Economics of Fiscal Federalism in Nepal

Abstract

Nepal is in irreversible path of the federalism. There is huge debate among the political parties on different issues such as numbers of states, names of the states, carving the boundaries of the states, classification and management of natural resources, revenue sharing and resources allocation, reliable fiscal policy with regard to the proposed federal structures. There is wide disparity in terms of resources including revenue collection among the districts. Those states having such resource and revenue earning will obviously be economically viable as compared to others without sources of income. This would further lead to disparities among the states. Hence, possible solution would be to carve boundaries based on the economic viability.