Interim Plan

Following two days of 'intense' deliberations, the National Development Council, the apex policy-making body of the National Planning Commission (NPC), has finalized a concept paper of the three-year Interim Plan, to be implemented from mid-July. We congratulate the NPC for successfully completing its ritual of formulation of the plan, albeit with certain reservations
Let's first talk on the pros and cons of the plan. It is good that some of the goals of the plan, like achieving an average 5.5 percent economic growth, appears relatively realistic. We believe achieving the growth rate will not be a difficult task should conducive entrepreneurship prevail after the CA polls in November.

However, it is bad that the plan has incorporated some targets that are really ambitious, and difficult to achieve. Like, containing inflation at 5.6 percent seems unrealistic since we all know the government has very little influence on domestic inflation rate. For example, agriculture production, which has the largest weight in the basket of consumer index, is prone to unpredictable fluctuations due to erratic weather, so are its prices. Similarly, in no way can the future price of imported items like petroleum products and its consequent multiplier effects, be simply gauged.

Likewise, lowering incidence of poverty to 24 percent is something difficult to materialize. No doubt, we were able lower a remarkable 11 percentage points in the past. But, keep in mind that that happened in the period of seven years and the NPC this time aims lower poverty rate by seven percentage points within three years, that too at a time when the economy is showing no signs of recovery and growth rate remittance inflow is dwindling. We have reiterated many times in the past what the country lacks at the moment is not a good policy per se, but a sound entrepreneurial environment, which has been rapidly deteriorating in recent months.
Why has foreign investment dried up, and why is additional domestic investment constantly shrinking, despite the fact that borrowing rate is at its lowest and the economy is in excess liquidity condition? Because, the country has no investment environment at all.

Labor unrest, which often carries political agendas rather than labor interests, is at its height. Entrepreneurs have been compelled to compromise with forces outside factories, which has greatly inflated labor costs, thereby eroding competitiveness. We believe that the government should overhaul its failed internal security strategies and place a new and convincing one to improve the law and order situation.

Another important aspect we have raised is that the country desperately needs a powerful body to independently evaluate the implementation of the plan. The institution that formulates plan shouldn't be allowed to evaluate the progress of the implementation. It is shameful that the NPC wasn't able to bring mid-term evaluation of the Tenth Plan on time, which means that the institution failed in bringing timely corrections, which are vital to keep the plan on track by dealing with emerging challenges.

Source: The Kathmandu Post, June 27, 2007