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Nepal became federal state in 2008 with the aspiration of inclusive-development and reduction of economic disparity between rural and urban parts of the country. However using qualitative approach, paper finds that after federalism, especially with the contentious choice of provincial capital and subsequent tax increase, there has been an overall decline in business in rural towns of the province, leading to the increased displacement of the youth populace from rural town to the provincial capital. By performing in-depth interviews of 22 respondents from province 1 and carrying out thematic analysis the paper further finds that unplanned dozer development, increased corruption, and lack of improvement in the education and health sector has further contributed in internal migration. Overall the broad theme of unmet expectation emerged as the main factor that led general populace to be displaced from their roots