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Economic Sense
Nepalonomics at five


It began with finding an appropriate pseudonym. Today, Artha Beed is five years old and introspection is due.

Most Nepali economists-and there aren't many-identify themselves as 'intellectuals' and continue dishing out old wine in old bottles. Analysis of the Nepali economy is usually confined to seminar papers. If it is a book, the author's CV is on the back page, and the appendices and references outweigh actual text.

Graph-savvy 'parachute consultants' have always just added more references of their earlier published works and footnotes but contributed no meat to the analysis. The advent of electronic word processing made the Rastra Bank's work easier but its research department has been interested only in delivering the same set of information.

The business community hasn't bothered about the economy because most can influence policy in other ways. Serious people rely on the Economist Intelligence Unit or Control Risks Group for real analysis about the Nepali economy. Even after a decade of insurgency we haven't seen published work on the economic impact of the conflict apart from the cut-and-paste reports.

Here is an example: the lack of proper analysis has made us believe that tourism in Nepal has suffered due to the insurgency, while it is actually supply outstripping demand that has led to the fall. Every tourist who comes to Nepal has three beds to choose from. The absence of self-regulation has killed the industry, not the insurgency. Five-star hotels selling rooms at $ 15 have forced other hotels to shut down. If they could have agreed to jointly maintain rates, not only would they survive but so would the smaller fellows.

Then there is the Beed's favourite topic: the magical 1.6 exchange rate between the Nepali and Indian rupee. This is a political exchange rate but no economist has come up with a sound justification against it.

Business groups, their umbrella organisations, the corporate houses, none of them have full-time economists. No surprise there is no fresh perspective, no long-term vision, no forecasting. The same 10 people are seen to be commenting on the economy on tv and in the business pages day in and day out, that is when they are not junketeering. Business journalism is not an in-depth look at privatisation or investigative reports on 'No Oil Corporation', it is superficial page fillers.

What is Nepal's foreign debt position likely to be in 2020? What would the long-term impact of new pension decisions to government employees be ? What is the consequence of increased security spending? What happened to the asset report on Royal Nepal Airlines? Writing on economics and business is not easy, it requires rigorous research, reading and poring over documents and statistics to interpret them for readers.

But apart from some hardcore Beed addicts, the Nepali readership is not prone to feedback. I could do with more comments. Please vehemently disagree with me.

So, older and wiser, let's take the opportunity of the fifth anniversary to relearn some mantras:

. Economic growth is directly correlated to economic freedom, which is directly correlated to political freedom.
. Poverty can only be alleviated by creating wealth, as the concept of poverty is all monetary. Only the private sector can create wealth since it is neither the job of the government nor of donors to create money. But the private sector has to behave like a business and not a rent-seeking-arbitrage-institution.
. Open up all sectors for foreign investment and technology transfer; do not hesitate to contract customs or revenue collection to foreign firms.
. Find ways to integrate Bideshi Nepalis to kick start the economy.
. With more than a billion people directly to our north and a billion more to the south we have to hitch our wagons to these two powerful locomotives.

(11 JAN 2013 - 17 JAN 2013)