Mending National Economy
At a time when Nepalese have been accustomed to hearing negative news related to politics and deteriorating economy, the Asian Development Bank’s (ADB) latest forecast of the economic growth for this fiscal year has come as a pleasant surprise. ADB has estimated the country’s economic growth between 5.2 to 6.2 percent in 2017. In fact, this is the highest projected growth rate in Nepal in the last two decades. Bouncing back from the lowest level of GDP growth in the aftermath of the devastating April 2015 earthquake, Nepal seems to have embarked on the journey of mending its economy if vital economic indicators are anything to go by. Contrary to the government target, the ADB predicts the country’s inflation to hover around 6-6.5 in this fiscal year.
This news has generated public vibes of late and people have started engaging with the information on the possible reasons for this situation. Among others, improved power supply in the country has been regarded as a significant driver of boosting the quake ravaged economy. With the well managed and smooth supply of power, the impetus for manufacturing industries and factories has grown. Although the service sector has been hard hit by the decreasing remittance, maximum growth in agricultural production and improved investment climate has been encouraging. Equally significant to state is the fact that the post earthquake reconstruction has gained momentum in the last two-quarters of the Fiscal Year 2017/18 as per the ADB.
Having said that, the onus is primarily on political leadership to achieve these targets. If we historically analyse Nepal’s economic growth trajectory, we find that whenever the national leadership has been instrumental in steering growth through a conducive economic policy, growth has been witnessed. When liberalisation and privatisation policy was adopted Nepal during 1990s, the first few years witnessed higher economic growth rates. But owing to an unstable politics resulting in frequent policy changes, the exciting prospect of the neo-liberal
economic growth was thwarted by the rise of Maoist insurgency in 1996. The decade long armed conflict pegged back the growth initiatives demolishing infrastructures like schools, hospitals, health posts, telephone and vandalising public property. Even after the end of the civil war with the signing of the comprehensive peace agreement between the then seven party alliance and the Maoists, Nepal haven’t been able to march ahead in the path of economic prosperity. More often than not, political agendas have overridden economic issues in Nepal.
It can be argued that economic policy priorities have not been clear in Nepal till date. Question of which model best fits in the national interest remains unresolved. Similarly, the priority sectors of economy- whether it’s agriculture or industry or services haven’t been systematically determined. Perhaps the most crucial problem has been policy inconsistencies and duplication of work with the frequent changes in government. Lack of ownership among the political parties pertaining to the common economic concerns of the nation has become a perennial problem.
Similarly, lack of development expenditure has pushed back economic development initiatives. Due to the sheer reluctance of the development administration to discharge its functions that primarily involve implementing plans and policies of development, the government’s capacity to spend has been eroding which is a serious economic issue. While the current expenditure is increasing inflicting huge burden on the state coffer, capital spending has been dismal.
In the absence of an evidence based policy decisions, economic discourses haven’t been well informed by science in our context. Hardly has a Prime Minister or a Finance Minister based his/her decision on the advise of non-partisan economic experts when it comes to taking groundbreaking and bold initiatives for ushering economic reforms in the field of policy reform. Clinging to the ideological stance, he/she has never been able to rise above petty politics barring a handful to exemplary leaders who have transformed the nation’s economy with clear vision and pragmatic policies.
Even some highly optimistic prospects of infrastructure development like construction of major roads and hydroelectricity projects- listed under the national pride projects have come to a standstill. For instance, Kathmandu Terai Fast Track project is still languishing in the issue of giving authority to manage the project and it’s been years that the government has been
discussing it. Finally, the Nepali Army is entrusted to complete this project now. Moreover, embezzlement of public funds, lack of enforcement of reward and punishment system in project management etc have contributed to the sluggish pace of growth.
Thus, Nepal’s economy still stands at the crossroads and is expecting a long term vision of development and prosperity that can really be brought into action. This demands according high priority to economic issues by quickly settling the political row. But with the agenda of federalism becoming more pertinent, this prospect is looking slim.