Federalism's birth pangs or death rattle?

May 2017 was a milestone in Nepal’s transition from a unitary system to a federal state, but a year since locally elected representatives took office, the process of devolution to sub-national governments has been slow. New administrative requirements have created confusion over the roles and responsibilities in the three tiers of government. 

Despite this, elected local governments remain determined to govern while managing public expectations to deliver campaign commitments. How well local leaders negotiate and handle pressures of unmet expectations will impact the political ecology of this transition, either leading to a favourable outcome or running the risk of failure.

While the constitutional mandate is clear, competing roles and the absence of consistent political will have caused uncertainties to persist. Mechanisms designed to settle disputes between layers of government have not yet been fully utilised, leaving room for bitter contestation. 

The continuation of this policy and structural vacuum means that chief ministers, mayors and ward chiefs use decentralisation to negotiate for more power, while lacking knowledge and capacity to govern effectively.

Conversely, the exercise of legislative powers at the sub-national level has led to a backlash, delimiting the actual authority given to local governments. The series of federal directives sent to elected local governments discouraging drafting of local legislation is proof of this.

Meanwhile, priorities and needs have begun to expand and multiply, signaling an end to the honeymoon period for elected representatives. Local governments are now under increasing pressure to administer their responsibilities and provide essential services to constituents. 

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Trial and error democracy, Om Astha Rai

Coalitions within local executives have fostered democratic practices in local governments in some areas. In others, conflict and collusion have plagued the system, chipping away at the quality of service delivery. There are conflicts of interest, nepotism, arbitrary decision-making and misappropriations of grants. There is an ongoing struggle to exercise autonomy as local governments attempt to establish new lines of power. 

A clear example is the recent controversy over the tax increase by provincial and local governments, which want to assert their powers defined in Schedule 8 of the Constitution to raise revenue. With the current budget allocations insufficient to meet the mandate to govern, elected representatives are looking to other avenues. 

The taxes have created an uproar in the private sector, however, which is concerned about double taxation and misuse of power. Tax hikes ultimately affect the public, which has to bear the additional costs of goods and services. Although the Federal Parliament has directed the government to look into tax increases, the National Natural Resources Fiscal Commission (NNRFC) is yet to be formally established. 

Nonetheless, Nepal’s first federal budget 2018-2019, presented in May, represents a significant departure in budgeting and planning processes carried out under the previous unitary system. This important policy instrument illustrates priorities of the elected government and the decisions taken to fulfill constitutional responsibilities. 

More importantly, it now includes resource allocations to sub-national governments. For the first time, local assemblies took part in the formulation of budgeting and planning needs. 

Other important markers of progress include the completion of the Organisation & Management (O&M) Survey to recommend the necessary requirements of Federal and Provincial government civil service needs. The O&M survey for local governments is ongoing and once finished, it will establish organisation structures and staffing needs for local governments not yet fully functional. However, to what extent this will restructure the bureaucracy to adopt a bottom-up approach to service the three-tiered federation remains to be seen. 

Read also: Devolution Revolution, Editorial

Federalism in jeopardy, Iain Payne and Binayak Basnyat

The merger of the UCPN and UML marked a significant milestone in political restructuring and consolidation of power across three levels of government. The realignment of political positions and interests signals a shift towards adaptation to a new architecture of a federal republic. Despite this, the current structure still exhibits and reinforces a patronage culture reminiscent of a unitary state. 

While a strong national majority government does provide significant benefits in terms of stability and decision-making power, the results of devolution will depend on the transformation of political parties. Institutional growth and reform are a prerequisite if there is to be a departure from the traditional decentralisation of the 1990s. This is critical to re-engineer accountability channels that were previously centralised and hierarchical.

Elected representatives heading judicial committees are trying to meet the high expectations of their constituents on one hand, while navigating the complexities of deciding on a just result amid competing economic, social, political and legal forces on the other. This raises fears that the poor and marginalised will continue to be ostracised, politicisation and corruption will continue to persist, and access to justice will continue to be difficult. 

Having an elected representation in a federal system after two decades is a real opportunity to deepen and institutionalise democratic practice in the 753 local governments. Institutional arrangements between the multi-tiered forms of government will determine the relationships, which will have to endure as power struggles define the boundaries of shared rule and self-rule. State and non-state actors, which have little history of cooperation, and who are suspicious of each other, must forge new ways of working together. 

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Devolution without federalism, David Seddon

Shre rule and self rule, George Varghese

Ashray Pande and Namit Wagley are Program Officers at the Asia Foundation in Kathmandu.

The views and opinions expressed here are those of the authors and not those of The Asia Foundation or its funders.