The agreement between major political parties and the alliance of parties led by CPN-Maoist to hold a round-table political conference spread some rays of hopes, which, however, did not last long because the major parties concluded that it was simply a time buying tactics of the agitators who under no circumstance wanted polls to be held. Major political parties have geared their activities towards selection/election of candidates to contest the poll. Party leaders and other aspirants are visiting nook and corner of the country. Parties are likely to finalize the list of contestants soon and are determined to organize polls despite threat floated by Kiran and his associates. In the selection of candidate, it is feared that loyalty to leaders, heading different groups within a party, would be counted more than popularity and dynamism of aspirants. People want all political forces to participate because they know with a major political and disruptive force like that of Kiran remaining outside, it will not be possible to hold polls in a satisfactory way. Therefore, they want the negotiation door not to be closed on Kiran and have him on board electoral process even if it results in little delay in the election. Chances of reopening negotiation, however, are very slim and line agencies accordingly have begun to make necessary preparations to hold polls on the stipulated day of November. The government seems to have seriously taken Maoist’s threat to disrupt the election as the Ministry of Home Affairs has demanded Rs. 9.21 billion to implement the integrated security plan for the polls, which is expected to be unveiled shortly. Despite very disappointing performance of the economy, there should not be any problem in providing the funds demanded because the current budget has set aside Rs.16 billion, Rs. 10 billion for security and Rs.6 billion for poll related activities.
Sharp depreciation of Nepalese currency is the major problem that has attracted the attention of almost everyone in Nepal which has huge trade deficit with rest of the world, mainly with its major trading partner India. In the last couple of weeks, each US dollar is exchanged at Rs 100 and above. There is, however, very little we can do to correct because we have to walk the line drawn by Reserve Bank of India, our currency being pegged to Indian money. Indians are worried that the economy that grew between 8-9 percent during 2004-10 is growing by less than 5 percent currently. Trade deficit and current account deficit as proportion of gdp stand at 10.4 and 4.8 percent, respectively.Mounting budget deficit, currently at 10 percent of gdp, is the problem that Indian authorities are finding difficult to handle. Generally, capital is attracted to places\economies that ensure better return on investment. In the past, lots of capital came into India because it was growing well and offered attractive returns to investors on their investment. Now outflow of hard currency is on the rise because Indian economy is not doing well and ailing economies in Europe (France and Germany) and that of US have shown some signs of improvement. Federal Reserve in the US seems inclined to slowly do away with the stimulus (quantitative easing) that it has been providing to stir the ailing economy, paving way for outside funds to flow there. All these factors have led to depreciation of Indian currency, which has lost over 19.5 percent against the dollar since the slide started in early May. To check dollar outflows, RBI has further curbed gold imports and cut the overseas investment limit for companies’ to100 percent of their net worth from 400 percent. India still has a reserve of 278 billion dollars, which is sufficient to cover country’s merchandise import requirement for 6.7 months. Some arguments circulating suggest that we should seriously think about appreciating our currency: our currency could be demerged or the pegging could continue even after appreciation. Any decision on currency appreciation, however, should not forget to look into our trade deficit with India (Rs.316 billion last year), which is 18.6 percent of our gdp and that Indian economy is still growing at a rate higher than ours despite the fact that their economy is currently growing at the slowest pace in a decade.Moreover, the economy is not likely to get into a situation of the kind in 1990 when gold from India had to be sent abroad to secure loans. This situation will not last long as the economy should bounce back taking not too long a time. Stronger US dollar might have made remittance receiving families and exporters happier but what should not be forgotten is the fact that our export base is weak and it becomes little difficult to take advantage of the depreciating currency in the short run.Therefore, with exports not increasing satisfactorily, trade deficit could further widen and inflation could climb up on account of rising import costs. It should also be noted that an economy does not gain from nominal currency depreciation when faced with high level of inflation, because inflation differentials play a major part in determining real effective exchange rate of currencies of trading partners. We have to delve into the matter but avoid making hasty decisions.
In our case political settlement seems to be a prerequisite to faster growth because we have not been able to grow satisfactorily in the past years of political instability and to achieve meaningful stability, major political forces should be made a party to important political decisions and events. Successful conclusion of talks between the High Level Political Committee and the two alliances of agitating parties led by Upendra Yadav and Ashok Rai, respectively, could not bring about any change in the attitude and approach towards election of the Kiran-led Maoists. With formal and informal talks with them failing to produce any positive result, the major political forces have concluded that they should now be prepared for the polls even without the agitating party. Maximum flexibility shown by the major forces, as demanded by all, could not produce any positive result, proving correct the apprehension of major parties correct. With the agitating Maoists almost certain to boycott the polls, it may be advisable that they take resort only to persuasive methods to keep voters away and not harp on violent ways of disrupting polls. Maoist leaders need not fear deployment of Nepal Army to ensure smooth conduct of polls because it has always been under sensible supreme commanders who never wanted too much blood of their own people spilt to safeguard their positions of power. Looking at the human carnage in Egypt, alleged gassing of hundreds of Syrians by Assad and remembering how Kaddafi of Libya made his forces fight till the last moment, peaceful relinquishment of power by the last representative of Shah dynasty, who enjoyed unquestioned loyalty of the Royal Nepal Army, deserves due appreciation. Hope the current commander, President Yadav, is aware of this and sees that the army is not pushed into serious action even at the drop of a hat. The need of the hour is to do everything possible to have agitating forces on board the electoral process and discourage those not participating from being violent. They should either participate in the polls or boycott it nonviolently. Kiran jee, nobody can stop you from choosing one of these two options related to the forthcoming polls.