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On/Off the Record

By P.R. Pradhan

The economic policy is the main base for the success of a political system in any of the countries. Without the economic base, a political system cannot sustain.

What is our economic base it could be a good topic to debate! Nepal, at present, is a consumer country. Everything we import from the international market and the government revenue is based on taxation on the imported commodity. Until the introduction of the multiparty democracy, Nepal was exporting some items in the international market. Along with the introduction of the multiparty democracy, Nepal’s economy is seen down falling as the gap of trade deficit is continuously widening and in the past several years, indicators are at an alarming level. It is mainly because of an abrupt jump over the free market economy without any precaution and preparation. Our political leaders provoked by the westerners and economic experts educated in the west under the western scholarship are convinced that the state should not do business! In the meantime, the political leaders converted those profit earning government undertakings into political workers recruitment centres and fundraising agencies. Soon, all the government-run industries were ruined displacing thousands of local workers from the job and replacing Nepali products by imported one in the name of the free market economy.

Whatsoever be said, today, China is practicing mixed economy or say the fusion of capitalism and Marxism. The Panchayat system in Nepal was practicing a mixed economy since 1961 along with the introduction of the Panchayat system. First of all, the necessary infrastructural bases were developed in all sectors. The government identified areas of economic development and started to run industries, opened tourism market, among others. The government identified Nepal as an agricultural country. The system had given priority to make the nation economically prosperous.

To some extent, one should agree that a nation should not be engaged in business activities, in the Nepali context, or say, in the context of an underdeveloped nation, the private sector cannot do big investments. Therefore, considering the country’s need, the government should invest in such areas.

In general, economic theories have taught us that the market price will be based on demand and supply. Such a theory didn’t work in the Nepali context. For example, local vegetable farmers are selling their products at a very nominal price and consumers are purchasing very products by paying many times more than the actual price. Middlemen and brokers are exploiting both farmers and consumers. Again, local farmers are unable to get market for their products, on the other hand, brokers are importing the very products from India truck by truck. The government of the day is helpless as there is no effective mechanism of intervening in the market discouraging price curtailing by the middlemen. In result, both the consumers and farmers have been exploited.

Besides, Nepal is a country located in between two big economies and by size and population as well. The market price in the neighbouring country will immediately affect the price here. Again, open and porous border with India is a big challenge for Nepal’s economic development.

Nepal lies in the red zone for natural calamity. It is, therefore, the compulsion for the government is to keep buffer stock of essential food, petroleum products etc.

Time and again, we have experienced economic blocked imposed by India. Currently too, along with the Indian restriction on onion export, the price of the product has been surprisingly inclined in the Nepali market. Still, we have not been able to develop smooth networking for trade and transit to and via China. Therefore, the nation’s economic priority should be producing every possible product within the country substituting imports. Those west-based economists always talk about “cost-benefit analysis” but it cannot be practical considering Nepal’s geopolitical location and landlocked status. For decades, we are talking about establishing a fertilizer factory within the country. When the time comes for the feasibility study, the report comes negative. The fact is that our farmers are facing an acute shortage of fertilizer always. Even if fertilizer production is costly, the government must establish a fertilizer factory if it wants to promote agriculture.

Our experts and political leaders make big talks for selling our electricity to India and earning good profit, which, this scribe doesn’t believe. India is the only buyer of our electricity and thus there is an Indian monopoly on price. India will buy our electricity if the price is nominal and she will use such cheap electricity in her industries reducing the production cost of their products. If Nepali leaders and experts will think about producing cheap electricity and supplying it to the local industries, at that time, our products will be able to compete with the Indian products due to the cheap priced electricity. It is up to us either to sell electricity at a low price and import Indian factory products or support local industries by supplying low priced electricity by making our products competitive in the global market!

Every month, we are establishing a record of importing a huge quantity of petroleum products. We import petroleum products by spending foreign currency or say the US dollar. If increased consumption rate of locally produced electricity, we can reduce the import of petroleum product following an attractive amount of foreign currency saving and remarkably reducing the trade deficit gap.

Today’s global war is based on strengthening and protecting their own economy by the developed countries and the strategy they are playing is to find consumers for their products.

When China became the second-largest economy in the globe and the forecast that China becoming the largest economy by keeping the US behind, the Americans have launched a trade war against China. In 1978, China initiated economic reforms, which lead the country to the present position. We can learn a good lesson from China’s progress.

Dr Swornim Wagle, a western product, has very nicely presented his arguments in favour of the free-market economy. Perhaps, his concept is appreciable for the westerners, therefore, the former National Planning Commission vice-chairman has recently been rewarded to the position of the advisor to a UN agency.

When his interview was published in a local daily, many NC activists wanted to see him as the finance minister transforming Nepali economy! We saw Dr Yubraj Khatiwada, a west’s confidant, who is also an advocate of the free market economy. What he did when he became the finance minister, we all have experienced. After the multiparty system, we saw some American returned economists becoming the finance minister including Mahesh Acharya and Dr Ramsharan Mahat. Had they been able to make Nepal an economically self-reliant nation? Nepal became a more economically dependent nation and consumer country. Not to forget, the developed nations want to keep underdeveloped nations always being depended on them so that they can export their products to these countries. Let’s review ourselves, Nepal even being very rich in natural resources, has always remained a poor nation, why?

Why foreigners have imposed such an expensive system that the entire domestic revenue cannot meet the expenditure of operating the three layers of the governments; why they planted the seed of dispute among different communities; why the monarchy, the symbol of national unity was removed, let’s try to analyze ourselves!

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