Federalism and Governance Transforming Provinces from Dysfunction to Functionality

Abstract

Federalism is an advanced governance system developed to manage diversity, ensure participation, and deliver quality services. This paper examines the federal structure of Nepal, where a three-tiered governance system has caused administrative interference and fiscal burden, consequently slowing down the pace of service delivery for the citizens of the nation. This study adopts a qualitative interpretative design based on secondary data. The sources of secondary data include peer-reviewed journal articles, books, policy documents, and reports. The study analyzes the data through the lenses of polycentric governance and the capability approach to get close to why the provincial level is so dysfunctional. The analysis results in the fact that assigning functions to subnational governments is necessary to get the work done for the welfare of citizens. Still, it is not sufficient to make federalism effective and successful. The strength of institutions depends on fiscal autonomy, sustainability, and the capacity to handle the administrative and technical work. The paper highlights that fiscal dependency, uneven capacity across subnational units of governance, and limited accountability have constrained the potential of federalism to transform its capacity for its citizens, as the empirical evidence from Nepal witnesses. It suggests that governance restructuring must lead to tangible improvement rather than only symbolic redistribution of authority. It also suggests applying Functional Federalism to overcome the weaknesses of Structural Federalism.