With less than three months remaining before the tenure of Constitution Assembly (CA) finishes, the issue of state-restructuring has been the centre of debate at the moment. The debate is because of the political parties, inside CA, which are still divided over the basis to carry out the process of state-restructuring. United Communist Party of Nepal (Maoist) [UCPN (M)] and Samyukta Loktantrik Madhesi Morcha (SLMM), the largest and the fourth largest parties in CA are advocating to make identity as the chief basis of state restructuring while for Nepali Congress (NC) and Communist Party of Nepal (United Marxist Leninist) [
Restructuring of state on the basis of identity will divide people in the name of caste. How can a multi-ethnic country like Nepal with no majority of a single ethnicity at a single place can be restructured on the basis of identity? Data of Central Bureau of Statistics shows that no ethnic community in any region of the country has population over 35 percent (CBS, 2003). In this case, in what way can Kathmandu Valley be restructured to Newa province given that the people from other ethnicities living in Kathmandu are in majority? If provinces are formed based on identity that has, say for instance, 27 percent share in the province’s total population; will not it exclude the remaining 73 percent from power politics and create division among the people in the name of ethnicity? Such a system will not only weaken democratic norms and values, but also promote injustice. Moreover, a recent report published by Central Bureau of Statistics (CBS) has revealed that Nepal has one hundred and eighteen different ethnicities (Rai, 2012). Given the vast number of ethnicities, state restructuring based on identity is not possible, because Nepal can’t be divided into as many numbers of provinces to address the demand of each and every ethnic group. International experiences with federalism show that most countries that have adopted federalism based on identity tend to come up against problems over time. Lack of consent between various regions regarding natural resources and issues of identity means that the number of federal states often tends to go on increasing. For instance, in Nigeria, the originally planned three states have now expanded to 36 (Sharma et al., 2012).
Scholars have identified some more serious problems that can arise. According to Khanal (2066), Nepal if restructured on the basis of ethnic identity will not only weaken its national identity rather its political existence will come under threat (p.36). By ‘threat to political existence’, Khanal is pointing towards provinces based on ethnic identity which speaks of allowing only one dominant ethnic group to rule over others which would create two types of citizens - first class and second class. This sort of division of people can lead to ethnic clashes which can threaten political existence of that particular state and even the nation. For example – a new country named Bangladesh (initially, East Pakistan) was formed out of Pakistan (initially, West Pakistan) in 1971, because Urdu language was enforced as a national language where most people in East Pakistan spoke Bengali. The story of Bangladesh and Pakistan is sure to repeat in Nepal also, if the ruling class Newars forced Newari language as the only provincial language in Newa province.
Besides dividing people in the name of caste, identity based state restructuring can’t guarantee economically sustainable provinces. There are various examples to show even a well-off place like Kathmandu Valley is not economically self-sustaining given that the country is ethnically divided. For instance, the scarcity of basic needs in Kathmandu Valley during Madhesh Andolan showed how much the Valley is dependent on other parts of Nepal. Similarly, we all know what happens to the petroleum supply in Kathmandu when vehicles carrying petroleum products from India to Nepal are blocked in Birjung?
In contrast, economic viability as the basis of state restructuring is not only free from the above discussed flaws of identity approach but can also address the economic disparity that people from different religions, languages and cultures were subjected to in the past. Economically viable provinces because of its ability to provide better economic facilities and social opportunities to its citizen in long run could also the address the problems of oppression and marginalization. Oppression and marginalization is sure to disappear once people will have similar social and economic opportunities; it’s the class created by social and economic opportunities that marginalize and oppress people rather than their caste. For example, a Dalit minister is respectable and honourable to everyone in Nepal but an ordinary Dalit is not even touchable. This example shows that social and economic opportunities is capable to solve the above mentioned problems of people in Nepal due to which state restructuring was demanded by people that too without dividing people in the name of caste, language, religion and culture. But then, provinces formed under the basis of identity despite of promises can’t provide economic and social opportunities to its people because of its economic inability. At this point, it must accepted that the ethnic boundaries rarely match with the boundaries of natural resources in Nepal (Sharma, 2011) which will create disproportionate distribution of natural resources among provinces and again unequal development across different provinces will be inevitable. In this context also, parties favouring identity as the basis of state restructuring do not stop stressing on it because of the political freedom to provinces that identity based state restructuring guarantees. But, it is often forgotten that the political autonomy remains circumscribed in the lack of economic autonomy and if a state or province has to rely on the centre for all its development needs, it cannot exercise autonomy in political or economic decision-making (ibid.). Political autonomy without economic autonomy is like having fishing nets but no fish in the pond. The theory of political autonomy may sound pleasing to ear but it cannot be practised without economic autonomy.
Thus, if the objective of state restructuring in Nepal is to create a prosperous country which will benefit all citizen, irrespective of their ethnicity, caste or class economic viability as the basis of restructuring is the sole way out. On the other side, identity based state restructuring is sure to divide people in the name of caste which in long run may even threat political existence of Nepal. So, political parties besides thinking of pleasing everyone should think of future consequences as well. The foresightedness political parties’ show today will make it easier to deal with the problems of tomorrow.
 Constitution Assembly (CA) election in Nepal was held on 10 April, 2008 to write a new constitution of Nepal. Tenure of CA is finishing on 5th May, 2012.
 Interim Constitution of Nepal, 2007 has already recognized Nepal as “Federal Democratic Republic” (UNDP, 2009, p.54) making it mandatory for CA to restructure the state before it promulgates the new constitution.
 Identity, as defined by parties favouring it basically includes, identity based on ethnicity. UCPN (M) after CA election used to organize mass gathering and declare provinces based on ethnicity. Some of the province it declared are Newa Rajya, Kirta Rajya, Magaraat Rajya, etc. Identities based on - community,geography, history, etc. are also under discussion but at the moment ethnicity is primarily being focussed, so whenever identity comes in the article ethnic identity should be understood.
 Economic viability, as defined by parties favouring it means the ability of a province to be economically self-sustaining with its own resources rather than relying on the centre (Jwala, 2012).
 State Restructuring Commission formed by Government of Nepal on 21st November, 2011 to recommend the CA a best possible model to federate the country was headed by Madan Pariyar. The other eight members in the commission were Malla K Sundar and Stella Tamang from the UCPN (M), Ramesh Dhungel and Sabitri Thapa from the NC, Bhogendra Jha and Sarbaraj Khadka from CPN (UML), and Krishna Hachhethu and Surendra Mahato from SLMM (Kharel, 2011). SRC submitted two reports to Prime Minister – one based on identity (supported by 6 members, Madan Pariyar leading the group) and the other based on economic viability (supported by 3 members, Ramesh Dhungel leading the group).
 Shah dynasty which ruled Nepal from 1768 to
 Among the 14 provinces proposed by Committee on State Restructuring and Distribution of State Powers, Newa Rajya is the smallest one that comprises Kathmandu Valley (Manandhar, 2010).
 Census 2001 enumerated 67 castes/ethnic and/or religious group with significant population living within the Kathmandu metropolitan. Among them Newar, Brahmin (Hill), Chhetri, Tamang, Gurung, Sherpa and Magar, are the main caste/ethic groups. No caste or ethnic group holds the majority, not even one-thirds of total municipal population. By far, Newar is the single largest group with its share of 31.8%. Brahmin (Hill) is the second largest group with 21.5%. Chhetri constitutes 16.4% (Subedi, 2010, p. 187).
 During 21 days long Madhesh Andolan of January-February, 2007, political parties of Madhesh deliberately stopped its transport connection with Kathmandu Valley in order to pressurize the central government to fulfil their demand of federalism. Termination of transport connection created shortage of petroleum, vegetables, oil, etc. in Kathmandu Valley.
Central Bureau of Statistics (2003). Population Census 2001 (various volumes), Kathmandu: Central Bureau of Statistics, Nepal.
Jwala, P. (2012, March 21). Jaatiya rajyako bipakshyama. Kantipur, p.2.
Khanal, K, Subedi, J & Tamang M.S (2065). Rajya punarsamrachana: Rajneetik, arthik ra sanskritic dristikon. Kathmandu: Martin Chautari.
Khanal, K. (2066). Prastabit pradeshharu ra rajya punarsamrachanako mudda. In D. Subedi (Ed.), Bichar bishesa: Sanghiyatamathi bimars (pp. 31-40). Kathmandu: Public Policy Paathsala Pvt. Ltd.
Kharel, P. (2011, November 23). State restructuring: Commission takes shape, finally. Retrieved March 13, 2012, from http://www.ekantipur.com/2011/11/23/top-story/state--restructuring--commission-takes-shape-finally/344261.html
Manandhar, M.S. (2010, January 21). 'We prepared two models after we failed to agree on one'. Retrieved March 23, 2012, from http://archives.myrepublica.com/portal/index.php?action=news_details&news_id=14290
Rai, G. (2012, March 11). Praramvik suchimaa 118 janajaati. Kantipur, p.2.
Shrama, B. & Kharel, P. (2012, January 6). A question of viability. Retrieved March 13, 2012, from http://www.ekantipur.com/the-kathmandu-post/2012/01/06/features/a-question-of-viability/230122.html
Sharma, P. (2011, April 27). ‘Development in one region should complement development in another.’ Retrieved March 22, 2012, from http://newbusinessage.com/Cover%20Story/268
Subedi, B.P. (2010). Ethnic/caste diversification in Kathmandu metropolitan:
Changing social landscape of a capital city. In Journal of Geography and Regional Planning Vol. 3(8), pp. 185-199. Retrieved March 22, 2012, from http://www.academicjournals.org/jgrp/PDF/pdf2010/Aug/Subedi.pdf
Thapa, G. (2066). Bidheshko nakkal garne bhul nagaraun. In Himal Media (Ed.), Sambidhan-yatra: Naya sambidhan ra sanghiyatasambandhi bahas (pp. 46-48). Kathmandu: Himal Media Pvt. Ltd.
United Nation Development Program [UNDP] (2009). The interim constitution of nepal, 2007. Kathmandu: UNDP.