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Federalism & Natural Resources

 The New Business Age interview with Dr. Pitamber Sharma, Chairperson RHF


The interim constitution says that the states, once created, must be autonomous. To ensure such autonomy also in the economic field, the states must have ample resources. How do you see the feasibility of such economic autonomy of the proposed states? Being self-reliant will depend on the number of states and the criteria on which they will be created. In Nepal, autonomy is interpreted only in the political sense. It is often forgotten that political autonomy remains circumscribed in the lack of economic autonomy. If a state or province has to rely on the centre for all its development needs, how can it exercise autonomy in political or economic decision-making? All states may not have all the resources. However, care should be taken that each state is carved, as much as possible, in a way that it has at least some basic resources to complement its development efforts. There are 14 states proposed by the Constituent Assembly’s state restructuring committee. Many of these proposed states are simply not viable economically or politically. I believe that in Nepal we still have enough scope to design states as planning units. The foresight we show today will make it easier to deal with the problems of tomorrow.

What would be the appropriate geographical delineation for distribution of natural resources among the new states? Nepal is a country with enormous geographical and topographical diversity. This diversity in many ways has determined the type and distribution of natural resources. The Terai plain as well as the Inner Terai are rich in agricultural resources. This area also has a unique wildlife. Similarly, the hills and mountains are rich in biodiversity resources, hydro power, nature- and culture-based tourism resources etc. The element that links and complements the geographical diversity between the hills and the plains is the hydrological system – the major river basins of Nepal. There are hydrological, demographic (migration) and economic (trade) linkages between the highlands and the lowlands. Ideally speaking, the most appropriate geographical delineation of states – which takes into account the distribution of natural resources – would be the one that follows the river basins because this would allow the complementary development of unique resources. However, we do not live in an ideal world. While natural resource endowment is important, equally important are the historic aspirations of the diverse communities that inhabit the different regions. These aspirations also need to be addressed in the formation of states. Nepal’s move from a unitary state to a federal one is dictated in many ways by these aspirations. In a country like Nepal, the crux of the issue of federalisation is that the development in one geographical and resource region has to complement the development of another region. That is the basis on which the resources need to be considered in designing federal states.

Some political parties are strongly raising the demand for states based on ethnicities. How challenging will it be to manage and distribute the resources along these lines instead of geography- and resource-based states? The political discourse on federalisation in Nepal has been dominated primarily by the issue of ethnicity. Not much attention has been paid to the attributes of an ethnic state, or even what comprises an ethnic state. Some people are scared of the word ethnicity altogether. The reality is that ethnicity makes a significant difference in the lives of people. Nepal has 100 designated ethnic groups according to the 2001 census. And there are 92 languages spoken in the country. Major ethnic/caste groups in Nepal have their territories of traditional habitation. The groups have settled continuously, are relatively concentrated, and have a significant and dominant, if not majority presence in particular areas. This is true for all large and small aadibasi and janajati groups and the Chhetris. However, the dalits do not have their own distinguished geographical territory or a separate identity by virtue of language. This is in spite of the fact that they comprise the third largest ethnic/caste group and the most marginalised population in Nepal.If all major ethnic groups in Nepal were to have their own states, it would be an enormous challenge to manage and distribute natural resources. Ethnic boundaries rarely coincide with resource boundaries. Even macro watershed would be divided among different ethnic domains. All hydropower resources would be in the domain of hill/mountain ethnic groups, with none in the Terai. The capacity of ethnic states to deal with the issues of mitigation and adaptation to climate change would be extremely limited. It is because this would require a coordinated watershed level response. 

Do you think that the redistribution of resources may ignite resource conflict after the formation of new federal states? As I have mentioned earlier, much would depend on the criteria used in the designation of states, and of course the number of states created. The experience of other countries show that conflicts over control, regulation, use, benefit and maintenance of resources, particularly water, are among the common conflicts resulting from federalisation. Constitutional provisions are therefore made for arbitration and resolution of such conflicts. (Highlight.) The redistribution of resources is ensured mainly through inter-governmental transfers. However, to assure that the central government has enough resources to offset imbalances between the states, some clarity is required with respect to the share of local/state revenue going to the central treasury.

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