The country has heard enough about two famous classmates — former prime minister Baburam Bhattarai and Dr Upendra Devkota, a renowned neurosurgeon. But little is known about another contemporary of Bhattarai and Devkota, who is as successful in his profession as the two. He is Bhairaja Panday. Panday, Bhattarai and Devkota pursued intermediate level of studies at Amrit Science College before they chose their own career paths. A Master’s degree holder in law from Yale University in the US, Panday dedicated 28 years of his life to the United Nations’ service and was based in countries ranging from South Sudan, Somalia, Angola and Iran to Myanmar, Thailand, Pakistan and Egypt, among others. He is now back in Nepal for good. In an interview with Rupak D Sharma of The Himalayan Times, Panday shared his foreign experiences and suggested the path that the country should take to attract foreign investment and achieve higher economic growth.

What do you think are the binding constraints for Nepal’s economic growth?

The development process in Nepal and many Southeast Asian countries started at the same time. However, economies of Singapore, Malaysia and Thailand took off well, whereas Nepal is moving backwards. The Southeast Asian countries attained higher growth rates because of investment in infrastructure, both human and physical. We have to focus in these areas as well. To build human infrastructure, focus should be laid on development of education and health sectors. Also, equal emphasis should be given to development of physical infrastructure.

As you said, one of the pillars of human infrastructure is education. But the government seems too obsessed in meeting quantitative targets, like primary enrolment ratio, which currently hovers around 98 per cent. The score appears quite good, but quality seems to be lacking, isn’t it?

What you said is true. The government has focused too much on quantity rather than quality. Education should lead to employment. Education should also support technological innovations. But these things are not happening here. What is the use of an education system that compels youths to find jobs in places like the Gulf and work as slaves? This shows the country’s education system has failed. Therefore, higher spending on education of higher quality is a must.

The biggest chunk of annual budget is always allocated for education. This shows the country is making quite a lot of investment in the sector. Yet, results are not impressive.

This is because of inefficient use of funds. In fact, the country as a whole is not working efficiently. To ensure sustainable economic growth, all sectors have to grow simultaneously. You cannot trade growth of one sector for the other. Also, prosperity needs to be shared. This means rising gross domestic product (GDP) may not always be an indicator for hike in income of all the people. A country that is attaining higher GDP growth may also have higher incidence of poverty. This happens when benefits of economic growth do not trickle down. So, economic growth has to be inclusive. What I’m trying to say is that sustainable economic development is a package deal. But everything takes place randomly here. As a result, the country seems to have lost its direction.

It appears you are not happy with many things here. If you were put in a responsible position, what initiatives would you take to bring about changes?

I’d invest heavily on human and physical infrastructure. I’d also build legal institutions so that investors, both domestic and foreign, feel secure about their investment. I’d also identify priority areas and develop government institutions to ensure investments coming into the country do not go elsewhere. At present, investors, who come here to invest, are more likely to run away once they become aware that they have to make rounds of over two dozen ministries, departments or offices to get a permission to do something here. No investor, in his right mind, would want to take this trouble. Also, Nepal has to become friendlier to foreign investors. In this regard, all legal texts in Nepali should contain an English translation in the opposite page. We should also move on to adopt Gregorian calendar and all road signs should contain information in English as well. Also, the rent-seeking bureaucratic system, which is not accountable to people, has to change. Surprisingly, every party that comes to power does not bother to change this, which shows ineffectiveness of the political leadership. I’m hoping for resurgence in public opinion on issues, such as government’s ineffectiveness and non-accountability, so that they could be addressed. Another disincentive of working here is political instability, which often results in policy instability. Businesses do not like instability and unpredictable situation. They do not like to see demonstrations and workers’ strike every day, because what they care about are productivity and profit. But the road that the country has taken does not assure this. So, the current situation has to change. And what is even more terrifying is that the new constitution is not going to restore stability. It is, therefore, essential that we set aside some of the ambitious goals, such as federalism, if we intend to deliver prosperity to all the citizens. Also, there is a need for a strong leader, who can give shape to institutions, set policies and priorities, and see those policies and priorities are implemented. So, we need one powerful person who can steer the nation to achieve rapid and sustainable economic development.

Everyone knows the new constitution will not allow a single party to form the government. So, frequent government change is inevitable. Against this backdrop, how can the country attain development goals?

That’s why the new constitution needs amendments. The present constitution was written under unique circumstances. It was, in fact, the result of decade-long insurgency. So, a constitution written to appease all the parties in the post-insurgency peace process does not have the potential to lay the right foundation for the country’s development. Constitution should be written to deliver prosperity, attain higher economic growth and ensure sustainable development.

Do you mean to say the constitution needs to be rewritten?

Yes, it needs to be rewritten — although this is my personal opinion. The way the constitution is written will either lead the country to another civil war or disintegrate the nation. This is because the constitution is a document of political compromise written by politicians. This is not the way to write a constitution. A constitution should be written by economists, and development and legal experts. So, this poorly drafted constitution will take the country nowhere. What this constitution can do is create lots of job opportunities for politicians in the federal states and the centre. But, unfortunately, it will not contribute to sustainable economic development.

Are you implying federalism is not the need of the day?

Yes, that’s what I’m trying to say. Federalism is a ridiculous idea for Nepal. This is because Nepal cannot mobilise adequate financial resources to run seven or eight provinces. Above all, the states are somehow balanced along ethnic lines, which is even more terrible.

The call for federal states was made because the government always considered Kathmandu as Nepal. Because of this, development activities couldn’t take off at many parts of the country, which widened the gap between have’s and have not’s. Against this backdrop, won’t federalism help in equitable development of the nation?

The problem that you depicted is true. But the solution offered by political leadership is not appropriate for a country like Nepal. The solution to this problem should have been effective decentralisation of power to local bodies, not federalism. Federal structures, along the ethnic lines as proposed, will lead to war on resources. If the central government intervenes in such conflicts and issues a verdict in favour of one state, the people of the other state may give it an ethnic twist and call the move discriminatory. This will only flare tensions among ethnic groups and states. So, what we need is a decentralised structure, with power structures in Kathmandu and elsewhere. Again, these power structures shouldn’t be based on ethnicity. Nepal shouldn’t utter a word about ethnicity because the country is already on the verge of an ethnic strife. There is no need to rekindle this fire because the whole ethnic agenda was a Maoist propaganda aimed at dividing people, creating chaos and capturing power — a classic Maoist philosophy. So, the constitution was not designed to put the country on a higher trajectory of economic growth.

You’ve worked for the UN for 28 years and were based in many different countries. Did you see problems, as faced by Nepal, turning worse in the countries that you served?

Every country that has taken our path has faced a disaster. You can take Somalia and South Sudan as examples. A federal structure works in a country with lots of money. If Nepal were rich, it could have adopted a federal structure. But we don’t have the money to run governments in the centre and in federal states. So, we cannot afford federalism. What we need is a small government which is very effective and can focus on rapid development.

Could you please explain what happened in Somalia and South Sudan?

South Sudan, for example, chose to have a democratic setup. Soon, everybody started demanding for share of revenue. Since this was not possible, war ensued between ethnic groups. Unfortunately, that war is still continuing. In Somalia, there was a delicate balance between different ethnic groups. After the subsidies were taken away, the ethnic balance broke and war started. So, ethnic wars do not take a long time to start.

So, you think seeds of ethnic war have been sowed in Nepal as well?

The decision to carve out federal states has created a tension among ethnic groups. Some of these groups think they are underprivileged than the other. So there are problems. But these problems should not be swept under the rug. These problems should be addressed properly by using a scientific formula. One can measure the achievements of people of various ethnic groups and extend support to those left behind so that their living standard could be raised. There are downtrodden people not only in Newari and Madhesi communities, but in Bahun and Chhetri communities as well. So, we need to tailor programmes for downtrodden people of each of these communities. So, ethnicity alone cannot be the basis for privileged treatment, because this will stoke tension.

But the new constitution, which you are quite critical of, has tried to address these problems, isn’t it?

The new constitution has not tried to solve these problems. Instead, it has tried to create commissions to solve these problems. Commissions do not address problems. They seek recommendations and take many years to frame policies. Those recruited to these commissions will make money, but the problems will continue to persist. So, these commissions will only help in postponing the looming disaster.

Since you are back in Nepal for good, are you intending to play a role in solving these problems?

Look, I got everything from the country, but I haven’t given back anything. So, I’m here to give back and I won’t charge anything for the service I intend to extend. I’ve met with the CEO of the National Authority for Reconstruction and told him the same thing as I have years of experience in managing donors and emergencies. So, we all should strive to create a functional government so that prosperity could be shared and the country could gear up for a higher trajectory of economic growth.