Economic issues: Whither short-term measures?

Poverty and economic backwardness are major challenges for most developing countries. Programmes implemented at national levels as well as cooperative endeavours by bilateral and multilateral donors contributed to reducing poverty and making life better for millions.

Nevertheless, the challenge of alleviating poverty remains formidable as around

700 million live in extreme poverty with an average of less than a dollar a day in Asia and the Pacific region. High economic growth in China and other South East Asian countries resulted in dramatic transformation and poverty reduction, yet small economies like Nepal remained marginalised, due to lack of growth, economic mismanagement and poor governance. Economic growth rates remained low due to inadequate investments, misallocation of resources, inaccessibility and poor quality of public services and inefficient public institutions. External assistance remained unutilised or mishandled with little impact on poverty reduction and national capacity building for generating growth. Instability kept plaguing the country, deterring investors from initiating new, or strengthening, existing enterprises. Productivity remained low with a high level of underemployment and increasing unemployment.

Poverty has been passed on to successive generations. Inequalities and exclusion arose across regions, ethnic groups and gender. Nepal has remained in such a state for the last 50 years or so. Now it’s trying to take a turn for the better with political change and reforms, state restructuring, institutionalising of democracy and greater involvement of people. Nepalis are eagerly waiting for concrete outcomes resulting from national understanding among competing parties. Resolution of critical issues takes time and sincere effort. Nepalis are hoping for concrete results for national consolidation and long-term solidarity.

While the nation awaits the resolution of critical issues for establishing peace and security, restoration of basic rights, democratic ideals and practices, is it not necessary that the government also initiate actions aimed at spurring economic growth, strengthening poverty reduction measures, reconstructing and rehabilitating infrastructure and creating a congenial atmosphere to attract more investment in social development for long term national capability building? While long-term economic policies and national priority identification cannot be undertaken in a political vacuum, and need to be shaped only when political matters are settled, there are basic economic measures that are common across the spectrum and need not be postponed till a full political understanding.

The government needs to come forward with a package of programmes that can bear immediate fruit. During the Budget Speech for 2006/07, the finance minister had stated that “a common conceptual vision incorporating social and economic development targets to be achieved in ten years would be prepared with wider consultation among all stakeholders and presented before the House soon.” The National Planning Commission (NPC) had informed that it was working on the formulation of a “Three Year Plan”. But there should be more urgency in dealing with critical economic needs and organising a broad stakeholders meet to come up with an economic package that enlists a large-scale private sector involvement in reconstruction and rehabilitation, mobilisation of external assistance in priority areas, including the energy sector, non-governmental organisations, building of community-based and civil society bodies to facilitate growth and initiation of development activities and employment generation programmes at the earliest.

Nepal is now poised to enter a new era marked by political stability and economic transformation with the help of progressive mandates and people’s participation. Even as opportunities for the country to emerge as a progressive modern state unfold, discarding old institutions, traditional thinking and customs will not be that easy. Nepalis should be able to embrace national ideals and shun their petty personal and sectarian interests. Leaders should lead in this process. Nepalis will get a historic opportunity to select the representatives to the Constituent Assembly (CA) in a few months. The CA will uphold the spirit and sentiments of the people at large and draft a constitution to transform Nepal into a democratic, progressive and prosperous nation. A new era will dawn when poverty and human suffering will become history.

The government needs to work towards establishing good governance and the rule of law. Its responsibility lies not only in striking a deal for political settlement but also in laying the foundation for free and fair CA polls. It is also the responsibility of the government to declare a concrete, short-term economic package not only for immediate relief and rehabilitation efforts, but also to lay the foundation for the augmentation of economic growth rates.

Dr Dhungana is an economist