The Economist’s July 5, 2025, edition features a story on why all Indians are rule-breakers. It concludes with the observation that the State has set impossibly high standards, making it difficult for Indians to comply with the law. This is not a uniquely Indian story; it can be echoed in almost all contemporary societies, including the US, China, and Nepal, as many normal daily activities of citizens may fall under the criminal or penal scrutiny of the State. Observing such rules may be impossible for the average citizen.
Take the case of the visit visa scandal in Nepal, which was initially introduced to regulate labor migration, especially the movement of women, in order to minimize human trafficking. Later, it turned into a major corruption and abuse scandal. In Nepal, not only is foreign travel by citizens heavily regulated, but most of their daily activities are also under State scrutiny — whether it’s going to a health facility, sending children to school, running a business, attending or organizing a family function like a wedding or religious ritual, or even having long hair (a few decades ago). Citizens are almost certain to break some law, whether it pertains to taxes, business, or the criminal code. The state machinery behaves like a grandparent (protector-guardian) and continues prescribing norms and behaviors in the name of protecting its ‘independent and free’ citizens.
This has resulted in two precarious scenarios in Nepal. First is the segregation of classes: those who abide by rules and those who feel clever by ignoring them. Most people feel proud to belong to the latter category and treat the former as naïve and ‘fit for nothing.’ The second scenario concerns the state of governance or 'governability' in Nepal, which is heavily politicized and interpreted differently depending on whom you ask. Speak to people close to the government, and they will share positive stories about their performance and exaggerate what they are doing. Speak to members of the opposition or a ‘not-so-happy civil society,’ and you get the impression that everything in Nepal has gone wrong and the country may soon freefall into a dark abyss. Ordinary people are confused and have either lost confidence in themselves (to seek opportunities on their own) or in state mechanisms and have fallen prey to the vicious cycle of state-imposed prescriptions. As a result, you hear increasing complaints in the mass media like ‘the state didn’t do this or that’ but rarely hear affirmative statements like ‘this has been a great individual achievement’ or ‘let’s do it this way.’
Status of Governance and Freedom
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Against this backdrop, let us explore what global comparisons reveal about Nepal’s governance and freedom indicators before drawing conclusions about the compatibility between freedom and governance. We will also examine some recent data from within Nepal, especially from the subnational governance perspective.
The World Governance Indicators (The World Bank) show that Nepal’s ranking for governance effectiveness improved significantly after federalization (the percentile rank was below 20 in 2015 and hovered above 33 from 2020 to 2023), though it still lags behind India, Bhutan (an outlier at 68), and Sri Lanka. Nepal recorded modest improvement across all six governance dimensions between 2020 and 2023. The EIU Democracy Index (The Economist) also showed improvement between 2015 and 2020 but has since declined, leaving Nepal categorized as a hybrid state. The Human Freedom Index, published by the Cato Institute and others, shows a decline in personal freedom after 2015, while economic freedom has improved marginally. Compared to the period before the 2006 ‘People’s Movement,’ Nepal’s human freedom index has nonetheless improved significantly. The Heritage Foundation’s Economic Freedom Index declined during 2015–2016 but improved thereafter; however, Nepal remains categorized as ‘mostly unfree.’
Let’s also consider Nepal’s Transformation Index (Bertelsmann Transformation Index – BTI) from 2015 to 2024 in terms of its status index (democracy and market economy status) and governance index (governance performance). The status index was 4.7 (out of 10) in 2015 and rose to around 5.2 between 2020 and 2024. The governance index rose from 4.1 in 2015 to 4.6 in 2024. Nepal’s performance in both democracy/economic status and governance lags behind Bhutan, India, and Sri Lanka and is ahead of only Bangladesh among neighboring South Asian countries. This global data shows very little improvement in Nepal over the last decade in both governance and human or economic freedom.
Subnational Performance in Nepal
Recent ground-level data on subnational governments in Nepal paints a somewhat different picture. A 2025 survey by Social Science Baha of ‘elite perceptions (views from the subnational level)’ shows strong appreciation for federalism and satisfaction with the functioning of local governments. Marginalized groups also expressed support for provincial governments. Local governments have performed better, including in reducing corruption, due to their proximity to the people. There is broad agreement that federalism and devolution after 2015 have brought the government closer to the people. However, despite the increased role of civil society and citizen groups in local planning and decision-making, these groups’ influence has waned due to the increasing dominance of politicians and political parties in the public sphere.
Governance or Freedom: What to Choose?
The above data depicts Nepal’s mild to poor performance in governance capacity and in citizens’ freedom to enjoy their human rights or make economic decisions, despite some progress since the advent of federalism. Nepalis are less free to make their own decisions, and the government’s capacity to govern is weak. It appears that ‘the better the governance status, the better the freedom of citizens’ — and vice versa. Furthermore, the patriarchal ‘grandpa’ or guardian-state approach is failing; it fosters corruption, law-breaking habits, and ungovernability (due to both the state’s incapacity to govern and citizens’ excessive dependency on the state). Nepal is trapped in a vicious cycle of law-breaking citizens and excessively demanding laws that cannot be obeyed by ordinary people. Any efforts toward good governance, effective service delivery, or economic and human freedom cannot yield desired results under such circumstances. Nepal deserves a freer society of independent citizens who are not burdened by excessively costly laws (both human and financial) and who can exercise their human and economic freedoms to their fullest potential.
Some Suggestions
Human and economic freedom is paramount and should take precedence over governance matters. Rules should not be designed to restrain or limit citizens’ choices. Politicians and bureaucrats must stop acting as ringmasters, dictating what is good or bad for Nepal’s citizens regarding choices about education, healthcare, business, or expression on social media. All laws — whether criminal, tax-related, or social behavior laws — must respect both human and economic freedoms, whether of individuals or communities. Women’s movements and decisions — whether concerning their bodies, societal relationships, or vocations — should not be hindered by the ‘behavioral limits’ imposed by the state.
Nepal’s Constitution provides a broad range of human rights — these cannot be casually compromised in the name of welfare or a socialist state. Governments at all levels must revisit their rule-making assumptions and deregulate, scale down, or redesign legislative and executive processes to support and promote free individual and community choices. Let individuals and communities exercise their choices freely. This will cultivate more mature, self-reliant individuals and communities and transform them into accountable citizens who demand a higher level of accountability from their governments. This will, in turn, help the state and its machinery improve their performance on governance indicators. This is a realistic proposition because ‘freedom for individuals’ shares the burden of governance with the citizens while simultaneously enhancing the government’s capacity to deliver quality services efficiently and effectively.
(The author is the chairperson of Nepal Transition to Peace Institute -NTTPI.)