Fiscal Space for Children in Federal Structure of Nepal

Abstract

Public financing for children is a critical yet underexplored aspect of fiscal governance in federal systems, particularly in low- and middle-income countries. This article examines how Nepal’s transition to federalism has reshaped the mobilization, allocation, and governance of public financial resources for children across federal, provincial, and local levels. Grounded in public finance framework, entitlement theory, and human capital investment frameworks, the study conceptualizes public spending on children as both a certificatory mechanism addressing structural inequalities and a long-term investment in national development. Drawing on a systematic review of academic literature, policy documents, and official government reports, the study analyses trends in revenue mobilization, expenditure patterns, and child-focused programmes in education, health, nutrition, and social protection. The findings show that government expenditure increased substantially after federalization, with a growing share directed to sectors that directly benefit children, such as education, health, and social security. While fiscal federalism has enhanced local-level engagement and service delivery, disparities in revenue capacity and administrative effectiveness continue to undermine equitable outcomes for children. The study concludes that effective public financing for children in Nepal requires not only increased budgetary commitments but also strengthened intergovernmental coordination, equitable fiscal transfers, and child-sensitive budgeting frameworks. By positioning children at the center of public finance, the article underscores the role of fiscal policy as a tool for advancing intergenerational equity, social justice, and sustainable human development.