The focus of this essay is to examine the current state of federalism in Nepal as part of a broader series of reformatory processes to address the root causes of the Nepali Civil War.
By Raunak Mainali
Almost two decades have passed since the end of the civil war in Nepal but the country still struggles to address the legacy of the long conflict. The Nepali Civil War, which lasted a decade from 1996 to 2006 arose primarily due to uneven development and discrimination that plagued Nepal. The then elected government, formed under the constitutional monarch in 1991, and drawn from the previous system of total monarchy between 1960 to 1990, was highly centralized with political power concentrated in Kathmandu. This led to the ostracization of rural inhabitants who lived in destitute conditions and found little to no support from the state. For instance, the poverty rate in far-western Nepal, an area with marginal urbanization, was at 63.9% in 1996 compared to 21.6% in urban areas.
Political parties have been alive to the issue and have mobilized people from time to time to address regional imbalances. Prominent among them is the Maoists, a crucial stakeholder in the political processes of the country. In their 40-point demand that preceded the onset of the conflict, they advocated for local autonomy to address the development divide between rural and urban Nepal as well as to tackle historical discrimination of ethnic and regional groups. The Maoists were able to gain a solid foothold in rural Nepal, and in areas with lack of governance they were even able to set up parallel administrations. The war eventually ended with the signing of the Comprehensive Peace Agreement (CPA) between the Maoist rebels and the then Government of Nepal in November 2006. The CPA contained provisions to establish mechanisms to address consequences of the conflict such as a Truth and Reconciliation Commission (TRC) and Disarmament, Demobilization, Reintegration process (DDR) to manage the rebels.
The CPA envisioned addressing this issue of regional and rural marginalization by “deconstructing the current centralized and unitary structure.” Therefore, federalism became a mainstay of Nepali politics, finding a place in the 2007 interim constitution and the 2015 constitution which laid the foundations for the current political structure of the country. However, the road to the promulgation of the 2015 constitution was not smooth. The first Constituent Assembly, elected in 2007, was not able to meet the deadline of drafting the constitution and the task had to be completed by a second Constituent Assembly. The constitution-making process was further interrupted by the 2015 earthquake before eventually being promulgated in September of that year. Violence was also a regular feature during this period, particularly in the Terai belt which makes up southern Nepal. Protestors were shot dead whilst advocating for greater rights for Madhesis, a conglomerate of several ethnicities from the Terai, in the new constitution. Eventually, dissatisfied groups were pacified, and Nepal conducted its first elections under the federal framework in 2017 and then again in 2022.
The 2015 constitution laid the ground for a federal framework between three tiers: federal, provincial (7 provinces), and local (753 made up of 6 metropolises, 11 sub-metropolises, 276 municipalities, and 460 rural municipalities). Each tier was endowed with exclusive powers as well as concurrent powers with other tiers in areas such as taxation, security, health, and education. However, despite the constitution granting exclusionary powers to local and provincial tiers, the federal government in Kathmandu has continued to exercise these powers. For instance, provincial police administration which falls under the jurisdiction of the province has not been implemented as the government has taken limited steps to adjust the police force.
Policing is a sensitive issue, particularly in Madhesh Province, as state police forces under the control of the center have committed violent acts against its inhabitants during different Madhesh political movements.
In a similar vein, there has been limited progress in the enactment of a Federal Civil Service bill that would allow the provinces to recruit their own civil servants. Nepal still functions under the guidelines of the Civil Service Act of 1992 which predates the federal model and therefore it not suitable for the current political structure. This has led to frustration amongst the provincial level as they are still reliant on the federal government for bureaucratic staff, many of whom leave the provinces without completing their full term. Additionally, the federal government still maintains offices in the provinces related to agriculture, livestock, forest, and education, despite several of these being the responsibility of the local government according to the 2015 constitution.
This centralized mindset is also reflected in the formulation of policies from the federal government. The education budget, devised by the federal government, pays scant attention to the requirements at the local level. Although around 69% of the education budget goes to the local level, 91% of this budget is predetermined by Kathmandu, giving local level leaders very little maneuverability in dealing with community specific issues.
The rigidity in central policy is also reflected in the health sector as inflexible allocations without input from the local government has prevented localities from providing targeted healthcare services.
Apart from the budget, the disregard for local and provincial needs is also reflected in the intentions of other federal bodies. The Public Service Commission, despite backlash from local and provincial levels, has expressed the desire to make the bureaucratic position of a Chief District Officer (CDO) even stronger. The CDO, appointed by and a representative of the federal government to a specific district, has wide-ranging powers including maintaining peace and security in the district. Despite districts not being an administrative unit under the 2015 constitution, federally appointed bureaucrats still enjoy wide ranging powers sometimes even having precedence over elected local leaders.
Federalism is also facing challenges due to political rivalries playing out within the structure.
Party politics, which has already hampered development in the country in various sectors is also playing out within the different levels of government. A well-documented rivalry is that of Kathmandu Mayor Balen Shah and Prime Minister K.P. Oli. The mayor began work on widening footpaths in the city, which was objected by a local ward chair (head of a municipal subdivision), a member of Oli’s party, who then went on to complain to the Ministry of Physical Infrastructure and Transport, which was headed by an Oli loyalist. Eventually, the minister issued a stop work order curtailing the autonomy of the mayor, an independent state functionary. Additionally, when it comes to the federal government encroaching on the jurisdictions of the province, the latter is more likely to raise its voice if the parties composing each legislature are different. Madhesh Province, which has filed the most court cases against the federal government due to issues of encroachment has a higher proportion of regional parties and therefore are not always a part of the perennial ruling coalition of Nepali Congress, Maoists, and the Unified Marxist-Leninists (UML).
Whilst there have been challenges facing federalism, there are reasons to be optimistic.
A long legacy of centralized administration means that it takes some time to build institutional capacity at the provincial and local levels to reach developmental goals.
The local governments have been successful in pushing for some reforms. In 2018, they were able to stop the unlawful collection of rental taxes by the federal government that had been supposedly under the authority of the local government. There was also a new Civil Service Act being tabled in the parliament in 2024 and although it was interrupted by the conclusion of the budget session, pressure from the different tiers will mean that it will not run out of steam. The provisions in the 2015 Constitution have also increased the political representation of the marginalized groups across all levels of government, but this is particularly pronounced at the local level. For instance, whilst women make up 33% of elected parliament members, they make up 41% of elected members at the local level. Marginalization was one of the root causes of the civil war and therefore representation in local political bodies must be ensured. The public also has a more favorable view of the local leaders compared to federally elected members. A report by Kathmandu University states that 74.1% of respondents believed that their local representatives cared about them compared to only 62.1% for their federal representatives.
Although this is the first time federalism has been institutionalized to this extent, it is pertinent to point out that Nepal has experienced limited versions of local governance in the past. From 1960 to 1990 Nepal was governed by King Mahendra and his successor King Birendra through an authoritative ‘Panchayat’ system, which aimed to decentralize power to local levels but with the guidance of the monarch. The Panchayati decentralization was far from optimal as it was largely undemocratic due to the King’s omnipotent role in the political process of the country.
Despite reforms introduced throughout this period, the total power monarchy collapsed under widespread political and popular opposition as development and prosperity was not delivered in the rural areas.
From 1991 to the start of the conflict in 1996, Nepal was governed by an elected parliament led by Nepali Congress and UML and the monarch’s role was limited by the 1991 Constitution. Development committees were created at the village (Village Development Committee) and at the district level (District Development Committee) and were given limited political power. However, several issues curtailed the effectiveness of these mechanisms such as lack of resources, limited technical capacity, conflicting jurisdictions, and reluctance of Kathmandu to relinquish power. The failure of the government to deliver developmental benefits equally in Nepal once again allowed opposition to mobilize effectively, this time in the form of a violent rebellion by the Maoists. It is unfortunate to see the same patterns being repeated once again in Nepal as federalism struggles to take root. Naturally, conflicts between the different tiers will iron out as institutional knowledge is strengthened, and new actors emerge. However, an active role must be played to support federalism through the introduction of intergovernmental laws and the reinforcement of bodies such as the Constitutional Bench (2015) and the National Coordination Council (2020), which are tasked with dealing with issues relating to federalism.
Nepal’s experience so far with federalism has been rocky. Elected officials at the local level have a more positive perception amongst the citizens than their federal counterparts, due to their understanding of community specific issues and in certain cases, and their distance from traditional political elites. This has certainly played a pivotal role in the strengthening of democracy in Nepal as it has allowed a path for citizens, particularly in rural areas to have more influence in their community’s development. However, there are still major roadblocks that are inhibiting the full potential of federalism. A failure to remove these roadblocks will undermine democratic and federalist ideals set forward by the 2015 constitution and therefore possibly limit the opportunities to address developmental disparities in the nation.
Raunak Mainali is a research fellow at the Centre for Social Change. His recent co-edited publication, Nepal’s Peace Process: Issues and Challenges (Routledge, 2024), analyzes 15 years of peacebuilding in Nepal.
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