Ensure enough kerosene

The decision taken by Nepal Oil Corporation (NOC) to distribute kerosene under quota system to prevent hoarding and cross border smuggling does not appear to be in the right direction. This is because most of the poor households are dependent on kerosene and any short supply of this commodity is bound to hit them more than others. What is more, any move from either Nepal or India to change the existing kerosene price has often led to cross border smuggling due to the unregulated open border. Besides, the nexus between smugglers and businessmen has also hampered the distribution of kerosene, particularly in border areas.

Any hike in prices of petroleum products in India has always inspired hoarding in the border towns and cross border smuggling. In such situations, Nepal loses millions of rupees in terms of revenue. Again, the chief culprit seems to be none other than the same unregulated open border. But unlike in the past, the government has now announced the quota system of distribution for kerosene, particularly in areas bordering with India. In fact, the price of kerosene in Nepal remains lower even after the hike to a level corresponding the Indian market price.

Nepal Oil Corporation may not have failed  to ensure adequate supply of kerosene for people in these border areas but the difference in prices has encouraged unscrupulous tendencies among businessmen in these areas. As a result, many consumers who depend on kerosene for cooking and heating have been badly affected. This would certainly not have happened if NOC had not reduced the supply of kerosene by 25 percent.

The country’s terai region requires approximately 2.6 million litres of kerosene every year and 60 percent of the region’s total population depend entirely on it for fuel. In spite of the fact that there are more than one hundred suppliers recruited to distribute kerosene in the terai region, consumers still need to spend hours in queue just for one litre of the commodity.

Unlike in India, Nepal has not yet introduced the ration card system wherein the government supplies essential commodities including kerosene at subsidized rates. Due to this, most suppliers either hoard or smuggle essential commodities into India, for the price of kerosene still remains higher in the open Indian market. The government has not been able to control cross border smuggling but it is now high time that it realised that the open border system has done more harm to Nepal than to India. The loss is not only in terms of revenue worth millions of rupees but also in terms of social security, as cross border crimes are also rising. So that the situation does not get worse, the government should raise the border issue with India without any delay or introduce an improved mechanism to regulate cross border movement and check illegal activities.

East-West family values & development

-By C D Bhatta

When the ‘miracle’ of East Asian growth  was being acclaimed around the world, an interesting and challenging conclusion drawn by many was that  rapid growth in this region was not only due to economic policies but also because of superior East Asian values, which involved a blending of the world’s greatest intellectual traditions.

Lee Kuan Yew of Singapore and Mahathir Mohammad of Malaysia have, in particular, denounced western values, especially western family norms.

Almost every second marriage in the US ends in divorce, living together without marriage is common. It is not surprising to see a mother without hubby and children without father in the western world. Almost one-third of the children are born outside wedlock. Children of broken homes often fall prey to crime and drugs. President Clinton’s popularity rating soars with every new sex scandal. The steep fall in family values with its terrible impact on children of split homes is evident beyond doubt in western countries. Thus Malaysia’s prime minister made the bold assertion: “Asian values are universal values. European values are European values.”

Asian values include “attachment to the family as an institution, deference to social interests, thrift, conservatism in social morals, and respect for authority.” Family values in East Asia and South Asia are idyllic. Divorce rate is very low. Living together without marriage is impossible. Juvenile crime and drug use rate are very low when compared to the West. There is hardly any South Asian leader who is divorced or involved in a sex scandal.

However, in East Asia, and more in South Asia, strong attachment to family leads to other problems. We have dynastic democracies in India, Pakistan, Nepal, Bangladesh and Sri Lanka. Three generations of the Nehru family ruled over India for almost four decades. And now an Italian lady who was married to Nehru’s grandson has become the head of Congress Party and may become India’s prime minister. Zulfikar Ali Bhutto and his daughter Benazir have held power in Pakistan. The Bandaranaike family has a similar position in Sri Lanka and Koiralas and others in Nepal are following the same footsteps.

Even in  China, Mr Li Peng, who has recently stepped down as prime minister after a ten-year stint, is the adopted son of the great Chinese leader Zhou Enlai (who had no children of his own). Mr Lee Kuan Yew’s son is part of the current Singapore cabinet. In Saudi Arabia, the country belongs to be the House of Saud, and is named after it. In Indonesia, Suharto had made his daughter a cabinet minister, after pampering his family with billions of rupees transferred to them through official patronage. Saddam Hussein continues to rule over Iraq despite the colossal damage he has done to his country and the region.

The recent meltdown in East Asia has revealed the other side of Asian values. Attachment to the family becomes nepotism; social relationships, rather than formal and legal contracts, lead to inevitable cronyism. Consensus converts into clannishness and corrupt politics. Conservatism and respect for authority turn into rigidity and an inability to innovate. Much-vaunted educational accomplishments are no better than rote-learning.

This explains the pervasive spirit of conformism and a reluctance to question those in authority. While the fantastic economic progress in East Asia was supposed to be due to Asian values, the recent meltdown which is financial and not economic, is also ascribed to the flip side of ‘Asian values’.

For Asian values, the family seems to be at the base of it all. Whereas strong family ties are good for social progress, morality, proper upbringing of children, and low rate of crime and delinquency, strong family attachment has adverse implications also. But the worst implication of family attachment is that it does not end at the political level but extends to the economic sphere as well.

The phrase “crony capitalism” has gained wide currency, indicating that Asian capitalism is largely based on family connections and patronage as opposed to western capitalism, which is based on entrepreneurship. Bill Gates has become the richest executive in the western world not because of his family connection but as a result of innovation, initiative and enterprise. The system allows poor lads like Bill Clinton to become President of the most powerful country in the world, and a grocer’s daughter (Mrs Thatcher) or a trapeze artist’s son (John Major) to become prime minister of Conservative Britain. Family wealth after high death duties (which, strangely, hardly exist in Asian countries) does pass down to the next generation but the Chief Executive Officer’s job  is rarely, if ever, inherited.

In almost every Asian country, including Japan, loans are often given on the basis of family or political connections. No wonder, all these countries have a large portfolio of bad debts. One of the main reasons of the recent East Asian turmoil was bad debts given on non-economic considerations. Depositors’ money is rarely treated as a sacred trust by the banks. The problem would not have been so severe if domestic money was given on family considerations, but foreign exchange borrowed on short-term maturity was lent on long-term maturity to doubtful parties. And when the confidence of foreign lenders was shaken and they asked for recall of their capital, the currency exchange rates and stock market indices crashed in no time.

Conservatism is a core Asian value. For developing countries conservatism in financial policies is indispensable. Making their currencies fully convertible and allowing free movement of long-term and specially short-term capital was highly imprudent. China, which pursued conservative financial policies and did not expose its economy to international speculators, has been relatively unaffected by the East Asian financial crisis, and it did not devalue its currency.

Similarly, Hong Kong, Singapore and Taiwan were less affected because they had very high levels of foreign exchange reserves. Thailand, Malaysia, South Korea, and worst of all, Indonesia faced sharp contractions in GNP along with a fall in their stock markets. By throwing financial conservatism to the winds and with full and unregulated exposure to speculative global markets, these countries were exploited by international financiers and footloose investors. Forsaking conservatism, a core value, was fatal for East Asian countries.

Asians are correct in emphasizing the importance of family values for social cohesion and overall progress of the human family. They are also correct in denouncing the moral decadence of the West, which through its control of the dominant multimedia is also corrupting the young in Asian countries. But Asians must also recognize the hazards of extending family bonds and loyalty to politics, finance and business.

It is better to keep family and politics apart, as it is to keep family and finance apart. In the age of globalization, instant connections, universal access to all types of information, and free international market for all currencies, financial mismanagement and bad loans to cronies will definitely bring down any financial system and institution.

Yamaichi securities, Japan’s second biggest brokerage house, was forced to close down as a consequence of mismanagement and cronyism. Japanese economy is stagnating now, after remarkable growth for a long time, largely because of bad financial management. Bad loans are given mostly to family members or cronies or influential people whom the institutions are too weak to turn away. Stress on family values as such must not lead to crony capitalism as it is bound
to lead to financial cataclysms sooner or later.

Summing up, Asian family values are  great values but they must never forget that ‘family values’ should never be stressed at the cost of institutional development, and family considerations must never flow into the financial field. The limits to family loyalty must be recognized and financial conservatism must never be forsaken. Otherwise the morally decadent West will continue to dominate them well into the next millennium, because its political and financial systems and institutions are far more efficient and vigorous.

Strange kind of happiness

-By Min Prasad Bhandari

Ihad never known the true meaning of  the word "satisfaction" until I came across a young boy of around ten at a hotel.

After a late lunch I had just sat down with a newspaper when the commanding voice of man to a little boy ended with the words “have it all”. This in itself was not particularly striking, but the noise that followed the man’s voice was unusual and drew my attention. It appeared as if someone  was being ridiculed and that the rest of the others were enjoying. Putting off my reading, I headed towards the noise to see a small untidy boy clearing up the plates. The second glance at the standing crowd showed them as waiting for their turn to take the food. I didn’t see through anything of that sort that could have caused such an eruption. I dragged myself back to the chair and sat down attempting to read the paper.

Obsessed as I was with the previous noise, I could not continue with the news and got up to leave. No sooner had I gotten up from the chair than my eyes fell upon the same shabby little figure who clearing up the plates with two others this time amid laughter with brightness on the faces. Standing at a few yards’ distance, I could notice their unusual happiness. I desired to know what the matter was.  With a detective mind I crept toward them until my way was blocked by an unusual smell reeking from those unwashed clothes and bodies. I stood where I had reached silent and alert wondering still why I should get entangled with those neglected figures because, never before had I been concerned with petty human affairs. Yet, some kind of curiosity captivated my mind compelling me to stay longer. Standing as a spy, I made every attempt to escape their attention. Except for occasional glances, I kept busy taking groundnuts.

With the first few glances, my mission looked unlikely to come to an end.  So, I made a further move by which I was able to see beside a huge pile of empty kitchen utensils a plate guarded by the three. What appeared on it was contemptible foodstuff as disordered as twigs in a crow’s nest. Deep into the pile, the little claws seemed to be dipping like vultures on a carcass tearing off the heap impatiently and taking it to their mouths mechanically. Seeing them swallow the food rapidly, I inferred that they were eating something which they had long been  desiring. Half content with my poor investigation, I thought of going toward the bus which deafened  passengers with its horn.  But them, I heard one of them say” We are lucky enough that sick looking old man kindly threw more than half of his food on the plate. Like a chilly northern wind something pierced inside me. I knew that those children were no more dish washers, but dishwashers. For their living they were collecting food remains grain by grain like a bird. What was waste for the others was life for them. They were struggling to collect their happiness with pieces from the helpless plates. People’s buffoonery had no effect on them in their struggle.

Confounded by the new discovery, I rushed to my seat with my eyes wet. For a moment all my previous memories were forgotten. But, what I could not forget was the glow of satisfaction shining on their faces. What was significant was that even with the leftover food they looked quite happy and content while the relatively better off people looked gloomy and suffered in their everyday life being unable to satisfy their desires.

Governance : Mistaking the wood for trees

-By Dr Hiramani Ghimire

Voices against the poor performance of government are becoming louder everyday. The government has promised to the people a decent future. Accordingly, a number of policy announcements have been made. In terms of achievement, these initiatives have become a Sisyphian work: very hard, but fruitless. The pursuit of progress must be sustained. But how?

Reduced role: Governments are supposed to “govern”. Increasingly, the capacity to govern is eroding. There are two main reasons for it. Firstly, value premises of those to be governed have changed. In fact, nobody wants to be governed any more. Calls for autonomy and self-rule (in various forms) are a case in point. And secondly, government institutions have failed to deliver what was expected of them, inviting questions over legitimacy. Internally, they are characterised by ineffective leadership and corruption. Externally, they are facing pressure from the need to reconcile “globalisation” with “localisation” as well as the “economic society” with civil society. These internal or external factors must be properly addressed if governance is to improve.

Point of departure: In the era of “strategic goals” and “perspective plans” policymakers need to look beyond their terms of office. Leaders are supposed to be pragmatic dreamers. They should be able to say what they have dreamt of. And that too needs to be presented in understandable language. This has not happened. Perhaps, the government is doing too many things. Some of them are important. Others are urgent. One should be able to make a distinction between the two. Former US president General Eisenhower once said, “I have two types of functions: important and urgent. The important are not urgent and the urgent are not important. Once urgency and importance are determined, agencies (not necessarily in the public sector) need to be identified with procedures clearly set out for them.

Need for independent policy, institutions: Creating a decent future requires the ability to see things in advance. Government organisations always busy attending to the immediate (“urgent”) needs do not have this ability. Also, they are overburdened with “rules”. Self-motivation is the other missing element with them. Experiences in many other countries show that independent agencies entrusted with policy thinking (“think tanks”) are more appropriate in this regard. It is time the government recognised them.

Development management requires policy consistency. In today’s development environment things are changing too quickly, and the time available to evaluate alternative courses of action has shortened dramatically. The process of “discontinuous change” has rendered traditional policy thinking insufficient. That is why most development activities suffer from policy deficiency. This applies also to development initiatives in Nepal.

It has been increasingly felt that holistic approach rather than the traditionally adopted “scientific approach” should influence development planning in order to achieve a balance between short and long-term solutions. Innovations are the order of the day. As is often observed, policymakers have to “think the unthinkable”. A number of government agencies in Nepal are involved in policymaking. Yet, the quality of public policies is much to be desired.

With the policy of economic liberalisation, market forces have become stronger. Planning as magical short cut does not exist any more. However, development cannot be handed over to the market. In course of liberalisation, present and inter-generational equity must be stressed. It is equally important to enhance the competitive capacity of the people through specially designed human development measures. The state must therefore assume the role of an enabling agency. The government has to be more active in “steering” and less so in “rowing”. Obviously, steering demands a high level of intellectual exercise.

Policy failures in the past were associated with the planners’ inability to set priorities and “posteriorities” right. Bad policies were often associated with good politics. The public sector, and especially the civil service, was not only omnipresent but also omnipotent. In the changed context, it has become desirable to involve  non-civil service experts, including academicians, in policymaking.

In the present organisational set-up, there are a number of institutions, which undertake policy initiatives. Parliamentary committees, cabinet committees, Prime Minister’s Office, National Development Action Committee, CEDA and National Planning Commission are examples of specialised bodies for policy review. The NPC is prominent among them. However, during the last 40 years it has remained obsessed with mechanical target-setting and sectoral allocation of resources. As a semi-political body, it has not been able to deliver what was expected of it.

The problem of policy failure is very much evident and acutely felt in Nepal in recent years. Four decades of experience with planning exercise has been proven to be “planning without implementation”. The incidence of poverty has been worsening despite the “efforts” of planners to curb it. For the last 20 years, the economy has been characterised by what may be termed as “dynamic stagnation”.

In the war against poverty some neighbouring countries, notably India and Pakistan have gained some success. Nepal, however, has remained where it was. Even in terms of human development, Nepal has shown poor performance. This is clearly an indication of policy failure. Institutional aspects of policymaking should be re-examined in this context.

It is not that the government is not aware of the need for a bond between promise and performance. The Agricultural Perspective Plan and the Ninth Plan, for instance, have tried to bring together ideas and approaches endorsed by development experts in various parts of the world. The aim is to reduce poverty. In addressing the problems of poverty, these plans go beyond achieving higher agricultural and industrial production. They also try to enhance the distributive capacity to ensure social equity. This cannot be achieved without substantive changes in the usual mode of institutional behaviour and standard operating procedures.

The appropriateness of development policies is a much-debated subject. Experience of the last 50 years shows that there is no key policy for development. Instead, there are many interdependent policies. Similarly, there are many institutions for policy undertaking. The government has a vital role to play. However, it cannot minimize the role of other agencies operating in the private or the non-governmental sectors. An organisation operating outside the premises of regular bureaucracy standing in intimate interaction with different agencies, including civil society can help reorient the policy process. Such an organisation could aim not only at transferring knowledge and experience from abroad but also testing their validity in the Nepali context.

The time factor: The government can, of course, take time to implement reform measures. This will however come at a heavy price. The World Development Report (1999/2000) prepared by the World Bank warns that the forces of globalisation influence policymaking in such a manner that rewards for successful development strategies and punishments for failure are likely to be greater and faster than in the past. Obviously, new ventures are in order. One cannot create a future merely by prolonging the past.