Nepal’s governance crisis: A nation in paralysis
March 27, a family trip from Kathmandu to Dang became a grim metaphor for Nepal’s institutional decay. What should have been a 10-hour journey stretched into a 21-hour nightmare, with a single 14-kilometer stretch Daunee consuming ten agonizing hours, an indictment of criminally neglected infrastructure. The exhaustion of travelers—sleep-deprived, hungry, and choking in dust—mirrors the nation’s broader dysfunction: structurally intact yet crippled by systemic rot. The collapse is not limited to roads. Just days earlier, a devastating fire at a Dang plywood factory destroyed nearly Rs 400m in assets and left over 500 workers jobless.
Chief District Officer Krishna Prasad Lamsal’s desperate pleas for firefighting support from neighboring districts and municipalities laid bare the shocking lack of emergency preparedness. These are not isolated incidents. In Kathmandu, Janamorcha and Rastriya Prajatantra Party cadres blockaded Ratnapark and other areas, paralyzing the capital’s transit, while Prime Minister KP Oli squandered a high-level economic forum on rustic analogies of buffalo - ticks and political jibes rather than substantive policy. Together, they expose a governance trifecta: crumbling infrastructure, unchecked political obstructionism, and executive unseriousness.
Federalism’s broken promise
The 2015 Constitution of Nepal, informed by seminal federalism theories, promised transformative decentralization. Yet nine years into implementation, subnational governments remain systematically disempowered—chronically under-resourced, understaffed, and stripped of meaningful autonomy, while political elites (KP Oli, Deuba, Dahal, MK Nepal, BR Bhattarai, JN Khanal) engage in perpetual factionalism at the expense of federal governance.
This institutional failure manifests in alarming macroeconomic indicators: public debt now stands at 47 percent of GDP (Rs 27trn), exceeding the 35.43 percent sustainability threshold identified by NRB seasoned economist Laxmi Prasad Prasai (2024), with annual debt servicing consuming Rs 402bn. Concurrently, Nepal’s recent grey-listing by the Financial Action Task Force (FATF) for failing to combat sophisticated financial crimes including systemic tax evasion and fraud further underscores institutional decay. Compounding this crisis is a perverse bureaucratic culture where civil servants demand additional ‘facilitation fees’ from citizens for routine services, despite receiving full salaries and allowances. This rent-seeking behavior, institutionalized at all levels of government, epitomizes how Nepal’s federal transition has been hijacked—not by constitutional design, but by entrenched interests that perpetuate centralized predation under the guise of federalism.
Critical infrastructure—Narayanghat-Butwal Highway, Nagdhunga Tunnel, Melamchi Water, Mugline–Pokhara Highway—remains mired in delays. Meanwhile, 6,200 youths leave the country daily for foreign employment, a stark exodus underscoring Nepal’s failure to secure its own future. The Local Government Operation Act (2018) remains a paper tiger, with provincial postings treated as bureaucratic exile. Subnational governments face chronic 23 percent budget shortfalls, while resources are allocated based on electoral patronage rather than developmental need.
The path forward
Nepal stands at an inflection point. Federalism’s promise has been hijacked by a new mind set of centralism, where even hiring school teachers requires Kathmandu’s approval. Three urgent reforms are critical:
- Administrative federalism: Devolve personnel and fiscal authority to subnational governments, ending Singhdurbar’s suffocating control,
- Fiscal federalism with teeth: Guarantee provincial revenue autonomy and performance-based funding, and
- Enforced accountability: Implement independent audits of federal spending, as long demanded by the Financial Comptroller’s Office.
Without immediate corrective action, Nepal risks transforming its federal experiment from a beacon of post-conflict hope into yet another case study in constitutional failure. The stranded travelers, the jobless workers, and the millions trapped in this institutional purgatory deserve more than a government that mistakes inertia for governance. The time for reform is now—before the paralysis becomes permanent.
