LEX LOCALIS – JOURNAL OF LOCAL SELF-GOVERNMENT 
Vol. 9, No. 1, pp. 39 - 66, January 2011  
 
 
 
 
The Democratic Deficit and Federalism in Nepal: 
Is it a Cure or Part of the Problem? 
 
GANGA BAHADUR THAPA & JAN SHARMA3 
 
ABSTRACT Since the second democratic opening in 1990, Nepal has 
suffered from a democratic deficit due to the new leaders’ failure to 
institutionalise democracy by promoting inclusion, representation, 
and responsiveness. The concept of federalism, as argued in Nepal 
today, reflects the failure of the past and the determination to give 
local governance the real political and economic power. The fringe 
leftist and rightist parties oppose federalism, arguing that it will 
create deep divisions.  Some of them even assume that the country 
may ultimately disappear altogether. In view of the widespread 
popular support, the challenge is to use federalism as an opportunity 
for prudently promoting inclusive, participatory, and responsive 
governance in the interest of economic prosperity and social well-
being of the Nepali people. 
 
KEYWORDS: • federalism • monarchy • decentralisation • democracy 
• transition • constituent assembly • Nepal 
 
 
                                                 
CORRESPONDENCE ADDRESS: Ganga Bahadur Thapa, Ph. D., Professor of Politics, 
Tribhuvan University, P O Box 3475, Kathmandu, Nepal, email: thapa_gb@yahoo.com. Jan 
Sharma, Ph. D., Tribhuvan University, Post Box 1491, Kathmandu, Nepal, email: 
jansharma@gmail.com. 
 
DOI 10.4335/9.1.39-66(2011)  
ISSN 1581-5374 Print/1855-363X Online © 2011 Lex localis (Maribor, Graz, Trieste, Split) 
Available online at http://pub.lex-localis.info. 
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G. B. Thapa & J. Sharma: The Democratic Deficit and Federalism in Nepal: Is it a 
Cure or Part of the Problem? 
 
1 Introduction 
 
The 2007 Interim Constitution transformed Nepal into a Federal Democratic 
Republic. It basically reflects a disdain for royal or other forms of authoritarian 
rule, and a longing for an inclusive, representative and responsive democracy. 
Federalism was one of the key demands of the new leaders of the 2006 pro-
democracy movement. As it is envisaged at present, there will be many 
governments, at least at the central, state/provincial, and local levels.  How it will 
impact democracy depends to a large extent on how federalism is defined in terms 
of the levels of government, and their respective powers and responsibilities. The 
manner of addressing this issue will determine whether the proposed federalism is 
part of the solution to the democratic deficit or it becomes part of the problem. 
 
Unfortunately, there is no constitutional theory of federalism. It exists neither in 
Western countries nor elsewhere. So what is federalism? According to the 
Stanford Encyclopedia of Philosophy, federalism is the theory or advocacy of 
federal political orders where final authority is divided between several units and a 
centre. Unlike a unitary state, sovereignty is constitutionally split between at least 
two territorial levels so that units at each level have final authority and can act 
independently of the other in some areas. Citizens thus have political obligations 
to two authorities (Stanford Encyclopedia, 2010). The oldest federal system is that 
of the United States after which Switzerland opted it in 1848, Canada in 1867, 
Australia in 1901, Austria in 1920, Germany in 1949, and India in 1950. More 
recently, Belgium adopted federalism in 1993, Spain in 1978, and Malaysia in 
1963. These are successful examples of federalism. Some experiments (e.g., 
Czechoslovakia and Yugoslavia) have proved disastrous. While federalism is 
adopted by geographically large and small countries, it is also expected to address 
issues relating to cultural, religious, linguistic, and ethnic diversities so specific in 
Nepal where reluctant experience with decentralisation has not been good. 
 
The review of the literature on decentralisation shows that federalism is concerned 
with the extent to which power and authority are dispersed through the 
geographical hierarchy of the state. It involves the concepts of politics, power and 
space, with a strong correlation between political freedom and development. 
Federalism implies that the distribution of political power and delivery of services 
to different groups of society play a direct role in a country’s political arena, that 
is, regional and local issues should prevail over national ones (Blair, 1996). On the 
other hand, decentralisation can be defined as centrally initiated efforts to move 
authority and responsibility for significant governmental activities down to local 
government units. Although Nepal has historically experienced more 
centralisation than decentralisation, governance in its common usage refers to “the 
act, manner, function or power of government where government means an 
established system of political administration by which a nation is governed” 
(Webster, 1998). 
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41 
 
The debates on governance reforms in Nepal, particularly since the Constituent 
Assembly (CA) elections in April 2008, have been focused on an inclusive, 
representative, and responsive policy-making framework and process. The 
identification of the direction and nature of change in a political culture where 
small units of government are particularly suited to nourish democratic 
government is a difficult enterprise, yet a variety of scholars and modern studies 
generally agree that public attitudes favour local government because it is more 
understandable and capable of affecting government policies at the local level, an 
increasingly important source of democratic stability (Dahl & Tufte, 1973; 
Markovitz, 1999). The efficacy of reforms will partly depend on what national 
structure of governance is expected to achieve. 
 
Nepal’s case is problematic.  Its established image of democracy has declined to 
the level closer to the top-down, centralised and hierarchical institution of almost 
exclusively small groups of politicians who expect to achieve their objectives 
through fairly open networks of people that increasingly impinge upon 
government. Federalism cannot be analysed in terms of a dichotomy of 
decentralisation and centralisation. In order to elaborate this contention, a whole 
range of questions has to be confronted, questions relating to the changing 
character of contemporary federalism, to the complex relationship that has 
evolved between the state and the localities, and between the centre and the 
periphery (Kjeellberg, 1995). But more important, political rules are changing in 
Nepal, and it is essential to look more closely at the constitutional framework of 
the actual rules of the game by which people live and politics play even in 
situations with no democratic tradition. 
 
The modern federal system of government, invented in America, has been 
spreading since the last two decades of the twentieth century, marked by the rise 
of new democracies and a new political culture (Clark & Martinot, 1998). There 
are wide variations of federalism. Undoubtedly, the conventional assumption that 
all significant political decisions are made nationally and implemented locally 
builds on what is often called a centralised political system. If political parties 
could not tackle federalism with a new political consensus, it would lead to 
exacerbated social tensions in Nepal, further marginalising and impeding 
institutionalisation of participatory democracy, and delegitimising the state as 
being incapable of overcoming problems, or as being unable to withstand any 
threat to its stability. Authority patterns are important in affecting democratisation 
in a country. Nepal still maintains many traditional values that cannot be 
overturned in a short period of time. Democracy can be brought about through 
devolution of authority, and by efficiently designed institutions, which Dahl calls 
a pluralistic social order (Dahl, 1971). Strong and positive effects of federalism 
are a boon for enhancing sustainability of democratic governance because they 
facilitate better institutional performance (Morgan, 2007). 
 
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G. B. Thapa & J. Sharma: The Democratic Deficit and Federalism in Nepal: Is it a 
Cure or Part of the Problem? 
 
 
2 Contextualising and Historicising Local Government 
 
Over the recent past, Nepal has reluctantly experimented with decentralisation 
devoid of “transfer of power to people” in the political sphere as implied by 
political decentralisation. It also creates an environment that protects individuals 
against the state to enable competition and enhance efficiency, and to protect the 
state from being captured by narrow-interest groups, or by a dictator. While the 
success of the participatory programmes in attracting and sustaining citizen 
interest depends primarily on the design of the programme itself such as the 
structure of participation, the range of significant issues over which citizens’ input 
is invited is wider, and most importantly, local government provides a much 
needed cushion between central politics and development activities directly 
affecting individuals. Since most of these changes come from political 
expediencies, neither significant nor sustained participation nor large advances in 
terms of citizen participation are possible. After Nepal had ended its self-imposed 
isolation in 1951, decentralisation efforts began by setting up the Royal 
Commission on Decentralisation in 1963. It was little more than a rhetorical 
exercise. Instead of starting a political process to distribute power, resources, and 
administrative capacities through different territorial units of a government, it 
turned out in hindsight to be bureaucratic deconcentration (Kafle, 1987; Agrawal). 
 
There were no sincere efforts made until 1999 when the Local Self-Governance 
Act was promulgated (Dhungel, 1999). It was followed by the Local Self-
Governance Regulations in 2000. The legislation provided locally elected bodies 
(e.g., the District Development Committees (DDCs) at the district level and 
Village/Town Development Committees (VDCs/TDCs) at the village or town 
level) with a greater latitude and legal framework for finance and other 
development responsibilities such as sectoral devolution and resource 
mobilisation. One of the major components of the self-governance programme 
was the enhancement of financial, technical and managerial capacities of the 
DDCs. The idea was basically inspired by the success of grassroots democracy in 
the Nepalese Community Forest Management with user groups making major 
decisions. The whole idea was to transfer development initiatives to the DDCs to 
plan, manage and implement development activities through self-governing 
community organisations with the active involvement of civil society and the 
private sector. The hope was service delivery, e.g., health and education.  They 
were best managed by local communities and not by central government. 
 
In order to address institutional and policy barriers, a high-level Decentralisation 
Implementation Monitoring Committee was chaired by the Prime Minister. It 
turned out that he was too busy manipulating survival in office with little time or 
interest in decentralisation. Another major constraint was the limited resource base 
with only a portion of the land registration fee. Devolution of fiscal authority was 
given to the central-level Local Government Finance Commission. The VDCs 
were provided with the central grant of Rs 500,000, and previously, as from Rs 
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a Cure or Part of the Problem? 
43 
 
25,000. This significantly boosted distribution of resources, but there was neither 
appropriate monitoring mechanism nor VDC capacity for implementing 
development projects. In policy, it could not have been better. In practice, it could 
not have been worse. There was reluctance on the part of the central government 
to share the actual political and financial powers with the local bodies. As a result, 
policies and strategies were inadequate and remained on paper only. 
Implementation has always been promised, but never done.   
 
For all intents and purposes, the Local Self-Government Act was meant for an 
elected local government with powers and resources to implant and institutionalise 
democratic principles at the grassroots level. It was expected to provide for 
structural democratic change, but in effect, it turned out to be a mere 
representative of the central government that had final authority to withhold, grant 
or withdraw powers and privileges at its free will with no questions asked (Thapa, 
1998). One reason for this might lie in the fact that the powers conferred on the 
local bodies are often not enacted. These powers are insufficient, and it is feared 
that empowering local bodies will create a political opposition because of the lack 
of institutional capacity (NASC, 1998). If one considers enforcement aspects, it is 
indeed the power to delegate authority, responsibility, and resources to make local 
bodies capable and effective. This shows that the mere provision of authority or 
power in the legislation is not a sufficient condition for grassroots democracy.1 
 
3 Conceptual Overview: Federalism and Democracy 
 
Traditionally, ‘dual’ federalism was a system of dividing the functions between 
the state and national governments that gave each of them considerable autonomy 
within their own areas of jurisdiction (Beam, Conlan & Walker, 1983). Federalism 
is a system in which political authority is divided between two or more 
constitutionally distinct orders or levels of government. Each one has a set of 
constitutional powers and an independent base of political legitimacy. The 
provinces can have either identical powers or ‘symmetrical federalism,’ or powers 
varied formally or informally to suit specific needs and characteristics of each 
province, or asymmetrical federalism. Symmetrical federalism with the right to 
internal self-determination would be more conducive to stable democracy in 
Nepal, which is what David Easton defined politics as the “authoritative allocation 
of values” (Easton, 1965). 
 
In the Nepali context, several explanatory factors could be ruled out if there were 
a façade of a democratic regime only protecting a corrupt authoritarian oligarchy 
(Thapa, 2008). While no method of organising institutions is completely neutral in 
its impact on all those who might be affected  by it “within the realm of a balanced 
federalism, one might prefer a somewhat greater concentration of programmes or 
authority at one level or another, but unless there is a clear link between citizen 
participation and representation in a certain function at a given level of 
government, democratic assertions about governmental size provide little basis for 
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Cure or Part of the Problem? 
 
 
determining where individual programmes should be placed, or how they should 
be shared” (Beam et al., 1983). 
 
This perspective does suggest that while the underlying justification for the 
rational choice theory of federalism derives from the distribution of public 
resources, and the constitutional system of division of powers (the factors 
influencing public policy) is the institutional context with the governmental 
system simple enough to facilitate citizen understanding and clear channels of 
accountability to safeguard individual liberty. Truly, there are a series of 
unresolved problems of assigning governmental functions to different levels of 
government in political theories of federalism in their failure to adequately address 
current patterns of federal politics and intergovernmental relations. In a related 
vein, economic theories of federalism still prohibit extensive federalism, whereas 
political decentralisation promotes fair, transparent, effective, and accountable 
institutions. However, such a tendency is probabilistic, not deterministic. The 
administrative perspective on federalism stresses the impossibility of effectively 
managing a country from a single centre. A unitary system refers to 
maladministration and functional autonomy-a strong executive with hierarchical 
organisation functional at each level, whereas political decentralisation is 
incompatible with such an organisation (Markovitz, 1999). This largely confirms 
Putman’s theoretical position. He argued that even if civic associationalism makes 
state institutions work better, the crucial issue is the legitimisation of democracy 
by performance2 (Putnam, 1993). 
 
Whereas civic organisations must be able to significantly affect the policy-making 
process from outside the state, then we make a strong case that the rule of law, as 
a key component of democratic participation, is not merely a matter of creating 
just institutions. While civil society  cannot work by itself as a mechanism for the 
empowerment of marginalised groups in the context  where there are vast 
structural impediments for the effective participation and broader influence of 
such groups or equalising functions that have long been associated with 
government in a larger social context, but certain forms of civil society may 
function as a multiplier of unresolved tensions and divisions in the political and 
social spheres, and they may help to promote mechanisms linked to 
democratisation3 (Schmitz & Gillies, 1992). 
 
Although the concept of federalism is an outgrowth of an increasing awareness on 
the part of citizens, and it is a product of the community for bringing democracy to 
the local level, very little has been said here about the political process that 
undermines the actual devolvement of significant power to the local level. 
Arguably, representative democracy cannot be replaced. Yet, the question is how 
to build a new sense of community that promotes shared social networks and 
social capital4 (Putnam, 1993), and a governance process that facilitates the 
development of networking and the participation of citizens, groups and 
community organisations, without the local government being the centre of power 
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45 
 
or authority, which can overcome the shortcomings of a pluralistic democracy, 
i.e., democracy deficiencies (Thapa, 2007; Thapa, 2008; Sharma, 1998). 
 
With regard to the social, economic, and political transformation, Nepal faces 
similar issues as other transitional countries, yet without a multilayered federal 
governing structure marked by consociationalism in place, which will undoubtedly 
produce a local democratic practice and real citizen participation in the ongoing 
process of building democratic practices and institutions over the population that 
is increasingly discontent due to increasingly unsatisfied needs, and because of 
being disconnected from power. It matters considerably because the Nepali 
political elites are responsible for negotiating the rules for drafting the constitution 
in the daily political game and federal structure that give a political system 
behavioural consolidation5 (Przeworski, 1991; Merkel, 1997) and constitutional 
legitimacy6, while the consolidation of civic culture and civil society completes 
the stabilisation of the socio-political substructure of democracy. 
 
Power rests with the Nepali people now, and the central supremacy has been 
established. Nepal still has to make its way through federalism towards the 
creation of linear state restructuring to achieve a reasonably efficient blend of 
democracy, markets, and equity, which is nowadays politicised largely because it 
has failed to accurately describe the actual practice. Indeed, the unitary system is 
outmoded with its dispersion of power and control. It cannot permanently resolve 
the issues because every successive stage of political and economic development 
gives a new aspect, makes a new question, yet federalism remains the cardinal 
proposition of the Nepali constitutional system. Nepal faces a challenge stemming 
from historical and structural problems of the society, whatever the form of 
government. But we assume that the system of progressive or collaborative 
federalism with broad responsibilities in a form of accountability, and with the 
emergence of new identities and interests, is primarily ingrained in the character 
of Nepal as a political community. So, it could be more inclusive, representative 
and responsive. 
 
The effectiveness of decisions can be determined, as Easton has noted, “when 
decision-makers are recognised by most members of the system as having 
responsibility for these matters, and taking actions which are accepted as binding 
most of the time by most members so long as they act within the limits of their 
roles” (Easton, 1965). In every society, we can discover its own patterns, to use 
Lasswell’s terminology (Quoted in Cox, Ikenberry & Inoguchi, 1999), authority 
“practices”, yet two basic political claims have been advanced on behalf of 
federalism. One maintains that federalism provides the most advantageous 
governmental arrangements to reconcile the competing political advantages of 
large and small republics. The other emphasises its role in preventing 
concentrations of governmental power and in promoting public access to 
government decision-making (Beam et al., 1983). Motivationally and logistically, 
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Cure or Part of the Problem? 
 
 
smallness is often thought to contribute to democracy by enhancing citizen 
participation and their control over the government. 
 
Federalism certainly provides no clear and consistent guidance on the question 
concerning the proper allocation of functions and powers among governmental 
levels, and for managing intergovernmental programmes. A number of political 
scientists (Friedrich, 1968) have begun to view federalism in behavioural terms as 
a political process or as a bargain that has frequently been an unstable phase of 
political development. The decisions made at the local level is best viewed in 
determining the shape of the community as well as “who gets what and how.” 
Nonetheless, federalism with its autonomous and unalterable subunits rather than 
with administrative or political decentralisation probably contributes to protecting 
individual liberty when it is part of a broader fabric of constitutional 
representation. 
 
4 Federalism: State Crafting? 
 
There is evidence of broad contours of post-monarchy changes in Nepal. They can 
be seen as peaceful transformation towards a civilian political order. Such a 
broader background might make one tempted to think that democratic reform is 
possible along with transferring power to the grassroots in support of 
democratically elected and controlled institutions for all intents and purposes. Yet, 
the continuing class and regional cleavages that dominate real politics have 
developed as a new pillar of conflict that hampers the constitutional reforms 
designed to create an institutional culture for democratic institutions. The core 
issue is the kind of democracy we need today and to accordingly reform the the 
governance structure so that it promotes good and accountable governance.  
 
The democratic agenda has dominated Nepal since 1990. However, democratic 
institutions are still extremely fragile, and the search for consensual solutions 
through local governments remains restricted, or it is considered insignificant. The 
institutionalisation of the democratic order is thus fraught with risk. Nepal’s 
transformation from a monarchy to a republic does not change the basic societal 
rules. Democracy and freedom require citizens to exercise independent decision-
making and political responsibility, yet local governments are the best-endowed 
institutions fundamentally responsible for the transformation of the Nepali society.   
 
The traditional local government institutions characterised by “cultures of 
paternalism, bureaucracy, departmentalism, hierarchy, closed local democratic 
deficit, and central orthodoxy are now fairly uncommon” (McGarvey, 1997). 
Obviously there is undoubted consensus that the distribution of power in the 
political and social systems within authoritarianism or the centralised system 
(tightly associated with communication styles where orders, control and 
punishment are directed from top to bottom, and where democratic culture is 
suppressed through the use of force rather than participation) weakens the 
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democratic process (Hermochova, 1997). Nepal’s political direction remains 
uncertain in the very near future. In such a situation, federalism allows a space for 
people to communicate efficiently, discuss views openly, and to negotiate 
solutions that are acceptable. 
 
Decentralisation is undoubtedly part of a wider process of involving local 
communities in the local political process. It is often claimed that it creates an 
environment in which local officials have both the opportunity and the incentive to 
learn from policy experimentation in order to advance towards better policies and 
results that may transmit their wishes to the policy process Yackee and Palus, 
2010). Federalism, which connects devolution, innovation and more successful 
policy outcome, focuses on the penetration and standardisation processes, and 
thereby underlining the importance of integrating peripheries, defining boundaries, 
and creating identities (Walle, 2010). Federalism is seen as a strategy and 
institutional innovation. They develop political and governing institutions that are 
more understanding of the needs and wishes of the ordinary people. Federalism 
secures institutionalisation of political and social conflicts, and it achieves the 
formation and adoption of political identities and roles. This helps to overcome the 
democratic deficit. 
 
Even if we assume that decentralisation plays a role in organising some form of 
stability and social cohesion, especially by using the argument that conflict can be 
resolved by gradually reducing central dependence what Lijphart calls a 
consociational system of democracy (Lijphart, 1996; Lijphart, 1997), the 
democratic mandate will only be an effective tool if local politics can legitimately 
claim to be representative of the local communities. This approach implies that 
maintaining democracy or democratic stability requires that citizens agree on the 
limits on the state that they are to defend. Decentralisation may relieve centre-
periphery tensions around long-standing grievances of the marginalised groups. 
The power-sharing theory holds that democracy is possible in deeply divided 
societies provided that consociational societies are characterised by (1) grand 
coalition governments that include representatives of all major linguistic and 
religious groups, (2) cultural autonomy for these groups, (3) proportionality of 
political representation and civil service appointments, and (4) a minority veto 
with regard to vital minority rights and autonomy in contrast to majoritarian 
democracy, the winner-takes-all democracy characterised by the concentration of 
power in the hands of a bare majority, one-party governments, centralised power, 
a disproportional electoral system, and an absolute majority rule, which are most 
probably the conditions for a stable democracy in divided democracies. Equally 
importantly, if decentralisation brings about a fair distribution of power and 
innovation, then it may also intensify inequalities among jurisdictions because 
some localities may be ill-equipped with weak human resources or policymaking 
capacities necessary to deal with the new authority (Yackee and Palus, 2010). 
 
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In the light of deep social cleavages that characterise Nepal, it is difficult to see 
how the participation rights can be enough to empower them through civic 
engagement. Federalism reduces grievances by increasing autonomy and 
participation in decision-making. However, significant structural and institutional 
changes can result in new tensions, particularly if they are poorly planned or 
monitored. Gutmann and Thompson (2004) argue that variations in democratic 
participation can be attributed to the extent at which agents at various levels of 
state hierarchy encourage more direct and robust modes of popular engagement 
with politics. What is more important is that even if all citizens favour democracy 
and elections, they are likely to disagree about a range of policies, citizens’ 
political rights, the pace of economic reform, possible further reform, and the 
corresponding institutions. This is the case even if the concept of elections is a 
heuristic device that allows establishment and stabilisation of various forms of 
democratic government. It cannot automatically lead to responsive or accountable 
participation in the democratic process. Let us take the case of India. Its ethnic and 
linguistic federalism has worked for sixty years, but it is ‘quasi-federal or semi-
federal’ because it has never been highly decentralised. It is even more centralised 
due to frequent use of the president’s rule for partisan purposes, including the 
central government’s right to dismiss state governments and to replace them with 
direct central rule. With its constitutionally granted autonomous state, in practice, 
federalism should be seen as a political arena in institutionalising efficient 
representation in Nepal’s conflict-ridden transition. 
 
In long-term democracies, as Lijphart (1999) summarises the evidence, federal 
arrangements are most common in the societies that are geographically large 
and/or ethnically and linguistically diverse, while the vast majority of monolingual 
and mono-ethnic states are unitary in form. Several scholars of comparative 
politics, most notably Juan Linz, have argued that presidential systems are 
particularly pernicious in their potential for conflict, especially when coupled with 
constitutional arrangements that create rival centres of power. For example, ill-
defined borders between presidential powers and those of the legislature can be 
continual irritants leading to political unrest, and it may trigger the crisis that leads 
to the end of democracy. Rather unsurprisingly, a federal structure with limited 
autonomy is indeed entirely superficial, deeply problematic, and perhaps 
constantly prone to not being able to give citizens the opportunity to voice their 
preferences, and to allow them to become politically active. 
 
The processes of local and territorial politics are now well-grounded, and they 
have grown steadily, which cannot be ignored, although effects are not yet clear-
cut. It is difficult for Nepal to break the traditional pattern of seeking solutions. In 
Nepal, there is still a struggle between the forces that favour federalism and those 
that are in favour of a unitary state. And there are several bargaining chips and 
deadlocks that are becoming increasingly obvious. The main question is not 
whether federalism will work, but how it will work, and in particular, what 
representation channels, mobilisation, and socialisation will be at a time when the 
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organisation and style of governance remain an open question after the overthrow 
of the monarchy. The state is now under the control of the parties with conflicting 
ideologies. It is worth noting that democracy as we understand it is not a system 
that bestows powers to a certain group of people. Democracy is real, provided that 
people are engaged in decision-making and other processes that affect their lives. 
In this context, federalism is certainly a good beginning. 
 
Still more important, a modern and forward-looking nation requires a mature and 
reasoned political discourse, including the economic policy that deals with 
allocation, stabilisation, and redistribution of resources. By finding local solutions 
to problems, federalism gives people a real role in shaping decisions, serving the 
values of associational freedom such as equality of opportunity, a tension that may 
be particularly acute in significantly multiracial and multicultural societies, e.g., 
the contemporary Nepalese society. Those who wonder why every individual 
needs to engage in decision-making and deliberation, and to support a functioning 
market economy in a high-income country, it is still not clear how federalism 
resolves the paradox of participation that is difficult to be generalised elsewhere. It 
is argued that many independent, regional and ethnic movements lead to disabled 
and fragmented politics. But a legitimate academic question that perhaps deserves 
serious consideration is: what would be a feasible polity in Nepal that would help 
tackle different dimensions of institutionalisation, participatory democratic 
practices, political institutions and representation in order to enhance the quality of 
democracy and address extreme levels of inequality, poverty, and exclusion.    
 
Neither a single format nor a set of institutions embodies modern democracy, even 
if at a given moment in time, some particular country may seem to represent “best 
practice” in which individuals acquire power to decide by means of a competitive 
struggle. Consolidation of democracy is strongly associated with five values and 
attitudes: rule of law, electoral accountability, participation, inter-institutional 
accountability, participation, and competition, which reflect democracy’s capacity 
to give citizens an adequate answer by implementing the public policies that 
respond to their needs (Morlino, 2009). The extension of democracy to the state is 
not just a matter of elections, constitutional reform, or changes in the form of 
government, particularly in the countries with a long history of authoritarian rule 
like Nepal. Federalism should be seen as a political arena that institutionalises 
effective representation and political participation to enhance multiple social, 
economic and political transformations in the context of Nepal’s long-standing 
problems with democracy, local interests, and sustainable socio-economic 
development in some cases what Dahl calls “participatory autocracy” (Dahl, 
1998).  
 
The unquestionable relevance of federalism is consistently confirmed by better 
results and performance when policy-making authority is within the local 
governments because decision-making takes place closer to the people. Federalism 
produces diversification and localisation of the demands to which traditional 
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decentralisation is unable to respond adequately. The transfer of power under 
federalism provides services to its citizens in tune with local norms and values, 
and it creates a new and innovative programme to address community problems 
more effectively. It promotes better informed and responsive local governments as 
well as the general well-being of a community and its citizens. It helps to build 
strong communities and to create loyalty to the political system. It helps 
understand local needs and preferences by ensuring delivery of services that 
people actually need. The people are the ultimate judges of the performance of 
their local authorities in terms of both development needs and service delivery. 
Thus, it ensures policy effectiveness and quality of service delivery. The 
politically accountable local government is regarded as a decisive precondition for 
the functioning of the entire national and democratic character. Last but not least, 
it brings major improvements in terms of democratic control and political 
accountability (Walle, 2010; Yackee and Palus, 2010; Kuhlmann, 2010 and 
Thapa, 1998).  
 
5 Strategic Leadership 
 
Freedom of ordinary people, with particular emphasis on people power, tolerance 
for non-conforming people, and trust in people, can be observed today in many 
countries that seek to democratise. Yet, shamefully, Nepal has no strategic or 
rational7 (Gros, 1997) political leadership committed to democracy to rally 
popular support against authoritarian forces whether they are Maoists or Marxist-
Leninists, or any others whose passions can be infectious. This does not put an end 
to the matter. Whereas the normative basis of democracy emphasises political 
completion through regular elections, the durability of democracy and the real 
capabilities of the state ultimately depend on the Charter of Democracy itself. 
Unfortunately, in Nepal, those who have acquired power and status have an 
interest in maintaining the status quo, institutions, and ideologies of manipulation. 
Therefore, we must say that such challenges can only be a bad influence that 
manifests itself in repressive policies and state intervention, which are less open to 
democratic rule. Clearly, creating a federal structure is highly complex. Yet, 
unless there is the will to act when the situation demands action, it is unlikely to 
allow people to translate democratic preferences into active support for democratic 
goals (Welzel, 2007). The crucial point, however, is that when leaders are both 
capable and willing to struggle for democratic goals, they do allow for much 
variation in terms of conceptualising and formulating the politics that leads to 
transformation. The ongoing struggle of the indigenous and regional movement 
for recognition of the right to self-determination raises fears of destabilisation 
(Kraljic & Stolz, 2010), but it is the job of the responsive and creative leadership 
to mobilise and galvanise them to join the action for shared benefits. 
 
While it is true that through various forms of autonomous arrangements, 
federalism allows people to develop their institutions in their own territory, and to 
determine their own development in accordance with their own values, it seems 
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that the only way to maximize participation is to ensure the country’s territorial 
integrity and sovereignty (Morgan, 2007). Whether the Nepalese traditional 
leaders, characterised by personalised leadership, will be a positive force to make 
the transition from a besieged to functional democracy remains to be seen. It is no 
less true that the poor and corrupt conduct of politicians and public institutions has 
consistently dampened the prospects of effective institutions of political authority 
requiring entirely new dimensions of social and economic arrangements that foster 
innovations. People are increasingly sceptical about the state’s ability to deliver on 
its promises. In this respect, leadership is an important criterion for determining 
the political life in institutionalising federalism. 
 
What one actually observes in Nepal (in the context of the history of the 
communist-like concentration of power, or despite the rhetoric about a pendulum-
like movement between centralisation and decentralisation) are the continuous 
preponderance of centralism, political culture and practices, and institutions 
calling for reform that guarantees participation and representation contributing to 
strengthening democracy and the federalised institutional pattern emerging from a 
new form of politics that pulls together diverse people from across the political 
spectrum. We believe that socially peaceful transformation is an extremely 
complex process that needs the work of all forces. Yet, it is important to 
acknowledge that, firstly, Nepal needs to allow democratic self-government; 
secondly, the country needs to allow legitimate power to uphold autonomy so that 
it is no longer seen as a single body of citizens who constitute a plurality of 
diverse people, groups, and associations that legitimise the transformation taking 
place in society. All this will lead to a “democracy-accountability-state” (Bislev, 
2004). Its absence diminishes the propensity of the Nepali regime to democratise. 
For those who advocate the centrality of participatory democracy linking citizens 
with the state, it may be important to know that creative leadership and an 
institutionalised form of governance can affect citizen expectations and reach out 
to higher levels of distrust in the state (Herrcros & Criadao, 2008). Coming from 
the liberal perspective, the national consensus must be derived from political 
parties as a basis for the formulation of any reform agenda. Our assumption is that 
nobody can do this but the Nepalese themselves [what Shorbagy (2009) calls 
“only of national fabrics”] to overcome the ideological battles that have been 
fought in the Nepalese politics for so long. Thus, the resolved ideological conflicts 
are the key to any constitutional reform of shaping the Nepalese political life, and 
to strengthening democratic political institutions and local systems. 
 
There are not many examples of simple and safe transition from despotism to 
democracy. Nepal’s conflict-ridden transition dilemma under the circumstances of 
repressive, idiosyncratic, and ambitious leadership (which is apparently linked 
with traditional clientele mechanisms intended to promote themselves and their 
policies to the public, and in blunt terms, they raise their game “contrary to civic 
engagement and other forms of participation) highlights the existence of class-
based inequality, and it has certainly not reached the threshold of a comprehensive 
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democracy promotion with regard to being involved in those social, cultural, and 
associational activities in that may offer benefits at large” (Wagle, 2006). It casts a 
perennial shadow over the scope for greater efficiency, speed, and flexibility for 
the effective exercise of institutionalised forms of governance. In the present 
analysis, it is still difficult to ascertain whether Nepal will foster a political culture 
that favours participatory democracy and transforms the social structure to 
eventually develop a political will to reflect the shift, especially the citizens who 
have direct routes to influencing the policy outcomes. The problem does not end 
here.  
 
While democratisation is not unlikely, most Nepalese politicians behave like Jell-
O; it moves and wiggles a lot when we shake the bowl; then it returns to its 
original shape (Thapa, 2009b). It is not that the Nepali political leadership is 
unaware of the need for changes, but it is its indomitable will to hang on to power 
no matter what. The people are pushed to the periphery. It can be argued that 
while there has been some interest in conceptual change about the modernisation 
of the state that favours local representation, the concept is variously interpreted 
over its meaning that the restructuring of the political system remains open-ended, 
lacking an intellectual pedigree breakthrough in the process. It needs to be noted 
that this problem has not been unique to Nepal. So far, it has been characteristic of 
a generation of politicians, and those at the helm have been concerned merely with 
the utilitarian government. They do not really commit themselves to adopting 
democratic principles and values.  
 
Differences are likely to surface between cultures, values, and aspirations as 
Huntington’s Clash of Civilizations points out (Huntington, 1997). Through their 
incisive judgment and sense of responsibility, the leaders (e.g., B.P. Koirala, 
Ganeshman Singh, T. P. Acharya, Pushpa Lal, Manmohan Adhikari, and K.P. 
Bhattarai) used to guide their parties largely in the right direction. One of the most 
important things for a leader is that s/he should be aware that s/he is the pillar in 
unfavourable times and the motivator committed to organisational goals and 
aspirations. S/he should encourage people to stand up for what they believe in, and 
give credit when and whom it is due to, gracefully and quietly. But the exact 
opposite is true in Nepal. The leaders who are on the scene now not only lack 
these qualities, but they are also formalistic, indecisive, they favour the linear 
views of political development, and they are focused on material factors. The 
troubling paradox is that in spite of the successful struggle for a republic and 
numerous valid demands for systemic reforms, politicians have indulged in 
grabbing power and privileges rather than pursuing the national interest or public 
welfare what Englehart (2007) calls “self-destructive despotism.” Revealingly, it 
could be that, to paraphrase Englehart, while functional states are all the same, 
weak states are weak in their own way, and most struggling democracies continue 
to resemble chromatically weak states only after serious miscalculations by 
leaders.8 Despite the mountain of problems and huge challenges that lie ahead of 
Nepal, there is still room for optimism. 
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6 Analysis 
 
Ideological nuances notwithstanding, old and new democracies began to redesign 
their political institutions during the 1980s and 1990s. The general notion was that 
the government required more citizen participation and greater decentralisation to 
give local governments more authority and local citizens more potential 
instruments of participation, although in varying degrees. We may say that a 
balance of power between central and local government is desirable, and it is the 
imperative to decentralise decision-making power and to establish real local 
governments, as O’Donnell and Mainwaring have noted, to claim (on the basis of 
shared beliefs) that democracy is viable insofar as it is based on the community 
and society (O’Donnell, 1999; Mainwaring, 1992). If governments do nothing but 
umpire the group struggle, as is the case in Nepal, sheer survival or durability of 
democracy has to be considered as a major achievement. If not, has the political 
process taken place to lay down the conditions for self-sustaining democracy? 
 
More specifically, the Nepali local government is at a turning point where it calls 
for a broad political and social pact for the state with a high level of organisational 
capacity and institutionalised rule of law. It highlights the need to complement the 
politics of a true democracy, involving federalism. The question is how successful 
the new institutions will be in actually attracting and sustaining a large number of 
citizen participants, or what effects of participatory mechanisms will be on local 
government transparency, inclusion, and wider civic engagement. Such a process, 
paradoxically, is too recent, and the responses to these questions are going to be 
varied in each case. The problems surrounding their implementation are huge, and 
they are going to take a long time to be resolved. 
 
As argued elsewhere, Nepal’s transition from a monarchy to a federal republic is 
distinct on several counts, but it encounters a number of important challenges, 
including constructing a culture based on sharing, reciprocity, responsibility, 
accountability, and mutual obligation – a primary factor that contributes to the 
lack of consensus regarding the concept of the state itself, and to the growth of the 
democratic deficit9 (Thapa & Sharma, 2009; Thapa, 2009a; Herb, 2001). The 
democratic institutions created to represent the interests of people are 
insufficiently accountable. Transparency and effectiveness are lacking, especially 
the decision-making authority is centralised in the hands of the political executive. 
Unless the new power-sharing arrangement breaks with the centuries-old political 
tradition, Nepal will witness a game that is less cryptic, but far more perilous. 
There has been no concerted action for participatory programmes in order to 
sustain a large number of participants in implementing policies in various public 
sector activities, or in terms of local-level participatory programmes and state-
society cooperation in order to adjust to the complexities of central-local relations. 
This calls for a new concept of local government. While resources are critical to 
promote and sustain citizen participation, the Nepali political leadership lacks 
education, skills, and experience in managing governance. There is a poor 
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understanding of the nation-building10 process and of how the fractured transition 
is put together. This is certainly a call neither for a return to the now discredited 
highly centralised regime nor for a brutal nomadic vision, but for the re-
conceptualisation of the Nepali state to better meet the needs of citizens, and to 
reflect the goals of inclusive, responsive, and accountable governance. 
 
The Nepali politics is lurching like a drunk from crisis to crisis, and the cyclical 
ups and downs of political elites in response to current debate on federalism pose 
serious problems for rational choice. The political processes of reforming the 
Nepali state and building democratic institutions have been stalled for lack of 
consensus on this vital national agenda. The basic rules of politics are at stake, 
including the state’s territorial integrity. Our hypothesis concerning local 
government is that unlike the communist system, incorporating local politics into a 
hierarchical political party, the emergence of the modern system with new state 
institutions, but without inclusive public forums and new participation 
programmes in the political process, participant enthusiasm is going to fade 
quickly. The risk is that the ruling elite, participating in the reforms, seems 
unwilling or unable to guarantee the continuity of the long-term policies, or to try 
to undo or at least thwart some modernisation reforms. Therefore, it is once again 
important to view the parties within a wider context: the nature of such linkages 
largely determines the effectiveness of local government in promoting and 
sustaining local participation programmes. 
 
Federalism may not be a panacea for Nepal, but it is certainly important for the 
Nepali society where the organisation of the state is such that all authority and 
power are excessively concentrated in the central government. It is on this basis 
that not only politicians, but also every group have access to the state resources 
and patronage. The state is indeed based on personal and clientele ties with 
political institutions, i.e., the privatisation of the state that continues to be the 
driving force in the Nepali politics. Even the hybrid nature of the CA is turning to 
disappointment, to say the least. Democratic regimes can only survive when their 
societies are committed to them. There is no doubt that Nepal is in need of a 
substantial shift in the formal structures of local political systems, but there are 
certain set values (liberty or autonomy, democracy or participation) generally 
perceived to be essential, particularly if the government politics affects citizens’ 
basic rights and interests. If it widens the gap between the rulers and the ruled, 
people may stand up against government. 
 
From one standpoint, Nepal deserves high marks for the progress it has made 
towards a multi-party democracy, but the transition process is far from being 
complete because there needs to be certainty with regard to unshakable 
commitments to democratic values, to the changing character of the society. 
However, authoritarian elements still control the administrative bureaucracy, 
including the military. Federalism seems dubious on political grounds as well. It is 
axiomatic that democracy thrives in a competitive system, and it also fosters a 
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desire for individual decision-making shaped solely by wider civic engagement, 
and the by the presence of national decentralisation and supportive civic culture, 
as illustrated in the chart below. It is no secret that without a constitutional system 
that combines the inclusive governance elements coupled to extensive political 
reforms, there will be no increase in the representation of citizens. Moreover, the 
state reform would allow citizen participation, and a blossoming democracy would 
be a far cry. 
 
Chart 1: Political System Dimensions  
 
An ideal type of the political system 
 
Political System Dimensions Authoritarian Democratic 
Institutional   
(structure, powers) Fusion of powers Division of powers 
Institutional Web Unaccountable institutions Accountable institutions 
Procedural   
Rules, Procedures & Accessibility Hierarchical Egalitarian 
Representational   
Territorial & Functional Structures Unitary Federal 
Representation Corporativist Pluralistic 
Policy-making mechanisms Central planning/ 
interventionism 
Pressure 
 
(Adapted from Ganga Thapa’s forthcoming book entitled ‘Nepal: The Road to Democracy’) 
 
Post-monarchy Nepal is marked by the desire for a more decentralised and 
market-oriented public sector, but the manner in which federalism is expressed to 
some extent makes it difficult to shape the content and character of contemporary 
local government for increased citizen participation in efforts to significantly 
improve governance. As the French adage says, “the more things change, the more 
they stay the same,” the debate on the role of federalism in Nepal is more and 
more intertwined with the domain of the central government for the lack of a 
coherent perspective on contextualising the local-level participatory programmes, 
the absence of trust in politicians, and with the perception that democratic 
institutions have little legitimacy and accountability.  
 
In a conceptual sense, if the state and local authorities are very active, the 
principle of local autonomy becomes part of legal rhetoric rather than part of 
reality. Nepal still has a long way to go from the society, based on the 
combination of a large and increasing number of programme participants in civic 
engagement, to the expansion of citizen decision-making power. As long as 
popular sovereignty was the standard of democracy, considerable changes 
occurred following the 1990 revolution, culminating in the popular uprising of 
April 2006. They looked like nostalgic phases in the long process of the 
emergence of the Nepali nation. 
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There are several ways in which local government operations can be assessed. 
Although scholars disagree, there is no systematic relationship between the federal 
system and the protection of individual minorities. However, if one looks more 
closely at the value maintained, the multiple power centres and access points in 
the federal system enhance government responsiveness and improve the process of 
representation to protect and defend territorial minorities irrespective of legal 
doctrines in ethnically divided countries such as Canada, Australia, and 
Switzerland. The chart below illustrates the territorial structure of representation 
in the federal, semi-federal, semi-unitary, and unitary political systems. 
 
Chart 2: Territorial Structure of Representation of the Political 
System 
 
 
The democratic ideal in local government implies that active participation of 
citizens in local affairs is both a goal in itself and an instrument for strengthening 
democracy in society at large. Federalism may not be the final answer to the issues 
concerning local population. Our argument is that federalism as administrative or 
political decentralisation without autonomy and the right to internal self-
determination is a futile exercise. There is no way to avoid citizen disengagement 
from the political system, the rules and procedures of which are illustrated below: 
 
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Chart 3:  Rules and Procedures of the Political System 
 
 
 
There are local government examples that choose their form of governance, and 
there are communities where local powers are defined by the centre, but most 
countries do not allow local autonomy to decide on its form of governance. Even 
at the theoretical level, the contentions are about what kind of political-structural 
specificities and variations can be maintained for different countries. Federalism is 
strong in some countries, but it is hardly visible in others. By itself, this is not 
particularly remarkable. The sharply conflicting assessments of the current 
theories of federalism reveal that the discourse is increasingly focused both on 
what institutional options are suitable for a particular country and on their 
desirability. Nepal represents a picture of one of the most complex multiethnic 
societies. It is still organised in terms of the hierarchy of race, gender, class, etc. 
New institutional mechanisms are best achieved if economic and political 
priorities are accompanied by a transformation of both the short-term 
empowerment of the poor and the long-term consolidation of democratic 
institutions. 
 
7 Building a Democratic Community 
 
The most appropriate type of government remains debatable, but the constitutional 
structure is without doubt the foundation of democracy. Elites are responsible for 
negotiating the rules for drafting the constitution, and for upholding the 
constitutional procedures in the daily political game. Moreover, democratic 
governance can work only when citizens are responsible to themselves, and 
thereby also demonstrating a reasonable commitment to their community. To 
build a democratic community, the social reality of a community, which shapes 
social relations, must be understood. The leading authorities agree on the theory of 
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the modern democratic state where democratic institutions must have a local 
foundation. Yet, some common ground needs to be articulated to genuinely push 
local democracy so that it is composed of self-governing institutions to build a 
strong democratic community in which individuals, groups, and collectivities of 
all kinds treat themselves as parts of a creative society seeking liberation from all 
forms of domination (Mohanty, 1998).  
 
There is virtually no intensive debate on the models of democracy to be preferred 
(Held, 1996). Local governance is an important democratic alternative for 
sustaining public solidarity and community participation. In local governance, 
participatory politics can bring people out of isolation into a community to create 
a context of enhancing individual autonomy and citizenship. In fact, the spread of 
democratic ideas and the emergence of a global system have contributed to a 
resurgence of local initiatives. The pressures for democratisation have led to a new 
emphasis on local governance as illustrated below.  
 
Chart 4: Society and State 
 
Category Power 
Elites Political issues, access to power 
Spoilers Personal wealth and power 
Citizens Economic concerns, basic life necessities 
Victims Justice, revenge 
Social groups Security in society  
 
It is most likely that the CA will provide for a three-tier federal government 
structure consisting of the central government, state/provincial governments, and 
local governments. Ten thematic committees and a Constitutional Committee are 
working on building the Nepali state and the federal structure. The CA Committee 
on State Restructuring and Distribution of State Powers considered its sub-
committee report that had proposed two alternative models for the federal system: 
the first model with 14 provinces and the second model with six provinces. On 20 
January 2010, the main committee, by a majority vote, decided on 14 provinces 
based mainly on ethnic identities with some changes in the names and alignments 
of ethnic settlements. Most significantly, the main committee also recommended 
prior political rights of ethnic community leadership in the special structures to be 
established in provinces for at least two consecutive elections. The state is divided 
into the following provinces (from west to east): Khaptad, Jadan, Karnali, 
Tharuhat-Awadh-Lumbini, Magarat, Tamuwan, Narayani, Tamsaling, Newa, 
Mithila-Bhojpura-Madhesh, Sunkoshi, Sherpa, Kirat and Limbuan, as shown in 
the map below: 
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(Source: myrepublica.com) 
 
The stage is thus set for the CA to finalise the recommendation, and to take a 
decision on whether the provinces will remain as provinces or as states / republics. 
The precise number of provinces and their geographical alignments need to be 
determined if they are to be changed. There is also an option to come up with a 
new or better alternative, if any. It may be noted that among the three key players, 
the Unified Communist Party of Nepal (Maoist) (UCPN-M) has proposed 14 
“autonomous republics,” the Communist Party of Nepal (Unified Marxist-
Leninist) (CPN-UML) has proposed 15 provinces, whereas the Nepali Congress 
(NC) has remained confused and undecided. The Communist Party of Nepal 
(Marxist-Leninist) (CPN-ML) and the Communist Party of Nepal (United) (CPN-
U) have proposed six and eight provinces respectively. 
 
Given this wide divergence in the nature and pattern of the federalism proposed by 
major political parties, the CA endorsement is unlikely to win universal support. It 
would be least surprising if the main opposition to the proposed provinces came 
from the Tarai-based political parties and groups because the main committee is in 
favour of the creation of two provinces in the Tarai bordering India where groups 
ask for “one Madhesh, one province” with the right to self-determination. This is a 
potential recipe for the new series of conflicts, even intense ones, if such regional 
movements obtain extraneous support. Apart from this, the division of powers and 
responsibilities is already being worked out to meet the tight deadline of 
promulgating the new constitution (the country’s seventh constitution in six 
decades) by 28 May 2010. 
 
Federalism must serve the interests of popular sovereignty by placing government 
closer to the people, allowing citizens to pursue their interests through several 
governments rather than through the traditional perception of separation of powers 
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in the name of democracy by believing that a true democracy arises ultimately 
from a direct democracy in a small community in which citizens are thought to be 
more familiar with issues and leaders. Besides, the consolidation of civic political 
culture and civil society completes the stabilisation of the social and political 
structure of democracy. It is not a problem, however, if some of the characteristics 
tend to favour democracy, while the others tend to work against it. 
 
In recent years there has been a flowering of federalism or self-government 
initiatives among developing countries. The range and diversity of these initiatives 
are quite impressive, reflecting the different historical, cultural, and political 
conditions of various countries. One theory of the modern democratic state is that 
liberalism aims at creating a society where the obtained conditions enable the 
individual to exercise her or his capacity of self-rule. The democratic idea centres 
upon the assumption of the capacity of individuals as citizens to govern 
themselves. It is assumed, first, that every adult can be rightly considered to be, in 
principle, sufficiently well qualified to participate in the democratic process of 
governing the state to whose laws they are subjected. It is further assumed that 
among adults, no persons are so definitely better qualified than others to govern 
the state, and that they should be entrusted with complete and final authority over 
the government of the state. 
 
It is crucial to understand that modern political liberalism aims at ensuring that the 
democratic process is politically organised. Individuals must be members of the 
state, and they must be its “nationals” in order to have citizenship rights. Popular 
sovereignty is thus understood as the self-rule by nationals in their capacity as 
citizens. This liberal conceptualisation of popular sovereignty is premised upon 
the acceptance of this dual notion of self-determination: the capacity of 
individuals to govern themselves, and the capacity of individuals as citizens to 
govern a political community (Teune, 1996). 
 
Again, a number of pluralist writers have maintained that power is fairly evenly 
dispersed in society with no single group having ultimate control over all issues. 
As Arbalester reminds us, the core meaning of democracy “may be vague, but at 
its root lies the idea of popular power, of the situation in which power, and 
perhaps authority too, rests with people” (Arbalester, 1997). As democratisation 
has been a favourite object of study since the collapse of state communism, an 
essential element in the political theory of federalism stems from the view that a 
genuinely democratic government can flourish only in a small political entity, and 
that it can serve as a very good and easy-to-measure dimension of consensus 
democracy (Lijphart, 2008). For this reason, as Dahl puts it, “it is nearly self-
evident as to require no discussion” that “the greater the belief in the legitimacy of 
the institutions of polyarchy within a country, the greater the chance for a 
consolidated democracy” (Dahl, 1971).  
 
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8 Conclusion 
 
In this brief paper, we attempt to argue that federalism is not an end in itself, but 
devolution of power. It is rather a central mechanism for understanding democracy 
to guide the institutionalisation of the federal democratic republic. The debate on 
whether Nepal needs federalism came to an end on the very day when the Interim 
Constitution transformed Nepal into a Federal Democratic Republic. Nepal, of 
course, is not yet a democracy because the centre has power monopoly. Our 
discussions on federalism are obviously impressive, but concerns still remain 
rather strong regarding the political communities’ professed commitment to 
enacting meaningful reform of local governance in the interest of democratic 
governability.  
 
One cannot fail to note that state institution building is a complex process that 
requires agreement on multiple issues, including centralisation of coercive powers, 
the division of power between the centre and periphery. However, the new state 
institutions, imposed by external actors, are likely to be fragile and unable to 
generate authority within society. Of course, when rulers benefit from state 
weaknesses, they will have no interest in measures that strengthen the state to their 
misfortune. It would not be inaccurate to say that Nepal is in the middle of a range 
of debates that may decide the future shape of federalism and democracy. 
Anyway, we cannot import it as if it were KFC or Pizza Hut, or Coca Cola. 
Federalism cannot be imported like refrigerators or computers, it can only be 
shared. The best option would be federalism which would provide for autonomy 
and cultural pluralism, where local and central sovereignty are cooperative and 
coequal. We can, however, deal with enlightened, effective, and realistic themes. 
Yet, principled policies need to transform society where government is run by 
commonly accepted and binding rules. Democracy can best provide prosperity, 
independence, and liberty for which the Nepali people have struggled and suffered 
for so many years. 
 
There are some practical obstacles to participation and fairness. We need to 
resolve some issues, for instance, how to decide which groups are entitled to 
greater representation, and how to ensure that their representatives are in fact 
accountable. Federalism is first and foremost a federation of peoples. The 
decisions regarding the powers of the federal subunits should recognise and affirm 
the equal status of the disadvantaged and marginalised groups or regions that need 
special representation. Nepal is a country of great diversity: there are varied ethnic 
groups, varied resource bases, and varied climate patterns. Therefore, a strategic 
response is needed in order to make the right choices that can become a model 
without threatening the stability and integrity of the Nepali state.  
 
Since 1990, the main tendency of the democratic process has been to produce 
several parties that have a potential plurality status, but no single party can 
realistically strive for setting up a federal structure. The Nepali case study does not 
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analyse a single event, but a series of events that have occurred over 60 years 
since Nepal’s first democratic opening in 1951 when democracy and popular 
sovereignty tended to degenerate into the tyranny of the majority (or to worse than 
that). The problem of Nepal’s democratic deficit is the centralised authority of 
political leaders who want a total and unchallenged grip on the political process. 
Another problem is the politics that is less based on ideas and ethical concerns, but 
more on material advantages and state resources rather than public goods. Nepal’s 
political future seems largely to depend on an emerging class structure and class 
relations. However, if substantive democratic reforms are combined with faster 
economic development, they will enhance the prospects of democratic 
transformation and good governance based on the political system that is 
inclusive, accountable, and responsive. If this is not the case, the prospects are 
rather bleak. 
 
Aknowledgements 
 
An earlier version of this paper titled ‘Debating Federalism and Democracy in Nepal’ was 
presented at the International Seminar on Federalism in Nepal: Challenges and 
Opportunities organized by the Centre for the Study of Nepal, Faculty of Social Sciences, 
Banaras Hindu University (BHU), India, and Centre for International Relations, Tribhuvan 
University (TU), 29-30 January 2010, Kathmandu. The authors are grateful to the seminar 
organisers and participants for their thought provoking comments on the previous version 
of the article. However, we would especially like to express our sincere gratitude to 
Professor Anjoo Sharan Upadhyay, Coordinator, Centre for the Study of Nepal, BHU for 
her encouragement and crystallizing thoughts she accorded to us during the entire period of 
the seminar. The authors, however, jealously claim full blame for any errors, foibles, and 
follies as revealed in this essay. 
 
Notes 
 
1 The promulgation of the 1999 Local Self-Government Act (although it theoretically 
envisages that local government should be elected and should have the power and resources 
to exercise effective political authority) was an effort to institutionalise democracy on the 
basis of political pluralism. It can be seen as an indication of the desire to implant 
democratic principles into the grassroots. However, their functioning can be merely seen in 
the central government that may withhold, grant or withdraw power and privileges as it 
deems fit. One reason for this is that the powers conferred on the local bodies are often not 
enacted, or for fear of creating political opposition because of the lack of institutional 
capacity, or enforcement is poor.   
2 Sidney Tarrow Putnam’s Making Democracy Work: Civic Traditions in Modern Italy 
tackles two problems in social science: how to marry directly collected quantitative data to 
the historical information from external sources, and how to connect political culture to 
democracy. Still more impressive is how traditions of association and civic engagement 
affect political behaviour. 
3 In this context, developing democracy is fundamentally about developed citizenship, and 
about building a strong civil society, which gives people an effective voice in the governing 
institutions and development plans that affect their lives. Civil society is distinguished from 
the formal structures of the state, yet pluralist democracy encourages a strong associational 
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63 
 
life uncontrolled by the sate, which helps to mediate between the state bodies and the 
multiplicity of private interests and diverse expressions of public opinion. 
4 Social capital is a concept often stressed by economists in order to explain and understand 
various human relationships as well as people’s connections to associations and community 
affairs; it is used as a framework for bridging theory and practice as local citizens develop a 
vision for collective action through mutual trust and cooperation in society and community. 
5 We use here a narrow definition of behavioral consolidation as formulated by Adam 
Przeworski (1991) and Wolfgang Merkel (1997). It refers to reducing the attractiveness for 
powerful actors such as military, large landowners, businessmen, radical movements, 
clandestine groups, or populist, charismatic leaders who pursue interests outside the 
democratic institutions and against the democratically legitimated representatives. 
6 The legitimacy of a democratic system is not static. While it is not solely generated by the 
legality and democratic quality of constitution-making, Lipset and others argue, no matter 
what kind of defects the political system might have, it is legitimate so long as it is 
perceived by the governed to be the best realistic alternative imaginable. Moreover, in 
constitutional law, the legitimacy of democratic constitution is derived primarily from its 
own enactment, which can be differentiated into three levels: legitimacy from above, 
internal procedure legitimacy, and legitimacy from below. 
7 Strategic leadership is political leadership involving the setting of clear priorities and 
making difficult choices, resolving conflict and balancing different demands and views, and 
as such, it entails arbitration and persuasion. By rational leaders we mean that leaders act to 
maximize the net gains resulting from a deliberate process of decision-making. The success 
of democratic government (in the countries that are newly endowed with it) depends on 
rational leaders committed to democratic ideals. Leadership is crucial because emerging 
democracies often have important groups that are loath to accept the rules of the democratic 
game. The elites that have held onto power by hook or by crook for a long time may be 
ready to finance a coup d’etat before the ink is dry on the new ballots.  
8 The distinction between weak, failing and collapsed states, according to Robert Roteberg, 
is that weak states have a low capacity to make and carry out policy, but the state apparatus 
is not significantly challenged by other actors. Failing states are challenged by others - local 
elites who usurp much of their power, criminal gangs that operate in defiance of the state, 
or active insurgencies. Collapsed states are those where government has failed entirely, 
either there may no longer be any central government or the central government may be 
entirely powerless, see Ibid. The debate over this prediction is vigorous and voluminous. 
9 In the mainstream political science, the prominent explanation of the democratic deficit is 
not given by culturists, but instead there is a focus on the social structure. Even then, we do 
not speak of the preservation of the liberal polity here, but instead, we speak of the power 
of the political elite. Especially there where powerful antidemocratic parties, ideologies, 
and forces are alike, liberal democracy is less likely to emerge, and if it does emerge, it is 
less likely to endure. 
10 Nation building is generally a pejorative term used to describe effects on reviving and 
rebuilding governance, peace, stability, and rule of law. 
 
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