In The Slump

  3 min 14 sec to read
In The Slump

The Nepali economy is already in an economic slump and it may take more than a year to get out of it. There’s no need to explain that, even if the ongoing blockade along the Nepal-India border (jointly put in place by agitating Madhesi parties with tacit support from the Indian government) is lifted today, the damage already caused to the economy is not likely to be compensated even after the end of the current fiscal year. Perhaps it will take even longer than two years.

For ordinary people as well as business, it is natural to turn to the government in such situations of extremely unexpected and national crisis rooted not only within the country, but also abroad. Hence, there was a demand for a White Paper from the government. The government did oblige, but what it brought out is a document which, to the utter dismay of everyone, is devoid of anything expected from a White Paper. Everyone who understands the international best practices of issuing a White Paper had hoped that the Nepali government too would publish a document that not only clearly lays down government policies to tackle the ongoing problem and avoid a repetition of the same in the future, but also invite opinions from the general public and the experts. But the White paper issued on November 24, has failed to even clearly state the problem and its causes. As a result, also the solutions the White paper talks about are sketchy and far from likely to be implemented. There is no call for public opinion in the so called White Paper. Nor does it contain anything on which to offer feedback to the government. 

One good news emanating from the White paper, however, is that the government coffers are full to the brim with cash that can be used to solve the immediate needs as well as to make investment for the future. But the bad news is that, due to the utter scarcity of fuel, this money cannot be used. And the White Paper is silent on how and in which sectors is this money be used. 

Since the government seems to be unable to play its role of the ultimate saviour, private sector businesses and individual citizens have to learn themselves how to cope with the ongoing slump and survive it. That calls for a paradigm shift in the way our businesses and households are managed. For example, they have to minimise dependency on imported fuel by improving energy efficiency and developing or importing and adapting new technology; changing product lines, shifting factory locations etc. Obviously, these are not easy and some of these solutions need a much longer time to implement. And as JM Keynes said long ago, we will all be dead in the long run.

Thus, as the problem is beyond the capacity of the private sector and the households, the government should come out with a new White Paper, with a clear statement of the long-term policies, which will be adhered to religiously no matter who leads the government. That needs a broad political consensus as well as support from the entire private sector. The development of such a new White Paper will require a similar broader consultation with all the political parties and the entire private sector and the academia. 

The sooner the government starts this consultation, the better. If the government does not come forward, the private sector should take the initiative itself forming a broad coalition of all the major national level chambers, political leaders, economists and other academics in a way that is different from the Third Force that Dr Baburam Bhattarai says he is trying to form. This should be in line with what the Americans did in the Progressive Era. 

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