After the global financial meltdown, the idea that “the government which governs the least is the best” has received a serious setback. The government has now become the largest entrepreneur even in the US and Western Europe. The debate and discourse on state intervention in economy have once again come to the fore. Therefore, it is high time to revisit our economic policy even here in Nepal.
Nepal initiated structural adjustment program in 1985 under the International Monetary Fund (IMF) conditionality for Special Drawing Rights to mitigate the Balance of Payment crisis. Later on, rampant economic reform policy measures were applied after the restoration of democracy in 1990 under the conditionality of IMF, World Bank and their Asian brother Asian Development Bank. “Deregulation”, “decontrol”, trade and financial “liberalization”, “privatization” and “globalization” were frequently used as economic mantras by the far-right to ultra-left policymakers and politicians in the country.
The data of multilateral institutions such as World Bank and IMF reveal that Nepal experienced less than 5 percent economic growth rate even in the “golden era” of liberalization. The neo-liberal policymakers and politicians were often mesmerized even with that sluggish growth rate when, in essence, they needed to be more concerned with the structure and quality of economic growth. The government did not take corrective action timely; even that economic growth rate became lopsided and flawed in Nepali economy and society. Determined efforts are needed to avoid economic growth that is jobless, ruthless, voiceless, rootless and futureless in Nepal.
Market alone cannot bring social justice and socioeconomic transformation. The role of state is equally essential. So, it is time to revisit our economic policy as we work to create a federal Nepal.
The widening of the vertical and horizontal disparities in economy is creating two types of Nepali societies that are polarized in terms of income and poverty. Nepal has become more divided in terms of access to health, education and political economic resources. The gulf between the poor and rich has widened even further during the last decades when the neo-liberals and free market policies assaulted the common mass. Out of US$ 5.4 billion GDP in 2003/4, US$2.88 billion was shared by the richest 20 percent of the population and only US$0.286 billion was shared by the poorest 20 percent.
Jobless growth: The overall economy grew a bit but did not expand the opportunities for employment creation. The unemployment rate has remained at 45 percent throughout the last two decades. Jobless growth has meant long hours of work and very low income for the hundreds of thousands of people in low-productivity agricultural and informal sectors of the economy.
Ruthless growth: This means that the fruits of economic growth mostly benefit the few handful rich traders, few assembling industrialists and the powerful elites, leaving millions of people struggling in poverty. Statistics reveal that the poor became poorer and the rich became richer during the same period. The Gini coefficient soared to 47.3 in 2005 from 35.4 in 1994/95. The share of income of the richest 20 percent soared to nearly 54 percent from 39.67 percent in 1994/95. Another indicator of poverty measurement – the Kuznets coefficient, which is the ratio between the share of income of the richest 20 percent and the poorest 40 percent – soared to 3.76 in 2004/05 from 2.82 in 1994/95.
Voiceless growth: This means that the growth of the economy has not been accompanied by an extension of democracy and empowerment of the people. Political repression of the mass and authoritarian tendency to control resources and power have silenced alternative voices and stifled demands for greater social and economic inclusion and participation. We have witnessed even policymakers debating whether they should choose economic growth or extensive participation, assuming that these are mutually exclusive. That debate is dead. People do not want one or the other; they want both. But too many people are still denied even the most basic forms of inclusive democracy. Voiceless growth gives women only a minor role in polity and economy. If politics and government are not engendered, it is endangered.
Rootless growth: This causes people’s cultural identity to wither. It is believed that we have more than 200 distinct cultures, many in a dangerous risk of being extremely marginalized or eliminated in the future. In some cases, minority cultures are being swamped by dominant cultures whose power has been amplified with that rootless growth. In the Panchayat regime, the government had deliberately imposed uniformity in the pursuit of nation-building, say with a national language and national attire.
Futureless growth: Such growth is “cosmetic” in nature, sustained only by remittance inflow and foreign aid/grant and INGOs spending in their “development enterprises”. The high rate of unemployment and underemployment is one of the key factors behind this kind of growth. However, increases in aggregate demand and national income increased due to remittance inflow, donor’s funding and INGOs’ spending but not because of real sector development like agriculture and manufacturing. Twenty five years later, World Bank is ‘convinced’ that the agricultural sector holds the key role in the economic development of Nepal. Who will take the responsibility to compensate the damage that has already been done?
In sum, as Adam Smith said, no society can surely be flourishing and happy, of which by far the greater parts of numbers are poor and miserable. The development that perpetuates today’s inequalities is neither sustainable nor worth sustaining in the future. Similarly, the structure and quality of growth demand more attention to contribute to esteemed and dignified livings, ensuring social justices, poverty eradication and sustainability. If we aspire to see social inclusion, socioeconomic transformation, the role of state is mandatory. It is obvious that market alone cannot bring social justice and socioeconomic transformation. The role of state is equally essential. So, it is time to revisit our economic policy as we work to create a federal Nepal.
b.p.bhurtel@gmail.com
Related story
Transparent policy-making makes people less cynical of their go...
