Structural reforms are inadequate to alleviate poverty and ensure food security in Nepal.
The country lacks adequate, proper and complete implementable policy recommendations on poverty. It necessitates an overview of poverty alleviation initiatives in terms of agricultural reform and its implications on food security to build up a definite perspective on domestic market reform and food security. There have been satisfactory improvements in economic and social indicators over the last one decade. Poverty is, however, still widespread since the incidence of poverty has not been declined significantly over last two decades. Government interventions have not been successful in reducing wide variations between rural and urban poverty because of the absence of rural-urban economic linkages, inaccessibility, and inadequate investment in the underdeveloped areas. It is observed that poverty incidence is higher for occupational caste groups. As people in the high per capita bracket have better access to productive assets, it is necessary to emphasise improving the poorâ€™s access to resources by removing institutional constraints.
The challenge South Asia faces is to bring about a shift of labour and other resources from the low-productivity primary sector to high-productivity manufacturing for achieving higher living standards. However, over-emphasis on macroeconomic reforms without properly addressing other important issues such as weak entrepreneurship, poor technology, untrained
managerial and technical personnel have made reform measures ineffective in correcting South Asiaâ€™s structural inadequacies. In Nepal, urban poverty declined at twice the rate of poverty in rural areas indicating higher degree of inequality. The lesson: structural reforms are inadequate to alleviate poverty, and moderate growth could not trickle down to the poor. It necessitates finding out the effects of domestic policies that relate to agricultural liberalisation and market reforms on food security and poverty. Poverty and food insecurity are interdependent. There is a lack of study on the characteristics of households under the poverty line. Food insecurity has prevailed for reasons such as the limited access to resources, education, harsh environmental conditions, larger family size that prevent occupational castes from adopting occupations of their choice.
Public expenditure was increased in the rural sector for alleviating poverty with an aim to increase production, productivity and income distribution through reform programmes in agriculture, forestry and unorganised sectors. The target was to utilise employment and income opportunities for the poor by emphasising social security, physical infrastructure and human resources development. The government deregulated the fertiliser trade and removed support to farmer-managed irrigation systems and shallow tube-wells. The involvement of private sector in the distribution of food grain offered an opportunity to get food at competitive prices and the withdrawal of subsidy to urban areas reduced budgetary deficit. However, due to inaccessibility, the food prices are much higher in remote areas. The conflict has further disrupted the food supply system.
The impact of liberalisation on agriculture is mixed in terms of productivity and income growth. It is assumed that real wages and job opportunities have declined after the liberalisation. The per capita agricultural growth rate and productivity are believed to have increased partly because the farmers unofficially imported the fertilisers taking advantage of the open border with India. The villagers household income and the job opportunities have improved not so much by improvement in agriculture but by labour migration through the remittances. The NLSS II (2003) shows an increasing per cent of households receiving remittances during 2003/04. It was 23.40 per cent during 1995/96 and reached 31.90 during 2003/04.
One of the main reasons for the increase in productivity was the increased availability and use of fertiliser due to private sectorâ€™s involvement. However, considering the decline in the sales of fertilisers from 47 to 24 thousand MT during 1998-2001, one may say that Nepali farmers are using the illegally smuggled fertilisers through open border. It is generally estimated that as much as 20 per cent of fertilisers may enter Nepal through illegal ways. Food grain production has not kept up with the population growth rate. From livelihood perspectives, the governmentâ€™s major mission should be the eradication of hunger poverty. Reduction not just in the percentage but also in the absolute number of the poor is desired. Reform may have crossed the hunger barrier but most people are still faced with the challenge of poor diet. To ensure adequate safety net measures for the poor, the budgetary allocation goal should be more realistic.
The mechanism to update the incidence, intensity and severity of poverty has not been fully developed. Therefore, the tracking and monitoring of poverty trend had always been a problem in judiciously allocating scarce resources to priority areas. In this regard, the impact of National Planning Commissionâ€™s integrated set of instruments under Poverty Monitoring and Analysis System and Poverty Alleviation Fund is yet to be seen as a new targeted instrument to implement poverty-related development work by reaching poor and excluded communities by reasons of gender, ethnicity and caste.
Prof Pyakuryal is president, Nepal Economic Association