Nepal Needs Course Correction to Avoid Sri Lanka-like Crisis

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Nepal Needs Course Correction to Avoid Sri Lanka-like Crisis

Bijan Pant is a development economist. He is an advisor at Oxford Poverty and Human Development Initiative (OPHI), Secretariat MPPN, Oxford University. He has been serving as the chair of the Institute of Public Policy and Action Research (IIPAR) since 2015. Pant has also served an adviser (development and social sector) at the Office of the Prime Minister of Nepal for more than eight years. He is also a visiting professor at the University of Lodz. Sarad Pradhan of New Business Age recently talked to Pant about various aspects of development economics. Excerpts:

You were involved with Oxford Poverty and Human Development Initiative (OPHI) for a long time. What did it do?
It works on the multidimensional poverty index (MPI) which is based on Amartya Sen's 'The Idea of Justice'. It tries to find the causes of poverty. It challenges the growth that the World Bank and other agencies talk about on the basis of gross domestic production (GDP). For MPI, what matters most is the prosperity of people. MPI doesn't take growth as the middle point between the earnings of Bill Gates and say a Ram Bahadur from Humla. These two have different types of growth altogether. This is the main theme of OPHI.

About a month ago, India was supposed to export 10,000 quintals of wheat to Turkey. But Turkey rejected the supply citing quality issues. I fear the consignment will make its way to Nepal. Distribution is at the crux of the economy and development. People won't be able to get the dividends of development unless there is a fair and just distribution of resources. Development doesn't mean the betterment of certain individuals and groups of people. What matters most is whether the people at the grassroots level are getting this dividend. I joined Oxford because of the appeal of this project. We should fix the basics first, like education, health, drinking water, electricity etc. Traditional education alone is not sufficient. People need practical education.

The distribution of resources is not as easy as the World Bank and the Asian Development Bank are saying. Back in the 1980s, we were providing subsidies to farmers. But the World Bank said distribution of the same subsidy to farmers holding, say 10 bigha of land and 10 kattha of land, isn't going to work. WB proposed to remove subsidy and implement Structural Adjustment Program. We agreed with what WB said, but India continued its subsidy scheme. Result is, we are importing even paddy from India today.

It happened because our government was weak. It should have said - ‘no we will continue the subsidy scheme. We will provide more subsidies to farmers with low landholding, but extract subsidies offered to large farmers in other forms like tax.  

The United Kingdom during COVID lockdown provided almost the same salary that workers were drawing pre-pandemic period. Now with the situation improving, the government is taking it back. It is the duty of the state to look after people when they are in need.

Where does Nepal rank in terms of health in South Asia?
Talking about health, our health structures are good. But we don’t have duty officers. The state should have seen why there aren’t doctors, nurses and health assistants in structures that it has put in place. I will say we rank better than Afghanistan and Pakistan to some extent.  In India, some sections of society do not have proper access to health facilities even though India has some of the best hospitals of the region. We provide heli evacuation services for pregnant women in rural parts of the country, but do not think about ways to take proper health services there. Despite adopting a federal set up, many things are still centralised. If we do not decentralise in practice, our health facilities will be of medium level only.

When I travelled from Gorkha to Sankhuwasabha in the course of my research some two decades ago, I saw many buildings. I asked the locals what they were. They told me those were hospitals built by the World Bank. These buildings had proper American toilets. But there were no doctors. Another thing that I noticed is, people didn’t have ownership of those facilities. They were still saying ‘world bank’s hospitals’. Clearly those were not people-centric projects built in consultation with people.  

Donors mostly focus on infrastructure and reports. It doesn’t matter for them whether people are benefiting or not in practice. It is high time our state looks after the software part - which cannot be seen or felt but whose effect would be substantial.

What about education?
Unfortunately, there are a lot of disparities in private and public schools in Nepal. Such disparities also exist in the UK - there are three levels of schools - private, public and grammar. Here, we have some world-class schools where students are topping ‘A’ levels. Again, look at the scenario of public schools and colleges. Recently there was a news report of the examination board repeating last year’s question. The Vice-Chancellor was saying it happened due to the negligence of professors. Is it only negligence? It is the height of negligence. Unless this huge gap between public and private schools is bridged, the gap between haves and have-nots will continue to exist in our society.

So how can we improve the education sector in Nepal?
Instead of giving suggestions, I believe in my practice. In my native Gorkha, we applied ‘Grade Teaching Method’ in 18 public schools. We imparted classroom-friendly education to students of Grade 1 to 5. Our main thrust was that the students should enjoy the classroom environment. There was one main teacher and other teaching assistants. The teacher knows everything about the student - their meal time, what they like and what they don’t, their preferences, etc. Education is not about curriculum only. The outcomes of the grade teaching method were very good.  Students were willing to come to school, they were more interactive. It was wonderful. The 2015 earthquakes, unfortunately, affected our program for a few years. Now, we are preparing to implement it again.

Coming back to your question, our teacher's training program has collapsed. Such training is being continued for the sake of allowances only. The program should be discontinued at the earliest. Donors have no idea this program has failed because they are getting good reports.

We must admit we all failed in the overall management of the education sector. I would like to give you the example of a Gorkha school where our former Prime Minister Dr. Baburam Bhattarai studied. The school was getting the support of the United Mission to Nepal. It was like a grammar school of the western countries where extra-curricular activities were focused, way of life was prioritised, etc. But after the new education plan was implemented, we failed in systematic management. Our curriculum is fine. But we were very poor in management. We still are.

The people responsible for implementing the education plan at the ground level failed. Since the plan was implemented from the centre, they waited for the centre’s instructions for everything.

You said the curriculum was fine. Don’t you think our English curriculum was very weak compared to India?
We must admit our English curriculum was weak. Indians were forward in English even at that time because it was their connecting language. But our students are good in science and mathematics.

How do you see the country’s present economic situation?
Indicators do not look good. One of the reasons behind this is our depleting foreign currency reserves. This happened because we are dependent on imports for everything - from salt to gold. The fear of the economy falling into crisis will remain unless and until we become self-reliant on certain things. Today, everybody is saying we are headed on the path of Sri Lanka. It looks inevitable if we do not mend our ways. What we need now is course correction.  

Recently I attended a meeting where the vice chairperson of the National Planning Commission and advisers to the finance minister were present. I told them, please don’t hide facts.  Tell people where we are lacking and what we are doing to address them. For example, we are facing a shortage of chemical fertilisers every year. But why are we talking about opening a fertiliser plant in Nepal in the plantation season only. Since huge amount of forex is being spent on purchasing  fertilisers, why the government has not taken it seriously is a big question.   

In Sri Lanka, only the bubbles have cracked. Their structure is still intact. It is not that their system has collapsed. Talking about Nepal, our system is non-existent. We don’t have an authentic data bank.  Where are the findings of our research and studies? We are seeing so many governments, but are not finding a zeal to develop the country in any of them. Did any government say we are here for, say six months, and we will do these things in this period? No.

We are dependent on almost everything. The foreign currency we earn isn’t staying in the country because we use it to finance imports of almost everything we consume.

Are we wisely using foreign currency earned from remittances?
The need is to make a substantial and sustainable economy. But what we are doing is financing luxury goods. Few days ago the vice chairperson of the National Planning Commission (NPC) was saying that very soon every household will have refrigerators and washing machines. This shows where our priorities are.

The main thing is we need to increase our production. In this 21st century, you cannot stop the workforce from travelling to lucrative job destinations. But you can build an appeal here so that our workforce stays in the country itself. Ensure easy availability of fertilisers here. I travelled to different parts of the country recently and encountered farmers who were not getting good prices for their produce, but people are paying high prices for grains, vegetables and fruits imported from abroad. We have to eliminate the middlemen for the welfare of our farmers. This is where people need the state most. Today, we have elected representatives in all our municipalities. Why aren’t they delivering what people need the most? Are they supposed to make budgetary spending only?

While our products are decaying in farms, people are forced to consume farm products imported from India at a higher price.  We have the state's presence at the ward level today. Still, we aren’t seeing any change. Where is the state? Is the state only for making appointments?

We always point fingers at politicians? Don’t you think the bureaucracy and we, the people, should also be blamed?
Yes. But bureaucracy should take most of the blame. Not a single civil servant today has the zeal to serve the country. Bureaucracy has the authority to challenge wrong policy and programmes brought by the ministers. But have we seen this? We are seeing so many ills today because our bureaucracy is not working as per our expectations.

Our leaders and bureaucrats hold talks with India, China and other bilateral and multilateral partners. Are they negotiating for the betterment of the country? The answer is no. They are more concerned about what benefits they will get.

How do you see Nepal-India trade?
If you study Nepal-India trade closely, we will see our no-tariff goods are facing a lot of hurdles to enter India. These goods will have to go through all the processes like quarantine and quality tests etc. Perishable goods often get damaged in the customs itself. But such goods are coming unabated from India. Our trade deficit with India is well over Rs 700 billion. Interestingly, products like betel nuts and palm oil etc enter India without any ado. Nobody questions whether Nepal is growing betel nuts and palm. Few days ago, diesel prices in Nepal were lower than in India. At that time, we would see diesel imports on paper only because it used to be sold in India. We all know who is behind this.

Today, middlemen take most of the trade decisions of the country. Our bureaucracy isn’t doing anything to control this because our secretaries and joint secretaries are more concerned about their career. Nobody speaks anything about such activities. Somebody has to challenge this because no Robin Hood is coming to solve our woes.

Are we also failing on diplomatic fronts?
Again, it all is guided by Singha Durbar. See the recent appointments of ambassadors. An ambassador is a representative of Nepal in a foreign land. Their duty is to uphold the nation's interests in a foreign land. But are they doing it? Our leaders make tall claims in social media, but agree to whatever proposal is brought by middlemen for such appointments.

The parties and individuals leading the government shouldn’t have any prejudice as such. Their activities should be guided by our foreign policy. If they work as per the advice of ‘special envoys’ that keep coming, we will fail on diplomatic fronts.  Why is there a need to align with some countries or power when we are practising the foreign policy of non-alignment? And why do our President and PM have to meet whoever comes from a foreign country, right after they land in Kathmandu?  Bhutan which chased away more than one hundred thousands of people is delivering a speech on human rights in the United Nations. And we, who provided shelter to those people, are failing to make ourselves heard. This explains the sorry state of our diplomacy.

I have attended receptions organised by our ambassadors. I feel very disappointed because they are forgetting protocols. Instead of putting the interest of the country first, they are putting themselves and their personal interests first.

I don’t have much hope in our career diplomats too. Because most of the times they are busying building relations with political leaders to secure the best posting for them. Career diplomats are required to learn about the country they are being posted beforehand. I don’t think our career diplomats are doing this.

I am hearing preparations are underway to double the posts of joint secretaries at the ministry of foreign affairs. This is being done for career growth of near and dear ones.   

You have started coffee farming recently. Could you please inform us more?
I have realised that after participating in numerous policy dialogues, it is time to get some practical knowledge. Earlier, people in my native Gorkha used to sell oranges worth Rs 150,000-200,000 annually. Now, they are in frustration as orange trees have dried up. So, coffee farming is my effort to provide a new source of income generation for the local people. Our plan is to produce organic coffee and sell them in Japan and South Korea. The Japanese government has already shown interest in our project. Now, my focus is on building social capital. Instead of making tall claims, my efforts will be on providing some benefits to the local farmers.

Lot of Nepalis are working in foreign lands. Can’t we bring them back and utilise the skills they have learned?
In the 60s, South Korea sent thousands of its people to work in foreign job destinations. Later, it welcomed them back with skill and capital. South Korea has reached today’s stage because of that programme. India is doing the same. It is providing a lot of facilities for non-resident Indians. We should also create a conducive environment for Nepalis working abroad to come back with skill and capital. If we don’t do that, very soon we will have only an old population here as an energetic workforce will be in foreign lands.   

We have also seen foreign direct investment (FDIs) returning because they didn’t find a conducive environment here. Again I point my finger at the bureaucracy. It is its duty to remove any hurdles that individuals or firms bringing FDIs are facing. But our civil servants are more focused on their career growth. They are only doing routine work. Our bureaucracy is as good as dead, and our government is content doing business as usual. Who will deliver the results?    

We all know a multinational company recently tried to repatriate dividends by evading taxes. Media soon carried the story. Who do you think advised the company to evade taxes? Our bureaucracy. It advised the company - give me a certain percent of your earnings and you don’t need to pay taxes. It did accordingly.  

What do you think can be done to make our bureaucracy more proactive?
I often interact with new section officers at the Staff College. I always advised them to not focus on career development only. I tell them you should be aware of your role and responsibilities to the state. I always tell them bureaucracy has to challenge political leadership if they are making wrong decisions. That is because bureaucracy is the permanent government. Governments formed by political parties are periodic. So, you should correct if the government brings wrong policies and programmes. If a political leader is forcing a secretary to do something wrong, s/he should politely reject that. If middlemen are influencing ministers, secretaries should stop that. There should be unity among secretaries, joint secretaries and other civil servants. 

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