The grand inclusion project

  • Economic exclusion precludes the majority from opportunities afforded by social and political inclusion
- RAM C ACHARYA
The grand inclusion project

Jan 13, 2015-

The three transformations that Nepal has been through—from a kingdom to a republic, from a unitary state to federalism, and from a religious to a secular state—have been monumental. If followed by the right set of public policies, they have the potential of making Nepal a great nation—one with democratic institutions, social harmony, and economic prosperity. Absent these changes, the transformations will be relegated to changes of elites in power and positions.

This giant leap forward requires that Nepal becomes an inclusive society that provides equal opportunity to all citizens, irrespective of ethnicity, religion, and region. All documents from all political parties, all speeches and discussions, highlight the need to be inclusive, but the travesty is that the thorniest issues of exclusion have remained sacrosanct.

Identifying exclusion

Exclusion is multi-dimensional: social, political, and economic. Social exclusiveness occurred as one language, one religion, and one culture. Political exclusion is reflected in the low representation of Dalits, Madhesis, Janajatis, and highly disadvantaged groups in political and public institutions. Economic stagnation and income inequality have led to economic exclusion.

Social and political exclusions are more group related whereas economic exclusion is more individual related. Economic exclusion begets and magnifies the other two exclusions. With secularism, republic state, and federalism, group-related exclusions are somewhat diminished. But economic exclusion is intact.

Going further, social inclusion can be strengthened by making Nepali and Maithili the two official national languages and ensuring that people have the right to be educated till Grade 12 in one of these two or the English language. The other 114 languages spoken in the country can be promoted by arranging that students can take them as courses in schools.

Political inclusion has been initiated through proportional representation and federalism. As federalism is supposed to bring the government closer to the people, the hope is that it will be more representative. However, the argument that only federation along ethnic lines will be inclusive is wrong. In fact, federalism by itself, whether ethnic or non-ethnic, is not the right instrument to fix any form of exclusion.

The Interim Constitution has invoked a quota of 38 percent for Janajatis, 31 percent for Madhesis, and 13 percent for Dalits in Parliament. There are also quotas for these groups in civil services and admissions to higher education as well. The quota raises three concerns. First, it takes away the flexibility of voters to potentially choose better candidates. Second, as they are quite heterogeneous groups (48 Janajatis, 59 Madhesis, and 22 Dalits), the quota might be taken by few affluent ones.

Third, the level of education will be the single most important criteria for selection. According to the 2011 population census, at the national level, among people of ages 24 and above (potential age for Master’s) only 1.3 percent had completed their Master’s; only 4.6 percent of the potential age group had completed Bachelor’s, and only 11 percent had completed higher secondary. These percentages might be even lower for these groups, making the potential beneficiaries of these quotas a coterie.

It is desirable that public institutions represent the population composition. If unchecked, all groups are not capable of acquiring their fair share. But such fixes do not benefit the grassroots, an essential step for inclusiveness. Furthermore, political inclusiveness is not an issue confined only to the national parliament. More importantly, it is about effective participation of all groups at all levels of government, and management of schools, hospitals, and user groups. But economic barriers preclude the majority from these opportunities.

Excluded economically

Economic exclusion reflects the deprivation of three Es: endowment, employment, and  education. Take endowment. Based on the 2011 agricultural census, out of 5.4 million households, 71 percent are agricultural. Among them, 12 percent of farmers have land smaller than 0.1 hectare. Combining another 43 percent households, which have land less than 0.5 hectare, which is barely enough for subsistence, 54 percent farmers are functionally landless, 6 percentage points higher than a decade ago.

Unable to be self-employed, they seek employment elsewhere. Every day, a greater number (1,800) of the working age population is leaving Nepal for dangerous work in foreign countries than the number of people entering the job market (1,400). Yet, the unemployment rate is 22 percent. The situation is so bad that only seven in each hundred of the working-age population are engaged in the private sector, which creates three-quarters of jobs in developed countries.

Frustrated by present outcomes—not enough land and no job opportunity—parents look at the next generation, their children, as saviours. Alas, hope is dashed again. Among the population with ages of completing SLC and above, only 20 percent have done so. Among the remaining 80 percent, some have grade 8 education but most are illiterate. This has happened because they cannot afford private schools and public schools are a complete failure. For example, in last year’s SLC exam, 72 percent of students failed (compared to seven percent in private school) and only nine percent scored first division and distinction (compared to 73 percent from private school). And in public schools, only 4.4 percent of students who started first grade 10 years ago completed SLC; all others either dropped out completely or failed and repeated at least once. Even with such mind-boggling differences between private and public schools, still 80 percent of SLC examinees are from public schools.

Education is the most effective instrument for achieving inclusiveness. But Nepal’s education system turns inclusiveness on its head by systematically excluding the overwhelming majority of children from grade 1. Hence, the majority of Nepalis are excluded not only today but also generation after generation.

Way forward

Inclusiveness requires addressing the root causes of the deprivation of three Es. Land ownership has been the root cause of economic exclusion. The rent that landowners accumulate has killed incentives for hard work and investment in other employment generating sectors. Tax, monetary, and other regulatory policies should be designed in such a way that the return from urban land is far lower than return from small businesses and industries. Highly progressive tax rates at up-to-date market value for owners of more than one homestead, more than one house, and agriculture land that is barren are desirable policy tools.

Public spending should be geared towards job creation. With plenty of revenue for

the government and cash in the banks, there could not be a better time for big

infrastructure projects.

Finally, top-notch, scientific, publicly funded education to all up till the 12th grade should be mandatory and enshrined in the constitution. If the government is incapable of implementing this, public schools must be improved so that they are at least on par with private ones. As a second best policy, government should provide education vouchers (for tuition fees) till grade 12 so that students can choose their schools.

With these three transformations, social and political barriers to inclusiveness can be substantially weakened. Rapid economic growth, fuelled by participation of these excluded masses in economic activities and the provision of sharing benefits among all citizens, would eliminate remaining hindrances. However, in the absence of economic inclusion, any other inclusions would not generate tangible results. The choices, which only Nepalis can make, cannot be starker: build a prosperous great nation or squander the opportunity to elite entitlement.

Acharya is a Canada-based economist who conducts research on economic policies

Published: 14-01-2015 09:18

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