After more than half a century of struggle, Nepal finally promulgated its constitution manifesting a long writhe and aspiration into a reality. We have been able to put up the world’s newest constitution, adopted through a democratic process into effect. Although the herculean task of constitution promulgation is over the fact that the Terai belt of Nepal is not a part of it could have huge economic implications to the country.
It is known that the performance of economy is not just determined by economic actors but also non-economic factors, political stability being the major one. The political system plays a key role in determining the pace and direction of a country’s economic performance. It is a success that Nepal now possesses a document that envisages the principles to run the nation including the economy.
The constitution promulgation paints a merry picture in the early outlook. The constitution making that had been lingering from many years with its promulgation has of course given a certainty to the country. Under such circumstance, a surge in economic transactions retaliating to economic gain is understandable. Post decades of uncertainty, the anticipated stability with constitution is aspired to be pivotal in increasing Foreign Direct Investment. For businesses that were constricted within certain areas, there is now hope to explore new avenues with private sector friendly norms. Besides, the constitution promulgation is also expected to be able to win the hearts of foreign aid providers, which account for over 50% of the economy.
The constitutional promulgation no doubt is a huge boost for the economy. But if the three major parties fail to bring the disgruntled Terai parties on board, then the consequences might be highly detrimental. If a significant resource of the country is divested in reconciliation even after statute drafting then the effectiveness of the constitution itself will be a big question. What needs to be emphasized here is that for economy to prosper, it is not only the constitution Nepal sought for, but also stability. Until and unless we are able to depict stability, the constitution alone would not be able to uplift the economy. The present scenario in Terai is a burning issue for Nepal. We know that majority of the industries in the country is located in Terai. A failure to bring in the Terai-based parties on consensus results in doubts over a conducive economic environment.
The statute adopted with an enraged and infuriated Terai has already hinted that India is not content. On one hand we have already dissatisfied people that account for 40% of the population and on the other, we have created a room for in congruency with a neighbor we are hugely dependent upon. From an economic perspective what one needs to be cautious of is that is the same country with which our currency is pegged and with whom we share our borders in three sides. Over 50% of our imports account from India and angering Southern neighbor will be a huge threat to our already stagnant economy.
Already, the low supply of commodities due to strikes in Terai, have made other parts of the country witness a rise in prices of commodity. Otherwise, amidst the season of festive a free flow of commodities from Terai would be a factor in economic boom. Nepal’s economy is already reeling under the effects of earthquake and the ceaseless strikes in Terai have marred the situation further. All the expectations attached with the historic statute will go into vain in the current turbulent political environment. With displeased neighbor, the country can neither witness the anticipated domestic investment nor the foreign investment.
Given the turmoil in Terai, reconstruction in the post earthquake phase, is believed to take a hit as well. The chance of construction material shortage is high, pushing reconstruction further. The domestic industries located in the plains are not in the position to produce them and even the supply from foreign country is disrupted.
Thus, constitution promulgation comes with many positives and negatives to the economy. But without the consent of major stakeholders in the Terai, the new constitution will lose its effectiveness, denting the forestalled economic development placed along with it.