Nepali Times
Economic Sense
Rx for Nepal


After the institution of the interim government in Nepal, the Beed has been bombarded with questions: about the future of the Nepali economy, and developments in general. But, the festive season has perhaps turned the Beed temporarily into an optimist. So here's my suggestion: why aren't we asking what opportunities this situation provides, instead of looking at it from the traditional Nepali perspective of failure and disaster.

While an efficient democratic system is often held to be the foundation of a good economy, it isn't necessary, evidently, that economies only flourish under a participatory democratic political system. Look at Singapore and China, or the complexity of the Indian economy. Strong political will can override the limitations of any system. A political system by any old name is still about governance.

If it's true that elections aren't possible before November 2003, let's just put up with the interim government and get on with preparing for our future which, one way or the other, will eventually come to pass. Do we really need a bicameral legislative system or can we do with fewer lawmakers. Do we need the multitude of ministries and 75 districts that bloat administrative and government costs? Do we really need a planning commission? Perhaps a single ministry can take care of finance, local development, planning, implementation and control.

Eminent Nepali scholars have dealt with all these matters-Dr Harka Gurung on district divisions, Madhukar Rana on the integration of ministries, Dipak Gyawali on restricting the possibilities of making politics a life-long profession. Nepali academia comprises people who can hold their own even outside lecture halls. If the interim government recognises them, and the donor community can fund well-advised, if radical ideas, this phase will be worth it.

The prescriptions for the economy are clear: improve revenue, reduce costs, decentralise decision-making and punish the corrupt. Governance, foreign investment and a conducive business environment will follow automatically. It's vital to reduce the cost of government, and continuously monitor corruption. One way to begin doing this is legitimising campaign finance and demanding transparency.

We need at most 15 decentralised financially autonomous regions in the country. Parallel to this, the central government needs to be reduced drastically to 10 ministries, and departments within ministries need to be slashed. A donor-supported enterprise development and training fund can be created by the government to take care of government servants who are let go. Pension money outflow would go down, and perhaps a lot more space would be available for remaining employees to function efficiently, possibly through a substantial performance-based increase in emoluments. Maybe we'll finally realise how weird it is that offices in urban areas close at 4PM in the winter. Fewer parliamentarians will mean fewer ministers, too. A unicameral 125-member House should dovetail with the division of local government, the key to development and empowerment.
Revenue collection needs to be reorganised and GDP must be examined in light of total revenue collection. Increased revenue may come from higher land revenue taxes and no income tax, or through expanded economic activity that emerges out of conducive tax laws.

The Beed has discussed all this before, but this provides a good opportunity to pull everything together. There is an opportunity for administrative and other reforms. The interim government can set the stage for democratic institutions, including the political parties, to contribute better after the next elections.

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(11 JAN 2013 - 17 JAN 2013)