Even after the completion of three full budget cycles since the formation of three tiers of government in Nepal, there are general complaints about the 'lack of delivery'. There are various perspectives and reasons that can possibly explain why 'development' has not occured as expected. Among them, lack of coordination and collaboration between the various levels of government in the selection and implementation of programmes and projects has been persistently problematic. There are provisions in the laws intended to avoid overlapping, gaps and contradiction in the selection and implementation of annual plans and budgets. But in practice, this does not seem to be the case. The federal and provincial governments send conditional programmes and projects, and the local units are compelled to implement them.

With regard to the federal plans, there are grievances from both the provincial and local levels. The biggest complaint of the provincial governments is directed at the small conditional schemes selected by the federal government. Dozens of conditional projects including road bridges, which have lain unfinished for 50 years, have been sent to the provincial governments with a very small budgetary allocation. The Coordination and Interrelationships Act 2020 states that any level of government should not interfere in the jurisdiction of another level of government while formulating laws, policies and plans. But government officials do not know or care about this law passed to ensure coordination and collaboration between the three levels of government.

Unrealistic projects

Dozens of unrealistic projects—like bridges in open areas, drinking water schemes in uninhabited places, irrigation schemes for non-agricultural lands, and additional road schemes in areas with adequate road infrastructure—can be seen. In addition, there is a tendency to ensure budgetary allocations from different levels of government and bodies for the same project.

During budget season, the offices of the Ministry of Finance, National Planning Commission and development ministries are crowded with people trying to influence budget allocations. The disease of Singha Durbar has spread to the provinces and local units. Although there is a constitutional provision to distribute the resources of the country on the basis of fiscal need, the practice of allocating resources based on access to power centres has not ended.

Nepal has undergone massive political and administrative changes. But there has been little change in how policies, plans and budgets are decided. The annual progress report of the Ministry of Finance states that there is a mismatch between the periodic plans, government policies and programmes and the annual development programme. The old mentality of deciding and influencing even small projects has remained at the federal level, and the provincial and local governments are reinventing the same practice.

Some local units have the wrong thinking and mentality of doing all the development tasks from the office of the municipal executive and not delegating rights to the ward level. While the wards are the real constituencies of the local level, many of them do not even have a ward secretary. Similarly, some local units do not even provide a budget ceiling to the wards. The system has changed, but not the mindset. The tendency to plan on the basis of preconceived notions, rather than based on the idea of inclusion, justification and necessity, still prevails.

In the erstwhile unitary system, the planning process began at the settlement level and ended at the National Planning Commission and Ministry of Finance. The local unit used to start the planning process in November. The plan selection process would end after the details were submitted to the sectoral ministries and the National Planning Commission by the end of March. Even in the absence of elected representatives, almost all local units used to follow participatory planning procedures.

In the changed context, participatory planning procedures have been adopted to some extent in the selection of projects at the local level; this tool has not been adopted at the provincial and federal levels. Similarly, there is a lack of project selection criteria from the community to the higher level as we did in the past. In order to fill this gap, it is necessary for the National Planning Commission to coordinate with the subnational levels. As in the past, it is necessary to follow a bottom-up planning and budgeting process where plans are first selected at the local level followed by the provincial and federal government.

In principle, the responsibility of parliamentarians is to make policies, rules and laws, monitor and evaluate and give instructions to the government. It is the responsibility of the government to implement the budget by selecting the proper programmes and projects. But problems have arisen due to the tendency of some ministers and influential leaders to engage in pork-barrel politics by bringing federal funding to their own constituencies, ignoring the demands from less influential parliamentarians or constituencies. The local infrastructure development partnership programme (Constituency Development Programme) emerged from this background where all parliamentarians would get a certain budgetary allocation to implement programmes in their constituencies.

Scrap that programme

This programme was somewhat fine when there were no elected representatives at the local level in the previous system. But in the presence of elected representatives, the programme is against the idea of a federal system of governance where the constitution has designated each level with its own power and functions. This programme has created the biggest problem in the provinces. Even in provinces where resources are scarce, other programmes and projects have to be made only after funding allocation has been made for the Constituency Development Programme. Because of this programme, the general public's confidence in federalism is waning. Regardless of the arrangement, a negative message is rife about the misuse of funds without contributing much to local socio-economic transformation.

The Constituency Development Programme should be scrapped. But even now amid the Covid-19 pandemic when the country is struggling to manage even its current expenditure from its own resources, the programme has not been abolished. This programme is now likely to go on indefinitely. This is unfortunate for federal Nepal. If funding is distributed based on fiscal need, there will be no rush of parliamentarians to get their hands on it. It is important to focus on allowing the subnational levels to carry out their responsibilities well, and allocating resources in a transparent manner on the basis of 'finance follows the functions'.