Views of a Nepali Economist

Why federalism?

By: Mukesh Khanal

Majority of Nepalis believe that Nepal should become a federal republic with much decentralization of power. This belief is a result of the skepticism that a central government cannot solve all of Nepal’s ills which results mainly due to central government’s inability in resolving local and regional level problems. A case study of Dang helps understand this skepticism better.

Dang suffers from competition between farmers and the crusher industry over use of water resources. Farmers complain that Dang’s crusher industry uses a disproportionate share of water. The industry is blamed for running rivers dry because of which irrigation canals have dried up, and Dang’s agriculture is hurting as a result. Also, of all districts in the country, Dang has the highest concentration of cement factories. Locals report that surrounding hills are being lost to these factories. Adding insult to injury, these factories are accused of hiring mostly Indian laborers instead of locals from Dang. This has created conflict and tension between locals and businesses. Locals fear that this will only increase in coming days given huge unemployment among local youths in Dang.

Locals in Dang believe that these problems exist, and have been unresolved, due to direct influence of national government at the local level with no veto power in the hands of local government and local citizenry. Locals suggest that higher powers in the central government pocket bribes from these industries, and grant licenses to exploit the natural resources that rightfully belong to people in Dang. As a result, operators of these businesses have not listened to local people’s concerns and have been destroying local natural environment. Locals understand that some hills would be lost to Dang’s cement and crusher industries but they would not feel as bad if they helped generate more local employment.

Land and timber mafia in Dang have been active under the aegis of influential national level actors in politics and in government. Productive agricultural lands are being plotted and sold in record numbers. Land mafia has been very active in capturing private and public land. Land belonging to a local Sanskrit university has been captured by the mafia. Land belonging to Swargadwari ashram and one belonging to the Sports Ministry have been illegally captured by the mafia and are for sale. Similarly, forests in Dang have been illegally cut down by the timber mafia in record volumes.

Amidst these exploits by land and timber mafia, locals in Dang feel helpless because there is very little action that they can take except filing a complaint to their local government. Local government is helpless because these mafias have direct permission from national level politicians—and bureaucrats in Ministries—to continue their shenanigans. A case against those that captured the land belonging to the Sanskrit university has been registered with the central government. Locals believe that resolution in that particular case would have been quick and effective if local government had been given power to adjudicate. As for other cases related to land and timber mafia, there is silence from local government, local authorities and the department of forestry.

Dang also suffers from exceptionally poor public service delivery. Nepal Electric Authority (NEA) has been incompetent in providing electricity to dalit communities and landless settlers. As a result, electricity is being stolen with persisting disputes between NEA, dalits, landless settlers, and local law-abiding community over the practice. Also, based on the policies made at the central level, each farmer in Dang can only purchase 5 kg of fertilizer from local government and cooperatives. Fertilizer dealers in Dang have been engaging in illegal sale of fertilizers with farmers often having to pay two to three times the actual price.

Members of a VDC with fertilizer shortage are not permitted to buy fertilizers from a neighboring VDC that has a surplus. This rigid policy devised by central government is hurting farmers in Dang, and has affected their productivity and their livelihoods. As a result, some farmers in Dang committed suicides this year. Locals believe that if the local government and local citizenry had powers to determine their own policy and fate, farmers in Dang would have fared better, not to mention numerous famers’ lives that would have been saved. Amidst these problems, local government has remained silent because it is powerless against central government’s policies.

Federalism and more decentralization do not ensure an across-the-board increase in freedom in the local level, and may not necessarily result in more development. That is determined by what functions of the central government are decentralized and how effectively that decentralization is carried out. However, education, health, counter-trafficking and social efforts become freer and much more effective when decision making powers are decentralized to the most local level. That will make local actors and advocates more effective in prevention as well as cure to social ills. Similarly, resource allocation, public service delivery and disaster response are more effective when decision making is directed by local government with significant financial and logistical support from central government.

As it stands today, under the rigid policies of central government, Dang and its surrounding region are suffering. People are helpless as they have no power and authority to go above and beyond the central government’s policies. They feel that federalism—and subsequent devolution of powers to the local or regional level under a federal state structure—is their only way of choosing their own development agenda and fate. Not just Dang, but the entire mid-west and far-west of Nepal have been neglected for years. Locals in the mid-west and far-west of Nepal wait with patience for a federal state system to relieve them of their sufferings.