The government recently lowered the target of national economic growth rate for the current fiscal year (2006-07) to 3.8 per cent from the original 5 per cent — a practice of downward revision that has gone on for most of the past several years. This reflects unrealistic target-setting in the midst of the conflict and other constraints such as the failure to create a sufficiently conducive climate for economic activity to pick up — even after the SPA came to power nearly a year ago and started the peace process. The government’s growth rate readjustment has been attributed primarily to a sluggish agricultural growth, down to 0.7 per cent from 3.5 per cent. Given the unending series of bandhs, strikes, chakkajams, and deteriorating industrial relations, it might not be a surprise if at the end of the year the growth projection were revised further downwards. Every group of people with grievances to voice — now even the businessmen — seems to take to the streets or call a hartal.

This is at a time when Nepal’s two giant neighbours are moving along at something like a double-digit clip. The country is expected very soon to have an eight-party interim government (IG), which will consist of the political parties reflecting different economic priorities and policies. It is necessary to harmonise these for better interim governance, and the ongoing exercise in developing a common minimum programme (CMP) should be able to come up with a document that provides a sound basis for growth and development. Donors are ready to give more, depending on policies and programmes. At this juncture, they are both interested in and worried about what the CPN-Maoist’s economic policy would be like. On their part, the Maoists have been explaining it in patches. But it is still inadequate and does not reflect a total picture. The Maoists have said they will soon bring out a “white paper” on their economic policy. The sooner, the better.

In recent years, many economists feel, successive governments have been almost wholly preoccupied with political problems, virtually neglecting economics — but both should go together whether in wartime or peacetime. If the eight political parties could display a minimum consensus on broad policy areas such as agriculture, industry, trade, investment, including foreign direct investment, employment, and also improve the climate of industrial relations in the country, it would send the right signals everywhere. Work should start now on laying a solid foundation for the post-constituent assembly government to base future economic development on. But at the same time, it is necessary to come up with a resolve and an effective mechanism to crack down on the evil that has severely distorted and weakened almost every major sector of society and set back national development — financial corruption — in the process also breaking the unholy alliance among the bureaucrats, politicians and businessmen. On this front, however, both bilateral and multilateral donors are also to blame for their failure to exert a sufficient retraining influence on successive governments, for political and other reasons.