- Poverty, regional imbalance and unemployment remain Nepal's major problems. The idea of federal structure emerged as a political agenda against unitary system after the success of people's movement in 2006. Like in other federal countries, provinces demand the additional expenditure as they face new challenges.
- Federalism also comes with drawbacks. Chief among them are economic disparities across states, race-to-the-bottom dynamics (i.e., states compete to attract business by lowering taxes and regulations), and the difficulty of taking action on issues of national importance.
- The issues like political will and orientation, jurisdictional clarity, transitional management, sectoral coordination, governmental autonomy, technical competency, extensive revenue utilization, judicious allocation of resources, financial discipline, credibility and accountability etc.
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