Consolidating Local Government


Udbodh Bhandari

Local government (LG) is about the government closest to the common people. As it is aware of day-to-day problems of the local people, it resolves them quickly and with minimum cost. The LG believes that local knowledge and local interest are essential ingredients for democratic decision-making. They are also necessary for efficient and people-friendly administration. Since the individuals from the local self-government are nearby individuals, they can comprehend the gravity of neighbourhood issues more genuinely than the provincial or federal government and can appropriately sort out them. 

The local self-government is helpful for uniformity and freedom and the ideal medium for fulfilling the requirements and grievances of the general population in the neighbourhood and local level. More widely speaking, the establishment of a unique relationship of LG with the people, which we prefer calling a refurbished "local social contract," which will evolve into a set of shared mutual expectations and obligations as accountability relationships develop between them. LGs can thus be thought of in terms of their direct "social contract" relationship with local people, as well as their constitutional relationship with other levels of government and constitutional bodies. This is a big departure from Nepal's previous decentralisation experiment. 


Moreover, LGs in Nepal are constitutionally distinct from the federal and provincial governments. They are autonomous and constitutionally recognised, whereas in many other federal countries they are subordinate to provinces or states. They are, in fact, subordinate to no one except the constitution itself. The executive head of a LG is directly elected by the people and cannot be removed through a vote of no-confidence or any other form of dismissal. Another distinguishing feature of LG in Nepal is the intricate intertwining of the local assembly and local executive — drawing assembly and executive members from various political parties, with Mayors or chairpersons, for example, being in minority. Similarly, there are no formal "opposition parties" in LG.  

However, one of the most common problems faced by the local bodies is the scarcity of finance and funds. When compared to their functions, their source of income is insignificant. Their main sources of income include different types of taxes. Despite this, most of the income-generating taxes are levied by the central and provincial governments and, the taxes collected by the urban/rural bodies are not sufficient to cover the expenses of the services provided. In this regard, federal transfers or grants to provincial and LGs are noteworthy.  They are classified into four types under the federal constitution: federal equalisation grants, conditional grants, complementary (matching) grants, and special grants. 

The Intergovernmental Financial Arrangements Act (IFAA, 2017) also introduced formula-based revenue sharing from domestic VAT and excises, with provincial and LGs each receiving 15 per cent. This revenue sharing, which is similar to the federal equalisation grant in some ways, was first implemented in the 2018/19 fiscal year. In this sense, the inter-governmental transfer, which began in 2017, is part of a larger constitutional change that has redefined how the Nepalese state operates, its obligations, and its relationship with the people. 

In Nepal, local bodies during the last five years period have managed to procure various kinds of services for the general population largely.  During this period, young, dynamic, and skilled manpower have been recruited in big numbers under the administration of the Public Service Commission. So, local bodies have been institutionalised largely. In most of the municipalities, urbanisation process has gained momentum. Nevertheless, the municipal authorities are not able to cope with the increasing demands of the people, both quantitatively and qualitatively. 

Furthermore, impunity, corruption, and dishonesty are found to be spreading rapidly at the local level as a result of unnecessary connections between politicians and bureaucrats with competing interests, power-holding attitudes, and the manipulation of legal loopholes. In the perspective of insufficient accounts, the local bodies lack the capacity to satisfy their necessities. 

In almost all cities of Nepal, like Kathmandu, Biratnagar, Birgunj, and so on, the basic facilities i.e., water cannot be supplied properly, drainage system is not effective, unplanned colonies along with slums are on the rise, the danger of stray cattle on the streets continues, traffic is unplanned, streets are not legitimately kept up and risky structures are permitted, notwithstanding the conspicuous risk to the inmates and the tenants of the territory.  

Capacity building 

Constitutionally and legally, despite the fact that the Local Government Operation Act -2017 attempted to simplify LG operations by disaggregating all exclusive and concurrent rights, the Act has been criticised for a number of reasons. First, it is unable to minimise the conflicting provisions of laws between inter and intra-governments, demonstrate the scope of LGs to raise revenue, and develop the capacity of elected representatives and staff, which is insufficient when compared to the list of functions LGs are supposed to perform. Second, it ignores the professional capacity limitations of elected officials and administrative staff. Third, some functions devolved by the federal government are unclear. 

So, what are the improvement and mitigation measures for the inclusive sophistication and further institutionalisation of LGs in Nepal? Intergovernmental connections must balance local development with higher expectations for bridging the gap between government and civil society, and government institutions dealing with human resources and institutional operations. Concerns have been raised about insufficient legislation and institutional frameworks, human resource management, accounting and procurement processes, and revenue administration. 

(The author is a freelance researcher and local development practitioner.)

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