While talking about our economy, we can analyze it in two ways. One is describing the positive things that have happened. The second is to describe what positive things have not happened or the negative things that have. Most people focus only on negatives but I would like to discuss both the sides. First, let’s discuss positive things. For the past 25-30 years, education has improved by a lot, so has people’s lifespan. We live to be 70 now than die at 35, as my school textbook used to inform me. So people’s average lifespan has doubled. Of course, there are people, for instance the Dalits of the far-west or western hills, who do not average 70 years. But that is something we have to work on.
Poverty has been reduced by almost half, a huge achievement. From around 42 percent in 1995, the proportion of absolutely poor or very poor who do not get two meals a day has come down to 21 percent. It is a huge achievement.
There are, of course, 20-21 percent who are still poor, who do not have two meals a day. Also, 35 percent of our children are stunted as they do not have nutritious diet. Being stunted means not only are you are physically deficient you are also mentally ill.
Another positive is that we are growing at about 6.5 percent, which is not very high but not very low either. It is about the approximate growth in India and now also in China. So the growth rate is reasonably high, although it is not the rate we should be satisfied with; we should grow at about 10 percent annually. Plus, in infrastructures such as roads and hydro, we are doing well. We will be self-sufficient in hydro production starting next year and there will be surplus to sell. The NEA has thus been asking us to cook food with electricity.
Now let’s talk about the problems. First, I say one-fifth population is absolutely poor that cannot afford two meals a day. That is a sad statistics and should trouble our state and government that promised to institutionalize socialism.
Socialism is particularly needed for the poor, females, Dalits and other marginalized groups. It is not an immediate priority for those who are well off. But our government would have failed if it cannot meet the needs of the very poor, women, Dalit and so forth.
Inscribing socialism in the constitution is one thing but actually implementing it is another. So the government should think seriously about what socialism means. Of course, the constitution does not merely says socialism, it also says socialism based on democratic norms and values. So it is not socialism of the variety implemented in the Soviet Union or China.
It is more democratic socialism, or socialist democracy as they call it in Northern Europe, which means you have individual liberty, freedom of association and so forth. It also means the economy to a large measure will be run along capitalist lines but revenue will be spent on social welfare. There is some way to go have that kind of socialism in Nepal.
The second point is that we do not have an investment-friendly climate. We live at a time the Foreign Direct Investment is open across the world. The fact that we are poor does not mean we should have no investment.
Investment can flow across the world in principle. But there are hindrances in Nepal obstructing people from investing. The government should open up to international investment. Now, a sizable number of people in Nepal can invest. But their investment is going mainly in three or four areas: land deals, construction, schools, and health.
Other sectors are short of investment. For instance, there is insufficient investment in tourism, agriculture, even in hydro. It is important that we take all possible steps to open investment in other areas, the principal avenues through which poverty can be reduced.
Poverty in Nepal was reduced by half within the 25 years primarily, not exclusively, as many Nepalis were employed in South East Asia, West Asia and other countries. So why can’t we have more jobs right here? Investment is the prime avenue through which we can increase employment.
Some sectors are growing, for example hydro and roads but agriculture has no investment, even though it creates 60 percent jobs in Nepal. We have come a long way from the time agriculture contributed 75 percent of total GDP in 1970.
Now, it is more like 25 percent. But the number of people who rely on it is still high. So agriculture may not generate as much GDP as it did but continues to provide job opportunities to most of the population.
Many rely on agriculture, at least for their household income. If agro productivity continues to decline many will suffer. It vital that agriculture productivity be increased; and in its subsectors like hatchery, dairy, fruit cultivation, green vegetable cultivation, it has increased. We now hear stories like how a family earns up to Rs 1.5-2 million a year from the orange they grow.
You can grow vegetables, tree crops and other products. Tree crops will be very important in dry areas. They are water-efficient unlike other crops which require much water. Tree crops, of course, pay back in 10-15 years, not immediately. It is not like you bring a cow and it starts giving milk right away. Tree crops take longer but their rate of return is much higher and they are much more climate-change friendly. So growing trees and forests is important.
With bigger roads and even railroads between Nepal and China, we can sell high value crops in their markets. Even bus and truck corridors with China will open up huge opportunities for Nepal.
It is important that the government gives due attention to agriculture. That will help especially the poor in rural areas. Health and education are fundamentally important for growth but in a narrow way. Hydropower, agriculture productivity, tourism and connectivity are important for Nepal and we must open up more with China. It is not only an economic imperative but also a political one. We are now like a stadium with only one gate so in my life-time I experienced three blockades. We cannot let happen that again.
We must open all avenues of exchanges and connectivity with other neighbors and friends rather relying on only one neighbor. That is imperative from both economic and strategic viewpoints.
Finally, it is important we govern well. The main problem in Nepal is governance, particularly in the bureaucracy and political parties. The parties have monopolized most sectors, capturing universities, bureaucracy, school boards, and community forestry. Monopolization of power by political parties leads to economic depression. The bureaucracy is too bound by rules.
Some bureaucrats are not working properly, while others live in fear. Corruption has not decreased. So how can there be economic growth? There should be timely decisions at the source. The main blockage is in Singhadurbar O
Based on a conversation with Kamal Dev Bhattarai