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Federalism in Nepal: Experiment to loom or doom

Hem Raj Subedee

Introduction
Federalism is not always best, and there is no best version of federalism. Federalism seems particularly suited to democracies with very large populations or territories or with highly diverse populations that are regionally concentrated. Over time, federalism requires a significant part of population to have a sense of identity with the whole country, as well as lively and engaged political communities at the regional level.1

Nepal from its foundation has remains highly centralized and provides little space for the equal participation of its all people (of all caste and ethnicity) in public affairs. There is consensus among scholars and politicians that despite the democratization in 1990, there was very limited progress in establishing effective institutions of government at local levels and the great majority of people felt they had no opportunity to influence policy or exercise accountability over the executive. This prevented the growth of the exercise, or even the awareness, of democratic practices. The centralization of state power in Kathmandu also alienated the vast majority of the people from the structures of the state. There was considerable resentment from the belief that this centralization was a strategy for the continued monopolization of power by small elite, based on caste and region. Consequently many people see federalism as a way to empower communities and regions, which have been marginalized by the centralization of power, through forms of self-government. They also see it as recognition of the religious, linguistic and ethnic diversity of the Nepali people.2 Thus calls for federalism is to convey that the power of the centre must be constrained or removed, to end domination and to secure a more fair distribution of opportunities and living conditions. Human rights constraints and federal features have historically often been used for this very objective: to prevent domination by the centres. But is the need derived from an organic process where people really felt the need of federation and it is the only solution to the problem or else is it the process fuelled by political parties to garner public support in CA election to deter Maoists Party as federalism is their brainchild, laid out in their 40 points demand. The hard reality is that even though this grand project of federation is one of the most talked issue in Nepal but there are very few research and studies on the rational proposal of federal structures and its working modality, None of the seven party leaders have any concrete idea about the shape of the future constitution and ingredients of restricting the state into federal units. Even if they have, it is purely based to garner the mass support in their favour. They will continue doing that just for the sake of power not for their materialization.

1 2

George Anderson, Federalism: An Introduction, (Ontario: Oxford University Press, 2008). Opening remarks of Yash Ghai on a conference report, Federalism and State Restructuring in Nepal: The Challenge for Constituent Assembly, (Kathmandu: UNDP, 2007).

Structural and Operational Realities The interim constitution of Nepal has declared Nepal to be the federal democratic republic, and has left it open to the constituent assembly to decide on the modality of the federal states. Though Nepal is in the process of demarcation of the federation but this grand project may witness major challenges such as presence of the large number of ethnic communities and its skewed distribution throughout the country. Of the 100 ethnic/caste groups identified in the 2001 census there were only six that exceeds 5 percent or more of the national population and total of just 18 groups has a population size greater than 1 percent.3 This skewed population and distribution may cause major challenges in demarcation of federal states based on the ethnic or linguistic lines. To deteriorate the challenge further, all the major political parties have put forward very vague proposal for the delineation of federal structures either based on ethnic, linguistic, natural resources or geographical lines. This lack of vision and inaction of the political parties may further create a situation of stalemate during the constitution drafting process. As stated above, the grand project of federalism in Nepal can be doubted in many respects. One of major suspicions to this project is: how viable is this project of federalism in Nepal based on our socio-economic reality? What is the right modality if this project is viable? The heterogeneous mixture of all ethnic population in one society makes it impossible to have an absolute majority of one particular ethnic group in existing political set up. Based on such realities it would be very difficult, if not impossible, to delineate ethnicity based federal structure for a multiethnic, multicultural, multilingual, and multi-religious nation like in Nepal. Based on ground reality of mixed ethnic presence on the most part of the country, federalism based on ethnicity alone would not address the issue of proportionate sharing of power and resources in fact aggravates the problem more. Taking Nepal's specific geographic and socio-economic context into consideration, the regions need to be complementary to each other's existence. Hence, the cooperation between the regions and communities is imperative. The reality of Nepal, however, is that this is the country of minorities and they need to live together harmoniously if they want to survive as prosperous, stable and independent nation. Similarly, Nepal's two giant neighbours, India and China are keenly observing Nepal's current restructuring process; the country is not in a position to undermine their security and strategic interests. Although Nepal's political parties have already accepted the agenda of federalism, it is doomed to fail if it goes against long-term strategic interest of Nepal's neighbours. Similarly, in a highly diverse society like Nepal, it needs a political culture of tolerance and accommodation. Thus, there needs a political leadership of wisdom and courage: not a leadership like Milosevic who divided in Yugoslavia but a leadership like Ghandi, Nehru or Mandela who build the spirit of national sharing. Looking at the present political leadership in Nepal, this seems seriously lacking as we are going through the politics of mistrust and divisions on our ethnic and linguistic identities.
3

Pitamber Sharma, Unravelling the Mosaic: Spatial Aspects of Ethnicity in Nepal, (Kathmandu, Himal Books, 2008).

Political Parties and their position The interim constitution pledges autonomy for all future provinces. Major political parties are engaged in laying out their model of federalism and some opposing this concept. The CPN (Maoist) has sketched its 11 federal and two sub-states on the basis of ethnic composition, geographical contiguity, language and ethnic viability. The Nepali Congress has devised 7 federal states based on territoriality and the CPN-UML has drawn 15 on the basis of territory, caste, language and ethnicity. The TMLP, Sadbhavana Party and MJAF have proposed a single Tarai province with several selfruling units governing it while the ethnic Tharus are opposed to this idea. Jana Morcha Nepal has opposed the concept of federalism and preferred a unitary state with ample power devolution. But except for the Maoists proposal from other political parties are not formal but just the view of some of their leaders. Even though, there was a high spirit towards the devolution of central power into federal structures, now this grand project of federation have been diminishing its spirit. Recently some key political leaders including Girija Prasad Koirala have questioned the viability of federalism project. Noted scholar Saubhagya Shah argues political parties who were the greatest proponent of the grand project of federalism now seems mum to its debate. He further asserts that:
After the collapse of the royal government in 2006, political parties that have hitherto remained wedded to the idea of the unitary state also embraced federalism as part of the new state restructuring project. Rather than genuine conviction or even conversion to the idea, the shift appears to have been occasioned by the fear that not doing so would cost dearly at the CA polls. The populist expediency has come to expose itself in recent months once the actual constitution writing approaches near. Both in rhetoric and posture, the major political parties that was just a few short months ago triumphantly claiming federalism now appear to be more circumspect on the issue. Even if not rejecting the whole idea, the earlier promises of federal local autonomy and selfdetermination are now gradually being scaled back to administrative notions of decentralization and devolution of powers. Some quarters have begun to warn the threat of national disintegration from federal project.4

Shah further asserts that now the political leadership are sceptic of federation project due to the potential loss of political power which is clearly visible during the outcome of CA election and the rise of two terai-based political parties namely Madhesi Jana Adhikar Forum (MJAF) and Terai-Madhes Loktrantik Party (TMLP) into political mainstream. Similarly the federal structures will question the legitimacy of the national parties like NC, CPN-UML and CPN-M and it will also erode the old political power and privileges if the federal structures will be delineated based on ethnicity, language and region. It is therefore likely that the mainstream political parties will seek to dilute or backtrack on both the content and form of such federal structures. 5 So many now
4

Saubhagya Shah, Conflict Transformation and Democratic Consolidation: A Nepali Post Conflict, paper presented at seminar titled Nepal: Building Sustainable Peace organized by National Media Development Center and Friedrich-Ebert Stiftung at Kathmandu on Sep, 20, 2008. 5 Ibid.

believes that the slogan of federalism is just a strategic slogan to fulfill the interest under a grand design. It is a completely inconceivable thing coming from those political parties whose leaders have completely centralized powers in their hands. Economic Rationality of Federation in Nepal The other challenges are the rationality of federal structures in Nepal based on its economic viability. How can a developing country like Nepal can sustain the federal structures as delineating federation means creating more bureaucratic structures such as federal court system, federal governments, federal parliament, federal security apparatus etc within federal governance. The important source of revenue of running these federal structures is the income generated through taxes. In a country like Nepal where there is a limited tax nets and lack of resources to generate such tax based revenue, rationality of such federal structures might be in question. At a time when Nepal has been facing several economic challenges, nobody has any idea how federal states will deal with those issues. Given the limited resources and competitive market, there lies a major economic challenge of distribution of resources as well. According to the Economic Survey of Nepal (2006-07), the government collected total revenue of Rs, 72.28 billion in fiscal year 2062/063; Rs. 57.43 billion as tax revenue and Rs.14.85 billion as non-tax revenue. Out of this, Rs. 15.34 billion were collected from custom duties, Rs.28.11 billion from VAT and Income tax and 21.8 billion from land and registration fees, respectively.6 Thus in a country like Nepal where we have more import based revenue generation how can sustain our federal system when our income is concentrated only on few pockets of the country. In fiscal year 2006-07, Kathmandu had the highest contribution with 41.2 percent of total revenue generation. Parsa which includes the Birgunj custom contributed 24.8 percent and Morang, Rupandehi and Jhapa collectively contributed 14.2 percent, while Sindhupalchowk and Lalitpur and other 68 districts contributed 14.8 percent.7 Thus with this centralized tax revenue among 1 or 2 pockets of the country, the federal unit may rely on generating their own revenue either by taxing the citizens, property or business. But Nepal being poor developing country, such taxation may add extra burden to the people and further fuel poverty prompting inequity both on horizontal and vertical levels. Similarly, how are we going to allocate the resources to each federal unit as we have very limited natural resource base. The major resources we have are fresh reserve of water which can be harness in various forms such as hydropower, water tourism, drinking water, irrigation etc. But among the federal units how can it be delegated to such potential use of rivers. Suppose a federal unit situated on the up-stream part of the river may demand that it will exploit the river to produce electricity which is done by constructing high dams. This can be a problem for the lower stream federal units situated within the same river basin as it will completely limits their potential to harness the same river as most of the lower stream place will utilize the river either for irrigation
6

Ministry of Finance, Economic Survey of Nepal: Fiscal Year 2006-2007, (Kathmandu: Government of Nepal, 2007) 7 Ibid.

or water-tourism. Both of these activities will be limited if there is a dam placed on the upper stream of the river. So this is just a small example of conflict which can arise in due course of creation of federation without considering the proper resource base to support the local economy of the each federal unit so that it can sustain on its own. Conclusion Federalism is a necessary element which do