Part 5 : Structure of State and Distribution of State Power | The Constitution of Nepal 2015
Part 5
Structure of State and Distribution of State Power
56. Structure of State:
- The main structure of the Federal Democratic Republic of Nepal shall be of three levels, namely the Federation, the State and the Local level.
- The Federation, State and Local levels shall exercise the power of State of Nepal pursuant to this Constitution and law.
- There shall be States consisting of the Districts as mentioned in Schedule-4 existing in Nepal at the time of commencement of this Constitution.
- There shall be Village Institutions, Municipalities and District Assemblies under the Local level. The number of Wards in a Village Institution and Municipality shall be as provided for in the Federal law.
- Any Special, Protected or Autonomous Region can be set by the Federal law for social, cultural protection or economic development
- The Federation, State and Local levels shall protect Nepal’s freedom, sovereignty, territorial integrity, independence, national interest, overall development, multi-party, competitive, democratic, republican, federal system of governance, human rights and fundamental rights, rule of law, separation of powers and check and balance, egalitarian society based on pluralism and equality, inclusive representation and identity.
57. Distribution of State power:
- The powers of the Federation shall be vested in the matters enumerated in Schedule-5, and such powers shall be exercised pursuant to this Constitution and the Federal law.
- The powers of a State shall be vested in the matters enumerated in Schedule-6, and such powers shall be exercised pursuant to this Constitution and the State law.
- The concurrent powers of the Federation and the State shall be vested in the matters enumerated in Schedule-7, and such powers shall be exercised pursuant to this Constitution, the Federal law and the State law.
- The powers of the Local level shall be vested in the matters enumerated in Schedule-8, and such powers shall be exercised pursuant to this Constitution and the law made by the Village Assembly or Municipal Assembly.
- The concurrent powers of the Federation, State and Local levels shall be vested in the matters enumerated in Schedule-9, and such powers shall be exercised pursuant to this Constitution, the Federal law, the State law and the law made by the Village Assembly or Municipal Assembly.
- Any law to be made by the State Assembly, Village Assembly or Municipal Assembly pursuant to clause (3) or (5) shall be so made as not to be inconsistent with the Federal law, and any law made by the State Assembly, Village Assembly or Municipal Assembly which is inconsistent with the Federal law shall be invalid to the extent of such inconsistency.
- Any law to be made by the Village Assembly or Municipal Assembly pursuant to clause (5) shall be so made as not to be inconsistent with the State law, and any law made by the Village Assembly or Municipal Assembly which is inconsistent with the State law shall be invalid to the extent of such inconsistency.
58. Residual powers:
The Federation shall have power on any matter not enumerated in the Federal List, State List, List of Local level or Concurrent List or on any matter which is not so specified in this Constitution as to be exercised by any level.
59. Exercise of financial powers:
- The Federation, State and Local level shall make laws, make annual budget, decisions, formulate and implement policies and plans on any matters related to financial powers within their respective jurisdictions.
- The Federation may so make necessary policies, standards and laws on any of the matters enumerated in the Concurrent List and other areas of financial powers as to be applicable also to the States.
- The Federation, State and Local level shall make budget of their respective levels, and the time for submission of budget by the State and Local level shall be as provided for in the Federal law.
- The Federation, State and Local level shall provide for the equitable distribution of benefits derived from the use of natural resources or development. Certain portions of such benefits shall be distributed, pursuant to law, in forms of royalty, services or goods to the project affected regions and local communities.
- If, in utilising natural resources, the local community desires to make investment therein, the Federation, State and Local level shall accord priority to such investment in such portion as provided bylaw on the basis of the nature and size of such investment.
- The Government of Nepal shall have power to obtain foreign assistance and borrow loans. Such assistance or loans shall be so obtained or borrowed as to have macro-economic stability of the country.
- Provisions relating to the management of budget deficits and other fiscal discipline of the Federation, State and Local level shall be as provided for in the Federal law.
60. Distribution of sources of revenue:
- The Federation, State and Local level may impose taxes on matters falling within their respective jurisdiction and collect revenue from these sources.
Provided that provisions relating to the imposition of taxes and collection of revenue on matters that fall within the Concurrent List and on matters that are not included in the List of any level shall be as determined by the Government of Nepal. - The Government of Nepal shall make provisions for the equitable distribution of the collected revenue to the Federation, State and Local level.
- The amount of fiscal transfer receivable by the State and Local level shall be as recommended by the National Natural Resources and Fiscal Commission.
- The Government of Nepal shall, on the basis of the need of expenditure and revenue capacity, distribute fiscal equalization grants to the State and Local level.
- Each State shall, in accordance with the State law, distribute fiscal equalization grants out of the grants received from the Government of Nepal and revenues collected from its sources, on the basis of the need of expenditure and revenue capacity of its subordinate Local level.
- Provisions relating to distribution of conditional grants, complementary grants or special grants for other purposes to be provided by the Government of Nepal from the Federal Consolidated Fund shall be as provided for in the Federal law.
- Distribution of revenues between the Federal, State and Local level shall be made in a balanced and transparent manner.
- A Federal Act on the distribution of revenues shall be made having regard to the national policies, national requirements, autonomy of the State and Local levels, services to be rendered by the State and the Local level to the people and financial powers granted to them, capacity to collect revenues, potentiality and use of revenues, assistance to be made in development works, reduction of regional imbalances, poverty and inequality, end of deprivation, and assistance to be made in the performance of contingent works and fulfilment of temporary needs.