Mahat brings ‘Trails, Tremors and Hope’

Former finance minister and Nepali Congress (NC) stalwart Dr Ram Sharan Mahat launched his new book ‘Trails, Tremors and Hope: The Political Economy of Contemporary Nepal’ today.
The book – jointly launched by former president Dr Ram Baran Yadav and former foreign minister Bhekh Bahadur Thapa – deals with various ups and downs Nepal went through regime changes, promulgation of new constitutions, 2015-earthquakes, armed insurgency and peace process. "It is the second one after ‘In Defence of Democracy’," Mahat said addressing the ceremony.
“The first chapter of the book deals with ideological underpinnings, especially socialist philosophy adopted by the Constitution,” he said, remembering the Nepali Congress founder BP Koirala and his vision for socialism. “Likewise, the book also discusses Maoist insurgency followed by peace process and management of Maoist combatants, and issues formation of constitution.”
The book also discusses about Nepal’s foreign relation, especially geopolitics, and how the concept of Nepal being a ‘yam between two boulders’ is changing in the current times.
Describing about the book, Mahat said that the book also talks about 'competitive populism' that is increasing in recent years is fatal for the governance. “The book also dwells on Nepal’s hydropower potential, its present status, problems and prospects,” he said, adding that remittance and its impact on the lives of people, and need for rapid economic growth by attracting foreign direct investment are also discussed in the book. “The book raises concerns about financial sustainability of local governments.”
Apart from geo-politics and economy, the book also touches upon the issue of climate change and how Nepal has been affected by carbon emissions by two big fast industrialising neighbours China and India. After discussing about trails and tremors in Nepali polity and economy, Mahat talks about hopes in the last chapter of the book.
Speaking about the book and the writer Dr Mahat, former vice chair of the National Planning Commission (NPC) Dr Swornim Wagle said the most important chapter of the book is ‘Hope’. Mahat ends the book with hope, he said, lauding the book’s key message that is ‘no compromise with liberal democratic order.’
Wagle also compared the book with Mahat’s persona. “Performance evaluation, high moral and discipline are the key elements of Dr Mahat’s persona and so preaches the book,” he said, adding that the slowdown of economic reforms and indifference by incumbent government can also be read in the book.
“After going through the book, Dr Mahat seems to be becoming more flexible towards the liberal values,” said former finance minister Surendra Pandey, speaking about the book. He also blamed the author for failing to express his opinion on many issues like secularism and citizenship. “The book also fails to discuss the issue of land reforms as without land reforms no country in the world has been developed.”

Private sector loses its patron

Nepal lost the leader, who believed in democratic socialism, the role and capacity of private sector and the industrialisation of the country. Under late Girija Prasad Koirala's leadership during the early 90s, the country took major policy decisions that brought sweeping changes in the economy.

"The economy is surviving even today due to decisions that were taken under his leadership post-1990," according to former finance minister Dr Ram Sharan Mahat, who worked under him at different times and in different capacity.

Post-1990, the country not only saw multiparty democracy, the national economy also saw liberalisation. His government encouraged the private sector and the economy began to take off. Nepal implemented extensive reforms under his leadership to facilitate its integration with the global economy. Though the favourable initial effect of liberalisation on economic growth could not be sustained and inequality in distribution of income has continued to rise, the country saw many industries flourish post-1990.

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Kush Kumar Joshi said that foreign investment policy was brought by Koirala's government. "He was instrumental in bringing a foreign investment policy," he said.

Joshi remembers Koirala as a leader who always lent his ear to the private sector. "He always reacted spontaniously when the private sector approached him for his help," he said adding, "Koirala always fought for democracy. His post-1990 movement established democracy and brought about economic liberalisation."

Binod Chaudhary, president of Confederation of Nepalese Industries, reminisced, "When late Koirala became the PM, I was FNCCI vice-president. He totally trusted us and relied on us as we worked closely with his government in transforming Nepal's economy from controlled to liberal. Tremendous changes took place then which resulted in higher-ever growth, close to nine per cent, doubling of exports and revenue.

"History will see him as a leader who played a crucial role in opening up the economy by supporting the private sector and taking the economy to an unprecedented height," he added.

Industrialist Rajendra Khetan thinks that the economic liberalisation policy brought by his government helped boost the private sector especially banking, insurance, airlines, telecom and the media.

"Nepal entered the modern economic era under his leadership," he added.

"Koirala ended the licence-Raj and liberalised the economy," remembers Diwakar Golchha. "He brought various policy changes during his tenure as Prime Minister," he said adding that Koirala played a key role in the Nepal-India Trade Treaty that opened the door for Indian investment in Nepal. "Koirala was serious about bringing about an economic revolution through industrialisation," Golchha said.

Brought up in the industrial capital of Nepal -- Biratnagar -- Girija Prasad Koirala knew how the economy worked and was aware of the importance of industrialisation.

"He had strong faith in the capacity of the private sector and under his leadership post-1990 Nepal saw sweeping changes in its economy," recalled Mahat.

It is no surprise then that a man, who started his political career from Biratnagar Jute Factory as a trade union leader in 1947-48, always stood for a market-oriented economy and social justice.

"To him, socialism meant roads where there were no roads, drinking water where there was no drinking water and employment where there was no employment," he said adding that Koirala gave subordinates a free hand in implementing liberal economic policies.

Though various political parties came to power, the successive governments after Koirala's government followed his policy of economic liberalisation. They all understood that Nepal should find a way of translating its integration with the global economy into higher growth and sustainable development by carrying out complementary policies to enhance supply elasticities and offset some of the adverse outcomes by cooperative action in partnership with its South Asian neighbours.

Industries closed

KATHMANDU: Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has decided to close all industries throughout the country on Sunday to honour late Girija Prasad Koirala. It also conveyed its condolences at the demise of former Prime Minister and Nepali Congress president Koirala. Issuing a press statement, the umbrella organisation of Nepali private sector said, "FNCCI will always remember late Koirala as the leader of historical revolutions -- the people's movement of 1990 and 2006 as well as his role as the father of market economy in Nepal. The Nepali private sector cannot forget his contribution to the peace process and liberalisation of the economy that led the country towards prosperity. The duty of promulgation of constitution and making Nepal a prosperous country has shifted to other leaders," it said.

10-Point carta wraps up Microfinance Summit

With a 10-point declaration, the second Microfinance Summit concluded here today.
In the closing session of the last day of the three-day summit, Centre for Microfinance president Dr Haridev Pant read out the 10-point declaration.
"In the first summit, we had targetted to bring three million people within the reach of microfinance sector by 2015," he said adding that by now 1.8 million Nepalis are involved in the sector. "We are pretty much on track," he added.
The declaration also urged various sectors to contribute to make this endeavour successful and ensure economic growth of the country in order to alleviate poverty.
The declaration also stated that in order to bring about national development, the microfinance sector should be given priority as a primary sector. Microfinance is the only tool to uplift the life standards of the poor. He also requested for a reduction in taxes as the tax on microfinance institutions is as high as that for commercial banks.
The summit also requested the Finance Ministry to support it in inclusive economic development. "Microfinance institutions have been facing problems due to conflict in the Tarai region," it said. Mountainous and hilly regions are yet at a low reach from the sector due to geographical reasons and high costs.
Former finance ministers Dr Ram Sharan Mahat and Bharat Mohan Adhikari also took part in the last session held today.
The summit also requested Nepal Rastra Bank (NRB) for a microfinance policy that would allow the sector to mobilise deposite as it has been facing resource crunch. The sector is also looking to form a unified network to promote its concerns via advocacy and deliberations.
Some 722 people involved with microfinance took part in the second edition of the Microfinance Summit, where 19 working papers were presented. It also reviewed the progress made in the field after the first summit. The third Summit will be held in 2013.

The year 2008: Lost opportunity and demised economic revolution

At the start of 2008, except for fuel prices everything looked rosy. But, by the end of the year only fuel prices look rosy.
The year 2008 will go down in the country's history as one that saw experiments in policies and politics, all at the cost of the economy. Increased hours of power outages, insecurity, closure of industries and hotels by militant trade unions and the highs and lows of the stock market are merely some of the barbs that rankled this year.
When it started, the country had a liberal economist finance minister Dr Ram Sharan Mahat, who gilded the economic skyline with a golden brush. And now, when the year has come to an end we have the first Maoist finance minister Dr Baburam Bhattarai who believes that capitalism is the major cause of global economic doom.
Dr Bhattarai, on September 19, presented a deficit and ambitious budget of Rs 136.15 billion with tall claims of ushering in an economic revolution to change the centuries-old proletariat structure of Nepali society. The year 2008 leaves us with a shattered dream of economic revolution that we were promised. Nepal has lost one more year in political jingoism.
However, just after three months of the announcement of the budget and five months of the lapse of the current fiscal year, he is trying to stay afloat just to maintain the revenue target. His own militant trade union along with other ruling political party-affiliated ones are throttling industries, forcing their managments on the backfoot and making it generally difficult for them to even mainatin open-eye mode. The newly-formed industry ministry and its minister are trying even harder to understand the problems plaguing the industries that have seen nil growth in recent times. Frequent bandhs and increased load-shedding is bleeding the industries white.
The government may have eked out the revenue target but it has failed to start even a single development project and has double-failed in that it has not been able to create even a single job opportunity. Unemployment is forcing the country's young generation to fan out abroad in search of greener pastures but despite his claims the rebel-turned mainstream politico finance minister Dr Bhattarai has failed to provide them employment opportunities. He has been appealing to Nepali youths to return home but he has no explanation why they should when there are no employment opportunities.
Inflation stands at a high, high of 14.5 per cent despite claims by the central bank that it will crack whip on it and contain within 7.5 per cent. But its spiriling up, up and above, there is no respite to the people.
Of late, the country is getting singed from the heat of the global financial crisis, and migrant workers in Gulf countries as well as Malaysia - the major labour markets for Nepalis - are returning home, and that is certain to hit the remittance that is sent home.
Besides, there is capital flight due to one after another plant shutdown. Colgate-Palmolive is one example where the investors fled the country as they were not feeling safe despite the government's promises of creating an investment-friendly environment.
When the Maoists came to power, a section of society was bristling with excitement that the country would prosper and that there would be greater investment in development works while creating more jobs, but their dreams lie mute in the dust.
In the Tarai, mushrooming militant groups have got industrialists by the short hairs, spreading a donation-terror and making it difficult for them to do business. The law machinery has totally failed to protect industrialists and industrial areas.
The government has failed in all those very aspects that it had claimed that it would bring about change. The people's woes have not been addressed. In public view, it is instead the government itself that is suspected of corruption at the policy level. Instances abound.. Either in the name of declaring an energy crisis for the covert purpose of bringing thermal plants or clamping a ceiling on the purchase of vehicles priced beyond a certain amount just to protecting certain vested interests. You name, you have it. The list goes on...
The capital market -- propelled by the financial institutions -- saw a record high before plunging to the lowest of lows this year. It has no contribution of the real sector even after 15 years of operations. Capital market experts are not slow in pointing out that over and above all the mayhem and mess-up, the Maoist-led government has no 'definite policy' for capital market development.
The ministries of Industry and Transport Management & Labour failed to deliver on any score. The transport entrepreneurs have gone beyond the ministry pale and are forcing the general people to cough up hiked transport fares even after Nepal Oil Corporation, taking a cue from the global scenario, slashed the price of petroleum products four times in a row. Price cuts began on October 25. The slate is still open.
Burn, burn slower, that is the only message that 2008 is leaving us with. All else may be Humpty Dumptyish but it now costs less, on paper, to ride.
Let's ride, if only the transporters will have mercy.

21st commercial bank comes into operation

Finance Minister Dr Ram Sharan Mahat inaugurated Prime Commercial Bank Ltd, the 21st commercial bank in the capital on 28 September.
“Banks should extend their services to rural areas,” Mahat said adding that in proportion to increasing number of banks, the economy is not expanded and only finance sector is attracting more investment currently. “If it continues, it may not be sustained,” he said.
Speaking on the occasion, Krishna Bahadur Manandhar, acting governor of the Nepal Rastra Bank (NRB) said thatnew banks are coming as per government’s policy.Given the size of economy and the low gross domestic production (GDP), experts claim that the banks are overcrowded.
“But in the open market policy they cannot be stopped,” Manandhar said adding that those who cannot compete in the free market will close down.Prime Commercial bank has more than 359 promoters from different walks of life.Its authorised capital is Rs 1.5 billion, issue capital one billion rupees and paid up capital is700 million. It has the largest paid up capital among the commercial banks.
Narayan Das Manandhar, a seasoned banker and chief executive officer (CEO) of the bank said that Prime bank is the first bank which has largest paid up capital.
“We are bringing some more innovative banking products and services to offer to our clients soon,” he said announcing the starting of its services of ATMs, Internet banking, SMS banking and evening counter from today.
Narendra Bajracharya, chairman of the bank, on the occasion said that Prime is committed to prudential banking norms, financial transparency and good corporate governance.
“We are planning to invest on hydro, agro, infrastructure, road, communication-based industries,” Bajracharya said adding that it will bring some new packages for the SMEs also.
“Due to lack of opportunity for big investment, Nepali banks are concentrating on retail lending only,” Radhesh Pant, managing director of Bank of Kathmandu and president of Nepal Bankers’ Association said adding that after 2010, foreign banks will come to Nepal and local banks have to compete with them.
“Thus local banks should build competitiveness in skilled manpower, modern technology and they should be efficient in management,” he added.
The banks that have professional management team have registered tremendous growth. Thus professional management of banks is a key to compete with the foreign banks.

Budget: Mahat is a dreamer

The government unveiled Rs 168.99 billion budget on Thursday. It is higher by 17.4 per cent as compared to the budget for fiscal year 2006-07 and 28.2 per cent higher than the revised estimate for the same period.
The budget, for the fiscal year 2007-08, presented by the finance minister Dr Ram Sharan Mahat at the interim legislature parliament on Thursday, has been scripted in the backdrop of November 22 Constituent Assembly poll, and its no wonder that its more a political document than an economical one.
The budget has kept tax rates stable on most of the items except cigarettes and liquors, which is the usual practise.
It is not surely a visionary budget, as it has a lots of constraints. It is shaped in line with the common minimum agenda (CMG) of eight-political parties. The budget devoted Rs 28.39 billion to the education sector, higher than last year’s Rs 17 billion but received less applause.
The budget seems to have focused on agricultural development also.
Some called it balanced and others feel let down, and yet others term it ‘over ambitious’ and big. However, the budget in a whole falls short of the larger picture within which the government should try and address the concern of the common people and ailing industries.
What’s good for Nepal in the long run, is good for the capital market also. Thus, the finance minister has tried to continue to appease the private sector especially to the capital market.
The government has also targeted to produce 5000MW of electricity within five years. It has planned to woo internal and external investment for hydro power generation.


Budget 2007-08
Total budget Rs 168.99 billion
Recurrent expenditure Rs 98.17 billion
Capital expenditure Rs 55.26 billion
Net budget deficit of Rs 20.5 Billion.

Target
GDP growth rate 5pc
Inflation at 5pc
Rs 99.60 billion revenue
Rs 27.46 billion foreign grant
Rs 17.36 billion foreign loan

Sectoral allocations
Rs 28.39 billion for education
Rs 12.18 billion for health
Rs 10.89 billion for defence
Rs 9.56 billion for police forces
Rs 13.8 billion for local development
Rs 5.82 billion for agriculture
Rs 7.65 billion for hydropower
Rs 3.5 billion for Constituent Assembly polls
Rs 9.34 billion for roads

International Airport to be constructed at Nijgarh, Bara
Infrastructure Development Bank to be set up
Two cement factories to be set up in Dang, Surkhet
New Tourism Policy-2007 to be formulated