Economic risk of outer-ring road

Kathmandu suffers from crowded roads and a housing shortage. Thus an outer ring road has been planned inside the Kathmandu Valley to decrease the traffic pressure and provide more housing for the people. But creating more houses would actually mean more vehicles on the streets, significantly increasing the pollution levels and making the city more unlivable than before.

Nepal’s leadership is decided by elections, and elections are funded generally by big businesses that carry out housing and infrastructure projects that see huge profits in opening new estates for development.

People who own land in Kathmandu may be hoping to see a rise in the land price, but it’s only a shift of funds from one sector to another as there is technically no tangible growth. Instead it is a loss of agricultural land. The creation of new infrastructure will decrease the value of the core city.

There is an even greater fear, which we fail to see - the emergence of the housing bubble. As people can’t afford to buy land or build a house with their savings, they depend heavily on loans from the banks and hope for greater resale value, thinking the prices of houses would continuously go up.

The value of houses depends on the demand, and if there is an overflow of cheap real estates in Kathmandu, this could lead to many house owners defaulting on their loans. And banks may end up going bankrupt, bringing down the economy of the capital city.

Kathmandu is already overpopulated, and the country should not plan to bring more people to the capital. The government should transfer the taxes upon private vehicles to subsidise public vehicles and end all existing syndicates that force private companies from investing in this sector. Bicycles should also be encouraged.

There is an acute shortage of housing in the capital and without creating a new urban centre this problem will not be solved. The new urban centre should be in under-developed areas beyond the hills of the Kathmandu Valley.

It would be an incredibly expensive endeavour to complete such a massive ring road project altogether. However, the state should acquire all the necessary land at the current rate, and then with the rise in housing demand, complete more infrastructure, while the lands must be sold to the developers as per the shortage of the housing needs, keeping a steady flow of housing and prohibiting a housing bubble.