NIBR-report 2011:23 Dwarika Nath Dhungel, Mahendra Raj Sapkota and Marit Haug with Pradyuman Prasad Regmi Decentralization in Nepal: Laws and Practices Decentralization in Nepal: Laws and Practices Dwarika Nath Dhungel, Mahendra Raj Sapkota and Marit Haug with Pradyuman Prasad Regmi Decentralization in Nepal: Laws and Practices NIBR-rapport 2011:23 Title: Decentralization in Nepal: Laws and Practices Authors: Dwarika Nath Dhungel, Mahendra Raj Sapkota and Marit Haug with Pradyuman Prasad Regmi NIBR Report: 2011:23 ISSN: 1502-9794 ISBN: 978-82-7071-902-0 Project number: O-2636 Project name: Decentralization as a strategy for resolving conflict? An analysis of the impact of decentralization reforms in Nepal, the Philippines and Sri Lanka. Financial supporter: The Norwegian Research Council Head of project: Marit Haug Abstract: This report analyses the legal framework for local governance in Nepal and how it is practiced in six districts. It focuses specifically on transfer of resources and delivery of services, how various groups participate in local planning, decision-making and implementation of projects and programmes, and relations between local governance institutions and the central government. This research forms part of a comparative study of the Philippines, Sri Lanka and Nepal on ‘Decentralization as a way of resolving conflict’. Summary: Norwegian and English Date: November 2011 Pages: 309 Price: 250 Publisher: Norwegian Institute for Urban and Regional Research Gaustadalléen 21 0349 OSLO Telephone (+47) 22 95 88 00 Telefax (+47) 22 60 77 74 E-mail: [email protected] http://www.nibr.no Printed: Nordberg A.S. Org. no. NO 970205284 MVA © NIBR 2011 1 Preface This monograph offers a detailed account of how local governance functions in Nepal based on extensive fieldwork in 6 districts and 17 village level local bodies within these districts. The research has been part of a comparative research project on ‘Decentralization as a strategy for resolving conflict’ funded by the Research Council of Norway. NIBR would like to thank the research team at the Institute for Integrated Development Studies (IIDS) for their commitment and professionalism throughout the study. It has been a real pleasure working with the team headed by Dwarika Nath Dhungel and quietly supported by Mahendra Raj Sapkota and Pradyuman Prasad Regmi. NIBR is deeply grateful to all those who gave of their time for interviews: political party officials, government officials, and civil society members. We thank all those who shared their insights and experiences with the team during focus group discussions in the villages. Participants of the two stakeholder meetings held in Kathmandu offered constructive comments to the draft report. The report would not have taken its present shape without their invaluable support. We want to thank the Executive Director Dr. Bishnu Dev Pant and his staff at the IIDS for their help, in particular Devendra Shrestha and Govinda Ghimire. Likewise, Ms. Niru Upadhaya Dhungel deserves special thanks for all the support she extended to the study team during the preparation and finalization of the study report. Finally, we hope the study will provide insights on local governance to the framers of the new constitution. Oslo, November 2011 Marit Haug, Research Director, NIBR NIBR Report 2011:23 2 Table of Contents Preface ................................................................................................... 1 Table of Contents .................................................................................................. 2 Tables ................................................................................................... 6 Figures ................................................................................................... 7 Maps of the Districts and Village Development Committees Studied .......... 9 Summary ................................................................................................. 16 Study Team ................................................................................................. 23 Field Team ................................................................................................. 24 Acronyms ................................................................................................. 25 1 Introduction ................................................................................................. 27 1.1 Study Rationale ............................................................................... 31 1.2 Objectives of Study ........................................................................ 33 1.3 Methodology ................................................................................... 33 1.4 Limitations ...................................................................................... 37 2 Country Scenario ......................................................................................... 38 2.1 Planned Development Efforts ..................................................... 39 2.2 Armed Insurgency and Comprehensive Peace Agreement ..... 40 2.3 Local Bodies Affected by the War ............................................... 41 3 Local Governance Reforms and Decentralization ................................. 44 3.1 Under the Panchayat Regime (1962-1990) ................................. 44 3.2 After 1990, the Local Self Governance Act, 1999 .................... 45 3.3 The Interim Constitution of Nepal, 2007 .................................. 49 4 Organisational Structure ............................................................................. 52 4.1 Present Structure ............................................................................ 53 4.2 All-Party Mechanism ..................................................................... 54 4.3 Observations ................................................................................... 61 4.3.1 Low Representation of Women and Dalit ................................. 61 4.3.2 Absence of Elected Representatives ........................................... 62 4.3.3 Overburdened VDC Secretaries and LDOs .............................. 63 5 Participation in Programme Planning ...................................................... 67 NIBR Report 2011:23 3 5.1 Planning in Reality ......................................................................... 75 5.1.1 Pursuing Planning Steps ................................................................ 75 5.1.2 Following the Planning Steps as a Mere Formality ................... 77 5.2 Programmes/Projects Discussed and Selected ......................... 87 5.2.1 VDC-Level Programmes/Projects .............................................. 87 5.2.2 DDC-Level Programmes/Projects ............................................. 89 5.3 Observations ................................................................................... 92 5.3.1 Resolution of Demands and Domination of APM ................... 92 5.3.2 New Form of Conflicts ................................................................. 96 5.3.3 Women and Weaker Sections in Decision Making and Use of Resources .................................................................... 97 5.3.4 Extra-Budgetary Allocation ........................................................ 102 5.3.5 Meaningless Devolution .............................................................. 103 6 Programme Implementation and Management .................................... 107 6.1 Implementation Modality ........................................................... 107 6.2 Technical Backstopping .............................................................. 113 6.3 Supervision and Monitoring ....................................................... 115 6.4 Repair and Maintenance .............................................................. 117 6.5 Observations ................................................................................. 117 6.5.1 User’s Committee ......................................................................... 117 6.5.2 Inadequate Technical Persons .................................................... 122 6.5.3 Ignored Supervision and Monitoring ........................................ 123 6.5.4 Neglected Repair and Maintenance ........................................... 124 6.5.5 Lack of Responsibility-Sharing Mechanism ............................. 125 7 Incomes and Expenditures ...................................................................... 126 7.1 Incomes from Internal Revenue Sources ................................. 127 7.2 Government Grants .................................................................... 129 7.3 Internal Source of Revenue vis a vis Government Grants ............................................................................................ 136 7.4 Expenditure Pattern ..................................................................... 139 7.4.1 Expenditures of the VDCs ......................................................... 139 7.4.2 Expenditures of the DDCs......................................................... 140 7.5 Observations ................................................................................. 141 7.5.1 Ad Hoc Allocation Criteria ......................................................... 141 7.5.2 Late Transfer of Funds ............................................................... 142 7.5.3 Proxy Expenditure ....................................................................... 144 7.5.4 Increased Grant Amount without Institutional