Resources For Local Govt

Mukti Rijal

The constitution has laid out the design for a federal mode of governance in the country. It is a very delicate and complex task to reorganize the state structures in line with the jurisprudence and principles of federalism. Moreover, though the constitutional blueprint is very important, it is not at all adequate, sufficient and complete. The provisions and texts provided in the new constitution should be further prescribed, elaborated and illustrated by a number of supplementary laws and by-laws. It is roughly guessed that around five hundred new Acts and Regulations have to be formulated at federal, provincial and local levels to provide statutory infrastructures to implement federalism in Nepal. These laws and bylaws support the constitution to enter into effect. There is, therefore, a need to create a participatory and supportive environment to formulate statutes and regulations and also make them implementable subservient to the norms and principles of the constitution.

Federal Spirit
These laws should not only reflect the spirit of the federal constitution but also create a broader space and enabling environment for the implementation of the constitution. It is said that around one hundred new legislations should be enacted to give effect to the provisions relating to local government in the new constitution. Some existing laws should be amended and elaborated as well. As the local level elections has been more or less completed, and the date for the federal and provincial elections has been announced attention should be placed to finalize and promulgate the law relating to local governance in particular to enable the local governments to work. Undoubtedly, the constitution provides for several important provisions relating to local governance. But the constitutional provisions need to be elaborated and detailed out in a clear and unambiguous manner.
Moreover, there is an utmost need to clarify the constitutional allocation of fiscal authorities and competencies among the three-tier of government. Needless to say, the assignment of responsibilities and competencies to raise and mobilize revenues to different levels of government is a key issue for the implementation federalism. Moreover, in line with the principles and norms of fiscal federalism, functions and competencies need to be devolved to the lower level of the government. The strengthening of local government is therefore crucial. As the local governments are closer to the people, they have better knowledge about the tastes and preferences of the people of their jurisdiction.
In terms of constitutional allocation of mandates and functions, local level governments are entrusted such crucial functions as delivery of education, health and other basic services to the people. In order to make them effectively implemented, fiscal resources should also be transferred to them accordingly. But it is disconcerting to note that the intergovernmental fiscal transfer bill that is being discussed in the parliament intends to squeeze the size of resources to the local level governments. As the country has shifted to federal system of governance from the unitary practice only recently, it has, nonetheless, gathered enormous and useful experiences through implementation of deconcentration and decentralization since early 1960s.
The Local Self Governance Act 1999 constitutes the milestone in the annals of the Nepal’s trysts with the destiny of decentralization for long. But the practice and implementation of decentralization in the country has been very weak as it was plagued with several bottlenecks and constraints. The local bodies - VDCs, Municipalities and DDCs - had remained institutionally and organizationally very weak while the central government has been always reluctant to transfer resources and authority to the local institutions.
In the new context of federal governance too, if we cling to the mindset that prevailed in the past, the constitutional scheme of federal governance will falter. Unless and until, the centralized mindset and power centralizing tendencies are transformed, neither can we produce decentralized governance and appropriate development outcomes nor build democratic institutions to support implementation of federalism in Nepal. In the past, local bodies - VDCs, municipalities and DDCs- had exercised a very low level of revenue autonomy where more than 90 per cent of the total revenue was collected by centre and less than 8 per cent was transferred to the local bodies. The local bodies had faced with high quantum of vertical fiscal imbalance. Likewise, the local bodies had different and disproportionate level of revenue sources and capacities. As a result there existed not only the vertical imbalances but also horizontal fiscal imbalance as well.
If these gaps, disparities and imbalances are allowed to prevail and not corrected accordingly in the new federal scheme, the equitable and symmetry based distribution of resources and capacity to achieve a balanced development will not be possible. Moreover, if we look at the provisions for revenue assignment to the provinces and local level in the new constitution, there is also a need not only to increase the quantum of vertical fiscal transfer in a very liberal manner but also enhance capacity of local governments and provinces to collect and mobilize the tax and non-tax revenue and resources.

Revenue sharing
While an increased revenue autonomy to sub-national governments is desirable and important, inter-governmental fiscal transfer should be so provided as to correct the fiscal imbalances. In other words, sharing of revenue authority and distribution of available resources between centre and sub-national governments have been the two important means of fiscal federalism. In this process, transferring authorities and funds should not be limited to the provinces and should go down to the level of local governments as well.


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