May 2017 was a milestone in Nepal’s transition from a unitary system to a federal state, but a year since locally elected representatives took office, the process of devolution to sub-national governments has been slow. New administrative requirements have created confusion over the roles and responsibilities in the three tiers of government.
Despite this, elected local governments remain determined to govern while managing public expectations to deliver campaign commitments. How well local leaders negotiate and handle pressures of unmet expectations will impact the political ecology of this transition, either leading to a favourable outcome or running the risk of failure.
While the constitutional mandate is clear, competing roles and the absence of consistent political will have caused uncertainties to persist. Mechanisms designed to settle disputes between layers of government have not yet been fully utilised, leaving room for bitter contestation.
The continuation of this policy and structural vacuum means that chief ministers, mayors and ward chiefs use decentralisation to negotiate for more power, while lacking knowledge and capacity to govern effectively.
Conversely, the exercise of legislative powers at the sub-national level has led to a backlash, delimiting the actual authority given to local governments. The series of federal directives sent to elected local governments discouraging drafting of local legislation is proof of this.
Meanwhile, priorities and needs have begun to expand and multiply, signaling an end to the honeymoon period for elected representatives. Local governments are now under increasing pressure to administer their responsibilities and provide essential services to constituents.
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Coalitions within local executives have fostered democratic practices in local governments in some areas. In others, conflict and collusion have plagued the system, chipping away at the quality of service delivery. There are conflicts of interest, nepotism, arbitrary decision-making and misappropriations of grants. There is an ongoing struggle to exercise autonomy as local governments attempt to establish new lines of power.
A clear example is the recent controversy over the tax increase by provincial and local governments, which want to assert their powers defined in Schedule 8 of the Constitution to raise revenue. With the current budget allocations insufficient to meet the mandate to govern, elected representatives are looking to other avenues.
The taxes have created an uproar in the private sector, however, which is concerned about double taxation and misuse of power. Tax hikes ultimately affect the public, which has to bear the additional costs of goods and services. Although the Federal Parliament has directed the government to look into tax increases, the National Natural Resources Fiscal Commission (NNRFC) is yet to be formally established.
Nonetheless, Nepal’s first federal budget 2018-2019, presented in May, represents a significant departure in budgeting and planning processes carried out under the previous unitary system. This important policy instrument illustrates priorities of the elected government and the decisions taken to fulfill constitutional responsibilities.