Economy and Politics in Nepal

From economic standpoint, we have gone below Bangladesh, our South Asian neighbor, and Sub-Saharan Africa, the region often noted all over the world for abject poverty and mismanagement of the economy. <br>Dr. Tilak Rawal

Nov. 28, 2011, 5:45 p.m. Published in Magazine Issue: Vol. : 05 No.-10 Nov. 25-2011 (Mangsir 09,2068)<BR>

Economic crises have caused political accidents time and again in different countries. After the crisis of 1997 that engulfed ASEAN countries, Suharto, the strongman of Indonesia, was forced out of power by the rioting Indonesians. Recurrence of these kinds of incidents can still be seen. For example, a new coalition government is already installed in Greece, which is believed to save the nation from going bankrupt. Berlusconi of Italy has been hooted out of power by the people there because he could not get the economy out of the mess that it is still in. Nonpoliticians, currently at the helm of affairs, are expected to save the economy there.

Economy has taken precedence over politics in most of the countries because unresolved economic problems are taking a heavy toll on rulers. There are, however, some countries like Nepal where those charged with the responsibility of running the country can afford to let economic problems remain unattended for years and decades. In a country like Nepal, nobody has ever been penalized for his\her failure to correct economic woes because people here are used to live a life deprived of even the basic necessities of life. Supply of things like drinking water and electricity depends on water from the sky and so is the state of annual gross domestic product more than 30 percent share of which is constituted by our rain-fed agriculture. Small wonder, people here turn more towards the almighty than their rulers when faced with problems whose solution is beyond their reach.

From economic standpoint, we have gone below Bangladesh, our South Asian neighbor, and Sub-Saharan Africa, the region often noted all over the world for abject poverty and mismanagement of the economy. It may be noted that our economy grew on average by 3.7 percent during 2000 Asian \2009, while Bangladesh and Sub-Sahara Africa each grew by 5.9 percent during the same period. Our agriculture is highly unproductive and not much different is the case with the industrial sector. Data released by multilateral bodies suggest that capital productivity in Nepal is much less than it is in Bangladesh and Sub-Sahara Africa. In the current situation, it is very difficult to attract foreign investment in Nepal and whatever little capital is available is not being used productively. The number of tourists coming to Nepal has increased remarkably in 2011 but there has not been a corresponding increase in income from tourism. Looking at the state of our only international airport, recently ranked one of the eight worst airports in the world, and other infrastructures, both the number of tourists and income there from is bound to decline in times to come. Nepal will have to assure both multilateral and bilateral investors that Nepal would create a congenial environment for productive utilization of resources from outside. Therefore, many more bilateral investment promotion and protection agreement (BIPPA) such as the one signed with India during our prime minister’s recent visit there, will have to be negotiated in an uncontroversial manner with many other resourceful centers. Our economic situation is pathetic by anybody’s standard. High level of persistent inflation, huge trade deficit and glaring unemployment situation stand as evidence to this.

It would be, however, foolish to blame the less-than-three-month-old current dispensation led by Dr.Bhattarai for not correcting these imbalances. Nobody before him paid attention to these problems and no agreement, generally concluded prior to government formation, did ever pay any attention to these problems. This government is, therefore, pretty safe from this stand point.

On the political front also the current dispensation does not look that precariously placed. Notwithstanding criticism on the jumbo cabinet, the largest ever the country has seen since the rehabilitation of multi party democracy in 1990,and government’s decision recommending amnesty to Maoist lawmaker Dhungel, convicted of murder by the Supreme Court, peace related work seems to be making some headway. Despite continuing opposition from the Baidya-led faction of the Maoist party, work related to integration and rehabilitation of Maoist combatants seems to be moving ahead. Regrouping of combatants has begun in the midst of opposition by Baidya and commanders loyal to him. Maoist chairperson Prachanda seems genuinely serious this time to conclude the peace process and prepare the new constitution. He even went to Bardiya, a stronghold of Maoists in mid-west Terai, to facilitate return of land forcibly taken away by the Maoists from the genuine owners. However, in the face of Baidya faction’s determination to thwart land return, it is difficult to say how much fruit his new initiative would bear. 

Of the few major issues left unresolved so far, the issue of state restructuring looks most complicated, more controversial and complex than the twin issues of the system of governance and the electoral system. On this, parties had indulged themselves in a game of one step forward and two steps backward. It may be recalled that the Madhesh-based parties decided to do away with the state restructuring commission, provided in the Interim Constitution, in the four point- deal signed by them prior to the government formation, which was further reinforced by the seven-point deal signed also by NC and UML parties, in addition to those in government. The government-tabled bill to substitute the commission by an experts' panel through the eleventh amendment to the constitution, however, had to be withdrawn in the face of strong objection to the bill from Baidya faction and indigenous caucus. The major parties, showing great flexibility, signed a two-point deal agreeing to constitute the State Restructuring Commission, which is clearly mentioned in Article 138 of the Interim Constitution. Parties  have also succeeded in forming an eight-member Restructuring Commission, albeit without a chairperson, to submit its report based on identity and capability in two months. If the eight nominees of the major parties carry on their work in the best interest of the nation, Nepalis would definitely thank them and the concerned parties.  People are waiting for the result and they want it at the soonest possible time. Indeed, the fate of the current dispensation depends on the progress made on the political front. What appears as a setback to some as a result of withdrawal of government-sponsored bill may turn out to be a blessing in disguise for Bhattarai who could continue to lead the government even beyond 30th November, the day current tenure of the CA expires. It is likely to get extended by six more months the same day.

To conclude, despite diminishing popularity, Bhattarai will not lose his job because of the inability to handle economic problems but his failure to clear the political impasse will definitely cost him his job. Hope the commission does its work as expected, keeping the party united does not remain the biggest challenge for Prachanda and the row between Koirala and Deuba of NC does not accentuate.
(Dr. Rawal is CA member and former governor)              


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