Local level restructuring is a requisite for the implementation of federalism, so the much-hyped debate on it is understandable. With hardly a month left for the Local Level Restructuring Commission (LLRC) to finalise its recommendations on the restructuring of local level governments, political parties and experts are still divided on the number of local units.

‘Principle of subsidiarity’ and ‘economies of scale’ are the two crucial but contending principles that should guide local level restructuring. In principle, the purpose of federalism is to transfer centralised power to the lowest political units nearest to the people so as to ensure easier access to government services. Therefore, one may argue that limiting the number of local governments lowers the accessibility of services.

However, in terms of economies of scale, institutional arrangements must be viable and sustainable. A small (large) unit with a large (small) set of functions may not produce output at an optimum level. Nepal’s constitution has assumed a sovereign local government with a long list of functions to be carried out. So a local government unit should be able to carry out the functions assigned and therefore cannot be too small as argued by many political parties. However, it cannot ignore the principle of subsidiarity, which encourages reducing the distance between services and citizens.

Around the world

Mandates for local governments have always been a point of discussion in federal countries. Early federations like the US, Canada, Australia and Switzerland kept their local government under the competence of provincial governments and delegated selected asymmetrical functions depending on provincial laws. Local governments in these countries, except for Switzerland, still do not have constitutional recognition of power and authority as federal units. In these countries, the size of local governments varies markedly in terms of both population and economy from a small territory of less than 100 people to the world’s largest mega-cities.

There are some federal countries like Germany and India that recognise local self-government. Germany was the first to do so in 1949, when it granted autonomy to the local level for determination and implementation of all policies concerning economic, social and cultural life. However, municipalities are not incorporated as a third order of government in Germany. India included local governments in its constitution through the 73rd and 74th amendments of its constitution in 1992 but largely kept them under the competence of provincial government. Hence their autonomy is questioned.  

By contrast, the federal systems of Brazil and South Africa have devolved power to the local governments through constitutional allocation. The Constitution of Brazil 1988 recognised municipalities as the members of federation with powers of self-organisation. The fragmentation or consolidation of municipalities in Brazil would mainly depend on the provincial law which resulted in an increase in the  number of municipalities from 4,189 in 1988 to 5,437 by 1995, making the management of local bodies difficult. The constitutional amendment in 1996 proposed additional provisions to discourage unwarranted creation of new municipalities. Still the fragmentation of municipalities is affecting their relationship with state and federal government encouraging discourse on consolidation. South African municipalities enjoy relative autonomy in terms of service provisions. But the symmetrical allocation of power and autonomy has produced asymmetrical results as the large municipalities are fully enjoying constitutional rights while the small ones are struggling to protect theirs.

Further devolution of power

Unlike global experiences, Nepal’s constitution has ensured an autonomous and stable local government with responsibilities to deliver a large number of     functions that were traditionally kept under a higher order of government. The global orientation of strengthening local governance promotes consolidation in terms of size to enhance competence while fragmentation is necessary to ensure service provisions.  Consolidating the size of local units does not prevent it from providing services to people but increases the competency of the unit to implement constitutional provisions. The optimal size of local government units is most contested across the

globe and there is no specific universal principle to define it. However, constitutional allocation of function, public aspirations and global practices recommend consolidation in size while maintaining fragmentation in service delivery units within the local government. A fragmented local government, as in South Africa and Brazil, would face difficulties in protecting and implementing their constitutional rights, which in turn may become a challenge to institutionalise federalism.  

With varied models and practices of defining the size of local government, a plausible model for Nepal should be home-grown. Keeping the political boundary of local units consolidated for economies of scale, service centers within the unit can be fragmented as per the spirit of the principle of subsidiarity. Wards of municipality or village council serve as the lowest political unit with elected representative for the interface between the state and the people. Many functions of local government can be delegated to the wards so that they will have ample business to remain engaged with the people, thereby promoting local accountability and ensuring delivery of public services. The elected local government is autonomous to decide on the structure of the service delivery system. However, we need to encourage further devolution of power to the lowest unit instead of centralising it within the ‘town executives’.

The writers are associated with Nepal Administrative Staff College