Economy cannot sustain federal system: Mahat

Kathmandu, February 19

Former finance minister Ram Sharan Mahat has said that the federal system is costly for the country as it will raise the administrative cost heavily as there will be separate provincial assemblies, commissions and other administrative offices. The $22.49 billion economy may not sustain the federal system if economic activities are not expanded in a rapid manner, according to Mahat.

Speaking in the launching ceremony of ‘Samakalin Nepali Arthatantra’ (Contemporary Nepali Economy) written by senior economic journalist Gajendra Budhathoki, Mahat cited the political instability and over politicisation of institutions as reasons why the country lagged behind.

“The Nepali economy boomed after then Nepali Congress-led government introduced liberal economic policies in the 1990s but the decade-long insurgency and the consequent political instability has crippled the country’s economy,” said Mahat. He credited liberal economic policies introduced in the 1990s for the sustainability of the economy.

Mahat further laid emphasis that the private sector should be promoted under better regulations to move towards a higher growth trajectory. He also underlined the need for simultaneous reforms in the legal and administrative front to build an investment friendly environment to enhance productivity and generate employment in the country.

Likewise, another speaker in the programme, Bishwambher Pyakurel also said that the parliament and the government had missed an opportunity to demarcate financially viable provinces. Provinces have been demarcated in a haphazard manner ignoring the financial viability, he said.

“This will have an adverse impact on the economy in the future.”