Federalism is still in its early stages in Nepal, but already the political and economic dimensions of categorising urban centres are clear. This is particularly evident in the naming of the capital cities of the seven new States, which is the responsibility of the elected State governments. At the time of writing, only three of the States had officially declared their capital, over nine months after their governments were formed. Investors move in, and land prices immediately rise once a capital is known – making some people rapidly rich and leaving the prospect of land or house ownership far out of the reach of others. Similarly, the main towns of (urban) municipalities are seeing significant investment and growth; they can also claim a greater allocation of federal funds than rural municipalities.

This noted, federalism is – and is intended to be – a catalyst for urban development across a wider swathe of the country, spurring the growth of urban conurbations outside Kathmandu valley.