According to the National Planning Commission, the latest thresholds for LDC graduation are (i) per capita GNI of $ 1,242 or more, (ii) HAI of 66 or more, and (iii) EVI of 32 or less. At least two of the three criteria must be met to qualify for graduation. Alternatively, a country also qualifies for graduation if its GNI per capita is twice of the minimum i.e $ 2,484 or more irrespective of HAI and EVI scores.As a result, effective and meaningful graduation requires high economic growth rate, which is the major challenge before the country. We would not resultantly achieve the forward-looking status with current volume of economic progress and performance. For the country to take stride, it has to make consistent annual economic growth rate of more than 7 per cent, a big jump from the current 4.6 per cent.
According to the 2015 Triennial Review, the GNI per capita should stand at USD 1,242 on which Nepal needs to make a whopping rise of $ 519 from current $703. However, the country has witnessed substantial progress on two other non-economic criteria for graduation – human asset index and economic vulnerability index. "Nepal has already met the criteria of human asset index and economic vulnerability index for graduation as per the 2015 UN Committee for Development Policy evaluation", said Dr Swarnim Wagle, Member of National Planning Commission (NPC).
Nepal's human asset index comprising the progresses made on health and nutrition index and education index currently is 70.4 and will be 77.2 in 2021. The threshold for graduation is 66. Economic vulnerability index is expected to remain at 21.89 in 2021 from 24.58 in 2015 whereas the threshold for graduation is 26. It shows Nepal's good signs of progress in meeting the UN targets to present her candidacy for graduation.
Albeit the improvements in social development indicators, the snail pace progress in the economic sector is a key bottleneck to elevate its overall status. With the passage of two criteria, Nepal can make a shift to the status of a developing country but it would merely be technical rather than meaningful. "Technical LDC graduation will not be a distant dream for Nepal. The challenge is to sustain economy with increased gross national income", Dr Wagle added.
The Asian Development Bank's recently projected the growth rate of Nepal to remain at 4.6 per cent in the current fiscal year, down from last fiscal year's 5.2, while World Bank has forecasted it to stand at 4.5 per cent. The indication is something to reckon with critically in the LDC graduation context. The ADB, however, has projected economic growth of 5.1 per cent in 2016-17. Even if the growth trend will go on accordingly, it would not be adequate to cherish Nepal's dream of meaningful graduation from economic front by 2022. The robust income base is spectacular to achieve the target in a true sense making majority of people feel that they are also graduating to a better status with the elevation of the country. On the other side, government's capital spending is important for economic growth which merely stands at 25 per cent of the total budget in the current fiscal year.
Minister for Finance Dr Ram Sharan Mahat stressed that putting productivity-oriented economy and culture at centre stage are the foremost need to graduate Nepal to the status of a developing country from LDC in an effective and meaningful manner. "A national commitment is a must to end obstruction to development works in a bid to ensure Nepal's socio-economic transformation", he said, adding that placing priority on economy could only lead us to leap forward to a developing country.
In his budget speech for fiscal year 2014-15, Dr Mahat had said that the country needs to invest minimum 30 per cent of GDP on fixed capital formation to earn the identity of the developing country. "However the average investment for the past three years stood only 22 per cent", he noted. Additional Rs 160 billion should be invested in the fiscal year alone.
"Technical graduation to LDC will not be a big cry for Nepal within coming seven years as the country has made substantial progress on non-economic criteria but the challenge is to sustain economy with increased gross national income", he added.
In the same tone, hydropower expert Gyanendra Lal Pradhan says Nepal needs to raise big chunk of money to achieve the target. It is indeed a herculean task for a LDC country like Nepal. Placing emphasis on the need of huge investment in infrastructure sector, he said hydropower development with active public participation can make the dream a reality.
"A high and sustainable economic growth and development in LDC graduation would require effective utilization of current hydropower resources to create pre-requisites for the economy to take off on a high, inclusive, employment centric and sustainable growth path", said Pradhan, who is also the Chairperson of SAARC Energy Committee.
Nepal should take optimum advantage of its geographical location between two economic giants China and India placing emphasis on trade able service, tourism, agriculture, hydropower, formation of gross capital formation with integrated production and economy first policy approach to level up the target.
Albert Einstein's popular observation – "The significant problems we face cannot be solved at the same level of thinking we were yet when we created them" – is quite relevant in our country's development context. The significant breakthrough is much anticipated to gratify with a different image and introduction – a mass feeling of being the citizen of a developing country. However, million dollar questions are ahead – are we really prepared to elevate our level of thinking and action to address the significant problem? How much intrinsic motivation we can gain to break the tradition, the old way of thinking and the old paradigms? Would it be barely a technical graduation or meaningful one? The tacit answers to these questions hold much water towards moving to the pathway of developing country in an effective and meaningful way. RSS
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