Foreign aid has become a necessary evil as it has been financing around 60 per cent of the development programmes, according to the experts.
Without developing our own competency, there is no alternative to the foreign aid, though our dependency syndrome is increasing, said former ambassador to India Prof Lok Raj Baral, speaking at a workshop on 'The Political Sociology of Aid in Nepal', organised by Alliance for Aid Monitor Nepal (AAMN) here today.
Apart from increasing the absorptive capacity of the country, the aid has also to be channelised to the priority sectors, he added.
State's regulatory capacity has to be increased for the better output of the aid, as the resource distribution depend on political influences, he said, adding that there is also a need to serious study on its contribution to various sectors like poverty alleviation.
Backing Baral, senior economist Prof Dr Bishwhambher Pyakuryal also agreed on a serious need to study on why foreign aid failed to respond in Nepal. "The impact of foreign aid on inflation, exchange rate and other critical indicators have to be studied in detail for effective public expenditure management and formulation of appropriate fiscal and monetary policy," he added.
"We should also be aware that over dependency on foreign aid could erode domestic resource mobilisation capacity," Pyakuryal said, adding that external aid should not suppress the domestic resource mobilisation capacity.
The government has also started monitoring development cooperation through Aid Management Platform to take maximum benefit of the aid. It has also asked the development partners to align their assistance with the Three Year Interim Plan that could bring more output.
Likewise, Prof Dr Krishna Bhattachan, on the occasion, asked to study the contribution of foreign aid on state and the society as the effectiveness also depends on strong state and society.
National Programme Manager of AAMN Prabash Devkota, meanwhile said that the foreign aid has to be linked with the political sociology to understand why foreign aid did not deliver economic success in Nepal. "Not only would it shed light on why foreign aid aimed at economic development failed in the past but also can analyse and explain what a country like Nepal should expect from foreign aid to achieve economic development," he added.