These are the forgotten Nepalis, who do not seem to matter to anyone in all three levels of government. Elected members of ward, municipal or provincial councils should be listening to them, but they do not.&nbsp;
The demand for federalism was first raised from these districts which were always treated as peripheral by Kathmandu. Yet, even after the provinces were carved out in 2015 to devolve decision-making, these families on the margins still do not count.&nbsp;
They are not powerless, they were never given any power. They are not voiceless, they are not allowed a voice.
The state does not need to move mountains to meet their needs. Their needs are simple: make the citizenship process easier, provide a hand pump in the village for safe drinking water, make sure the health post has a nurse, protect them from persecution from powerful castes.
Read also: <a href="https://www.nepalitimes.com/opinion/borderlines/fogbound-tarai">Fogbound Tarai</a>, Chandra Kishore
But the gap between Nepalis who have access to state services and those left out is widening. Grassroots democracy under federalism has not changed the fortunes of those at the grassroots. A new class of politicians is emerging who are riding identity-based provincial politics, but they have no time for the corner people who elected them.
The state’s legitimacy should stem from how much the perennially outcast, landless or Dalits are allowed to voice their concerns. Eight years after the Constitution, and two elections later, there has been no improvement in the condition of Nepal’s most underserved.
The problem of landless Dalits in the Tarai is different from others from this community in Nepal. Families are crammed inside mud and thatch huts come winter, summer or monsoon.
I ask them if the ward or municipality leaders they elected have ever visited, and they shake their heads. Provincial politics is just a proxy for Kathmandu’s bloated centralised system.
Read also: <a href="https://www.nepalitimes.com/banner/feudal-federalism/">Feudal federalism</a>, Editorial
In these backwaters of the Tarai, political power comes out of the claws of excavators mining sand from rivers. Power is flaunted by hobnobbing with imported godmen, by ignoring the victims of loan sharks, or neglecting the neglected.
The Constitution guarantees freedom of expression. But that freedom means nothing to people not given the means to express themselves. Grassroots democracy was supposed to be the mechanism for them to be heard, but that channel has been muted by power brokers.
Local radio stations and media should have stepped in, but they are victims of self-censorship themselves. Media owners are hand in glove with the powers that they cannot hold to account. The social media sphere is too preoccupied with sharing selfies.
The local media should be the medium to amplify the concerns of excluded castes and classes, and be the solution. But it is a part of the problem. Local journalists are megaphones for the already rich and powerful, they have no time for those at ground zero.
Read also:<a href="https://www.nepalitimes.com/opinion/borderlines/un-centralising-the-federal-structure"> Un-centralising the federal structure</a>, Chandra Kishore
These are families so deprived and abandoned they do not even have the resources or connections to march to Kathmandu to press their demands. Small people have small wants, but multiply these with the expectation of millions and it becomes a wildfire of outrage that can engulf those in the ivory towers.
A recent visit to the hinterlands of Madhes Province was a chance for me to hear about local governments engaged in local plunder. In paddy fields and roadside shacks, there was talk of corruption, extortion and a sense of abandonment. These districts in the plains used to be ignored by Kathmandu, now they are ignored by the local officials they themselves elected.&nbsp;
The movers and shakers of the Madhes regard genuine empowerment at the grassroots with suspicion, afraid that freedom will allow the anger to erupt one day.
And to distract public attention from this failure to address the needs of the neediest, politicians use aggressive intolerance and refuse to even acknowledge that the people they were elected to serve do exist. &nbsp;
Read also: <a href="https://archive.nepalitimes.com/regular-columns/Analysis/how-decentralised-is-federalism,776">How decentralised is federalism?</a>, Kiran Nepal 
 
<a href="https://twitter.com/Kishore_chandra">Chandra Kishore</a> is a Birganj-based commentator who writes this monthly column Borderlines for Nepali Times.

Chandra Kishore

original

674x448

610x380

500x500

400x266

400x240

400x203

301x200

1250x600

1084x550

The outcasts

Swiss Ambassador <a href="https://www.nepalitimes.com/editorial/remit-for-remittances">Elisabeth von Capeller Oswald</a> has been in Nepal for over a decade and in that time, has seen the country undergo significant political and socio-economic change in real time. Von Capeller first came to Nepal in 2007 with the Swiss Agency for Development and Cooperation (SDC). She then served as Head of the South Asia Division of SDC in 2011, and was appointed the Ambassador to Nepal in January 2018.
Von Capeller is finishing her tenure in Nepal and will be leaving the Swiss Foreign Service. She spoke to Nepali Times about her experience here and Switzerland’s changing focus in Nepal’s development over the decades. Excerpts:&nbsp;
Nepali Times: What are some of the lasting impressions of Nepal that you will take back with you?
Elisabeth von Capeller: I have seen a country which has changed very fast in recent years, from a closed, rural society to an urban, global society. I have also seen Nepal go through many ups and downs, including being hit by many crises. But it also overcame them, which goes on to show a certain strength of the people. We have also seen the women, they have changed the most. They are so positive, their body language is so different than 10 years ago, and they are much more present in the public sphere and private sectors.
Yet there are many more changes Nepal needs to address, social injustice is still very much prevalent. Also, one thing that worries me is the rapid environmental destruction, and I hope there will be more sensitivity towards nature because Nepal is destroying essentially its wealth, beauty and future potential.
Switzerland has had a 70-year history of development cooperation with Nepal. How has the nature of Swiss assistance changed in that time?
I believe we have always been a consistent partner that Nepal could rely on. We started with technical assistance but during the insurgency, we got involved in service delivery because the state was not present. Also during the insurgency, we came up with a diplomatic instrument to accomplish the peace accord. After the peace agreement, we helped Nepal with the implementation of the new Constitution. We have always been able to adapt as per the context and situation. Nowadays, local and provincial levels are carrying out service delivery, and we support them as well as the federal level in the building of the institution.
What are some of the lessons Nepal could learn from Switzerland, another landlocked country surrounded by bigger neighbours?
When you are in this field, you always have areas where you are not satisfied, you also have failures. But what we have done is always try to adapt our programs relevant to the political as well as economic context. We have had technical solutions to political problems but we also need political solutions to political problems. As you know, development cooperation, even more humanitarian ones, are political. Our concern has always been that we do no harm which is why we always did a good analysis of the political context and reflected on what and how we did it.&nbsp;
<div class="embed-block"><div><div style="left: 0; width: 100%; height: 0; position: relative; padding-bottom: 56.25%;"><iframe src="//cdn.iframe.ly/api/iframe?url=https%3A%2F%2Fwww.youtube.com%2Fembed%2FyRPQ75WDw38&key=87ca3314a9fa775b5c3a7726100694b0" style="top: 0; left: 0; width: 100%; height: 100%; position: absolute; border: 0;" allowfullscreen scrolling="no" allow="accelerometer *; clipboard-write *; encrypted-media *; gyroscope *; picture-in-picture *; web-share *;"></iframe></div></div></div>
Many Nepalis are now questioning if it can deliver true devolution through federalism. What are some of Switzerland’s experience in making federalism work?
The Constitution is a result of the peace process and Nepalis should be proud of it. There used to be districts with district offices but they were not working. There was also huge exclusion, development took place just around Kathmandu which meant the majority of the population was not included. These are the very reasons why the former model was questioned. And I strongly believe that in the short seven years, federalism is already showing results, especially at the local levels.
But what we have now is a dangerous narrative, a very Kathmandu centric elite-driven discourse. People have forgotten how it was, many of them have never been in districts, they don’t know what service delivery was like in there. I also believe that Nepal has not even started to implement the Constitution, important laws have not been passed like the Civil Service Act without which the local levels cannot fulfil their mandate. Province governments are criticised when they are the victims of the politics at the centre.
Nepal has a good Constitution and there is a reason why the new model was chosen. Please give this model a try, pass the much needed acts in order for this system to work. And the Constitution is a living document, you can change it, adapt it but this country cannot afford to have a total new change. I recommend people to go to Humla, Rolpa, Madhes, talk with people there, and see how federalism has changed their lives.
We knew from the beginning that it would be a bumpy road for the next 15 years. We need three cycles of elections at the very least, we have to give it some time. But while certain things can be given more time, important acts which will allow the mandate given to the local and provincial levels to be fulfilled, need to be passed. We blame provinces, we say they are unable to do the job, but the truth is they haven’t been enabled. I think the media is also very important to bring out a good narrative. It is easy nowadays to bash, but not so easy to construct.
We believe you are leaving the Swiss Foreign Service. Where does the Nepal experience fit in your career? &nbsp;
For me Nepal was the height of my career. I have seen where Switzerland could really make a contribution in Nepal, be it in the forest sector, technical and vocational education, building trail and motor bridges, or the peace process. Even now, we are very much engaged in helping Nepal address the Transitional Justice Bill. And I have decided not to go for the next post because I don’t want to have something less of what I had here.
So I’ve decided to stop here and look for other sectors where I think I will be useful. But having said that, all the experiences I had here including the wonderful exchanges, the people I met as well as the challenges and chaos, they will accompany me in my next journey. I am really grateful for and proud of my time here. We have a wonderful team. All of this goes on to show that people matter. And as long as there are wonderful people, I am positive and optimistic.
Read also: <a href="https://www.nepalitimes.com/here-now/it-is-now-or-never-to-devolve-power-to-local-governments">“It is now or never to devolve power to local governments”</a>

"Give federalism a real chance"

<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20230208140216/63e3a0b79c7e80680e0d704djpeg.jpg" alt="" width="1400" height="807"/>Nepal’s 2015 Constitution took two elections and more than a decade to write. Even then, it did not address a groundswell of identity consciousness and demands for autonomy.Some of these were overlapping claims for ethnic, linguistic, religious, cultural and geographical belonging. During this sometimes-volatile process, the one factor that moderated the discord was the move towards inclusivity.There is a Maithili saying in Nepal’s plains “चले थे हरि भजन को, ओटन लागे कपास”. It means ‘No matter how lofty your goals, keep yourself busy with the small details.’Eight years after the Constitution was promulgated, and after the second elections under the federal system, we are still trying to make federalism work. It is a work-in-progress.It is not enough for Nepal to be declared a ‘federal’ republic. The essence of federalism is to include Nepalis who have historically been excluded in the political process. The people want devolution that grants their province autonomy to make their own decisions.Read also: <a href="https://archive.nepalitimes.com/regular-columns/Analysis/how-decentralised-is-federalism,776">How decentralised is federalism?</a> Kiran NepalYet, even after the November 2022 elections in which a sizeable section of the electorate cast protest votes against established parties — and despite affirmative action provisions in the Constitution — provincial governments are anything but inclusive. All seven provinces recently nominated Chief Ministers, but where are the women? Where are the Dalits and the Indigenous people?The movers and shakers in the provinces already have access to the corridors of power at party headquarters in Kathmandu. It is the people at ground level, those kept out, and those without connections who want grassroots government.The process of putting together provincial governments directly reflects the wheeling dealing and patronage at the centre. This means governance will once more be a challenge, and without it there is no hope for the neglected and left-behind.It is not just the Madhes that needs federalism. Having an autonomous local government brings representatives closer to the people — no matter which province. Party cadre also get to practice the exercise of power and show accountability.Read also: <a href="https://www.nepalitimes.com/banner/feudal-federalism/">Feudal federalism</a>, EditorialBut by far the most important function of federalism is that it is effective in delivering appropriate and locally relevant development with accountability.But November’s election threw up people’s representatives who do not like federalism, and some who want to abolish it. One cannot just turn federalism on or off with the flick of a switch. It does not work like that.The exclusionists reject principles and ideas of devolving decision-making to local governments, and want a shortcut to political power for themselves and their cabal by trying to make a self-fulfilling prophecy that federalism is an expensive white elephant.Rejecting devolution is rejecting democracy. After all, democracy is not just a state governing mechanism, it is a social ideology, even a philosophy of national life.The Constitution has tried to put the country on track to true devolution to provinces, but dog-eat-dog politics has been derailing this exercise.Read also: <a href="http://archive.nepalitimes.com/news.php?id=13361#.Y8yt4-xByrc">Ethnicity-based federalism?</a> Keshab Suryabansi MagarThis week is the anniversary of the Madhes Movement that allowed Nepal to move towards federalism. The second Movement was mediated by India, and in the third, it started showing who is boss.Indeed, India’s role in Nepal’s political evolution is hardly hidden. But lately, one sees a drop in interest in Madhesi sentiments not just in New Delhi but even in Patna or Lucknow.Recent political undercurrents are eroding the gains of the Madhes Movement. The relationship between Madhesi leaders and their electorate is being eroded fast, and unless there is new commitment to the cause, it could see a complete reversal.That is because there is now no relation between what is promised at election time and what is accomplished. An anti-incumbent wave is also sweeping the plains. Those who espoused extremist views, took up arms, or were separatists have decided that a middle political path is a better alternative.Those who used to be moderates have therefore had the rug pulled from under them. There is now only one kind of politics in the Tarai: one that reflects the interests and aspirations of citizens.Read  also: <a href="https://www.nepalitimes.com/opinion/safety-valve-politics/">Safety valve politics</a>, Chandra KishoreConservative forces are trying their best to roll back the gains of the Movement, and within the Madhes the big national parties are also elbowing their way into the fray. Both will ultimately undermine the Madhes agenda.What the Madhes wants is respect for its language and culture, genuine inclusiveness, sustainable development, streamlined access to state services. But the comforts of power have made Madhesi politicians status quo-ists, they are wallowing in the political muck of their own creation.In the coming decade, Madhesi politics is set to change. A new post-1990 generation is coming of age which has seen both struggle, and its futility. The new generation is aware of the factors keeping the region back, it has understood the geography of Nepal and the place of the plains in it.This new generation has a very clear idea about the political-economy of the borderlands. Their slogans are different, and so is the way they look at politics.The Nepali nation state is now at the crossroads. It cannot look back, it must forge a more progressive path ahead. For that, friends of federalism must work to make the provincial political structure deliver. And the pre-requisites are inclusiveness and good governance.Chandra Kishore is a Birganj-based political commentator. This is his second monthly column BORDERLINES in Nepali Times.  @kishore_chandra

Un-centralising the federal structure

Feudalism noun /ˈfyudlˌɪzəm/
A social system in which people were given land and protection by a nobleman, and had to work and fight for him in return.
Federalism noun /ˈfedərəlɪzəm/
A system of government in which the individual states of a country have control over their own affairs, but are controlled by a central government for national decisions.
Nepal’s 2015 Constitution was the by-product of two constituent assemblies over nine long years of bitter negotiations. As this newspaper <a href="http://archive.nepalitimes.com/news.php?id=15383#.Y4PMrC9w2Lc" target="_blank">reported blow-by-blow</a> at the time, there was prolonged deadlock over the style of federalism that delayed passage of the Constitution.
Having a constituent assembly election was part of the package that was agreed upon in the Comprehensive Peace Accord of 2006. Federalism was to be the antidote to feudalism.
This was not an unreasonable demand, although whether the country had to go to war to achieve it was debatable even back then. Nepal had been a feudal state under the absolute monarchy of the Shah and Rana dynasties.
When B P Koirala, as Nepal’s first democratically-elected prime minister, tried to institute land reform and dismantle vestiges of feudalism, he was deposed and imprisoned by King Mahendra in 1960.
The partyless Panchayat system for the next 30 years perpetuated feudalism, with the palace ruling by parcelling out favours in return for unquestioned loyalty to royalty.
The 1990 People’s Movement and the advent of a constitutional monarchy and restoration of multi-party democracy was supposed to change all that. But feudalism was not so easy to uproot — it continued within political parties, even as Singha Darbar replaced Narayanhiti as the centre of power.
When the Maoists launched their armed struggle in 1996, it was ostensibly to demolish feudalism once and for all and replace it with a dictatorship of the proletariat. The feudocracy was not going to hand over power willingly, they reasoned, which was why violence was needed to counter the structural violence of the state.
When the war got mired in a military stalemate after 10 years, the Maoists needed a face-saving achievement to show. Devolving Kathmandu’s &nbsp;centralised power through federalism was one of them.
But the Maoists insisted on an <a href="http://archive.nepalitimes.com/news.php?id=13361#.Y4PN5y9w2Lc" target="_blank">ethnicity-based model</a> of federalism with <a href="http://archive.nepalitimes.com/news.php?id=16674#.Y4PRBS9w2Lc" target="_blank">at least 14 provinces</a> named after Nepal’s <a href="http://archive.nepalitimes.com/news.php?id=15669#.Y4PPBi9w2Lc" target="_blank">various racial groups</a>. The Nepali Congress batted for a <a href="https://archive.nepalitimes.com/regular-columns/As-It-Happens/bring-Madhes-Tharus-Janajati-on-board-and-be-done-with-it,548" target="_blank">territorial form</a> of federalism not much different from the Development Zones of the day, while the UML backed a hybrid model.
One of the ethnicity-based province demands was the case for ‘<a href="http://archive.nepalitimes.com/news.php?id=15775#.Y4PQlC9w2Lc" target="_blank">One Madhes One Pradesh</a>’ to address the long-standing struggle of the Nepal Tarai for autonomy and respect from the state. This was a demand backed at one point by India, but fiercely resisted by the dominant parties in Kathmandu.
In the end, the Constitution was hurriedly promulgated after the earthquake in July 2015 that had a truncated Madhes province in the eastern Tarai. Even the naming of the seven provinces was so contentious that they only had numbers. New Delhi was not happy and punished Nepal with a 6-month blockade.
The first elections under the new Constitution for three tiers of government were held in 2017. The idea sounded great: power would be devolved from Kathmandu to provincial assemblies and local municipalities with the central government only acting as a facilitator and handling national needs like infrastructure.
But practice was far removed from theory. Provincial governments became proxies of Kathmandu, provincial assemblies were franchises of the main political parties. The bureaucracy and politicians at the centre were reluctant to yield political decision-making, <a href="https://archive.nepalitimes.com/regular-columns/guest-editorial/federalism-jeopardy,981" target="_blank">revenue collection</a> and control of police to provincial governments.
The provinces just became a mechanism for the centre to dispense jobs and patronage. The high cost of maintaining seven provincial governments and assemblies was a waste, and corruption got decentralised as well.
Except for Madhes-based parties and those in the provinces who benefit from patronage, there is not much public support for federalism. Public opinion appears to support the idea that it is an expendable and <a href="https://www.nepalitimes.com/editorial/feudalism-to-federalism/" target="_blank">costly second tier of government.</a>
On 20 November, Kathmandu mayor Balen Shah pointedly refused to cast his provincial ballots. The Independent Party’s Rabi Lamichhane did not either, and his party did not even field candidates for provincial assemblies.
However, the problem is not with federalism. It has become an ‘F’ word because it was never allowed to function as designed. And in that respect, Nepal is still a feudal state.

Feudal federalism

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101144/63720df99c7e80680e0b78efjpeg.jpg" alt="" width="960" height="640"/><figcaption>Illustration: RABINDRA</figcaption></figure>Over the past 30 years since the first People’s Movement, we have seen that things start moving in Nepal when local governments are empowered. Devolution to village and district development councils in the 1990s forced local leaders to be accountable, especially in service delivery.In fact, everything that has worked well in Nepal till now has the word ‘community’ in it: community radio, community forests, community women’s groups, community-managed schools and hospitals, community irrigation systems.Unfortunately, political intrigue, the Maoist conflict and a return to an authoritarian monarchy meant that there were no local government elections for 20 years till 2017. Their five year tenure is now coming to an end, and the <a href="https://www.nepalitimes.com/editorial/polls-in-the-time-of-pandemic/" target="_blank" rel="noopener noreferrer">second local elections under the federal system</a> are being held on 13 May in 460 rural municipalities, 260 municipalities, 11 sub-metropolitan cities and six metropolitan cities. Candidates are already on the <a href="https://www.nepalitimes.com/editorial/battle-lines-drawn-for-nepal-elections/" target="_blank" rel="noopener noreferrer">campaign trail</a>, and for many this is a chance to prove through performance that they deserve a second term.These new mayors and ward chairs were guinea pigs. They not only had to make up for lost time but also deal with a complex maze of new overlapping regulations and jurisdictions. There was confusion galore on budget, revenue, civil service appointments.Despite having swept the 2017 elections, bitter political strife within the ruling Nepal Communist Party<a href="https://www.nepalitimes.com/latest/nepals-post-breakup-politics/" target="_blank" rel="noopener noreferrer"> led to its fragmentation</a> into the UML, Maoist Centre and Unified Socialists last year. The stranglehold of political parties over the federal structure also meant that corruption and infighting got decentralised as well.All this gave the ‘F’ word such a bad name that the alternative Bibeksheel Sajha Party in its manifesto even calls for scrapping federalism altogether. Much of this negative public perception is fed by cynical Kathmandu-centric analysts and commentators.The reality is different. An evaluation by the National Natural Resource and Fiscal Commission (NNRFC) has given nearly all 753 municipalities above pass marks. In fact, the top three that scored more than 75 out of 100 points in the survey are all rural municipalities. Public opinion polls have shown that most respondents are happy with the functioning of local governments, especially in rural areas.Read also: <a href="https://www.nepalitimes.com/banner/nepals-local-election-gives-power-back-to-people/" target="_blank" rel="noopener noreferrer">Nepal's local election gives power back to people</a>, Rabin GiriTo be sure, many municipalities have been captured by corrupt contractors who got themselves elected in 2017. They rented out their own excavators to their municipalities, and awarded themselves road contracts.This does not mean, however, that we should throw out the <a href="https://www.nepalitimes.com/opinion/federalism-rule-of-law-and-the-judiciary/" target="_blank" rel="noopener noreferrer">federalism </a>baby with the bathwater.Kathmandu’s Ward 14 is a model for how elected officials at the sub-municipal level should perform. Ward chair Sobha Sapkota has transformed her constituency by coordinating between various federal ministries, central-level agencies and Kathmandu Metropolitan City to sort out traffic, upgrade roads, and ensure water distribution.Sapkota had noticed how women had to wait hours for water every morning and made improving supply a priority. She has proven why it is important to have women heading local governments, and brings a whole new perspective to service delivery.In Bhaktapur, Mayor Sunil Prajapati set an example for other municipalities about how to serve a city’s citizens. He set a firm priority on quality education from pre-school to university, made basic health care affordable and door-to-door saving many lives during the pandemic. He rejected a €10 million German grant for post earthquake reconstruction of monuments because of too many strings attached, and restored 118 temples with local resources.“Despite confusion and duplication we have seen that federalism has allowed true devolution of governance and service delivery,” says Balananda Poudel, Chair of the NNRFC. “In 2017, local governments had to start from zero and learnt as they went along.”The past five years have also thrown up design defects in the decentralisation project. Instead of devolution some places have directed democracy with faux-federalism. It is not just Singha Darbar in Kathmandu that sets budgets and earmarked outlays for provincial and municipal governments, but a handful of men in the headquarters of political parties. These vestiges of feudalism <a href="https://archive.nepalitimes.com/regular-columns/Analysis/how-decentralised-is-federalism,776" target="_blank" rel="noopener noreferrer">co-exist with federalism</a>.Although we say there are three levels of government in the current system, there is actually a fourth: the district administration. Staffed by <a href="https://www.nepalitimes.com/latest/including-the-excluded-in-the-bureaucracy/" target="_blank" rel="noopener noreferrer">centrally-appointed bureaucrats</a>, it is Kathmandu’s ears and eyes on the ground. It controls vital services like citizenship and passport issuance, and other registrations – functions that can easily be done by a department of municipalities or provinces.District demarcations, district administrations and CDOs are obsolete and redundant. They do not align with the values of devolution and could be done away with to free us of the centralised mindset of the past.Read also: <a href="https://www.nepalitimes.com/banner/power-to-the-periphery/">Power to the periphery</a>, Sonia Awale

Feudalism to Federalism

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101116/637208209c7e80680e0b54cejpeg.jpg" alt="" width="1500" height="1119"/><figcaption>Takam village (above) in Dhaulagiri Municipality is a model for how federalism should function. Photos: JOY STEPHENS</figcaption></figure>Bal Bir Biswakarma from the village of Lulang at the lap of Mt Dhaulagiri in Central Nepal is a 68-year-old subsistence farmer, descendants of metal smiths who settled here centuries ago to smelt copper ore.When the copper ran out, he became a high altitude porter, summiting Mt Lhotse and even rock climbing in Wyoming in the United States. But, as Joy Stephens <a href="https://www.nepalitimes.com/banner/the-clouds-are-lifting-below-dhaulagiri/" target="_blank" rel="noopener noreferrer">writes in her travelogue</a> most of his life Bal Bir Biswakarma has been living hand-to-mouth in this Dalit village high up in the mountains.Since 2017, Lulang is a part of Dhaulagiri Municipality and elected Thamsara Pun as mayor who took the revolutionary step of moving the headquarter from the traditional power centre of Takam to Muna village to make it better accessible to the region’s indigenous and Dalit populations.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101116/637208239c7e80680e0b54cfjpeg.jpg" alt="" width="640" height="792"><figcaption> </figcaption></figure>In the past five years, villagers have begun to see improvements in healthcare, education and jobs, thanks to political devolution gained through Nepal’s new federal structure. Pun is <a href="https://www.nepalitimes.com/here-now/all-politics-is-local/" target="_blank" rel="noopener noreferrer">looking forward to fast-tracked local elections</a> on 18 May, and the chance to serve five more years.This is what federalism means in practice: giving voice to the voiceless, letting under-served communities take charge so they can better take care of themselves. Dhaulagiri Municipality is also a reminder to the squabbling political class in faraway Kathmandu, some of whom have prematurely declared federalism dead without even letting it prove its worth.Excitement about <a href="https://www.nepalitimes.com/editorial/think-nationally-vote-locally/" target="_blank" rel="noopener noreferrer">local elections</a> is already palpable across rural Nepal, but a cynical and pessimistic political class in the national capital does not want to let go of power and resources. In fact, despite a federal Constitution, political decision-making is more centralised than ever before.While the rights of <a href="https://www.nepalitimes.com/editorial/polls-in-the-time-of-pandemic/" target="_blank" rel="noopener noreferrer">local governments</a> are enshrined in the Constitution, it is not followed in the spirit with access to resources for them to actually perform.“Federalism is the sum total of everything we Nepalis have gone through, from various governing structures to the Maoist conflict, the Madhes Movement and everything in between,” explains Khimlal Devkota, recently elected to the National Assembly.“Federalism stands for stability, development and devolution and we had high expectations, expecting quick results,” he adds. “In some ways we have succeeded, people don’t have to rely on Kathmandu for everything. But the centre is still involved in everything from hydropower plants to erecting view towers.”The 2015 Constitution <a href="http://archive.nepalitimes.com/article/nation/trial-error-democracy,3713" target="_blank" rel="noopener noreferrer">devolved rights to local and sub-national governments</a>, but the necessary laws were not in place until after elections. This meant a confusing transition regarding jurisdiction which threatened to undermine past gains in areas like community forestry, public health and education.“Coordination between the governments, vertical and horizontal, is a pillar of federalism and so is functional demarcation,” says Balananda Paudel who headed the Local Bodies Restructuring Commission. “Our laws are riddled with lack of clarity in some places and elsewhere there is a problem of overlapping functions for different levels of government.”This results in a perpetual blame-game between different levels of government, and a lack of accountability. <a href="https://www.nepalitimes.com/editorial/the-f-word/" target="_blank" rel="noopener noreferrer">Federalism</a>, therefore, is still work in progress and this year’s series of elections will hopefully result in greater devolution.One of the reasons federalism got a bad name is that in the past years, it also decentralised corruption. Of the 753 local governments, one-third have elected chairs and mayors who are contractors and have awarded themselves <a href="https://www.nepalitimes.com/banner/hiding-their-head-in-the-sand/" target="_blank" rel="noopener noreferrer">sand-mining</a>, road-building and quarrying  contracts.Which is why upcoming local elections are even more important -- to reward elected municipal governments who have worked for the people with another five-year term and reject those who did not.This might also be a time to question the purpose of retaining a parallel power structure composed of the District Administrations and the Chief District Officers. Its job of issuing citizenship papers and passports allows this unelected office of centralised bureaucrats to wield extraordinary power over ordinary people.Federalism has also multiplied central-level politics by seven. Bagmati Province recently set a new record with 70 mini-ministries in Hetauda to allow the coalition to keep power. Much of the last five years were wasted in <a href="http://archive.nepalitimes.com/article/editorial/The-f-word-again,1426" target="_blank" rel="noopener noreferrer">endless debates about demarcation</a> of provincial boundaries and designating capitals. It took four years for Madhes Province to get its name, and Province 1 is still just a number.“We have made some headway in formulating laws and regulations, now we must bring it into practice, improving staffing for service delivery at local levels and promoting better coordination between and within levels by activating intergovernmental relations,” says Balananda Paudel.Just as democracy is only as effective as politicians, <a href="https://www.nepalitimes.com/opinion/federalism-rule-of-law-and-the-judiciary/" target="_blank" rel="noopener noreferrer">federalism</a> too will only function if it follows the true spirit of devolution of power and resources to the periphery. It needs political will at the centre to provide technical and financial support – something we have not seen in the last five years.Says Khimlal Devkota: “Citizens should be placed at the centre of all decision making. This can be done only by nurturing and strengthening federal practice.”

Sonia Awale

Power to the periphery

<figure><img width="1400" height="1051" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111410118/637205959c7e80680e0b28c5jpeg.jpg" alt=""/><figcaption>Photo: BIKRAM RAI/NEPALI TIMES</figcaption></figure>When the second wave hit Nepal in May 2021, <a href="https://www.nepalitimes.com/here-now/helping-nepalis-breathe-again/" target="_blank" rel="noopener noreferrer">city hospitals ran out of ICU beds and oxygen</a>, and politicians in Kathmandu appeared helpless, local governments across Nepal sprang into action.In Helambu, village chair <a href="https://www.nepalitimes.com/latest/rural-nepal-fights-back-covid-19/" target="_blank" rel="noopener noreferrer">Nima Galgen Sherpa</a> set up action teams in each ward to go house-to-house looking for people with symptoms. They were tested on the spot and told to isolate or quarantine. This strategy did not burden overwhelmed hospitals, and helped contain the contagion. Chair Laxmi Pandey and vice-chair Kopila Malla of <a href="https://www.nepalitimes.com/latest/women-leaders-set-example-for-rest-of-nepal/" target="_blank" rel="noopener noreferrer">Hupsekot of Nawalparasi district</a> worked together to trace, test, and treat Covid-19. Ever since they were elected in 2017, these two women leaders, despite belonging to different political parties, have set a new benchmark for education, agriculture and nature conservation in rural Nepal. Dhawal Shumsher Rana was r<a href="https://www.nepalitimes.com/here-now/rana-regime-restored-in-nepalganj/" target="_blank" rel="noopener noreferrer">e-elected mayor of Nepalganj</a> in 2017, and built on a solid track record of good governance and transparency to upgrade urban infrastructure, and improve service delivery in his border city.All these local government leaders have one thing in common: serving their constituents. That is what politics is all about, not the <a href="https://www.nepalitimes.com/here-now/nepal-ruling-party-feud-affecting-covid-19-response/" target="_blank" rel="noopener noreferrer">mad scramble for power in Kathmandu</a> that has held Nepal back for decades. The mayors and their deputies may be from different parties, but that almost does not seem to matter since the needs of their constituents are the same.Even as national-level politicians in Kathmandu <a href="https://www.nepalitimes.com/editorial/polls-in-the-time-of-pandemic/" target="_blank" rel="noopener noreferrer">dither about local election dates</a>, these grassroots leaders have shown in just five years what is possible when the people they serve are put first.To be sure, not all local leaders have been honest and accountable. A survey in this paper in 2018 showed that more than <a href="https://archive.nepalitimes.com/article/from-nepali-press/Elected-contractors,4182" target="_blank" rel="noopener noreferrer">one-third of elected mayors were contractors</a>. They went on to take corruption to new heights, as illustrated in our investigation of illegal sand-mining in the Tarai.Putting aside these bad apples, there are plenty of examples of responsive and responsible local governments who have now served five years. <a href="https://www.nepalitimes.com/latest/nepal-coalition-dilly-dallying-on-polls/" target="_blank" rel="noopener noreferrer">Local elections cannot be postponed</a> just because some national leaders think they will lose. Prime Minister Sher Bahadur Deuba must over-ride opposition from two of his coalition partners, follow the Constitution and safeguard the gains of the past five years.Srijana Tamang is vice-chair of Jugal Rural Municipality, and together with other local leaders we profile in this edition she best understands what the needs of her people are.“They know where we live, they have our number, it is easy for people to tell us about their needs. They can come to our homes and complain about the work we are doing or encourage us to do better,” Tamang told us.Local government elections were the first to be held after Nepal moved to <a href="https://www.nepalitimes.com/editorial/volatile-mix-of-politics-and-religion/" target="_blank" rel="noopener noreferrer">federalism</a> following the 2015 Constitution, so it was up to elected representatives to institutionalise it. It became a learning platform for the other two governments in the exercise of federalism and democracy.There were also many good practices that came with the 2017 local elections. For one, it was significant in advancing <a href="https://archive.nepalitimes.com/article/nation/including-the-excluded-women-dalit-women-in-local-elections,3742" target="_blank" rel="noopener noreferrer">female representation</a> in the political sphere of Nepal, and helped bring minorities forward in local governments. Each local tier of government could also function on its own, making policies and taking action to answer the needs of their constituencies.As per Nepal’s Local Election Act 2017, voting for all 753 local units must be held by 19 March. The EC has proposed 27 April and 5 May dates. Leaders of the Maoist Centre and Unified Socialists are so wary of faring badly in local polls, that they want to use a loophole in the law to have it postponed. But all the local leaders Nepali Times spoke to this week spoke with one voice: local elections should be held as scheduled. Local government elections are a mechanism that allows Nepalis to vote for the leaders they want: keep the ones who have done good work, replace those who have not lived up to expectations. Or, maybe experiment with a new face altogether. <a style="font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/dance-of-democracy/" target="_blank" rel="noopener noreferrer">Pushing back the dates or aborting local elections</a> will be a disservice to Nepalis, undermine the democratic values the nation stands on, and push back development.Arjun Mabuhang, Chair of Laligurans Municipality in Tehrathum sums it up: “It is written in the Constitution that local elections have to be held on time. Choosing their local representatives is the people’s right. Whether they want to keep us or replace us is up to them. The national parties in government should respect that.”Sahina Shrestha

Sahina Shrestha

Think nationally, vote locally

<img width="1000" height="1336" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111410114/637204d59c7e80680e0b2883jpeg.jpg" alt=""/>After <a href="https://www.nepalitimes.com/latest/nepal-coalition-dilly-dallying-on-polls/" target="_blank" rel="noopener noreferrer">hemming and hawing about holding local elections</a>, top leaders of the five-party alliance that met on Tuesday finally made some headway. 
The good news is that they said they were committed to holding the local polls “on time”. The bad news is that the parties were even thinking of postponing polls to suit their electoral prospects, even though that is entirely the purview of the Election Commission. 
And who knows what they mean by “on time”? Nepali time is elastic.  
The ‘high level political mechanism’ is an uber-government prone to <a href="https://www.nepalitimes.com/latest/political-expediency-trumps-nepal-constitution/" target="_blank" rel="noopener noreferrer">bending the Constitution</a> whichever way it suits them. 
However, on elections, mechanism members are not united. Prime Minister Sher Bahadur Deuba’s Nepali Congress wants to hold local polls as scheduled on 27 April, and this puts him closer to the opposition UML’s stand. 
The JSP also wants the local polls in April, but the Pushpa Kamal Dahal of the Maoist Centre and Madhav Kumar Nepal of the Unified Socialists being from fragments of larger parties, want more time to prepare for elections. And the pandemic has been the perfect pretext to argue for postponing it. 
The other argument they are using is that elections are costly, and why not have all three tiers of elections in November? 
There are differing provisions for local elections in Nepal’s Constitution and election laws. While Article 225 of the Constitution stipulates new local leaders be elected within six months after the terms of the current leaders expire, Nepal’s Local Level Election Act 2017 states that elections be held two months before the terms of the current representatives end. 
Coalition leaders are said to be exploring the possibility of passing an ordinance to amend the local election law so that they can hold local elections when they see fit — which means later in the year.
That provisions for elections are inconsistent, <a href="https://www.nepalitimes.com/latest/political-expediency-trumps-nepal-constitution/" target="_blank" rel="noopener noreferrer">subject to amendments at </a>the convenience of political leaders, and that the Election Commission is unable to make an independent decision is emblematic of a failing state.
It shows just how <a href="https://archive.nepalitimes.com/regular-columns/Analysis/how-decentralised-is-federalism,776" target="_blank" rel="noopener noreferrer">centralised Nepal’s power structure is</a>,  and how blatant political interference in Constitutional bodies like the Election Commission has become.  
Read also: <a href="https://www.nepalitimes.com/editorial/battle-lines-drawn-for-nepal-elections/" style="font-weight: 600;">Battle lines drawn for Nepal elections</a>, Nepali Times
The differing positions within the governing coalition on proposed election dates have further exposed the volatile dynamics within the five-party coalition. 
As it is, the <a href="https://www.nepalitimes.com/latest/mcc-row-rocks-nepals-ruling-coalition/" target="_blank" rel="noopener noreferrer">governing coalition is already on thin ice </a>due to differences over the US-supported MCC project, as well as over the Nepali Congress being disinclined to form an electoral alliance with coalition partners. Differences over MCC ratification by Parliament already threatens to split the coalition of which some members are said to be beholden to Chinese pressure.
But there are other more pressing matters. Parliament has not been able to sit and pass pending bills due to the UML not letting it function because of K P Oli’s grudge against Speaker Agni Sapkota over his refusal to expel former party members including Madhav Kumar Nepal.  
The five-year terms of Nepal’s <a href="https://www.nepalitimes.com/latest/nepals-politicians-take-up-farming/" target="_blank" rel="noopener noreferrer">locally elected representatives</a>, which began on 20 May 2017 are set to end on 19 May. Not holding these elections on time will undermine local governance because wards and municipalities will be left leaderless, delegitimising the country’s still fragile federal system. 
Some of the smaller parties are already campaigning against federalism, and a gridlock in local elections could bolster their argument that the system is too <a href="https://www.nepalitimes.com/latest/is-democracy-too-expensive-for-nepal/" target="_blank" rel="noopener noreferrer">costly</a> and not suitable for Nepal. 
As the highly transmissible<a href="https://www.nepalitimes.com/here-now/3rd-wave-in-2-years/" target="_blank" rel="noopener noreferrer"> Omicron strain</a> spreads across the country and overwhelms Nepal’s limited healthcare infrastructure, Nepal’s villages and rural communities will need steady leadership more than ever. 
The <a href="https://www.nepalitimes.com/banner/vaccines-variants-and-a-third-wave/" target="_blank" rel="noopener noreferrer">third wave has hit Nepal </a>as the country enters the third year of the pandemic. During that time, power struggles at the top have largely paralysed the federal government’s response to the crisis.
However, at the local level many elected representatives have been leading from the frontlines to help constituents. This newspaper reported about mayors and ward chairs in <a href="https://www.nepalitimes.com/latest/women-leaders-set-example-for-rest-of-nepal/" target="_blank" rel="noopener noreferrer">Nawalpur</a> and <a href="https://www.nepalitimes.com/latest/nepals-local-governments-lead-from-the-front/" target="_blank" rel="noopener noreferrer">Khotang</a> districts driving the sick to hospitals during the second wave. They set up local quarantine and isolation centres, and did not wait for Kathmandu to respond.
One of Nepal’s development success stories in the past 40 years was that local elections have ensured accountability and service delivery. The 2017 local polls were the first in 20 years, and not having elected local leaders cost the country two decades in lost development.
National leaders treating local elections as if it is just another power play will be a misdeed against the Nepali people.
Shristi Karki
Read also: <a href="https://www.nepalitimes.com/here-now/nepals-rudderless-political-leadership/" target="_blank" rel="noopener noreferrer">Nepal’s rudderless political leadership</a>, Santa Gaha Magar

Shristi Karki

Polls in the time of pandemic

<figure><img width="1750" height="919" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114091156/6372033d9c7e80680e0b27f9jpeg.jpg" alt=""/><figcaption></figcaption></figure>The Election Commission has set local elections for May, with federal elections following early next year. Given the heated debate about federalism and <a href="https://www.nepalitimes.com/opinion/secularism-and-sectarianism/" target="_blank" rel="noopener noreferrer">secularism</a> the polls will be a referendum on those two issues. In 2017, Nepal held sub-national elections after 20 years. Those ward, municipal  and provincial representatives were pushed into uncharted territory, and coped the best they could. The hope was that locally-elected leaders would demonstrate more accountability than their national-level counterparts.Indeed, some ward and municipal chairs <a href="https://www.nepalitimes.com/latest/women-leaders-set-example-for-rest-of-nepal/" target="_blank" rel="noopener noreferrer">performed exceptionally well</a>. But many mayors are <a href="https://archive.nepalitimes.com/article/from-nepali-press/Elected-contractors,4182" target="_blank" rel="noopener noreferrer">contractors</a>, and are involved in blatant malfeasance. Political devolution has decentralised corruption as well. News reports about Bagmati Province’s bloated ministries as well as the provincial governments just being reflections of the power balance in Kathmandu have given federalism a bad name. Which is why some political leaders want federalism scrapped. Local elections this year is a chance to set things right. All politics is local – or should be. And we have seen since 1990 in Nepal that decentralised political decision-making is the best way to govern.However, there are indications the polls will be a dirty political game where politicians devoid of ideology stoke <a href="https://www.nepalitimes.com/from-the-nepali-press/back-to/" target="_blank" rel="noopener noreferrer">religious fervour </a>to get votes. This is dangerous, it will polarise and destabilise Nepali society.  This requires vigilance from voters who must vet candidates and cast their ballots for those who are more likely to address their most urgent needs like health, education, jobs and a streamlined administration – and not fall for extremist slogans.We need to make sure that the people at the local level, especially those who have been excluded till now in decision-making, benefit the most from federalism. Given Nepal’s diversity in ethnicity and religion, a prosperous and democratic society is not possible without the stability that secularism  guarantees. Going by the general conventions of the major parties over the last months, it looks like secularism, restoration of the monarchy and federalism will dominate the upcoming polls. <a style="font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/editorial/battle-lines-drawn-for-nepal-elections/" target="_blank" rel="noopener noreferrer">Rajendra Lingden’s resounding win</a> over Kamal Thapa as the leader of the RPP means that the party will be even more aggressive in promoting the royal-Hindu line. Even self-proclaimed democratic and progressive parties that stood for alternative politics like Bibeksheel Sajha are falling back on religion and monarchy to gain popular votes.  Republicanism, federalism and secularism became the main pillars of the Constitution that was drafted after two elections following the People’s Movement of 2006. Remove any one of these three pillars and the country could be pushed back to instability. Some of the very leaders who once played a key role in writing that Constitution, like Shashank Koirala and Shekhar Koirala of the ruling Nepali Congress (NC), are in favour of a Hindu state. The main opposition UML’s K P Oli has himself been dabbling in religion. An eager gathering of former prime ministers at a recent reception for Indian guru Baba Ramdev in Kathmandu in November also showed that political leaders across the spectrum recognise the power of religion in vote mobilisation. Much of this is due to the <a href="https://www.nepalitimes.com/editorial/a-yam-between-two-indias/" target="_blank" rel="noopener noreferrer">gravitational pull that India exerts on Nepal</a>. Narendra Modi’s Bharatiya Janata Party (BJP) has actively used Hindu nationalism to stay on in power, and he has made no secret of his desire for Nepal to revert being a Hindu state. In Nepal, some leaders are deliberately bending the definition of ‘secularism’ to mean ‘anti-faith’ to disrupt Nepal’s long-standing religious harmony and tap the majoritarian vote bank. In her article Shaping Secularism in Nepal on European Bulletin of Himalayan Research, Chiara Letizia says that secularism in Nepal will be determined by how the Hindu majority is addressed: ‘Nepal is a post-secular laboratory, where the state’s policy must walk a tightrope, upholding ‘absolute’ secular values such as equal citizenship, and yet balancing the Hindu majority tradition, Hindu fears, and the claims of minorities for social, political and religious recognition.’Rajeev Bhargava, a political theorist who has studied India's secularism, suggests a principled stand for <a href="http://archive.nepalitimes.com/article/editorial/separation-of-state-and-temple-in-nepal,1444" target="_blank" rel="noopener noreferrer">secularism</a> in countries like India and Nepal which are ethnically, culturally and linguistically diverse. The state should give equal respect to all religions, but can also push universal values of tolerance and human rights.The test of a true democracy is how well it treats its minorities. Following secularism in letter and spirit makes such tolerance possible, and having it enshrined in the Constitution is not enough. It should be followed in practice. Indian historian Bipan Chandra in his 2008 book Communalism: A Primer analyses how the anti-secularism spread: ‘Communalists call themselves good nationalists and communalism as nationalism. Therefore, the good fight against communalism must be fought on the same ground of nationalism.’To prevent Nepal from falling into the same trap and keep our democracy vibrant and inclusive, we must use upcoming elections to eschew parties that espouse majoritarianism, exclusion and division.At the very least Nepal’s political leaders must adhere to <a href="https://archive.nepalitimes.com/regular-columns/by-the-way/new-constitution-should-adopt-inclusive-democracy-with-federalism-republicanism-secularism,538" target="_blank" rel="noopener noreferrer">values enshrined in the Constitution</a> as their true ‘religion’.Rabin Giri

Volatile Mix of Politics and Religion

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109171152/636bdb389c7e80680e0802b0jpeg.jpg" alt="" width="1250" height="1145"/><figcaption>Illustration: BHANU BHATTARAI</figcaption></figure>In 2017, Nepal held its first local election after two decades. A generation of Nepalis had grown up without any experience of electing mayors or ward chairs. Bureaucrats were appointed to municipalities.Those were not just any local elections, they were the first under a federal structure. Hopes were high, and expectations higher. But how to make fiscal federalism work, and particularly municipal financing? What has been the experience of the past two years?There are two schools of thought about how municipalities should fund themselves. The first is that they have limited resources to invest in socio-economic development, and even added fiscal transfers from the federal and provincial governments on top of local revenues, are not enough for infrastructure and service delivery.The second is that local governments are unable to use available resources due to lack of technical and financial capacity, and that financial deficit is irrelevant when local governments are not even able to spend their allotted budget.<a href="http://archive.nepalitimes.com/article/editorial/nationally-local,3705">Nationally local</a>, EditorialWhile both these narratives ring true, the challenges are not faced in isolation and are cyclical in nature -- they feed into each other. The lack of capacity of local governments has led to underutilisation of funds available through the market and the federal government. Administrative and policy restraints set by the federal government also limits local governments’ access to finance.However, lack of spending capacity or lack of financing is not a challenge unique to local governments.  It is in fact part and parcel, a hereditary defect passed on from Kathmandu to rest of the country.Under the federal structure, significant power has been devolved to local governments than previously imagined. However, the expenditure responsibilities of local governments do not match their ability to generate revenues -- their power to govern through constitutional mandate has been restricted by their financial ability to govern.The revenue municipalities raise from taxes and levies is insufficient to cover operational expenses, let alone finance infrastructure or service delivery. Local governments are criticised for bloated operational expenses, but while this may be  justified, municipalities will still not be able to finance big ticket infrastructure and service delivery projects with merely internally generated revenues.Local governments therefore have fewer avenues to raise funds. To decrease their finance deficit, they can either steal, beg, or borrow to meet their requirements. In the crudest sense, local governments can either raise taxes, or utilise federal government transfers, or borrow from banks.<a href="https://archive.nepalitimes.com/regular-columns/Analysis/how-decentralised-is-federalism,776">How decentralised is federalism?</a>, Kiran NepalAn obvious mechanism to increase the funding base of municipalities is to increase their own source revenue generated through property taxes and business registrations, among others. However, municipalities already have a smaller tax base which restricts their revenue-generation capacity. They also cannot increase tax rates twice within their 5-year term limit, as it would be politically unpopular. The other mechanisms to access finance are largely dependent on local governments’ ability to raise revenue locally.Another option is to use the four intergovernmental transfers (grants)provided by the federal government. Fiscal equalisation grants disbursed to local governments is generally inadequate to cover municipal expenses which drives local governments turn to conditional grants.However, this reliance on conditional grants can only support piecemeal projects that do not always meet local needs and priorities. With Covid-19, the ability of the federal government to generate revenue have been hit, and subsequently, transfers to local governments.<a href="https://www.nepalitimes.com/latest/local-governments-lack-resources-to-tackle-covid-19/">Local governments lack resources to tackle Covid-19</a>, Nepali TimesLocal governments can also take internal loans through Nepal’s banksand financial institutions to cover their deficit. As of this fiscal year, municipalities can borrow up to 12% (a two-percentage point increase from last fiscal) of its revenue and revenue distribution from the federal and provincial governments.For instance, a larger municipality like Bharatpur could borrow up to Rs130 million in internal loans in the last fiscal year. Smaller municipalities like Birendranagar and Damak could borrow only up to Rs50 million. The minor increase in the debt ceiling does not increase their borrowing limit significantly. Considering the infrastructure and services delivery needs of growing urban centres that requires billions in investment, this amount seems grossly inadequate.There are regulatory and institutional restraints and reluctance to empower local governments to finance their capital deficits. However, the lack of technical capacity of  local governments contributes equally to this problem. Nowhere is this more obvious than in their inability to spend their annual budgets.This is also evident in the underutilisation of some of their federal grants, mostly because applying for these grants require project planning skills that are absent at the local level. Lack of capacity to plan, execute and monitor large scale projects is fuelling their inability to proactively seek federal grants to increase the revenue.This limitation has been amplified due to restrictive banking and financial practices in Nepal. Financial institutions are inclined to provide collateral backed lending, which allows banks to sell the land (commonly used as collateral) if a project fails to deliver.However, financing institutions are reluctant to lend to municipalities as municipal land cannot be used as collateral. While non-collateral based lending is an alternative, they are rare and limited to projects with guaranteed revenue streams such as hydropower projects with signed Power Purchasing Agreements with Nepal Electricity Authority.<a href="https://www.nepalitimes.com/opinion/federalism-rule-of-law-and-the-judiciary/">Federalism, rule of law and judiciary</a>, George Varughese and Iain PayneThese are not just structural challenges, municipalities also face a crisis of confidence. Most municipalities are averse to borrowing and have not utilised the 12% internal borrowing threshold. Current borrowing, on average, comprises only 0.85% of municipal total revenue. Several municipalities say that despite their growing financial needs, they are less likely to take internal loans. Even if they do borrow, loans are used to manage working capital deficits rather than to finance municipal projects.In absence of long-term vision and prior plans, costly projects that may exceed the allotted fiscal transfers are not included within municipal plans and budget. Plans are limited to short to medium term projects and larger infrastructure or service delivery improvements which could potentially increase local governments revenues are ignored. The crux of the matter is, rather than municipal needs informing the budget, fiscal transfers dictate policy priorities of local governments.Local governments are locked in this vicious cycle. The federal government’s reluctance to ease up its fiscal hold on municipal finances constricts their capacity to deliver on their constitutional responsibilities. In parallel, limited institutional capacity of municipalities to deliver on their budget drives the federal government to maintain its regulatory and administrative hold.These constraints subsequently limit municipalities access to adequate finance. Unless this cycle is broken, local governments, much to our disappointment will only end up delivering short sighted piecemeal projects.The effectiveness of federalism rests on enabling municipalities and the leadership to identify, create, plan, and implement sustainable long-term projects. Despite the authority provided by the Constitution to local governments, their heavy reliance on fiscal transfers and inability to seek internal loans as an alternative for financing projects weakens their autonomy and governing power.After all, adequate fiscal autonomy is a key tenet of effective decentralisation which should not be undermined by poorly designed federal controls.Read also:<a href="https://archive.nepalitimes.com/article/editorial/government-to-governance-editorial,4200">Government to governance</a>, Editorial <img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109171152/636bdb3b9c7e80680e0802b1jpeg.jpg" alt="" width="93" height="111"><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221109171152/636bdb3c9c7e80680e0802b2jpeg.jpg" alt="" width="76" height="114">Anna S Gautam and Nishu Baral are analysts with Infrastructure Development and Financial Sustainability project supported by The Asia Foundation at VRock and Company.

federalism