Government Initiates Inquiry into Nearly NPR 2 Trillion in Agricultural Grants: What Is the Process?

June 23, Kathmandu – Over the past decade, nearly NPR 2 trillion has been distributed as government grants for agricultural development and expansion. However, these subsidies have not resulted in any significant transformation in agricultural productivity nor improved the livelihoods of actual farmers.

Despite substantial investment, critics say the funding has been akin to “pouring water into sand,” benefiting mostly influential figures and so-called “pocket farmers,” raising allegations of misallocation that have persisted for years.

Experts and stakeholders in agriculture have widely criticized the subsidy system. Parliamentary debates and public protests have frequently highlighted this issue.

In a parliamentary session on June 12, KUSRP Party MP Khushbu Oli demanded an investigation into systemic corruption surrounding state subsidies for farmers.

In her statement, she said, “The state disburses subsidies annually, yet there is no corresponding improvement in production. The government provides data on subsidies given but cannot show increased agricultural output. The subsidies end up in intermediaries’ pockets, not on the farmers’ fields, so investigation is essential.”

She also suggested implementing a ‘cross-verification’ system to assess how subsidy funds are spent and whether productivity has risen, along with a greater focus by the Ministry of Agriculture on technological development.

Claims of subsidy embezzlement are not new; past parliamentary meetings have seen MPs from various parties raise serious concerns. They allege substantial sums intended for small farmers have instead been captured by influential individuals, middlemen, and fraudulent farmers.

From ghost farmers who reportedly keep cattle on paper to ministers, MPs, and their relatives’ involvement, these practices have repeatedly drawn parliamentary ire.

Genuine farmers often miss timely access to fertilizers and seeds, while impostors exploit the system, prompting continuous appeals to the government to punish these fake farmers.

So far, past governments have shown little interest in addressing this issue. However, the current government, through the Ministry of Agriculture, Forestry and Environment, has formed a high-level committee to audit agricultural grants distributed since fiscal year 2072/73.

This committee, formed at Agriculture Minister Gita Chaudhary’s initiative, has been given a six-month timeline to submit a comprehensive report.

Chairing the task force is Joint Secretary Badri Prasad Dahal, with members including Senior Agricultural Extension Officer Prakashraj Bista from the Agriculture Information and Training Center, Deputy Secretary (Accounts) Tilak Prasad Chapagai, Senior Veterinary Doctor Dr. Manoj Kumar Shahi, and Section Officer Prakash Dulal from the ministry.

Agriculture and livestock contribute approximately 25 percent to Nepal’s total GDP, with the government running various annual subsidy programs in these sectors.

Despite these subsidies, challenges such as declining agricultural productivity, subsistence farming, climate change impacts, irrigation deficits, and lack of modern technology have intensified.

The ministry indicated this task force was established to review the existing subsidy system and recommend improvements to make it more transparent, productivity-focused, sustainable, and farmer-friendly.

Task force coordinator Joint Secretary Badri Prasad Dahal confirmed that a six-month action plan for an effective investigation is already underway.

He stated, “We are currently in the initial phase. According to our Terms of Reference (TOR), the team is preparing a plan within six months. Once that is ready, responsibilities will be allocated, and the work will proceed accordingly.”

The inquiry will primarily use two methods: reviewing past work and documentation and, if required, conducting on-site studies at locations where subsidies were provided.

“Studying previous work is essential, and field visits will be necessary,” Dahal said. “We are prioritizing according to the responsibility delegated to us.”

While documentation is currently available, the committee noted that the actual subsidy status can only be confirmed after detailed investigation and field monitoring.

How Much Has Been Distributed in Subsidies Over the Decade?

According to the Office of the Auditor General, approximately NPR 1.97 trillion in agricultural grants were allocated in about ten years.

Of that amount, around NPR 1.5 trillion was spent on chemical fertilizers, while over NPR 48 billion went to individual and commercial agricultural firms.

In fiscal year 2072/73, the grant amount was around NPR 10 billion, swelling to over NPR 36 billion by FY 2079/80. Despite annual state budget allocations, targeted improvements in agricultural output have not been realized.

The Auditor General’s annual reports show NPR 1.04 billion allocated in FY 2072/73, NPR 1.078 billion in FY 2073/74, NPR 877 million in FY 2074/75, and NPR 1.229 billion in FY 2075/76.

In FY 2076/77, NPR 1.683 billion was allocated, with amounts increasing steadily in subsequent years.

By FY 2077/78, subsidies rose to NPR 1.968 billion, reaching NPR 2.183 billion in FY 2078/79, and peaking at NPR 3.604 billion in FY 2079/80. However, in FY 2080/81, it decreased to NPR 2.934 billion.

Past Efforts and Systemic Flaws

Although every government has prioritized curbing subsidy misuse, former Agriculture Minister Ramnath Adhikari also formed a committee that identified names of those misusing funds.

That committee reviewed NPR 1.07 trillion distributed over five years and submitted its report, but no actions were taken, and the report was shelved.

After federalization, uncoordinated distribution by federal, provincial, and local levels has led to increased cases of individuals receiving duplicate or triplicate benefits due to the lack of harmonized systems.

The absence of clear guidelines, frequent procedural changes, and no official list of farmers have encouraged widespread exploitation.

The Auditor General has emphasized the need for a national-level integrated information system to ensure transparency in subsidy distribution. Without proper identification and records of genuine farmers, preventing multiple subsidy claims remains impossible.

Paper Fraud to Claim Subsidies and Post-Monitoring Exit from Business: Agricultural Economist’s View

Agricultural experts welcomed the government’s formation of the subsidy investigation committee but pointed out that paper-based processes are the root cause of large-scale misuse.

Agricultural economist Prof. Dr. Rishiram Kattel stressed the need for a production-based subsidy system to curb misuse.

He shared, “In the Nepalese context, some recipients manipulate documents, receive subsidies for a few years, run the business temporarily, then quit, representing a form of institutionalized corruption.”

He noted, “In modern countries, even with large subsidies, farmers utilize funds efficiently. But in Nepal, more than half of the budget goes to chemical fertilizers, reducing the subsidies’ effectiveness.”

He advised the new committee to study the distribution and current status of small, medium, and large subsidy recipients.

He added, “The committee must clarify not only past subsidy allocations but also future strategic directions.”

Instead of offering cash subsidies, Kattel suggested enhancing financial access and promoting concessional loans targeted at small genuine farmers.

Following concerns raised by the Auditor General’s Office, parliamentary voices, and expert pressure, the new government has begun uncovering the true status of subsidies. Whether this report will gather dust like previous ones or lead to accountability remains to be seen over time.