Nepal - Public expenditure review (Vol. 2 of 4) : Agriculture and rural development report

Report No. 20211-NEP Nepal Public Expenditure Review (In Five Volumes) Volume 11: Agriculture and Rural Development April 5, 2000 Rural Development Unit South Asia Region Document of the World Bank CURRENCY Currency NRs/US$ 1980 12.00 1981 12.34 1982 13.24 1983 14.55 1984 16.46 1985 18.25 1986 21.23 1987 21.82 1988 23.29 1989 27.19 1990 29.37 1991 37.26 1992 42.72 1993 48.61 1994 49.40 1995 51.89 1996 56.69 1997 58.01 1998 65.97 1999 68.25 Note: The Nepali fiscal year runs from July 16 through July 15. Source: IMF, International Finance Statistics (IFS), line "rf" (period average). a Starting November 30, 1985, the Nepali Rupee was linked to a basket of currencies. Subsequently in early 1992, a two-tier exchange rate system with partial convertibility was introduced. In February 1993, the dual exchange rate system was replaced by a unified market-determined exchange rate system providing de facto convertibility for all current account transactions. Vice President Mieko Nishimizu Country Director Hans M. Rothenbiihler Sector Director Ridwan Ali Staff Members Jeeva Perumalpillai-Essex, Douglas Addison CONTENTS CURRENCY ABBREVIATIONS AND ACRONYMS ACKNOWLEDGEMENTS ECONOMIC DEVELOPMENT DATA SOCIAL INDICATORS EXECUTIVE SUMMARY .......................................... .................. i 1 INTRODUCTION.........................................................1 A. Scope of Report.............1.......... ..................1 B. The Incidence of Rural Poverty in Nepal ............................2 C. Trends in the Rural Sector ............................. .........3 D. Weak Portfolio Performance ...........4........... ............4 2. ISSUES AND TRENDS......................................................6 A. Resource Availability and Allocations ..............................6 B. Rural Development Strategies in Nepal .................... ..........8 C. Implementation Issues........................................10 3. PUBLIC SECTOR MANAGEMENT ...........................................17 A. Procedural Reforms................ .................... .....17 B. Incentives ................................................22 4. ISSUES AND TRENDS BY SECTOR............................................25 A. Agriculture .................... ..................... .....25 B. Forestry.................. . ....................... ......34 C. Irrigation.................................................38 5. LOCAL DEVELOPMENT AND DECENTRALIZATION ....................... ......43 A. The Ministry of Local Development................................43 B. Decentralization .................................... ........45 ANNEX A: EXPENDITURE PRIORITIZATION CRITERIA ...........................50 ANNEX B: FOREIGN AID ....................................................54 ANNEX C: DATA ..........................................................56 List of Tables Table 1.1 Poverty Incidence - Regional, 1995/96..........................2 Table 1.2 Selected Indicators ............4............ ..............4 Table 1.3 Assessment of Selected Projects Financed by the World Bank . ...........5 Table 2.1 Comparative Fiscal Indicators ...........6........ ............6 Table 2.2 Rural Resource Availability....................................7 Table 2.3 Selected APP Targets and Actual Spending, FY95-97. ...................11 Table 2.4 Selected Rural Project and Program indicators, FY97 ....... .........12 Table 2.5 Alternative Financing of Priority Expenditures, FY97,...... ..........14 Table 2.6 Expenditures as Percent of Allocations, FY95-97 .......... .........16 Table 4.1 Composition of FY97 Budgetary Allocations, Agriculture ..... ........26 Table 4.2 Expenditure Trends in Agriculture, FY95-98 .........................27 Table 4.3 Fertilizer Sales ............................................28 Table 4.4 Use of Urea ............................................28 Table 4.5 Implicit Fertilizer Subsidy, October 1998 ........................29 Table 4.6 Determinants of Fertilizer use...........................30 Table 4.7 Composition of FY97 Budgetary Allocations, Forestry ...............35 Table 4.8 Expenditure Trends in Forestry, FY95-98 .......... ..............35 Table 4.9 Composition of FY97 Budgetary Allocations, Irrigation ...... .........39 Table 4.10 Expenditure Trends in Irrigation, FY95-98 .................. .....40 Table 4.11 Agricultural Development Bank Irrigation Program .................41 Table 5.1 Composition of FY97 Budgetary Allocations, Local Development.............43 Table 5.2 Expenditure Trends in Local Development, FY95-98 ........... .....44 Table 5.3 District Expenditures by Region..........................46 ANNEX B Table B1 Budgeted Donor Contributions, FY97 ................... ..........54 Table B2 Sectoral Donor Dependency .......................................55 ANNEX C Table Cl Budgetary Allocations, FY95-98 ...............................57 Table C2 Actual Expenditures, FY95-97...........................70 List of Boxes Box 2.1 The Upper Sagarmantha Agricultural Project.......................16 Box 3.1 HMGN Review of Development Constraints ..................18 Box 3.2 Internal Audit and Authority to Spend in Nigeria....................24 Box 3.3 Corruption .................... ..................26 ABBREVIATIONS AND ACRONYMS ADBN Agricultural Development Bank of Nepal AGDP Agricultural Gross Domestic Product AGO Auditor Generals Office AIC Agriculture Inputs Corporation APP Agriculture Perspective Plan AsDB Asian Development Bank CBO Community Based Organizations CIAA Committee to Investigate the Abuse of Authority DADO District Agriculture Development Office DDC District Development Committee DFID Department for International Development DFO District Forestry Officer Dol Department of Irrigation DSCWM Department of Soil Conservation and Watershed Management FAO Food and Agriculture Organization FCGO Financial Comptroller General Office GDP Gross Domestic Product GNP Gross National Product HMGN His Majesty's Government of Nepal JAT Junior Agriculture Technicians JTA Junior Technical Assistants MoA Ministry of Agriculture MoF Ministry of Finance MoFSC Ministry of Forestry and Soil Conservation MoLD Ministry of Local Development MoWR Ministry of Water Resources MTEF Medium Term Expenditure Framework NARC Nepal Agriculture Research Council NFC Nepal Food Corporation NGO Non Governmental Organization NPC National Planning Commission OAG The Office of the Auditor General PAC Public Accounts Committee SEP Sector Expenditure Program TCN Timber Corporation of Nepal TYRB Three Year Rolling Budget UNDP United Nations Development Program VDC Village Development Committee  ACKNOWLEDGMENTS This report was prepared by a team led by Jeeva Perumalpillai-Essex (SASRD) and consisting of Douglas Addison (AFTM4) and Jyoti Lohani (Center for Policy Research and Analysis). The report also benefited from contributions by P. Drouet (Consultant), Champak Pokharel (Deputy Team Leader, APP Implementation and Monitoring Project), Ohn Myint (SASRD), Ram Mishra (SASRD), Sugandha Shrestha (SASRD), Shyam Ranjitkar (SASRD), Ethel Sennhauser (SASRD) and Robert Epworth (SASRD). Valuable editorial assistance and comments were provided by John Joyce (Portfolio Manager SASRD). Administrative support and production assistance were provided by Theodosia Karmiris (SASRD) and Kiran Gautam (SASRD). Sanjay Pradhan (ECSPE) and Para Suriyaarachichi (SASPR) were the Peer Reviewers for the report. The report is based on discussions held with government officials in the National Planning Commission and the Ministries of Agriculture, Water Resources, Forestry and Local Development. Most of these discussions took place between October 26 and November 20, 1998. A draft of the report was discussed with government officials on February 9, 2000. Comments were also received from the Asian Development Bank and Department for International Development (DFID). We gratefully express our appreciation to government officials, donor representatives and to all those who contributed to the preparation of the report.  ECONOMIC DEVELOPMENT DATA GNP Per Capita (US$, 1998): 210 a/ Gross Domestic Product (FY99) b/ FY99 Annual Growth Rate (% p. a., constant prices) US$ Million % of GDP FY86-90 FY91-94 FY95-99 GDP at Factor Cost 4754 96.5 4.8 5.6 3.9 GDP at Producers' Prices 4926 100.0 4.6 5.6 3.9 Gross Domestic Investment 956 19.4 19.8/c 21.9/c 22.8/c Gross National Saving 700 14.2 12.2/c 14.2/c 14.2/c Current Account Balance -256 -5.2 -7.6/c -7.6/c -8.6/c Output, Employment and Productivity Value Added, FY 99b/ Labor Force d/ V.A. per Worker US$ Million % of Total Million % of Total US$ % of Average Agriculture 1906 40.1 7.2 76.1 265 52.7 Industry 998 21.0 0.9 9.8 1072 213.5 Services 1849 38.9 1.3 14.0 1391 277.0 Total 4754 100.0 9.5 100.0 502 100.0 Government Finance e/ NRs. billion % of GDP As % of GDP FY99 FY86-90 FY91-94 FY95-99 Revenue Receipts 37.2 11.1 9.0 9.2 11.1 Total Expenditures 63.2 18.9 18.8 17.4 18.4 Regular Expenditures 31.8 9.5 6.4 6.5 9.0 Development Expenditures 31.4 9.4 12.4 10.9 9.5 Overall Deficit -24.7/f -7.4/f -9.8 -8.2 -7.4 External Assistance 18.7 5.6 7.4 6.2 5.5 Domestic Borrowings 6.0 1.8 2.4 2.0 1.9 Money, Credit, and Prices g/ FY94 FY95 FY96 FY97 FY98 FY99 NRs. Billion outstanding, end of period Broad Money (M2) h/ 69.8 81.0 92.7 103.7 126.5 152.9 Bank Credit to Government (net) 23.5 25.2 27.5 29.2 31.8 35.5 Bank Credit to Private Sector 32.3 44.9 57.7 64.7 76.8 90.8 Percentage or index number Broad Money as % of GDP 35.0 36.9 37.2 37.0 42.6 45.7 Consumer Price Index (1983/84=100) 284 305 330 356 370 417 Annual Percentage Changes in: Consumer Price Index 9.0 7.6 8.1 7.8 4.0 12.7 Broad Money (M2) 19.6 16.1 14.4 11.9 21.9 20.9 Bank Credit to Government (net) 0.2 7.3 9.3 6.2 8.6 11.7 Bank Credit to Private Sector 35.1 38.8 28.7 12.0 18.8 18.2 a/ World Development Report 2000, The World Bank. b/ National Accounts of Nepal 1999, Central Bureau of Statistics. c/ Data for Gross Domestic Investment, Gross Domestic Savings and Current Account di Nepal Labor Force Survey 1993/99, Central Bureau of Statistics. Balance are as percentage of GDP. e/ Economic Survey FY99, Ministry of Finance. f/ After "non-budgetary receipts" of Rs. 1.3 billion. g/ Nepal Rastra Bank. h/ Includes money supply (MI) and time deposits. Balance of Payments (US$ Million) Merchandise Exports (Average FY95 - FY99) FY97 FY98 IFY99 US$ Million % of Total Exports of Goods & NFS 1295.0 1108.3 1061.9 Woolen Carpets 147.9 35.5 Merchandise, fob 397.4 444.6 525.3 Readymade Garments 112.1 26.9 Imports of Goods & NFS 1854.7 1645.7 1495.9 Others 156.5 37.6 Merchandise, cif 1642.3 1439.1 1290.6 Total 416.4 100.0 of which POL products 126.5 154.0 128.6 Trade Balance -1244.9 -994.6 -765.3 Total External Debt,1998 a! Non Factor Services (net) 685.2 457.2 331.3 US$ Million External Debt 2646.0 Resource Balance -559.7 -537.4 -434.0 Net Factor Income 5.0 13.0 25.0 Debt Service Ratio for 1998 a/ Net Transfers 94.5 103.0 152.9 % of current Receipts Debt Service 7.1 Current Account Balance -460.3 -421.4 -256.1 Official Grants 170.8 176.3 171.4 IDA Lending, January 2000 i/ Medium & Long Term Capital US$ Million Gross Inflows 197.0 229.8 195.2 Outstanding & Disbursed 1211.1 Principal Repayments 49.8 62.4 61.3 Undisbursed 253.6 Miscellaneous Capital Flows 198.5 254.8 95.5 Overall Balance (-Increase) -56.1 -177.0 -144.8 Gross Reserves (end year) 865 969 1128 Rate of Exchange Period Average Rate (US$/NRs.) 57.03 61.95 67.95 i/ The World Bank. Nepal Social Indicators Latest single year Same region/income group 1970-75 1980-85 1992-97 South Low- Asia income POPULATION Total population, mid-year (millions) 12.8 16.5 22.3 1,281.3 2,035.6 Growth rate (% annual average) 2.4 2.6 2.5 1.5 1.7 Urban population (% of population) 5.0 7.8 10.9 27.0 28.4 Total fertility rate (births per woman) 6.3 6.1 4.4 3.5 4.0 POVERTY (% of population) National headcount index .. .. 42.0 Urban headcount index .. .. 23.0 Rural headcount index .. .. 44.0 INCOME GNP per capita (US$) 120 170 220 380 350 Consumer price index (1995=100) 17 35 114 117 122 Food price index (1995=100) .. 33 111 INCOMEICONSUMPTION DISTRIBUTION Share of income or consumption Gini index .. 36.7 Lowest quintile (% of income or .. 7.6 consumption) Highest quintile (% of income or .. .. 44.8 consumption) SOCIAL INDICATORS Public expenditure Health (% of GDP) .. .. 1.2 0.8 1.0 Education (% of GNP) 1.5 2.6 2.8 3.0 Social security and welfare (% of 0.1 0.1 GDP) Net primary school enrollment rate (% of age group) Total .. 58 Male .. 79 Female .. 36 Access to safe water (% of population) Total 8 24 59 81 69 Urban 85 78 61 84 80 Rural 5 20 59 80 66 Immunization rate (% under 12 months) Measles .. 34 85 81 74 DPT .. 32 78 87 76 Child malnutrition (% under 5 years) 69 .. 47 53 Life expectancy at birth (years) Total 43 49 57 62 59 Male 44 50 58 62 58 Female 43 48 57 63 60 Mortality Infant (per thousand live births) 160 125 83 77 82 Under 5 (per thousand live births) 234 180 117 100 118 Adult (15-59) Male (per 1,000 population) 482 376 274 219 274 Female (per 1,000 population) 476 395 314 212 255 Maternal (per 100,000 live births) 1999 World Development Indicators CD-ROM, World Bank s 4 EXECUTIVE SUMMARY This is the third public expenditure review for Nepal. Previous reports were issued in 1992, 1993 (roads only) and 1994.' Key findings in the 1994 review included the need to prioritize rural expenditures in line with available resources, improve planning and budgeting procedures and reign in the growth of the civil service. There was also an Economic Update issued in 1997 that included some key public expenditure management issues-including the need to increase expenditures on agriculture and make key policy decisions with regard to the fertilizer subsidy.2 This report includes a review of public sector management issues that affect the delivery of rural public services such as the planning and budgeting procedures. It also expands the analysis to review the incentives for good governance. The report reviews public expenditures for the period FY95-98 in four ministries that play a major role in rural development, namely Agriculture, Forestry and Soil Conservation, Water Resources (Irrigation) and Local Development. In addition, the report reviews the transport subsidy for the Nepal Food Corporation, managed by the Ministry of Supplies, and rural programs with allocations made through the Ministry of Finance. The rural roads sub-sector is not covered in this report. INTRODUCTION Poverty in Nepal is widespread, with an incidence close to 42 percent. Between 1976 and 1996, the number of poor increased by approximately 3.5 million people.' Many basic services are still underdeveloped. Only 6 percent of the population has access to sanitation (compared to 30 percent in Bangladesh and India) ; only 44 percent has access to safe water (compared to an average of 77 percent in South Asia); and the illiteracy rate is 73 percent (compared to an average of 51 percent in South Asia). Poverty is more widespread in the rural areas than in the urban areas. The stagnation of agriculture has been a major contributor to poverty . The rural sector has languished despite substantial foreign aid. The rate of real agricultural growth has been only about 2.6 percent per annum over the past two decades, barely keeping up with the population growth rate of 2.5 percent. Predictably this has had an adverse impact on rural welfare. ISSUES AND TRENDS BY SECTOR Rural spending has generally failed to keep pace with domestic inflation. While there have been some gains in irrigation and forestry, expenditures on agriculture have declined. The outcome 1 World Bank, 1992. Nepal: Public Resource Management in a Resource Scarce Economy, Rp. No. 10324-NEP. World Bank, 1993. Nepal: Expenditures in the Road Sector, Rp. No. 10988-NEP. World Bank, 1994. Nepal: Fiscal Restructuring and Public Resource Management in the Nineties, Rp. No.12281 - NEP. 2 World Bank, 1997. Nepal: 1997 Economic Update: The Challenge ofAccelerating Economic Growth,Rp. No. 17034- NEP. 3 World Bank, 1998. Nepal: Poverty at the Turn of the Century. I for the level and quality of rural services in all three sub-sectors is inadequate. To the extent possible, the government should seek to increase resource allocations for rural services and, at the same time, seek more efficient use of those resources. Key actions for each sector include cost-cutting, better prioritization and a larger role for the private sector. A. AGRICULTURE Fertilizer Nepal has the lowest nutrient application rate (only 33 kg/ha) in South Asia (compared to 78 kg/ha in India, 115 kg/ha in Bangladesh, 318 kg/ha in China and 101 kg/ha in Pakistan'). The low level of usage is consistent with the low share of crop land under irrigation, low road density and low per-capita income. More alarmingly, fertilizer sales in FY98 were the lowest in a decade On-going reforms. The Government has effectively removed the subsidies on all fertilizers. The prices of chemical fertilizers have been deregulated both at the wholesale and retail levels. The private sector is to be allowed to import and distribute all inputs freely. The role of the government-owned Agriculture Inputs Corporation (AIC) is being reviewed with the possibility of privatization. The Government discontinued the transport subsidy for AIC to deliver fertilizers to remote districts and the subsidy was converted into General Agriculture Development Fund (GADF) to be utilized by District Development Committees (DDCs). This fund is available for 23 remote districts, determined on the basis of road access and extent of food deficit. Food Subsidy The government has intervened in the food market for many years in order to help reduce poverty. The government strategy has, until recently, been to reduce food prices in 38 remote districts through a transport subsidy; increase farmer incomes by procuring food products at a floor price from farmers in less accessible areas; and intervene in the market to stabilize prices. These activities have been carried out through the Nepal Food Corporation (NFC) administered under the Ministry of Supplies. However, few farmers sell to NFC, the NFC supplies only a fraction of the consumer market and its capacity to influence market prices is negligible. Inefficiencies within NFC have resulted in losses as well as heavy subsidies from the Government amounting to NRs 225 million in FY98. Steps towards the reform of NFC (January 2000) include: the number of districts served by NFC has been reduced from 38 to 27; the number of employees has been reduced from 1,304 to 836; 36 depots have been closed; the retail price for government employees in remote areas has been increased by 25 percent; about 40,000 mt have been kept in reserve in strategic locations; NFC 4 From averages of 1990-97 FAO estimates. 5 At present definition of "remoteness" is those districts that do not have a road link nor production potential. ii must compete commercially wherever possible and; steps have been taken for the introduction of a ration card system. Research and Extension The Ministry of Agriculture has failed to provide farmers with the research and extension services they need. The Nepal Agriculture Research Council (NARC) has the responsibility to carry out agricultural research but most of its work has not been well connected to the relative importance of different commodities. The performance of the Department of Agriculture, which is responsible for agricultural extension, has been ineffective. Its staff is spread thinly across the population and they have little incentive to work directly with farmers. The Ministry of Agriculture has been advocating reforms of the research and extension systems through the "pocket" approach, but there has been little impact on agricultural growth. The recent mid-term review of the IDA-financed project, which is the largest contributor to the Department of Agriculture budget, indicated the need for decentralization of both research and extension. On extension, efforts to redefine and refocus the program would require: (i) modernizing public extension services; (ii) formulating a National Agricultural Extension Strategy; (iii) promoting partnerships with private extension providers; (iv) decentralizing extension services and (v) human resource development and management improvement for extension staff. On research, reforms would focus on: (i) improving the management and focus of NARC; (ii) improved regional and outreach technical research in NARC; (iii) development of a national agricultural research policy; (iv) funding mechanism for both public and private research facilities; and (v) training of research staff on issues such as agribusiness and post- harvest technology. B. FORESTRY The Ministry of Forestry and Soil Conservation (MoFSC) provides four inter-related services: forestry management and development; parks and wildlife management; soil and water conservation; and research and extension. Forestry resources are spent almost exclusively on community forestry, leasehold forestry and the District Forest Offices that manage the national forests. District Forestry Officers (DFOs) are empowered to transfer any portion of a national forest to qualified Forest User Groups. User groups are allowed to use and freely sell forest products within general guidelines that promote good management. A recent decision by MoFSC to ban the green felling of community forests threatens the policy environment and sustainability of community forests. A recent circular (January/February 1999) also provides for 25 percent of total proceeds from the sale of forest products to be spent in development, conservation and management of forest and the rest on welfare activities of the community. The transfer process has gone smoothly in the hill districts but lags far behind in the Terai; there, only 5 districts out of 21 have actively handed over portions of the national forest. The reasons for the slow transfer have to do with the socio- economic and geographical conditions in the Terai. Uli The leasehold program brings in revenues equivalent to almost half of the forestry budget, and it may be an effective and profitable way for the government to reassert control over illegal logging. Legalizing logging operations, subject to restrictions for soil and forestry conservation purposes, would allow the government to increase its revenues. Raising leasehold fees to an appropriate level would provide an incentive to conserve the supply of trees. The Timber Corporation of Nepal (TCN), a public sector enterprise, has a monopoly over the marketing of timber products at present. The corporation is running at a loss (NRs. 15 million in 1996/97). In the interest of competition and a transparent pricing system, there is a need for TCN to open up for competition. C. IRRIGATION The share of crop land currently under irrigation in Nepal is quite low, at approximately 35 percent. The Terai, for example, contains three quarters of the irrigable land, but only a third is irrigated. The seasonal nature of most of its rivers reduces the possibility of year-round irrigation. The main issue for farmers depending on surface systems is water management and the temporary and rudimentary nature of water control head-works and conveyance structures. However, the full exploitation of the surface systems is also constrained by riparian and environmental issues. At the same time, real spending on operation and maintenance in public sector surface schemes is declining. The simple failure to de-silt the systems at regular intervals has resulted in the need for costly interventions to repair and rehabilitate systems. A declining trend is also observed for flood control and emergency repairs. HMGN has been focussing on expanding the use of ground-water by increasing the number of tubewells in the country, mainly through its subsidy programs.' The main issues here are high operation and maintenance costs of mechanical/electrical equipment and the need for these tubewells to be owned and operated by the farmers themselves - which involves community mobilization. Furthermore, the need for legislation to regulate the use of ground-water is urgent and HMGN is still to draft and ratify an appropriate legislation. Irrigation Subsidies. In the last several years, capital subsidies have been made available to farmers for tubewell schemes. The capital subsidy for group-based tubewells is 60 percent of costs for shallow tubewells and about 84 percent of costs for deep and medium-sized tubewells. There are also credit programs for farmer-owned surface schemes. Funding for the subsidy programs has come from a variety of donor projects, as well as the government, and has been disbursed to farmers through the ADBN. The government also levies a tariff for water use for the large public surface schemes, but this covers only 40 percent of estimated costs at best. In practice, the collection rate is very poor, averaging only 30 percent, making the effective subsidy even greater. As a result, real expenditures on operation and maintenance are sub-optimal and undermine the performance of public irrigation systems. 6 The share of spending on tubewells would be much higher if the ADBN credit program were included in the analysis. iv The Government's goal of subsidizing the installation of 8,200 new tubewells was too ambitious in terms of implementation capacity and financial feasibility. In fact, the number of new tubewells per year actually fell from 3,600 in FY95 to 2,360 in FY97. The introduction of the subsidy may actually have induced a slow-down in investment, as farmers waited for access to the subsidy. A large share of the subsidy was also diverted for administrative purposes on its way through the ADBN. Ongoing reforms. The government's irrigation policy of 1997 improved a number of policies including cost recovery, greater beneficiary participation and an increased rate of transfer of operation and maintenance of large surface schemes to beneficiaries. Collection of water user charges was also transferred to beneficiaries with the expectation that recovery rates would improve. The capital subsidy for group-based tubewells was reduced-from 80 percent to 60 percent for shallow tubewells, to be eliminated by July 2000; and from 90 percent to 84 percent for deep and medium-sized tubewells. Subsidies for individually-owned shallow tubewells was completely eliminated. Customs duties on imported diesel tubewell pumpsets were eliminated - reducing their costs by another 22 percent. Under the ongoing Nepal Irrigation Sector Project (Cr. 3009), there are two studies being carried out; (i) a review of the irrigation subsidy policy (for both private and public irrigation schemes, including tubelwells); and (ii) a review of O&M costs and cost recovery in the public irrigation schemes. A report on the former is expected shortly. D. GENERIC ISSUES Over-ambitious strategies, poor planning and budgeting: A generic issue affecting all sectors is that plans are over-ambitious and are not integrated fully into the budget. The government's rural strategies (Eighth, Ninth Plans and in the Agricultural Perspective Plan) display an understanding of inter-sectoral linkages in the rural areas, but they are optimistic about goals and generally lack an assessment of their affordability and feasibility. Currently, the rural portfolio consists of over 200 programs, marginally financed, and there are about 21-34 new projects and programs added annually to the agriculture and rural development portfolio. Improvements to the institutional capacity of ministries to plan, create realistic budgets and monitor implementation progress are urgently needed. Lack of prioritization. HMGN has been unable to implement the first phase of the APP on time due to a lack of resources and delays in supporting institutional change. Officials interviewed for this report noted they were unable to access foreign aid fully on account of insufficient counterpart funds and could not drop low priority projects due to political opposition. As a result, they routinely underfund many projects without making tangible physical progress. The data show that fully funding the 43 largest budget heads in FY97 would have consumed all of the resources actually spent on rural programs. HMGN needs to become more focused on available financing and administrative capacity. In order to make better use of scarce public sector resources, the government should consider creating a de-politicized process for identifying and dropping low priority and low return activities. V Ineffective Policies: There are a number of subsidy programs for fertilizer, tubewells and credit that are not targeted and are also ineffective. The fertilizer subsidy is a case in point where pricing decisions and other regulatory issues have not leveled the playing field between the Agriculture Inputs Corporation (AIC) and private importers. Similarly, the tubewell subsidy has not proven to be adequate to match demand, and a review is being taken to evaluate the most equitable and affordable level of subsidy. Poor implementation. The implementation of programs and projects is very poor. For example, the outcome of most of Bank-assisted programs has been unsatisfactory. Project implementation has been adversely affected by the changes in government with resultant changes in project personnel. According to recent evaluations of completed Bank projects the impact of research and extension projects was limited because they did not respond to farmers' needs, the training and visit system was unsuitable in the hills, and there were weak linkages between research and extension and poor motivation in public agencies. In irrigation, projects failed to yield reliable water supply as they did not involve farmers and did not ensure cost recovery. Donor programs and coordination. Most programs (over 60%) in the sector are financed by external donors. The largest donors in the sector are IDA, Asian Development Bank, Japan and Danida. In the Ministry of Agriculture FY97 budget, external assistance was expected to finance all the capital allocations and 41 percent of the recurrent budget allocations. The same year aid was expected to contribute substantially to the capital allocations for irrigation (81 percent), forestry (73 percent) and local development (61 percent). If the planning and budgeting process is to be improved, rural ministries and local governments need to play a stronger role in coordinating contributions from the donor community. This is necessary in order to ensure a focused approach which can be adequately financed from domestic resources as well as foreign. The use of a Medium-Term Expenditure Framework under Ministry of Finance/National Planning Commission sponsorship would make this easier through the emphasis on objectives and outcomes rather than sources of funding. Donor coordination problems could also be reduced through the gradual introduction of Sector Expenditure Programs (SEPs), which would allow line ministries more freedom in deciding how best to make the intra- sectoral allocations across priority activities. Public sector investments have not significantly arrested the declining health of the rural sector. The composition of expenditures must be critically re-evaluated and restructured. This means addressing the imbalances in resource allocation and inefficiencies in the management of the public expenditure programs. Furthermore, there is severe inadequacy in operation and maintenance and the private sector, both community-based organizations and non-governmental organizations, has not been sufficiently harnessed. A shift in public expenditure policy, changes in expenditure composition in the public sector and selective divestiture to the private sector are all urgently needed. VI PRINCIPAL FINDINGS AND KEY RECOMMENDATIONS Affordability of Rural Development Strategy The Agriculture Perspective Plan (APP) has been articulated in the Ninth Plan as the HMGN strategy for growth in the rural sector. In the past few years spending on activities consistent with the APP has been less than budgeted. To rectify this, over two hundred heads of expenditure in the rural sector need to be reviewed by the government and the donors. Some of these will need to be eliminated or restructured, in particular those that are not consistent with APP objectives. For example, in FY97 priority APP activities received an average of 77 percent of the adjusted budget allocations. By contrast, grant programs and key administrative functions received almost their full allocations. Secondly, even if non-APP activities were eliminated the total funding consistent with the APP objectives would have fallen short of the original APP target of NRs.5 billion in FY97. In this sense, the full APP is not affordable and should be reviewed for a reduced scope. Public Sector Management A substantial improvement in the planning and budgeting process is needed. At present the programs are budgeted on the basis of previous years' expenditure and political motivation rather than on the merit of their impact on overall growth and strategy. Planning is based on annual incremental budget rather than on progress in implementation. Movement towards a fully- developed Medium-Term Expenditure Framework should be pursued. The government is the provider of most services. Many of these could be carried out by the private sector e.g. extension services, research activities. The capacity of community-based organizations in irrigation and forestry should be enhanced and incentives provided for their sustainabilty. Both the agriculture and irrigation departments should be agencies that regulate activities rather than implement. The capacity of the public sector to implement the programs within its purview needs to be strengthened. Institutional arrangements for transparency and accountability urgently need to be strengthened. The government needs to improve its ability to monitor spending and the impact of service delivery. The government may wish to reinstate the old practice of monthly review meetings chaired by the Prime Minister. Such reviews should be aimed at those activities most likely to reduce poverty, regardless of size or cost, rather than being aimed at the largest projects. The government should also strongly consider strengthening the monitoring capacities of the MoF, NPC, FCGO, AGO and line ministries. Vii Agriculture Sector Public Sector Enterprises such as the Nepal Food Corporation and the Agriculture Inputs Corporation need to be restructured and have their roles modified. Some progress has been made but much more is required. In September 1999, the government decided to include AIC in the privatization list of MoF. Subsequently, MoA formed a task force, in October 1999, to examine the details in executing the above decision of the government. The task force is expected to submit its report shortly. Research and extension should be restructured and made more effective. Activities need to be refocused to take into account the decentralized initiatives of the government. Strategy needs to be developed to encourage private sector participation in delivery of services. Forestry Sector The Timber Marketing Corporation should give up monopoly rights in marketing forest products. At present there are allegations of rampant corruption in the organization. The private sector should be encouraged to enter the timber market with TCN and the Ministry of Forestry being the regulator. The Ministry of Forests and Soil Conservation should also reverse the decision to ban the green felling of community forests, which threatens the policy environment and sustainability of community forests. Irrigation Sector In the Irrigation sector, the operation and maintenance of Agency Managed Irrigation Systems that are not transferred to users groups must be fully funded for efficiency. The current level of funding is only about 15-20 percent of the requirement. Cost recovery is limited and must be augmented. The government is encouraging the development of tubewell irrigation in the Terai with limited options of exploiting surface systems. To ensure that the groundwater resources are not over- exploited the subsidies for tubewells must be reduced over time. The Department of Irrigation should become the policy, regulatory and monitoring agency and should empower private irrigation systems. A water strategy is being formulated under the Irrigation Sector Project and this should provide the basis of further dialogue with the government. Local Development. To ensure sustainability and a demand-driven approach to development, administrative and financial capacity of local governments, village development councils and district development viii councils need to be strengthened. There are a number of initiatives currently being carried out in Nepal and these should be replicated to cover all districts. The planning of projects and programs is ad-hoc and the resources being provided to local government have remained constant since inception. This needs to be reviewed and a more effective development program at the local level implemented. Many rural sector services should be developed within the context of decentralization initiatives to ensure sustainability. ix  INTRODUCTION 1. Nepal is the poorest country in the sub-continent and the ninth poorest country in the world. It has a per capita income of US$210 and an estimated population of 21.5 million growing at 2.5 percent per annum. Rural outcomes have not met expectations. In particular, the rate of real agricultural growth has been only about 2.6 percent per annum over the past two decades, barely keeping up with the population growth rate. The government has been making sustained efforts to improve the situation but it has not been able to keep up with the demand for public services. Its programs are often poorly implemented and it is heavily dependent upon foreign aid, unable to raise enough revenue to pay for its programs on its own. Many basic services are still underdeveloped; only 6 percent of the population has access to sanitation (compared to 30 percent in Bangladesh and India) ; only 44 percent has access to safe water (compared to an average of 77 percent in South Asia); and the illiteracy rate is 64 percent (81 percent female and 46 percent males) (compared to an average of 51 percent in South Asia). A. SCOPE OF REPORT 2. This report focuses on expenditures for the delivery of government services in rural areas, namely for agriculture, livestock and forestry since these sectors contribute about 43 percent of GDP and 80 percent of employment. To do this, the report examines expenditures made by the Ministry of Agriculture, the Ministry of Forestry and Soil Conservation and the Department of Irrigation in the Ministry of Water Resources. Selected expenditures from the Ministry of Supplies and the Ministry of Finance are included where relevant. The report also includes an assessment of activities under the Ministry of Local Development since many of its programs are aimed at rural areas. 3. The rest of the report reviews issues and trends associated with the government's rural strategy. Chapter 2 opens with an assessment of resource availability for the government as a whole and for the rural sector in particular. It then reviews the strategies of the government for using those resources and concludes with a review of the efficacy of the government's programs to date. Chapter 3 raises several issues of public sector management. In particular, it looks at what could be done to produce more affordable rural strategies and budgets and how incentives for governance play an important role. Chapter 4 provides a review of key issues and trends in specific sub-sectors: agriculture and livestock, forestry, and irrigation. Chapter 5 provides an assessment of the Ministry of Local Development because of its important role in supporting rural development and the process of decentralization. Key recommendations for each of the sub-sectors discussed are also provided. 1 B. THE INCIDENCE OF RURAL POVERTY IN NEPAL 4. Slow growth has had a long-term adverse impact on rural welfare. Between 1976 and 1996, the number of poor increased by approximately 3.5 million people.' According to the World Bank's 1998 Poverty Assessment, 42 percent of the population lived below the poverty line in 1996.' In rural areas, the share is slightly higher at 44 percent (Table 1.1). 5. Poverty has increased because the rate of agricultural growth has not kept pace with population growth. Non-agricultural GDP has grown quite rapidly, but its impact has been mainly in urban areas. Most of the population lives in the rural areas and is dependent on agriculture for its livelihood. 86 percent of households cultivate some land, 80 percent have some livestock and agriculture is the main sector of employment for 83 percent of the labor force. 80 percent of those employed in agriculture are self-employed, and the rest are wage workers dependent on agriculture. The poor in the rural areas are disadvantaged in terms of land, access to inputs and literacy levels. 6. Rural poverty increased compared to urban poverty based on data from the periods 1976- 1996 and 1986-1996. These increases were significant in the rural areas of the West, Mid-West, and Far-West regions and the Eastern Hills, which outweighed declines in poverty in the Central Hills/mountains and Eastern and Central Terai. Among the rural areas, the remote areas (mid and far western development regions and the mountain belt where the poverty incidence is 72 percent) are further below the poverty line than the poor elsewhere. Social indicators mirror indicators in consumption levels. Illiteracy is twice as high in rural areas as it is in urban areas and 15 percent higher in the mid and far western regions than in other rural areas. Table 1.1: Poverty Incidence - Regional, 1995/96 I PrivM I 111it'eracY _______________Incidence___ r~ Pove'rri Gap !'9 pnpulatdon) Nepal 42 I11 64 Urban 23 .070 37 Rural 44 .125 67 Urban Kathmandu Valley 4 .004 24 Other Urban 34 .109 45 Rural Eastern Terai 42 .095 62 Rural Central Terai 38 .082 77 Rural western Terai 40 .092 69 Rural-Mid-Far West Terai 53 .132 72 Rural Eastern Hills/Mtns 28 .068 59 Rural Central Hills/Mtns 67 .108 66 Rural Western Hills/Mtns 40 .128 54 Rural Mid and Far West Hills/Mtns 72 .281 73 Terai 42 .099 69 Hills 41 .136 58 Mountains 56 .185 75 Source: Nepal, Poverty at the Turn of the Twenty-First Century, July 1998 7 World Bank, 1998. Nepal: Poverty at the Turn of the Century. 8 Based on the Nepal Living Standards Survey, 1995/96. 2 7. Income inequality has also increased noticeably. There were significant income inequalities between urban and rural areas and within rural areas. Between 1984/85 and 1995/96 about a third of the increase in inequality is explained by an increase in inequality between urban and rural areas and the remaining two-thirds by increases within areas. However, between the period 1991/92 and 1995/96 there is a slight decline in poverty in the rural areas. This indicates that there has been some progress since 1991/92 but not enough to compensate for the deterioration that took place in previous years. C. TRENDS IN THE RURAL SECTOR 8. The performance of the rural sector has been mixed with the low growth in food crops and forestry products outweighing the faster gains made in cash crops and livestock. Real growth in agricultural value-added and food crop output fell below the rate of population growth increase between 1990 and 1995, with only small gains in 1996 and 1997 (Table 1.2). Food grain yields, which were once the highest in South Asia, are now the lowest. Food production remains dependent on the monsoons because of difficult water management conditions. Less than a third of the land is effectively irrigated, of which only 20 percent is irrigated year-round. Extensive cropping has reduced soil nutrients yet the application rate of soil nutrients is very low, less than a quarter of the recommended levels at 33kg/ha (compared to 71 kg/ha for India and 101kgs/ha for Bangladesh). 9. The output of livestock products (milk, meat and eggs) has made good progress, increasing from an average of 1 percent per annum for 1991-93 to an average of 4 percent per annum for 1994-97. By contrast, the output of forestry products has fallen from 2.7 percent per annum for 1991-93 to just under 1 percent per annum for 1994-97 (Table 1.2). Pressure is increasing on the forest lands, as the human and livestock populations continue to increase. Livestock per hectare is among the highest in the world, putting additional pressure on pastures and forested areas. Nevertheless, recent successful efforts in forest management have helped in arresting the deterioration of the forest cover. Since the late 1980s, FAO data indicate that the forest cover has remained essentially constant with losses in the Terai being balanced by gains elsewhere. Preliminary data show improvements in the quality of some forest cover as well. 10. As a result of the weak performance outlined above, as many as 14 districts are frequently in food deficit according to government officials, notably in the hill and mountain areas. This has contributed to the migration of labor to the increasingly urbanized Kathmandu valley and to the lowland Terai areas. Population pressure is becoming extremely high in the Terai, creating strong competition for resources. 3 Table 1.2: Selected Indicators!/ 15 19Y5T150 1 1992 1993 1994 1995 16 197' Agricultural GDPffotal GDP 61.8 51.7 51.6 48.6 45.9 43.3 43.1 41.8 42.0 42.7 Agricultural GDP/Capita Index (1995=100) 87.8 98.9 106.1 105.6 101.8 98.5 103.1 100.0 101.7 102.4 Period Average Growth Rate -3.3 2.0 1.5 -0.4 -3.6 -3.2 4.7 -3.1 1.7 0.7 Food Production Index Index (1995=100) 59.5 86.6 105.7 107.5 100.9 93.0 108.6 100.0 115.4 118.2 Growth Rate, Production -2.9 6.0 4.3 1.7 -6.1 -7.9 16.8 -7.9 15.4 2.4 Growth Rate, Yield -3.4 0.9 3.6 1.7 -4.1 -7.3 10.4 -7.7 10.5 2.0 Cash Crop Production Index (1995=100) 32.5 43.4 72.9 79.9 86.9 89.8 94.6 100.0 105.9 112.4 Growth Rate, Production 4.5 6.2 12.1 9.6 8.7 3.4 5.3 5.8 5.9 6.1 Growth Rate, Yield 0.1 5.7 12.8 7.7 6.9 0.7 3.6 1.2 -2.6 5.2 Milk, Meat, Eggs Index(1995=100) .. 77.9 90.7 91.4 92.0 93.8 96.8 100.0 106.2 110.1 Growth Rate, Production .. .. 3.4 0.7 0.7 1.9 3.2 3.3 6.2 3.7 Forestry Products Index (1995=100) .. 79.6 89.1 92.8 93.7 96.4 99.0 100.0 99.8 99.8 Growth Rate, Production .. .. 2.2 4.2 0.9 2.9 2.7 1.0 -0.2 0.0 1. Growth rates are period averages. Ratios and indices are end-of period. GDP share is calculated from current prices. Source: FAO and World Bank databases. D. WEAK PORTFOLIO PERFORMANCE 11. The government has been making efforts to improve the rural situation, but its programs are poorly implemented and many basic services are underdeveloped. Although none of the ministries reviewed for this report, including the NPC, were able to provide detailed evaluations of project outcomes, an evaluation of IDA-financed programs in the country demonstrates the poor performance of rural sector programs. These projects have suffered from a range of implementation problems, and there are serious doubts about their sustainability. At present, 47 percent of projects currently active are at risk of failure, while only 16 percent of closed projects were thought likely to be sustainable (compared to 55 percent in the South Asia and 59 percent globally). Performance is declining: 93 percent of the projects approved between 1981 and 1985 were satisfactory, compared to 66 percent of projects approved between 1986 and 1993. Among projects completed in the 1990s, 27 percent of original commitments were cancelled, the highest cancellation rate in the South Asia region. The average completion delay per project was 31 months, compared to 27 in Pakistan, 25 in Bangladesh, and 20 in Sri Lanka. The average Development Effectiveness Index (which combines outcome, institutional development, and sustainability ratings) for projects in Nepal was the lowest in the South Asia region. Ratings for government performance in preparation, implementation, and compliance were well below regional and Bank-wide norms. 4 12. Table 1.3 mirrors this assessment for the ministries under review in this report. Between FY81 and FY85, four projects were satisfactory, two unsatisfactory. Between FY86 and FY93, only one project was satisfactory, two were not. Completion delays were substantial. Of these nine projects, sustainability was rated as likely for only one. Table 1.3: Assessment of Selected Projects Financed by the World Bank Ccmmimenj Ficl Year 11kle Peremo Compiered Piwecis Sm Oulcorne Sustal:ablni imunth.) Cancell ed Completed Agricultural Extension and Research 17.50 FY81 Satisfac. Uncertain 37 18 Hill Food Production 8.00 FY81 Unsatis. Uncertain 37 30 Bhairawa-Lumbini Groundwater 16.00 FY83 Satisfac. Likely 24 0 Second Forestry Project 18.00 FY84 Unsatis. Unlikely 31 80 Agricultural Extension 2 7.20 FY85 Satisfac. Uncertain 37 19 Narayani Irrigation 3 24.50 FY86 Unsatis. Unlikely 6 42 Sunsari Morang Irrigation 2 40.00 FY87 Satisfac. Uncertain 6 9 Third Rural Development Project 19.10 FY87 Unsatis. Unlikely 5 76 Sunsari Morang Headworks 28.00 FY93 Satisfac. Uncertain 0 1 Source: World Bank, Operations Evaluation Department. 5 ISSUES AND TRENDS 13. The inadequate portfolio performance and weak capacity to deliver services outlined above are the result of a combination of over-ambitious strategies relative to available resources and poor implementation - compounding the impact of other factors such as difficult terrain and the low base of economic development. A. RESOURCE AVAILABILITY AND ALLOCATIONS 14. Broad Resource Envelope. Nepal's spending as a share of GDP has been rather low compared to that of other low income nations. For example, in FY95, total spending was 17 percent of GDP compared to an average of 28 percent for a sample of 50 low income nations (Table 2.1). This is mainly due to Nepal's low revenue effort. In 1995, Nepal collected tax revenues equivalent to 9 percent of GDP compared to an average of 14 percent for the low- income sample - and an average of 20 percent for a sample of 46 lower-middle income countries.9 A high level of foreign aid has helped bridge the gap but not enough to bring the expenditure share in line with international norms (See Annex B for a short summary of the degree of aid dependency in Nepal's rural programs). Table 2.1: Comparative Fiscal Indicators LoW Income Middle Income Nepoal1995 Nepal 2002 Economies 1995 Ec-, oomies 1995 GNP per Capita in US$ 1/ 200 260 376 1,576 Public Spending as Share of GDP 3/ 17 19 28 35 Tax Revenue as Share of GDP 2/ 9 10 14 20 Foreign Aid as Share of Spending 33 37 70 12 1. Low income economies have 1995 GNP per capita below US$ 750 per capita using World Bank Atlas methodology. Lower-middle income economies have GNP per capita's between US$750 and US$3,200. 2. Omits non-tax revenues and foreign grants. 3. Excludes principle repayments. Source: World Bank staff estimates and World Bank Social and Economic Database. 15. Even with moderately optimistic projections, the availability of resources over the next three years will not reach international standards. Tax revenues will increase but only to 10 percent of GDP. Foreign aid is also expected to increase, on the assumption that the capacity problems documented in this report are addressed, to cover 37 percent of public expenditures (Table 2.1). This will allow public spending to rise to 19 percent of GDP. 9 it is important to note that low revenue efforts are not necessarily a function of low per capita incomes. Many poor nations, such as Mozambique have a stronger revenue effort while some rich nations have weaker efforts. 6 16. Rural Sector Resource Availability. The level of real resources per capita that has been allocated to the rural sector has been falling - both from HMGN sources and from external donors. Taken together, real per capita expenditures in all four sub-sectors have been falling through FY97. Real per capita contributions from external donors have declined even faster, with the FY97 level only 73 percent of the FY95 level. If the expectations are confirmed, however, this will have improved to 90 percent of the FY95 level in FY98 (Table 2.2). It is important to point out that this outcome would have been better if actual spending had equaled the amounts allocated in the budget. Actual spending fell from 98 percent of the allocated amount in FY95 to 84 percent in FY97. 17. As shown in Table 2.2, both the government and the donor community have been shifting non-debt service resources away from agriculture and irrigation. Shares in total non-debt spending have fallen for these two activities. Spending on forestry has remained constant as a share of total non-debt spending. Spending on local development is the only activity which gained as a share of the total. This shift towards local government occurred because of the introduction of the grant programs for the district and village development councils (DDCs & VDCs) and increasing expenditure on rural infrastructure. Table 2.2: Rural Resource Availabilityp FY 3 i 1)96 FJ97 1--1-8 iaual aLturd acualv, budgeted GDP Shares Expenditures 4.0 3.9 3.4 3.9 Agriculture and Livestock 2/3/ 1.3 1.0 0.8 1.0 Forestry 3/ 0.4 0.4 0.3 0.4 Irrigation 3/ 1.2 1.2 1.1 1.1 Local Development 3/ 1.1 1.4 1.3 1.5 External Assistance Disbursements 2.6 2.1 1.8 2.3 Indices of Real Spending per Capita Expenditures 100.0 98.9 88.5 101.0 Agriculture and Livestock 2/3/ 100.0 76.7 58.8 77.1 Forestry 3/ 100.0 100.9 98.6 105.5 Irrigation 3/ 100.0 100.7 89.9 94.9 Local Development 3/ 100.0 122.6 118.6 134.3 External Assistance Disbursements 100.0 84.0 72.7 90.2 Actual Exp./Budgeted Exp. (%) 97.5 88.2 84.4 -- Share of Total Non-Debt Expenditures (%) Agriculture and Livestock 2/3/ 8.9 6.2 4.9 5.4 Forestry 3/ 2.4 2.3 2.3 2.0 Irrigation 3/ 8.1 7.4 6.8 6.1 Local Development 3/ 7.5 8.4 8.3 7.9 Notes: 1. Actual expenditures. Loans and grants are actual disbursements through FY96 and planned for FY97. 2. Includes transport subsidy for the Nepal Food Corporation managed by the Ministry of Supplies. 3. Includes rural projects with funding recorded under the Ministry of Finance. 4. FY98 - actual spending is likely to be lower- and rural share of actual will also be lower. Budgeted foreign aid is optimistic and may not have materialized.Sources: Ministry of Finance, UNDP 1996 Development Cooperation Report, 1995 Population Monograph of Nepal. 7 18. The data show that agricultural spending failed to keep pace with local inflation, so much so that real per capita spending in FY97 and FY98 was worth only 59 and 77 percent respectively of spending in FY95 (Table 2.2). Spending on local development expanded faster than inflation due to the introduction of the grants program. Spending on irrigation and forestry remained almost constant in real per capita terms. B. RURAL DEVELOPMENT STRATEGIES IN NEPAL 19. Nepal's rural development strategies are well articulated but ambitious. They are not realistic however, because their cost exceeds the government's financial and administrative capacities. In addition, they rely too heavily on the role of government as an investor, with insufficient attention to operation and maintenance. There is little said about the role of government in making needed regulatory changes in support of its spending programs or in support of the private sector. Finally, there is very little said about opportunities for increasing revenues or about strengthening the capacity of the government to administer and implement its programs. 20. Strategic Planning. Nepal's rural strategies are articulated in the Plans and in the Agricultural Perspective Plan (APP). The strategic focus of all Plans in Nepal has been to focus on agriculture growth and rural development. The strategy of the Eighth Plan (1992- 1997) was to emphasize low-cost farming activities with high rates of return, such as intensive farming in irrigated areas, animal husbandry, bee keeping or sericulture. Crop diversification into higher- value crops was also emphasized in areas where there was access to services. In most cases, these changes in output were to be promoted through increased government support for inputs, subsidized irrigation water, subsidized fertilizer, subsidized credit, increased road density and rural electrification. The planning was well integrated. The irrigation plan, for example, assumed that tubewell investments would be supported by increased rural road building and a rural electrification program. The Eighth Plan also stated that sustainability of agricultural development cannot be achieved unless there is close ecological coordination between farming, livestock and forestry. Increasing rural poverty including disparities between the regions was also recognized as a problem that needed to be addressed. Infrastructure and social services were to be promoted in the far-western and mid-western regions so that the population would be able to access markets and employment opportunities. 21. The Ninth Plan is quite similar in content to the Eighth Plan. The main differences are that it correctly makes poverty alleviation the over-arching goal and it is more reflective of recent moves towards decentralization where the district and village level governments gain more responsibilities in the development effort. The Ninth Plan has developed strategies by ecological regions, and has focussed on priority outputs and inputs required to achieve growth in the rural sector. 22. The strategy for the rural sector is based on the Agriculture Perspective Plan (APP), a twenty year agricultural growth framework developed and incorporated in the Ninth Plan. The main objectives of the APP are to: (i) accelerate the growth rate of the agriculture sector through increased factor productivity; (ii) reduce poverty through growth and increased employment 8 opportunities; (iii) diversify into high-valued horticultural crops; (iv) ensure a sound policy environment for private sector participation; and (v) identify clear implementation strategies. 23. The implementation strategy is focused on: (i) expansion of year-round irrigation - shallow tubewells with farmer participation; (ii) growth in the supply of fertilizer with private sector participation; (iii) streamlining agricultural research; and (iv) provision of infrastructure. These investments from both the private and public sector are to be facilitated by policy and institutional reform and availability of credit. In practice, the implementation of the APP has been mixed and its impact on agricultural growth has not been noticeable. Irrigation and fertilizer have been inadequate, and the situation worsened with poor monsoons. However, on the policy front there has been some progress with elimination of all fertilizer subsidies, reduction of subsidies for irrigation (tubewells) and institutional reform of the Agriculture Inputs Corporation (AIC) - providing subsidized fertilizer and seed and Nepal Food Corporation (NFC)- providing subsidized grain. 24. Local Government. The government has started making efforts to decentralize development activities through the District Development Councils (DDCs) and the Village Development Councils (VDCs). A Local Governance Act has been passed that provides DDCs and VDCs greater autonomy in planning and implementation of development programs. However, this is a slow process as the capacity of the local governments is limited. The basic thrust of a number of recent donor-funded programs is to strengthen the local government and to involve community-based organizations to ensure sustainability of outcomes. 25. Role of the Private Sector. The low revenue effort of the government implies a need to share more of the responsibility for development with the private sector, the communities, self- supporting NGOs and foreign investors. HMGN has already put more reliance on the communities through its hand-over policies in forestry and surface irrigation systems. In both cases, however, there is room for more progress. For example, the transfer of the national forests in the Terai to local users groups has lagged far behind schedule. Foreign investment in rural activities is currently minimal though there is strong potential in areas such as water management, electrification, fertilizers and other inputs. The government may therefore wish to consider a review of the investment codes and tax laws with the aim of facilitating more foreign participation. The Bank has recently commissioned a study entitled " Terai Options Study", which is reviewing alternative mechanisms to deliver services to rural Terai. The report is expected to be completed by June 2000. Preliminary findings of the study include the need for greater participation by private sector, community-based organizations and NGOs to deliver rural services. 26. Role of the Government. Encouraging the private sector is often better done through policies and regulatory reforms that make private participation more rewarding rather than spending by itself. Some examples of needed regulatory changes include fertilizer policies (pricing, tariff rates, income taxation, quality standards), water management for irrigation (through a continued effort to settle riparian issues with India and allowing greater foreign investment), and rural labor productivity (through changes in land tenure and land use laws which might promote more efficient application of inputs). 9 27. Land Issues. The Bank recently commissioned a paper on land issues ( as part of the Terai Options Study) and the findings were discussed at a workshop " in June 1999. The workshop debate revolved around questions with respect to farm size and impact on agricultural productivity and the relative efficiency of sharecropping that is predominant in the Terai area. A general consensus emerged on the need for land reforms in Nepal and political will to address the issues. It was generally agreed that there is the need to review further the issues with respect to dual ownership, share cropping, land fragmentation, land registration and taxation. 28. Decentralization. The government, and the donor community, should be patient in the desire to decentralize. There is evidence that the transfer of responsibilities may be exceeding the administrative capacities of many district and village level governments while the lack of incentives for good governance is inducing corrupt behavior on the part of both central and local officials. Improving the incentives for good governance should be viewed as an essential prerequisite to further decentralization. C. IMPLEMENTATION ISSUES 29. The performance of Nepal's public expenditure programs has been disappointing. Rural output and productivity, as documented in Chapter I, have not risen as quickly as hoped. Rural poverty is increasing. One reason for this is that Nepal has intrinsically high infrastructure investment costs because of its difficult terrain and late start in modern development. There are, however, other factors under Nepal's control that are critical to success. In particular, it appears that Nepal has been constrained by trying to do too much with the result that very little is done well. For example, officials in the Department of Irrigation noted they were often unable to fully access foreign aid due to insufficient counterpart funds - but they could not drop low priority projects due to political opposition. As a result, many projects are under-funded without making tangible physical progress. Project implementation is often spread out well beyond planned completion dates, completion costs rise and rates of return fall. HMGN efforts need to become more focused and more in line with available financing and administrative capacity. 30. Over-Extension. The planning and budgeting system has not constrained the number and cost of projects and programs to match available resources and capabilities. The data provide two very clear-cut illustrations of this point. In the first case, HMGN has been unable to implement the first phase of the APP as originally scheduled due to a lack of resources and delays in required institutional changes. In the second case, it is shown that fully funding the 43 largest budget heads in FY97 would have consumed all of the resources actually spent on rural programs, leaving nothing for any other activities. In fact, all activities consistent with the APP could have been fully funded if non-priority spending had been reduced. Papers presented were: Land Tenure in Nepal: A Constraint or Catalyst for Economic Growth by Ravi Bhandari; Land Tenure in Nepal: Status and Main Issues by Devendra P. Chapagain (IMU/GTZ) 10 Table 2.3: Selected APP Targets and Actual Spending, FY95-971/ Fertilizer Full Target 542 586 636 656 701 Actual Spending 573 500 502 Research 2/ Full Target 360 389 422 435 466 Actual Spending 483 503 570 Livestock Full Target 456 493 535 551 590 Actual Spending 62 60 116 Horticulture Full Target 250 270 293 302 324 Actual Spending 73 64 43 Forestry Full Target 322 348 378 389 417 Actual Spending 341 316 372 Irrigation Full Target 2,352 2,542 2,760 2,845 3,044 Actual Spending 1,353 1,605 1,441 Other 3/ Actual Spending 589 153 276 Total Full Target 4,282 4,628 5,024 5,179 5,541 Reduced Target 3,303 3,570 3,875 3,995 4,274 Actual Spending 3,474 3,202 3,319 Actual/Full Target (%) 81 69 66 Actual/Reduced Target (%) 105 90 86 I. Omits agribusiness, roads and institutional strengthening. APP provided estimates only for a single year and the 5 year multiple in 1995 prices. Individual years have been calculated by applying consumer price inflation to the first year's annual average cost estimate. FY98 inflation rate is assumed to be 7 percent in line with the previous 5 year average. 2. Actual spending includes research and extension expenditures for agriculture and livestock combined. 3. Includes expenditures by the Ministry of Agriculture, the Ministry of Finance and the Ministry of Local Development that appear to be consistent with APP objectives. Sources: APP Table 16-1 and 16-5, Revised Final Draft, April 1995 and Ministry of Finance. 31. APP. The first phase of the APP was originally intended to cover the years 1995 through 1999. The necessary investments represented a major increase in investment spending compared to previous levels." In fact, because of the difficulties of planning under political uncertainty and the general lack of adequate resources, the government was unable to achieve more than 81 percent of the target levels in its first three years - and this level declined to 66 percent in the third year.'2 In some sectors, such as livestock or horticulture, it was far less. This is shown in Table 2.3. The APP also included an alternative implementation plan with lower investment levels - but its authors recommended against this on the grounds that the plan's effectiveness would be markedly reduced. The data show that the government did match this reduced level of I1 The APP generally failed to project recurrent financing requirements needed to sustain the recommended investments. 12 An official in the APP Independent Monitoring Unit noted that there are no APP projects per se. Instead, a project is determined to be, or not to be, consistent with APP objectives. 11 spending - but only for FY95. The delays in funding and accompanying institutional changes have motivated a change in the official APP start date to January 1998. Given that the second phase of the APP calls for even higher real spending, it should be clear that the APP is not affordable under any reasonable circumstances. Table 2.4: Selected Rural Project and Program Indicators, FY97 Rudget as Budget Percent of .\ctual Share of lead Rudget Budget F,.penditurc Iotal Actual NRs Mill tNRs Mill ) 1%) Min. -%griculture 1.15 I "I 12 11 40/4/800 Agriculture Input Price & Transportation Grant 600 5.2 502 6.2 40/5/410 Agricultural Extension Program 198 1.7 184 2.1 40/5/512 Livestock Extension 154 1.3 146 1.6 40/4/560 Animal Health Strengthening Project 131 1.1 36 1.4 40/4/260 Secondary Crop Development Project 69 0.6 40 0.7 Dept. Irrigation 1,652 14.3 1,368 17.2 47/4/314 Second Irrigation Sector Project 374 3.2 285 3.9 47/4/315 Irrigation Line of Credit 364 3.2 235 3.8 47/4/406 Bhairahawa Lumbini Irrigation Project (III Phase) 344 3.0 241 3.6 47/4/411 Mahakali Irrigation Project, Kanchanpur 332 2.9 382 3.5 47/4/404 Bagmati Irrigation Project 238 2.1 225 2.5 Min. Forestry 574 5.0 548 6.0 59/3/122 District Forest Offices 221 1.9 217 2.3- 59/3/152 National Park (Security Group) 217 1.9 206 2.3 59/5/311 Community Forest Development Program 50 0.4 44 0.5 59/5/650 District Soil and Water Conservation Program 48 0.4 45 0.5 59/3/151 Shivapuri Watershed and Wildlife Protection 39 0.3 35 0.4 Min. Local Development 3,151 27.3 2,916 32.8 69/5/520 Village Self Reliance Grant 2,010 17.4 1,855 20.9 69/5/500 District Development Committee Grant 620 5.4 719 6.5 69/5/400 Solid Waste Management Program 207 1.8 90 2.2 69/5/280 Rural Community Infrastructure Dev. Program 186 1.6 142 1.9 69/5/610 Local Development Construction Program 128 1.1 111 1.3 69/5/530 Election Area Development Program 106 0.9 106 1.1 Min. Finance 853 7.4 437 8.9 87/4/822 Small Farmers Development Program (III Phase) 500 4.3 170 5.2 35/4/825 Farmer Irrigation Subsidy- Capital Subsidy 110 1.0 110 1.1 87/4/820 Agriculture Development Bank (Share Investment) 109 0.9 109 1.1 35/4/817 Biogas Production Subsidy- Capital Subsidy 99 0.9 45 1.0 35/4/819 Small Farmers Interest Subsidy- Price Subsidy 35 0.3 4 0.4 87/4/828 Gulmi Argakanchi I.R.D. (Credit) 30 0.3 30 0.3 Total, Five Largest per Ministry 7,382 64.1 6,176 76.8 Total Recurrent and Capital 11,525 100.0 9,608 120.0 Source: Ministry of Finance. 12 32. An excess of projects and programs. The financing requirements for rural sector projects and programs exceed available resources. If all spending had met targeted allocations, required spending in FY97 would have been 20 percent higher than actual spending (Table 2.4). If the government and donors had decided instead to fund as many of the largest programs as possible in FY97, it would have run out of resources after the forty-third largest budget head - leaving nothing for the remaining 154 budget heads. The 5 largest projects and programs in each ministry accounted for 64 percent of the total allocation for FY97 and 77 percent of all actual spending. In order to compensate for the shortfall many projects and programs are routinely under-funded. Interviews with officials confirm that ad-hoc control measures have become necessary. Chief among these are the practices of withholding domestic funds from various activities or spreading funding thinly across a wide variety of activities. As shown in the concluding section of this chapter, the MoLD seems to have a special problem in this regard. 33. Reprioritizing and restructuring. A better solution would be to prioritize and restructure or drop non-essential projects. One of the key criteria for such an exercise should be consistency with the APP. Other relevant criteria are laid out in Appendix A. HMGN and the donor community will need to work together to decide which activities should be dropped and which should be restructured. As an illustration of how spending on priority activities could be made more sustainable, Table 2.5 shows how the composition of spending would have changed if only those activities consistent with the APP had been fully financed, along the local development grants and key administrative functions outside of the APP mandate." 34. Table 2.5 shows that priority APP activities received an average of 77 percent of the adjusted budget allocations in FY97. By contrast, the grant programs and key administrative functions received almost their full allocations and other non-APP activities received 76 percent of their allocations. This outcome should be reversed, with APP activities fully funded and non- priority activities reduced or eliminated. The two columns on the right-hand side of Table 2.5 show how this could have been accomplished in FY97 without exceeding actual total spending. Actual spending in each ministry is maintained or increased: APP activities are fully financed as are key non-APP administrative functions and the MoLD grant programs. The reduced remainder is left for other non-APP activities. This would have meant the elimination of the entire non-APP portfolio in two ministries. Ministry of Supplies, and Ministry of Agriculture. This would leave a small amount (NRs. 166 million) for reallocation to other uses. If these reallocations had been made, other non-APP activities would have received only 39 percent of the budgeted allocation while APP priorities would have been fully funded according to FY97 budget allocations. Even so, this remains far short of the original APP target of NRs. 5,024 million set for FY97.14 13 The Department of National Park & Wildlife Protection is an example of the latter. 14 Inflation adjusted annual average. From table 2.3 above. 13 Table 2.5: Alternative Financing of Priority Expenditures, FY97, NRs Millions. AJternative Actual Expenditures Expenditures Adjusted NRs NR% Budget Millions Percent Millions Percent Min. Finance 969 497 51 497 51 APP 202 124 61 202 100 Other 768 374 49 296 39 Min. Supplies 225 172 77 0 0 Min. Agriculture 1,915 1,605 84 1,611 84 APP 1,572 1,323 84 1,572 100 Administration 39 36 92 39 100 Other 303 247 81 0 0 Dept. Irrigation 3,282 2,825 86 2,825 86 APP 1,787 1,331 74 1,787 100 Administration 109 99 91 109 100 Non-APP Priorities 295 291 99 295 100 Other 1,091 1,105 101 635 58 Min. Forestry 1,023 970 95 970 95 APP 385 366 95 385 100 Administration 521 493 95 521 100 Non-APP Priorities 12 12 95 12 100 Other 106 99 94 52 50 Min. Local Development 4,112 3,538 86 3,538 86 APP 350 176 50 350 100 Administration 13 13 100 13 100 Grant 2,820 2,763 98 2,820 100 Non-APP Priorities 6 3 50 6 100 Other 924 584 63 350 38 Grand Total 11,525 9,608 83 9,608 83 APP 4,295 3,319 77 4,295 1 Administration 681 641 94 681 100 Grant 2,820 2,763 98 2,820 100 Non-APP Priorities 313 305 98 313 100 Other 3,416 2,580 63 Remainder 166 APP Target 5,024 729 Source: World Bank staffjudgements. Other Implementation Issues 35. There are other implementation issues that need to be addressed. Some, like problems due to contractors, natural disasters or slow donor procedures, are common to all countries. Others are a result of factors under the government's control. These are summarized below. An example of a problem project is provided in Box 2.1. * Program or project designs that lack political support, due to a lack of consensus within government and/or a lack of support from beneficiaries tend to become problems. * Programs or projects are sometimes delegated to agencies that lack the necessary mix of skills for design, supervision or monitoring. The MoLD, for example, must monitor 14 thousands of small projects in agriculture, rural roads, water supplies etc. - with little resident expertise and only imperfect coordination with appropriate line ministries. * Frequent changes in senior government officials and project managers have reduced the capacity to formulate consistent policy and manage projects. The FY98 amendment to civil service code should help in this regard. It is noted that the reform also created some new problems due to an additional round of transfers of some officers back to the agencies which originally employed them. In addition, the reform included NRs3 billion in additional salary and pension adjustments which may not be affordable. * Personnel have little incentive to be posted to the rural districts and often spend little time working directly with beneficiaries. This is an especially relevant concern for agricultural extension. * Standard bidding documents have recently been introduced to help reduce procurement delays but they now need to be made operational. * The procurement of local and foreign consultants often takes as long as 18 months as officials address concerns about loyalty to their ministry, office or district. * Funds are often not released until as much as 6 months after the budget year has begun. * There are leakages as funds and goods are diverted for private use by project managers, local officials, and central government personnel. Interviews with project beneficiaries and officials indicate the problem is widespread. The food-for-works program is one well documented example.i I Box 2.1: The Lipper Sagarmantha Agricultural Project The past performance of thc Upper SagarrnanTh., Agricultural Project ilustratec several of the issues raised a bo%c This projoci ,a intended to increase the aEgriculrural producri%t-. erplo,.meni. and income of ru I people through the pro isiun .f credit, .rain[n and mpro%ements in nfrasruciure Some of the key problems included- . neak capjcity of implnienting agencies * Politcization in orider to itract pn%at%; bcnefits Paliticai d-batv and .niLrfurenec in what shuuld be conructed arid where * PoliEicl interference n the selection of NGO . Auditor cneral detected irregularites rsulTny n the NGO component beiiv discontinued * Frequent changes of project rnaniger Im.TIfll) Dept of Roads iDOR) .nolvemen resulic in tup-down approach. DOR standard road %ere too bL. and environmenallh unfricndl It wis then decided to im olve uwer groupn 36. Interviews with ministry officials revealed there is a labor- related implementation problem at the district and village levels. Many agencies rely on communities and beneficiary groups to contribute their time and labor in planning and operating various projects. For example, the Department of Livestock has established 5,000 users' groups, the Department of Irrigation (Dol) transfers the operation of some irrigation projects and the Ministry of Forestry and Soil Conservation (MoFSC) transfers the administration of selected forested areas. The problem occurs when a substantial number of communities within a district become overburdened with too many activities. This is not uncommon. Officials claimed they have problems finding labor needed for operation and maintenance due to competing local demands the key to the solution. Making this tax explicit through monetization would provide the 15 World Bank, 1998. Combating Rural Public Works Corruption: Food-for- Work Programs in Nepal. 15 government and the communities with additional flexibility. Use of tax monies would allow the use of labor hired from inside or outside the communities, according to availability. Where justified, that DDCs or VDCs cannot pay the additional taxation, could be subsidized. 37. Officials report that in many cases they have also been forced to create local positions for central government staff because it has been difficult to gather together enough competent individuals for planning and administrative purposes due to competing demands from their farms and communities. The MoFSC has tried, with some success, to utilize pre-existing groups formed for other purposes and which meet basic criteria for leadership and savings. This is a good tactic but it might be even more efficient for the ministries and donors to rely on the DDCs and VDCs to represent the interests of their constituencies rather than setting up numerous other representative bodies. To facilitate this, in some cases, it may be necessary to help DDC and VDCs upgrade their administrative capacity. For more on these issues, Chapter 5. 38. Under-funding as a symptom. Actual spending typically falls well short of budget targets, often by large margins in some sectors, because of the implementation issues described above." The result shows up clearly when actual spending is calculated as a share of budgeted allocations (Table 2.6). For example, in the Ministry of Local Development, actual spending declined to only 86 percent of the budgeted allocation in FY97 from 91 percent in FY95. Interestingly, this performance varied radically within the Ministry, ranging from an average of just over 100 percent for grant programs to below 55 percent for women's programs.7 The same pattern can be observed in the other ministries reviewed in this report and even in individual projects (see also the section below on expenditure controls). Table 2.6: Expenditures as Percent of Allocations, FY95-97 Agriculture 96 86 72 Forestry 87 82 95 Irrigation 110 94 89 Local Development 91 87 86 A. Administration 93 89 93 B. Grant Programs 106 100 98 C. Area Development 101 53 64 D. Rural Infrastructure 39 64 64 1. Agricultural Roads 5 8 21 2. Rural Water Supply n.a. 70 91 3. Other Infrastructure 68 101 80 E. Women 78 80 71 F. All Others 52 43 49 Source: Ministry of Finance and World Bank staff calculations. 16 There are also a some cases of over-spending. The frequency of such excesses is, no doubt, reduced by the law that total spending is not supposed to exceed the overall budget limit approved by Parliament. 17 Ministry of Local Development road projects show even lower percentages but this is partially due to a lack of administrative and technical capacity. 16 PUBLIC SECTOR MANAGEMENT 39. The previous chapters have made the case that rural outcomes have not been satisfactory and that the government will need to improve the manner in which it spends and uses its resources. Part of the answer lies in better procedures for prioritization and implementation. Even when expenditures are brought into line with available resources, however, the delivery of rural services is also hampered by distorted incentives which lower morale among civil servants and induce government employees to avoid accountability. Box 3.1 contains a short summary of the government's own findings on key factors limiting Nepal's success to date. Several of those issues are explored in this chapter. Part A explores procedural reforms and Part B reviews the incentives for good governance. These are generic issues applicable to almost all government agencies but this does not diminish their importance in the assessment of rural issues. Box 1.1: HMGN Revie" of Declopment Constrainit In formul.anng the Ninth Delopmen Plian H\1K.N identified a number of shoricomings in Nepale-e de.elopment cfforts The 1911" paper taled .Approach to the Niih P an" noted th.a "Despite a cunmderable period uf planred decelopmnct effort. the inabilht to bring about fundamental charges emrgcd. a a nijior challenge for the nation The document then wkcnt on to mention 15 maJor problems in planninc and impIemenanon Among these ,cru the followi!in* * Inadequ"re atteninon to the efficient allocation and urih.:atiun of limutd resources * Poor use of forcign aid * Weak procedures for tbrmulaiing the deve1upmnt plan- * insufitent people's p_tric:paiiin IndLeiopmLn, planning * Lack ofclarirv in the roles of role% of p:bLI and pri%ate sctirr; xuid their complementril, * Abcnce of coordination between plan policies and str.tegiis Lack of standard.e-d project selection and inplementation promises Weak implementation of public accounitabiit% and transparenc% * Weak control of pilferae and other undesirabic ct.iicc Extracted from.,ippr.ah U.. hL Aifah Pan '.i'-'OR.', unofficial English translation. No-. !9 7 A. PROCEDURAL REFORMS 40. HMGN needs to improve the institutional capacity of the rural ministries through better planning, budgeting and monitoring procedures. Better planning and budgeting can help match resources and capacities to activities. It can also help strengthen the links between investment, staffing and operation and maintenance - thus improving implementation and reducing waste. Better monitoring will improve planning quality and, when problems occur, allow faster response time and more appropriate solutions. 41. The MoF is responsible for the Regular Budget and setting its annual spending ceilings. The Regular Budget covers mainly recurrent spending. The National Planning Commission (NPC) is responsible for the Development Budget and its annual spending ceilings which it sets 17 in consultation with the MoF. The Development Budget covers mainly capital expenditures. The NPC is also responsible for the production of the Plans and for advising and monitoring the physical progress of the government's projects. The sectoral line ministries are responsible for preparing budget proposals for submission to the MoF and NPC and for the authorization of the release of funds. There is also a separate process at the district and village levels described in Chapter 5. 42. Timing. The fiscal year starts on July 16. Calls for budget proposals from central government line ministries are usually issued by the MoF and NPC in December or January. Proposals for the Regular Budget are usually received a month or two later and are finalized into a draft budget by the MoF no later than April. Proposals for the Development Budget are usually received no later than April. The process of finalizing the Development Budget requires the line ministries to hold discussions with both the NPC and the MoF under separate schedules. The results are finalized by the NPC, in consultation with the MoF, no later than July. The combined budgets are then presented to Parliament in July and an Appropriations Bill is issued by September or October. Spending in the first three or four months of the year must therefore be covered by a Vote on Accounts Bill that authorizes spending up to one-third of the proposed budget. 43. Current scheduling practices in the budgetary process have created some problems. The MoF and NPC often shorten the amount of time between the call for proposals and the deadline for their receipt. The result is that proposals are often too aggregated or not well thought through. The need for dual discussions on the Development Budget creates confusion and often ends up in delays so that quality is compromised in order to meet the obligation to Parliament. After Parliament has issued a Vote on Accounts Bill, the actual release of funds may be delayed by as much as 6 months. There are several reasons for this. The first is the need for ad-hoc control measures via under-funding as documented above. Second, Letters of Authorization may not by issued by the MoF Department of Foreign Aid when arrangements for donor assistance have not been finalized. Third, since FY98, the NPC has insisted on approved work plans from all spending units before making the first release of funds. Only a few ministries have been able to supply all of the necessary work plans for all of their activities. Finally, funds are released in two-month tranches but only after each previous release has been utilized." In this way, a large implementation problem in one period can be dragged out into the next period. HMGN is currently receiving assistance from DFID to resolve many of these issues. 44. Dual budget system. Development planning in Nepal is, in practice, viewed mainly as an activity to be financed by external donors. For this reason, there is a dual budgeting scheme where a Regular Budget is financed almost entirely out of domestic resources and a Development Budget is financed mainly from external loans and grants. Recurrent and capital spending can be found in both budgets but the links between the two are weak. As indicated above, the two budgets are negotiated separately and the Regular Budget is completed several months before the Development Budget. Given the prior claim by recurrent budget needs, capital allocations from 18 Four months' of funds requirements for priority projects and two months' requirements for non-priority projects are released at the beginning of the year. 18 domestic sources are often viewed as a residual. This system also implies that the allocations for recurrent resources to operate and maintain projects is generally unrelated to actual needs. The government is now moving towards a more integrated approach, with DFID assistance, but progress has been slow. 45. Replacing the dual budget system. The government is currently exploring the formation of a three-year rolling budget (TYRB) for development expenditures, with DFID assistance, but implementation has been slow. This effort should now be accelerated and expanded to cover all spending in the context of a rolling, medium-term expenditure framework (MTEF) that links policies, priorities, plans into a single unified budget." Under a MTEF, the practice of dual budgeting is eliminated - but this need not to diminish the need for both the NPC and the MoF as distinct institutions. A MTEF is characterized by six main processes. These are listed below: (a) Defining the overall level of resources available to the government - not for one year but for three. Macroeconomic revenue and aid forecasts must be accurate and should not be overestimated in order to justify spending. At this stage, governmment and donors need to agree that funding is being solicited for objectives rather than for specific projects. Once this has been determined, MoF should establish a solid budget constraint by sending a clear message to all the ministries via a single annual call circular that this level of spending cannot be exceeded. The government needs to do more to avoid over-estimating revenues and foreign aid availability. Concerns during the annual planning cycle about making realistic spending plans seem to be softened by overly optimistic forecasts. For example, an official in the MoFSC complained that they had received less than half of the annual amounts specified in their master plan - without considering the possibility that the plan itself was over- ambitious in the light of actual resource availability and competing needs. This optimism, combined with a lack of prioritization, has also contributed to excessive growth in the number of projects. Within the last 2 years, there are now over one hundred more projects in the development budget. (b) Reaching consensus within and across ministries on objectives - what services shall the government provide to the citizens of Nepal and what monitorable targets shall be set? This process should include frequent consultations with a broad range of citizenry. In this regard, it would be extremely useful to introduce the practice of nation-wide participatory surveys conducted at the village level. The results should be carefully prioritized. The NPC can play a strong role in this regard. Setting preliminary monitorable targets is very helpful at this stage because it focuses attention on feasibility and accountability. An examination of previous development plans, and even the APP to some extent, indicates the need for more monitorable details 19 The same concept was referred to as a Three Year Rolling Expenditure Program (TYREP) in the 1997 World Bank report entitled Nepal: 1997 Economic Update: The Challenge ofAccelerating Growth. 19 about what is to be achieved and how. With regard to the latter, officials in the NPC and AGO indicate that feasibility studies are often lacking and, when they exist, are often not analyzed or cited in the plans. (c) Identifying policies and activities required to achieve the agreed objectives - regulatory changes as well as spending programs. (d) Assessing the revenue and cost implications of the desired policies and programs - again for three years - and then prioritizing as to which can be included in the budget. It is important in this process to include all recurrent and capital costs associated with each goal: investment, staffing, overhead, maintenance and so on - without regard to their placement in the regular or development budgets. In this light, the APP could be made more useful for budgetary purposes if it could be revised to include estimates for recurrent operation and maintenance costs in addition to capital costs. In order to be relevant, these also need to be shown on an annual basis rather than for five-year periods. (e) Developing some contingency plans in case expected resources do not materialize or critical programs run into difficulties. This will include a further prioritization of key activities which can be maintained while others are halted or dropped. The concept of a core set of activities that can be maintained, even under resource shortages, may also be helpful. (f) Drawing up a formal budget for the next year. with an indicative budget for the following two years. This process, when repeated on an annual basis, produces a rolling budget which is easier to monitor and reduces the cost of future planning. The rolling cycle also ameliorates another problem: the five year plans have often been finalized one or even two years after the period they cover has begUn. The 1997-2002 plan, for example, was finalized only in mid-1998. 46. Prioritization. Prioritization is urgently needed because of Nepal's low revenue effort and it is an activity repeated throughout the MTEF process. Ministries providing rural services will need to become more methodical about prioritizing according to policy objectives. At present, according to government officials, projects are given priority according to their strategic economic importance, their size, availability of foreign financing, and their degree of completion. With the exception of the first item, these criteria may not serve the best interests of the nation. The degree of project completion, for example, is irrelevant if a project is a money loser. Moreover, according to many officials, there s a reactive expediency of assigning priority mainly to those projects that have run into trouble through price escalations, delays or lack of counterpart funding. In order to make better use of scarce public sector resources, the government should consider creating a de-politicized process for identifying and dropping low priority and low return activities. To be consistent with the MTEF process, the prioritization should be done at the level of objectives first, programs second, and specific activities or projects last. A list of useful selection criteria can be found in Annex A. In this effort, the MoF, NPC and line ministries may need to strengthen their capacity for project screening and prioritization through increased training, adequate staffing and adequate financing. 47. Donor Coordination. If the planning and budgeting process is to be improved, rural ministries will also need to play a stronger role in coordinating the contributions from the donor community. This is necessary in order to ensure a focused approach which can be adequately financed from domestic resources as well as foreign. The use of a MTEF under MoF/NPC sponsorship would make this easier throu 'h mhe emphasis or objectives and outcomes rather than sources of funding. 48. Donor coordination problems could also be reduced through the gradual introduction of Sector Expenditure Programs (SEPs). A SEP is the sum of a country's medium-term strategy and activities in a specific sector. Donor resources allocated to a SEP are meant for general use within the targeted sector thus allowing the line mimstries more freedom in deciding how best to make intra-sectoral allocations.20 A natural result of this change is greater reliance on the government's own procurement code since there would be less direct donor financing of various activities. In return for this additional frecdorm, it sho uld be expected that donors would insist that HMGN ensure open and transparent procedures. A SEP includes a clear strategy, measurable outcomes, a policy framework that may encompass regulatory changes as well as spending programs, and clear assignments of responsibility--within government and among the donors and NGOs--for spending, monitoring and t1nancing. This approach is being used with success in an increasing number of countnes. 49. Making the transition away from project based lending is not straightforward.21 To make SEPs work properly, the government must provide a clear articulation of its strategy, plans and resource requirements for the donor community. Th fungibility of resources makes it important to demonstrate to donors that inappropriate or wasteful activities, whether inside or outside the rural sector, will not be funded. At the outset, it will be very important to strengthen the administrative capacity of the line ministries because tey will need to take over the responsibilities currently performed for them by numerous project implementation units. This process will need to be focused on only one or two ministries at a time, paying special attention to issues of staffing, training, incentives and accou?tability. As alluded to above, HMGN would need to pay special attention to the transparency offlne prmcurement code and ensure the civil service adhere to it. The MoF and NPC woud also ed to strengthen their capacity to play the coordinating role between the donors and the lne- mJnistries. 50. Monitoring. Each ministry visited during the cou-se of the research for this report indicated that they were weak with regard to moutorng. Most ministries need to do more to set and monitor measurable targets for service deivCry. -eeral ministries have established offices in each of Nepal's 75 districts. Despite this, mnis;r staFF do not systematically visit and assess each of their projects on a regular basis: staff x cofen reluctant to be posted to regions outside Kathmandu and are constrained by poor roads and -oor communications. In none of the 20 The logical extension of this concept is support for then budget across all sectors. 21 World Bank, 1998. Sector Investment Programs. (AFTM2) ministries were officials able to provide data on the estimated costs of completion for their projects and only a few could provide summaries of performance for more than a handful of their projects. This capacity has clearly eroded. The 1994 World Bank Public Expenditure Review included many references to the government's ratings of projects, which cannot currently be duplicated. 51. The government may also wish to reinstate, the old practice of monthly review meetings chaired by the Prime Minister aimed at those activities most likely to reduce poverty, regardless of size or cost. This review of critical activities will remain necessary even if the government were to adopt the proposed MTEF and SEP approaches. Finally, the government should strongly consider strengthening the monitoring capacities of the MoF, NPC, FCGO, AGO and line ministries to monitor spending and service delivery and the impact of service delivery on citizen welfare. This effort should include improvements in staffing, skills mix, training, computerization and provision of adequate financing. B. INCENTIVES 52. The previous section indicated the need for the government to strengthen its capacity for effective planning, budgeting, implementing and monitoring the delivery of needed rural services. The prospects for improvement can be increased by providing the right kind of environment. In particular, it would be helpful to reduce the level of political instability and to increase incentives for good governance. These issues are addressed below. 53. Political instability. Political instability has weakened the capacity of government to administer and implement its programs. Nepal has had eight governments in the last decade. Donors and government officials have complained that programs and projects have suffered as key personnel has been shifted from programs/projects with changes in government. There may also be reverse causality due to the rising level of inequality. For example, the recent Maoist insurgency is most active mainly in the poorest districts, especially in the western region. Reducing the level of instability will require leadership from many parts of society. Political instability can also be reduced, in part, by attacking poverty through growth and development. This is an urgent challenge. 54. Institutions and Incentives. The actions and effectiveness of government officials can be judged by those within government, by the citizenry, or by foreign agencies. The former is referred to as internal accountability, the latter as external accountability. Better internal accountability can motivate performance - judged against existing HMGN policy. Better external accountability (to citizens) can help motivate improvements to existing policies. In Nepal, the institutions which support external accountability include the democratic election of key officials, a free and inquisitive press, and audits performed by the Office of the Auditor- General which are reported, via His Majesty the King, to the Public Accounts Committee (PAC) of Parliament. The institutions which support internal accountability include the internal audit function supervised by the FCGO and the Committee to Investigate the Abuse of Authority 22 (CIAA). These are briefly reviewed below. The mission found that several institutions are in need of strengthening. 55. Internal Audit. The internal audit function has been compromised by the system of bureaucratic incentives and organizational structure.22 FCGO staff is stationed in each payment center of each ministry. These staff is expected to maintain the accounts of each payment center in addition to reporting problems when they occur. This mixes responsibility for accounting and auditing and introduces the possibility that some audits will be biased in order to justify various accounting decisions. The government should consider separating these two functions. 56. The accounting officers do not have a strong incentive to report problems. This is because they report not only to the FCGO but also to the head of the spending unit they are assigned to. Within the existing system, the evaluation of the head of the spending unit carries more weight than that of the FCGO in performance grading. Bov 3.2: Internal Audit and Authorit- to Spend in Nigeria. In 198.S. the Nigerian go%crnrnent nade uwo ch.enLCs hich stronglk undrmiined .cal conroIl .n,i icco-ntbili: ,The first w.as to give the authorN to spend to poiticul appoiniccs inc7uding niinisierm The m.cnd %as to nuke ihe Inernal audit officers responsible 1o :he rnnisers rrther:h.n the Ot h . or the . ur.Crt-Gen a .1 a re;. :.hc ha,r : ove- spndine and unbudgeted expenditurcs in toal c.pendatures rose fron ,5 percent n 1 :') to C' pcrLent i1 '2 These p0L c errors were not corrected until 1995 The share ot unbudgceed c.pend:tu.es sub equentrh Iell Ir Al:T14 zcro rhL nL 0 . . r World Bank Report 1.447-LINI 1996 57. The organizational structure of the payments system also makes auditing difficult. There are payment centers at the central level and sub-centers distributed across the 75 districts. In order to assemble the picture for a single ministry, the reports of 75 DTCOs and I or more central offices have to be collated. This system has worked well for minor abuses but larger abuses may be harder to detect on a timely basis since communications are poor, few treasury officers have the complete picture for any single ministry-and some projects are spread across several ministries. The government may therefore wish to review the efficacy of the organizational structure of the internal audit force.23 58. There are a few other agencies that also perform internal audit functions. These include the CIAA which is a constitutional body intended to investigate and control corrupt practices, the Revenue Intelligence Department and the Special Police Department. An earlier Bank mission identified these as being in need of strengthening.24 59. External Audit. The Office of the Auditor-General is the supreme audit institution in Nepal. It is an independent institution which conducts its own audits and reports to His Majesty the King. The OAG has, up until very recently, been reluctant to take on the issues of waste and corruption in a substantive way. Annual reports have tended to focus on a large number of small abuses without regard to the larger abuses and without regard to the context they take place in. 22 World Bank, 1998. Nepal: Country Profile ofFinancial Accountability. 23 Government is currently examining several options with assistance from DFID. 24 World Bank, 29 June 1998. Nepal: Country Profile ofFinancial Accountability. 23 In FY98, the OAG issued a more aggressive report which identified misuse of funds, delays in funds releases, delays in implementation, projects entered into the budget without proper feasibility studies or prioritization, externally funded projects entered into the budget without confirmed funding and so on. Even this latest OAG report, however, failed to include reviews of key issues such as ghost workers and ineffective subsidies on fertilizer, credit, and food which do not reach the poor in sufficient quantity and quality. 60. The OAG must rely on Parliament to take action on the cases it raises. The PAC in the House of Representatives holds detailed discussions of the OAG's reports. The PAC frequently reviews cases of waste, fraud and corruption. These cases are usually minor and few disciplinary actions have been recommended in the major cases. Parliament has occasionally formed committees to investigate allegations of corruption. PAC reports are submitted to Parliament prior to the submission of budget estimates. 61. Public information. External accountability can also be increased by making more information available to the public. Draft development plans, for example, should be made available, with monitorable targets, for public debate well in advance of their finalization. Budgets should be published with actual outcomes not only in aggregate, as is the case now, but also for each budget head and line item. 62. Other incentives. Other incentives play a role too. These include the ability to wield power through policy making or spending, salaries and benefits. When these are well balanced and stable, good results are obtained. When they are not, governments often suffer from some degree of corruption. Nepal is no exception. This is briefly explored in Box 3.3. Box 3.3: Corruption. Poor planning and budgeting practices are not the only reasons wh) goerment programs are not performing bter Corruption is a major obstacle to using Nepal's assets more producutiely Corruption ii gcncraly pcrceived to be widespread, contributing to misallocation of government resources, severe delays in project implementation. difficulTIes in obtaining appro.al for pri6ate investments, and rapid turnover and perverse incenti'.es for cit% scrtants What encourages corruption? Recent research points to se6eral ke% factors in Le\plainlri the le%el of corraptAon. First, incentives for corruption anse whenever public officals hae wide discretion wih little accountability The potential gain from corruption can be increased when polic) makers create pol;cy distrtions such as restrictie regulations on land use or subides on inputs. The chances of a penalty for corrupt practices is reduced 'when the judicial systum is either wak or Licks credibiL[I, Poverty and low wages also create incentives for corruption Go%ernmen salaries are t en low Senior ct il senants' salanes are about USS1,000 a year. This is well below what they could earn in the prate sector Under such circumstances. in order to ensure their future secunty. those who have power will have a strong incentte to use it to obtain as much wealth as possible Finally, the current poliical instabiliry has made the s:auation k% orse it has focused the attention of pohricins on short-term maneu%ering and led to increasing politiciztion of the administration In this situ-tion. not only % would one e%ercise po%er to obtain wealth. one would also do so as quickly as possible before power is chifted to others Reducing Corrupt Behavior. Gi%en the above, sonic obvious correctiC mCisureb include the climination of excessi%e authonty to set policy and to spend, more transparency and accountabilis in taking decisions, the elimination of policy distortions, the establishment of a strong and credible iudiciarv. adequate remuneranon for cL% 1 sen ants, merit based rccruitmeni and promotion, establishment ofa stable political s-trem and the elimination of parronage as the foundation ot political po1er 24 ISSUES AND TRENDS BY SECTOR 63. This chapter provides a summary of the general trends between FY95 and FY98 along with key issues. The trend analysis is for 4 years beginning FY95. As shown in Chapter 2, rural spending generally failed to keep pace with domestic inflation, with the largest losses accruing to the Ministry of Agriculture (MoA). Spending on irrigation and forestry did gain with respect to inflation but remained almost constant in real per capita terms. This outcome, for all three sectors, is not adequate if significant improvement is required on the level and quality of rural services. To the extent possible the government should seek to increase resource allocations for rural services and, at the same time, seek more efficient use of those resources. Key strategies for each sector include cost-cutting, prioritization, and a larger role for the private sector in some activities. An important first step would be to eliminate or restructure activities that are not consistent with the APP, thus releasing resources for APP priorities. A. AGRICULTURE 64. In Chapter 1, it was shown that agriculture suffered a severe decline in real per capita spending between FY94 and FY98. This puts a great deal of stress on the capacity of the MoA and other agencies to fully fund and implement their agricultural programs and projects. Some of the critical issues covered in this section include the fertilizer subsidy, the food subsidy, and research and extension. 65. Budgetary composition and services. Most agricultural spending (66 percent in FY97) reviewed in this report is managed by the Ministry of Agriculture. Allocations for several projects and programs are made through the MoF and the food transport subsidy is managed by the Ministry of Supplies. 66. The largest programs administered by the Ministry of Agriculture include the fertilizer subsidy, livestock development, extension services, general administration and the Nepal Agricultural Research Centre (NARC). The fertilizer subsidy accounted for 31 percent of the FY97 MoA budget and 21 percent of the sectoral total (Table 4.1). Most of the remaining expenditures within the MoA are either directly or indirectly for salaries and benefits. Direct payments for salaries and benefits in FY97 were 23 percent of the MoA total and 15 percent of the sectoral total. Much of the transfer payments to NARC were indirectly for the same purpose. The only deviation from this pattern of heavy salary expenditures is in the Department of Livestock where the largest allocations are for overhead--mainly for the Livestock Medical Improvement Project. Nearly all of the allocations for the Ministry of Supplies is for the subsidy to transport food items ( Table 4.1). The remainder is spent on administrative expenses. In contrast, all of the MoF allocations are for projects and are recorded mainly as financial investment or as transfers and grants. The largest MoF allocation for an agricultural project in FY97 was NRs 500 million for the Small Farmer Development Program, Phase III. 25 67. Budgetary Trends. The pattern over time for budgetary allocations for agriculture in all three ministries shows that there were some significant shifts in the composition of spending. In particular, the allocations for agricultural credit was reduced from 33 percent of the total in FY95 to zero by FY98 because of a withdrawal of AsDB support to the Agriculture Development Bank of Nepal (ADBN), channeled through the MoF, due to poor performance in loan recoveries (Table 4.2, Part B). Allocations for livestock development were boosted, notably for extension services and input supplies. This was a welcome improvement given Nepal's high livestock density. There were also large increases in the FY98 shares for research and for administration. Table 4.1: Composition of FY97 Budgetary Allocations, Agriculture Salaries Tras- Producit Cqpital Phnsle Finap- & OVer- fers & -ion Trans- Invend- cial Cash Toad Beitsfl head Grant Servces fer ma Inves. Grum Millions of Rupees Total 2,911.2 448.5 309.8 1,218.4 37.0 2.8 160.0 650.0 49.2 Percent of Total Total 100.0 15.4 10.6 41.9 1.3 0.1 5.5 22.3 1.7 Ministry of Agriculture 65.7 15.3 10.6 31.2 1.3 0.1 5.5 0.0 1.7 Subsidy 20.6 0.0 0.0 20.6 0.0 0.0 0.0 0.0 0.0 Ministry of Agriculture 1.2 0.5 0.2 0.5 0.0 0.0 0.0 0.0 0.0 Dept. Agriculture 20.5 8.3 3.0 2.5 1.1 0.1 4.7 0.0 0.8 Dept. Livestock 14.5 5.3 7.0 1.2 0.2 0.0 0.8 0.0 0.0 Cooperative 2.0 1.3 0.4 0.2 0.0 0.0 0.0 0.0 0.0 NARC 7.0 0.0 0.0 6.1 0.0 0.0 0.0 0.0 0.8 Ministry of Finance 25.2 0.0 0.0 2.9 0.0 0.0 0.0 22.3 0.0 Small Farmer Training Grant 1.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 Gulmi Arghakhanchi IRDP 0.5 0.0 0.0 0.5 0.0 0.0 0.0 0.0 0.0 Livestock Insurance 0.2 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 Small Farmer Interest Grant 1.2 0.0 0.0 1.2 0.0 0.0 0.0 0.0 0.0 ADBN, Share Investment 3.6 0.0 0.0 0.0 0.0 0.0 0.0 3.6 0.0 Small Farmer Dev. 1II 17.2 0.0 0.0 0.0 0.0 0.0 0.0 17.2 0.0 Rural Women Dev. Prod. 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 Gulmi Arghakhanchi IRDP 1.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 Ministry of Supplies 7.8 0.1 0.0 7.7 0.0 0.0 0.0 0.0 0.0 Administration 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Nepal Food Corporation 7.7 0.0 0.0 7.7 0.0 0.0 0.0 0.0 0.0 Other 1.2 na na na na na na na na Source: Ministry of Finance. 68. Actual and real expenditures. Actual spending declined from an average of 96 percent of the total allocation in FY95 to an average of only 72 percent in FY97 (Table 4.2, Part C). After adjusting for inflation, real spending fell even more. Total real spending in FY97 was only 61 percent of the level spent in FY95 - and down by 86 percent even after the credit program is excluded from the calculation (Table 4.2, Part C). Other than the credit program, the largest losses in real terms for extension services and for programs in horticulture, aquaculture and crop protection (Table 4.2, Part D). Real allocations for fertilizer fell to 74 percent of the FY95 level. The largest real gains in FY97 were for livestock development. This was primarily because of the introduction of three donor financed programs. More details on the subsidies for fertilizer and food appear below along with a review of research and extension services. 26 Table 4.2: Expenditure Trends in Agriculture, FY95-98 Part A Millions of Rupees Budgeted Allocations 3,053 2,885 2,911 2,913 Actual Expenditures 2,927 2,480 2,109 -- Part B Budget Allocations as Percent of Total Total 100 100 100 100 A. Credit 33 26 17 0 B. Fertilizer & Other Supplies 20 21 23 23 C. Extension & Training 17 18 13 13 D. NFC Transport Subsidy 8 8 8 8 E. Research and Development 5 6 6 10 F. Livestock Development 3 5 18 24 G. Policy Analysis & Admin. 4 4 5 12 H. Other (Horticulture, Aquaculture, etc.) 11 12 11 9 Part C Expenditures as Percent of Allocations Total 96 86 72 -- Part D Expenditure Indices In Constant 1995 Rs '000 Total 100 78 61 -- A. Credit 100 62 14 -- B. Fertilizer & Other Supplies 100 85 74 -- C. Extension & Training 100 105 66 -- D. NFC Transport Subsidy 100 91 80 -- E. Research and Development 100 103 109 -- F. Livestock Development 100 90 438 G. Policy Analysis & Admin. 100 95 99 H. Other (Horticulture, Aquaculture, etc.) 100 60 54 -- Memo: Total excluding Credit 100 87 86 -- 1. Includes the transport subsidy for NFC. Sources: Ministry of Finance and staff estimates. Fertilizer 69. According to government and FAO estimates, Nepal has the lowest nutrient application rate of only 23 kg/ha (current estimates are 33 kg/ha) in the region compared to 78 kg/ha in India, 115 kg/ha in Bangladesh, 318 kg/ha in China and 101 kg/ha in Pakistan." The low rate of usage is consistent with the low share of crop land under irrigation, the low road density and low per-capita incomes (Table 4.3). More alarmingly, fertilizer sales in FY98 were the lowest in a decade. 25 From averages of 1990-97 FAO estimates. 27 Table 4.3: Fertilizer Sales ' Nutrients (Mt) Nutrt K ha) FY89 56,840 17 FY90 67,286 20 FY91 72,718 22 FY92 84,443 26 FY93 83,332 26 FY94 73,809 22 FY95 90,026 26 FY96 69,720 19 FY97 64,149 18 FY98 46,423 13 Average FY90-96 23 a. Excludes unofficial cross border imports from India. FY97-98 data include private sector distribution. Source: AIC for fertilizer and Economic Survey for hectares under crops. 70. Previous policy. The government strategy up until 1992 had been to try to increase fertilizer use through a subsidy. The government set selling prices and subsidized the procurement price and transport costs through the Agricultural Inputs Corporation (AIC). As the data in Table 4.3 indicate, this strategy produced only mild gains and certainly did not bring fertilizer use closer to the standards set by other countries in the region. The main supply constraint was the cost of the subsidy itself: resources that could have been directed towards increased imports were used instead for the subsidy. This approach also necessitated a delicate balancing act. The quality of Indian fertilizer is generally considered to be lower than imports from major suppliers elsewhere. Thus, if prices in Nepal were set too low, there would be an incentive to smuggle Nepal imported fertilizer into India. Conversely, if prices were set too high, there would be an incentive to smuggle from India into Nepal. In general, prices have usually been slightly higher than Indian prices. HMGN authorities estimate that cross-border inflows have contributed from 10 to 45 percent of total consumption in any given year.26 Finally, it has been observed that the subsidy has not been equitable. Available data indicate that the well-off households tend to have more access to the subsidized fertilizers than poor households (Table 4.4). Table 4.4: Use of Urea Average Households Quantity Households Purchasing Purchased Using L'rea from .41C from AIC (percent) (Kg) Bottom 25 percent 37 24 10 Lower Middle25-50 percent 55 33 19 Upper Middle 50-75 percent 58 39 30 Top 25 percent 63 44 39 Average 54 36 26 Source: World Bank 1998. Nepal: Poverty at the Turn of the Twenty-First Century. 26 NPC 1998. Report on the Study on Fertilizer Policy and Institutions. Table 7. 28 71. Current strategy: With effect from November 1997, subsidies on DAP and Muriate of Potash (MOP) was removed and the price subsidy on urea was reduced in a phased manner and in November 1999 eliminated. The prices of chemical fertilizers have been deregulated both at the wholesale and retail levels. The implicit fertilizer subsidy that existed prior to November 1999 is shown in Table 4.5. The FY99 budget allocation of NRs501.6 million, down from NRs600 million in FY98 and FY97, should therefore be the last. Table 4.5: Implicit Fertilizer Subsidy, October 1998. Import Cost CIF Nepal 10,602 19,219 OtheNRs Costs (Commission, interest etc.) 1,574 2,052 Total Landed Cost 12,176 21,271 less Subsidy 4,776 2,701 o/w Official Subsidy 2,728 - equals AIC Selling Price 7,400 18,570 Subsidy as Percent of Landed Cost (%) 39 13 Source: NPC 1998. Report of the Study on Fertilizer Policy and Institutions. Table 12. 72. In addition, under the reforms, AIC's monopoly on the import and distribution of fertilizers has been removed. The fertilizer policy is designed to encourage private sector participation in the import and distribution of fertilizers. As a result of these policies private sector imports of urea increased from 17,550 mt in Fiscal Year 1997/98 to 91,049 mt in Fiscal Year 1998/99. Import and distribution of DAP and MOP continue to be carried out mainly by AIC. 73. In August 1998, the Government discontinued the provision of the transport subsidy for AIC to deliver fertilizers to remote districts and converted this subsidy into a General Agriculture Development Fund (GADF) to be utilized by District Development Committees (DDCs). This fund is available for 23 remote districts, (based on road access and extent of food deficit). For FY 1999/2000 the Government has allocated NRs.74.9 million towards the fund. To acquire fertilizers using the Fund AIC will assist 14 DDCs and MoA will assist the remaining nine DDCs. The private sector is also allowed to distribute the fertilizers in these areas. Additionally, the government has decided that fertilizers received from bilateral grants will be distributed to AIC and private sector on a transparent and competitive basis. 74. Determinants of demand. The elimination of the fertilizer subsidy is not likely to reduce demand by a significant amount. The response rate of fertilizer is high and the terms of trade have been moving in favor of the farmer. Available research indicates demand in Nepal is inelastic with respect to price. Thus, the evidence indicates the main constraints for low fertilizer utilization are the low per capita income, the small share of cultivable land with predictable year round irrigation (35 percent) and the low density of the road network making it difficult for the free flow of inputs and outputs. This is illustrated in Table 4.6 which shows that countries with low road densities and poor irrigation consume less fertilizer. In the case of irrigation, Nepal's coverage is actually fairly high-the problem is the unpredictability of the water flows (see the sub-section on riparian issues in the section on irrigation below). Weak research and extension 29 services and inadequate access to formal credit - current estimates indicate that formal credit only reaches 20 percent of the market-are also important determinants of demand. Redirecting resources formerly allocated to the subsidy to water management, roads, research, extension services and credit reforms would all help increase fertilizer use in the long-run. Table 4.6: Determinants of Fertilizer Use Fertilier GAP per Road Cultivable Land Use Capita Density under Irrigation (Ag.'haj (USS) (AnLkm2) %) Low Road, Low Irrigation 17 1,221 12 3 Low Road, High Irrigation 94 1,070 11 28 High Road, Low Irrigation 157 10,680 535 4 High Road, High Irrigation 167 7,285 468 29 Nepal 1/ 23 206 35 35 India 78 348 231 29 Bangladesh 115 233 51 35 Pakistan 101 440 113 80 1. AIC for fertilizer and Economic Survey for land under crops. Source: FAO and 1994 World Development Report. Data are for 79 countries and averages cover 1990-96. 75. Recommendation: With the elimination of fertilizer subsidies and the increasing role of the private sector, the role of AIC is currently being determined by a Task force which includes possible privatization. AIC's exit from the distribution of seed and fertilizer would release budgetary resources that could be redirected to productive activities. For reasons of equity and political economy, the government may consider implementing a temporary safety net program for the poorer districts if the prices of fertilizers rise too rapidly. There is however a need for the Government, to designate an agency to regulate the quality of inputs , both fertilizer and seed. This is all the more important as there is a likelihood that there would be an increase in informal trade of subsidized fertilizers from India. Food Subsidy 76. The government has intervened in the food market for many years in order to help reduce poverty. The government strategy has, until recently, been to reduce food prices in 38 remote districts through a transport subsidy; increase farmer incomes by procuring food products at a floor price from farmers in less accessible areas; and intervene in the market to stabilize prices. These activities have been carried out through the Nepal Food Corporation (NFC) administered by the Ministry of Supplies. NFC's subsidies from the government have grown from NRs. 142.4 million in FY92 to NRs. 225 million in FY98 and FY99. The rationale for the government's strategy has been weakened by recent events. Few farmers sell to NFC, NFC supplies only a fraction of the consumer market, and its capacity to influence prices is negligible. 77. Food Procurement: Improved infrastructure development including the East-West Highway and the Karnali bridge has resulted in farmers having better access to markets. Quantitative restrictions on exports on all food items, including rice, have been removed. There is now only a marginal export duty. The basic policy framework is now in place for the market 30 to function effectively without the need for NFC's continued involvement in food procurement. NFC's operations are primarily in the two westernmost districts of the Terai - Kailali and Kanchanpur. About 40,000 mt was procured in FY96. Operations in these areas have been mostly loss making. Performance has been poor in the hill and mountainous districts where NFC procurement was around 2,000 mt. 78. Supplies to consumers: In theory, there is a rationale for subsidizing food. As many as 14 districts are frequently in food deficit according to government officials, notably in the hill and mountain areas. In reality, however, the subsidy program has provided only a fraction of the food requirements in the deficit districts while diverting food to the wealthy Kathmandu valley.' The amount of food actually supplied is far below requirements, having fallen from 8 percent to 4 percent in recent years due to escalating transport costs. In 1996/97 the amounts supplied to this area was only about 11,800 mt. Revising the program to reach all of the poor (where over 42 percent of the population is below the poverty line) would be prohibitively expensive for Nepal. The bottom line is that the market seems to be distributing food fairly satisfactorily with little need for NFC intervention. 79. Price stabilization: There is little justification for NFC's role in stabilization because the market is functioning quite well - and the potential to make an impact is negligible with only 4 percent of the food supply in only 38 out of 75 districts. 80. NFC may have a role to play in ensuring food security. Reorganization of NFC to have a National Strategic Food reserve could be beneficial, but the management of such reserves is extremely demanding. Food security issues are critical in the remote areas where there is food deficit. At present definition of "remoteness" is those districts in need of food transport. Hence many of these districts that are food surplus are areas that benefit from the subsidy. Hence a redefinition to take into account food deficit areas is required. 81. Recommendation: The AsDB, under the Program Loan has proposed that NFC should be revamped so that it could be more strategic and hold stocks for security purposes only. Food security is of concern in Nepal due to its geography. Natural disasters such as monsoon flooding, drought, earthquakes and landslides can all significantly affect food production and transport. Current estimates of the food reserve required would be about 20,000 mt of grain. 82. Steps towards the transformation of NFC ( January 2000) include: the number of districts served by NFC has been reduced from 38 to 27.28; the number of employees has been reduced from 1304 staff to 836; thirty-six depots have been closed; an increase of 25 percent of the retail price for government employees in remote areas; about 40,000 mt have been kept in reserve in strategic locations; NFC to compete commercially wherever possible; and steps have been taken for the introduction of a ration card system. 27 Earlier studies that have shown that the effect of NFC's market intervention activities have primarily been to subsidize to certain consumers- i.e. government servants and public sector employees. 28 At present definition of "remoteness" is those district that do not have a road link nor production potential. 31 Research and Extension 83. The delivery of effective agricultural research and extension services is part of the package of essential strategic inputs needed to achieve improved agriculture growth. Nepal's agricultural research and extension system has, unfortunately, been largely ineffective in delivering services to farmers. This has been reflected by declining productivity in agriculture. 84. Nepal's Agriculture Research Council (NARC) has the responsibility to carry out agricultural research through a network of stations in the hills and the Terai. In 1992, the budget allocated to NARC was 0.46 percent of agricultural GDP (AGDP) compared to the FAO recommendation of 1 percent of agricultural GDP. NARC's expenditures on research do not relate well to the relative importance of different commodities. Rice research is about half the average level of other commodities in relation to its contribution to AGDP whereas research on oilseeds and sugarcane is respectively 5 and 3 times higher than their relative contribution to AGDP. In the interim, it is suggested that research funds be devoted to where there is the greatest need. Partially as a result ofinappropriate resource allocation, the technology used in the Terai for main crops such as rice is outdated. The most common modem rice variety grown in the Terai is Mansuli, developed in 1965 in Malaysia and introduced to Nepal in 1973 and, even on irrigated land, 50 percent more Mansuli variety is grown than other modem IRRI varieties29 85. However, besides these, there are issues related to organizational/institutional framework of MoA and inadequate prioritization of activities for both research and extension, responsible for wasteful expenditures and little or no impact on productivity. For example, with the creation of NARC there is no rationale for continuing with several experimental and seed multiplication farms, commercial horticultural and fisheries farms within the Department of Agriculture, and livestock breeds production and dairy production farms within the Department of Livestock Services of MoA. Annual budgetary allocations are high for some of the farms compared to the negligible services provided by these farms to farmers and negligible revenues coming from these farms to HMGN. In addition, large number of highly qualified technical people are wastefully engaged in these farms mainly for managing seeds, sapling and breeding production, while there is a dearth of qualified manpower both in research and extension. These farms should be privatized or given on long-term lease to farmers/private sector. Many of the research experiments and trials continue to be planned at the behest of individual interests of researchers and not on farmers' needs. Likewise, extension demonstrations and training are planned without taking due cognizance of the needs of the farmers. 86. The performance of the extension service operated by the Department of Agriculture has also been poor. Part of the problem is that staff are spread thinly and many are not well qualified. The department's staff includes some 2,000 junior agriculture technicians (JT) and junior technical assistants (JTA) based in Nepal's 75 districts. Each technician is responsible for extension services in 2-6 VDCs, but the programs they work on are not well defined with objectively measurable outputs and clear expected outcomes. An allied problem, however, is 29 Nepal Agricultural Perspective Plan, 1995 32 that the incentives for these technicians are poor. Instead of working with farmers in their area, they spend most of their time in the District Agricultural Development Office (DADO) in the district headquarters or outside of the district on leave. They are rarely, if ever, seen in the rural areas they are meant to serve. 87. The government, with support from IDA0 and following the recommendations of the APP, is working to strengthen the national agricultural research, extension and training systems. The government aims to strengthen relevant public institutions, promote a decentralized user- oriented approach to research which focuses on the specific needs of farmers in each district, emphasize adaptive research, strengthen coordination mechanisms and maintain linkages with relevant international research institutes. According to the proposed agricultural research strategy, research management for the Terai would be decentralized to 4 regional research stations. Technologies would be transferred to the farms of lead farmers for validation and adapted to incorporate farmers' practices before being packaged for dissemination. The stations would concentrate on research on: (i) rice-wheat based production systems; (ii) integrated pest management; (iii) production systems based on rainfed and fragile ecosystems; and (iv) high- value commodity-based production systems including horticulture and livestock commodities. 88. Under the same reforms, the District Agriculture Development Offices (DADOs) would select high-potential areas, or "pockets", in their district and focus agricultural extension inputs into these areas. Within these pockets, agricultural extension workers would work with groups rather than individual farmers. There is some concern that the pocket approach could be inequitable and ineffective. Agricultural extension should be demand-driven based on farmers' needs and part of the income of agricultural extension workers should be paid for by fees charged to farmers for services rendered. Payments by beneficiaries are not expected in the short term but should be a long-term goal. In the medium term the private sector may be contracted by beneficiaries. The private sector can also be contracted to provide the services. This would be similar to what is already happening in the livestock sector where animal health workers charge for their services if they make farm visits. The DADOs would have greater autonomy in defining extension priorities based on demand from their "clients" (the farmers) rather than implementing top-down programs designed at the central level. 89. The implementation of these policies on the part of the Ministry of Agriculture has so far been below expectations. In November 1998, the APP implementation monitoring unit in the National Planning Council (NPC) reported that the pocket approach to agricultural extension had only been implemented in 12 of the country's 75 districts. There has been some progress recently where instructions have been provided to field level staff, but progress has to be expedited. 90. Recommendation: The resources allocated to agricultural research and extension in Nepal are low compared to other countries in South Asia. However, lack of implementation of policies and institutional capacity is the main cause of the Ministry of Agriculture's inability to provide farmers with the research and extension services they need. Innovative alternatives 30 Through the Agricultural Research and Extension Project (AREP) Cr, 2977-NEP., a 5 year project. 33 which are being tested in other parts of South Asia should be considered such as the sub- contracting by Government of research and extension to specialized NGOs and firms. In the long-run, the Ministry of Agriculture's role should be limited to the formulation of overall policies and the monitoring and evaluation of private sector service providers. 91. A mid-term review of the IDA financed project, which is financing a large part of the research and extension activities of the government, has been completed (February 2000). The mid-term review suggested the need to redefine the problems of extension and research operation; refocus activities on priority areas and develop appropriate work programs and revitalize the main agencies, DOA and NARC, to implement programs with clear outcomes. The need to take into account the Local Governance Act and decentralization was emphasized for both research and extension. On extension, efforts to redefine and refocus the program would require: (i) modernizing public extension services by improving district extension infrastructure, and technical support; formulating a National Agricultural Extension Strategy; (ii) promoting partnerships with private extension providers; (iii) decentralizing extension services by developing more effective bottom-up planning and priority setting; and (iv)human resource development and management improvement for extension staff. On research, it was agreed that reforms would focus on: (i) improving the management and focus of NARC; (ii) improved regional and outreach technical research in NARC; (iii) development of a national agricultural research policy; (iv) a funding mechanism for both public and private research facilities; and (v) training for research staff on issues such as agribusiness and post harvest technology. B. FORESTRY 92. Services and Budgetary Composition. The Ministry of Forestry and Soil Conservation (MoFSC) provides four inter-related services: forestry management and development; parks and wildlife management; soil and water conservation; and research and extension.31 The largest allocations are for salaries and physical investment (Table 4.7). This is consistent with the fact that the MoFSC makes direct investments in public works for soil and watershed conservation and for reforestation in addition to acting as a service provider - notably for the protection of the forests and national parks. In fact, the salary and benefits allocations for the Department of Forestry and for the Department of National Parks and Wildlife were the two largest allocations for any purpose in the entire FY97 MoFSC budget. 93. Forestry. There are 4 main categories of forests within the Nepalese system: national forests, community forests, leasehold forests and private forests. National forests are owned and managed by the government. Community forests are owned by the government but managed by Forest User Groups. Leasehold forests are owned by the government but leased to individuals or organizations for commercial purposes. MoFSC expenditures for all categories of forestry make up 44 percent of its FY97 budget (Table 4.8). Government resources are spent almost exclusively on community forestry, leasehold forestry and the District Forest Offices. The 31 All of the governments' forestry and soil conservation programs, and all but one forestry project, are managed by the Ministry of Forestry and Soil Conservation (MoFSC). Allocations for the Hilly Leasehold Forest and Charan Development Project are, however, made through the MoF for control purposes. 34 MoFSC does contribute towards private forestry but mainly through the free distribution of seedlings and limited technical assistance. Table 4.7: Composition of FY97 Budgetary Allocations, Forestry Sakkdes Trais- Product C'ap&l# Physkia Fizn- ,& Over- fe & -40o Thans- Inve- clat Cash Conming Tw Benefla head Grams Ser*es fer a rent Inves Grant eno- Millions of Rupees Total 1,021.4 599.7 69.9 7.7 1.4 2.9 287.9 15.0 36.6. 0.3 Percent of Total Total 100.0 58.7 6.8 0.8 0.1 0.3 28.2 1.5 3.6 0.0 Min. of Forest Land Cons. 98.5 58.7 6.8 0.8 0.1 0.3 28.2 - 3.6 0.0 Admin. and Planning 3.1 1.1 0.5 - - 0.0 0.5 - 1.0 0.0 Dept. Forestry 45.4 24.3 3.0 0.1 - 0.0 15.3 - 2.6 - Dept. Botany 3.3 1.2 0.8 0.0 0.0 0.0 1.2 - - Dept. Soil Conservation 13.8 2.7 1.4 - - - 9.6 - Dept. Nat' Park & Wild Life 33.0 29.4 1.1 0.6 0.1 0.2 1.5 - Ministry of Finance 1.5 - - - - - - 1.5 Hilly Leasehold Forest 1.5 - - - - 1.5 Source: Ministry of Finance. Table 4.8: Expenditure Trends in Forestry, FY95-98 FY95 F Y96 F f 97 FY198 Part A Millions of Rupees Budgeted Allocations 928 1,095 1,021 1,099 Actual Expenditures 807 899 975 -- Part B Budget Allocations as Percent of Total Total 100 100 100 100 A. Forest Development 48 47 45 44 1. Community Forest 15 16 14 16 2. Leasehold Forestry 9 10 7 9 3. Private Forestry 1 1 2 1 4. National & Commercial Forestry 1 0 0 0 5. District Forestry Offices 21 20 22 19 B. Soil & Water Conservation 13 10 13 14 C. National Park and Wildlife Proct. 22 27 26 25 D. Research and Extension 8 6 6 4 E. Administration 10 10 9 11 Part C Expenditures as Percent of Allocations Total 87 82 95 -- ofwhich Community Forest 75 62 74 -- Leasehold Forestry 85 83 70 -- Research and Extension 91 78 89 -- Part D Expenditure Indices In Constant 1995 NRs '000 Total 100 103 103 -- A. Forest Development 100 104 95 -- of which Community Forest 100 99 90 -- Leasehold Forestry 100 116 64 -- B. Soil & Water Conservation 100 70 130 -- C. National Park and Wildlife Proct. 100 118 109 -- D. Research and Extension 100 67 74 -- E. Administration 100 132 112 -- Source: Ministry of Finance and staff estimates. 35 94. Community forestry. Under the Forestry Act of 1993 and the Forest Bylaws of 1995, District Forestry Officers (DFOs) are empowered to handover any portion of a national forest to a qualified Forest User Group. User groups are allowed to use and freely sell forest products within general guidelines that promote good management. A recent decision by MoFSC to ban the green felling of community forests threatens the policy environment and sustainability of community forests. A recent circular (January/February 1999) also provides for 25 percent of total proceeds from the sale of forest products to be spent in development, conservation and management of forests and the rest on welfare activities of the community. The transfer process has gone smoothly in the hill districts but lags far behind in the Terai: there, only 5 districts out of 21 have actively handed over portions of the national forest. According to government officials the major reasons for the slow transfer of forests to user groups are socio-economic and geographical. A large number of forest dwellers in the Terai are encroachers, and these forests are also considered to be production forests that cater to the entire nation. As the forests are different in the Terai, there is a need for different models of forest management compared to the Hill region, with community/private and other stakeholder participation. Development of such models is required before going ahead with any arrangements. The models would have to take into account the social conditions, benefit sharing arrangements, governance issues - with the high valued production, and marketing issues with respect to the role of the Timber Corporation of Nepal (TCN). TCN has been operating with losses and there are allegations of political interference with respect to the pricing of timber. De-monopolizing TCN has been high on the agenda of the policy dialogue between the donors and HMGN. 95. Leasehold forestry. The leasehold program has been a profitable venture for the government. The government earned NRs 442 million (US$8 million or just under half of the forestry budget) in FY96 from the leasehold program and has estimated revenues of NRs 450 million for FY97 and FY98. These funds are remitted to the central treasury, however, and are not retained by the MoFSC. The leasehold program may be an effective and profitable way for the government to reassert control over illegal logging. Legalizing the logging operations, subject to restrictions for soil and forestry conservation purposes, would allow the government to increase its revenues. Raising the leasehold fees to an appropriate level would provide an incentive not to exhaust the supply of trees. There is also a need to strengthen the linkages of this program with community forestry. 96. Real spending on the leasehold program occurs in only two activities. These are the Hill Leasehold Forest and Pasture Development Project and the National and Leasehold Forest Development Program. These activities are primarily financed by donors Allocations to the latter fell sharply in FY97 and there has been significant under-spending on both (Parts C and D of Table 4.8). 97. District Forest Offices. As mentioned above, all portions of the national forests which have not been transferred or leased are managed by the DFOs. Expenditures on DFOs are large, and these that are related to managing community forests, accounting for 21 percent of the FY97 MoFSC budget. Real spending on DFO activities increased slightly in FY96 and FY97. In fact, as more forest is transferred, real DFO spending should be going down. To reduce government expenditures communities should be encouraged to contract private sector for post hand-over 36 activities. This has been piloted under the recently -completed IDA -financed Hill Community Forestry Project (Cr. 2028-Nep.) Government may wish to expedite the rate of transfer and ensure that DFO resources are adjusted accordingly. 98. Parks and wildlife. The Department of National Parks and Wildlife Protection provides protective services for the national parks and items of important cultural heritage. Its operations in the national parks also generate revenues worth roughly NRs. 70 million annually from the national parks, mainly from Chitwan. This is equivalent to roughly one quarter of the Department's annual expenses (the DPWP uses 25 percent of the FY97 MoFSC budget). Real spending on parks and wildlife management in FY96-97 has increased slightly over the amounts spent in FY95. Almost all of the budget for the Department is for a transfer to the military service to pay for the patrol and protection of the parks. 99. The programs of DPWP are generally successful. Officials noted, for example, that rhinoceros and tiger populations, though small, were increasing. The Department is currently beginning to set up buffer zones around the parks in order to further protect them. These buffer zones would be controlled by local communities who would be entitled to use the land's resources in exchange for proper management. There would also be some revenue sharing between the Department and the buffer zone communities. The major challenge raised by officials was the need for better coordination in planning with other ministries. For example, there are proposals for road project that would divide Chitwan National Park and for an irrigation project that would adversely affect Bardiya National Park. The Department noted it would also benefit from improved coordination with the new Environmental Protection Agency. 100. Soil conservation. The Department of Soil Conservation and Watershed Management (DSCWM) provides services to 55 out of 75 districts for land use planning, land use management (tree and grass plantings etc.), infrastructure (road slope stabilization, trail protection etc.) and hazard prevention programs such as landslide treatments and streambank protection. The DSCWM used 14 percent of the MoFSC budget in FY97. Almost all of the DSCWM budgetary allocations are made through the development budget. Spending therefore rises and falls with project performance and donor support: real spending fell sharply in FY96 but then more than recovered in FY97. 101. Activities are generally small-scale and tend to rely on local labor. Officials in the DSCWM noted that this tends to create problems when communities have already committed their labor to other competing needs. Finding people and keeping them has proven to be difficult. In response, the DSCWM is now trying to utilize pre-existing community user groups, that had been set up for other purposes, which demonstrate signs of sustainability. The DSCWM is also concerned that the NPC and the donor community should acknowledge that the participatory nature of their activities requires new thinking about how to set targets for performance evaluation. Certainly annual physical targets for inputs such as streambank stabilization would be less appropriate than 3-year targets for outcomes such as streamflow volatility. 37 102. The programs for soil conservation, that have a large community participation component, need to be strengthened. Government staff see the need for linkages with agriculture and irrigation at the district level. Concern has been raised that budgetary constraints have prevented an integrated approach to soil conservation. Within the context of the APP a number of programs in the agriculture/irrigation sector should incorporate and consolidate existing soil conservation activities. 103. Research and extension. The MoFSC has a number of research and extension activities under way that accounted for only 4 percent of the FY98 MoFSC budget, down from 6 percent in FY97 and 8 percent in FY95. These include the Botanical Research Division, the Forest Research & Survey Program, the Forest Products Development Program, the Tree Improvement Program, the Training and Extension Program and the Plant Development Program. Actual spending on these activities has fallen steeply in real terms, in part due to inadequate allocations but also due to under-spending (parts C and D of Table 4.8). Given the poor performance of forestry in recorded output and exports, the government may wish to identify ways to fully utilize the resources allocated and consider making some moderate real increases in expenditures-perhaps restoring real spending to FY95 levels. 104. Administration. Administrative activities have consistently used roughly 10 percent of the MoFSC budget over the years. Real spending, however, has increased. The Ministry may wish to explore the possibility that some of these resources could be reallocated towards research and extension. C. IRRIGATION 105. The share of crop land currently under irrigation in Nepal is quite low, approximately 35 percent. The Terai, which contains three quarters of the irrigable land, is only one-third irrigated. The seasonal nature of most of the rivers further reduces the possibility of year-round irrigation of these lands from the existing run-of the rivers irrigation schemes. But surface schemes supply over 85 percent of the national total. Of that amount, 75 percent of existing surface schemes were put in place by farmers. The main issues for these farmer-managed schemes are lack of water management, temporary and rudimentary nature of water control headwork and poor conveyance structures. Many of them are washed away during floods and have to be restored. (see the section on riparian issues below). The main focus of the government, however, is to expand the use of ground-water by increasing the number of tubewells in the country, mainly through its subsidy programs. This is reflected in the currently escalated Government's FY99 program of APP tubewell program, AsDB funded Community Shallow Tube Well Irrigation Project and IDA-funded ground-water irrigation component under the ongoing Nepal Irrigation Sector Project. (See the section on subsidies below.) This may be a second-best solution and choice to farmers; as these tubewells are high in operation and maintenance costs relative to surface schemes. However this is unavoidable and most rational solutions for Nepal, as large scale water management schemes, are expensive and riparian issues and environmental problems make surface schemes unfeasible. Surface irrigation would only be economically feasible if it is 38 within the context of a multipurpose water resources development program where the costs of the expensive headwork is shared among other sub-sectors i.e hydro-electric. 106. Composition of services and expenditures: Most of the governments' irrigation programs are managed by the Ministry of Water Resources (MoWR). There is also a credit program managed by the ADBN which is not covered in this review. The composition of expenditures is clearly for a ministry heavily involved with direct physical investments in infrastructure. Irrigation works consumed 87 percent of FY97 allocations to the irrigation sector while only 5 percent was devoted to salaries and benefits. Only 3.1 percent was allocated for overhead - mostly for operations and maintenance (Table 4.9). The largest MoWR irrigation investments were for surface schemes. The tubewell programs were next largest and the lift irrigation project (Marchawar), the smallest." The Farmer Irrigation Grant and the Underground Irrigation and Flood Disaster Reconstruction Project managed by the MoF are for cash grants and financial investment respectively. These represented less than 4 percent of the FY97 allocations to irrigation. Table 4.9: Composition of FY97 Budgetary Allocations, Irrigation Salaries Trans- Product Capikal Phj-ica Fian- & Over. fer & -in Trans- Inve dd Cash Coating TOra Benefits head Grant Serices for nsent nves. Grat acy Millions of Rupees Total 3,290.2 178.2 102.1 4.3 0.0 22.5 2,866.1 7.0 110.0 0.0 Percent of Total Total 100.0 5.4 3.1 0.1 0.0 0.7 87.1 0.2 3.3 0.0 A. Administration 3.7 2.9 0.4 0.0 0.0 0.0 0.3 0.0 0.0 0.0 B. Irrigation Development 78.9 1.4 1.5 0.1 0.0 0.6 71.7 0.2 3.3 0.0 1. Large Surface 33.9 0.6 0.5 0.0 0.0 0.5 32.3 0.0 0.0 0.0 2. Small/Medium Surface 32.1 0.4 0.5 0.0 0.0 0.0 27 0.0 3.3 0.0 3. Deep Tubewell 10.5 0.3 0.3 0.1 0.0 0.1 9.7 0.0 0.0 0.0 4. Shallow Tubewell 1.7 0.0 0.0 0.0 0.0 0.0 1.4 0.2 0.0 0.0 5. Lift Irrigation 0.6 0.0 0.1 0.0 0.0 0.0 0.5 0.0 0.0 0.0 C. O&M and Management 8.5 1.0 1.1 0.0 0.0 0.1 6.3 0.0 0.0 0.0 D. Flood Control & Emerg. 9.0 0.1 0.1 0.0 0.0 0.0 8.8 0.0 0.0 0.0 Memo: Ministry of Finance 3.6 0.0 0.0 0.0 .0.0 0.0 0.0 0.2 3.3 0.0 Source: Ministry of Finance. 107. Budgetary Trends. There has been a shift in allocations away from Irrigation Development and towards Flood Control and Emergency Repair, though the former continues to dominate spending at 79 percent of total FY98 allocations (Table 4.10, Part B). Within Irrigation development, there has been a shift away from large surface water projects and away from deep tubewell projects. This has allowed larger shares to be taken up by shallow tubewells and by small-and medium-scale surface schemes, mostly for rehabilitation. No new surface irrigation scheme has been implemented in the last decade. These changes are consistent with the strategy laid out in the APP and Ninth Plan. These trends, however, are only imperfectly mirrored in actual expenditures. 32 The allocations for the Farmer Irrigation Grant and the Underground Irrigation and Flood Disaster Reconstruction Project are made through the MoF for control purposes. 33 The share of spending on tubewells would be much higher if the ADBN credit program were included in the analysis. 39 108. Real Expenditures. Real spending on the tubewell programs has increased dramatically as directed under the APP (Table 4.10, Part D). At the same time, however, real spending on surface schemes has not been reduced. Real spending on deep tubewells nearly doubled in FY96, mainly because the allocation to the Bhairahawa Lumbini Irrigation Project (III Phase) was doubled. This allocation was subsequently reduced in FY97. Real spending on shallow tubewells tripled in FY96 partly because actual spending on the Community Shallow Tubewell Irrigation Program was also tripled. Large surface schemes gained in real terms mainly because their allocation share was increased. Small and medium surface schemes gained in FY96 and then fell back a bit in FY97 as spending was less than allocated. Spending on the lift irrigation project declined as a result of falling allocations and failure to spend all that was allocated 109. Real spending on operation and maintenance and water management declined as allocations fell in FY96 and then failed to keep up with inflation even though spending was increased in FY97. The simple failure to de-silt the systems at regular intervals has resulted in the need for costly interventions to repair and rehabilitate systems at a later date in the form not so much as deferred maintenance but expensive capital investment. A declining trend is also observed for flood control and emergency repairs - despite the addition of 3 new, small projects in FY96. Finally, spending on administration generally did not keep up with inflation. In fact, there is scope for additional reductions: the Dol maintains offices in all 75 districts, even though many of the mountain districts have negligible need for Dol services or irrigation. 4.10: Expenditure Trends in Irrigation, FY95-98 FYV95 FY96 FY9 FY98 Part A Millions of Rupees Budgeted Allocations 2,417 3,154 3,290 3,263 Actual Expenditures 2,664 2,963 2,935 -- Part B Budget Allocations as Percent of Total Total 100 100 100 100 A. Administration 5 4 4 4 B. Irrigation Development 81 82 79 79 1. Large Surface 32 32 34 28 2. Small/Medium Surface 38 35 32 39 3. Deep Tubewell 9 12 10 8 4. Shallow Tubewell 0 2 2 4 5. Lift Irrigation 2 1 1 0 C. O&M and Management 8 7 8 6 D. Flood Control & Emergency Repair 5 6 9 11 Part C Expenditures as Percent of Allocations Total 110 94 89 -- Part D Expenditure Indices In Constant 1995 NRs '000 Total 100 103 94 -- A. Administration 100 94 84 -- B. Irrigation Development 100 124 104 -- 1. Large Surface 100 122 113 -- 2. Small/Medium Surface 100 113 92 -- 3. Deep Tubewell 100 181 114 -- 4. Shallow Tubewell 100 309 361 -- 5. Lift Irrigation 100 81 45 -- C. O&M and Management 100 55 65 -- D. Flood Control & Emergency Repair 100 38 70 -- Source: Ministry of Finance and staff estimates. 40 Riparian Issues 110. The seasonal monsoon creates highly variable river flows with high silt content. This makes water management for irrigation purposes difficult and expensive. More to the point, water usage is low because of its unpredictability. Farmers need to time the arrival of seeds, water, and fertilizer carefully. At present, there is only one surface storage reservoir in the nation for water management. Additional large-scale water management schemes could mitigate these two problems. In particular, it is estimated that proper water management would permit a doubling of cropping intensity over all of Nepal's arable land. 111. The high financial and environmental costs, combined with the international ramifications with India, have inhibited the implementation of such schemes. The alternative, the shift towards tubewell schemes, allows a more predictable water supply, which is closer to farmer's fields -- -the trade-off is higher operation and maintenance costs. A framework for regional cooperation is urgently needed, not only for the resolution of downstream issues but also for the resolution of the environmental and financial issues. One financial solution may be for HMGN to allow private investors and India to invest a higher share in the water management works. A comprehensive Water Resources Management Strategy will also be required as an input for this process because large-scale water management schemes will have a significant impact on the nation's rivers and ecology. A strategy is currently being prepared financed by the IDA-financed Nepal Irrigation Sector Project (Cr. 3009). Irrigation Subsidies 112. In the last several years, capital subsidies have been made available to farmers for tubewell schemes. The capital subsidy for group-based tubewells is 60 percent of costs for shallow tubewells and about 84 percent of costs for deep and medium-sized tubewells. The average investment cost per well was NRs 43,000 for all types of tubewells in FY97. There are also credit programs for farmer-owned surface schemes disbursed through the ADBN (Table 4.11). Funding for the subsidy programs comes mainly from the government as well as a variety of donor projects. Table 4.11: Agricultural Development Bank Irrigation Program, (NRs.'000). FY95 FY96 FY97FY Capital Investment - by Instrument 211,571 178,680 168,016 98,114 Loan 113,036 113,944 107,457 64,780 Grant 98,536 64,736 50,559 33,334 Capital Investment - by Use 211,571 178,680 168,016 98,114 Shallow Tubewell 121,411 126,340 121,594 67,275 Surface Irrigation 33,244 10,871 12,680 9,478 Other Irrigation 56,916 41,480 33,742 21,361 MoF Transfer for Capital Subsidy 120,000 100,00 100,00 80,200 Number of Schemes 7,521 6,547 4,262 2,832 Source: Agricultural Development Bank. 41 113. The government levies a tariff for water use (200 NRs./ha or about $3/ha) for the large public surface schemes but this covers only 40 percent of estimated costs at best." In addition, the collection rate is very poor, averaging only 30 percent, making the effective subsidy even greater. In FY96, actual revenues collected from irrigation amounted to only NRs. 1.6 million (approximately US$29,000). As a result , real expenditures on operation and maintenance are sub-optimal and undermine the performance of the public irrigation systems. 114. Ongoing reforms. The Government's irrigation policy of 1997 improved a number of policies including cost recovery, greater beneficiary participation and an increased rate of transfer of operation and maintenance responsibilities of large surface schemes to beneficiaries. Collection of water user charges were also transferred to beneficiaries with the expectation that recovery rates would improve. The capital subsidy for group-based tubewells has been reduced to 60 percent for shallow tubewells, to be totally eliminated by July 2000; and from 90 percent to 84 percent for deep and medium-sized tubewells. Subsidies for individually owned shallow tubewells have been completely eliminated. Customs duties on imported diesel tubewell pumpsets have been eliminated - reducing their costs by another 22 percent. Under the ongoing Nepal Irrigation Sector Project (Cr. 3009), there are two studies being carried out; (i) a review of the irrigation subsidy policy (for both private and public irrigation schemes, including tubewells); and (ii) a review of O&M costs and cost recovery in the public irrigation schemes. A report on the former is expected shortly. 115. Unresolved issues. Discussions with officials revealed three concerns about the tubewell subsidy program. First, the government's goal of subsidizing the installation of 8,200 new tubewells per year is too ambitious in terms of implementation capacity and financial feasibility. As noted in the APP, a tubewell-based strategy requires supporting investments in additional roads, rural electrification and/or more diesel servicing facilities, and, in some areas, the consolidation of fragmented lands. In fact, the number of new tubewells per year had been falling in recent years from 3,600 in FY95 to 2,360 in FY97. Thus, to reach the government's target, real resources would have to be more than tripled. Second, the introduction of the subsidy may actually be inducing a slow-down in investment as farmers wait for access to the subsidy. Third, some officials voiced reservations that a large share of the subsidy was diverted for administrative purposes on its way through the ADBN. The government may wish to explore these issues further to determine the efficacy of its subsidy program. The on-going studies on subsidies are expected to provide some guidance on these issues. 34 Estimating costs for operations and maintenance is difficult due to the wide range of physical characteristics. 42 LOCAL DEVELOPMENT AND DECENTRALIZATION 116. This chapter reviews the Ministry of Local Development (MoLD) because of its key role in rural development through its important grant programs and many projects. The main finding are that the MoLD would do well to concentrate exclusively on its grant programs and transfer its projects to appropriate line ministries. The chapter concludes with a review of critical issues in decentralization. The main conclusion is that the incentives for good governance should be a prerequisite to further decentralization. A. THE MINISTRY OF LOCAL DEVELOPMENT 117. Budgetary Composition: All but two local development projects are managed by the Ministry of Local Development (MoLD). The Gulmi Arghakhanchi IRDP is funded by MoF and the Rural Women Development for Production Loan Program. The MoLD is involved almost exclusively in two activities: administering the local government grant programs (68 percent of the total) and making physical investments (21 percent of the total) (Table 5.1). There are four main grant programs. From largest to smallest, these are the Village Development Committee (VDC) grants, the District Development Committee (DDC) grants, the Election Area Development grants, and the Municipality grants. The largest physical investments are for the Rural Community Development Program, the Solid Waste Management Program, the Local Development Construction Program and the Sadhan Labor Intensive Road Reconstruction Project. Table 5.1: Composition of FY97 Budgetary Allocations, Local Development Satarles Trans- Product Capital Physical Finan- & Oer- fers A -ion Thas- Inwrt- cial Cash Cantin- Toal Beneffks head Grams Services fer wnex Intss Grant gncy Millions of Rupees Total 4,162.3 85.8 33.0 243.8 0.0 15.0 887.6 45.0 2,774.6 77.4 Percent of Total Total 100.0 2.1 0.8 5.9 0.0 0.4 21 1.1 66.7 1.9 A. Administration 0.7 0.5 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 B. Grant Programs 6 8 0.0 0.0 3.1 0.0 0.0 0.0 0.0 64.6 0.0 1. VDC Grant 48.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 48 3 0.0 2. DDC Grant 14.9 0.0 0.0 3.1 0.0 0.0 0.0 0.0 ! ,8 0.0 3. Election Area Dev. 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5 0.0 4. Municipality Grant 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 0.0 C. Area Development 6.3 0.0 0.0 1.0 0.0 0.0 4.2 0.7 0.2 0.1 D. Rural Infrastructure 13.5 0.3 0.2 0.0 0.0 0.0 2.3 0.0 0.0 0.8 1. Roads 3.7 0.1 0.1 0.0 0.0 0.0 3.5 0.0 0.0 0.0 2. Water Supplies 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 3. Other Infrastructure 9.0 0.2 0.1 0.0 0.0 0.0 8.8 0.0 0.0 0.0 E. Women 3.0 0.8 0.3 1.0 0.0 0.0 0.5 0.4 0.0 0.0 F. Other 8.8 0.4 0.2 0.7 0.0 0.4 4.4 0.0 1.8 0.9 Memo Item: Min. Finance 1.4 0.0 0.0 0.4 0.0 0.0 0.0 1.1 0.0 0.0 Source: Ministry of Finance. 43 118. Budgetary Trends: The largest changes in composition were an 8 percentage point gain for the VDC grant program in FY96 and a 4 point loss in FY97 (Table 5.2, Part B). The DDC suffered a 5 point loss in FY96 as well. Municipal grants were quite small in FY95 but were substantially increased in FY96 and FY97 to 2 percent of the total. The share in total allocations for rural infrastructure projects gained 6 percentage points in FY97. All other projects, as a category, lost 4 points in FY97. Table 5.2: Expenditure Trends in Local Development, FY95-98 Part A Millions of Rupees Adjusted Budgeted Allocations 2,701 3,852 4,162 4,280 Actual Expenditures 2,469 3,343 3,588 -- Part B Budget Allocations as Percent of Total Grand Total 100 100 100 100 A. Administration 1 1 1 na B. Grant Programs 67 71 68 na 1. VDC Grant 44 52 48 na 2. DDC Grant 20 15 15 na 3. Election Area Dev. Program 2 3 3 na 4. Municipal Grant 0 2 2 na C. Area Development 7 4 6 3 D. Rural Infrastructure 10 8 14 17 1. Agricultural Roads 4 3 4 11 2. Rural Water Supply 0 1 1 1 3. Other Infrastructure 5 4 9 5 E. Women 4 3 3 na F. All Others 12 13 9 na Part C Expenditures as Percent of Budget Grand Total 91 87 86 A. Administration 93 89 93 B. Grant Programs 106 100 98 C. Area Development 101 53 64 D. Rural Infrastructure 39 64 64 1. Agricultural Roads 5 8 21 2. Rural Water Supply Na 70 91 3. Other Infrastructure 68 101 80 E. Women 78 80 71 F. All Others 52 43 49 Part D Expenditure Indices In Constant 1995 NRs. '000 Grand Total 100 125 124 A. Administration 100 96 96 B. Grant Programs 100 132 123 1. VDC Grant 100 155 132 2. DDC Grant 100 81 95 3. Election Area Dev. Program 100 174 176 4. Municipal Grant 100 445 595 C. Area Development 100 41 76 D. Rural Infrastructure 100 177 297 1. Agricultural Roads 100 133 505 2. Rural Water Supply na na na 3. Other Infrastructure 100 141 258 E. Women 100 96 94 F. All Others 100 123 92 Source: Ministry of Finance and staff estimates. 44 119. Actual Expenditures: The MoLD displays a consistent pattern of under-spending in some categories. Spending on the grants programs is generally quite close to the budgeted amounts while spending on projects is generally lower than programmed (Table 5.2, Part C). This is especially the case for the MoLD roads projects, area development and other projects. This observation is consistent with concerns expressed by several government officials that the MoLD does not have the capacity to properly manage sector projects. In fact, it may be more efficient to let the MoLD focus exclusively on the grants programs and transfer all other projects administered directly by the MoLD to the DDCs. 120. Real Expenditures. Inflation adjusted spending rose substantially in all categories except administration, the DDC grant, women's projects, other projects and area development. The latter category is the only one which saw a real decline in purchasing power, falling to 41 percent of the FY95 level in FY96 and 76 percent in FY97 (Table 5.2, Part D). This could have been partially averted if actual spending had matched the amounts allocated. Instead, spending on area development was 53 percent and 64 percent of the budgeted allocation in FY96 and FY97 respectively (Table 5.2, Part C). Real spending on rural infrastructure nearly doubled in FY96 and nearly tripled the FY95 level in FY97. This was partially due to the significant under- spending in FY95 and partly due to large increases mainly in two projects: Rural Community Infrastructure Development and Local Development Construction. 121. Real spending on the grants programs also expanded. The VDC grant grew by 55 percent in FY96 and then shrank back a bit in FY97 as inflation overcame the amount spent. The election area development grant grew by 74 percent in FY96 and the municipalities grant was quadrupled in FY96 and expanded still more to nearly 600 percent of the FY95 level in FY97. B. DECENTRALIZATION 122. Nepal is divided into 75 districts (21 of which are in the Terai) each governed by a district development committee (DDC). Each district is sub-divided into an average of 50 village development areas, each governed by a village development committee (VDC). There are currently some 4,000 VDCs in Nepal. Urban areas with more than 10,000 people (20,000 in the Terai) are designated as municipalities and there are currently 58 municipalities in the country. The VDC chairperson and municipal mayor are directly elected by voters in their areas. The DDC chairperson is elected by a college formed by members of the VDCs and municipalities in the district. District Expenditures 123. District expenditures indicate that the regions with a higher poverty incidence have been getting a larger share of the budget (Table 5.3). Significant declines in the last 3 years in the Central Terai/Hills and Mountains, whilst there has been an increase in resources to the Western, Mid western and Far western regions. In the central region if Kathmandu and Lalitpur are excluded the per capita expenditures are reduced significantly indicating that the urban areas are heavily funded. 45 Framework 124. Building on the basic prescriptions of the 1990 constitution, the local government legislation of 1992 provided the legal framework for a decentralization process and an opportunity for a greater participation in government for the people of Nepal. However, the legislation was criticized on the grounds that insufficient powers were devolved to local bodies and that local officials were insufficiently accountable for their actions to their constituency,5. The first elections of local bodies were held in 1992 and a second round of elections was held in 1997. That same year, an act amending the 1992 legislation was enacted. The principle changes related to the organization of local bodies. The act increased the powers of the ward committees elected by voters in each of the 9 wards of each VDC. The act made provisions for the formation of village and municipal councils to oversee the work and approve the financial decisions of the VDCs and municipalities. In 1998, the Local Autonomy bill was passed devolving additional development, financial and judicial powers and functions to local bodies. Table 5.3: District Expenditures by Region (NRS.'000) Eastern Hills & 28 273 280 277 277 Mountains Central Terai 38 391 341 309 347 Western Terai 40 214 268 300 261 Western Central 40 164 88 237 163 Eastern Terai 42 309 272 236 272 Mid & Far West Terai 53 289 436 436 387 Central Hills & 67 1,288 1,142 888 1,106 Mountains excl.Kath &Lalitpur [320] [362] [322] [335] Mid- & Far-West Hills & 72 295 471 308 358 Mountains Hills 41 583 546 476 535 exc.Kath. & Lalitpur [229] [256] [268] [251] Terai 42 318 326 310 318 Mountains 56 350 416 338 368 Nepal 42 436 430 384 417 excl. Kath. & Lalitpur [286] [307] [296] [296] Sources: Ministry of Finance and World Bank staff calculations. 125. According to the provisions of the new law, the VDC's main development functions include the procurement of projects from ward committees and NGOs, the formulation of annual plans, the management of a local development fund, the preparation of a resource map for their area, the explanation of projects to local people, the training of user groups for the implementation of their projects, and the formal coordination of NGOs. The main development functions of the DDC include the formulation of an annual district development plan, 35 Murgatroyd, Chris, The Legal Framework for Decentralization, Report presented to the World Bank, June 1998. 46 management of a district development fund, the coordination of NGO activity, the supervision of line agency, municipal and VDC development activities, and the explanation of projects to local people. Funding 126. The central government provides each VDC with a local development fund of NRs 500,000 per year" to finance small infrastructure, economic and social projects based on proposals received from the ward committees in their area. The local development fund gives an opportunity for the population in rural areas to work with their locally elected government to plan and implement small projects addressing their needs. These funds are transferred by the Ministry of Local Development (MoLD) to the District Development Committee (DDC) in several installments according to the expenditure reported by the DDC. Each VDC must present plans for approval by the DDC in order to obtain the funds allocated to their VDC area. The engineeNRs from the DDC's technical unit appraise the technical feasibility and costing of all proposed infrastructure projects. Once a project is approved by the DDC, funds are released to the VDC in installments according to physical and financial execution of each project. The VDC must submit complete account reports to be revised by the DDC's accounting unit before any additional funds are released. Plans from line Ministries are also expected to be approved by the DDCs , though this has yet to happen. Mixed Results 127. In practice, the results achieved by the local development fund have been mixed. Typically, decision-making power for the allocation of VDC local development funds is usually concentrated in the hands of the VDC chairperson and the VDC secretary. Participation of other members of the VDC committee, the VDC council, local institutions and the population is marginal in the best of cases. As a result, the allocation of funds is often based on the political interests of the VDC chairperson rather than on development needs expressed by the population. In a recent survey7 of 32 VDCs in 8 districts of Nepal, it was found that 45 percent of VDC development funds are typically expended on rural roads, 38 percent on buildings such as VDC offices or schools. The remaining funds go to the development of drinking water, small irrigation schemes and grants for schools. There tends to be little spending on the maintenance of existing infrastructure, on social needs or on human resource development. The population, CBOs and local NGOs are seldom involved in the planning and implementation of local development fund projects. 128. The financial record-keeping of the VDC and DDC is weak, and neither the VDC or the DDC chairpersons report to the population or to other members of their respective committees on financial or physical progress of their program. Irregularities in the selection of contractors for infrastructure projects and kickbacks to locally elected officials are commonplace. Cases of VDC chairpersons using their influence to illegally obtain large personal advances from their 36 S 7,350 per year. 37 The Human Resource Development Centre (HURDEC), The Impact of Decentralization on the Poor, September 1998. 47 VDC's local development fund are widespread. Accusations against local officials for misappropriating funds are common, particularly in the Terai. Results of another survey' of 30 VDCs in 15 districts of Nepal indicate that there is no internal audit system and that the performance and financial management of local government is not assessed. There is also no system for making public the financial results of projects implemented with local development funds. The Act provides for a financial action committee at the VDC level, but this has not been implemented in all VDCs. Ongoing Reforms 129. In an attempt to address the shortcomings of local government, several large programs are being implemented in Nepal to strengthen the management and technical capacity of local government". These programs have focused mainly on transferring skills but have arguably achieved little in changing the attitudes and behavior of locally elected government officials and their staff. Without any effective checks on their powers, the authoritarian habits and misuse of local public funds are likely to continue. The experience of programs in other countries that were designed to strengthen civil society suggests that accountability to a well-informed and empowered constituency may prove to be the most effective check on the abuses of power and financial mismanagement by local government. When made aware of the responsibilities and duties of their local government, Community Based Organizations (CBOs) and NGOs put pressure on VDCs and municipalities to consult their constituency before allocating local development funds, and to be more transparent in the use of public resources"o. There is some concern amongst staff in HMGN that there are numerous VDCs, this would have to be reviewed, as this has resource implications. 130. In conclusion, the legislation enacted since the adoption of the 1990 constitution indicates that there is strong political support for decentralization in Nepal. Ever-increasing powers and duties are being devolved to locally elected bodies. However, there is a risk that in the rush to support further decentralization of power, the Government may simply transfer responsibility for service delivery in rural areas from ineffective and corrupt line agencies to incompetent and readily corrupted local government. The large donor-supported programs to increase the administrative and technical skills of VDCs, municipalities and DDCs may not be sufficient to redress the management problems of these local bodies. The main issue at stake in the decentralization process is arguably improved governance rather than increased management capability. This is particularly true in the Terai where financial irregularities in the use of local development funds is widespread and unchecked. The Government's first priority should therefore be to increase the accountability of local government to their constituencies. This can be achieved in two ways. One, local governments should increase transparency by regularly 38 Suwal, Rajendra, Village Development and the Self-Reliance Programme: an Assessment, the Journal of Development and Local Government, Local Development Training Academy, Nepal, May 1998. 39 The largest of which are UNDP's PDDP and LGP programs and DANIDA's local government training Programme. Similar smaller programs have been supported by the Swiss (SDC) and the Dutch (SNV). 40 CBOs such as Saving and Credit Organizations (SCOs), farmers marketing associations and Forest User Groups (FUGs) formed in Jumla, Baitadi and Dadeldhura districts with support from CECI's Community Based Economic Development project (CBED) are demanding greater transparency and accountability from their locally elected bodies. 48 publishing objectives and outcomes. Two, civil society should be strengthened through the formation and strengthening of a significant network of self-reliant CBOs and NGOs capable of interacting constructively with local bodies to address local development issues. The Local Governance Act has already been approved with the Royal Seal. And the Self-Governance regulations have also recently been approved by the Cabinet. 49 Annex A Expenditure Prioritization Criteria The analysis contained in this report indicates that HMGN should seek to reduce the number and cost of projects and programs to better match available resources and administrative capacity. Some criteria which would be helpful in achieving this task are presented below. Objectives and Risks * Policy. This is the first criteria that should be considered. Are the objectives of the proposed activity consistent with official policy goals and priorities? If not, the activity should be rejected. If yes, then, the rest of the criteria should be applied. * Prerequisites. Does the success of the proposed activity depend upon success in one or more other projects? Does success depend upon policy changes? If the answer is yes, then the prerequisites must be taken care of first. An example might be the decision to create apple orchards in areas without all weather roads connecting directly to the Kathmandu market. * Risks. This is related to the issue of prerequisites. What are the major risk factors which could render the proposed activity unsuccessful? Are there contingency plans in place to deal with these risks? If not, does the government have an "exit strategy" that will allow it to drop the project if a damaging risk factor materializes? Who and How * Role of Private Sector. Could the project or program be handled by the private sector? If yes, then the government should reduce or eliminate its own participation. In general, this would apply to investments in all potentially marketable goods and services. An example is the recent decision to allow private sector traders to import fertilizer rather than rely only on the AIC. The result was a substantial increase in the availability of fertilizer in 1998. * By similar logic, HMGN should gradually withdraw from financing (directly or indirectly through subsidized credit) most of the small scale surface and tubewell irrigation projects and concentrate instead on water resources management. This strategy would allow HMGN to reallocate its funds towards the provision an expensive but important public good--a more predictable water supply. * If private sector participation seems lacking, there is a high probability that HMGN has not included all the relevant factors into the analysis: for example, there may be problems land use laws, inappropriate government pricing decisions, lack of access to credit, problems with 50 regulatory agencies, or problems with the overall macroeconomic environment. Fixing these problems is a better solution than substituting government for private funds. * Role of Government. Could the project or program objectives be achieved through regulatory changes rather than spending? If yes, does the net benefit of the regulatory change--on society--exceed the net benefit of the project or program? If yes, then the project or program should be reduced or dropped. What is the Best Option? * Which is the best Way to Achieve the Objective? How does the proposed activity compare with other options which could achieve the same objective? In many cases, a different approach may be more cost-effective. * Rate of return. Projects with high investment content and clearly defined completion dates such as irrigation projects can be evaluated in terms of their financial and economic rates of return. The measurement of costs and benefits should include an analysis of social benefits and opportunity costs. In general, a project should be rejected when the expected net present value, discounted at the opportunity cost of capital, is negative. * Projects should also be rejected when the expected net present value is not higher than or equal to the expected net present value of mutually exclusive project alternatives. Other projects, such as those in the areas of research or extension services provide benefits which cannot be easily captured or evaluated in terms of financial rate of return. Yet these projects clearly facilitate and complement all other forms of investment. In such cases, the least cost alternative for achieving the desired result should be chosen. * Maintenance. Projects which emphasize good management, maintenance, and rehabilitation of existing assets are usually less expensive than new projects which substitute new for old assets. Affordability Programs and projects carry more than one type of cost. Financial costs are but one of many costs incurred when a government decides to undertake an activity. * Counterpart funding requirements. In many cases, donors will not advance funding without the provision of these counterpart funds, This is especially true of the multilateral agencies. In order to meet this requirement without becoming overburdened, the HMGN should focus on projects which will help generate more tax revenues or which help reduce domestic costs. 51 * Recurrent funding requirements. Does the proposed activity required continued expense after investment costs are completed? For example, would the creation of a secondary irrigation network require annual maintenance? If yes, are the recurrent costs affordable- knowing that there are many other competing activities which also require recurrent funding? If not, the proposed activity should be dropped. See the next point on cost recovery as well. * Cost recovery. Does the proposed activity have the potential to be self-financing if user charges are applied? If not, is the government willing and able to sustain the proposed activity indefinitely? The activity should be dropped if the answer is no to either question. This criteria can be well applied to issues such as the provision of credit, agricultural inputs or to irrigation and extension services. * Administrative capacity. Can the staff in the appropriate administrating agency properly supervise and monitor the project? The answer may be no if there are already many projects, or if a few projects are especially troublesome or complex. Agency staff may also need more managerial, financial or technical training before certain projects can be productively taken on board. The data show that an average of 27 projects per year have been added to the rural project. At this pace, it is not hard to imagine that this could lead to a situation where HMGN staff would be unable to properly look after each project. * Environmental costs. Deforestation, soil degradation, water shortages, and water contamination reduce economic productivity, damage natural resources, and impair human health. Projects which help reduce over-population or which help restore the environment should be given as much priority as those which provide more income or employment. Cautionary Notes There are also some common criteria, used by many governments, which are often mis-used or should not be applied. These are briefly reviewed below. * Project completion. The degree of project completion is usually not relevant except in the special case of two competing projects with approximately the same (ex-ante) rate of return. In such a case, the nearly finished project should be completed and the other dropped or shelved. In most cases, a poorly designed project will be a money loser no matter how far along it is. Attempts to redesign money losers are often costly as well. * Size. The size of a project should normally have little bearing on prioritization. As in the case of the availability of financing, the objectives and the net return are more important. There are exceptions. Extraordinarily large projects may require so much funding that other worthy projects could be pre-empted. In such circumstances, the net benefit of the entire expenditure program should be weighed with and without the project. * Availability External Financing. Availability is important but it should never take precedence over the issue of whether a proposed activity is consistent with official policy 52 objectives and priorities. Moreover, availability of financing does not imply anything about the net benefit of the proposed activity. * Internal Rate of Return. The rule that projects should be rejected if the economic rate of return does not equal or exceed the opportunity cost of capital can be helpful but there are two problems. One, there are mathematical examples where a stream of project benefits may produce more than one IRR. Second, IRRs cannot be ranked or compared across sectors. * Problem projects. When faced with a problem project, many governments, all over the world, choose to apply their staff and their resources ever more intensely. In hindsight, these same governments will later observe that their efforts were wasted. It is more important to spend those resources upfront in the design and decision stages-and to include exit strategies when problems become intractable. 53 Annex B Foreign Aid The depth of dependency. Many of Nepal's public sector activities are sustainable only with continued high levels of foreign aid. This is clearly seen in the high share of aid not only in capital costs but also, in the case of agricultural programs, recurrent costs (Table B.1). For example, 81 percent if the capital investments in irrigation and 73 percent of all forestry investments are financed by aid. In the MoLD, 61 percent of all non-grant investments are financed by aid. In the MoA, 100 percent of capital investment and 41 percent of all recurrent expenditures are financed by foreign aid. Table B.1: Budgeted Donor Contributions, FY97 Aid as Percent of Capital as Percent of Percent Capital Percent Recurrent Total Allocations Total Allocations Financed by Aid Financed by Aid Agriculture 52 30 100 32 A. Min. Agriculture Allocations 48 11 100 41 B. Min. Finance Allocations 63 98 64 0 Forestry 25 34 73 0 Irrigation 74 91 81 0 Local Development 15 90 16 0 . Grant Programs - 95 0 0 . Others 47 77 61 0 Source: Ministry of Finance FY97 Redbook. The danger of dependency. If this aid were to vanish, much of the MoA projects and programs would collapse. In fact, Nepal's projects and programs are in fact at risk: the data show aid to Nepal has been falling while global aid to all nations has been falling as well. Falling foreign contributions. Gross donor contributions to rural sector projects in the ministries reviewed by this report have been falling as a share of GDP. They were the equivalent to 2.6 percent of GDP in FY95, 2.1 percent in FY96, 1.8 percent in FY97 and 2.3 percent in FY98 (Table B.2). The level of foreign aid contributions to the rural sector has been falling in real terms for several years. For example, in FY97 the real level of aid was only 80 percent of the level achieved in FY95. More specifically, real sectoral contributions have been falling between FY95 and FY97 for agriculture, irrigation and forestry (Table B.2). The FY97 donor contribution for agriculture was only 64 percent of the level made available in FY95. The estimated contribution for FY98 shows a rebound to 79 percent was expected. The pattern is very similar for forestry. In contrast, real contributions to Local Development have climbed rapidly in FY97. 54 Future trends. The Bank's projections of foreign aid include a prediction that the level of foreign aid will stop falling and increase slightly as a share of GDP. This is based on the assumption that the implementation and governance problems will be quickly and demonstrably overcome. If not, then the overall downward trend is likely to continue over the next several years. Table B.2: Sectoral Donor Dependency Part A Millions of Rupees Actual Donor Contributions 5,689,088 5,276,893 5,066,845 6,618,109 As Percent of GDP 2.6 2.1 1.8 2.3 Part B Donor Contribution Indices In Constant 1995 NRs. '000 Total 100 88 80 100 Agriculture 100 82 64 79 Forestry 100 91 67 94 Irrigation 100 98 90 104 Local Development 100 65 117 179 excluding grant programs 100 I. FY98 data are estimates. Sources: Ministry of Finance and staff estimates. 55 Annex C Table Cl: Budgetary Allocations, FY95-98 Table C2: Actual Expenditures, FY95-97 56 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 95 3514/815 AG 01.2.3 Mixed Small Farmer Training and institutional Development Project 10,500 - - 10,500 - - - - - FY 95 35/41818 AG 02.2.3 HMG Livestock Insurance (Including Loan Guarantee)- Price Subs 5,000 - - 5,000 - - - - - FY 95 35/4/819 AG 01.2.3 HMG Small Farmers Interest Subsidy- Price Subsidy 50,000 - - 50,000 - - - FY 95 35/4/910 AG 01.2.3 Mixed Small Farmer development Project (Unicef) 40,000 - - 40,000 - - - - - FY 95 36/4/200 AG 04 HMG Food Subsidy for Nepal Food Corporation 250,000 - - 240,000 - - - 10,000 - FY 95 4013/110 AG 06.4 HMG Agriculture Ministry 6,861 5,215 616 - - - 30 - - 1,000 FY 95 40131120 AG 06.1 HMG Department of Agriculture Development 8,733 7,279 1,446 - - - 8 - - - FY 95 40/3/121 AG 06.1 HMG Regional Agriculture Development Directorate 8,952 4,813 1,870 - - - 1,714 - 555 - FY 95 40/3/122 AG 05 HMG Agricultural Statistics 1,900 1,047 553 - - - - - - 300 FY95 40/3/123 AG 05 HMG Economic Analysis 1,592 1,048 394- - -150- - - FY 95 40/3/140 AG 06.4 HMG Department of Cooperative 2,833 1,845 988 - - - - - - FY 95 40/3/141 AG 06.4 HMG District Cooperative Offices 35,382 29,525 5,022 - - 200 635 - - - FY 95 40/3/191 AG 06.4 HMG National Cooperative Development Board 2,500 - - 2,500 - - - - - - FY 95 40/3/193 AG 06.4 HMG Tea & Coffee Development Board 6,200 - 6,200 - - - - - FY 95 40/3/194 AG 06.2 HMG Dairy Development Board 500 - - 500 - - - - - - FY 95 40/4/200 AG 05 HMG Women Farmer Development Programme 1,453 160 491 802 - - - - - - FY 95 40/4/250 AG 06.1 Mixed Upper Sagarmatha Agri. Dev. Project 28,384 987 1,134 396 - 500 25,367 - - FY 95 40/4/260 AG 01.2.2 Mixed Secondary Crop Development Project 26,083 985 2,878 1,700 - - 20,520 -- FY95 40/4/270 AG 01.2.2 Mixed Agriculture Development Project, Janakpur 34,803 3,825 2,070 - 705 10,332 -17,871 - FY 95 40/4/272 AG 01.1 HMG Agriculture Farm 3,846 772 650 - 1,870 - 554 - - - FY 95 40/4/280 AG 04 Mixed Sericulture Development Programme 42,153 5,001 4,500 3,622 8,440 10,000 10.590 - -- FY 95 40/4/290 AG 03 Mixed Hill Fruits Development Project 47,658 1,663 1,918 274 776 2,000 26,800 - - 14,227 FY 95 40/4/291 AG 03 Mixed Kirtipur Horticultre Dev. Project 6,475 991 2,888 1,005 1,090 - 501 - - - FY 95 40/4/292 AG 03 HMG Horticulture Farms 19,020 8,040 2,488 - 5,626 - 2,866 - - - FY 95 40/4/294 AG 04 HMG Cardoman and Orange development 1,384 982 357 - - - 45 - - - FY 95 40/4/300 AG 03 Mixed Vegetable Seed Production Centre 4,864 2,121 859 10 1.478 35 361 - - FY 95 40/4/302 AG 04 Mixed Potato Research and Development Program 1,868 1,239 406 50 155 - 18 - - - FY 95 40/4/320 AG 04 HMG Fishery Dev. Programme 16,462 6,894 6,046 684 2,261 40 537 - - - FY 95 40/4/330 AG 04 HMG Food Nutritution and Technology 12,772 8,312 3.534 376 - - 550 - - FY 95 40/4/350 AG 04 HMG Crop Protection and Silkworm Development 16,386 6,470 3,369 701 2,556 - 1,322 - 1,968 FY 95 40/4/300 AG 01.2.2 HMG Crop and Cash crops Development Project 3,397 846 142 - - - 45 - 2,364 FY 95 40/4/370 AG 01.2.2 HMG Agriculture Communication Service Programme 5,000 1,317 3,652 15 - - 16 - - FY 95 40/4/380 AG 01.2.2 Mixed Agriculture Training Programme 11,742 4,767 2,945 1,790 550 - 1,690 - FY 95 40/4/390 AG 01.2.3 HMG Seed Dev. and Control Service 3,969 2,009 1,380 300 - - 280 - FY 95 40/4/400 AG 01.2.2 HMG Soil Test Service Programme 5,808 1,783 1,410 335 - - 2,280 - FY 95 40/4/410 AG 01.2.2 Mixed Agriculture Extension Project 18,833 5,299 10,439 2,000 - . 1,095 - FY 95 40/4/450 AG 01.2.4 HMG Agriculture Market Development Programme 4,029 1,658 1,041 130 - - 1,200 - - FY 95 40/4/500 AG 02.2.5 HMG Animal Health Service Programme 20,198 10,048 7,382 - 1,750 - 1,018 - - - FY 95 40/4/510 AG 02.2.2 Mixed Livestock Development Service Programme 6,543 2,511 3,122 670 - - 240 - - FY 95 40/4/520 AG 02.2.3 HMG Livestock Development Farms 14,699 8,291 3,504 274 1,822 200 508 - - FY 95 40/4/530 AG 02.2.3 HMG Rural Poultry Development Programme 5,089 3,240 1,322 15 265 - 247 - - FY 95 40/4/540 AG 02.2.3 HMG Animal Reproduction & Artificial Insemination Programme 4,553 2,298 1,945 - 170 - 140 - - FY 95 40/4/541 AG 02.2.3 Mixed Animal Reproduction & Promotion Project 19,025 1,830 11,589 - - - 5,606 - - - FY 95 40/4/550 AG 02.2.3 Mixed Hill Lease Forestry Project (Livestock Dev.) 2,195 380 734 - - 290 545 - - 246 FY 95 40/4/600 AG 06.4 Mixed Cooperative Training Centre 8,940 1,875 6,590 - - 100 375 - - - FY 95 40/4/700 AG 01.1 HMG Nepal Agriculture Research Council 26,525 - - 25,000 - - - - 1,525 - FY 95 40/4/710 AG 01.1 Mixed Agriculture Research Programme 26,670 - - 22,500 - - - - 4,170 - FY 95 40/4/720 AG 01.1 Mixed Agriculture Enterprise and Technology System Project 65,990 - - 60,000 - - - - 5,990 - FY 95 40/4/730 AG 01.1 Mixed Secondary Crop Development Project (R) 35,000 - - 15,000 - - - - 20,000 FY 95 40/4/740 AG 01.1 Mixed Potato Research and Development Program 2,308 - - 192 - - - - 2,116 - FY 95 40/41750 AG 04 Mixed Natural Water Fish Development Project (R) 19,721 - - 10,000 - - - - 9,721 - FY 95 40/4/800 AG 01.2.3 Mixed Agriculture Input Price & Transportation Grant 500,000 - - 500,000 - - - - - - FY 95 40/5/250 AG 01.2.2 Mixed Upper Sagarmatha Agriculture Dev Project 13,727 9,642 1,735 1,758 - - 592 - - - FY 95 40/5/260 AG 01.2.2 Mixed Secondary Crop Dev. Project 33,343 960 1,765 4,310 - 70 26,238 - - - FY 95 40/5/290 AG 03 Mixed Hill Fruits Development Project 6,423 1,380 1,548 1,997 - - 1,498 - - - FY 95 40/5/410 AG 01.2.2 HMG Agricultural Extension Programme 199,208 141,250 29,118 22,300 170 - 6,370 - - - FY 95 40/5/412 AG 01.2.2 Mixed Seti integrated Rural Development Project 10,933 538 1,564 - - 75 8,756 - - - FY 95 40/5/413 AG 01.2.2 Mixed Agriculture Extension Project 144,385 87,914 27,181 19,074 - - 10,216 - - - FY 95 40/5/421 AG 01.2.2 Mixed Mechi Hill Development Project (Agric) 566 93 111 362 - - - - FY 95 40/5/422 AG 03 Mixed Koshi Hill Seed and Vegetables Project 3,462 650 1,068 1,648 - - 96 - - - FY 95 40/5/461 AG 01.2.4 Mixed Rapti Integrated Rural Development Project 25,958 17.343 3,842 3,382 - - 1,391 - - - 57 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 95 8714/820 AG 04 Mixed Agriculture Development Bank, Share Investment 110,000 110,000- FY 95 87/4/822 AG 01.2.1 Mixed Small Farmers Development Programme (III Phase) 500,000 - - - - - 500,000 - FY 95 87/4/823 AG 01.2.1 Mixed Sixth Agriculture Loan 500,000 - - - - - - 500,000 - FY 95 59131110 FO 06 HMG Ministry of Forestry and Soil Conservation 5,090 4,065 1,025 - - - -- FY 95 59/3/120 FO 06 HMG Department of Forest 9,734 7,060 549 - - 2,125 - FY 95 5913/121 FO 06 HMG Regional Forest Offices 6,740 4,453 2,217 - - - 70 - - FY 95 5913/122 FO 06 HMG District Forest Offices (Including Armed forest secunty) 199,481 191,251 7,910 20 - - 200 - - 100 FY 95 59/3/130 FO 06 HMG Botanical Department 2,138 1,965 173 - - - - FY 95 59/3/131 FO 06 HMG Natural Resources Development Division 7,023 3,420 2,083 - 600 - 920 - - FY 95 5913/140 FO 06 HMG Department of Soil and Water Conservation 4,695 4,220 475 - - - - - FY 95 5913/150 FO 06 HMG Department of National Park & Wild life Protection 10,820 9,860 935 25 - - - - - FY 95 59/3/151 FO 06 HMG Shivapuri Watershed and Wildlife Protection (Security Group 25,590 24,665 675 - - - 250 - - - FY 95 5913/152 FO 03 HMG National Park (Security Group) 147,680 141,200 4,405 - - - 2,075 - - FY 95 59131164 FO 06 HMG Hattisar 13,311 12,800 411 100 - - - - - - FY 95 59/3/180 FO 06 HMG Central Zoo Developement Committee 5,000 - - 5,000 - - - - - - FY 95 5914/200 FO 05 Mixed Forest Research & Survey Program 10,543 5,085 2,967 - - - 2,291 - - 200 FY 95 59/4/210 FO 05 Mixed Forest Products Development Program 16,900 - - - - - - 16,900 - FY 95 59/4/211 FO 01.4 HMG Forest Development Project 800 293 507 - - - FY 95 59/4/220 FO 03 HMG Shivapuri Watershed and Wildlife Protection Project 5,836 1,359 405 - - 160 3,912 - - FY 95 59/4/221 FO 04 Mixed Herbs Production and Promotion Company 3,000 - - - - - - 3,000 - FY 95 5914/310 FO 01.3 Mixed National & Leesehold Forest Development Programme 69,752 1,000 4,855 - - - 63,897 - - - FY 95 59/4/311 FO 01.1 Mixed Community Forest Development Programme 23,790 1,490 595 - - - 21,705 - - FY 95 59/4/313 FO 01.3 Mixed Hill Leesehold Forest & Pasture Development Project 7,221 839 500 10 - - 5,872 - - - FY 95 59141330 FO 05 Mixed Tree Improvement Programme 14,502 740 322 - - - - - 13,440 FY 95 59/4/331 FO 01.4 Mixed Forest Management and Utilization Project 12,500 995 505 - - - 11,000 - - - FY 95 59/4/340 FO 01.1 Mixed Churiya Forest Development Programme 1,260 - - - - - 1,260 - - FY 95 59/4/350 FO 05 Mixed Training & Extension Programme 12,554 3,034 2,500 25 - - 6,695 - - 300 FY 95 59/4/500 FO 05 Mixed Botanical Research Division 17,380 6,094 4,841 - 200 - 6,245 - - - FY 95 59/4/610 FO 02 HMG Watershed Management Project 3,155 710 445 - - - 2,000 - - - FY 95 59/4/620 FO 02 Mixed Bagmati Watershed Project 23,650 1,497 1,159 - - - 20,994 - - FY 95 59/4/621 FO 02 Mixed Phewatal Watershed Project 2,500 700 535 - - - 1,265 - - - FY 95 59/4/630 FO 02 HMG Kulekhani Watershed Project 927 355 172 - - - 400 - - FY 95 59/4/710 FO 03 Mixed WIldlife Preservation Offices 14,280 6,930 715 - - - 5,435 - - 1,200 FY 95 59/4/720 FO 03 Mixed National Park Offices 34,273 18,550 1,302 30 - 4,000 10,391 - - FY 95 59/5/311 FO 01.1 Mixed Community Forest Development Programme 53,776 7,200 3,980 - - 500 24,820 - 17,276 - FY 95 59/5/401 FO 01.1 MIxed Koshi, Dhaulagiri Hill Area Forest Dev. Programme 28,336 17,912 1,670 - - - 5,155 - 3,599 - FY 95 59/5/402 FO 01.1 Mixed Dolakha-Ramechhap Community Forest Dev. Project 9,851 5,730 437 - - 200 1,794 - 1,690 - FY 95 59/5/403 FO 01.1 Mixed Sindhu-Kavre Forest Development Project 15,323 4,085 411 - - 4,163 - 6,664 - FY 95 59/5/404 FO 01.1 Mixed Palpa District Community Forest Dev. Programme 3,485 2,388 593 - - - 218 - 286 - FY 95 59/5/410 FO 01.2 Mixed Rapti Integrated Rural Developemnt Project 10,098 1,163 915 - - - 3,727 - 4,293 - FY 95 59/5/650 FO 02 Mixed District Soil and Water Conservation Programme 56,140 13,630 4,477 - - 800 37,233 - - FY 95 59/5/661 FO 02 Mixed Chure Land & Watershed Conservation Programme 815 27 20 - - - 768 - - - FY 95 59/5/662 FO 02 Mixed Sindhu-Kavre Soil Conservation Project 3,332 851 386 - - - 2,095 - - - FY 95 5915/664 FO 02 Mixed Begnas & Rupa Lake Project 6,505 590 263 - - - 5,652 - - FY 95 5915/665 FO 02 Mixed Upper Andhikhola Watershed Management Project 7,440 524 116 - - - 6,800 - - - FY 95 59/5/670 FO 02 Mixed Rapti Integrated Rural Developemnt Project (Soil Conservati 12,203 2,592 799 - - - 8,812 - - FY 95 59/5/680 FO 02 Mixed Community Development & Forest/Watershed Protection 2,440 455 285 - - 1,700 - - - FY 95 87/4/824 FO 01.3 Mixed Leasehold Forest and Pasture Development Project 6,200 - - - - - - 6,200 - - FY 95 35/4/825 IR 01.5 HMG Farmer Irrigation Grants 80,000 - - - - - - 80,000 - FY 95 47/3/130 IR 04 HMG Department of Irrigation 10,681 9,805 806 70 - - - - FY 95 47/3/131 IR 04 HMG Regional Irrigation Directorates 19,565 15,150 2,035 - - - 2,380 - -- FY 95 47/3/132 IR 04 HMG District Irrigation Offices 80,582 58,905 10,737 - - - 9,940 - - 1,000 FY 95 47/4/309 IR 01.5 Mixed Rajkudwa Irrigation Project 2,000 - - - - - - - 2,000 FY 95 47/4/310 IR 02 Mixed Irrigation Management Transfer Project 11,500 - -- - - 10,000 - - 1,500 FY 95 47/4/311 IR 02 Mixed System Management & Training Programme 10,000 2,210 1,365 6,225 - 200 - FY 95 47/4/312 IR 02 Mixed Irrigation Institution Development Programme 64,506 200 2,575 - - 100 61,631 - FY 95 47/4/313 IR 01.5 Mixed Irrigation Sector Project 350,000 1,980 4,545 35 - 200 343,240 - - - FY 95 47/4/315 IR 01.5 Mixed Irrigation Line of Credit 320,000 7,400 8,755 - - - 303,845 - FY 95 47/4/319 IR 01 5 Mixed Small Irrigation Special Programme 10,000 - - - - - - - - 10,000 FY 95 47/4/340 1R 03 Mixed River Control 90,000 275 532 - - - 89,193 - - - FY 95 47/4/341 IR 03 Mixed Water Related Disaster Control Technology Centre 27,679 - - - - - 25,179 - - 2,500 FY 95 47/4/359 IR 01 3 Mixed Seti Integrated Rural Development Project 8,000 260 270 - - - 7,470 - - 58 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 95 47/4/360 IR 05 Mixed Ground Water Investegation Programme 19,920 3,824 892 - - - 10,204 - - 5,000 FY 95 4714/361 IR 01.4 Mixed Community Shallow Tubewell Irrigation Programme 11,620 550 1,300 - - - 9,770 - - FY 95 47/4/370 IR 02 Mixed Repair, Maintenance Projects 118,395 26,275 21,040 - - 1,000 66,685 - - 3,395 FY 95 47/4/392 IR 01.1 HMG Bherd Babal Multi-purpose Project 1,5- - - 1,500 FY 95 47/4/401 IR 01.5 Mixed Mechi Hill Irrigation Project 2,335 379 176 - - - 1,780 - - - FY 95 47/4/402 IR 01.1 Mixed Sunsari Morang Irrigation Project (Il Phase) 350,000 4,225 3,985 - - 2,500 339,290 - - - FY 95 47/4/404 IR 01.1 Mixed Bagmati Irrigation Project 244,000 3,950 5,360 - - 12,000 222,690 - - FY 95 47/4/405 IR 01.5 Mixed Eastern Rapti Irrigation Project 137,436 975 1,195 100 - - 135,166 - - FY 95 47/41406 IR 01.3 Mixed Bhairahawa Lumbini Irrigation Project (Ill Phase) 220,753 8,850 11,465 2,000 - 2,000 196,438 - FY 95 47/4/407 IR 01.2 Mixed Marchwar Irrigation Project, Rupandehi (11 Phase) 39,200 1,115 1,935 - - 500 35,650 - FY 95 47/4/408 IR 01.5 Mixed Dhaulagir Zone Irrigation Project 19,646 375 471 - - - 18,800 - FY 95 47/4/410 IR 01.1 Mixed Rajapur Irrigation Project 60,000 1,300 908 - - - 57,792 - FY 95 47/4/411 IR 01.1 Mixed Mahakali Irrigation Project, Kanchanpur 108,000 6,250 2,362 700 - 2,800 95,888 - FY 95 3514/829 LD 01 Mixed Gorkha Integrated Rural Development Project 7,500 - - 7,500 - - - FY 95 35/4/900 LD 01 Mixed Dhading District Integrated Rural Development Project 10,700 . - 10,700 - - FY 95 35/4/930 LD 01 Mixed Rapti Integrated Rural Development Project 8,400 - - 8,400 - FY 95 69/3/110 LD 03 HMG Ministry of Local Development 9,281 8,130 1,151 - FY 95 6913/120 LD 03 HMG Local Development Regional Directorates 4,154 3,493 661 - FY 95 6913/130 LD 03 HMG District Guest Houses 2,285 2,058 227 - FY 95 6913/131 LD 03 HMG Juddha Firebrigade Offices 5,766 4,680 1,086 - FY 95 69/3/140 LD 03 HMG Registration Section 2,904 754 2.150 - - FY 95 69/4/200 LD 03 Mixed Women Development Programme 10,405 1,461 1,010 7,884 - - 50 - FY 95 69/4/210 LD 01 Mixed Remote Area Development Programme 11.474 1,890 674 725 - . - 8,185 - - - FY 95 69/4/220 LD 03 HMG Monastry Management & Development Committee 3,000 465 176 250 - - 2,090 - -19 FY 95 69/4/230 LD 03 Mixed Population Education Programme 2.752 332 137 2,283 - - - FY 95 69/4/240 LD 03 Mixed Local Development Training Institute 16,000 - - 16,000 - - FY 95 69/4/241 LD 02.3 Mixed Urban Infrastructure Service Project 9,200 - - 9,200 - - - - - 1 FY 95 69/4/420 LD 03 HMG Tribal Groups Development Project 20,000 215 20 791 -120 699 18,155 FY 95 69/5/200 LD 03 Mixed Women Development Programme 84,294 24,820 8,552 28,011 - - 16,511 - - 6,4 FY 95 69/5r210 LD 01 Mixed Remote Area Development Programme 51,500 4,883 401 - 46,216 - - 1 FY 95 6915/260 LD 03 Mixed Flood Affected Area Reconstruction and Rehabilitation Proje 105,000 - -- - 105,000 FY 95 69/5/400 LD 03 Mixed Solid Waste Management Progamme (Including Okharpauw 160,000 -- - 160,000 FY 95 69/5/401 LD 02.1 Mixed Upper Sagarmathe Roads and Bridges Project 34,292 - 450 . - - 33,842 - 3,5 FY 95 69/5/402 LD 01 Mixed Kamali Local Development Project 3,450 - - 3,450 FY 95 69/5/410 LD 02.1 Mixed Labour Intensive Road Reconstruction Project 86,360 1,152 1,832 - - - 83,376 - 1,9 FY 95 69/5/421 LD 01 Mixed Seti Integrated Rural Development Projects Office 9,564 830 279 - - 7,065 -1,390 FY 95 69/5/422 LD 01 Mixed Rapti Integrated Rural Development Project's Office 4,980 1,658 698 2,324 - - 300 - FY 95 69/5/423 LD 01 Mixed Rapti Integrated Rural Development Project(Local Developm 16,774 2,935 967 11,804 - - 1,068 - FY 95 6915/424 LD 01 Mixed Seti Integrated Rural Development Project 11,220 285 161 - - - 10,774 - FY 95 69/5/451 LD 01 Mixed Dhading Integrated Rural Development Project 18,630 1,060 830 6,500 - - 10,240 - FY 95 69/5/452 LD 01 Mixed Gulmi Integrated Rural Development Project 4,914 484 217 360 - - 3,853 - FY 95 6915/453 LD 01 Mixed Arghakanchi Integrated Rural Development Project 5,869 340 121 333 - - 5,075 - FY 95 69/5/454 LD 01 Mixed Gorkha Development Project 1,320 120 - 1.200 - - FY 95 69/5/455 LD 01 Mixed Lamjung Development Project 1,500 - -- - 1,500 FY 95 69/5/456 LD 03 Mixed Patan Preservation & Development Programme 4,692 - - - 445 5 FY 95 69/5/500 LD 03 HMG District Development Committee Grant 540,000 - - 94,500 - 445,500 - FY 95 69/5/610 LD 03 HMG Municipal Grant 12,000 - - - 9 - - 9,000 3,000 FY 95 69/5/520 LD 03 HMG Village Self Reliance Grant 1,200,000 - - - - - 100,000 - FY 95 69/5/530 LD 03 HMG Election Area Development Programme 51,250 51,20- - - - 5- FY 95 69/5/531 LD 01 HMG Drought Area Relief Programme 10,000 - - - . - - 10,000 FY 95 69/51532 LD 03 HMG Bonded Labour Settlement Programme 10,000 -10,000 - FY 95 6915/610 LD 02.3 Mixed Local Development Construction Programme 102,950 3,250 560 - - 99,140 - FY 95 69/5/620 LD 02.3 Mixed Local Road Suspension Bridges 32,500 - . - - 32,500 1 - FY 95 8714/827 LD 03 Mixed Loan for Rural Women Development 10,000 - - - 10,000 - FY 95 87/4/828 LD 01 Mixed Gulmi Ardhakanchi Grants Share Investment 4,500 -4,500 - FY 96 35/4/815 AG 01.2.3 Mixed Small Farmer Training and Institutional Development Grant 7,950 - - - 7,950 FY 96 35/4/818 AG 02.2.3 HMG Livestock Insurance (Including Loan Guarantee)- Price Subs 5,000 - - 5.000 - FY 96 35/4/819 AG 01.2.3 HMG Small Farmers Interest Subsidy- Price Subsidy 60,000 - - 60,000 - - FY 96 3514/910 AG 01.2.3 Mixed Small Farmer development Project (Unicet) 46,512 - - - - 46,512 - FY 96 36/4/200 AG 04 HMG Food Subsidy for Nepal Food Corporation 234,766 - - 226,000 - - -5- FY 96 40/3/110 AG 06.4 HMG Agriculture Ministry 8,592 6,585 1,962 - - - 70- - FY 96 40/3/120 AG 06.1 HMG Departmentof Agriculture Development 11,665 9,004 1,61 - - -700 59 Public Expenditures Annex C (Budget) Rural Development FY95-98 iBudget (Millions of Rupees) FY 96 40/3/121 AG 06.1 HMG Regional Agriculture Development Directorate 7,805 5,288 1,905 600 - - 12 - - - FY 96 40/3/140 AG 06.4 HMG Department of Cooperative 2,751 1,362 1,189 - - - 200 FY 96 40/3/141 AG 06.4 HMG District Cooperative Offices 38,493 32,500 5,133 - - - 860 - - FY 96 40/3/191 AG 06.4 HMG National Cooperative Development Board 2,500 - - 2,500 - - - FY 96 40/3/192 AG 06.4 HMG Cotton Development Committee 1,000 - - 1.000 - - - FY 96 40/3/193 AG 06.4 HMG Tea & Coffee Development Board 6,000 - - 6,000 - - FY 96 40/3/194 AG 06.2 HMG Dairy Development Board 1,500 - - 1,500 - - FY 96 40/4/200 AG 05 HMG Women Farmer Development Programme 1,295 165 880 200 - - 50 - FY 96 40/4/250 AG 06.1 Mixed Upper Sagannatha Agri. Dev. Project 28,229 1,174 1,260 345 - 100 25,350 - - - FY 96 40/4/260 AG 01.2.2 Mixed Secondary Crop Development Project 72,650 2,585 3,220 1,495 - - 65,350 - - FY 96 40/4/270 AG 01.2.2 Mixed Agriculture Development Project, Janakpur 36,044 4,200 2,035 - 600 - 11,650 - 17,559 - FY 96 40/4/280 AG 04 HMG Sericulture Development Programme 53,299 6,175 4,734 5,725 9,965 10,000 16,700 - - - FY 96 40/4/290 AG 03 Mixed Hill Fruits Development Project 22,835 1,515 1,100 145 750 - 19,325 - - - FY 96 40/4/291 AG 03 Mixed Kirtipur Horticultre Dev. Project 9,145 1,684 3,029 964 1,238 - 2,230 - - - FY 96 40/4/292 AG 03 Mixed Horticulture Farms 23,448 9,462 3,035 - 7,027 - 3,924 - - - FY 96 40/4/293 AG 04 HMG Orange & Tea, Coffee Dev. Programme (incl. Gulmi, Aanpch 1,659 1,012 347 300 - - - - - FY 96 40/4/300 AG 03 Mixed Vegetable Seed Production Centre 5,197 2,524 893 - 1,780 - - FY 96 40/4/310 AG 04 HMG Cardoman, Dry Ginger and Potato Dev. Programme 2,847 1,807 610 15 210 - 205 - - - FY 96 40/4/320 AG 04 HMG Fishery Dev. Programme 19,038 6,478 5,940 975 4,595 - 1,050 - - - FY 96 40/4/330 AG 04 HMG Food Nutritution and Technology 14,610 9,132 3,885 510 - - 1,083 - - FY 96 40/4/350 AG 04 Mixed Crop Protection and Silkworm Development 17,460 7,765 4,130 1,400 2,970 - 1,195 - FY 96 40/4/360 AG 01.2.2 HMG Food Crops and Cash crops Development Project 5,036 3.475 623 - 807 - 131 - FY 96 40/4/370 AG 01.2.2 HMG Agriculture Communication Service Programme 5.638 1,467 4,136 15 - - 20 - FY 96 40/4/380 AG 01.2.2 Mixed Agriculture Training Programme 21,403 8,835 6,935 4,000 650 - 983 - FY 96 40/4/390 AG 01.2.3 HMG Seed Dev. and Control Service 4.343 2,308 1,375 435 - - 225 - FY 96 40/4/400 AG 01.2.2 Mixed Soil Test Service Programme 8,733 2,615 1,493 685 - - 3,940 - - FY 96 40/4/410 AG 01.2.2 HMG Agriculture Extension Project 2,400 1,410 990 - - - - FY 96 40/4/412 AG 01.2.2 Mixed Seti Integrated Rural Development Project 1,400 - - 250 - - - - 1,150 - FY 96 4014/450 AG 01.2.4 HMG Agriculture Market Development Programme 4,392 1,570 1,777 385 - - 660 - - FY 96 40/4/451 AG 01.2.4 Mixed Small Market Infrastructure Dev. Project 20,467 1,275 1,420 - - 2,330 15,442 - - FY 96 40/4/500 AG 02.2.5 Mixed Animal Health Service Programme 24.281 13,120 7,755 15 2,100 - 1,291 - - FY 96 40/4/510 AG 02.2.2 HMG Livestock Development Service Programme 3,537 2,176 984 347 - - 30 - FY 96 40/4/520 AG 02.2.3 HMG Livestock Development Farms 16,256 9,779 3,697 210 2,100 - 570 - - - FY 96 40/4/530 AG 02.2.3 HMG Rural Poultry Development Programme 1,310 . 896 329 15 50 - 20 - - FY 96 40/4/540 AG 02.2.3 HMG Animal Reproduction & Artificial Insemination Programme 5,784 2.628 2,674 - 137 - 345 - - - FY 96 40/4/541 AG 02.2.3 Mixed Animal Reproduction & Promotion Project 18,113 2,204 9,457 - - - 6,452 - - - FY 96 40/4/550 AG 02.2.3 Mixed Hill Lease Forestry Project (Livestock Dev.) 4,940 1,320 840 1,430 - - 1,350 - - - FY 96 4014/560 AG 02.2.5 Mixed Animal Health Strengthening Project 50.000 4,500 40,500 - - - 5,000 - - - FY 96 40/4/561 AG 04 Mixed Cotton Developemnt Project 1,000 - - 1,000 - - - - - - FY 96 40/4/562 AG 02.2.2 Mixed Dairy Development Project 10,000 - - 10,000 - - - - - FY 96 40/4/600 AG 06.4 HMG Cooperative Training Centre 9,440 2,065 7,300 - - - 75 - - FY 96 40/4/601 AG 06.4 HMG Cooperative Institution Promotion Programme 4,000 - - - - - - - 4,000 FY 96 40/4/700 AG 01.1 HMG Nepal Agriculture Research Council 38,500 - - 36,500 - - - - 2,000 - FY 96 40/4/710 AG 01.1 Mixed Agriculture Research Programme 28,350 - - 26,280 - - - - 2,070 - FY 96 40/4/720 AG 01.1 Mixed Agriculture Enterprise and Technology System Project 74,813 - - 72,292 - - - - 2,521 - FY 96 40/4/730 AG 01.1 Mixed Secondary Crop Development Project (R) 23.230 - - 22,030 - - - 1,200 - FY 96 40/4/740 AG 01.1 HMG Potato Research and Development Program 2,562 - - 2,357 - - - - 205 FY 96 40/4/750 AG 04 Mixed Natural Water Fish Development Project (R) 22,839 - - 12,074 - - - - 10,765 - FY 96 40/4/800 AG 01.2.3 Mixed Agriculture Input Price & Transportation Grant 500,000 - - 500,000 - - - - - FY 96 40/5/250 AG 01.2.2 Mixed Upper Sagarmatha Agriculture Dev.Project 15,359 10,817 2,092 2,140 - - 310 - - FY 96 40/5/260 AG 01.2.2 Mixed Secondary Crop Dev. Project 11,809 1,213 3,036 4,500 - 50 3,010 - FY 96 40/5/290 AG 03 Mixed Hill Fruits Development Project 7,258 1,516 1,837 2,983 - - 922 - - FY 96 40/5/410 AG 01 2.2 Mixed Agricultural Extension Programme 325,421 220,524 47,400 50,000 130 - 7,367 - - - FY 96 40/5/412 AG 01.2 2 Mixed Seti Integrated Rural Development Project 3,862 184 33 - - - 3,445 - - - FY 96 40/5/421 AG 01.2.2 Mixed Mechi Hill Development Project (Agric) 690 124 127 439 - - - - - FY 96 40/5/422 AG 03 Mixed Koshi Hill Seed and Vegetables Project 3,632 670 1,072 1,808 - - 82 - - FY 96 40/5/461 AG 01.2.4 Mixed Rapti Integrated Rural Development Project 27,500 18,758 4,156 3,936 - - 650 - - FY 96 87/4/820 AG 04 Mixed Agriculture Development Bank, Share Investment 85,000 - - - - - - 85,000 - FY 96 87/41822 AG 01 2 1 Mixed Small Farmers Development Programme (Il Phase) 750,000 - - - - - - 750,000 -- FY 96 59/3/110 FO 06 HMG Ministry of Forestry and Soil Conservation 6,089 3,876 1,513 - - - 200 - - 500 FY96 59/3/120 FO 06 HMG DepartmentofForest 11,123 7,983 640- - -2,500- -- FY 96 59/3/121 FO 06 HMG Regional Forest Offices 6,694 4,687 2,007 - - - - - - 60 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 96 5913/122 FO 06 HMG District Forest Offices (Including armed forest security) 222,071 213,575 7,626 870 - - - FY 96 59/3/130 FO 06 HMG Botanical Department 2,590 2,249 341 - FY 96 59/3/131 FO 06 HMG Natural Resources Development Division 9,706 3,718 2,945 - - 3,043 FY 96 5913/140 FO 06 HMG Department of Soil and Water Conservation 4,911 4,261 646 - - - 4 - - FY 96 59/3/150 FO 06 HMG Department of National Park & Wild life Protection 9,213 7,692 864 25 700 - 32 - - - FY 96 59/3/151 FO 06 HMG Shivapuri Watershed and Wildlife Protection (Security group 33,775 31,120 830 - - 1,825 - - FY 96 59/3/152 FO 03 HMG National Park (Secunty group) 206,322 191,284 5,194 - - - 9,844 - - FY 96 59/3/153 ED 06 HMG National Hunting Office 3,280 3,255 25 - - - - - - FY 96 59/3/154 FO 06 HMG Hattisar 16,525 14,993 1,200 110 - - 222 - FY 96 59/3/180 FO 06 HMG Central Zoo Developement Committee 6,420 - - 6,420 - - - - - FY 96 59/4/200 FO 05 Mixed Forest Research & Survey Program 9,447 4,260 2,837 - - - 2,350 - - FY 96 59/4/210 FO 05 Mixed Forest Products Development Program 10,500 - - - - - - - 10,500 - FY 96 69/4/220 FO 03 Mixed Shivapuri Watershed and Wildlife Protection Project 15,786 1,768 888 - - 530 12,600 - -- FY 96 5914/221 FO 04 Mixed Herbs Production and Promotion Project 6,349 - - - - - - 6,349 FY 96 59/41310 FO 01 3 Mixed National & Leesehold Forest Development Programme 67,785 1,515 5,435 - - - 60,835 - FY 96 59/4/311 FO 01.1 Mixed Community Forest Development Programme 37,217 1,750 700 - - 34,767 - - FY 96 59/4/312 FO 01.1 HMG Community Forest Plantation Programme 24,200 - - - - 24,200 - - - FY 96 59/4/313 FO 01.3 Mixed Hill Leesehold Forest & Pasture Development Project 22,994 1,337 735 20 - - 15,876 5,026 - FY 96 59/4/330 FD 05 Mixed Tree Improvement Programme 11,197 1,680 2,594 - - - 6,923 - - - FY 96 59/4/340 FO 01.1 Mixed Churiya Forest Development Programme 2,069 98 184 - - - 583 - 1,204 - FY 96 59/4/350 FO 05 Mixed Training & Extension Programme 9,570 220 1,435 - - - 7,915 - - FY 96 59/4/500 FO 05 Mixed Botanical Research Division 20,665 6,611 4,654 - 1,000 - 8,400 - - - FY 96 59/4/610 FO 02 Mixed Watershed Management Project 2,950 556 1,969 - - - 425 - - - FY 96 59/4/620 FO 02 Mixed Bagmati Watershed Project 10,535 1,730 865 - - - 7,940 - - - FY 96 59/4/630 FO 02 HMG Kulekhani Watershed Project 825 380 220 - - - 225 - - - FY 96 59/4/640 FO 02 HMG Land Slide Control Project 2,000 - - - - - 2,000 - - - FY 96 59/4/660 FO 03 HMG Padampur Resettlement Project 15,000 - - - - - 15,000 - - - FY 96 59/4/710 FO 03 Mixed Wildlife Preservation Project 14,360 7,550 853 25 - 2,500 3,432 - - - FY 96 59/4/720 ED 03 Mixed National Park Project 40,441 19,780 2,497 50 - 10,000 8,114 - - - FY 96 59/5/311 FO 01 1 Mixed Community Forest Development Programme 51,333 7,700 3,585 - 300 23,538 - 16,210 FY 96 5915/401 FO 01.1 Mixed Koshi, Dhaulagiti Hill Area Forest Dev Programme 33,378 19,280 1,783 - - 300 8,554 - 3,461 - FY 96 59/5/402 FO 01.1 Mixed Dolakha-Ramechhap Community Forest Dev. Project 9,535 5,960 787 - 1,169 1,619 - FY 96 59/5/403 ED 01.1 Mixed Sindhu-Kavre Forest Development Project 13,505 4,603 451 - - - 2,571 - 5,880 - FY 96 5915/404 ED 01.1 HMG Palpa Distnct Community Forest Dev. Programme 3,842 2,638 333 - - 594 277 - FY 96 59/5/410 FO 01.2 Mixed Rapti Integrated Rural Developemnt Project 9,180 1,155 1,023 - - 50 3,915 - 3,037 - FY 96 59/5/650 FO 02 Mixed Distnct Soil and Water Conservation Programme 51,073 14,900 6,173 - 30,000 - - - FY 96 59/5/661 FO 02 Mixed Chure Land & Watershed Conservation Programme 1,770 72 131 - - - 1,567 - - - FY 96 59/5/662 ED 02 Mixed Sindhu-Kavre Soil Conservation Project 4,195 865 550 - - 2,780 - - - FY 96 59/5/664 FO 02 Mixed Begnas & Rupa Lake Project 5,151 575 439 - - - 3,737 - 400 - FY 96 59/5/665 FO 02 Mixed Upper Andhikhola Watershed Management Project 7,715 695 835 - - - 6,185 - - - FY 96 5915/670 FO 02 Mixed Rapti Integrated Rural Developernt Project (Soil Conservati 12,397 2,790 1,280 - - - 8,327 - - - FY 96 59/5/680 FO 02 Mixed Community Development & Forest/Natershed Protection 14,205 1,075 1,095 - - 12,035 - - FY 96 87/4/824 FO 01.3 Mixed Leasehold Forest and Pasture Development Project 15,470 - - - - - - 13,470 2,000 - FY 96 47/3/130 IR 04 HMG Department of Irrigation 11,551 10,658 818 75 - - - - FY 96 47/3/131 IR 04 HMG Regional Irrigation Directorates 13,830 10,152 2,103 - - - 1,575 - - - FY 96 47/3/132 IR 04 HMG District Irrigation Offices 93,336 76,420 10,609 - - - 6,307 - FY 96 47/4/310 IR 02 Mixed Irrigation Management Transfer Project 45,000 1,000 1,000 - - 43,000 - - FY 96 47/4/311 IR 02 HMG System Management & Training Programme 5,890 1,400 1,190 - - - 3,300 - FY 96 47/4/312 IR 02 Mixed Irrigation Institution Development Programme 54,502 312 2,690 - - 200 51,300 - FY 96 47/4/313 IR 01.5 Mixed Irrigation Sector Project 354,160 2,050 4,545 - - - 347,565 - - FY 96 4714/315 IR 01.5 Mixed Irrigation Line of Credit 370,298 7,800 9,130 - - - 353,368 - - FY 96 47/4/340 IR 03 Mixed River Control 93,165 290 605 - - 92,270 - - FY 96 47/4/341 IR 03 Mixed Water Related Disaster Control Technology Centre 54,465 2,310 2,055 - - - 50,100 - FY 96 47/4/342 IR 03 Mixed Bakraha River Control Project 20,755 75 545 - - - 20,135 - FY 96 47/4/359 IR 013 Mixed Seti Integrated Rural Development Project 1,545 190 225 - - - 1,130 - - FY 96 47/4/360 IR 05 Mixed Ground Water Investegation Programme 11,500 3,650 1,185 - - - 6,665 - FY 96 47/4/361 IR 01 4 Mixed Community Shallow Tubewell Irrigation Programme 53,480 800 1,630 - - 51,050 - - FY 96 47/4/370 IR 02 Mixed Repair, Maintenance Projects 127,335 28,630 28,860 - - 1,000 68,845 - - FY 96 47/4/371 IR 01.5 HMG Farmer ingation Grants 110,000 - - - - - - - 110,000 - FY 96 47/4/392 IR 01.1 HMG Babai Irrigation Project 139,790 2,183 1,607 - - - 136,000 - - FY 96 47141393 IR 03 Mixed Groundwater Irrigation and Flood Control Project 14,000 - - - - - - 14,000 - - FY 96 47/4/394 IR 01 1 HMG Kankai Irrigation Project 3,000 - - 3,000 - - 61 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) Year Head SetrC Der o o Dsuplion Exedtre eeit vmad Grns S csCptlTrandr Ivaiet aetmr aswrn ContLcgenc FY 96 47/4/395 IR 03 HMG Bagmati Bishnumati Embankment Programme 15,000 - 15,000 - - - FY 96 47/4/401 IR 01.5 Mixed Mechi Hill Irgation Project 1,000 41 104 - - - 855 - FY 96 47/4/402 IR 01.1 Mixed Sunsari Morang Irrigation Project (Ii Phase) 215,000 4,900 4,540 - - 9,000 196,560 - - FY 96 47/4/403 IR 01.1 Mixed ChandraMohana Irrigation Project 20,755 75 645 - 20,135 - - - FY 96 47/4/404 IR 01.1 Mixed Bagmati Irrigation Project 243,000 4,100 4,090 - - 10,000 224,810 - - - FY 96 47/4/405 IR 01.5 Mixed Eastern Rapti Irrigation Project 219,760 1,200 1,040 - - - 217,520 - - - FY 96 47/4/406 IR 01.3 Mixed Bhairahawa Lumbini Irrigation Project (11 Phase) 378,395 10,000 10.515 2,000 - 2,500 353,380 - - - FY 96 47/4/407 IR 01.2 Mixed Marchwar Irrigation Project, Rupandehi (I Phase) 36,565 1,275 3,165 - - 500 31,625 - - - FY 96 47/4/408 IR 01.5 Mixed Dhaulagiri Zone Irrigation Project 11323- 11323 - - - FY 96 47/4/410 IR 01.1 Mixed Rajapur Irrigation Project 85,700 1,450 1,025 - - 83,225 - - - FY 96 47/4/411 IR 01.1 Mixed Mahakali Irrigation Project, Kanchanpur 312,500 6,275 2,975 700 - 7,500 295,050 - - - FY 96 5915/530 IR 01.5 HMG Minor Irigation Program 37,500 - - - - - - - 37,500 FY 96 35/4/900 LD 01 Mixed Dhading District Integrated Rural Development Project 2,000 - - - - - - - 2,000 - FY 96 35/4/920 LD 01 Mixed Rural Loan Project 10,000 - - - - - - 10,000 - FY 96 69/3/110 LD 03 HMG Ministry of Local Development 12,764 11,412 1,152 - - - 200 - FY 96 69/3/120 LD 03 HMG Local Development Regional Directorates 4.958 4,302 656 - - - - - FY 96 69/3/130 LD 03 HMG District Guest Houses 2,645 2,431 214 - - - - FY 96 6913/140 LD 03 HMG Registration Section 6,218 4,220 1,998 - - - - - - - FY 96 69/4/200 LD 03 Mixed Women Development Programme 22,111 1,621 1,205 9,235 - - 50 - 10,000 - FY 96 69/4/210 LD 01 Mixed Remote Area Development Programme 9,600 - - 3,833 - - - - 5,767 - FY 96 69/4/220 LD 03 HMG Monastry Management & Development Committee 4,000 570 247 300 - - 2,883 - - - FY 96 6914/230 LD 03 Mixed Population Education Programme 2,895 381 122 2,392 - - - - - - FY 96 69/4/240 LD 03 HMG Local Development Training Institute 14,000 - - 14,000 - - - - - FY 96 69/4/250 LD 03 HMG Manpower Development 20,000 - - - - - - - - 20,000 FY 96 69/4/260 LD 03 Mixed Flood Affected Area Reconstruction and Rehabilitation Proje 9,903 180 1,623 25 - - 8,075 - - - FY 96 69/5/200 LD 03 Mixed Women Development Programme 72,607 27,606 8,807 26,804 - - 9,390 - - FY 96 6915/210 LD 01 Mixed Remote Area Development Programme 70,000 - - 6,577 - - - - 63,423 - FY 96 69/5/260 LD 03 Mixed Flood Affected Area Reconstruction and Rehabilitation Proje 121,155 3,630 2,227 - - - 115,298 - - - FY 96 69/5/280 LD 02.3 Mixed Infrastructure Development Project 25,000 - - - - - 15,000 - - 10,000 FY 96 69/5/290 LD 02.1 Mixed Rural Infrastrcuture Development Programme 3.200 - - - - - 3,200 - - FY 96 69/5/400 LD 03 Mixed Solid Waste Management Progamme (Including Okharpauw 280,000 19,325 9,980 - - 30,540 220,155 - - FY 96 6915/410 LD 02.1 Mixed Labour Intensive Road Reconstruction Project 101,252 1,170 2,532 - - 97,550 - - FY 96 69/5/420 LD 03 HMG Tribal Groups Development Project 20,000 235 30 1,000 - 120 850 - - 17,765 FY 96 69/5/421 LD 01 Mixed Seti Integrated Rural Development Projects Office 8,563 706 257 - - 5,400 - - 2,200 FY 96 69/5/422 LD 01 Mixed Rapti Integrated Rural Development Projects Office 2,750 1,318 630 802 - - - - - - FY 96 6915/423 LD 01 Mixed Rapti Integrated Rural Development Project(Local Developm 4.887 2,474 986 - - - 1,427 - - - FY 96 69/5/451 LD 01 Mixed Dhading Integrated Rural Development Project 17,607 1,200 756 4,845 - - 10,806 - - - FY 96 69/5/452 LD 01 Mixed Gulmi Integrated Rural Development Project 4,651 324 140 537 - - 3,650 - - FY 96 69/5/453 LD 01 Mixed Arghakenchi Integrated Rural Development Project 4,000 340 88 333 - - 3,239 - - - FY 96 69/5/454 LD 01 Mixed Gorkha Development Project 1,960 240 293 710 - - 717 - - - FY 96 69/5/455 LD 01 Mixed Lamjung Development Project 1,500 - - - - - 1,500 - - - FY 96 69/5/456 LD 03 Mixed Patan Preservation & Development Programme 8,500 - - - - - 8,500 - - - FY 96 69/5/500 LD 03 HMG District Development Committee Grant 570,000 - - 110,000 - - - 460,000 - FY 96 69/5/510 LD 03 HMG Municipal Grant 60,000 - - - - - - - 51,000 9,000 FY 96 69/5/520 LD 03 HMG Village Self Reliance Grant 2.013,650 - - - - - - - 2,013,650 - FY 96 6915/530 LD 03 HMG Election Area Development Programme 97,000 - - - - - - - 97,000 - FY 96 69/5/540 LD 01 HMG Local Development Fund 10,000 - - - - - - - - 10,000 FY 96 69/5/560 LD 03 HMG Targeted Group Upliftment Programme 30,000 - - - - - - - 30,000 FY 96 6915/610 LD 02.3 HMG Local Development Construction Programme 124,800 3,550 1,355 - - - 119,895 - FY 96 69/5/620 LD 02.3 HMG Local Road Suspension Bridges 57,700 - - - - - 57,700 - - FY 96 69/5/621 LD 03 HMG Nationalities Upliftment Programme 4,000 - - - - - - - - 4,000 FY 96 87/4/827 LD 03 Mixed Loan for Rural Women Development 11,600 - - - - - - 11,600 - FY 96 87/4/828 LD 01 Mixed Gulmi Ardhakanchi Grants Share Investment 4,500 - - - - - - 4,500 - - FY 97 35/4/815 AG 01.2.3 Mixed Small Farmers Training & Institutional Development Subsidy 29,500 - - 29,500 - - - FY 97 35/4/817 AG 02.2.3 Mixed Biogas Production Subsidy- Capital Subsidy 99,000 - - - - - - - 99,000 - FY 97 35/4/818 AG 022.3 HMG Livestock Insurance (Including Loan Guarantee)- Price Subs 5,000 - - 5,000 - - - - - - FY 97 35/4/819 AG 01.2.3 HMG Small Farmers Interest Subsidy- Price Subsidy 35,000 - - 35,000 - - - - - FY 97 36/4/200 AG 04 HMG Food Subsidy for Nepal Food Corporation 224,500 - - 224,500 - - - - - FY 97 40/3/110 AG 06.4 HMG Agriculture Ministry 9,346 7,186 2,100 - - - 60 - FY 97 40/3/120 AG 06.1 HMG Department of Agriculture Development 10,545 8,150 2,295 100 - - - FY 97 40/3/121 AG 06.1 HMG Regional Agriculture Development Deirectorate 7,073 4,320 1,392 500 - - 861 - - FY 97 40/3/130 AG 06 2 HMG Department of Livestock 3,490 2,825 665 - - - - - - 62 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 97 4013/131 AG 062 HMG Regional Livestock Directorate 5,572 3,672 1,400 450 - - 50 - FY 97 40/3/140 AG 06.4 HMG Department of Cooperative 2,373 1,492 851 - - - 30 - - - FY97 40/3/141 AG 06.4 HMG District Cooperative Offices 39,675 33,400 5,225 - - -1,050- - FY 97 40/3/191 AG 064 HMG National Cooperati Developmlopment Board 2,500 1 - 100 - - 25 - -0 FY 97 40/3/192 AG 06.4 HMG Cotton Development Committee 1,000 2 781,000 0 - - - FY 97 40/4/193 AG 06.4 HMG Tea & Coffee Development Board 5,000 - -,5,000 - 5 - FY 97 40/3/194 AG 06.2 HMG Dairy Development Board 1,500 2,5 - - 59,79 - FY 97 40/4/200 AG 05 HMG Women Farmer Development Programme 1,635 170 440 1,000 - - 25 FY 97 40/4/210 AG 06.1 Mixed Rural Development Market Project (Office of the Coordinator 4,0047 2,200 500 - 119 FY 97 40/4/250 AG 061 Mixed Upper Sagarmathja Agd. Dev. Project 30,851 2,015 1,820 396 - 50 26,570 - FY 97 40/4/260 AG 01.2.2 Mixed Secondary Crop Development Project 68,820 3,009 3,5690 2,425 - 59,796 - - FY 97 40/4/270 AG 01.2.2 Mixed Agriculture Development Plan Janakpur 38,530 4,100 2,130 50 - 7,050 - 24,600 - FY 97 40/4/280 AG 04 Mixed Sericulture Development Programme 30,752 4,195 4,774 2,233 12,000 - ,550 - - - FY 97 40/4/290 AG 03 HMG Hill Fruits Development Project 416 267 149 - - - - - FY 97 40/4/291 AG 03 Mixed Kiripur Horticuntre Dev. Project 8,672 1,655 3,356 1,160 1,300 - 1,201 - - - FY 97 40/4/292 AG 03 HMG Horticulture Farms 23,117 8,427 3,240 100 7,500 - 3,850 - - FY 97 40/4/293 AG 04 HMG Orange & Tea, Coffee Dev. Programme c. Gulmi Aanph 1,368 859 334 125 - - 50 - - - FY 97 40/4/300 AG 03 HMG Vegetable Seed Production Centre 4,300 1,634 925 300 1,170 - 271 - - FY 97 40/4/310 AG 04 HMG Cardoman, Dry Ginger and Potato Dev. Programme 2,663 1,650 773 98 205 - 37 - - - FY 97 40/4/320 AG 04 HMG Fishery Dev. Programme 20,585 6,710 6,595 1,000 4,800 - 1,480 - - FY 97 40/4/330 AG 04 HMG Food Nutritution and Technology 15,319 8,320 4,449 900 - - 1,650 - - - FY 97 40/4/340 AG 01.2.5 HMG Crop Protection 14,705 6,008 3,255 486 3,000 1,95 - FY 97 40/4/350 AG 04 HMG Silkworm Development 4,765 2,060 1,245 800 30 - 10 - - - FY 97 40/4/360 AG 01.2.2 HMG Food & Cash Crop Development 2,846 2,170 481 20 - - 175 - - - FY 97 40/4/370 AG 01.2.2 HMG Agriculture Communication Service Programme 6,181 1,625 4,541 15 - - - - - - FY 97 40/4/380 AG 01 2.2 Mixed Agriculture Training Programme 20,425 7,315 7,827 3,500 750 - 833 - - - FY 97 40/4/390 AG 01.2.3 HMG Seed Dev and Control Service 4,338 2,266 1,407 490 - 2 175 - - - FY 97 40/4/400 AG 01.2.2 Mixed Soil Test Service Programme 7,341 2,305 1,731 1,225 0 - 2,080 - - - FY 97 40/4/410 AG 01.2.2 HMG Agriculture Extension Project 1,800 1,070 730- - - - - FY 97 40/4/450 AG 01 2A3 HMG Agriculture Market Development Programme 3,495 1,385 1,695 375 - 40 - - - FY 97 40/4/451 AG 01.2.4 Mixed Small Market Infrastructure Dev Project 20,767 1,275 1,420 - - 2,630 15,442 - - - FY 97 40/4/500 AG 02.2.5 HMG Animal Health Service Programme 26,724 14,430 8,679 200 2,100 - 1,315 - - - FY 97 40/4/510 AG 02.2.2 HMG Livestock Development Service Programme 3,949 2,375 1,247 155 160 -12--- FY 97 40/4/520 AG 02 2 3 HMG Livestock Development Farms 16,663 9,805 3,798 120 2,300 640-- FY 97 40/4/530 AG 02.2.3 HMG Rural Poultry Development Programme 1,762 1,148 399 30 80 -105--- FY 97 40/4/540 AG 02.2.3 HMG Animal Reproduction & Artificial Insemination Programme 5,787 2,478 2,659 15 140 -495-- FY 97 40/4/541 AG 02.2.3 Mixed Animal Reproduction & Promotion Project 13,405 250 8,405 - - - 4,750 - FY 97 4014/550 AG 02.2.3 Mixed Hilt Lease Forestry Project (Livestock Dev.) 17,700 1,922 2,245 5,414 - 8,119 - - FY 97 40/4/560 AG 02.2.5 Mixed Animal Health Strengthening Project 131,077 74 130,543 - - - 460 - - FY 97 40/4/570 AG 02.2.2 Mixed Animal Service Training Programme 10,617 3,600 3,512 2,700 - - 805 - - FY 97 40/4/600 AG 06.4 HMG Cooperative Training Centre 8,765 1,911 6,854 - - - - - - FY 97 40/4/610 AG 06.4 HMG National Cooperative Union 4,000 - - 4,000 - - - - - FY 97 40/4/700 AG 01 1 HMG Nepal Agriculture Research Council 45,000 - - 40,500 - - - - 4,500 - FY 97 40/4/710 AG 01.1 Mixed Agriculture Research Programme 37,407 - - 29,574 - - - - 7,833 - FY 97 40/4/720 AG 01 1 Mixed Agriculture Enterprise and Technology System Project 68,820 - - 66,105 - - 2,715 - FY 97 40/4/730 AG 01.1 Mixed Secondary Crop Development Project (R) 31,216 - - 24,216 - - - 7,000 - FY 97 40/4/740 AG 01.1 HMG Potato Research and Development Program 3,395 - - 3,071 - - 324 - FY 97 40/4/750 AG 04 Mixed Natural Water Fish Development Project (R) 16,936 - 14,752 - - - 2,184 - FY 97 40/4/800 AG 01 2.3 Mixed Agriculture Input Price &Transportation Grant 600,000 - - 600,000 - - FY 97 40/4/810 AG 04 HMG Tea Development 1,199 - - 1,199 - - - FY 97 40/4/820 AG 02.2.2 HMG Chandradangi Seeds & Dairy Dev. Committee 4,000 - - 4,000 - - - FY 97 40/5/250 AG 01 22 Mixed Upper Sagarmatha Agriculture Dev Project 10,190 6,186 1,034 2,500 - - 470 FY 97 40/5/260 AG 01.22 Mixed Secondary Crop Dev. Project 10,333 1,390 2,927 4,500 - - 1,516 - FY 97 40/5/410 AG 01.2.2 Mixed Agricultural Extension Programme 197,600 135,766 18,908 40,105 - 150 2,671 - FY 97 40/5/421 AG 01 2.2 Mixed Mechi Hill Development Project (Agric) 1,227 203 249 775 - - - FY 97 40/5/422 AG 03 Mixed Hill Seed and Vegetable Project 8,980 1,544 2,024 5,237 - - 175 FY 97 40/5/461 AG 01 2.4 Mixed Village Devlopment Market Project 26,192 18,168 2,611 5,273 - 140 - - FY 97 40/5/511 AG 02.22 Mixed Upper Sagarmatha Animal Devlopment Project 9,227 4,620 1,678 1,799 - - 1,130 - FY 97 40/5/512 AG 02.2.2 Mixed Animal Service Transfor Program 154,170 92,185 34,555 23,000 - - 4,430 - FY 97 40/5/513 AG 022.2 Mixed Mechi Hill Devlopment Project (Animal) 716 90 195 381 - - 50 - FY 97 40/5/580 AG 02 2.4 Mixed Village Devlopment Market Project(Animal) 20,348 13,655 4,801 1,892 - - - FY 97 87/4/820 AG 04 Mixed Agriculture Development Bank (Share Investment) 105,000 - - - - - - 105,000 - 63 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) Ho lrvrsms r cyea Year HdseeGe TsmC FY 97 87/4/822 AG 01 2,1 Mixed Small Farmers Development Programme (ll1 Phase) 500,000 - - - - - - 500,000 - FY 97 59/3/110 FO 06 HMG Ministry of Forestry and Soil Conservation 6,460 4,675 1,485 - - - - - - 300 FY 97 59/3/120 FO 06 HMG Department of Forest 8,947 8,160 652 - - - 135 - - - FY 97 59/3/121 FO 06 HMG Regional Forest Offices 6,538 4,440 1,958 - - - 140 - - - FY 97 59/3/122 FO 06 HMG District Forest Offices (including Armed forest security) 195,807 187,100 7,807 900 - - - FY 97 59/3/130 FO 06 HMG Botanical Department 17,719 10,995 5,589 - - - 1,135 - - FY 97 59/3/140 FO 06 HMG Department of Soil and Water Conservation 4,328 3,640 680 - - - 8 - - - FY 97 59/3/150 FO 06 HMG Department of National Park & WId life Protection 9,977 8,030 944 - 970 - 33 - - - FY 97 59/3/151 FO 06 HMG Shivapuri Watershed and Wildlife Protection (Security Group 38,654 37,105 950 - - - 599 - - FY 97 5913/152 FO 03 HMG National Park (Security Group) 217,347 208,500 5,497 - - - 3,350 - - FY 97 5913/153 FO 06 HMG National Hunting Office 3,870 3,795 25 - - - 50 - - - FY 97 59/3/1154 FO 06 HMG Hattisar 16,161 14,455 1,325 50 - - 331 - - - FY 97 59/3/180 FO 06 HMG Central Zoo Developement Committee 6,420 - - 6,420 - - - - - - FY 97 59/4/200 FO 05 Mixed Forest Research & Survey Program 9,341 4,435 2,601 - - - 2,305 - FY 97 59/4/210 FO 05 HMG Forest Products Development Program 10,500 - - - - - - - 10,500 - FY 97 59/4/220 FO 03 HMG Shivapuri Watershed and Wildlife Protection Project 6,608 1,870 1,031 - - 125 2.582 - - - FY 97 59/4/300 FO 06 Mixed Environmental & Forest Entrepreneur Programme (Coordina 1,985 680 645 200 - - 460 - - - FY 97 59/4/310 FO 01.3 HMG National & Leesehold Forest Development Programme 29,720 1,216 5,005 - - - 23,500 - - - FY 97 59/4/311 FO 01.1 Mixed Community Forest Development Programme 28,287 1,750 767 - - - 25,770 - - - FY 97 5914/312 FO 01.1 HMG Community Forest Plantation Programme 6,500 - - - - - 6,500 - - - FY 97 59/4/313 FO 01.3 Mixed Hill Leesehold Forest & Pasture Development Project 30,859 3,250 1,200 10 - - 26,399 - - - FY 97 5914/330 FO 05 Mixed Tree Improvement Programme 16,972 1,940 3,115 - - - 11,917 - - - FY 97 59/4/340 FO 01.1 Mixed Churiya Forest Development Programme 2.324 100 301 - - - 25 868 1,030 - FY 97 59/4/350 FO 05 Mixed Training & Extension Programme 11,950 150 920 - - - 10,880 - -- FY 97 59/4/500 FO 05 HMG Plant Devepment Programme 15,620 900 2,615 30 400 200 11,475 - - - FY 97 59/4/610 FO 02 Mixed Watershed Management Project 2,979 510 2,024 - - - 445 - - FY 97 59/4/620 FO 02 Mixed Bagmati Watershed Project 11,463 1,695 823 - - - 8,945 - - - FY 97 59/4/630 FO 02 HMG Kulekhani Watershed Project 826 330 216 - - - 280 - - FY 97 59/4/640 FO 02 HMG Soil Erosion Emergency Control Project 2,000 - - - - 2.000 - - - FY 97 59/4/710 FO 03 HMG Wildlife Protection Programme 12,128 7,675 933 20 - 1,000 2,500 - - - FY 97 59/4/720 FO 03 HMG National Park Programme 30,214 21,055 1,564 45 - 1,500 6,050 - - - FY 97 59/5/311 FO 01.1 Mixed Community Forest Development Programme 49,783 7,725 3,878 - - - 24,788 - 13,392 - FY 97 59/51401 FO 01.1 Mixed Koshi, Dhaulagiri Hill Area Forest Dev. Programme 34,024 17,750 1,784 - - 75 10,227 - 4,188 - FY 97 59/5/402 FO 01.1 Mixed Dolakha-Ramechhap Community Forest Dev. Project 9,397 5,770 588 - - - 1,567 - 1,472 - FY 97 5915/403 FO 01.1 Mixed Sindhu-Kavre Forest Development Project 10,314 4,508 447 - - - 3,323 - 2,036 - FY 97 59/5/404 FO 01.1 HMG Palpa District Community Forest Dev. Programme 3,530 2,388 313 - - 584 - 245 - FY 97 5915/410 FO 01.2 Mixed Environment & Forest Entrepreneur Programme (Forest) 15,682 1,539 1.630 - - 50 9,111 - 3,352 - FY 97 59/5/420 FO 01.1 Mixed Mechi Hill Development Programme (Forest) 920 104 159 - - - 307 - 350 FY 97 59/51150 FO 02 HMG District Soil and Water Conservation Programme 47,682 13,900 6,005 - - 27,777 - - - FY 97 59/5/660 FO 02 Mixed Mechi Hill Development Programme (Land Erosion) 1,674 180 199 - - - 1,295 - - - FY 97 59/51661 FO 02 Mixed Chure Land & Watershed Conservation Programme 2,625 104 359 - - - 2,162 - - - FY 97 5915/662 FO 02 Mixed Sindhu-Kavre Soil Conservation Project 3,665 810 439 - - - 2,416 - - - FY 97 59/5/663 FO 02 Mixed Watershed Management Project (Rasuwa, Nuwakot) 15,874 1,561 698 - - - 13,615 - - - FY 97 59/5/664 FO 02 Mixed Begnas & Rupa Lake Project 3,749 525 664 - - - 2,560 - - - FY 97 59/5/665 FO 02 Mixed Upper Andhikhola Watershed Management Project 8,832 675 185 - - - 7,972 - - FY 97 59/5/670 FO 02 Mixed Environment & Forest Entrepreneur Programme (Land Erosi 13,360 2,454 1,137 - - - 9,769 - - - FY 97 59/51680 FO 02 Mixed Community Development & ForestiWatershed Protectin 21,570 1,300 1,020 - - - 19,250 - - - FY 97 59/5/750 FO 03 Mixed Environment & Forest Entrepreneur Programme (National W 1,230 - - - - - 1,230 - - FY 97 59/5/760 FO 03 HMG Zoological Program 1,000 - - - - 1,000 - - FY 97 87/4/824 FO 01 3 Mixed Hill Leesehold Forest & Pasture Development Project (Credit 15,000 - - - - - - 15,000 - FY 97 35/4/825 IR 01.5 HMG Farmer Irrigation Subsidy- Capital Subsidy 110,000 - - - - - - - 110,000 - FY 97 47/3/130 IR 04 HMG Department of Irrigation 12,088 10,832 1,166 90 - - -- FY 97 47/3/131 IR 04 HMG Regional Irrigation Directorates 12,059 9,275 1,784 - - - 1,000 - - FY 97 47/3/132 IR 04 HMG District Irrigation Offices 84,805 71,505 10,755 - - - 2,545 - FY 97 47/4/310 IR 02 Mixed Irrigation Management Transfer Project 73,100 2,000 2,545 - - 68,555 - - FY 97 47/4/311 IR 02 HMG System Management & Training Programme 6,325 1,100 1,260 - - - 3,965 - - FY 97 47/4/312 IR 02 Mixed Inigation Institution Development Programme 60,000 312 3,038 - - 550 56,100 - - FY 97 47/4/313 IR 01.5 Mixed First Irrigation Sector Project 100,000 - - - - - 100,000 - FY 97 47/4/314 IR 01.5 Mixed Second Irrigation Sector Project 399,130 2,222 5,570 77 - 200 391,061 - - FY 97 47/4/315 IR 01.5 Mixed Irrigation Line of Credit 228,000 8,325 9,500 - - - 210,175 - - FY 97 47/4/340 IR 03 Mixed River Control 154,975 260 655 - - - 154,060 - FY 97 47/4/341 IR 03 Mixed Water Related Disaster Control Technology Centre 54,185 2,550 2,320 - - - 49,315 - - 64 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Miffions of Rupees) FY 97 47/4/342 IR 03 Mixed Bakraha River Control Project 50,000 200 365 - - - 49,435 FY 97 47)41343 IR 03 HMG Bagmati River Control Project (Rautahat Sarahi) 30,000 - - 30,000 - - FY 97 47/4/344 IR 03 HMG Banganga River Control, Tilaurakot Protection 6,000 - - 6,000 FY 97 47/4/360 IR 05 Mixed Ground Water Investegation Programme 12,075 3,700 1,090 - - 7,285 - - FY 97 47/4/361 IR 01.4 Mixed Community Shallow Tubewell Irrigation Programme 49,700 1,050 1,642 - - 47,008 - - FY 97 47/4/370 IR 02 HMG Repair, Maintenance Projects 140,035 30,580 29,325 - 1,230 78,900 - - - FY 97 47141401 IR 01.5 Mixed Mechi Hill Irrigation Project 1,500 - - - 1,500 - - FY 97 47/4/402 IR 01.1 Mixed Sunsar Morang Irrigation Project (I Phase) 161,875 5,300 5,015 - - 2,500 149,060 - - - FY 97 47/4/403 IR 01,1 Mixed Chandramohana Irrigation Project 30,000 200 590 - - - 29,210 - FY 97 47/4/404 IR 01.1 Mixed Bagmati Irrigation Project 237,870 4,100 4,175 - - 5,000 224,595 - - - FY 97 47/4/405 IR 01.5 Mixed Eastern Rapti Irrigation Project 208,000 2,036 1,445 650 - 500 203,369 - - - FY 97 47/4/406 IR 01.3 Mixed Bhairahawa Lumbini Irrigation Project (III Phase) 344,900 10,600 10,785 2,500 - 2,500 318,515 - - FY 97 47/4/407 IR 01.2 Mixed Marchwar Irrigation Project, Rupandehi (Il Phase) 19,900 1,275 3,190 - 500 14,935 - - FY 97 47/4/408 IR 01.5 Mixed Dhaulagin Zone Irigation Project 9,500 - - - - - 9,500 - - FY 97 47/4/409 IR 01.1 HMG Babai Irrigation Project 74,900 2,250 1,590 - - 1,000 70,060 - - FY 97 47/4/410 IR 01.1 Mixed Rajapur Irrigation Project 279,820 1,750 1,425 - - 500 276,145 - - - FY 97 47/4/411 IR 01.1 Mixed Mahakali Irrigation Project, Kanchanpur 332,475 6,775 2,865 1,000 - 7,500 314,335 - - FY 97 87/4/826 IR 01.4 Mixed Ground Water and Flood Rehabilitation Project (Credit) 7,000 - - - - - - 7,000 - - FY 97 35/41829 LD 01 Mixed Gulmi Argakanchi LR.D. 15,000 - - 15,000 - - - - FY 97 69/3/110 LD 03 HMG Ministry of Local Development 12,987 11,712 1.275 - - - - - - FY 97 69/3/120 LD 03 HMG Local Development Regional Directorates 5,234 4,438 706 - - - 90 - - - FY 97 69/3/130 LD 03 HMG District Guest Houses 2,906 2,674 232 - - - - - - FY 97 6913/140 LD 03 HMG Registration Section 6,212 4,050 2,138 - - - 24 - - FY 97 69/4/200 LD 03 Mixed Women Development Programme 22,822 1,820 1,310 7,612 - - 12,080 - - - FY 97 6914/201 LD 03 HMG Women Skill Development Programme 1,500 - - - - - - - - 1,500 FY 97 69/4/210 LD 01 HMG Remote Area Development Programme 14,600 - - 5,550 - - - - 9,050 - FY 97 69/4/220 LD 03 HMG Monastry Management & Development Committee 9,000 570 290 600 - 7,540 - - - FY 97 69/4/230 LD 03 Mixed Population Education Programme 3.136 363 152 2,616 - - 5 - - - FY 97 69/4/240 LD 03 HMG Local Development Training Institute 17,000 - - 14,000 - - - 3,000 - FY 97 69/4/250 LD 03 HMG Manpower Development 6,000 - - - - - - - - 6,000 FY 97 6914/260 LD 03 Mixed Flood Suferer Reconstruction and Rehabilitation Project 4,263 103 170 3,990 - - - - - FY 97 69/41280 LD 02.3 HMG Rural Community Infrastructure Development Programme 615 320 275 - - - 20 - FY 97 69/4/290 LD 02.1 Mixed Rural Infrastrcuture Development Programme 735 400 290 - - - 45 - - FY 97 69/4/300 LD 02.2 Mixed Lumbini Zonal Rural Drinking Water & Sanitation Programm( 3,000 - - - - - - - 3,000 FY 97 69/4/310 LD 03 HMG Decertralization Work Plan 2,500 - - - - - - - 2,500 FY 97 69/4/320 LD 03 Mixed National Ethenitic Community Upliftment Institute 4,000 - - 4,000 - - - - - FY 97 6915/200 LD 03 Mixed Women Development Programme 87,515 33,065 9,873 34,466 - - 10,111 - - FY 97 69/5/210 LD 01 Mixed Remote Area Development Programme 75,000 - - 7,172 - - 67,828 - - FY 97 69151260 LD 03 Mixed Flood Suterer Reconstruction and Rehabilitation Project 1,839 1,114 725 - - FY 97 69/5/280 LD 02.3 Mixed Rural Community Infrastructure Development Programme 186,295 7,700 2,370 - - - 176,225 - - - FY 97 69/5/290 LD 02.1 Mixed Rural Infrastrcuture Development Programme 46,865 1,433 702 - - - 44,730 - -- FY 97 69/5/300 LD 02 2 Mixed Lumbini Zonal Rural Drinking Water & Sanitation ProgrammE 31,360 - - - - - - - - 31,360 FY 97 69/5/400 LD 03 Mixed Solid Waste Management Progamme (Including Okharpauw 207,000 13,225 9,175 3,000 - 15,000 166,600 - FY 97 6915/410 LO 02.1 Mixed Labour Intensive Road Reconstruction Project 105,260 1,250 2,760 - - - 101,250 - FY 97 69/5/420 LD 03 HMG Tribal Groups Development Project 20,000 235 30 1,000 - - 970 - - 17,765 FY 97 69/5/451 LD 01 Mixed Dhading Integrated Rural Development Project 7,348 590 207 567 - - 5,984 - - FY 97 69/5/452 LD 01 Mixed Gulmi Integrated Rural Development Project 50,000 530 170 6,310 - - 42,990 - - - FY 97 69/5/453 LD 01 Mixed Arghakanchi Integrated Rural Development Project 50,000 550 150 6,310 - - 42,990 - - - FY 97 6915/454 LD 01 Mixed Gorkha Development Project 14,465 233 316 779 - 13,137 - -- FY 97 69/5/455 LD 01 Mixed Lamjung Development Project 3,900 - - - - - - - - 3,900 FY 97 69/5/456 LD 03 Mixed Patan Preservation & Development Programme 4,500 - - - - - 4,500 - - FY 97 69/5/500 LD 03 HMG District Development Committee Grant 620,000 - - 130,000 - - - 490,000 - FY 97 69/5/510 LD 03 HMG Municipal Grant 84,000 - - - - - - - 84,000 - FY 97 69/5/520 LD 03 HMG Village Self Reliance Grant 2,010,000 - - . - - - 2,010,000 - FY 97 6915/530 LD 03 HMG Election Area Development Programme 106,000 - - - - - - 106,000 - FY 97 69/5/540 LD 03 HMG Local Development Fund 10,000 - - - - - - - 10,000 FY 97 69/5/550 LD 03 HMG Paticipatory Development Program 35,000 - - - - - - 35,000 - FY 97 69/5/560 LD 03 HMG Targeted Group Upliftment Programme 30,000 - . - - - - 30,000 - FY 97 69/5/610 LD 02.3 Mixed Local Development Construction Programme 128,050 - - - - - 126,050 - - - FY 97 69151620 LD 02.3 HMG Local Road Suspension Bridges 60,615 - - - - - 60,000 - - 615 FY 97 6915/650 LD 03 HMG Account Settlement of Completed Projects 800- - - - - - - - 800 FY 97 69/5/660 LD 03 HMG Padampur Resettlement Project 10,000 - - - - - 10,000 - - - 65 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 97 87/4/827 LD 03 Mixed Production Credit for Rural Women (Credit) 15,000- - - 15,000 - FY 97 8714/828 LD 01 Mixed Gulmi Argakanchi LR.D. (Credit) 30,000- - - 30,000 - FY 98 35-4-816 AG 01.2.3 Mixed Small Farmers Training & Institutional Development Subsidy 20,650 - - 20,650 - - - - - FY 98 35-4-817 AG 02.2.3 Mixed Biogas Production Subsidy- Capital Subsidy 112,000- - - - - - 112,000 - FY 98 35-4-818 AG 02.2.3 HMG Livestock Insurance (Including Loan Guarantee)- Price Subs 7,500 - - 7.500 - - - - FY 98 35-4-819 AG 01.2.3 HMG Small Farmers Interest Subsidy- Price Subsidy 35, - 35,000 - - - - FY 98 36-4-200 AG 04 HMG Food Subsidy for Nepal Food Corporation 225,000 - - 225,000 - - - - - FY 98 40-3-110 AG 06.4 HMG Ministry of Agriculture 9,382 7,200 2,182 - - - - FY 98 40.3-120 AG 06.1 HMG Department of Agriculture Development 11,480 9,043 2,377 60 - - - - - FY 98 40-3-121 AG 06.1 HMG Regional Agriculture Development Directorate 7,277 4,420 1,357 500 - - 1,000 - - FY 98 40-3-130 AG 06.2 HMG Department of Livestock 3,805 3,055 750 - - - - - - FY 98 40-3-131 AG 06.2 HMG Regional Livestock Directorate 6,126 4,057 1,469 450 - - 150 - - FY 98 40-3-140 AG 06.4 HMG Department of Cooperative 2,438 1,525 913 - - - - - - FY 98 40-3-141 AG 06.4 HMG District Cooperative Offices 41,738 35,600 6,563 - - - 575 - - FY 98 40-3-191 AG 06.4 HMG National Cooperative Development Board 2,500 - - 2,500 - - - - - - FY 98 40-3-192 AG 06.4 HMG Cotton Development Committee 1.000 - - 1,000 - - - - - FY 98 40-3-193 AG 06.4 HMG Tea & Coffee Development Board 5,670 - - 5,670 - - - - - - FY 98 40-3-194 AG 06.2 HMG Dairy Development Board 1,500 - - 1,500 - - - - - - FY 98 40-4-200 AG 05 HMG Women Farmer Development Programme 1.275 80 120 1,075 - - - - - FY 98 40-4-210 AG 06.1 Mixed Rural Development Market Project (Office of the Coordinator 5,398 2,567 1,101 397 570 - 763 - - - FY 98 40-4-211 AG 06.1 Mixed Agricultural Research & Extension Project (Coordinate Offici 84,290 7,625 7,065 1,025 - - 68,575 - - FY 98 40-4-220 AG 05 HMG Agriculture Long-term Planning Monitoring & Coordination Pi 1,000 - - - - - - - - 1,000 FY 98 40-4-250 AG 06.1 Mixed Upper Sagarmathja Agri. Dev. Project 65,000 2,370 3,955 - - - 58,675 - -- FY 98 40-4-260 AG 01.2.2 Mixed Secondary Crop Development Project 50,918 3,240 3,828 2,900 - - 40,950 - - - FY 98 40-4-270 AG 01.2.2 Mixed Agriculture Development Project, Janakpur 45,200 4,850 2,335 - 675 - 19,759 - 17,581 - FY 98 40-4-280 AG 04 Mixed Sericulture Development Programme 33,800 4,457 4,760 1,668 10,000 240 12,675 - - FY 98 40-4-291 AG 03 Mixed Kirtipur Horticultre Dev. Project 8,375 1,970 3,463 1,041 1,400 - 501 - - FY 98 40-4-292 AG 03 HMG Horticulture Farms 26,071 10,738 3,610 123 8,400 - 3,200 - - FY 98 40-4-293 AG 04 HMG Orange & Tea, Coffee Dev. Programme (inc Gulmi, Aanpch 1,439 923 381 136 - -- FY 98 40-4-300 AG 03 HMG Vegetable Seed Production Centre 4,413 1,679 964 310 1,200 - 260 - FY 98 40-4-301 AG 01.2.3 Mixed Seeds Promotion Project 11,711 681 1,445 2,900 - - 6,685 - - FY 98 40-4-310 AG 04 HMG Cardoman, Dry Ginger and Potato Dev. Programme 3,137 1,800 827 200 240 - 70 - - FY 98 40-4-320 AG 04 HMG Fishery Dev. Programme 22,500 7,810 6,970 1,200 5,000 - 1,520 - - FY 98 40-4-330 AG 04 HMG Food Nutritution and Technology 15,065 8,729 4,821 705 - - 810 - - - FY 98 40-4-340 AG 01.2.5 HMG Crop Protection 14,575 6,176 3,574 749 3,000 - 1,076 - - - FY 98 40-4-350 AG 04 HMG Silkworm Development 5,120 2,303 1,503 790 474 - 50 - - FY 98 40-4-360 AG 01.2.2 HMG Food & Cash Crop Development 2,584 2,095 489 - - - - - - - FY 98 40-4-371 AG 01.22 Mixed Agriculture Research & Extension Project (Communication) 27,402 1,885 6,052 15 - - 19,450 - - FY 98 40-4-381 AG 01.2.2 Mixed Agriculture Research & Extension Project (Training Centre) 20,700 7,200 6,477 2,500 800 - 3,723 - - - FY 98 40-4-390 AG 01.2.3 HMG Seed Dev. and Control Service 3,106 2,110 951 - - - 45 - - FY 98 40-4-400 AG 01.2.2 Mixed Soil Test Service Programme 6,298 2,290 1,859 835 397 - 797 - 120 FY 98 40-4-450 AG 01.2.4 HMG Agriculture Market Development Programme 3.761 1,270 1,530 380 - 150 431 - - FY 98 40-4-451 AG 01.2.4 HMG Small Market Infrastructure Dev. Project 786 496 275 - - - 15 - - FY 98 40-4-500 AG 02.2.5 HMG Animal Health Service Programme 27,375 15,340 9,415 220 2,200 - 200 - FY 98 40-4-510 AG 0222 HMG Livestock Development Service Programme 4,062 2,600 1,002 400 - - 60 - FY 98 40-4-520 AG 02.2.3 HMG Livestock Development Farms 17,900 10,565 4,184 200 2,524 - 427 - FY 98 40-4-530 AG 02.2.3 HMG Rural Poultry Development Programme 2,094 1,335 544 55 80 - 80 - FY 98 40-4-540 AG 02.2.3 HMG Animal Reproduction & Artificial Insemination Programme 7,276 2,554 3,885 200 87 - 550 - - FY 98 40-4-541 AG 02.2.3 Mixed Animal Reproduction & Promotion Project 14,000 110 13,430 - - - 460 - - FY 98 40-4-550 AG 02.23 Mixed Hill Lease Forestry Project (Livestock Dev.) 16,273 2,143 3,692 5,448 - - 4,990 - - FY 98 40-4-560 AG 02.2.5 Mixed Animal Health Strengthening Project 131,100 117 128,860 - - 2,000 123 - FY 98 40-4-570 AG 02.2.2 HMG Animal Service Training Programme 10,453 4,024 3,840 2,034 45 - 510 - - FY 98 40-4-580 AG 06.2 Mixed Third Livestock Development Management Office 76,643 2,293 32,495 - - - 41,855 - - - FY 98 40-4-600 AG 06.4 HMG Cooperative Training Centre 7,907 1,858 5,904 - - - 145 - - - FY 98 40-4-610 AG 06.4 HMG National Cooperative Union 4,000 - - 4,000 - - - - - FY 98 40-4-700 AG 01.1 HMG Nepal Agriculture Research Council 27,949 - - 23,482 - - - - 3,467 1,000 FY 98 40-4-710 AG 01.1 Mixed Agriculture Research Programme 28,596 - - 25,883 - - - - 2,713 - FY 98 40-4-711 AG 01.1 Mixed Agriculture Research & Extension Project 204,918 - - 81,047 - - - - 123,871 - FY 98 40-4-730 AG 01.1 Mixed Secondary Crop Development Project (R) 28,773 - - 26,588 - - - - 2,185 - FY 98 40-4-731 AG 01.1 HMG Hill Crop Research Project 13,000 - - 7,500 - - - - 5,500 - FY 98 40-4-750 AG 04 Mixed Natural Water Fish Development Project (R) 19,564 - - 17,038 - - - - 2,526 - FY 98 40-4-800 AG 01 2.3 Mixed Agneulture Input Price & Transportation Grant 600,000 - - 600,000 - - - - - - 66 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 98 40-4-810 AG 04 HMG Tea Development 500 - - 500 - - - - - FY 98 40-4-820 AG 02.2.2 HMG Chandradangi Seeds & Dairy Dev. Committee 3,500 - - 3,500 - - - - - FY 98 40-5-250 AG 01.22 Mixed Upper Sagarmatha Agriculture Dev Project 12,691 6,565 1,201 3,775 - - 1,150 - - - FY 98 40-5-260 AG 01.2.2 Mixed Secondary Crop Dev. Project 11,000 1,475 2,950 5,400 - - 1,175 - - FY 98 40-5-410 AG 01.2.2 HMG Agricultural Extension Programme 112,456 79,853 11,315 20,265 - - 1,023 - - - FY 98 40-5-411 AG 01.2.2 Mixed Agriculture Reaearch & Extension Project 97,833 47,600 8,203 33,450 - - 8,580 - - FY 98 40-5-421 AG 01.2.2 Mixed Mechi Hill Development Project (Agric) 1,237 160 192 885 - - - - FY 98 40-5-461 AG 01,2.4 Mixed Rural Development Market Project (Agriculture) 28,820 18,740 3,055 6,500 - - 525 - - FY 98 40-5-511 AG 02.2.2 Mixed Upper Sagarmatha Animal Dev. Project 10,888 5,055 1,913 2,750 - - 1,170 - - - FY 98 40-5-512 AG 02.2.2 Mixed Livestock Service Extension Programme 156,319 98,380 32,839 23.000 - - 2,100 - - - FY 98 40-5-513 AG 022.2 Mixed Mechi HillI Development Project (Livestock) 1,169 135 295 720 - - 19 - - - FY 98 40-5-580 AG 02.2.4 Mixed Rural Development Market Project (Livestock) 22,582 13,920 5,214 2,800 - - 648 - FY 98 40-5-590 AG 02.2.2 Mixed Third Livestock Development Project 9,475 3,630 1,720 1,665 - - 2,460 - - FY 98 87-4-820 AG 04 HMG Agriculture Development Bank (Share Investment) 88,000 - - - - - - 86,000 - - FY 98 87-4-821 AG 02.2.1 Mixed Biogas Production (Credit) 157,300 - - - - - - 157,300 - - FY 98 59-3-110 FO 06 HMG Ministry of Forestry and Soil Conservation 6,690 4,945 1,745 - - - - FY 98 59-3-120 FO 06 HMG Department of Forest 8,547 7,820 727 - - - FY 98 59-3-121 FO 06 HMG Regional Forest Offices 6.348 4,340 2,008 - - FY 98 59-3-122 FO 06 HMG District Forest Offices (Including Armed forest security) 211,825 202,850 8,175 800 - FY 98 59-3-130 FO 05 HMG Botanical Department 18,707 12,838 5,869 - - FY 98 59-3-140 FO 06 HMG Department of Soil and Water Conservation 4,335 3,595 732 - - - 8 - - FY 98 59-3-150 FO 06 HMG Department of National Park & Wild life Protection 10,402 8,460 937 - 1,005 - FY 98 59-3-151 FO 06 HMG Shivapuri Watershed and Wildlife Protection (Security Group 40,561 39,562 999 - - - - - FY 98 59-3-152 FO 03 HMG National Park (Security Group) 229,335 222,850 5,985 - - - - - - 500 FY 98 59-3-153 FO 06 HMG National Hunting Office 3,925 3,900 25 - - - - - - FY 98 59-3-154 FO 06 HMG Hattisar 16,977 15,625 1,302 50 - - - - - FY 98 59-3-180 FO 06 HMG Central Zoo Developement Committee 6,420 - - 6,420 - - - - - - FY 98 59-4-200 FO 05 HMG Forest Research & Survey Program 8,935 5,195 2,802 - - - 938 - - - FY 98 59-4-210 FO 05 HMG Forest Products Development Program 7,500 - - - - - - - - 7,500 FY 98 59-4-220 FO 03 HMG Shivapuri Watershed and Wildlife Protection Project 6,168 2,005 948 - - 150 3,065 - - - FY 98 59-4-300 FO 06 Mixed Environmental & Forest Entrepreneur Programme (Coordina 2,525 810 865 4173 - - 377 - - - FY 98 59-4-310 FO 01.3 Mixed National & Leasehold Forest Development Programme 32,552 945 5,455 - - - 26,152 - FY 98 59-4-311 FO 01.1 Mixed Community Forest Development Programme 28,872 1,775 830 - - - 26,267 - - - FY 98 59-4-312 FO 01.1 HMG Community Forest Plantation Programme 5.115 - - - - - 5,115 - FY 98 59-4-313 FO 01.3 Mixed Hill Leesehold Forest & Pasture Development Project 43,610 3,410 2,410 10 - - 37,780 - - - FY 98 59-4-330 FO 05 Mixed Tree Improvement Programme 14,354 2,360 3,580 - - - 8,414 - - - FY 98 59-4-340 FO 01.1 Mixed Churya Forest Development Programme 3,206 - 312 - - - 1,999 - 895 - FY 98 59-4-350 FO 05 Mixed Training & Extension Programme 4,955 150 900 - - - 3,905 - - - FY 98 59-4-500 FO 05 HMG Plant Devepment Programme 13,405 960 2,915 30 400 200 8,900 - - - FY 98 59-4-610 FO 02 Mixed Watershed Management Project 3,000 550 2,103 - - - 347 - - - FY 98 59-4-620 FO 02 Mixed Bagmati Watershed Project 26,500 3,050 3,400 - - - 20,050 - - - FY 98 59-4-630 FO 02 HMG Kulekhani Watershed Project 800 330 216 - - - 254 - - FY 98 59-4-640 FO 02 HMG Soil Erosion Emergency Control Project 2,000 - - - - - 2,000 - FY 98 59-4-710 FO 03 HMG Wildlife Protection Programme 12,478 8,415 973 20 - - 3,070 - FY 98 59-4-720 FO 03 HMG National Park Programme 31,401 24,227 1,624 50 - - 5,500 - FY 98 59-5-311 FO 01 1 Mixed Community Forest Development Programme 68,404 10,240 4,780 - - - 34,043 - 19,341 - FY 98 59-5-401 FO 01.1 Mixed Koshi, Dhaulagiri Hill Area Forest Dev. Programme 36,993 20,817 1,835 609 - 300 13,432 - FY 98 59-5-402 FO 01.1 Mixed Dolakha-Ramechhap Community Forest Dev. Project 14,517 6,790 660 - - 75 5,643 - 1,349 - FY 98 59-5-403 FO 01.1 Mixed Sindhu-Kavre Forest Development Project 11,599 4,368 445 - - - 2,342 - 4,444 FY 98 59-5-404 FO 01.1 HMG Palpa District Community Forest Dev Programme 3,572 2,388 321 - - - 773 - 90 FY 98 59-5-410 FO 012 Mixed Environment & Forest Entrepreneur Programme (Forest) 6,020 1,432 1,759 - - - 2,348 - 481 FY 98 59-5-420 FO 01.1 Mixed Mechi Hill Development Programme (Forest) 1,309 163 259 - - - 741 - 146 FY 98 59-5-650 FO 02 Mixed District Soil and Water Conservation Programme 54,000 16,625 6,670 - - - 30,705 - FY 98 59-5-660 FO 02 Mixed Mechi Hill Development Programme (Land Erosion) 2,529 180 224 - - - 2,125 - FY 98 59-5-661 FO 02 Mixed Chure Land & Watershed Conservation Programme 5,202 180 599 - - - 4,423 - FY 98 59-5-662 FO 02 Mixed Sindhu-Kavre Soil Conservation Project 4,788 860 525 - - - 3,403 - FY 98 59-5-663 FO 02 Mixed Watershed Management Project (Rasuwa, Nuwakot) 17,817 1,625 713 - - - 15,479 - FY 98 59-5-665 FO 02 Mixed Upper Andhikhola Watershed Management Project 9,806 845 185 - - - 8,776 - - FY 98 59-5-670 FO 02 Mixed Environment & Forest Entrepreneur Programme (Land Erosi 8,820 2,844 1,109 - - - 4,867 - FY 98 59-5-680 FO 02 Mixed Community Development & Forest/Watershed Protectin 21,950 1,700 995 - - - 19,255 - FY 98 59-5-750 FO 03 Mixed Environment & Forest Entrepreneur Programme (NationalW 684 - - - - - 684 - FY 98 87-4-824 FO 01.3 Mixed Hill Leesehold Forest & Pasture Development Project (Credi 19,100 - - - - - 19,100 - 67 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 98 35-4-825 IR 01.5 HMG Farmer Irrgation Subsidy- Capital Subsidy 90,000 - - - - - - 90,000 - FY 98 47-3-130 IR 04 HMG Department of Irrigation 11,231 9,885 1,256 90 - - - - FY 98 47-3-131 IR 04 HMG Regional Irrigation Directorates 12,865 10,025 1,840 - - - 1,000 - - FY 98 47-3-132 IR 04 HMG District Irrigation Offices 87,576 76,580 10,960 - - - 45 - - FY 98 47-4-310 IR 02 Mixed Irngation Management Transfer Project 46,265 2,000 2,665 - - - 41,600 - FY 98 47-4-311 IR 02 HMG System Management & Training Programme 6,705 1,390 1,315 - - - 4,000 - - - FY 98 47-4-312 IR 02 Mixed Irrigation Institution Development Programme 12,380 350 3,060 - - - 8,970 - - - FY 98 47-4-314 IR 01.5 Mixed Second Irrigation Sector Project 548,918 2,658 5,605 42 - 1,100 539,513 - - - FY 98 47-4-316 IR 01.5 Mixed Nepal Irrigation Sector 439,794 10,400 11,225 - - - 418,169 - - - FY 98 47-4-317 IR 01.4 Mixed Ground Water Irrigation Sector 5,000 - - - - - - - - 5,000 FY 98 47-4-318 IR 01.5 Mixed Irrigation Development Project 12,500 - - - - - - - - 12,500 FY 98 47-4-319 IR 01.5 Mixed Small Irigation Special Programme 50,000 - - - - - 50,000 - - - FY 98 47-4-340 IR 03 Mixed River Control 120,000 316 582 - - - 119,103 - - - FY 98 47-4-341 IR 03 Mixed Water Related Disaster Control Technology Centre 60,000 2,570 2,455 - - - 54.975 - - - FY 98 47-4-342 IR 03 Mixed Bakraha River Control Project 109,717 240 385 - - - 109,092 - - FY 98 47-4-343 IR 03 Mixed Bagmati River Control Project (Rautabat Sariah!) 35,000 - - - - - 35,000 - - - FY 98 47-4-344 IR 03 HMG Banganga River Control, Tilaurakot Protection 10,000 - - - - - 10,000 - - FY 98 47-4-345 IR 03 Mixed Lal Bakaiya River Control 21,000 - - - - - 21,000 - - - FY 98 47-4-360 IR 05 Mixed Ground Water Investegation Programme 19,915 3,820 1,140 - - - 14,955 - - - FY 98 47-4-361 IR 01.4 Mixed Community Shallow Tubewell Irrigation Programme 94,280 1,194 1,790 - - - 91,296 - - FY 98 47-4-370 FR 02 Mixed Repair, Maintenance Projects 125,000 31,430 30.675 - - 4,000 58,895 - - - FY 98 47-4-403 IR 01.1 Mixed Chandramohana Irrigation Project 39,854 240 600 - - - 39,014 - - FY 98 47-4-404 FR 01.1 Mixed Bagmati Irrigation Project 225,265 4,000 4,450 - - 7,000 209,815 - - - FY 98 47-4-405 IR 01 5 Mixed Eastern Rapti Irrigation Project 128,600 1,970 1,630 - - 1,100 123,900 - - - FY 98 47-4-406 IR 01.3 Mixed Bhairahawa Lumbini Irrigation Project (Ill Phase) 276,220 10,700 10,745 2,500 - 3,500 248,775 - - - FY 98 47-4-407 IR 01,2 HMG Marchwar Irrigation Project, Rupandehi (It Phase) 5,925 1,135 3,190 - - 500 1,100 - - - FY 98 47-4-409 IR 01.1 HMG Babal Irrigation Project 50,000 1,894 1,465 - - 1,000 45,641 - - - FY 98 47-4410 IR 01.1 Mixed Rajapur Irrigation Project 262,315 2,010 1,630 - - 500 258,175 - - - FY 98 47-4-411 IR 01.1 Mixed Mahakali Irrigation Project, Kanchanpur 116,741 6,750 3,105 1,000 - 3,500 102,386 - - - FY 98 47-4-412 IR 01.1 Mixed Sunsary-Morang Irrigation Project (Third) 113,665 200 1,475 - - 3,900 108,090 - - FY 98 47-4-413 IR 01.1 Mixed Sunsary-Morang Headworks Project 105,770 5,500 4,280 - - 15,000 80,990 - - - FY 98 87-4-826 IR 01.4 Mixed Ground Water and Flood Rehabilitation Project (Credit) 20,000 - - - - - - 20,000 - - FY 98 69-3-110 LD 03 HMG Ministry of Local Development 14,112 12,722 1,390 - - - - - - FY 98 69-3-120 LD 03 HMG Local Development Regional Directorates 5,575 4,800 750 - - - 25 - - FY 98 69-3-130 LD 03 HMG District Guest Houses 2,918 2,675 243 - - - - - - FY 98 69-3-140 LD 03 HMG Registration Section 6,714 4,550 2,164 - - - - - - FY 98 69-4-200 LD 03 Mixed Women Development Programme 26,019 1,820 1,310 7,270 - - 15,619 -- FY 98 69-4-201 LD 03 HMG Women Skill Development Programme 2,500 - - - - - - - 2,500 - FY 98 69-4.210 LD 01 HMG Remote Area Development Programme 16,000 - - 2,400 - - - - 6,720 6,880 FY 98 69-4-220 LD 03 HMG Monastry Management & Development Committee 6,000 - - - - - - - - 6,000 FY 98 69-4-230 LD 03 Mixed Population Education Programme 5,050 425 194 4,431 - - - - - FY98 69-4-240 LD 03 HMG Local Development Training Institute 16,000 - - 9,204 - - - - 6,796 - FY 98 69-4-250 LD 03 HMG Manpower Development 6,000 - - - - - - - - 6,000 FY 98 69-4-280 LD 02.3 Mixed Rural Community Infrastructure Development Programme 1,045 305 330 400 - - 10 - - - FY 98 69-4-290 LD 02.1 Mixed Rural Infrastrcuture Development Programme 24,943 500 403 - - - 22,040 - 2,000 - FY 98 69-4-300 LD 022 HMG Lumbini Zonal Rural Drinking Water & Sanitation ProgrammE 100 - - - - - - - - 100 FY 98 69-4-320 LD 03 HMG National Ethenitic Community Upliftment Institute 4,000 - - 4,000 - - - - - - FY 98 69-4-340 LD 03 HMG Land Revenue Collection Strengthening 300 90 210 - - - - - - FY 98 69-4-350 LD 03 HMG Local Bodies Boarder Study 300 189 111 - - - - -- FY 98 69-4-351 LD 03 Mixed Western Nepal Poverty Erradication Programme 11,000 - - - - - - - - 11,000 FY 98 69-5-200 LD 03 Mixed Women Development Programme 76,669 30,634 10,638 34,847 - - 550 - - - FY 98 69-5-210 LD 01 Mixed Remote Area Development Programme 76,000 - - - - - - - 76,000 - FY 98 69-5-280 LD 02.3 Mixed Rural Community infrastructure Development Programme 232,012 10,395 2,919 - - - 218,698 - - - FY 98 69-5-290 LD 02.1 Mixed Rural Infrastrcuture Development Programme 54,930 1,685 1,327 - - - 51,918 - - - FY 98 69-5-300 LD 02.2 Mixed Lumbini Zonal Rural Drinking Water & Sanitation Programm( 32,500 - - 2,340 - - 30,160 - - FY 98 69-5-400 LD 03 Mixed Solid Waste Management Progamme (Including Okharpauw 200,000 13,215 6,785 - - 10,000 170,000 - - - FY 98 69-5-410 LD 02.1 Mixed Labour Intensive Road Reconstruction Project 143,000 1,450 1,960 - - - 139,590 - - - FY 98 69-5-420 LD 03 HMG Tribal Groups Development Project 17,000 - - - - - - - - 17,000 FY 98 69-5-451 LD 01 Mixed Dhading Integrated Rural Development Project 1,150 275 35 - - - 840 - - - FY 98 69-5-452 LD 01 HMG Gulmi Integrated Rural Development Project 500 345 155 - - - - - - FY 98 69-5453 LD 01 HMG Arghakanchi Integrated Rural Development Project 500 388 112 - - - - FY 98IFY 99 FY 100IFY 101FY 1021FY 103 FY 104 FY 10 1FY 106 IFY 107 FY lo IFY 109 FY 110 FY111 FY 112 IFY 113 68 Public Expenditures Annex C (Budget) Rural Development FY95-98 Budget (Millions of Rupees) FY 98 69-5-455 LD 01 Mixed Lamijung Development Project 3,757 - -3,757 FY 98 69-5-456 LD 03 Mixed Patan Preservation & Development Programme 4,500 - - - - 4,500 - - - FY 98 69-5-500 LD 03 HMG District Development Committee Grant 650,000 - . - - - - - 650,000 - FY 98 69-5-510 LD 03 HMG Municipal Grant 140,000 - -140,000 FY 98 69-5-520 LD 03 HMG Village Self Reliance Grant 1,957,000 - - - - - FY98 69-5-521 LD 03 HMG Model Village Programme 30,000 --30,000 FY 98 69-5-530 LD 03 HMG Election Area Development Programme 106,000 - - - - -- FY 98 69-5-541 LD 03 HMG Poverty Allivation Fund 40,000 - - - - -40,000 FY 98 69-5-550 LD 03 HMG Paticipatory Development Program 33,000 - - - - - - 33,000 - FY 98 69-5-560 LD 03 HMG Targeted Group Upliftment Programme 17,000 - - - - - - - 17,000 - FY98 69-5-610 LD 02.3 HMG Local Development Construction Programme 130,000- - - - -130,000- - - FY 98 69-5-620 LD 02.3 Mixed Local Road Suspension Bridges 95,000 - - - - - 95,000 - - - FY 98 69-5-630 LD 02.1 Mixed Rural Agricultural Road 20,000 - - - - - - - - 20,000 FY 98 69-5-660 LD 03 HMG Padampur Resettlement Project 10,000 - - - - - 10,000 - - - FY 98 69-5-670 LD 01 Mixed Special District Program 40,000 - - - - - - - - 40,000 FY 98 87-4-827 LD 03 Mixed Production Credit for Rural Women (Credit) 15,000 - - - - - - 15,000 - - FY 98 87-4-828 LD 01 Mixed Gulml Argakanchi I.R.D. (Credit) 3,300 - - - - - - 3,300 - - 69 Nepal Public Expenditures Annex C (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) HMWTOta Sa,anes& 7rnes rdconPym eaca year Head SIFo Cod Donor Dtlpo E 4r,3r1 Bn1s Oeha rns evcsCptiTase neten netet cshrn ot rc FY95 35/4/815 AG 01.2.3 Mixed Small Farmer Training and Institutional Development Proect 4311 4,311 - FY95 35/4/818 AG 02.2.3 HMG Livestock insurance (Including Loan Guarantee)- Price Subs 6,000 - - 5,000 - - - - FY95 3514/819 AG 01.2.3 HMG Small Farmers Interest Subsidy- Price Subsidy - - FY95 35/4/910 AG 01.2.3 Mixed Small Farmer development Project (Unicef) 8,050 - - 8,050 - - FY95 36/4/200 AG 04 HMG Food Subsidy for Nepal Food Corporation 239,258 - - 239,258 - - FY95 4013/110 AG 06.4 HMG Agriculture Ministry 6,607 4,835 1,693 - - 79 - - FY95 40/3/120 AG 06.1 HMG Department of Agriculture Development 8,070 6,493 1,570 - - 7 - - FY95 40131121 AG 06.1 HMG Regional Agriculture Development Directorate (Adjusted) 7,452. 4,071 1,836 - - 1,116 - 429 - FY95 40/3/122 AG 05 HMG Agricultural Statistics 1,705 1,116 585 4 - - FY95 40/3/123 AG 05 HMG Economic Analysis 1,274 692 432 - - - 150 - - - FY95 4013/140 AG 06.4 HMG Department of Cooperative 2,026 1,105 921 - - - - - - FY95 40/3/141 AG 06.4 HMG District Cooperative Offices (Adjusted) 33,412 27,852 4,923 - - 200 437 - - FY95 4013/191 AG 06.4 HMG National Cooperative Development Board 2,500 - - 2,500 - - - - - - FY95 40/3/193 AG 06.4 HMG Tea & Coffee Development Board 6,200 - - 6,200 - - - - - - FY95 4013/194 AG 06.2 HMG Dairy Development Board 500 - - 500 - - - - FY95 4014/200 AG 05 HMG Women Farmer Development Programme 1,212 96 413 673 - - - - - 30 FY95 40/4/250 AG 06.1 Mixed Upper Sagarmatha Agriculture Dev Project 18,956 701 1,072 322 - 493 16,368 - - - FY95 40/4/260 AG 01.2.2 Mixed Secondary Crop Development Project 17,239 1,654 2,281 940 - - 12,364 - - FY95 40/41270 AG 01.2.2 Mixed Agriculture DevelopmentProject, Janakpur 32,867 3,412 2.186 - 695 - 7,757 - 18,817 - FY95 40/4/272 AG 01.1 HMG Agriculture Farm 3,136 425 467 - - - 2,244 - - - FY95 40/41/280 AG 04 Mixed Sericulture Development Programme 24,638 3,153 3,946 2,400 6,101 - 9,038 - - - FY95 40/4/290 AG 03 Mixed Hill Fruits Development Project 37,481 1,512 1,586 - 767 860 32,756 - - FY95 4014/291 AG 03 Mixed Kirtipur Horticultre Dev. Project 5,409 914 2,381 854 779 - 481 - - - FY95 40/4/292 AG 03 HMG Horticulture Farms 17,037 7,123 2,263 - 5,295 - 2,356 - - - FY95 40/41294 AG 04 HMG Cardoman and Orange development 1.181 818 318 - - - 45 - - - FY95 40/4/300 AG 03 Mixed Vegetable Seed Production Centre 4,614 2,024 738 10 1,446 35 361 - - - FY95 40/4/302 AG 04 Mixed Potato Research and Development Program 1,561 1,079 355 48 63 - 16 - - FY95 40141320 AG 04 HMG Fishery Dev. Programme 15,455 6,343 5,866 639 2,065 40 502 - - - FY95 4014/330 AG 04 HMG Food Nutritution and Technology 10,327 6,292 3.206 294 - - 535 - FY95 40/4/350 AG 04 HMG Crop Protection and Silkworm Development 14,853 5,135 3,053 1,437 2,120 - 1,318 - - 1,790 FY95 40/4/360 AG 01.2.2 HMG Food and Cash Crops Development Project 1,019 877 101 - - - 41 - - FY95 40/4/370 AG 012.2 HMG Agriculture Communication Service Programme 4,545 1,198 3,334 - - - 13 - - FY95 40141380 AG 01.2.2 Mixed Agriculture Training Programme 9,576 3,813 2,254 1,623 549 - 1,337 - - FY95 40/41390 AG 01.2.3 HMG Seed Dev. and Control Service 3,401 1,776 1,100 255 - - 270 - - FY95 40/4/400 AG 01.2.2 HMG Soil Test Service Programme 4,777 1,092 1,104 305 - - 2,276 - - FY95 40/4/410 AG 01.2.2 Mixed Agriculture Extension Project 14,386 3.126 8,565 1,525 - - 1,170 - - FY95 40/4/450 AG 01.2.4 HMG Agriculture Market Development Programme 2.536 1,197 997 54 - - 288 - - - FY95 40141500 AG 02.2.5 HMG Animal Health Service Programme 16,557 8,540 5,729 - 1,336 - 952 - - - FY95 40/4/510 AG 02.2.2 Mixed Livestock Development Service Programme 3,602 2,211 1,043 243 - - 105 - - FY95 40/4/520 AG 02.2.3 HMG Livestock Development Farms 13,879 7,613 3,323 203 2,061 143 536 - - - FY95 40/4/530 AG 02.2.3 HMG Rural Poultry Development Programme 4,906 3,133 1,270 14 261 - 228 - FY95 40/4/540 AG 02.2.3 HMG Animal Reproduction & Artificial Insemination Programme 4,216 2,007 1,941 - 129 - 139 - - FY95 4014/541 AG 02,2.3 Mixed Animal Reproduction & Promotion Project 17,787 1,510 11,296 - - - 4,981 - - FY95 4014/550 AG 02 2.3 Mixed Hill Lease Forestry Project (Livestock Dev.) 1,984 333 702 - - 289 502 - 158 FY95 40/4/600 AG 06.4 Mixed Cooperative Training Centre 7,600 1,498 5,779 - - - 323 - FY95 40/4/700 AG 01.1 HMG Nepal Agriculture Research Council 26,525 - - 26,525 - - FY95 40/41710 AG 01.1 Mixed Agriculture Research Programme 26,670 - - 26,670 - - - - - FY95 40141720 AG 011 Mixed Agriculture Enterprise and Technology System Project 65,990 - - 65,990 - - FY95 40/4/730 AG 01.1 Mixed Secondary Crop Development Project (R) 20,950 - - 20,950 - - FY95 40/4/740 AG 01.1 Mixed Potato Research and Development Program 1,554 - - 1,554 - FY95 40/4/750 AG 04 Mixed Natural Water Fish Development Project (R) 19,721 - - 19,721 - FY95 40/4/800 AG 01.2.3 Mixed Agriculture Input Price & Transportation Grant 572,820 - - 572,820 - - - - - FY95 40/51250 AG 012.2 Mixed Upper Sagarmatha Agriculture Dev Project 11,767 8,128 1,684 1,373 - - 582 - - - FY95 40/5/260 AG 01.2.2 Mixed Secondary Crop Development Project 7.120 635 1,422 2,922 - 21 2,120 - - - FY95 40/5/290 AG 03 Mixed Hill Fruits Development Project 5,658 1,363 1,454 1,477 - - 1,364 - - - FY95 40/5/410 AG 01.2.2 HMG Agricultural Extension Programme 170,556 118,138 27,259 18,846 81 - 6,232 - - - FY95 40/5/412 AG 01.2.2 Mixed Seil Integrated Rural Development Project 6,519 451 1.188 - - 39 4,841 - - - FY95 40/51413 AG 01.2.2 Mixed Agriculture Extension Project 122,053 75,998 25,181 14,674 - - 6,200 - - - FY95 40/5/421 AG 01.2.2 Mixed Mechi Hill Development Project (Agric) 516 93 100 323 - - - - FY95 40/5/422 AG 03 Mixed Koshi Hill Seed and Vegetables Project 3,153 649 1,012 1,400 - - 92 - - - FY95 40/5/461 AG 01.2.4 Mixed Rapti Integrated Rural Development Project 22,333 16,196 2,045 2,814 - - 1,278 - - - 70 Nepal Public Expenditures Annex C (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) FY95 87141820 AG 04 Mixed Agriculture Development Bank, Share Investment 200,000 - z- - - - 200,000 - FY95 87/4/822 AG 01.2.1 Mixed Small Farmers Development Programme (Ill Phase) 500,000 - - - - - - 500,000 - FY95 87/4/823 AG 01.2.1 Mixed Sixth Agriculture Loan 500,000 - - - - - - 500,000 - - FY95 59/3/110 FO 06 HMG Ministry of Forestry and Soil Conservation 5,239 3,980 1,235 - - - - - - 24 FY95 59/3/120 FO 06 HMG Department of Forest 8,025 5,470 500 - - - 2,056 - - FY95 59/3/121 FO 08 HMG Regional Forest Offices 5,332 3,382 1,880 - - - 70 - - FY95 59/3/122 FO 06 HMG Distnct Forest Offices (Including Armed forest security) 164,590 156,046 8,413 - - - 131 - FY95 59131130 FO 06 HMG Botanical Department 1,868 1,711 157 ------ FY95 59/3/131 FO 06 HMG Natural Resources Development Division 6,751 3,226 2,170 - - - 1,354 - - - FY95 59/3/140 FO 06 HMG Department of Soil and Water Conservation 3,654 3.171 483 - - - - - - FY95 59/3/150 FO 06 HMG Department of National Park & Wild life Protection 9,717 8,726 978 - - - 13 - - - FY95 59/3/151 FO 06 HMG Shivapuri Watershed and Wildlife Protection (Security Group 23,430 22,587 593 - - - 250 - - FY95 59/31152 FO 03 HMG National Park (Security Group) 147,401 141,415 3,911 - - - 2,075 - - - FY95 59/3/154 FO 06 HMG Hattisar 11,432 10,635 290 33 - - 368 - - 106 FY95 5913/180 FO 06 HMG Central Zoo Developement Committee 5,000 - - 5,000 - - - - - - FY95 59/4/200 FO 05 Mixed Forest Research & Survey Program 9,237 4,119 2,514 - - 119 2,485 - - - FY95 59/4/210 FO 05 Mixed Forest Products Development Program 16,873 - - - - - - 16,873 - FY95 59/4/211 FO 01.4 HMG Forest Development Project 774 240 522 - - 12 - - - - FY95 59/4/220 FO 03 HMG Shivapuri Watershed and Wildlife Protection Project 5,793 1,344 418 - - 12 4,019 - - FY95 59/4/221 FO 04 Mixed Herbs Production and Promotion Company 3,000 - - - - - 3,000 - - - FY95 59/4/310 FO 01.3 Mixed National & Leasehold Forest Development Programme 60,159 960 5,232 - - - 53,967 - - FY95 59/4/311 FO 01.1 Mixed Community Forest Development Programme 10,932 1,110 484 - - - 9,338 - - FY95 59/41313 FO 013 Mixed Hill Leasehold Forest and Pasture Development Project 4,301 1,290 431 - - 19 2,561 - - - FY95 59/4/330 FO 05 Mixed Tree Improvement Programme 15,195 523 322 - - - 14,350 - - - FY95 59/4/331 FO 01.4 Mixed Forest Management and Utilization Project 4,426 609 302 - - 3,516 - - - FY95 59/4/340 FO 01.1 Mixed Churya Forest Development Programme 1,016 - - - - - 1,016 - - FY95 59/4/350 F 05 Mixed Training & Extension Programme 7,596 1,719 1,525 - - 50 4,302 - - - FY95 59141500 FO 05 Mixed Botanical Research Division 17,215 5,969 5,146 - - 200 5,899 - - FY95 59/4/610 FO 02 HMG Watershed Management Project 2,624 653 459 - - - 1,512 - FY95 59/4/620 FO 02 Mixed Bagmati Watershed Project 24,943 1,410 1,032 - - 30 22,470 - - FY95 5914/621 FO 02 Mixed Phewatal Watershed Project 2,164 600 474 - - - 1,089 - - FY95 59/4/630 FO 02 HMG Kulekhani Watershed Project 814 358 154 - - - 303 - - - FY95 5914/710 FO 03 Mixed Wildlife Preservation Offices 12,330 6,232 746 - - 46 4,841 - 464 - FY95 59/4/720 FO 03 Mixed National Park Offices 32,332 17,346 1,382 11 - 94 13,499 - - - FY95 59/5/311 FO 01.1 Mixed Community Forest Development Programme 43,311 7,499 4,083 - - 496 19,318 - 11,916 - FY95 59/5/401 FO 01.1 Mixed Koshi, Dhaulagiri Hill Area Forest Dev. Programme 20,262 15,150 1,401 - - 55 997 - 2,659 - FY95 59/5/402 FO 01.1 Mixed Dolakha-Ramechhap Community Forest Dev. Project 8,691 3,888 495 - - - 4,308 - - FY95 5915/403 FO 01.1 Mixed Sindhu-Kavre Forest Development Project 14,653 3,455 411 - - - 10,788 - - - FY95 59/5/404 FO 01.1 Mixed Palpa District Community Forest Dev. Programme 2,937 938 1,622 - - - 189 - 188 - FY95 59151410 FO 01.2 Mixed Rapti Integrated Rural Developemnt Project 8,083 1,084 950 - - 99 3,103 - 2,847 - FY95 59/5/650 FO 02 Mixed District Soil and Water Conservation Programme 46,065 10,154 4,081 - - 540 31,290 - FY95 59/5/661 FO 02 Mixed Chure Land & Watershed Conservation Programme 748 26 17 - - 59 646 - - FY95 59/5/662 FO 02 Mixed Sindhu-Kavre Soil Conservation Project 3,864 781 360 - - - 2,723 - - FY95 5915/664 FO 02 Mixed Begnas & Rupa Lake Project 8,299 514 213 - - - 7,572 - - FY95 59/5/665 FO 02 Mixed Upper Andhikhola Watershed Management Project 6,439 993 62 - - - 5,384 - - - FY95 5915/670 FO 02 Mixed Rapti Integrated Rural Developemnt Project (Soil Conservat 11,271 2,441 727 - - 90 8,013 - - - FY95 5915/680 FO 02 Mixed Community Development & Forest/Watershed Protection 2,402 460 292 - - 20 1,631 - - - FY95 87/4/824 FO 01.3 Mixed Hill Leasehold Forest and Pasture Development Project 6,066 - - - - - - 6,066 - - FY95 35/4/825 IR 01 5 HMG Farmer Irrigation Grants 90,000 - - - - - - - 90,000 - FY95 47/3/130 IR 04 HMG DepartmentofIrrigation 9,109 8,372 673 64 - - - - - #VALUE! FY95 47/3/131 IR 04 HMG Regional Irrigation Directorates 12.440 8,577 1,856 - - - 2,007 - - FY95 4713/132 IR 04 HMG District Irigation Offices 76,737 58,083 9,762 - - - 8,892 - FY95 47/4/309 iR 01.5 Mixed Rajkudwa Irrigation Project - - - FY95 47/4/310 IR 02 Mixed Irrigation Management Transfer Project - - -- - - FY95 47/4/311 IR 02 Mixed System Management & Training Programme 6.155 1,219 1,137 3,601 - - 198 - - FY95 47/4/312 IR 02 Mixed Irrigation institution Development Programme 63,241 162 2,316 - - - 60,762 - FY95 47/4/313 IR 01.5 Mixed Irrigation Sector Project 308,106 1,356 4,159 - - 200 302,392 - - FY95 47141315 IR 01.5 Mixed Irrigation Line of Credit 286,986 5,199 8,395 - - - 273,393 - FY95 47/4/319 R 01.5 Mixed Small Irrigation Special Programme 8,306 - - - - - 8,306 - - - FY95 47/4/340 IR 03 Mixed River Control 329,568 207 448 - - - 328,913 - - FY95 47/4/341 R 03 Mixed Water Related Disaster Control Technology Centre 23,518 - - - - - 21,194 - - 2,324 71 Nepal Public Expenditures Annex C. (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) FY95 4714/359 IR 01.3 Mixed Sei Integrated Rural Development Project 7,434 1i8 239 -i006 FY95 47/4/360 IR 05 Mixed Ground Water Investegation Programme 14,189 933 431 -12,825 FY95 47141361 IR 01.4 Mixed Community Shallow Tubawell Irrigation Programme 10,068 94 1,105 - - 8,869 - - FY95 47/4/370 IR 02 Mixed Repair, Maintenance Projects 258,235 25,803 23,115 505 836 207,976 - - FY95 47/4/392 IR 01.1 HMG Bhei Babai Multi-purpose Project 398 - - - - - - - 398 FY95 47/4/401 IR 01.5 Mixed Mechi Hill Irrigation Project 1,396 237 152 - - 1,008 - FY95 47/4/402 IR 01.1 Mixed Sunsari Morang Irrigation Project (11 Phase) 429,893 4,402 3,544 - 2,490 419,457 - - FY95 47141404 IR 01.1 Mixed Bagmati Irrigation Project 168,473 3,275 5,112 - - 10,964 149,122 - - FY95 47/4/405 IR 01.5 Mixed Eastem Rapti Irrigation Project 125,363 914 1,153 41 - - 123,256 - - FY96 47/4/406 IR 01.3 Mixed Bhairahawa Lumbini Irrigation Project (Il Phase) 173,053 8,407 7,286 1,938 - 1,345 154,076 - - FY95 47/4/407 IR 01.2 Mixed Marchwar Irrigation Project, Rupandehi (II Phase) 28,089 968 1,788 - - 426 24,908 - - FY95 47/4/408 IR 01.5 Mixed Dhaulagiri Zone Irrigation Project 13,458 313 332 - - - 12,814 - - FY95 47/4/410 IR 01.1 Mixed Rajapur Irrigation Project 29,465 895 697 - - - 27,872 - - FY95 47/4/411 IR 01.1 Mixed Mahakali Irrigation Project, Kanchanpur 190,416 5,235 2,559 700 - 2,620 179,302 - - FY95 35/4/829 LD 01 Mixed Gorkha Integrated Rural Development Project - - - - - FY95 35/4/900 LD 01 Mixed Dhading District Integrated Rural Development Project - - - - - - - - FY95 35/4/930 LD 01 Mixed Rapti Integrated Rural Development Project 4,094 - - 4,094 - FY95 69131110 LD 03.1 HMG Ministry of Local Development 9,279 8,128 1,151 - - - - FY95 6913/120 LD 03.1 HMG Local Development Regional Directorates 3,603 3,030 573 - - - FY95 6913/130 LD 03.1 HMG District Guest Houses 1,651 1,487 164 - - - - - FY95 69/3/131 LD 03.1 HMG Juddha Firebrigade Offices 5,766 4,680 1,086 - - - - FY95 69/3/140 LD 03.1 HMG Registration Section 2,432 631 1,801 - - - - - FY95 6914/200 LD 03.6 Mixed Women Development Programme 8,146 1,144 791 6,172 - - 39 FY95 69/4/210 LD 01 Mixed Remote Area Development Programme 18,677 3,076 1,097 1,180 - - 13,323 - FY95 69/4/220 LD 03.7 HMG Monastry Management & Development Committee 2,836 440 166 236 - - 1,976 - 18 FY95 6914/230 LD 03.7 Mixed Population Education Programme 2,213 267 110 1,836 - - - FY95 6914/240 LD 03.7 Mixed Local Development Training Institute 12,500 - - 12,500 - - - - - FY95 69/4/241 LD 02.3 Mixed Urban Infrastructure Service Project 9,200 - - 9.200 - - - - FY95 69/41420 LD 03.7 HMG Tribal Groups Development Project 2,061 22 2 82 - 12 72 - - 1,871 FY95 6915/200 LD 03.6 Mixed Women Development Programme 63,515 18,702 6,444 21,106 - - 12,441 - 4,822 FY95 69/5/210 LD 01 Mixed Remote Area Development Programme 61,961 5,875 482 - - - 55,604 - - FY95 69/5/260 LD 03.7 Mixed Flood Affected Area Reconstruction and Rehabilitation Proje 72.942 - - - - - - - 72,942 FY95 69/5/400 LD 03.7 Mixed Solid Waste Management Progamme (Including Okharpauw 54,786 - - - - - - - 54,786 FY95 69/5/401 LD 02.1 Mixed Upper Sagarmatha Roads and Bridges Project 3,643 - 112 - - - 3,531 - - - FY95 6915/402 LD 01 Mixed Kamali Local Development Project 3,450 - - - - - - - - 3.450 FY95 69/5/410 LD 02.1 Mixed Labour Intensive Road Reconstruction Project 2,013 99 351 - - 1,563 - - - FY95 69/5/421 LD 01 Mixed Seti Integrated Rural Development Projects Office 9,564 830 279 - - - 7,065 - - 1,390 FY95 6915/422 LD 01 Mixed Rapti Integrated Rural Development Project's Office 4,980 1,658 698 2,324 - - 300 - - FY95 69/5/423 LD 01 Mixed Rapti Integrated Rural Development Project(Local Developm 16,774 2,935 967 11,804 - - 1,068 - - FY95 6915/424 LD 01 Mixed Seti Integrated Rural Development Project 11,220 285 161 - - - 10,774 - - FY95 69/5/451 LD 01 Mixed Dhading Integrated Rural Development Project 31,525 1,794 1,404 10,999 - 17,328 . - - FY95 69/5/452 LD 01 Mixed Gulmi Integrated Rural Development Project 4,430 436 196 325 - - 3,474 - - - FY95 69151453 LD 01 Mixed Arghakanchi Integrated Rural Development Project 5,869 340 121 333 - - 5.075 - FY95 69/5/454 1.D 01 Mixed Gorkha Development Project 2,407 219 - 2,188 - -- FY95 69/5/455 LD 01 Mixed Lamjung Development Project - - - FY95 69/5/456 LD 03.7 Mixed Patan Preservation & Development Programme 8,352 - - - - - 8,352 - - - FY95 69/5/500 LD 03.3 HMG DistrictDevelopmentCommitteeGrant 646,558 - - 113,148 - - - 533,410 - FY95 69/5/510 LD 03.5 HMG Municipal Grant 12,000 - - - - - - 9,000 3,000 FY95 69/5/520 1.D 03.2 HMG Village Self Reliance Grant 1,200,000 - - - - - - 1,200,000 - FY95 69/5/530 LD 03.4 HMG Election Area Development Programme 51,250 - - - - - - 51,250 - FY95 69/5/531 LD 01 HMG Drought Area Relief Programme 10,000 - - - - - - - 10,000 FY95 69/5/532 LID 03.7 HMG Bonded Labour Settlement Programme 10,000 - - - - - 10,000 - FY95 6915/610 LD 02.3 Mixed Local Development Construction Programme 59,525 1,879 324 - - 57,322 - - - FY95 69/5/620 LD 02.3 Mixed Local Road Suspension Bridges 30,195 - - - - 30,195 - - FY95 87/4/827 LD 03.6 Mixed Rural Women Development for Production Loan Programme 10,000 - - - - - 10,000 - FY95 8714/828 LD 01 Mixed Gulmi Ardhakanchi Grants Share Investment - - - FY96 35/4/815 AG 01.2.3 Mixed Small Farmer Iraining and Institutional Developmes Grant 4,289 - - - - - 4,289 - FY96 35/4/818 AG 02.2.3 HMG Livestock Insurance (including Loan Guarantee)- Price Subs 4,200 - - 4,200 - - - - - FY96 35/4/819 AG 01.2 3 HMG Small Farmers Interest Subsidy- Price Subsidy 30,000 - - 30,000 - - - - - FY96 35/4/910 AG 01.2.3 Mixed Small Farmer development Project (Unicef 2,529- - - - - - -2,529- FY96 36/4/200 AG 04 HMG Food Subsidy for Nepal Food Corporation 226,000 - - 226,000 - - - - 72 Nepal Public Expenditures Annex C. (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) FY96 40/3/110 AG 06.4 HMG Agriculture Ministry 9,344 6,439 1,810 6o 35 FY96 40/3/120 AG 06.1 HMG Department of Agriculture Development 7,828 6,362 1,466 - - - - - FY96 40/3/121 AG 06.1 HMG Regional Agriculture Development Directorate (Adjusted) Wc 7,453 5,084 1,922 441 - 6 - - FY96 40/3/140 AG 06.4 HMG Department of Cooperative 2,485 1,217 1,069 - 199 FY96 40/3/141 AG 06.4 HMG District Cooperative Offices 36,741 31,691 4,188 - - - 862 - - FY96 40/3/191 AG 06.4 HMG National Cooperative Development Board 2,500 - - 2,500 - - - FY96 40/3/192 AG 06.4 HMG Cotton Development Committee 1,000 - - 1,000 - - - - FY96 4013/193 AG 06.4 HMG Tea & Coffee Development Board 6,0- 6,000 FY96 40/3/194 AG 06.2 HMG Dairy Development Board 1,500 - - 1,500 - FY96 40/4/200 AG 05 HMG Women Farmer Development Programme 936 152 659 76 - - 49 - - FY96 40/4/250 AG 06.1 Mixed Upper Sagarmatha Agriculture Dev Project 17,513 955 1,055 22 - 99 15,382 - - FY96 40/4/260 AG 01.2.2 Mixed Secondary Crop Development Project 62,896 1,865 3,666 1,159 - 56,206 - - - FY96 4014/270 AG 01.2.2 Mixed Agriculture Development Project, Janakpur 34,861 3,768 2,302 - 550 - 10,682 - 17,559 - FY96 40/4/280 AG 04 HMG Sericulture Development Programme 43,003 12,517 4,027 4,350 6,728 85 15,296 - - FY96 40/4/290 AG 03 Mixed Hill Fruits Development Project 21,001 1,357 856 142 744 . 17,902 - - FY96 40/4/291 AG 03 Mixed Kirtipur Horticultre Dev. Project 7,434 1,469 2,636 756 1,155 - 1,418 - - - FY96 40/4/292 AG 03 Mixed Horticulture Farms 21,055 8,118 2,767 - 6,571 - 3,598 FY96 40/4/293 AG 04 HMG Orange & Tea, Coffee Dev. Programme (Incl. Gulmi, Aanpch 1.092 610 395 87 - - . - - FY96 40/4/300 AG 03 Mixed Vegetable Seed Production Centre 4,966 2,396 786 - 1,784 . - - - FY96 40/4/310 AG 04 HMG Cardoman, Dry Ginger and Potato Dev. Programme 2,329 1,523 465 - 139 - 202 - - FY96 4014/320 AG 04 HMG Fishery Dev. Programme 17,649 6,143 5,772 826 4,254 - 654 - - FY96 40/4/330 AG 04 HMG Food Nutritution and Technology 12,549 7,488 3,730 494 - - 837 FY96 4014/350 AG 04 Mixed Crop Protection and Silkworm Development 15,151 6,561 3,602 1,161 2,652 - 1,175 - FY96 40/4/360 AG 01.2.2 HMG Food Crops and Cash crops Development Project 2,945 1,403 604 - 807 - 131 - FY96 40/4/370 AG 01.2.2 HMG Agriculture Communication Service Programme 4,775 1,493 3,263 - - - 19 - FY96 4014/380 AG 01 2.2 Mixed Agriculture Training Programme 17,844 7,422 5,872 2,984 617 - 949 FY96 40141390 AG 01.2.3 HMG Seed Dev. and Control Service 3,825 1,966 1,242 405 - - 212 FY96 40/4/400 AG 01.2.2 Mixed Soil Test Service Programme 6,848 1,448 1,363 601 - - 3,436 - FY96 40/4/410 AG 01.2.2 HMG Agriculture Extension Project 1,793 955 838 - - - FY96 40/4/412 AG 01.22 Mixed Seti Integrated Rural Development Project 1,400 - - 250 - - - 1,150 FY96 40/41450 AG 01.2.4 HMG Agriculture Market Development Programme 3,205 1,213 1,313 51 - - 628 - FY96 40/4/451 AG 01.2.4 Mixed Small Market Infrastructure Dev. Project - , . - - - - - FY96 40/4/500 AG 02.2.5 Mixed Animal Health Service Programme 20,039 10,821 6,304 15 1,686 - 1,213 - - FY96 40/4/510 AG 02.2,2 HMG Livestock Development Service Programme 2,910 1,885 787 209 - 30 FY96 40/41520 AG 02.2.3 HMG Livestock Development Farms 15,296 9,055 3,444 195 2,118 - 484 - - - FY96 40/4/530 AG 02.2.3 HMG Rural Poultry Development Programme 1,310 896 329 15 50 - 20 - - FY96 40/4/540 AG 02.2.3 HMG Animal Reproduction & Artificial Insemination Programme 5,141 2,138 2,540 - 126 - 336 - - FY96 4014/541 AG 02.2.3 Mixed Animal Reproduction & Promotion Project 13,607 1,834 9,320 . - - 2,353 FY96 40/4/550 AG 02.2.3 Mixed Hill Lease Forestry Project (Livestock Dev.) 3,619 553 781 1,044 - - 1,241 - - FY96 40/4/560 AG 02 2.5 Mixed Animal Health Strengthening Project - - . - FY96 40/4/561 AG 04 Mixed Cotton Developemnt Project - - - FY96 40/4/562 AG 02.2.2 Mixed Dairy Development Project - - -- FY96 40/4/600 AG 06.4 HMG Cooperative Training Centre 8,058 1,622 6,361 - - - 75 FY96 40/4/601 AG 06.4 HMG Cooperative Institution Promotion Programme - - - -- FY96 40/4/700 AG 01.1 HMG Nepal Agriculture Research Council 31,500 - - 30,000 - 1 - 1,500 FY96 40/4/710 AG 01.1 Mixed Agriculture Research Programme 28,350 - 26,280 - - - - 2,070 FY96 4014/720 AG 01.1 Mixed Agriculture Enterprise and Technology System Project 74,813 - - 72,292 - - - - 2,521 - FY96 40/4/730 AG 01.1 Mixed Secondary Crop Development Project (R) 23,230 - - 22,030 - - - - 1,200 - FY96 40/4/740 AG 01.1 HMG Potato Research and Development Program 2,562 - - 2,357 - 205 FY96 40/4f750 AG 04 Mixed Natural Water Fish Development Project (R) 22,839 - - 12,074 - - - - 10,765 FY96 40/4/800 AG 01.2 3 Mixed Agriculture Input Price & Transportation Grant 500,000 - - 500,000 - - -- FY96 40/5/250 AG 01.2.2 Mixed Upper Sagarmatha Agriculture Dev Project 13,262 9,090 2,028 1,835 - - 309 - - FY96 40/5/260 AG 01.2.2 Mixed Secondary Crop Development Project 9,264 1,020 2,804 3,423 - 49 1,967 FY96 4015/290 AG 03 Mixed Hill Fruits Development Project 6,647 1,389 1,703 2,642 - - 913 - FY96 40/5/410 AG 01.2.2 Mixed Agricultural Extension Programme 297,155 207,744 46,846 38,791 65 - 3,708 - - FY96 40/5/412 AG 01.2.2 Mixed Set/ Integrated Rural Development Project 3,271 184 32 - - . 3,055 - - FY96 40/5/421 AG 01.2.2 Mixed Mechi Hill Development Project (Agric) 636 124 121 391 - FY96 4015/422 AG 03 Mixed Koshi Hill Seed and Vegetables Project 3,194 633 986 1,498 - . 77 - FY96 40/5/461 AG 01.2.4 Mixed Rapti Integrated Rural Development Project 9,781 5,984 2,536 765 - - 496 - FY96 87/4/820 AG 04 Mixed Agriculture Development Bank, Share Investment 67,500 - - - - - - 67,500 FY96 87/4/822 AG 01.2.1 Mixed Small Farmers Development Programme (Ill Phase) 670,000 - - - - 670,000 73 Nepal Public Expenditures Annex C (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) YQat pead Secto Code. DooCecrpo xeniue Bn Oentwad Granis ews CptTransfer 111aestment invetme4 Cash Grant Cnaer FY96 59/3/110 FO 06 HMG Ministry of Forestry and Soil Conservation 6,086 4,005 1,838 45 - 200 FY96 59/3/120 FO 06 HMG Department of Forest 9,057 7,708 661 - - 689 FY96 59/31121 FO 06 HMG Regional Forest Offices 5,800 4,019 1,781 - - FY96 59/3/122 FO 06 HMG District Forest Offices (including armed forest security) 189,790 182,603 6,838 344 - - 6 FY96 59131130 FO 06 HMG Botanical Department 2,204 1,930 274 - - FY96 59/3/131 FO 06 HMG Natural Resources Development Division 9,194 3,424 2,746 - - - 3,024 - - FY96 59/3/140 FO 06 HMG Department of Soil and Water Conservation 4,166 3,519 643 - - - 4 - FY96 59/3/150 FO 06 HMG Department of National Park & Wild life Protection 8,744 7,190 834 - 691 - 29 - - FY96 59/3/151 FO 06 HMG Shivapur Watershed and Wildlife Protection (Security group 32,293 29,750 718 - - 1,825 - FY96 59/3/152 FO 03 HMG National Park (Security group) 195,992 181,222 4,969 - - - 9,801 - - FY96 59/3/153 FO 06 HMG National Hunting Office 3,238 3,224 15 - - - - - - FY96 5913/154 FO 06 HMG Hattisar 14,522 13,124 1,173 6 - - 220 - - - FY96 59131180 FO 06 H-MMG Central Zoo Developement Committee 6,420 - - 6,420 - - - - FY96 59/4/200 FO 05 Mixed Forest Research & Survey Program 8,581 4,174 2,536 - - - 1,871 - FY96 5914/210 FO 05 Mixed Forest Products Development Program 10,500 - - - - - - - 10,500 - FY96 59/4/220 FO 03 Mixed Shivapur Watershed and VWdlife Protection Project 7,065 1,652 1,112 - - 120 4,181 - - FY96 59/4(221 FO 04 Mixed Herbs Production and Promotion Project 6,340 - - - - - - 6,340 - - FY96 59(41310 FO 01.3 Mixed National & Leesehold Forest Development Programme 54,432 1,478 5,355 - - - 47,599 - - FY96 59/4/311 FO 01.1 Mixed Community Forest Development Programme 17,403 1,572 569 - - - 15,262 - - - FY96 59/4/312 FO 01.1 1MG Community Forest Plantation Programme 5,377 - - - - - 5,377 - - FY96 59/4/313 FO 01.3 Mixed Hill Leasehold Forest and Pasture Development Project 18,411 979 656 - - - 13,705 - 3,071 - FY96 59/41330 FO 05 Mixed Tree Improvement Programme 2,190 877 525 - - - 788 - - - FY96 59/4/340 FO 01.1 Mixed Chuilya Forest Development Programme 1,535 121 157 - - - 547 - 709 - FY96 59/4/350 FO 05 Mixed Training & Extension Programme 6,946 193 1,297 - - - 5,456 - - FY96 59/4/500 FO 05 Mixed Botanical Research Division 19,801 6,784 4,446 - - - 8,571 - - FY96 59/4/610 FO 02 Mixed Watershed Management Project 2,403 390 1,635 - - - 378 - - - FY96 59(4(620 FO 02 Mixed Bagmati Watershed Project 9,055 1,656 704 - - - 6,695 - - FY96 59(4(630 FO 02 HMG Kulekhani Watershed Project 763 383 178 - - - 202 - FY96 5914(640 FO 02 HMG Land Slide Control Project 1,967 - - - - 1,967- - FY96 59/41710 FO 03 HMG Wildlife Preservation Project 11,668 6,957 892 8 461 3,258 92 FY96 59/41720 FO 03 Mixed National Park Project 38,173 17,950 2,450 32 - 10,000 7,742 - FY96 59/5/311 FO 01.1 Mixed Community Forest Development Programme 54,925 13,270 4,643 - - 277 25,954 - 10,781 FY96 5915(401 FO 01.1 Mixed Koshi, Dhaulagiri Hill Area Forest Dev, Programme 15,969 13,458 1,617 - - 286 608 - FY96 59(5/402 FO 01.1 Mixed Dolakha-Ramechhap Community Forest Dev. Project 5,303 4,507 771 - - 25 - FY96 59/5/403 FO 01.1 Mixed Sindhu-Kavre Forest Development Project 4,538 4,109 414 - - - 15 - - FY96 59/5(404 FO 01.1 Mixed Palpa District Community Forest Dev. Programme 3,347 2,254 286 - - - 807 - - FY96 59/5/410 FO 01.2 HMG Rapti lnegrated Rural Developemnt Project 7,518 1,086 1,004 - - - 3,311 - 2,117 - FY96 5915/650 FO 02 Mixed District Soil and Water Conservation Programme 48,568 14,001 5,825 - - 28,743 - FY96 59/5/661 FO 02 Mixed Chure Land & Watershed Conservation Programme 1,723 72 118 - - - 1,533 - - FY96 59/5(662 FO 02 Mixed Sindhu-Kavre Soil Conservation Project 1,170 833 336 - - - - FY96 59/5/664 FO 02 Mixed Begnas & Rupa Lake Project 1,635 531 375- - - 434 - 296 - FY96 59/5/665 FO 02 Mixed Upper Andhikhola Watershed Management Project 1,359 555 99 - - - 705 - - FY96 59(5(670 FO 02 Mixed Rapti Integrated Rural Developemnt Project (Soil Conservati 11,669 2,582 1,183 - - - 7,905 - - FY96 5915/680 FO 02 Mixed Community Development & Forest/Watershed Protection 3,022 918 278 - - - 1,826 - - - FY96 87/4/824 FO 01.3 Mixed Hill Leasehold Forest and Pasture Development Project 15,470 - - - - - - 15,270 200 - FY96 59/41660 FO 03 Mixed Padampur Resettlement Project 12,745 - - - - - 12,745 - - - FY96 47/3/130 IR 04 HMG Department of Irrigation 10,323 9,560 679 9 75 - - - #VALUE! #VALUE' FY96 47/3/131 IR 04 HMG Regional Irrigation Directorates 11,101 6,250 1,773 20 - - - 1,058 - FY96 47(3(132 IR 04 HMG District Irrigation Offices 82,470 67,293 9,812 156 - - 7 5,202 - - FY96 47/4/310 IR 02 Mixed Irrigation Management Transfer Project 38,323 405 839 - - - 37,079 - - FY96 47/4/311 IR 02 HMG System Management & Training Programme 4,703 1,225 1,098 - - 2,380 - - FY96 47/4/312 IR 02 Mixed Irrigation Institution Development Programme 42,972 207 2,379 - - 200 40,186 - FY96 47/4/313 IR 01.5 Mixed Irrigation Sector Project 317,487 1,962 3,862 - - 100 311,563 - FY96 47(4(315 IR 01.5 Mixed Irrigation Line of Credit 337,628 5,543 7,541 - - 324,544 - - FY96 47/4/340 IR 03 Mixed River Control 98,445 89 512 - - 97,844 - FY96 47/4/341 IR 03 Mixed Water Related Disaster Control Technology Centre 43,819 1,984 1,971 - - - 39,864 - - FY96 47/4/342 IR 03 Mixed Bakraha River Control Project 503 44 330 - - - 129 - - FY96 47/4/359 IR 013 Mixed Sell Integrated Rural Development Project 1,536 174 196 - - - 1,166 - - FY96 47/4/360 IR 05 Mixed Ground Water Investegation Programme 10,742 3,339 957 - - - 6,446 - - FY96 47/4/361 IR 01.4 Mixed Community Shallow Tubewell lmgation Programme 33,617 346 1,462 8 - - 31,801 - - - FY96 47/4/370 IR 02 Mixed Repair, Maintenance Projects 107,102 26,643 27,934 - 601 51,925 - - 74 Nepal Public Expenditures Annex C.. (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) -k-i~i Unxf-sntinTCa FY96 47/4/371 IR 01.5 HMG Farmer Irigation Grants 104,625 - - 104,625 FY96 47/4/392 IR 01.1 HMG Babai Irrigation Project 149,202 2,213 1,489 - - - 145,500 - FY96 4714/393 IR 03 Mixed Groundwater Irrigation and Flood Control Project - - - - FY96 47/4/394 JR 01.1 HMG Kankai Irrigation Project 2,999 - - - - 2,999 - FY96 47/4/395 IR 03 HMG Bagmati Bishnumati Embankment Programme 2,997 - - - - - 2,997 - FY96 47141401 IR 01.5 Mixed Mechi Hill Irigation Project 563 41 85 - - - 437 - FY96 47/4/402 IR 01.1 Mixed Sunsari Morang Irrigation Project (1I Phase) 420,834 4,533 4,442 - - 8,870 402,990 - - FY96 47/41403 IR 01.1 Mixed ChandraMohana Irrigation Project 438 35 295 - - - 108 - - FY96 47/4/404 IR 01 1 Mixed Bagmati Irrigation Project 188,987 3,510 4,302 - - 9,995 171,180 - - - FY96 47/4/405 IR 01.5 Mixed Eastern Rapti Irrigation Project 215,828 1,035 994 - - - 213,799 - - - FY96 47/4/406 IR 01.3 Mixed Bhairahawa Lumbini Irrigation Project (III Phase) 352,184 10,247 7,476 1,979 - 903 331,579 - - FY96 47/4/407 IR 01.2 Mixed Marchwar Irrigation Project, Rupandehi (I Phase) 24,622 1,169 1,695 - - 426 21,332 - - FY96 47141408 tR 01.5 Mixed Dhaulagiri Zone Irrigation Project 8,582 - - - - - 8,582 - - FY96 47/4/410 IR 01.1 Mixed Rajapur Irgation Project 28,281 1,396 810 - - - 26,076 - - - FY96 47/4/411 IR 01.1 Mixed Mahakali Irrigation Project, Kanchanpur 284,525 6,087 2,879 673 - 13,513 261,373 - - FY96 59/5/530 IR 01.5 HMG Minor Irrigation Program 37,500 - - - - - - 37,500 - FY96 35/4/900 LD 01 Mixed Dhading District Integrated Rural Development Project - - - - FY96 3514/920 LD 01 Mixed Rural Loan Project FY96 6913/110 LD 03.1 HMG Ministry of Local Development 12,233 10,937 1,104 - - - 192 - - FY96 69131120 LD 03.1 HMG Local Development Regional Directorates 3,983 3,456 527 - - - FY96 69/3/130 LD 03.1 HMG District Guest Houses 1,973 1,813 160 - - - - - - FY96 69/3/140 LD 03.1 HMG Registration Section 5,408 3,670 1,738 - - - FY96 6914/200 LD 03.6 Mixed Women Development Programme 9,637 707 525 4,025 - - 22 - 4,358 FY96 69/4/210 LD 01 Mixed Remote Area Development Programme 8,416 - - - - - - - 8,416 - FY96 69/4/220 LD 03.7 HMG Monastry Management & Development Committee 3,361 246 183 1,404 - - 8 - 1,520 - FY96 69/4/230 LD 03.7 Mixed Population Education Programme 2,387 - - 953 - - - - 1,434 - FY96 69141240 LD 03.7 HMG Local Development Training Institute 14,000 - - 14,000 - - - - - - FY96 69/4/250 LD 03.7 HMG Manpower Development 16,243 - - - - - - - - 16,243 FY96 69/4/260 LD 03.7 Mixed Flood Affected Area Reconstruction and Rehabilitation Proje, 3,326 438 140 2,748 - - - - - FY96 69/5/200 LD 03.6 Mixed Women Development Programme 63,733 24,232 7,731 23,528 - - 8,242 - - FY96 69/5/210 LD 01 Mixed Remote Area Development Programme 25,278 - - 2,375 - - - 22,903 FY96 6915/260 LD 03.7 Mixed Flood Affected Area Reconstruction and Rehabilitation Proje, 62,765 7,686 9,383 22,736 - - 22,960 - - FY96 69/51280 LD 02.3 Mixed Infrastructure Development Project 33,360 - - - . - - - 28,356 5,004 FY96 69/5/290 LD 02.1 Mixed Rural Infrastrouture Development Programme - - - - - - - FY96 69/5/400 LD 037 Mixed Solid Waste Management Progamme (Including Okharpauw; 77,186 6,561 1,698 6,426 - - 62,501 - - - FY96 69/5/410 LD 02.1 Mixed Labour intensive Road Reconstruction Project 8,120 94 203 - - - 7,823 - - - FY96 69/5/420 LD 03.7 HMG Tribal Groups Development Project 6,923 2,632 840 2,556 - - 895 - - - FY96 69151421 LD 01 Mixed Set integrated Rural Development Projects Office 7,320 604 220 - - 4,616 - - 1,881 FY96 69/5/422 LD 01 Mixed Rapti Integrated Rural Development Project's Office 2,750 1,318 630 802 - - - - FY96 69/5/423 LD 01 Mixed Rapti Integrated Rural Development Project(Local Developm 4,583 2,320 925 - - - 1,338 - FY96 69/5/451 LD 01 Mixed Dhading Integrated Rural Development Project 17,182 1,171 738 4,728 - - 10,545 - - - FY96 69/5/452 LD 01 Mixed Gulmi Integrated Rural Development Project 2,308 159 82 - - 252 1,815 - - - FY96 69/15/453 LD 01 Mixed Arghakanchi integrated Rural Development Project 1,582 18 40 - - - 1,524 - - - FY96 69/5/454 LD 01 Mixed Gorkha Development Project 1,777 21 3 89 - 11 76 - - 1,578 FY96 6915/455 LD 01 Mixed Lamjung Development Project FY96 69/5/456 LD 03.7 Mixed Patan Preservation & Development Programme 4,300 - - - - - 4,300 - - FY96 69/5/500 LD 03.3 HMG District Development Committee Grant 567,214 - 109,462 - - - - 457,752 - FY96 6915/621 LD 03.2 HMG Village Self Reliance Grant 2,012,082 - - - - - - - 2,012,082 - FY96 69/5/530 LD 03.4 HMG Election Area Development Programme 96,333 - - - - - 96,333 - - FY96 69/5/540 LD 01 HMG Local Development Fund 10,000 - - 1,930 - - - - 8,070 FY96 69/5/560 LD 03.7 HMG Targeted Group Upliftment Programme 29,947 - - - - . - - 29,947 FY96 69/51610 LD 02.3 HMG Local Development Construction Programme 117,547 3,344 1,276 - - - 112,927 - - FY96 69/5/620 LD 02.2 HMG Local Road Suspension Bridges 40,599 - - - - - - 40,599 - FY96 69/5/621 LD 03.7 HMG Nationalities Upliftment Programme 357 - - - - - - - 357 FY96 69/5510 LD 03.5 HMG Municipal Grant 57,656 - - - - 49,007 8,648 FY96 87/4/827 LD 03.6 Mixed Rural Women Development for Production Loan Programme 11,600 - - - 11,600 - - FY96 87/4/828 LD 01 Mixed Gulmi Ardhakanchi Grants Share Investment - - FY97 35/4/815 AG 01.2.3 Mixed Small Farmers Training & Institutional Development Subsidy - - FY97 35141817 AG 02.2.3 Mixed Biogas Production Subsidy- Capital Subsidy 44,996 - - . - - 44,996 - FY97 35/4/818 AG 02.2.3 HMG Livestock Insurance (including Loan Guarantee)- Price Subs 5,000 - - 5,000 - - FY97 35/4/819 AG 01.2.3 HMG Small Farmers Interest Subsidy- Price Subsidy 3,500 - - 3,500 - - 75 Nepal Public Expenditures Annex C (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) FY97 36/4/200 AG 04 HMG Food Subsidy for Nepal Food Corporation 172,015 - - 172,015 - FY97 40/3/110 AG 06.4 HMG Agriculture Ministry 8,780 6,400 2,359 - 22 FY97 40131120 AG 06.1 HMG Department of Agriculture Development 10,347 8,059 2,242 46 - - FY97 40/3/121 AG 06.1 HMG Regional Agriculture Development Directorate 6,464 3,950 1,287 413 - - 815 FY97 40/3/130 AG 06.2 HMG Department of Livestock 3,291 2,656 636 - - - - FY97 40/3/131 AG 06.2 HMG Regional Livestock Directorate 5,160 3,377 1.351 383 - - 50 - FY97 40/3/140 AG 06.4 HMG Department of Cooperative 2,038 1,218 791 - - - 30 - FY97 4013/141 AG 06.4 HMG District Cooperative Offices 37,735 31,588 5,108 15 - - 1,023 - FY97 40/3/191 AG 06.4 HMG National Cooperative Development Board 2,500 - - 2,500 - - - - FY97 40/3/192 AG 06.4 HMG Cotton Development Committee 1,000 - - 1,000 - - FY97 4013/193 AG 06.4 HMG Tea & Coffee Development Board 5,000 - - 6,000 - - - - - - FY97 40/3/194 AG 06.2 HMG Dairy Development Board 1,500 - - 1,500 - - - FY97 4014/200 AG 05 HMG Women Farmer Development Programme 1,563 150 388 1,000 - . - 25 - - - FY97 40/4/210 AG 06.1 Mixed Rural Market Development Project 3,617 1,774 1,480 159 - - 205 - - - FY97 40/4/250 AG 061 Mixed Upper Sagarmatha Agniculture Dev Project 13,665 1,127 1,329 - 43 11,166 - - - FY97 40/4/260 AG 01.2.2 Mixed Secondary Crop Development Project 39,506 21,908 12,501 2,800 - - 2,296 - - - FY97 4014/270 AG 01.22 Mixed Agriculture Development Plan Janakpur 35,689 3,674 2,496 - 650 - 6,798 - 21,870 - FY97 40/41280 AG 04 Mixed Sericulture Development Programme 26,686 4,583 4,413 1,782 8,670 - 7,238 - - FY97 40/4/290 AG 03 HMG Hill Fruits Development Project 415 267 148 - - - - - - FY97 40/4/291 AG 03 Mixed Kirtipur Horticuttre Dev. Project 7,911 1,644 1,180 322 2,478 - 2,287 - - FY97 40/4/292 AG 03 HMG Horticulture Farms 22,697 8,409 3,283 853 6,519 - 3,633 - - FY97 40/4/293 AG 04 HMG Orange & Tea, Coffee Dev. Programme (incl. Gulmi, Aanpch 958 495 331 82 - - 50 - - FY97 40141300 AG 03 HMG Vegetable Seed Production Centre 3,956 1,476 828 271 1,130 - 252 - - FY97 40/4/310 AG 04 HMG Cardoman, Dry Ginger and Potato Dev. Programme 2,600 1,569 716 97 186 - 31 - - - FY97 40/4/320 AG 04 HMG Fishery Dev. Programme 19,873 6,382 6,475 864 4,689 - 1,463 - - FY97 40/41330 AG 04 HMG Food Nutritution and Technology 13,883 9,181 4,187 421 - - 95 - - FY97 40/4/340 AG 01.2.5 HMG Crop Protection 13,583 5,462 3,156 288 2,756 - 1,921 - FY97 4014/350 AG 04 HMG Silkworm Development 4,535 1,840 1,311 765 310 - 309 - - FY97 40/4/360 AG 01.2.2 HMG Food & Cash Crop Development 2,525 1,857 493 - - - 175 - FY97 40/4/370 AG 01.22 HMG Agriculture Communication Service Programme 5,629 1,523 4,097 9 - - - - FY97 40/4/380 AG 01.2.2 Mixed Agriculture Training Programme 17,144 6,618 6,795 2,308 543 - 880 - FY97 4014/390 AG 01 2.3 HMG Seed Dev and Control Service 3,898 2,014 1,318 393 - - 173 - - FY97 40/4/400 AG 01.2.2 Mixed Soil Test Service Programme 6,876 1,997 1,759 1,091 - - 2,029 - - FY97 40/4/410 AG 01.22 HMG Agriculture Extension Project 1,684 965 719 - - - - -- FY97 4014/450 AG 01.24 HMG Agriculture Market Development Programme 3,047 1,262 1,467 294 - - 25 - - FY97 40/4/451 AG 01.24 Mixed Small Market Infrastructure Dev. Project 17,694 13 20 - - - 17,660 - - FY97 40/4/500 AG 022.5 HMG Animal Health Service Programme 23,322 12,482 7,689 167 1,664 - 1,320 - - - FY97 40/4/510 AG 02.2.2 HMG Livestock Development Service Programme 3,606 2,214 1,099 121 160 - 12 - - FY97 40/4/520 AG 02.23 HMG Livestock Development Farms 16,595 9,519 3,865 160 2,427 - 623 - - - FY97 40/4/530 AG 02.23 HMG Rural Poultry Development Programme 1,762 1,148 402 35 71 - 105 - - FY97 40(4/540 AG 022.3 HMG Animal Reproduction & Artificial Insemination Programme 5,818 2,374 2,875 13 103 - 454 - - FY97 40/4/541 AG 02.2.3 Mixed Animal Reproduction & Promotion Project 9,069 - 9,069 - -- - - - FY97 40/4/550 AG 02.2.3 Mixed Hill Lease Forestry Project (Livestock Dev) 16,595 1,291 2,389 4,251 - - 8,664 - - FY97 40/4/560 AG 02.2.5 Mixed Animal Health Strengthening Project 36,173 76 24 - - -36,074- - - FY97 40/4/570 AG 02 2.2 Mixed Animal Service Training Programme 8,473 3,214 2,827 1,622 - - 810 - - - FY97 40/4/600 AG 06.4 HMG Cooperative Training Centre 7,149 1,046 6,103 - - - - - - FY97 40/4/610 AG 06.4 HMG National Cooperative Union 4,000 - - 4,000 - - - - FY97 40/41700 AG 01.1 HMG Nepal Agriculture Research Council 45,000 - - 40,500 - - - - 4,500 - FY97 40/41710 AG 01 1 Mixed Agriculture Research Programme 37,240 - - 29,574 - - - - 7,666 - FY97 40/4/720 AG 01 1 Mixed Agriculture Enterprise and Technology System Project 68,820 - - 66,105 - - - - 2,715 - FY97 40/4/730 AG 01 1 Mixed Secondary Crop Development Project 31,215 - - 24,215 - - - 7,000 - FY97 40/4/740 AG 01.1 HMG Potato Research and Development Program 3,395 - - 3,071 - - - 324 - FY97 40/4/750 AG 04 Mixed Natural Water Fish Development Project (R) 16,936 - 14,752 - - - 2,184 - FY97 40/4/800 AG 01.2.3 Mixed Agriculture Input Price & Transportation Grant 501,600 - - 501,600 - - - - FY97 40/4/810 AG 04 HMG Tea Development 1,199 - 1,199 - - - - FY97 40/4/820 AG 02 2 2 HMG Chandradangi Seeds & Dairy Dev Committee 4,000 - - 4,000 - - - - - FY97 40/5/250 AG 01.2.2 Mixed Upper Sagarmatha Agriculture Dev Project 9,279 5,682 809 2,270 - - 518 - - FY97 40/51260 AG 01.2.2 Mixed Secondary Crop Development Project 9,525 1,199 2,904 3,851 - - 1,571 - - FY97 40/5410 AG 01.22 Mixed Agricultural Extension Programme 183,728 129,276 18,594 34,213 - - 1,644 - - FY97 40/5/421 AG 01,2 2 Mixed Mechi Hill Development Project (Agric) 1,023 202 229 591 - - - - - FY97 40/5/422 AG 03 Mixed Hill Seed and Vegetable Project 8,174 1,972 2,485 3,413 - - 304 - 76 Nepal Public Expenditures Annex C (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) FY97 40/51461 AG 01 2.4 Mixed Rural Market Development Project 23,919 16,527 2,490 4,594 - - 308 - FY97 40/5/511 AG 02.2.2 Mixed Upper Sagarmatha Animal Deviopment Project 8,949 4,601 1,637 1,599 - - 1,112 - - FY97 4015/512 AG 02.2.2 Mixed Animal Service Transfor Program 146,042 90,298 33,451 18,021 - - 4,271 - - FY97 40/5/513 AG 02.2.2 Mixed Mechi Hill Devlopment Project (Animal) 621 77 202 292 - - 51 - - FY97 40151580 AG 02.2.4 Mixed Rural Market Development Project (Animal) 18,401 12,191 4,554 1,656 - - - - - FY97 87/4/820 AG 04 Mixed Agriculture Development Bank (Share Investment) 108,670 - - - - - - 108,670 - FY97 87/4/822 AG 01.2.1 Mixed Small Farmers Development Programme (III Phase) 170,000 - - - - - - 170,000 - FY97 5913/110 FO 06 HMG Ministry of Forestry and Soil Conservation 6,380 4.646 1,734 - - - - - - FY97 59/31120 FO 06 HMG Department of Forest 8,059 7,239 686 - - - 135 - - FY97 59/3/121 FO 06 HMG Regional Forest Offices 6,108 4,150 1,822 - - - 137 - FY97 59/3/122 FO 06 HMG District Forest Offices (Including Armed forest security) 216,970 209,116 7,408 446 - - - FY97 6913/130 FO 06 HMG Botanical Department 9,819 5,386 3,506 - - - 928 - FY97 59/3/140 FO 06 HMG Department of Soil and Water Conservation 4,263 3.592 671 - - - FY97 59/3/150 FO 06 HMG Department of National Park & Wid life Protection 9,594 7,900 929 - 744 - 21 - FY97 59/3/151 FO 06 HMG Shivapuri Watershed and Wildlife Protection (Security Group 35,039 33,563 877 - - - 599 - - FY97 59/3/152 FO 03 HMG National Park (Security Group) (Adjusted) 206,458 198,054 5,222 - - 142 3,040 - FY97 59/3/153 FO 06 HMG National Hunting Office 3,622 3,549 23 - - - 50 - - FY97 59/3/154 FO 06 HMG Hatsar 14,746 13,656 1,081 9 - - - FY97 59131180 FO 06 HMG Central Zoo Developement Committee 6,420 - - 6,420 - - - - FY97 59/4/200 FO 05 Mixed Forest Research & Survey Program 8,578 4,540 2,552 - - - 1,486 - - FY97 5914/210 FO 05 HMG Forest Products Development Program 10,500 - - 10,500 - - - - - FY97 5914/220 FO 03 HMG Shivapui Watershed and Wildlife Protection Project 5,595 1,895 1,043 - - 103 2,556 - - FY97 5914/300 FO 06 Mixed Environmental & Forest Entrepreneur Programme (Coordina 1,765 619 611 126 - - 409 - - - FY97 59/4/310 FO 01.3 HMG National & Leesehold Forest Development Programme 24,680 851 4,913 - - 18,916 - - FY97 59/4/311 FO 01.1 Mixed Community Forest Development Programme 15,143 1,251 714 - - - 13,178 - - FY97 6914/312 FO 01.1 HMG Community Forest Plantation Programme 1,797 -- - - - 1,797 - FY97 59/4/313 FO 01.3 Mixed Hill Leasehold Forest and Pasture Development Project 22,885 1,793 1,110 - - - 19,982 - FY97 59141330 FO 05 Mixed Tree Improvement Programme 15,304 1,059 556 - - - 13,689 - - FY97 59/4/340 FO 01.1 Mixed Churiya Forest Development Programme 2,892 159 349 - - - 1,572 - 812 FY97 59/4/350 FO 05 Mixed Training & Extension Programme 7,725 141 947 - - - 6,637 - - FY97 59/4/500 FO 05 HMG Plant Devepment Programme 15,508 928 2,675 22 391 125 11,368 - - FY97 59/4/610 FO 02 Mixed Watershed Management Project 2,612 386 1,854 - - - 371 - - FY97 5914/620 FO 02 Mixed Bagmati Watershed Project 10,883 1,528 809 - - - 8,547 - - FY97 59/4/630 FO 02 HMG Kulekhani Watershed Project 807 363 177 - - - 267 - - FY97 5914/640 FO 02 HMG Soil Erosion Emergency Control Project 1.787 - - - - - 1,787 - - FY97 59/4/710 FO 03 HMG Wildlife Protection Programme 11,576 7,957 1,151 14 - - 2,454 - FY97 59/41720 FO 03 HMG National Park Programme 27,872 19,929 1,566 41 - 566 5,770 - - - FY97 59/5/311 FO 01.1 Mixed Community Forest Development Programme 44,463 7,444 3,620 - - - 23,523 - 9,876 FY97 59/5/401 FO 01.1 Mixed Koshi, Dhaulagiri Hill Area Forest Dev. Programme 21.923 1,509 1,587 - - - 15,862 - 2,965 FY97 59/5/402 FO 01.1 Mixed Dolakha-Ramechhap Community Forest Dev. Project 6,612 4,567 586 - - - 1,460 - FY97 59/5/403 FO 01.1 Mixed Sindhu-Kavre Forest Development Project 10,455 4,386 423 - - - 5,646 - - FY97 59/5/404 FO 01.1 HMG Palpa District Community Forest Dev. Programme 3,255 2.229 282 - - - 506 - 239 - FY97 5915/410 FO 01.2 Mixed Environment & Forest Entrepreneur Programme (Forest) 14,655 1,509 1,587 - - - 8,794 - 2,965 - FY97 59/51420 FO 01.1 Mixed Mechi Hill Development Programme (Forest) 746 104 152 - - - 248 - 242 FY97 59/5/650 FO 02 HMG District Soil and Water Conservation Programme 44,871 12,718 5,610 - - 74 26,469 - FY97 5915/660 FO 02 Mixed Mechi Hill Development Programme (Land Erosion) 1,564 167 194 - - 1,204 - - FY97 59/5/661 FO 02 Mixed Chure Land & Watershed Conservation Programme 2,772 98 387 - - - 2,287 - - FY97 59/5/662 FO 02 Mixed Sindhu-Kavre Soil Conservation Project 3,645 822 384 - - 2,439 - - FY97 59/5/663 FO 02 Mixed Watershed Management Project (Rasuwa, Nuwakot) 28.215 1,408 591 - - - 26,216 - - FY97 59/5/664 FO 02 Mixed Begnas & Rupa Lake Project 16,475 455 249 - - - 15,771 - FY97 59151665 FO 02 Mixed Upper Andhikhola Watershed Management Project 26,208 675 148 - - - 25,386 - - FY97 5915/670 FO 02 Mixed Environment & Forest Entrepreneur Programme (Land Erosi, 12,956 2,444 1,045 - - - 9,466 - - FY97 59/5/680 FO 02 Mixed Community Development & Forest/Watershed Protection 14,148 1,032 884 - - - 12,232 - - FY97 59/5/750 FO 03 Mixed Environment & Forest Entrepreneur Programme (National W 829 - - - - - 829 - - FY97 59/5/760 FO 03 HMG Zoological Program 800 - - - - - 800 - - FY97 87/4/824 FO 01.3 Mixed Hill Leasehold Forest and Pasture Development Project 5,000 - - - - - - 6,000 - - FY97 35/4/825 IR 01.5 HMG Farmer Irrigation Subsidy- Capital Subsidy 110,000 - - - - - - 110,000 - FY97 47131130 IR 04 HMG DepartmentofIrigation 10,634 9,442 1,111 81 - - - - - FY97 47/3/131 IR 04 HMG Regional Irrigation Directorates 10,982 8,405 1,610 - - - 968 - - FY97 47/3/132 IR 04 HMG District Irrigation Offices 77,472 65,655 10,193 - - - 1,624 - - FY97 47/4/310 IR 02 Mixed Irrigation Management Transfer Project 62,125 929 2,254 - - - 58,912 - - 77 Nepal Public Expenditures Annex C (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) $Ica, Ts FY97 47/4/311 IR 02 HMG System Management & Training Programme 5,788 1,194 994 3,600 FY97 47/4/312 IR 02 Mixed Irrigation Institution Development Programme 48,039 220 2,921 - - 44,899 - - FY97 4714/313 IR 01.5 Mixed First Irrigation Sector Project 132,131 - - - - - 132,131 - FY97 47/4/314 IR 01.5 Mixed Second Irrigation Sector Project 285,126 2,078 4,745 14 - 200 278,088 - - FY97 47/4/315 IR 01.5 Mixed Irrigation Line of Credit 235,419 5,948 9,002 - - 498 219,970 - - FY97 47/4/340 IR 03 Mixed River Control 198,669 230 639 - - - 197,800 - - FY97 47/4/341 IR 03 Mixed Water Related Disaster Control Technology Centre 53,543 2,261 2,235 - - - 49,047 - - FY97 4714/342 lR 03 Mixed Bakraha River Control Project 2,326 199 294 - - - 1,834 - - FY97 47141343 IR 03 HMG Bagmati River Control Project (Rautahat Sarahi) 30,000 - - - - - 30,000 - - - FY97 47141344 IR 03 HMG Banganga River Control, Tilaurakot Protection 5,999 - - - - 5,999 - - - FY97 47/4/360 IR 05 Mixed Ground Water Investegation Programme 12,209 3,309 1,019 - -7,880- - - FY97 47/4/361 IR 01.4 Mixed Community Shallow Tubewell Irrigation Programme 42,659 687 1,552 - - - 40,421 - - FY97 47141370 IR 02 HMG Repair, Maintenance Projects 132,258 - . - - - 132,258 - - FY97 47/4/401 IR 01.5 Mixed Mechi Hill Irrigation Project 1,053 - - - - - 1,053 - - - FY97 47/4/402 IR 01.1 Mixed Sunsari Morang Irrigation Project (II Phase) 260,369 5,248 5,158 - - 2,500 247,463 - - - FY97 47/4/403 IR 01.1 Mixed Chandramohana Irrigation Project 2,194 195 472 - - - 1,528 - - - FY97 47/4/404 IR 01.1 Mixed Bagmati Irrigation Project 224,527 3,915 4,161 - - 6,039 210,412 - - - FY97 47/4/405 IR 01.5 Mixed Eastern Rapti Irrigation Project 128,057 1,870 1,492 - - 124,695 - - - FY97 47/4/406 IR 01.3 Mixed Bhairahawa Lumbini Irrigation Project (Ill Phase) 241,244 10,563 10,095 2,251 - 387 217,959 - - - FY97 47/4/407 IR 01.2 Mixed Marchwar Irrigation Project, Rupandehi (1J Phase) 14,804 1,111 2,096 - - 499 11,099 - - - FY97 47/41408 IR 01.5 Mixed Dhaulagir Zone Irrigation Project 4,613 - - - - - 4,613 - - - FY97 47/4/409 IR 01.1 HMG Babai Irrigation Project 73,435 1,596 1,530 - - 54 70,255 - - - FY97 47/4/410 IR 01.1 Mixed Rajapur Irrigation Project 147,953 1,670 1,380 -- - 144,903 - - - FY97 47/4/411 IR 01.1 Mixed Mahakali Irrigation Project, Kanchanpur 381,582 6,747 2,829 999 - 9,460 361,547 - - - FY97 87/4/826 IR 01.4 Mixed Ground Water and Flood Rehabilitation Project (Credit) - - - - - - FY97 35/4/829 LD 01 Mixed Gulmi Argakanci .R.D. 15,000 - - 15,000 - - - - - FY97 69/3/110 LD 03.1 HMG Ministry of Local Development 12,987 11,712 1,275 - - - - FY97 6913/120 LD 03.1 HMG Local Development Regional Directorates 4,154 3,522 560 - - - 71 - - - FY97 693/130 LD 03.1 HMG DistrictGuest Houses 2,170 1,997 173 - - - - FY97 69/3/140 LD 03.1 HMG Registration Section 6,212 4,050 2,138 - - - 24 - - FY97 69/4/200 LD 03.6 Mixed Women Development Programme 8,301 662 . 476 2,769 - - 4,394 - FY97 69/4/201 LD 03.6 HMG Women Skill Development Programme 1,500 - - -- - - - - 1,500 FY97 6914/210 LD 01 HMG Remote Area Development Programme 14,599 - - 5,550 - - - - 9,050 - FY97 69/4/220 LD 03.7 HMG Monastry Management & Development Committee 9,000 570 290 600 - - 7,540 - - FY97 69/4/230 LD 03.7 Mixed Population Education Programme 2.836 328 137 2,365 - - 5 - - - FY97 69/4/240 LD 03.7 HMG Local Development Training institute 17,000 - - 14,000 - - - - 3,000 - FY97 6914/250 LD 03.7 HMG Manpower Development 3,590 - - - . - - - - 3,590 FY97 6914/260 LD 03.7 Mixed Flood Suferer Reconstruction and Rehabilitation Project 2,281 55 91 2,135 - - - - - - FY97 69/4/280 LD 02.3 HMG Rural Community Infrastructure Development Programme 389 202 174 - - - 13 - - - FY97 69/4/290 LD 02.1 Mixed Rural Infrastrcuture Development Programme 4,363 167 170 - - - 4.027 - - - FY97 69/4/300 LD 02.2 Mixed Lumbini Zonal Rural Drinking Water & Sanitation Programm( - - - - FY97 69/4/310 LD 03.7 HMG Decertralization Work Plan - - FY97 69/4/320 LD 03.7 Mixed National Ethenitic Community Upliftment Institute 2,300 - - 2,300 - FY97 6915/200 LD 03.6 Mixed Women Development Programme 75,363 28,474 8,502 29,680 - - 8,707 - FY97 69/5/210 LD 01 Mixed Remote Area Development Programme 76,470 - - 7,313 - - 69,158 - - FY97 69/5/260 LD 03.7 Mixed Flood Suferer Reconstruction and Rehabilitation Project 1,480 897 584 - - FY97 6915/280 LD 02.3 Mixed Rural Community Infrastructure Development Programme 141,675 5,856 1,802 - - - 134,017 - - FY97 6915/290 LD 021 Mixed Rural Infrastrcuture Development Programme 1,089 569 422 - - - 97 - - - FY97 6915/300 LD 02.2 Mixed Lumbini Zonal Rural Drinking Water & Sanitation Programm( 31,360 - - 7,836 - - - - 23,524 - FY97 6915/400 LD 03.7 Mixed Solid Waste Management Progamme (including Okharpauw 90,431 5,778 4,008 1,311 - 6,553 72,782 - - - FY97 69/5/410 LD 021 Mixed Labour Intensive Road Reconstruction Project 28,050 502 1,193 - - - 26,355 - - - FY97 69/5/420 LD 03.7 HMG Tribal Groups Development Project 2,378 28 4 119 - - 115 - - 2,112 FY97 6915/451 LD 01 Mixed Dhading Integrated Rural Development Project 7,313 587 206 564 - - 5,956 - - - FY97 6915/452 LD 01 Mixed Gulmi Integrated Rural Development Project 8,520 90 29 1,075 - - 7,326 - - FY97 69/5/453 LD 01 Mixed Arghakanchi Integrated Rural Development Project 8,060 89 24 1,017 - 6.930 - FY97 69/5/454 LD 01 Mixed Gorkha Development Project 3,730 60 81 201 - - 3,387 - - FY97 69/5/455 LD 01 Mixed Lamjung Development Project 2,217 . - - - - - 2,217 FY97 6915/456 LD 03.7 Mixed Patan Preservation & Development Programme 4,500 - - - - - 4,500 - - FY97 69/5/500 LD 03.3 HMG District Development Committee Grant 718,908 - - 150,739 - - - - 568,169 - FY97 69/5/510 LD 03.5 HMG Municipal Grant 83,843 - - - - - - - 83,843 - FY97 69/5/520 LD 03.2 HMG Village Self Reliance Grant 1,854,501 - - - - - - - 1,854,501 78 Nepal Public Expenditures Annex C. (Actuals) Rural Development FY95-98 Actual Expenditures (Millions of Rupees) FY976915130 LO 3.4 HMG ElectionArea Development Programme 106,000- - - - - - 106,000- FY97 6915540 LD 03.7 HMG Local Development Fund - - - - - - - - - FY97 69/5/550 LD 03.7 HMG Paticipatory Development Program 32,709 - - - - - - 32,709 - FY97 69/5/560 LD 03.7 HMG Targeted Group Upliftment Programme 283 - - - - - - 283 FY97 69/5/610 LD 02.3 Mixed Local Development Construction Programme 110,976 - - - - - 110,976 - - FY97 6915/620 LD 02.3 HMG Local Road Suspension Bridges 46,582 - - - - - 46,109 - - 473 FY97 69/5/650 LD 03.7 HMG AccountSettlementofCompleted Projects 860 - - - - - - - - 860 FY97 69/5/660 LD 03.7 HMG Padampur Resettlement Project 9,432 - - - - - 9,432 - FY97 87/4/827 LD 03.6 Mixed Rural Women Development for Production Loan Programme 5,000 - - - - - - 5,000 - FY97 67/4/828 LD 01 Mixed Gulmi Argakanchi R.D. (Credit) 30,000- - - - - -30,000- 79