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In countries practicing federalism, commissions related to natural resources and fiscal issues play pivotal roles in making the federal setup work equitably, through rational distribution of natural and financial resources. In some countries, there are separate advisory bodies to handle natural and fiscal resources. The 2015 constitution of Nepal established a single National Natural Resources and Fiscal Commission (NNRFC). 

The commission’s role is crucial in transforming the old unitary state into a functional federal one. “Only effective implementation of fiscal federalism can sustain our political federalism,” says Jhapat Bahadur Bohara, Minister for Economic Affairs and Planning, Sudur Paschim province. “Yet, there seems to be no serious effort to get the fiscal side of federalism right.”

An effective commission could significantly reduce chances of disputes among the three tiers of government—federal, provincial and local. Most such disputes are over natural resources and revenue distribution. The commission is mandated to make recommendations on revenue distribution, equalization grants, conditional grants, internal borrowing, and sharing of natural resources among the three tiers. 

Currently, there are clear fiscal gaps at the provincial and local levels, as they are being asked to spend more than what they can collect in revenues. As such, the central government has to make fiscal transfers to the provincial and local levels to bridge the gaps. Although the local governments under the new constitution have been running for three years, the commission, mandated to facilitate their functions, is itself mired in problems. 

Late, incomplete, understaffed 

Soon after the enactment of the new constitution, the formation of a commission should have been the first priority of political parties. Yet, it wasn’t until two years later, in 2017, that the National Natural Resources and Fiscal Commission Act was finalized, with the commission coming into existence on the 28 December 2017. A year after the commission’s formation, the federal government, on 21 March 2019 appointed Balananda Poudel as its chairman. But four other members of the commission are yet to be appointed. “We have time and again urged the government to appoint remaining commission members at their earliest, for it is difficult to work without them,” says chairman Poudel. 

The long delay in the appointment of commissioners can largely be attributed to disputes within the ruling Nepal Communist Party, as well as between the NCP and the Nepali Congress, the main opposition. All their senior leaders want those close to them appointed as commissioners.  

Other personnel are also in short supply in the commission. According to Poudel, frequent staff turnover is not helping either. “On one hand, we have insufficient staff members, and on the other they are frequently being replaced”. Then there is the mismatch between the nature of the work, and knowledge and capacity of the staff. “Our staff are not trained to handle the specialized tasks the commission needs to handle,” Poudel adds. 

Legal troubles 

Then there are the legal hurdles. The constitution has given some exclusive powers to federal, provincial, and local governments, while, at the same time, there are some concurrent powers they share. But, there are no laws that clearly define exclusive and concurrent rights. Similarly, provinces and local governments can both collect house and land registration fees, motor vehicle tax, entertainment tax, and advertisement tax. Yet again, no existing laws clearly define what each is entitled to. 

Likewise, there are legal ambiguities in collecting fees and royalties through mobilization of natural resources. According to experts, several laws that were being applied, before the country adopted the federal structure, are still in place.  The laws related to natural resources, for instance, need to be amended to make it compatible with the new federal structure. Moreover, there are no mechanisms to ensure local governments are correctly using their resources, with the purpose of improving people’s lives and enhancing service delivery. The Commission for Investigation of Abuse of Authority (CIAA) and the Office of Auditor General are mandated to curtail abuse of authority and check corruption. But, once again, there are no clear accountability mechanisms to ensure local and provincial governments are not misusing their constitutional rights. 

Shadow of Finance Ministry

The NNRFC was envisioned as an autonomous constitutional commission, yet the federal government, and particularly the Ministry of Finance, continues to exert heavy influence over it. According to Section 20 of the National Natural Resources and Fiscal Commission Act, 2074: “The Government of Nepal, Ministry of Finance, shall liaison the commission with the Government of Nepal.” As the ministry is responsible for preparing the federal government’s annual budget, it is improper to make it a liaison for the commission, say fiscal federalism experts. 

Commission sources speak of the ministry’s undue influence and tussles on issues related to revenue distribution. Hinting at it, commission chair Poudel speaks of the need to “enhance understanding with the Ministry of Finance”. Experts say the commission should ideally be under the prime minister’s office. That way, it can better collaborate with other government ministries and departments. On the other hand, the commission, an autonomous constitutional body, is not answerable to any certain government ministry. 

Former National Planning Commission (NPC) vice-chairman Jagadish Chandra Pokharel says the fiscal commission chair could be more assertive in exercising the body’s constitutional rights. According to Pokharel, the domination of a single party from the federal to local levels is another reason behind the undue meddling with the commission’s work. 

Furthermore, the federal government doesn’t seem committed to implementing the commission’s recommendations on fiscal transfers to provincial and local governments. After the chair’s appointment, the commission had submitted its first report on the distribution of fiscal resources—a report that was completely ignored by the federal government. An official at the finance ministry says the problem was that the commission made recommendations without consulting the ministry. 

It is mandatory though for the government to abide by the commission’s recommendations. Article 60(3) of constitution says: “The amount of fiscal transfer receivable by the State and Local level shall be as recommended by the National Natural Resources and Fiscal Commission. Therefore, the government will have to implement the recommendations made by the commission.” 

Fiscal federalism expert Khim Lal Devkota avers that more than a constitutional obligation, it’s a matter of “our commitment to federalism.” Yes, he adds, the commission and the ministry can coordinate, but, at the end of the day, “the ministry is obliged to implement the commission’s recommendations.” 

Working without expertise 

The job of this commission is highly technical, and as such it requires specific expertise. Yet, instead of experts related to the field being appointed to fill the remaining vacancies in the commission, chances are that the vacancies will, eventually, be filled with political appointees. Meanwhile, in the absence of these specialists, civil servants are being forced to work as their substitutes. 

“We are generalists rather than experts,” says a commission staffer requesting anonymity. “Yet we have been functioning as experts for the past two years. It does not seem to have occurred to the government that we can only support the experts, not replace them.” 

Commission chair Poudel says he immediately needs a natural resources specialist as well as senior economists. Without such experts, he adds, the commission cannot conduct reliable research. 

Provincial reservations

As per its mandate, the commission has to work extensively with federal, provincial, and local governments. For this purpose, it needs both experts and expertise, both of which the commission lacks. The representatives of provincial governments blame the commission of failing to carry out its duty of persuading the federal government to delegate more power and resources to the provinces. 

“The financial resources we get are insufficient for effective service delivery. What has the commission done to improve things?” asks Kailash Prasad Dhungel, Minister for Economic Affairs and Planning of Bagmati province. According to him, there is also a need for an in-depth study on the problems faced by local governments. “Population and geography are being used as the only criteria for distribution of financial resources. This is wrong”. Provincial and local government representatives say resources should rather be allocated based on performance and necessity. 

Bohara, the Minister for Economic Affairs and Planning of Sudur Paschim province, also disagrees with the commission’s recommendation on the distribution of revenues to the provinces. He asks the commission to start using the Human Development Index—in addition to population and geography—as a gauge for resource allocation. 

Even though there has been some consultation between the commission and the provincial governments, such consultation with local governments is largely missing. Not that it is only the commission’s fault. Dozens of local governments have failed to bring timely budgets, nor are they submitting their expenditure reports. This has made it difficult for the commission to collect data from local governments, and, on top of that, other ministries are not cooperating. 

Learning by doing 

Nepal was still a unitary state when the commission was proposed. Now, three years since the country embraced federalism, the new setup has brought to the fore many unimagined issues. Pokharel suggests revisiting the commission’s function after the completion of an election cycle. “When the commission was formed we had just started on the federal road. Many new issues have cropped up, which in turn make it important to revisit the commission’s function on a timely basis.” 

According to experts, the recent past has also shown how local governments lack expertise to handle natural resources and revenue distribution related issues. Pokharel says local governments were never oriented with a federal setup in mind. 

One of the commission’s major responsibilities is to make recommendations on the equalization of grants to be provided to the provincial and local governments out of the federal consolidated fund. The commission has been more successful in this than in some of its other responsibilities. For instance, it has largely failed to carry out research on likely disputes between and within the three tiers of government, and to suggest ways to prevent them. With intensive and timely research, it would be easier to resolve possible disputes. “The commission has been able to carry out only some of its responsibilities mandated in the constitution,” says fiscal federalism expert Devkota. 

Unless the NNRFC starts functioning effectively, it won’t be possible to implement fiscal federalism in the true sense of the term. But the federal government, which has been charged with reluctance to delegate rights and resources to provincial and local governments, seems to be in no hurry to adequately empower the commission. 

Major functions of the National Natural Resources and Fiscal Commission: 

 • To make recommendations on equalization grants to be provided to the provincial and local governments out of the federal consolidated fund.

• To carry out research and define parameters for conditional grants to be provided to the provincial and local gov­ernments in accordance with national policies and programs, norms, standards, and the state of infrastructures. 

• To determine a detailed basis and modality for the distribution of revenue between the provincial and local govern­ments out of the state consoli­dated fund. 

• To recommend measures to meet expenditures of the federal, provincial and local govern­ments, and to reform revenue collection mechanisms.

• To analyze macro-economic indicators and recommend ceilings on internal loans that the federal, provincial and local governments can take out.

• To review the basis for revenue distribution between the feder­al and provincial governments and recommend revisions.

• To set bases for the determination of shares of the feder­al, provincial and local gov­ernments in investments and returns and in the mobilization of natural resources.

• To conduct research on possible disputes between the federation and the provinces, between provinces, between a province and a local level, and between local levels, and make suggestions on ways to prevent such disputes.

• To carry out environmental impact assessment required in the course of distribution of natural resources, and make recommendations to the government. 

(Source: The Constitution of Nepal, 2015) 

The builder of the under-construction sports stadium at Dudhauli Municipality-9, Bhoragachhi is allegedly using substandard materials. Construction had started with the Bagmati provincial government’s investment of Rs. 694.92 million. Ramkumar Adhikari Danuwar, the Bhoragacchi ward chief, accuses Pines Construction, the company responsible for the stadium and related infrastructures, of using substandard cement, bricks, mortar, sand and other construction materials. “Despite repeated requests from the municipality to use only quality cement, bricks and sand, the construction company has continued working with substandard materials,” he informs.

A complaint has been lodged at the District Administration Office alleging negligence in stadium construction. Danuwar says the company had brushed aside the complaint. The contract agreement stipulates that the 120 square feet stadium be built with ‘number one’ standard bricks and OPC cement.

A monitoring team including the then Chief District Officer of Sindhuli, Janardan Gautam, had demolished a stadium wall after finding that its bricks were of ‘number three’ standard, the cement was of poor quality, and sand was mixed with untreated soil.

Purna Bahadur Bista, chairman of Dudhauli Town Development Committee, informs that the company has continued building using the same bricks, sand and cement even though the CDO Gautam, Bagmati province MP Rajan Dahal and other stakeholders have admonished the company against it. The risk is that, adds Bista, “the stadium will not only drain state coffers but could also lead to a serious accident in the future”.

The construction company has also broken the mandatory requirement of having an information board at the construction site. Such a board includes information on the masterplan as well as estimated cost, date of commencement, and completion date. There is no such information board at the stadium’s site.

Locals are outraged that instead of using OPC cement for pillars and beams, the company is using generic cement. And, instead of grit from the crushers, the company is employing the stuff directly lifted from the river.

Mayor of Dudhauli Municipality Ghanshyam Raut says he has time and again warned the company. “We’ve stopped construction before and asked them to start using quality materials but whenever there’s a slack in monitoring, they go back to their old ways. We are taking this seriously now,” Raut says.

Bal Krishna Shrestha, an engineer working at the construction site, claims that although the bricks the company sourced were initially of low quality, there has been no issues with other construction materials. “It is true that some ‘number two’ bricks were used in the beginning but we returned them as soon as we found out about their low quality. After that, we make sure we use construction materials like iron rods, cement and bricks only after doing requisite lab tests,” Shrestha says. “Also, we have used both OPC and PPC cements wherever required.”

Also rebutting these accusations, Bharat Bhadaur Karki, CEO of the construction company, claims no construction material being used in the stadium is substandard. “It’s a protest without a cause. The ones protesting have nothing else to do as they are without jobs,” he says.

As the band gathers for rehearsal in Old Baneshwor after a gap of almost five months, there is little enthusiasm among its members. The members of The Midnight Riders (TMR)—who have never missed a show on Nepali New Year’s Eve for the past 10 years, since the band was formed—haven’t played a gig since February 14, missing all important occasions in between and not earning a dime. 

The rehearsal is meant to give continuity to their momentum and not lose their touch as a band playing together, but with no sign of the Covid-19 disappearing soon, or gigs and concerts resuming in Nepal, the effort is half-hearted. Pessimism pervades the group, more than it did when some of its members had quit or been laid off. Years of investment in music—both financial and emotional—seem like a waste for now. This is true not only for TMR, but for most of the musicians who survived by playing live music. 

Shree 3, a relatively new band that had been touring all over Nepal before the pandemic, also practices at the same rehearsal space. Having spent months at home without playing with one another, the band just wants to create some fresh music to forget their woes. In fact, they are writing enough material to cut out an EP soon. 

“We, as a band, have been idle for too long. So we decided we’ll start rehearsing at least three times a week and compose some new songs,” says Sarad Shrestha, the vocalist/guitarist of Shree 3. “There’s been so much going on in the past few months that we lost our concentration. Now it’s time we get back to doing what we are supposed to.” But despite his shot at positivity, the unanswered question of when they will finally be able to perform on stage casts a long shadow. 

More than money

For many musicians, performing live is not only about the money. Although stage performances are the major income source for most, there is also a sense of personal satisfaction, feeling of accomplishment and validation of one’s own music when performing live. Devoid of the stage, the toll on the musician’s financial and mental health is enormous. And while musicians and artists in developed countries have already started announcing tour dates for 2021, with Nepal’s failing response to contain the Covid-19 pandemic, the musicians here are more morose. 

Guitarist Ameet Rocker (stage name), a regular performer in the pubs and bars of Lakeside, Pokhara, is currently unemployed and bitter about his situation. “Even earlier, we didn’t earn much but we still made enough to survive,” he says. “I was also planning to move to Kathmandu to play music, but now everything is ruined.” Ameet played with his band The Wave five days a week, making just enough to continue playing music as his sole profession. Now, with the pandemic still spreading, he sees no hope of re-employment but also has nothing else to do or fall back on. 

“Most of my band members are also unemployed right now,” says Deepak Gurung, bass player for Pariwartan, one of the most popular bands that initially emerged from the pub scene in Thamel and went national with their music. Deepak is also a school teacher, allowing him to still make an income, while his band members are totally dependent on playing music for their livelihood. “Each month, we used to make around 55,000-60,000 rupees per person, playing up to six days a week,” he says. “Now we’re all unemployed and not sure if we will ever get back to being as busy playing music.” But on a positive side, the band finally managed to get time to make their own music during the lockdown. Pariwartan has released a couple of singles already and is planning an album soon. 

Not a priority

Also starting her career from the Thamel scene and then going on to perform in China and India is singer Preety Manandhar. Preety was performing as a house musician at a popular 5-star hotel in New Delhi, India, when the pandemic hit the ensuing lockdown made her return home. “I was there with my band and we were doing pretty well,” she says. “Now we’re all out of work and dependent on our families for survival.” Like most musicians, Preety is also working on original music while she waits for the pandemic to be over so that she can get back on stage with her band. 

For Nepali musicians, playing live music at different venues in Kathmandu and all over Nepal, was also a show of financial independence. Young musicians had left their families and homes to create a space for themselves in the world with music as their tool. But the Covid-19 pandemic has affected almost all trades and industries; music seems to have been hit hard and will probably be the last to recover. During hard times, arts and entertainment fall to the very bottom of priorities, as is the consensus among Nepali musicians. 

Shiva Mukhiyaa, the frontman of the Axe Band, also sees bleak days ahead. Shiva had already been fighting over copyright issues with music companies when the lockdown began and all of the Axe Band’s shows were cancelled. Now he is not sure when the next show will happen and is in no mood to talk about it. “We complete 28 years this August 13, and this will be the first time ever that we have not played a show in five months,” he says. “We are trying to create some new music but honestly, it has been really difficult. It’s like our minds have shut down too.”

These are only a few examples of Nepali musicians we talk to on an everyday basis. Their feelings and emotions now can be generalized. Everyone misses the stage as much as they miss the income generated by a profession that is as demanding as any other, and perhaps more emotionally draining than most. As musicians wait with no hope of a respite, their mental health might suffer too.

When the Covid-19 pandemic reached Nepal, the government had no option but to follow other countries and close down its schools and cancel students’ remaining examinations. Most of the lockdown measures have since been lifted, but schools remain closed, leaving students stuck in their homes.   

Aarav Tandukar, a 9-year-old from Kathmandu, misses being at school and around his friends. He says, “At home, I enjoy playing games on my gadgets, but my parents won’t allow me to play for long. Yet when I try to read a book, I get bored, and that’s when I really miss my school.” 

Srijan Khatiwada, a Grade X student from Inaruwa, explains that online classes are not compelling enough for him. He prefers being in the classroom, and learning face to face.   

Some schools have started online classes but many doubt the viability of these classes. So far, anecdotal evidence suggests online classes have not been very effective for Nepali students, deepening the doubts about this new form of “learning”. 

Sujan Shrestha, a psychologist and faculty member at St. Xaviers College, says school closure has interrupted the process whereby children learn by observing and interacting with teachers and friends. “Live demonstrations and face to face teaching is always the best. As children’s attention span is limited, it is normal for them to get bored when they have to sit in front of a screen for long periods. Plus, staring at a screen is never healthy for children,” he says.

Children’s capacity to socialize is also being impacted, Shrestha points out. “In school, they get a chance to interact with both their peers and teachers, allowing them to build those necessary socializing skills. Losing this opportunity can make children aloof and decrease their capacity to navigate social situations and settings,” he adds. 

Bidhyanath Koirala, an educationist, criticizes the way in which both the government and teachers organizations are handling the situation. He also fears children who are in their homes the majority of the day will get addicted to electronics. “If children are exposed to videos or images that are unsuited for their age groups and thus harm well-being, who will take responsibility?” he questions.  

He claims the government and education system are not well-equipped to handle the loss of an academic school year. “When old students whose studies have now been disrupted resume their studies, the education system will have to accommodate both them as well as the new students,” Koirala says. “This won’t be easy, on the system as well as on the students.” 

Separately, as children are being forced indoors, the feeling of being caged is growing. “Many children are getting angry, irritated, and violent,” adds psychologist Shrestha. “It is the parents’ duty to reassure their children at this difficult time, and help them understand that what they are feeling is perfectly normal, while also suggesting ways to calm those anxieties.”

Psychologists stress the importance of children engaging in creative activities, such as art projects, music, and learning new cognitive skills, while they are confined in their homes.  

According to UNICEF, more than a billion students are still out of school due to lockdowns around the world. But over 70 countries have announced plans to reopen schools and hundreds of millions of students have already returned to their schools in recent weeks. And yet, for Nepali students, there is no clear path back to their classrooms anytime soon.