The goal of an ideal tax regime is not to create an extractive system but to increase the yield from economic activities while running the state efficiently

Last month, some of us met visiting executive directors of the World Bank in Kathmandu. The fact that nine of 25 EDs came to Nepal demonstrated a level of curiosity the bank has about Nepal now. Nepal also seems to be increasing its engagement with the bank by entering into new loan agreements and starting new projects. Given the prevalence of both cost and time overrun in most of the projects in Nepal, one of the topics of discussion was “science of delivery”—how to improve the delivery of projects in Nepal.

Nepal’s ranking in World Bank’s Doing Business (DB) improved from last year’s 110th to 94th, mainly due to the improved scores in getting credit, trading across borders, and dealing with construction permit sub indicators. This news brought much needed joy to the finance ministry beset with the increasing criticism of how it has hitherto handled economy. The finance minister was said to be “giddy”, according to an expatriate living in Kathmandu who met him after the ranking came out, and a news conference was organized in the ministry the next day. The ranking, which had remained more or less constant for more than 10 years (see the graph), suddenly seemed to be moving in the right direction. The ministry officials rightly promised to create a momentum and improve the ranking in the years to come.

Two recently published global indices embody the motionless in governance in the last two years. The first, Global Competitiveness Index (GCI), ranked Nepal 108th out of 141 economies it looked at in 2019. Nepal was ranked 109th last year and 108th two years ago.

China has only enthusiastic well-wishers in Nepal. However, they fall into two categories. The first are naïve type, who think China is still a Mao-era country enthusiastic about exporting revolution, excited about the tales of Yan’an and Hunan and eager to share it with the rest of the world. Many of these enthusiasts have read Yang Mo’s The Song of Youth in their formative years.

Social protection programs are generally popular: they are important instruments of wealth redistribution and even if they are not considered equalizers, they are programs in the right direction.

Should policy making be more nuanced to accommodate the need of evolving demographic trend in Nepal? If phrased like this, the answer is likely to be an almost unanimous ‘yes.’ And yet, policy making tends to be rigid and changing a policy takes ages. Take for example, policies regarding women entrepreneurs. In a survey of managers and owners of 622 Nepali firms conducted by the International Labor Organization (ILO) two years ago, women entrepreneurs identified access to finance and difficulty of getting customers as two top barriers to growth.

As long as the market-related inefficiencies that actually gave rise to syndicates remain, the transportation syndicates will rise again, in one form or another

History suggests that Nepal-China railway project does not have an easy answer