March 2023 Analysis: Federalism

Posted by : Rasila Dhamala


Date : 2023-03-30

Following the election of President and Vice-President, the change in composition of the ruling coalition has started showing effects in the provinces. The composition of provincial governments are bound to go under major changes. This has once again led to instability in provinces while their performances are already weak. Following the weak performance of Provincial and local governments, and decision to decrease in budget size for fiscal year 2080/81, National Natural Resources and Fiscal Commission has suggested a decrease in Financial Equalization Grant for sub-national governments. 

Timeline of Major Events

Date Event
March 1 Province 1 is named as “Koshi Province”.
March 5 Sudurpaschim Province Chief Minister Kamal Bahadur Shah secured Vote of Confidence.
March 24 Bagmati province Chief Minister Shalik Ram Jamkattel secured a vote of Confidence.
March 24 Maoist Center withdrew the support from Gandaki Province Government.
March 31 Karnali Province Rajkumar Sharma secured a vote of confidence.

Protests in Koshi Province following its naming

After five years of its existence, Province 1 was officially named as Koshi Province with an overwhelming majority of the Provincial Assembly on March 1st. The name “Koshi” was jointly proposed by CPN UML and Nepali Congress at the beginning but later Congress withdrew the support, and yet voted in favour of the name. Province 1 as “Koshi Province” was passed by 82 votes i.e. with more than two-third majority.
The proposal jointly filed by the opposition United Samajwadi Party and Janata Samajwadi Party to name “Kirat-Limbuwan-Sagarmatha” Province was automatically rejected.

However, the decision was later followed by a series of protests in different parts of the province by various ethnic and political groups. The situation in Province headquarter Biratnagar is still under tension as one of the protesters lost his life on March 24. The protest has now intensified with expansion in different districts. The protests took place in Jhapa, Taplejung, Panchthar, Illam and other districts. Some of the local government representatives and government officials have been manhandled and locked in their own offices. The District Administration Office, Morang had to declare a prohibited area and enforce prohibitory order in various parts of the district.

Province 1 had been facing criticism for failing to name itself even after five years of existence. The members of the Provincial Assembly were divided on whether to name the province on the basis of geography or ethnic identity, so the first five-year Provincial Assembly could not name it. In the past, various ethnic, religious and other organizations have been submitting memorandums to the provincial government and the speaker for different names. They have demanded through a memorandum to keep names like Koshi, Kirat, Everest, Virat, Limbuwan, Khumbuwan, Koshi-Kirat, Koshi-Sagarmatha etc. Those organisations which have held many street protests have considered that naming the province is a conspiracy to wipe out their existence.

While Madhesh Province is the only one to be named after the people’s identity, other four provinces are named after rivers, Lumbini after the name of Gautam Buddha and Sudurpaschim based on its geographic location. Even during the naming of Lumbini and Gandaki Province, people had taken to the streets.

Provincial governments stuck in Federal Powerplay

With the formation of a 10-party alliance led by Nepali Congress following the Presidential and Vice-Presidential election in the center, the provincial governments are also changing accordingly. After Pushpa Kamal Dahal, secured a vote of confidence for the second time on March 20, the alliance is believed to be stronger. Governments led by CPN UML are now at stake as CPN Maoist and other old alliance parties decided to withdraw their support. Madhesh Provincial Government is now on safe cushion as the government is led by JSP with support of Nepali Congress, CPN Maoist and Janamat party.

Sudurpaschim Province Chief Minister Kamal Bahadur Shah secured a vote of confidence on March 5 as Nagarik Unmukti Party decided to vote in his favour. He was appointed as Chief Minister in February, as the former Chief Minister Raj Kumar Rawal could not secure the vote of confidence as Nagarik Unmukti Party refused to vote for him. Bagmati Province Chief Minister Shalikram Jamkattel also secured a vote of confidence on 24th March after the Rastriya Prajatantra Party withdrew their support. CPN UML withdrew support from Bagmati Province while announcing the decision at the Provincial Assembly meeting and their ministers resigned en masse the same day. However, the division of ministers is still at halt as the parties failed to reach a conclusion.

Chief Ministers of Gandaki and Lumbini Provinces are sharing their fate as their government is at stake after CPN Maoist took their support back. CPN UML in both provinces lack enough votes to secure the governments. Nepali Congress is most likely to lead both provinces following the next vote of confidence session.
The Government at Koshi led by CPN UML is struggling following the new power equation at the centre. The government needs at least 47 seats to secure its position, while CPN UML- RPP and Eight party coalition has 46 seats in the province, and Koshi Province Speaker is set to be the tiebreaker. Meanwhile, the Unified Socialist with only four seats out of 93, have claimed the leadership of Koshi government, but Nepali Congress and Maoist Center have shown discontent towards the claim.

The Karnali Province Government led by Chief Minister Rajkumar Sharma secured a vote of confidence on 31st March. He was able to receive total votes of 38 out of 39 from four parties and independent assembly members except for RPP. CPN UML, a major coalition partner, has not left the government and is ready to continue the support. Maoist and Nepali Congress had not reached consensus on government leadership in previous meetings.
Federalism has yet again been a pawn of major political parties as Provincial governments are going through major changes within two months of their formation. The central committees of Political parties are still deciding the fate of provinces with their mathematical calculations. While provinces should have been kept out of political business following the essence of federalism, these kinds of frequent changes will neither give a positive message nor help governments to function properly. Provinces are already struggling with their performance, as the federal government has failed to guide them. Now there is a hope for stability in political alliance so that the provinces can function smoothly and prove their essence among the citizens of Nepal.

Centre to decrease the Financial Equalization Grant for sub-government units next fiscal year

Based on the ceiling given by the National Resource Estimates Committee by reducing the total size of the budget, the amount of financial equalization subsidy for the local and provincial governments in the budget of the next fiscal year (FY) 2080/81 has been significantly reduced. According to the recommendation of the National Natural Resources and Fiscal Commission submitted to the Government of Nepal regarding the Financial equalization grant, unconditional grants of 146 billion 20 million 400 thousand Rupees will be sent to provincial and local governments next fiscal year, which is 15 billion lesser than current fiscal year.

The sub-national governments can make plans and spend according to their priorities from the subsidy amount. The Commission has suggested to the government to reduce the other three types of grants (conditional, complete and special) as much as possible this year and compensate them through financial equalization grants. According to the Commission, this will increase the capacity of the local level and also enable them to use the rights granted by the constitution. It is also recommended to use the financial equalization grant for the economic development of the province and local level. From this year, the commission has recommended that the salaries of the health workers and teachers working at the local level be sent to the lower government as a financial equalization grant without any condition. Local and provincial governments should focus on utilizing such grants in economic development of their area and decrease their extra expenses.