The Ministry of Federal Affairs and General Administration (MoFAGA) is considering suggesting the Finance Ministry to keep the share of complementary grant from the centre to the provincial or local government at 30-60 percent based on the nature and scale of infrastructure projects.

The centre allocates funds to the provincial and local governments under four headings—fiscal equalisation grant, conditional grant, complementary grant and special grant. Although there is already a mechanism of providing fiscal equalisation and conditional grants, the federal government is exploring ways to provide complementary and special grants.

The federal government has allocated Rs20 billion to provide complementary and special grants. The complementary grant is provided to the physical infrastructure projects such as road, drinking water projects, and landfill sites, among others, which are developed by provincial or local government with the community participation.

The special grant is provided to social infrastructure projects such as school, health post and targeted poverty alleviation initiative in the areas where human development index is poor.

The Finance Ministry has proposed keeping the share of complementary grant to be provided by the federal government at 30-40 percent. But MoFAGA officials said they had reached a tentative understanding that the centre’s share should be up to 60 percent in large scale projects if the communities could not make contribution.

“For example, we are in favour of keeping the share of the complementary grant at 60 percent for province level highway to be developed either by provincial or local government,” said Bishnu Dutta Gautam, under secretary at MoFAGA.

The Finance Ministry has proposed that the size of the project should be at least Rs10 million to receive complementary grant. “But we are considering asking the Finance Ministry to hike the minimum threshold for the effective implemention of the projects,” said Gautam. The Finance Ministry’s suggestion of keeping the special grant at Rs5m is said to have been approved by MoFAGA.