The push for small-scale projects undercuts federalism

Despite the establishment of a new government in Nepal with a mandate for good governance, a troubling pattern persists: lawmakers continue to lobby for small-scale projects within their constituencies to be funded through the national budget. As the fiscal year 2026-27 approaches, the Ministry of Physical Infrastructure is inundated with proposals, including numerous low-budget schemes that rightfully belong to provincial and local authorities under Nepal's federal structure.

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With fiscal year 2026-27 about to commence in a few months, parliamentarians are again besieging the Ministry of Physical Infrastructure, seeking funds for roads, bridges and minor works.

This legislative overreach is driven by a desire for political visibility and constituency-based patronage. Lawmakers, having made grand promises during election campaigns, feel compelled to deliver tangible results, often opting for minor works that offer immediate, visible impact. Examples include requests for road blacktopping and numerous small bridge projects, even from former prime ministers. This behavior directly contradicts the spirit of federalism, which aims to empower subnational governments by granting them autonomy over local infrastructure development.

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Such low-cost projects fall under the jurisdiction of provincial and local governments and are not supported by the federal government’s guidelines for national-level investment.

The consequences of this practice are significant. It creates jurisdictional confusion and duplication in project execution. More critically, it diverts federal funds from larger, strategic infrastructure projects that are vital for national development. With capital investment often limited and recurrent expenditures consuming a large portion of the budget, these fragmented, populist allocations place an undue burden on federal resources and hinder the completion of crucial national projects.

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When federal lawmakers put forth small projects, it creates jurisdictional duplication in their execution.

Nepal has a '30 million ceiling policy' to curb such fragmented budgeting, with discussions underway to raise it to Rs 50 million. However, successive governments have failed to adhere to these provisions. It is imperative that these policies are strictly enforced, and priority is not given to populist, fragmented allocations in the upcoming budget. Empowering subnational governments to manage small and medium-sized projects, as envisioned by the constitution, is essential for the successful implementation of federalism and for ensuring that national resources are utilized effectively for the country's long-term development.

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Successive governments have often pledged not to carry out projects whose budgets are below Rs30 million, but have failed to comply.