‘Statute should make roles of different govt layers clear’

  • heading towards federal structure
- POST REPORT, Kathmandu
‘Statute should make roles of different govt layers clear’

Aug 3, 2015-

Stakeholders have said the upcoming constitution should be clear about the jurisdictions of centre and federal provinces and local level authorities to make sure the supreme law of the country is able to play an instrumental role in shaping up the national economy.

The constitution should either have clear cut provisions about the jurisdictions of each layer of the government or mention each layer’s role in brief while allowing the Acts to define the jurisdictions later to avoid any controversy and dispute in the future, they said at a “Workshop on Resource Management in Federal System” here on Monday.

Former National Planning Commission (NPC) vice-chairman Shankar Sharma said the resources management in the federal setup would be one of the key issues and that the government should be clear about the functions of different tiers of the government, sources of funds/revenues (tax base or revenue assignment, efficiency of tax collection, transfer) and efficiency of resource use (recurrent, capital, prioritized expenditure, leakage in the economy and so on) while adopting the federal model.

After entering into the federal setup, the economy could be affected both positively and negatively, according to Sharma. “The positive scope of federalism is that there will be possibility of competition among different provinces, contributing to enhancement of economic growth,” said Sharma, adding the negative scope is increased administrative expenditure.

He said the outcome of studies, according to which, a 10 percent higher expenditure in decentralisation decreases the growth of real gross domestic product (GDP) per capita in developing countries with weaker party system by 0.14 percentage points. “This suggests challenges of the federal setup,” he said.

Former Nepal Rastra Bank governor Yuva Raj Khatiwada said there needs to be clarity about the power of the centre and the provinces, and the provinces should have certain authorities so the people and businesses there should not run after the central authority to settle petty issues.

“The private sector has a huge scope in Nepal’s economy. We need support of the private sector to sustain provincial states too. Hence, the private sector cannot depend on the central financial mechanism,” Khatiwada said, adding there will be a need for a federal wing of the central bank, which would work as per the local circumstances based on the regulation of the central bank. “If industrialists are bound to visit Kathmandu for petty issues, there won’t be much use of the federal structure,” he said. 

Senior advocate Anil Sinha said duplication of revenue might be a big issue in the federal economic structure. “We will need a lot of Acts and polices to implement the upcoming constitution,” Sinha said, adding jumping into a provincial setup without fixing a federal law might be a setback for the government. Confederation of Nepalese Industries (CNI) President Narendra Kumar Basnyat said the upcoming constitution should ensure “liberal economy”. “Apart from this, there are several issues which needs clear cut mention in the draft constitution. If we don’t take care of it now, it might turn into a big problem tomorrow,” he said. 

Published: 04-08-2015 09:10

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