Decentralization is the transfer of authority and responsibility for public functions from the central government to intermediate and local governments or quasi-independent government organizations and/or the private sector which is a complex multifaceted concept.

Much of the decentralization which has taken place in the past decade has been motivated by political concerns. For example, in Latin America, decentralization has been an essential part of the democratization process as discredited autocratic central regimes are replaced by elected governments operating under new constitutions. In Africa, the spread of multi-party political system is creating demand for more local voice in decision making. Although the main reason for decentralization around the world is that it is simply happening, there are a multitude of design issues that affect the impact of different types of decentralization on efficiency, equity and macro stability.

The specific services to be decentralized and the type of decentralization will depend on economics of scale affecting technical efficiency and the degree of spillover effects beyond jurisdictional boundaries. These are issues that need to be taken into account in the design of a decentralized system.

In practice, all services do not need to be decentralized in the same way or to the same degree. In an important economic sense, the market is the ultimate form of decentralization in that the consumer can acquire a tailored product from a choice of suppliers. The nature of most local public services limits this option and establishes a government role in ensuring the provision of the services, but it does not automatically require the public sector to be responsible for the delivery of all services. Where it is possible to structure competition either in the delivery of a services or for the right to deliver the service, the evidence indicates that the service will be delivered more efficiently.

Although uncommon in practice, local governments have successfully completed for the right to provide certain local services. In an array of local public services in any particular country, a mix of solutions from de-concentration to managed competition/privatization is likely to co-exist.


Nepal has been facing various problems in its way to socio-economic development. Government of Nepal has shown its commitment and determination to decentralize management of the local service institutions to the local bodies through appropriate mechanism.

In this context, decentralization of health services to the local bodies has been accepted as the means of people’s participation for health sector development activities and that of promoting easy access to health services for the poor, deprived, vulnerable and people in remote areas. The Decentralization Implementation and Monitoring Committee (DIMC) was formed in 1996 under the chairpersonship of the Prime Minister to implement the decentralization process. The legal provision for decentralization in the country has culminated in the form of the Local Self-Governance Act (LSGA) 1990 and regulations 2000.

This provides the basis for local self-governance with explicit roles and appropriate responsibilities to Village Development Committees (VDCs), Municipalities (MCPs) and the District Development Committees (DDCs) specified in them. Similarly the roles and responsibilities of the central and Community Based Organization (CBOs) and other concerned Bodies (LBs) are clearly spelled out in the law. In view of absence of many prerequisites for decentralization, the country is not in a position to devolve all the Local Health Institutions (LHIs) to the LBs of the country in one go.

Decentralization focused by different health policies:

The National Health Policy (1991)

The National Health Policy has specifically highlighted the need of decentralization as

“Decentralization and regionalization will be strengthened; peripheral units will be made more autonomous, DHOs and DPHOs will have a prominent role in planning and management of preventive, curative and promotive health services from district to village level.”

The Second Long Term Health Plan (SLTHP), 1997-2017

The SLTHP has emphasized the need of decentralization for effective health service delivery focusing on:

  • District budget for decentralized health programs to be entrusted to the DDCs.
  • District level long term plan for decentralization of essential health services to be developed; subsequent devolution to be made to the level of VDC.
  • Capacity of LBs to be developed so that they are able to take responsibilities once process of devolution is initiated.
  • Enable the LBs to develop plans focusing the needs of the local people in partnership with NGOs, CBOs, and the ministries and to generate and manage resources.