Nepali Times Asian Paints
ARTHA BEED
Economic Sense
Changing inheritance laws


ARTHA BEED


MIN RATNA BAJRACHARYA
FRAGMENTED FACADE: Streetfront traditional house in Kathmandu that has been developed separately by brothers who inherited the property from their ancestors.
Initiatives are finally being taken to scrap the age-old inheritance laws that make children automatic heirs to their parents' property. A panel led by Justice Khil Raj Regmi this week submitted a report recommending a change in the law so an inheritance becomes something bequeathed through a will rather than through birth.

The automatic transfer of property from parents to their children, especially given the rocketing prices of land and gold, has secured earnings for some people whether they have earned it or not. It has perpetuated 'rent-seeking behaviour' among Nepalis, wherein people do not feel the need to think of how to make money or pay their bills. Why take the risk of entrepreneurial pursuits when one can be content living off the rent from ancestral properties? This attitude has led to the mushrooming of the 'shutter' culture: people simply open retail stores on their ground floors, rent them out, and secure a monthly cash inflow without working at all.

In many corporate entities, the scions of the family automatically become shareholders and directors irrespective of their competencies. Ancestral land is often sold to finance lavish desires for these fortunate young people, be it the latest motorbike or resources to record an album or music video.

In a country where there's no state-instituted social security, surely having parental property provides a necessary cushion? However, this legal provision is usually taken as bait to ensure a good after-life than to face challenges post-retirement. The inheritance law stems from the Hindu principle of chain of command, where it is deemed necessary to hand over one's mantle (and property) to the eldest son in exchange for smooth passage after death. As Dor Bahadur Bista said, we are more concerned about the dead than the living.

We are a democratic republic now, but we are yet to become a real democracy, stuck as we are in a feudal mindset. We say we have become a secular country, but electricity subsidies are only available to temples. When we light lamps at inaugurations, idols belonging to specific faiths guard the entrance. The seating arrangements at conferences are still the same as they were during the monarchy. The king has been substituted by a head of state, but he still spends much of his time attending religious functions. It may be a transitional period, but if we are to evolve as a democratic society that is secular and equal, we need to ring in the changes.

A real democracy talks about equal opportunities and helps to foster a society where there is a level playing field. The challenge is to build a society based on merit and deeds rather than who your parents were. An inheritance law that is based on wills rather than automatic inheritance will definitely help us move towards a meritocratic society. Will-based inheritances will also minimise reckless investments in the non-productive sector. The need to draft a will should force people to plan for their properties and investments, and convince them to put their money to productive use rather than just buy land or hoard gold. But the most important side effect of this change might be that people will begin to think about how much property they should actually transfer to the next generation, and how much they should set aside for philanthropic purposes. This could usher in a new era of private philanthropy in Nepal, where people make social investments in schools, hospitals or old age homes.

www.arthabeed.com

READ ALSO:
Win-win-win, ALOK BOHARA
Good guys and bad guys, PUBLISHER'S NOTE
Patronising behaviour, PRASHANT JHA
A season to write, RABI THAPA



1. chandra Gurung

Sujeev,

You disappointed me greatly in this article. For the first time, I noted that you are becoming like those political leaders who start some talk on some serious issue and connect it with politics or some sort of populist talk. While I was hoping to read some thought provoking economic article from you, you degenerated into the same mindless platitude in the following passages:

"However, this legal provision is usually taken as bait to ensure a good after-life than to face challenges post-retirement. The inheritance law stems from the Hindu principle of chain of command, where it is deemed necessary to hand over one's mantle (and property) to the eldest son in exchange for smooth passage after death. As Dor Bahadur Bista said, we are more concerned about the dead than the living.

We are a democratic republic now, but we are yet to become a real democracy, stuck as we are in a feudal mindset. We say we have become a secular country, but electricity subsidies are only available to temples. When we light lamps at inaugurations, idols belonging to specific faiths guard the entrance. The seating arrangements at conferences are still the same as they were during the monarchy. The king has been substituted by a head of state, but he still spends much of his time attending religious functions. It may be a transitional period, but if we are to evolve as a democratic society that is secular and equal, we need to ring in the changes.

A real democracy talks about equal opportunities and helps to foster a society where there is a level playing field. "


Democracy? Secularism? What else, sir, federalism? Here at this column while talking about a legal issue related to economy?

Please be focussed.



2. Artha Beed

Dear Chandra Gurung

I have tried to spark a debate that is directly related to the economy. Due to our inheritance laws, rent seeking mentality persists and enterpreunership always takes a back seat due to 'security' provided by ancestral wealth...Columnists write not people to agree to disagree, but to ensure that their viewpoints are not ignored...its to continue the debate and continue to build a pluralistic society...

 

 



3. chandra Gurung
Dear Artha Beed,
I hope I didn't sound harsh earlier. I should have made it clear that the reason why I sounded harsh was because the article is not upto your standard. You have been better than it. 

I think the topic is good in itself, without throwing in secularism or democracy. This issue would have been relevant in 2046BS. It is really all about economy, and as a columnist writing on economic issue, you know it very well. When I said I was disappointed, that's what I meant.




4. Narbada Ghimire
 I don't understand the reason why secularism is taken as term for " atheism".  It means equal freedom to practice religion for all. A equitable, tolerant society aims to preserve religion and culture. Democracy provides opportunity for that. There are so many good things in our culture and religion, which are followed by West but we are forgetting  what we have and trying to copy and imitate all the time. Assault on minority and majority, all kinds of religion is not commendable. The writer is not explicit enough while trying to say whether  he is saying that there should be complete abolishment of Hinduism or  there should be equal rights to all religion. What's wrong in President as a head of state taking part in religious ceremonies? Can't we look like at that in different way, that a head of state coming from commoners family background is taking part in social affairs of so called majority groups and religion and the latter accepting him with pride and dignity. I don't even  think that president discriminates between one religion or other.   Nepal is known for religious tolerance. If you can strengthen it, that would be great, if not, be sensitive while writing on these delicate issues. On the other hand, talking about electricity in temples, I am assuming the writer is not aware of smuggling of priceless idols which are not heritage of Nepal and Nepali, some of them are enlisted in World Heritage. 
The article began with good opening, raised absolutely relevant issue but towards the end, writer began preaching like a politician with some hidden self interest and thus went off topic.


5. Rajaram
Secular pertaining to present world.or things not spiritual, civil,not ecclelesiastic,lay,not concerned with religion,observed once in a life time,generation,century or not bound by monastic rule or dharmic satyama abiswasi. In  Nepali;laukik,ehalaukik,samsaric,
 Dharma cannot be translated as Religion ; the nearest word for it is  Majahab. ,Mataor Sampradaya.Dharmahas many meanings:kartabya,achar, kanoon,prachalan,pratha,naitikgun,neki,ramrokam, nyaya,adhikar,auchitya,pabitrata,prakriti, swabhav, charitra, satsangha, bhakti,riti riwaj,etc-refer Apte's  Sanscrit dictionary.
 Nirapexya-without, unnecessary,, neutral, not adherengto either party, indifferent.
So tatastha is a better translationthan Nirapexya.Why imitate poor Indian semantic.? It can be Majahab Nirpexya, not dharmanirapexya, .it can be Mata nirapexyaor Sampradaya Nirapexya.
For example,religionand its denominations are Matas;Hindu matah,Buddhist matah, Islam matah, Christian matah, Sikhism, the  Catholic,etc,nihilism,atheism, including Marxism,communism , capitalism, socialism, opinion, man made rules, etc.
 Dharma is the essence and one universal ethical ,moral real ,awareness.it is a subject of science of values something coming from within yourself spontaneously,a spiritual experience.Secularism  is utilitarian ethic., designed for the physical,spiritual,and moral improvement of mankind which neither affirms nor denies the theistic premises of religion; as per Encyclopaedia Britannica.  There is no dispute about making the country secular. The copying of a bad translation in Hindi In India must be corrected in our country. We don't have to make a caricature of ourselves. Let us say in Nepali Matah Nirapexya  or Sampradaya Nirapexya or Dharma Tatastha or Majahab Nirapexya.
Secular is hardly used in  any constitution as title or titular way.  The founding fathers in framing the (Indian Constitution  did not find it necessary.   The original text of the Preamble of the  Indian Constitution  did not contain the word Secular. It was added only in  1976 as a populist  act by the then ruler.
 Best way will be to replace a word which has not been given  Definition propery by following European model like;
Freedom of Religion and Conscience ; i. e. Neutrality in religious matters,equal treatment to all religions.
Sarva dharma Sambhava.
 Likewise the Original Preamble of Indian Constitution also did not mention  the Word Socialist  before Republic. It was also added in 1976. The founding fathers  did not want the Constitution  to be wedded to any particular political ideology or - ISM  or to be limited by any economic doctrine. They did not agree to any reference inter alia to Socialism. But did mention to resolve to secure to all citizens economic justice,and equality of status and opportunity.







,








6. Dr B
Never mind the quality of the article, what about the quality of the comments/debate!?
Someone picks on the use of the word "secular", and before you know it we have a full blown debate on the damned definition of the word and chastising the author for not mentioning the stealing of priceless idols from temples!
For goodness sake the article is about inheritance laws and the effect this will have on Nepali society, certainly economically but also culturally too. 
What happens today when a parent has one son and one daughter? What could happen in the future?
What happens today when the son is unsympathetic and uncaring towards his parents in old age? Would such behaviour be mitigated under new inheritance laws?
How do sons today plan for their future when they KNOW they will automatically inherit everything? How would this change?
My wife's family comprised three brothers and three sisters. During her parents old age one son cared for his parents relentlessly, one son ignored his parents, one son was an absolute misery to his parents with his criminal activity in many cases. When the parents died guess how the property was divided and how would this change under a future law?
I have in-laws who have two sons each, both who have wasted parents funding on meaningless education overseas, returning to Kathmandu to live a life of idleness knowing they have only to "survive" to inherit substantial property and businesses. Both sets of parents are completely ignorant of retirement planning or any other form of financial planning for that matter.
I have another friend who inherited a sum of money sufficient to build his own property and we advised him to build a two story property with a home for his family on top and a lower floor area for a business of some sort. We spent a long time trying to help him decide. Eventually, guess what? He built a two storey edifice, both living space, and rented out the lower home. This was five years ago. Today, he has nothing to do, no work, no business, and survives off the irregular income from semi-squatting tenants.
THESE are some of the issues that will be touched by the change to inheritance laws, so continue your discussion of secularism, ignore the major change highlighted by the author, and all will be well! Not!


7. chandra Gurung
Dr B

That's exactly my point--and I am assuming you too couldn't see it.

The issue was legitimate, but the author throws in buzzwords from politics and what not, and the issue was distracted. It is not the commentators who need to be blamed for this, IMHO. 

Beed lost focus as he diluted his main message with the contemporary political theme.

I see lots of students in the states, who waste their time in low ranked universities, who keep on getting money from home to spend on unsalable skills from these lousy school, and then blithely tell me that they have a business back home. If only they had the pressure to make money, they would have been more focussed on their schooling, and spent time trying to learn salable, practical skills thus benefiting the country that had to fulfill their foreign exchange request..


8. Dr B
Chandra
Thank you for your considered response.
The thrust of my post was aimed at the commentators who followed you rather than yourself, although you raise an interesting point or two.
But first a question: You were assuming I couldn't see what?
When I read an article such as Beed's I subconciously take three factors into account; the central tenet of the article or argument, the particular leaning of the author, the writing style of the author. Of these three the latter I completely ignore. I have no interest in nor understanding of it and I try to cut through it like a knife through butter metaphorically speaking. The second of these is of passing interest, it informs me of whether the writer has a particular bias or leaning politically, whether he has a personal axe to grind (there's that stylised metaphor again) or whether professionally he sits in a particular camp. So, in my country a socialist leaning member of the medical profession may write an article completely different but on the same topic from a member of a patient pressure group who is a paid up member of the Conservative party. It informs me, but does NOT detract from my first factor, the central tenet of the article. 
In Beed's case it is about inheritance laws and interested me because I had never paused to consider possible changes in such an area before. It made me think about my wife's family and what effect it might have had on the sisters who got nothing, it made me think about the wastrels on my in-laws side, and then it made me think about the wider implications on a greater Nepal. 
I realise that you personally had not written about secularism or stealing from temples but you had critiqued the Beed's style and his use of other examples in Nepali society where the opportunity for fundamental change is missed completely because of particular mindsets. 
IMHO this article is too close to the truth for too many to stomach!


9. AiDeeAh
If the idea is to minimize the number of people living off an inheritance, merely requiring a will to determine who your property should go to is unlikely to change much. It's not a bad start and is better than all your property going to your son but it doesn't go far enough to be really effective. You now need to cough up a few thousand rupees and hire a lawyer to draw up a will and you can still give all your property to your son or daughter and they can live off  the money for the rest of their life without lifting a finger. Is that really a meaningful change? Unless we have an enforceable inheritance tax that strictly taxes inheritance above a certain amount, nothing much will change.

Also, many of the richer families in Nepal  tend to be  fairly well educated and are acutely aware of potential issues related to inheritance and tend to divvy up  property - ansabanda - when the parent are alive. In which case a will becomes moot. 


10. aawartan.org
A few things that this article makes us ponder:

1. An awareness and a choice to parents: Many young and old parents in Nepal cannot think of giving away their property to anyone else even when they know they do not have a worthy son/daughter to transfer the wealth to. This law will empower them to choose. [Thinks of those thousands of parents rotting in Devghat.( Quite a few jump into the river every year.)]

2. Because the parents have a family business (small shop, retail business, or factory etc.), kid(s) are **always** asked and expected to carry the business forward because they are told she/she is the one who will inherit it, so has to manage it, despite the fact that the kids are not interested in continuing it.[Think of a gay kid being asked to "appear" straight because of family pressure!] The kid(s) now have a more favorable environment to say a proper no to it and pursue their heart.

3. This we hope will be a far better solution than the previously discussed equal inheritance rights to girls and boys.

4. We could very well implement death taxes too which will further erode the "rent-seeking" attitude. But since the Nepalis do not believe in government spending their money wisely, this will have to wait a few more years.

@Beed Chandra Gurung, like many of us, is sick to his neck of the Nepali politics and does not want an economics columnist like you to be linking this paradigm with Nepali politics the way "illustrious" Nepali politicians do in "bhasans" all the time. At least that is what he is, we believe. 

@Dr. B, a very practical comment.


11. jange
Has the Beed read the report?


12. jange
We should get rid of the concept of inheritance altogether. Use it or lose it.

Would do wonders for economic development as people scrambled to spend before they died.


13. JPT Bro
Nepalese and philanthropy? How come all the rich folks in Ktm don't sell some of their property while they are living right now and give to charity? Charity is not in our blood. Indians too are the same. Ambani and his 1 billion dollar house. Bill Gates & Warren Buffett give away billions to charity. Tha 3Fs of Nepalese mentality - Fokotay .... Free .... Fittan!! By changing probate laws ... will a will or living trust change this scenario in Nepal? I highly doubt it.


14. chandra Gurung
Jange,

If inheritance system were really bad, it wouldn't have existed for so long. For example, suppose we have 'use it or lose it' law. Then, even extremely talented successful people will call it quit once they think they have more than enough money for their survival. Or they may find devious ways to work in their children's name. There would be a lot more complications, and that's why this inheritance system , which is very simple, survives.

The best way to stimulate some spending is to impose heavy tax, but not eliminate the inheritance system altogether. 


15. Sargam

Before any nosedive action is taken to amend the inheritance laws, we must think about the pros and cons of the same. That means whether the law is equitable for everybody or not.

Inheritance in itself is a very delicate societal issue, for sure it is. And there is hardly any appropriate nostrum to satisfy all the members of the family concerned. But, on top of all that, if we dream of an egalitarian democratic nation we must make some concessions, such as no more mention of gender's priority. Both male and female genders should be on equal footing holding equal parts in usufruct, and the inheritance should be bequeathed through a testament or a will instead of through birthright.

While we are at it, why not make atonement for the wrong done in the past because of our ancestral traditions of always favoring the eldest son of the family who is a cut above the other siblings either males or females.

And the government's inheritance taxes should be applicable in accordance with the amount in question and the use made by the beneficial owner, either he makes investment of a dollop sum to create wealth or he spends it carelessly at random.

Here is food for thought!?!



16. SheetalB

Great Discussion.

I think this law will also address problem for married couples who only have daughters and hence their inheritence is all taken by their nephews because of ignorance on their part that nephews will have them die peacefully and hence need to give them their wealth to them while the daughters get nothing from them.

Also, for married couples who do not have any children. I think at present, their wealth is taken by the nearest relative but this law will force them to think about giving it to people who need or deserve the money.

A 'will' will also force the sons/daughters to think about their parents even if it is for the interest in the share of property.



17. hange

This is one of Artha Beed's best articles.  The only way to become a truly secular society is to move away from our religious dispositions in legal and government affairs. 

Chandra Gurung, secularism and democracy go hand-in-hand: you cannot pretend to be an unbiased state when favours are given to one religion or another.

Narbada Ghimire, no one has said that secularism and atheism is the same thing; equating these two items is the tendency of Hindu hard-liners who wish to scare the general population into thinking that if we are not a Hindu state, we cannot practice Hinduism. All Dr. B is saying is that at the legal level, we cannot use religious law.  We are not Bangladesh/Iran/Pakistan/etc (thank goodness!).  We no more need a judiciary based on Hindu scripture any more that we need Sharia law. 

The point is that in a secular society, people decide what they want to follow (or not follow for that matter).  Any religion is okay to follow, any belief is fine insofar as it does not trample on the rights of others.  The fact that the state no longer directly sponsors Hinduism is only a concern to those Hindus who lack self-confidence in their own faith.  Who said anything about anyone not being able to follow Hinduism under what is supposed to be a secular democracy?



18. K. K. Sharma
Using political jargon was not so good.  Beed does not deal with operational constraints and ramifications of his proposal. 

What percentage of people does Beed have in mind.? Is he thinking of rural people ( are they rentiers ?)   Will his recomendation provide scope for employment, for the deprived ( disinherited ) children ? Is there sufficient employment opportunities being created in Nepali economy to employ all ?  Can such children, deprived of inheretance, have investment potentials? Have no inheritors invested in productive enterprises ? What percentage of the inheritors are idle and what percentage of the inhertors have been innovative with the seed money obtained as inheretance ? Will the property given by formal wills to one child be better than the property given to all the childern.? 

What is the status ( efficiency) of our legal system (judiciary) to cater to the wills made by the parents. Who oversees who makes what will? Who protects the wills made by the parents? Who gurantees, and how, the wills thus made , to be administered properly.? Who examins the validity and authentitcity of the wills ?.......... one could go on and on. 

Is he just rationalising his jealousy. ?

Disappointing that a person like Beed should sink to superfecial writing.  


19. chandra Gurung
Hange, 

Not so fast. What makes you an authority on secularism? Like an uncontrolled radio, you keep on spewing your own definition of secularism. Where do these definitions come from?

I don't think a Hindu country (or Buddist country, as far as I understand) puts restriction on your thought process, or on your action. While I am a democrat and I am not going to go against recently promulgated secularism of our country, I would be careful with your likes who licentiously redefine what life under Hindu kingdom (or country) are like.


20. Artha Beed

Dear All

thank you to all for such stimulating thoughts and debates...as I said in the column, we need to develop a pluralistic approach to issues be it inheritance or securalism...for this beed, all these issues have bearing on the economy so at times issues may just sound political...as an eternal management student, I always believe in the 10% take away with each issue I read or a session in a seminar I attend...I do not believe in perfection..I just believe in generating some good thoughts..

 



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