It is incredible to see the all-pow­erful federal government of KP Oli stumble so badly—and on so many fronts. The government’s reluctance to devolve powers to the provincial and local levels has resulted in a lot of bad blood between the three tiers of government, not a healthy sign for an infant federal state. Even the chief ministers from the PM’s own party are rebelling against what they see as Singhadurbar’s attempts to increase its powers at their expense.

 

The Oli government had to beat a shameful retreat from the Guthi bill, prepared without consulting key stakeholders. The prime minister’s recent Europe trip also proved to be a disastrous folly, a perfect example of how not to ‘diversify’ away from India and China: unlike what the prime minister seems to believe, the number of countries he visits cannot be the yardstick of a successful diver­sification policy.

 

Economically, too, the country is in a shambles. There is a lopsided concentration of resourc­es, including the annual budget, at the center. The expected economic growth has failed to materialize. The partial health of the economy is owing to the good monsoon of the past few years, and to the continuous inflow of remittances. Otherwise, the banks are over-leveraged and short of cash; a real estate bubble is building; the foreign account deficit is reaching a troubling level; and the Nepali rupee is vulnerable to the unpredictable global economy.

 

There are many other shortcom­ings of the Oli government. But he has also done some good. The land­mark trade and transit protocol has been signed with China; relations with India have been normalized; countless regulations to implement federalism have been passed; and the separatist group of CK Raut has been brought into the national main­stream.

 

Yet the strong federal government could have done so much more. It is hobbled by corruption, intra-par­ty feuds, and the prime minister’s self-serving working style. What’s more, this government with an over­whelming public mandate is a threat to liberal values. The eroding legit­imacy of the two-third Oli govern­ment bodes ill for the health of the Nepali democracy.