As the government prepares to unveil its policy and programme and budget shortly, it is vital to emphasise federalism and address pertinent issues. The government should prioritise the following issues and take necessary action to address them effectively.

Devolution of power

The common minimum programmes of the Sher Bahadur Deuba government and the policy documents of the KP Sharma Oli government both emphasised the need to adjust the police forces in the provinces promptly. However, despite their commitments, they failed to implement this provision. The current government, led by Pushpa Kamal Dahal, claims in its Common Minimum Programme that this adjustment will be achieved within six months. However, there is no solid basis to believe this claim. Consequently, the province has yet to witness the fulfilment of this commitment. This has led to a growing disillusionment among the people. The morale of the provinces is suffering, and urgent attention is needed to address this crucial matter so that effective planning, resource mobilisation and peace and security at the provincial level are achieved.

The adjustment of the police force holds paramount importance for the stability of the provinces. The federal government must expedite this process to create an environment where the provinces can effectively exercise their authority over police administration and ensure peace and security. Therefore, it is crucial to incorporate this issue into policy and program frameworks and allocate sufficient budgetary resources in the upcoming budget to support its implementation.

The failure to adjust police forces, an exclusive power jurisdiction of the provinces, even after six years of implementing federalism, undermines the provinces’ authority. It also constitutes a disregard for the constitution, so the government must immediately rectify this mistake and uphold the constitutional provision.

The distribution of grants is guided by various principles, one of which emphasises reducing conditional grants and increasing fiscal equalisation grants. However, the current situation paints a different picture. For instance, in the fiscal year 2018-19, fiscal equalisation grants accounted for approximately 10.5 percent of the total government budget allocated to subnational governments. Unfortunately, this percentage has declined over the years, reaching just nine percent in the fiscal year 2022-23.

Let's look at conditional grants, particularly at the local level. In the fiscal year 2018-19, local governments received a conditional grant of Rs110 billion, which significantly increased to approximately Rs200 billion in the fiscal year 2022-23. However, the utilisation of conditional grants is limited, as they can only be spent on predetermined plans and programmes. This restrictive approach leaves subnational governments with limited discretion to address their specific needs. To address this issue, it is essential to establish clear sectoral conditions, goals and expected outcomes when allocating such grants. This approach would provide greater flexibility and enable subnational governments to address their unique requirements effectively.

The international community closely observes and assesses the fairness in the distribution of grants to sub-national levels. It is of utmost importance for the government to prioritise this matter and give it special attention. By addressing the distribution of grants fairly and equitably, the government can foster greater provincial development and ensure that resources are allocated based on each subnational unit's specific needs and priorities.

Provincial balance

Provincial balance in budget allocation is crucial in Nepal. While the goals of achieving inclusive economic growth in the pre-budget document for FY 2023-24 are commendable, ensuring an equitable distribution of resources among the provinces is equally important. The longstanding practice of concentrating a significant portion of the budget on constituencies associated with the prime minister, ministers, and influential leaders persists even in the period of federalism and republic. This practice must be improved and rectified to promote fairness and equal opportunities for all provinces.

Moreover, it is crucial to recognise that allocating a bigger budget or a higher number of programmes to specific constituencies does not guarantee electoral success. The cases of leaders such as Pashupati Shumsher Rana and Vijay Kumar Gachchhadar demonstrate that focusing exclusively on district constituencies does not always result in electoral victory. Ultimately, the federal government is responsible for balancing budgets across the provinces. All three levels of government—federal, provincial and local—should prioritise balancing the budget and make concerted efforts to achieve fair and equitable resource allocation, fostering development and progress for all regions of the country.

In recent years, the government has emphasised implementing large-scale projects considered game changers and strategically important. However, there is a disparity between the government's intention and action. While the federal government committed to focusing on significant projects, reports from the Office of the Auditor General show that it still intervenes in smaller projects related to local infrastructure.

Additionally, the federal government has taken over plans and programs such as water supply, urban development, and irrigation, approved by Parliament through the budget for the current fiscal year 2022-23, and transferred them to the subnational and local levels. The subnational levels included the projects in their budgets, received formal approval, signed contracts, and initiated them. The budget approved by Parliament should not be reversed by the Cabinet meetings. Nevertheless, the government has found a dishonest way to reclaim control over these projects.

The provinces face similar issues in terms of plan selection and implementation. Some individuals argue that small projects have worsened the value of the provinces. Therefore, the provinces also need to improve their approach. To address the implementation of plans, National Assembly has instructed the government to set certain thresholds in thematic areas. For road infrastructure, it has been proposed that the federal government will not implement projects with a budget of less than Rs150 million, while other infrastructure sectors should receive a budget ranging from Rs50 million to Rs70 million.

At the provincial level, road infrastructure projects should not be allocated less than Rs20 million, and other infrastructure sectors should no less than Rs5 million. At the local level, it is recommended that at least 50 percent of the total capital budget be distributed based on ward population, geographical area, poverty and other factors. To ensure the optimum implementation of parliamentary recommendations, it is essential to address not only the execution of plans and programs but also to prioritise the successful implementation of federalism.

Civil law

Despite the Common Minimum Programme’s emphasis on enacting civil laws to improve governance and service delivery, the Civil Service Law has yet to be enacted after eight years of the Constitution's promulgation and six years after the first federal elections in 2017. This raises concerns regarding the effectiveness of promoting governance and providing services without such legislation.

The constitution was drafted and issued in seven years through two elected Constituent Assemblies. Therefore, it is pertinent to ask the government why enacting civil laws is as challenging and time-consuming as drafting the constitution. During the previous government led by KP Sharma Oli, it was announced that this law would be introduced in March 2018. However, despite the approval of the Federalism Implementation Action Plan by the Inter-Provincial Council, the enactment of the civil law is still in limbo. This situation raises the crucial question of whether this country is governed by political parties or the bureaucracy.

Regardless of how well-crafted the budget may be, its successful implementation relies on the competence and dedication of the civil service. Unfortunately, it seems that the leaders have struggled to effectively manage and regulate the behaviour of the employees. The delays in enacting the Civil Law can be attributed to the actions of certain employees who have impeded its timely introduction.

Apart from the Civil Law, the Federal Education Act, the Health Act, the Local Service Improvement Standards and other important laws and policies related to implementing federalism have not been enacted. The government should also be serious about this aspect.