Nepal’s policy failure is seen in building development infrastructure, improving public services, creating employment opportunities, involving the grassroots in planning and decision-making, channelling resources for women, poorest castes and classes and deepening democracy from representative to participatory form. Such failures have increased the risk of worsening human development and raising the number of those living below the poverty line, especially women, “low caste” and disadvantaged indigenous groups.

Statistics before the formation of Interim Parliament reveals that women were underrepresented in elected government (6 per cent in the Lower House). A World Bank publication reports that they represented less than 8 per cent in civil service and 4 per cent at officer level, a much lower percentage compared to South Asia. The Janajatis and Dalits — 31 and 16 per cent of Nepal’s population — fall below national average and well below Brahmins, Chhetris and Newars. Although some Gurungs, Magars, Rais, Sherpas and Thankali are better off in terms of education and income, they are less empowered in joining civil service. Inequality assessment and policy formulation should be our priority. The big challenge is institutional reforms, which will have conducive impact in improving these indicators.

Devolution of authority, capacity-building and accountability to local bodies have not yet occurred satisfactorily for consolidating the empowerment of the grassroots. The reason for poor devolution, according to UNDP, is the absence of partnership and other forms of collaboration which ensures that voices at the community level reach governing bodies. Most VDCs and DDCs are not economically viable. The population size, revenue base and institutions responsible for effective service delivery are not functionally effective. Therefore, to make Local Self Governance Act 1999 more productive, the municipalities, VDCs and DDCs need to be restructured.

For the improvement of institutions a model worth emulating has been provided by the People’s Campaign for Decentralised Planning in Kerala. This campaign, one of the largest experiments in the world, involves 31 million people for strengthening democracy and local empowerment. The Kerala model could be replicated as it ensures local empowerment, environmental protection, gender equality and sustainable development. It is also successful in increasing literacy rate, life expectancy, political participation, social justice and reducing infant mortality, caste discrimination, and religious violence.

Nepal’s economic empowerment score is relatively poor as compared to its scores in social and political empowerment. The current state of Nepali economy needs to be assessed to understand reasons behind rural and urban disparity. Although a surplus has been recorded due to increasing remittances, the fiscal position is weak with the budget deficit increasing to 37 per cent in 2005/06. Fiscal deficit has widened alarmingly to Rs. 6 billion due to reduced revenue and increased expenditure. Revenue is inadequate to fund public health, education and poverty reduction, making it extremely difficult to achieve the Millennium Development Goals. Hence it is important to look into the impact of diversion of scarce resources on sustainable development.

Even after the restoration of peace in April 2006, the growth pattern has not shown positive signs. Economic growth slowed to 2.3 per cent in 2006, which is half the government’s projection of 4.5 per cent. The agricultural sector was adversely affected by bad weather and political instability; service sector remained stagnant and manufacturing sector weak. The policy of inclusion and efforts for macro-economic stability should be designed on the basis of pre- and post-conflict trend and pattern of economic development. A basic pool of information is necessary to understand the structure of local economy (employment rate, number of jobs created, potential industries employing the labour force, etc.) and also the basic knowledge about how the economy functions.

The government reinstated through people’s movement is having to deal with deteriorating quality of life, erosion of manufacturing capacities, reduced productivity, accelerating unemployment, shortage of donor aid, shrinking international trade and widening income inequality. The question of empowerment and strengthening democratic institutions will be limited to slogans unless critical areas such as restructuring security arrangement, formulating immediate, short- and long-term implementable employment policies, restructuring poverty alleviation programmes that help build the assets of poor are immediately taken up in the development agenda. The important part of our analysis with regard to restructuring is the estimate of economic costs and management of resource allocation under Nepal’s federal structure.

Dr. Pyakuryal is Economics professor, TU