Published On: September 30, 2018 08:13 AM NPT By: Bijay Pandey

Hopes of federal system

Hopes of federal system

In a series of events post the peace treaty between the government, and the then Maoist rebels, the nation has accomplished several achievements. The new constitution is among the most remarkable achievements. Nepal, which was unified by Pritivi Narayan Shah, has now been divided into seven federal states. This is a major move of the country toward federalism. The federal system refers to the system where power is divided between the central and regional or state government.

Nepal has a small economy with the population approaching three crores. We are a tiny country placed between two economic Goliaths -- India and China. Many Nepalese youths migrate to foreign countries in hopes of improving their finances. Nepal’s economy mainly features unemployment, poverty, poor infrastructure, low national output, low living standard, and the increasing gap between the rich and poor. 
Previously there used to be few heads in power, but with the federal structure, there are more. Therefore, the level of corruption will inevitably grow. Budget allocated to regional and local level may be not implemented effectively. The government needs more budget than before to look after the different ministries.

There are several instances which show disadvantages of the federal system.  Simply by increasing the taxes will not help the economy in the long run. The country needs infrastructural development. So, it requires a heavy budget which should be financed by the tax collection, foreign debts, and other sources. However, it is necessary that revenue increase is in perfect alignment with employment, national output, and the living standard. 

It’s too early to predict the results of federalism in Nepal. Countries like the USA and India have highly benefited from this system. If we strategize our policies and governance strategy with that of successful states, federalism has high chances of leading Nepal in the path of prosperity.

Pandey works at Machhapuchchhre Bank Limited. 

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