Accepting a new political and administrative system is akin to an entrepreneur switching into a new business. If any person changes the business and starts new one, it takes time to be familiar with the new business, nature of product and risks factors, nature of market as well as customers. To achieve success in business, an aware entrepreneur prepares transitional strategic plans that help to minimize the risk and maximize the momentum of the business.

During transition period, there may be risk of gaps resulting from the transition where the old system is removed and a new system is yet to be completely installed. The gap can hamper the delivery of public services.

Similarly like in a business, while adopting a new political system from older one, it may require new and additional policies, laws, infrastructures, logistics, human resources and financial resources as well as changing political and administrative behavior. So, for the transformation of country from traditional type of unitary political-administrative system to federal system, it needs a bonafide strategic action plan which must incorporate the elements of capacity building of sub-national state units relating to physical, technical and management. This is because an orderly and well planned transition is essential for the successful implementation of the new system. During transition from the unitary system to an established multi-tier government, it demands new structures, rules of playing and systems to support them. During transition period, there may be risk of gaps resulting from the transition where the old system is removed and a new system is yet to be completely installed. The gap can hamper the delivery of public services.

Therefore to prevent the system from this kind of risk and possibility, a well charted and well scheduled implementation strategy is required. As per the Constitution, the federalism of Nepal is based on tri-party principles; cooperative, coexistence and coordination among the three tiers of the state units. This means the strategic plan should be developed in close consultation with three level of governments under the leadership of the central government.

Unfortunately, Nepal could not design such strategies, in due time; or before the implementation of federalism started. Actually, this task was necessary to accomplish immediately after the promulgation of the constitution. On the other hand, firstly the local elections were conducted before holding the federal and provincial elections.

The components to be considered while designing the strategy are: developing a medium term support plan in relation to sub-national governments to perform the assignments provided by the constitution for one year to three years period, timely development of sequential legislations; as well as institutional development and capacity development plan. In addition, other factors to be considered are: rearrangement and adjustment plan related to human resources, development of sub national expenditure management mechanism and capacity development plan, development of sub national level revenue/tax and expenditure management mechanism, a rational rule and formulae based  transfer plan, preparation of human resource development strategy as well as  formulation of physical infrastructure and logistics arrangement plan to perform the expenditure assignments by the subnational governments in due course and time.

However, the most important part is the need of the politicians and bureaucrats to change their capital centric behavior. Unfortunately, Nepal could not design such strategies, in due time; or before the implementation of federalism started. Actually, this task was necessary to accomplish immediately after the promulgation of the constitution. On the other hand, firstly the local elections were conducted before holding the federal and provincial elections. The elections to the HoR were conducted nearly one year after the local level elections. From hierarchies and accountability point of view, the task of developing above mentioned strategic plan is mostly the duty of the Center; so the order of elections of three levels, looked like an anti-clock wise action. This has influenced the implementation process of the federalism too. The sub-national governments are still plagued by indecisive and cautious mind set and the federalism has not geared up as desired. Its pace towards the so called prosperity is very slow. So, transitional plan of around three to five years is still required, to expedite the implementation of federalism.

On the one hand the capacity of the State and the Local level is very low, in comparison to the functions assigned by the constitution. The balance among the three side of the triangle, functions, fund and functionaries is far from the federal structure designed by the constitution.

Concerning Nepal, background issues of federalism are related to identification, disparity, imbalance development, exclusion and centralization of resources. Based on these issues, the rationalities of accepting federalism in Nepal are geographical and ethnical identification, ending of socio-economic discrimination, equitable development in all aspects and sections of lives as well as decentralizing the political, fiscal and administrative powers in lower level of political state units based on subsidiary principles. The experience of implementation of federalism in these two years is not so keen.

To some extent, the federalism has been derailed by top level self-centric leaders and their crony bureaucrats; the implementation of federalism has been slow and is trudging along the critical path.

Understanding level in political as well as in administrative level is not so well regarding the implementation of federalism and fiscal federalism. Political parties are biased on capacity building of the sub-national levels and in handing over resources and power to sub-national governments. The power and rights are granted in piece meal basis, although the constitution has granted more than two dozens major economic and revenue rights at the State and Local level. On the one hand the capacity of the State and the Local level is very low, in comparison to the functions assigned by the constitution. The balance among the three side of the triangle, functions, fund and functionaries is far from the federal structure designed by the constitution. No, significant programs are initiated and launched by the Center in relation to orientation and capacity enhancing in institutional level and educating and communicating the citizen regarding the implementation, importance and resource mobilization approach under federalism.

Formation of federal institution is polluted by the corrupt system of appointment and nomination based on personal intimacy and interest of the leaders rather than based on meritocracy and competence. To some extent, the federalism has been derailed by top level self-centric leaders and their crony bureaucrats; the implementation of federalism has been slow and is trudging along the critical path. Therefore, the correction in approach, system and behavior as well as attitude is very essential. The reform can be launched in two aspects; one is structural change and another one is reform in action.