Nepali Times
Economic Sense
The business of banda



On the Monday after the valley came to a standstill due to yet another banda from a party that seems to have become irrelevant in the new political equation, a dear friend of the Beed remarked: "This may tempt the ex-king to make demands of his own and call a Banda." On the same day, investors closed the stock exchange for two days and pushed the government into loosening up a bit on margin lending against stocks. So if Nepal is to liberalise, it ought to tell foreign investors in fine print: there is a risk of business closures during abrupt holidays called for lunar, solar, ethnic and political eclipses, and the stock exchange can also be closed by anyone who makes his way onto NEPSE premises.

For everyone, closure has become the ultimate tool to use to get authorities to listen. And, it seems, authorities only indulge the habit by waiting until closures to act. Therefore, the Nepal Rastra Bank (NRB) will wait until all the people who have invested in real estate come and gherao it before it reviews its earlier decision on real estate lending.

The margin lending against shares is a classic way in which government just does something weird and never follows up. First of all they had a policy that people could borrow against shares freely with no restrictions. So everyone started pledging certificates and then getting money. That pushed the stock market. Then they decided, this should stop and put in a strange rule that one could only borrow 50 per cent against stocks valued based on 180 day pricing and which cannot be renewed beyond a year. So it did not matter whether you had stock of blue chip companies or fly-by-night operators, the rule was the same. The quality of assets did not matter, only the value did. Then the NRB decided not to pay attention to revising this by instituting a system of valuation or ratings to ensure that people with better stocks could borrow more for longer periods and people with bad stocks could not borrow a rupee. After three years, when their patience wore out, the investors started to stop trading and suddenly NRB decides to take a decision.

There are many policies that have not been reviewed for the past couple of years. Everyone lives for the present and political parties are more interested in the short run in selling government positions than doing something good for the people. The fact that we have a weak finance minister right now does not help. As someone who has been on many missions to Nepal told me, "This finance minister is probably the worst we've had since 1950." The finance ministry did better during the king's direct rule.

The business of closure that was just introduced in Nepal after 1990 has taken deep roots in our society and culture, and has grown into something very ugly. How do we end this? Perhaps we should begin by preventing kids from causing obstructions during Shivaratri. That way, we'd catch em young.

1. Arthur
Perhaps the next time a Maoist led government proposes an end to bandhs the Congress and UMLs will understand the consequences of refusing.

2. Anonymous
Thank you for your commentary on the subject. The reason why there are so many closures is because politics has gained primacy over every aspect of life. And this democracy is led by the most unimaginative bunch of power hungry people.?I agree with you (naturally) that policies which should be driven by common sense are instead designed to tackle the most short term concern of the authorities involved.?

Yet, I am convinced that at the core of this decline and the complete loss of sanity lies the erosion of culture and of values of Nepal. Politics is rotten, there is no one left to trust, no religious nor social authority. Families are completely broken with no one left to care for the future generation. After all, what values would they pass on!!?

Unfortunately, there is no economic or social commentary that would help solve this problem. The only hope lies in the merciful nature of time.

3. jange
But why is this wrong? Nepalis have accepted and welcomed the principle that it is right and justified to kill fellow humans for what one wants. Surely a banda is more acceptable than killing.

(11 JAN 2013 - 17 JAN 2013)