricts1 Sankuwasabha1 DarchulaName of Districtsnot regarded asmain sourceSource: FGD with DDC officials (August 2010) and field consultation (July-August 2010),In terms of main sources of revenue, export tax on NTFP registration andrenewal fee of class D contractor and NGO registration recommendation feerevenue sharing from land and house registration are major stable sources.However, stable source of revenue differs from one to another district. Detail isgiven in table 4.2 below.21

Table 4.2: Main 5 stable sources of internal revenue of Himalayan districtsDistrictsHouse&LandRegd.ForestroyaltyTourismSectorRoyaltyLandRevenueTollTaxExportTax -NTFPExportTax -MineProductsTax onDeadAnimalresiduesTax oncommercial agroproduct'stransactionTax on liveanimal Recommendaticommercial on FeetransactionD Classcontract &NGOrenewalApple. fee,Exam FeeRent,DividendInterestTaplejung 1 1 1 1 1Sankhuwasabha 1 1 1 1 1Solukhumbu 1 1 1Dolakha 1 1 1Sindhupalchowk 1 1 1 1 1Rasuwa 1 1 1Dolpa 1 1Jumla 1 1 1 1Mugu 1 1 1 1 1Humla 1 1 1 1Bajhang 1 1Darchula 1 1Totalfrequencyamong 12districts5 2 3 4 1 6 2 1 2 1 5 6 2 1 2Source: FGD and district consultations, July-August 2010.Note: 1 denotes yes for stable source.Sale ofmineproduct22

The FGD with 12 DDC officials also reflect that the revenue sharing from hydro-electricity followed by sharing from tourism is mostunpredictable source of DDC income (Table 4.3). Despite being major sources DDCs have problems to project income from suchsources.Table 4.3: Unpredictable sources of local revenues in Himalayan districtsDistrictsHydroElectRoyaltyTourismRoyaltyLandRevenueExportTax -NTFPExport Tax -Wear & teargoodsTax on commercialagro product'stransactionRecommendationFeeApple. fee,Exam FeeTaplejung 2 1Sankhuwasava 2 1 3Solukhumbu 1 3 2Dolakha 1 2Sindhupalchowk 1 2 3Rasuwa 1 2Jumla 1 2Mugu 1Humla 3 2 4 1Bajhang 1 2 4 3Darchula 1 3 2One districtmissing??Also give totalfrequencySource: : FGD and district consultations, July-August 2010. Note: The range 1 to 4 denotes most unpredictable to less unpredictable sources.RiverMinesales23

In similar way, the FGD and field consultations reflected that there is diverse pattern of unstable sources of income in Himalayan districts.Table 4.4: Unstable sources of local revenues in Himalayan DistrictsDistrictsHouse &LandRegdHydroElecRoyaltyTourismRoyaltyLandRevenueToll TaxExportTax -NTFPRiverMinesalesTenderDocumentSaleRivercrossingtaxTaplejung 1Sankhuwasava 1Solukhumbu 1 1Dolakha 1 3 4 2Sindhupalchowk 3 2 1Rasuwa 1 2Dolpa 1Jumla 2 3 1Mugu 1 2Humla 1 2Bajhang 1 2Darchula 2 1Total frequencyamong 12districtsSource: : FGD and district consultations, July-August 2010Note: The range 1 to 4 denotes most unstable to less unstable sources.Agricultureproductsexport24

Some of the DDCs in Himalayan region have not initiated collecting revenue from some sources either due to cost effectiveness orvery low yield; hence it is possible to raise revenue from the sources provisioned in LSGA and its Regulation. For example, sales ofgravel, stone and sand from river mine is potential in almost all Himalayan districts but due to inaccessibility and also low level oftransaction volume, DDCs have not yet been attracted to these sources. Taplejung, Rasuwa and Bajhang can introduce toll tax asthese districts have potentiality to raise such tax from vehicles. Likewise, many districts have potential to raise tax in commercialtransaction of agricultural products such as (apple and walnut in Jumla and Dolpa, vegetables in Dolakha, dairy products inSolukhumbu) etc.Table 4.5: Revenue not yet collected by DDCs provisioned in the lawDistrictsToll TaxExportTax -NTFPExportTax -TimberExport Tax- MineProductsTax onDeadAnimalresidues25Tax onagroproduct'stransactionServiceChargeFee onRivercrossingRiver MinesalesTaplejung 1 1 1 1Sankhuwasava 1Solukhumbu 1 1 1 1 1Dolakha 1SindhupalchowkRasuwa 1 1 1 1 1 1Dolpa 1 1Jumla 1 1 1Mugu 1 1 1 1 1 1Humla 1 1 1Bajhang 1 1 1Darchula 1 1 1 1Follow similarpattern as inprevious tables.Source: : FGD and district consultations, July-August 2010Note: 1 denotes Yes- i.e. not collected yet.SweptWoodsales

The table 4.6 shows the least important sources of DDC internal revenue. Most of the districts have no potential for sales of riverswept wood and river mine products. With respect to toll tax (from vehicle and mule), some DDCs are raising it though amount isinsignificant, whereas most of DDCs have not introduced it due to insignificant yield from such products. The FGD indicates thatsome of the DDCs account even the income from revenue sharing as least important because the amount received from it is eitherinsignificant or is far below from their potential. Besides, revenue from these sources is not even for all districts. The revenuesharing from electricity is insignificant or irregular in mid-west region, whereas there is no hydro-electricity generation in far-westernregion. The royalty from mining is almost non-existent in all districts.Table 4.6: Least important sources of revenues in district in terms of yieldDistrictsHouse & LandRegistrationMining RoyaltyHydro ElecRoyaltyTourism SectorRoyaltyLand RevenueToll TaxExport Tax -NTFPExport Tax -TimberExport Tax -Mine ProductsExport Tax -Wear & teargoodsTax on agroproduct'stransactionService ChargeRecommendationFeeWater source andMine registration& Renewal FeeFee on Rivercrossing (Tuinand Boat)Contractor &licensing andNGO renewalTaplejung 1 2Sankhuwasava 4 3 1 5 2Solukhumbu 5 1 6 2 4 3Dolakha 3 2 4 5 1Sindhupalchowk 3 1 4 2Rasuwa 2 4 1 3Dolpa 2 1Jumla 6 3 5 2 4 1Mugu 1 4 3 2Humla 1 4 3 5 2Bajhang 3 4 1 5 2Darchula 3 4 1 2Frequency 1 3 1 4 2 6 5 1 4 1 3 4 3 1 3 1 7 1 1Source: : FGD and district consultations, July-August 2010Note: The range 1 to 6 denotes less important to least important order.River Mine salesSwept WoodsalesDDC Publicationand Forms sale26

All provisioned sources of revenue in Himalayan districts are not financially feasible to administer. The non-tax sources likerecommendation fee, contractor licensing etc are administratively convenient sources because of their low collection costs. In caseof NTFP export tax; there is coordination with district forest office that issues license for export only after payment of export tax toDDC. The table 4.7 shows the most feasible sources to administer by respective DDCs. Land revenue (shared from VDC andMunicipality), NTFP export tax, service charge, recommendation fee, contractor licensing, rent are considered to be convenientsources from administration viewpoint .Table 4.7: Administratively feasible own revenues sources in Himalayan districtsDistrictsLandRevenueTollTaxExportTax -NTFPExportTax -TimberExportTax -MineProductsServiceChargeRecommendationFeeContractorlicensingand NGOrenewalRiverMinesalesTenderDocumentSaleTaplejung 1 2 3 4Sankhuwasava 1 2 3 4Solukhumbu 1 2Dolakha 1 2 3 4 5Sindhupalchowk 3 1 2Rasuwa 2 3 1Dolpa 1 2 3Jumla 1 2 3 4Mugu 1 5 6 3 4 2Humla 1 2Bajhang 1 3 2Darchula 5 3 1 4 2Frequency 4 2 9 1 1 4 8 6 3 2 4Source: : FGD and district consultations, July-August 2010Note: The range 1 denotes most feasible and 6 denote less feasible order.Rent27

In contrast to feasible sources the list of sources that are felt difficult to administerby respective district is shown in table 4.8. It is important to note here that theaccessibility and number of export points (more the export points more the cost)determines the financial feasibility for administering the revenue collection.Table 4.8: Local revenues sources difficult to administerDistrictsTollTaxExportTax -NTFPExportTax -TimberExportTax -MineProductsRiverMinesalesPublicHealthRelatedTaxAgro.ExporttaxTaplejung 1Sankhuwasava 2 1Solukhumbu 2 1Dolakha 1 2Sindhupalchowk 2 1 3Rasuwa 1 2Jumla 2 1 3Humla 3Bajhang 1Darchula 1Frequency 4 2 2 5 2 1 2Source: : FGD and district consultations, July-August 2010Note: The range 1 to 4 denotes most unstable to less unstable sources. Add frequency and4.2 Revenue Analysis of Sample DistrictsThe available records shows that Himalayan DDCs generate revenue fromvarious sources as per the authority provisioned by the LSGA and its Regulationsand the amount varies significantly by sources and by districts. The yield fromthose various sources is very low compared to Terai and Hilly regions. Some ofthe revenue sources are not utilized yet due to economic unavailability, i.e.absence of market and insignificant volume of transaction in the district. Thesources of revenue, their predictability and their significance in respectiveHimalayan districts have already been mentioned in previous paragraphs.Table 4.9: Structure of revenue by sources in sample districtsFiscalYearDistrict NameTaxServicechargeandfeesSalesOthersourcesownRevenueRevenuesharingTotalInternalRevenue062/63 Sankhuwasava 307111 158570 156476 157619 779776 3800989 4580765062/63 Sindhupalchowk 387082 225315 2287335 473670 3373402 17349747 20723149062/63 Jumla 610038 32000 41000 0 683038 12390 695428062/63 Darchula 0 205911 74585 8700 289196 1063160 1352356063/64 Sankhuwasava 335000 46180 606245 78389 1065814 6079518 7145332063/64 Sindhupalchowk 187749 199445 1232975 165888 1786057 14559916 16345973063/64 Jumla 579470 717080 200000 143615 1640165 18717 1658882063/64 Darchula 0 208405 82300 53220 343925 2476218 282014328

064/65 Sankhuwasava 4439520 203258 404600 59194 5106572 4931162 10037734064/65 Sindhupalchowk 236628 189220 2365432 498359 3289639 14175335 17464974064/65 Jumla 524029 891150 332500 703468 2451147 3349167 5800314064/65 Darchula 0 530570 263130 67397 861097 2455615 3316712065/66 Sankhuwasava 2841405 198782 411200 23945 3475332 6211761 9687093065/66 Sindhupalchowk 578923 251000 3774406 270000 4874329 31027268 35901597065/66 Jumla 548113 205640 582950 185651 1522354 3379213 4901567065/66 Darchula 0 641197 211000 130550 982747 2907420 3890167066/67 Sankhuwasava 1709837 601516 1106985 340067 3758405 14251603 18010008066/67 Sindhupalchowk 1896101 389908 6928424 271300 9485733 30119697 39605430066/67 Jumla 546219 265077 1274822 271673 2357791 2049448 4407239066/67 Darchula 0 820000 220000 57500 1097500 2706500 3804000Source: Records of Respective DDCs4.2.1 Own Sources:Both tax and non-tax sources are own source revenues in sample Himalayandistricts. Basically, the NTFP has remained the key source of revenue in Jumlaand Sankhuwasabha where as it is non-existent in Darchula and irregular andminor source for Sindhupalchowk DDC. Toll tax is a regular source forSindhupalchowk DDC and recently, Sankhuwasabha and Jumla have alsoinitiated to generate revenue from this source. Export tax on mining products andcommercial agriculture transaction is limited to Sindhupalchowk DDC only. Inrecent years, Sankhuasabha DDC has started to generate revenue from export ofaromatic Product i.e. Rudrakshya. The export tax on wear and tear goods hasbeen stopped recently caused by administrative order of central government.NTFP Marketing Chain: FGD with Local traders in Jumla- a case(From discussions with Padam Bahadur Rokaya and Dhirendra Raj Shahi)Available NTFPs and their market prices in Jumla, 2010S.N. Main NTFPs Price/KG Main MarketEstimatedQuantity1. Yarcha Gumba 600,000 Tibet 50 Kg2. Gucchi Chayu9,000 Delhi, India 500 Kg(mushroom)3. Satwa Jara (root) 1300 India 10,000 Kg4. Panch Aule 500 India 200 Kg5. Kutki 700 India 4000 Kg6. Shilajit 250 India -7. Jatamashi 200 Nepalgunj 30,000 quintal8. Dhupjadi 100 Nepalgunj -9. Sugandhawal 100 India 5000 Kg10. Bishjara 100 India 2000 KgMarketing channel: Collector (local people - Small traders (Jumla) - export traders(Jumla and Nepalgunj) - Dealer (Nepalgunj, Dehli, Kathmandu) and Factory(Dehli).29

License Holders: about 30 persons, others are also involved. About 40 persons(traders with more than 10 million transactionsPayment: Advance and during transaction to traders by dealers but deductmargin (jarti) in quantity.Problems:• Fluctuation in prices in market,• Cartelling by large traders in prices,• Traders provide daily necessity and other goods in households in credit andcompel them to sell in lower price,• Irregularity in regulation system (e.g. traders have to pay Rs. 50 per a sack ofNTFP in various check posts while transporting from Jumla to Nepalgunj).• Tax evasion by influential persons (Rs.10 to 12 lakhs per year). Cases of usinghelicopter for irregular transportation by senior official in government were alsomentioned by the respondents.Suggestions for Improvement:• Regularize in providing collection license and provision for non-transfer of suchlicense,• Facilitation to collector and traders with the investment from royalty raised,• Further institutionalize the collection and trading by appropriate procedures byGoN.• Establishment of processing plant in Jumla – as raw materials can be collectedfrom Mugu and Kalikot for some of the NTFPs.30

4.2.2 Revenue from Tax:The amount of revenue from tax sources varies from district to district and has been presented in table 10. Jumla DDC generatesabout NRs. 600,000 of revenue from the source whereas Sankhuwasabha and Sindhupalchowk DDCs generated about NRs.1700,000 and NRs. 1900,000 in FY 2066/67 respectively that grew more than five folds from around NRs. 300,000 in 2062/63. Thegrowth of tax source is tremendously increasing in Sankhuwasabha (from 1.83 % to 9.49%) and Sindhupalchowk (0.97% to16.49%) from the FY 2062/63 to FY 2066/67 where as the amount of NTFP export tax- the only tax source in Jumla is graduallydeclining though in percentile term it has increased significantly reflecting decrease in overall revenues. Sindhupalchowk DDC hasinitiated tax on export of slates from quarry and the amount is increasing annually. Revenue generation in Darchula district from taxis nil.Table 4.10: Own Source Revenue of Sample DDCs from TaxFiscalYearDistrict NameToll TaxExp. Tax- NTFPExp. Tax- TimberExp. Tax- MineProducts31Exp. Tax- Wear &teargoodsTax onBirdsfeatherTax onDeadAnimalresiduesTax oncom.agroproduct'strans.Tax onliveanimalcom,trans.062/63 Sankhuwasava 0 307111 0 0 0 0 0 0 0 0 307111062/63 Darchula 0 0 0 0 0 0 0 0 0 0 0062/63 Jumla 0 610038 0 0 0 0 0 0 0 0 610038062/63 Sindhupalchowk 204044 2575 0 0 145523 0 0 34940 0 0 183038063/64 Darchula 0 0 0 0 0 0 0 0 0 0 0063/64 Jumla 0 579470 0 0 0 0 0 0 0 0 579470063/64 Sankhuwasava 0 335000 0 0 0 0 0 0 0 0 335000063/64 Sindhupalchowk 187749 0 0 0 0 0 0 0 0 0 0064/65 Darchula 0 0 0 0 0 0 0 0 0 0 0064/65 Jumla 0 524029 0 0 0 0 0 0 0 0 524029064/65 Sankhuwasava 200000 4239520 0 0 0 0 0 0 0 0 4239520064/65 Sindhupalchowk 94144 25138 5862 0 111484 0 0 0 0 0 142484065/66 Darchula 0 0 0 0 0 0 0 0 0 0 0065/66 Jumla 4500 539613 0 0 4000 0 0 0 0 0 543613065/66 Sankhuwasava 0 2841405 0 0 0 0 0 0 0 0 2841405OthersTotal

FiscalYearDistrict NameToll TaxExp. Tax- NTFPExp. Tax- TimberExp. Tax- MineProductsExp. Tax- Wear &teargoodsTax onBirdsfeatherTax onDeadAnimalresiduesTax oncom.agroproduct'strans.Tax onliveanimalcom,trans.065/66 Sindhupalchowk 220603 0 20000 338320 0 0 0 0 0 0 358320066/67 Darchula 0 0 0 0 0 0 0 0 0 0 0066/67 Jumla 65875 480344 0 0 0 0 0 0 0 0 480344066/67 Sankhuwasava 0 1709837 0 0 0 0 0 0 0 0 1709837066/67 Sindhupalchowk 830101 0 0 1066000 0 0 0 0 0 0 1066000Total 1807016 12194080 25862 1404320 261007 0 0 34940 0 0 13920209Source: Records of Respective DDCsOthersTotal4.2.3 Revenue from Service Charge and Fee:The revenue from service charge and fees is generated in the entire sample DDCs. Though the amount collected from this sourceis not that high but contribution in total revenue has remained significant for Darchula and also to Jumla as their revenue from othersources is low. The maximum amount collected from this source in Jumla was NRs. 717080 in 2063/64 whereas it was NRs. 88200in Darchula in 2066/67. Its contribution in total revenue of Sankhuwasabha and Sindhupalchowk has reached about 3.3% in2066/67 from less than 1% in 2062/63. During the field visit and consultation with concerned DDC staffs, it was also found that theaccounting practice of revenue sources was not homogeneous across the districts and the revenue from some other sources wasalso booked in this source, in some districts. Recommendation fee, D class contractor licensing and renewal, and examination feeduring recruitment of staff are major items within this source. Sankhuwasabha DDC generates revenue also from river-crossing fee.32

Table 4.11: Own Source Revenue of Sample DDCs from Service Charge and FeesFiscalYearDistrict NameServiceChargeRecommendationFeeWater source andMine registration &Renewal FeeFee onRivercrossing(Tuin andBoat)D Classcontract &NGOlicensingandrenewal062/63 Darchula 0 31880 0 5131 145700 23200 0 205911062/63 Jumla 0 1000 0 0 31000 0 0 32000062/63 Sankhuwasava 0 60 0 109960 45685 2865 0 158570062/63 Sindhupalchowk 1990 13145 0 0 210180 0 0 225315063/64 Darchula 0 42130 0 0 164500 1775 0 208405063/64 Jumla 0 61610 5500 0 649970 0 0 717080063/64 Sankhuwasava 0 1000 0 0 40620 4560 0 46180063/64 Sindhupalchowk 0 27235 0 0 172210 0 0 199445064/65 Darchula 234000 47505 0 0 188620 60445 0 530570064/65 Jumla 33800 6850 5500 0 755000 90000 0 891150064/65 Sankhuwasava 0 1355 0 146250 53465 2188 0 203258064/65 Sindhupalchowk 12735 34310 0 0 142175 0 0 189220065/66 Darchula 265500 130647 0 0 198500 46550 0 641197065/66 Jumla 0 670 5500 0 109000 90470 0 205640065/66 Sankhuwasava 0 1102 0 141050 55400 1230 0 198782065/66 Sindhupalchowk 0 72000 0 0 179000 0 0 251000066/67 Darchula 450000 150000 0 0 200000 20000 0 820000066/67 Jumla 0 680 5500 0 153500 105397 0 265077066/67 Sankhuwasava 0 10438 0 507726 71217 12135 0 601516066/67 Sindhupalchowk 0 55813 0 0 334095 0 0 389908Source: Record of Respective DDCsApple.fee,ExamFeeOthersTotal33

4.2.4 Revenue from Sales:The revenue of DDC from sales is highly associated with accessibility andmarkets in the district. The river mine sale is applicable only in Sindhupalchowkand to a limited amount in Sankhuwasabha. It is the single largest source ofrevenue for Sindhupalchowk contributed by huge Kathmandu valley market.Jumla and Darchula have also potential to raise revenue from sale of bouldergravel and sand but have not started selling them. No DDC could generaterevenue from sale of swept wood as the volume of such product vis-à-vis the costof revenue collection would be high. Interestingly only Jumla DDC has raisedrevenue from registration of one water source nearby district headquarters forpast 4 years.The sale of tender documents has remained a major source for Darchula andJumla DDCs in recent years. The RRRSDP and DRILP Projects have contributednot only in sale of tender documents but also increased registration of D classcontractors and licensing. Comparatively this source of revenue forSindhupalchowk and Sankhuwasabha has remained low in amount andpercentage as well. Revenue from sale and auction of DDC property and assetsis insignificant in amount and is irregular. Very often this source is accounted inother sales as well. The table below shows that DDCs have not booked anyrevenue from sale of DDC publications & forms due to generation of smallamount from this source as well as being irregular in selling them.The sale of natural resource products is basically dependent upon theaccessibility to market and local demand. Its contribution too is very important toSindhupalchowk as it is exported to Kathmandu market whereas inSankhuwasabha its trend is increasing in terms of amount and percentage inrecent years due to increasing road networks and local demand. In Jumla andDarchula, there is potential of selling stone boulder sand and gravel especially forroad and other construction works though in small scale.Table 4.12: Own Source Revenue of Sample DDCs from SaleFiscalYearDistrict NameRiver MinesalesSwept WoodsalesTenderDocument SaleProperty andAuction SaleDDCPublication andForms saleOthersTotal062/63 Darchula 0 0 63880 10705 0 0 74585062/63 Jumla 0 0 35000 0 0 6000 41000062/63 Sankhuwasava 80611 0 75865 0 0 0 156476062/63 Sindhupalchowk 2013720 0 272561 0 0 1054 2287335063/64 Darchula 0 0 82300 0 0 0 82300063/64 Jumla 0 0 200000 0 0 0 200000063/64 Sankhuwasava 540000 0 66245 0 0 0 606245063/64 Sindhupalchowk 1232975 0 0 0 0 0 1232975064/65 Darchula 0 0 259900 3230 0 0 263130064/65 Jumla 0 0 332500 0 0 0 33250034

064/65 Sankhuwasava 329304 0 75296 0 0 0 404600064/65 Sindhupalchowk 1932288 0 398144 0 0 35000 2365432065/66 Darchula 0 0 196000 15000 0 0 211000065/66 Jumla 0 0 582950 0 0 0 582950065/66 Sankhuwasava 375000 0 36200 0 0 0 411200065/66 Sindhupalchowk 3624406 0 150000 0 0 0 3774406066/67 Darchula 0 0 210000 10000 0 0 220000066/67 Jumla 0 0 1112750 162072 0 0 1274822066/67 Sankhuwasava 1050335 0 56650 0 0 0 1106985066/67 Sindhupalchowk 6769179 0 132245 0 0 27000 6928424Source: Records of Respective DDCs4.2.5 Other sources of own Revenue:In other sources of revenue to DDCs, two items i.e. deposit forfeit and rent ismajor. DDCs tend to account revenue from contingency and items not booked incategorized title in other heads. This source contribution in total revenue rangesfrom zero to as high as about 6 percent (Jumla, 2066/67). The fine and penalty isoccasional and found in Jumla only. Likewise, deposit forfeited is also not regular.In rent and dividend item, three districts other than sankhuwasabha have rentedout their buildings either on event basis or on annual basis. DDC Jumla is rentingout its one of the buildings for past four years. Sankhuwasabha DDC hasinvested on hydro-electricity project from which it receives dividend in recentyears. In income generating activities, none of the sample districts has invested.The overall contribution of this miscellaneous source in total DDC revenue isnegligible for sample districts.Table 4.13: Own Source Revenue of Sample DDCs from Other SourcesFiscalYearDistrict NameFineandPenaltyIncomeGeneratingActivities35DepositForfeitRent,DividendInterestOthersTotal062/63 Darchula 0 0 0 8000 700 8700062/63 Jumla 0 0 0 0 0 0062/63 Sankhuwasava 0 0 0 0 157619 157619062/63 Sindhupalchowk 0 0 0 155500 318170 473670063/64 Darchula 0 0 21500 1200 30520 53220063/64 Jumla 50000 0 30000 63615 0 143615063/64 Sankhuwasava 0 0 21250 0 57139 78389063/64 Sindhupalchowk 0 0 0 143100 22788 165888064/65 Darchula 0 0 64207 3190 0 67397064/65 Jumla 0 0 131614 185500 386354 703468064/65 Sankhuwasava 0 0 0 0 59194 59194064/65 Sindhupalchowk 0 0 0 480900 17459 498359065/66 Darchula 0 0 124500 2800 3250 130550065/66 Jumla 10500 0 605 50250 124296 185651065/66 Sankhuwasava 0 0 0 0 23945 23945065/66 Sindhupalchowk 0 0 0 270000 0 270000066/67 Darchula 0 0 50000 4000 3500 57500066/67 Jumla 0 0 0 271673 0 271673066/67 Sankhuwasava 0 0 12283 NA 327784 340067066/67 Sindhupalchowk 0 0 0 40500 230800 271300Source: Records of Respective DDCs

4.2.6 Income from Revenue Sharing:The table 4.14 shows the income of DDCs from revenue sharing. A decade longpast conflict has affected in raising royalty from house and land registration,forests based products, tourism fee as well as from hydro-electricity. In Jumlawhere conflict was intensive, the house and land registration royalty was nil in062/63 and 063/64. With the development of peace process, the revenue sharingfrom these sources has gradually increased.The revenue sharing source of DDC income is not same for all sample districts.The house and land registration revenue is the major source for Darchula, Jumla,and Sankhuwasabha. In Sindhupalchowk though the amount is substantial, yetits contribution in total revenue is next after the revenue from hydro-electricity.Table 4.14: Own Source Revenue of Sample DDCs from Revenue SharingFiscalYearDistrict NameLandRegistrationFeeMiningRoyaltyForestProduct SaleRoyaltyHydro Elect.RoyaltyTourismSectorRoyaltyRevenueSharingTotalLandRevenueSharing fromVDCs062/63 Darchula 938280 0 123020 0 0 1061300 1860062/63 Jumla 0 0 0 0 0 0 12390062/63 Sankhuwasava 3581892 0 0 0 0 3581892 219097062/63 Sindhupalchowk 4692010 1062 63136 12532962 0 17289170 60577063/64 Darchula 2337935 0 131773 0 0 2469708 6510063/64 Jumla 0 0 0 0 957 957 17760063/64 Sankhuwasava 5937236 0 15090 0 0 5952326 127192063/64 Sindhupalchowk 5458684 0 0 8992673 0 14451357 108559064/65 Darchula 1818000 0 632505 0 0 2450505 5110064/65 Jumla 3008237 0 312960 0 3970 3325167 24000064/65 Sankhuwasava 4356272 0 78992 425578 46239 4907081 24081064/65 Sindhupalchowk 3573561 0 186073 10286115 0 14045749 129586065/66 Darchula 1786984 0 426930 0 0 2213914 8000065/66 Jumla 2864817 0 446461 0 0 3311278 67935065/66 Sankhuwasava 5446982 0 42371 505365 124299 6119017 92817065/66 Sindhupalchowk 7544000 0 123268 23300000 0 30967268 60000066/67 Darchula 2000000 0 700000 0 0 2700000 6500066/67 Jumla 1540135 0 366951 80000 0 1987086 62362066/67 Sankhuwasava 10673265 0 16911 159000 3287430 14136606 114997066/67 Sindhupalchowk 1704279 0 127384 0 0 1831663 181762Source: Records of Respective DDCsGiven the five sources of revenue sharing, mining royalty is almost non-existentin the sample districts though the stone quarry for slates are abundant inSindhupalchowk district but has been limited to tax on export only.Sankhuwasabha district has also potential for precious stone mining but theirorganized registration and operation has not been started yet.The royalty from forests products (timber and non-timber) is another source ofrevenue sharing income in sample districts. NTFP is the major item for Darchula36

and Jumla whereas timber products are main sources of forest royalty inSindhupalchowk and Sankhuwasabha districts. The revenue sharing from forestsroyalty is in increasing trend in both Darchula and Jumla districts and it hasremained a reliable source for them. The Yarcha Gumba is major item in forestroyalty. Other NTFPs include Jatamasi, Satuwa roots, Gucchi Mushroom, Kutkietc. There is huge potential of utilizing these NTFPs in Himalayan districts,however in the absence of road networks within the districts, they have not beenfully utilized. Moreover, due to terrain constraints administrative surveillance isalso not adequate in their utilization and trade.The royalty sharing from the hydro-electricity is not even in the developmentregions. In far western region there is no such hydro-electricity project, hencethere is no sharing of royalty to Darchula district. In mid-western region, there isonly one small hydro-electricity project (Jhimruk in Pyuthan) and that is also notregular in operation. Hence, revenue from this source to Jumla is not onlynegligible but also unpredictable. Sidhupalchowk district receives highestamount from hydro-electricity revenue sharing. Bhote Koshi (36 MW) andSunkoshi (10 MW) Projects are located in the district and also it receives sharingfrom Khimti, Kulekhani, Trishuli, Devighat, Chilime and Panouti Projects. Thetotal revenue from sharing of hydro-electricity in Sindhupalchowk has grown fromNRs 12.5 million in FY 2062/63 to NRs. 23.3 million in 2065/66 contributing28.9% in total revenue whereas the amount has not been transferred in the FY2066/67. Sankhuwasabha district also receives a small amount of revenue fromthis source. In eastern development region, only one small hydro-electricityproject in Ilam (6 MW) is installed and sharing from it to Sankhuwasabha isnegligible. Besides, the district receives revenue from district based Piluwa Kholaproject from recent past.Similarly, the revenue sharing from tourism sector is also not even in Himalayandistricts and sample districts. Sankhuwasabha DDC receives a small amount ofrevenue (mountaineering in Makalu and tourist entry fee). However, the transferof revenue to district is not timely and the amount is also not predictable. JumlaDDC gets negligible amount from tourist entry fee occasionally and DDC is lessaware on how it is shared. Though there are a lot of tourists activities inSindhupalchowk district, the revenue from these activities are not within the foldof royalty and hence not shared. Tourists for Bungee Jump, rafting in Bhotekoshiare popular activities besides Tatopani being tourist entry point.In overall scenario of revenue sharing, only the revenue from the land and houseregistration is more or less evenly distributed to all sample districts and hasremained predictable source for DDCs. The distribution of hydro-electricityrevenue is based on development regions and limited to mainly in central andwestern development region. Similarly, revenue from tourism is also available inselective districts only. Another issue with regard to revenue sharing is timelytransfer of shared amount from central government agencies to DDCs that hasaffected district level planning and budgeting.37

4.2.7 Land Tax Revenue:The sharing of land tax revenue by VDCs and Municipalities is one of the localsources of revenue for DDCs. In general, it is considered as the reliable sourcefor financing local development projects. However, it has always remained alacklustre in local revenue of local bodies. The coverage of this source isuniversal and all citizens publicly accept it, yet its generation as a prominentsource is shadowed. The data of sample districts presents a gloomy picture ofrevenue generation at local level. The amount collected from this source in fiveyears period has not exceeded four digits in Darchula where other sources ofrevenue are also very weak. In other districts, revenue from this source more orless is stable in amount. Jumla DDC is collecting land tax revenue within therange of NRs. 12000 to 62,000 from FY 2062/63. Likewise, collection of land taxin Sankhuwasabha and Sindhupalchowk DDCs are also more or less stablewithin the past five years after restoration of the peace process. In both of thesedistricts the revenue collection is in gradual increasing trend.The major problems associated with the issue of low level of collection of the landtax revenue of DDCs are: 1) execution of lower rate provisioned in LSGRirrespective of the productivity and accessibility of land by VDCs causing taxpayer for deferring payment as the cost of tax payment is higher compared to taxamount. The tax payers tend to pay tax once for several years with penalty whichis also very low. 2) Low level of capacity of VDCs to raise taxes and enforcementof law for compliance. 3) Indifference of government and DDCs to invest incapacity building of VDCs in administering land tax and maintaining appropriaterecords. 4) Non-compliance of VDCs/ municipality to share revenue collected bythem to DDCs (very often in reciprocal with sharing of revenue by DDCs), 5)absence of inspection and monitoring of revenue collection procedure furtherweakening compliance in tax payment by citizen and, low amount of revenuemaking DDCs indifferent to lay enough attention and further effort to collect it.Figure 1: Revenue of Sample DDCs from Internal Sources38

Chart 2. Structure of Intern3500300025002000150010005000FY FY2063/64FY2064/65 FY2062/632065/66FY2066/67Tax Service Charge Sales Other source Revnue SharingChart 3. Structure of Internal revenue Jumla DDC (in '0000 Rs.)335337.9204.9127.589.161 57.971.7 70.352.4 54.8 58.3 54.62033.33.24.101.2 14.4 20.6 18.6 26.5 27.21.9FY FY FY FY2065/66 FY2062/632063/642064/652066/67Chart 4. Structure of Internal revenue Darchula DDC (in '0000 Rs.)TaxSalesRevenue Sharing247.6Service charge/FeeOther Source290.7270.7245.6106.320.60 7.50.9FY2062/638264.153.120.8 26.3 21.10 8.25.30 6.7 13.1220 0 5.8FY FY FY FY2063/64 2064/65 2065/66 2066/6739

Table 4.15: Structure of Revenue (R1 & R2) in sample districtsFiscal Year District Name TaxServicecharge andfeesSales40OthersourcesOwnRevenue(R1) TotalRevenuesharingTotalInternalRevenue(R2)Per CapitaRevenueNRs.062/63 Sankhuwasava 307111 158570 156476 157619 779776 3800989 4580765 28.77062/63 Sindhupalchowk 387082 225315 2287335 473670 3373402 17349747 20723149 67.75062/63 Jumla 610038 32000 41000 0 683038 12390 695428 7.78062/63 Darchula 0 205911 74585 8700 289196 1063160 1352356 11.09Total 4 district 1304231 621796 2559396 639989 5125412 22226286 27351698percentage 4.8 2.3 9.4 2.3 18.7 81.3 100.0063/64 Sankhuwasava 335000 46180 606245 78389 1065814 6079518 7145332 44.88063/64 Sindhupalchowk 187749 199445 1232975 165888 1786057 14559916 16345973 53.44063/64 Jumla 579470 717080 200000 143615 1640165 18717 1658882 18.55063/64 Darchula 0 208405 82300 53220 343925 2476218 2820143 23.12Total 4 district 1102219 1171110 2121520 441112 4835961 23134369 27970330percentage 3.9 4.2 7.6 1.6 17.3 82.7 100.0064/65 Sankhuwasava 4439520 203258 404600 59194 5106572 4931162 10037734 63.05064/65 Sindhupalchowk 236628 189220 2365432 498359 3289639 14175335 17464974 57.10064/65 Jumla 524029 891150 332500 703468 2451147 3349167 5800314 64.86064/65 Darchula 0 530570 263130 67397 861097 2455615 3316712 27.19Total 4 district 5200177 1814198 3365662 1328418 11708455 24911279 36619734Percentage 14.2 5.0 9.2 3.6 32.0 68.0 100.0065/66 Sankhuwasava 2841405 198782 411200 23945 3475332 6211761 9687093 60.85065/66 Sindhupalchowk 578923 251000 3774406 270000 4874329 31027268 35901597 117.38065/66 Jumla 548113 205640 582950 185651 1522354 3379213 4901567 54.81065/66 Darchula 0 641197 211000 130550 982747 2907420 3890167 31.89Total 4 district 3968441 1296619 4979556 610146 10854762 43525662 54380424Percentage 7.3 2.4 9.2 1.1 20.0 80.0 100.0066/67 Sankhuwasava 1709837 601516 1106985 340067 3758405 14251603 18010008 113.12066/67 Sindhupalchowk 1896101 389908 6928424 271300 9485733 30119697 39605430 129.49066/67 Jumla 546219 265077 1274822 271673 2357791 2049448 4407239 49.28066/67 Darchula 0 820000 220000 57500 1097500 2706500 3804000 31.18Total 4 district 4152157 2076501 9530231 940540 16699429 49127248 65826677Percentage 6.3 3.2 14.5 1.4 25.4 74.6 100.0

Having erratic nature of data, no trend analysis could be done. However, duringfield level interaction, it was said that the conflict situation has substantiallycontributed to the revenue mobilization of the districts particularly in FY 2063/64and 64/65.Source: Records of respective DDCs4.2.8 Grant Revenue:In accordance with the LSGA provision (article 236), the government of Nepalprovides grant to DDCs annually. This is broadly categorized as recurrent grantand capital grant. The capital grant is formula based for past six years. Thetable… shows the amount of grant in four sample districts. The amount of grant ishighest to Sindhupalchowk district followed by Darchula, Sankhuwasabha andJumla (FY 2062/63 to 2065/66) respectively. In 2065/66, the amount of grant toDarchula, Jumla, Sindhupalchowk and Sankhuwasabha is NRs. 21.75 million,19.5 million, 71.44 million and 43.41 million respectively. The ratio of therecurrent and capital grant for these districts for the same year are 1:169, 1:148,1:41 and 1:47 respectively. It reflects that by and large the ratio increased withthe increase in grant amount to DDCs. In another word, the percentages ofrecurrent grant in total grant are 59.3, 67.4, 24.5 and 21.4 respectively. Thecontribution of grant to total revenue ranges from as high as 94.6 % in Jumla inFY 2062/63 to as low as 48 % in Sindhupalchowk in the same year. The range ofstructure of central grant in overall revenue in Darchula ranges from 84 to 91 %,whereas it ranges from 70% to 94% in Jumla. Likewise, the contribution of it inSindhupalchowk ranges from 48% to 67% and it is within the range of 58% to 82% in sankhuwasabha DDC within the period of 2062/63 to 2065/66.Table 4.16: GON Grants to Sample DDCsDistrictsDarchulaJumlaSankhuwasavaSindhupalchokSource: MLDDDC2062/63 2063/64 2064/65 2065/66 2066/67GrantRecurrent 9204918 9950480 11191918 12903423 16807000Capital 4716276 5233551 6644919 8851438 53034956Total 13921194 15184031 17836837 21754861 69841956Recurrent 8413848 8655941 9905533 13176592 17000203Capital 3783693 2464640 3342816 6358951 58100000Total 12197541 11120581 13248349 19535543 75100203Recurrent 7239317 7685623 8623667 9285944 11462625Capital 4987346 4773000 5521192 34123423 58113333Total 12226663 12458623 14144859 43409367 69575958Recurrent 10739550 12459429 13789197 17495516 22372000Capital 8490745 6386000 5943693 53948000 117763667Total 19230295 18845429 19732890 71443516 140135667The total revenue of sample DDCs varies largely from one to another district. Therecent total revenue amount reflects that Sindhupalchowk DDC has as much asalmost four times larger than that of total revenue of Darchula and Jumla andalso double of the same of Sankhuwasabha DDC.Details on tax and non-tax public revenue are given in Annex 26.41

4.3 Inter Local Bodies Partnership, Cooperation andCollaborationThe LGs with a higher functionality will require property tax, land tax, propertytransaction taxes and a set of user charges. The law assigns land tax, house andland tax, integrated property tax, taxes on natural resources, export tax on certaincommodities, tolls and user charges to the local level. As per Law there isprovision to work with two or more than those LGs together to generate revenuein the periphery. Basically there is vertical relation in revenue sharing amongLGs.a. VDC and Municipality collect the land and property tax and share to the DDC.b. District Forest Office collects forest based product tax/revenue and share toDDC.c. The revenue collected at Land Revenue Office at the district level is shared tothe DDC.d. Revenue collected from buffer zone of national park is shared with DDC.e. Revenue collected from Gravel and sand at the DDC is shared withrespective VDCs and Municipality.Making synergy in the revenue collection efforts and to minimize in theadministration and compliance cost, government of Nepal brought inter LBspartnership, cooperation and collaboration policy in local revenue collection andexpenditure management. However, this is one of the very limited used policiesby the local bodies. No relation observed in revenue sharing horizontally in theHimalayan districts.However, there are unilateral practices of raising taxes from non-district sources,for example some DDCS are collecting import export tax even on the materialsthat has not been exported from the same district. For example, Taplejung,Pachthar and Ilam DDCs collect the export tax from Cardamom in all districtseven that was produced and carried out from Taplejung. Such practices might demotivatethe traders and reduce compliance. It also affects promotion ofeconomic activities because of increased costs as the traders have to pay taxesin many places. There is a need to foster inter local bodies partnership,cooperation and collaboration in revenue mobilization in an institutional way.Some opportunities have also been observed during the study on the areas ofcollaboration on revenue mobilization. For example Taplejung, Panchthar andIlam districts may agree in resource utilization and district export tax collectionjointly and divide the yield on derivative basis. Similarly, Mugu and Jumla districts42

may have ample opportunities to collect NTFP export tax jointly. The samestrategy can be applied by Sindhupalchowk and Kavre districts, Rasuwa andNuwakot Districts, Manang and Lamjung Districts to collect river mine base taxand toll tax, and NTFP export tax collection. However, as explored only in Jumlaand Mugu Districts lies in the Himalayan region that may set joint strategy.Possibilities of collaboration and cooperation among different tiers of LGs arealso possible. Few VDCs and respective DDC can use this strategy to collect tolltax at VDC level. In Sankhuwasabha District's Chainpur-Nundhaki Road,Kalikasthan-Chainpur Road, Dokhu- Khandbari Road's toll tax can be collected atVDC level as a shared tax. Similarly, In Sindhupalchowk, about two third VDCsare linked with local roads to district headquarters. However, only 8 roads areused to collect toll tax. If toll tax be collected in other roads, there needs to be acommon effort of VDCs and DDC. Similar collaboration also could be made inJumla DDC and many VDCs in the District. However, there is no such opportunityseen in the Darchula district currently.4.4 Revenue/Tax Rate DecisionTax, service charges and fee directly affect the people (users). Tax also has animpact on the development of trade, market and in attracting or distractingindustries. The rates of taxes and other revenues of the surveyed DDCs arewithin the limit of the legislative provisions; however, most of these rates are inthe lower echelon. No DDCs have put efforts to analyze the rate structures, itsimpact to the local economic development, rate structures of other adjoiningDDCs and collection methods. It is always fixed in an ad hoc basis. On the otherhand, there is short of capacities to analyze and fix rate structure by applying theeconomic principles.4.5 Pattern and Trend of Sample DDCs Expenditure fromInternal Revenue (R2)The records of sample DDCs on expenditure from internal revenue (includesrevenue sharing) gives a varied picture of expenditure from DDC internal revenue(table 4.17 below). Though the trend in expenditure is steady however, there ishuge difference on volume of expenditure among these four districts. During theanalysis period of 2062/63 to 2066/67, Sindhupalchowk DDC has almost sevento 30 fold higher amount of expenditure compared to Sankhuwasabha DDC andsix to nine times high compared to Jumla and Darchula. There is steady growthof expenditure from FY 2062/63 to 2066/67 in the expenditure of DDCs with theexception of Sankhuwasabha and Sindhupalchowk that observed slight decline inthe FY 2063/64. The mean expenditure of four districts in five years period fromFY 2062/63 to 2066/67 is NRs. 6.65 million, 9.12 million, 10.31 million, 11.58million and 11.2 million respectively. However, these values largely differ amongsample DDCs where Sindhupalchowk has more than three times highercompared to the mean values in every year. As against this, other three districtshave considerably lower value compared to the same. In the total five years43

period, Sankhuwasabha has least expenditure compared to other three DDCs.The trend of expenditure from internal revenue is in increasing order every yearwith the exception of slight decrease in FY 2066/67 which is attributed by markeddecline in expenditure by Sindhupalchowk DDC.The expenditure pattern of internal revenue for the FY 2062/63 reveals that withinthe recurrent expenses, the percentage on employee expenses, operatingexpenses and travel and daily allowances is 16.42, 21.17 and 6.88 respectively.Similarly, within the capital expenses, more than 34% is spent on infrastructures.The total expenditure in social sector is less than 2 percent. It is noteworthy hereto mention that the available record doesn't reveal expenditure in water andsanitation sector.The percentage of DDC expenditure in employee expenses from FY 2063/64 to2066/67 ranges within 10.2 to 13.6 with slight increment over time. Similarly, theoperating expenditure ranged from 12.6 to 18 percent in the same period withdecline 2064/65 and 2065/66. The TADA expenditure has gradually increasedfrom 5.5 percent in the FY 2063/64 to 8.9 percent in FY 2066/67. In the capitalinvestment, the percentage of expenditure on infrastructures (road, bridges andothers) has gradually decreased from 19.0% in FY 2063/64 to 12% with somevariations within the period. The DDC expenditures on devolved sectors likeeducation, health, agriculture extension and livestock development has remainedinsignificant ranging from less than 2% in 2062/63 to 4.3% in 2065/66 and 3.8%in 2066/67 with slightly increasing trend. However, there is no consistency ininvesting in those devolved sectors. Agriculture extension and livestockdevelopment sectors have been least financed by DDCs with the exception ofJumla DDC which is financing value chain development of organic apple andother horticultural crops in the district.The DDC expenditure in inclusion (dalit, janajati and women development) is alsoinsignificant. That was 0% in 2062/63 and has grown over years reaching to 1.8% in 2066/67. It was attributed by the establishment of Adabasi Janajati DistrictCoordination Committee and Dalit Utthan District Coordination Committeemechanism for inclusive development in the districts. The 'other expenditure' notstated in the heading of the tables' ranges from about 21% to 37%. This source ofexpenditure is not best explained in the records and documents of sampleHimalayan DDCs. It also includes capital investment projects by DDCs andfinancing of some small projects of Land Revenue Office and District ForestOffice as part of investing on the sectors that generated revenue sharing.44

Table 4. 17: Sample DDC Expenditure pattern and Trend from Internal Revenue (R2)FiscalYearDistrict Name Employee Operating TADAGov./CapacityRoad &BridgesOtherInfrastructuresEducationHealthAgri/Livestock062/63 Sankhuwasava 404461 277286 229973 9600 0 0 0 0 0 0 80625 1001945 82:18062/63 Sindhupalchowk 1469699 3110303 1054942 1827024 4675776 1779145 196000 194349 0 0 5382432 19689670 39:61062/63 Jumla 1248647 1491181 341650 270520 0 55000 0 0 0 0 0 3406998 98:2062/63 Darchula 1244882 751776 202844 155000 0 0 0 19917 0 0 130000 2504419 35:65InclusionRelatedOthersTotalRatio ofRecurrentand CapitalexpenditureTotal 4367689 5630546 1829409 2262144 4675776 1834145 196000 214266 0 0 5593057 26603032Percentage 16.42 21.17 6.88 8.50 17.58 6.89 0.74 0.81 0 0 21.02 100.0063/64 Sankhuwasava 290407 416725 56000 15000 76270 0 0 0 0 0 84200 938602 67:33063/64 Sindhupalchowk 2236629 3531404 1089081 2655005 6480198 3795000 400000 455000 0 0 8600000 29242317 33:67063/64 Jumla 573583 1226231 531387 838619 246937 0 0 0 467876 0 0 3884633 61:39063/64 Darchula 930961 1034280 317763 64445 0 0 0 0 0 0 76200 2423649 32:68Total 4031580 6208640 1994231 3573069 6803405 3795000 400000 455000 467876 0 8760400 36489201Percent 11.0 17.0 5.5 9.8 18.6 10.4 1.1 1.2 1.3 0.0 24.0 100.0064/65 Sankhuwasava 459265 558762 235132 1215295 1068045 0 17390 15000 0 0 390536 3959425 92:8064/65 Sindhupalchowk 1220164 2592551 1109995 3289027 2637105 1339123 1487000 35000 0 0 14701525 28411490 29:71064/65 Jumla 1430000 680000 450000 887000 962500 300000 200000 200000 0 50000 300000 5459500 48:52064/65 Darchula 1106820 1383774 607329 120000 0 0 0 66000 0 0 135450 3419373 34:66Total 4216249 5215087 2402456 5511322 4667650 1639123 1704390 316000 0 50000 15527511 41249788Percent 10.2 12.6 5.8 13.4 11.3 4.0 4.1 0.8 0.0 0.1 37.6 100.0065/66 Sankhuwasava 735249 613351 54086 249678 556400 160690 262585 22500 0 0 649500 3304039 74:26065/66 Sindhupalchowk 1989785 3051080 2863386 4325725 1215638 3855569 3078000 47206 0 0 13443460 33869849 36:64065/66 Jumla 1217000 1119000 1000000 998000 0 125000 70000 0 0 50000 476000 5055000 66:34065/66 Darchula 1359011 1392544 600000 649950 0 0 0 100000 0 0 0 4101505 45:55Total 5301045 6175975 4517472 6223353 1772038 4141259 3410585 169706 0 50000 14568960 46330393Percent 11.4 13.3 9.8 13.4 3.8 8.9 7.4 0.4 0.0 0.1 31.4 100.0066/67 Sankhuwasava 490560 559010 188761 1187287 94925 9000 0 30800 0 0 887000 3447343 67:33066/67 Sindhupalchowk 2645000 4771024 2400000 2609000 300000 250000 1000000 61000 0 0 10538100 24574124 50:50066/67 Jumla 1450000 1245000 500000 1185000 5177000 0 100000 0 400000 808000 1020000 11885000 27:63066/67 Darchula 1530000 1852600 900000 550000 0 0 0 100000 0 0 0 4932600 47:53Total 6115560 8427634 3988761 5531287 5571925 259000 1100000 191800 400000 808000 12445100 44839067Percent 13.6 18.8 8.9 12.3 12.4 0.6 2.5 0.4 0.9 1.8 27.8 100.0Sources of revenue in the Himalayan Districts are given in Annex 26.45

4.6 Public Revenue from Mountain RegionTotal public revenue (tax and non-tax revenue of GoN) from mountain region (16districts) is only a small part of the total national revenue. It accounts only toabout 2 Percent and it has been declaiming for last five years and presently itaccounts to about 0.8%. The growth is negative by ten percent a year (nominal)over the last five years while it is growing at about 14 percent a year at thenational level. In this fall in revenue, Sindhupalchowk district alone (major customdistrict) accounts to about 75 percent share. Another district which registerednegative decline in revenue is Manang. Poor revenue mobilization in the regionfrom the public sector also reduces revenue sharing going to the region. IfSindhupalchowk is taken out, revenue growth for most of the districts of mountainregions is within 10 to 20 percent. Since the total revenue mobilization by thegovernment is itself low in the region and is majorly custom oriented, there is nosignificant attention of the government in mobilizing revenue from other sectors.Table 4.18: Public revenue in Himalayan districtsFY FY FY FY FY Growth rateArea2060/61 2061/62 2062/63 2063/64 2064/65 per year (%)Nepal 62824.9 70122.74 72282.09 87712.08 107622 14.7Mountain 1380.1 1512.60 1628.09 902.43 888 -7.4Mountain Regions 2.2 2.16 2.3 1.06 0.8as % of NepalTotal DDC InternalRevenueSource: Calculation Based on FCGO Data4.6.1 Tax and Non Tax Revenue of the Public SectorNon- tax revenue counts only 20 percent of the revenue in the region. There isnot much difference between tax and non tax revenue share on the total nationalrevenue of the corresponding components from the region. District-wise scenariovaries. Details on tax and non-tax revenue are given in Annex 26.Table 4.19: Public Revenue -Tax and Non Tax: 2005-2008 (Rs. Million)AreaFY 2061/62 FY 2062/63Tax Non Tax Total Tax Non Tax TotalNepal 54104.78 16017.96 70122.74 57430.54 14851.54 72282.09Mountain 1343.72 168.87 1512.60 1472.04 156.05 1628.09MountainRegionsas % ofNepal2.48 1.05 2.16 2.56 1.05 2.2546

AreaFY 2061/62 FY 2062/63Tax Non Tax Total Tax Non Tax TotalNepal 71126.73 16585.36 87712.08 85155.46 22467.02 107622.50Mountain 720.56 181.87 902.43 697.41 190.57 888Mountain 1.04 1.11 1.06 0.82 0.85 0.8Regionsas % ofNepalSource: Calculation Based on FCGO Data4.6.2 Total Public Expenditure by Government through Centraland District Level Institutions during 2061/62-2066/67:National, Mountain Region and DistrictsGovernment spending in the mountain region districts has reached to aboutRs.12 billion and has been growing at about 22.3 percent a year over the lastfive years in nominal terms as against the growth of 20.8 percent at the nationallevel. The share in total spending in the region from the public sector is onlyabout 5.5% on average. This indicates that the government emphasis ofspending in the mountain region has not significantly shifted from previous oldpattern despite the conflict resolution in the country. Basically, institutionalabsorption capacity is also considered to be the problem in increasing theexpenditure on one hand and the modality of spending has maintained status-coon the other. Share of development and capital expenditure is also not muchdifferent from the total expenditure. District-wise status of spending in the regionis given in Annex 27, 28 and 29.Table 4.20: Total Public Expenditure 2061/62-2065/66, National, MountainRegions and Districts(Rs. million)Area FY 2061/62 FY 2062/63 FY 2063/64 FY 2064/65 FY 2065/66Nepal 102560 110847 133605 161350 218389Mountain 5811 6134 7237 8701 12978Mountain5.67 5.53 5.42 5.39 5.94Regions as% of NepalSource: Calculation Based on FCGO Data47

4.6.3 Analysis of District Level ExpenditureGovernment Expenditure through District Level Line AgenciesGovernment expenditure heads and budget through district offices has to bereported and approved by DDC, though they do not have much control on themdue to centrally tied nature of the expenditure. Such expenditure includes allexpenditure done by the district level line agencies including the devolvedsectors. Expenditure on the devolved sector will be dealt later.Government spends about 35 billion rupees as Development expenditure by thegovernment through district level line agencies (including devolved sectors). Itaccounts to about a third of the total development expenditure of the governmentby central and district level line agencies in the district. In the total district levelexpenditure done through the district level agencies, the share of the mountainregion is about 15% (2009). Given the population share of 7% in the mountain,the districts in the region receives proportionately higher share of the nationaldevelopment expenditure at the district level. Government has been increasingthe Development expenditure through district line agencies for the better reach atthe grass root level. Expenditure through district level has tripled over the lastfive years. District level details are shown in Annex 30.Table 4.21: Public District Level Development Expenditure 2005-2009,National, Mountain Regions and Districts (in Rs million)Area FY 2061/62) 2062/63) 2063/64) 2064/65) 2065/66Nepal 11394 12654 17577 21198 34649Mountain 1500 1915 2577 3136 5180Mountain13.16 15.13 14.66 14.80 14.95Regions as %of NepalSource: Calculation Based on FCGO Data4.6.4 Expenditure in the Devolved SectorFrom 2058, the government initiated the piloting devolution. District developmentfund (DDF) was also created as a pool of resources coming to DDC. From 2061,small rural infrastructure (drinking water, agriculture road and rural road) wereadded by shifting also the DTO (district technical office) under DDC. With thatmove, the following components have come under the full jurisdiction of DDCplanning even if the expenditure framework is still partly controlled through thecentral level directives:• Basic health (up to sub health posts)• Primary education• Agriculture extension• Transportation excluding national highway, strategic highway and road connecting districtheadquarters• Small irrigation and river control

• Micro hydro

4.6.5 Sectoral Public Expenditure in the Mountain RegionSectoral public expenditure at the district level through centre and district level line agencies is highest in education followed bylocal development. Education accounts to about one third of the total spending by the government in the mountain region and localdevelopment accounts to about 16% in 2008 (table 4.24). The share of the expenditure in the local development is rising faster.The district-wise expenditure scenario is given in Annex 32, 33 and 34.Table 4.23: Sectoral Public Expenditure 2061/62 and 2064/65 (Rs Million)2061/62Agriculture IrrigationLandReform &SurveyForestryRoadTransportation Education Health DrinkingWaterLocalDevelopmentAll OtherSectorsNepal 2192 2332 668 1993 4620 17166 4927 1982 5034 61647 102560Mountain 217 47 36 330 189 2141 327 115 751 1658 5811Sector as 3.7 0.8 0.6 5.7 3.3 36.8 5.6 2.0 12.9 28.5 100.0% ofMountainregionTotalLandRoad2064/65 Agriculture Irrigation Reform & ForestryTransportation Education Health Drinking Local All OtherTotalWater Development SectorsSurveyNepal 3507 4089 876 2160 7661 26914 10265 4692 9066 92120 161350Mountain 323 71 46 372 209 2837 606 290 1413 2534 8701Sector as 3.7 0.8 0.5 4.3 2.4 32.6 7.0 3.3 16.2 29.1 100.0% ofMountainregionSource: Calculation Based on FCGO Data50

4.6.6 Sectoral Share of District Level Public Expenditure by the Government in the Mountain RegionGovernment expenditure through the district line agencies varies by sector up to 20 percent. Because of difficult terrain for access,government expenditure through district line agencies is high in agriculture, accounting about more than one fifth followed by localdevelopment, about 16%. Other major social sector expenditure varies around 10%. Details by district are shown in Annex 35.Table 4.24: Sectoral District Level Public Development Expenditure 2061/62 and 2064/65(Rs. million)Area 2061/62Agriculture Forestry Road Education Health Drinking Local All Other TotalTransportWater Development SectorsNepal 903 413 200 3460 337 750 4808 522 11394Mountain 181 47 20 310 46 111 748 37 1500MountainRegions as %of Nepal19.99 11.42 10.02 8.96 13.69 14.75 15.55 7.16 13.16Area 2064/65Agriculture Forestry Road Education Health Drinking Local All Other TotalTransportWater Development SectorsNepal 1064 348 305 6287 2159 1793 8777 464 21198Mountain 229 52 32 862 230 250 1413 68 3136MountainRegions as %of Nepal21.55 15.05 10.62 13.71 10.64 13.93 16.10 14.58 14.80Source: Calculation Based on FCGO Data51

4.6.7 Public Expenditure of MLD during 2061/62 to 2065/66(National, Mountain Regions and Mountain Districts)MLD is one of the prime ministry for spending in the local level. Its spending wasabout Rs 24 billion in 2065/66 as the amount going to local level was nearlydoubled. The average spending by MLD in mountain region accounts to about15% and per capita expenditure is twice the share of the population in the region(Table 4.26). District-wise detail is given in Annex 36.Table 4.25: Public Expenditure of MLD 2061/62 to 2065/66 National,Mountain Regions and Mountain Districts(Rs. Million)Area FY 2061/62 FY 2062/63 FY 2063/64 FY 2064/65 FY 2065/66Nepal 6455 7048 10615 10972 23664Mountain 865 1034 1513 1622 3585Mountain 13.39 14.68 14.25 14.79 15.15Regions as% of NepalSource: Calculation Based on FCGO Data4.6.8 Expenditure in High Priority Sector in Mountain RegionGovernment has taken policy of public expenditure prioritization and the projectsof highest priority (p1) get budgetary allocation guaranteed by the government.Out of the total expenditure made by the government in the sector in themountain region, p1 projects were more than 91 % in 2064/65 (Table 4.26), whilethe total national development expenditure in p1 category was much lower thanthat (73%). P1 projects are more pro-poor in characteristics. This reflectsrelatively more emphasis of the government in incurring expenditure in pro-poorprojects in the mountain regions. District-wise details of the expenditure bypriorities (p1, p2, and p3) are given in Annex 37.Table 4.26: Prioritized Development Expenditure 2004/05 and 2007/08(Rs. Million)Area 2061/62 2064/65P1 P2 P3 Total P1 P2 P3 TotalNepal 27853 8014 861 36728 50444 17931 392 68768Mountain 1644 762 7 2413 3473 319 5 3798P1 as %of 43.29 20.07 0.17 63.53 91.45 8.41 0.14 100.00totalexpenditureof MountainregionSource: Government' Budget Statements52

4.6.9 Recurrent Expenditure in Total Public Expenditure inMountain Region.Because of the difficult terrain, recurrent expenditure of the government in theregion is much higher than at the national level. While national level recurrentexpenditure in 2065 accounted to about 57 % of the total national expenditure,the share was much higher about 75 % for the mountain region. The salarycomponent of the share (including salary and allowance) is one of the primefactors to it. The salary and allowance accounts to about 17 percent at thenational level, while it accounts to much higher as 26% in the mountain region(Table 4.27). District-wise detail of the expenditure category is given in Annex38.Table 4.27: Public Expenditure by Economic Heads in Mountain Region (Rs.million)AreaRecurrent1 ConsumptionExpenses1.01 Salary1.02AllowancesOtherConsumptionExpenditure2 OfficeOperation andServicesExpenses3 Grants andSubsidies(CurrentTransfer)4 Service andProductionExpensesNepal 91447 42381 26020 1837 14523 5774 28626 7643Mountain 6552 3033 1962 314 756 287 2762 469Expenditure as % ofMountainRegions75.30 34.86 22.55 3.61 8.69 3.30 31.75 5.39Area10 PrincipalPaymentsInterestPayment +RefundCapital5 CapitalTransfer6 CapitalFormation7Investment8 CapitalGrantsTotalNepal 16387 7022 53516 1077 19736 15314 17389 161350Mountain 0 0 2149 4 801 0 1345 8701Expenditur 0.00 0.00 24.70 0.04 9.21 0.00 15.45 100.00e as % ofMountainRegionsSource: Calculation Based on FCGO Data4.6.10 Poverty Alleviation Fund and Expenditure in the MountainRegionPoverty Alleviation Fund (PAF) funded by World Bank and Chaired by the PrimeMinister has grown as one of the prime sources of expenditure in rural areas. Itprovides Grants to the community organizations to carry out the developmentactivities. While the expenditure through PAF is already accounted in the53

development expenditure of the government through central level, a separateanalysis is presented due to the specific importance of the fund for povertyalleviation. The PAF data source indicates that about 27 percent of the PAF fundis spent in the mountain region (Table 4.29) and the per capita expenditure fromthe fund is almost four times the population share of the region. So far, 9 districtsof the 16 mountain districts fall under the program with a major focus on midwesternand far western mountain districts and Rasuwa district of central regionwhich are quite behind in the development. District-wise details are given inAnnex 39.Table 4.28: District-wise Programs and Expenditures Carried out by PovertyAlleviation Fund (PAF) From Fiscal Year 2061/62 to 2064/65 (Million Rupees)AreaIncomeGenerationProgramSmallInfrastructureProgramInnovativeProgramTotalNepal 2938 724 715 4376Mountain 809 253 129 1192Mountain Region27.6 35.0 18.1 27.2as % of NepalMountain Regions and DistrictsRasuwa 66.86 1.07 22.51 90.44Central Mountain 66.86 1.07 22.51 90.44Dolpa 39.16 0.00 16.85 56.01Humla 72.42 3.50 39.35 115.27Jumla 128.63 18.78 31.15 178.55Kalikot 144.68 2.60 0.00 147.27Mugu 37.26 47.63 0.00 84.89Mid Western422.15 72.50 87.35 582.00MountainBajhang 32.78 43.90 17.41 94.09Bajura 111.32 17.80 2.14 131.27Darchula 176.37 117.85 0.00 294.22Far Western320.47 179.55 19.56 519.58MountainSource of Basic Data: Economic Survey 2009/104.6.11 Government Grants to DDCsGovernment Grant to DDCs has increased significantly over the years. In2064/65, it increased by almost 80 % in the mountain region. Overall growth inthe first five years has been about 29% per year in nominal term and about 21 %in real term. If the sudden increase of the fund from a political decision in theyear 2065 is excluded, the growth is about 15 % per year in nominal term andabout 7% per year in real terms. The increase in grant in the remote areas hasincreased more as the under development factor has received higher weight inthe grant allocation by the government (Table 4.29). In the total grant allocationby the government, recurrent expenditure grant is about 38%. The recurrentexpenditure grant in mountain region is relatively higher than in the nationallevel.54

Table 4.29: District Development Committee Grant in Mountain Districts2061/62-2065/66(Rs Million)DDC FY FY FY FY FYDistrictsGrant 2061/62 2062/63 2063/64 2064/65 2065/66Bajhang Recurrent 69.6 94.1 107.9 115.7 125.3 15.8Capital 53.6 53.9 56.6 81.6 208.9 40.5Total 123.1 148.0 164.5 197.3 334.2 28.4Bajura Recurrent 58.6 84.6 79.5 96.9 104.0 15.4Capital 45.8 55.4 65.9 54.2 118.9 26.9Total 104.3 139.9 145.5 151.2 222.9 20.9Darchula Recurrent 70.6 92.0 99.5 111.9 129.0 16.3Capital 47.7 47.2 52.3 66.4 88.5 16.7Total 118.3 139.2 151.8 178.4 217.5 16.4Dolakha Recurrent 61.5 84.4 93.7 101.0 113.6 16.6Capital 45.3 45.4 166.5 123.6 394.8 71.8Total 106.8 129.7 260.3 224.6 508.4 47.7Dolpa Recurrent 54.9 77.1 71.7 91.6 99.9 16.1Capital 62.8 214.2 317.9 90.6 123.1 18.3Total 117.7 291.3 389.6 182.2 223.0 17.3Humla Recurrent 59.6 80.7 76.7 95.9 104.0 14.9Capital 58.9 159.4 328.8 96.0 180.3 32.3Total 118.5 240.1 405.5 191.9 284.3 24.5Jumla Recurrent 60.2 84.1 86.6 99.1 131.8 21.6Capital 49.8 37.8 24.6 33.4 63.6 6.3Total 110.0 122.0 111.2 132.5 195.4 15.4Kalikot Recurrent 64.1 80.8 82.5 98.2 119.2 16.8Capital 56.4 52.7 26.1 9.2 63.0 2.8Total 120.5 133.5 108.7 107.4 182.2 10.9Manang Recurrent 44.1 63.7 58.4 72.3 80.3 16.2Capital 30.8 30.2 103.0 110.3 53.4 14.8Total 74.9 94.0 161.3 182.6 133.8 15.6Mugu Recurrent 56.1 75.0 73.2 93.2 100.0 15.6Capital 50.3 56.9 359.2 63.8 58.3 3.8Total 106.3 131.9 432.4 157.0 158.3 10.5Mustang Recurrent 43.4 63.6 64.5 65.9 79.4 16.3Capital 34.0 35.2 95.0 51.2 26.4 -6.2Total 77.4 98.8 159.5 117.1 105.8 8.1Rasuwa Recurrent 35.5 56.0 57.7 76.1 88.0 25.5Capital 45.5 63.3 43.8 52.2 185.1 42.0Total 81.0 119.2 101.6 128.3 273.1 35.5Sankhuwasava Recurrent 51.6 72.4 76.9 86.2 92.9 15.8Capital 43.2 49.9 47.7 55.2 341.2 67.7Total 94.8 122.3 124.6 141.4 434.1 46.3Sindhupalchok Recurrent 86.2 107.4 124.6 137.9 175.0 19.4Capital 43.3 84.9 63.9 59.4 539.5 87.9Total 129.5 192.3 188.5 197.3 714.4 53.3Solukhumbu Recurrent 47.9 70.5 78.9 83.0 92.1 17.8Capital 34.9 38.4 50.5 54.6 167.6 48.0Total 82.8 108.9 129.3 137.6 259.8 33.1Taplejung Recurrent 62.6 87.3 88.6 80.2 99.8 12.4Capital 52.5 77.9 56.6 59.1 262.5 49.5Total 115.1 165.2 145.2 139.2 362.3 33.2All districts Recurrent 926.4 1273.8 1321.0 1505.2 1734.3 17.0Capital 754.8 1102.5 1858.4 1060.9 2875.2 39.7Total 1681.1 2376.4 3179.4 2566.1 4609.5 28.7Source: FCGO Data, * Growth based on 3 years moving average.55Growth %Per Annum*

____________________________Chapter FiveIssues and Challenges5.1 Issues on Revenue MobilisationThe focus group participants in the surveyed districts stated that assessingrevenue potentials, preparing database for revenue generation, building humanand institutional capacities of DDCs, increasing compliance of tax-payer andaccessibly are the major issues in revenue mobilization.The participants stated the following problems in revenue mobilization during thefocus group discussion conducted at the sample districts. Table 5.1 refers to theproblems in revenue collection stated by the DDCs.56

Table 5.1: Stated Problems in Revenue Collection in districtsDistrictsAbsence ofSurvey/studyInter AgencyCoordinationAccessibilityindifference ofAdminMechanismLack of TrainedHRConflicting LawsNon ComplianceCarteiling /SyndicatingAdministrativeinefficiencyLack of Incentiveto staffAbsence of TaxEffortDisseminationand masscommunicationPoliticalinstabilityNon feasiblesourcesTaplejung 1 2 3 4Sankhuwasava 1 2 3Solukhumbu 1 3 2Dolakha 1 2 3 4 5Sindhupalchowk 1 3 2Rasuwa 2 1Dolpa 1 2Jumla 1 2 3 4Mugu 1 3 4 2Humla 1 2 4 3Bajhang 1 4 2 3 5Darchula 2 1 3 4 5frequency 6 2 3 3 5 2 3 2 5 1 2 1 5 4Source: Focused Group DiscussionsNote: The range 1-5 denotes high to low severity of problem.57

Table 5.2 reflects the major discrepancies between budgeted and collected revenues in districts. The main reasons opined by DDCofficials are absence of research and database on potential of sources followed by accessibility, conflict situation and absence ofstrong political will in the districts.Table 5.2: Reasons for the deviations between budgeted and collected revenueDistrictsLessPoliticalCommitmentConflictsituationIllegalexportTax noncomplianceEconomicDepressionCapacityConstraintNoResearchBaseLack ofLocalLabourInternal/seasonalMigrationAbsenceofdatabaseTaplejung 1 2Sankhuwasava 4 1 2 3Solukhumbu 2 1Dolakha 1 2Sindhupalchowk 4 1 2 3Dolpa 1 2Jumla 1 2Mugu 2 1 3Humla 1 2Bajhang 1 2Darchula 1 2Frequency 3 4 2 3 3 2 4 1 1 3 2Source: FGD of 11 DDC OfficialsUnlawfulpressure58

5.2 Major Problems in Revenue MobilisationMajor problems associated with the revenue mobilization are:• Unclear division of tasks across levels of government and between the LGs. TheLSGA has provisioned for almost similar type of tasks to the tier of LGs. Veryoften there is no clarity of responsibilities among LGs. Similarly, the tasks are notclearly divided between central government and local governments. It hascreated problems in raising revenues by local governments.• Contradiction in the legal framework between the LSGA and the sector laws.There are several sectoral laws conflicting with LSGA. In the context of revenuemobilization, the Forests Act, 2049, The National Park and Wild Life reserve Act,2031, Mining Act have affected in raising revenues by LGs - especially by DDCs.• Poor revenue assignment and same provisions to different geo-social situation:The LSGA/R have provisioned for uniform policy for revenue generation acrossthe 75 district. Looking from the perspectives of natural resource endowments,accessibility, food sufficiency and purchasing power of the populations amongothers, Himalayan districts have very little possibility of raising revenue by localgovernments.• Lack of clarity on LG revenue bases and revenue sharing system between layersof government and between LGs. There is multiple level of authority in raisingrevenue from various sources such as sale of natural resource (mine products,wood and timber sale, export tax on commercial use of agriculture and livestockproducts). Besides, the basis of revenue sharing among LGs (from DDC to VDCand Municipality in case of export from district) is very difficult to administer as itis very often not possible to maintain record of the quantity goods of derivation.• Weak incentive or structure for fiscal autonomy. Since there is no study onexpenditure based revenue assignment, the central grant is provided based onformulae irrespective of revenue potential and revenue efforts by LGs. Therevenue sharing from hydro-electricity - as national good, is distributed on thebasis of administrative boundary discouraging local tax efforts. Besides, here isno strong mechanism of enforcing accountability to LGs.• Unclear expenditure needs and financial impact of the transfer of tasks devolvedto LGs. The total expenditure of government in districts is increasing over timehowever; the expenditure in devolved sectors especially on agriculture andlivestock development is declining. Local governments are reluctant to invest insectoral development as devolution itself is not complete and accountability ofsector remains in central government.• Poor administrative capacity to assess the revenue base and enforce the taxes:Most of the Himalayan DDCs have very weak administrative capacity in terms ofprocedures, human resource including technical capability. There is no seriouseffort from either GON or DDCs to develop capacity in revenue generation.• Political pressure on the local tax administration to relax on revenue collection:The local tax collector (contractors) lobby with political leaders for relaxing bidamount showing various cause and leaders put pressure to DDCs to exempt ordeduct the contracted amount.59

5.3 Major Issues and ChallengesThe following are the major issues and challenges in revenue mobilization in theHimalayan districts.Flexibility in identifying new revenue sources: A variety of tax sources havealready been provisioned in the LSGA/R for different tiers of local governmentsand there is little scope for assigning new additional sources to the DDCs.Supporting LGs from the centre to increase revenue: Local governmentsgenerally perceive that the centre has only assigned them authority to impose taxand do not give attention to build capacities of DDCs to generate revenues fromthe sources assigned to them.Focusing towards yielding revenue sectors: Some of the assigned revenuesources do not yield substantial revenue and at the same that difficult to execute.The DDCs have inadequate ability to focus to the potential yielding sectors.Large range of tax rate: Some DDCs consider that the range of tax rate is toolarge. Due to large range, DDCs often find difficulties to arrive at the appropriaterates. DDCs are not used to deliberate upon the pros and cons and implicationsbefore fixing the tax rate. Therefore, these DDCs rather preferred a rate fixed bycentral government. However, few DDCs considered that the centre shouldauthorize them to fix the tax rate based on socio-economic conditions andsuitability without limiting autonomy of the DDCs to fix tax rates. These DDCsconsidered that large range of tax rates provides them autonomy. Therefore, thecentre should not abandon this practice.Revenue Planning: The DDCs plans are expenditure oriented and there is nopractice of revenue planning. A comprehensive plan of DDC revenue is required.Inadequate central policies and contradictory legal provisionsInadequate attention and efforts on local revenue by the line agencies in theirrespective sectors like forests, mining and land registrationIneffective LB revenue suggestion central Committee: The committee has notbeen pro-active in resolving the issues of local revenue at central level. Limitedflexibility of DDC in new sources: The LSGA/R has limited the autonomy of LGsin Himalayan districts to raise revenue from the bases that are not under premiseof central and local tax fold.Making attitude of LGs proactive: Some of the DDCs were sceptical ofassignment of new sources of revenue to them. According to them, the collectionof tax revenue in the Himalayan DDCs is decreasing year after year due to nonbiddingby the contractors. Most of the DDCs collect all of their tax revenuesthrough contractors at present.Setting up proper organization for revenue administration: Currently,Financial Administration Section performs the revenue related functions in mostof the DDCs. As most of the DDCs have been collecting taxes through60

contractors and they do not see the need of a separate revenue section in theirorganizational hierarchy.Maintaining revenue records: Revenue records provide the local governmentauthorities details about the past arrears of revenue, and the amount which willbe generated during the current year under different revenue heads.Revenue records are inadequately available at the DDCs because they collectmost of their tax and non-tax revenues through outsourcing. At best, the DDCscan only provide total figure of revenue collection by major revenue heads.Building capacity of human resources: The revenue performance of the localgovernments will get a real boost in raising revenues to the potential providedtheir staffs are properly trained and possess the skills and techniques required forthe jobs. The financial administration staffs of the DDC, who are responsible foroverseeing the revenue administration functions, are not trained on the subject.On the other hand, most of the revenue staffs of municipalities have receivedtraining on different aspects of revenue administration including tax assessmentand valuation.Himalayan DDCs have very limited bases for revenue generation given theexisting legal provisions. The study shows that the DDCs of Himalayan districtshave low level of institutional and HR capacity to effectively manage revenuegeneration in more transparent manner. Though the LSGA has provided theauthority to raise revenue from tax and non-tax revenue generation, yet the effortso far made is transactional approach only. There is no serious effort in raisingrevenue in district. DDCs do not have systematic accounting, record keeping andreporting practices hence creating obstacle to project revenue potential in thedistrict. The improvement may take several forms including; updating databases,introducing reward schemes for tax administration staff especially those whowork in revenue collection; increasing the operating budget assigned for differenttax administration functions; and enhancing the mechanisms of follow up,monitor, control, and coordination.Increasing rate of tax and non-tax revenues: The ability of local governmentsto raise revenue to the potential depends on many factors including the ability oftheir tax and non-tax payers to pay. Quite often, DDCs are finding it very difficultto raise their revenue collection to a higher level due to the lower rate of tax andnon-tax revenues fixed by the LSGR even when there is ability among theresidents to pay. This is true for land tax and other charges and fees.61

____________________________Chapter SixCapacity Structure of Himalayan Districts in Expenditure andRevenue ManagementCapacity can be defined as the ability of individuals and organizations ororganizational units to perform functions effectively, efficiently and sustainably.Capacity is a continuing process which ensures that human resources and theway in which they are utilized are central to capacity development. The overallcontext within which organizations undertake their functions will also be a keyconsideration in strategies for capacity development.The surveyed Himalayan districts' have low level of capacity in terms of overallmanagement of development and service delivery. The major reasonscontributing to it ranges from the physical condition to low infrastructuredevelopment, low level of human development, social capital formation andavailability of facilities and services required for development management in theregion. However, the status of all the districts is not the same in many ways.Generally, Himalayan districts of eastern and central development regions aremore capacitated in comparison to those of mid and far western regions.Retention of professional and experienced staff for relatively a reasonable timeperiod has remain a major and consistent problem in management ofdevelopment and delivery of service in high mountain districts.6.1 Organizational Structure of DDCsLSGA and its Regulations have provided the general framework of organizationalstructures of DDC. DDCs can organize some of the committees, sub-committeesand sections under their secretariat. A model organizational structure of DDC isgiven in figure.2. In the absence of political representatives in DDCs, some of thecommittees and sub-committees under DDC have remained non-functional. Thekey role of DDCs like participatory, inclusive and bottom up planning process,monitoring of development programme and projects, and coordination withvarious development partners have been seriously impair. Account Committeethat is supposed to function as oversight mechanism for DDC financial matter isalso non-functional in the absence of the DDC Council. However, the support ofpolitical parties is being the political mechanisms that function as advisory boardto DDC. The District Revenue Advisory Committee has a key role in mobilizationof revenue in DDC. The Committee advises DDCs in determining tax rates,service charges and fees and supports DDC in monitoring and review of DDCrevenue and its administration.Planning and Implementation of Projects in Sample Himalayan districts:The consultations with DDC staff at districts reveals that all four district followplanning processes while formulating district development plan and there by62

selecting capital investment projects. DDCs are physically involved from Ilakalevel planning workshop upward to holding of district council meeting. All DDCshave a common basis for project selection as 1) NPC guidelines/directives 2)Sectoral ministry's directive and programme, and 3) Priority list of Ilaka workshopand political consensus among others. Feasibility studies of the capitalinvestment projects are carried out by respective sectoral offices and DDC/District Technical Offices. However, feasibility study does not cover all projects inthe absence of adequate human resource and technical capacity.In implementation of projects, all districts follow the procedures stated in LSGAand its regulations. It is found that public-private partnership has been initiated ByJumla DDC in the area of developing slaughtering house, agricultural marketingcentre, sanitation and some capacity development activities.Monitoring of capital investment projects are carried out as quarterly, half-yearlyand annual progress review meetings in addition to site visits. Joint monitoringprocess by political representatives, civil society representatives and respectiveoffices have been initiated in sample districts, however such monitoring visits aread hoc and most of the time in the absence of appropriate frame and indicators.63

Fig. 2: Organization Structure of District Development Committee:(Model)District CouncilAccount CommitteeSubject Wise CommitteesVacancy FulfillmentCommitteeSub CommitteesSupervision and MonitoringChair and Deputy chair of the VDCs, Mayor and Deputy Mayor ofMunicipalities, Members of DDCs, Members of House ofRepresentatives and National Assembly, 6 persons nominated byDistrict CouncilDDC-Executive Committee (Board)President, Vice-president, Ilaka Members, 2 nominatedpersons, Members of House of Representatives andNational AssemblySubject wise Planning CommitteePublic Private PartnershipPromotion CommitteeDistrict Level RevenueAdvisory CommitteeSupervision andMonitoring CommitteeIntegrated PlanningCommitteeDUDCC/AJDCCDistrict SportsDevelopment CommitteeOthers as per necessitySecretary (LDO)Thematic Coordination CommitteeWage Rate FixationCommitteeDIDCDistrictTechnicalOfficeAdministrationNote: Shaded committees are not functional at present.Planning &MonitoringProgrammingFinancialAdministrationInternal AuditSectionSectoral Sections(Social, HRD, Sector coordinationetcOthers64

6.2 DDC Revenue Administration in Sample DistrictsAll sample DDCs have Internal Revenue Sub-unit basically under FinancialAdministration/Account Section with strong linkage to general administration andInternal Audit sections. The number of staff deputed in Internal Revenue Sub-unitranges from one to three in these districts. In Jumla and Darchula DDCs, onestaff (Sub-accountant-) has been assigned where as in Sankhuwasabha andSindhupalchowk two staff (Accountant, and Sub-accountant) have been assignedin the units. Sankhuwasabha DDC has also hired some personnel on contractualbasis.6.3 Revenue Collection Procedure and its Impact onCompliance6.3.1 Revenue ComplianceRevenue compliance is the support of citizen or prospective tax payers to thedistrict revenue programmes implementation. It has always been an importantissue in revenue administration for choosing of system of compliance that bestserves the implementation of revenue policy.The knowledge for local governments about operation of an efficient taxadministration is essential for local revenue improvement. The primary aim ofDDC revenue administration is clearly to collect revenues, and is responsible fordefending the interests of the DDC in the scope of tax administration.All the DDCs in the Himalayan districts have fairly uniform and more or lessunrestricted power to require information from taxpayers and third parties,including other government line agencies. These powers include identification ofrevenue sources by DDC itself or third parties and to project revenue on thebasis.In deciding the extent of compliance the determinant factor is informationcollection mechanism, a key consideration is relationship and trust with thetaxpayers at the local level and monitoring. Clearly, individual taxpayers’ rightsare of greater importance. Potential harassment of taxpayers is also of a concern.Consequently, Revenue Sub-section of the DDC's information-collection powersis crucial. Besides the use of external reviews of the exercise of informationpowers are important. These possibly include reviews by audit by the InternalAudit Section of the DDC.The Revenue Sub-section of the DDC should also be required to followprescribed procedures when exercising its powers. Most of the staff in theRevenue Sub-section of the DDCs tends to believe that more information andmore monitoring improve compliance. The goal is to balance the amount ofinformation that taxpayers have to provide to DDC on themselves and others withthe additional revenue that such information would help the DDC to collect. Thus,compliance depends on the upbeat of the DDC towards revenue administration.65

6.3.2 Revenue Collection ProceduresLSGA/R provide framework of revenue collection methodologies of different taxand non-tax sources assigned to DDCs. The framework includes the methods ofdirect collection, and collection through contractors. The methods of collectingrevenues from different sources of sample DDCs are given in table 6.1.Table 6.1: Major Mode of Revenue Collection in Sample DistrictRevenue SourcesSample Infrastructure ResourceServiceDistrict Utilization UtilizationFees SalesChargeSankhuwasabhaSindhupalchowkJumlaDarchulaTaxContractingand collectingin instalmentContractingand collectingin instalmentInitiatedPartneringwith FNCCIfor toll taxNo revenuecollectionthrough taxsourcesSource: DDC consultationTaxContractingandcollectingininstalmentContractingandcollectingininstalmentTradersdeposit inOfficeTradersdeposit inOfficeRegular/OfficestaffAnnual/OfficestaffRegular/OfficestaffRegular/OfficestaffRegular/officestaffOfficeStaffRegular/officestaffRegular/OfficestaffContractingandcollectingininstalmentContractingandcollectingininstalmentRegular/office staffRegular/Office staffProblemDifficulty inContractingof ResourceUtilizationtaxDelay inPayment(contractor)/Pressurefor rebatePassengerJeeps not intoll tax foldNo study onpossibilityof raisingrevenuefromtaxablesources.Darchula DDC has not yet been able to collect revenues from tax sources. Since,no all season in-country vehicle transportation is available in the district, theinternal use and district export of stone, sand, gravel and other resources exceptherbs is not commercially viable in this district. In the surveyed DDCs, taxes arecollected through contract, and fees and charges by direct collection throughDDC staff. Since the coverage of tax is limited and export points are fixed inDarchula and Jumla, the traders themselves pay resource utilization taxes inDDC office prior to exporting the products. In Sankhuwasabha andSindhupalchowk, contractors are appointed to collect revenue from tax and sales.It has been found that the local bodies have done some innovative work in thecontext of improving tax and fees. Examples are found that DDC Jumla has beendoing an interaction with its stakeholders especially with local chapters of NepalChamber of Commerce and Industries and made partnership to collect toll taxwith it. Similar examples can be found in other DDCs, as well. The process isencouraging for revenue collection and found positive responses from allstockholders. It will be useful to encourage this process. It is felt that this processhas increased the cooperative feeling of the industrial/commercial sectorstowards the local bodies.66

6.3.3 Impact on ComplianceSo far as the compliance to the LSGA/R provisions related to revenues isconcerned, compliance to the fees and charges raised by the DDC staffsthemselves is higher. Compliance to the revenue raised through the contractor isless as the contractor is self-responsible to collect the revenues and submitcommitted revenue to the DDC. There is lack of adequate monitoring mechanismto review the contractor's revenue collection activities and tax returns. Theoutsourcing process adopted by the DDCs to raise revenue through contractorsis appropriate and appreciable; however, tax information on the basis of the taxreturns through contractors has to be updated by the DDCs. It helps increasingtax base and revenue projection for the forthcoming years.6.4 Capacity of Sample DDCs in Revenue Mobilization:The consultation process, analysis of checklists and observation reflects that thehuman resource capacity of DDC in terms of number, knowledge and skill isweak in all the sample districts though it differs district-wise. Table 6.2 shows thecapacity of revenue administration in sample DDCsTable 6.2: Capacity Assessment of Revenue Administration in SampleDDCsName of DDC HRNo.Sankhuwasabha 3Sindhupalchowk 2Capacity Of DDCsPosition and Physicalqualification Facility• OneComputerAccountant Available(Intermediate)• Subaccountantandtax inspector(High School)• Accountant(Intermediate)• Subaccountant(High School)Jumla 1 Sub-accountant(Primary level)ComputerAvailableProcedure/ResearchNo systematicstudies• River basemineutilizationplan exists,• discussionheld toimpose agrobase tax oncommercialtransaction- • No studies forpotential• Absence ofRevenueMobilizationplanCapacity gap• Inadequate/level of staff• inadequateknowledge,skills andtraining• No systemand proceduredeveloped• Inadequate/level of staff• inadequateknowledge,skills andtraining• No systemand proceduredeveloped• Inadequate/level of staff• inadequateknowledge,skills andtraining67

Darchula 1 • Accountant(Intermediate)• Subaccountant(High School)Source: DDC consultations and recordsAvailable• No studies forpotential• Absence ofRevenueMobilizationplan• No taxresources areutilized• No systemand proceduredeveloped• limited recordkeeping andcomputer skill• Inadequate/level of staff• inadequateknowledge,skills andtraining• No systemand proceduredeveloped• Recordkeeping andcomputer skillThe table shows that all observed DDCs have not given adequate attention toenhance internal revenue mobilization capacity. The personnel deputed forrevenue administration have inadequate capacities and did not get training toimprove their performance. There are computers, but utilization to record revenuepotentials, past revenues from different sources and future projection have notyet been done.One of the major problems of the DDCs is inadequate ability on revenuemobilisation. In most DDCs there are huge gaps between projected and collectedrevenues. This is due to: (i) poor administrative capacity to assess the revenuebase; (ii) poor administrative capacity to enforce the taxes; (iii) explicit andintentional tax evasion and resistance from taxpayers; (iv) corruption, includingembezzlement of revenues; (v) external pressure on the Revenue Sub-unit toprovide optimistic projections; and (vi) political pressure on the local taxadministration to relax on revenue collection.In terms of incentive and additional facilities to the concerned staff,Sankhuwasabha DDC provides additional allowance, whereas other threedistricts have not provided further incentives. However, DDCs have realized theneed for incentive system ranging from 15 to 20 percent of the basic salary of therevenue staffs based on their performance. Likewise, DDCs have not significantlyallocated budget for improving revenue management besides deputing staffs.Data Base and Revenue PotentialsDatabase is one important element of revenue administration. The datamanagement of sample DDCs appears very weak. None of the DDC has analysisabout how much revenue is best potential to mobilize from the sources availablein their territory. Instead of the identification of tax payers, coverage of certainresources and monitoring of the yield, these DDCs have been budgeting andmobilizing revenues on the basis of traditional practices. There is a tendency of68

assigning low importance to data management on revenue projection, contractmanagement, organizational structure and human resource management.Under these circumstances it is difficult to assess the fiscal capability and fiscalachievement of the DDCs under this study. On the other side, the DDCs alsohave less knowledge about what aspect to be emphasized to attain highersuccess. Therefore, it is necessary to develop a system of maintaining revenuerelated database in order to make the local bodies fiscally more capable.MCPM reports have identified the following capacity gaps:♦♦♦♦♦♦♦♦No Himali districts failed to meet MCs related to local revenue mobilization.They failed in following indicators:o Annual budget ceiling and planning guidelineso Annual Progress Reviewo Internal Audit Section establishedo Comments and reactions on audit reportso Records of unsettled irregularities Records of unsettled irregularitieso Appoints final auditorsKalikot and Mugu districts are getting low score in all three years.Sankhusabha loose 20% grant in 2008/09 due to inadequate capacity for fiscalresource mobilization.Manang loose 20% grants in 2008/09 due to inadequate financial managementMustang loose 20% grants in 2008/09 due to inadequate financial managementKalikot loose 20% grants in 2008/09 due to inadequate Monitoring and evaluationSankhuwasabha and Mustang districts were bad performers in PM evaluation in therevenue mobilization sector.69

Findings of Capacity Gaps from MCPM <strong>Report</strong>sSN Himali Districts MC Status (failed indicators) PM Status Areas of Improvements2006/07 2007/08 2008/09 2006/07 2007/08 2008/09 2006/07 2007/08 2008/091 Taplejung √ √ √ 52 67 712 Sankhuwasabha 1.2, √ √ 36 86 57 - 100% - 20%3 Solukhumbu √ √ √ 53 52 524 Dolakha √ √ √ 60 61 685 Sindhupalchowk √ √ √ 60 67 686 Rasuwa √ √ 1.2 43 69 46 - 100%7 Manang 1.4, √ √ 43 71 57 - 100% - 20%8 Mustang 1.2, 1.4, √ √ 42 53 67 - 100% - 20%2.5, 2.6,9 Dolpa 1.2, 2.6 √ √ 41 58 55 - 100%10 Jumla √ √ √ 56 74 7011 Mugu 2.4, 2.7 √ 51 44 54 - 100% - 100%12 Humla 1.2, √ √ 62 70 75 - 100%13 kalikot 1.2, 2.4, √ √ 38 65 45 - 100% - 20%14 Bajhang √ √ 1.2 71 71 56 - 100%15 Bajura √ √ √ 63 67 5216 Darchula √ √ √ 61 77 6270

__________________________Chapter SevenRevenue Modelling and Projection7.1 Composition of Internal Revenue SourcesInternal revenue as a composition of revenue sharing and other sources of revenue wasanalysed for five years for the districts for which the data from various sources wereavailable. In total internal revenue of the districts, the revenue sharing accounted toabout 78 percent. Own source revenue accounted to only 22 % indicating a highdependency of the DDCs in the centrally raised revenue than mobilizing own revenueby them. In the remaining sources, taxes include 6%, sales 8% and rest the others(Table 7.1). Efforts to increase local tax and fees are very minimal in the districts,basically due to poverty and lack of elected local government for almost a decade.Share of this revenue and other revenue mobilization have either stagnated or declinedover the years. Main reason for not increasing local taxes is the political resistance.There is a tendency of favouring of rebates in the name of relief than towards raisingrevenue by taping local resources. There is significant scope of increasing internalrevenue of DDC by mobilizing additional sources of tax and revenues in the district. Thedetails of revenue generations by all sample 4 districts are given in Annex 40, 42 to 49.Table 7.1: Internal Revenue (own plus revenue sharing) CompositionFiscal YearNumberofMountainDistrictsRevenueSharingIncludingLandRevenueLocalTaxServiceChargesandFeesSalesOtherIncomeInternalRevenueExcludingLandRevenue &RevenueSharing(R1)2005/6 5 84 4 2 8 2 16 1002006/7 11 79 5 3 4 9 21 1002007/8 13 72 7 7 4 10 28 1002008/9 14 80 6 5 4 4 20 1002009/10 11 74 7 3 12 4 26 100Average % 78 6 4 6 6 22 100Source: Study calculation based on local revenue dataTotal71

7.2 Revenue Expenditure GAP of DDCsAnalysis was done to examine how much of the expenditure on development handledby DDC is met through its own source. The revenue expenditure Gap has beenestimated on this basis. The study has estimated the revenue from own source andfrom revenue sharing, which is a kind of claimable source of DDCs. Internal revenuefrom own source has been defined by this study as R1 and Internal revenue includingrevenue sharing and revenue from land tax as R2. Development expenditure by DDCoffice has been considered as the total absorbable demand for resources at the presentinstitutional capacity of DDC. The proportion of R2 to development expenditure throughDDC is less than one percent in all the years for the mountain region indicating that ownresource generation is very minimal. Thus, the revenue expenditure gap with respect tothe demand for development expenditure is closer to 99.5 percent of their totalexpenditure (Annex 42). Even if MoLD provides Grant to the districts, it is majorly anadministrative grant to keep their office running and varies around Rs 15 million to Rs20 million by district. That has not been considered as revenue to DDC in this analysisfor the purpose of analyzing revenue/expenditure gap.Expenditure has been projected on the basis of district expenditure data available fromthe FCGO; and the stated growth rate of national expenditure and projected inflation inthe current Three Year Plan of the Government. The Government outlay projection forcapital expenditure (more or less analogues to development expenditure) is beingconsistently maintained at 15%. Internal revenue source is a very small part in themountain districts; they are likely to have additional 1 to 1.5 % impacts in the totaldistrict level development expenditure. Based on all these, a growth rate of 16% peryear (in nominal term) has been applied for projecting the development expenditure atthe district level (Annex 51)7.3 Major Contributing Factors to Total Internal Revenue7.3.1 Theory of Revenue ProjectionForecasting upcoming expenditure requirements and resource availability is critical tothe budgeting and planning process. It gives prospective expenditure needs andsources of funding such needs. However, in developing countries, especially at locallevel it is very difficult to get forecasting data. There are few forecasting techniques thatare used in developing countries like Nepal, which are based on forecaster's judgment,time series, historical, and statistical. The choice of approach is likely to be based inpart on the forecaster’s judgment and various approaches’ feasibility. (World Bank,2007)72

a. Judgmental TechniquesJudgmental forecasting essentially relies on the forecaster’s special expertise—that is,knowledge of the local revenue system and the factors that tend to affect annual flowsof revenue.b. Time-Series TechniquesTime-series techniques link expected future revenues or expenditures to pastexperience. This approach is to project the next year’s flows purely on the basis of whathappened in the very recent past.c. Deterministic TechniquesForecasters may find variables other than the passage of time more realistic asdeterminants of future revenues or expenditures. They can also use the technique toestimate future locally generated revenues Forecasters use deterministic forecastsextensively in making projections of expenditures.d. Statistical ModelsStatistical forecasting models, sometimes termed econometric models, constitute themost complex approach to forecasting and require the most extensive amount of data. tavailable in the Himali districts.7.3.2 Revenue ModellingThe data on total internal revenue has been modelled as a function of revenue sharing,service charge and fees and the sales to estimate the internal revenue elasticity ofthose variables. Logogrammatic model has been used. Other income and local taxescould not be used due the presence of no such revenue in several cases and an erraticnature of data. The elasticity was estimated by converting all the revenues in real termof 2010 to account also the inflation and express the expenditure unit at present date(table 7.2). Cross-sectional Models were run for each year starting 2063/64 (2006/07).The models estimated were highly significant with the capacity of explaining more thanthree fourth of the variation in revenue, as is seen from the result shown in Table 7.2below. It is seen that elasticity of the revenue sharing is high around 60 % at present,implying that 1% increase in revenue sharing will contribute to 0.6% increase in the totalinternal revenue of the district. On the other hand, the effort in raising revenue fromown sources was declining as is seen from the coefficient of service charge and feeswhich are one of the important revenue raising area in the districts. As explainedearlier, local tax and the service charge and fee contributed small about 10% in total(about half each). Since the government was increasingly handing over the centralresources to district level, there seems to be an adverse selection of not making effort of73

aising own revenue by the district. It was expressed that raising revenue was difficultbecause the party representatives were more inclined to giving rebates for a cheappopularity than to make an effort of raising revenue. Particularly, this was due to lack ofthe elected government in the districts, since the nominee representatives did not havedirect stake of delivering developments.Though the model developed helped in understanding the elasticity of some importantvariables, it could not be used for projection as other important variables could not beused due to either unavailability of data or due an ad-hoc pattern of raising revenue.Alternate, approach of projecting the revenue has been applied.Table 7.2: Internal Revenue ModellingDependentVariableInterceptLogRevenueSharingIncludingLandRevenue(x1)Explanatory VariablesLog ofServiceChargesand Fees(x2)Log Sales(x3)Other ParameterLog TotalInternalRevenue (R2)ValueT statElasticityT statElasticityT statElasticityT statAdjustedR^2Fobservations063/64 3.11 1.56 0.50 3.73 0.25 0.91 0.09 0.79 0.76 11.34 11064/65 2.57 1.45 0.67 4.41 0.15 0.98 0.00 0.03 0.64 7.97 13065/66 0.91 0.72 0.81 8.29 0.20 2.14 0.02 0.34 0.85 25.07 14066/67 2.49 2.44 0.63 5.95 0.06 0.62 0.14 1.92 0.86 20.71 11Pooled 3.14 5.25 0.59 11.67 0.12 2.05 0.04 0.92 0.78 58.79 49Source: Study analysis7.4 Internal Revenue Growth Modelling and ProjectionRevenue modelling was done by using the data for six districts which included alsoother two districts (due to availability of data) Bajhang and Manang, in addition to thesample districts Darchula, Jumla, Sankhuwasabha and Sindhupalchok. The data usedwere for all major sources of revenue (a) Local Tax (b) Revenue sharing (c) Servicecharge and fees (d) Sales (e) Other income (f) Total internal revenue and (g) Internalrevenue excluding land revenue and revenue sharing. Growth trends were analysed foreach category of revenue for those six districts by taking both the nominal (current pricerevenue) and real terms values by deflating the nominal values by using GDP deflator.However, no consistent growth pattern were seen even after deflating due to an erratic74

(highly bumping) nature of the revenue collection data in almost all variable heads withsome exception of service charge and fee (one heading out of 7 in Bajhang and Jumla).Even in those districts, revenue collection in rest of the six headings had followed veryerratic pattern. Thus, an exponential growth modelling against time trend could not beapplied. Likewise, average growth of the last five years also could not be applied duesignificant bumps on the data. The revenue raised in the districts in 2066/67 was muchless compared to other years in most of the heading due to repeated strikes at locallevels. Different data series of moving average could not be prepared and applied forgrowth trend modelling as the data was only for five years and would generate too fewobservations for the trend modelling. Approach applied were based on somequantitative framework and common sense, as described below:• Conversion of the data on real terms in 2010 price to take care of the inflation effects upto 2010• Application of some average growth rate that would be more practical. The review of therevenue data revealed that the data for the period 2006/7, 2007/8 and 2008/9 weresmoother. Averaging was done to that.• The projection base was built on those averages by adding the premium for inflation toarrive at 2010 as the expected base, if the revenue raising were to be normal.• After that a growth of 15% a year was allowed with an inflation of about 9% a year andreal additional revenue effort of 6%, in general.• In case of the land tax, the expected base revenue of 2010 has been put intact as anincrease in the tax rate on land would not be practical and will not be politicallyacceptable due to the high poverty in the region.• The proposed revenue growth is based on additional revenue generation from internalcommercial activities and revenue sharing, in general.• In case of the revenue sub heads for which a tax was not raised by a district, a smallstarting amount of Rs 10000 is set as a target, for the projection from the next year.Projection for all the six districts based on the above approach has been given in Annex49, 50, 51 and 52. An example of the projection result for Sankhuwasabha is shownbelow75

Table 7.3: Revenue Projection of Sankhuwasabha DistrictParticularsLocal TaxLand RevenueRevenueSharingSankhuwasavaServiceCharges andFeesSalesOther IncomeTotal InternalRevenueInternalRevenueExcludingLandRevenue &RevenueSharingAverage of Last three normal 3193.2 105.1 7260.7 186.7 616.9 71.7 11434.4 4068.5years (2006/7, 7/8 and 8/9) at2006/67price (A)Maximum of (A) and 2009/10 3193.2 115.0 14136.6 601.5 1107.0 340.1 19493.4 5241.8revenue as expected base for2011Projection at 15 % Yr 2011 3672.2 115.0 16257.1 691.7 1273.0 391.1 22417.4 6028.1growth 9 percentinflation and 6 %Yr 2012 4223.0 115.0 18695.7 795.5 1464.0 449.7 25780.0 6932.3additional tax effort Yr 2013 4856.5 115.0 21500.0 914.8 1683.6 517.2 29647.0 7972.1with no increase inland tax and Rs. 10Yr 2014 5585.0 115.0 24725.0 1052.1 1936.1 594.8 34094.1 9167.9thousand if there is no Yr 2015 6422.7 115.0 28433.8 1209.9 2226.5 684.0 39208.2 10543.1tax on a sub headSource: Study estimates76

__________________________Chapter EightConclusion and Recommendations8.1 ConclusionOut of 75, 16 are Himalayan districts in Nepal. These districts are characterized bylimited accessibility, scattered settlements and low population density, slow pace ofdevelopment and in overall prevalence of mass poverty. This region accounts about 7% of total population of Nepal with an annual growth rate of 1.6 percent. There are onlytwo municipalities in the region so far. The HDI (0.361), life expectancy (52.55), adultliteracy (36.1%), and per capita GDP (1114 US $ - PPP) indicate the low level of socioeconomicdevelopment of the region. In addition, Himalayan districts have very limitedroad access and four districts have no road connectivity with outside world.Agriculture farming and livestock rearing are main economic activity though subsistencein nature and low productivity. Only 4% of land is cultivated for agriculture and 12districts out of 16 have food shortages by about 20%. Agriculture land modernizationand commercialization of the agriculture and livestock sector is in infantry stage. Exportof cash crops (in east), carpets, herbs, Yak cheese, fruits like apple, walnut is some ofthe products from farming. Livestock farming is an integral part of livelihood and hashigh number of stock per capita. Market accessibility is a major hindrance forcommercialization followed by slow spread of technology and its adoptability by localfarmers. In recent years, the non-timber forest products especially the collection andsale of Yarcha Gumba has remained seasonal economic activity in some of the districts.Other valuable herbs and aromatic plants are also available in supporting livelihood ofthe people in this region. Low level of economic activity has also affected the revenuegeneration of local governments in this region.The FGD and field consultations reflected that there is diverse pattern of stable andunstable sources of income in Himalayan districts. Some of the DDCs in Himalayanregion have not initiated collecting revenue from some sources either due to costeffectiveness or very low yield. Most of the districts have no potential for sales of riverswept wood and river mine products.), some DDCs are raising toll tax (from vehicle andmule) though the amount is insignificant. The royalty from mining is almost non-existentin all districtsThe FGD and field consultations indicated that sales of gravel, stone and sand fromriver mine; commercial transaction on horticultural products; dairy products etc. arepotential in most of the districts. Also districts having road network have potential toraise revenue from toll tax. Some of the revenue bases such as tax on river crossing,77

water source registration, fishing licensing in the river are untouched area for most ofthe Himalayan districts. .Internal revenue generation is not uniform in terms of structure of source and amountwithin the region. Himalayan DDCs have very limited bases for revenue generationgiven the existing legal provisions and other attributions. Tax base is very limited due toaccessibility and market for local products. Eastern mountain districts raise someamount of tax from the commercial export of agricultural products (including aromaticproduct such as Rudrakshha). In mid and far western districts (except Darchula), exporttax on NTFP is a major source of tax revenue. Sindhupalchowk district which hasaccess and market raises significant amount of tax from export of mine and river mineproducts. Toll tax is limited to some districts though it has potentials in other districtsthat are connected by road.Sales are another source of revenue of the Himalayan districts but revenue generationopportunity is not evenly distributed. Sale of gravel, sand, boulder etc is one of themajor sources to Sindhupalchowk whereas it is almost non-existent in many of theHimalayan districts. No districts have been able to sell swept wood in the region.Revenue sharing has remained the main source of internal revenue of Himalayandistricts. Revenue sharing from land registration and transfer is distributed to all districtsand more predictable as well. The royalty sharing from tourism is limited to some of thedistricts only (from mountaineering, national parks and restricted area). Similarly, theroyalty sharing from hydro-electricity revenue is not available in far-western districts andirregular and very low in mid-west region. It is also very low in eastern districts as well.The revenue sharing from forestry (timber and NTFP) is more significant and regular inmid and far west.The available data shows that the sharing of land tax revenue from the VDCs andMunicipalities is also very low compared to its potential. Basically, most of the VDCs inthe region administer lower rate provisioned in laws for land revenue tax.The overall scenario of internal revenue is not encouraging in the Himalayan DDCs.Own source revenue in sample districts in past five years shows that the contribution of17 to 32% in total internal revenue. This figure further declines if we omitSindhupalchowk district which is raising significant amount of revenue from sale andexport tax on gravel, sand and boulders.The expenditure pattern reflects that about 40 percent of DDC expenditure is recurrentand 60 percent as capital investment. In recurrent expenses, about 10, 19, and 8percents expenses are incurred in employee, operating and daily allowances. Likewise,about 35% of capital investment is made in infrastructures in these districts. The DDCbudget allocation and disbursement in the devolved sector is less than 2% in the region.In the public revenue side, less than two percent is contributed by this region whereasthis region receives about 5.5% share of public expenditure. The trend of such78

expenditure in the region is increasing (22.3% per year) as against national average(20.8%).The study shows that the DDCs of Himalayan districts have low level of institutional andHR capacity to effectively manage revenue generation in more transparent manner.Though the LSGA has provided the authority to raise revenue from tax and non-taxsources yet the effort so far made is transactional approach only. There is no seriouseffort in raising revenue in the districts. DDCs do not have systematic accounting,record keeping and reporting practices hence creating obstacle to project revenuepotentials in the districts.In sum, the Himalayan districts are very diverse in terms of generating internal revenueattributed mainly by physiography, accessibility and state of the development. Therevenue potentials are not the same within the region as well. The existing policy ofGoN also doesn't favour equitably to all districts (e.g. revenue sharing from tourism andelectricity). Hence, most of the districts are heavily dependent on the GoN grant for theirexpenditure needs. Even with the improvement and reformation of internal revenuemobilization policy and practice, the dependency of these districts on central grantcannot be expected to reduce substantially.8.2 RecommendationsThe previous discussions and analysis clearly reflects that the data and information forin- depth analysis of internal revenue of the Himalayan districts is not only inadequatebut also highly erratic for in depth recommendations to enhance revenues. Besides, theanalysis and conclusion drawn from sample districts cannot be generalized for alldistricts. Hence, a detailed study is required for in- depth analysis of specific district.In addition to common recommendations for all Himalayan districts, some districtspecific potentials of sample districts are summarized as follow;• Jumla: DDC Jumla has potential to raise export tax on fruits (organic apple) onceregular motor service to Surkhet and beyond is in operation. Likewise, it has potentialto raise revenue from export of goats and sheep. In sales, it has potential for sellingsand, gravel and boulders from rivers though in small amount. Another potential sourceis entry fee for herbs collectors for which mandatory provision of identity is required toimplement. In addition, fishing licensing is also potential in Jumla district.•• Darchula: DDC Darchula has to do proper administration of herbs such as YarchaGumba. It has potentials to raise revenue from export tax on agriculture products andlivestock. Besides, regularization of mining and timber export is also possible to raiserevenue. The proposed Mahakali Highway and other proposed link roads can generatedemand for river mine products. Swept wood (Dahattar-Bahattar) sale could be anothersource of revenue.79

• Sankhuwasabha: DDC Sankhuwasabha has already been generating revenue fromexport tax on cardamom and Rudraksha. It has also introduced levying toll tax. Inaddition, public-private-partnership has been initiated in transportation and energygeneration sector. Export tax on timber from private forests is potential when regularmotor services to the Terai are available. Regularizing mining activity can generateincome through revenue sharing with GoN. River mine sale from major rivers have highpotential for proposed Arun hydro-electricity project and associated road construction.•• Sindhupalchowk: Sindhupalchowk district receives significant amount of revenue fromriver mine sale. However, the cartelling of the contractors and transporters areobstructing to fair market play causing low bidding for sale. Regularization of mining(slate), provisioning of fee for tourism related activities such as bungee jump and raftingcould be a huge potential source for this district. Export tax on agriculture products andlivestock has also potential for revenue.Based on the potentials of districts and expenditure & revenue projection in precedingchapters, some broader recommendations have been made to enhance the internalrevenue for the Himalayan districts.Capacity Development as entry point:The existing capacities of DDCs in terms of revenue mobilization have to be improved.The improvement may take several forms including; updating databases, conductingresearches and studies, introducing reward schemes for tax administration staffespecially those who work in revenue collection; increasing the operating budgetassigned for different tax administration functions; and enhancing the mechanisms offollow up, monitor, control, and coordination. In addition, DDCs need to promotetransparency of revenue and its expenditure to get further support of tax payers. Thefollowing action points are recommended for developing capacity of DDC:• All Himalayan DDCs needs to up-grade the status of internal revenue unit to a sectionwith professional (officer level) staff.• District specific revenue potential study and revenue projection and revenue mobilizationplanning is required to enhance the revenue of DDC.• Orientation to political cadres of DDC needs to be conducted in order to get support ofthem in raising revenue• Periodic research on tax base and coverage has to be conducted in cooperation withline offices (land revenue, agriculture and livestock, forest, inland revenue or treasurycontrol), private sector and VDCs. Government should set aside a specific resource poolfor such activities• Periodic interactions with multi-sectoral stakeholders including local administration andRevenue Advisory Committee is required to get support from them80

• Publicizing revenue generated and expenditure to seek support to enhance revenuegeneration in the districts will promote transparency and accountability.• DDCs senior as well as staff involved in revenue generation have to be trained onrevenue mobilization, accounting and record keeping as per requirement.• Preparation/updating of DDC by-laws to introduce new source, coverage andadministration.• Regularize LB Revenue Suggestion Committee meetings as provisioned in the LSGR.Clarify and create understanding on contradictory legal provisions.• Partnership and Collaboration: Every district has potential to raise revenue from some ofthe sources available in the district. But the cost of administering them might be highcompared to their yield. In such a situation outsourcing to an individual (close to site) orcontractor on benefit sharing basis may generate some income.oInitiate partnership with private sector/individuals for raising tax/fee/charge (e.g.toll tax, selling sand boulder from a small pocket, service charge in rivercrossing)on benefit sharing basis,• Revise rate: DDCs need to revise the rates of tax, fee and charges in a regular intervalconsidering inflation rate and market prices.• Provide autonomy to DDCs in raising revenue from the bases that are not under purviewof Centre and LGs.• Provide training and orientation to VDCs staff in record keeping, reporting of land taxand its administration and compliance.• Update the valuation of land in accordance with changes in land value, infrastructuredevelopment in close collaboration with District Administration Office, Land RevenueOffice, Cadastral Survey Office and VDCs/Municipalities for land ownership transferpurpose.• Increase investment in agriculture and livestock sector because those are viable sectorsfor raising revenue from their commercial transactions and exports.• Introduce tax in commercial export of agriculture products (fruits, seeds anddomesticated herbs) and livestock (stock trade) since these sectors provide the maineconomic activities and also are potential for commercialization.• Accountability: Invest a portion of income for the development of the sector from whererevenue is generated. It could be conservation, promotional, infrastructure developmentetc.• Encourage local bodies to initiate and promote inter-local bodies partnership,cooperation and collaboration to raise revenue in the districts• Public -Private Partnership: DDCs can promote public private partnership in incomegenerating projects or other revenue raising spheres as well.• Horizontal Coordination: DDCs can increase their revenue not only with increased basebut also extending the coverage of revenue in close coordination and collaboration withVDCs and Municipalities. Moreover, inter-district coordination in revenue generationwould bring mutual benefits.81

• Monitoring and inspection: Himalayan DDCs have very weak monitoring and inspectionsystem since they have acute shortage of trained human resource to carry out this task.DDCs have to emphasize in monitoring and also inspection of the revenue sources andbases in regular interval.• Environmental assessment of potential resources as prescribed by environmental lawshas to be conducted for sustainability and complying with regulations.Policy and Laws• Special provision for Himalayan District: GoN can review the existing policies on localrevenue generation authority with a view to promote fiscal autonomy to the Himalayandistricts. In this respect, local stakeholders demand for authority to levy tax on air flight,import tax on commodities adversely affecting public health, exploring new sources ofrevenue sharing such as excise duty, VAT etc.• Tourist entry fee: There is no clarity about revenue sharing from tourism (entry inprotected area and district, royalty sharing raised by NGOs - Nepal MountaineeringAssociation, Nature Conservation Trust) sector.• Regulating illegal export (timber to Tibet from the northern border): There is illegaltrafficking of timber from Nepal to Tibet and forest offices have not been able to control itin many Himalayan districts. It may create environmental problem on the one hand anddevoid of revenue to GoN as well as DDCs on the other. Strengthening coordinationamong the sector, district administration and LGs could be crucial in controlling thisactivity.• Inter-ministerial Coordination: There are number of problems associated with weakcoordination among ministries concerned with revenue sharing. Lack of clarity about therevenue sharing (royalty sharing from tourist entry fee in buffer zones/conservation area,royalty raised by Nepal Mountaineering Association, Nature Conservation Fund) is someof the unresolved issues. Likewise, timely disbursement of royalty from hydro-electricity,and also its utilization, delayed in disbursing of royalty amount from tourism sector haveremained a problem causing unpredictability of resources to Himalayan DDCs. Besides,there is no mechanism for prior estimation of the resource coming from these sectors inorder for district annual planning. Hence a strong coordination amongministries/departments with MLD is essential. The Ministry of Finance is supposed tofacilitate revenue sharing process in more predictable manner ensuring timelydisbursement of the revenue sharing.• Strengthening LBFC's Role: The role of LBFC is in facilitating and capacity developmentof DDCs has remained inadequate at present. It is an appropriate body to facilitaterevenue related studies, research, potential assessment and projection as well ascapacity development of LGs. Besides, it should also strengthen inter LGs coordinationfor enhancing revenue mobilization in close collaboration with ADDCN.82

8.3 Recommended ActionsThe following actions are recommended for implementation by respective agencies.Some of these actions would also be applicable to DDCs of other geographical regionsas well as to other LGs.Activities Milestone TimePeriodResponsibility SupportingAgencyDevelop capacityof Revenue Unitof DDCStrengthenInstitutionalcapacity of DDCConduct Revenuepotentialstudy/revenueprojection of DDCConductorientation topolitical parties oninternal revenuemobilizationClarify and createunderstanding oncontradictory legalprovisionsClarify taskdivision amongImpart knowledge andskill to DDC senior aswell as staff involved inrevenue generation,mobilization, accountingand record keepingRecruit/designateprofessionals inRevenue UnitTrain personnel onrevenue mobilization andprojectionPrepare/update DDC bylawsto introduce newsource, coverage andadministration ofrevenueEstablish partnershipand collaboration withstakeholdersIdentify sources andcoverage of potentialrevenueRevise rates (tax, feeand charges)Build consensusamong stakeholdersAcquire local politicalsupport for revenuegenerationRegularize LB RevenueSuggestion CommitteemeetingsClarify functional rolesImmediate DDC LBFC/MLD/ADDCNImmediate DDC LBFC/83MLDShort term DDC LBFCShort termDDCRegular MLD ADDCN, LBFCMediumtermMLDLG Association

Activities Milestone TimePeriodResponsibility SupportingAgencyLGsProvide autonomyto DDCs in raisingrevenue from thebases that are notunder purview ofCentre and LGsCapacitate VDCsin land revenuegenerationDetermine somethumb rules forsharing revenuefrom DDC toVDC/MunicipalityPrepare DDCrevenue plan aspart of district planEncourage DDCsto allocate budgetto devolved sectorDevise localpolicy inreinvesting somepercentage insector from whichrevenue is raisedIdentify new and viablesourcesEfficiency in landrevenue generation,recording, reportingand sharing, andcompliance.Compliance to lawsSmooth sharingmechanism among LGsMention revenue planas an indicator forMinimum conditionFinance priorityprojects of devolvedsectorPromotion of sectoralgrowthMediumtermMLDMOFShort term DDC LandAdministrationOfficeShort term MLD LBFC/LGAssociationsShort term DDC LBFCShort term MLD MOFShort term DDC MLD, MOFEnsure periodicinteractions withmulti-sectoralstakeholdersincluding localadministrationand RevenueAdvisoryCommitteePublicize incomeand expenditurefrom internalrevenue sourcesUpdate thevaluation of landfor registrationpurposeconsideringmarket pricesIdentify revenue issuesPromote TransparencyPublic Audit, PublicHearing and othermedium to make publicfor transparency andaccountabilityEngage stakeholders inthe processUpdateresource/infrastructuremapsImmediateRegular84DDCDDCShort term DDC DAO, LandAdministrationOfficeIncrease Enhance pocket Immediate DDC MLD, MoF

Activities Milestone TimePeriodResponsibility SupportingAgencyinvestment inagriculture andlivestock sectorthat are base forrevenue in regionConductinteractionprogramme withstakeholdersForm inter LGcommittee asrequiredActivate Interministerialcoordinationprogramme forcommercializationPromote coordinationand receive support ofconcernedstakeholdersCoordination inenhancing revenuemutuallyDefine functional role ofactors in revenuegenerationAddress revenuesharing issuesIdentify sources anddetermining rates forlocal revenuesRegularDDCShort term DDC VDCs andMunicipality (ies)Regular MLD MoFStrengthen role ofLBFC in LGrevenue mattersNarrow down theLG tax/fee/chargerateCapacity developmentof LGsAppropriate recordkeeping and reportingRevenue potentialstudy/researchesIncreasing rate of taxand non-tax revenuesShort term MLD LG AssociationsImmediate MLD MoFShort term = 1 year, Medium term = 3 year85

BIBLIOGRAPHYAnalysis of Minimum Conditions and Performance Measures (MC/PMs) Results for the FiscalYear 2006/07,2007/08 & 2008/09 of Local Bodies of NepalAssessment of Village Development Committee Governance and Use of Block Grants, UNDP(2009), KathmanduAdhikari, Damodar (2006), Towards Local Democracy in Nepal: Power and Participation inDistrict Development Planning a Phd. dissertation published by SPRING Centre, faculty ofSpatial Planning, University of Dortmund, GermanyBahl, Roy and Johannes F. Linn (1992), Urban Public Finance in Developing Countries. (NewYork: Oxford University Press).Bahl, Roy and Johannes J. Linn. (1992), Urban Public Finance in Developing Countries. NewYork, Oxford University PressBailey, Stephen J. (1999), Local Government Economics: Principles and Practice, London:Macmillan Press.Bird, Richard M. and Tanji, Vito (1999). Rethinking Sub National Taxes: A New Look at TaxAssignment, IMF Working Paper, WP/99/165Brennan, G. and J.M. Buchanan (1978), Tax Instruments as Constraints on the Disposition ofPublic Revenues, Journal of Public Economics 9, 301-318.CBS, National Sample Census of Agriculture, 2001-02CBS, Population Census of Nepal, 2001CBS, Population Projection for Nepal, 2001-2021CBS, Small Area Estimation of Poverty Caloric Intake and Malnutrition, 2006CBS, Statistical Year Book of Nepal 2007CBS, Women in Nepal Some Statistical Facts, 2005Cyan, M. R, Pokharel C.P, and Adhikari C.M, Nepal’s Choices in Fiscal Federalism, August2009DOE, Educational Statistics of Nepal Flash <strong>Report</strong> 1, 2006DOR, Road Statistics DatabaseECONOMIC POLICY NETWORK – II, GON (2010), Enhancing the Resources and FinancialManagement Capacity of the Local Bodies in Nepal, KathmanduGhimire, Banshidhar, Subedi Somlal., Dhakal, Anandaraj, Nepal Purusottam, Bhandari,Krishnaprasad (2004), Identification of Local Government Revenue Sources: A Review of DDCand VDC Tax Systems, Secretariat of Local Bodies Fiscal Commission, Nepal86

GTZ/Ministry of Local Development Nepal (2003, 2004, 2005, 2006 & 2007) "Detailed Revenueand Expenditure Breakdown and Basic Financial Information of Municipalities of Nepal, MLDKhadka, Rup. (2002), Municipal Finance in Nepal with Special Reference to Taxation, (n.p.)Khanal Rabindra (2006), Local Governance In Nepal (Democracy at Grassroots), Smriti BooksKupondole, LalitpurLekhi, R.K. (2003), Public finance, Kalyani Publishers, Ludhiana, India.Ligal,P, Shrestha, DP, Bista, KK, Chapagain, Y, Maharjan K, (2004), Revenue Assignment andFiscal Gap Analysis Of Local Bodies In Nepal, Local Bodies Fiscal Commission, NepalLocal Self Governance Act (LSGA),(1999), Law Books Management Committee, Ministry of Lawand Justice, His Majesty’s Government of Nepal, Kathmandu, Nepal.MID-TERM REVIEW <strong>Report</strong> of LGCDP (Oct 2010), LGCDP KathmanduModels of Tax Administration (2005), Georgia State University, Andrew Young School of PolicyStudies, Working Paper 05-02Nepal, Khemraj et.al (2007), Status paper on Decentralization in Nepal, World Bank,KathmanduNepal, Purusottam (2006), Financial Management Practices of Nepalese Municipalities, AProject <strong>Report</strong> submitted to M-phil in Management, Tribhuvan University, NepalPainter, David L. (2005), Local Resource Mobilization, A report prepared for Supporting LocalGovernance in the ANE Region: Fostering Multi-sectoral Approaches Workshop January 31 -February 3, 2005 Cairo, Egypt.Prud’homme, Remy. (1995), The Dangers of Decentralization, World Bank Research Observer10: 201-220.Salvatore Shiavo-Campo and Daniel Tommasi (1999), Managing Government expenditure,Asian development Bank.Shrestha, Manoj (2002), An Overview of Intergovernmental Fiscal Relations in Nepal, WorkingPaper No. 02-05, AYSPS, Georgia State University, USAShrestha, Manoj (2004), Institutions, Incentives and Local Fiscal Autonomy – A Case ofMunicipalities in Nepal, PAD 6109: Institutions and Society Semester Research Paper for Prof.Feiock SpringSteffensen, Jesper et.al (2009) Review and Refinement of Fiscal Transfer Mechanisms forLocal Bodies (DDCs and VDCs)Subedi, SL (2006), Decentralization and Local Finances, Anjana Subedi, Kathmandu, NepalElection Commission of Nepal, Final Result of CA Election, 2064FCGO, Consolidated Financial Statement, Fiscal Year 2003/04, and Onward Series87

Government of Nepal, Interim Constitution of Nepal, 2063LBFC, Fiscal Analysis of Local Bodies, Fiscal Year 2060/61, 2061/62, 2062,63 and 2063/64LGCDP Program Coordination Unit, Local Governance and Community Development Program,2008MOAC, Statistical Information on Nepalese Agriculture, SeriesMOF, Budget Speech, Fiscal Year 2003/04, and Onward SeriesMOF, Estimates of Expenditure Detail (Redbook), Fiscal Year 2003/04, and Onward SeriesMOF, Economic Survey, SeriesNepal Development Information Institute, Land Resource Mapping Project 1981NPC, Three Year Interim Plan (2011-14)NPC, Annual Programs of The Government of Nepal, SeriesUNDP, Nepal Human Development <strong>Report</strong>, SeriesWorld Bank, Public Sector Governance and Accountability Series Local Budgeting, 200788

Annexes

Annex 1a.Lists of Persons MetS. No. Name Designation Organization1. Ganesh Pandey Under Secretary MLD2. Dinesh Kumar Thapaliya Joint Secretary MLD3. Kumar Bahadur Khadka LDO DDC, Baitadi4. Ram Mani Bhattarai LDO DDC, Rasuwa5. Shanker Bahadur Thapa LDO DDC, Dolkha6. Bishnu Prasad Pokhrel LDO DDC, Myagdi7. Narayan Prasad Mainali LDO MLD8. Mukti Ram Bhattarai DTO, Chief DDC, Solu DTO9. Ganesh Bahadur Khadka LDO DDC, Bajhang10. Bishnu Singh Basnet LDO DDC,Darchula11. Ramesh Kumar K.C LDO DDC, Jumla12. Rabi Chandra Pariyar LDO DDC, Dolpa13. Yam Lal Adhikari LDO DDC, Humla14. Anjay Kumar Deo DTO DDC, Humla15. Prem Kumar Shrestha LDO DDC, Taplejung16. Raj Kumar Shrestha LDO DDC, Gorkha17. Ishwor Raj Poudel LDO DDC, Mugu18. Bishnu Datt Gautam LDO DDC, Jagarkot19. Navraj Bhandari Accountant DDC, Mugu20. Rishiram Koirala SMO/DRILP Mugu21. Sanjeev Shrestha CDE Gorkha22. Ramesh Kumar KC LDO DDC Jumla23. Tirtha Bahadur Buda Ex‐president DDC Jumla24. Jaya B. Shahi Ex‐Vice president DDC Jumla25. Sakti Prasad Neupane Political Representative UCPN‐Maoist26. Jagat B Khatri Political Representative NC27. Padam B Rokaya Political Representative CPN‐UML28. Birkha B Raut Political Representative Nepal Majdur Kisan29. Agni Raj Upadyay Political Representative Rastriya Jana Morcha30. Birkha B Kathayat Political Representative RPP Nepal31. Srikrishna Buda Political Representative RJSP32. Kali B Mahat Political Representative RPP33. Surat B Raut Secretary Talium VDC34. Dutta B Shahi Secretary Dhaula Mahadev VDC35. Sri B Bista Secretary Dillichaur VDC36. Rajendra Mahat Secretary Mahat VDC37. Ganesh Dutta Rawal LDF, DDC Jumla38. Bal Krishna Chaulagain Secretary Chhumachaur VDC39. Hari B Mahat DDC Jumla40. Jaya Sharma Acharya Office Assistant Chandannath VDC41. Laxmi Mahat DF WUPAP42. Govinda Raj Rokaya Adviser SNV Nepal43. Chetan Raj Giri HECR Jumla44. Aaita Singh Gurung ADO DADO Jumla45. Shyam P Poudel WUPAP, NPJ46. Jagadishwor Barun Adviser SNV Nepal47. Govinda Neupane Chief Land Revenue Office48. Dhananjaya Lamichhane D FO DFO49. Moti Giri MEDEP, Jumla50. Chandra P Chhetri RCIW Jumla51. Indra B Thapa RCIW Jumla52. Buddhi B BK RADC Jumla53. Chhetra B Budthapa PO DDC Jumla54. Bipendra Adhikari Computer Operator DDC Jumla55. Mun B Buda Helper DDC Jumla56. Jaya Bhakta Acharya Helper DDC Jumla

S. No. Name Designation Organization57. Hem Raj Giri DDC Jumla58. Dhanjit Buda Act. Chief DLSO59. Dhirendra Raj Giri Ex‐member DDC CPN‐UML60. Bhakti Lal Buda DDC Jumla61. Tek B Bhandari Jumla62. Purna Bhandari Jumla63. Padam B Rokaya Herbs Trader Jumla64. Dhirendra Shahi Herbs Trader Jumla65. Bijaya Adhikari Supervisor Plant resource Office, Jumla66. Rabikiran Chemist Plant resource Office, Jumla67. Bishnu Singh Bista Local Development Officer Ministry of Local Development68. Dinesh Kumar Thapaliya Joint Secretary Ministry of Local Development69. Pursotham Nepal Under Secretary Ministry of Local Development70. Nirmal Kumar Sivakoti Under Secretary Ministry of Local Development71. Krishna Shyam Budhathoki72. Jaman Singh Dhami (U) CPNM73. Ganesh Singh Dhami NC74. Uday Singh Badal UML75. Ram Singh Mahara UML, Joint76. Tek Bahadur Gurung District Soil Conservation Office77. Bashu Dev Joshi Cottage Industry Office78. Dhan Singh Dhami District Education Officer79. Devi Prasad Koirala Section Officer80. Narayan Prasad Koirala Cottage Industry Office81. Sandip Upadhaya DDC District energy andenvironment division82. Bishnu Bahdur Adhikary District Agriculture Officer Darchula83. Arun Dutt Joshi DDC, Darchula84. Laxmi Bhatt Section Officer Community Water85. Prem Singh Dhami Section Officer86. Lal Bahadur VDC, Secretary87. Mohan Dev Joshi VDC, Secretary Pipal chour88. Arjun Dev Bhatt VDC, Secretary Ghumsa89. Lal Singh Dhami90. Laxman Raj Joshi VDC, Secretary91. Rajendra Singh Dhami VDC, Secretary Khalanga92. Rajendra Bahadur Singh VDC, Secretary Byas93. Gopal Dutt Ojha94. Kausila Joshi VDC, Secretary Bhori VDC95. Deepak Bahadur Bista VDC, Secretary Tapawan96. Indra Singh Dhami VDC, Secretary Hekili97. Krishna Dutt Pandey VDC, Secretary Sunsera98. Ishwor Prasad Joshi VDC, Secretary Siwauli99. Karna Bahadur Bista VDC, Secretary Guljar100. Mohan Raj Joshi <strong>Report</strong>er Kanchanpur101. Yubraj Joshi Executive secretary DDC102. Jaya Singh Dhami DDC103. Karna Bahadur Khadiyat Internal Auditor DDC, Darchula104. Lawa Raj Pant District Facilitator DDC, Darchula105. Bhoj Raj Bhatt VDC106. Sanjeev Awasthi Accountant DDC107. Ram Dutt Bista Disable Association Darchula108. Harak Singh Kunwar109. Laxmi Prasad Nirula Local Development Officer DDC, Sankhusava110. Kashiram Sharma CDO Assistant CDO111. Ripu Prasad Rai (U) CPNM112. Mukti Singh Rai Nepali Congress113. Umesh Kumar Dangi Nepali Congress114. Tek Kumar Regmi Khadbari Municipality115. Subash Chandra Siwakoti DTO DTO, Chief

S. No. Name Designation Organization116. Digra Dhoj Chapagain DEO DEO117. Naresh Prasad Mahoto118. Ananta Gauli FNCCI119. Hari Pd Thapa Nepal Red Cross Society120. Prem Bahadur Shrestha VDC, Secretary Samaisori121. Govinda Prasad Ghimire VDC, Secretary Dhupu122. Himalaya Pokheral Acting Chief District Livestock Office123. Ganesh Regmi Representative124. Rebanta Bhandari LGCDP District Facilitator125. Pretam Lama REDP Technical Officer126. Bhola Nath Gurung Executive Secretary DDC127. Yogendra Prasad Poudel Accountant DDC128. Krishna Pd Tamang Chairman NAFDIN129. Ganesh Kumar Rai VDC, Secretary Khadbari130. Saroj Kumar Shrestha Assistant Accountant DDC131. Lili Kutwal Assist Engineering Remote Area Development132. Rabindra Rai DDC133. Ganesh Shrestha Kharidar DDC134. Narvada Ghimire Na.Su DDC135. Dal Bahadur Shrestha DADO136. Bharat Bahadur Rai Jansakti Parti137. Menuka Shrestha Alternative Energy138. Jamuna Shrestha DDC139. Kamal Bahadur Karki140. Hit Kumar Karmacharya141. Rajendra Karki DDC142. Padam Prasad Dahal DDC143. Jagadish Shakya Accountant DDC144. Krishna Prasad Aryal Chairman , Local Development Officer DDC, Sindupalchock145. Hari Prasad Lohani Program Development Officer146. Muris Prasad Pokheral147. Indramani Pokheral DTO, Chief DTO148. Khil Bahadur Giri UML149. Madhu Sudan Sapkota Secretary NGO Association Nepal150. Netra Prasad Political Representative (U) CPNM151. Nirmal Prasad Dhungel Political Representative Rastraya Janmorcha152. Dhruba Bahadur Khadka DDC153. Yug Bahadur Khadka DDC154. Madhu Bilas Devkota DDC155. Ramjee Thapa VDC, Secretary DDC156. Dev Bahadur Thapa Galeshwor157. Gopal Mahoto VDC, Secretary Chokti158. Sunita Sha VDC, Secretary Pipaldada159. Apsara Sapkota VDC, Secretary Kadambas160. Kalpana Basnet VDC, Secretary Seule161. Damber Bahadur Shrestha Tatopani162. Sansar Shrestha RPP163. Shyam Krishna Shrestha164. Indra Bahadur Nepal FNCCI165. Janak Bahadur Tamang FNCCI166. Rajan Prasad Bhattarai167. Dev Bahadur Karki Nepal Dalit Welfare168. Narayan Bhakta Khanal DDC169. Ganendra Timilsina Nepal Media Association170. Sundra Thapa171. Jerubu Bangal Lama Attepur VDC172. Indra Ledan Dhital173. Buddha Kumar Shrestha DDC

Annex 1 : Mountain Districts by development Regions and ZonesDevelopment Region Zones DistrictsEasternMechiKosiSagarmathaTaplejungSankhuwasabhaSolukhumbuSub Total 3JanakpurDolakhaCentralBagmatiRasuwaSindhupalchokNarayani 0Sub Total 3GandakiManangWesternDhabalagiriMustangLumbini 0Sub Total 2Bheri 0Rapti 0DolpaMid WesternHumlaKarnaliJumlaKalikotMuguSub Total 5BajhangSetiFar WesternBajuraMahakaliDarchulaSub Total 3Total Mountain 10 16Nepal 14 75 (Mountain and Others)Source of Basic Data: CBS, Government of Nepal

Annex 2: Projected Population 2010, Households Number, Population, Employment Status and Population Range in VDCs (2001) in Mountain Regions and NepalMountain RegionsParticularsEastern Central Western Mid Western Far Western MountainMountain asMountain Mountain Mountain Mountain Mountain Total Nepal % of NepalProjected Population 2010 (Medium variant) 465687 655395 30168 364256 472179 1987685 28043744 7.09Total Population 2001 Census 401587 554817 24568 309084 397803 1687859 23151423 7.29Population 2001as % of Population in DevelopmentRegion 7.51 6.91 0.54 10.26 18.15 7.29Male 197231 275330 13214 156984 194301 837060 11563921 7.24Female 204356 279487 11354 152100 203502 850799 11587502 7.34Rural 379798 532901 24568 309084 397803 1644154 19923544 8.25Urban 21789 21916 0 0 0 43705 3227879 1.35Urban Population Share in Total Population (%) 5.4 4.0 0.0 0.0 0.0 2.6 13.9Annual Population Growth Rate (1991‐2001) 1.12 1.65 2.26 1.72 1.80 1.58 2.3Share in Total population (%) 23.8 32.9 1.5 18.3 23.6 100.0 100.0Total 379798 532901 24568 309084 397803 1644154 19923544 8.25Population Maximum 11912 9786 1698 7127 7881 11912 41262in VDCs Minimum 273 323 192 293 653 192 192Average 3246 3601 877 2307 3459 3033 5092PopulationDensityPerson/Sq. Km.Nepal 38 88 4 14 50 33 157Rural 37 86 4 14 50 32 138Urban 239 337 0 0 0 280 985Population 10 Years of Age And Above + 296838 385583 20405 124407 274651 1101884 16770295 6.57Usually Economically Active Population 195528 276979 14554 98227 201854 787142 9761497 8.06% Unemployed in Usually Active Population 3.2 8.1 3.6 4.6 3.5 5.2 8.8Population Absent from Household forDestination Abroad 12564 8348 1094 1505 22791 46302 762181 6.07% of Population Absent from Household forDestination Abroad 3.13 1.50 4.45 0.49 5.73 2.74 3.29TotalNumber ofHouseholdsAverageHouseholdSizeNepal 77197 112313 5019 55363 69995 319887 4253220 7.52Rural 72573 107404 5019 55363 69995 310354 3588713 8.65Urban 4624 4909 0 0 0 9533 664507 1.43Nepal 5.20 4.94 4.89 5.58 5.68 5.28 5.44Rural 5.23 4.96 4.89 5.58 5.68 5.30 5.55Urban 4.71 4.46 0 0 0 4.58 4.86Sources: CBS, Population Census 2001 and Population Projection for Nepal 2001‐2021Note:1. Projected Population of 2010 has been Calculated on the basis of projected population by district of 2006 and 20112. Source of population of all VDCs is CBS, Population Census 2001, VDC Level3. Other required classification and calculation for table are based on source of Basic Data

Annex 3: Projected Population 2007, Households Number, Population, Employment Status and Population Range in VDCs (2001) by DistrictDistricts Bajhang Bajura* Darchula Dolakha* Dolpa* Humla Jumla* Kalikot* Manang Mugu* Mustang Rasuwa Sankhuwasabha Sindhupalchok* Solukhumbu TaplejungProjected Population 2010 (Medium variant) 198588 128589 145002 241317 34743 47729 104992 124551 13215 52241 16952 53493 184844 360584 124445 156396Total Population 2001 Census 167026 108781 121996 204229 29545 40595 89427 105580 9587 43937 14981 44731 159203 305857 107686 134698Share in National population (%) 0.7 0.5 0.5 0.9 0.1 0.2 0.4 0.5 0.0 0.2 0.1 0.2 0.7 1.3 0.5 0.6Annual Growth Rate (1991-2001) 1.8 1.7 1.8 1.7 1.7 1.7 1.6 1.7 5.8 1.9 0.5 2.0 1.2 1.6 1.0 1.2Male Population 80676 53834 59791 99963 14735 20962 45848 53189 5034 22250 8180 23355 77853 152012 53173 66205Female Population 86350 54947 62205 104266 14810 19633 43579 52391 4553 21687 6801 21376 81350 153845 54513 68493Rural Population 167026 108781 121996 182313 29545 40595 89427 105580 9587 43937 14981 44731 137414 305857 107686 134698Urban Population 0 0 0 21916 0 0 0 0 0 0 0 0 21789 0 0 0Urban Population Share (%) in Total Population 0.0 0.0 0.0 10.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 13.7 0.0 0.0 0.0Population in VDCs Total 167026 108781 121996 182313 29545 40595 89427 105580 9587 43937 14981 44731 137414 305857 107686 134698Maximum 6491 7881 5764 8508 2136 2997 7127 6092 1299 3469 1698 5965 8090 9786 6260 11912Minimum 1669 1372 653 635 390 768 293 4814 192 668 489 517 317 323 1157 273Average 3554 4029 2976 3575 1285 1504 2981 3519 799 1831 936 2485 4164 3872 3167 2694Population Density Person/Sq. Km. Total 49 50 53 93 4 7 35 61 4 12 4 29 46 120 33 37Population 10Years of Ageand AboveRural 49 50 53 86 4 7 35 61 4 12 4 29 41 120 33 37Urban 337 239Total 116601 70107 87943 133005 16155 29158 49017 8273 8153 21804 12252 33380 118504 219198 80007 98327UsuallyEconomicallyActivePopulationTotal 87031 56570 58253 93263 12489 23561 39643 4839 5259 17695 9295 25581 71963 158135 57885 65680Employed 82991 54558 57141 83211 12273 22374 38118 3439 5132 17533 8900 24502 69640 146927 56864 62756Unemployed 4040 2012 1112 10052 216 1187 1525 1400 127 162 395 1079 2323 11208 1021 2924%Unemployed4.6 3.6 1.9 10.8 1.7 5.0 3.8 28.9 2.4 0.9 4.2 4.2 3.2 7.1 1.8 4.5Population Absent from Household for Destination 13572 5166 4053 2335 153 161 611 136 189 444 905 352 5516 5661 2334 4714AbroadPopulation% Absent from Household for Destination 16.82 9.60 6.78 2.34 1.04 0.77 1.33 0.26 3.75 2.00 11.06 1.51 7.09 3.72 4.39 7.12AbroadTotal Number of Households Nepal 28588 20378 21029 43165 5812 6953 15850 18487 1776 8261 3243 8696 30766 60452 21667 24764Rural 28588 20378 21029 38256 5812 6953 15850 18487 1776 8261 3243 8696 26142 60452 21667 24764Urban 0 0 0 4909 0 0 0 0 0 0 0 0 4624 0 0 0Average Household Size Nepal 5.84 5.34 5.80 4.73 5.08 5.84 5.64 5.71 5.40 5.32 4.62 5.14 5.17 5.06 4.97 5.44Rural 5.84 5.34 5.80 4.77 5.08 5.84 5.64 5.71 5.40 5.32 4.62 5.14 5.26 5.06 4.97 5.44Urban 4.46 4.71No of Households in VDCs Total 28588 20378 21029 38256 5812 6953 15850 18487 1776 8261 3243 8696 26142 60452 21667 24764Maximum 1150 1473 1173 2107 428 528 1452 1206 278 689 429 1078 1478 1871 1409 2400Minimum 290 252 149 125 89 137 52 818 39 114 87 102 53 63 237 66Average 608 755 513 750 253 258 528 616 148 344 203 483 792 765 637 495Sources: CBS, Population Census 2001 and Population Projection for Nepal 2001-2021Note: 1. Projected Population of 2010 has been Calculated on the basis of projected population by district of 2006 and 20112. Source of population of all VDCs is CBS, Population Census 2001, VDC Level3. Other required classification and calculation for table are based on source of Basic Data

Annex 4: Ethnicity (%) National, Mountain Belts and Mountain DistrictsAreaAllCast‐EthnicGroupChhetri Tamang Brahman(Hill)Sherpa Rai Kami Newar Limbu Thakuri Gurung Damai /DholiSarki Magar Others(90EthnicGroups)Nepal 100.0 15.8 5.6 12.7 0.7 2.8 3.9 5.5 1.6 1.5 2.4 1.7 1.4 7.1 37.2Mountain 100.0 33.4 12.2 10.1 5.1 5.1 5.1 4.3 4.3 3.1 3.0 1.8 1.7 1.6 9.0Mountain Regions and DistrictsSankhuwasabha 100.0 19.4 9.5 6.6 5.2 22.4 4.4 5.1 4.8 0.0 5.8 2.1 1.1 3.2 10.5Solukhumbu 100.0 15.2 9.4 5.1 18.3 31.5 5.3 2.5 0.0 0.0 1.1 1.6 0.4 4.6 4.8Taplejung 100.0 11.9 4.1 10.4 9.3 5.0 4.4 1.7 41.7 0.0 4.5 1.6 0.8 0.9 3.7Eastern Mountain 100.0 15.8 7.7 7.5 10.1 19.0 4.7 3.2 15.9 0.0 4.1 1.8 0.8 2.8 6.7Dolakha 100.0 33.1 15.7 10.7 5.5 0.1 3.3 9.0 0.0 0.6 0.8 1.7 2.0 1.9 15.5Rasuwa 100.0 3.4 63.7 15.8 1.0 0.1 2.0 2.8 0.0 0.1 6.7 0.7 0.1 1.3 2.1Sindhupalchok 100.0 18.8 32.2 11.5 5.4 0.1 3.7 11.5 0.0 0.5 1.6 1.4 1.2 1.6 10.6Central Mountain 100.0 22.3 29.3 11.6 5.1 0.1 3.4 9.9 0.0 0.5 1.8 1.5 1.4 1.7 11.5Manang 100.0 2.1 3.6 2.5 8.9 0.2 1.4 1.5 0.0 0.5 75.9 0.4 0.2 0.9 1.8Mustang 100.0 5.9 1.3 4.0 0.4 0.4 5.8 1.3 0.1 1.4 45.2 3.2 0.3 6.1 24.7Western Mountain 100.0 4.4 2.2 3.4 3.8 0.3 4.1 1.4 0.0 1.0 57.2 2.1 0.3 4.1 15.7Dolpa 100.0 43.9 1.1 2.6 2.2 0.0 5.8 0.7 0.0 3.7 22.6 0.8 1.0 13.1 2.5Humla 100.0 43.8 0.8 6.3 14.0 0.0 4.9 0.0 0.0 19.6 0.1 2.7 1.2 0.2 6.3Jumla 100.0 63.1 0.7 9.5 0.6 0.0 5.2 0.3 0.0 5.7 0.2 2.1 6.5 0.2 6.0Kalikot 100.0 15.1 0.2 27.5 0.0 0.1 21.6 0.2 0.0 21.7 0.1 5.6 0.1 3.1 4.5Mugu 100.0 44.3 3.1 4.3 10.1 0.0 3.0 0.1 0.0 17.0 0.1 0.0 0.1 0.2 17.5Mid Western Mountain 100.0 49.7 1.2 8.2 5.6 0.0 5.9 0.3 0.0 11.8 3.0 1.9 3.0 2.0 7.6Bajhang 100.0 63.9 0.1 10.8 0.1 0.0 7.9 0.1 0.0 5.6 0.0 2.2 2.8 0.0 6.5Bajura 100.0 55.5 0.0 6.9 0.0 0.0 9.4 0.1 0.0 6.4 0.1 4.0 3.5 0.2 13.7Darchula 100.0 60.0 0.0 18.5 0.0 0.1 5.3 0.1 0.0 6.6 0.2 0.6 1.8 0.1 6.7Far Western Mountain 100.0 60.5 0.0 12.2 0.0 0.0 7.5 0.1 0.0 6.1 0.1 2.1 2.7 0.1 8.4Source: Population Census 2001, CBSNote: Source of Cast/Ethnic Population by district is CBS, "Population Census 2001, Cast Ethnic Population", 2007 and other required classification and calculation for Table are based on source ofbasic data

Annex 5: Population of Religion by Development RegionIn PercentageArea ALL RELIGION HINDU BOUDDHA ISLAM KIRAT JAIN CHRISTIAN SIKH OTHERSNepal 100.00 80.62 10.74 4.20 3.60 0.02 0.45 0.03 0.35Mountain 100.00 69.37 21.02 0.02 8.88 0.01 0.32 0.01 0.37Mountain Regions and DistrictsSankhuwasabha 100.00 46.95 24.78 0.01 27.55 0.01 0.63 0.01 0.06Solukhumbu 100.00 42.91 29.00 0.05 26.81 0.01 0.82 0.01 0.39Taplejung 100.00 36.52 18.68 0.02 43.47 0.01 0.54 0.01 0.75Eastern Mountain 100.00 42.37 23.87 0.03 32.69 0.01 0.65 0.01 0.38Dolakha 100.00 72.43 23.92 0.00 1.32 0.00 0.30 0.00 2.02Rasuwa 100.00 33.10 65.56 0.01 0.00 0.01 1.21 0.00 0.11Sindhupalchok 100.00 62.53 37.03 0.02 0.01 0.00 0.31 0.01 0.09Central Mountain 100.00 63.36 35.03 0.01 0.46 0.00 0.39 0.01 0.75Manang 100.00 25.35 74.18 0.02 0.01 0.04 0.29 0.00 0.10Mustang 100.00 25.28 74.25 0.05 0.02 0.06 0.33 0.00 0.02Western Mountain 100.00 25.31 74.22 0.04 0.02 0.05 0.31 0.00 0.05Dolpa 100.00 60.35 39.59 0.02 0.00 0.00 0.02 0.00 0.03Humla 100.00 84.40 15.59 0.00 0.00 0.00 0.00 0.00 0.00Jumla 100.00 97.90 1.88 0.04 0.00 0.00 0.16 0.00 0.02Kalikot 100.00 99.78 0.05 0.07 0.00 0.00 0.00 0.00 0.10Mugu 100.00 86.44 13.53 0.01 0.00 0.00 0.01 0.00 0.01Mid Western Mountain 100.00 88.09 11.80 0.02 0.00 0.00 0.07 0.00 0.02Bajhang 100.00 99.77 0.20 0.01 0.00 0.00 0.00 0.00 0.01Bajura 100.00 98.72 1.05 0.13 0.00 0.00 0.06 0.00 0.03Darchula 100.00 99.85 0.10 0.01 0.00 0.01 0.00 0.01 0.02Far Western Mountain 100.00 99.52 0.39 0.04 0.00 0.00 0.02 0.00 0.02Source: Population Census 2001, CBS

Annex 6 :Total Area, Area of Holdings and Type of LandArea Area in Sq. Km. Area of Holdings ('000 Ha) Agri. Landas % ofNepal RuralAreaAverage ofVDC AreaUrbanAreaWet Dry Agri.LandTotal Land(2001)Average ofMunicipalityAreaTotalArea ofHoldings2001All OtherArea ofHoldingsNepal 147181 143905 37 3276 56 2654 1606 1048 2498 156 17Mountain 51817 51661 95 156 78 219 72 147 208 11 4Mountain Regions as % of Nepal 35 36 259 5 138 8 4 14 8 7 24Mountain Regions and DistrictsSankhuwasabha 3480 3389 103 91 91 25 12 13 24 1 6.9Solukhumbu 3312 3312 97 0 0 21 3 18 19 2 5.8Taplejung 3646 3646 73 0 0 24 8 16 22 1 6.1Eastern Mountain 10438 10347 88 91 91 69 23 47 65 4 6.3Dolakha* 2191 2126 42 65 65 27 7 20 26 1 11.8Rasuwa 1544 1544 86 0 0 5 1 4 5 0 3.3Sindhupalchok* 2542 2542 32 0 0 35 17 18 33 2 13.1Central Mountain 6277 6212 42 65 65 68 25 43 65 3 10.3Manang 2246 2246 187 0 0 1 0 1 1 0 0.5Mustang 3573 3573 223 0 0 1 1 1 1 0 0.3Western Mountain 5819 5819 208 0 0 2 1 2 2 0 0.4Dolpa* 7889 7889 343 0 0 3 0 2 2 0 0.3Humla 5655 5655 209 0 0 6 1 5 6 0 1.1Jumla* 2531 2531 84 0 0 8 1 7 8 0 3.1Kalikot* 1741 1741 58 0 0 15 6 9 15 0 8.6Mugu* 3535 3535 147 0 0 6 1 5 6 0 1.8Mid Western Mountain 21351 21351 159 0 0 39 10 29 38 1 1.8Bajhang 3422 3422 73 0 0 14 5 9 13 1 3.7Bajura* 2188 2188 81 0 0 9 3 6 9 1 3.9Darchula 2322 2322 57 0 0 18 6 11 17 1 7.2Far Western Mountain 7932 7932 69 0 0 40 14 27 38 2 4.8Source: Population Census of Nepal 2001 and National Sample Census of Agriculture 2001-02Note: 1. Source of Total Area by districts and area of municipalities is CBS " Population Census 2001" , 2. Source of Area of Holdings by district is CBS, " Nationl Sample Census of Agriculture,2001", 3. Other required classification and calculation for table are based on source of basic data

Annex 7: Land Use Pattern by Ecological Belts and Mountain DistrictsArea in HectareAreaForestAreaShrubAgriculturalland/grass(A)Grass Landas % of(A)*WaterbodiesBarrenlandSnow Others TotalNepal 5599760 1283231 4061631 41.7 64664 1683493 1974003 108377 14775159Mountain 1214910 426363 518377 84.6 7652 1246595 1680399 107833 5202129 (35%)Particular Land Area as % of Total Area in Mountain 23.35 8.20 9.96 0.15 23.96 32.30 2.07 100.00Mountain Regions and DistrictsSankhuwasabha 159872 48476 71335 62.2 975 23723 40825 0 345206Solukhumbu 86002 49628 67424 72.3 571 59670 50037 19509 332841Taplejung 112256 56362 70946 57.7 405 37757 60115 27496 365337Eastern Mountain 358130 154466 209705 64.7 1951 121150 150977 47005 1043384Dolakha* 78111 41194 54778 56.8 401 16031 22913 2985 216413Rasuwa 47494 15667 9443 82.4 54 8983 25138 44308 151087Sindhupalchok* 92955 36017 67105 36.6 162 17404 32560 2679 248882Central Mountain 218560 92878 131326 54.6 617 42418 80611 49972 616382Manang 11760 20304 279 97.9 378 29828 165154 0 227703Mustang 16723 23587 285 99.2 272 78241 229295 10856 359259Western Mountain 28483 43891 564 98.9 650 108069 394449 10856 586962Dolpa* 60603 3910 77 99.0 764 474881 249817 0 790052Humla 41051 21954 12584 95.9 677 112174 421759 0 610199Jumla* 110531 1118 19819 89.3 338 98595 18566 0 248967Kalikot* 87165 3846 15560 73.7 0 48264 9588 0 164423Mugu* 87312 9387 20729 93.6 1360 139358 69568 0 327714Mid Western Mountain 386662 40215 68769 94.0 3139 873272 769298 0 2141355Bajhang 92391 39713 43697 80.8 440 38826 139599 0 354666Bajura* 72507 23982 31414 81.7 264 32110 63897 0 224174Darchula* 58177 31218 32902 78.6 591 30750 81568 0 235206Far Western Mountain 223075 94913 108013 80.1 1295 101686 285064 0 814046Source: CBS, Environment Statistics of Nepal 2008 and LRMP 1981 Data Forest and Grazing Area ---*Calculation based on Land Resource Mapping Project 1981for Forest and Grazing Areas ( fromNepal District Profile 2006, Nepal Development Information Institute)

Annex 8 : Ecological and Physiographical Division of the Districts of NepalPhysiographic Division (% of area)Area Area in Sq. Km. Total Area (Ha.)TeraiSiwalik Middle Mountain High Mountainvalley Slope Valley Slope Valley SlopeNepal 147181 14748398 14.4 3.6 9.1 1.8 27.7 0.2 19.4 23.7Mountain 51817 5186182 0.0 0.0 0.0 0.3 6.6 0.4 34.9 57.8Mountain Regions and DistrictsSankhuwasabha 3480 345729 0.0 0.0 0.0 0.9 23.4 0.2 42.6 32.9Solukhumbu 3312 339776 0.0 0.0 0.0 0.0 0.8 0.1 40.3 58.8Taplejung 3646 364221 0.0 0.0 0.0 0.0 12.6 0.1 38.2 49.1Eastern Mountain 10438 1049726 0.0 0.0 0.0 0.3 12.3 0.1 40.3 46.9Dolakha* 2191 214278 0.0 0.0 0.0 0.3 24.4 0.2 38.1 37.0Rasuwa 1544 151179 0.0 0.0 0.0 0.1 2.7 0.4 45.4 51.4Sindhupalchok* 2542 248096 0.0 0.0 0.0 1.2 32.9 0.2 45.2 20.5Central Mountain 6277 613553 0.0 0.0 0.0 0.6 22.5 0.2 42.8 33.9Manang 2246 219625 0.0 0.0 0.0 0.0 0.0 0.1 5.2 94.7Mustang 3573 355951 0.0 0.0 0.0 0.0 0.0 0.1 1.2 98.7Western Mountain 5819 575576 0.0 0.0 0.0 0.0 0.0 0.1 2.7 97.2Dolpa* 7889 793230 0.0 0.0 0.0 0.2 0.0 0.1 12.3 87.4Humla 5655 583826 0.0 0.0 0.0 0.0 0.3 0.5 17.0 82.2Jumla* 2531 254365 0.0 0.0 0.0 0.0 0.0 2.3 63.6 34.1Kalikot* 1741 174927 0.0 0.0 0.0 0.0 0.0 0.3 99.7 0.0Mugu* 3535 358282 0.0 0.0 0.0 0.0 0.0 0.2 47.4 52.4Mid Western Mountain 21351 2164630 0.0 0.0 0.0 0.1 0.1 0.5 32.5 66.9Bajhang 3422 347560 0.0 0.0 0.0 1.7 10.0 0.8 42.7 44.8Bajura* 2188 202177 0.0 0.0 0.0 0.0 1.7 1.0 80.0 17.3Darchula 2322 232960 0.0 0.0 0.0 0.5 15.9 0.3 40.9 42.4Far Western Mountain 7932 782697 0.0 0.0 0.0 0.9 9.6 0.7 51.8 37.0Source: Department of Irrigation, DEVELOPMENT OF DATABASE FOR IRRIGATION DEVELOPMENT IN NEPAL FINAL REPORT March, 2007Note: 1. Source of Area in Sq. Km. by districts is CBS " Population Census 2001"2. Area by Ecological Belts has been Calculated on the basis of district level data.HighHimal

Annex 9: Human development index by Region, 2001AreaLifeExpectancyat birthAdultliteracyMeanyears ofschoolingHuman Development Index by Region, 2001GDP Percapita (PPPUS$)LifeexpectancyIndexEducationalAttainmentindexIncomeIndexHumandevelopment Index(HDI)Ratio toNationalHDIHDI Rank(Kathmandu=1)CBS Ranking on28 Dev.Indicators(Kathmandu =1)Nepal 60.98 48.6 2.75 1310 0.6 0.385 0.429 0.471 100Mountain 52.55 36.1 2.5 1114 0.459 0.296 0.402 0.386 81.9Mountain Regions and DistrictsSankhuwasabha 63.78 47.5 2.58 1257 0.646 0.374 0.422 0.481 102 28 19Solukhumbu 65.94 39 2.15 1455 0.682 0.308 0.447 0.479 101.6 30 44Taplejung 61.94 47.3 2.73 1169 0.616 0.376 0.41 0.467 99.1 36 40Eastern mountain 63.9 45.2 2.51 1276 0.648 0.357 0.425 0.477 101.2Dolakha* 63.5 42.2 2.19 965 0.642 0.33 0.378 0.45 95.5 42 35Rasuwa 54.75 25.4 1.56 1802 0.496 0.204 0.483 0.394 83.6 62 59Sindhupalchok* 60.02 31 1.74 1194 0.584 0.245 0.414 0.414 87.9 54 43Central mountain 60.63 34.4 1.88 1157 0.594 0.271 0.409 0.425 90.1Manang 57.03 52.2 3.17 2746 0.534 0.418 0.553 0.502 106.4 15 20Mustang 57.03 47.8 2.58 2466 0.534 0.376 0.535 0.482 102.2 26 14Western mountain 57 49.5 2.82 2505 0.533 0.393 0.538 0.488 103.5Dolpa* 52.52 29 1.59 1279 0.459 0.229 0.425 0.371 78.7 67 70Humla 58.37 19.6 1.25 1014 0.556 0.158 0.387 0.367 77.9 68 74Jumla* 50.82 26.6 1.55 1104 0.43 0.212 0.401 0.348 73.8 70 68Kalikot* 46.67 33.2 1.81 775 0.361 0.262 0.342 0.322 68.2 73 69Mugu* 44.07 24.1 1.4 1105 0.318 0.192 0.401 0.304 64.4 75 75Mid-western mountain 52.94 25.3 1.48 940 0.466 0.202 0.374 0.347 73.6Bajhang 49.69 29.1 1.65 825 0.412 0.231 0.352 0.331 70.3 72 73Bajura* 45.67 27.1 1.62 907 0.345 0.217 0.368 0.31 65.7 74 71Darchula 56.43 41.5 2.73 1175 0.524 0.337 0.411 0.424 90 52 60Far Western mountain 50.8 32.6 1.99 939 0.43 0.262 0.374 0.355 75.3 52.8 52.1Source: UNDP, Nepal Human Development <strong>Report</strong> 2004

Annex 10: Human development index by Selected Mountain Region, 2006AreaLifeExpectancyat birthAdultliteracyMeanyears ofschoolingHuman Development Index by Region, 2006GDP Per capita Life Educational Income Index(PPP US$) expectancy AttainmentIndex indexHumandevelopmentIndex (HDI)Ratio toNationalHDINepal 63.69 52.42 3.21 1597 0.645 0.421 0.4624 0.509 100Mountain 57.91 44.67 2.44 1158 0.548 0.352 0.4088 0.436 85.7Eastern Mountain 65.42 55.29 3.06 1441 0.674 0.437 0.4453 0.519 101.8Central Mountain 62.94 40.51 2.33 1161 0.632 0.322 0.4092 0.454 89.2Western Mountain 51.79 41.89 2.18 2401 0.447 0.328 0.5305 0.435 85.4Source: UNDP, Nepal Human Development <strong>Report</strong> 2009/ NDHS 2006 and NLSS 2003/04

Annex 11: Social and Economic Development Status National, Mountain Regions and Mountain DistrictsLength of Road (K.M.) (2007)Electricity 2001 Communication 2001 Irrigation 2009AreaStrategic Road NetworkBT GR ERTotalSRNDRURTotalLengthof RoadHouseholdshaving electricityfacility (%)Householdshaving radiofacility (%)Telephonelines perthousandpopulationTotalIrrigatedArea Ha.TotalIrrigatedLand as %of TotalArablelandNepal 4258 2062 3079 9399 6955 2473 18828 39.79 53.12 12.85 1093172.1** 46.4Mountain 190 126 489 805 263 19 1087 21.40 53.90 1.36 29648 14.8Mountain Region as % of Nepal 4 6 16 9 4 1 6 3Mountain Regions and DistrictsSankhuwasabha 0 10.7 66 76.7 0 0 76.7 30.10 61.30 2.02 3403.95 14.6Solukhumbu 0 0 0 0 0 0 0 13.40 59.80 3.27 1442 7.9Taplejung 0 21.4 4.1 25.5 11 0.6 37.1 8.10 55.70 1.76 2963.5 13.5Eastern Mountain 0 32.1 70.1 102.2 11 0.6 113.8 18.36 59.08 2.27 7809.45 12.3Dolakha* 86.68 30 20 136.68 95 15.8 247.48 45.80 65.10 1.30 3211.5 12.7Rasuwa 0 40.5 10 50.5 44 3 97.5 32.80 40.00 4.02 1013 20.1Sindhupalchok* 103.31 23.84 34.5 161.65 80.6 0 242.25 27.50 58.30 0.47 6362.22 19.1Central Mountain 189.99 94.34 64.5 348.83 219.6 18.8 587.23 34.53 59.21 1.06 10586.72 16.7Manang 0 0 18 18 0 0 18 80.50 65.60 1.56 253 27.9Mustang 0 0 43 43 0 0 43 53.30 54.00 2.54 1007 96.4Western Mountain 0 0 61 61 0 0 61 62.92 58.10 2.16 1260 64.5Dolpa* 0 0 0 0 0 0 0 0.60 50.20 0.10 733.5 29.6Humla 0 0 30 30 0 0 30 12.20 29.70 0.07 672.5 11.3Jumla* 0 0 36 36 0 0 36 19.70 56.40 1.95 549.8 7.1Kalikot* 0 0 64 64 0 0 64 5.20 66.40 1.11 816.8 5.6Mugu* 0 0 0 0 0 0 0 5.70 30.60 0.07 156 2.5Mid Western Mountain 0 0 130 130 0 0 130 11.81 45.45 0.89 2928.6 7.9Bajhang 0 0 76 76 32 0 108 5.20 38.00 0.72 4051 34.3Bajura* 0 0 16 16 0 0 16 5.30 41.50 0.92 788 9.3Darchula 0 0 71.42 71.42 0 0 71.42 8.30 52.80 1.35 2224.5 16.3Far Western Mountain 0 0 163.42 163.42 32 0 195.42 6.19 43.52 0.97 7063.5 20.8

Annex 12 (Continued from Agriculture)Area Agriculture Poverty Incidence Rate, 2003/04 Caloric Intake and Malnutrition 2003/04Edible Food Production and Requirement2005-06 Mt.Production Requirement Surplus/DeficitPer CapitaEdible FoodProduction(KG)PovertyIncidenceRatePoverty Incidence Ratein Ilaka Level 2003/04Maximum Minimum PovertyGapCaloricIntakePrevalenceMeasures of malnutrition 2003/04Nepal 4869442 4890993 ‐21551 188.1 0.335 0.821 0.012 0.097 0.398 0.076 0.504 0.452 0.096Mountain 279683 346127 ‐66444 150.6 0.425 0.656 0.087 0.125 0.452 0.094 0.614 0.451 0.053Mountain Regions and DistrictsSankhuwasabha 40330 32057 8273 232.4282 0.487 0.638 0.401 0.151 0.402 0.084 0.564 0.389 0.038Solukhumbu 22675 21549 1126 193.7455 0.463 0.624 0.28 0.141 0.417 0.088 0.6 0.391 0.038Taplejung 31714 27157 4557 216.0207 0.518 0.638 0.382 0.170 0.456 0.099 0.59 0.411 0.042Eastern Mountain 94719 80763 13956 216.5694 0.491 0.638 0.28 0.155 0.424 0.090 0.582 0.397 0.039Dolakha* 18169 42028 ‐23859 80.75758 0.336 0.462 0.149 0.092 0.364 0.070 0.582 0.406 0.048Rasuwa 6688 9303 ‐2615 134.7382 0.509 0.621 0.344 0.162 0.494 0.112 0.611 0.403 0.031Sindhupalchok* 83496 62718 20778 248.147 0.370 0.484 0.266 0.102 0.409 0.081 0.57 0.397 0.043Central Mountain 108353 114049 ‐5696 177.309 0.370 0.621 0.149 0.104 0.401 0.080 0.578 0.401 0.044Manang 722 2352 ‐1630 62.27897 0.212 0.296 0.087 0.051 0.552 0.136 0.595 0.24 0.015Mustang 1439 2887 ‐1448 89.51233 0.258 0.33 0.144 0.064 0.511 0.121 0.604 0.286 0.017Western Mountain 2161 5239 ‐3078 78.10186 0.240 0.33 0.087 0.059 0.527 0.127 0.600 0.268 0.016Dolpa* 2616 6088 ‐3472 80.27742 0.397 0.519 0.252 0.105 0.586 0.139 0.68 0.477 0.045Humla 1684 8365 ‐6681 37.61532 0.415 0.495 0.308 0.111 0.593 0.136 0.722 0.537 0.054Jumla* 12282 18379 ‐6097 124.617 0.344 0.42 0.282 0.086 0.533 0.111 0.676 0.495 0.063Kalikot* 8116 21804 ‐13688 69.59297 0.568 0.595 0.533 0.180 0.505 0.107 0.639 0.551 0.091Mugu* 6003 9146 ‐3143 123.2421 0.510 0.656 0.453 0.155 0.648 0.158 0.697 0.547 0.062Mid WesternMountain30701 63782 ‐33081 89.9679 0.412 0.656 0.252 0.113 0.572 0.129 0.689 0.516 0.060Bajhang 17901 34647 ‐16746 96.89731 0.473 0.56 0.402 0.143 0.486 0.100 0.656 0.531 0.074Bajura* 10391 22386 ‐11995 86.66462 0.482 0.546 0.403 0.148 0.496 0.105 0.651 0.54 0.075Darchula 15457 25261 ‐9804 114.5727 0.377 0.459 0.295 0.109 0.490 0.098 0.619 0.505 0.067Far Western Mountain 43749 82294 ‐38545 99.53113 0.445 0.56 0.295 0.134 0.490 0.101 0.643 0.525 0.072Note: Source of Poverty Incidence Rate and Measures of Malnutrition by district and Ilaka Level is CBS, Small Area Estimation of Poverty Caloric Intake and Malnutrition 2006,and other required classification and calculation for table are based on souurce of basic dataCaloricIntakeGapStuntingUnderweightWasting

Annex 13: (Continued from Literacy Rate)Area Literacy Rate 2001 DrinkingWater andSanitation2001TotalLiteracyRateMaleLiteracyRateFemaleLiteracyRateLiteracy Rate in VDCsLiteracy Rate in VDCs andMunicipalitiesAccessto toiletfacility (%)Access toimprovedsource ofdrinkingwater (%)HealthNumber of Health Institution 2063‐64Maximum Minimum Maximum Minimum HospitalPHC/HCHealth PostSub‐HealthPostTotalHealthCare UnitNepal 53.7 65.1 42.5 82.4 0.0 82.6 0.0 46.7 82.0 89 209 677 3126 4101Mountain 43.2 56.6 30.1 79.6 0.9 79.6 0.9 40.8 72.7 16 19 149 383 567Mountain Regions and DistrictsSankhuwasabha 53.75908 63.35631 44.6625 63.5 18.1 63.5 18.1 59.6 62.6 1 2 11 25 39Solukhumbu 45.80955 56.63123 35.41117 63.6 30.3 63.6 30.3 51.1 76.7 1 2 9 23 35Taplejung 52.20773 62.52562 42.3436 68.4 16.8 68.4 16.8 47.8 90.7 1 2 8 43 54Eastern Mountain 51.1 61.3 41.4 68.4 16.8 68.4 16.8 53.42897 75.57166 3 6 28 91 128Dolakha* 50.63932 63.54463 38.3222 60.2 17.9 60.2 17.9 65.8 82.7 1 1 10 43 55Rasuwa 33.9634 42.49314 24.52872 52.6 10.1 52.6 10.1 31.9 85.2 1 1 8 9 19Sindhupalchok* 40.18591 51.37115 29.12293 66.6 17 66.6 17 45.1 82 1 3 10 65 79Central Mountain 43.2 54.7 32.0 66.6 10.1 66.6 10.1 51.44095 82.52039 3 5 28 117 153Manang 59.91164 66.87406 52.11234 79.6 40 79.6 40 35.9 93.5 1 0 9 4 14Mustang 51.75295 60.9081 40.7017 73.4 25 73.4 25 40.8 84.7 1 1 8 7 17Western Mountain 55.0 63.2 45.3 79.6 25 79.6 25 39.06611 87.81393 2 1 17 11 31Dolpa* 34.66435 49.21159 19.60979 66.9 0.9 66.9 0.9 13.9 36.7 1 0 9 14 24Humla 26.61956 40.66029 11.52448 41 9.2 41 9.2 18.3 64.5 1 0 10 16 27Jumla* 32.40689 46.89792 16.69585 64 13.8 64 13.8 52.4 74.5 1 1 8 20 30Kalikot* 37.5092 53.74765 16.97979 37.5 35.5 37.5 35.5 42.4 48 1 1 9 19 30Mugu* 27.79065 45.13315 9.187826 49.4 12.5 49.4 12.5 13.4 55.3 1 1 8 16 26Mid Western Mountain 30.9 45.9 14.5 66.9 0.9 66.9 0.9 31.52273 61.68223 5 3 44 85 137Bajhang 35.26094 57.33594 15.08068 52.2 18.7 52.2 18.7 10.8 44 1 2 10 35 48Bajura* 33.72835 50.67118 17.07293 45.8 21.8 45.8 21.8 20.2 65.5 1 1 11 15 28Darchula 49.38612 67.38014 32.37604 72.7 27.1 72.7 27.1 14.4 71.4 1 1 11 29 42Far Western Mountain 39.4 58.8 21.1 72.7 18.7 72.7 18.7 14.45245 58.28317 3 4 32 79 118Note: 1. Sources of literacy rate by districts and VDCs is CBS, Population Census 2001 2. Source of Indicators of Drinking Water and Sanitation is CBS, "DISTRICT LEVEL INDICATORS OF NEPALfor Monitoring Overall Development 2003". 3. Source of number of Health Institution and Work Force by districts is Department of Health Service. 4. Other required classification and calculation for tableare based on source of basic data.

Annex 14: (Continued from Number of Work Force)Area Health 2006/07 Education 2009Number of WorkForce (Sanctioned)Number of School 2009No of StudentsDoctorsHealthAssistant/AHWNurses /ANM Total PrimaryLevelLowerSecondaryLevelSecondaryLevelPrimaryLevelLowerSecondaryLevelSecondaryLevelTotal Student(Primary toSecondary Level)Nepal 1007 5794 2974 4992 31655 11341 6928 4900663 1604422 790348 72954334Mountain 53 821 180 5629 3920 1118 591 432066 115499 54570 602135Mountain Region as % of Nepal 5.3 14.2 6.1 11.3 12.4 9.9 8.5 8.8 7.2 6.9 8.3Mountain Regions and DistrictsSankhuwasabha 5 58 17 565 400 110 55 37018 12427 5356 54801Solukhumbu 5 52 15 388 287 67 34 27883 7595 3338 38816Taplejung 4 70 16 445 311 89 45 48972 12193 5554 66719Eastern Mountain 14 180 48 1398 998 266 134 113873 32215 14248 160336Dolakha* 4 72 14 621 421 125 75 44647 16040 7520 68207Rasuwa 3 33 9 160 111 34 15 9143 3239 1437 13819Sindhupalchok* 6 99 20 805 541 164 100 43772 14844 7336 65952Central Mountain 13 204 43 1586 1073 323 190 97562 34123 16293 147978Manang 2 26 5 49 32 13 4 577 212 136 925Mustang 3 31 9 93 70 15 8 1856 544 266 2666Western Mountain 5 57 14 142 102 28 12 2433 756 402 3591Dolpa* 1 37 5 153 119 22 12 6975 1490 777 9242Humla 3 44 9 160 119 29 12 11654 1962 993 14609Jumla* 3 43 8 241 152 55 34 27054 5950 2706 35710Kalikot* 2 45 10 381 267 78 36 37316 7971 4196 49483Mugu* 2 40 8 175 130 30 15 11655 2537 1462 15654Mid Western Mountain 11 209 40 1110 787 214 109 94654 19910 10134 124698Bajhang 4 67 14 576 398 118 60 60045 12451 5466 77962Bajura* 3 45 9 334 229 71 34 33606 7619 3222 44447Darchula 3 59 12 483 333 98 52 29893 8425 4805 43123Far Western Mountain 10 171 35 1393 960 287 146 123544 28495 13493 165532Source of Number of School, Student and NER by districts is DOE, "SCHOOL LEVEL EDUCATIONAL STATISTICS OF NEPAL FLASH I REPORT 2009/10" and other classification and calculation fortable are based on source of basic data.

Annex 15: (Continued from NER in Primary Level)Area Education 2009NER in primary level Student per School Level Number of Teachers Student Per TeacherGirls Boys Total PrimaryLevelLowerSecondaryLevelSecondaryLevelPrimaryLevelLower SecondaryLevelSecondary LevelPrimaryLevelLower SecondaryLevelNepal 92.6 94.7 93.7 154.8 141.5 114.1 153536 40259 29109 32 40 27Mountain 93.7 97.0 95.4 110.2 103.3 92.3 14982 3112 2037 29 37 27Mountain Regions andDistrictsSankhuwasabha 91.0 96.1 93.7 92.5 113.0 97.4 1513 326 226 24 38 24Solukhumbu 88.8 97.2 93.2 97.2 113.4 98.2 879 204 145 32 37 23Taplejung 94.9 97.4 96.2 157.5 137.0 123.4 1327 311 186 37 39 30Eastern Mountain 91.8 96.9 94.4 114.1 121.1 106.3 3719 841 557 31 38 26Dolakha* 97.6 98.8 98.2 106.0 128.3 100.3 1809 298 298 25 54 25Rasuwa 98.9 96.8 97.8 82.4 95.3 95.8 477 69 52 19 47 28Sindhupalchok* 91.5 94.6 93.1 80.9 90.5 73.4 2021 433 245 22 34 30Central Mountain 94.4 96.4 95.4 90.9 105.6 85.8 4307 800 595 23 43 27Manang 59.3 58.8 59.1 18.0 16.3 34.0 151 40 22 4 5 6Mustang 77.9 84.0 80.8 26.5 36.3 33.3 362 58 50 5 9 5Western Mountain 70.7 73.7 72.1 23.9 27.0 33.5 513 98 72 5 8 6Dolpa* 98.1 97.7 97.9 58.6 67.7 64.8 407 73 43 17 20 18Humla 94.0 97.0 95.5 97.9 67.7 82.8 355 79 27 33 25 37Jumla* 94.4 99.1 96.8 178.0 108.2 79.6 623 105 77 43 57 35Kalikot* 94.8 98.6 96.6 139.8 102.2 116.6 943 221 108 40 36 39Mugu* 96.3 95.5 95.9 89.7 84.6 97.5 363 76 47 32 33 31Mid Western Mountain 95.1 98.0 96.5 120.3 93.0 93.0 2691 554 302 35 36 34Bajhang 94.2 97.4 95.9 150.9 105.5 91.1 1677 365 242 36 34 23Bajura* 94.7 99.3 97.1 146.8 107.3 94.8 983 202 108 34 38 30Darchula 95.5 98.8 97.2 89.8 86.0 92.4 1092 252 161 27 33 30Far Western Mountain 94.7 98.3 96.6 128.7 99.3 92.4 3752 819 511 33 35 26SecondaryLevelSource of Number of School, Student and NER by districts is DOE, "Educational Statistics of Nepal Flash <strong>Report</strong> 1, 2006" and other classification and calculation for table are based on source of basicdata.

Annex 16 :Number of Cottage & Small Scale Industries Registered (Up to F.Y. 2065/66) by TypeArea Manufacturing EnergyBasedAgriculture Tourism Mineral Service Construction TotalNepal 36367 251 3430 8635 732 43992 3717 97124Mountain 797 21 443 166 3 2231 546 4207Mountain Region as % of Nepal 2.2 8.4 12.9 1.9 0.4 5.1 14.7 4.3Mountain Regions and DistrictsSankhuwasabha 65 1 53 13 3 187 37 359Solukhumbu 37 6 49 14 0 65 21 192Taplejung 39 2 44 3 0 123 1 212Eastern Mountain 141 9 146 30 3 375 59 763Dolakha* 78 0 17 27 0 234 23 379Rasuwa 46 0 25 9 0 114 15 209Sindhupalchok* 76 1 66 27 0 483 145 798Central Mountain 200 1 108 63 0 831 183 1386Manang 16 0 2 1 0 34 1 54Mustang 8 0 31 26 0 42 32 139Western Mountain 24 0 33 27 0 76 33 193Humla 15 0 15 3 0 60 73 166Jumla* 50 1 63 17 0 176 6 313Kalikot* 94 5 22 6 0 226 6 359Mugu* 46 3 11 6 0 86 13 165Mid Western Mountain 205 9 111 32 0 548 98 1003Bajhang 150 0 19 13 0 260 1 443Bajura* 68 2 2 1 0 71 80 224Darchula 9 0 24 0 0 70 92 195Far Western Mountain 227 2 45 14 0 401 173 862Source: Department of Cottage and Small Scale Industry 2065/66

Annex 17: Number of District and Ilaka Post Offices 2008/09, Nationa, Mountain Regions and DistrictsArea D.P.O. A.P.O. Grand TotalNepal 70 842 912Mountain 16 133 149Mountain Region as % of Nepal 22.9 15.8 16.3Mountain Regions and DistrictsSankhuwasabha 1 13 14Solukhumbu 1 8 9Taplejung 1 12 13Eastern Mountain 3 33 36Dolakha 1 10 11Rasuwa 1 4 5Sindhupalchok 1 13 14Central Mountain 3 27 30Manang 1 5 6Mustang 1 8 9Western Mountain 2 13 15Dolpa 1 7 8Humla 1 5 6Jumla 1 7 8Kalikot 1 7 8Mugu 1 7 8Mid Western Mountain 5 33 38Bajhang 1 9 10Bajura 1 8 9Darchula 1 10 11Far Western Mountain 3 27 30

Annex 18: Number of Commercial Bank Branches, Finance Company and Development Bank (Mid‐Jan 2010) , National, Mountain Regions and DistrictsArea Commercial Bank Finance Company Development BankNepal 845 78 73Mountain 31 0 0Mountain Region as % of Nepal 3.7 0 0Mountain Regions and DistrictsSankhuwasabha 3 0 0Solukhumbu 4 0 0Taplejung 1 0 0Eastern Mountain 8 0 0Dolakha 4 0 0Rasuwa 1 0 0Sindhupalchok 4 0 0Central Mountain 9 0 0Manang 1 0 0Mustang 2 0 0Western Mountain 3 0 0Dolpa 1 0 0Humla 1 0 0Jumla 4 0 0Kalikot 1 0 0Mugu 1 0 0Mid Western Mountain 8 0 0Bajhang 1 0 0Bajura 1 0 0Darchula 1 0 0Far Western Mountain 3 0 0Source: NRB, Quarterly Economic Bulletin

Annex 19: Number of Cooperatives (2063 Chaitra, Registered in Department of Cooperatives) , National, Mountain Regions and DistrictsAreaNumber of CooperativesNepal 9361Mountain 630Mountain Region as % of Nepal 6.7Mountain Regions and DistrictsSankhuwasabha 47Solukhumbu 9Taplejung 29Eastern Mountain 85Dolakha 168Rasuwa 32Sindhupalchok 226Central Mountain 426Manang 2Mustang 7Western Mountain 9Dolpa 5Humla 3Jumla 38Kalikot 2Mugu 2Mid Western Mountain 50Bajhang 33Bajura 22Darchula 5Far Western Mountain 60Source: Department of Cooperatives

Annex 20: Production of Cereal Crops, 2008/2009 National, Mountain Regions and DistrictsIn Mt.Area Barley Maize Millet Paddy Wheat TotalNepal 23224 1930670 292683 4523693 1343862 8114132Mountain 10015 188828 56506 129105 50756 435210Mountain Region as % of Nepal 43.1 9.8 19.3 2.9 3.8 5.4Mountain Regions and DistrictsSankhuwasabha 29 28209 9956 28677 2288 69159Solukhumbu 224 29100 2566 2916 3574 38380Taplejung 264 28495 3567 16048 2285 50659Eastern Mountain 517 85804 16089 47641 8147 158198Dolakha 230 10800 3580 6318 5105 26033Rasuwa 344 4500 1155 3300 1393 10692Sindhupalchok 0 51490 21070 36439 12100 121099Central Mountain 574 66790 25805 46057 18598 157824Manang 240 365 3 0 454 1062Mustang 400 795 4 0 1024 2223Western Mountain 640 1160 7 0 1478 3285Dolpa 95 4360 275 475 1088 6293Humla 280 140 1300 910 431 3061Jumla 3200 6850 4400 4844 1532 20826Kalikot 750 3834 1260 4610 3928 14382Mugu 1260 1000 1550 1785 1690 7285Mid Western Mountain 5585 16184 8785 12624 8669 51847Bajhang 1350 6261 2170 9200 6317 25298Bajura 557 1659 2650 6103 3292 14261Darchula 792 10970 1000 7480 4255 24497Far Western Mountain 2699 18890 5820 22783 13864 64056Source of Basic Data: Statistical Information on Nepalese Agriculture

Annex 21: Production of Cash Crops, 2008/2009 National, Mountain Regions and DistrictsIn Mt.Area Potato Oil Seed Sugarcane Tobacco JuteNepal 2424050 135494 2354412 2497 17658Mountain 429888 3040 2788 0 0Mountain Region as % of Nepal 17.7 2.2 0.1 0.0 0.0Mountain Regions and DistrictsSankhuwasabha 33186 574 650 0 0Solukhumbu 151640 220 0 0 0Taplejung 41406 390 0 0 0Eastern Mountain 226232 1184 650 0 0Dolakha 27004 242 154 0 0Rasuwa 36292 100 9 0 0Sindhupalchok 58800 1100 320 0 0Central Mountain 122096 1442 483 0 0Manang 9250 20 0 0 0Mustang 3200 15 0 0 0Western Mountain 12450 35 0 0 0Dolpa 5386 9 0 0 0Humla 6640 21 0 0 0Jumla 18887 95 0 0 0Kalikot 11385 70 0 0 0Mugu 6153 16 0 0 0Mid Western Mountain 48451 211 0 0 0Bajhang 7272 24 450 0 0Bajura 4171 77 710 0 0Darchula 9216 67 495 0 0Far Western Mountain 20659 168 1655 0 0Source of Basic Data: Statistical Information on Nepalese Agriculture

Annex 22: Production of Pulses Crops, 2008/2009 National, Mountain Regions and DistrictsIn Mt.Area Black Gram Chick Pea Grass PeaHorseGram Lentil Pigeon Pea Soyabean Others TotalNepal 25964 6877 4335 5385 147725 18152 21456 25490 255384Mountain 3923 511 0 381 1171 12 3102 2058 11158Mountain Region as % of Nepal 15.1 7.4 0.0 7.1 0.8 0.1 14.5 8.1 4.4Mountain Regions and DistrictsSankhuwasabha 472 0 0 70 13 0 270 79 904Solukhumbu 60 0 0 15 10 0 200 30 315Taplejung 455 0 0 30 20 0 216 138 859Eastern Mountain 987 0 0 115 43 0 686 247 2078Dolakha 122 4 0 5 5 2 329 510 977Rasuwa 102 0 0 0 160 2 77 25 366Sindhupalchok 1780 458 0 1 450 0 670 300 3659Central Mountain 2004 462 0 6 615 4 1076 835 5002Manang 0 0 0 0 0 0 0 100 100Mustang 276 0 0 0 128 0 525 55 984Western Mountain 276 0 0 0 128 0 525 155 1084Dolpa 1 0 0 1 0 0 10 158 170Humla 37 0 0 4 10 0 25 56 132Jumla 3 0 0 3 10 0 30 120 166Kalikot 25 0 0 0 54 0 40 100 219Mugu 22 0 0 7 5 0 32 40 106Mid Western Mountain 88 0 0 15 79 0 137 474 793Bajhang 288 3 0 25 198 2 98 150 764Bajura 118 15 0 60 55 5 23 51 327Darchula 162 31 0 160 53 1 557 146 1110Far Western Mountain 568 49 0 245 306 8 678 347 2201Source of Basic Data: Statistical Information on Nepalese Agriculture

Annex 23: Production of Fruits, 2007/2008, National, Mountain Regions and DistrictsIn Mt.Area Citrus Summer (Tropical) Winter (Deciduous) TotalNepal 226403 304383 97712 628498Mountain 13408 4908 39915 58231Mountain Region as % of Nepal 5.9 1.6 40.8 9.3Mountain Regions and DistrictsSankhuwasabha 2328 1460 1916 5704Solukhumbu 2019 248 3180 5447Taplejung 3229 622 1224 5075Eastern Mountain 7576 2330 6320 16226Dolakha 1360 255 1304 2919Rasuwa 124 232 3114 3470Sindhupalchok 1874 1521 3031 6426Central Mountain 3358 2008 7449 12815Manang 0 0 1245 1245Mustang 0 0 3518 3518Western Mountain 0 0 4763 4763Dolpa 0 0 3022 3022Humla 0 0 1914 1914Jumla 0 0 5423 5423Kalikot 534 125 3236 3895Mugu 0 0 2098 2098Mid Western Mountain 534 125 15693 16352Bajhang 531 99 2037 2667Bajura 434 200 1675 2309Darchula 975 146 1978 3099Far Western Mountain 1940 445 5690 8075Source of Basic Data: Statistical Information on Nepalese Agriculture

Annex 24: Livestock Production, 2008/2009 National, Mountain Regions and DistrictsAreaBuffaloMilk(mt.)CowMilk(mt.)Total MilkProduction(mt.)BuffaloMeat(mt)ChickenMeat(mt)DuckMeat(mt)GoatMeat(mt)Mutton(Sheep)Mt.PigMeat(mt)Total Meat(Net)Production(mt.)Duck EggProduction(000Number)Hen EggProduction(000Number)Total EggProduction(000Number)WoolProduction(Kg.)Nepal 1031500 413919 1445419 156627 16662 226 48472 2711 16992 241690 13635 616311 629946 583781Mountain 63021 37295 100316 11977 994 1 3558 1113 1263 18906 144 39896 40040 255704Mountain Region as % of6.1 9.0 6.9 7.6 6.0 0.4 7.3 41.1 7.4 7.8 1.1 6.5 6.4 43.8NepalMountain Regions and DistrictsSankhuwasabha 8068 5142 13210 1708 161 0 363 43 487 2762 11 5048 5059 10577Solukhumbu 5643 2334 7977 1393 88 0 226 32 216 1955 7 3954 3961 6210Taplejung 6904 3257 10161 1514 87 0 316 49 271 2237 20 3346 3366 10550Eastern Mountain 20615 10733 31348 4615 336 0 905 124 974 6954 38 12348 12386 27337Dolakha 7682 5135 12817 1369 180 1 487 85 112 2234 81 10912 10993 16500Rasuwa 3272 1393 4665 757 60 0 100 40 10 967 2 2097 2099 7947Sindhupalchok 10888 4801 15689 1334 172 0 363 51 122 2042 10 7936 7946 11300Central Mountain 21842 11329 33171 3460 412 1 950 176 244 5243 93 20945 21038 35747Manang 1 202 203 0 1 0 49 13 0 63 0 19 19 4028Mustang 20 355 375 2 3 0 68 17 0 90 0 175 175 4199Western Mountain 21 557 578 2 4 0 117 30 0 153 0 194 194 8227Dolpa 259 564 823 62 27 0 81 125 0 295 0 845 845 24657Humla 406 734 1140 67 16 0 129 80 0 292 0 375 375 21790Jumla 188 1407 1595 134 28 0 326 117 0 605 0 604 604 34420Kalikot 3056 1074 4130 627 17 0 309 73 0 1026 1 341 342 13996Mugu 824 1403 2227 202 27 0 183 139 1 552 1 842 843 33531Mid Western Mountain 4733 5182 9915 1092 115 0 1028 534 1 2770 2 3007 3009 128394Bajhang 5289 3159 8448 1370 36 0 176 91 14 1687 5 1019 1024 20290Bajura 5113 3500 8613 749 21 0 287 60 19 1136 4 969 973 15150Darchula 5408 2835 8243 689 70 0 95 98 11 963 2 1414 1416 20559Far Western Mountain 15810 9494 25304 2808 127 0 558 249 44 3786 11 3402 3413 55999Source of Basic Data: Statistical Information on Nepalese Agriculture

Annex 25: Continued Livestock Population, 2008/2009 National, Mountain Regions and DistrictsAreaNumber ofBuffalosNumber ofMilkingBuffalosNumber ofCattlesNumber ofMilkingCowsNumber ofGoatsNumber ofSheepsNumber ofPigsNumber ofFowlsNumber ofLying HensNumber ofDucksNumber ofLyingDucksNepal 4680486 1211495 7175198 932876 8473082 802993 1E+06 2E+07 7E+06 383124 179187Mountain 385104 88950 907134 111208 1144126 343514 113512 2E+06 594451 10438 3041Mountain Region as % of Nepal 8.2 7.3 12.6 11.9 13.5 42.8 10.9 7.2 8.3 2.7 1.7Mountain Regions and DistrictsSankhuwasabha 46278 12583 122498 13955 162587 14103 32900 293228 79981 1070 318Solukhumbu 42506 8666 47138 6956 84340 8280 23850 159785 63913 970 228Taplejung 43441 10775 73612 9299 123852 13936 33782 157100 52043 1150 419Eastern Mountain 132225 32024 243248 30210 370779 36319 90532 610113 195937 3190 965Dolakha 38938 9371 93752 10847 180287 22916 9295 354723 150800 4249 1470Rasuwa 21020 4986 26458 3873 31715 11038 654 88333 30150 230 35Sindhupalchok 36583 12500 85473 10703 152420 14952 9282 291231 108700 806 184Central Mountain 96541 26857 205683 25423 364422 48906 19231 734287 289650 5285 1689Manang 8 2 3974 839 12928 5370 62 1005 324 25 0Mustang 78 26 6860 1550 23720 5598 20 6169 2952 20 1Western Mountain 86 28 10834 2389 36648 10968 82 7174 3276 45 1Dolpa 2624 430 22385 1878 52218 32876 233 56358 13547 81 5Humla 1750 690 32546 2975 33561 29053 43 28518 6288 10 0Jumla 3688 318 71625 5484 47977 45893 635 49366 9161 270 54Kalikot 22834 4295 49171 4362 44209 18661 1002 26140 5218 163 18Mugu 7225 1420 31366 5222 34821 44708 105 46237 13214 212 24Mid Western Mountain 38121 7153 207093 19921 212786 171191 2018 206619 47428 736 101Bajhang 47890 7663 98743 11627 51228 28664 793 61829 16847 402 119Bajura 39205 7387 80002 11683 59427 20200 576 48362 16883 531 115Darchula 31036 7838 61531 9955 48836 27266 280 91009 24430 249 51Far Western Mountain 118131 22888 240276 33265 159491 76130 1649 201200 58160 1182 285Source of Basic Data: Statistical Information on Nepalese Agriculture

Annex 26: Public Revenue ‐Tax and Non Tax: 2005‐2008In Million RupeesArea 2004/05 2005/06 2006/07 2007/08Tax Non Tax Total Tax Non Tax Total Tax Non Tax Total Tax Non Tax TotalNepal 54104.78 16017.96 70122.74 57430.54 14851.54 72282.09 71126.73 16585.36 87712.08 85155.46 22467.02 107622Mountain 1343.72 168.87 1512.60 1472.04 156.05 1628.09 720.56 181.87 902.43 697.41 190.57 888Mountain Regions as % of Nepal 2.48 1.05 2.16 2.56 1.05 2.25 1.04 1.11 1.06 0.82 0.85 0.8Mountain Regions and DistrictsSankhuwasabha 6.57 14.44 21.01 7.23 19.17 26.40 8.31 21.19 29.50 10.19 18.17 28Solukhumbu 4.27 14.72 18.98 4.04 17.36 21.40 4.54 19.20 23.74 5.49 22.41 28Taplejung 5.48 13.10 18.58 5.78 17.20 22.98 7.18 19.23 26.41 7.49 18.02 26Eastern Mountain 16.31 42.26 58.58 17.05 53.73 70.77 20.04 59.62 79.66 23.18 58.61 82Dolakha 4.54 13.31 17.85 5.33 19.46 24.80 7.91 24.98 32.89 8.74 24.22 33Rasuwa 4.55 10.89 15.44 7.66 9.83 17.49 2.85 9.54 12.39 3.01 10.40 13Sindhupalchok 1291.58 77.86 1369.44 1412.53 45.21 1457.75 652.94 56.70 709.64 618.59 51.62 670Central Mountain 1300.67 102.06 1402.73 1425.52 74.51 1500.03 663.70 91.22 754.92 630.34 86.24 717Manang 1.34 1.37 2.71 1.04 1.46 2.50 1.40 1.52 2.92 1.57 1.52 3Mustang 4.07 4.22 8.29 4.95 4.58 9.53 3.65 5.32 8.97 2.59 6.16 9Western Mountain 5.41 5.59 11.00 5.98 6.05 12.03 5.04 6.84 11.88 4.16 7.67 12Dolpa 1.97 1.53 3.50 3.51 4.96 8.47 5.00 2.49 7.48 5.01 5.39 10Humla 3.34 1.41 4.75 3.93 1.98 5.91 4.03 1.66 5.69 5.70 2.41 8Jumla 6.15 3.56 9.71 3.74 2.88 6.62 4.60 4.07 8.67 4.49 6.21 11Kalikot 2.43 1.16 3.59 2.45 1.14 3.59 2.45 1.92 4.37 7.66 2.98 11Mugu 1.73 0.92 2.65 1.92 1.37 3.29 2.38 1.27 3.65 3.18 1.78 5Mid Western Mountain 15.62 8.58 24.20 15.55 12.33 27.88 18.46 11.40 29.86 26.05 18.77 45Bajhang 2.33 3.36 5.69 2.32 2.25 4.57 5.82 3.50 9.33 4.49 5.03 10Bajura 2.82 1.15 3.96 2.91 1.17 4.08 4.90 2.48 7.38 4.60 3.01 8Darchula 0.56 5.87 6.43 2.71 6.02 8.72 2.59 6.81 9.40 4.60 11.24 16Far Western Mountain 5.71 10.38 16.09 7.93 9.44 17.38 13.32 12.79 26.11 13.69 19.28 33Source: Revenue Annual <strong>Report</strong> MOF

Annex 27: Total Public Expenditure 2005‐2009, National, Mountain Regions and DistrictsIn RupeesArea (2004/2005) (2005/2006) (2006/2007) (2007/08) (2008/09)Nepal 102560 110847 133605 161350 218389Mountain 5811 6134 7237 8701 12978Mountain Regions as % of Nepal 5.67 5.53 5.42 5.39 5.94Mountain Regions and DistrictsSankhuwasabha 376 384 474 557 826Solukhumbu 346 359 468 626 850Taplejung 329 393 486 560 899Eastern Mountain 1051 1135 1428 1743 2575Dolakha 494 568 673 837 1258Rasuwa 233 290 296 371 497Sindhupalchok 1051 586 734 888 1395Central Mountain 1778 1444 1703 2096 3150Manang 131 133 171 204 275Mustang 242 249 303 323 400Western Mountain 373 382 474 527 675Dolpa 311 370 402 461 664Humla 263 366 430 480 705Jumla 362 492 555 642 1076Kalikot 287 377 385 485 872Mugu 246 332 403 437 618Mid Western Mountain 1470 1937 2175 2506 3935Bajhang 405 454 547 725 1068Bajura 255 332 402 457 714Darchula 479 449 507 648 862Far Western Mountain 1139 1236 1456 1830 2645Source: FCGO

Annex 28: Public Development Expenditure 2005‐‐2009, National, Mountain Regions and DistrictsIn RupeesArea (2004/2005) (2005/2006) (2006/2007) (2007/08) (2008/09)Nepal 36728 40038 50471 68768 98329Mountain 2413 2268 3025 3798 6802Mountain Regions as % of Nepal 6.57 5.67 5.99 5.52 6.92Mountain Regions and DistrictsSankhuwasabha 136 118 186 207 367Solukhumbu 113 107 180 279 422Taplejung 102 129 194 215 447Eastern Mountain 351 354 560 700 1236Dolakha 207 248 334 427 691Rasuwa 72 96 102 142 221Sindhupalchok 714 210 295 348 660Central Mountain 992 554 731 917 1572Manang 57 52 78 95 143Mustang 73 66 97 106 148Western Mountain 130 118 174 201 291Dolpa 97 148 183 222 384Humla 106 194 243 270 445Jumla 111 171 198 240 579Kalikot 83 112 125 193 543Mugu 87 145 202 221 364Mid Western Mountain 484 771 951 1145 2315Bajhang 139 163 242 353 588Bajura 94 127 159 181 367Darchula 221 180 209 301 431Far Western Mountain 455 470 609 834 1386Source: FCGO

Annex 29: Public Capital Expenditure 2005‐2009, National, Mountain Regions and DistrictsIn RupeesArea (2004/2005) (2005/2006) (2006/2007) (2007/08) (2008/09)Nepal 27341 29607 39730 53516 71901Mountain 1498 1190 1744 2149 4224Mountain Regions as % of Nepal 5.48 4.02 4.39 4.02 5.88Mountain Regions and DistrictsSankhuwasabha 68 47 96 101 215Solukhumbu 46 39 97 179 268Taplejung 39 58 108 113 273Eastern Mountain 152 144 301 394 756Dolakha 130 157 227 294 480Rasuwa 28 48 46 72 120Sindhupalchok 617 102 159 188 395Central Mountain 776 307 431 554 995Manang 30 24 47 56 90Mustang 35 25 55 56 79Western Mountain 65 49 101 112 169Dolpa 62 91 117 132 264Humla 55 132 172 169 302Jumla 57 99 115 107 373Kalikot 30 44 48 71 311Mugu 44 85 134 124 226Mid Western Mountain 247 450 586 603 1476Bajhang 66 79 130 213 365Bajura 42 64 75 69 196Darchula 151 99 120 204 267Far Western Mountain 258 241 325 487 828Source: FCGO

Annex 30: Public District Level Development Expenditure 2005‐2009,National, Mountain Regions and DistrictsIn Million RupeesArea (2004/2005) (2005/2006) (2006/2007) (2007/08) (2008/09)Nepal 11394 12654 17577 21198 34649Mountain 1500 1915 2577 3136 5180Mountain Regions as % of Nepal 13.16 15.13 14.66 14.80 14.95Mountain Regions and DistrictsSankhuwasabha 122 110 167 182 305Solukhumbu 87 83 153 245 359Taplejung 94 121 175 189 379Eastern Mountain 303 314 496 616 1043Dolakha 125 152 217 267 415Rasuwa 54 80 81 114 153Sindhupalchok 167 190 260 295 524Central Mountain 346 422 558 676 1091Manang 54 49 74 88 131Mustang 62 54 87 89 126Western Mountain 115 103 161 177 257Dolpa 79 133 168 198 314Humla 98 177 223 245 367Jumla 94 142 160 200 383Kalikot 74 106 118 175 394Mugu 76 128 184 195 308Mid Western Mountain 420 687 852 1013 1766Bajhang 114 140 206 292 441Bajura 85 115 138 153 273Darchula 117 135 166 210 308Far Western Mountain 316 390 510 654 1022Source: FCGO1499629182 1915163634 2576808924 3136349329 5179596908

Annex 31: Public Expenditure in Devolved Sectors 2005‐2009,National, Mountain Regions and DistrictsIn RupeesArea (2004/2005) (2005/2006) (2006/2007) (2007/08) (2008/09)Nepal 3787 4239 5288 6937 9197Mountain 389 555 729 979 1270Mountain Regions as % of Nepal 10.26 13.10 13.79 14.11 13.81Mountain Regions and DistrictsSankhuwasabha 31 39 60 73 96Solukhumbu 28 28 44 57 98Taplejung 32 45 55 66 102Eastern Mountain 91 112 159 197 296Dolakha 41 46 61 84 129Rasuwa 19 25 26 35 37Sindhupalchok 51 56 80 118 137Central Mountain 111 127 167 237 303Manang 15 15 24 28 40Mustang 15 17 25 29 38Western Mountain 30 32 49 57 78Dolpa 14 30 36 41 59Humla 10 35 55 52 66Jumla 15 34 35 68 67Kalikot 13 40 47 74 91Mugu 7 24 31 51 63Mid Western Mountain 58 162 204 286 346Bajhang 44 49 53 79 98Bajura 24 30 47 59 80Darchula 31 43 49 65 69Far Western Mountain 99 122 150 203 246Source: FCGO

Annex 32: Sectoral Public Expenditure 2004/05 and 2007/08In million RupeesArea 2061/62 2064/65AgricultureIrrigationForestryEducationHealthTotal AgricultureIrrigationForestryEducationLandReform &SurveyRoadTransportationDrinkingWaterLocalDevelopmentAllOtherSectorsNepal 2192 2332 668 1993 4620 17166 4927 1982 5034 61647 1025603507 4089 876 2160 7661 26914 102654692 9066 92120 161350Mountain 217 47 36 330 189 2141 327 115 751 1658 5811 323 71 46 372 209 2837 606 290 1413 2534 8701Mountain9.90 2.03 5.39 16.54 4.09 12.47 6.64 5.78 14.93 2.69 5.67 9.20 1.74 5.29 17.23 2.73 10.54 5.91 6.19 15.59 2.75 5.39Regions as %of NepalAppendix7: Mountain Regions and DistrictsSankhuwasab 9.90 2.68 3.67 12.75 0.04 141.31 21.04 5.22 71.28 108.2 376.10 13.82 4.50 4.82 18.55 0.66 229.86 41.19 15.10 70.34 157.9 556.75ha31Solukhumbu 14.58 5.37 2.10 47.03 0.14 112.65 15.87 9.13 40.73 97.99 345.59 24.43 5.99 2.91 51.45 0.54 195.96 36.37 15.45 134.82 158.0 625.963Taplejung 8.80 2.34 2.45 6.10 0.20 131.64 25.40 8.22 42.66 101.3 329.19 14.98 2.23 3.48 7.17 0.23 228.53 46.70 17.18 78.66 161.2 560.3780EasternMountain33.28 10.39 8.21 65.88 0.38 385.60 62.31 22.57 154.67 307.601050.8853.23 12.72 11.20 77.17 1.43 654.36 124.2647.73 283.82 477.141743.07Dolakha 14.84 4.65 2.49 13.26 75.63 139.44 27.10 8.80 53.61 154.0 493.83 29.68 16.79 3.27 16.43 119.93 266.88 46.86 22.52 102.67 211.5 836.6026Rasuwa 8.67 1.21 1.69 83.34 2.37 48.96 12.86 5.89 24.56 43.69 233.24 15.41 1.38 2.19 100.62 0.00 83.10 29.31 11.99 44.99 82.15 371.13Sindhupalcho 12.93 1.21 3.63 13.61 7.70 708.34 37.09 12.68 75.10 178.4 1050.7 24.43 1.49 3.99 16.38 10.30 323.82 56.95 25.48 128.65 296.4 887.95k6 67CentralMountain36.44 7.07 7.80 110.21 85.70 896.74 77.05 27.37 153.27 376.171777.8469.53 19.66 9.45 133.42 130.24 673.79 133.1259.99 276.31 590.182095.68Manang 9.32 1.55 1.63 5.02 0.50 27.17 11.33 5.17 31.57 37.55 130.80 11.58 1.79 2.69 6.04 1.28 42.84 20.13 9.16 45.52 62.59 203.63Mustang 14.64 1.95 1.94 1.63 0.38 45.24 14.12 5.47 35.87 120.9 242.21 17.34 2.47 2.49 3.28 1.70 64.36 20.73 10.73 38.55 161.8 323.4460Western23.96 3.50 3.57 6.65 0.88 72.41 25.45 10.64 67.45 158.5 373.01 28.92 4.27 5.17 9.32 2.98 107.20 40.86 19.89 84.07 224.3 527.07Mountain18Dolpa 14.09 1.47 1.80 58.62 3.40 63.72 15.46 6.03 41.10 105.7 311.42 20.99 1.65 2.11 49.65 1.67 100.85 29.43 12.78 125.85 116.4 461.4437Humla 19.10 1.62 2.10 4.48 1.33 63.57 13.45 5.78 57.05 94.85 263.35 25.31 3.29 2.55 5.44 1.49 121.82 28.12 27.92 133.64 130.6 480.236Jumla 14.60 7.22 2.19 13.82 0.02 85.19 24.53 5.25 40.75 168.7 362.34 26.89 8.82 2.59 16.92 0.70 155.88 56.14 8.99 67.86 297.0 641.8273Kalikot 12.63 1.27 1.52 4.22 0.40 87.37 16.45 5.37 35.82 121.7 286.82 16.51 2.62 1.95 5.23 0.00 179.60 34.29 16.92 61.13 167.0 485.3277Mugu 15.07 1.01 1.81 45.47 0.42 56.97 15.95 5.92 45.91 57.36 245.87 22.04 2.28 2.32 47.30 1.30 119.86 33.01 15.67 98.01 95.38 437.16Mid WesternMountain75.49 12.59 9.42 126.62 5.57 356.82 85.84 28.35 220.63 548.481469.80111.73 18.66 11.52 124.54 5.15 678.01 180.9882.27 486.49 806.612505.96Bajhang 15.41 4.82 1.95 5.75 0.59 188.72 28.67 8.47 51.25 99.74 405.38 22.55 6.64 2.74 6.62 1.50 317.64 49.11 31.92 126.42 159.3 724.517Bajura 12.06 2.30 2.17 6.68 1.23 102.44 18.35 7.09 46.59 56.26 255.16 20.85 2.04 2.70 9.23 0.50 178.29 32.05 14.78 67.35 129.2 457.068Darchula 20.46 6.56 2.86 7.92 94.72 137.87 29.64 10.11 57.62 110.8 478.62 15.82 7.12 3.52 11.90 66.98 227.52 45.85 33.83 88.76 146.7 648.0565Far WesternMountain47.93 13.68 6.98 20.35 96.53 429.04 76.66 25.67 155.46 266.861139.1659.22 15.80 8.96 27.74 68.98 723.46 127.0280.53 282.52 435.401829.62LandReform &SurveyRoadTransportationHealthDrinkingWaterLocalDevelopmentAllOtherSectorsTotalSource: FCGO

Annex 33: Sectoral Public Development Expenditure 2004/05 and 2007/08In Mmillion Rupees2061/62 2064/65LandReform &RoadTransportatDrinkingLocalDevelopme All OtherLand ReformRoadTransportatDrinkingLocalDevelopmen All OtherArea Agriculture Irrigation Survey Forestry ion Education Health Water nt Sectors Total Agriculture Irrigation & Survey Forestry ion Education Health Water tSectors TotalNepal 2050 2118 300 782 4395 5373 2554 1968 5010 12179 36728 3294 3802 394 695 7374 8698 6893 4672 9049 23896 68768Mountain 215 41 1 76 186 873 57 115 750 99 2413 315 63 1 97 204 972 240 290 1413 201 3798MountainRegions as % ofNepal 10.49 1.94 0.28 9.77 4.23 16.25 2.23 5.82 14.98 0.81 6.57 9.57 1.67 0.34 13.90 2.76 11.18 3.49 6.22 15.62 0.84 5.52Mountain Regions and DistrictsSankhuwasabha 9.90 2.68 0.15 12.54 0.04 24.27 2.75 5.22 71.18 7.24 135.96 13.62 4.50 0.10 17.91 0.66 59.14 15.38 15.10 70.34 10.22 206.97Solukhumbu 14.58 5.37 0.10 6.22 0.14 26.46 2.04 9.13 40.71 8.15 112.89 24.28 5.99 0.04 7.30 0.54 67.36 16.23 15.45 134.82 6.88 278.88Taplejung 8.80 2.34 0.05 2.53 0.20 27.13 3.13 8.22 42.64 7.44 102.49 14.84 2.23 0.06 3.72 0.23 63.55 19.32 17.18 78.66 14.79 214.58EasternMountain 33.28 10.39 0.30 21.29 0.38 77.86 7.92 22.57 154.53 22.83 351.34 52.74 12.72 0.19 28.93 1.43 190.05 50.92 47.73 283.82 31.90 700.44Dolakha 14.11 3.44 0.00 11.76 72.47 32.34 5.30 8.80 53.51 4.79 206.50 26.94 15.01 0.07 15.63 114.94 95.25 18.98 22.52 102.67 14.99 427.00Rasuwa 8.67 1.21 0.13 8.47 2.37 11.85 2.76 5.89 24.49 6.50 72.35 15.26 1.38 0.57 11.38 0.00 30.27 13.76 11.99 44.99 12.89 142.47Sindhupalchok 12.93 1.21 0.00 13.61 7.70 579.08 6.76 12.68 75.02 4.60 713.59 24.18 1.49 0.00 7.46 10.30 111.76 19.61 25.48 128.65 18.57 347.51CentralMountain 35.71 5.86 0.13 33.84 82.54 623.26 14.82 27.37 153.02 15.89 992.44 66.38 17.87 0.63 34.47 125.24 237.28 52.35 59.99 276.31 46.46 916.98Manang 9.32 1.55 0.00 0.36 0.50 3.06 2.36 5.17 31.56 3.15 57.03 11.47 1.79 0.04 0.60 1.28 11.53 7.28 9.16 45.52 6.26 94.94Mustang 14.64 1.95 0.06 1.63 0.38 6.94 3.42 5.47 35.86 2.58 72.94 17.24 2.47 0.04 3.28 1.70 14.48 7.86 10.73 38.55 9.61 105.96WesternMountain 23.96 3.50 0.06 1.99 0.88 10.00 5.78 10.64 67.42 5.74 129.98 28.70 4.27 0.07 3.89 2.98 26.01 15.14 19.89 84.07 15.87 200.90Dolpa 14.09 1.47 0.00 6.68 3.40 9.83 3.35 6.03 41.09 11.30 97.25 20.88 1.65 0.07 8.35 1.67 29.82 11.31 12.78 125.85 9.41 221.77Humla 19.10 1.62 0.00 0.88 1.33 15.43 1.33 5.78 57.04 3.80 106.31 25.17 3.29 0.09 1.12 1.49 56.32 11.58 27.92 133.64 8.94 269.57Jumla 13.23 4.91 0.15 3.35 0.02 24.15 5.90 5.25 40.27 13.68 110.90 24.53 5.85 0.12 5.78 0.70 69.17 31.46 8.99 67.86 25.95 240.40Kalikot 12.63 1.27 0.00 1.01 0.40 14.11 4.72 5.37 35.80 7.24 82.56 16.38 2.62 0.06 1.22 0.00 67.83 13.25 16.92 61.13 13.40 192.81Mugu 15.07 1.01 0.00 4.18 0.42 6.67 4.49 5.92 45.89 3.51 87.16 21.95 2.28 0.07 6.88 1.30 51.81 12.51 15.67 98.01 10.22 220.69Mid WesternMountain 74.12 10.27 0.15 16.10 5.57 70.20 19.79 28.35 220.09 39.53 484.18 108.91 15.69 0.40 23.36 5.15 274.95 80.12 82.27 486.49 67.92 1145.24Bajhang 15.41 3.72 0.12 0.48 0.59 49.90 2.84 8.47 51.24 6.49 139.26 22.36 5.19 0.00 0.94 1.50 124.60 16.99 31.92 126.42 22.95 352.87Bajura 12.06 2.30 0.00 0.67 1.23 18.08 3.19 7.09 46.58 3.21 94.41 20.65 2.04 0.00 0.74 0.50 55.11 11.66 14.78 67.35 7.72 180.54Darchula 20.46 5.11 0.07 1.98 94.72 23.70 2.53 10.11 57.60 5.14 221.41 15.62 5.60 0.04 4.30 66.98 64.22 13.12 33.83 88.76 8.60 301.07Far WesternMountain 47.93 11.13 0.19 3.13 96.53 91.68 8.56 25.67 155.41 14.84 455.08 58.63 12.83 0.04 5.99 68.98 243.93 41.77 80.53 282.52 39.26 834.48

Annex 34: Sectoral Public Capital Expenditure 2004/05 and 2007/08 (In Million Rupees)Area 2061/62 2064/65Agriculture Irrigation LandReform &SurveyForestryRoadTransportationEducation Health DrinkingWaterLocalDevelopmentAll OtherSectorsTotal Agriculture Irrigation LandReform &SurveyForestryRoadTransportationEducation Health DrinkingWaterLocalDevelopmentAll OtherSectorsTotalNepal 99.19 1921.4 90.21 410.68 4326.55 1260.83 435.50 1578.25 3645.49 ##### 27340.72 453.10 ##### 122.18 ### #### #### #### #### #### 25107.95 53516.10Mountain 1.51 29.68 0.52 21.89 183.07 582.95 11.85 71.68 553.85 40.91 1497.92 17.90 47.50 1.44 26.64 201.80 365.27 74.43 240.06 1064.41 110.03 2149.49Mountain Regionsas % of Nepal1.53 1.54 0.58 5.33 4.23 46.24 2.72 4.54 15.19 0.30 5.48 3.95 1.32 1.18 10.63 2.76 12.33 3.01 5.70 15.17 0.44 4.02Mountain Regions and DistrictsSankhuwasabha 0.10 1.26 0.08 1.67 0.04 1.31 0.00 3.22 59.44 0.45 67.56 0.45 1.58 0.13 1.84 0.66 21.43 3.86 12.41 52.97 5.94 101.25Solukhumbu 0.19 1.49 0.01 1.90 0.14 1.08 0.00 5.59 30.60 5.10 46.11 3.28 2.01 0.14 0.83 0.54 31.42 4.91 12.98 117.63 5.44 179.18Taplejung 0.04 1.39 0.05 1.04 0.20 0.08 0.00 5.90 28.74 1.20 38.63 0.94 1.63 0.11 2.09 0.23 20.84 3.48 15.51 58.92 9.65 113.39Eastern Mountain 0.34 4.14 0.13 4.61 0.38 2.47 0.00 14.70 118.79 6.74 152.30 4.66 5.21 0.38 4.76 1.43 73.69 12.24 40.90 229.51 21.03 393.82Dolakha 0.09 3.39 0.05 3.45 72.47 2.78 1.07 5.42 41.30 0.37 130.38 2.49 14.86 0.03 3.60 114.94 44.53 4.69 19.57 79.68 9.58 293.96Rasuwa 0.09 1.19 0.05 1.67 2.37 0.37 0.44 4.38 17.05 0.26 27.87 0.78 1.31 0.53 2.35 0.00 11.59 3.31 10.13 33.11 8.47 71.57Sindhupalchok 0.13 1.19 0.06 3.95 7.70 538.04 2.60 8.47 54.33 0.84 617.31 2.63 1.42 0.00 2.91 10.30 32.86 5.90 21.50 97.30 13.21 188.03Central Mountain 0.31 5.78 0.16 9.07 82.54 541.18 4.11 18.26 112.68 1.47 775.56 5.90 17.59 0.56 8.85 125.24 88.98 13.90 51.21 210.08 31.25 553.56Manang 0.10 1.27 0.01 0.16 0.50 0.08 0.50 3.06 23.43 0.48 29.58 0.25 1.49 0.13 0.40 1.28 6.60 2.18 6.73 34.76 2.44 56.25Mustang 0.10 1.20 0.06 0.59 0.38 0.08 1.69 3.45 27.46 0.34 35.35 0.59 1.79 0.02 1.53 1.70 6.07 2.57 8.28 28.04 5.37 55.96WesternMountain0.20 2.47 0.07 0.74 0.88 0.16 2.19 6.51 50.89 0.82 64.93 0.84 3.28 0.15 1.93 2.98 12.67 4.75 15.01 62.81 7.81 112.22Dolpa 0.18 1.45 0.01 1.78 3.40 3.28 0.00 3.81 30.20 17.63 61.73 1.59 1.15 0.04 1.53 1.67 7.81 2.28 9.85 104.19 1.58 131.68Humla 0.07 1.60 0.01 0.67 1.33 3.94 0.03 3.25 43.80 0.22 54.93 0.73 1.86 0.07 0.77 1.49 29.45 3.28 23.60 104.74 3.04 169.02Jumla 0.13 4.85 0.01 1.92 0.02 7.98 3.29 3.27 27.06 8.72 57.24 1.69 5.61 0.06 3.05 0.70 10.78 21.35 6.57 38.90 18.48 107.19Kalikot 0.06 1.26 0.01 0.77 0.40 0.08 0.00 3.18 23.67 0.22 29.66 0.70 1.80 0.04 0.86 0.00 12.45 2.58 13.70 36.36 2.40 70.89Mugu 0.06 0.99 0.01 0.86 0.42 0.08 1.33 4.34 34.94 0.47 43.51 0.73 1.85 0.04 1.23 1.30 21.44 2.61 13.06 78.44 3.80 124.50Mid Western 0.50 10.16 0.04 5.99 5.57 15.36 4.66 17.85 159.67 27.26 247.06 5.44 12.27 0.24 7.44 5.15 81.94 32.10 66.77 362.63 29.29 603.28MountainBajhang 0.07 1.78 0.06 0.32 0.59 23.56 0.20 4.26 34.76 0.29 65.88 0.20 3.20 0.00 0.68 1.50 66.49 4.70 26.67 93.96 15.80 213.19Bajura 0.07 1.14 0.01 0.40 1.23 0.08 0.70 3.70 34.14 0.17 41.64 0.18 1.21 0.00 0.43 0.50 13.02 2.69 10.40 38.96 1.59 68.99Darchula 0.05 4.22 0.06 0.75 91.87 0.15 0.00 6.38 42.93 4.14 150.55 0.68 4.75 0.12 2.55 65.00 28.48 4.05 29.11 66.47 3.25 204.44Far WesternMountainSource: FCGO0.18 7.14 0.13 1.47 93.68 23.78 0.90 14.35 111.83 4.61 258.07 1.06 9.16 0.12 3.66 67.00 107.99 11.43 66.18 199.38 20.64 486.62

Annex 35 : Sectoral District Level Public Development Expenditure 2004/05 and 2007/08In Million Rupees2061/62 2064/65AllRoadDrinking Local OtherRoadTransportation Education Health Water Development Sectors Total Agriculture Forestry Transportation Education HealthDrinkingWaterLocalDevelopmentAreaAgriculture ForestryTotalNepal 903 413 200 3460 337 750 4808 522 11394 1064 348 305 6287 2159 1793 8777 464 21198Mountain 181 47 20 310 46 111 748 37 1500 229 52 32 862 230 250 1413 68 3136MountainRegions as %of Nepal 19.99 11.42 10.02 8.96 13.69 14.75 15.55 7.16 13.16 21.55 15.05 10.62 13.71 10.64 13.93 16.10 14.58 14.80Mountain Regions and DistrictsSankhuwasabha 9.90 7.83 0.04 22.81 2.69 5.01 71.13 2.24 121.66 12.02 8.94 0.66 55.90 15.07 14.85 70.34 4.15 181.93Solukhumbu 9.22 0.72 0.14 22.79 2.04 9.13 40.51 2.22 86.77 15.31 0.86 0.54 58.32 15.84 15.38 134.82 3.75 244.83Taplejung 8.80 2.53 0.20 27.07 3.11 7.94 42.64 1.96 94.25 12.40 3.67 0.23 56.13 18.09 16.83 78.66 3.42 189.44EasternMountain 27.92 11.08 0.38 72.67 7.84 22.08 154.28 6.43 302.69 39.74 13.48 1.43 170.35 49.00 47.06 283.82 11.32 616.20Dolakha 9.64 10.84 4.82 31.56 4.19 7.73 53.11 2.96 124.84 12.84 13.32 8.24 84.35 18.64 21.62 102.67 5.06 266.74Rasuwa 8.20 1.98 0.60 8.87 2.43 5.43 24.29 2.10 53.89 11.60 3.77 0.00 24.91 13.21 11.99 44.99 3.78 114.25Sindhupalchok 10.35 12.65 5.87 43.17 5.33 12.68 74.32 2.63 167.00 12.90 4.09 10.30 92.63 19.17 22.80 128.65 4.89 295.44CentralMountain 28.18 25.46 11.29 83.60 11.94 25.85 151.72 7.69 345.73 37.35 21.18 18.54 201.90 51.01 56.41 276.31 13.73 676.43Manang 9.32 0.36 0.50 3.06 1.83 4.87 31.36 2.37 53.67 11.03 0.60 1.28 9.92 6.92 8.96 45.52 3.53 87.76Mustang 9.45 1.63 0.38 5.75 1.72 5.17 35.36 2.08 61.54 11.00 3.28 1.70 13.49 7.58 10.10 38.55 3.28 88.98WesternMountain 18.77 1.99 0.88 8.81 3.55 10.04 66.72 4.45 115.22 22.03 3.89 2.98 23.41 14.49 19.06 84.07 6.81 176.74Dolpa 12.48 1.26 3.40 9.74 2.36 6.03 40.89 2.52 78.68 17.13 0.71 1.67 26.80 11.00 9.78 125.85 4.77 197.70Humla 14.75 0.43 1.33 15.38 1.24 5.78 56.54 2.30 97.76 17.55 0.87 1.49 53.56 11.29 22.86 133.64 4.03 245.29Jumla 12.89 2.69 0.02 23.86 5.72 5.25 40.27 2.95 93.65 21.34 4.86 0.70 64.96 27.04 6.35 67.86 6.58 199.69Kalikot 12.63 0.56 0.40 14.05 2.73 5.37 35.80 2.06 73.60 16.38 0.97 0.00 63.92 12.93 14.65 61.13 4.86 174.84Mugu 12.12 0.56 0.42 6.67 3.20 5.07 45.89 1.88 75.81 16.48 0.71 1.30 49.04 12.19 13.13 98.01 4.21 195.08Mid WesternMountain 64.87 5.50 5.57 69.71 15.25 27.50 219.39 11.71 419.51 88.88 8.12 5.15 258.27 74.46 66.76 486.49 24.46 1012.60Bajhang 11.04 0.48 0.59 37.92 2.62 8.27 51.24 2.31 114.46 13.88 0.94 1.50 108.83 16.62 19.97 126.42 3.58 291.73Bajura 9.34 0.67 1.23 15.77 2.45 7.09 46.58 2.26 85.39 14.35 0.74 0.50 43.97 11.43 10.89 67.35 3.57 152.80Darchula 20.46 1.98 0.12 21.69 2.52 9.71 57.60 2.56 116.64 13.06 4.08 2.33 55.00 12.76 29.66 88.76 4.20 209.85Far WesternMountain 40.84 3.13 1.94 75.38 7.59 25.06 155.41 7.13 316.49 41.29 5.76 4.33 207.80 40.81 60.52 282.52 11.35 654.38AllOtherSectorsSource: FCGO

Annex 36: Public Expenditure of MLD 2004/05‐2008/09, National, Mountain Regions and DistrictsIn RupeesArea (2004/2005) (2005/2006) (2006/2007) (2007/08) (2008/09) Est.Nepal 6455 7048 10615 10972 23664Mountain 865 1034 1513 1622 3585Mountain Regions as % of Nepal 13.39 14.68 14.25 14.79 15.15Mountain Regions and DistrictsSankhuwasabha 80.17 61.37 91.18 85.07 203.82Solukhumbu 47.28 42.80 95.10 147.51 242.54Taplejung 52.39 63.84 101.68 93.31 257.85Eastern Mountain 179.85 168.01 287.95 325.90 704.21Dolakha 71.70 87.68 127.56 130.99 280.12Rasuwa 28.55 45.52 42.06 51.66 94.01Sindhupalchok 99.74 110.91 163.79 162.24 397.69Central Mountain 199.99 244.11 333.41 344.90 771.83Manang 33.24 24.85 45.88 51.39 82.42Mustang 38.34 29.76 49.50 45.41 65.60Western Mountain 71.57 54.61 95.37 96.80 148.02Dolpa 47.50 90.63 126.78 134.30 239.34Humla 62.20 105.62 162.41 144.80 280.05Jumla 42.15 52.32 71.37 72.24 212.76Kalikot 39.96 46.00 44.99 65.15 274.69Mugu 48.15 60.12 111.43 108.54 223.50Mid Western Mountain 239.96 354.68 516.98 525.03 1230.34Bajhang 55.84 72.11 106.79 145.21 338.49Bajura 53.86 74.99 83.00 78.53 186.22Darchula 63.52 65.94 89.00 105.91 206.21Far Western Mountain 173.22 213.03 278.79 329.65 730.91Source: FCGO

Annex 37: Prioritized Development Expenditure 2004/05 and 2007/08In Rupees Million2004/05 2007/08AreaP1 P2 P3 Total P1 P2 P3 TotalNepal 27853 8014 861 36728 50444 17931 392 68768Mountain 1644 762 7 2413 3473 319 5 3798Mountain Regions as % of Nepal 5.90 9.51 0.76 6.57 6.89 1.78 1.32 5.52Mountain Regions and DistrictsSankhuwasabha 117.78 18.03 0.15 135.96 185.97 19.43 1.57 206.97Solukhumbu 101.05 11.84 0.00 112.89 268.15 10.73 0.01 278.88Taplejung 90.62 11.87 0.00 102.49 200.07 14.35 0.16 214.58Eastern Mountain 309.45 41.74 0.15 351.34 654.19 44.51 1.74 700.44Dolakha 154.75 50.22 1.53 206.50 330.77 95.90 0.34 427.00Rasuwa 59.66 10.91 1.77 72.35 131.55 10.62 0.30 142.47Sindhupalchok 162.27 549.49 1.83 713.59 313.89 33.57 0.05 347.51Central Mountain 376.69 610.62 5.13 992.44 776.22 140.09 0.68 916.98Manang 47.60 9.34 0.10 57.03 80.71 14.17 0.05 94.94Mustang 59.55 13.26 0.14 72.94 93.11 11.85 1.00 105.96Western Mountain 107.14 22.60 0.24 129.98 173.82 26.03 1.05 200.90Dolpa 85.47 11.78 0.00 97.25 207.94 13.63 0.19 221.77Humla 96.71 9.49 0.11 106.31 256.51 12.77 0.30 269.57Jumla 103.33 7.09 0.48 110.90 235.89 4.50 0.01 240.40Kalikot 73.85 8.71 0.00 82.56 189.41 3.15 0.25 192.81Mugu 78.24 8.69 0.22 87.16 211.25 9.22 0.22 220.69Mid Western Mountain 437.61 45.76 0.81 484.18 1101.00 43.27 0.97 1145.24Bajhang 134.98 4.28 0.00 139.26 329.13 23.13 0.60 352.87Bajura 83.74 10.62 0.05 94.41 166.08 14.46 0.00 180.54Darchula 194.68 26.53 0.20 221.41 272.94 27.97 0.15 301.07Far Western Mountain 413.39 41.44 0.25 455.08 768.15 65.57 0.75 834.48Source: FCGO

Annex 38: Economic Head wise Public Expenditure 2007/08, National, Mountain Regions and DistrictsIn RupeesArea Recurrent 1ConsumptionExpenses1.01Salary1.02AllowancesOtherConsumptionExpenditure2 OfficeOperationandServicesExpenses3 GrantsandSubsidies(CurrentTransfer)4 ServiceandProductionExpenses10PrincipalPaymentsInterestPayment+ RefundCapital5 CapitalTransfer6 CapitalFormation7 Investment 8 CapitalGrantsTotalNepal 91447 42381 26020 1837 14523 5774 28626 7643 16387 7022 53516 1077 19736 15314 17389 161350Mountain 6552 3033 1962 314 756 287 2762 469 0 0 2149 4 801 0 1345 8701Mountain Regions as % of Nepal 7.16 7.16 7.54 17.11 5.21 4.97 9.65 6.14 0.00 0.00 4.02 0.34 4.06 0.00 7.73 5.39Mountain Regions and DistrictsSankhuwasabha 455.496 192.354 133.414 13.887 45.054 18.190 209.776 35.176 0.000 0.000 101.250 0.150 66.395 0.000 34.705 556.746Solukhumbu 446.777 214.218 125.852 14.235 74.130 20.682 178.361 33.515 0.000 0.000 179.181 3.259 24.364 0.000 151.558 625.958Taplejung 446.979 175.809 121.743 12.571 41.495 13.929 224.966 32.275 0.000 0.000 113.388 0.000 25.259 0.000 88.129 560.367Eastern Mountain 1349.251 582.380 381.009 40.693 160.678 52.801 613.103 100.967 0.000 0.000 393.819 3.409 116.018 0.000 274.392 1743.070Dolakha 542.636 235.640 181.363 10.495 43.781 18.441 250.078 38.477 0.000 0.000 293.962 0.276 153.363 0.000 140.323 836.598Rasuwa 299.566 182.080 135.141 9.632 37.306 13.558 76.116 27.813 0.000 0.000 71.569 0.000 21.694 0.000 49.875 371.135Sindhupalchok 699.921 308.676 232.183 13.649 62.844 25.789 323.160 42.156 0.000 0.141 188.028 0.000 37.873 0.000 150.155 887.949Central Mountain 1542.123 726.396 548.687 33.777 143.932 57.787 649.353 108.446 0.000 0.141 553.559 0.276 212.931 0.000 340.352 2095.682Manang 147.377 80.972 50.569 15.150 15.254 9.250 42.602 14.554 0.000 0.000 56.255 0.000 10.227 0.000 46.028 203.632Mustang 267.480 171.233 93.599 21.199 56.435 13.281 64.717 18.250 0.000 0.000 55.961 0.000 32.722 0.000 23.239 323.441Western Mountain 414.857 252.204 144.167 36.349 71.688 22.531 107.318 32.804 0.000 0.000 112.216 0.000 42.949 0.000 69.267 527.073Dolpa 329.753 176.238 97.861 24.437 53.940 15.553 108.608 29.354 0.000 0.000 131.683 0.000 24.975 0.000 106.708 461.436Humla 311.206 145.815 83.381 20.284 42.149 19.054 119.570 26.759 0.000 0.008 169.024 0.000 34.856 0.000 134.168 480.230Jumla 534.634 297.344 190.522 39.363 67.459 17.869 186.223 33.171 0.000 0.026 107.185 0.000 56.032 0.000 51.153 641.819Kalikot 414.431 173.091 85.733 22.069 65.289 13.293 200.140 27.908 0.000 0.000 70.887 0.000 20.893 0.000 49.994 485.318Mugu 312.664 143.879 84.192 19.670 40.016 15.956 129.274 23.545 0.000 0.010 124.497 0.000 15.731 0.000 108.766 437.161Mid Western Mountain 1902.688 936.367 541.689 125.824 268.854 81.724 743.815 140.737 0.000 0.044 603.276 0.000 152.487 0.000 450.789 2505.964Bajhang 511.321 188.796 123.354 26.526 38.915 30.285 254.553 37.688 0.000 0.000 213.187 0.000 107.222 0.000 105.965 724.508Bajura 388.070 156.740 91.382 23.317 42.042 23.619 183.452 24.259 0.000 0.000 68.987 0.000 19.643 0.000 49.344 457.057Darchula 443.611 190.110 131.860 27.979 30.271 18.236 210.796 24.469 0.000 0.000 204.443 0.000 149.832 0.000 54.612 648.054Far Western Mountain 1343.002 535.646 346.596 77.822 111.228 72.140 648.800 86.416 0.000 0.000 486.618 0.000 276.697 0.000 209.920 1829.620Source: FCGO

Annex 39: Table District‐wise Programs and Expenditures Carried out by Poverty Alleviation Fund (PAF)(Grants to Community Organizations) From Fiscal Year 2004/05 to 2008/09In Million RupeesArea Income Generation Program Small InfrastructureProgramInnovative ProgramNepal 2938 724 715 4376Mountain 809 253 129 1192Mountain Region as % of Nepal 27.6 35.0 18.1 27.2Mountain Regions and DistrictsRasuwa 66.86 1.07 22.51 90.44Central Mountain 66.86 1.07 22.51 90.44Dolpa 39.16 0.00 16.85 56.01Humla 72.42 3.50 39.35 115.27Jumla 128.63 18.78 31.15 178.55Kalikot 144.68 2.60 0.00 147.27Mugu 37.26 47.63 0.00 84.89Mid Western Mountain 422.15 72.50 87.35 582.00Bajhang 32.78 43.90 17.41 94.09Bajura 111.32 17.80 2.14 131.27Darchula 176.37 117.85 0.00 294.22Far Western Mountain 320.47 179.55 19.56 519.58Source of Basic Data: Economic Survey 2009/10Total

Annex 40: Total Revenue by Source of Sellected DDCs of Mountain Region (Real)In Thousand RupeesFiscal Year Districts RevenueSharingIncludingLandRevenue(x1)Local Tax(x2)ServiceChargesand Fees(x3)Sales(x4)TotalInternalRevenue(R2)InternalRevenueExcluding LandRevenue &RevenueSharing (R1)OtherIncomeGrantTotalRevenueIncludingGrantTotalExpenditureFrom R22063/64 Sankhuwasava 8491 468 64 847 9979 1489 109 17400 27379 13108472063/64 Sindhupalchok 20334 262 279 1722 22829 2494 232 26319 49148 40839672063/64 Manang 11246 0 43 28 11597 351 279 22529 34126 97089482063/64 Mustang 19466 2373 41 80 24522 5056 2562 22271 46793 34864252063/64 Dolpa 1976 0 80 31 2872 895 785 54410 57282 43381252063/64 Humla 4170 485 37 226 5336 1167 418 56633 61969 40259182063/64 Jumla 26 809 1001 279 2317 2291 201 15531 17848 54252592063/64 Bajhang 2870 76 187 7 6532 3662 3392 22978 29510 57778792063/64 Bajura 360 0 131 80 914 554 342 20314 21229 2313182063/64 Darchula 3458 0 291 115 3939 480 74 21206 25145 33848562064/65 Sankhuwasava 6520 5870 269 535 13273 6752 78 18703 31976 52354462064/65 Dolakha 20986 574 238 697 24372 3387 1878 29700 54072 26128842064/65 Sindhupalchok 18744 313 250 3128 23093 4350 659 26092 49186 37567782064/65 Manang 12638 0 48 40 13011 372 284 24146 37157 13010512064/65 Mustang 32072 1719 53 13 36173 4102 2317 15485 51658 36173462064/65 Dolpa 1789 793 126 29 7579 5790 4842 24097 31676 75792772064/65 Humla 5058 661 90 198 6701 1644 694 25374 32076 11881952064/65 Jumla 4429 693 1178 440 7670 3241 930 17518 25188 72189572064/65 Mugu 625 105 6692 341 7833 7208 70 20758 28591 7337452064/65 Bajhang 1421 72 217 34 5762 4340 4017 26089 31851 48190292064/65 Bajura 603 0 229 87 989 386 71 19990 20979 9882072064/65 Darchula 3247 0 702 348 4386 1139 89 23585 27971 45213492065/66 Sankhuwasava 7087 3242 227 469 11051 3965 27 49522 60573 37693082065/66 Dolakha 22902 6276 228 923 30694 7792 365 57994 88689 3069429

2065/66 Sindhupalchok 35396 660 286 4306 40957 5561 308 81504 122461 38639342065/66 Manang 17796 0 9 540 19729 1934 1384 15260 34989 21528682065/66 Mustang 34687 1483 58 228 38726 4040 2270 12072 50798 39296622065/66 Humla 4392 570 148 371 6081 1688 599 32432 38512 10529752065/66 Jumla 3855 625 235 665 5592 1737 212 22287 27878 57668372065/66 Mugu 742 103 7056 120 8083 7341 63 18057 26140 82024842065/66 Bajhang 2391 89 275 145 5863 3472 2963 38121 43984 37564202065/66 Bajura 491 0 280 316 1148 658 63 25431 26579 7187162065/66 Darchula 2535 0 731 241 3656 1121 149 24818 28474 46790722066/67 Sankhuwasava 14252 1710 602 1107 18010 3758 340 21999 40009 37223432066/67 Taplejung 2500 1550 85 60 5745 3245 1550 22334 28079 93374002066/67 Dolakha 29801 811 301 2184 33157 3356 60 22344 55501 19071712066/67 Sindhupalchok 2013 1896 390 6928 11499 9486 271 29653 41152 24824122066/67 Manang 6283 0 11 1005 7314 1031 15 17945 25259 76637822066/67 Jumla 2049 546 265 1275 4407 2358 272 24268 28675 11885002066/67 Kalikot 1480 15 205 400 2770 1290 670 23125 25895 18438582066/67 Bajhang 1730 25 222 100 2844 1114 767 25236 28080 57031862066/67 Darchula 2707 0 820 220 3804 1098 58 23820 27624 4932600

Annex 41:(revenue modeling) : Total Revenue by Source of Sample DDCs of Mountain Region (Nominal)Fiscal Year Districts R1 R2 Grant Total RevenueTotal DDCExpenditure (DDCexp) against R2Revenue (R2) ‐Expenditure GapR2/DDC exp ratio2062/63 Sankhuwasava 779 4580 12226 16807 1001945 ‐997365 99.52062/63 Sindhupalchok 3373 20723 19230 39953 1968967 ‐1948244 99.02062/63 Jumla 683 695 12197 12892 3406998 ‐3406303 99.92062/63 Darchula 289 1352 13921 15273 2504419 ‐2503067 99.92063/64 Sankhuwasava 1065 7145 12458 19603 938602 ‐931457 99.22063/64 Sindhupalchok 1786 16345 18845 35191 2924231 ‐2907886 99.02063/64 Jumla 1640 1658 11120 12779 3884633 ‐3882974 99.92063/64 Darchula 343 2820 15184 18004 2423649 ‐2420829 99.82064/65 Sankhuwasava 5106 10037 14144 24182 3959425 ‐3949387 99.72064/65 Sindhupalchok 3289 17464 19732 37197 2841149 ‐2823685 99.02064/65 Jumla 2451 5800 13248 19048 5459500 ‐5453700 99.82064/65 Darchula 861 3316 17836 21153 3419373 ‐3416056 99.92065/66 Sankhuwasava 3475 9687 43409 53096 3304039 ‐3294352 99.72065/66 Sindhupalchok 4874 35901 71443 107345 3386984 ‐3351083 99.02065/66 Jumla 1522 4901 19535 24437 5055000 ‐5050098 99.92065/66 Darchula 982 3204 21754 24959 4101505 ‐4098300 99.92066/67 Sankhuwasava 3758 18010 21999 40009 3722343 ‐3704333 99.52066/67 Sindhupalchok 9485 11499 29653 41152 2482412 ‐2470913 99.52066/67 Jumla 2357 4407 24268 28675 1188500 ‐1188093 99.92066/67 Darchula 1097 3804 23820 27624 4932600 ‐4928796 99.9Source: Annual <strong>Report</strong> of DDCs

Annex 42: for Revenue Projeciton : Total Revenue by Source of Sellected DDCs of Mountain Region (in Nominal Term)In Thousand RupeesFiscal YearFiscal YearLocal TaxLand RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land Revenue2062/63 2006 14.9 0.0 1130.6 76.6 36.9 77.8 1336.8 206.2 0.0 1.9 1061.32063/64 2007 54.5 15.0 2040.0 134.0 5.0 2428.8 4677.3 2622.3 0.0 6.5 2469.72064/65 2008 54.5 15.0 1060.0 164.0 26.0 3038.0 4357.5 3282.5 0.0 5.1 2450.52065/66 2009 77.9 0.0 2096.0 240.7 127.5 2597.4 5139.4 3043.4 0.0 8.0 2213.92066/67 2010 25.0 10.0 1720.0 222.0 100.0 766.7 2843.7 1113.7 0.0 6.5 2700.0GDP Deflator at Producers PriceBajhangRevenueSharing2005/06 127.13358742006/07 136.79976362007/08 144.48881482008/09R 167.47088442009/10P 191.0538541

Total Revenue by Source of Sellected DDCs of Mountain Region (in Real Term)(2066/67=100)In Thousand RupeesBajhangFiscal YearFiscal YearLocal TaxLand RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharing2062/63 2006 22.4 0.0 1699.0 115.1 55.5 116.9 2008.9 309.9 0.0 2.8 1594.92063/64 2007 76.1 20.9 2849.1 187.1 7.0 3392.0 6532.2 3662.2 0.0 9.1 3449.22064/65 2008 72.1 19.8 1401.6 216.9 34.4 4017.1 5761.8 4340.4 0.0 6.8 3240.22065/66 2009 88.8 0.0 2391.2 274.6 145.5 2963.1 5863.1 3472.0 0.0 9.1 2525.72066/67 2010 25.0 10.0 1720.0 222.0 100.0 766.7 2843.7 1113.7 0.0 6.5 2700.0Average 56.9 10.2 2012.2 203.1 68.5 2251.2 4602.0 2579.6 0.0 6.9 2702.0% Share in Total Internal Revenue 1.2 0.2 43.7 4.4 1.5 48.9 100.0 56.1 0.0 0.2 75.8Average Annual Change in % 46.5 #DIV/0! 14.9 21.5 149.2 679.7 40.9 253.1 #DIV/0! 51.5 23.8Avearge of (20063‐65)Total Revenue by Source of Sellected DDCs of Mountain Region (in Real Term)(2066/67=100)Annual Change in %BajhangFiscal YearFiscal Year2062/63 2006Local TaxLand RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharing2063/64 2007 239.9 #DIV/0! 67.7 62.6 ‐87.4 2800.8 225.2 1081.8 #DIV/0! 225.4 116.32064/65 2008 ‐5.3 ‐5.3 ‐50.8 15.9 392.3 18.4 ‐11.8 18.5 #DIV/0! ‐25.7 ‐6.12065/66 2009 23.2 ‐100.0 70.6 26.6 323.1 ‐26.2 1.8 ‐20.0 #DIV/0! 35.1 ‐22.12066/67 2010 ‐71.9 #DIV/0! ‐28.1 ‐19.2 ‐31.2 ‐74.1 ‐51.5 ‐67.9 #DIV/0! ‐28.8 6.9Average 46.5 #DIV/0! 14.9 21.5 149.2 679.7 40.9 253.1 #DIV/0! 51.5 23.8

Projected revenue for the next 5 years (Based on maximum of (2007‐9) average and 2010 revenue adjuted for 15 % growth (9% inflation and 6% real effort); no increase in case o land revenue due to ruraBajhangLocal TaxLand RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingAvaerage of Last three noramlyears (2006/7, 7/8 and 8/9) at2006/67price (A)79.0 13.6 2213.9 226.2 62.3 3457.4 6052.4 3824.9 0.0 8.3 3071.7Maximum of (A) and 2009/10revenue as expected base for 2011 79.0 13.6 2213.9 226.2 100.0 3457.4 6090.1 3862.6 0.0 8.3 3071.7Yr 2011 90.8 13.6 2546.0 260.1 115.0 3976.0 7003.6 4442.0 10.0 8.3 3532.5Yr 2012 104.5 13.6 2927.9 299.2 132.3 4572.4 8054.2 5108.3 11.5 8.3 4062.3Projection at 15 %growth 9 percentYr 2013 120.1 13.6 3367.1 344.0 152.1 5258.2 9262.3 5874.5 13.2 8.3 4671.7infaltion and 6 % Yr 2014 138.2 13.6 3872.2 395.6 174.9 6047.0 10651.7 6755.7 15.2 8.3 5372.4additional tax effortwith no increasae inland tax and Rs 10thopusand if thereis no tax on a subheadYr 2015 158.9 13.6 4453.0 455.0 201.1 6954.0 12249.4 7769.0 17.5 8.3 6178.3

DarchulaJumlaServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing205.9 74.6 8.7 1352.4 289.2 610.0 12.4 0.0 32.0 41.0 0.0 695.4 683.0208.4 82.3 53.2 2820.1 343.9 579.5 17.8 1.0 717.1 200.0 143.6 1658.9 1640.2530.6 263.1 67.4 3316.7 861.1 524.0 24.0 3325.2 891.2 332.5 703.5 5800.3 2451.1641.2 211.0 130.6 3204.7 982.7 548.1 67.9 3311.3 205.6 583.0 185.7 4901.6 1522.4820.0 220.0 57.5 3804.0 1097.5 546.2 62.4 1987.1 265.1 1274.8 271.7 4407.2 2357.8

DarchulaJumlaServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing309.4 112.1 13.1 2032.3 434.6 916.8 18.6 0.0 48.1 61.6 0.0 1045.1 1026.5291.1 114.9 74.3 3938.6 480.3 809.3 24.8 1.3 1001.5 279.3 200.6 2316.8 2290.6701.6 347.9 89.1 4385.6 1138.6 692.9 31.7 4396.8 1178.3 439.7 930.2 7669.6 3241.1731.5 240.7 148.9 3655.9 1121.1 625.3 77.5 3777.6 234.6 665.0 211.8 5591.8 1736.7820.0 220.0 57.5 3804.0 1097.5 546.2 62.4 1987.1 265.1 1274.8 271.7 4407.2 2357.8570.7 207.1 76.6 3563.3 854.4 718.1 43.0 2032.6 545.5 544.1 322.8 4206.1 2130.516.0 5.8 2.1 100.0 24.0 17.1 1.0 48.3 13.0 12.9 7.7 100.0 50.737.9 41.5 123.5 23.1 36.0 ‐12.1 46.5 #DIV/0! 483.3 138.4 #DIV/0! 76.1 38.5DarchulaJumlaServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing‐5.9 2.5 468.5 93.8 10.5 ‐11.7 33.2 #DIV/0! 1982.5 353.3 #DIV/0! 121.7 123.2141.0 202.7 19.9 11.3 137.0 ‐14.4 27.9 328867.2 17.7 57.4 363.8 231.0 41.54.3 ‐30.8 67.1 ‐16.6 ‐1.5 ‐9.8 144.2 ‐14.1 ‐80.1 51.3 ‐77.2 ‐27.1 ‐46.412.1 ‐8.6 ‐61.4 4.0 ‐2.1 ‐12.6 ‐19.5 ‐47.4 13.0 91.7 28.3 ‐21.2 35.837.9 41.5 123.5 23.1 36.0 ‐12.1 46.5 #DIV/0! 483.3 138.4 #DIV/0! 76.1 38.5

l poverty )DarchulaJumlaServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing574.7 234.5 104.1 3993.4 913.4 709.2 44.7 2725.2 804.8 461.3 447.5 5192.7 2422.8820.0 234.5 104.1 4238.7 1158.7 709.2 62.4 2725.2 804.8 1274.8 447.5 6023.9 3236.3943.0 269.7 119.7 4874.5 1332.5 815.5 62.4 3134.0 925.5 1466.0 514.6 6927.5 3721.81084.5 310.2 137.7 5605.7 1532.3 937.9 62.4 3604.1 1064.4 1686.0 591.8 7966.6 4280.01247.1 356.7 158.4 6446.5 1762.2 1078.5 62.4 4144.7 1224.0 1938.8 680.6 9161.6 4922.01434.2 410.2 182.1 7413.5 2026.5 1240.3 62.4 4766.4 1407.6 2229.7 782.7 10535.8 5660.31649.3 471.7 209.4 8525.5 2330.5 1426.4 62.4 5481.4 1618.7 2564.1 900.1 12116.2 6509.4

ManangSankhuwasavaLocal TaxServiceCharges andFees Sales Other IncomeInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueServiceCharges andFeesLand RevenueRevenueSharingTotal InternalRevenueRevenueSharingSales0.0 1.5 4783.6 24.9 2.0 49.5 4861.5 76.3 307.1 219.1 3581.9 158.6 156.50.0 2.5 8050.0 31.0 20.0 200.0 8303.5 251.0 335.0 127.2 5952.3 46.2 606.20.0 3.0 9555.0 36.5 30.0 215.0 9839.5 281.5 4439.5 24.1 4907.1 203.3 404.60.0 0.0 15598.9 8.0 473.7 1213.2 17293.8 1694.9 2841.4 92.8 6119.0 198.8 411.20.0 5.5 6277.5 11.2 1005.0 14.7 7313.9 1030.9 1709.8 115.0 14136.6 601.5 1107.0

ManangSankhuwasavaServiceCharges andFees Sales Other IncomeInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFeesLocal Tax Land RevenueRevenueSharingTotal InternalRevenueSales0.0 2.3 7188.7 37.4 2.9 74.4 7305.7 114.7 461.5 329.3 5382.8 238.3 235.10.0 3.5 11242.6 43.3 27.9 279.3 11596.6 350.5 467.9 177.6 8313.0 64.5 846.70.0 4.0 12634.3 48.3 39.7 284.3 13010.5 372.2 5870.3 31.8 6488.5 268.8 535.00.0 0.0 17795.5 9.1 540.4 1384.0 19729.1 1933.6 3241.5 105.9 6980.7 226.8 469.10.0 5.5 6277.5 11.2 1005.0 14.7 7313.9 1030.9 1709.8 115.0 14136.6 601.5 1107.00.0 3.1 11027.7 29.8 323.2 407.4 11791.2 760.4 2350.2 151.9 8260.3 280.0 638.60.0 0.0 93.5 0.3 2.7 3.5 100.0 6.4 19.9 1.3 69.8 2.4 5.4#DIV/0! #DIV/0! 11.2 ‐7.7 560.9 141.3 14.9 146.2 266.0 28.3 35.6 98.4 86.7ManangSankhuwasavaLocal TaxLand RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFeesSales#DIV/0! 51.0 56.4 15.9 853.2 275.4 58.7 205.6 1.4 ‐46.0 54.4 ‐72.9 260.1#DIV/0! 13.6 12.4 11.5 42.0 1.8 12.2 6.2 1154.7 ‐82.1 ‐21.9 316.7 ‐36.8#DIV/0! ‐100.0 40.9 ‐81.1 1262.3 386.8 51.6 419.5 ‐44.8 232.5 7.6 ‐15.6 ‐12.3#DIV/0! #DIV/0! ‐64.7 22.7 86.0 ‐98.9 ‐62.9 ‐46.7 ‐47.3 8.6 102.5 165.2 136.0#DIV/0! #DIV/0! 11.2 ‐7.7 560.9 141.3 14.9 146.2 266.0 28.3 35.6 98.4 86.7

ManangSankhuwasavaLocal TaxLand RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFeesSales0.0 2.5 13890.8 33.6 202.7 649.2 14778.7 885.4 3193.2 105.1 7260.7 186.7 616.90.0 5.5 13890.8 33.6 1005.0 649.2 15584.1 1687.8 3193.2 115.0 14136.6 601.5 1107.010.0 5.5 15974.4 38.6 1155.8 746.6 17921.7 1940.9 3672.2 115.0 16257.1 691.7 1273.011.5 5.5 18370.6 44.4 1329.1 858.6 20610.0 2232.1 4223.0 115.0 18695.7 795.5 1464.013.2 5.5 21126.2 51.0 1528.5 987.4 23701.5 2566.9 4856.5 115.0 21500.0 914.8 1683.615.2 5.5 24295.1 58.7 1757.8 1135.5 27256.7 2951.9 5585.0 115.0 24725.0 1052.1 1936.117.5 5.5 27939.4 67.5 2021.4 1305.8 31345.2 3394.7 6422.7 115.0 28433.8 1209.9 2226.5

InternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueSindhupalchokServiceCharges andFees Sales Other IncomeInternalRevenueExcludingLand Revenue& RevenueSharingOther IncomeTotal InternalRevenueRevenueSharingTotal InternalRevenue157.6 4580.8 779.8 387.1 60.6 17289.2 225.3 2287.3 473.7 20723.1 3373.478.4 7145.3 1065.8 187.7 108.6 14451.4 199.4 1233.0 165.9 16346.0 1786.159.2 10037.7 5106.6 236.6 129.6 14045.7 189.2 2365.4 498.4 17465.0 3289.623.9 9687.2 3475.3 578.9 60.0 30967.3 251.0 3774.4 270.0 35901.6 4874.3340.1 18010.0 3758.4 1896.1 181.8 1831.7 389.9 6928.4 271.3 11499.2 9485.7

InternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingSindhupalchokServiceCharges andFees Sales Other IncomeInternalRevenueExcludingLand Revenue& RevenueSharingOther IncomeTotal InternalRevenueTotal InternalRevenue236.9 6883.9 1171.8 581.7 91.0 25981.8 338.6 3437.4 711.8 31142.3 5069.5109.5 9979.1 1488.5 262.2 151.6 20182.7 278.5 1722.0 231.7 22828.7 2494.478.3 13272.6 6752.3 312.9 171.3 18572.3 250.2 3127.8 659.0 23093.5 4349.827.3 11051.3 3964.7 660.4 68.4 35328.0 286.3 4305.9 308.0 40957.2 5560.7340.1 18010.0 3758.4 1896.1 181.8 1831.7 389.9 6928.4 271.3 11499.2 9485.7158.4 11839.4 3427.2 742.7 132.8 20379.3 308.7 3904.3 436.4 25904.2 5392.01.3 100.0 28.9 2.9 0.5 78.7 1.2 15.1 1.7 100.0 20.8249.4 31.0 83.5 65.6 46.3 ‐8.7 5.7 32.6 13.0 ‐5.0 30.5SindhupalchokOther IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing‐53.8 45.0 27.0 ‐54.9 66.5 ‐22.3 ‐17.7 ‐49.9 ‐67.5 ‐26.7 ‐50.8‐28.5 33.0 353.6 19.3 13.0 ‐8.0 ‐10.2 81.6 184.4 1.2 74.4‐65.1 ‐16.7 ‐41.3 111.1 ‐60.1 90.2 14.4 37.7 ‐53.3 77.4 27.81144.9 63.0 ‐5.2 187.1 165.5 ‐94.8 36.2 60.9 ‐11.9 ‐71.9 70.6249.4 31.0 83.5 65.6 46.3 ‐8.7 5.7 32.6 13.0 ‐5.0 30.5

SindhupalchokOther IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing Local Tax Land RevenueRevenueSharingServiceCharges andFees Sales Other IncomeTotal InternalRevenueInternalRevenueExcludingLand Revenue& RevenueSharing71.7 11434.4 4068.5 411.8 130.5 24694.4 271.7 3051.9 399.6 28959.8 4135.0340.1 19493.4 5241.8 1896.1 181.8 24694.4 389.9 6928.4 399.6 34490.1 9614.0391.1 22417.4 6028.1 2180.5 181.8 28398.5 448.4 7967.7 459.5 39663.6 11056.1449.7 25780.0 6932.3 2507.6 181.8 32658.3 515.7 9162.8 528.4 45613.2 12714.5517.2 29647.0 7972.1 2883.7 181.8 37557.0 593.0 10537.3 607.7 52455.1 14621.7594.8 34094.1 9167.9 3316.3 181.8 43190.6 682.0 12117.9 698.8 60323.4 16814.9684.0 39208.2 10543.1 3813.7 181.8 49669.2 784.2 13935.5 803.6 69371.9 19337.2

Annex 43: Tax and Nontax Sources of revenue in Himali Districtsa. Tax SourcesFiscal Year District Name Toll Tax Export Tax –NTFPExport Tax –TimberExport Tax– MineProductsExport Tax– Wear &tear goodsTax onBirdsfeatherTax onDeadAnimalresiduesTax oncommercialagro product'stransactionTax on liveanimalcommercialtransactionOthersTotal062/63062/63062/63062/63063/64063/64063/64063/64064/65064/65064/65064/65065/66065/66065/66065/66066/67066/67066/67066/67Sankhuwasava 0 307111 0 0 0 0 0 0 0 0Darchula 0 0 0 0 0 0 0 0 0 0Jumla 0 610038 0 0 0 0 0 0 0 0Sindhupalchowk 204044 2575 0 0 145523 0 0 34940 0 0Darchula 0 0 0 0 0 0 0 0 0 0Jumla 0 579470 0 0 0 0 0 0 0 0Sankhuwasava 0 335000 0 0 0 0 0 0 0 0Sindhupalchowk 187749 0 0 0 0 0 0 0 0 0Darchula 0 0 0 0 0 0 0 0 0 0Jumla 0 524029 0 0 0 0 0 0 0 0Sankhuwasawa 200000 4239520 0 0 0 0 0 0 0 0Sindhupalchowk 94144 25138 5862 0 111484 0 0 0 0 0Darchula 0 0 0 0 0 0 0 0 0 0Jumla 4500 539613 0 0 4000 0 0 0 0 0Sankhuwasawa 0 2841405 0 0 0 0 0 0 0 0Sindhupalchowk 220603 0 20000 338320 0 0 0 0 0 0Darchula 0 0 0 0 0 0 0 0 0 0Jumla 65875 480344 0 0 0 0 0 0 0 0Sankhuwasawa 0 1709837 0 0 0 0 0 0 0 0Sindhupalchowk 830101 0 0 1066000 0 0 0 0 0 0Total 1807016 12194080 25862 1404320 261007 0 0 34940 0 0307111061003818303805794703350000052402942395201424840543613284140535832004803441709837106600013920209

Annex 44: b. Nontax source – Service charges and FeesFiscalYearDistrict Name Service Charge RecommendationFeeWater source andMine registration& Renewal FeeFee on Rivercrossing (Tuinand Boat)D Class contract& NGO licensingand renewalAppl. fee, ExamFeeOthersTotal062/63062/63062/63062/63063/64063/64063/64063/64064/65064/65064/65064/65065/66065/66065/66065/66066/67066/67066/67066/67Darchula 0 31880 0 5131 145700 23200 0205911Jumla 0 1000 0 0 31000 0 032000Sankhuwasava 0 60 0 109960 45685 2865 0158570Sindhupalchowk 1990 13145 0 0 210180 0 0225315Darchula 0 42130 0 0 164500 1775 0208405Jumla 0 61610 5500 0 649970 0 0717080Sankhuwasava 0 1000 0 0 40620 4560 046180Sindhupalchowk 0 27235 0 0 172210 0 0199445Darchula 234000 47505 0 0 188620 60445 0530570Jumla 33800 6850 5500 0 755000 90000 0891150Sankhuwasava 0 1355 0 146250 53465 2188 0203258Sindhupalchowk 12735 34310 0 0 142175 0 0189220Darchula 265500 130647 0 0 198500 46550 0641197Jumla 0 670 5500 0 109000 90470 0205640Sankhuwasava 0 1102 0 141050 55400 1230 0198782Sindhupalchowk 0 72000 0 0 179000 0 0251000Darchula 450000 150000 0 0 200000 20000 0820000Jumla 0 680 5500 0 153500 105397 0265077Sankhuwasava 0 10438 0 507726 71217 12135 0601516Sindhupalchowk 0 55813 0 0 334095 0 0389908Total 998025 689430 22000 910117 3899837 460815 0 6980224

Annex 45: Nontax source – SalesFiscal Year District Name River Mine sales Swept Wood sales Tender DocumentSaleProperty andAuction SaleDDC Publicationand Forms saleOthersTotal062/63062/63062/63062/63063/64063/64063/64063/64064/65064/65064/65064/65065/66065/66065/66065/66066/67066/67066/67066/67Darchula 0 0 63880 10705 0 074585Jumla 0 0 35000 0 0 600041000Sankhuwasava 80611 0 75865 0 0 0156476Sindhupalchowk 2013720 0 272561 0 0 10542287335Darchula 0 0 82300 0 0 082300Jumla 0 0 200000 0 0 0200000Sankhuwasava 540000 0 66245 0 0 0606245Sindhupalchowk 1232975 0 0 0 0 01232975Darchula 0 0 259900 3230 0 0263130Jumla 0 0 332500 0 0 0332500Sankhuwasava 329304 0 75296 0 0 0404600Sindhupalchowk 1932288 0 398144 0 0 350002365432Darchula 0 0 196000 15000 0 0211000Jumla 0 0 582950 0 0 0582950Sankhuwasava 375000 0 36200 0 0 0411200Sindhupalchowk 3624406 0 150000 0 0 03774406Darchula 0 0 210000 10000 0 0220000Jumla 0 0 1112750 162072 0 01274822Sankhuwasava 1050335 0 56650 0 0 01106985Sindhupalchowk 6769179 0 132245 0 0 270006928424Total17947818 0 4338486 201007 0 69054 22556365

Annex 46: Revenue SharingFiscal Year District Name Land registrationFeeMining RoyaltyForest Productsale royaltyHydro ElectricityRoyaltyTourism SectorRoyaltyTotalLand Revenue062/63062/63062/63062/63063/64063/64063/64063/64064/65064/65064/65064/65065/66065/66065/66065/66066/67066/67066/67066/67Darchula 938280 0 123020 0 010613001860Jumla 0 0 0 0 0012390Sankhuwasava 3581892 0 0 0 03581892219097Sindhupalchowk 4692010 1062 63136 12532962 01728917060577Darchula 2337935 0 131773 0 024697086510Jumla 0 0 0 0 95795717760Sankhuwasava 5937236 0 15090 0 05952326127192Sindhupalchowk 5458684 0 0 8992673 014451357108559Darchula 1818000 0 632505 0 024505055110Jumla 3008237 0 312960 0 3970332516724000Sankhuwasava 4356272 0 78992 425578 46239490708124081Sindhupalchowk 3573561 0 186073 10286115 014045749129586Darchula 1786984 0 426930 0 022139148000Jumla 2864817 0 446461 0 0331127867935Sankhuwasava 5446982 0 42371 505365 124299611901792817Sindhupalchowk 7544000 0 123268 23300000 03096726860000Darchula 2000000 0 700000 0 027000006500Jumla 1540135 0 366951 80000 0198708662362Sankhuwasava 10673265 0 16911 159000 328743014136606114997Sindhupalchowk 1704279 0 127384 0 01831663181762Total 69262569 1062 3793825 56281693 3462895 132802044 1331095

Annex 47: Revenue SharingFiscalYear062/63062/63062/63062/63063/64063/64063/64063/64064/65064/65064/65064/65065/66065/66065/66065/66066/67066/67066/67066/67District Name Fine and Penalty IncomeGeneratingActivitiesDeposit ForfitRent, DividendInterestDarchula 0 0 0 8000 700Jumla 0 0 0 0 0Sankhuwasava 0 0 0 0 157619Sindhupalchowk 0 0 0 155500 318170Darchula 0 0 21500 1200 30520Jumla 50000 0 30000 63615 0Sankhuwasava 0 0 21250 0 57139Sindhupalchowk 0 0 0 143100 22788Darchula 0 0 64207 3190 0Jumla 0 0 131614 185500 386354Sankhuwasava 0 0 0 0 59194Sindhupalchowk 0 0 0 480900 17459Darchula 0 0 124500 2800 3250Jumla 10500 0 605 50250 124296Sankhuwasava 0 0 0 0 23945Sindhupalchowk 0 0 0 270000 0Darchula 0 0 50000 4000 3500Jumla 0 0 0 271673 0Sankhuwasava 0 0 12283 NA 327784Sindhupalchowk 0 0 0 40500 230800TotalOthersTotal8700015761947367053220143615783891658886739770346859194498359130550185651239452700005750027167334006727130060500 0 455959 1680228 1763518 3960205

Annex 48: Total revenue of Sample Districts (2062/63 - 2066/67)Fiscal Year District Name Toll Tax Export Tax –NTFPExport Tax– TimberExport Tax –MineProductsExport Tax– Wear &tear goodsTax onBirdsfeatherTax onDeadAnimalresiduesTax oncomm. agroproduct'strans.Tax on liveanimalcomm.ltrans.Sub TotalTax Sources% of TotalRevenueServiceChargeRecommendation FeeWater sourceand Mineregid. &Renewal FeeFee on Rivercrossing(Tuin andBoat)D Classcontract &NGOlicensing andrenewal062/63 Darchula 0 0 0 0 0 0 0 0 0062/63 Jumla 0 610038 0 0 0 0 0 0 0062/63 Sankhuwasava 0 307111 0 0 0 0 0 0 0062/63 Sindhupalchowk 204044 2575 0 0 145523 0 0 34940 0063/64 Darchula 0 0 0 0 0 0 0 0 0063/64 Jumla 0 579470 0 0 0 0 0 0 0063/64 Sankhuwasava 0 335000 0 0 0 0 0 0 0063/64 Sindhupalchowk 187749 0 0 0 0 0 0 0 0064/65 Darchula 0 0 0 0 0 0 0 0 0064/65 Jumla 0 524029 0 0 0 0 0 0 0064/65 Sankhuwasava 200000 4239520 0 0 0 0 0 0 0064/65 Sindhupalchowk 94144 25138 5862 0 111484 0 0 0 0065/66 Darchula 0 0 0 0 0 0 0 0 0065/66 Jumla 4500 539613 0 0 4000 0 0 0 0065/66 Sankhuwasava 0 2841405 0 0 0 0 0 0 0065/66 Sindhupalchowk 220603 0 20000 338320 0 0 0 0 0066/67 Darchula 0 0 0 0 0 0 0 0 0066/67 Jumla 65875 480344 0 0 0 0 0 0 0066/67 Sankhuwasava 0 1709837 0 0 0 0 0 0 0066/67 Sindhupalchowk 830101 0 0 1066000 0 0 0 0 00 0.00610038 4.73307111 1.83387082 0.970 0.00579470 4.53335000 1.71187749 0.530 0.00524029 2.754439520 18.36236628 0.640 0.00548113 2.242841405 5.35578923 0.540 0.00546219 0.691709837 1.951896101 1.250 31880 0 5131 1457000 1000 0 0 310000 60 0 109960 456851990 13145 0 0 2101800 42130 0 0 1645000 61610 5500 0 6499700 1000 0 0 406200 27235 0 0 172210234000 47505 0 0 18862033800 6850 5500 0 7550000 1355 0 146250 5346512735 34310 0 0 142175265500 130647 0 0 1985000 670 5500 0 1090000 1102 0 141050 554000 72000 0 0 179000450000 150000 0 0 2000000 680 5500 0 1535000 10438 0 507726 712170 55813 0 0 334095

Appl. fee,Exam FeeSub Total ServiceCharge & Fees% of TotalRevenueRiver Mine sales Swept Wood sales Tender DocumentSaleProperty andAuction SaleDDC Publicationand Forms saleOthers Sub Total Sales % of TotalRevenueFine and PenaltyIncomeGeneratingActivitiesDeposit ForfitRent, DividendInterest23200028650177504560060445900002188046550904701230020000105397121350205911 1.3532000 0.25158570 0.94225315 0.56208405 1.16717080 5.6146180 0.24199445 0.57530570 2.51891150 4.68203258 0.84189220 0.51641197 2.57205640 0.84198782 0.37251000 0.23820000 1.11265077 0.33601516 0.69389908 0.260 0 63880 10705 0 00 0 35000 0 0 600080611 0 75865 0 0 02013720 0 272561 0 0 10540 0 82300 0 0 00 0 200000 0 0 0540000 0 66245 0 0 01232975 0 0 0 0 00 0 259900 3230 0 00 0 332500 0 0 0329304 0 75296 0 0 01932288 0 398144 0 0 350000 0 196000 15000 0 00 0 582950 0 0 0375000 0 36200 0 0 03624406 0 150000 0 0 00 0 210000 10000 0 00 0 1112750 162072 0 01050335 0 56650 0 0 06769179 0 132245 0 0 2700074585 0.4941000 0.32156476 0.932287335 5.7382300 0.46200000 1.57606245 3.091232975 3.50263130 1.24332500 1.75404600 1.672365432 6.36211000 0.85582950 2.39411200 0.773774406 3.52220000 0.301274822 1.601106985 1.266928424 4.570 0 0 80000 0 0 00 0 0 00 0 0 1555000 0 21500 120050000 0 30000 636150 0 21250 00 0 0 1431000 0 64207 31900 0 131614 1855000 0 0 00 0 0 4809000 0 124500 280010500 0 605 502500 0 0 00 0 0 2700000 0 50000 40000 0 0 2716730 0 12283 NA0 0 0 40500

OthersSub Total OtherRevenues% of TotalRevenueLandregistration FeeMiningRoyaltyForest Hydro ElectriProduct sale city RoyaltyroyaltyTourismSectorRoyaltySub TotalRevenueSharing% of TotalRevenueTotal LandRevenue% of TotalRevenueGrantRecurrentGrant CapitalSub TotalGrants% of TotalRevenueGrand Total ofDistrict Revenue70001576193181703052005713922788038635459194174593250124296239450350003277842308008700 0.060 0.00157619 0.94473670 1.1953220 0.30143615 1.1278389 0.40165888 0.4767397 0.32703468 3.6959194 0.24498359 1.34130550 0.52185651 0.7623945 0.05270000 0.2557500 0.08271673 0.34340067 0.39271300 0.18938280 0 123020 0 00 0 0 0 03581892 0 0 0 04692010 1062 63136 12532962 02337935 0 131773 0 00 0 0 0 9575937236 0 15090 0 05458684 0 0 8992673 01818000 0 632505 0 03008237 0 312960 0 39704356272 0 78992 425578 462393573561 0 186073 10286115 01786984 0 426930 0 02864817 0 446461 0 05446982 0 42371 505365 1242997544000 0 123268 23300000 02000000 0 700000 0 01540135 0 366951 80000 010673265 0 16911 159000 32874301704279 0 127384 0 01061300 6.950 0.003581892 21.3117289170 43.272469708 13.72957 0.015952326 30.3614451357 41.072450505 11.583325167 17.464907081 20.2914045749 37.762213914 8.873311278 13.556119017 11.5230967268 28.852700000 3.671987086 2.5014136606 16.141831663 1.21186012390219097605776510177601271921085595110240002408112958680006793592817600006500623621149971817620.01 9204917.98 4716276 13921193.98 91.15 15273549.980.10 8413847.72 3783692.93 12197540.65 94.61 12892968.651.30 7239317.12 4987346.31 12226663.43 72.75 16807428.430.15 10739550.07 8490744.5 19230294.57 48.13 39953443.570.04 9950480.16 5233551 15184031.16 84.34 18004174.160.14 8655941.02 2464640 11120581.02 87.02 12779463.020.65 7685623.29 4772999.81 12458623.1 63.55 19603955.10.31 12459428.98 6386000 18845428.98 53.55 35191401.980.02 11191918.15 6644919 17836837.15 84.32 21153549.150.13 9905533.44 3342816 13248349.44 69.55 19048663.440.10 8623667.04 5521192.15 14144859.19 58.49 24182593.190.35 13789197.39 5943692.63 19732890.02 53.05 37197864.020.03 12903423.19 8851438 21754861.19 87.16 24959522.190.28 13176592.1 6358951 19535543.1 79.94 24437110.10.17 9285943.55 34123423 43409366.55 81.76 53096532.550.06 17495516.02 53948000 71443516.02 66.55 1073451130.01 16807000 53034956 69841956 94.83 736459560.08 17000203 58100000 75100203 94.46 795074420.13 11462625 58113333 69575958 79.44 875859660.12 22372000 117763667 140135667 92.42 151634825

Annex 49: Public Revenue Generation ‐Tax and Non Tax: 2005‐2008 (In Million Rupees)Area 2004/05 2005/06 2006/07 2007/08 065/66 066/67 067/68 068/69 069/70 070/71 071/72Nepal 70122.7 72282.1 87712.1 107622.5 116417.2 129210.1 142003.0 154795.9 167588.8 180381.8 193174.7Mountain 1512.60 1628.09 902.43 888 959 1031.61 1107.64 1186.93 1270 1356.17 1446.59Mountain Regions as % of Nepal 2.16 2.25 1.06 0.83 0.82 0.80 0.78 0.77 0.76 0.75 0.75Mountain Regions and DistrictsSankhuwasabha 21.01 26.40 29.50 28 32.61 35.12 37.64 40 42.67 45.19 47.70Solukhumbu 18.98 21.40 23.74 28 30.29 33.20 36.11 39 41.94 44.85 47.76Taplejung 18.58 22.98 26.41 26 29.43 31.85 34.28 37 39.12 41.55 43.97Dolakha 17.85 24.80 32.89 33 40.48 45.83 51.17 57 61.86 67.20 72.54Rasuwa 15.44 17.49 12.39 13 14.51 15.70 16.99 18.39 19.90 21.54 23.31Sindhupalchok 1369.44 1457.75 709.64 670 713.43 759.45 808.44 860.58 916.09 975.17 1038.07Manang 2.71 2.50 2.92 3 3.19 3.34 3.50 4 3.80 3.96 4.11Mustang 8.29 9.53 8.97 9 9.09 9.17 9.25 9 9.42 9.50 9.58Dolpa 3.50 8.47 7.48 10 12.39 14.36 16.33 18 20.27 22.25 24.22Humla 4.75 5.91 5.69 8 8.59 9.57 10.56 12 12.53 13.52 14.51Jumla 9.71 6.62 8.67 11 10.18 10.68 11.18 12 12.18 12.69 13.19Kalikot 3.59 3.59 4.37 11 11.03 13.22 15.42 18 19.81 22.00 24.19Mugu 2.65 3.29 3.65 5 5.46 6.19 6.92 8 8.38 9.11 9.84Bajhang 5.69 4.57 9.33 10 11.33 12.96 14.58 16 17.82 19.45 21.07Bajura 3.96 4.08 7.38 8 9.32 10.75 12.17 14 15.02 16.45 17.87Darchula 6.43 8.72 9.40 16 17.32 20.21 23.10 26 28.88 31.77 34.66Source: FCGO

Annex 50 : DDC Expenditure from Internal Revenue (R2) in Himali DistrictsFiscalYearDistrict NameEmployeeExpsOperatingExpsTADAExpsGovernance/Capacity ExpsRoad &BridgesWASHExpsOtherInfrastructuresEducationSector expsHealthSectorAgri/LivestockSectorInclusionRelatedOthersNRS '000Total062/63062/63062/63062/63063/64063/64063/64063/64064/65064/65064/65064/65065/66065/66065/66065/66066/67066/67066/67066/67Sankhuwasava 416725 56000 15000 76270 0 0 0 0Sindhupalchowk 3531404 1089081 2655005 6480198 3795000 400000 455000 0Jumla 1226231 531387 838619 246937 0 0 0 467876Darchula1034280 317763 64445 0 00 0 0Sankhuwasava 558762 235132 1215295 1068045 0 17390 15000 0Sindhupalchowk 2592551 1109995 3289027 2637105 1339123 1487000 35000 0Jumla 680000 450000 887000 962500 300000 200000 200000 0Darchula1383774 607329 120000 00 0 66000 0Sankhuwasava 613351 54086 249678 556400 160690 262585 22500 0Sindhupalchowk 3051080 2863386 4325725 1215638 3855569 3078000 47206 0Jumla 1119000 1000000 998000 0 125000 70000 0 0Darchula1392544 600000 649950 00 0 100000 0Sankhuwasava 559010 188761 1187287 94925 9000 0 30800 0Sindhupalchowk 4771024 2400000 2609000 300000 250000 1000000 61000 0Jumla 1245000 500000 1185000 5177000 0 100000 0 400000Darchula 1852600900000550000 0 0 0 100000 0Sankhuwasava 416725 56000 15000 76270 0 0 0 0Sindhupalchowk 3531404 1089081 2655005 6480198 3795000 400000 455000 0Jumla 1226231 531387 838619 246937 0 0 0 467876Darchula1034280 317763 64445 0 00 0 0Total0 84200416725 560000 86000003531404 10890810 01226231 5313870 76200 1034280 3177630 390536558762 2351320 147015252592551 110999550000 300000680000 4500000 135450 1383774 6073290 649500613351 540860 134434603051080 286338650000 4760001119000 10000000 0 1392544 6000000 887000559010 1887610 105381004771024 2400000808000 10200001245000 5000000 018526009000000 84200416725 560000 86000003531404 10890810 01226231 5313870 76200 1034280 317763Source: DDC Annual <strong>Report</strong>s

Annex 51: Total District Level Development Expenditure projection Mountain Regions and DistrictsIn Million RupeesArea (2004/2005) (2005/2006) (2006/2007) (2007/08)(2008/09)Est. 066/67 067/68 068/69 069/70 070/71 071/72Nepal 11394 12654 17577 21198 34649 40192 46623 54083 62736 72774 84418Mountain 1500 1915 2577 3136 5180 6008 6970 8085 9378 10879 12620Mountain Regions as % of Nepal 13.16 15.13 14.66 14.80 14.95 14.95 14.95 14.95 14.95 14.95 14.95Mountain Regions and DistrictsSankhuwasabha 122 110 167 182 305 353 410 476 552 640 742Solukhumbu 87 83 153 245 359 416 483 560 650 754 874Taplejung 94 121 175 189 379 440 510 592 687 797 924Eastern Mountain 303 314 496 616 1043 1210 1403 1628 1888 2190 2541Dolakha 125 152 217 267 415 481 558 647 751 871 1010Rasuwa 54 80 81 114 153 177 206 239 277 321 372Sindhupalchok 167 190 260 295 524 608 705 818 949 1101 1277Central Mountain 346 422 558 676 1091 1266 1469 1704 1976 2292 2659Manang 54 49 74 88 131 152 176 205 237 275 320Mustang 62 54 87 89 126 146 170 197 229 265 308Western Mountain 115 103 161 177 257 299 346 402 466 541 627Dolpa 79 133 168 198 314 364 422 490 568 659 764Humla 98 177 223 245 367 426 494 573 665 772 895Jumla 94 142 160 200 383 445 516 598 694 805 934Kalikot 74 106 118 175 394 457 531 616 714 828 961Mugu 76 128 184 195 308 357 414 480 557 646 750Mid Western Mountain 420 687 852 1013 1766 2049 2377 2757 3198 3710 4303Bajhang 114 140 206 292 441 511 593 688 798 926 1074Bajura 85 115 138 153 273 317 368 427 495 574 666Darchula 117 135 166 210 308 357 414 480 557 646 750Far Western Mountain 316 390 510 654 1022 1185 1375 1595 1850 2146 24891.5E+09 1915163634 2.577E+09 3.1E+09 5.18E+09 6008 6970 8085 9378 10879 126200 0 0 0 0

Annex 52: Projection of Resource Gap for Himali Districts for next 5 yearsFiscalYearDistrict Name Total Dev Exp in MillionNRsTotal DDC Rev (includingRevenue Sharing andLand tax) in Million NRs% of DDC Rev to Total DistDev ExpResource Gap in MillionNRs% of Resource Gap ontotal Dist Dev Exp062/63 Darchula 134.9 1.35 1.00 133.51 99.00063/64 Darchula 166.3 2.09 1.25 164.24 98.75064/65 Darchula 209.9 3.07 1.46 206.79 98.54065/66 Darchula 307.7 3.26 1.06 304.41 98.94066/67 Darchula 356.9 3.50 0.98 353.39 99.02067/68 Darchula 414.0 4.33 1.05 409.67 98.95068/69 Darchula 480.2 5.20 1.08 475.05 98.92069/70 Darchula 557.1 6.23 1.12 550.84 98.88070/71 Darchula 646.2 7.48 1.16 638.73 98.84071/72 Darchula 749.6 8.98 1.20 740.63 98.80062/63 Jumla 142.3 0.70 0.49 141.58 99.51063/64 Jumla 160.5 1.18 0.73 159.30 99.27064/65 Jumla 199.7 3.73 1.87 195.96 98.13065/66 Jumla 383.3 5.35 1.40 377.97 98.60066/67 Jumla 444.7 4.65 1.05 440.00 98.95067/68 Jumla 515.8 5.59 1.08 510.21 98.92068/69 Jumla 598.3 6.70 1.12 591.62 98.88069/70 Jumla 694.1 8.04 1.16 686.01 98.84070/71 Jumla 805.1 9.65 1.20 795.45 98.80071/72 Jumla 933.9 11.58 1.24 922.34 98.76062/63 Sankhuwasava 109.6 4.58 4.18 104.97 95.82063/64 Sankhuwasava 167.4 5.86 3.50 161.58 96.50064/65 Sankhuwasava 181.9 8.59 4.72 173.34 95.28065/66 Sankhuwasava 304.7 9.86 3.24 294.85 96.76066/67 Sankhuwasava 353.5 13.85 3.92 339.62 96.08067/68 Sankhuwasava 410.0 16.62 4.05 393.40 95.95068/69 Sankhuwasava 475.6 19.94 4.19 455.68 95.81

FiscalYearDistrict NameTotal Dev Exp in MillionNRsTotal DDC Rev (includingRevenue Sharing andLand tax) in Million NRs% of DDC Rev to Total DistDev ExpResource Gap in MillionNRs% of Resource Gap ontotal Dist Dev Exp069/70 Sankhuwasava 551.7 23.93 4.34 527.79 95.66070/71 Sankhuwasava 640.0 28.72 4.49 611.28 95.51071/72 Sankhuwasava 742.4 34.46 4.64 707.94 95.36062/63 Sindhupalchowk 189.8 20.72 10.92 169.08 89.08063/64 Sindhupalchowk 260.0 18.53 7.13 241.43 92.87064/65 Sindhupalchowk 295.4 16.91 5.72 278.54 94.28065/66 Sindhupalchowk 524.0 26.68 5.09 497.28 94.91066/67 Sindhupalchowk 607.8 23.70 3.90 584.10 96.10067/68 Sindhupalchowk 705.0 28.44 4.03 676.60 95.97068/69 Sindhupalchowk 817.9 34.13 4.17 783.72 95.83069/70 Sindhupalchowk 948.7 40.95 4.32 907.75 95.68070/71 Sindhupalchowk 1100.5 49.15 4.47 1051.36 95.53071/72 Sindhupalchowk 1276.6 58.97 4.62 1217.61 95.38062/63 Solukhumbu 82.78 2.39 2.89 80.39 97.11063/64 Solukhumbu 153.43 3.46 2.25 149.97 97.75064/65 Solukhumbu 244.83 6.07 2.48 238.76 97.52065/66 Solukhumbu 358.91 7.98 2.22 350.93 97.78066/67 Solukhumbu 416.34 8.59 2.06 407.75 97.94067/68 Solukhumbu 482.95 10.51 2.18 472.45 97.82068/69 Solukhumbu 560.23 12.78 2.28 547.45 97.72069/70 Solukhumbu 649.86 15.53 2.39 634.33 97.61070/71 Solukhumbu 753.84 18.86 2.50 734.98 97.50071/72 Solukhumbu 874.45 22.88 2.62 851.57 97.38062/63 Taplejung 121.38 2.57 2.12 118.81 97.88063/64 Taplejung 174.73 3.85 2.20 170.89 97.80064/65 Taplejung 189.44 5.55 2.93 183.89 97.07065/66 Taplejung 379.24 7.75 2.04 371.48 97.96

FiscalYearDistrict NameTotal Dev Exp in MillionNRsTotal DDC Rev (includingRevenue Sharing andLand tax) in Million NRs% of DDC Rev to Total DistDev ExpResource Gap in MillionNRs% of Resource Gap ontotal Dist Dev Exp066/67 Taplejung 439.91 8.24 1.87 431.67 98.13067/68 Taplejung 510.30 9.97 1.95 500.33 98.05068/69 Taplejung 591.95 12.02 2.03 579.93 97.97069/70 Taplejung 686.66 14.49 2.11 672.17 97.89070/71 Taplejung 796.53 17.47 2.19 779.06 97.81071/72 Taplejung 923.97 21.07 2.28 902.90 97.72062/63 Dolakha 151.81 2.77 1.83 149.04 98.17063/64 Dolakha 217.45 4.79 2.20 212.66 97.80064/65 Dolakha 266.74 7.17 2.69 259.56 97.31065/66 Dolakha 414.58 10.67 2.57 403.91 97.43066/67 Dolakha 480.91 11.86 2.47 469.05 97.53067/68 Dolakha 557.85 14.89 2.67 542.97 97.33068/69 Dolakha 647.11 18.51 2.86 628.60 97.14069/70 Dolakha 750.65 22.91 3.05 727.74 96.95070/71 Dolakha 870.75 28.26 3.25 842.50 96.75071/72 Dolakha 1010.07 34.76 3.44 975.32 96.56062/63 Rasuwa 80.20 1.96 2.44 78.25 97.56063/64 Rasuwa 80.68 1.80 2.24 78.88 97.76064/65 Rasuwa 114.25 2.92 2.55 111.33 97.45065/66 Rasuwa 152.84 3.82 2.50 149.01 97.50066/67 Rasuwa 177.29 4.06 2.29 173.23 97.71067/68 Rasuwa 205.66 4.94 2.40 200.71 97.60068/69 Rasuwa 238.56 6.02 2.52 232.54 97.48069/70 Rasuwa 276.73 7.37 2.66 269.36 97.34070/71 Rasuwa 321.01 9.06 2.82 311.95 97.18071/72 Rasuwa 372.37 11.17 3.00 361.20 97.00062/63 Manang 48.77 0.28 0.57 48.49 99.43

FiscalYearDistrict NameTotal Dev Exp in MillionNRsTotal DDC Rev (includingRevenue Sharing andLand tax) in Million NRs% of DDC Rev to Total DistDev ExpResource Gap in MillionNRs% of Resource Gap ontotal Dist Dev Exp063/64 Manang 73.58 0.42 0.58 73.16 99.42064/65 Manang 87.76 0.67 0.77 87.09 99.23065/66 Manang 131.15 0.84 0.64 130.31 99.36066/67 Manang 152.14 0.86 0.57 151.27 99.43067/68 Manang 176.48 1.02 0.58 175.46 99.42068/69 Manang 204.72 1.20 0.58 203.52 99.42069/70 Manang 237.47 1.41 0.59 236.06 99.41070/71 Manang 275.47 1.66 0.60 273.80 99.40071/72 Manang 319.54 1.97 0.62 317.57 99.38062/63 Mustang 54.31 1.07 1.96 53.25 98.04063/64 Mustang 86.97 1.31 1.50 85.66 98.50064/65 Mustang 88.98 1.90 2.14 87.07 97.86065/66 Mustang 126.25 2.40 1.90 123.85 98.10066/67 Mustang 146.45 2.37 1.62 144.08 98.38067/68 Mustang 169.88 2.69 1.58 167.19 98.42068/69 Mustang 197.06 3.06 1.55 194.00 98.45069/70 Mustang 228.59 3.49 1.53 225.10 98.47070/71 Mustang 265.17 3.99 1.51 261.17 98.49071/72 Mustang 307.59 4.59 1.49 303.00 98.51062/63 Dolpa 133.46 0.95 0.71 132.51 99.29063/64 Dolpa 167.75 1.09 0.65 166.66 99.35064/65 Dolpa 197.70 2.26 1.14 195.44 98.86065/66 Dolpa 313.65 3.26 1.04 310.38 98.96066/67 Dolpa 363.83 3.72 1.02 360.11 98.98067/68 Dolpa 422.04 4.75 1.13 417.29 98.87068/69 Dolpa 489.57 5.99 1.22 483.57 98.78069/70 Dolpa 567.90 7.51 1.32 560.39 98.68070/71 Dolpa 658.76 9.35 1.42 649.41 98.58

FiscalYearDistrict NameTotal Dev Exp in MillionNRsTotal DDC Rev (includingRevenue Sharing andLand tax) in Million NRs% of DDC Rev to Total DistDev ExpResource Gap in MillionNRs% of Resource Gap ontotal Dist Dev Exp071/72 Dolpa 764.16 11.60 1.52 752.56 98.48062/63 Humla 177.20 0.66 0.37 176.54 99.63063/64 Humla 222.61 0.83 0.37 221.78 99.63064/65 Humla 245.29 1.77 0.72 243.52 99.28065/66 Humla 367.33 2.26 0.62 365.07 99.38066/67 Humla 426.11 2.48 0.58 423.63 99.42067/68 Humla 494.28 3.07 0.62 491.21 99.38068/69 Humla 573.37 3.78 0.66 569.59 99.34069/70 Humla 665.11 4.64 0.70 660.47 99.30070/71 Humla 771.53 5.69 0.74 765.84 99.26071/72 Humla 894.97 6.95 0.78 888.02 99.22062/63 Kalikot 106.30 0.40 0.38 105.90 99.62063/64 Kalikot 117.75 0.64 0.54 117.12 99.46064/65 Kalikot 174.84 2.32 1.32 172.53 98.68065/66 Kalikot 394.35 2.91 0.74 391.45 99.26066/67 Kalikot 457.45 3.42 0.75 454.03 99.25067/68 Kalikot 530.64 4.49 0.85 526.16 99.15068/69 Kalikot 615.55 5.77 0.94 609.78 99.06069/70 Kalikot 714.03 7.34 1.03 706.70 98.97070/71 Kalikot 828.28 9.25 1.12 819.03 98.88071/72 Kalikot 960.80 11.59 1.21 949.21 98.79062/63 Mugu 127.50 0.37 0.29 127.13 99.71063/64 Mugu 183.58 0.53 0.29 183.05 99.71064/65 Mugu 195.08 1.08 0.55 194.00 99.45065/66 Mugu 307.65 1.44 0.47 306.21 99.53066/67 Mugu 356.87 1.60 0.45 355.27 99.55067/68 Mugu 413.97 2.01 0.49 411.96 99.51

FiscalYearDistrict NameTotal Dev Exp in MillionNRsTotal DDC Rev (includingRevenue Sharing andLand tax) in Million NRs% of DDC Rev to Total DistDev ExpResource Gap in MillionNRs% of Resource Gap ontotal Dist Dev Exp068/69 Mugu 480.21 2.50 0.52 477.70 99.48069/70 Mugu 557.04 3.10 0.56 553.94 99.44070/71 Mugu 646.17 3.83 0.59 642.34 99.41071/72 Mugu 749.56 4.71 0.63 744.84 99.37062/63 Bajhang 140.18 0.51 0.36 139.67 99.64063/64 Bajhang 205.82 1.36 0.66 204.46 99.34064/65 Bajhang 291.73 2.07 0.71 289.66 99.29065/66 Bajhang 440.69 2.99 0.68 437.70 99.32066/67 Bajhang 511.20 3.35 0.66 507.85 99.34067/68 Bajhang 592.99 4.24 0.72 588.75 99.28068/69 Bajhang 687.87 5.31 0.77 682.56 99.23069/70 Bajhang 797.93 6.60 0.83 791.33 99.17070/71 Bajhang 925.60 8.18 0.88 917.42 99.12071/72 Bajhang 1073.69 10.09 0.94 1063.60 99.06062/63 Bajura 114.77 0.46 0.40 114.31 99.60063/64 Bajura 138.24 1.07 0.78 137.17 99.22064/65 Bajura 152.80 1.66 1.08 151.14 98.92065/66 Bajura 273.30 2.46 0.90 270.84 99.10066/67 Bajura 317.02 2.78 0.88 314.24 99.12067/68 Bajura 367.75 3.54 0.96 364.21 99.04068/69 Bajura 426.59 4.45 1.04 422.13 98.96069/70 Bajura 494.84 5.56 1.12 489.28 98.88070/71 Bajura 574.01 6.92 1.20 567.10 98.80071/72 Bajura 665.86 8.56 1.29 657.29 98.71