BP Koirala, Nepal’s best known socialist leader, understood the value of democracy, private initiative and work ethics well. At the same time, the consideration of social justice was of paramount importance for him. He considered democracy indispensable for achieving socialist goals. Indeed, socialism without democracy leads to an autocracy seen in communist countries and other one-party rules. Democracy without socialistic orientation and devoid of justice and humanity, on the other hand, will not be sustainable. It will degenerate into plutocracy. Rather than fighting over doctrines, the world today is witnessing the convergence of philosophies. Communist regimes which believed in the dictatorship of the proletariat and centralized economy are adopting market economy to spur economic growth and prosperity. Capitalism is assuming human face by including welfare programs to reduce poverty, narrow disparities and ensure social justice and equal opportunities.
BP did not succumb to populism by raising popular aspirations he could not fulfill. It will be relevant to recall his presidential speech to the seventh convention of Nepali Congress in Kathmandu in 1959. He urged party delegates not to fall prey to populism but accept the reality that it is not possible for a poor economy to meet people’s basic aspirations without hard work and higher productivity. He asked party workers to be bold enough to tell this bitter truth to the people, as the need of the hour was further hard work through the mobilization of available resources.
PHOTO: THE AMERICAN
THE FALLACY
It is often alleged that market reforms will reduce government obligation and its role towards the people and economy. This is a fallacy. Liberal economy cannot function without a strong government. The government role in business and commerce, as investor and manager, will certainly decrease, as no government has a proven track record in this respect. State has a stronger role to play in creating infrastructure, protecting environment, securing life and property, ensuring fair play and rule of law, reducing disparities, and providing education and health care to citizens and welfare programs to the poor and marginalized. Instead of overstretching state capacity by expanding the scope of functions, its scope should be limited to its primary functions, where it is best suited and can be the most effective.
A careful observation of public expenditure pattern in Nepal since 1991 shows that public expenditure as percentage of GDP has risen, which demolishes the theory that government role has shrunk since the start of liberal reforms. Public investment in social sector has increased significantly to around 35 percent of total budget as compared to about 25 percent in the pre-reform days. Higher social investment made it possible to reduce poverty, increase longevity, spread literacy, improve girls’ education, as well as to reduce maternal, infant and child mortalities.
STATE INSTITUTIONS
Development is not a function of economic variables alone. The role and strength of state institutions is equally important, but often taken for granted. The dismal aspect of present Nepal is the erosion of state authority, and deteriorating quality of its institutions. Notwithstanding the significantly increased investment in social sector, the quality of public sector education and health services has deteriorated. Inefficiency, low productivity of public investment and lack of effective supervision and regulation have further contributed to public-private disparity.
Constitutional organs like the parliament and its committees were effective to an extent in controlling misuse of power. But particularly after the dissolution of the Constituent Assembly/Legislature Parliament, no such institution exists. Self-seeking politicians have converted national centers of excellence into their personal fiefdoms. The latest examples are the PAHS/Patan Hospital and the Kathmandu University, where institutional leadership, not ready to compromise on values and professional ethics, was abruptly changed. Civil service has been weakened, key institutions like the Ministry of Finance which often prided itself for its clout and professional approach is being de-professionalized. Proximity to ruling clique and corruption has become the criteria for key appointments.
Weak governance, poor security, industrial unrest and labor militancy have vitiated the industrial climate and the country is almost at the deindustrialization mode. Manufacturing sector’s contribution to GDP had risen to about 9 percent in the year 2001 from about 6 percent a decade earlier. Thanks to the Maoist insurgency, and consequent political instability and uncertainty even after the start of the peace process, the share has come down to about six percent. Export-import ratio, which had risen to about 60 percent, now stands at a paltry 16 percent. The poor business environment is reflected in Nepal’s dismal ranking in the Doing Business Report published annually by the World Bank; Nepal stands 108th, further deterioration from its 107th position in 2011.
COMPARATIVE ADVANTAGE
Hard working, young and dynamic Nepalis have proven their mettle at home and abroad. Today, they are using their muscles and skills in Gulf countries, India, Malaysia and elsewhere. This precious asset and well known natural resources should be the foundation for our prosperity. The unparalleled ecological diversity and agro-climatic zones within limited space has the potential of making this country an agro-power, with the potential of growing practically any agro- and forestry product. Specialization in carefully chosen products can give us a significant edge in this sector. Because of road connectivity in parts of mid-hills, our young men have already started growing products that sell both in domestic and external markets. Off-season vegetables grown in Nepali mid-hills have unlimited market in India.
The Tarai region with its semi-tropical climate and proximity to India’s vast market is our food granary and manufacturing hub. The tourism diversity that has developed in the country within a short period, thanks to the entrepreneurial genius of private sector, is already making the country the tourism capital of South Asia. The country has one of the best climates in the world. The climatic beauty and time zone advantage are others assets that can be harnessed to make the country a hub for service industries including education and health, and outdoor sports like golf and cricket. One can already see growing business interest in these fields.
At a time when climate change and global warming have become an issue of serious concern, Nepal’s well-known potential as a clean energy powerhouse of South Asia offers us enormous opportunities. Unfortunately, excessive politicization has inhibited its exploitation to the extent that we increasingly rely on power import from India, even for our domestic needs.
PRIORITY AGENDA
The world is moving fast and prospering. Economy now occupies the center-stage everywhere. Nepal is lagging behind because we ignore this priority agenda. We continue to waste time in false promises, abstract platitudes, dividing the society and sapping the creative energy and dynamism of our people.
The roadmap to economic prosperity is clear, and one does not have to invent new things. We can learn from own experience and look around for good practices to suit our conditions. The country can progress only with a policy that encourages hard work, entrepreneurship, innovation and creativity. Countries without natural resources worth the name, but which possessed strong state institutions, have achieved unparalleled prosperity within limited time under policies that rewarded these qualities. No country without these attributes has achieved economic success in human history.
Populist policy and claptrap rhetoric that characterize national scene today do not bring development. Preoccupation with short-term interest hampers long-term development prospects. The country’s resources where comparative advantage exists are well known. Under the right environment, we can attract capital and technology from all over the world. The dynamism and creative energy of our people must be mobilized by creating conditions of peace, and rewarding innovation, enterprise and work discipline. Rather than making them dependent on state handouts, our youth must be taught to be productive. Young returnees who have gained job experience abroad are setting an example by producing and earning more in their own backyard through the utilization of their learned skills, and thereby are contributing to nation building.
This is the final part of a two-part article. The first part which was published on Nov 22 (Thursday)
Related story
Kathmandu Road Division Office starts blacktopping road demolis...
-1773673205.webp)
-1200x560-1773818828.webp)
