Nepal – Failed federalism


Note the situation in Nepal is more or less the same as in South Africa…   There are two characteristics of a failed state. The first is that the government cannot project authority over the people and the territory. The second is that it is unable to protect its boundaries. In other words, the government structure is completely unsuccessful. The government of a failed state is unable to control its people or resources, and there are very few – if any – public services available.    There are many reasons why a state would fail. A predatory and corrupt government is one major reason. Other reasons include civil wars, genocide, and ethnic violence. A failed state can’t implement public policies, infrastructure is not effectively built, and civil liberties and human rights are unprotected. There is no physical security for a failed state’s residents, and there is no stable political or economic systems in place.
Nepal: Failing Federalism

 Prof. Durga D. Poudel, USA: On August 2, 2009, I published an article entitled “Federalism in Nepal: Issues and Concerns” in one of the online portals in Nepal, stressing a need for a thorough discussion on advantages and disadvantages of federalism before adopting it in the country.


Nearly after 10 years of the publication “Federalism in Nepal: Issues and Concerns”, and more than one year of implementation of federalism in Nepal, issues and concerns raised on federalized governance about 10 years ago have become more relevant and even more pressing.

There are widespread reporting of cases of malpractices, corruption, misuse of resources, encroachment of public lands, illegal logging, bribes, killings, rapes, human trafficking, over-extraction of natural resources, and social disorder in the country. Corruption and briberies have become so rampant that even the Chief of the Commission for the Investigation of Abuse of Authority has been caught red-handed recently receiving 78 lakh rupees bribe. Corruption scandals like wide body airbus, 33 Kg gold, Swiss bank deposits, and various construction companies’ ruthless cheating of the nation constitute recent media highlights in Nepal.

Government expenditures for the purchase of 1,600 vehicles, salaries and allowances for elected officials under federal system, and expenses on office buildings and spaces specially provincial and local governments include just some of the expanded governmental expenses due to federalism in the country. In this context, there are many questions in relation to federalism that Nepalese society is seeking urgent answers. Some of these questions include, how justifiable is this enormous expansion of government size and related expenses for a country that is increasingly experiencing trade deficit, unemployment, declining agricultural productivity, and rising public debt? How would federalism address natural resources conservation, development, and utilization issues that crosscut political boundaries?

How would provincial and local governments build their capacities for planning and development? How would you control corruption, which is already so rampant and massive in every sector of the society including political, governance, judiciary, security, and private sector, by expanding administrative structure further to provincial and local levels under federalism?

How would you ensure fast-paced economic development, good governance, social justice, and socio-economic transformation of Nepalese society? Federalized administrative structure also requires high level of capacity-building at the local, provincial, and national level for coordinated planning and development, policy decision-making; project formulation, implementation, and monitoring and evaluation; and for overall development of the nation. In the absence of appropriate capacity-building, enforcement of strict anti-corruption measures, and the availability of necessary financial and technical resources, ominous signs are already visible in the society that federalism is resulting in more corruption, misuse of resources, poverty, and social unrest.

Lately, public frustration on federalism is increasingly surfacing through various media, public sentiments, and political statements. Major factors responsible for failing federalism in Nepal include excessively high cost of governance, lack of capacity-building, massive corruption, implementation failure of developmental projects, lack of coordination of governmental activities, federalism-imposed tax burden on public, and, more importantly, implementation of federalism without thorough discussion about its relevancy in Nepal.

Last but not the least, Nepal Finance Ministry had estimated an initial cost of Rs. 800 Arab for the development of basic infrastructure to start federalism in Nepal, while World Bank estimates 3-4% of Nepal’s GDP per year, which comes to be another Rs. 400 Arab, for next four years for transitioning into federalism.

In 2017/2018 Fiscal Year, Nepal Government appropriated Rs. 225 Arab to Provincial and Local Governments and Rs. 150 Arab was transferred. However, the sub-national governments were able to spend less than half of the allocated funds. Thus, there exists a twin problem of finding large amount of funds to meet the expenses of federalism and meanwhile developing efficiency that is necessary for productive spending of the money. Obviously, most expenses of federalism must have to come from people’s pockets. This simply proves that federalism is too costly for Nepal.

Prof Durga D. Paudel

Nepal: Failing Federalism



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