Nepal’s new National Natural Resources and Fiscal Commission

Nepal’s Constitutional Council recently recommended candidates to chair a number of constitutional bodies. This week, Parliamentary hearings will commence for the confirmation of each these candidates, and subsequent appointment by the President.  

Perhaps the most pivotal of these constitutional bodies for federalism’s survival and success is the National Natural Resources and Fiscal Commission (NNRFC) as it will serve as the constitutionally-mandated authority (under Section 26) forsetting guidelines for federal fiscal transfer to subnational governments, and developing formulas for distributing natural resource royalties, among others. 

NNRFC’s ability to deliver on its constitutional mandate will critically depend on the quality of data and evidence-based decision making. Globally, governments are increasingly employing evidence-based policymaking, data science, and analytics to solve policy challenges. Data analytics can help understand, simplify, and predict trends to improve public policy. 

The NNRFC is strategically positioned to adopt and deliver a risk-tested, contextual, and adaptable template of data and evidence-based policymaking that other Nepali government entities can benefit from in delivering public goods and services.

Uniform policies will not suit Nepal’s diversity which is why the NNFRC will have to deliver a nuanced and context-specific model of allocation decisions. Evidence-driven analytics will enable NNRFC to contextualise and adopt existing fiscal federalism into an implementable inter-governmental architecture. 

NNRFC’s role naturally transcends the remedying of fiscal and horizontal imbalances across the three types of government, and extends to analysing related issues of fiscal federalisation such as potential intergovernmental spillovers, fiscal mobility, and fiscal discipline. 

These tasks will need a new domain of data and accompanying analytical capability which will authorise a detailed examination of existing reality to ensure that the recommendations are not just implementable but will in fact produce the desired results for each of Nepal’s 761 governments.

Researchers have argued that public sector reform will germinate and sustain only in a space characterised by acceptance of reform by the political and bureaucratic order, an authority who champions the reform, and technical ability to absorb the reform. The NNRFC is uniquely positioned to serve as such a reform space if its broad acceptance as a mission-critical commission and the reputation of its candidate for chairperson are built upon to drive the technical ability for data and evidence-based analytics.

The magnitude of data requirement for NNRFC is unprecedented and the deficiency of such data compels the Commission to be not just a user, but also a producer of data. As a strategically-positioned adopter and champion of evidence-based policymaking in federal Nepal, the NNRFC will most likely face challenges as well as risks associated with testing new practices/technology. 

The lack of reliable data coupled with generally low levels of research and analytical literacy in government entities are major constraints in effective data-driven policy making. For example, accessing revenue and expenditure data at all levels of the government is a tremendous challenge. The secretariat of the NNRFC currently gets development data from line ministries for financial data and the Central Bureau of Statistics (CBS), but they are hard pressed to provide the data. Thus, in light of NNRFC’s constitutional mandate to determine the distribution of revenues between the federal, state and local governments, a new domain of data is needed.  

Another data challenge in Nepal is the presence of diverse data related initiatives, which are not inter-linked, triangulated and tested for internal and external validity. Government entities that own and use data remain isolated, for the most part, with weak inter-governmental data linkages. 

The NNRFC has a constitutionally-grounded basis for championing inter-governmental data consolidation and facilitating data linkages among ministries and departments across federal, provincial, and local governments. A consolidation initiative of this sort is overdue, since many subnational governments are exploring and even embarking on data-related initiatives that are unrelated and potentially incoherent for whole of government. 

Finally, the challenge of data requisitioning in government can be addressed to a great extent by a constitutional body such as the NNRFC, if the appropriate rules and regulations are enacted and practiced. India’s Finance Commission functions as a quasi-judicial body and has the powers of civil court for summoning and enforcing attendance as well as requisitioning any public record from any court or office. 

The long wait for the appointment of the NNRFC chairperson will soon be over. More importantly, this appointment should drive the NNRFC’s delivery of a constitutionally-grounded framework for fiscal transfers and royalty distribution that uses evidence generated by data science and analytics. 

The moment is here to support the NNRFC as a reform space that is strategically positioned to champion a risk-tested, contextual, and implementable model of data and evidence-based policymaking in Nepal.

Yanki Ukyab and George Varughese are associated with Niti Foundation.