Forgotten federalism

  • Major threat to federalism is that provinces have not been drawn up in a way to allocate equal capacity-building resources

Dec 26, 2017-

What is clearly missing in the agenda of the otherwise acrimonious debate in Kathmandu-centric power politics is the concern for Nepal’s fledgling federalism. No political party or leader of wielding influence seems bothered by the federal polity’s rather dangerously flickering fate. It may be argued that the polity’s script for failure was already written when provinces were delineated without considering their economic viability, for that matter, without any consideration that would augur success. The only hope was that political wisdom would prevail and major political forces would honestly strive to save it from abject failure. But indications are ominous.

Capacity differentials

An example of critical political short-sightedness is evidenced by the acute dissimilarity of financial capabilities among the provinces. For example, a decade long (2006-2015) fiscal data reveals that Province 3 alone not only collects approximately 55 percent of national revenue (Figure 1) but also accounts for about 60 percent of total national expenditure (Figure 2). No other province gets expenditure allocation of more than 10 percent. Due to the country’s largest customs office being located in Birgunj, of Province 2, its revenue income seems larger than the other five provinces but, practically, the collection goes straight to the central accounts.

Even if efforts were made, this scenario is difficult to change in a short time horizon—say in a couple years. Because major existing tax points are impossible to be altered or transferred overnight since such a move is contingent upon costly infrastructure, market size and number of citizens in the tax-net, among several other factors. The provinces’ exploring their own sources for financial resource is even more implausible, particularly in the short run. What this practically means is that, despite incessant rhetoric of decentralised authority to provincial or even local levels, all the functions and decisions of the lower two layers of government are completely dependent on vertical fiscal transfer from the Centre (read Province 3). Ironically though, the Centre itself is gobbling more resources than it is actually generating.

Fight for capital

The contest to turn cities into provincial capitals is heating up. But the debate on the issue is misplaced. Most influential leaders are competing to make existing, relatively developed cities into the provincial capitals. Obviously, none of them were planned for the purpose and the very idea of federalism is not to add value to already urbanised, attractive market hubs, but to create a centripetal effect by developing new and expectedly better planned locus, instead, for public services as well as public goods.

The claims put forth by two influential leaders of CPN-UML, Vice-president Bishnu Poudel and Secretary Shankar Pokharel on Butwal and Tulsipur-Ghorahi, respectively, to be picked as the capital of Province 5, in fact, make mockery of our federalisation process. It is no different than a group of ‘experts’ deciding to choose Bhaktapur as the capital of Province 3. These escapisms offered by work-shy politicians and/or so called experts in effect are thwarting one critical expectation from federalisation—that it would deepen the access to infrastructure and, thereby, market reach to a so far marginalised populace.

Development paradox

Mayor of Kathmandu Metropolis, Bidya Sundar Shakya, as a representative case, is at the centre of criticism for his utter inability to deliver against his rosy election promises of development. News stories are aplenty on how heads and office-bearers of constitutionally all powerful local governments are lost in the haze even after nine months in office. These are not only true stories but true indications of how the federal facade is gradually failing to interface with its own rationale.

Elections for all three layers of legislatures are now complete. The government as a continuous institution is always there. The cacophony of power struggle is often too noisy. It is natural for people to expect some positive changes and get to see some hopeful signs for the country, and their own future. Yet, the political class at all levels is invariably failing to deliver, on all fronts. Where does the problem exactly lie?

Electorates have carried out their responsibility, duly voting in their government(s). Asking for their elected representatives to fulfil their promises is their natural right. Their constant pursuit to the cause of development has become increasingly engaging over time. But this is only the demand side of the issue. The real bottleneck on development lies on the supply side. It has been so, literally, for generations.

For a moment, let’s forget about development. Are our representatives, particularly at provincial and local levels, aware about their own latitude on decision-making?  Do people like Mr Shakya possess the minimum required knowledge and skill on project implementation in their respective jurisdictions?  An answer is an unambiguous ‘Nay’.  As such, no matter how hard the demand side may put pressure on, the government’s ability to deliver is unlikely to improve.

There could be only two possibilities of filling this gap between the demand and supply of the development, per say. One, a relatively successful global practice is that these political executives are supported by a well-trained, well-intended and well-meaning bureaucracy; more like a technocracy. Second, in a federal set-up, since decision independence is a crucial component even at lower levels: Willingness and suitable opportunity for the elected representatives to learn and execute the development knowledge can substantially change the scenario for the better. This, in fact, applies to all levels of political figures with public responsibility.  In federal polity, if the system is not matched by an equal level of administrative, financial management and public preference ordering skills, it is doomed to fail. That is exactly where we stand now.

Apparently, what we are doing and experiencing in these crucial fronts are visibly antithetic to very principles of federalism. However, it is not yet too late for course correction and, in many areas, for right beginning. Only question is when and where do we begin from?

Wagle, a founding editor of the economic daily Arthik Abhiyan, is an eco-political analyst

Published: 26-12-2017 08:22

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