For accurate census

The census, no matter how seriously it has been taken by successive governments for developmental purposes, is the exercise of a constitutional provision conducted every ten years. The first census in the country dates back to 1911, almost a century ago. However, the way we have conducted every census since then shows that it still lacks a systematic approach for reaching the entire population. This is one of the reasons why governments have failed to regulate the population explosion and to introduce effective measures for socio-economic development. The majority of our population still lives under acute poverty and there has not been any appreciable change in their lot.

Census 2001 begins on June 8, and ends by the 20th of that month. The Central Bureau of Statistics (CBS) responsible for conducting every census in the country has used a de jure rather than de facto method. It counts even foreign nationals who have been staying here for some time but does not include diplomats and tourists. The general sample used for counting both urban and rural population do not specify particulars other than religion, occupation and number of dependants. However, the household sample goes into detail. To conduct the census, the CBS has deputed five thousand supervisors who are secondary teachers by occupation. And the 20,000 enumerators selected from among primary level teachers include 20 percent women. Perhaps the inclusion of women was with a view to empower them. How accurately will the CBS be able to conduct Census 2001? Has it realized that five percent of the population was left out in the last census? Why has there been delay in the necessary publicity work? What mediums has it used to create popular awareness of the census? How will it conduct the census in the Maoist-affected areas if any untoward incidents occur? These are a few questions which still remain unanswered. There are also complaints that the minorities have not been properly enumerated in the past. These complaints should be addressed both through better care and caution, by designing effective questionnaires and by including more enumerators from the minority communities.

In 1991 head count, the CBS left out five percent of the population due to lack of follow-up and publicity measures, besides factors such as rugged terrain and poor communications. The CBS did not properly train the census takers on how they should cover the remote and inaccessible regions of the country. Thus the total population of the country turned out to be more than what the CBS made public. Such a projection of inaccurate data not only undermines decision-making in development planning but also affects long term strategies. The country is passing through a population explosion. The size of the population has become larger than what can be sustained with the existing level of development. The CBS must not take the census of 2001 as merely an exercise of a constitutional provision. It has to train its personnel well in the methods of conducting a census and conduct it in such a way that as few people as possible are left out and there are as few complaints as possible afterwards. For this it has to use new and scientific tools for publicity.

Democracy, fair consent and morality

By Nagendra Prasad Shrestha

Man is the centrality in democracy. Its fundamental principles are liberty and equality. In democracy every man is believed to be a precious child of God made in His won image and created equal. It means, equality of political voice, equality of opportunity, equality of consideration, equality before the law and equality in human and constitutional rights.

Democracy believes that the state is made for man and not man for the State. Thus, the state cannot be anything more than the individuals who make it up. Democracy places man at the centre of its thoughts.

In question of liberty and equality democrats prefer individualism rather than statism. In other respects, democrats like to think and treat man and state together in a relationship that honours the needs and rights of each other. Government is needed like family for the human needs of society. Even if men were heavenly beings, some political arrangement would be necessary to adjust the complexity of their relations and to do as citizens of heaven on earth what they could not do as individuals and families. Government serves a lot of the genuine purposes of people, which they cannot do as individuals or family.

Experience of democracy teaches us that government is something like a ‘fire’. Under control, it is the most useful servant of the people and out of control, it is a ravaging force or like a tyrant. Held within proper limits of the constitution and its laws, it addresses all the purposes of good government.

Man is a mysterious and a complex being. No amount of research has ever solved his mysterious complexity. Man’s limitation is his imperfect nature and corruptibility about which human history and traditions have issued several sharp warnings. Man may govern himself but there is no certainty that he will be able to do so. Man will need all the help he can get from family, education, the spiritual and from institutions of democracy if he is to achieve even limited success in his experiment of self-government. He must be wisely counselled, encouraged, informed and above all, properly checked.

It is said that if you want to know a man and what he is, place him in authority or power. Man has potentialities both for virtues and vices. Most of the time, he is alert to shun the vices, which are powerful within him, and he is advised to overcome those vices through virtues, which are very fragile. In democracy it is said that government is a matter for moral men because those who are free from vices must be virtuous, honest and patriots. Politics without morality becomes like a beautiful woman with no character.

Naturally, we may ask ‘Democracy for what? The answer is the fundamental basis of government is it must be of the people, by the people and for the people. It must be of the people because they are the only source of legitimate power. That’s why the ballot is called the final orbit in democracy of who is to govern, not any person or organ of the constitution, not even the judiciary. Government by the people means parliamentarians who have received the fair consent of the people, have the right and capacity to judge the rightness of the laws and government policies under which they have to live. And, government for the people because their liberty, equality and welfare are the only reason and objective for which the self- rule of government exists.

If the sanction of fair consent of the people is the basis for the formation of government and its rule, the prevailing practice of democracy in our country does not truly reveal this fact and instead gives a very different picture. Parliamentarians in our electoral system, in most of the cases, get elected in the first place, because a minority of the votes polled is enough to capture executive power to rule. Technically, a majority of seats in the lower house becomes the criteria and not the majority of people voting. The government in power is precisely a case in point. It secured 36 percent of the total vote, while a majority of 64 percent of voters did not vote for it . This is the fact and truth about the nature of the fair consent of the people. Rule by majority has become rule of majority of seats obtained in an electoral system not requiring not to secure a certain percentage of the total vote and in which the majority of 64 percent who voted in different ways like- 30 percent, 10 percent , 6 percent or 3 percent for different political parties- have become less important. What a funny situation and a fiction of fair consent it seems!

Secondly, there is no constitutionally binding provision for publicly declaring the assets, election expenditures and sources by the political parties and their candidates, thereby leaving widely open the floodgates for political corruption. This can lead to a nexus with the foreign elements, criminals and other undesirables influences. These are undeniable strong factors, which can corrupt the fairness of the consent to rule.

Thirdly, there are also other anomalies like the citizenship cards, which are needed for many important purposes not being made the basis for voting. The identity cards, introduced by other agency other than the Election Commission, complicate the constitutional right of citizens to vote and give opportunity for corruption. People do not have easy access to information about the candidates and their specific views on vital issues, which are closely related with the life of voters and their families. Voters are not given sufficient time how they will vote, given the lower literacy rate and backwardness of numerous ethnic communities so that the ballot of the people does not become a blank cheque for the parliamentarians.

To conclude, will our politicians take the trouble to get together in one

place for soul-searching? Then will they realize all these existing anomalies and basic flaws in our electoral system and election process in order to correct them for ever with due regard to the nation’s vital security interests, political stability and patriotism. Politicians who assert democracy must come with fairness. If they do not speak the truth, the people, nation and democracy are bound to suffer. Political corruption ultimately leads to politicization of vital public institutions and bureaucratic corruption.

These dangerous circumstances put our politicians' honesty on trials. Of course, money is needed to run political parties and contest elections, but that does not mean indulging against national interests and polluting the fairness of the consent of the people. There are many healthy ways and sources for raising money for politicians' funds, provided they could do a little bit of homework. Perhaps, the state can contribute, instead of allocating handsome amounts to parliamentarians individually as project money in the annual budget. Fees and contributions may be raised from membership of the party. One can also raise contributions from other healthy sources, a practice followed by the reputed democracies of the world.

The real iron-man !

By Shreedhar Khanal

Today, the burning question in Nepal is who is falling behind? But it is not unanswerable. If you use your common sense, you are prompted to say that the government is falling behind. You are walking on the streets with a false sense of security. Nobody knows when and where a student, a teacher, or a civil servant will be killed in a Maoist ambush. Even hundreds of police constables and officers, supposed to maintain law and order, are themselves victimized by the Maoists. The Prime Minister and the Home Minister are telling the press that they are trying to maintain law and order in the country. In spite of their assurances, hundreds of Nepali citizens are being massacred in the Maoist Movement. Clearly, the government is telling the public how not to govern. The big irony is: you are consoling yourself with the view that more policemen are being killed in the mayhem than civilians.

Take the case of drinking water, electricity, education, health and any other service, the democratically elected government is falling behind in every aspect. And you are bound to say that you have never seen such a dirty government in your life. The Prime Minister as well as other ministers go to Singh Durbar almost every day, but you never feel that there is a government in your country. Among all the leaders of political parties, Girija Babu has indeed exhibited a miraculous performance. He has compelled time and tide to wait for him. Any other Prime Minister would have resigned during such a crisis. He or she would have been ashamed of failure in convincing the opposition as well as the people of his/her assurances and would have resigned for the sake the party. Unlike Girija Babu, he would have been swept away by time and tide, being unable to perform miracles. Girija babu has proved himself the only iron-man of Nepal. All the leaders of the Nepali Congress are now repenting that they had bestowed the title Supreme Leader on the late Ganeshman Singh. The people are also ashamed of their illusion that Singh was the only iron-man. Even the Maoist leaders are compelled to change their view that there is no iron-man now within the Nepali Congress.

Is it no wonder that the government is falling behind and the Prime Minister is ahead of time? Prime Minister Girija Babu, adamant that he be in power forever, has proved that one can remain in power, as long as one wishes. The people are scared of this Girija-miracle. If the next Prime Minister also follows in his golden path, what will happen? This is the crucial question the people are facing today. For them, there is no alternative but to curse the iron-man and hope for a new leadership in the Nepali Congress.

How to tackle NPAs

By Surendra Man Pradhan

In any business, an element of non performing assets (NPA) is inevitable. Banking is a business, and therefore, NPAs are unavoidable. The concept of NPAs came into the Nepalese financial systems, and consequently the Prudential Accounting Norms were established a decade ago. An era of recognising income (even unrealised) was changed to providing for probable losses. The days of counting the chickens before the eggs hatch are over. However, the overemphasis on NPA has created an atmosphere of non-sanction of credit. All NPAs are not irredeemable. It is part of banking throughout the world. It is neither peculiar to government owned banks nor to the public sector banks. Quantum wise, the gross NPA is high in the former case as they account for a major share of the total credit portfolio. In the government owned and semi-government owned banks like the Nepal Bank Limited and the Rastriya Banijya Bank, it comes to around 20 to 30 percent of their credit portfolio but in case of other public sector joint venture banks, it ranges at around 8 to 15 percent. However, they are showing a trend of growth in gross NPA.

The NPA position in the Nepalese banking is being exaggerated. The ratio is related to credit and not to assets. The international norm is to relate the ratio to assets. If the ratio is related to total assets, the NPA ratios in the Nepalese banking sector is bound to fall very sharply. Hence, it is necessary to take a policy decision to relate NPAs to total assets and not to credit as at present. It is also necessary for the banks to give disaggregated data on NPAs such as substandard, doubtful and loss assets, which will throw more authentic light on the quality of assets.

There is a growing realisation that unless the growth in NPAs is kept under control, it has the potential to cause crisis. Hence, even though NPAs cannot be avoided, the growth reduction should be brought down to around 2-3 percent of risk weighted assets.

Before going for the ways and means of tackling NPAs, we should be well aware of the reasons for the protuding of NPAs. The ‘euphoria’ generated by liberalisation can be taken for granted as the main reason. The dream of globalisation led to huge investments, which unfortunately could not be utilised properly due to incomplete liberalisation policies. Large corporate bodies misutilised credits and delayed payments, and contributed indirectly to enhancing the NPA ratio. The use of the existing banks in Nepal, as an instrument of public policy, is another prime reason. Lendings under populist schemes such as directed lendings to certain sectors, priority sector lending, export financing at reduced return rates are some of the examples.

All these loans have joined the ranks of the NPAs. Projects financed in the pre-reform era, low promoters' stake, viability based on high tariffs and fiscal concessions have also contributed to increasing the NPAs. Lack of vision in appraisal of proposals while sanctioning loans, reviewing or enhancing credit limits , absence of risk management policy in financing, concentration of credit in a few group and sectors, lack of coordination among various financiers, lack of initiative in taking timely action against wilful defaulters and indecision on exiting out of bad loans for fear of investigating agencies like the Special Police, CIAA, Public Accounts Committee of Parliament have also contributed, in whatever measure, to worsening the situation on the NPA front.

The most crucial reason for the increase in NPAs is the shabby and defaulter friendly legal system. The worthwhile exercise, undertaken by the two oldest Nepalese banks in the court, to recover their overdue loans has gone in vain. This clearly brought out that it takes decades for courts to decide even after decrees are obtained. Hundreds of cases are languishing in courts since decades. The failure in the inception of Debt Recovery Act and Debt Recovery Tribunals has also played a positive role in increasing NPAs. Similarly, the labour-oriented small -sized old technology operations, unionised work force, non-transparent accounting policy, poor auditing practices, corruption, political patronage and pressure have all also contributed equally in this respect. Also, the Nepal Rastra Bank, the Central Supervisory authority for the financial sector of the country cannot be ignored. Its ineffectiveness and inefficiency in monitoring and supervising the performance of commercials banks have also added to the growth of the NPAs.

The treatment of any ailment should not be difficult once you have diagnosed the illness. In any case of NPAs also, the only solution for all the NPAs seems to be a compromise and settlement policy to be framed by each bank based upon the track record of the borrower, the original amount lent, the minimum rate of return to cover the cost of the money and the present value of the cash. Of course, the realisable value of security, and the worth of guarantors and the absence of
any malafide intention on the part the borrower should also be taken into account. The prescriptions for the problem of NPAs are mentioned hereunder .

Strengthen the administrative system: The most important remedy for tackling the NPAs is to give autonomy to the boards of banks. Neither the NRB nor HMG should interfere in the settlement of problem loans. "Autonomy and accountability" are the core principles of the liberalisation process. The impertinent nature of bureaucracy complicates the issue and NPAs linger on.

Hence, banks should be given absolute autonomy so that they can go for a professional board without any government/NRB nominee having a seat there on. Let the board exercise its legitimate powers of supervision through good corporate governance and be accountable to shareholders.

Appoint professionals as CEOs. They should have freedom to operate and be accountable to the board so that they can improve the quality of appraisals and take proactive and aggressive measures to recover dues. All the banks need to restructure and reorganise themselves through appropriate schemes.

In this regard, talk of the country chapter regarding contracting out of the management of Nepal Bank Limited and Rastriya Banijya Bank to international management consultants by Nepal Rastra Bank as a step towards the financial sector reform programme initiated by HMG should be taken as a welcome step. NRB should also go a step further in withdrawing NRB and HMG nominees from the boards of other banks in the country so that they have liberty in formulating a professional board accountable to the shareholders. Nepal Rastra Bank can keep its eyes open to monitor and supervise their performance by strengthening its supervisory methodologies and acting as a watchdog.

Legal reforms: The much talked about legal reforms need to be urgently effected and an awe-inspiring legal system to punish large wilful defaulters should be in place. Revenue Recovery Acts should be made applicable to bank dues as well. The proposed amendment to the Nepal Rastra Bank Act, proposed Depository Institutions Act, Foreign Exchange Regulations Act etc should be effected urgently. Similarly, the long- awaited Debt Recovery Act should be enacted immediately. Appointment of receivers should be mandatory to prevent borrowers from alienating the assets.

Formation of assets reconstruction company: ARCs can also be used as a remedy for NPAs. However, many countries have used ARCs to address NPAs, only where there is a full-blown banking crisis. But in our context, we are not in such a situation. If government owned banks are to be bailed out through ARCs, it can create a serious moral hazard problems in the system. Hence, it cannot be prescribed a full-proof remedy for now. Radical revamping of the present management and organisational system coupled with adequate legal reforms should be enough for the time being. These can be complemented by a strengthened and dependable Credit Information Bureau and effective and efficient monitoring and supervision from Nepal Rastra Bank, along with the full support from the government.