The Concept of Decentralized System of Governance in the Context of Balanced Development of Nepal

July 20, 2006 at 9:27 am 1 comment

The Concept of Decentralized System of Governance in the Context of Balanced Development of Nepal

Dr. Durga P. Paudyal

The Context

The Constitution of the Kingdom of Nepal 1990 has aimed to develop Nepal as a welfare state in order to provide social, economic and political justice to all citizens. Accordingly, it has established a number of fundamental directive principles and policies of the state espousing equitable distribution of resources, opportunities and benefits to all citizens, removing social and economic inequalities across regions and social groups, maximum involvement of citizens in the governance process through decentralization, positive discrimination in health care, education, housing and employment to socially and economically disadvantaged communities, raising productivity in agricultural sector and increased emphasis on rural development. Decentralized system of governance is one of the fundamental policies to achieve those objectives outlined in the constitution.
Two Acts have been enacted so far on decentralization following the new Constitution: The VDC, Municipality and DDC Acts 1991 and the Local Self-Governance Act 1999. The former was only the continuation of the earlier system with a different nomenclature while the later was designed on the basis of the report of the High Level Decentralization Coordination Committee 1997. The Local Self-Governance Act 1999 has provisioned broad based organizational structure, devolution of authorities, special provision to include women and disadvantaged communities, planned development process and judicial authorities to local bodies. Whether the Act has provided enough legal basis for the development of a capable, responsive and accountable local self-governance system is itself an issue. However, looking at the experience of the past 12 years in general and after the legislation of the Act in particular, it seems that more and more party-political rivalry and unhealthy competition among all development players have created a confusion and chaotic situation at the local level. Moreover, the terrorist activities of the Maoist’s “people’s war” of the past 6 years, in particular the past two month’s destruction of the physical infrastructure of local bodies, have threatened the total destruction of the local governance mechanism.
Recently, whether it in the donor’s meeting or in constitutional amendment or in the pre-condition for the extension of the state of emergency, major political parties have given high preference for the development of an effective system of local self-governance for equitable distribution of resources across the country. But it is not clear as to what type of decentralized governance system leaders have in mind: a political tool for resource distribution as seen before or a system of decentralized governance? This paper examines some of the fundamental issues that have effected the development of a decentralized system of governance over the past few years.

Major Issues

The major issues that have effected the development of a decentralized system of governance in Nepal can be grouped into three areas.

Conceptual issues, which include:

Defining Responsibilities: The policy makers have understood decentralized governance system as an attempt to make the center powerless while empowering the local level, which, however, is not the case. Decentralization, in fact, means defining responsibilities at each level. For example, local level would require technical, human resources, research and other support from the regional and central level when authorities relating to health, education, housing, water supply, transport etc. are devolved to them. Similarly, there are other sectors involved in local development such as NGOs, INGOs, donors and private sector, whose responsibilities in the decentralized development process should be clearly defined. An example shown in the following chart shows how responsibilities of various sectors could have been defined at local, regional and central levels.

Chart 1: Responsibilities of various sectors at each level






identify local potentialities and demand,

plan, implement, monitor and  sustain projects as per the local need

coordinate various agencies/ activities

identify regional level demand and potentialities

human resources management

monitor and evaluate (M&E)

policy development

human resource development and management

M&E, research and quality control

donor’s coordination


development of disadvantaged communities & areas to enable them to access the decentralized resources & opportunities



policy advocacy

donor’s coordination

INGO/ Donors

M&E of projects supported by them

M&E of projects supported by them

more emphasis to remote areas and disadvantaged communities

technical and financial support on research, needs identification, technology development & transfer, human resources development and infrastructure development.


establishment of area specific industries and trade in coordination with govt., bank and donor

quality development in construction projects

identification of regional level potentialities and market

quality development in construction and consultancy

coordination with government in development of industrial, trade and other policies

quality control in construction and consultancy services.

Reforms at the central level: Decentralization policy has been popularly termed as a measure “to devolve authority from Singha Durbar to the village level”. This would have been possible in countries where the center is capable and strong. But in our country the institutional structure and decision making processes of the “center” itself is characterized by incapable, unorganized and weak institutional framework and decision making processes. For example, controversial policy statements are made public by individual ministers giving impression that only a few “influential” ministers take the policy decisions in the cabinet. There is no coordination between two departments under the same ministry. Similarly, recently, it appears that the government, in fact, does not take major policy decisions without a green signal of the donors. In this scenario, from where the “power” is to be decentralized to the local level? Thus, the center itself needs major reform, restructuring and reorientation to make policies in a more organized and coherent manner.

Two suggestions can be offered to reform the central level institutions in commensurate with the decentralization policy. First, Kathmandu Metropolitan Municipality, where the capital is located, needs a separate legal framework. As recommended by the Local Bodies’ Financial Commission’s Report 2000, the three districts of the Kathmandu Valley viz. Kathmandu, Lalitpur and Bhaktapur could be merged into a Kathmandu Metropolitan Authority and a separate legislation could be designed. Second, the role of the central level could be defined, as shown in Chart 1 above, that it would perform only the ministerial level policy making functions while delegating all the departmental functions at the regional level (section iii below). The institutional framework could be changed accordingly.

Regional inter-dependence: The institutional framework of decentralized governance system has been drawn with parallel lines, like in a chart, from the center to all districts. The identical institutions and expertise as well as the same timetable for planning and implementation for all districts do not address the area specific geographic and socio-economic realities of the country. For example, during the winter season over 18 districts of the Himalayan region to the north are under the snow while the project implementation is just suitable in the Terai region to the south, and during the summer season the Terai region is inundated with torrential rain and flood water while it is the suitable time for project implementation in the Himalayan region. Similarly, the area specific problems and potentials across geographic regions, and within the same region also, vary. For example, the requirements and constraints of Humla and Taplejung, both are of the Himalayan region, and Jhapa and Bardia, both are of theTerai region, are not identical. Of course, there is also a great inter-dependence between Himalayan, mid-hills and Terai regions, without one the other can not live or prosper.

In this context, only a pencil sketch of decentralized institutional framework, which can be adjusted according to the local needs, could be more relevant and effective than clearly defined blueprint across the whole country. Similarly, the Regional Directorates of almost all-sectoral offices have been functioning in all five-development regions from the past 25 years. These offices could be delegated departmental functions and responsibilities in the areas of regional level resource mobilization and allocation, program identification and management, and human resources development and management. This would leave only the policy-making functions for the Ministries located at the capital.

Decentralization “project”: Decentralization is generally seen as the policy domain of Ministry of Local Development (MLD). Recently, with the initiation of Local Governance Program (LGP) supported by UNDP, decentralization (or local self-governance) has been understood at the local level as ‘a donor supported project’. Similarly, the sectoral agencies have their own decentralized projects, which is generally referred as to having the component of “people’s participation”. At the operational level, such projects, either from the donors, INGO/NGOs or sectoral agencies, are made “decentralized ” by getting “approval” from the local bodies or involving them in “coordination/ advisory” committees.

In fact, decentralization is not a donor supported “project”, but a system of governance for balanced development in a heterogeneous geographic, social, cultural and economic setting like ours. However, the essence of this policy needs to be understood, visualized and developed at the political level. Professionals and donors can only complement in designing, implementing and institutionalizing the policy, once it is conceived with commitment at the political level. The past experience is, however, just the opposite: professionals design the policy and donors pledge support but there is no political commitment and support. On the contrary, political leaders themselves seem skeptical and fearful, as if it might erode their authority. In fact, the present crisis of Nepal could be addressed through the decentralized system of governance by which effective participation of the people in the governance process, equitable distribution of resources across the regions, organized presence of the government at all levels, empowerment of disadvantaged communities and enhancement of production and job creation could be achieved. Such policy can be designed and implemented only when the major political parties can visualize such potentialities. The contents of the policy are not important at this stage. The past experience suggests that without proper understanding and commitment at the political level, a decentralization policy, be it with full of ideal program package, will not be effective.

2. Institutional issues

Organizational framework: The organizational structure of local bodies is unresponsive and unaccountable to the voters and most of them function on an undemocratic manner. Take the example of DDC, which plays very important role in resource mobilization, allocation and program management at the local level. The organizational structure of DDC is such that the Chairman/Vice-Chairman are elected by the electoral college consisting of elected representatives of VDCs and Municipalities of the entire district while a DDC Member is elected by the electoral college of an Ilaka. However, there is no institutional mechanism for the voters to monitor the activities of their leaders and question and expel them, if so required. Thus, all the representatives of DDC, as well as VDC and Municipality, remain in their seat for full term irrespective of their performance. Moreover, as DDC Chairman/Vice-Chairman represent larger constituency than the DDC Members, the DDC functions not on a parliamentary style guided by the majority, but on a presidential style guided, mainly, by the Chairman.

It has been suggested in section III below that, perhaps there is no need for a separate “assembly” for legislative functions at the local level, as they are not functioning as expected. Instead, the executive “Committee” itself can be strengthened and assigned legislative functions such as policy development, policy monitoring and policy evaluation (Chart 2), relating to local level development. Further, if the districts are reorganized into 25 districts (Gurung: Himal 2002) the executive body of the DDC could be further expanded by maintaining the existing representation from the Ilaka level. The members could elect a Working Committee with Chairman/Vice-Chairman and a few Members from among themselves, thus making the Working Committee responsive and accountable to the larger Committee.

Legislative and executive functions: The institutional mechanism at local level has followed, to some extent, to that of the central level: a legislative “Assembly” with larger representation for policy making and a smaller executive “Committee” for day to day functioning. Recently, with the provision of monthly ‘salary’ of the executive committee chiefs, they are established as salaried staff at the respective level. But with the present income level of local bodies the salary has to be borne from the central grant. Moreover, as the Assembly hardly meets once a year to “formalize” the annual plan and budget, it can not monitor the functions of the executive Committee. Moreover, the Assembly has no authority to hold the Committee accountable to its deeds and take actions, if so required.

If separate legislative and executive bodies are felt necessary at the local level, then, as per the recommendation of the High Level Decentralization Coordination Committee 1997, one District Legislature will be elected from each VDC, along with VDC Chairman, for the district legislative body which will elect the executive body from among themselves. Similarly, as in the center, the legislative body will meet regularly and several committees will be formed to monitor the activities of the executive body. In this manner, it may develop as a mini “state government” in the long run. If, however, local bodies are to assist the unitary central government, as it is, in identifying local needs, making sectoral agencies more responsive to the local bodies and enhance local employment and income, perhaps, there is no need for the separate legislative “assembly”.

More importantly, if VDC/Municipality/DDC are executive bodies, what are the sectoral agencies working at the local level? Are not they executive bodies, under the leadership of the Local Development Officer, who should execute projects, as approved by the DDC/Municipality/VDC with professional expertise? It looks logical that local representative bodies such as VDCs, Municipalities and DDCs have people’s mandate to set policies on resources allocation, monitor implementation process, mobilize people’s participation and quality control for optimal use of resources , while on the other hand, the sectoral agencies have professional expertise, experiences, institutional support and quality control mechanism to implement projects. In this manner, the local requirements and professional expertise could be optimally utilized in local level planned development. Based on the concept, an illustration of the policy and executive functions at the local level is shown in the Chart No. 2 below.

Chart No. 2: Policy and executive functions at the local level


Policy functions

Executive functions


Policy development, such as:

Resources identification and mobilization

basis for resources allocation

consistency with national policy

discussion & approval of the annual plan & budget

Follow the policy in planning, such as:

resources identification, mobilization and allocation as per the process.

preparation of sectoral programs

submission of annual plan & budget to the policy making level for approval.


Policy monitoring, such as:

whether the process followed in implementation

whether resources optimally used

whether good quality achieved

whether process was transparent


Follow the policy in implementation, such as:

development of time schedule

transparency in money disbursement and expenditure

quality control

monitoring and supervision


Evaluation and processing of the policy, such as :

identify weakness of the policy

recommend to take action against misusers

processing of the policy

Progress review:

progress & expenditure

submission of the report and review at the policy level

take action against misusers as per the recommendation

3. Implementation issue

Resources allocation through “Tok Aadesh” (personal influence/memo): One may find appropriately following all procedures in the file, but in reality from appointment/transfer of a peon/clerk to allocation of resources, location of projects and approval of contracts are done through Tok Aadesh of important persons in power. In the process, neither the person follows any procedure nor is accountable to anybody. In fact, such process was originated during Panchayat period to distribute resources and opportunities to the Panchayat workers which, however, is still continuing. The Report of Local Bodies’ Financial Commission 2000 has reported that the allocation of resources by the local bodies in health care support, teaching materials, tea-parties and financial support to various clubs on the basis of personal application is non-transparent and used for party-political purpose directly or indirectly. Thus, the Report has recommended prohibiting such practices. In fact, Tok Aadesh is more rampant at the central level. One can imagine the long term implication of over four thousands of Technical Assistants hired by the then Minister for Local Development or tens of thousands of school teachers hired by the then Minister for Education on an ad hoc manner. Such examples are ubiquitous. This “process” has now got legitimacy in the Constituency Development Fund, which is allocated by the Tok Aadesh of the respective MP. If Tok Aadesh is so useful and convenient to everybody, why do we need the decentralized development process?

In order to curb this culture of Tok Aadesh, a transparent process needs to be developed at all level, in which all application of demand must be addressed to the executive chief, not the political leaders, who should follow the established procedure. If a procedure is unclear, or does not meet to a particular case, it should be duly put up to the policy making level and the decision should be implemented by the executive level.

Social Mobilization: One of the strength of the decentralized system of governance is the equitable distribution of resources and opportunities across all regions, groups and communities. However, majority of the poor and disadvantaged communities are living in an unorganized, vulnerable and scattered manner, much below than the reach of decentralized institutions. Thus, resources and opportunities channeled through the decentralized institutions have not reached to them. However, there is no strategy in the policy to organize, empower and lift them within the reach of the decentralized institutions. Of course, several “projects” on social mobilization such as awareness raising, organizing into groups and enhancing skills are implemented by NGOs/INGOs/Donors but there is no “concept” as an integral part of the decentralization policy to enable and activate communities to demand resources, opportunities and services, meant for them.

Some of the donor supported social mobilization projects, however, have made the local bodies more defunct and donor dependent due to their own implementation strategy and parallel institutional mechanism. For example, the UNDP supported PDDP/LGP have been working at the community level to develop “saving, skill and organization”. The development process is such that Community Organization (CO) at the hamlet level demands project to the VDC level Conference of the Chairmen and Managers (CMC), which forwards with its approval, to the district level Local Trust Fund Board (LTFB) seeking for fund. The fund is also channeled down the line in the same manner. This has made the statutory bodies such as Ward and VDC weak. On the other hand, there are other NGOs who sensitize and empower communities and organize them into self-reliant cooperatives to complement decentralized institutions to reach to the community level have no space for work.

Monitoring, evaluation and knowledge generation: Concurrent monitoring and evaluation is required to understand whether the Local Self-Governance Act is properly implemented, local institutions are capable to implement it and, indeed, whether the Act itself is enough to capture the essence of the decentralized system of governance. Based on these information, analysis, advocacy and sensitization at the policy making level is required to make necessary reforms. Considering the physical infrastructure, institutional strength and past experience, the Local Development Training Academy (LDTA) would have been the ideal institution. But the MLD does not seem interested to reform LDTA to make it capable to assume such responsibilities in the changing context. Of course, donors through individual consultant or institution e.g. POLSAN have made some efforts on policy research in this case, but they are scattered and confined to a close circle in Kathmandu due to the limited accessibility as well as the high academic English language used. But the essence of the decentralized policy need to be understood by a large number of Nepali people scattered in the districts, who are looking for an alternative strategy that benefits the country at large. They will, then, put pressure to the MPs in their respective constituencies to debate in the Parliament. Thus, such M&E exercise and knowledge generation must be done in Nepali language and well disseminated across the country with, of course, a summary in English for the donors if such efforts are funded by them.

To monitor the implementation process of the Act, there is a high level Decentralization Implementation Monitoring Committee under the chair of the Prime Minister. It also has a Working Committee as a professional wing of the High Level Committee. However, the Working Committee is almost defunct as it is manned by the party workers of the ruling party or the Minister in power. Similarly, the local bodies have their own national level federations as a “watch dog” to monitor the implementation of the policy. Over the past few years, they have acted as pressure groups to the government for more power, resources and opportunities to the local bodies. But, they have rarely given time to think about institutional and moral issues such as development of the institutional mechanism of local bodies more responsive, accountable and transparent to the voters; raising voice against corruption and mismanagement of resources at the local level; advocating democratic values and norms in local development process; bringing in the backward communities and disadvantaged groups in the development mainstream and organizing/encouraging people against the Maoist insurgency. Moreover, recently, with huge resources of the donors these institutions, which were established by their own resources, have transformed into “development consultants” (Bikase Sanstha) used as an instrument to legitimize donor’s program at the local level.


The decentralization policy of the past has not been effective to achieve the balanced development of the country. While, the central level leadership could not internalize true meaning of decentralization in the Nepalese context, thus it could not provide political support to design and implement the policy with it’s proper spirit. At the same time the local bodies also could not ascertain their rights and duties, whatever was devolved under the present legal framework, and implement with the true norms and values of a democratic institution. Consequently, a huge resources and opportunities channeled through local bodies were captured by a limited group of people, leaving a large number of people out of the development mainstream. Thus, the socio-economic situations of large number of people have further deteriorated and they became dissatisfied with the establishment of the country.
Perhaps, this is one of the messages given by the Maoists, Khumbuwan, Madhesi and other revolt and agitation against the establishment. In order to address these revolts on a sustainable manner, the development must be equitably distributed across development regions, ethnic communities and disadvantaged groups. Decentralized system of governance is one of such approach by which the national and local resources can be optimally combined and allocated for taking area specific comparative advantages and enhancing income and employment opportunities of the people. How could such “appropriate combination” be designed is the essence of the decentralization policy in Nepal. In this context, the following essential elements should be seriously considered for designing the decentralized system of governance in Nepal:

Decentralization is not a donor supported “project” but a system of governance, which must be originated, visualized and internalized at the political level, with national consensus on the fundamental elements.
Local body should be used as a policy making and coordinating body for generating income and employment at the local level by taking area specific comparative advantages rather than making just an “implementing body” of donor supported project.
The institutional framework of local bodies should be accountable, transparent and responsive to the people.
Decentralization is a process of learning-by-doing. Thus, there is need for a national level professional institution for policy monitoring, evaluation, research, training and dissemination, for learning from the past experiences. On the other hand, the government should also have an open mind to learn from the past mistakes and correct them.



  • The Constitution of the Kingdom of Nepal, 1991.
  • The Local Self-Governance Act, HMG, 1999.
  • Report of Decentralization and Local Self-Governance. High Level Decentralization Coordination Committee (HLDCC), 1996, Kathmandu.
  • Report on the Local Bodies’ Financial Commission, 2000, Kathmandu.
  • Gurung, Harka: New Nepal of 25 Districts (Nepali: 25 Jillako Naya Nepal). Himal 28 Feb. – 13 March 2002, Kathmandu.



Entry filed under: Reports.

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1 Comment Add your own

  • 1. enockntoka  |  December 4, 2009 at 3:06 pm

    I need the concepto on the role of communties a decentralised governance system

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