Tarai protests put a severe crimp on economy

Positive elements in the constitution far outweigh some of its weaknesses

• Ram Sharan Mahat, Finance Minister

Kathmandu, September 29

Agitating Madhesi parties and groups should realise that protests are ‘self harming’ and one would come to know about their consequences once income level starts dipping following contraction in economic activities, Finance Minister Ram Sharan Mahat said today.

“Agitations taking place in the Tarai have rendered many jobless, shut down factories and marketplaces, and affected those who have to work every day to put food on the table,” Minister Mahat told The Himalayan Times in an interview. “All these activities will create sufferings and ultimately hit the economy hard.”

Nepal’s economic growth dipped to an eight-year low of 3.04 per cent in the last fiscal year, as earthquakes of April and May inflicted damage and losses worth Rs 706 billion.

The economy was expected to make a rebound this fiscal due to jump in spending related to reconstruction. But that is unlikely to happen.

“When there are disruptions in the supply chain, when cement factories have remained shut, when we have been unable to transfer goods from one place to the other, when there is shortage of construction materials, how can you expect reconstruction works to start?” questioned Minister Mahat.

This implies the protests in the Tarai are likely to become a major headwind deferring quake-related reconstruction works. This will put a severe crimp on the economy and prevent the government from meeting growth target of six per cent fixed for this fiscal year.

Different Madhesi parties and groups have been holding protests in the Tarai for more than one-and-a-half months, expressing dissatisfaction over a number of provisions in the new constitution that was passed last week by around 85 per cent of the Constituent Assembly members.

These protests, taking place around Nepal-India border points, have prohibited cargo vehicles from entering Nepal from Indian border points. “Also, Indian restrictions on supply of goods have further affected Nepal,” the minister said.

These disruptions have created acute shortage of essential commodities, especially petroleum products.

Shortage of petroleum products is not good news for a country facing energy deficit. This is bound to have cascading effects on various sectors of the economy — from manufacturing to services — and fuel inflation.

“What is even worse is terror tactics being used by protesters to shut down manufacturing units, which are already facing shortage of raw materials and diesel to run their machineries,” Minister Mahat said. “This has led to closure of many factories in Lumbini-Bhairahawa, Birgunj-Hetauda and Sunsari-Morang areas.”

All this, according to the minister, is happening because some ‘elements are trying to mislead people about the content of the constitution’.

“Positive elements in the constitution far outweigh some of its weaknesses,” the minister said. “But people are not aware of this because they have not been properly educated. So, many people are supporting the agitation out of sheer ignorance.”

For instance, the constitution has guaranteed one-third of seats in legislative bodies to women, while eight seats allocated for each province in the Upper House have to be filled with at least three women, one Dalit and one physically impaired or member of a minority group.

Also, there is a provision for selection of 40 per cent of parliamentarians through proportional representation system; and many riders have been incorporated to protect rights and interests of minority groups, women, Dalits and disadvantaged groups.

“These provisions that protect the interest of women, Dalits, differently-abled people, third gender and members of marginalised and historically-underrepresented communities are unique in this universe, which makes the new constitution the most progressive document in the developing world,” Minister Mahat said. “And this is the reason why so many countries have welcomed it.”

Yet, some of the Madhesis are not happy with the same document, the minister added.

Against this backdrop, the only way to find a solution, according to Minister Mahat, is through sincere talks.

“The government’s doors are open for dialogue. And Prime Minister Sushil Koirala has assured to make necessary amendments to the constitution to address the demands of Madhesis,” Minister Mahat said, adding, “The protesting parties should show flexibility and refrain from making unreasonable demands.”

Minister Mahat stated that ruling parties have always shown flexibility.

For instance, federalism was never the agenda of the Nepali Congress and the Communist Party of Nepal-Unified Marxist Leninist, the minister informed. “But we embraced it (federalism) to respond to Madhesi demands. So, Madhesis should also become flexible and trash out differences through dialogue.”