There were discrepancies after the restoration of democracy in 1990 in the sense that the political parties fell short in creating an ideal society (equal distribution of income, free from exploitation and corruption, equal footing in creating and distributing

opportunities, vision in the balanced development

approach, rational utilization of state property

etc) within the framework of globalization and liberalization. Grievances over the performance of the leaders amplified as the aspirations passed on into frustration and pessimism. Hence,

the quick spread of

Maoist movement making Nepal a failed state in the world order.

It had to change somewhere and somehow. The People’s Movement 2006 restored democracy while getting rid of the so-called autocratic monarchy. However, the country has not been able to taste the fruits of the Federal Republic. Contrary to expectations, people are being hammered by unexpected price rises, widespread unemployment, and unequal distribution of opportunities and income. Good governance is lacking thereby offering safe passage to rampant corruption and fraud. In addition, the law and order situation is pathetic, the peace process is lost, and progress, if any, in drafting the constitution is frustrating. The biggest party in the Constituent Assembly is out protesting in the streets. It is nothing but political darkness and financial indiscipline.

With political instability, the country is wasting its limited resources in unproductive sectors. There is a strong positive relationship between rising political instability and misuse of limited resources. To make rational decisions on national issues, it becomes necessary to formulate a national government represented by all the parties in the CA.

Nepal is located between the most emerging and economically prosperous countries of the world. India has recorded 6-8 percent economic growth rate per annum since the last fifteen years. China is the fast growing economy in the world with economic growth rate ranging from 8-10 percent per annum since the past two decades. These miraculous and dramatic achievements in the economic front of our neighboring countries have not been quite able to influence our economic condition as the overall performance of the economy is poor with 2.7 percent economic growth during the last decade. Nepal and India adopted liberal economic policy since 1990 with more similarities than odds. For example, both have been adopting multiparty political system, both depend on agriculture; both have problems with the basics like food, education, poverty, and many more. The only dissimilarity between Nepal and India is that Nepal is small and landlocked with disappointing economic performance whereas India is big with huge access to sea making rapid economic progress to register itself as the world’s most emerging economy. The annual economic growth rate of India still is above 6% despite recession plaguing the world. The relationship between the economic growth of landlocked and sea locked countries reveals that 1% increase in the GDP of sea locked countries would increase the GDP of land locked country by 0.4% on an equal developmental pace. These evidences are not applicable to Nepal. If they were then Nepal’s economy would be at least 40% as good as India’s or even China’s.

There are various reasons why Nepal has not progressed as much as it should have. First and foremost, Nepal is plagued by political instability. The data published by Human Development Report 2009 reveals that the annual average growth rate of per capita real GDP for Nepal was 1.9% during 1990-2007, while the same for Bhutan, India and Bangladesh were 5.2%, 4.5% and 3.1% respectively. Similarly, Human Development Index (HDI), which is based on the combined average of income per head, longevity and education index, shows that Nepal has the second lowest HDI value (0.553) among the member countries of South Asian region and 144th out of 182 countries. The same for Bhutan, India and Bangladesh was 0.619, 0.612 and 0.535 respectively in 2007. These countries have maintained minimum political stability required to continue economic development. These indicators proves that Nepal is not inspired/influenced by the development of the economies of its neighbors.

Restoration of political stability, thus, can be considered as a prerequisite for economic progress. It reduces the allocation of limited resources in unproductive sectors which can be channeled into the most productive sector. Defense expenditure can be reduced to a minimum once political stability is restored.

Formation of inclusive and transparent government represented by all the parties in the parliament is a need today. It can break

ongoing political stalemate which is needed to

bring peace in a logical order and maintain security by enforcing the effective laws needed to carry out economic progress. If we ignore the experiences from the past, it will be unfortunate for the country.

Dr. Dhungel is Associate Professor, Department

of Economics, TU

— kamal.raj.dhungel@gmail.com