Nepal | September 24, 2019

Nepal’s development model has increased our dependency

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Umesh Poudel

Continuing the age-old trend of accelerating development works towards the fiscal-end, the government has recently sped up its capital spending at the risk of haphazard and substandard infrastructure development. Moreover, there are growing concerns about the country’s economic development not trickling down to the grassroots level. Against this backdrop, Umesh Poudel of The Himalayan Times caught up with Dinesh Paudel, a development expert, to learn about Nepal’s development scenario. Excerpts:

What is your analysis of Nepal’s current development scenario?

I’m actually quite pessimistic. Our development scenario has more or less been guided by others, not our own interests and circumstances since the last 70 years. After restoration of democracy, we have focused on economic growth, but lack our own development plan and production system. For a prosperous society, we need to have three things — one is fulfilment of basic needs, second is infrastructure and third is economic production. Ignoring to fulfil the criteria for basic needs and production, the governing system has only focused on infrastructure. Hence, our economic resources are being consumed for development of infrastructure and we are dependent on foreign markets and imports to fulfil our basic needs. Therefore, I’d say Nepal’s current development model has in fact increased our dependency. For self-reliance, we need to develop a new kind of development plan that would increase domestic production. In a nutshell, I believe our development model needs to be radically changed and geared towards domestic production instead of being focused on infrastructure like right now.

The country’s capital expenditure continues to accelerate towards fiscal-end even as the country has adopted the federal system. Why do you think this is the scenario and what could be the solution to this perennial problem?

One reason for this situation, I think is due to lack of accountability among concerned stakeholders — including government officials, contractors, technicians, among others. By spending a huge chunk of allocated capital budget towards the end of the fiscal year, they can make personal benefits by cutting corners in terms of quality of work and only focus on spending the funds without worrying much about the oversight mechanisms. Technically speaking, most of the development works in the country should be taking place in the winter season, not during the onset of the monsoon like it is happening now. Government officials should make an effort to finish all the paper works before the festivals of Dashain and Tihar, which would put pressure on contractors to carry out the construction works during the winter months in a full-fledged manner. But that is not happening. Also, at present development is considered synonymous to infrastructure in Nepal. This kind of thinking needs to be changed. For instance, the government could allocate part of its development budget to planting and nurturing high-yielding crops and fruits during the rainy season instead of bulldozing the mountains. Like I said before, our development strategy needs a radical shift to ensure timely and sustainable prosperity of the nation.

There has long been discussions on cross-border railway system in Nepal. Indian and Chinese governments have pledged to construct railway lines to Nepal. What is your take on this?

Railway service is very necessary in Nepal. The railway will be cheaper compared to roads for transportation of goods. Actually river basin transport is not feasible for Nepal. So the government needs to focus on facilitating in bringing the rails from the south and the north. Our giant neighbours are looking for a virgin market to sell their goods and Nepal also needs to focus on exporting more goods to foreign markets at a cheaper cost. Rather than the cost, we should consider the long-term benefits of having rail connectivity in the country.

Which development model do you think will best suit Nepal?

A major problem lies in the lengthy process of awarding the contract. Also, as per the rules, those making the lowest bid are awarded the contract for any project. While the government may be able to save a few bucks in doing so, there are chances of substandard works and compromise in terms of quality of construction materials. Eventually this will lead to bigger losses — in terms of maintenance, not to mention the chances of major mishaps. So, the existing policies need to be changed taking all these factors into consideration. As our current development strategy is centred on infrastructure development, we can see ‘dozer terrorism’ at the local levels, where the local bodies are building roads haphazardly without fulfilling the basic criteria like consulting an engineer before carrying out the project. Personally, I think instead of building new roads, the government should focus on upgrading and maintaining the existing road infrastructure for a few years. In the meantime, it should revisit the whole planning system so that we can mitigate the risks to the environment and society.

So, what sort of development policy should government adopt?

The government should redefine the whole budgeting system. Since the last 70 years, our budget allocation pattern has pretty much remained the same, even as the governing system has changed many times. Firstly, the government needs to create a base for a new development roadmap that is geared towards a self-reliant economy. It needs to include some transformative ideas for leap-frogging the overall development. It should particularly focus on ramping up our agricultural and industrial production. For this, the government should research the needs and demands of the local market and create a conducive environment to promote youth entrepreneurship. I think the local bodies should allocate at least Rs one million per person for youth entrepreneurship. At the same time, along with infrastructure development, the local bodies should also plan on other development activities that would make the residents of that area self-reliant and upgrade their living standards. Moreover, I think categorising development budget into funds for infrastructure and production sectors will be beneficial. If we continue with the current ‘dozer’ development, one day we won’t have any arable land left in this country.

How do you suggest bringing the country’s scattered development back on track?

The present government unveiled its theme titled ‘economic prosperity movement’, but has not come up with an actual action plan. While the National Planning Commission has unveiled some plans, there has been no discussion at the grassroots level. Formulating policies at the centre without any consultation with the intellectuals and the targeted groups cannot yield good results. Even the parliamentarians seem less keen on discussing such issues. So, first of all the government needs to create a national roadmap for development with the participation of all stakeholders, including political parties, business communities, locals, among others. This would ensure that the change in guard will not result in scrapping of the development plan. Then based on the national roadmap, the provincial and local governments can formulate their own long-term and short-term development plans. For example, the local level governments have focused on infrastructure while disregarding other development needs, like job creation, which is in fact one of the priority areas announced by the federal government. Consequently, a large number of youths in our villages are migrating to urban areas and abroad. This has resulted in imbalanced development across the country.

What steps should government take to achieve double-digit growth and Sustainable Development Goals?

Double-digit growth and SDGs are not related to each other. Simply by achieving double-digit growth, Nepal will not have met its SDG targets. For example, if a few individuals or a bunch of companies own most of the country’s money and are progressing well, it would seem that the country is meeting its economic target. However, this would not translate to prosperity of all people. The SDGs measure the living standards of people and look into whether everyone is receiving equal opportunities for growth, which is crucial for sustainable development. The government should be able to achieve double-digit growth in a few years due to political stability and the improving investment scenario. If the government is able to tap huge foreign direct investment (FDI), the nation will develop, but will it translate to upgrading the living standards of the people? That is the main question. If the government is able to mobilise domestic resources as well as FDI as per the need, we can expect some positive outcomes. But, without proper planning, the lives of people will not improve even if the country achieves impressive economic growth.


A version of this article appears in print on July 16, 2019 of The Himalayan Times.


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