KATHMANDU: Almost a decade has passed since Nepal introduced three-tier federalism. Instead of good governance, criticism has grown that state spending has ballooned across the federal, provincial, and local levels; corruption has spread to villages; and people have not been able to fully exercise their rights. 

Some now argue that federalism has become unnecessary and burdensome, even calling for its abolition. Despite some positive results in participation, inclusion, and human development, why has federalism become so discredited? Is the problem with federalism itself, with the constitution and its implementation, with political leadership, or with public expectations?

Former Supreme Court Justice Ananda Mohan Bhattarai spoke to Nepal News’ Krishna Dhungana on these very issues. Here are the edited excerpts:

It has been almost 10 years since the constitution was promulgated. It not only restructured the state but also brought big changes in inclusion, rights, and resource distribution. Yet debates for and against federalism continue. Why is this happening?

When politics becomes reactionary and driven more by impulse than reason, there is always doubt whether discussions around the constitution will be properly understood. There is already widespread agreement that review and amendment of the constitution is necessary. However, the disputes we see today in politics can all be addressed within the constitution itself. It provides avenues for amendment and even referendum. It is not rigid.

It has been nearly a decade since we implemented this constitution. I observe that while terms like “forward-looking,” “progressive political settlement,” and “inclusion” were present in the Comprehensive Peace Accord, the word “federalism” was not. This shows that until that time, federalism was not considered necessary. The issue truly became prominent only after the Madhes Movement. But before adopting federalism, we did not have enough discussion or debate.

Around the world, 29 countries practice federalism in different models, each for their own reasons. As William Riker pointed out, some chose it for external security, others for resolving internal conflicts. In our case, the drivers were neglect and discrimination. When citizens felt discriminated against by the state, they sought an alternative governance system—hence, federalism.

Another reason was identity. When communities felt their identity was lost, they raised the demand for federalism. But in the Constituent Assembly, federalism was not debated as thoroughly as it should have been. Committees and reports touched on it, but a full-house, deep debate never happened.

Federalism is not an “coincidence of history.” It should have been formally negotiated in the Constituent Assembly, but it was not. Only by carefully analyzing these aspects can we properly understand the federalism debate.

Many countries like the U.S., Australia, Malaysia, and Switzerland function under federal structures. Why does it seem so messy in Nepal?

Federalism has both social and political aspects. For example, in Europe, its roots go back to the Holy Roman Empire. Germany even calls itself a “welfare state.” But in Nepal, people never had a social practice of federalism. After unification 250 years ago, even though some local rulers were given limited authority over tax and justice, Kathmandu ultimately controlled everything.

Before the Second World War, countries with federalism usually had provinces that were already independent states with their own constitutions and legislatures—like in the U.S. and Australia. Even under British rule, American states such as Connecticut and Rhode Island had their own governing charters. Municipalities were granted autonomy through charters.

In Nepal, however, federalism was neither politically rooted nor socially practiced. Therefore, one could say it came “accidentally.”

That said, we have made achievements through the constitution—federalism and inclusion being two of them. Very few countries have an inclusive democracy like ours. I even call inclusion the “sweetest melody” of the constitution. No one can now remove it.

But inclusion comes with the challenge of balancing representation and participation, and ensuring substantive equality through positive discrimination. To preserve these values, federalism itself is not strictly necessary. One must understand federalism simply as a service delivery model—not a doctrine, nor a cure-all.

We have empowered the local level in the constitution. We have granted legislative, executive, and administrative authority to 753 local units. Constitutionally, local governments are not creations of the provinces. Provincial governments can be dissolved—but neither the federal nor provincial government can dissolve local governments. This is a beautiful aspect of the constitution. Now if you have a strong center and a strong local government, then do we even need provinces in between? This has become a serious question.

After establishing provinces and municipalities below the federal level, it was said that decentralization of resources would be institutionalized, power would be distributed among different cultures and societies, and people’s needs would be better addressed. Does this not qualify as an achievement?

We must examine provinces from multiple angles. First is good governance. How are the seven provinces functioning? How much budget do they receive? How do they spend it? What achievements do they have? Have people appreciated their work? Or have they proven indispensable?

Currently, provinces cannot function independently. Kathmandu decides everything—from who becomes chief minister to ministerial appointments.

Another principle in federalism is subsidiarity, which says that higher levels should only handle tasks that lower levels cannot. But in Nepal, when schedules dividing authority were drafted, duplication was created between center, provinces, and local governments.

For example, water resources: conservation is federal, usage is provincial, water supply and sanitation are joint, and small hydropower is local. This creates implementation complexity. Similarly, land policy is federal, land management is provincial, and guthis also hold land. Mineral extraction is federal, but conservation is local. Such unclear divisions cause problems.

The division of authority is a complex issue. What is not visible today may become apparent tomorrow. To address this, the Constitution has a provision. Article 232(2) of the Constitution allows the federal government to direct the provinces and local levels on matters of national importance.

What constitutes a matter of national importance can vary over time and may sometimes be intangible.

For example, when the Constitution was being drafted, climate change was considered a matter of national concern, but the Paris Agreement had not yet been adopted. Today, various issues included in the Paris Agreement have emerged rapidly, and matters once viewed at the national level have now gained regional and international significance and concern.

 This has compelled us to think in new ways. For instance, biodiversity was long understood as a regional issue, but climate change has made biodiversity an international matter. The loss of biodiversity affects forests and agriculture, which we had understood as national issues.

In short, our national concerns are evolving, and they compel us to rethink the division of authority in new ways.

Even though the expenses have increased with three tiers of the federal government, decentralization has been further streamlined by the provinces and Singhadurbar (the seat of the central government) with its powers has reached the villages. So where do you see the problem in this?

According to the constitution, residual powers are kept with the center, and in matters of national importance, the center has the upper hand, so it may not become too complicated. However, multi-tier federalism will somehow add complexity. When the US Constitution was being drafted, no thought was given to matters of national concern. Later, the courts interpreted that matters of national concern were within federal jurisdiction. We have multi-tier federalism.

Former Supreme Court Justice Anand Mohan Bhattarai. Photo: Shachindra Gautam

In terms of good governance, the question is how and in what proportion development and ordinary expenses are incurred when allocating the budget in a federal system. Dr. Bhesh Bahadur Thapa, in his book ‘Rastra Pararashtra: Ekatantra Dekhi Ganatantra Samma’ (Nation and Foreign Affairs: From Autocracy to Republic), provided clear statistics on the ratio of recurrent and development expenditures during the Panchayat era. At that time, development expenditure was higher than recurrent expenditure.

Currently, development expenditure is less than 20 percent. The allocated amount is not fully spent. Looking at it this way, the majority of the budget is spent on maintaining the state structure. On top of that, there’s the matter of the Constituency Development Fund. Plans to distribute funds in the name of the Constituency Development Fund, from the center to the provinces, were introduced through the budget. A petition claimed that such distribution was a mockery of good governance. The Supreme Court has put a stop to it with an interim order. I know politicians don’t like this, but such steps are necessary to ensure good governance.

When the constitution was being drafted, there was no plan to pay salaries to elected representatives of local levels. That’s why articles 220 and 227 of the constitution use the word ‘allowances’ instead of ‘remuneration’. But after local representatives started taking salaries, a writ was filed against it in the Constitutional Bench, and the Supreme Court, while delivering the verdict on that writ, decided that they could not receive salaries and allowances. The Supreme Court stopped it, but they are still indirectly taking remuneration. In this way, a political bureaucracy of five to seven thousand people has been created, and it is exploiting the state.

Another question related to federalism is whether our structures have the potential to be financially strong. The answer is no. What is currently being seen is that the provinces and local levels have become like tax offices rather than drivers of development.

An example comes from the provincial level. Last year, all seven provinces imposed a tax of 15 to 40 percent on the products of community forests. Community forest users are regulated under the Forest Act and also pay taxes like VAT. But then another tax? After this unfair practice, a writ was filed in the Supreme Court. The petition claimed that if one tax after another was imposed, community forests would be wiped out. So, the Supreme Court stopped it.

Community forests have played a role in Nepal having 46 percent forest cover. But the situation has changed since 1992. People no longer live in villages. The forests are also not used as much as before. As the forests grow, the monkey menace has increased in the villages. This is a new challenge. 

But instead of paying attention to challenges in the agriculture and forest sectors, our state structures have become like bodies for imposing taxes and making wasteful expenditures. Therefore, from the perspective of good governance, multi-tier federalism has become challenging in Nepal.

We have the constitutional body, the Commission for the Investigation of Abuse of Authority, for the prevention of corruption. The National Assembly of the Federal Parliament also has members elected by the provinces and municipalities. So why is there still a problem?

We can think about making the National Assembly, the upper house of the Federal Parliament, a house of proportional and federal representation. This is how it is in Germany. The upper house, the Bundesrat, is called the house of the states. If Berlin takes a position, everyone from that state votes as a bloc. We don’t have that here. Here, the practice is to vote according to the directives of the party at the center. The members of the National Assembly don’t even think that they should work for the benefit of their own provinces. That is, the National Assembly does not even affirm federalism.

Even with a two-tier structure, 753 local levels is a large number. There’s also the question of how to reduce this. If most of the work at the local level can be done at the ward level or online, the number can be reduced even more.

The service delivery model needs to be changed without compromising people’s rights and the democratic system.

Federalism is not a system that cannot be changed. Before World War II, there was one type of federalism around the world. Later, the concept of non-territorial federalism came about. Malaysia has this model. They have written in articles 8 and 253 that priority will be given to the natives. The natives are given priority in many things like jobs, representation, and licenses. India has a different kind of federalism. In India, the states were not formed all at once but in different phases. States were also formed based on language.

In our country, the trend is to go to Kathmandu or to a nearby city after becoming a little prosperous. This can be considered a development-related trend. However, the current rate of migration suggests that the concept of social federalism will not take root.

Looking at federalism from a market perspective, Nepal is a small market. Does the challenge of climate change allow us to live in small pieces? We saw this in the issue of the Chure hills. The Chure issue is so big that if we don’t handle it well, Nepal itself will not survive. Now, is the problem of the Chure, which is spread over 36 districts, the province’s or the center’s? Or the local level’s? Can only the local government or the province fight this problem now? Who will stop the destruction happening there? In all these contexts, we need to think about the federal structure.

There are legal hurdles to migration and the exploitation of natural resources. Local governments are also closer to the people and stronger than before. In your understanding, what are the main things hindering the expected results?

Local levels have become stronger, but the question is how people-friendly they have become. The development budget should be used for ‘productive use.’ It should not be used to build a view tower. 

The type of road network that has been built is also a matter of review. For local levels to become drivers of development, they must invest in productive sectors. For example, the change that comes to a farmer’s life when they are given a goat farming subsidy does not come from building a view tower or an entrance gate.

There is also a political side to the question of whether federalism is needed or not. But what is our priority? Is it sustainable peace, good governance, prosperity, practical guarantee of fundamental rights, inclusion, and a system with positive discrimination, or what is federalism?

As I said before, these things can be achieved even without federalism. On the contrary, when a financially burdensome state structure is created, the people cannot fully enjoy their rights. An example is a reservation. A reservation is certainly a way to end discrimination and ensure equality in practice. But it does not solve all discrimination. The Supreme Court is in favor of a reservation; there have been verdicts. But a reservation alone does not provide a solution.

We said we would provide reservations in education, but what’s the point if children can’t even go to school? The reservation works for those who can go to school. For those who can’t, shouldn’t we first help them create an environment where they can go to school? 

Again, there is the question of the quality of community schools, which is deplorable in most places. Currently, the rate of dropping out after school-level education has increased in the villages. When asked what to do after studying, the answer is to go for foreign employment in the Gulf countries.

The narrative that why go for higher studies when you can go to the Gulf is being created. It is also necessary to change the method and model of education. Should we arrange for vocational education or other skill-based education? If we do that, there might be employment in the country, and even those going for foreign employment might be able to earn more. 

Here, a reservation alone doesn’t provide a solution. To make the state structure strong, we must stop wasteful spending and use the money to protect rights. When drafting the constitution, instead of focusing on good governance, were we intent on creating unnecessary structures in the state? That also needs to be seen.

So how to fix the reservation system in the constitution?

Many things in the constitution and in practice do not match. For example, let’s look at the issue of inclusion again. A case was filed in the Supreme Court. The case filed by Senior Advocate Balkrishna Neupane is related to proportional representation. The petition claimed that even now, when selecting proportional representatives, individuals who have been MPs and ministers many times are being chosen, which is largely true. Political inclusion seems to be captured by the leaders of society.

Due to technical reasons, a writ of mandamus was not issued in that case, but a directive order was issued in the name of the government to review the law regarding the selection of proportional representatives before the 2027 elections and free the parliament from ‘elite capture.’ That is, if inclusion is to be made a reality in the state, it must reach the target group. Those for whom representation was intended must get it; the parasitic class should not seize it.

Federalism and justice are another important issue. Federalism is also chosen for justice. Within the broad scope of justice, the entire state structure must be justice-oriented. But even if we only look at the justice provided by the courts, the justice system needs to be improved to ensure justice. The judicial structures must be able to make people feel that they will get justice.

The rights of Dalits fall within the broad scope of justice. The constitution guarantees housing and land for landless and homeless Dalits. But planned work has not been done. The Halia (bonded laborers) have not been truly liberated either. These arrangements have no relation to federalism. If federalism is not a hindrance to doing any work, why is federalism needed or why should it be kept?

Currently, in political circles, there is a situation where they cannot say they don’t need federalism but cannot sustain it either. Therefore, I see the need to review federalism and make the federal structure smaller. In my opinion, if we are to keep federalism, a two-tier structure would be sufficient. A three-tier federal system is not necessary.

Nepal has been a Hindu-majority society and a Hindu nation from the beginning. Nepal’s constitution in 2015 made it a secular nation. Looking at the principles and practices of justice, is there any connection between secularism and federalism?

There is no direct connection between secularism and federalism, but there seems to be some. For example, the issue of Guthi (trust). Guthi is placed on the list of provincial powers. Most of our Guthis are connected to religion. Our festivals are related to Guthi. But the ‘Guthi Sansthan Act’ is still under the federation. Looking at it this way, this also needs to be reviewed.

Going back to your question, the main purpose of secularism is that the state has no religion, it does not oppress in the name of religion, every person who believes in a religion is free to practice their religion, and forced conversion is not allowed.

Our constitution says this much, but the constitution is not entirely secular, and it does not say that the state should turn a blind eye to religious matters. I want to make this clear with two or three examples.

First, let’s look at our national flag. The flag has the moon and sun on it. This is our heritage. Its history goes back to time immemorial. In the Licchavi era, a triangular flag protected by a lion can be seen on Manadev’s coin, Manangka. In Anshu Varma’s coin too, a lion is seen holding a triangular flag. There have been flags with the moon and sun on our temples and monasteries since ancient times. Evidence shows that Prithvi Narayan Shah also carried this flag when he unified Nepal. How to make a flag with the moon and sun is given in Percival Landon’s book.

What needs to be understood is that the moon and sun are the revered gods of Hindus, Som and Narayan, they are not secular! Therefore, our national flag has a direct connection with our religion.

Second, according to the constitution, the cow is our national animal. Hindus worship the cow as ‘Gau Mata.’ It is believed that Brahma, Vishnu, and Maheshwar reside on the cow’s head and various deities in its body. 

It is a Hindu belief that the sun and moon reside in the cow’s two eyes; the Vedas mention that God consumes dairy products and so do humans. In the case related to the protection of cows filed by Advocate Padam Shrestha, the Supreme Court mentioned these things in its verdict. That is, it seems that the predominance of the Hindu religion is in the constitution.

Third, the right to religion is guaranteed in Article 26 of the constitution. The prohibitive clause of sub-article (2) of that article states that “nothing shall be deemed to prevent the making of laws for the operation and protection of religious places and religious trusts and for the management of trust property and land.” That also means that the state can play a role in protecting religious institutions and ensuring good governance in those institutions. That is, the constitution has accepted that the state has a role to play in protecting religion.

Currently, Guthi Sansthan gives money for the Bhoto Jatra of Machhindranath. It gives money to the sages who come to Pashupati on Shivaratri and sends them away, and the tradition of the state spending money for other religious festivals and events also continues. 

The Pashupati Development Fund Act and the Guthi Sansthan Act are still in force as federal laws. The recent census also showed that 81.19 percent of Nepalis are Hindus. In fact, Hinduism is not just our religion; it is a way of life. The Supreme Court of India said this a long time ago in the Bal Thackeray case.

More recently, in 2023, it was reiterated in a case filed by Ashwini Upadhyay.

If the constitution is a document of faith, then it should be mindful of what the religious faith of the majority of the people is and how it can be preserved. Just because some foreigner says we should be secular, we don’t have to applaud. Therefore, there is a need to review whether to maintain a Hindu nation or be secular. For this, a referendum can also be held.

Considering your views on the constitutional provisions and our practice of federalism so far, is it time to change the state structure? Is it time to amend the constitution?

Yes, the situation has arisen where the constitution needs to be reviewed. After 10 years of practice, many shortcomings have been seen. Now they must be addressed. If it is difficult to go directly to an amendment on a political issue like secularism or federalism, the dispute needs to be resolved through a referendum. If a referendum is not held, a decision can be made through extensive discussion in parliament, without being reactive and with a view to the distant future.

Another issue that needs to be reviewed is the post of vice president. Is the vice president’s job just to inaugurate things? In India, the vice president is given the responsibility of being the chairman of the upper house. In the US, the vice president presides over the Senate. Why was it necessary to have a separate National Assembly chairman in Nepal? The vice president and the National Assembly chairman also use the state treasury. Making the vice president the chairman of the National Assembly would contribute to thrift.

Other issues to be reviewed include the size of the federal parliament and the number of provincial cabinet members. Judges are always in favor of constitutional continuity. Since I belong to that class, I also stand in that favor.