Photo Source pradesh.com
Photo Source paradesh.com
– By Kamala Sarup

It is a well-known fact that any improvement in the law-and-order situation in Nepal must help improve the economy in terms of foreign investment, tourism, and, of course, in the daily economic activities of the masses.

As for longer-term improvements in the economy, both land reforms and education reform will be necessary. Education reform (ensuring basic education to all the children o school-going age and making secondary education possible for those who perform well in basic education) will vastly improve the economic potential of the country as a whole. It will also make it possible for young people to consider jobs beyond subsistence farming.

Land reforms (real land reform — not collectivization per se) would help break-up the feudal agricultural production system in Nepal. This would be an uphill struggle against well-connected vested interests and would also require small land-holders to organize into cooperatives in order to increase their negotiating power in order to sell their produce. Nepal should learn how not to reform land from The Philippines. The South East Asian country has been struggling to implement meaningful land reforms for decades!.

It is but obvious that economic recovery of Nepal will depend on improved security. However, restoration of law and order, favourable weather conditions and a strong external sector, among others, are necessary conditions for realising the economic recovery. Government must establish trade schools in every district where people are taught about income-generating skills such as electrical work, plumbing, brick laying, cosmetics and also the basic health care programs.

Government must initiate a National Literacy Campaign and challenge every literate Nepali to teach at least three more of their brothers and sisters to read and write within a year. In this way we could eliminate illiteracy within a year and achieve a literacy rate comparable to those of the developed countries. It will really help to solidify democracy in future.

“The (Nepal) government must encourage establishment of industries which enable her to be not only self sufficient in consumer goods but would also help her export products. The government needs to encourage production of non perishable fruits and vegetables, which can be exported to other countries.

The government should also promote electrification of rural areas by encouraging establishment of small hydroelectric pants and solar power,” said Dr. Khagendra Thapa, a distinguished professor at the Ferris State University, USA.

Though the Maoists called off their two-week long blockade on Saturday, it had already exacted a heavy toll on the country’s economy. Besides daily monetary loss, Nepali export industries are also losing their competitiveness and their image among the international buyers. If we accumulate the loss of all the industries countrywide the amount of daily loss would cross millions of rupees every day.

No doubt, general consumption gets hurt when normal functioning of the economy is disturbed. Though Nepal has a comparatively small economic base, a host of impediments exist in front of the business activities. It is the local partners of joint venture companies who are hit hard by such disturbances.

So, what the Nepal government should do to prop up the economy from what economists call the ‘conflict rate of growth scenario’?

It should pass laws, with high fines imposed on those who call for bandhs. (For Maoists, popular disenchantment should serve as a deterrent.)

The impact of the bandhs would be strong on the non-agriculture sector, especially service sector. Service sector contribution to Nepali GDP presently stands at around 50 per cent. The major setback of such undesirable agitation is that it destroys Nepal’s image. Investors tend to lose confidence when violence and bandhs frequently affect business activities. Confidence once lost is hard to be regained. All channels of distribution will be disrupted and, hence, effects of bandhs will be felt more by the local beneficiaries of joint venture companies than the parent company. Hence, the government needs to make every effort possible to end ‘bandhs’ in the country forever.

Each country is sufficiently different in a way that what works well in one country will not do so in another country. To move up the ladder economically in comparison to other countries, Nepal would have to import technology, including technical know how, but it has little to offer in exchange for it, just tourism and some articles requiring cheap, unskilled or semi-skilled labor, which have limited purchasing capacity. To make the matter worse, tourism has not expanded and continues to suffer due to the on-going internal conflict.

A cash flow analysis of Nepal’s economy might be a start to determine whether or not Nepal is able to move up the economic ladder or continue to remain on the lower rungs.

Last, not the least, popular participation in the decision making process and making people accountable—both at the leadership as well as bureaucracy—for their actions would also help Nepal to move fast in the way of economic development.