My Vision for Nepal | A prosperous country with equitable growth

A prosperous country with equitable growth.

 

Three ways to realize the vision:
1) Address the country’s agriculture failure.
2) Realize our industrial potential with pro-industry plans.
3) Invest in expressways like Kathmandu-Pokhara, Pokhara-Butwal.

My first exposure abroad was China, which taught me that a country can achieve progress even if it does not have raw materials of its own. It had to import raw material and machines, and its education system was also so-so, and yet they managed to grow. When I was doing my PhD, I read Robert Solow’s growth model that says that human capital is the determinant of long-term growth. Silicon Valley got richer because of their best brains. So I felt Nepal needed to focus on its education and use its available resources in order to move ahead. Development takes place over multiple generations; you only have to ensure that you are walking on the right path and working hard.

In Nepal, we have lacked a consistent direction, and we have been unable to take advantage of our resources. No regime could figure out our economy. There was no job creation and industrialization. In the past 70 years or so, some major causes of Nepal’s failure can be pinpointed. For one, as Mahesh Chandra Regmi has written, we abandoned the lush Tarai and went to live up in the less fertile hills. It should have been the opposite. I will now point out Nepal’s major failures.

The first is agriculture failure. Other Asian countries started growing on the back of agriculture. They invested in agro-based industries and made a lot of money. In Nepal, it was a neck-to-neck failure. Before 1950, we didn’t have irrigation facilities. After that, the goal was to establish rural co-operatives, use good technology and seeds, and establish research centers. But they never took off. Even the agriculture university failed to gain momentum.

During the 1973 petroleum crisis in India, Nepal was in a position to sell its grains abroad. We started building the Bheri-Babai irrigation canal but we never finished it. Our only way out is use of technology, GMO and improved seed. In their absence, there has been no growth of agro-based industries and instead our agro-imports have soared. Agriculture has been a failure. When people of Bhajhang are hungry, young people in Kathmandu get angry but they don’t give solutions. You have to increase yield and use technology but then you are opposed to technology. Your bleeding heart is useless.

The next failure is industrial failure. We said we would use our own resources to stimulate industries. The Panchayat-era industrial zones failed, and so did industries established back then. Even during the times of Juddha Shumsher (prime minister from 1932 to 1945), we knew Nepal had great hydro potential. Then we developed Chitwan valley to develop industries related to sugar, cigarettes, slippers, clothes, masala, and cement. We opened Hetauda Cement Industry. The then Finance Minister Surya Bahadur Thapa’s 1979-80 budget clearly showed that state-owned enterprises were a failure. But we continued to drag them to 1990. Nepal’s story of industrialization has been no better since.

Why not open all medical schools in Kathmandu and take hospitals all over Nepal? A medical college in Karnali is bound to fail sooner or later

 

The third is infrastructure failure, mainly on roads and electricity. The East-West Highway took nearly 40 years to complete, and it was not a good highway. We could never mobilize our own resources to build our highways. In Kathmandu, I can study for 18 hours. In Chitwan’s hot climate, I cannot even read for two hours. Extreme temperatures decrease our productivity. Air conditioners are thus important for a country like Nepal with extreme climates. A common man today wishes to have a washing-machine, a refrigerator, and an air-conditioner. We need better transmission and cross-border lines for these. The MCC was aimed at the same. But we are fighting to build every inch of the transmission line. We fare a little better in power generation due to privatization. The private sector is more efficient. Take the state-owned Chamelia Hydropower Project with per megawatt cost of Rs 580 million, while private ones are undertaking similar projects with per megawatt cost of Rs 150 million.

Nor could we build expressways. A country is all about connecting people. A Kathmandu-Pokhara expressway would cost around $2 billion. It’s not something we cannot afford and we can built it within 5-6 years. With a little spur, we can also link Chitwan to this expressway. But we don’t think of linking these major economic centers, which could result in huge benefits. None of our major projects has been completed without time and cost overruns.

And fourth, there is collective administrative failure. Let us reduce the number of ministries and cut down recurrent expenditure, which has in 15 years grown 14-fold while development expenditure has grown only eight-fold. Even our growing revenues are being funneled into recurrent expenditures. We are not a good place to do business in.

I even keep health and education under administration as the state provides for them. Upendra Mahato built Medicity Hospital for Rs 10-12 billion. What is wrong if it operates a teaching hospital? Why are we opposing it? My relatives say they won’t go to Karnali to study medicine. Even in the US and China, top universities are bunched together, which results in a positive spillover. Why not open all medical schools in Kathmandu and take hospitals all over Nepal? A medical college in Karnali is bound to fail sooner or later without good teachers and students. This hints at our administrative failure.

We have healthy foreign exchange reserves and thousands of students who have gotten good education oversees. We also have goodwill abroad. So this is a time for development. But for this we need to be liberal and pro-business and give up our self-interest. There are always tradeoffs. Moreover, it is always easier to destroy than to build. Rather than always protesting against everything let us find a way to prosper, to give collective positive feedback.

Let us improve this place we call home and people will come back. Nepalis are diverse but also connected and that gives us cohesive strength. Our other strengths are our natural beauty and natural diversity within short distances. Democracy is our strength too. We should welcome everyone here, encourage people to drive here from Bangladesh and Bhutan. If outsiders can bring in much-needed investment, what is the harm? 

When we address all these collectively, as we have envisioned in Vision 2030, Nepal will be a mid-income industrial country that has solved its road, electricity and drinking water problems. At the same time, we should ensure our development is equitable and benefits everyone across class and caste divides.