India–Nepal Border Economies after Federalisation

Federalisation Chapter 131 examines the India–Nepal border economy after Nepal’s transition to federalism. The constitutional change of 2015 created a three-tier state—federal, provincial and local—and the first full cycle of provincial and local governments after the 2017 elections brought new institutions directly into the economic life of the Terai–Madhesh border. Yet federalisation did not create a new international border, nor did it transfer customs or international trade to Madhesh Province. Nepal’s Constitution keeps customs, international trade, international boundaries, major national transport and treaty-making within federal jurisdiction. Provincial and local governments nevertheless shape the economic experience of the border through roads, markets, agriculture, tourism, business administration, land-use decisions, municipal services and subnational finance. For Mithila, Vajji and Anga this distinction is essential. The border is simultaneously a customs boundary and a dense field of family, labour, pilgrimage, educational, health and market mobility. Formal trade is concentrated in large corridors such as Raxaul–Birgunj and Jogbani–Biratnagar, while Jayanagar–Janakpur and numerous road crossings support passenger movement and local commerce. Since 2015 the material infrastructure of this border has also changed: integrated check posts, passenger and freight rail, a transnational petroleum pipeline, electricity trade, revised transit rules and digital-payment links have converted parts of the border from a truck-and-cash frontier into a multimodal economic network. The historical question is therefore not whether federalism ‘opened’ or ‘closed’ the border, but how authority, infrastructure and economic opportunity have been redistributed across a border economy that remains deeply transnational. 131.1 Federalisation changed the institutional map, not the border itself Nepal’s 2015 Constitution reorganised the state into federal, provincial and local levels. The transformation mattered greatly for the Madhesh/Terai because provincial and municipal governments acquired their own budgets, laws and development responsibilities. But the international boundary with India remained a federal matter. Border diplomacy, treaty revision, customs tariffs, foreign exchange and international trade rules therefore continued to be negotiated by Kathmandu with New Delhi. What changed on the ground was the number of public institutions able to shape the economic environment around the border. A trader crossing at Birgunj still encounters federal customs, but the road to the market, local drainage, licensing of some businesses, municipal sanitation, market management and nearby agricultural services may involve provincial or local authorities. Federalisation thus created a layered governance system around an old border rather than a separate provincial border regime. 131.2 Three tiers govern one border economy The post-federal border economy operates through three different scales of authority. Federal institutions control customs, international trade agreements, currency, major rail and highway frameworks, immigration and national security. Provincial governments influence transport, agriculture, tourism, provincial roads, industrial and commercial administration within their constitutional and statutory remit, and they prepare their own budgets and economic programmes. Municipalities and rural municipalities manage local roads, market areas, sanitation, drainage, local tourism, local business services and other functions that directly affect commercial costs. The practical economic problem is coordination. A modern land port can process cargo efficiently, yet trucks still lose time if the connecting municipal road is congested or flooded. A local HISTORY OF MITHILA, VAJJI & ANGA — VOLUME II market may be well managed but unable to export perishable produce if federal quarantine procedures are slow. The border economy therefore behaves as one production-and-mobility system even though authority is divided among several governments. 131.3 Customs and international trade remain federal powers Federalisation is sometimes described as economic decentralisation, but customs illustrates its limits. Nepal’s Constitution lists customs, major national taxes, international trade, exchange, ports and quarantine among federal powers. This is logical because a country cannot operate multiple provincial tariff regimes on one international boundary. Madhesh Province cannot independently lower customs duties at Birgunj or negotiate a rules-of-origin concession with India. It can, however, advocate for its producers, improve access infrastructure and build institutions that help firms meet federal trade requirements. This distinction matters for historical interpretation. If an agricultural exporter in Sarlahi or Dhanusha faces difficulty entering the Indian market, the obstacle may arise from a federal sanitary standard or bilateral protocol rather than from provincial policy. Conversely, weak local roads or storage can undermine market access even when the formal tariff is favourable. Trade performance therefore emerges from the interaction of federal rules with subnational production systems. 131.4 Provincial and local governments shape the last mile The strongest economic effect of federalisation is often found before the trader reaches the customs gate. Nepal’s Local Government Operation Act assigns municipalities important responsibilities for local markets, supply monitoring, local roads, agricultural roads, irrigation, sanitation and local infrastructure. Provincial governments likewise plan roads, agricultural programmes, tourism and sectoral development. These powers influence the ‘last mile’ that determines whether small producers can use national trade opportunities. A farmer may benefit more from a reliable feeder road, collection centre and drainage improvement than from a headline bilateral agreement that does not solve local logistics. The same applies to pilgrims, patients and students: border crossing is only one part of a journey whose cost depends on municipal transport, bus stands, lodging, safety and information. Federalism therefore makes local administrative quality part of international economic competitiveness. 131.5 Madhesh Province is an economic layer across historic Mithila Madhesh Province is a modern administrative unit and should not be equated with historical Mithila. Its eight districts include Maithili, Bajjika, Bhojpuri and other linguistic and social zones, while historical Mithila extends beyond the province and across the Indian border. Nevertheless, federalisation created a new economic layer centred on Janakpurdham with its own finance ministry, economic surveys, budget process and sectoral departments. For the history of Mithila, this provincial layer matters because it can coordinate infrastructure and services across districts that previously depended more directly on Kathmandu. It also produces a new documentary archive: provincial budgets, economic surveys, development programmes and local-government records. These sources allow historians to observe how border districts are governed after federalisation without projecting the province backwards as an ancient or culturally uniform territory. 13431343 GAJENDRA THAKUR Figure 520 — Governance architecture of the post-federalisation India–Nepal border economy. 131.6 Border towns are paired urban systems Large India–Nepal crossings function as paired urban systems rather than as isolated checkpoints. Raxaul and Birgunj share freight, warehousing, trucking, finance and labour markets; Jogbani and Biratnagar are linked by road, rail and industrial supply chains; Jayanagar and Janakpur connect pilgrimage, retail, education and passenger movement. Prices, transport strikes, road conditions or currency availability on one side can affect activity on the other. The formal border creates legal distinctions, but daily economic geography often treats the paired towns as one corridor with two regulatory systems. Federalisation gives the Nepali-side municipality and province greater administrative presence within this paired system, yet national customs and bilateral infrastructure remain decisive. The analytical unit should therefore be the corridor, not only the municipality. Corridor analysis can reveal how a policy adopted in Kathmandu or New Delhi is translated into queues, rents, wages and retail demand in specific border towns. 131.7 Raxaul–Birgunj remains the dominant formal gateway Raxaul–Birgunj is the most important formal land-trade corridor between India and Nepal. The Land Ports Authority of India identifies it as the leading route for bilateral and third-country exchange, linked to Birgunj’s inland container and customs infrastructure. Its current statistics illustrate the scale of formalisation: for 2025–26 the Raxaul land port reports trade facilitated of about ₹38,425.95 crore and 219,210 cargo movements. These are corridor-administration figures, not the whole of India–Nepal trade, and they should not be compared mechanically with national customs totals. Their importance lies in showing how strongly formal trade is concentrated in one logistics node. The corridor’s economic reach extends far beyond the border itself, connecting Indian ports and industrial centres to Nepal’s main commercial artery. Congestion, rail access, quarantine, warehouse capacity and customs processing at Raxaul–Birgunj therefore affect prices throughout Nepal, including Madhesh. HISTORY OF MITHILA, VAJJI & ANGA — VOLUME II 131.8 Jogbani–Biratnagar links eastern Bihar and the Nepal Terai Jogbani–Biratnagar is especially important for the eastern part of the study region. It links north-eastern Bihar with Morang and the industrial-commercial economy of Biratnagar while also connecting to the wider Anga and eastern Gangetic transport system. The Land Ports Authority reports that in 2025–26 the Jogbani land port facilitated trade worth about ₹11,833.08 crore and recorded 109,551 cargo movements. The corridor is smaller than Raxaul–Birgunj but increasingly multimodal. Road traffic, an integrated land-port complex and the Jogbani–Biratnagar broad-gauge rail link now operate within one logistics geography. For producers and traders in eastern Nepal and Bihar, this reduces dependence on distant gateways and can change warehouse, trucking and industrial location decisions. It also creates a more direct link between local economic development in Madhesh/Koshi border districts and regional railway networks in India. 131.9 Jayanagar–Janakpur shows how passenger mobility creates local demand The Jayanagar–Janakpur corridor demonstrates a different border economy. Passenger rail between Jayanagar and Kurtha began in 2022 and later extended further within Nepal, reconnecting a historic mobility axis in the central Mithila region. Its economic significance cannot be measured only by freight tonnage. Pilgrims, students, family visitors, patients, small traders and tourists generate demand for rickshaws, buses, hotels, food, retail and local services. Janakpurdham’s religious importance makes mobility itself a source of economic activity. The corridor also shows why an open-border economy requires more than customs statistics: a person may cross without carrying commercial cargo yet still create income through transport, lodging or purchases. Federal and provincial tourism policy, municipal management around stations and local transport regulation therefore interact with cross-border mobility. The railway turns a cultural route into transport infrastructure without erasing its social character. 131.10 Rail freight is changing the geography of transit For decades, road trucking dominated Nepal’s land trade, with rail playing a major role mainly in container movement to Birgunj. Liberalisation of the rail-services framework has gradually widened the categories of cargo and operators able to use Indian railways for Nepal-bound trade. This matters because rail can reduce handling, fuel use and uncertainty for bulk or containerised cargo moving long distances from Indian ports. The economic effect is not simply cheaper transport; it changes where warehouses, customs yards and industrial users find it advantageous to locate. Birgunj gained early from rail-linked dry-port functions, while the extension of rail freight to Biratnagar opens a second major eastern gateway. For the border economy after federalisation, rail thus creates a corridor that cuts across municipal and provincial boundaries and requires federal coordination even while its local benefits—employment, land values, warehousing and services—are experienced subnationally. 131.11 The 2023 Transit Treaty widened multimodal options India and Nepal revised their Treaty of Transit on 1 June 2023. India’s Department of Commerce notes that the revised arrangement incorporated updated routes for road, rail and inland-waterway transit and added locations for bulk cargo movement. For landlocked Nepal, transit policy is part of economic sovereignty because access to seaports and third-country trade depends on reliable passage through Indian territory. The post-federal implication is indirect but important. Provinces cannot negotiate their own transit treaties, yet a new route can redistribute opportunity among border regions. If freight can move efficiently through an eastern rail gateway, firms in Biratnagar and nearby districts may gain relative to more distant corridors. Transit reform therefore creates spatial consequences inside Nepal even though the treaty itself 13451345 GAJENDRA THAKUR remains federal. Provincial planning should respond to those corridor shifts through industrial land, road links, logistics skills and urban services. 131.12 The 2025 rail protocol and the 2026 Biratnagar container service A further Letter of Exchange in November 2025 amended the transit protocol to facilitate rail-based freight between Jogbani and Biratnagar, including bulk cargo and direct links from Kolkata and Visakhapatnam routes. On 28 July 2026 Indian Railways reported the first direct commercial container freight train from Kolkata Port to Biratnagar Customs Yard: a 40-wagon train carrying canola. The operational importance lies in removing border transshipment for eligible container cargo and allowing end- to-end rail movement. This is a concrete example of how treaty language becomes economic infrastructure only when the first train actually runs. It also gives historians a precise marker for the emergence of Biratnagar as a direct port-connected freight node. Future evaluation should measure frequency, dwell time, freight rates and commodity mix rather than treating the inaugural train as proof that all logistics problems have been solved. Figure 521 — Infrastructure and policy milestones after Nepal’s federal transition. 131.13 Integrated check posts formalise without eliminating local crossings Integrated check posts concentrate customs, immigration, quarantine, security and cargo-handling functions in purpose-built facilities. Raxaul and Jogbani were among the early India–Nepal land ports, and the model has since expanded elsewhere along the border. The economic gain comes from co-location of agencies, larger parking and warehouse capacity, electronic processing and clearer separation of cargo streams. Yet formalisation does not make smaller local crossings irrelevant. Family visits, local retail, short-distance transport and agricultural exchange continue through numerous road points that serve different functions from container trade. Policy should therefore avoid a false choice between ‘modern ICP’ and ‘traditional border’. High-volume commercial cargo benefits from concentrated infrastructure, while local mobility needs safe, predictable and proportionate procedures. A resilient border economy requires both scales to work without forcing every transaction into a single gateway. HISTORY OF MITHILA, VAJJI & ANGA — VOLUME II 131.14 Standards and quarantine can be more binding than tariffs For agricultural and food products, market access often depends less on the headline customs duty than on sanitary, phytosanitary and technical requirements. Nepal raised this issue in the 2023 bilateral discussions, asking for better-equipped testing laboratories, simpler procedures and mutual recognition of test certificates. The January 2025 Inter-Governmental Committee again discussed harmonisation of standards and market-access issues. These are crucial for Madhesh and Bihar because much local production is perishable and low-margin. A truck of vegetables, milk products or processed food can lose value rapidly if sampling and certification are slow. Federal agencies must set and enforce legitimate health standards, but infrastructure can reduce unnecessary delay: laboratories near major corridors, interoperable certificates, transparent risk-based inspections and pre-arrival documentation. For small producers, standards policy is therefore an economic-development issue as much as a regulatory one. 131.15 Nepal’s trade deficit with India is structural, not a corridor failure Nepal’s governments have repeatedly identified the large merchandise trade deficit with India as a policy concern. The imbalance reflects broad differences in economic scale, industrial capacity, energy and fuel demand, consumer imports, production structure and the range of goods Nepal can export competitively. It should not be attributed simply to border inefficiency. Better logistics can raise trade in both directions; they do not automatically reduce a deficit. A corridor that becomes faster may even increase imports if domestic demand is strong. The appropriate policy question is whether connectivity improves productivity and export capability inside Nepal: lower input costs, reliable electricity, better agricultural certification, industrial clustering and access to Indian and third-country markets. Federalisation can help if provincial and local governments use their development powers to strengthen production. It cannot substitute for national trade, industrial and macroeconomic policy. 131.16 Petroleum pipelines convert border queues into network infrastructure The Motihari–Amlekhgunj petroleum pipeline, commissioned in 2019, was South Asia’s first transnational petroleum-products pipeline. It changed border logistics by moving a large-volume commodity away from road tankers and into a continuous network. IndianOil and Nepal Oil Corporation have since agreed on further infrastructure, including extension toward Chitwan and a new Siliguri–Jhapa pipeline with storage terminals. Pipeline economics illustrate the deeper transformation of the border after federalisation: some exchange no longer appears as visible trucks at a gate. The border becomes a fixed energy network whose reliability depends on engineering, storage, regulation and bilateral coordination. The benefits include reduced handling, lower transport losses, less road congestion and potentially greater supply security. But network infrastructure also concentrates dependence, so redundancy, maintenance, disaster planning and transparent pricing remain important. 131.17 Electricity trade creates a new export geography Electricity has become one of the most important new forms of Nepal–India exchange. The long-term power-trade agreement signed on 4 January 2024 envisages the possibility of Nepal exporting up to 10,000 MW to India over ten years, subject to projects, transmission capacity and market approvals. Nepal Electricity Authority reported that in FY2024/25 it exported 2,380 GWh to India while importing 1,681 GWh, making electricity trade seasonally bi-directional. A first trilateral transaction also sent up to 40 MW from Nepal to Bangladesh through the Indian grid. For the border economy, electricity is unlike ordinary cargo: it crosses through transmission lines, not markets or customs yards, and its geography follows 13471347 GAJENDRA THAKUR substations and grid capacity. Federal agreements dominate, but provincial economies gain through construction, land use, jobs, power reliability and the fiscal consequences of energy development. 131.18 Cross-border digital payments reduce the cash friction Cash has long been central to everyday India–Nepal transactions, but digital-payment interoperability is reducing some of the friction faced by travellers and merchants. UPI merchant acceptance through Nepal’s Fonepay network went live in 2024, allowing eligible Indian users to scan QR codes at participating Nepalese merchants. NPCI International reported that cross-border UPI merchant transactions in Nepal crossed 100,000 by August 2024. The figure is modest relative to the scale of total border movement, but it is institutionally significant. A tourist, pilgrim or business traveller can make a small payment without first finding a money changer or carrying large amounts of cash. The gain is greatest where merchant onboarding, mobile coverage and grievance handling are reliable. Digital payments do not replace currency regulation; they make regulated cross-border payments easier to execute at the point of sale. 131.19 The 2026 UPI–NPI remittance link changes household transfer channels On 9 June 2026 NPCI International and Nepal Clearing House launched a real-time linkage between India’s UPI and Nepal’s National Payments Interface for person-to-person transfers through participating banks. The service was announced as live through select banks with expansion planned. This is different from merchant QR acceptance. P2P linkage potentially affects family transfers, workers, students and other small-value cross-border payments that previously depended more heavily on cash, bank branches or remittance intermediaries. The long-term economic effect will depend on fees, transaction limits, user eligibility, exchange arrangements, bank participation and customer trust. It should therefore be studied with transaction data rather than assumed. Nevertheless, the 2026 launch is a clear institutional milestone: household money movement is becoming part of the same real-time digital infrastructure that already transformed domestic payments in both countries. 131.20 Open-border mobility is larger than customs trade The India–Nepal relationship includes visa-free movement for citizens under longstanding bilateral arrangements and practice, subject to applicable identity requirements. This makes the border economy fundamentally different from a conventional customs frontier. People cross for family visits, seasonal work, pilgrimage, shopping, education, health care and social events; most of these journeys never appear in merchandise trade data. The economic value generated can be substantial but dispersed across transport, lodging, food, retail, medical services and household transfers. It is therefore misleading to equate the border economy with customs revenue or cargo value. At the same time, an open-border mobility regime still requires security, lawful documentation and protection against trafficking or criminal activity. The policy challenge is to preserve low-friction legitimate movement while managing risks in a targeted way rather than making ordinary social mobility bear the costs of unrelated enforcement problems. HISTORY OF MITHILA, VAJJI & ANGA — VOLUME II Figure 522 — Five cross-border flows that cannot be measured by customs data alone. 131.21 Labour migration and commuting create distributed households Labour mobility between Nepal and India predates federalisation by generations and continues to shape household economies on both sides. Some movement is long-distance, but border districts also support shorter-term commuting, construction work, transport employment, retail labour and seasonal agricultural activity. A household can therefore earn in one jurisdiction while consuming, farming or educating children in another. This distribution complicates provincial economic statistics because income may be generated outside the province and spent inside it. Digital transfers, improved roads and easier passenger transport intensify these links. For local governments, the consequences appear in housing demand, school enrolment, care burdens and local markets rather than in customs records. Labour mobility should thus be treated as part of the economic infrastructure of the border, alongside railways and land ports, while worker protection and access to formal financial channels remain essential. 131.22 Health, education and pilgrimage are service exports and imports Border economies exchange services as well as goods. Patients from Nepal travel to Indian hospitals and diagnostic centres; Indian pilgrims travel to Janakpurdham and other Nepalese religious sites; students cross for schools, colleges, coaching and professional education; families use transport and hospitality on both sides. These flows create income even when nothing is declared at customs. They also influence where pharmacies, hotels, bus services, hostels and private educational institutions locate. Federalisation increases the role of local and provincial governments because service quality depends on municipal roads, sanitation, tourism management and health or education administration. The economic history of the border must therefore count mobility-linked services conceptually even when complete statistics are unavailable. A railway or digital-payment link can raise service trade by making a journey easier without changing merchandise trade at all. 131.23 Local markets, haats and municipalities matter under federalism Federalisation gives local governments greater visibility in the everyday commercial institutions that sit below the international-trade system. Nepal’s local-government law assigns municipalities responsibilities for 13491349 GAJENDRA THAKUR local market management, supply monitoring, local roads and other services that shape haats, bus stands and retail streets. This matters in the border belt where small transactions are frequent and where formal wholesale chains coexist with weekly markets. Better paving, drainage, lighting, sanitation, vendor organisation and traffic management can raise productivity without any change in customs policy. Local governments can also improve transparency by publishing fees and reducing informal rent extraction. The important distinction is jurisdiction: a municipality may regulate its market but cannot impose a charge that obstructs national movement of goods contrary to higher law. The border economy works best when local revenue mobilisation supports services rather than recreating fragmented internal barriers. 131.24 Fiscal federalism expands responsibility faster than own-source revenue Nepal’s federal system gives provincial and local governments substantial expenditure responsibilities, but their fiscal autonomy remains incomplete. The World Bank’s Nepal Fiscal Federalism Update 2024 found that subnational governments still relied heavily on intergovernmental transfers and that provincial and local deficits appeared in FY2023 as federal revenue weakened. Local governments received roughly three-quarters of their revenue through the four main forms of intergovernmental fiscal transfer. This matters for border development because municipalities may be responsible for local roads, markets and services without having a tax base large enough to finance major upgrades independently. The result can be a mismatch between the economic importance of a border town and its municipal fiscal capacity. Better coordination of federal grants, provincial investment and local maintenance is therefore as important as assigning legal responsibility. Federalism decentralises decisions only when money, staff and data follow the function. 131.25 Informal exchange must be distinguished from unauthorised trade The bilateral Inter-Governmental Committee explicitly includes cooperation to control unauthorised trade, reflecting legitimate concerns about evasion, prohibited goods and revenue leakage. Yet historians should not collapse all small-scale or undocumented border exchange into one category. A family carrying household goods, a pilgrim buying food, a worker spending earnings, and a commercial trader evading customs are economically and legally different activities. Open-border social life creates many low-value transactions that may be difficult to measure but are not equivalent to organised smuggling. Effective regulation therefore needs thresholds, clear allowances, risk-based enforcement and public information. Excessive friction on ordinary movement can push more activity into informality, while weak enforcement can disadvantage compliant firms. The policy objective should be proportionality: concentrate inspection resources where fiscal, sanitary or security risks are greatest while preserving lawful local mobility. 131.26 Women traders and small firms face documentation and mobility costs Border modernisation can lower costs, but it can also create barriers if procedures assume that every trader has dedicated staff, digital literacy, collateral and time to visit multiple offices. Women running small enterprises may face additional constraints from care responsibilities, safety, access to transport and weaker ownership of assets used for formal finance. Small agricultural processors can struggle with standards documentation, packaging, testing and minimum shipment sizes even when the tariff is favourable. Federalisation offers an opportunity because provincial and local agencies are closer to these firms. Business help desks, shared testing facilities, women’s producer groups, market information and transparent digital procedures can convert formalisation from a compliance burden into productive capability. Inclusion should therefore be measured by who can actually use the border infrastructure, not merely by whether a new facility has been inaugurated. HISTORY OF MITHILA, VAJJI & ANGA — VOLUME II 131.27 Floods and climate shocks test economic continuity across the border Chapter 130 showed that the river systems of Bihar and Nepal are physically transboundary. The same is true of economic disruption. Floods can close approach roads, strand trucks, damage railway embankments, interrupt electricity, contaminate markets and delay agricultural exports. A border land port may remain physically intact while its catchment roads fail. Climate resilience is therefore an economic-continuity problem as well as a disaster-management problem. Corridor planning should map alternate routes, elevate critical equipment, protect data links, maintain emergency fuel and power, and share hydrometeorological information across agencies. Local governments need plans for markets and shelters; provincial authorities need road and drainage coordination; federal agencies need customs and transport continuity. Federalism can improve resilience if these responsibilities are coordinated, but it can worsen fragmentation if each tier plans only within its own administrative boundary. 131.28 Data must be reconstructed from incompatible administrative systems No single dataset measures the post-federalisation border economy of Mithila, Vajji and Anga. Indian trade statistics are national and financial-year based; Nepal uses a different fiscal calendar; land-port data are corridor-specific; provincial economic surveys cover Madhesh as a modern administrative unit; local budgets capture municipal services; electricity and petroleum flows belong to separate sectoral systems; passenger movement is incompletely recorded at many open-border points. The historian must therefore resist false aggregation. Raxaul land-port trade cannot be added casually to national bilateral totals, and Madhesh provincial GDP cannot be treated as the economy of historical Mithila. The correct method is an evidence architecture: use each dataset for the process it actually records, date it precisely, state the unit and keep gaps visible. Federalisation has created richer subnational records, but also more layers that need to be reconciled. 131.29 What better border governance should measure A modern border-economy dashboard should move beyond gross trade value. For goods, it should track border dwell time, end-to-end transit time, truck or rail reliability, rejected consignments, testing time and logistics cost. For people, it should track safe passenger access, station connectivity and service availability without turning open-border mobility into unnecessary bureaucracy. For payments, it should monitor transaction success, cost and coverage across banks and merchant networks. For resilience, it should measure days of disruption after flood or infrastructure failure. For inclusion, it should ask whether small firms, women-owned enterprises and local producers can use formal systems. For federalism, it should record who is responsible for each bottleneck and whether the responsible level has the staff and finance to solve it. Measurement becomes useful when it points to an accountable institution rather than merely describing congestion. 13511351 GAJENDRA THAKUR Figure 523 — A producer- and household-centred dashboard for border-economy governance. 131.30 Conclusion: federalisation localised development while the border economy stayed transnational The decade after Nepal’s federal transition has produced two changes at once. First, provincial and local governments became durable actors in roads, markets, agriculture, tourism, public finance and municipal services. Second, the international economic network became more integrated through land ports, railways, petroleum pipelines, power trade and digital payments. These processes are not contradictory. Customs and bilateral treaties remain federal because the border is international; development is increasingly subnational because economic opportunity is local. The result is a layered border economy in which a household, trader or pilgrim may pass through infrastructure designed by one government, regulated by another and maintained by a third. For Mithila, Vajji and Anga, the durable historical fact is not the erasure of the border but the persistence of a connected economic zone across it. The next part of the volume turns from contemporary economic structures to the family, gender, youth, language and cultural institutions that inhabit this connected space. Table 131.1 — Evidence architecture for analysing India–Nepal border economies after federalisation Evidence source What it establishes Decision / Main limitation historical use Constitution of Nepal division of federal, separates formal jurisdiction + federal laws provincial and local customs/treaty does not show powers powers from last-mile administrative development capacity functions Madhesh Province provincial spending, tracks the new modern province is budgets/economic sector priorities and provincial layer after not identical with surveys subnational federalisation historical Mithila indicators Local-government markets, local roads, shows how border quality and budgets and acts drainage, sanitation competitiveness is comparability vary by and local services produced below municipality customs level HISTORY OF MITHILA, VAJJI & ANGA — VOLUME II Evidence source What it establishes Decision / Main limitation historical use India–Nepal trade and formal rules for dates institutional treaty text does not transit agreements bilateral and third- changes in routes, rail measure actual use country movement and transit LPAI Raxaul/Jogbani corridor trade value measures not equal to total statistics and cargo movements concentration and bilateral trade; change at major land definitions can ports change Railway operational passenger/freight identifies when inauguration does records opening dates and infrastructure not prove sustained direct services became operational frequency or cost savings Power-sector records electricity captures a major non- national/sectoral exports/imports and cargo border flow data, not province- transmission level household arrangements effects Petroleum-pipeline pipeline shows shift from throughput and price records commissioning, tanker queues to effects need separate expansion and network logistics data storage plans NRB/NCHL/NPCI merchant QR and tracks formalisation coverage depends on payment records P2P cross-border of small-value money participating payment milestones movement banks/merchants and limits Immigration/passenger rules and selected documents mobility open-border sources passenger movements regime and service- movement is economy links incompletely enumerated Fiscal-federalism transfers, revenue tests whether national aggregates reports dependence and devolved functions may hide border- subnational capacity have adequate municipality finance differences Disaster and flood disruption and connects resilience to event data rarely hydrometeorological continuity risks trade, mobility and measure full records service continuity economic loss PART XIV 13531353 GAJENDRA THAKUR CONTEMPORARY SOCIAL AND CULTURAL CHANGE Chapters 132–142