Growth of private schools fails to close widening gap between richer and poorer students

According to a report, increase in private educational institutions in Nepal has failed to bridge the gaps between the richest and poorest.

The report launched today at an event at Institute for Integrated Development Studies (IIDS) in Kathmandu also provides a comprehensive and invaluable analysis of the role of non-state actors in the education system of Nepal, and across South Asia. Produced by UNESCO’s Global Education Monitoring Report and Institute for Integrated Development Studies (IIDS) Nepal, the study ‘Who Loses, Who Chooses,’ reveals the inequalities in education experience and learning outcomes which have resulted from a rapid growth in the private education sector.

There has been rapid growth in access to education in Nepal in recent decades. If late enrollment is included, 95 per cent of children reached the last year of primary school, meaning Nepal almost achieved universal primary completion within a generation. As across the whole of South Asia, where private education has grown faster than any other region, much of this expansion has been in privately provided schools. Half of children in pre-primary and one quarter of students in primary and secondary education in Nepal attend privately funded schools, according to the report.

But the report warns that education quality is suffering. Learning levels are growing more slowly in South Asia than in the rest of the world, it reads, adding that only 39 per cent have minimum proficiency skills in reading by the end of grade 5 in Nepal. The report also calls for greater oversight of the quality of all schools by the government, whether schools are state or non-state provided. It notes the prevalence of unregistered madrasas and Buddhist and Hindu schools in Nepal. “Up to 3,000 madrasas may be operating unregistered,” it adds.

“Governments need to collaborate with the range of private and other non-state schools and universities in Nepal to ensure fruitful regulations and financing across the full system,” GEM Report senior policy analyst Priyadarshani Joshi, said on the occasion.

The report acknowledges that Nepal and India prohibit profit making in education in the country. However, it notes that the rise of private education has increased financial burdens on households all the same. Household incomes currently account for 63 per cent of total spending in pre-primary education. Due to stigma regarding the quality of state education, individuals are more likely to invest in and support private industries. The report finds that in two districts, even the ‘best’ public schools struggled to attract students from wealthier backgrounds.

Growing competition in the labour market has also resulted in an increase in the demand for private tutoring, adds the report, citing that the positive example in Nepal of regulations on tutoring for other countries in the region, including the quota for tutoring for marginalised groups, the caps on fees and the necessity of a government permission for private tutoring classes to be established. Nonetheless, as with tutoring across the whole region, the report warns about the practice continuing to widen education gaps between the richest and poorest.

The also recommended five policies to enhance the quality and equity of education in South Asia:

1. Fulfil the commitment to make 1 year pre-primary and 12 years primary and secondary education free. Most countries in the region are not nearly reaching the necessary minimum funding to ensure free access to education.

2. Set quality standards that apply to all state and non-state education institutions and improve state capacity to ensure their implementation. Governments should work to establish universal standards for quality of education in both state and non-state schools to promote more equitable outcomes for all learners. Governments should dedicate funding to frequent school inspections and assessments to ensure parity across sectors.

3. Establish common monitoring and support processes that apply to all state and non-state institutions through a system of clear and standardised regulations on teacher training, curriculum, and testing. This will help to ensure that students in all education systems receive a more equitable education.

4. Facilitate the spread of innovation through the education system for the common good.

Mistrust between governments and non-state actors has negatively impacted both standardisation and student performance. Governments should recognise good practices used by non-state actors and work to incorporate them into public education systems.

5. Maintain the transparency, inclusivity, and integrity of public education policy processes. Open communication between all actors should be prioritised, with the common goal of increasing education quality and access of all learners at the heart of discussions.

Migration can boost South Asia’s recovery and support long-term development

As South Asia reels from the impacts of unprecedented economic shocks, migration can boost its recovery and support long-term development, says the World Bank in its latest regional economic update.

‘Coping with Shocks: Migration and the Road to Resilience’ is the subject of a two-day conference that opened today in Kathmandu, organised by the Institute for Integrated Development Studies (IIDS) and the World Bank (WB), according to the multilateral development partner. The conference provides academics and researchers a platform to discuss the current situation, challenges and advancements related to migration in South Asia.

Migration drives economic growth as it allows people to move to where they are more productive. International migrants from Bangladesh, Nepal, Pakistan, and Sri Lanka, who work in the Gulf states, for example, earn up to five times what they would at home and help generate some of the largest remittance inflows in the world. Nepal derives an estimated 20 per cent of its income from remittance inflows, and in Bangladesh and Pakistan, remittance revenue accounts for 6 per cent and 8 per cent equivalent of their GDP, respectively. Migration also allows people to adjust to local economic shocks, such as extreme-weather disasters, to which South Asia’s rural poor are highly vulnerable, the report adds.

“While migration has numerous economic benefits, the costs of moving such as credit constraints, lack of information, and labor market frictions prevent them from being fully realized,” said secretary at the Ministry of Labour, Employment, and Social Security Eaknarayan Aryal, addressing the conference. “Nepal and countries across South Asia must work to facilitate labour mobility as doing so is vital to the region’s recovery and resilience to future shocks,” he added.

Poor South Asian migrants, many of whom hold temporary jobs in the informal sector, face several challenges such as precarious labour market conditions, visas tied to employment, and limited access to social protection. The Covid-19 pandemic exposed their long-standing vulnerabilities as they were disproportionately affected by restrictions to movement. However, the later phase of the pandemic has highlighted the crucial role migration can play in facilitating recovery. Survey data from the report suggests that in late 2021 and early 2022, migration flows are associated with movement from areas hit hard by the pandemic to those that were not, thus helping equilibrate demand and supply of labor in the aftermath of the Covid-19 shock. In Nepal, by late 2021, migrants were 13 percentage points more likely to be employed than those who did not migrate after facing job loss during the early months of the pandemic.

“Migration is picking up again in South Asia, but remains slow and uneven, raising concerns that the pandemic shock has had long-term impacts on the costs and frictions associated with it,” said World Bank chief economist for South Asia Hans Timmer, on the occasion. “Policymakers must address these often-prohibitive costs and frictions and incorporate measures to de-risk migration.”

The report offers several recommendations on cutting the high costs of migration, including drawing bilateral and multilateral agreements, strengthening the remittance infrastructure, and offering information and training programmes to help potential migrants make better decisions about moving. It also offers recommendations on de-risking migration through means such as more flexible visa policies, mechanisms to support migrant workers during shocks, and social protection programmes.

“South Asia is the largest beneficiary of remittance in the world,” IIDS executive chair Dr. Biswash Gauchan said, adding that remittance has played a central role in alleviating poverty, coping with economic shocks, and making substantial progress toward sustainable development goals in Nepal. “However, the socioeconomic and political cost of migration is also very high in the country where a substantial number of the working-age population has gone abroad in search of employment.”

Covid-19 triggers largest disruption of livelihoods in human history

The Covid-19 pandemic in South Asia has triggered the largest disruption of livelihoods in human history, affecting over 1.7 billion people. The disruptions to supply chains, lack of access to health and nutrition services, and overwhelmed social protection system is leading to increased food and nutrition insecurity in the region. To address many of the long-standing issues underpining food insecurity and poverty the International Food Policy Research Institute (IFPRI) officially released the 2020 Global Food Policy Report (GFPR) today.
The IFPRI 2020 Global Food Policy Report (GFPR) highlights the central role that inclusive food systems play in meeting global goals to end poverty, hunger, and malnutrition, and offers recommendations for making food systems more inclusive for four marginalised groups including smallholders, women, youth, and conflict-affected people. The report also provides analysis on transforming national food system in several countries like Bangladesh and Ethiopia, and advice on development of food system in different regions worldwide.
 “Over the past two decades, Nepal has gone through atypical structural transformation, marked by desertion of agriculture and epic out-migration of young people,” chair of IIDS and former vice-chair of NPC Swarnim Wagle said, adding that after Covid-19, reliance on remittances will fall, and there is urgency to find gainful jobs for millions. “Renewed agriculture can become a source of inclusive growth if we incentivise high-value-to-weight products and food processing, streamline the subsidy regime through targeted digital transfers, and invest heavily to combat deficits in hard infrastructure as well as the softer menace of childhood malnutrition.”
“These efforts need to be undergirded by enhanced capacities across all tiers of Nepal’s newly federated governance structure,” he added.
“Food systems provide opportunities to improve food and nutrition security, generate income, and drive inclusive economic growth, but even in prosperous times too many people are excluded from fully participating in them and securing these benefits,” said director general of IFPRI Johan Swinnen. “In times of crisis like today, inclusion is an even greater imperative for protecting the most vulnerable.”
“Covid-19 has struck the world at a time when experts were already deliberating on the need for a paradigm shift in the agri-food sector that could address the broader challenges of sustaining the humanity,” member NITI Aayog of India Ramesh Chand said, adding that Covid-19 is expected to lead to a significant shift in dietary preferences, adding new dimensions to the food system thinking.
South Asia’s steady progress has reshaped the region’s diverse food systems over the past decade. This regional transformation has been marked by strong economic growth, rising real wages, and the expansion of nonagricultural sectors. In recent years in South Asia the growth rate of high-value foods has been greater than that of cereals. The increase in income and greater diet diversity has also led to growth of the food processing sector. Yet post-harvest losses continue to be high in South and Southeast Asia compared to other regions.
“South Asian economies are transforming. Real wages are rising, shares of agriculture in GDP are declining, and nonfarm employment in much of the region has surpassed that of farm employment,” director of South Asia, IFPRI Shahidur Rashidsaid, adding that these structural changes will bring about changes in food system with new challenges, the challenges of ensuring that food system transformation is efficient, inclusive, and sustainable.
The report recommends three key policy levers which will be critical in making the food system transformation inclusive and sustainable: (1) reforming agricultural input subsidies and price supports; (2) improving the targeting of social protection programs; and (3) building effective institutions for governing the emerging food system. Reforming some of the age-old programs on agricultural subsidy and price policies could free up public funds, to invest in fostering more inclusive, equitable, and gender- and nutrition-sensitive food systems.
In South Asia, social safety net programmes can be effective platforms for making food systems inclusive. “IFPRI-WFP’s Transfer Modality Research Initiative in Bangladesh found that providing young mothers cash transfers combined with nutrition behaviour change communication reduced child stunting by three-times the national average decline,” senior research fellow and country representative of IFPRI-Bangladesh Akhter Ahmed said, adding that this is substantial evidence on the potential of social transfers to enhance nutrition.
Establishing effective institutions for food system governance is another strong policy lever for inclusive food systems. “Food system governance have significant potential for promoting an inclusive food system but the political will is required to provide adequate funding and to respond to bottom-up pressure from consumer rights groups and civil society organisation,” programme leader at the Pakistan Strategy Support Programme of IFPRI Abdul Wajid Rana said.
“Indian agriculture has shown great resilience during the Covid-19 pandemic,” secretary at the DARE and director general at ICAR Trilochan Mohapatra said, adding that it has, however, also highlighted the needs for policy thinking beyond staple food to ensure nutritional balance and environmental sustainability. “The current pandemic will accelerate the process of nutrition-sensitive, inclusive and sustainable agricultural growth.”
The report also features chapters analysing developments in agri-food systems in Africa south of the Sahara, the Middle East and North Africa, Central Asia, and Latin America and the Caribbean.
A virtual event was co-organised by IFPRI South Asia, Indian Council of Agricultural Research (ICAR) and Trust for Advancement of Agricultural Sciences (TAAS) yesterday, to present the highlights of the report in the South Asian context. The policy makers and thought leaders shared their perspectives in light of the Covid-19’s impacts on our food systems.
The Covid crisis has accelerated the importance to reshape our food systems making them more inclusive, sustainable, and resilient. The disruptions to supply chains, lack of access to health and nutrition services, and overwhelmed social protection system have led to increased food and nutrition insecurity in the region. Consequently, the awareness and need to work towards inclusive food systems have been amplified for all countries in the region.

Improving capacity of local levels must for successful federal transition in Nepal: World Bank

Easing tensions between different levels of the government and improving capacity at the local levels would support a successful federal transition in Nepal, a new World Bank report reads.
The report ‘South Asia Economic Focus’ under the theme of ‘Making (De)centralisation Work’ also stated that the transition will need time to deliver better services and managing the expectation of people will be helpful for this. It is the report that the global development bank publishes every six months.
Nepal has adopted federalism under which separate the governments have been formed at three levels; central, provincial and local with relatively more power to the provincial and local levels compared to the past. There are elected governments at all three levels since the elections were held of all levels in 2017.
Despite high expectations of people from the federal set up, service delivery for the sub-national governments – provincial and local – has been challenging due to their capacity constraints, according to the report. “Three of the seven provinces spent less than half of the budgeted expenditure in the last fiscal year 2018-19 and some local government seems still dysfunctional.”
The World Bank report suggested – for decentralisation to work – prioritising both decentralisation and centralisation highlighting the important role of sub-national governments to ensure better service delivery and the central government’s role to create integrated market and ensuring harmonious standards. “The central government can set the standard for education, health care, the environment and other services,” it reads, adding, “Without effective central government, decentralisation can degenerate into fragmentation.”
Highlighting the report’s findings, on the occasion, chief economist for South Asia of the World Bank Dr Hans Timmer said that without effective central government, an integrated market for the businesses could not be created nationwide. “You can learn from the example of Pakistan where different laws and rules in different provinces are creating chaotic situation,” he said, adding that, however, in the case of Nepal, the sub-national governments don’t have enough power. “A lot of infrastructure projects are handled by the national government. In such a situation, it is difficult to implement decentralisation effectively.”
Sharing experiences about running local governments in the last two years, mayor of Chandannath Municipality in Jumla Kantika Sejuwal said that the local governments are more empowered by the constitution as it gave them rights to frame their own laws and rules. “As such laws should be consistent with the federal laws, the federal governments’ delay in formulating laws in line with new constitution, hampered the local government's effort in creating legal framework for the service delivery.”
Complaining about the little resources allocated for the local levels, she said that local governments should also be involved in large scale infrastructure projects.
Prof Dr Pushkar Bajracharya of Tribhuvan University (TU), on the occasion, stressed on the need for central government incentivising the local governments provided they make proper initiative for the development of the local economy.
Likewise, chairman of the Institute for Integrated Development Studies (IIDS) and former vice chair of National Planning Commission (NPC) Dr Swarnim Wagle said that both central and sub-national governments have roles to play to make decentralisation a success. “The central government should be involved in the areas where there is an economy of scale  and maintaining law and order, judicial system, water resources and creating common standards in the areas of education,” he said, adding that local government should, however, be given full authority in public service delivery.

Nepal to achieve 7.1 per cent growth: World Bank

The economy is estimated to grow at 7.1 per cent in the current fiscal year 2019-20 primarily driven by private investment and consumption, according to the World Bank. However, the World Bank has projected a slowdown in Nepal’s economy in the next two fiscal years in line with a global downward trend.
The World Bank – in its report ‘South Asia Economic Focus’ published on Sunday – said that the gross domestic product (GDP) growth rate has forecast to grow at 6.4 per cent in fiscal 2020-21 and at 6.5 per cent in 2021-22. The Asian Development Bank (ADB) has, however, projected a growth rate of 6.3 per cent while the Institute for Integrated Development Studies (IIDS) – a domestic research wing of Kathmandu University – has estimated 6.02 per cent growth for the current fiscal year. The government has, however, set a target of 8.5 per cent growth to make Nepal a middle-income country by 2030.
While targeting the economic growth rate, the government mainly considers the supply side and agriculture production in particular, as a base but lack of coordination among the key government institutions and a mechanism to conduct a trend analysis in changing macroeconomic variables has led the government to make rampant projections, though the government targets always remain ambitious.
The World Bank's forecast is based on soaring services and construction activity due to rising tourist arrivals and higher public spending. The government aims to boost tourist arrivals to 2 million during the 2020 with the help of Visit Nepal 2020 campaign. According to the World Bank, the construction of big hotels and the completion of Gautam Buddha International Airport in Bhairahawa will contribute significantly to Nepal’s growth rate.
Likewise, the World Bank expects investment and government consumption to drive the economy to achieve the targeted growth. It has pointed to an increase in public consumption due to increased spending on salary and goods and services. In addition, efforts aimed at building the capacity at the sub-national levels and the implementation of performance-based contracts at the federal level will also result in higher overall public spending.
“The implementation of the 2019 national work plan to minimise the trade deficit along with investment-related initiatives like establishing a one-stop service centre, will support private investment,” the World Bank report reads, adding that the growth of private sector consumption is expected to drop due to increased import tariffs on selected agricultural products and consumer goods.
Government spending will increase to 29.7 per cent of the gross domestic product (GDP) by 2021 due to increased salaries of civil servants, higher social security spending and a pick-up in capital expenditure, according to the report.
The government might not achieve the targeted economic growth rate even with a rise in public expenditure as the capital expenditure is below the level necessary to achieve the growth rate.
However, the World Bank says that the country’s current account deficit is likely to moderate to 5.9 per cent of GDP by 2020-21, as spending on federalism-related infrastructure and post-earthquake reconstruction tapers down and the government starts implementing a work plan for encouraging export-oriented and import-substituting industries.
Meanwhile, the report also reads that the persistently high trade deficits would raise the risks to the external sector, especially if remittance growth slows down due to geopolitical tensions in migrant receiving countries and uncertain oil prices. Similarly, lower remittances could also impact the liquidity in the financial system.
The World Bank report also projects rise in inflation rate marginally with higher public sector wages, increases in import duties on agricultural and industrial goods, and the removal of value added tax exemptions on some intermediate goods and services.
According to the World Bank, Nepal’s inflation will remain between 4.5 per cent and 5 per cent, though the current macroeconomic report published by the central bank revealed that inflation reached a near three-year high of 6.95 per cent in mid-August following a sharp hike in food prices.
The World Bank has attributed the rise in the consumer price index to higher public sector wages, increases in import duties on agricultural and industrial goods, and the removal of value added tax exemptions on some intermediate goods and services. “Regular supply of electricity at low cost and low inflation in India is expected to offset some of the increase.”
Likewise, the South Asia Economic Focus, ‘Making (De)centralisation Work’, reads that strong domestic demand, which propped high growth in the past, has weakened, driving a slowdown across the region. Imports have declined severely across South Asia, contracting between 15 per cent and 20 per cent in Pakistan and Sri Lanka. In India, domestic demand has slipped, with private consumption growing 3.1 per cent in the last quarter from 7.3 per cent a year ago, while manufacturing growth plummeted to below one per cent in the second quarter of 2019 compared to over 10 per cent a year ago, according to the report.
In a focus section, the report highlights how, as their economies become more sophisticated, South Asian countries have made decentralisation a priority to improve the delivery of public services. With multiple initiatives underway across the region to shift more political and fiscal responsibilities to local governments, the report warns, however, that decentralisation efforts in South Asia have so far yielded mixed results.

Economy to grow at 6.02 per cent

Against the government projection of 8 per cent, the economy is projected to grow at 6.02 per cent in the fiscal year 2018-19 and 5.77 per cent in the current fiscal year.
The Institute for Integrated Development Studies (IIDS) – a research wing of Kathmandu University (KU) – projection of economic growth is not only lower than government but also the projections of development partners including World Bank (WB), Asian Development Bank (ADB) and International Monetary Fund (IMF).
The World Bank has projected Nepal’s economy to grow at 6.4 per cent in the fiscal year 2018-19, while ADB and IMF both have forecast a 6.3 per cent growth. The IIDS growth – based on the current macroeconomic scenario – forecast for the fiscal year 2020-21 is also lower compared to World Bank – that has projected the economy to grow at 6.5 per cent during the year. But the IMF has projected Nepal’s economy to grow at 4.5 per cent in fiscal year 2020-21.
The IIDS – releasing Nepal Economic Outlook 2018-19 today – also claimed that the growth rate will moderate in the current fiscal year, and is expected to decline in the next fiscal year 2020-21.
Speaking at a panel discussion – after launching the Nepal Economic Outlook 2018-19 – former finance ministers emphasised on the need to focus on policy implementation, project execution, corruption control, good governance and enhancing bureaucratic capacity to foster desirable economic and development growth.
Accusing the government of failing to lay the economic foundation for sustainable development, they also said that the government has not succeeded in attracting investment adequate enough to achieve double-digit growth target though economic development is its top priority. They said that internal and external investment and infrastructural development are important factors to ensure sustainable economic development in Nepal.
On the occasion, former finance minister Dr Ram Sharan Mahat said that the government has yet to formulate a plan needed to achieve the objective of sustainable development. Urging the government to emphasise institutional capacity building to ensure sustainable economic development, he advised the government to focus on implementing policies, generating employment opportunities, establishing a culture of respect for labour, developing infrastructure and enhancing the capacity of the three tiers of the government so that the country can achieve competitive development and economic growth, rather than being populist.
Likewise, another former finance minister Prakash Chandra Lohani, on the occasion, said that the government should primarily address the issue of corruption and maintain transparency to develop the economy and the country. “For this, the government should immediately endorse the Transparency Law, which was drafted many years ago,” he added.
Meanwhile former finance minister and leader of the ruling Nepal Communist Party (NCP) Surendra Pandey said that efforts should be made to bring informal businesses and activities into the formal economy. Pandey also claimed that sustainable economic development in Nepal has not taken place due to lack of political reform. He said that the country could achieve its objective of sustainable economic development only after making reforms in political, administrative and educational systems.
The IIDS report has, meanwhile, projected inflation to remain at 4.76 per cent in the current fiscal year and 4.7 per cent in the next fiscal year against the World Bank, ADB and IMF projection of 4.7 per cent, 5.1 per cent and 6.5 per cent inflation, respectively in the current fiscal year. In the next fiscal year 2020-21, the IMF and World Bank have projected inflation to reamin at 6.2 per cent and five per cent, respectively. 

Kathmandu to host Nepal-India Think Tank Summit

The Nepal-India Think Tank Summit 2018 is going to take place in Kathmandu on Tuesday.
Nepal Communist Party co-chairman Pushpa Kamal Dahal is inaugurating the summit jointly hosted by Asian Institute of Diplomacy and International Affairs (AIDA) and Nehru Memorial Museum Library, AIDIA CEO Sunil KC informed.
"India’s ruling Bharatiya Janata Party’s secretary general Ram Madhav is delivering a keynote speech," he said, adding that Nepal will – for the first time – address the need for greater collaboration and knowledge-sharing among Nepali and Indian think tanks, as well as the particular problem of bridging the gap between think tanks and policymakers in the region. "The summit is proposed to become an annual feature and will be hosted alternatively each year in Nepal and India."
Nepal Council of World Affairs, Confederation of Nepalese Industries (CNI), Nepal Economic Forum (NEF), Institute for Integrated Development Studies (IIDS), Indian Council for Research on International Economic Relations (ICRIER), Observer Research Foundations (ORF), Institute for Défense Studies and Analyses, Vivekananda International Foundation, Nepal Institute for Strategic Studies (NISS), Centre for International Security (CIS), Gateway House, Brookings India, and Centre for Nepal and Asian Studies will be participating in the summit.
“The aim of the summit is to support the networks and promote mutual understanding through institutional collaboration on resources sharing among think tanks of the two countries, to facilitate cooperation and knowledge-sharing among think tanks, and to reflect on the work of think tanks and the challenges they are facing,” KC added. "
Policymakers, government representatives, diplomatic missions, academicians, business sectors and media personnel will engage in open and rational discourse to draw meaningful conclusions and recommendations at the summit."

Government told to start work for granting transit rights to India, China

Experts have proposed to the government start homework for granting transit rights to both the neighbors.
Presenting a paper entitled 'Toward a New Framework for Nepal's Trade and Industrial diversification' at the International Conference on Key Trends in China-Nepal-India Relations and New Development Strategy for Nepal,' jointly organised by South Asian Institute of Management (SAIM), Institute for Integrated Development Studies (IIDS) and Nanyang Technological University of Singapore, in Kathmandu today, former finance secretary Rameshwor Khanal said that the two neighbours – India and China – will, sooner or later, ask for transit rights. "Nepal should start homework right now to make sure that transit agreements would be in its favour,” he added.
He also proposed implementing connectivity infrastructure projects that support transit and trade diversification in the changed context of recent trade and transit blockade.
As the need of the hour is to diversify trade for a self-reliant economy, Khanal also proposed promoting energy-intensive industries, developing cross-border energy market and economic corridors along north-south transit routes, and promoting high value niche products and specialized services for trade diversification.
“Nepal has failed to diversify trade and transit even though each periodic plan – after the second periodic plan – has been emphasising on trade diversification, export promotion, foreign investment promotion,” Khanal said, adding that the country is still harping on trade diversification after six decades of the planned development practice.
Nepal started planned development practice from 1956 when over 95 per cent of its trade was with India. Trade with Tibetan Autonomous Region of China was confined to border region and most of it was bartering. Nepal had little to export to outside world then.
With foreign assistance, particularly from the then Soviet Union and China, critical manufacturing factories that aimed at import substitution were established in the decade following 1956. But following the calibrated reforms of 1985-86, policy reforms spanning all sectors of the economy were implemented between 1990 and 1992, he added. "The reforms led to trade diversification, growth of manufacturing sector, export growth, and some of the positive changes could also be seen lasting until 1998."
However, overall development policy did not support the trade and industrial policies started during the economic reforms of post-1990. Lack of continuity of reforms, weak institutions, and above all no infrastructure support held back the growth, Khanal said.
Commenting on his paper, chief executive of Investment Board Nepal (IBN) Radhesh Pant said that finance is not the problem for infrastructure development in Nepal. "Finance is the least of the problems," he said, giving examples of how foreign investors have been eager on putting money on Nepal's infrastructure development ranging from hydropower projects to cement factories.
Nepal needs huge investment in infrastructure development to meet the gap that can fuel economic growth, according to former member of the National Planning Commission (NPC) Swarnim Wagle. Hailing Chinese approach to development, Wagle said that quick delivery of aid without strings attached will help infrastructure development in Nepal.
In his paper on 'Asian Infrastructure Investment Bank (AIIB) and Infrastructure Construction in South Asian Countries', Prof Dai Yonghong, Director of Center for Myanmar Studies in Sichuan University and Deputy Director and Center for Nepal Studies in Sichuan University, highlighted benefits of Nepal as a transit economy. "It will help strengthening sub-regional cooperation between Sichuan-Tibet and SAARC, adjusting the area of cooperation, establishing Sino-Nepal FTA, and build Nepal overland trade route," he said, adding that it will also strengthen infrastructure development in border areas, apart from expansion of trade preferences and encourage investment, and expanding tourism cooperation, innovation and tourism business one-stop service mode.

Economic growth to contract in coming years

If the current trend of economic activities continues, growth will contract to 3.15 per cent in 2016 due to prolonged political instability, according to a report.
The economy is projected to grow by 3.62 per cent in 2013, said the Nepal Economic Outlook 2012-2013, published by the Institute for Integrated Development Studies (IIDS), here, today. The ‘conditional forecast’ could be U-turned, if the economic agenda could be brought to the forefront, it added.
The country has been struggling to maintain a positive economic growth in recent years, it said, adding that agriculture that serves as a major sector of providing rural employment, producing raw materials for agro-industries, and providing market for industrial products, has been highly disappointing due to poor resource allocation, weak implementation, and lack of coordination among government and non-government agencies.
The report has mentioned that the mechanisation of agriculture, improvement of extension services, irrigation and timely availability of seeds and fertilisers could help push economic growth up, as agriculture contributes to one-third of the total gross domestic product (GDP).
The second report of IIDS has also urged the government to increase capital expenditure as according to the study, one per cent increase in capital expenditure will contribute to 0.43 per cent in the real GDP, whereas one per cent increment in recurrent expenditure will contribute only 0.26 per cent to the real GDP.
Thus, public spending is key to economic growth despite the increasing importance of the private sector, according to the report that has revealed that private sector investment has, however, been decreasing compared to the GDP.
“However, foreign direct investment has seen an increment after 2005-06 after the comprehensive peace agreement. If the political stalemate does not sideline the economic agenda, Nepal has the potential to emerge as one of the fastest growing economies in a few years,” said executive director of IIDS Dr Bishnu Dev Pant, on the occasion.
The current political wrangling has crippled the economic agenda, he said, adding that the bureaucracy also plays a key role in improving economy, despite the political instability.
“The manufacturing sector has been performing poorly in the last couple of years,” said former economic advisor of the finance ministry Keshav Acharya.
“The high cost of operation and low returns have made investors shy away from manufacturing,” he said, adding that the country should encourage the agriculture sector first, then the industrial sector and finally the services sector, for balanced growth.
Trade should not be fixed up with services sector, said IIDS chair Dr Mohan Man Sainju.
“Without a sound basis, the current growth of services sector also will not be sustainable,” he said, adding that the government should encourage a detailed study before it introduces any policy.

Technology, input on time, market key to boost agriculture output

Experts today suggested adoption of demand driven technology, provide timely inputs like fertilizers and improved seeds on time, markets and services for the increased agriculture output.
Weak agriculture research and lack adequate resources, coupled with lack of enough extension services, capacity and resources to deliver inputs on a timely manner, commercial banks apathy towards providing loans to farmers have contributed to decline in agricultural productivity contributing to food insecurity in the country, said executive director of Institute for Integrated Development Studies (IIDS) Dr Bishnu Dev Pant during a Consultation Workshop on Agriculture Inputs and Policy, jointly organised by International Food Policy Research Institute (IFPRI), IIDS and USAID, here today.
Agriculture contributes to around one third of total GDP and around four-fifth (some 4.2 million) populace depends on agriculture providing net employment to two-third of the total population, however, agricultural productivity has started declining over the years, he said, adding that Nepal has become net food importing country in recent years from a food surplus country once. "Some 43 out of 75 districts are food deficit."
He also suggested significant increment in investment on irrigation and in technology, massive investment on rural infrastructures, increase in budgetary allocations to at least 20 per cent of total budget and farmers' access to agricultural inputs to boost the agriculture production.
However, agriculture expert at the NEAT under USAID-Nepal Dr Deva Bhakta Shakya recommended establishment and operation of Fertilizer Buffer stock under Public Private Partnership arrangement, with database and monitoring system of fertilizer use and distribution, including both official and informal import.
The government must bring a progressive policy to meet an annual demand of 758,000 MT of fertilizers ($500m), exploit and engage private sector, provide subsidy for remote farmers, where logistics are still a challenge, the experts claimed. "Of the total demand some 200,000 MT is formally supplied, whereas the remaining gap in filled by the informal supply."
Likewise, director of IFPRI Dr Pramod Joshi, on the occasion, said that the wider policy consolation will help government fill the gap. "As more than 90 per cent Nepalis live in rural areas and depend on agriculture, there is high incidence of poverty is in hills and mountains and in the mid-western and far-western region due to low crop yields," he said, suggesting to analyse policy and execute it properly that would guarantee food safety.

Sustainable, inclusive growth key

Sustainable and inclusive growth is more important than the double digit growth, according to the experts.
"Economic growth alone does not guarantee people's welfare," said senior economist Prof Dr Bishwhembher Pyakuryal, at an interaction organised by Institute for Integrated Development Studies (IIDS) here today.
On one hand the government has been talking of double digit growth and on the other, the country lacks resources, he said, adding that rate and return of public sector spending has been unsatisfactory leading to the uneven growth.
The country needs to invest heavily on infrastructure, education, healthcare and other basic amnesties for economic growth, said executive director of the IIDS — one of the leading private sector and non-partisan think tanks — Dr Bishnu Dev Pant.
"Unfortunately the country relies heavily on foreign aid and loans to meet such public expenditures, which is not sustainable, he said, adding that the government must raise sufficient revenues for public expenditures via efficient and fairer tax policies.
Political instability has slowed down the pace of economic growth, Pant said, adding that capital expenditure is largely dependent on foreign aid making the government unable to spend on the development expenditures.
Lack of better public expenditure management and result-oriented budget has made the budgetary system redundant, said former economic advisor of the Finance Ministry Keshav Acharya.
Donor-driven propriety, rising non-budgetary expenses and arrears, weakness in various funds and government assets management and public procurement are some of the hurdles in the national development process, he said, adding that the current budgetary system needs reform.
The government's capacity to spend on development works has been eroding, Acharya added.
Declining capital expenditure has greatly affected the key infrastructures coupled with affordable and reliable electricity supply and poor transport network that have contracted the economic growth prospects.
However, the government's ability to spend more on development works will push the economic growth over five per cent from current over three per cent growth, according to a research 'Nepal Economic Outlook, 2011-12 conducted by IIDS.
If the government can increase capital expenditure from current eight per cent to 15 per cent and decrease recurrent expenditure from 18 per cent of current trend to 10 per cent — concentrating on development works and investment — the economic growth rate could climb up to 5.1 per cent in the next year 2012 and 4.6 per cent in an average in the next three years, the research revealed.
However, the current trend coupled with policy measures as well as external factors remain unchanged, Nepal Economic Outlook Model projected the economic growth to remain between 4.6 per cent in 2012 and 4.3 per cent in an average the next three years.
The report also suggested boosting the confidence of domestic investors not only to build the domestic goods competitive but also to attract foreign direct investment that would create employment in the country that has been witnessing an exodus of both brain and muscle drain hurting the country's growth prospects further.

Knowledge sharing can increase market opportunities

Knowledge sharing can open wider markets, according to experts.
"Regional learning and cooperation can open wider markets, increase access to improved technologies and skills, and encourage sharing of lessons and knowledge about the most effective interventions to achieve food and nutrition security," director of IFPRI’s Development Strategy and Governance Division Paul Dorosh said here today at the technical workshop and conference, 'Knowledge, Tools, and Lessons for Informing the Design and Implementation of Food Security Strategies in Asia.
Country and regional stakeholders from governments, researchers, non-governmental organisations, donors, and the private sector are reviewing and sharing state of the art knowledge, practical lessons, and tools for supporting agriculture and food security strategies in Asia at the three-day workshop from today that ends on November 16.
The workshop is organised by the International Food Policy Research Institute (IFPRI) and Institute for Integrated Development Studies (IIDS), and supported and funded by the United States Agency for International Development (USAID).
The workshop that aims to bring together stakeholders in the various sub-regions of Asia to review and share knowledge of successful approaches, practical lessons, and tools for supporting agricultural and food security strategies in Asia will allow participants to learn from regional counterparts to address common challenges like population growth, rapid rural-to-urban migration, climate change, food price instability, and undernutrition.
Asia accounts for 59 per cent of the world’s population and is home to more than 68 per cent of poor people living below $1.25 a day. It is an extremely diverse region, and both successful and lagging countries are affected by recurrent crises like poverty, food insecurity, environmental and climatic shocks, and economic and financial turmoil.
The region is recognising the importance of cooperation and dialogue to find solutions to shared problems.
"Following our established role of fostering informed debate and exchange of experiences within and outside the country, we are pleased to co-organise the technical workshop," said executive director of IIDS Bishnu Dev Pant.
In Asia, USAID has active food security, agriculture, and nutrition programs and plays a central role in the President’s Feed the Future (FTF) initiative, the US global hunger and food security initiative.
USAID supports the effort through robust programmes in four Asian FTF focus countries — Cambodia, Nepal, Bangladesh, Tajikistan — and through active food security programming in several non-focus countries throughout the region.
"There is a lot of knowledge within the region," USAID Mission Director in Nepal David Atteberry, said, adding that the region needs to collect and share it, learn what has worked, and put those solutions to work in a regional resource network that can benefit both the country-owned planning process and the development partners involved in food security strategy.
The three-day technical workshop and conference will discuss on implications of growth and transformation on food availability and access science and technology solutions, including climate change adaptation and mitigation options Integrating agriculture and nutrition interventions, and review experiences and lessons of programme design and implementation and approaches, tools, and data systems for monitoring and evaluation.
The mutual learning could accelerate economic growth and catalyse further reductions in poverty and hunger, Dorosh added.