Improve Nepal-India ties

Foreign Minister Chakra Bastola has begun an official visit to New Delhi. Bastola left for New Delhi only a month and half after assuming office and it should be noted that prior to his departure he had said he would attempt to "normalise" Nepal-India relations which, in his own words, are in a "standstill situation". Although he said that the "whole gamut" of Nepal-India relations would be discussed, his one point agenda is apparently the resumption of Indian Airlines flights. This, of course, will carry a price which the Nepali Congress government seems quite eager to pay. Reports in Indian newspapers which detail how and under what conditions Indian Airlines will resume its service to Nepal are not very flattering. It is to be hoped that the neither the foreign minister or the Prime Minister who is to pay a visit to India at a later date will compromise the Nepalese stand on the issue. Our government should need no reminding of how difficult it was for Nepal to ask Indian "wireless operators" who were stationed in the country to leave in 1969.

The resumption of Indian Airlines flights is but one of the many aspects bedevilling Nepal-India relations. The open border between the two countries, for instance, is another area that needs immediate attention. In the aftermath of the Indian Airlines hijacking, responsible circles in India had mooted the idea of closing the border. But with the passage of time, interest in this idea seems to have waned. Nepal, on its part, has been calling for proper regulation of the border. Nepal has also been stressing on the need to monitor everyone passing through check points and keeping records. There are also problems with the 1950 Treaty of Peace and Friendship between Nepal and India. The issue of Kalapani has also figured prominently as a problem in bilateral relations and so has the issue of encroachment along the Nepal-India border. Then there is also the problem of Bhutanese refugees which has remained unresolved mainly because of India’s unwillingness to help Nepal and Bhutan with the repatriation of refugees.

Unfortunately, no forward movement on these issues can be expected during Bastola’s visit to New Delhi. The Nepal-India Joint Border Committee has not progressed at all. After all, the committee can only do so much and nothing more. Nepal has a preferential trade treaty with India but the manner in which this is being (un)observed in recent days by India has cost the Nepalese business community billions of rupees. The complications resulting from the Duty Refundable Process (DRP) and the Central Vat (CENVAT) in India is creating unnecessary problems for many Nepalese importers of Indian goods. The imposition of Special Additional Duty (SAD) of 4 percent in India has not only proved to be demotivating for those exporting to India from Nepal but it also directly contravenes clauses of the Nepal-India trade treaty.

An early settlement of these issues is in the interest of Nepal-India friendship as is the protection of Nepali speaking people, whether Nepalese or Indian citizens, in north-east India. If the foreign minister’s visit to India is not to be ritualistic one and if it truly aims at bettering relations, then he must take up these problems with all seriousness.

Global economy and Nepalese context

By Sushil R Mathema

The later period of the twentieth century passed through a series of economic and political upheavals both in the domestic and international world. The liberalization and globalization of the North-South economy was at least partly slowed down by more than one year long financial turmoil experienced by tiger economies in Asia. The contagion effect has nonetheless caused Nepal to depreciate its currency against the greenback dollar by more than 19 percent during the very period. While the domestic economy suffered as a result of fragile policies that sprouted from a series of hanging governments in the past couple of years. The depreciation of home currency to such an extent was triggered by additional factors such as economic sanctions imposed on India and Pakistan by USA, Japan and other bilateral and multilateral agencies in the aftermath of the nuclear tests conducted by them in May 1998.

Now, Asian countries except Japan have shown economic recovery particularly in 1999 and this recovery is expected to continue in 2000 as well. With the global output considerably strengthened in 1999 (3.0 percent) and expected to attain 3.5 percent in 2000 propelled by a continued high demand growth in USA, exports of developing countries expanded by as much as 8.5 percent in 1999 and secured a hold of 27.5 percent share percent in the global aggregate.

Nepal’s economy is also recovering from the transition phase of slow pace of development witnessed in 1998/99. In the past, Nepal did face a state of so called recession and or even stagflation. The major ace card earned by recent development in the domestic economy is the macroeconomic stability being maintained through the pursuit of economic reforms and a significant improvement witnessed in the external sector. The country has been able to contain annual average inflation at a single digit level of 8.1 percent in FY 1998/99 (1995/96=100) and foreign exchange reserves has enormously increased to an equivalent of RS 77305.8 million. Even now, the domestic price movement on point to point basis has remarkably come down to 2.8 percent as revealed by the eight months data while the pace of expansion in foreign exchange reserves continued to soar to 90380 million rupees.

In spite of this favourable development, Nepal has been unable to achieve sustainable growth. During the last five fiscal years, economic growth decelerated to an average of 3.9 percent from about 5.6 percent registered on average of four years between FY 91-94. Talking in terms of agricultural growth, it has secured an average growth of 2.3 percent, which is less than the population growth rate of 2.5 percent. Even the growth rate in non-agricultural sector has shown a decelerating trend standing at around 5.0 percent on average during the review period compared to the previous average of 8.7 percent. The weak performance of national growth has radiated from a number of structural problems, which not only affected the domestic investment environment but also hindered the integration of domestic economy into the globalization process.

The slow pace of structural reform witnessed in recent times, inherent weak fiscal consolidation, emerging new problems in the banking sector have all been primarily responsible for hampering the economic growth processes.

This has even raised concern on the sustainability of the government’s prioritized programmes such as Poverty Alleviation Program. A cautious approach has therefore to be taken particularly in the banking sector programmes projected to assist in the poverty alleviation programmes of the government. It is worth noting that financial reform, among others, is the top agenda of the government country memorandum.

Reports that Rural Development Banks are eroding their paid up capital on account of high delivery cost is in itself a matter of big concern as these banks were established to provide the much needed service to the rural poor, ie, availing credit in their development endeavours. There is a need to restructure these banks for securing better administrative management and discouraging acquisition of high cost fund. This will eventually avoid the necessity of re-capitalization of these banks. Similarly, insurgence of cooperatives operating banking transactions with lending credit to non-members, thus dishonouring the clause pre-ambled in the Co-operative Act is another problem the financial sector is encountering. All these indicate growing problems in the sustainability of micro-finance institutions meant to help support poverty alleviation programmes.

The government is committed to implement the second phase of economic reform packages beginning with the new budget year. The reforms will cover wide areas from banking sector, administration, civil service, further liberalization of fiscal sector, strengthening the role of private sector and creating good governance and so on. Nepal’s country memorandum at Nepal Development Forum meeting focusing on alleviating poverty received great applause from both bilateral as well as multilateral donors. It is therefore high time to get into real action to implement development programmes to accelerate economic growth for which the government has to properly address the structural problems sequentially to enable the efficacy of reform processes it initiated in the past.

Recently, in creating desirable financial cushion for the government’s programme heralded by the second phase of economic reform package and the sole goal of alleviating poverty in the country, Nepal Rastra Bank cut the bank rate and also delinked bank rate from refinance rate by naming special refinance rate. Accordingly, bank rate and special refinance rate was introduced under the new arrangement. The bank rate for refinancing priority sector credit of commercial banks as well as for providing refinance to ADB/N and NIDC has been reduced by 1.5 percentage points to 7.5 percent from the existing rate of 9.0 percent. The special refinance rate applicable to micro-finance institutions such as rural development banks and similar others has been reduced by 2.5 percent points to 6.5 percent from the existing 9.0 percent. Both the revisions are expected to lower the cost of capital and reduce lending rates of financial institutions thereby promoting credit flow to economic activities of priority sectors.

The foregoing discussion suggests that the political upheavals and slow movement in economic reforms with snags in the areas of implementation which have hindered the process of economic development though global environment was more or less conducive for hailing such a process. With the new thrust on implementing economic process in sequential sector as observed from recent reduction in bank rate, it can be assured that the domestic investment environment will be reinvigorated and financial market will be more developed in the coming years. The only need under the current situation is the government’s active role in implementing the second phase of reform process and assuring better participation of the private sector in development endeavours. Besides, the country also needs a vibrant economic system free from corruption, poor governance, indiscipline and insecurity.

Of Ujelis and Chamelis

By Hitesh Karki

Ujeli undoubtedly stands out as one of the best telefilms aired on NTV. Now comes Chameli, the current buzz among cinegoers of Kathmandu. I must admit that I haven’t yet seen the movie but then wherever I go I hear people talking about it, how nice it is with its hard hitting, mind stirring storyline. Mr Baral, I think your Chameli will certainly go down in history as one of the best in this never progressing (quality-wise that is) Nepali movie industry.

Well, as mentioned earlier, I am yet to see how a village nubile Chameli ends up in the big bad world of Kamathipuram. But some of my friends who have already seen the movie tell me that it was too mind disturbing for them, the brutality of brothel owners treating our poor Chameli not even like an animal is too humiliating to bear. They said the feeling rattling their mind at that moment was that of humiliation of being Nepali who sell their own daughters just for a few thousand rupees when they very well know what their fate will be some years later. They left the movie while it was only half way through. This reminds me of the recent news that even Manisha could not help shouting "Stop Stop" while it was being screened for Bollywood stars. I guess they say a lot about how humiliating it must have been for her in the midst of Mumbai stars.

The movie has finally succeeded in once again highlighting the issue of Chelibeti Bechbhikhan which crops up every now and then in the form of protests. Foreign funded NGOs, while many of their work is just on paper, get paid in dollars.

It would be completely irresponsible to say that the all of them are just the same. We lament, we cry saying our girls are sold like commodities and forced into the business of selling their bodies across the border but have we ever realised what is happening right under our noses? Yes right here in the heart of the city! cabins, dance restaurants. The brothels of Kathmandu. A village nubile girl lands here in Kathmandu with little money. She has taken up a course to learn dancing or to become a waitress in one of the innumerable restaurants mushrooming in the valley. Some even hope to continue their studies alongside their job.

But like what Chameli had imagined about Mumbai and what it turned out to be at the end, the Chamelis coming to Kathmandu too will realise that it’s not rosy here in Kathmandu. Well, she gets the job, it’s easy with each one of them opening (dance/cabin restaurants in every nook and corner of the city) every other day but the fact is, slowly a customer with a perverted mind starts to physically harass her. She goes to the manager only to get a nice scolding saying that it's part her work. As each day passes, the harassment grows more and more. Ultimately a new prostitute is born.

And the funniest thing about the whole episode is that while the dancers or those waitresses are arrested by police, the owners go scott free. Now the question is, is such business really possible in their very restaurant without their knowing or consent? While Police leave no time to flash their act of bravery(?) in both print and electronic media,
they can hardly boast of having shut down the restaurants. The very next day the business is again back to normal.

While one has to accept the fact that fate of Ujelis in spite of the child marriage act is hard to control as they take place in remote areas, what about the Chamelis born here everyday in Kathmandu?

On top of a volcano

By Basanta Lohani

How does a man feel if he is standing on a volcano that could erupt at any moment? Probably void if he is ignorant or paranoid fear if he is aware of the threat. Our prime minister Girija Prasad Koirala could be in the midst of such fear if not in void this time because he feels that his position is similar to that of a man standing on top of a volcano that could explode any moment. This is how he explained his position when he addressed a public meeting in Kathmandu last week. If what he says is correct, then we Nepalese people have become quite vulnerable under his benevolent leadership as a prime minister who he is threatened to such an extent that anything can happen any moment in this country. Has the situation become that hopeless at a time when he, as the president of the ruling Nepali Congress, has a comfortable majority in parliament?

This part of the region where we are is known to be a seismic zone and, thus, threatened by earthquakes, landslides and avalanches rather than volcanic eruptions. But volcano is volcano that can have its birth anywhere in the world wherever there is significant movement of earth’s crustal plates. Volcanologists now believe they can relate it to plate tectonics. Whatever may be the case, Its effect is that volcano vents out molten lava charged with steam and gas and fragmented material so forcefully when it erupts that the whole area gets devastated.

In the case of our country, as it appears now, volcano is born under greed and betrayal of the political leadership like an underwater volcano not easily seen by everybody. But Koirala is an old war-horse who could sense the state of volcano that has now become active after being dormant for long. As volcanologists often say, when an active volcano erupts after a long dormancy, it could go very violent.

Greed and betrayal have given birth to this volcano that has now become active if it has not erupted. If anyone is more responsible in Nepal for this volcano being what it is today, it is Girija Prasad Koirala by all counts. He is the one who has remained in power more than anybody else and, likewise, surpassed others in harbouring greed and betrayal. The all-pervasive corruption plaguing the nation is only the by-product of this process. So if he is indeed on top of a volcano breaking open any moment, as he has sensed, the responsibility lies more on him than anybody else.

From the first time on may 21, 1991 to the fourth time on March 20, 2000, ruling this country for over four years as a prime minister in about eight years of Nepali congress rule, 75 years old Koirala’s position now is like that of a person who is swimming across the current of a river. He started his prime ministerial innings in a void and by the time he came to this point, his idea of state management seems to have crystallized significantly. In his first press conference after assuming power this time, he set his priorities thus: "I don’t want to commit many things for the nation as I have three simple priorities. Restoring law and order, providing corruption free administration and implementing administrative reforms." On the Maoist front, he urged the rebels "to come forward for dialogue but before that they needed to lay down their arms."

But he is slipping on all these counts and his expression of anxiety is manifested through his utterances like being on top of a volcano. For whatever reason he may have said so, this time he is not farther from truth for the very simple reason that he is fighting on three fronts at the same time. The first and foremost is his fight inside his own party. His life long political friend, Krishna Prasad Bhattarai whom Koirala betrayed and packed him out of office in a humiliating way, has made no secret of his revengeful attitude. In his tearful address to the parliament March 16, where he tendered his resignation, Bhattarai explained how his nine and half month old government
was toppled by the corrupt forces that included airport smugglers and commission agents.

Bhattarai’s bottom line is that he will not allow NC to split. Any action short of that he is willing to justify so long as he can hit back at Koirala. Realizing his apparent weakness in a frontal attack from Koirala and how he has suffered all this time because of that weakness, Bhattarai has outwitted him this time by pitting Sher Bahadur Deuba against Koirala. So Koirala’s fight with Bhattarai is now through Deuba, Koirala’s own protegee. Thus, the fighting terrain has changed, where it has become increasingly difficult for Koirala alone with a bunch of sycophants who can not match Deuba. In a situation like this, instead of forging some sort of loose alliance inside his own party, his advisors are making him drift further. The way committees and elected bodies are dissolved only attests to this fact

Koirala’s second front is corruption that is eating away his vitality. The passion to store riches among members of his family and the dons in his cabinet on whom he is so dependent for survival now as never before, is growing stronger. That has, as always, been his melting ground, thus, breeding so much of chaos, confusion, and distortions in the functioning of the government. This is how the government is losing its sense of direction at a time when the complexities are mounting. All these are reflected in the non-delivery of the system. This front is more difficult than fighting inside his own party.

The third front comprises of opposition parties looking for an opportunity to anchor a power sharing arrangement, Maoist rebels and other power centres hostile to him. Handling this front has become increasingly difficult because of mounting pressures pounded on him in the first and second front and the momentum it is gaining. The parliament is due to start May 15, where the main opposition is determined to stop parliamentary business the way it did at the end of the last session. So this confrontation is due. Deuba committee’s time has been extended for negotiating with Maoists but, it seems, Koirala himself is not optimistic about the possible outcome. And, also his strong-arm tactics is not finding any headway. As there are few whose business is to harvest rumours, multiparty democracy gets into added strain.

Amidst all this, the growing dissatisfaction among people is boiling like molten lava and fragmented materials of a volcano. There is always the danger of this emotion oozing out. A wary Koirala in his weary moments has rightly felt himself on top of a volcano that can blast any
time but, again, this is an irresponsible statement coming from a prime minister who should inform people but not make them panic.