Currently, Nepal has a total of 753 local governments, including 6 metropolitan cities, 11 sub-metropolitan cities, 276 municipalities, and 460 rural municipalities.
These local governments were established based on the recommendations of the Local Level Restructuring Commission formed under Article 295 of the Constitution, and decisions of the Council of Ministers (2073/74 BS). Additionally, 6,743 ward offices under these local bodies are actively functioning.
These structures not only bring local democracy directly to citizens’ doorsteps but have also played a notable role in strengthening public trust in the state.
During the implementation phase of the federal governance system, local governments have gained significant experience in service delivery, development works, planning, and financial management.
Furthermore, due to changes in population, economic activities, infrastructure development, expansion of education-health services, and market areas, many rural municipalities have gradually taken on an urban character, highlighting the need for re-examination of their primary classification.
Although the restructuring carried out after the promulgation of the Constitution addressed the political and administrative necessities of that time, structural reforms aligned with the current realities are now essential.
From a policy perspective, the classification of local governments is linked deeply not only to their name or status but also to service quality, administrative capacity, accessibility, financial sustainability, and planned urban development.
With appropriate criteria and objective bases for reclassification, local governance can become stronger, more accountable, and results-oriented.
Classification based on economic activities, infrastructure, population, and population density will positively impact the equitable distribution of resources and the implementation of long-term urban planning.
Why Focus on Local Governments?
Various studies have demonstrated that local governments enjoy higher popularity and trust among citizens compared to other levels of government.
This confirms that capable and effective local governance is foundational to overall national development. However, after two terms of experience, the question arises—are the number and boundaries of local governments immutable?
Constitutional and Legal Foundations
The constitutional basis for restructuring lies in Article 295(3) of the Constitution, which makes special provisions for determining the number and boundaries of local levels.
Since federalism is a dynamic process, Sections 3 and 4 of the Local Government Operation Act, 2074, allow changes in the number, boundaries, names, centers, and classification of rural and urban municipalities through legal means. However, this Act grants nearly the same rights to metropolitan and rural municipalities, which weakens functional particularities.
The former Local Self-Governance Act, 2055, emphasized allocation of powers based on geographic, demographic, and economic factors, but this is not adequately reflected in the current legislation.
The Local Government Operation Act, 2074 prescribes that any changes in the number or boundaries of rural or urban municipalities require a two-thirds majority approval from the relevant assembly and submission through the provincial government to the federal government.
Such changes must be completed at least one year prior to elections, as a legal requirement.
Section 84 of the Act mandates that the Provincial Coordination Council coordinates and resolves disputes related to boundaries, jurisdiction, or natural resource use between two or more local governments.
Basis for Restructuring
Sections 3 and 5 of the Local Government Operation Act, 2074, provide criteria for restructuring on the following grounds:
1. Population and Service Delivery
One key criterion is equitable population distribution. If population density and the extent of services do not align, administrative burdens increase in large local governments while smaller units experience resource wastage. Therefore, balancing service accessibility and population size is a primary objective of restructuring.
2. Economic Viability and Resource Distribution
Natural resources (stone, sand, water, forests) form the backbone of local government income. Unequal resource distribution creates economic disparities.
Restructuring must ensure fair mapping of natural assets and establish a minimum basis for self-sufficiency of all municipalities to prevent boundary disputes.
3. Accessibility and Administrative Efficiency
Geographical continuity and suitability reduce governance costs. Shorter and easier distances between administrative centers and service recipients enhance effective governance.
Consideration of ground realities is necessary to improve service delivery and reduce expenditures.
4. Socio-Cultural Ownership
Local governments are administrative units as well as centers of social identity.
Grouping communities with shared language, culture, and history in one administrative unit fosters citizen attachment, builds social capital, and strengthens local democracy.
Why is Territorial Restructuring Necessary?
Although local restructuring represents the largest political-administrative reform in Nepal’s history, its discourse remains incomplete.
There are large and remote local units, some financially weak; ward delimitations and the distance to service centers directly affect citizens’ access, necessitating micro-level restructuring.
Geographic restructuring is now deeply linked not only with geography but with functions, powers, and resource distribution—overlapping rights, legal ambiguities, and conflicts among the federal, provincial, and local governments have made regional reforms inseparable from institutional reforms.
Nearly a decade into federalism and about 14 months remaining in the current local term, demand for restructuring has grown.
In this context, a study by the Nepal Association of Municipalities submitted to the Ministry of Federal Affairs and General Administration revealed serious issues.
Administrative Costs and Grants
Current trends in administrative spending and grants have raised concerns over the financial sustainability of local governments.
Many rural and urban municipalities have yet to achieve financial self-reliance.
While conditional grants have increased in recent years, the reduction of parallel grants has weakened local governments’ financial autonomy, since conditional grants tend to prioritize central government agendas.
Higher administrative expenditures relative to capital budgets limit development and investments. Stability in the current system risks inefficiency and duplication, especially for smaller local units sharing limited resources.
Therefore, serious discussions on “right-sizing” the 753 local governments for long-term financial sustainability, service quality, and efficient resource use are essential.
Resolving Boundary Disputes
Disputes over natural resource use and revenue collection among local, provincial, and federal governments are widespread.
Lack of clear boundaries, overlapping jurisdictions, and legal ambiguities have resulted in multiple claims on the same resources.
This not only hampers sustainable resource use but also reduces revenue collection and increases risks of irregular exploitation.
For example, Hoopsyakot Rural Municipality has boundary disputes with Kawasoti Municipality and Nisdi Rural Municipality of Palpa, affecting drinking water sources, forest areas, and road infrastructure, thereby depriving local residents of basic services and stalling development projects.
In hill and Terai border areas, unclear forest boundaries and allegations of encroachment or inaction between local governments abound. Federal and provincial laws have sometimes further complicated authority issues.
Delay or Political Apathy?
According to the Ministry of Federal Affairs and General Administration, 97 applications for ward divisions and boundary changes from various municipalities and rural municipalities across districts from Ilam to Bajura have been received through provincial governments.
Despite years passing, no significant progress has occurred.
Lack of technical review, fact-based evaluation, and political coordination at the ministry level have hindered implementation.
This has chilled relations between local governments and the three tiers of government. The issue is not merely administrative but fundamentally linked to political decision-making.
Four District Headquarters: Injustice or Constraint?
Out of Nepal’s 77 districts, four district headquarters have not yet been declared municipalities—Simkot in Humla, Chame in Manang, Jomsom in Mustang, and Dhunche in Rasuwa.
These areas still function as rural municipalities. Although district administrative centers, they lack municipal infrastructure and identity, which is unjust.
Declaring municipalities based on population density, access, and role of district headquarters could reshape planning and budgeting and attract investments in large and small projects.
For instance, Rautahat has 16 municipalities based solely on population, but some longstanding district towns remain rural municipalities, which is arguably inappropriate and inequitable policy-wise.
Revisiting classification based solely on population reveals that many municipalities and metropolitan cities do not meet the required criteria according to the 2078 Census.
New Blueprint for Economic Centers
The latest report from Nepal Association of Municipalities indicates the need to upgrade the status of some cities based on population density, economic activities, and population.
For example, Butwal Sub-Metropolitan City is a significant economic gateway in western Nepal.
By integrating urban clusters in neighboring Palpa, Kapilvastu, and Rupandehi districts, there is sufficient basis to elevate it to a metropolitan city.
Similarly, historic municipalities like Dhulikhel, Banepa, and Panauti in the Kavre valley can be developed as sub-metropolitan cities, preserving their unique identities and strengthening shared infrastructure and socio-economic aspects.
Likewise, Siddharthanagar in Lumbini Province and Damak Municipality in Koshi Province meet infrastructure and economic standards for sub-metropolitan status.
Integrating interconnected urban areas based on population and urban continuity can help construct stronger governance structures.
Since Karnali Province currently has no metropolitan or sub-metropolitan city, upgrading the provincial capital Birendranagar to sub-metropolitan status and investing targeted resources is crucial to creating a capable economic center that will have a qualitative impact on development in Karnali.
Additionally, 31 municipalities in fast-urbanizing hill and mountain regions such as Dang and Rapti should be upgraded to municipalities with effective urban management and service delivery ensured.
International Practices
Successful federal countries worldwide periodically adjust the number of their local governments by merging or creating new units.
Denmark’s 2007 local government structural reform merged smaller municipalities into larger, more capable local governments.
In Japan, due to economic recession and population decline during the late 1990s, a merger program was implemented. The number of municipalities, which stood at about 3,230 in 1999, dropped to approximately 1,720 by 2010, effectively consolidating more than half of the local governments.
Canada’s Tillicoultry town has fewer than 400 inhabitants and is among the smallest cities nationally. Municipal classifications there consider historic context, geographic distance, service needs, and administrative traditions rather than only population, allowing small populations to retain local government status.
This shows that when declaring municipalities, not only population but geographic location, accessibility, service delivery, and local needs are equally important.
In Nepal, upcoming restructuring should not be merely administrative division but should align with economic clusters and development prospects.
Strengthening Wards and Preserving Identity
Limiting wards solely to “recommendation centers” weakens the fundamental structure of local governments.
As the governance unit nearest to citizens, wards play a crucial role in service delivery, planning, and social accountability.
However, very small, fragmented, and resource-poor wards often cannot maintain adequate technical staff or provide effective services.
Hence, consolidating such wards based on population, geographic accessibility, and service coverage to create “strong wards” is necessary, which reduces administrative costs while enhancing service quality and accountability.
In the context of rapid urbanization, every municipality should have at least one urban planner and one environmental expert appointed.
Currently, lack of technical capacity in many municipalities and rural municipalities leads to unplanned settlement expansions, environmental risks, and unbalanced infrastructure development.
Sufficient technical human resources would enable institutionalizing land use planning, green space conservation, risk management, and sustainable infrastructure development.
Local level reorganization is not only a political and administrative reform but also a critical strategic agenda closely related to Nepal’s economic development, sustainable urban management, and strengthening of federalism.
Strong local governments are the first prerequisite for effective federalism. This requires timely structural reforms and clear functional division among government tiers.
Institutional restructuring to ensure effective coordination among the three tiers of government is essential.
Placing Federal Affairs under the Prime Minister and Council of Ministers’ Office to reinforce intergovernmental coordination, and developing General Administration into a separate department focused on human resources and management, would be appropriate.
The government’s governance reform agenda should include this issue as a policy priority.
Without attention to this critical aspect, achieving expected reforms will be difficult. However, steps toward constitutional amendment are positive, and incorporating territorial reform into the agenda is necessary.
According to clear provisions in the Act, classification, upgrading, boundary changes, adjustments, and dispute resolutions of local governments should be completed at least one year before upcoming elections.
Therefore, to explore possibilities for upgrading certain municipalities and sub-metropolitan cities, and to resolve boundary disputes across different areas promptly, the Government of Nepal must deploy technical teams for GPS surveys and ground studies of disputed areas immediately.
Simultaneously, proposals regarding classification, upgrading, and boundary adjustments should be promptly approved by the Council of Ministers and published in the official gazette.
Territorial restructuring is a continuous dynamic process. Thus, the government must not merely resolve disputes temporarily but develop long-term strategies.
For this, identification of boundary disputes, assessment of natural resource productivity, and continuous improvement of classification and upgrading based on objective criteria require establishing a permanent institutional mechanism.
Legal amendments aligned with the times are also needed to ensure sustainable solutions to problems.
(Devkota is the Executive Director of Nepal Association of Municipalities.)
