Truly topmost

The newly-formed Ministry of Peace and Reconstruction (MoPR) has said government property worth Rs 5,110 million was destroyed during the ten-year long conflict and that it would take at least three years to rebuild the damaged infrastructure. According to the statistics, the Home Ministry suffered the biggest loss (Rs 2,428.6 million) as police stations and administrative buildings were the main targets during the insurgency. The MoPR along with the National Planning Commission and the Ministry of Physical Planning and Works is now preparing the cost estimates for the reconstruction job.Now that the country has a separate ministry for reconstruction, it can be expected that all rebuilding works would be completed within the stipulated time period. And, for this, the government is preparing to hike the national budget. Donor agencies and nations have so far committed aid to the tune of Rs 320 million to the Peace Fund created for this purpose. The ADB, too, under its Rural Infrastructure Peace and Rehabilitation Programme, has pledged financial support for reconstruction of the damaged rural infrastructure. Unfortunately, however, vandalism and destruction of public and private property worth millions is taking place in the country even today. No reconstruction and rehabilitation work can kick off in a hostile environment and amid ongoing violence. So, establishing a truly lasting peace should be the topmost priority of all the political forces in the country.

Source: The Himalayan Times, May 17, 2007

Unacceptable

Prachanda and his rag-tag army committed the first blunder by declaring an armed rebellion back in 1996. Even if we agree on their claim that they raised awareness in the rural areas, the loss of human lives, infrastructures and economic deterioration do not justify the so-called people's war. The compulsion they confronted to join the mainstream politics also proves the point. Thankfully, the obdurate king helped them by not inviting the political parties until things turned unmanageable. The Maoists would have, otherwise, joined the mainstream in much weaker position. Alas! Even after joining the government at equal strength as that of UML, the Maoist leadership has not realized its myopic vision in handling the home-grown goons called Youth Communist League (YCL) which is ruining its political achievements, and also risking the sovereignty of this country. So, the second blunder the Maoist leadership has made is the unleashing of YCL.

Comrade Prachanda and his followers are turning deaf ears to the fact that the YCL activities are not directed at cleaning the society but at cleansing rules, norms, system and civilization of this country. The manhandling of chief district officers, vandalizing of district administrative blocs and attacking on other government officers are nothing but sheer highhandedness, disrespect to the rule of law, and typical to an autocratic and criminal mindset. The YCL cadres have gone beyond control. Not only in Mahendranagar, they have committed such crimes in various other districts and even in Padma Kanya College. Their assertion has been unabated because they have won the psychological war with the leadership. These people are taking the advantage of fissure in the Maoist leadership. Prachanda and Baburam look timid and helpless in controlling YCL because they do not want to lose them to the trio -- Kiran, Badal and Gaurav -- who is growing strong within the party.

If the Maoist leadership has consciously unleashed YCL to do whatever and attack whomever, their strategy is absolutely wrong and will have a detrimental effect on the Maoists themselves. Maybe, they are trying to manage the level of fear that general public had on them before they laid down their weapons. But if they achieve that goal, the CA elections will not take place. If they fail to achieve the goal, they will land on their face in the CA elections. Their acts will also cost the country dear because the feeble administration is simply unable to cope up with the pressure from separatists, fundamentalists and criminals operating in terai. It is high time the Maoist leadership reconsidered its stance and mulled seriously over the future of this country. At the moment, the YCL activities are unacceptable and the Post strongly condemns them.

Source: The Kathmandu Post, May 17, 2007

Negative intentions

It is unfortunate that the proceedings of the interim parliament (IP) have remained obstructed for a month in a row. MPs from the various political parties, including the Nepali Congress, the CPN-UML, and the NC-D, have vowed that they will not allow the parliamentary business to resume until the demands of the Tarai are addressed first. The Maoist MPs tried the same tack for several days but for different reasons. However, CPN-Maoist central member C P Gajurel said on Tuesday that his party would now not disrupt the House. Dinanath Sharma, chief whip of the Maoist parliamentary party, earlier tried to explain that their obstruction had been not over the issue of republic but for demanding a poll date for the constituent assembly (CA), judicial inquiry into the Gaur carnage, proper management of the Maoist cantonments, and corrections in the constituency delimitation commission (CDC). The Maoist MPs from the Tarai region, however, have not gone along with the Madhesi MPs of the other major parties. When MPs even from Prime Minister Koirala’s party are at it, who’s to blame whom?

Though belatedly, Koirala has given a hopeful sign by saying that he will take the initiative to end the impasse by discussing the issue with the eight political parties. The Maoist disruption was not desirable, either, but at least, one knew that its MPs behaved the way they did on party’s orders. But the parties like the NC, the CPN-UML, and the NC-D owe it to the public to explain whether their Madhesi MPs have in theory been defying the party whips. If they have taken a path of defiance, is it not the duty of the respective party leaderships to take disciplinary action? If they are toeing their parties’ tacit line, the leaderships of the parties may be seen to be hunting with the hounds and running with the hares. The public is likely to receive wrong signals from these ironies — the utter lack of party discipline or suspicion of the entire show being stage-managed. On Wednesday, too, the attempt to resume the House business fell flat, leading to its adjournment until May 24.

Blocking the House business, particularly so long, is not a healthy practice. Those Tarai MPs’ demands include a new commission to replace the CDC, which has already submitted its report, and a fully proportional representation system in the CA polls. The intrinsic merits of their demands may be debatable, but most of those MPs who are currently styling themselves as the champions of the Tarai people were conspicuously silent when the delimitation commission work was in full swing. This gives their present activism a ring of mystery. As for the Maoists’ demands, they can be resolved through talks. The in-house agitators should understand that if they continued to push their demands through an obstructionist strategy, tomorrow other MPs who are against, say, a fully proportional representation system, might follow suit. Where will all this lead the country to? The IP is the outcome of Jana Andolan II. If everybody is to hold the parliament hostage to their demands, the CA polls may well and sadly be sidelined.

Source: The Himalayan Times, May 17, 2007

Dependency syndrome: Issues for economic adjustment

Bishwambher Pyakuryal

Nepal’s remoteness and underdeveloped small consumer population has been wrestling with developmental dilemma to expand trade and investment and utilise tremendous geographical and ecological diversity. In the past and more so in the so-called post-conflict Nepal, whatever infrastructure development has been made, it is inadequate and inefficient. The task was completed at the expense of investment in direct production. The result is average growths of less than 3% most likely by the end of the Tenth Plan (2002-2007).Nepal’s dependency syndrome has weakened the development capability of the governance. Soaring external debt level and poor investment climate is likely to further affect macro-economic stability. Aid has failed to address wider inequality in income and mass poverty but the debt service ratio remains around one-third to one-fourth of the annual regular expenditure.

India’s policy influence in determining Nepal’s growth has necessitated a debate to find out if Nepal is India locked or India linked. The opinion may differ. There is, however, no debate that Nepal’s economy is irrevocably tied to India. When there is a misunderstanding between the two countries, the penetration of Nepali goods into the Indian market becomes difficult. The trade and transit dispute of 1989, for instance, resulted in 1.5% decline in Nepal’s economic growth. On the contrary, there was a dramatic growth in trade with India during politically stable times. For instance, after signing the Nepal-India Trade Treaty in 1996/97, the trade shot up from 25.9% in 1996/97 to 48.1% in 2001/02.

Currently, Nepal’s share in total trade with India is import dominating. In 2005/06, as against the export of only 25.9%, the import constituted 74.1%. Out of Nepal’s total import of Rs. 175108.0 million, the import from India alone was Rs. 109305.9 million, whereas it remained at Rs. 65802.1 million from other countries. Interesting characteristics has been emerging in the trade front. First, the ranking of Nepal’s priority exports to India such as zinc oxide, vegetable ghee, toothpaste, copper wire rod, M.S. Pipe, and mustard and linseed is declining dramatically. As an example, the export of vegetable ghee in FY 2004/05 was Rs. 4635.9 million but it declined to Rs. 3861.7 million in FY 2005/06. Secondly, the import has excessively increased and remains constant but there is a greater degree of export vulnerability reflecting a declining trend. Nepal should seek technical assistance to facilitate trade by eliminating non-tariff barriers in the existing trade regime. Efforts are also needed to design and negotiate on the provisions of the proposed Bilateral Investment Promotion and Protection Agreement with India for enhancing mutual investment benefit.

The widely discussed advantages of lower wages in Nepal are actually offset by low labour productivity necessitating the need for competitive exchange rate and higher labour productivity. As Nepal’s competitiveness in terms of price, quality and supply potential is weak, she has bad experience in locating proper market of the manufactured goods in India. The country needs to capitalise on her strength offered through economic reform programmes. For instance, Nepal with an access to cheaper raw materials is one of the open economies in the LDCs in general and South Asia in particular, which has an average tariff rate of about only 14%.Nepal has relatively satisfactory banking services, improved telecommunication facilities and enabling environment for foreign investors. In specialised fields such as hydropower generation, there is an opportunity for foreign investors to supply goods and services and technology. Provided the defunct Power Exchange Committee between India and Nepal is reactivated, there is a big prospect for India’s involvement in large-scale projects such as Upper Karnali (300 MW) and Pancheshwar (6,480 MW).

Although India has rescued Nepal in critical periods, Nepal’s increasing dependency has spoilt the innovativeness of the Nepali entrepreneurs. Not much success has been made in tourism sector, mineral exploration and exploitation, ICT, and infrastructure development. This is because of the unresponsive nature of socio-political and economic structure.World growth rate can be raised only if the increased incentives for innovation in leading countries are not counteracted by the loss of too many innovation sectors to the lagging countries with which they trade. The non-developmental market with limited demand around consumer electronics, fine textiles, fancy foods, and toiletries among affluent Nepali urbanites, contributes to persistent inequality and divergence. This necessitates reorientingeconomic planning to improve the incentives for investment and innovation through strengthening the institutions for addressing priority projects as the country’s own long-term self-interest.Dr Pyakuryal is professor of Economics, TU

Source: The Himalayan Times, May 17, 2007