Finally on 20 September 2015, Nepal promulgated its seventh constitution – the first one made by the direct representatives of the people. The constitution federated the country in seven states and Nepal moved from a country with unitary system of government to being the Federal Democratic Republic. However, with constitution have also come new challenges for Nepal. Right after the constitution was promulgated, dissenting voices have been felt across the country.
To talk about the principles of a competitive federalism and also to hear young people’s analysis of the new constitution, the Liberty Discussion Group, once again, picked up James M Buchanan’s essay “Federalism as an Ideal Political Order and an Objective for Constitutional Reform” as the selected reader for the September edition of Liberty Discussion Session on 25 September 2015.
The takeaways for the members of the group were:
1. In a competitive federalism, there must be constitutional limits on the domain of the federal government to protect the citizenry from the discretionary powers of an all-powerful federal government.
2. Right to secession acts as a powerful mechanism to put a check on the powers of the federal government. The participants also discussed that it it is not a very popular practice to explicitly mention such a right in the constitution. However, they agreed that there should be possibilities for the states to secede through the referendum if its citizenry so chooses to.
3. In order to capacitate the states (and the subsequent local governments) to handle the local issues effectively, guarantee accountability and withhold the demands of the citizenry, the institutions of the unitary governance mechanism should be devolved.
4. There should be provisions so as to allow competition between the states to reap the benefits of competition just as well as consumers benefit from competition between the producers in a free market.
5. The participants discussed that as countries move from being an under-developed one to a developed one, they switch from being nepotism/favoritism driven to one driven by competitive institutions, like merit-basis.
6. Some participants pointed out that the federalism that Nepal has chosen through this new constitution is not competitive, on four grounds:
a) states have not been given enough autonomy
b) private sector has been distrusted
c) the constitution promotes reservation, which restricts competition and innovation, despite its good-intentions