Conflict hits Nepali economy hard

Govind Mishra

Kathmandu, May 2:

Nepal’s Conflict Economy, Costs, Consequences and Alternatives is a book that seeks to draw attention to the spiraling cost of the on-going conflict in Nepal and to initiate a serious dialogue on how to assess the cost and stem it. The book is based on a monogram entitled ‘Nepal’s Conflict Economy — Costs, Consequences and Alternatives, presented by Bishwabher Pyakuryal, president of Nepal Economic Association and a professor of economics at the Tribhuvan University. The reason for the conflict, according to the author, lies in ‘poverty … the womb wherein the evils of insurgency, chaos and conflicts flourish’. In a short but unequivocal political stand, the author states in the ‘forewards’ to the book, ‘The paper assumes that since people’s war in Nepal aims at overturning the established order as was done in Cambodia and Coloumbia, it is a revolutionary war.’

The final resolution, according to Pyakuryal, can only come if ‘collaborative work is developed and agreed between the revolutionaries, local communities and other potential stakeholders’.

Having dealt with the reason and possible resolution, the author devotes his keynote address, which is the basis of the book, in seeking suggestions for improvement in the methodology for assessment of costs and consequences of the on-going conflict. The book also attempts to establish linkages between the conflict and the development process.

Pyakuryal as well as most other panelists and participants at the discussion, that make up the book, recognised the difficulty in assessing the cost of the conflict. This is both due to lack of available and trusted models of assessment and the very complicated nature of the conflict.

Pyakuryal suggests a three-fold method to assess the cost of the conflict. A direct cost of war, which includes human costs in the form of death and injury, direct physical damage to plants, buildings and contents; The second kind, defined as the indirect cost of war that includes loss of production, sales, goodwill and administrative cost of insurance; The last one, the cost of government efforts to deal with the conflict, including security expenditure and preparations to maintain security.

As a seasoned economist, Pyakuryal supports his position with a wealth of information collated from numerous domestic as well as foreign sources. While all the participants praised the quality and relevance of the work, some raised objections. Notably, Dr Shankar Prasad Sharma, vice-chairman of National Planning Commission disagreed with some of the figures provided by the paper. These included figures quoted in relation to public spending on health sector, share of education to total expenditure, state of access to drinking water and rate of development in the human development index (HDI) in Nepal.

Dr Tilak Rawal, the governor of the Nepal Rastra Bank agreed that the cost of the conflict has indeed been high, but insisted that the macro-economic indicators of the nation are positive.

The panelists’ opinions and details of the floor discussion amply show how the author’s thesis succeeded in stimulating a lively discussion in which, naturally, there were also voices of dissent. Going through the book can be an enlightening experience for students of development and economics. The book places the on-going conflict and its impact on a larger context and might force its readers to ponder over the wider, long-term ramifications.

Despite the fact that the book is technical in nature, its editing and production could have been better. But that is more a concern over style than substance.