Nepali Times: Do you see any parallels with West Bengal in the old days with what you've seen in Nepal in the six years you've been here?
Sujit Mundul: My times in Nepal has shown me how transformation in a country starts and progresses, albeit slowly. I was in college in Calcutta when West Bengal as a whole was severely affected by the onslaught of the Naxalite movement: destruction and killings, ruthlessly. Nepal has experienced similar kinds of events, though it may not be as intense as what we went through.
Are there lessons we can learn from what Nitish Kumar has achieved in Bihar?
Bihar is a real case study. It was synonymous with non-governance and non-performance for the last few decades but has now risen from the ashes. It's all about Mr Nitesh Kumar's leadership, which I think has gone above petty partisanship, but remained inclusive to usher in such fantastic all-round growth of a state that remained underserved for many years. Lesson learnt: a true leader will not bother about party line only, but will ensure holistic growth?for the betterment of people and country.
Are you optimistic about the coming few years in Nepal?
I am optimistic about Nepal both in the medium and long term. Obviously there will be challenges. Adopting the right economic model and harnessing its resources (both natural and human) to ensure all-round growth is crucial. What would be the right fiscal policy at least for the next 45 years, with a critical evaluation at the end of each fiscal year? What would be the right mix of monetary policies? What would be the ideal real interest rates? How to boost domestic savings and add FDI for growth?
We have lost a lot of time, the government should encourage FDI and the private sector. A more investment friendly labour policy (I don't mean hire and fire) and maybe a bit of a tax sop would be conducive for the formative years of growth.The government has to not only encourage manufacturing sectors but also the service sectors, which hold enormous potential for growth in the South Asian sub-continent.
There is talk of a liquidity crunch.
Better governance is needed for a sustained performance in the banking/financial sector.?The skewed credit/deposit ratio of most of the banks (C/D ratios more than 90%) is cause for concern and needs correction on a long-term basis. The NRB and MoF need to fine-tune monetary policy so flow of credit to the desired growth sectors are not hampered but speculative activities are curbed for? better economic management.
The liquidity crunch that the market is currently facing, in my opinion, may not be a short-term phenomenon. It will re-surface if long-term corrections are not undertaken now and might inflict serious damage on the financial system in the not-too-distant future. But I don't think the balance of payments is a real cause for concern.
Money matters - FROM ISSUE #490 (19 FEB 2010- 25 FEB 2010)