Though federalism promised power devolution, nearly a decade later, analysts say that it remains an idea rather than a reality.
Nepal's transition to federalism in 2015, when it ratified its new constitution. It was a culmination of politicized protest, civil strife, decade-long insurgency, calls for inclusivity, and desires for increased balanced, equitable development of the country's different regions. Federalism has indeed put an end to decades-long, deep-rooted centralization of power and provided a platform of inclusive politics.
After the approval of the constitution, the nation was structured into three layers of government: federal, provincial, and local. The constitution established seven provinces to ensure coverage of geographic, ethnic, and administrative grounds. The local elections in 2017 and 2022, following a gap of more than 20 years, brought back democratic representation at the local level, which is considered a significant achievement of federalization of the nation.
Notable Achievements
Following the adoption of the federal structure, several gains have been made. Local governments began handling health, education, road construction, and other infrastructure development. Provincial governments, too, launched major initiatives. For example, Karnali added over 200 km of paved roads, Sudurpaschim 550 km, and Lumbini more than 1,160 km. With rapid construction, several remote parts of hills and mountains have road networks while rural electrification and internet access has reached to more than 90 per cent of the population in over 70 districts.
Gaps in DRRM funding and institutional setup may hinder localiz...
The federal government, meanwhile, has undertaken several health programs for the common good of the people. Airlifting pregnant women from remote areas and facilitating them with safer delivery services and free health services for the poor, elderly, and patients suffering diseases such as cancer, kidney-related problems, and many others are new gains for people. Health insurance at affordable premiums has also been carried out.
Fiscal decentralization also gained favor. Provincial and local authorities began to be allocated distinct shares of VAT, excise duties, and natural resource royalties. National natural resources and fiscal institutions were set up in a bid to ensure equity in the fiscal distribution. These measures were aimed at allowing local governments to raise revenues independently.
Donor-funded programs, including the Provincial and Local Governance Support Programme (PLGSP), also increased administrative and planning capacity. Delivery of services in many areas was improved as a result. Municipalities and rural municipalities across the country now have budgets of their own and have taken on significant roles previously centralized. The central government provides a significant portion of its GDP to provincial authorities. In 2020/21, provincial governments budgeted 6.2% of the GDP. This percentage can vary from year to year depending on the specific budget allocations.
Growing Frustration
Despite these positive changes, the sense that federalism has yet to take strong roots. In many quarters, frustration has grown over its pace and impact on federalism. Corruption at three layers of government too has been a matter of higher concern. Though federalism promised power devolution, nearly a decade later, analysts say that it remains an idea rather than a reality. There are still numerous provinces without the most basic administrative capacity. The majority of local units in Madhes, Karnali, and Sudurpaschim provinces lack chief administrative officers, which has impeded administrative decision-making. Shortages of employees and insufficient technical expertise have weakened service delivery at several provinces and local units.
Meanwhile, central legislation, such as the Federal Civil Service Act and the Education Act, is still in abeyance. Their delay has left provinces at the mercy of federal diktats, limiting their autonomy. Similarly, provincial governments have not been authorized to administer police forces, undermining their authority over internal security matters.
More and more, there is a feeling that federalism has become a fiscal burden. Many say federalism has become expensive owing to provisions of three layers of government, several provincial ministers, and local and provincial representatives. Paying salaries, allowances, and perks to over 35,000 people’s representatives in a three-tier system has proven burdensome to the government’s budget. Others argue that provincial governments have not demonstrated what they are meant for. Public dissatisfaction has grown in terms of corruption, nepotism, and waste in provincial government. It has led many, from politicians to civil society members, to question whether the model can be sustained. Critics say that federalism has become an economic burden rather than a medium for empowerment.
Furthermore, budgetary arrangements are often disregarded. Federal ministries continue to finance small local projects at the expense of provincial and local governments completely. This contradiction goes against the principle of decentralized decision-making. Meanwhile, power and resources, as well as decision-making between the local and provincial levels, have created the confusion. Local government has strong associations and lobby resources, whereas provinces have little voice.
To ensure federalism’s effective outcome, a few rights and resources have to be guaranteed for the provinces. To begin with, they need more defined legal powers in education, health, local infrastructure, and security. Otherwise, provincial governments will continue to be weak and ineffective. They need sufficient budgetary support, which, however, must be tied to their performance. Delays or cuts in budget hinder planning and erode trust. Furthermore, provinces should be allowed to collect and retain some of their finances in the form of fees and taxes, reducing dependence on federal coffers.
Likewise, there should be legislation to better delineate the role and powers of each level of government to avoid duplication and institutional showdowns. Checks and balances must be established. Transparency in spending, public auditing, and citizens’ participation at all levels are also required to ensure the effectiveness of the federal structure.
Rays of Hope
While the federal parliament has set up a Federalism Committee to oversee implementation and look at issues, the Office of the Prime Minister is rethinking the responsibilities given to provinces and may alter them. The recent cabinet’s decision to form a good governance committee under the prime minister’s coordination is a potential move in this regard. Talks are being held on capping ministerial terms and bringing professionals into executive positions, which reflect a shift in mentality towards deepening federalism.
In order for federalism to serve the people in real life, coordination between the three levels of government needs to be deepened further. The provinces must assert their rights and interests more strongly, and federal governments and officials must listen. Planning, budgeting, and rules of implementation must go hand-in-hand with ground realities. In addition, eliminating politicization of appointments and building local capacity through training and investment can get institutions to perform effectively. Our federalism will not prosper with the ‘one size fits all’ approach. Nepal will need to adapt its federal model to its own socio-political context.
That being said, the success of federalism will be realized by continuous improvement, but not by hollow rhetoric. For now, the system offers significant potential for equitable development and increased inclusivity. However, what will happen next will depend very much on political will, institutional reform, and citizen participation. There are many in the country, from top leaders to a layman, who are still not supportive of federalism, who must be told that rather than ditching federalism altogether, improving its implementation for better outcomes is the way forward.
