LOST IN IMAGINATION : A Japanese tourist observing the Patan Durbar Square from a traditional window at the Patan Museum in Lalitpur on Tuesday.

NRB to study magnitide of IC circulation

By Prem Khanal

KATHMANDU, Jan 2 - As the circulation of Indian Currency (IC) is increasing in the domestic
economy, Nepal Rastra Bank, the central regulatory body, has initiated a comprehensive study.

The study, expected to complete within two months, will analyze the magnitude of IC circulation and its impact on the national economy.

Dr Yuba Raj Khatiwada, Chief Economic Advisor at NRB says the use of IC in domestic transaction is growing, however, "it is very difficult to pin point the exact volume of IC use for transaction purpose".

NRB officials estimate that the use of Indian Currency in local business transactions has exceeded 25 percent of the total money supply. Monetary experts argue that if IC circulation in the domestic business transaction is more than 25 per cent of the total transactions, then it could create a potential risk for monetary policy.

"Twenty-five percent of money demand is being fulfilled by the IC means that NRB is slowly losing its control over the major economic variables such as inflation and interest rates, " says Dr Mohan man Saiju, Former Vice-Chairman of National Planning Commission. Money supply is one of the tools that the central monetary authority uses to play with inflation and interest rates. With increasing substitution of the local currency by the foreign currency, this tool becomes blunt.

Dr Khatiwada also admits the challenge lying ahead with the monetary authority and says, "such a strong presence of the Indian currency in the domestic market often compounds the estimation of aggregate demand for the local currency often leading to mismatch between the demand and supply."

The use of Indian currency, which was prevalent only in the Terai belt adjoining India in the past, has now spread to other parts of the country as well, especially in the tourist cities like Pokhara and Kathmandu. With the increased flow of Indian tourists to Nepal during the last few years, which accounts about one-third of the total tourist arrivals, the circulation of Indian currency has been reinforced. Indian currency enjoys open and unlimited convertibility in Nepal.

In some of the bordering towns, businessmen openly admit that they prefer Indian currency to Nepali currency. The reason is obvious: Indian currency is accepted on either side of the border, while Nepali currency is not accepted in India.

The low interest rate offered by the commercial banks on the deposit is another reason behind the surge of IC circulation. As a result, boarding Indian informal banks in recent years have attracted large volume of domestic capital by offering relatively higher interest rates and other attractive schemes.

"The growing trend will definitely encourage capital flight to India, which is dangerous threat for a small economy like ours," Dr Sainju said.

The mounting export to India in recent years, particularly after the entry of Indian multinational investment in Nepal, and after the signing of Nepal India Trade Treaty, is another influential factor for the rise in IC reserve with NRB, which has crossed Rs 8.27 billion during the first three months of the current year. Dr Khatiwada, however, says "since such payments come through the banking channel, its role for rising IC circulation is least". But the expanding export of informal sector to India and huge remittances that Nepalese bring in to the country can be partially blamed for growing use of IC, he said.

Second day of bandh passes off peacefully
200 protesters arrested

Post Report

KATHMANDU, Jan 2 - The second day of the two-day nation-wide shutdown (Nepal Bandh) called by a grouping of nine left parties passed off peacefully, with partial impact in southern belt of the country and urban areas, reports received from across the country said.

The state-owned trolley buses, buses of Sajha Yatayat and some public and private vehicles were seen plying on the streets of the Kathmandu Valley throughout the day. Though most of the shops in major areas of the city remained closed, most of the shops inside the residential neighbourhoods were open.

Since there was possibility of sudden eruption of sporadic violence, the security was on high alert as compared to police deployment during the past strikes, said Ananta Ram Bhattarai, Deputy Inspector General of Police at Valley Police Office (VPO). According to him, altogether 1600 policemen were deployed in Kathmandu district alone, while extra 150 policemen in Lalitpur and 100 in Bhaktapur were deployed to avert possible violence.

Altogether 200 demonstrators including ten Central Working Committee members of CPN-ML, lawmakers Lilamani Pokharel and Pari Thapa were arrested to avert any potential violence, Bhattarai said. They would be released after inquiries,he added.

According to our Hetauda-based reporter, no vehicles except cycles and rickshaws were seen plying on the roads in this industrial town. Almost all shops were closed, except pharmacies and a few tea-stalls. All educational institutions and factories too remained closed.

Meanwhile, reports from our Rukum-based reporter state, the two-day bandh didnot affect this Maoist-hit district at all. The markets in the district headquarters remained open as usual. Contrary to this, another Maoist-hit district, Rolpa, remained closed the whole day today. There was no impact of the strike here yesterday.

Meanwhile, Rajbiraj continued to remain tense today as compared to other days, since police shot a local here on Sunday. Khusilal Yadav, a local, was shot dead in police firing while he was participating in a protest. The town remained almost totally closed.

According to our reporters, the strike had partial impact in Bhadrapur (Jhapa), Bhojpur, Dhangadhi (Kailali) and Parbat.

Meanwhile, Rabindra Adhikari, president of CPN-ML associated student-wing, issuing a press release today, has reiterated the demand for the resignation of the Deputy Prime Minister and Home Minister Ram Chandra Poudel.

LPG shortage may worsen further

Post Report

KATHMANDU, Jan 2 - Liquefied Petroleum Gas (LPG) dealers have warned of severe LPG shortage in the near future if immediate measures are not taken to ensure adequate supply.

The fresh warning comes amidst continuing shortage of LPG in the domestic market despite resumption of supply from the Barauni gas station in India, which had temporarily suspended LPG supply due to technical problems. Barauni gas station is the only supplier of LPG to Nepal.

Nepal Oil Corporation (NOC), the state-owned monopolist in the import of LPG, and gas dealers accuse each other for the shortage of gas. While dealers point at the NOC for not being able to supply gas adequately, the corporation maintains that the shortage is only artificial.

Whatever the reason the market has faced continued gas shortages for the last few months and shows no sign of relief. Instead, the shortage could grow worse, warn dealers.

"The market will face severe shortage of LPG within a few days if NOC does not immediately restore adequate supplies. Stock with the private sector is rapidly exhausting," said Hari Prasad Pathak, President of the Liquefied Petroleum Gas Association (LPGA) and Managing Director of the Baba Gas Udyog Pvt Ltd.

"NOC is not supplying LPG as per the dealers’ demands. Product Delivery Order (PDO) payment of almost 80 million rupees is already pending with the NOC," he said.

However, the NOC maintains that normal flow of LPG has resumed after completion of the maintenance work at the Barauni gas station.

"Consumers seem to be hoarding LPG in fear of possible shortage triggering artificial crisis. If there really was a shortage, how come all vehicles are running," says Madan Raj Sharma, Executive Director of the NOC.

According to the NOC, the monthly demand of LPG stands at around 3500 tons, up from 2500 tons before hike in the price of petroleum products, especially that of kerosene. However, LPG dealers say that the monthly demand is almost 4000 tons and that the present supply of LPG by the NOC only from Barauni would not be sufficient to meet the domestic demand.

Sharma, however, does not buy the argument. "The imports by the NOC is enough to meet the domestic demand. The NOC imported 3500 tons of LPG in December and would import the same amount till February or March, until demand recedes to some extent," Sharma said.

Meanwhile, dealers flayed the NOC’s recent decision to start its own bottling plant and to set up storage facilities of 3000 tons. The decision to start a new plant by the state-owned corporation comes at a time when the private sector claims to have monthly refilling capacity of 8000 tons, far more than the average demand and current gas import.

Transporters call off strike

Post Report

KATHMANDU, Jan 2 - Transport entrepreneurs have called off the nationwide chakkajam which they had earlier announced to stage tomorrow. Federation of Nepalese Transport Entrepreneurs (FNTE later today said that it has withdrawn all the strikes programmes due for tomorrow in view of deteriorating political situation in the country.

"We are calling off all the strike programmes in view of the current political situation," said a press release issued today by FNTE General Secretary Hom Prasad Adhikari. "But that does not mean that we have given up our protest programmes...We will hand over a memorandum to the Prime Minister soon. If that does not work, we will be forced to stage bandhs and chakkajams."

According to the press release, both factions of the FNTE will jointly hand over a memorandum to Prime Minister GP Koirala on Friday and will jointly stage protest programmes if need so arises. The transport entrepreneurs are demanding that the government reconsider its recent decision that calls for a total ban on the operation of vehicles older than 20 years in the Kathmandu Valley from Mangsir 1, 2058 BS (mid-November 2001).

The government in early November announced that it will impose a complete ban on the registration and operation of all the old vehicles - both diesel and petrol-operated buses, minibuses, minitrucks, mobile trucks, tankers, vans and taxis owned by both the government and private enterprises and individuals - in the municipal areas of the country from mid-November.

Also, the government announced that all the petrol and gas-operated three wheelers (with two-stoke engines) owned by both the government and private enterprises and individuals will be banned from operating in the Valley after Shrawan 1, 2058 B.S. (mid-July 2001). However, such vehicles will be allowed to operated in other municipal areas of the country.

The transport entrepreneurs are also demanding that the government provide them with some incentives such as duty free facility while importing new vehicles. The government officials, however, say that the government cannot afford to do so.

According to FNTE estimates, the owners of around 5,000 vehicles - including buses, mini-buses, trucks, tankers and taxis - will be left to bear the brunt of what they describe as a "one-sided and sudden" ban.

Officials claim that the decision was taken in line with recommendations made by a task force formed to carry out a study on the carrying capacity and vehicular emission problem in the Valley.

Deuba protests open voting in NCPP

Post Report

KATHMANDU, Jan 2 - Sher Bahadur Deuba, who is leading a rebellion against Prime Minister Girija Prasad Koirala, protested the decision to use open voting on the proposal of no-confidence against Koirala.

"We strongly object to the decision to hold the voting in an open ballot fearing defeat, despite using power and threatening to lure votes on to their side, against our no-confidence motion," a statement issued by Deuba said. The rebels are accusing Koirala camp of conspiring to bring faction in the party by using the mode that so far has been used only to divide the treasury and the opposition parties in parliament.

Secretary of the Nepali Congress (NC) parliamentary party (PP) Benup Raj Prasai, however, denied the allegations and said it was a normal procedure used in the House of Representatives, the Lower House of Parliament.

"It had been decided to hold open balloting even when similar motion had been brought against Krishna Prasad Bhattarai last year," Prasai said. "This is just a continuation of the process we adopted from House Regulations."

Rebels fear that an open balloting would reduce their support as some of the NC lawmakers still fear Koirala, who has held top position of power in the party for long time and has his aides still in key positions in the party.

The proposal of no confidence is scheduled to be discussed and voted on Thursday by 113 lawmakers of the party in the Lower House.

The rebels led by Former Prime Minster Sher Bahadur Deuba need at least 57 votes to oust Koirala as the leader of the NC Parliamentary Party.

The leader of the PP with the majority in the House is automatically appointed to the post of prime minister.

Though the proposal had signatures of 56 members and support from senior NC leader Krishna Prasad Bhattarai, at least four of those signatories have openly withdrawn their support.

Ram Janam Chaudhury and Janak Raj Giri have joined hands with Mahendra Kumar Raya and Nagendra Kumar Raya and publicly announced their support for Koirala.

Deuba in the statement also condemned what he said was a propaganda by the state-run media.

"These news reports are not only insult but also humiliation to the positions they hold," Deuba said.

Meanwhile, the meeting between Koirala and Bhattarai failed to take place Tuesday morning. Instead Bhattarai met NC lawmakers and asked them to vote using their judgement and refrain from getting lured.

This would be the second time in less than a year that NC lawmakers would be meeting to discuss such a motion.

About nine months back, two such proposals were filed against Bhattarai by Koirala supporters accusing him of failing to curb corruption and quell the Maoists problem.

Tourists return with bad taste in mouth

By Rajeeb Tamrakar

KATHMANDU, Jan 2 - Barbara Ness, a 35-year- old European tourist, was happy to reach the Tribhuvan International Airport Monday to catch a flight to Bangkok. She had to pay Rs 400 to a rickshaw from Thamel where she "wasted" her week-long new year vacation by watching TV, alone in the hotel room.

A swedish couple using the cycle-rikshaw to visit Patan Durbar Square during the second day of Nepal bandh on tuesday.

"I could not find a cab at Thamel, so I had to take a rickshaw," said Ness, as she dropped off the rickshaw and hurriedly proceeded towards the terminal of the Tribhuvan International Airport Monday. "My week-long stay in Kathmandu went in vain, I could not go around."

Also on the second day of the two day-long Nepal bandh today, commuters and tourists could be seen travelling on foot, dragging heavy luggage, or hiring rickshaws to the country’s only international airport - even though the state-owned Sajha Yatayat operated three buses to and from the Kathmandu airport.

Defying the call for two-day bandh by a grouping of Nine-Left parties, more than ten buses -- operated by the Shajha Yatayat and the Nepal Transport Corporation -- were seen scurrying around the streets of the capital city today, ferrying tourists and locals alike.

And, Ness was not the only tourist who could not enjoy her short Christmas-New Year trip to Nepal. There were hundreds of western - and of course Indian - tourists who could be seen returning back with not-so-good impression about Nepal.

"We landed up here in wrong time bhai," said an Indian tourist from Varanasi, who denied to be identified by name. "Many honeymooners wishing to visit Nepal this time have cancelled their plans...We can not just figure out what is happening out here."

Thanks largely to the street demonstrations, ignited by the Hrithik Roshan-rumour and the political games played by the country’s political parties, or more precisely by their sister organisations like the students’ unions, normal life and business activities in the capital city have remained impeded for the last one week.

Riot-police patrol were out on the streets and the state-owned buses too had up to seven armed policemen on board, but still, the fear of possible vandalism was apparent on the faces of the cops as well as the passengers on-board.

Sanu Babu Lama, driver of a Sajha bus, said no untoward incident happened today. "On Thursday, mobs pelted stones at my bus and even damaged a window pane while plying near the Bir Hospital," he said. "But today it is all right so far."

While most of the hotels and private airlines operated their own vehicles to transport their guests, there were a few fortunate tourists who had friends and acquaintances in the city to ferry them on motorcycles to and from the city’s only airport.

But, the happiest of the lot were the rickshaw-pullers, who incidentally happened to hit the jackpot after a long time. "It had been long since I had earned as much as Rs 700 on a single day," said Hari Tamang, a rickshaw-puller from Thamel as he counted the wad of currency notes and few dollars that he earned on Tuesday alone.

Tomorrow is again a day of chakkajam (transportation strike) called by transport entrepreneurs protesting the ban on twenty-year-old vehicles from next year. But the organizers of the transport strike have called off the strike late this eveing spoiling Tamang’s hope of earning as much as today.

Education policy guided more by donors’ suggestion

Post Report

KATHMANDU, Jan 2 - Who makes the education policy for Nepal? A report prepared to analyse the policy and programmes of Ministry of Education and Sports says that education policy and planning is guided more by the suggestion from donor countries.

The preliminary draft report on Institutional Structure for Educational Development, prepared by Institutional Linkage Programme (ILP) and Danish University Education (DUE) for the ministry says that 71 per cent of the suggestions from the donor agencies turns to be "fitting for the last decision" whereas, only 31 per cent of the suggestions made by the parliament reaches implementation stage.

The report states that policies of the ministry have not been able to reach the stage formulation and implementation stage. "It should take steps toward policy making, criteria development, resource mobilisation, affiliation and follow-up, rather than confining itself to administration works," it adds.

Chuda Nath Aryal, one of the national consultants, takes this report as a challenge to the ministry and education policy of the country. "It has raised curtain over many of the bitter truths in the (education) ministry and policy. It is sad that the ministry which should herald education and awareness for the whole country is running without an infrastructure," said Aryal.

According to the report, the ministry’s manpower as well as the working structure has been useless. "The ministry has failed in formulating the right policy, technical and institutional form," it adds. The report says that 53 per cent of the staff at the ministry do not have an idea about the responsibility of their jobs.

In the ministry, the report adds, it takes 14 years for an employee to be promoted and 61 per cent have not been promoted after they joined the job. In addition, less than one per cent have represented the oppressed class and women participation is less than five
per cent.

The report will be submitted to the Ministry as a Human Resource Development Planning.