Nepal's transition to a federal system was hailed as a historic achievement when the 2015 constitution divided the country into seven provinces. Yet nearly a decade later, the promise of devolved governance remains largely unfulfilled. Provincial assemblies pass legislation that often duplicates or contradicts federal law, while local governments complain they lack both the financial resources and technical capacity to deliver basic services.

The root of the problem lies in the ambiguity of Schedule 5 through Schedule 9 of the constitution, which distribute powers among the three tiers of government. Concurrent jurisdictions have become battlegrounds rather than spaces for collaboration. Federal ministries have been reluctant to cede authority, and the Inter-Provincial Council — designed to mediate disputes — has met only a handful of times since its formation.

Fiscal federalism presents an equally daunting challenge. Provincial governments generate less than fifteen percent of their expenditure through own-source revenue, relying overwhelmingly on federal grants. Without meaningful fiscal autonomy, provinces cannot plan long-term development strategies or respond to local priorities. The equalization grant formula itself has drawn criticism for failing to account for geographic remoteness and the unique needs of historically marginalized communities.

For federalism to succeed, Nepal must invest in institutional capacity at the provincial and local levels, clarify overlapping mandates through parliamentary consensus, and reform the revenue-sharing mechanism so that subnational governments have genuine fiscal muscle. Federalism was never meant to be a gift from Kathmandu — it was supposed to be a fundamental restructuring of power. Until that restructuring becomes real, the promise will remain unfulfilled.