Myth between Periodic Development Plan and Economic Development of Nepal
Background and General Observations
Last March one event related to the preparation of long-term periodic development plan for Nepal was discussed at the Development Council chaired by the Prime Minister. Earlier to this event the Nepal Policy Institute (NPI), together with some Nepali diaspora scholars, had held an interaction program, in Bangkok, with the vice-chair of the National Planning Commission (NPC) and some senior government officials. Nepal Policy Institute had shared some real challenges in development planning process, effective monitoring and timely implementation of plan. NPI had drawn NPC’s attention on a few drawbacks hindering planning processes and had requested government to address them forthwith for better delivery of targeted results.
The strategies are broad and ambitious, and the long-term development plan still envisages the traditional pathway of development. But there are no concrete proposals addressing the main concerns in the development of specific program activities, effective monitoring and timely implementation to achieve the set goals. Clearly, government needs to do more and strengthen institutional capability and adapt effective mechanisms stimulating efficiency in all sectors.
The province level development plan should be contemplated with decentralization concept as this will add to better planning. Planning at the Federal and Provincial levels may need to be clarified with new planning techniques while simplifying the processes and elaborating program strategy, responsibility, authority, accountability, monitoring and implementation procedures.
Remittances is the mainstay of foreign currency income and employment for millions of working age population. For a long-period of time to come sustainability of Nepal’s economy will remain heavily dependent on remittances and foreign employment. Therefore, significance of remittances for prosperity needs a thoughtful consideration in planning process and due recognition of contribution made by migrant workers to nation-building process.
Poverty level and foreign employment are closely associated with remittances. Remittances has largely sustained livelihoods of millions of Nepali families and maintained their living standards. According one report migrants’ savings rate appears to be less than thirty percent. In this it is not realistic to expect change in investment scenario without injecting additional foreign direct capital investment from other sources. If we are to exclude revenues from remittances Nepal’s poverty level could drastically increase above the current estimate of about 28 percent. Worst, Nepal’s economy may even collapse if imports continue to rise and domestic production of food commodities do not increase rapidly to match the demand
Development Plan presented estimates very high-income growth from US$ 1,500 in 2076 BS to US 4,100 in 2087 BS to US$ 12,500 by 2100 BS. It is unrealistic because this growth requires an annual growth rate of 14 percent to achieve this, not 10 percent growth. This progress is unlikely given the past performance delivery, poor capital investment, corruption, mismanagement and poor implementation capacity of the government entities.
Policy Goal Dilemma
The development plan, under preparation, is reportedly being built around populist nationalist theme “Prosperous Nepal, Happy Nepali”. It is unclear what ‘happiness’ is and how is it measured to against this goal. For centuries “happiness” has been a controversial subjective term for both philosophers and modern-day economists who tried to find a congruence in the usage, but somewhat differently.
Ancient Greek Philosopher Epicurus (300 BC) to modern intellectuals like John Stuart Mill explained happiness influenced by life science philosophy which refers to a balance of bodily sensations between feel good factor and pain and sufferings. Nothing else. Modern philosophers, including Jeremy Bentham, think the main goal was to attain a happy and peaceful life characterized by absence of pain and fear. In other words, ‘supreme good’ is the greatest ‘happiness’ of the numbers. Thus, “happiness” is nothing beyond physical sensations for it is a psychological pleasure devoid of physical pain and sufferings.
Most Marxists’ view happiness as a state of being or living through hard work and sweat. To others, the concept of happiness could be a mere reflection of world view and outlook on life. Most of us, however, would agree that happiness is human life’s greatest joy through experiences. Given this difference, modern economists are still searching for an equilibrium equation beyond Gross Domestic Production (or GDP) to appreciate the real sense of measure of ‘happiness’. As we know GDP only reflects amounts of goods and services an economy produces referring to a general growth, but this does not reflect the general well-being and living standards which is the function of overall economic development.
So, what is the happiness that development plan of Nepal envisages? But if the development plan vision is about happy Nepali in prosperous Nepal then this should be elaborated with specific indicators enabling timely measurement level of ‘prosperity’ and ‘happiness’ which the future development plan expects to deliver by the end of planed period. Otherwise, this may connote a mere rhetoric and a populist nationalist theme devoid of pragmatism, and realistically unachievable within the current planning cycle.
The other myth is about continuing with national pride projects to justify high economic value of investments. Past and current performance on such projects have been marred by escalating costs, poor monitoring, delays in implementation and faltering management of funds demonstrating inefficiency and lack of seriousness contributing to a major source of perceived state corruption. This raises serious question about the wisdom of pride projects, its economic value and sustainability. It is not contributing positively to questionable good governance for there is no independent Ombudsman mechanism for assessing merits and sanctions on successes and failures. Simply put, state-run pride projects are not contributing to economic sustainability. Instead, it is draining nation’s limited treasury and fueling widespread corruption.
Given the fact that world is confronted with the emergence of new knowledge economy and socio-economic transformation is impacting innovation, widespread application of information technology, dominance of seamless satellite communications and rapid development in artificial intelligence. Digitization, connectivity and automation are swiftly changing work culture and ethics, individual choices, social views and economic preferences and political thinking impacting future course of humanity and integrity of sovereign nation states. This scenario will spare no one and no economy can remain isolated for we are already interconnected globally with simple palm-size hand-held mobile device and space-based wireless communications.
Development planners must embrace these developments and chart new ways of articulating flexible and rolling plans, managing economy and doing businesses before disruptions in global economic trends and political discourse ensuring that no one economy is left behind as a result of impending fourth Industrial Revolution in the coming decades.
Challenges vs Long-Term Policy Goal
The past performance delivery of development plan indicates that there are structural challenges requiring rebuilding of robust monitoring of implementation mechanisms, predictable resource allocation for timely completion of program. No matter how glorious project may appear or sound but without timely completion there would be no better outcomes of government policies and plans.
In parallel, program ownership should be assigned to an entity with full responsibility and needed authority to complete implementation. Authority should include resource planning, allocation, mobilization and utilization and be held accountable. Failing to deliver outputs should be sanctioned without mercy.
Increasing food imports from India could become a serious economic security threat given that our memory is still fresh with the recent experience faced by citizens from the past cross-border transport blockade from India. This concern should be the prime consideration of the planners. Against this environment, Nepal Policy Institute had recommended following pragmatic policy consideration to the National Planning Commission during the Bangkok interaction program.
Pro-actively engage in foreign relations with economic power houses like China, India, ASEAN, EU, the UK and the USA, and enhance economic cooperation, and create a peaceful environment and favorable conditions for national economic development.
Explore new opportunities for strategic economic relationships with dominant economies of the world for greater access of Nepali niche products in world market, create best opportunities for investment and develop world class physical infrastructure to reduce transport costs with increased productivity.
Develop a market-based economy, stabilize the macro-economy, create the environment and drive for socio-economic development.
Consider economic restructure with new growth model; improve productivity, efficiency and competitiveness of the economy.
Enhance measures and implement effective anti-corruption measures.
Improve quality of education, human resource and scientific and technological capability.
Invest in sustainable, curative and preventative health care system closely linked with United Nations Sustainable Development Goals for economic development and strive for social advancement and equality and improve people’s living standard and quality of life.
Develop strategies on managing climate change effects, prepare capabilities to deal with natural disasters, enhance management of natural resources and environment protection.
Instill effectiveness of public administration and good governance.
18 April 2019