Federalism a huge challenge: Experts

KATHMANDU: Economists have found numerous challenges in the implementation of federal system in Nepal. "Put simply, I will say there are too many challenges ahead," said Dr Uma Shankar Prasad, a researcher on fiscal federalism presenting a paper 'Fiscal Dimensions of federalism in Nepal' in a seminar here today.

He urged political parties to be realistic in the demarcation of states. "It must be based on resources and their use," he said adding any disparity could lead to civil war. He rejected the federalism proposals of political parties and intellectuals saying, "They have failed to address issues of resources and their allocation."

Nepal's 8th, 9th and 10th plans had given priority to reducing regional disparities but they failed to correct it. Giving an example of the government expenditure and human development status, he explained, "Where government spending is more, there is low human development." The government had invested Rs 9,611 per head in 2006-07 on central development region but the human development index of the region is 0.531 -- below the national average of 0.509. On the other hand, other development regions achieved remarkably higher results depsite low investment.

"Our national plans are failures, giving negative results," he said, "Budget allocation is not reality based." He urged the government not to divide the country on ethnic basis. "It would be wise to adopt current resource-based policy," he said. According to the paper, currently Madhes (Terai) and Newa (Kathmandu Valley) are generating above 80 per cent of the total revenue.

Commenting on the paper, Dr Shree Ram Poudyal argued for balancing among population, political structure and resource sharing policy. "It is a must for sustainable federalism," he said. Majority of the participants said people's war was behind the growing regional disparity and failure of decentralization since the 1970s.