The November 2006 CPA called for the establishment of Constituent Assembly elections and a competitive multiparty democratic system. As such, the Maoists were expected to allow their combatants to be assembled in the cantonments and participate in the Constituent Assembly (CA) elections. However, these reforms did not take place in 2006 because the promulgation of the interim constitution was delayed.

On 31 May 2015, parties had agreed to reach a consensus on disputed issues including federalism and issues of ethnicity and adopt a fast track approach to produce a draft of the constitution. On 9 June, 4 major political parties reached a 16-point agreement to deal with the contentious issues.¹ The draft constitution was submitted in the Constituent Assembly on 30 June. The draft constitution was approved for public debate on July 7.² The draft constitution provides that Nepal shall have eight provinces based on five criteria of identity (ethnicity/community, language, culture, geography/territorial continuity and historical continuity) and four criteria of capability (economic interdependence, and capability; status of infrastructure development, possibilities; availability of natural resources; administrative feasibility). The Nepal government will form a federal commission to recommend the demarcation of federal provinces. Two third majority of all members of the provincial assemblies will name the provinces.The draft constitution provided for the establishment of National Inclusive Commission, which is said to protect and promote interests of ethnic and minority groups.

Federalism and whether the federal states should be delineated based on ethnic identity remained contentious issues. The Committee for Constitutional, Political Dialogue and Consensus Building started multiparty dialogues to forge consensus on this issue among others but failed.³ The ruling coalition had proposed to create seven states whereas the rebel party, Maoist, had proposed the creation of ten states based on ethnic identity.

This is related to the federalism issues and was not implemented in 2013.

On 31st January 2012, the State Restructuring Commission submitted two separate reports to the government because commissioners in the Commission could not agree on substantive issues related to the bases of federal provinces. In a report submitted by six members, commissioners proposed 11 states based on ethnic identity. It also gave the priority rights to dominant ethnic groups at the local level for one term. The three members prepared a separate report proposing six federal provinces: two from the plain region based on identity, history and culture, and four from hill and mountain regions based on economic viability. The report was submitted to the Constituent Assembly for deliberation on 25 March.⁴ After discussion at the CA meetings, the report was to be forwarded to the constitution committee, which never happened. Nevertheless, parties reached an agreement to have 11 provinces on 15 May but the agreement was not fulfilled by the Maoist because the 11-state model agreed earlier did not resolve the issues related to ethnic identity.⁵ The Constituent Assembly was dissolved without promulgating the constitution on 28 May. As such, the inter-state and ethnic-relations provision of the accord was not implemented.

The CA failed again to deliver the draft constitution by the 28 May 2011 deadline. The term of the CA, then, was extended by 3 months. After the extension of the CA tenure, the three major political parties agreed to establish a State Restructuring Commission. This group is expected to recommend a viable model for the federal provinces in Nepal to the Constituent Assembly. Yet the Madesh-based political parties opposed the formation of the commission.⁶ The Madesh demanded that the restructuring of the state be dealt with by a sub-committee headed by the CPNU-Maoist leader Puspa Kamal Dahal. The reason they favored this specific leader is because the Maoists were responsive to their demands.⁷

At present, the commission has not been established and the efforts to promote inter-ethnic relations have yet to materialize in 2011. The Madesh parties wanted to scrap the constitutional provision of establishing the State Restructuring Commission and the Maoists were not opposed to that. On 28 August the Maoist party and the United Democratic Front of Madesh parties, (UDMF) made a four-point deal, which among other things included provisions to bypass the formation of the State Restructuring Commission, to form a coalition government. The government was formed on August 28.⁸ Any constitutional amendments, however, require a two-third majority. This, however, does not mean that progress has been at a standstill. Achievements, in terms of providing greater opportunity for ethnic minorities in the governance structure have been made. In the Constituent Assembly, the previously excluded caste and ethnic groups were represented through the quota system. Accordingly, Dalits hold 13% of the seats, oppressed caste/indigenous groups hold 37.8%, the Madeshi hold 31.2%, other groups hold another 30%, while backward regions hold 4% seats.⁹

On 1 November 2011, major political parties (Nepali Congress, Communist Party of Nepal-United Marxist and Leninists, Communist Party of Nepal- United Maoist and Samyukta Loktantrik Madhesi Morcha) reached a 7-point agreement on army integration, constitution drafting and a power-sharing government. According to the accord, the parties agreed to form an expert panel from the CA instead of the Constitutional Commission on State Restructuring.¹⁰ Nevertheless, the constitutional amendment requiring the formation of an expertsÕ panel could not materialize because of differences with the CPN-UML and Nepali Congress.¹¹ After failure to amend the constitution for the formation of an expertsÕ panel, the main political parties who were signatories of the 7-point accord forged a consensus on 22 November 2011 to form the State Restructuring Commission (SRC) without a Chairman for a time being. On 22 November 2011, an eight-member SRC was formed.¹²

Though it had been agreed upon in the peace agreement and provided for in the interim constitution, a High-Level Commission for Restructuring the State was not formed in 2010. Nevertheless, the state restructuring issue was considered and handled by the Constitutional Committees. The CA failed to deliver the constitution by 28 May 2010. This constitutional standstill was mostly due to the political partiesÕ inability to come to a consensus on the federal statesÕ boundaries and the role ethnic groups would play within the federal state among other contentious issues.

Though it had been agreed upon in the peace agreement and provided for in the interim constitution, a High-Level Commission for Restructuring the State was not formed in 2009. Nevertheless, the state restructuring issue was considered and handled by the Constitutional Committees.

The restructuring of the state was expected to end caste/ethnic based discrimination by allowing for greater representation of ethnic caste or minority groups and thus giving them power in the decision making process.

The Constituent Assembly elections took place on 10 April 2008 (Also see, Secretary General’s Report to the Security Council, S/2008/670, 24 October 2008). The CA was supposed to establish a High-Level Commission for Restructuring the State. The political parties were trying to forge a consensus on this commission in June 2008.[fn]”Secretary General’s Report to the Security Council,” United Nations (S/2008/454), July 10, 2008.[/efn_note] The commission, however, was not established in 2008. Nevertheless, the state restructuring issue was considered and handled by the Constitutional Committees.

Some progress was made in terms of ending caste/ethnic-based discrimination by restructuring of the state. The need to restructure the state in order to end structural discrimination was recognized by the interim constitution in the following provisions:

PART 4
RESPONSIBILITIES, DIRECTIVE PRINCIPLES AND POLICIES OF THE STATE

33. Responsibilities of the State: The State shall have the following responsibilities:

(d) To carry out an inclusive, democratic and progressive restructuring of the State by eliminating its existing form of centralized and unitary structure in order to address the problems related to women, Dalits, indigenous tribes, Madhesis, oppressed and minority communities and other disadvantaged groups, by eliminating class, caste, language, sex, culture, religion and regional discriminations.

PART 17
FORM OF STATE AND LOCAL SELF GOVERNANCE

138. Progressive Restructuring of the State: (1) Inclusive, democratic and progressive restructuring of the state shall be made to bring about an end of the discrimination based on class, caste, language, sex, culture, religion and region by eliminating the centralized and unitary form of the state.

(2) A High Level Commission shall be constituted to recommend for the restructuring of the State in accordance with clause (1) above. The composition, function, duty, power and terms of service of such Commission shall be as determined by the Government of Nepal.

(3) Final decision of restructuring of the State shall be as determined by the Constituent Assembly.

Though these provisions were written into the interim constitution, they do not ensure that cordial relations will exist between ethnic/caste groups and the state. The responsibility to fairly restructure the state falls solely on the shoulders of the Constituent Assembly. Since CA elections did not take place in 2007, the state was not restructured.