It’s time to rethink federalism in Nepal
By Akhilesh Tripathi
Over a decade ago, Nepal was promised a new beginning. The Constitution of Nepal 2015, touted to be a historic document, promised to address political, social, cultural and regional exclusion and bring government closer to the people, besides accelerating development. The Constitution projected federalism as the vehicle that would usher in a new era of prosperity and stability in the country.
Almost 11 years later, however, the journey has reached an uncomfortable crossroads, to say the least. Today, instead of becoming engines of development, the seven provinces in Nepal have proved to be the case of ‘big name, little game’ – a classic case of ‘the mountain labored and brought forth a mouse!’ Indeed, federalism has introduced expensive administrative layers, and, instead of political stability, it has delivered endless coalition games. Instead of bringing government closer to citizens, the provinces have multiplied power centers without improving governance to any satisfactory degree.
This has naturally raised questions over the relevance of federalism in Nepal. In fact, people are already asking it openly: Has Nepal’s experiment with federalism failed? We wouldn’t be facing this question in the first place, had the architects of the 2015 Constitution paid closer attention to the people they claimed to represent.
Before the promulgation of the Constitution, tens of thousands of public suggestions had been collected from across the country. It was said that in their suggestions, a significant number of citizens had expressed reservations about transforming Nepal into a federal and secular republic. They had questioned whether federalism was economically viable for Nepal, a country with limited resources. Sadly, those opinions were deliberately trashed, dumped in the dark rooms of Singha Durbar.
The consultations increasingly came to be viewed as a procedural exercise rather than a genuine attempt to shape the Constitution. The voices collected from villages and towns were quietly archived while political negotiations among party leaders determined the country’s future.
If the public worries were debated at all, then the form of governance in Nepal could have taken a different path. Instead, the choice of federalism took shape as a compromise reached by the political elites and parties rather than as a clear popular demand. That unresolved democratic deficit continues to haunt Nepal’s federal project today.
Government multiplied, governance did not
Federalism promised decentralization. What Nepal largely achieved instead was decentralized bureaucracy. Every province now has its own Chief Minister, cabinet ministers, provincial assembly, secretariat, ministries, advisers, political appointees, personal assistants, drivers, security personnel and administrative machinery.
The expectation was that these additional structures would produce faster decision-making and locally tailored development. However, much of the efforts of the provincial politics have been spent in cabinet formation, power sharing, coalition management, and appointment of ministers.
The figures say it all. Since provincial governments were established following the 2017 elections, Nepal’s seven provinces have witnessed 44 different governments in just over seven years.
Koshi Province alone has seen nine governments. Gandaki and Lumbini have each produced seven governments. Bagmati and Madhesh have witnessed six governments each. Even comparatively stable Karnali has had four administrations.
These are not changes driven primarily by provincial politics. Instead, provincial governments have functioned almost like extensions of Kathmandu. Whenever coalition equations change at the federal level, provincial governments collapse like dominoes. The drama of provincial politics was laid bare beyond any doubt after the federal coalition change in March 2024, when the governments in Gandaki, Karnali, Lumbini, and Sudurpashchim all changed within days.
Thus, it became clear that rather than exercising autonomous provincial leadership, chief ministers and provincial assembly members have been waiting for signals from party headquarters in Kathmandu. Federalism promised decentralization. Politics remained centralized.
Recent reports from across the country indicate that the Nepali Congress (NC)-CPN (UML) power-sharing arrangement is under strain in all seven provinces. In ‘normal times’, we would already have seen coalition collapses but since both NC and UML find themselves sidelined after the March 5 general elections, they are trying their best to stick together.
The provinces cannot finance themselves
The problems with the current federal structure lay not only in politics but in economics. A federation is generally expected to create economically capable sub-national governments capable of raising substantial revenue and financing their own priorities. Nepal’s provinces have done neither.
Despite functioning for almost a decade, every single province remains overwhelmingly dependent on transfers from the federal government. Their own-source revenues remain remarkably limited. Fiscal equalisation grants, conditional grants, complementary grants and revenue-sharing transfers from Kathmandu continue to finance not only development programs but even routine administrative expenses.
Without federal transfers, most provinces would struggle to pay salaries. Capital investment would become virtually impossible. For the upcoming fiscal year 2083/84 (2026/27), the seven provinces have announced a total budget of around Rs 293 billion. At the surface, the sum seems huge.
A closer examination tells a different story. The overwhelming share of provincial income continues to originate from the federal treasury rather than provincial revenue collection. In other words, the provinces are not generating wealth. They are redistributing money collected elsewhere. Even after nearly a decade, no province has emerged as financially self-reliant.
Federalism was expected to stimulate local economic dynamism. Instead, it has largely institutionalized fiscal dependence.
It is often argued that democracy inevitably costs money. That is true. But democracy also demands measurable returns. Across Nepal’s seven provinces, enormous sums are now spent every year maintaining political institutions. Chief ministers, cabinet ministers, provincial assembly members, Speakers, Committee chairpersons, political advisers, private secretaries, personal assistants, official residences, vehicle fleets, administrative staff, travel, allowances, security etc.
The cumulative cost runs into billions of rupees annually simply to sustain provincial political structures before a single kilometer of road is built or a health post upgraded. Ironically, these expenditures are financed largely through money transferred from the federal government. In effect, the central government collects resources and then redistributes them so provincial governments can maintain institutions that were supposed to become financially empowered themselves.
It is already too late to ask if Nepal has created additional layers of government without creating additional capacity to finance them.
Recent developments surrounding provincial budgets have only reinforced public skepticism. Two weeks after the federal government unveiled its national budget, all seven provinces presented budgets totaling nearly Rs 293 billion. Most promised roads, bridges, agriculture, tourism, education, health, employment and information technology.
Those priorities sounded familiar. Implementation has proven much less inspiring. Weeks after budget presentation, several provincial assemblies had still failed to begin meaningful deliberations. The obstacle was not opposition obstruction. It was infighting within ruling parties themselves.
From Koshi to Sudurpashchim, provincial assemblies became paralyzed by factional disputes. In Bagmati, dissatisfaction erupted within the ruling coalition. In Lumbini, legislators from the ruling party itself demanded budget rewriting. In Karnali, priorities came under intense criticism. Sudurpashchim struggled even to initiate formal discussions after presenting its budget late at night. The disputes centered less on development strategy than on allocation politics. Which constituency received more? Whose recommendation was accepted? Which leader’s supporters benefited?
Policy debates disappeared behind competition for budget shares. The provincial budget increasingly became an exercise in managing political interests rather than addressing public priorities. This is precisely the opposite of what federalism promised.
Federalism’s slogan was memorable: “Singha Durbar in every province.” The idea was simple. Decision-making would move closer to citizens. Unfortunately, in the name of taking Singha Durbaar to every province, many of Kathmandu’s political habits were transferred to provincial capitals. Factional bargaining. Patronage politics. Pressure from influential leaders. Distribution of resources according to political loyalty. Coalition instability. Short-term calculations.
Instead of developing distinct provincial political cultures rooted in local accountability, many provinces merely reproduced Kathmandu’s political dysfunction on a smaller scale. New institutions were created. But the same old political behavior persisted from the center to the provinces.
Time for an honest national conversation
When federalism was introduced, its implementers promised some powerful social objectives. It sought to provide greater representation for historically marginalized communities. There have indeed been important gains. Women, Dalits, Madhesis, Janajatis and other communities now enjoy greater formal representation than under previous constitutional arrangements.
However, mere representation does not guarantee good governance or good administration. People do not evaluate governments on the basis of the constitution, but rather by roads, healthcare, education, job opportunities, and administrative efficiency.
On those measures, public satisfaction remains low. Political inclusion without administrative performance has not generated the confidence federalism’s architects had anticipated.
It is often argued that the provinces need more time, greater constitutional authority and stronger fiscal powers. But almost a decade should have produced more convincing evidence of success. The ‘achievements’ of federalism are not commensurate with the costs. The provinces remain financially dependent. Politically unstable. Administratively weak. Development outcomes remain difficult to distinguish from those produced under the previous system.
Federalism was never meant to become an end in itself. It was introduced as a measure to improve people’s lives. Today, the general belief is that federalism has made governance more expensive without making it more effective. These concerns cannot simply be dismissed as anti-federal sentiment.
They deserve answers. More importantly, they deserve evidence that the system works. For nearly ten years, Nepal has invested enormous political capital, administrative restructuring and public resources into its federal experiment. Whether one supports federalism or opposes it, one fact has become difficult to ignore: The promises remain considerably larger than the outcomes.
Perhaps the greatest lesson is not that federalism must necessarily be abandoned. Rather, it is that constitutional architecture alone cannot transform a nation. No system, unitary or federal, can succeed if political parties prioritize power-sharing over public service, if institutions remain financially dependent, and if governments exist primarily to sustain themselves.
There is another lesson that is even more fundamental. The legitimacy of a constitution comes not just through parliamentary approval, but also through the agreement of the people. If the issues raised during the consultation process preceding the 2015 Constitution had been addressed seriously and not ignored, then perhaps there would have been more popular engagement with Nepal’s constitutional odyssey.
Now, as provinces face continued problems of instability, dependency and declining public trust, the challenge for Nepal is no longer whether federalism seemed promising on paper, but whether it has delivered a system of governance that is more efficient and more effective than the one that came before.
For an increasing number of Nepalis, the answer appears far less certain than it did on the day the Constitution was celebrated. It is reported that the task force formed by the government to recommend amendments to the Constitution has received suggestions from over 40,000 citizens from across the country. It is also reported that a majority of them see the provinces as unnecessary burden on the country’s federal structure. After all, the ruling Rastriya Swatantra Party has not proposed removing the provincial structures from the current federal set up without a reason.
Let’s hope the task force led by the Prime Minister’s chief political advisor takes due note of this.
Editorial Note: This article reflects the author’s personal views. Dragon Media does not necessarily endorse or oppose the opinions, analysis, or conclusions expressed in it. It is published to encourage evidence-based debate on an issue of public importance. The author bears responsibility for the views and claims presented in the article.
