THESIS ABSTRACT

Abstract

The conventional local revenue sources can't meet the demand of the huge infrastructure financing gap because of the rapid urbanization in Budhanilkantha Municipality. In spite of the fact that the municipality has embraced Land Based Financing (LBF) instruments to fill this gap, there is no systematic assessment of the efficiency of revenue generation, structural trends and mechanisms for converting revenues into expenditures. Therefore, this research is designed to study the trend of the LFBs, analyse the relationship between revenue and expenditure and explore important institutional problems in Budhanilkantha Municipality. This was done through a mixed methods research design that includes analysis of secondary financial data spanning seven fiscal years, (FY 2019/20 to 2025/26) along with a triangulation of perception surveys of sixty-five purposively selected respondents from two spatial clusters, (Cluster A: semi-urban, Cluster B: urban) and KIIs. Analytical methods used are the Compound Annual Growth Rate (CAGR), Pearson's bivariate correlation, Simple linear regression analysis. The results show that there is a serious imbalance in fiscal resources, as infrastructure expands at a 17.74% CAGR while own-source revenues increase at a 5.94% CAGR. The bivariate correlation suggests that only the transaction based registration fees are moderately positively correlated with capital spending (r = 0.577), while recurrent holding taxes are negatively correlated (r = −0.429). The overall Simple linear regression model is not statistically significant, p = 0.4864, which indicates a vertical fiscal gap, that is, the capital budget is not connected to local revenues. Current trend shows that capital deficit is projected to be NPR 301.15 Million in FY 2030/31.Finally, the current fiscal system based on economic transactions is unsustainable, leading to a vertical fiscal deficit and thus to growing dependency on grants. In order to attain fiscal autonomy and overcome the spatial infrastructure gap, Budhanilkantha Municipality needs to move from transactional fees to a stable recurrent Integrated Property Tax (IPT) backed by automated GIS-based land administration mechanism.

Keywords

Land Based Financing, Land Value Capture, Fiscal Federalism, Urban Infrastructure, GIS Based Taxation, Budhanilkantha Municipality.