As Nepal seeks to graduate from the Least Developed Country (LDC) status to a developing country status by 2022, more investments from internal and external sources, Foreign Direct Investment (FDI), including public and private investments, are a must to achieve the much-needed high growth rate. Thus, it is imperative that government adopt policies to turn the country from being an aid recipient country to a lucrative investment destination.

Foreign aid alone will not suffice to free the country from abject poverty. It is only a tool to support development.  Besides, poor utilization and mismanagement of foreign aid increases corruption as in Nepal. This increases dependency and austerity. In fact, due to power shortage, the cost of production in Nepal is relatively high. It encourages import of foreign goods leading to outflow of huge amounts of foreign currency. Moreover, that a country with immense potential for hydropower is suffering from power deficiency is an irony. Energy is essential for running industries, which we should not overlook.

As much as coherent business policies, regulations and stable government are concerned, the need to develop hydropower is of utmost importance. Hydropower is one of the profitable investment sectors which national and international investors are eyeing. Nepal can export energy and overcome trade deficit by developing hydropower. In addition, surplus energy in the country will make electricity relatively cheaper. This will ultimately reduce the cost of production and attract not only national but also foreign investors.

However, being a poor country, Nepal lacks financial and technological resources to speed up the wheels of development. To lubricate these wheels, the government should ensure the safety of investments, ease regulatory measures and guarantee unrestricted use of profits.

After graduating from the LDC status, foreign grants will be significantly lower due to an upgrading in status. It is impossible to sustain and propel economic development only with foreign aid; therefore, the government must promote free enterprises and tax not the producers but the consumers.

On the one hand, investors and producers invest funds with certain risks. On the other hand, consumers only consume. Investors are creating wealth, producing jobs, and supplying the needs of people.