Envisioning Nepal 2030: Transformative strategies key

In the Nepalese context, structural problems in the demand side of the economy are equally serious which are often ignored, undermining productive employment led inclusive growth and self reliant development

With the new constitution committed to accelerated economic prosperity rooted on equity, inclusion and self reliance led development discourse, there has been an urgency to overhaul or bring about drastic shift in the development paradigm and strategies. The Sustainable Development Goals (SDGs) which are symmetrical to the direction laid down by our constitution in many respects also entail such a necessity. A danger of bigger slippage in meeting the graduation target by 2022 additionally demands this. In such contexts, an initiative taken by the National Planning Commission (NPC) to prepare a long term development strategy aimed at transforming Nepal into the middle income country status by 2030 is imperative and timely. However, the challenges and downside risks are many.

First, notwithstanding several new initiatives, our developmental moves and policy directions are still grounded on business as usual discourse constrained by many factors, including path dependency syndrome, political behavior and power composition, infancy stage in framing new laws and changing old ones to be compatible with the constitution, absence of proper shape in federal structure and lack of local governments since many years.

Second, the preliminary SDGs related exercise carried out by the NPC in setting country specific goals and targets indicates that there is a need of bringing about coherency in them before jumping into the exercise on long term development strategies. An added complication is that despite some complementarities, many goals and targets apparently encompass through tradeoffs and contradictions.

Third and off shoots of above two, under as usual circumstances and development endeavourers the ambitious goals and targets set in the country specific SDGs will be impossible to achieve.  For instance, the first goal is that the level of poverty will be reduced to 5 percent by 2030 from 23.8 percent in 2014 which requires an annual reduction by more than 9 percent against historical reduction rate at 3.3 percent per annum.

Along with immediate need of focusing on reconstruction and economic revival drive, how to move to very high growth trajectory is a real challenge for reaching the middle income category and meeting poverty reduction targets by 2030. This, in the spirit of new constitution, necessitates addressing systemic and structural barriers which are principle impediments to sustainable growth and development in Nepal. Despite global SDGs recognizing some such barriers, narratives of changes and drivers of transformation are still missing there.

Therefore, evolving  robust transformative strategies to remove barriers for enhancing productive capacity and overall productivity of the economy will be critical. In this, two pronged strategic approach could be crucial. One, there is a need for topmost focus on intra labor productivity enhancement in  agriculture as a part of genuine transformation. Second, along with focus on moving labor force from agriculture to non-agricultural promising sectors, the productive capacity enhancement of lead sectors like energy, tourism and other selected services should be strategically worked out. The refocus on industrialization drive is a must in which both import substitution and export promotion industries should get equal priority. Maximum advantages should be taken from low labor cost, preferential trading facilities and big markets of the two neighboring countries. More broadly, there is a need of removing supply side structural constraints added by focus on raising the quality of institutions and improving governance system substantially. Here strategies ensuring catalyst and complementary role of the state, private sector and cooperatives will be essential with due care on horizontal and vertical balance for enhancing macro, sectoral and grass root linkages which in turn could help bring about changes in the rules of the game at the top and production relations at the base.

In the Nepalese context, structural problems in the demand side of the economy are equally serious which are often ignored, undermining productive employment led inclusive growth and self reliant development. Now time has come to focus not only on higher level of productive investment but also on its quality and composition which, in turn, would have decisive impact on growth and its pattern. More broadly, the strategic reforms, interventions and incentive structures have to be worked out to divert government expenditure and private investment to more productive areas besides encouraging cooperatives to channelize their savings toward production activities more exclusively.  Here, major reforms in the macroeconomic policy front will be the key.

Lastly, a comprehensive strategic framework covering growth, poverty reduction, universal health social services, social security to the vulnerable population, including labor force in the informal labor market, productive employment and decent work to all, environmental protection, inequality reduction etc has to be evolved in a coherent way along with identification of catalyst and complementary role of each strategy in meeting the goals. Eventually, materialization of goals will critically depend on the sincerity and commitment of the political forces with poor track records.