Intergovernmental Profile: Nepal

The Constitution prescribes a federal system with three levels: a federal government, province governments, and local governments. The Constitution defines the governance arrangements of governments at each level, and grants governments at each level exclusive and concurrent (shared) powers. Provincial and local governments have their own directly elected leadership, raise their own revenue (although they are mostly dependent on fiscal transfers from the federal government), formulate and implement plans and programs, and can—by law, but not yet in practice—manage their own human resources. Constitutionally, district assemblies and district coordinating committees are established as coordination units among local governments, and as mechanisms for local governments to coordinate with federal and provincial governments. In practice, the federal government retains a strong deconcentrated administrative presence at the district level.

Although neither the Constitution nor federal legislation explicitly mentions that provincial and local governments are corporate bodies, they are designated as autonomous legal entities and enjoy powers and responsibilities similar to corporate bodies, holding perpetual succession with their own elected leadership, (de jure) autonomy in decision-making power and administration, and constitutionally defined revenue assignment and functional responsibilities. In practice, however, the federal government has been reluctant to relinquish its powers over concurrent functions and over certain aspects of subnational government administration. For instance, despite provincial and local government level having constitutional autonomy, the federal government appoints the Principal Secretary and Secretaries of every Province, every District Coordination Officer, and the Chief Administrative Officer of every local government. The federal government has further delayed critical legislation that would allow subnational governments to independently recruit and manage their own local civil servants. As such, the federal government has given itself sweeping authority—as an open-ended transitional provision—to allow itself to depute any employee working in civil service at the local level to local governments.

The constitution grants all three levels of government exclusive and concurrent powers and functional responsibilities (Schedules 5 to 9). There are overlaps and inconsistencies in the exclusive as well as concurrent powers of the three levels of government listed in these constitutional schedules, especially in key sectors including education, health, agriculture, livestock, forest and physical infrastructure development. Attempts to bring more clarity on the roles and functions of each level include an unbundling exercise of the exclusive and concurrent powers, the business allocation rules of the federal and provincial governments, and the Local Government Operation Act, 2017. Although the broad range of concurrent powers among the three levels are subject to interpretations by federal laws, most federal sector ministries have yet to develop sector legislation that conforms to the new constitution. In the absence of legislation operationalizing the assignment of functions for key concurrent functions, the federal government continues to dominate—directly or indirectly—the delivery of many public services that are arguably assigned to provincial or local governments.