What is the status of balanced regional development policy in Nepal?

In the context of development of any nation, if balance is the key then the existing regional disparity is the lock; and no matter how hard a third world country likes to show it being focused on the removal of that disparity, the result has shown that the lock has not yet found the key. Policy without implementation is a blunt weapon. This blog tries to explore if the promises of regional balance in Nepal’s geographic developmental situation has been a reality.

Are all areas of Nepal basking in the sun of equality in resource sharing and development? What state of such regions has been the hopeful projection in our Constitution? Have the agendas been effectively executed and if not, what is causing the hindrance thereof?

Balanced Regional Development 

A 'region' signifies a defined geographical area chosen for specific objectives, used for analysis, administration, planning, and policy. Regions form based on historical, traditional, and societal division of labour factors. Regional balance denotes the equitable distribution of resources, wealth, and development within a country, reducing disparities between urban and rural areas.

Balanced regional development is crucial for economic efficiency, social harmony, and fair growth, promoting just resource allocation, social cohesion, and environmental sustainability. Regional imbalance, conversely, leads to economic inefficiency, social tensions, skewed investment, and environmental degradation.

South Korea serves as a prime example of a nation actively pursuing balanced regional development. Through policies aimed at reducing economic concentration in the capital region and ensuring equal opportunities in income, jobs, and education across all regions, the country has achieved rapid overall economic growth and income per capita while narrowing regional disparities. In essence, balanced regional development is pivotal for equitable growth, social cohesion, and sustainable resource use.

National State Policy 

The evolution of Nepal's development policies can be traced back to the 1960s when geographers introduced the concept of regional development and planning. During this period, the country was divided into Panchayats, Districts, and Zones. To reduce regional disparities, Nepal was further divided into Development Regions and later Development Zones. The policy evolution has been driven by the aim to reduce socio-economic imbalances, and it has involved the introduction of municipalities to promote grassroots development. The historical context also underscores the influence of geographic, economic, and social factors on regional inequalities, with the promise of a regional development approach to address these disparities more effectively.

Nepal's regional division is primarily based on ecological characteristics and development levels. It's categorised into three broad physical divisions: Mountain, Hill, and Terai (Plain). Post federation scenario of the country looks towards seven provinces. The concept of zones and development regions is a thing of the past. Further division to a total of 293 municipalities was to fasten the pace of regional balance but centrifugal forces and concentrated development efforts in specific areas, particularly the Kathmandu Valley, has been preventing the aimed result. Madhesh Province being the smallest province by area shelters the largest share of the total population as per the data of 2021 while Karnali Province being the largest is inhabited by the least number of the populace.

The essence of the Preamble of the Constitution of Nepal and its directive policies allude to Nepal's commitment to balanced regional development. The constitutional promise has been to revolve around addressing regional disparities, with the goal of reducing poverty and deprivation in less developed regions achieving equal development across various ecological and geographical regions.

Imbalance in the population distribution over the country is a response to weak transportation infrastructures. The Fifteenth Five Year Plan implemented in the Fiscal Year 2019/20, in acknowledgement of this fact, has included a balanced regional development by expansion of easy access to transportation in the mid-hill settlements as the objective of the Mid-Hill (Pushpalal) Highway Project. Balanced regional development as an undercurrent to the country’s development agenda of good governance and prosperity has been addressed in the long-term vision of the Plan. 

Nepal's comprehensive plan for balanced development aims to significantly reduce poverty, discrimination, and economic disparity. The government's goals include reducing the absolute poverty rate from 18.7% to 4.9% by 2030 and ultimately eradicating it by 2043. They also aim to reduce multidimensional poverty from 28.6% to below 6% by 2030 and below 3% by 2043, along with a progressive reduction of the Gini coefficient. To address regional disparities, Nepal is implementing targeted programs in collaboration with various sectors and preventing a concentration of the means of production. The government also seeks to promote equal access to resources and opportunities across provinces and encourages the replication of good development practices. Nepal's approach includes fiscal transfers, revenue sharing, and resource utilisation, linking them to the latest data and evidence. The federal, provincial, and local levels are committed to reducing provincial inequality and imbalance, with each level playing specific roles in achieving equitable development and enhancing public service delivery.

Implementation and Present Status

Nepal has faced economic challenges recently, with a notable decrease in real GDP growth to 1.9% in FY23. Several factors contributed to this slowdown, including monetary tightening and import restrictions. While the agriculture sector remained resilient, the industry and services sectors experienced subdued activity. However, the energy sector showed growth, thanks to increased hydroelectric generation. The central bank raised policy rates to control credit growth, and fiscal revenues declined due to import contractions, leading to a fiscal deficit of 6.1% of GDP, the highest in over two decades.

Looking forward, there is an expectation of economic rebound with projected growth rates of 3.9% in FY24 and 5% in FY25. This rebound is expected to be supported by lifting import restrictions and looser monetary policy. Hydroelectric production is also anticipated to bolster industrial sector growth, while service sectors are likely to benefit from the relaxation of import restrictions. However, inflation remains a concern, which could impact real disposable incomes and private consumption.

Nepal's regional disparities remain evident, with certain regions facing higher levels of poverty and underdevelopment. The government recognizes the need for a regional development approach to address these disparities. Provincial governments play a crucial role in achieving balanced regional development by identifying poverty pockets and implementing location-specific development programs. Delegating authority to provincial governments for regional infrastructure development is seen as an effective approach. However, provincial governments need to strengthen their legislative foundation and develop strategies to guide resources effectively in this endeavour.

Spatial planning and land use optimization are important components of achieving regional development. The country's road infrastructure, particularly the East-West Highway, plays a pivotal role in connecting different regions. Policies should promote industrial clustering and urbanisation at strategic locations along these highways to support economic growth. However, decentralisation efforts have faced challenges, mainly due to the economic fragility of districts. District consolidation is proposed as a means to enhance their economic base, enabling them to be agents of decentralisation.

Social inclusion is another key aspect of Nepal's development agenda, addressing political, sociocultural, and economic factors. This involves measures like a secular constitution, proportional representation, devolution to local governments, religious and linguistic equality, and affirmative action in education and employment. Nepal's development strategy should also consider its economic relationship with neighbouring regions, such as India and the Tibetan Autonomous Region. Promoting complementary economic relations rather than competition is vital for sustainable growth.


Despite being at the core of the National Plan document, ‘balanced development’ has not been even close to being a reality; its lack has been present as a bottleneck to other developments around. It's worth noting that Nepal's commitment to balanced regional development is vital for addressing regional disparities, reducing poverty, and promoting equal opportunities for all its citizens. A comprehensive way forward involves implementing balanced regional development policies, including the decentralisation of industries, which can distribute economic opportunities more evenly across different regions. Significant investments in infrastructure, spanning all regions, are crucial to mitigate regional disparities by facilitating transportation, connectivity, and access to resources. Additionally, a focus on education and skill development is essential, as it can enhance employment prospects in underdeveloped areas and contribute to regional equilibrium. Lastly, promoting local economies at the grassroots level ensures that all regions benefit from economic activities, fostering a more balanced and inclusive development landscape.