It’s been eight years since the promulgation of Nepal’s new constitution, but the implementation of federalism remains on the backburner due to a lack of political will at the federal and provincial levels.

Politicians leading the provincial governments continue to complain to their seniors in the federal government about the lack of devolution of constitutionally-guaranteed power. It took the federal government years to pass the Federation, Province and Local Level (Coordination and Inter-relation) Act (2020) that paved the way for coordination among the three tiers of government.

After almost three years of having the law, Prime Minister Pushpa Kamal Dahal organised the first meeting of the National Coordination Council in Pokhara on June 30, giving the provincial and local governments some hope that their concerns will finally be addressed.

Now the implementation of federalism is expected to be expedited as all mechanisms are in place to resolve disputes over exclusive and concurrent jurisdictions of the three-tier government.

Inter-governmental structures are vital in resolving differences between the different tiers of administration but seldom do such mechanisms meet.

Resolving disputes between the three tiers

The Federal, Provincial and Local Level (Coordination and Interrelationships) Act (2020) envisions five different mechanisms for institutionalising the relationship among the different tiers of governments and resolving their differences, if any. It envisions an Inter-Province Council, an Intergovernmental Fiscal Council, Provincial Coordination Council, a National Coordination Council and a Sectoral Committee, led by different federal ministries.

Article 235 (1) of the constitution states that the federal parliament makes necessary laws in order to maintain coordination among the federation, provinces and the local level.

Clause (2) of the Article says the Provincial Assembly may maintain coordination between the province and rural municipalities or municipalities and settle political disputes, if any, that have arisen, in coordination with the concerned rural municipality, municipality and the district coordination committee. The processes and procedures for the settlement of disputes are as provided for in the provincial law.

The Act was endorsed in July 2020, giving the basis for the provinces to form the Provincial Coordination Council led by the respective chief minister, besides the National Coordination Council led by the prime minister.

The 20-member National Coordination Council headed by the prime minister includes three ministers—holding law, finance and federal affairs and general administration portfolios—besides seven chief ministers, the chairs of the associations of rural municipalities and municipalities, and the representatives of the district coordination committees.

Meeting of the National Coordination Council

For the first time since the country adopted federalism, Prime Minister Pushpa Kamal Dahal called the meeting of the National Coordination Council on July 1, a day after six of the seven chief ministers met in Pokhara.

It took around three years for the prime minister to hold the meeting of the Coordination Council after the legal provision came into force in July 2020.

The meeting discussed forming a few panels to study the remaining laws necessary to exercise the exclusive and concurrent jurisdictions of three governments. Prime Minister Dahal promised both the chief ministers as well as the representatives of local governments that all their concerns would be addressed at the earliest.

Other coordinating mechanisms

Besides the inter-provincial council, the federal ministries can form sectoral committees led by federal ministries, including all the seven provincial ministries as members, to discuss issues related to the particular ministry.

According to Khim Lal Devkota, an expert on federalism and local governments, sectoral committees are in the process of being formed. “I have been pressing through different platforms to ensure all the Inter-Governmental Relations (IGR) mechanisms are in place,” Devkota said. “Implementation of federalism will be effective only when they are active.”

Linking federal and provincial governments

The constitution envisions an Inter-Province Council led by the prime minister with the chief ministers of all seven provinces as members, besides the home minister and finance minister of the federal Cabinet.

Article 234 (1) says there shall be an Inter-Province Council to settle political disputes arising between the federation and a province and between provinces.

The Inter-Province Council may invite to its meeting a federal minister and a provincial minister responsible for the dispute, plus an expert.

It took around nine months for the prime minister to hold the first meeting of the Inter-Province Council after the first elections were held in 2017 as per the new constitution.

Chief ministers complained to the then prime minister KP Sharma Oli about the lack of staff that had been hampering the smooth functioning of their governments. They also spoke on budgetary/tax constraints and the lack of basic infrastructure and legal framework to work in the provinces.

On September 9, 2018, Oli postponed the meeting of the Inter-Province Council after the meeting of six out of the seven chief ministers held in Pokhara came up with a nine-point demand to be presented to the prime minister.

It then took another three months for the prime minister to hold the first meeting of the council, on December 9 2018.

Only three such meetings have taken place, the last one in April 2019 in Oli’s premiership.

Provincial and local governments

The Provincial Coordination Council is an important forum for intergovernmental relations, as it facilitates planning and budgeting issues between the provincial and local governments, among other issues.

Chaired by the chief minister, the council has the provincial finance and internal affairs ministers, the principal secretary and representatives from each district as members.

The first chief minister of Gandaki Province, Prithvi Subba Gurung, said he formed the Provincial Coordination Council and held its meetings twice a year.

Another former chief minister, Lal Babu Raut of Madhesh, said the change in the legal provision to cut the number of members in the Inter-Provincial Coordination Council has affected its functioning with only a few representatives of local governments participating in the meeting.

Implementation of fiscal federalism

On the basis of the Intergovernmental Fiscal Arrangement Act (2017), the Intergovernmental Fiscal Council has been formed to discuss financial matters between the federal units. The Council includes the federal finance minister, provincial finance ministers, 14 representatives from the local units, and three experts nominated by the federal government.

According to Devkota, the Intergovernmental Fiscal Council is a common forum to discuss fiscal issues between the federal units. “Due to a legal arrangement requiring the council to meet annually in March, it is comparatively more active than other structures,” he said.

Even so, the problems of planning and grant distribution among the different levels of government have not been resolved.

Federal government’s role

In the words of Gurung, the former Gandaki chief minister, the federal government should help provinces and the local level to draft laws for the effective exercise of their exclusive rights.

They should also draft necessary laws to manage the concurrent rights of the three tiers of government. There must be a clear demarcation of jurisdictions between the federal, provincial and local governments.

Gurung also suggested that the federal government increase the budgets for the provinces and local units so that they could complete development projects on time.