Western Nepal remains economically sidelined under federalism
Summary
Western Nepal continues to lag economically despite Nepal’s federal system decentralizing political authority and services. Bagmati Province still dominates economic output and investment, while Lumbini, Karnali and Sudurpaschim face weak industrial growth, youth migration and heavy dependence on federal grants.
Key Points
- Bagmati Province accounts for 36.7 percent of Nepal’s estimated Rs 6.6 trillion economy, far ahead of the three western provinces combined.
- Business leaders in Nepalgunj and Surkhet say federalism has improved administrative access but not shifted capital or industrial decision-making away from Kathmandu.
- Weak industrial investment has fueled youth migration, reduced local purchasing power and limited provincial revenue in western Nepal.
- Industrialists are urging special investment packages, industrial corridors, tax holidays and reliable electricity to boost growth in the west.
