NPC as an apex institution, first prepare the draft of Base/Approach Paper for the forthcoming development plan before formulating the detailed plan document. Initially, the main objective of the plan is fixed and to achieve this objective total and sectoral economic growth rate targets are determined for the plan period. The Sectoral Incremental Capital Output Ratios (ICORs) are used for the determination of total investment requirements in various sectors to produce required output and to generate the targeted growth rates. To match the required resources for investment a financial plan is prepared taking into account the amount of domestic saving that could be generated and the inflow of capital from external sector during the plan period. Then, the resources from various sources for financing the public sector outlay are projected. For the preparation of the medium term plan, sector planning is the basic building block of the plan. The principal outputs of sector planning becomes the sectoral chapters in the Five Year Plan. These sectoral chapters lay the basic foundation of the plan's objectives, sectoral targets for the plan period, and the programmes that shall be implemented to achieve these targets.

After the completion of the draft Base/Approach Paper it is presented in the meeting of the NDC for suggestions. Then, the NPC revise the Base/Approach Paper according to the suggestions given by the NDC. The detailed plan document is prepared based on this Base/Approach Paper.

At the micro level the basic sectoral planning process is under taken by the respective development related ministries based on the plan document. Much of th initial inputs for the sector planning is provided by the implementing ministries/departments which is thenreviewed at the NPC. At NPC, various sectoral task forces review the performance of the sector as well as taking into consideration of the existing present situation within the country, present sectoral specific reports. These various reports are again examined within the respective sector planning unit for cinsistency before being presented to respective NPC member.

In conjunction with the above center driven planning process at the district level, continuous efforts have been placed to strengthen the decentralizattion mode of planning. Various District Development Committee (DDCs) identifies their programmes and projects, though it may normally take the shape of a shopping list due to incapability to priorities their projects.

After the preparation of the detailed plan document it is put forward to the Cabinet for its approval.. The plan is executed after the Cabinet approval.

The process of periodic national and district development and annual district plans are formulated on the participation of local people, institutions and central level authorities and institutions.

Steps of Participatory District Development Planning Process

1. In English
2. In Nepali

NPC reviews the achievements of the plan on mid-term and full-term basis

Monitoring and Evaluation
National Planning Commission (NPC) has been responsible for assessing the progress of development works from the beginning of planned development in Nepal. Considering the importance of a strong Monitoring and Evaluation (M&E) system in the management, His Majesty's Government introduced an improved M&E system in 1992 and created following new institutional structure for carrying out the M&E activities.

1. National Development Action Committee (NDAC) under the chairmanship of the Prime Minister, Ministers, Vice Chairman and Members of NPC and Chief Secretary are its members. The Committee meets in every four months or earlier if required.
2. Ministerial Development Action Committee (MDAC) in every ministry concerned with development works under the chairmanship of the Minister/Minister of State. The Secretary, Head of the departments and chiefs of Planning and Monitoring & Evaluation Divisions are its members. These committees meet in every two months or earlier if required.
3. Central Monitoring and Evaluation Division (CMED) in the NPC Secretariat to act as the Central unit of M&E System.
4. M&E Divisions or Sections in every ministry concerned with the development works.

M&E Divisions/Sections

To get the M&E works carried out by the projects.

1. To act as the Secretariat of MDAC. To collect details of the problems and progress from the projects and submit them in the MDAC meeting. To implement the decisions of MDAC.
2. To submit the decisions of MDAC to CMED for discussion in NDAC.
3. To inspect projects, obtain informations.