The Banker, a reputed magazine from the UK, named Dr. Ram Sharan Mahat as the best finance Minister of the year for the Asia-Pacific region. This news got mixed reactions in the media and on social media. On the one side, people were congratulating Dr. Mahat for this outstanding recognition of his contribution to the Nepali economy; on the other, there were criticisms about the open and liberal economic policies, and privatisation he championed as the finance minister of Nepal since early 1990s. However, there are other finance ministers like Dr. Prakash Lohani and Bharat Mohan Adhikary who have contributed to advancing a free, fair and inclusive economic agenda, and they should be duly credited as well.

Liberal policies

The economic condition of Nepal has been deteriorating over the years. Last year left a permanent scar in the economic history of Nepal mainly due to the loss of life and properties caused by the devastating earthquake, the Madhesi agitation and the blockade imposed by India. Economic losses have been faced by all sectors ranging from agriculture to manufacturing, health, education, transportation and tourism.

People in Nepal are often misinformed and misled that the current dismal state of the economy is a result of open and liberal economic policies. But these policies were adopted by many South Asian countries after taking a cue from the successes of East Asian and South East Asian countries. The rise of South Korea, Singapore, Taiwan and Malaysia was based on liberal economic policies. Lately China and India have adopted similar policies. Bangladesh is also striding ahead with such policies and is set to graduate from a Least Developed Country in 2018. Thus, modernisation of agriculture and industries, favourable environment for investment, public investment on physical and social infrastructures and promotion of good governance are the key elements to take the country to a high growth trajectory. Private sector should be encouraged to engage in producing goods and services that generate employment and revenue for the government to pay for social infrastructure and welfare.

The downfall

Nepal’s economic performance during the 90s was impressive with a growth rate of 6 percent and substantive progress in construction of rural roads, and expansion of health and education services. The private sector led the growth of the financial sector, air and surface transport services and energy, which generated employment opportunities for a substantial number of youths. Social welfare spending also expanded, particularly during the premiership of Late Man Mohan Adhikari. All these attempts provided foundations for robust economic growth.

In fact, the lopsided growth of the Nepali economy started with the onset of the decade-long conflict waged by the Maoists. The damages inflicted on Nepal’s economic and social system, destruction of vital communication infrastructures, and disruption of schools, health posts and water supply during the civil war are no secret. Moreover, the most formidable attack by the Maoists was on the social fabric and harmony of the nation, which the people are still paying the cost of. The royal coup of 2005 was another major turn in Nepali political history that contributed to the abolishment of monarchy. The transition period after the country was declared a republic lasted for quite long. It took almost 10 years to promulgate a new constitution, but since its endorsement, the country has plunged into turmoil with agitation staged by some ethnic groups in the southern areas of the country. The Tarai is not only the granary of Nepal, but also its industrial hub. Due to the agitation in the border areas, Nepal’s economy is now being held hostage and India has got an excuse to control the essential supplies and transport services.

Way ahead

The award given to Dr. Mahat as the best Finance Minister of the year at this juncture seems absurd to some people since the country’s economy is reeling under the impact of the blockade, thriving black marketeering, smuggling and poor accountability in governance. But it would not be fair to blame the policies and work modality championed by Dr. Mahat for these malaises. Other economies have been able to make headway over the last four decades by pursuing various economic agendas, but in Nepal’s case, the everlasting political instability, due to the vested interests of the political leaders and of the monarchs in the past, has hindered growth. The economic condition of Nepal now seems far behind even among the late reformers of Asia and Africa. The governments in Liberia and Rwanda in Africa and Bangladesh and Cambodia in Asia are leading the reform process and have been able to achieve substantial progress in reducing poverty in their countries.

It is time for the political parties to do soul searching. First, they should work in unison to advance economic agendas and encourage programmes for economic development. Basic tenets of the economy and the guiding policies should not change with the changes in the government. Second, the first generation leaders in all political parties should take responsibility of the falling economy and reach out to the reformers and younger generations. The Nepali Congress has a galaxy of reformers including Dr. Mahat, Mahesh Acharya and Minendra Rijal, among others. Similarly, Rabindra Adhikary, Gokarna Bista and Pradeep Gyanwali and some other young leaders are emerging potential leaders within the CPN-UML. Other parties like the UCPN (Maoist), Rashtriya Prajatantra Party-Nepal, Rastriya Prajatantra Party and Madhes-based parties also have some imminent personalities that are able to make a difference. Providing adequate space for these personalities within the party and within government would help to advance the Nepali economy in the right direction. Only with this kind of approach can Nepal produce best ministers in the days ahead.

Ojha is a former secretary at the Ministry of Commerce and Supplies