Grassroots Governance in Nepal
Reinventing Decentralization

Dev Raj Dahal

Introduction

The term decentralization is frequently used in democracy and development debate. In Nepal, until recently intermediate social links and institutions did not figure out much in the state, society and economy discourse. Nepal's multi-structural geography and social diversity offer extraordinary foundations for a path of decentralization in the production of public goods and services. The hitherto weakness and inefficiency of the centralized political and administrative superstructure in improving the quality of life of majority of people added further importance of decentralization. Today, major donors lay increasing emphasis on policy reforms focusing on economic liberalization, decentralization, human rights, democracy and good governance as essential conditions for development assistance. This has prompted the reinvention of decentralization a necessity.

Implementation of decentralization policies has, however, wide-ranging implications for organizing the functions of macro and micro agencies of the state at the horizontal level and the redefinition of relationships of the state with vertical institutions of society. These relate to the distribution of authority and responsibility and the sharing of public space with the state, including the right of people to legislate. In politics, for example, the hierarchically stratified power of central agencies over local government bodies affects a coordinated realization of collective interests. In fact, the very strata of hierarchy hinder and confound the aggregation and prioritization of local collective interests-hence, the argument for decentralization. The decentring of governmental power provides all those affected an opportunity to participate in the decision process and captures some of the rationality of collective action. The "rationality of collective action" lies not only in having an opportunity to participate in decisionmaking, but also in being able to arrive at some agreeable calculus of benefit sharing and in having the ability to hold each other accountable.

This essay attempts to analyze the necessity of decentralization, highlights a number of paradoxes, elaborates policy options and draws a brief conclusion.

Goals of Decentralization

The Constitution of the Kingdom of Nepal 1990, several periodic plan documents and Local Self-Government Act (LSGA) 1999 underline the goals of decentralization for achieving a) participation of sovereign people in the governance, b) institutionalization of the process of equitable development, c) capacity building of local bodies to sustain power and responsibility necessary to formulate and carry out plans and programs, d) development of local leadership capable of running local self-governance system and addressing local needs and concerns, e) build partnership with civil society espousing the democratic attributes of transparency and accountability in decision-making, and f) involvement of private sector in local self-governance in the tasks of providing basic services to the people . The reinvention of decentralization policies is desired to achieve a break with the past socioeconomic equilibrium of stagnation and to bridge the credibility gap between policy rhetoric and performance.

All legislative measures ostensibly use the principle of subsidiarity in their creation, that is, decisions should be made and administered as close to the people as possible to allow governance raise from the bottom-up and participatory. Decentralization by itself does not guarantee self-governance. Local self-governance requires a sound mechanism for making and enforcing rules, maintaining equitable and rational arrangements and applying sanctions. Any discourse on decentralization in Nepal, however, raises three pertinent questions: First, does the behavior of government conform to the vision of devolution of power or just combine a mix of de-concentration and delegation? Second, when political parties and major actors of society pursue rival strategies of achieving decentralization (for example, some focus on devolution of power to elected units, others on market, still others on civil society, community, NGOs, ethnicity, territorial federalism, etc), how can the needs of an entire society be reconciled with public policy? And third, do donors-driven conditions promoting market liberalization and global integration leave any space for the autonomy required for people to self govern? Each question gives big pause.

Like the Constitution, the term decentralization means different things for the different (political) parties in Nepal, with the result that every change in government amplifies the ambiguity of decentralization policies at all levels. The core of local governance in Nepal, the District Development Committees (DDCs), Village Development Committees (VDCs) and municipalities, suffers from a legitimacy crisis, as they are caught by a series of paradoxes between responsibilities and resources, between accountability and power and between legislative framework and ground realities. Who is to mediate these paradoxes and how they are to be reconciled? There is also a danger in an auto-centric management of a few self-governing units while others suffer from economic severity. Owing to disparity in prior resource endowments and uneven productive capacity, auto-centric development might lead to regional inequality in terms of information, natural resources, economic activities, population and forms of social and political organizations as well as pose danger in the loss of macroeconomic stability. The national policy, therefore, must address the sectoral growth needs and allocate surplus workforce in growth areas to catalyze the development process in integrating inter-sectoral and inter-regional balance and overcome the rampant distinctiveness and identity politics.

The official desire to use decentralization as a policy instrument to strengthen democracy and consolidate development from the base requires continuous assertion of people's sovereignty in public policy. This becomes possible if Nepal's development discourse, which is now being wholly influenced by outside advice, initiative and resources, looks inwards, to reflect local needs and aspirations, and if the central government, International Non-Governmental Organizations (INGOs) and donors, who have the propensity to establish counter structures at the grassroots level, are attuned to the need for local leadership growth, capital accumulation, enterpreneurship and increased participation of people in grassroots governance. The capacity of decentralization to serve as one pillar of autonomous local self-governance that are accountable to the electorate and capable of promoting public goods and services equally entails a balance in macro and micro-institutions of governance.

The trends of political economy suggest that Nepal is being squeezed by the economic pressure of globalization and of agencies like the World Bank, International Monetary Fund, Asian Development Bank and major donors. This has made it difficult to maintain governance practice and reform, which has an exclusive role in expanding the political constituency for democratization, while sustaining a development process that is just. For example, constant political pressure for a strong police and army to keep a tab on growing Maoist insurgency has drained the scarce resources of an already weak economy, resources that are badly needed to solve the growing impoverishment in the lives of the rural masses. In a highly diffused populace, it has become highly problematic for the faction-ridden government (and opposition) to function as a shared instrument of public power and to establish itself as a credible provider of public goods and services.

The Paradox of Decentralization

One contemporary paradox of Nepali politics is that the dis-empowerment of the state--erosion of its stability, sovereignty, autonomy and embeddedness-did not correspondingly contribute to the empowerment of either civil society or market institutions or contribute to the overall development goal set in the Directive Principles and Policies of the State. The other critical paradox is that without a strong central government, devolution of power is not possible. But, a strong government with weak democratic credentials will, of necessity, centralize power and authority. Nepal's case is additionally problematic as it is heavily dependent on external resources for its development and is facing enormous pressure exerted by globalization from above for faster decisions, by localization from below for the closeness of governance, and by horizontal market forces for the accessibility of resource, environment, technology and innovation. Erosion of central control is, by no means, decentralization.

Unmediated by Constitutional norms and an absence of a buffer to protect the poor and powerless, the adoption of markets as a vehicle for economic growth in Nepal has produced growing inequality, social polarization and political instability. Without the strong cultural component of a modern state, such as robust formal institutions, rule of law and public rationale of government action, the politics of decentralization seem only to tinker with the symptoms of Nepal's development problems. Development in Nepal has been held up by centralist governments and, therefore, requires a focus on rebuilding the nation in a new way, a way that is expected to promote an efficient state with a widespread and enduring social project on local development. A democratic state is expected to handle public resources with respect and a sense of responsibility and produce a greater amount of human welfare.

Decentralization of power tempers authoritarian rule and makes the wielders of power more accountable for their actions. Devolving ownership, responsibility and decision-making authority to the grassroots level helps ensure the participation of the less empowered and fortunate section of population in the planning, execution, and monitoring of social and economic development. Decentralization can also improve the efficiency and responsiveness of development actors by bringing decision-making and implementation closer to the people. The idea of giving responsibility to the local, however, should not take away from the salience of the role of state. It should lead to a reapportioning of role and responsibility of central level authority to align with a broader national and democratic mandate, which is to promote governance goals-security, rule of law, voice and participation, and public welfare. By implication, central government has a greater responsibility to the people than local bodies-elected, officially induced or voluntary constituted to elicit people's participation. This greater responsibility must be matched by certain strengths, that which can ensure the Constitutional vision of the "sovereignty of people," making a poor person is no less sovereign than the most powerful.

To make the sovereignty of Nepali people operational, the commitments set in the Directive Principles and Policies of the State must steer the rest of Constitutional provisions to govern the public and private life of citizens organized under the state, the market and civil society. One way to make people's sovereignty operational is scaling up of local representation, especially drawing in women and marginal sections of society. The adoption of positive discrimination or affirmative action favoring women allowed the election of about 40,000 women representatives at the local level, indicating a lessening of the monopoly of patriarchal politics. The second way is by improving the participation of people in consumer associations and voluntary organizations. The formation of national-level DDC, VDC and municipality federations has fostered a virtuous circle for both social capital formation and engagement of its members in collective action. Still another is strengthening the bargaining power of local people through solidarity and civic engagements. The multiple and somewhat successful protests by the Federation of Community Forestry Users Groups in Nepal (FECOFUN) in Kathmandu in recent times indicates the power of associations to defend zealously their members' interests and overcome centrally constructed constraints. A high level of civic engagements in the governance process in their wards, villages, cities, Ilakas, electoral constituencies and districts not only empowers them but also generates a high level of social capital and, consequently, greater interest in voluntary cooperation for the promotion of public goods.

The Plan documents and LSGA appear favorably disposed toward creating enabling rules for executing decentralization responsibilities, including tax collection, dispute settlement among social actors and the management of common property resources. Having legal standing, the LSGA also allows local government institutions to enter into productive relationships with line agencies as well as with NGOs, civil society, private sector and solidarity organizations like those of women, Dalits, human rights, environmental and indigenous groups aspiring to sharing resources, remove barriers to power devolution, and induce social change. Rapid growth of NGOs, civil society and issue-based people's institutions has provided new tools and resources for forging connections. It has also offered a scope for speedy dissemination of information and innovation as well as crafting of generalized reciprocity, which are essential for reducing transaction costs. Now the state is not the sole controller of people's actions and a means for social renewal in Nepal. Still, a sound framework is needed to remove structural and cultural barriers so that the state, market and civil society can be mutually embedded in the life of local society and foster the organization and integration system of local governance.

A deeply rooted patrimonial political culture and patronage-based development practice in Nepal often made the protection of public interest a highly contested terrain. A patrimonial culture places the government as a giver and the people as a receiver of development benefits, not the claimants of Constitutional rights and duties. It does not treat people as co-producers of development but only consumers. When the national resources and budget known as "common pool resources," laws and regulation become a property of the government, their distribution becomes a highly private and partisan matter. The tendency of ministers to transfer resources in their home constituencies rather than where it is most needed not only makes decentralization dysfunctional but also intensifies the irrationality of power. This culture has fostered an upward accountability rather than downward, distorted the effects of public policy on development and turned the people and their institutions virtually powerless in terms of applying an instrument of collective action. A power-based political culture that subverts the purpose of governance "to protect weak against strong" creates a "closed caste" for elite status quo and prevents the continuous and steady changes of society towards progress and modernity.

How can the poor and powerless people exercise their sovereignty when they are grievously exposed to the mercies of relatively centralized political parties and their leaders? When the donors' regime and governmental system are based on the logic of centralism how can decentralized bodies elicit the participation of poorer sections of society by stimulating them to exercise influence in decision-making and maintaining democratic control? Half a million Nepali Rupees annual grant-in-aid to each VDC and the authority to generate financial resources through taxes, fees, charges and loans that make up the financial resource of local governance cannot ensure their autonomy especially when resource endowment of local government is regionally uneven and development planning is largely determined by the budget at hand. The efficacy of recently constituted Poverty Alleviation Fund at the national level and Local Trust Funds at the district level has yet to be seen. One positive shift in public spending from the center to lower units has, however, increased horizontal incentives for people's participation and competition. This is also attracting the poor to organize politically for collective action.

After three decades of flirtation with statism during Panchayat system, the post-movement regimes dismantled political control on the economy, privatized many industries and liberalized trade and commerce. Economic decentralization and denationalization were expected to foster improved accountability, curb corruption and restrain centrifugal tendencies by accommodating local interests and concerns. Centrally planned development was considered an antidote for building a better society. A decentralized development that presupposes the local, practical knowledge possessed by the people-on-the-spot was considered important for making plans and programs contextual. A plan imposed by either the center or outside expert without consultation with the stakeholders was considered antithetical to local needs, initiatives and creativity. A concept of local ownership was equally paraded assuming that the benefits of that project should be distributed among the various economic groups and the accountability arising from the benefits is enforced.

Ironically, however, the successive failure of each national plan to meet its intended goal of lifting the income of the lowest economic groups indicates that the economic growth strategy-sectoral progress, privatization and structural adjustment-tended to legitimize a greater inequality, regressive taxes and subsidy to higher income groups and undermined the prospect for decentralization. It increased the costs for the majority of poor to participate in the economic growth. As a result, the need for alternative thinking emerged strongly-the need for local self-governance. The vision that decentralization serves as an instrument to reconstruct social justice and consolidate economic development has been notably reflected in three programs-Special Area Development Program covering 22 backward districts, Disadvantaged Groups Development Policy especially to provide benefits to the untouchable sections of society called Dalits and Indigenous People Development Policy formulated in the late 1990s to address human deprivation. Targeted programs like these are especially important for advancing the interests of more vulnerable sections of society and bringing them into the very center of the policy making process. The central challenge for Nepalese policy makers is to confront social power posed by societal complexity and asymmetries and their attendant effects on the composition of political power.

Policy Option or Policy Suffocation?

As the cold-war aid rationality of supporting strong state against communism declined, the new principles of Washington consensus left the poor countries with no policy option but to adjust to the conditionalities of global capital markets. This consensus has provoked an important issue regarding the questions of "ownership" of policy-making and strategy and matters of development choice: countries like Nepal do not have leeway to exercise their right to development and organize their economic and political life according to the interests and priorities of their people, i.e. democratically. The false harmony created by liberalization policies and the strategy of disciplining deficit countries with "structural adjustment" continue to weaken the prospect of development contract between the capital and the labor and of achieving a new balance between economic competitiveness and social justice envisaged by the Constitution of the Kingdom of Nepal. Harsh conditionalities have often conspired against the natural emergence of entrepreneurs, and the policy of deregulation has damaged many small-scale enterprises-which in the past had facilitated the decentralized participation of people in economic democracy and provided reasonable access to productive assets and a means of work.

International cooperation is one critical element in defining the terrain of discourse around matters of political and economic policy. The support of donors is now being aimed at providing opportunities for expanded participation of the poor in the state, the market and civil society. But there is neither policy coherence nor concertation of action to execute polices nor to avoid exacerbation of unequal power structures at the local levels. There is also a dilemma: while people's elected representatives and bureaucrats often use their position for gain of self, family, community or ethnic groups, the donors' preference for devolution of state service to private groups, NGOs and civil society has rendered the elected government ineffective, as many of them have entered into anti-state discourse and have distorted policy outcomes in favor of the rich, well-connected, or better organized interest groups. To make matters worse, Nepali planners share the assumption of donors that bureaucratic problems of government create barriers to people's participation in development. Without accounting for the size of the Nepali state they parrot the argument that state maximalism restricts human freedom, suppresses local perspective with its own, reduces private initiative, and fosters dependency. The ideology of decentralized development in Nepal was based on the market as the main tool for transforming society and economy, while the state was considered unresponsive and perhaps too invasive.

The justification for the market's role was the government's failure in executing appropriate development policies. Ironically, economic growth has not been paralleled by a rise in the quality of life of the majority of people in Nepal. Media often report that the government to suit the logic of donors' orientation to the free market system ideologically manufactures statistics of economic growth. As a result, greater income inequality, poverty and social disintegration accompany economic growth in Nepal. For the majority of Nepalis, absence of money denied them of democratic choice, freedom in political and economic life and deprived their institutions of coherent powers for setting and enforcing pro-decentralized public policies.

The weakness of executive authority in Nepal, the poverty of homegrown ideas, and heavy reliance on donors for financing development has made government prone to donors' influence in formulating public policies and setting priorities. It has crippled both the democratic authority of the government and the bureaucracy, thereby weakening the ability of the state to work in the public interest. The Nepali state has failed to assert itself over the donors' interests. And the latter is doling out aid as, when, and where they like, not necessarily where it is most needed. The weakness of the government in coordinating aid and monitoring its accountability and effectiveness has created a kind of aid anarchy. Especially the special interest groups of society enmeshed in donors' purse have render dysfunctional the role of aid in promoting pro-poor policies, policies which would have positive effects on social and economic stratification. Donors and government's coherent interest in coordinating and collaborating with sectoral line agencies of the ministries under the authority of DDCs especially made the local accountability difficult more so because DDCs do not have popular electoral base. A cause for concern lies in the polarization of relationship among the tiers of governance and a lack of clear definition of authority and responsibilities of political, governmental, elected and economic elites thus breeding perpetual tension between centralization and decentralization.

A number of donors are focusing more on the "institutions" and "processes" of decentralization than on initiative, access and service delivery. The institutions and processes thus created come to possess a life of their own. As they are imposed upon elected bodies, they constrain the choices of people's representatives. It is, therefore, creating an elite sub-culture of those countries in the Nepalese society, which their educational and economic systems have produced. This has weakened the rationality of bottom-up participatory planning process-reflecting a balance between local and national interests, providing the poor greater ownership in planning and execution of development, ensuring equity in development products and empowering people to develop access to the institutional resources of the state, the market and civil society. The bureaucratization of donor-driven programs has failed to perceive the diversity of life forms and disparate needs of the people. As a result, decentralization programs have strengthened the local power elites who are accountable only to their respective donor constituencies and political parties rather than the people who are most in need of development. This is why after fifty years of development cooperation critics calls Nepal's development a "failed one." The various poverty alleviation, social mobilization and "expert"-driven development strategies have failed to capture the potential synergy arising out of the complex interaction among the foreign aid regime, the state, private sectors and voluntary associations.

In a prevailing politics of growing scarcity of basic needs, increased democratic awareness and heightened aspirations, social mobilization without adequate resource transfer risks the danger of becoming a recipe for intensified and radical pressure. The rhetoric of social mobilization paraded since the Back to Village National Campaign has neither been able to bridge the ideological gulf between the elite and the masses, nor could change the existing social asymmetries of class and caste to make public policies secular and operational. It has only evidenced shift from people's dependence on local moneylenders to dependence on donors. The only difference between the two is: local moneylenders are physically, socially and mentally embedded in local life and, to great a extent, have to be accountable for their actions, whereas externally injected social mobilizers are not intimately linked with communities or local public agencies nor bear the burden of accountability for their actions.

Critics blame the distributive coalitions created by social mobilization activities of outside agencies as having rewarded the organized at the cost of non-organized people and having deleteriously affected the self-confidence and self-respect of the poor. Social mobilizers' paternalistic judgements of people as children-like, ignorant and illiterate in need of social mobilization and group formation are based on the ideology and interests of powerful interest groups of society. This approach inhibits the public expression of preferences and consensual processes between the rich and the poor, and discourages local initiative and innovation. Decisions made thorough consensual means have greater chance of sustainability and success. The growing number of NGOs, civil society and consumer groups in Nepal indicates the propensity of the Nepalis to come together to address the problems of collective action. There are genuine people's institutions but the majority of these NGOs are in Kathmandu, thus likely to be donor-driven.

Another criticism is that many donor-driven projects are creating dependency instead of self-help, swabalamban, and continue to weaken the indigenous capacity to carry out development programs and engage in autonomous collective action. Unless the bureaucracies of the bilateral and multilateral agencies are sufficiently reformed in terms of constituting a mechanism for fair recruitment, professionalism, promotion of their officials and transparent mechanism of aid disbursement "processes" are established, aid would serve exactly the opposite ends to its stated purpose of serving the wellbeing of poor.

Many donors are locked into a patron-client network with their own consultancy firms, NGOs and civil society with whom they exercise "consultation process" in framing Country Assistance Strategy and also in the design and planning of projects at the local level. Peoples' representatives, however, reveal that those consultation process are expert-based, in-house and, therefore, they do not have much trust because they are context-insensitive and hardly contribute to uphold standards either in policy formulation or implementation. What one sees, therefore, is a very narrow intellectual debate among experts who share the same development paradigm and bypass those that they do not understand. In other words, they only play the role of "advisor" rather than the authors of development. Moreover, they do not act as checks and balances crucial to reform public policies. This is undermining the capacity of locally elected bodies, an instrument of collective action of people, to promote local interests and meet the needs of local communities. To make development aid more effective, it must go directly to the people through their representative institutions, i.e. the VDCs and wards. Only then can decentralization beef up people's participation in wealth- producing activities and contribute to social democratization. The donors should provide a mechanism for beneficiaries to monitor the manner in which donor resources are used.

Conclusion

A centralized government imposing initiatives from above cannot solve Nepal's problem of development. What one sees in Nepal's decentralization is that central elites are seeking to extend control over the political, economic and social lives of Nepali people and turning some state activities to their own advantages. The lack of commensurate resources limits the effectiveness of many of the economic and political reform initiatives undertaken from above. The promise of democratic reforms has been further stymied by the inability of the polity to punish the corrupt and wrongdoers. The political obstacles faced by decentralization are more difficult to change, as they are rooted in the predominantly patrimonial mode of political culture. It is enmeshed with institutionalized and dominant state interests and patron-client relations between party leaders and specific interest groups of society. This holds equally true for many cases of donor-consultancy, NGOs and civil society relationships. Patron-client relationships are typically oriented towards the status quo and cannot provide critical feedback on either policy improvement or greater transparency and accountability nor even effect economic transformation. The three priority areas for immediate action-a framework for implementing decentralization achieve poverty alleviation, development of a viable fiscal system at the local level and coordination among donor agencies-identified recently by the peer review report of decentralization by six donor agencies only reinvented the already obvious problems of decentralization and, therefore, failed to illuminate persistent ills that continue to plague decentralization in Nepal.

How to break the web of power is the first major challenge. The second is dismantling the institutionalized patronage system known as the Constituency Development Fund, where the coupling of executive power with legislative largesse continues to undermine the constitutional separation of powers and checks and balances, as well as any prospect of genuine leadership development from the bottom up. The third challenge is correcting the extreme urban bias and priority given to the non-agriculture sector by central planners. The fourth challenge is to halt the steady retreat of the state from society, especially banks, police posts, schools, development projects, cooperatives, which has left a power vacuum increasingly filled by extra-constitutional forces. That a bulk of VDCs do not have secretaries reflect the dilapidated condition of local governance in Nepal. Lack of adequate technical personnel, resources and inadequate institutionalization of local governance are the critical bottlenecks affecting the viability of decentralized governance. The creation of competing structures by donors and government at the local level and their subtle politicization have often de-motivated and disorganized the already existing elected bodies and created winners and losers. Decentralized self-governance, therefore, requires the freeing up of all stakeholders to participate in development; a development that sets the conditions necessary for emancipated forms of livelihood for a diverse people.

Source: Sahabhagita, Vol. 3&4, No.2 PP. 33-47.