Just to make it easier for us to take the bad news, the United Nations Human Development Report (HDR) released this week upgraded Nepal from its category of 'low human development countries' to 'medium human development countries'.

The cutoff point between the two categories is a Human Development Index of 0.5, and Nepal's HDI climbed to 0.504 from 0.474 four years ago. This promotion carries symbolic value, it doesn't call for any major rejoicing.

We have been comparing this year's figures with those in HDR 2000. There may be a debate about the accuracy of statistics supplied by our government to the UN, but there are indications Nepal was headed in the right direction till 1997. The life expectancy of an average Nepali climbed from 43 thirty years ago to nearly 60. The infant mortality rate went down from 165 for every 1,000 live births in 1975 to 66 in the past 30 years.

Much of this improvement took place after 1990 as grassroots democracy allowed rural Nepalis to force their elected leaders to be accountable. VDC chairmen had to deliver, or else they didn't get re-elected. The villagers' demands were simple: a safe drinking water system which reduced diarrhoeal dehydration-the main killer of Nepali children. The villagers wanted schools and the VDCs built them-the percentage of youth literacy in Nepal shot up from 47 percent to nearly 63 percent in the past fourteen years.

If it hadn't been for the conflict, Nepal's development parameters would have improved at that pace and this year's HDR would have perhaps ranked Nepal ahead of Cambodia and Burma. Alas, some of the figures in this year's HDR are already three years old and it wouldn't be surprising if on literacy, health and other indicators we have regressed. Nepal's primary enrollment, maternal mortality and undernourishment are already at crisis levels.

The UN has boldly taken on the universal values of democracy and cultural liberty in this year's report. Boldly because there are some member governments who have never wanted the UN to be so explicit on issues like pluralism and political freedom.

For us in Nepal, the message has hit home: you have to address inequity, marginalisation and exclusion not just to end conflict but also for future economic progress. You can't have a Gini coefficient of 36.7 and hope to have sustainable growth.

Nepal has to move backward to move forward again. We have to go back to 1997 and start re-doing what we were doing right then.