TOPICS: Promoting equitable growth in Nepal

King Bhumibol of Thailand announced his idea of “sufficiency economics” in order to provide food for all Thai citizens. Thailand was an agro-based economy until it underwent the process of structural adjustment professed by World Bank and IMF. But the structural adjustment failed to provide sufficient food to a large section of Thai rural population. This prompted the Thai government to look for options for “Food for All”. Given the concentration of wealth in the hands of a few after adoption of industry based growth model, Thai economists recently adopted the “sufficiency economics” model which emphasisesfood sufficiency through agriculture rather than industrial growth.

Since a large proportion of the population of the least developed and developing countries depend on agriculture, focus on agriculture and non timber forest products (NTFP) rather than industrialisation would make the future development more broad based, equitable and just. Nepal has an agrarian economy. It was a food-exporting country until 1970s. But with less emphasis on agricultural growth and more focus on industrial development, food has become a scarce commodity. Due to lack of capital and trained labour, the dream of the policy makers of attracting agricultural farmers to industry has been a pipedream.

The structural adjustment policy of IMF and World Bank stressed industrial development in Nepal. But how can there be any industrial development where there are no natural resources to exploit and the only comparative advantage industry, i.e., agriculture, is relegated to the backseat?

It is interesting to note here that carpet is the major export of Nepal, but it is promoting New Zealand wool as a backward linkage. Since agriculture and NTFP are our comparative advantage, we should promote agriculture and NTFP farming in the first phase and processing

industries in the second phase. This would help make growth broad-based and equitable. GDP growth based on agricultural is about four times more effective in reducing poverty than GDP growth based outside this sector (Global Monitoring Report 2008, the World Bank). In Nepal, the present growth model has led to a concentration of 53 per cent of the income among 20 per cent of the population (NLSS 2003/04). We can promote agro-based industries as a forward linkage and infrastructure projects as backward linkage. Investment in infrastructure and modern technology is essential for more encompassing growth. We have to scan our export data and identify niche product, for example, carpet.

Promotion of carpet export means we also promote animal husbandry for the supply of wool to this industry. This will in turn call for pastureland and forage cultivation involving a wide range of population in the industry. The new government therefore needs to give first priority to agriculture and agro-based industries and side by side promote NTFP and the service sectors like, tourism, finance, education and health.