Governance reform in Nepal has become a highly debated issue in almost all formal and informal meetings and dialogues among stakeholders ever since the first Constituent Assembly (CA). As it happened, this very issue, particularly the restructuring of the state, caused the dissolution of the first CA. Furthermore, neither the first nor the second CA have paid heed to the need to debate on the reform of local bodies, which will undoubtedly be one of the core issues in the days to come. The reform comprises many elements like territorial, organisational, jurisdictional, functional, financial, internal governance, managerial, etcetera. This article highlights the need for the territorial reform of local bodies in Nepal.

Great imbalance

The term local bodies is used for local governments in Nepal, which include Village Development Committees (VDCs), Municipalities, and District Development Committees (DDCs). There are 3,625 VDCs, 130 municipalities and 75 DDCs, varying considerably in size and complexity. With regard to the population, districts in average comprise a population of 353,000 with 1,744,000 and 6,500 as the highest and lowest populated districts, respectively. The largest and smallest districts measure 7,889 and 119 square kilometres respectively, with an average of 2,000 square kilometres.

Similarly, the average population of VDCs is 5,000, with the highest and lowest containing 84,567 and 71 people, respectively—the highest comprising nearly 1,200 times more than the lowest. There is a huge variation in area as well. The largest VDC has an area of 1,467 sq km whereas the smallest is only 1.3 sq km, which is smaller than Tundikhel in Kathmandu. But the most interesting figure is that the area of the largest VDC is bigger than the sum of the areas of four districts, namely Kathmandu, Bhaktapur, Lalitpur, and Parbat, which have a total area of 1,393 square kilometers.

The situation is the same for municipalities. The average population of the 130 municipalities is 55,000 but the highest population is 975,000 and this is 78 times higher than the lowest population, which amounts to 12,700. The geographical sizes vary between 320 and six sq km with an average of 80 sq km.

These figures clearly indicate a big incompatibility in population and area of local bodies in Nepal, resulting in a big variance in basic service delivery. In other words, it is almost impossible to deal with a VDC with a population of 71 residents based on the same approaches and systems as with a VDC of 9 million residents. In order to comply with the local bodies’ tasks and demands of citizens in a satisfactory way, the size of local body units has to be appropriate.

International examples

In some countries, the numbers of local governments has been reduced and the areas and sizes increased with the objective of increasing efficiency. Denmark has twice implemented major administrative-territorial reforms. The first one, in the years 1962-1970, reduced the number of municipalities from 1,388 to 275 and the number of counties from 25 to 14, while the second, in 2003-2007, further cut down the number of municipalities to 98 and counties into five new regions.

Moreover, in the last 70 years, most other European countries have reduced the number of local public administrations by amalgamating local settlements into larger municipal units with the main purpose of increasing cost-efficiency in the provision of public services. Municipal amalgamations have also taken place in South Africa, Israel, Australia, Canada, Japan, etcetera. Again, the process has been driven by economic forces, seeking to increase efficiency instead of supporting low-capacity administrations in tiny municipalities.

Understandably, administrative-territorial reforms are complex and cannot be reduced to redrawing local body borders but instead, need in-depth study. Many different aspects must be taken into account in order to establish new local bodies of appropriate sizes that can work in an efficient and accountable way. If the local body units are too small, their budgets and number of specialised staff will be limited, and many tasks will typically be solved in an unsatisfactory way, or not at all. Some tasks will appear on a very small scale and cannot be carried out efficiently. Furthermore, some tasks need certain capacity and special knowledge to be resolved, which is typically lacking in small local bodies. In fact, VDCs and municipalities in Nepal are generally too small to be viable and to achieve the economies of scale necessary to engage in effective service delivery.

From VDCs to municipalities

Considering all these facts and figures, the present government has formed 72 new municipalities by assimilating 283 VDCs, which is a stepping stone towards the territorial reform of local bodies. Furthermore, an additional 66 municipalities are in the pipeline, which will further reduce the number of VDCs. Various studies have revealed that the number of VDCs should be reduced to around 1,000. For example, under prime minister Sher Bahadur Deuba, the Local Body Strengthening High Level Committee had recommended merging in each case three to six VDCs into one gaupalika, not exceeding 17 gaupalikas in each district.

As per the principle of subsidiarity, VDCs and municipalities are the local governments closest to the people. At this level, extensive interaction between the people and the public sector must take place, as they are the most suitable platforms for improving local public service delivery. It has been assumed that there would not have to be any district level structure like DDCs in the future. Those VDCs that are ready should be changed into municipalities and smaller municipalities should be amalgamated into larger ones.

Various CA reports have also visualised possible levels of rural and urban local governments in a future federal Nepal. Particularly, the Restructuring of the State and Distribution of State Power Committee Report has put forward a concept with two levels of local governments—Village Councils and municipalities, along with a recommendation to entitle provincial governments to constitute a high-level commission in order to reform local bodies in consideration of territorial and other factors.

In this regard, the rights of provincial governments on restructuring local governments need to be reviewed by the present CA. A powerful local government restructuring committee needs to be established, which will be likely to maintain uniformity as far as possible in the formation of new local bodies through a series of consultations with the provincial governments.

In conclusion, since the work of area determination and demarcation is mostly technical, the government at present should constitute a preparatory technical committee that includes experts who have experience in this field. The preparatory committee will study international practices and experiences, particularly from European, African, Canadian, and Australian models. The conceptual typology can then be applied to Nepal, even if the nature and structure of local governments differ from these countries.

Devkota holds a PhD in fiscal decentralisation and is a former member of the Local Bodies Fiscal Commission