Financing for equity in primary and secondary education
1. Education resources to subnational governments
2. Education resources to schools
3. Education resources to students and families
4. Social policies and family support programmes
Introduction
In Nepal, the Ministry of Education, Science and Technology (MoEST) is responsible for the administration of education from pre-primary to tertiary levels. The national educational budget is prepared jointly by MoEST, the Ministry of Finance, and the National Planning Commission in line with the 2025/26–2027/28 Medium-Term Expenditure Framework (MTEF).
In recent years, Nepal has transitioned from a centrally managed system to a devolved model. Local governments now hold primary responsibility for managing and funding basic and secondary education. They draw on multiple revenue streams to support their education services, including locally generated revenues such as taxes and fees, a designated share of federal tax collections, unconditional equalization grants providing fiscal flexibility, and conditional grants earmarked for specific purposes. These combined resources are allocated across key responsibilities, with education receiving a significant share. Schools serve as the primary delivery points for educational services, utilising this multi-source financing to provide basic and secondary education to communities across the country.
1. Education resources to subnational governments
Fiscal Equalisation Grants
Fiscal equalisation grants form the principal mechanism through which the government distributes equitable funding to local levels. Their allocation is determined using four weighted indicators: fiscal gap (60%), human poverty index (15%), social and economic discrimination (15%), and infrastructure availability (10%). As these grants are not specifically earmarked for education, local governments dedicate only a small proportion to the education sector. The 2022–32 School Education Sector Plan sets a policy objective to increase the proportion of equalisation grants allocated to local governments while reducing reliance on conditional grants.
Conditional Grants
Conditional grants were previously provided under the 2016–2023 School Sector Development Plan (SSDP) and are now administered through the 2022–32 School Education Sector Plan (SESP). The SESP budget is structured around broad cost components and specific programme orientations. Staff salaries account for the largest share, approximately 69% of total SESP expenditure, with the remaining resources distributed across capital investments (11%), operational expenses (11%), and social programming (9%). Among non-staff expenditures, access-related initiatives receive the largest allocation at 44%, equity and quality improvements each receive approximately 24–25%, and efficiency measures account for 7%, reflecting the distribution of targeted resources within the plan.
Equity Index
In 2017, under the Consolidated Equity Strategy for the School Education Sector, the Government of Nepal piloted the “Equity Index” to identify disparities in educational outcomes, access, and participation, and to allocate resources based on identified needs. The Index generates an “equity score” using the Human Opportunity Index (HOI) formula: Equity Index = C × (1 − D), where C represents coverage, or the average level of access, and D is a dissimilarity index measuring inequality of opportunity. The index uses data on gender, geography, socio-economic status, ethnicity, caste, and disability to assess inequities in educational provision. According to the School Education Sector Plan Budget Review in the 2023-24 academic year extra resources were allocated to the 80 Local Governments with the lowest scores, based on out of school rates and the equity index.
Supplementary and Special Grants
Local governments may also receive education-specific supplementary and special project grants. Allocation of these funds varies, and although 63% of local government revenue is unconditional, many local authorities restrict education spending to the amount received through federal conditional grants.
2. Education resources to schools
Child-Friendly School Initiative
The child-friendly school initiative in Nepal began in 2002 and expanded with support from UNICEF and other stakeholders. In 2010, the Government of Nepal established the National Framework on Child-Friendly Schools and Minimum Standards for Quality Education to promote child-friendly environments in schools. The initiative aims to improve children’s access to primary education that is socially inclusive, conflict- and gender-sensitive, and enables children, particularly girls and disadvantaged groups, to complete the basic education cycle and transition to lower secondary education. Programme objectives include the construction of separate girls’ toilets with water and sanitation facilities and the establishment of a book corner in every classroom. UNICEF Nepal continues to support the government in implementing and maintaining the Child-Friendly Schools National Framework.
3. Education resources to students and families
Scholarship Programmes under SESP
The 2022–32 School Education Sector Plan (SESP) outlines a scholarship system designed to support poor, disadvantaged, vulnerable, marginalised, and disabled children to enrol in school, continue their education, and participate fully in learning. Key activity 3.1.1 specifically aims to provide scholarships for uniforms and stationery to financially disadvantaged students, targeting 728,846 students over five years.
Currently, the government provides two types of scholarships: residential and non-residential, both of which cover various minority and vulnerable groups, including girls, students with disabilities, street children, ethnic minorities, children living in poverty, children in conflict-affected areas, and children of martyrs. These scholarships are administered to ensure equitable access to education for students from the most disadvantaged and marginalised groups, supporting both basic and secondary education pathways.
Residential Scholarships
Residential scholarships are available for students in feeder hostels for girls, students with disabilities, freed Kamlaries (bonded labourers), Himalayan hostels, children from endangered and marginalised communities, street children and child labourers, HIV-affected children and students from the Badi community, and students studying under the approved quota in model schools run through public–private partnerships.
Non-Residential Scholarships
Non-residential scholarships cover children with disabilities, educational materials, transport expenses where necessary, support for assistants, and girls in grades 1–5. They also include students from remote districts such as Mugu, Dolpa, Humla, Jumla, and Kalikot; Dalits in grades 1–5; freed Kamlari; targeted groups among 22 tribes and marginalised communities; poverty-focused scholarships for students in grades 6–12, including Science and Technical streams; and children of martyrs as well as conflict-affected children across grades 1–12, depending on the specific educational level.
Residential scholarships are provided to a total of 12,065 students across various categories. These include 400 students in feeder hostels for girls, 8,182 students with disabilities, 303 freed Kamlaries (bonded labourers), 2,082 students in Himalayan hostels, 50 children from endangered and marginalised communities, 240 street children and child labourers, 278 HIV-affected children and students from the Badi community, and 530 students studying under the approved quota in a model school run in public-private partnership. For all students studying in hostels, the total scholarship amount is NPR 50,000 for ten months, calculated at the rate of NPR 5,000 per student per month.
4. Social policies and family support programmes
Child Grant Programme
The Child Grant Programme, introduced in 2009, is an unconditional cash transfer initiative targeting children under five years of age, particularly those in the remote Karnali region and from the marginalised Dalit community. Eligible families receive NPR 1,600 (approximately USD 14) every four months to support basic needs. The programme has led to increased birth registration rates and improved access to essentials such as food and clothing.
Emergency Cash Transfer Programme (ECTP)
In response to the 2015 earthquakes, the Emergency Cash Transfer Programme (ECTP) was established to support vulnerable groups in the most affected districts. The initiative provides cash transfers to children under five, widows, single women, individuals with disabilities, senior citizens, and members of minority ethnic groups, assisting in relief and recovery efforts.
Scholarships
Scholarships cover educational fees and provide additional cash incentives to encourage school attendance. They remove barriers to education by covering direct costs associated with attending school and offer supplementary cash to compensate for indirect opportunity costs, such as the loss of potential income. The scholarships include the Dalit scholarship, girls’ scholarship, girls’ scholarship in the Karnali zone, scholarship for children of martyrs, Kamalari scholarship, scholarship for children affected by conflict, Himali hostel scholarship, feeder hostel scholarship, scholarship for students in model schools, Himali residential school hostel scholarship, and the management and operational costs of Himali and feeder hostels. In some cases, schools also receive grants from the programme. Scholarship recipients are required to maintain at least 70% attendance. These scholarships form part of the social protection programmes that are budgeted and transferred to local and provincial governments as conditional grants.
5. School meal programmes
Midday Meal Programme
Nepal began a midday meal programme in basic schools in 1974 with support from the World Food Programme. In 2020/21, the programme expanded across eight districts in the Karnali and Far-Western provinces and has since grown to reach 2.8 million children nationwide. All public-school students from early childhood development through Grade 5 currently receive free midday meals, costing NPR 20 per meal per day. The 2022–32 School Education Sector Plan includes objectives to implement programmes focused on school nutrition and health, alongside the continued provision of midday meals.
The profile has been reviewed by Kedar Prasad Acharya, Director, University Grants Commission.
