Federalism in Action as Provinces Chart Their Own Course

Two weeks after the federal government tabled its budget, all seven provincial governments have followed suit, unveiling their respective financial plans. Collectively, the provincial budgets amount to approximately Rs 287 billion. Bagmati Province leads with the largest budget, while Gandaki Province has the smallest. In accordance with constitutional provisions, all provinces announced their budgets on the same day, outlining their projected revenues and expenditures for the fiscal year. Each province has made efforts to incorporate unique elements into their budgets. While physical infrastructure remains a common priority across all provinces—mirroring the federal government’s emphasis—differences emerge in other policy areas, reflecting local needs and aspirations. Several provinces have introduced innovative, need-based programs in their budgets. Koshi Province focuses on youth employment and education for marginalized communities through initiatives like the "Daughters Empowerment Program." Gandaki continues its "First Homeland, Then Foreign Land" campaign and plans to regulate local liquor production to boost revenue. Madhesh has proposed wildlife-friendly water access, solar energy projects on riverbeds and district-level surface irrigation schemes. Lumbini emphasizes tourism, agriculture, and entrepreneurship, while Sudurpaschim prioritizes its "One Local Unit, Two Products" initiative, social justice, herbal medicine and cable car feasibility studies in major tourist sites.

Prior to the advent of federalism, the national budget—prepared and presented by the federal government—was the only source of development funding, regardless of how mismatched it might have been with local realities. Remote regions were often overlooked; their pain and poverty remained invisible to a centralised bureaucracy. Whether or not the resources were needed, welcomed or appropriate, provinces had little choice but to accept whatever was handed down. In many cases, budgets felt like “a headache being treated with stomach medicine.” Federalism, however, has transformed this dynamic. With the implementation of a federal republican system, the governance model that once operated under the domination of a few individuals has come to an end. A new process—grounded in local needs and contextual understanding—now guides budget preparation. This shift has enabled provinces to present budgets tailored to their specific priorities. Of course, the process is not without flaws. Concerns remain about inclusivity, the influence of vested interests and uneven participation. Yet, in relative terms, there has been meaningful progress. Provinces are now more capable of articulating their issues, demanding appropriate resources and influencing development priorities. The recently unveiled provincial budgets are clear evidence of this advancement.

Provincial leaders, being closer to the ground, are best positioned to understand local realities. They know what kind of plans to prioritise, what resources are required and what technical support is necessary. As a result, the provincial budgets announced this year have received relatively little criticism—precisely because they align with local contexts and expectations. This is, at its core, the outcome of federal governance under a republican system. Without this transformation, there would still be valid doubts about whether budgets and programs could ever be responsive to local realities. That is why it is essential for all stakeholders to remain vigilant and united in defending the federal structure, especially in the face of attempts to undermine it. This system—where people govern themselves through their elected representatives and hold them accountable at the ballot box—has made it possible for us to receive budgets that reflect our geography, environment, culture and potential. And if there is dissatisfaction, the system itself contains the mechanisms for reform. Ultimately, protecting federalism is fundamental to ensuring these gains are preserved—and on that, there is little room for disagreement.