Unequal nation

  • Generous budget allocations for marginalised regions, gender and social groups can pave way for a smoother transition
- ARJUN B. KUMAL
Unequal nation

Jun 16, 2014-

As the government prepares to announce the budget, it is worth giving a thought to a few enduring and a few fresh insights into Nepal’s human development, which is characterised by entrenched inequalities and stifled productivity. This in light of realising Nepal’s long-term goal of meaningful graduation from a least developed country (LDC) to a developing country by 2022 and decreasing poverty significantly, as the finish line of 2015 to the Millennium Development Goals draw close.

Low HDI

With a low Human Development Index (HDI)—calculated in terms of life expectancy at birth, adult literacy, average years of schooling, and the Gross National Income per capita—score of 0.463, Nepal ranks 157th in the world and 7th in South Asia in human development. Additionally, according to the World Human Development Report 2013, Nepal scores 43 percent for freedom of choice—the ultimate goal of human development—and a paltry 3.8 on a scale of 10 in life satisfaction.

The recently released Nepal Human Development Report 2014 offers some explanations for this. The report unequivocally points out the problem of entrenched inequalities between regions, castes/ethnicities and gender, and the problems in productivities for the first time.

With a low HDI score of 0.435, the Far West is the least developed while the Mid West occupies an uneviable second last position with an HDI of 0.447. Five Human Development Reports have shown these two regions to be laggards since 1998. Similarly, with an HDI score of 0.434 and 0.482 respectively, Dalits and Janajatis have always fared worse than Brahmins and Chhetris, who have a medium HDI score of 0.538. Though gender inequality is improving, we still need to bridge the gap between women and men, more so in the Far West.

Multiple imbalances

Yet another study conducted by the Central Bureau of Statistics, the Annual Household Survey 2012/2013, shows that inequalities are deep-rooted in economic classes. The richest 20 percent consumes nine times as much as the poorest 20 percent. Inequality in urban areas is worse still—the richest 20 percent consumes 10 times more than the poorest 20 percent.

Nepal is also inflicted with low productivities and capabilities—one of the most crucial factors for human development. Take, for example, the employment of the country. Though 3.3 percent unemployment among 81 percent of the economically active population may not look very grim, if we look at the partially employed (13.4 percent) and the under-utilised labour force (27.8 percent), Nepal is an extremely low productive nation.

Naturally, we would expect that donors, who are supposedly here to alleviate poverty, to pour in funds where it matters most. But against our expectation, a recently published report by the Finance Ministry on development cooperation reveals that donors spent the lowest amount of their funds in the Far-West—$78.13 million, less than half received by the most developed Central region.

These are sobering data on inequalities for Nepal which aims to reduce absolute poverty to 10 percent by 2017. A draft approach paper for LDC graduation points out that Nepal needs an annual average economic growth rate of 9.2 percent over the next eight years and an additional Rs 17 trillion in investment to meet the projected Gross National Income per capita of $2,094 in 2022. And reduction of absolute poverty to 10 percent means leap frogging 14 percent in four years—we were able to reduce poverty by only 17 percent in 10 years between 2001 and 2011, for which remittances were primarily responsible, not increased productivity.

Inclusive growth

Tall as these orders are, there is no reason why the government should not aim for them. However, under pressure to leapfrog growth to achieve these goals, the government may focus on the sectors that are growing the fastest—services and manufacturing—and ignore slow growing agriculture where two-thirds of the labour force is employed, ever widening entrenched inequalities. However, the data cited above demands that the government to make a real big push for inclusive growth. For that, the government has to simultaneously get hold of the money, increase the spending capacity of the bureaucracy—a big chunk of the development budget does not get spent early on in the year and the politics of budget transfer comes into play every year in a scramble to finish it off by the year end—and spending it in the areas that increase employment and income for the poor and achieve results.

But public spending alone will not suffice. The contribution of the donor community and the private sector is equally important for fostering inclusive growth, though the government has yet to define what it means for Nepal. While the Koirala government should be able to create the right environment for the private sector to invest more and foreign direct investment to come in, it will have to, in the words of former finance secretary Rameshwor Khanal, “negotiate with donors” to invest more in infrastructure, energy, agriculture and tourism, and in the regions lagging behind.

The government also needs to spend more for gender and social groups. Stren-gthened inclusive policies in education and health top the priority for women, Dalits, Janajatis and Muslims. However, these policies, are, as Harka Gurung, the famed Nepali anthropologist, states, are “merely welfare-oriented” to pacify the disgruntled. We need policies that are geared towards “addressing structural problems that marginalise and impoverish these citizens”.

Delivering inclusive growth is imperative for the government. Indeed, while the Constituent Assembly discusses restructuring of the state, it is important that the government gives the people a sense that it is finally tackling spatial inequalities and disparities in development with generous budget allocations for marginalised regions, gender and social groups from this fiscal year onwards. This could pave the way for a smoother transition.

 Kumal works at the National Planning Commission. Views expressed here are personal

Published: 17-06-2014 09:23

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