The study was conducted in Krishanpur & Laljhadi municipalities of Kanchanpur and Joryal municipality of Doti district adopting a participatory process. A total of 10 FGDs and several KIIs were conducted with the community institutions, cooperatives, right-based organizations, local municipalities and provincial government. One of the major findings of the study was the lack of transparency and trust between the provincial and local governments. for the Identification and Card Distribution Guideline (Nirdeshika) 2076 prepared by the Federal Ministry of Land Management, Cooperatives and Poverty Alleviation (MoLMCPA) have not reached out to the municipalities. Likewise, there is no clear guidance to municipalities to achieve the target of the 15th Plan (2018/19 to 2023/24) for poverty reduction. The provincial government has not been able to render the necessary support to local governments with a long-term vision. The limited capacity of pro poor is creating a gap to gain access to resources from governmental and non-governmental bodies and there is very little initiative taken by the municipalities to fill this gap. The federal government should expedite the preparation of a guideline to enable local municipalities to implement programmes for Mukta Kamaiyas and Mukta Haliyas. There is huge manipulation in the selection of beneficiaries including PwD both from the top and bottom levels. Due to such anomalies, the genuine victims are looked upon with suspicion delaying the entire process. There has been massive duplication of programme activities and exclusion of poor communities which is stemming from municipalities’ inability to maintain a one-door system. This is a mere reflection of the disparity between policies, acts, guidelines, strategies and its practice.