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Mass transit systems are a public sector responsibili­ty. But the current govern­ment thinking seems to be limited to opening up space for competi­tion among private players.Surely opening up the monop­olized space for more private players—by effectively stamping out the notorious transport syn­dicates—will bring about some improvement. But it won’t solve the bigger problem of the lack of common standards, unifor­mity and reliability. And leaving only the private sector to operate transport services will not result in a reliable mass transit system—a hallmark of any great city. Ease of mobility—both daytime and nighttime—is an important factor that determines the quality of life in big cities.

Examples from other great cit­ies show that public transport has to be operated under a public private partnership (PPP) model for it to be reliable and sustain­able. This requires a clear legal framework and a designated pub­lic entity for each city or town to regulate the standards, quality of services, frequency and cost.

We can draw lessons from the experiences of Delhi, Colom­bo or Bangkok for reorganizing Kathmandu’s mass transit system. But London—though not exact­ly a similar context—offers the best template for replication. Transport for London (TfL), a local government body respon­sible for public transport in the greater London area, is both a regulator and an operator. It pro­vides transport services through wholly owned subsidiary compa­nies, private sector franchisees and licensees.

For Nepal, the first step in this direction could be the creation of a high-powered mass transit authority for Kathmandu Valley. This can be replicated in other cities in subsequent phases. This body can serve purely as a regula­tor for issuing licenses and defin­ing routes, schedules and pricing. Or it can also double as a service provider operating its own fleet of buses and other modes of trans­port alongside private operators.

The TfL template can be mod­ified to fit our context. Let’s say that the government creates a Kathmandu Valley transport authority empowering it to work both as a regulator and an oper­ator. Current transport entre­preneurs could then be asked to organize themselves into three or four large companies. It would be ideal if the authority sets up a one-door ticketing and fare collec­tion system for all forms of public transport, excluding taxis.

Private sector operators would work through a tender system—where they bid for set routes and frequency for a five-year peri­od—which would include a pro­vision for adjusting inflation so as to ensure profitability for the private actors. This would allow commuters to buy single rides or daily, weekly or monthly pass­es. The ticketing system would basically be an improvement on (and consolidation of) the system currently implemented by Sajha Yatayat for its fleet.

Once the buses and taxis are reorganized, the transport authority can set its sight on other modes of mass transit.

Bus rapid transit

Bus rapid transits (BRT) have proven to be an easy way to improve mass transit in cities that do not have resources or favor­able conditions for metro rails and trams. They are easy to imple­ment and relatively inexpensive. They have exclusive right of way—through dedicated lanes—similar to that of metros and trams. Now they can be operated by a subsid­iary company run by the trans­port authority or by a new public company involving Sajha, which already has significant investment from local governments.

In the first phase, they could be operated along the Ring Road, Saatdobato-Narayan Gopal chowk and Surya Binayak-Ratnapark routes, as these have wide roads for dedicated lanes. This would require categorizing roads into primary, secondary and tertiary routes and phasing out tempos, micros and minibuses from the primary routes.

The Kathmandu Sustainable Urban Transportation Project, funded by the Asian Development Bank and the Global Environment Facility, had tried to work on some of these reforms. But lack of cooperation from transport syndi­cates and absence of political will stymied the initiative.

Improving public transport is possible only if there is a dedi­cated entity empowered with a clear legal and operational frame­work. Piecemeal approaches may lead to some improvements, but without a major overhaul, they will only bring cosmetic changes that won’t incentivize commuters to leave their private vehicles at home. As a 2012 JICA study shows, only 28 percent of the 3.6 million daily rides in the Valley are made using public transport.

Parajuli is a Kathmandu-based journalist with an interest in public policies

Implementing federalism is a cost-intensive proposition. As the projected federal budget for the next fiscal year shows, current revenues will cover only half (US $8 billion) of the estimated $16 billion budget. Early indication suggests the government plans to generate an additional $4 billion from foreign aid and domestic borrowing—leaving a quarter of the budget unfunded. That is a sizeable deficit. Finance Minister Yubaraj Khati­wada is already scrutinizing cus­toms collection—instructing offi­cials to follow reference price for import duties to clamp down on the collusion between businesses and officials. This has significantly increased daily collection at key custom points. He is also rolling out an online government pay­ment system to minimize leak­ages. The new finance minister has assured businesses he would not increase tax rates to fund the deficit; instead he would widen the tax net.

Revenue collection can be increased to a certain degree—particularly by bringing more individuals and informal busi­nesses within the existing tax bracket. But keeping up with increasing public and develop­ment expenses in the next few years—including extra-budgetary requests for province and local level infrastructures—would call for a multi-faceted approach.

Local levy

There is tremendous scope for generating revenues for local gov­ernments via a property tax—a sort of an annual levy—based on market valuation. An alter­native formula for taxation can be derived from market rates for housing rents. For instance, families that own concrete homes in urban areas can be charged an annual levy of 1/12th of what they would pay if they were renting an equivalent apart­ment in the local market. This needs to be built upon the current house rent tax that local govern­ments collect. For this to work, an increase in tax will have to result in an increase in munici­pal services. Even now, in many cases, citizens contribute up to 70 percent of the funds for local development projects that direct­ly benefit them: blacktopping of the alley road, constructing sew­age plants, etc.

Policy banks

In any country, the biggest tax contributors are private firms. Naturally, growth of the private sector is central to spreading prosperity and increasing reve­nue base. Two of the big obstacles to private sector growth in Nepal are high cost of doing business and political uncertainty. While KP Sharma Oli’s overwhelming majority in the parliament hope­fully addresses the political uncer­tainty part, reducing the cost of doing business would require tar­geted policy interventions.

For starters, the government can reduce the cost of borrow­ing for businesses through policy banks interventions in the form of a concessional lending and line of credit for select businesses that meet strict criteria. A revolving fund of about $400 million can be established over five years. This facility can be extended to businesses that have high export potential, and thus reduce trade deficit, or to entities that create a certain number of jobs.

For reference, current interest rate on business loans in the US is around 4 percent. Of course, this could foster crony capitalism. Yet if the governance of such policy banks is handed over to an inde­pendent party or a foreign equi­ty investor (five percent return should be lucrative), this could work. A separate policy bank for SMEs could also be formed to similar effect. This can also make lending by commercial banks competitive.

PPP for infrastructure

Innovative use of a private-pub­lic-partnerships (PPPs) model can address funding gaps in public infrastructure development. This can allow the government to spread available resources to several projects. For instance the hybrid annuity-based model (HAM), a variation of PPP, only requires government to pay 40 percent during construction. The rest is paid annually over 15 years. In this period, the private party is also responsible for project operation and maintenance. In this region, the International Finance Corporation, a member of the World Bank Group, has worked with the government of India and state governments to structure such a model to construct sewage treatment plants along the Ganga Basin.

Done right, PPPs can foster private sector growth while allowing effective mobilization of private capital in public sector infrastructure development.

Parajuli is a Kathmandu-based journalist with an interest in public policy

It is no news that the prime min­ister’s position is the most cov­eted political position in Nepal since the 1990s. This is true for any parliamentary democracy for that matter. Yet, ironically, the Prime Minister’s Office (PMO), the execu­tive nerve center, has been the least desired posting for civil servants. Some former bureaucrats even describe it as a ‘dumping ground’ for the undesirables. “In our system of governance, the prime minister is the most powerful person, ultimately accountable for all the successes and failures of the government,” says Bhoj Raj Pokhrel, former Chief Election Commissioner who has also served in the capacity of Chief Secretary. “But since the 1990s, successive prime ministers have been unable to exercise their authority and were often held hos­tage by influential ministers.”

This seems to be changing with the cabinet’s endorsement of new Business Rules for the executive last month. Close on the heels of federal restructuring, the PMO is undergo­ing a major overhaul—the first of its kind in its modern history—giving it broad powers designed to place it at the center of a “command and control” structure. While the details of the restructuring are still patchy, a broad outline being discussed sug­gests an expansive list of authority vested in the PMO.

The key principles guiding these reforms revolve around the idea of giving the PMO the ability to mon­itor and supervise the governance processes, and to set up a system of rewards and punishments as and when necessary, says Bishnu Rimal, Prime Minister KP Sharma Oli’s Chief Political Adviser. “It is designed to make the PMO a center of excellence.”

These plans for reform didn’t come about overnight though. They had been discussed during Oli’s first stint as prime minister in 2015-16. “Back then time was so short that we weren’t able to work on it,” says Rimal. “But this time we had couple of months between the elections and the formation of the new government.”

Prime Minister Oli’s previous experience in government appears to have convinced him of the need to revamp the system to clear the many governance bottlenecks. “PM Oli and the left alliance ran on the platform of political stability, pros­perity and good governance. Now that their agenda has been endorsed by the voters, they clearly under­stand that the road to prosperity passes through good governance,” says Pokhrel.

National security

There are several broad strands of reform under discussion. First among them is revamping the large­ly symbolic National Security Coun­cil (NSC) and empowering it as some other countries. The position of a National Security Adviser (NSA) is to be created—combining both security and foreign affairs roles, according to officials. To support the NSC and the NSA, the National Investigation Department (NID), which was under the Ministry of Home Affairs, has now been brought under the PMO to augment intelligence gathering on internal and external security threat, economic crimes and cor­ruption under the federal structure. Similar reform had been recom­mended by a recent study of the Nepal Institute for Policy Studies, a think-tank.

“The NSC is necessary in a federal setup and should be headed by a competent authority,” says Geja Sharma Wagle, a secu­rity expert, who was involved in the study. “Under past govern­ments, the NID had become a politi­cal recruitment center.”

Attempts to cre­ate a counter-intel­ligence unit under the PMO have been under discussion for several years but given the short stints of succes­sive governments, there has been no tangible action until now.

Governance

The second aspect of the restruc­turing is motived by the desire to maintain strict vigilance over gov­ernance processes, including cor­ruption and financial crime, while checking instances of constitutional bodies overstepping their mandates: Lok Man Singh Karki’s unruly tenure as the head of the CIAA, the consti­tutional anti-graft body, being the quintessential case in point, as UML leaders point out. The CIAA under Karki had become highly intrusive and had created a fear psychology among civil servants and politicians alike that in turn contributed to gov­ernance paralysis. This, UML lead­ers say, is the rationale for bringing the Department of Revenue Inves­tigation (DRI), the Department of Money Laundering Investigation (DMLRI) and the Social Welfare Council within the PMO’s purview.

“Controlling corruption is not the CIAA’s job, it is rather the prime minister’s job,” tweets Rabindra Adhikari, CPN-UML lawmaker and former chair of the parliament’s Development Committee. “The CIAA steps in only when the PM is unable [to control corruption].” UML leaders argue that the prime minister has to have the right infor­mation to check corruption, which is what the remodeled PMO enables. Moreover, say UML leaders, these institutions will have a lot of autono­my and power under the PMO.

While bringing these bodies under the PMO is a good step, that alone is inadequate, says former adminis­trator Pokhrel. “Effective and inde­pendent functioning of these institu­tions calls for an enabling environ­ment and strong leadership.”

Federalism concerns

Some worry that a strong PMO may also go against the idea of fed­eralism where power is shared and not concentrated. As Nepal is in its formative years of implementing a federal system, there are inherent risks of setting precedents where provinces do not assert their author­ity, partly because there is weak leadership in the provinces and a strong one at the center, and partly because six out of the seven provinc­es have government led by the ruling left alliance (all seven if Samajwadi Forum and RJPN join the govern­ment). In the case of the six chief ministers, they may be reluctant to challenge their own party’s prime minister if he seeks to weaken the provinces, the argument goes.

But others say that a strong prime minister is essential to honor the constitutional spirit of federalism. Given the clear devolution of power in the constitution where provincial and local governments are in charge of sub-national bodies, empowering provincial governments should be in line with the center’s agenda of shared prosperity, they argue.

“In principle, strengthening the PMO is a good thing. The only ques­tion is of intent,” says Wagle, the security expert. There are some who already question the government’s intent—pointing at the move to bring the Social Welfare Council under the PMO. They fear that the council could be used to deny donor fund­ing to civil society groups that are critical of the government.

The prime minister’s top polit­ical adviser argues that the Oli government is doing what all oth­er governments wanted to do but could not—and that there is no rea­son to fear a power grab. These reforms will be underpinned by recommendations of experts in the think-tank wing of the PMO, according to Rimal. “There will not only be party affiliated intel­lectuals, but also experts who offer critical viewpoints.”

On average, around 85 percent of public school teachers in Nepal are trained whereas the corresponding figure for private schools stands at around 15 percent. Public school teachers are better paid and have greater job security. Yet the public school system has consistently failed students. Before the SLC exams were phased out in 2016, only an average of 28 percent of public school students made it through the ‘Iron Gate’ for higher education. Our public school system has a huge management problem. Absenteeism is high both among students and teachers, and there is a general lack of discipline. Public school teacher unions are highly politicized and teachers use political connections to land secure jobs without much com­mitment to teach. In many cases, qualified teachers use an unqual­ified substitute to fill in while they go about other business. Again all these boil down to an ineffective school management that does not enforce rules and standards.

Private schools, on the other hand, are driven by profit and profit is directly linked to the performance of their students at regional and national level exams. But even the education the pri­vate schools provide (with some exceptions) cannot be called quality education by any stretch. What they are good at is getting students high marks in routine exams. There is very little critical thinking and problem-solving.

Still most students from pri­vate schools end up doing well academically and professionally. The same however isn’t true for students from public schools.Schools are supposed to pro­vide a level-playing field, yet our system does the opposite. It creates two classes of students (three, if you count the elite pri­vate schools).

To be fair, there have been efforts to reform school educa­tion but the problem is that they have been primarily focused on increasing enrollment. Some incremental reforms have been achieved through initiatives such as the School Sector Reform Program, but they do not go far enough. Nepal’s education system requires a massive overhaul, not gradual improvements.

There are several policy choic­es before the government, all of which require strong commit­ment to address head on the politicization of teachers’ union. One would hope that the new left government, which could have a two-thirds majority with Sanghiya Samajwadi Forum Nepal, would have no problem taking on the unions that have stalled reforms.

An autonomous school board or school management committee for public schools can be estab­lished—giving it broad authority to run its affairs, while linking grant transfers to performance stan­dards and enrolment rates. Par­allel to this, the government can bring another scheme involving a voucher system whereby anyone interested in enrolling their chil­dren in private schools receives a government voucher covering fees and other expenses but sub­ject to a means testing of income. These vouchers can be linked to the poverty card and nation­al social security register, which will reduce the cumbersome and lengthy process of means testing. This will force the public schools to remain competitive to receive grants or risk closure.

Clearly there is no one–size–fits– all solution. What will work in certain communities may not work in others. The key here is instilling a sense of competitive­ness in the public school system through different incentives, and linking them to the local gov­ernment’s overall performance. When the central government adopts required policy reforms, it can use conditional fiscal trans­fers to incentivize implemen­tation of these reforms. Where the first overhaul approach fails, the government could consider outsourcing the management of public schools to the private sec­tor—linking certain percentage of management fee to performance standards and enrollment rates. The idea of managing even a small percentage of nearly 30,000 com­munity schools, where the first option does not work, could be attractive for many private sector management companies.

Profits can drive competitive­ness. If spending a little more on management fee (increasing cur­rent education spending of about 4 percent of GDP to the global standard of 4.9 percent) delivers good education for the vast major­ity of students, wouldn’t that be a worthwhile investment?

With provincial govern­ments coming into being in the past few days, fed­eralism is actually here. But it will be several years before all levers of devolved power structures are in place, as over 100 laws need to be written. Even in the best-case scenario—as examples from other countries suggest—it will take at least four years to fully phase-in a functioning federal structure. This waiting period may sound long and even appear frustrating, but it is in fact a perfect opportu­nity to enact sweeping reforms that do away with the dysfunction of erstwhile unitary system of governance. For clarity’s sake, let me dwell on one reform issue in each column.

Health, first. Under the devolved power arrangement in the new constitution, delivery of basic health services falls under the jurisdiction of the local gov­ernment. The provincial govern­ment, meanwhile, is responsible for overall health services—of course, leaving aside broader national policies and standards to the federal government. In the­ory, the provincial government is free to shape health policies within its jurisdiction so long as it complies with the broad contours of national policy.

But in reality, health system requires an integrated approach and should not be bracketed into different boxes with competing jurisdiction. Righting the wrongs of the current health system that perpetuates unequal treatment and preys upon patients’ vulner­ability requires substantial poli­cy reforms at the central level—backed by strict implementation and monitoring at the provincial and local levels.

The problem with Nepal’s health system is obvious: public health system suffers from short­ages of hospital beds in urban areas, while in rural areas there are inadequate doctors and shortfall of essential medicines and diagnostic facilities. There are also no financing priorities for different needs of different areas and sometimes global agenda (malaria and TB eradication, for instance) take precedence over local needs. This is the reason hospitals serving the Tharu com­munities, for example, have no stocks of drugs to treat sickle cell anemia—a common condition in this community.

Despite spending millions on public health system every year—roughly Rs 41 billion this year—poor patients still forced to seek basic services in the private system. That puts the per capita government health spending at approximately Rs 3,000 a year. But this number belies the much higher out-of- pocket spending by individuals. A complicated pregnancy can cost a family, on an average, half a million rupees in a private hospital.

Private health system is over­priced, highly exploitative and under-regulated. Anecdotal evidence points to a disturbing exploitation.

Last year, an acquaintance developed typhoid fever. Upon visiting Patan Hospital, she was referred to intensive care unit (ICU) in other hospitals, as there was no empty ICU bed in Patan Hospital. She ended up being admitted at a nearby pri­vate hospital. Five days later she was slapped with a bill of over Rs 100,000, including medicines. She was moved to the general ward after the hospital adminis­tration sensed she might not be able to pay.

Two days after being dis­charged, the fever came back, and she had to be rushed back to another private hospital. She came home after spending anoth­er Rs 35,000 and three days in treatment. In total, she spent a year’s worth of earning, not sav­ing, for the treatment of just one illness. That is a representative picture of our health system, which disproportionately affects the poor.

To address the problem in our health system, the incoming gov­ernment will have to revisit the flawed fundamentals while insti­tuting a mechanism to strictly monitor health services—both public and private. Instead of hav­ing hundreds of scattered health schemes, it should raise the cov­erage amount of the government insurance scheme and simultane­ously curb the runaway private healthcare costs.

Conditions have to be creat­ed such that government issued health insurance card is accred­ited in private hospitals so that patients aren’t refused treatment or forced out of hospital before the completion of treatment.

One of the signs of development is that poor families in the coun­try do not have to take out big loans to take care of their sick. I hope the incoming government with its agenda of shared prosper­ity will pay heed to this cause of recurring poverty.

The author is a Kathmandu-based journalist who tweets @johnparajuli