Purna Bahadur Thapa

Prosperity and development become a hotcake in these days. The dream of prosperity has further ignited among citizen with the government slogan of “Prosperous Nepal, Happy Nepali”.  Let’s assess the local government functions and hurdles to glimpse the big picture towards ‘prosperous Nepal and happy Nepali’.

As the constitutional provision, by the end of Asadah, local governments have unveiled policies, programs and budgets for the fiscal year 2075/76.  Arguably, this is a first fiscal year of local levels which  had follow the seven steps planning process prescribed by the federal government which are regarded as democratic, participatory, equity and evidence based.

Despite prescribed planning steps, complain was reported that some local governments who have a majority in their assembly did not follow these steps, instead ward level planning meeting was called with a short notice and selected like-minded people were invited.

Focus on Infrastructure Development

Government of Nepal has opted for formula-driven fiscal transfers: population, poverty and geography. Based on the formula one of the local governments of province number 1 had provided a ceiling ranges from 70 to 90 lakhs for each wards. Interestingly, intense focuses of ward level programs are for construction of road, bridge, sewage management and infrastructure development. One of the chairpersons expresses that “local citizens have perceive the meaning of development is an infrastructure development thus prioritized are made accordingly”. Same arrangement was found in one of a local government of province number 5. In my personal communication, a civil servant works in local government states that the local government is forcefully interested to allocate majority of amount in the areas of road and construction so that through the consumer committees they can allocate work to their cadres and loyal ones. A plethora of empirical literature reveals that in federalism party in power allocates grants in those areas where partisan gains can be maximized.

It can be said that orientation towards the hardware development may have undermined the spillover effects of social sector that enhances inclusive economic growth. Study shows that the rate of return to education is 27% and in developed economies each dollar spent in the health sector results in an additional US$ 0.77.

Local budgets

The sources of budget for the local governments are: fiscal equalization grants, conditional grant, special grant, revenue distribution, internal sources. These grants are received from federal and provincial government. Some local governments who have local revenue sources fulfilled the demand gaps.

By nature, federal government retains major revenue sources and study shows that majority of local governments of Nepal is lagging behind generating local revenue spaces. Study shows that in such situation local governments perform just an agent of central government. With the federal grants, they will have less autonomy and flexibility. Thus, there are reports that some local governments have bought dozer and tractor so that they can earn through lending in rent. And some local governments have imposed heavy tax on property and vehicle to generate local incomes.

Some goods news

It was fascinated when I attended the village assembly of one of a local government of province number 7.  The assembly looks like a mini- parliament. It was found that the local government practiced the constitutional rights by formulating local policies and Acts on: infrastructure development act, health and sanitation act, local service act, NGO coordination act, health related operation act. This is an extraordinary example of innovative and responsive local government, where reports emerge that some local governments were perplexed about their roles and functions.

Some local governments have started to improve local governance. It was also noticed that some local government has set-up, electronic-attendance in all wards office; CCTV camera in Palika Office, birthing center services in all health posts; incentives to the female community health volunteers for improvement of mother and child health; compulsory English language in primary schools; provisions of tax exemption for establishment of primary hospital are few noble examples. These particular examples reveal that federalism in Nepal is not in jeopardy rather reaching closer to people and improving local governance.

Role of Federal and Provincial Government

In cooperative federalism, local governments are equal partners with higher-level governments. There are reports some local government were confused about budgeting and institutionalizing process. This shows the lack of coordination between the governments.

Although some local governments are in track, the behavior and actions of federal government alarmed the fate of federalism in Nepal. The recent decisions of holding most of the divisions and district sector office have raised the grave concern. Some sectoral district offices such as district public/health offices are extended for few months more. These sorts of decision of federal government has further bewildered and angered the local governments.

As most the civil servants are deputed temporarily they are reported worry about their permanent positing. Lingering of civil servants integration causes damaged – sluggishness and demotivated to the public service delivery. Pathetically, in some areas health workers did the strike for fulfillment of deficit salary and allowances. We can imagine that in such case how public service delivery are provided and how such arrangement affects the daily lives of the population.

These are few dark sides that questioned dreamed of prosperous Nepal and happy Nepali. It needs to be understood that the slogan will be translated into reality only when all tiers of government works in cooperation.


From the William Riker (founder of federalism) definition of federalism, we can articulate that Nepal’s Federalism is centralized, as political parties control the government and they are also centralized. As a result, provincial governments and local governments are not daring to speak out faced bottlenecks while delivering public services in federalism in front of ruling government. Apparently, we would hear the angered and frustration from province no 2, with joining of federal government, they have also geared down their voice.

Now it is time for federal government to speed-up consociational arrangements process. Both horizontal imbalance and vertical imbalance have to be settled down by the federal government.

Blaming to federalism and local government is not a solution. It is the responsibility of all tiers of governments to collaborate and work efficiently. Timely supporting policy infrastructure, institutional capacity enhancement and management of human are call of an hour. Further, different capacities issues and clarity related to taxes and expenditures are to be cleared. It can be said that prosperity may come to us when all tiers of governments work efficiently and in transparent manner. Otherwise, there is a saying “one can never blame federalism for a political outcome; outcomes are the consequences of the preference of the populations”, Riker.

Author works for development sector.