Nepali Economy
Nepal today is a country in a hurry. Building on the dramatic political achieve- ments of recent years of expanding democratic freedoms and increasingly inclu- sive polity, Nepal now seeks to leapfrog in terms of development, harnessing its unexploited economic assets, consolidating social gains, and minimising location- specific vulnerabilities. Essays in this compendium are a welcome addition to en- riching contemporary discourse on facilitating social mobility and inclusion, accel- erating economic reforms, and deepening regional collaboration for shared progress.
Nepalis and their economy are innately resilient. Even when the earthquakes of 2015 devastated parts of the country, our GDP growth rate did not nosedive. It took a bigger blow, the Blockade, to grind it to a halt in 2016. This year, we have rebounded to a healthy growth of 7%, thanks to a shrunk base, good monsoons, steady electricity supply, and normalisation of trade. Our focus now should be on continuing on a high growth path of at least 7%, year after year. This will double the size of our economy in 10 years and make us a vibrant, enterprise-friendly, middle- income nation by 2030.
The priority now should be on job-creating economic change, propelled by large investments in infrastructure. Energy and connectivity can unleash potentials in manufacturing, tourism and agriculture. There are major irrigation projects, which, when complete, will be like having a good monsoon every year. Sustained rise in agricultural productivity will form a durable basis of high and inclusive growth for decades to come.
After a gap of nearly 20 years, elected local governments are being formed in the grassroots with great enthusiasm. The 2017 budget has made a transformative departure by transferring hundreds of billions of rupees to local government cof- fers. Like an Englishman’s home is his castle, parts of Singha Durbar will now be located in every Nepali village. This will redress our deficits in governance, public- service provisioning and lackluster rural growth. This is, however, conditional on local governments being functional. While the urban municipalities are better equipped, villages will need to be guided. Transitional handholding cannot be pater- nalistic because each local government is sovereign.
Implementation of federalism frees public bodies like the National Planning Commission and other think tanks to take the long view. This begins with Vision 2030 that articulates the sources of long-term prosperity. Going forward, we must nurture the following five Ds to form our tailwind of progress:
Distance: Our proximity to two of the world’s fastest-growing economies, and half the world living within five hours of flying distance, is a huge resource. With links forged with China’s One Belt and Road Initiative and India’s drive to connect its Gangetic hinterlands, we can reverse the effects of the 20th-century handicap imposed by our landlockedness. With lower costs of engagement, we can be part of international production networks, attracting FDI, and specialising in compo- nents where we have an edge.
Demography: Our greatest strength is our people, half of whom are aged below 22. After 2028 we will become an ageing society, and after 2054, an aged one. We have a narrow window left to reap the demographic dividend, and to make up for two slow decades.
Democracy: There is no better way than democracy to govern a heteroge- neous society like ours. But we need to revamp the way we celebrate and leverage democracy: it is not just about periodic elections; it has to evolve into a culture of rules-based governance that aggregates and responds to our diverse preferences. Without proper checks, federalism could go horribly wrong, transporting problems of Kathmandu to local units and amplifying them.
Digitisation: Our old model of trade and production is obsolete; we need to catch up by leapfrogging into the digital age of fragmented production across inte- grated economies. There is an advantage inherent in backwardness: 25 years ago, there were 71,560 phones in the entire country, today Nepalis carry 28 million cell phones.
Diaspora: Our diaspora is coming of age. They need to be courted as the first investors. They must be our emissaries for greater trade, investment and tour- ism, stronger socio-cultural ties and firmer academic exchange and transfer of knowledge.
Issues covered in this volume are helpful to frame a forward-looking vision of Nepal’s prospects. The wide span and eclecticism of topics reflects both the versa- tility of development challenges in a low-income country and the complex, interwo- ven linkages across sectors. I trust that this volume will have practical policy reso- nance, and shall be of interest to not just the policy makers, academics and journal- ists, but also a lay audience concerned about our country’s fortunes.
Credit goes Swarnim Waglé, PhD
Member
National Planning Commission Kathmandu, Nepal
