The government of Nepal has announced a relief package to ‘help’ people deal with the economic fallout of Covid-19. But the relief package is not based on any principle, nor is it clear how it will help those in need. Further, the government has no clarity on how these expenses will be covered in the face of a looming fiscal deficit. So far, the economy has been hit by a nationwide lockdown and the fear of greater number of infections. There will be more severe impact on people’s daily lives the longer the lockdown continues
Finance Minister Yubaraj Khatiwada has said the economic growth rate will come down by a percentage point if we come out of this crisis by mid-April. That is hard to believe given that almost all businesses have come to a halt including in manufacturing, tourism, retail, and agriculture sectors. As India has declared an absolute three-week lockdown, the possibility of getting Nepal’s economy back into operation before India’s is low. Against this backdrop, the government should be clear on what people might have to go through in the coming days and months—if not years.
History teaches us that epidemics, forget pandemics of this scale, can lead to the rise and fall of nations and civilizations. Take the smallpox epidemic of 1526 in the then New World, the present-day United States. Atahuallpa was then the absolute monarch of the largest and most advanced state in the New World, and yet he was easily defeated by the Spaniards under the leadership of Pizarro.
The epidemic killed off the Inca emperor Huayna Capac and most of his court and then his designated heir, Ninan Cuyuchi. Those deaths precipitated a contest for the throne between Atahuallpa and his half-brother, Huascar.
The Spaniards exploited these divisions and they colonized the New World. Jared Diamond, the author “Guns, Germs and Steel”, argues that had it not been for the epidemic, the Spaniards would have faced a united empire that would have been much more difficult to defeat.
Fast forward to today, and we might have to face coronavirus challenges that we cannot foresee. But Nepal government has not done anything to prepare us for those trying times.
Compared to the fight against earlier pandemics, the fight against Covid-19 is relatively easier given the level of technological advancement today. Nepal has been able to benefit from these technologies thanks to globalization and technology transfer. But with the fear that the globalization could soon be in a retreat and countries could become more inward looking, Nepal should prepare to fight the multi-faceted challenges to its economy, politics, and society. There are clear signs that poor countries will get poorer as they won’t be able to manage the crisis with right fiscal and monetary tools.
Nepal’s economy is heavily dependent on remittances and foreign aid, along with agriculture. Even if the world emerges from this crisis relatively early, there will be significant disturbances on both remittances and foreign aid to Nepal. In that case we will be heavily dependent on agriculture. But then even agricultural tools have to be imported from India. This is why it is important to take daily stock of our economic situation, which could be a preliminary basis for future planning.
The relief package appears to be a political slogan of a distributive government. It doesn’t specify the ‘who’, ‘when’, ‘how’, ‘why’ and ‘under what terms’ of the package. There is thus a risk of the relief package being politicized and being diverted to party cadres. Nepal might be doomed to face a new kind of colonization if we don’t together fight the government recklessness at the time of this crisis.