Editorial»
Devil in the detail
MAY 26 -
The recently unveiled Three Year Interim Plan (2010-11) has the noble goal of bringing down the proportion of Nepalis living below the poverty line to 21 percent from the existing 25.4 percent. Chances are, the target will be met. But will it mean anything at all? In the last four years, poverty level has been cut from 31 percent to 25.4 percent, but during the same period, income inequalities have been constantly increasing. The Gini coefficient, a popular measure of income inequality, notched up to 47.2 percent in 2008 from 36.7 in 1996. This kind of disparity is indicative of non-inclusive growth, where a tiny section of populace keeps getting richer while the income levels of those at the bottom of the economic ladder tend to stagnate. The effects of large income disparities have been further accentuated by the galloping inflation of nearly 10 percent.
The new plan intends to level the playing field through sustainable and equitable economic growth — mainly through a robust growth in the job market. Besides the creation of dignified and beneficial employment, regional economic balance and elimination of all forms of social exclusion are on the top of the agenda. Yet it is hard to be optimistic about the new plan. The plan’s biggest pitfall is perhaps its failure to respond to the rapidly changing socio-political and economic climate both inside and outside the country. It is formulaic, some economists have said, in its adoption of the same-old ‘mechanistic models’.
The biggest obstacle to pro-poor growth envisioned in the plan will be in revitalising the agriculture sector, which is the mainstay of Nepali economy contributing 33 percent to GDP. The challenges are huge. In the current year (the last of the ongoing plan) alone, farm sector growth has shrunk to 1 percent against the target of 3.6 percent, dragging down overall growth by two percentage points. Yields of the most popular crops (paddy and maize) plummeted last year, mainly due to the prolonged dry spell. But the state cannot escape its share of the blame: even while the yields were going down, subsidies for seeds and fertilisers were drastically cut; there was no initiative to secure international markets for Nepali farm product or to boost domestic consumption; nor were there enough irrigation canals in place to compensate, albeit partially, for a relatively dry monsoon.
The new plan has some encouraging pro-poor provisions. Better roads are to be built to connect all district and zonal headquarters in the next 2-3 years. Thousands of jobs, it is hoped, will be generated during the construction phase and when the roads are completed, they are expected to help farmers and other productive sector workers transport their produce faster and penetrate new markets. But on the whole what we have is yet another periodic plan packed with high-sounding poverty reduction mantras — ‘job creation,’ ‘ending social exclusion,’ ‘bridging the economic divide,’ ‘regional balance’ — with few concrete ideas of how to achieve them. The political will to devise innovative, workable plans and push them through once again seems to be missing.
Posted on: 2010-05-27 07:58
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