Editorial [ The Kathmandu Post (Nepal)]

Cautious welcome

Keeping the volatile political scenario at bay, the Nepalese economy is moving ahead at a steady pace for the second consecutive year, all right. If the much-hyped economic projections are anything to go by, the Nepalese economy is expected to register a promising, and hopefully sustainable, growth rate of 6 per cent by the end of the current fiscal year. But there is nothing much to gloat about over this seemingly good news, as it is likely to be elusive. Gnawing problems on the macroeconomic front, more precisely in foreign trade, are likely to overshadow such a rosy picture soon.

The major worry comes from the foreign trade front. Even during the mid-1990s recession, both the components of foreign trade -export and import- maintained a robust growth rate. Obviously, the credit for the upsurge, which our economy is experiencing for the last two years, goes to this sector. But now it seems that things are getting stormy here as well. The export, major foreign currency earner, is growing but at a diminishing rate. During the first nine months of the current fiscal year, exports grew by only 21.5 per cent as against 37.6 per cent during the corresponding period. Meanwhile, imports that stood at 28.6 per cent last year have plunged dramatically to 6.9 per cent. The figure may be alluring to the trade pundits, who keep their eyes fixed at the Balance of Payment, but surely it is not so for our economy as a whole.

Since a good part of the country’s import constitutes capital goods and raw materials, the fate of the investment sector naturally depends on the rise and fall of imports. Low import means less capital goods, dwindling investment confidence and a slowdown in aggregate consumer demand. When the economy began to downslide in the mid-nineties, it was immediately reflected in dipping imports. By all accounts then, the tumbling imports could be an ominous indicator of our economy. If things spin out of control, there will be yet another round of economic slowdown in the next fiscal year. Things are equally gloomy on the domestic macroeconomic front. Thanks to the populist budget and its ambitious regular expenditure growth, the economy is all set to bear the brunt of widening fiscal deficit. Though the inflation rate has come down to 2.2 percent, this gives little cause to rejoice. Moreover, the figure could be fickle, due to the fluctuations in India’s inflation rate that will drag Nepalese inflation rate along the trend.

With the fiscal deficit of 8.42 billion rupees - a whopping figure indeed - up by 35.3 percent compared to the last fiscal year’s figure, the development front has once again become a major economic casualty. The Koirala government which is very generous to government employees and security personnel, has failed to invest much in development projects, the bedrock of a struggling economy. Private investment - both domestic and foreign - is already at an all time low and if the development expenditure continues to tumble, the economy is unlikely to get any lease on life through the investment sector. Moreover, if the fiscal deficit widens further, it could squarely hit the inflation rate and thereby the business climate. The Finance Minister and officials are already into the business of preparing next year’s budget. The budget preparation team has little maneuverability, as the Finance Minister himself has admitted. If they manage to address some of the pressing economic problems, it would indeed be a great achievement.

Maoist insurgency : War of attrition

By Dilpa Prakash Shah

Nepal Communist Party (Maoists) has launched the so-called People’s War against the constitutionally recognized people’s government in the country. The valuable period of nearly six years has been wasted by the legitimate government in designing and launching the counteroffensive programmes against the insurgents. The government has failed ab initio to check the insurgency launched by the so-called designed rebels. This situation has made people worried and they are not satisfied with the manner and model of the system in totality. More than a thousand precious lives have been brutally murdered and million worth of financial assets, both in public and private sectors, have been plundered or destroyed. Terror has been created all over the country both by insurgents and counter-insurgents.

The rebellion faced by the country is not against the state itself because the insurgents like in Kashmir, Assam and Sri Lanka have not rebelled to set up separate sovereign states. The main thrust of their rebellion in Nepal is to introduce to the Marxist-Leninist ideology oriented Maoist communist state which according to them only serves the best interest of proletariats and other suppressed classes. Thus, the fundamental strategy of the insurgents in Nepal is to invalidate the Constitution itself which has guaranteed the norms of democratic system. They are openly pleading and propagating that eleven years’ democratic set up has promoted loot to country’s economic resources, corruption, misrule thereby ignoring sovereign independence and basic life supporting needs of the most of the poverty-stricken people in the country.

Scenario existing in the country is very grim and the ruling elites are at confusion in taking abrupt and right decisions to solace the suffering of the people. National and international policy-decisions designed by the government have become ineffective in appeasing and pacifying the just demands of citizens. So the government representing the people has failed in its mission in maintaining the basic needs of the country such as security and order, economic reforms social upliftment and even proportionate allocation and distribution of the state resources in the backward and remote parts of the country. In addition to these vacuum, state machineries are very often arbitrarily misused to provide higher facilities to the kinsmen and yesmen, maladministration and misdeeds are tried to be covered by the fake slogans of democracy. These and other like activities on the part of the ruling elites during the period of eleven years sovereign democratic people of Nepal have ventured to go against government’s policy adopting any methods - peaceful or aggressive. To this context, the rule of democracy promoted and faciliated by the capitalist countries of the world is challenged in Nepal by the so-called insurgent groups and now the country as a whole is in chaos. Insurgency as such is not a new concept of the modern period. If we go back to the world history, this type of warfare fought by irregular forces in small scale with limited action in conjunction with a political-military strategy were rampant in various parts of the world from earlier days. Even the genesis of this kind of warfare can be found in the American Revolution when veterans of Indian fighting formed bands of riflemen practising unorthodox tactics against the well trained British army. First this type of warfare was known as the guerilla warfare, then partisan warfare and now the insurgency warfare.

The main strategy of the insurgents is to inflict protracted harassment adopting subtle, flexible tactics compelling to wear down (attrition) the enemy, so that sufficient military strength to defeat opponent in orthodox battle might be achieved either in the form of total victory or in the design of compelled negotiation. This tactics or strategy was based on the teaching and experiences of the Chinese General Suntzu in 350 BC. To quote him "There has never been a protracted war from which a country has benefited." He has further instructed his subordinates: "Know thy enemy, know yourselves, your victory will never be endangered, know the ground, know the weather, your victory will be total, avoid strength and strike weakness, make deception and surprise as your tactics." The Prussian military scholar of the 1st century also advocates: "A weaker adversary does not have to destroy the stronger’s army in order to gain victory, but rather he must destroy the other’s will to wage war." So Mr Karl von Clausowitz, famed Prussian officer-scholar accepted extensive fighting could aid the wearing process provides the theatre of the operation was large enough, the terrain sufficiently rugged, and the partisans themselves temperamentally suited to this type of fighting.

Motivation plays a decisive role in promoting rebellion and insurgency. Unfortunately, it is not a hard task to motivate people who are used to be motivated by different factions of the political parties within a span of half century. The main reason behind the crux is the miserable life-cycle of the people, and who under the temptation of better future get easily motivated. Notwithstanding the eleven years’ rule also could not appease hunger and ameliorate the economic and social status of the common people. The government has been unable to maintain law and order and even to provide security to life for the citizens. All in all, chaos is spreading and terror has gripped the democratic societies. Terror has consisted of killing of innocent people, abduction, assassination and indiscriminate bombing so that they may focus world attention on the rebel’s cause. As it is said that this kind of war anticipates intelligence, wisdom, precision, mobility, effective leadership, people’s participation and attractive propaganda, scenario has indicated a lot of homeworks has been extended on the foothills of Mao, Che Guevara, Castro and Pravakaran.

This hazardous situation faced by the country has not been taken up seriously and effectively by the ruling elites even after losing administrative controls in the various places of districts in the country. It might be presumed that the rulers have no capacity and a sense of responsibility to run the country. Steps taken by the government to counterinsurgency has become farcical and totally ineffective. When a nation is at war, can the forces not trained for this purpose overcome and suppress well-trained, disciplined and politically motivated enemies? The only slogan ‘democracy is in peril’ ‘extreme rightist and extreme leftists are attacking democracy’ and ‘save the democracy’ doesn’t redeem the mal-administration and evil practices adopted by the responsibility-bearers. When the constitutional body, the Commission for the Investigation of the Abuse of Authority, has categorically labelled corruption charge to the cabinet as a whole, can such government’s action and order in eliminating insurgency be effective? Will the people cooperate to the decisions of such government? The government during the period of nearly six years’ insurgency has not done pre-planned homeworks to contain the rebellion effectively and with due consideration. They have been the victims of the party-politics and are at crossroads while exercising decisive and effective mandate a guaranteed by the constitution of Nepal.

From the observation made above, it can be deduced that the government of the present stature cannot solve the insurgency problems faced by the country. It doesn’t mean that the existence of the country is at stake. If corrupt persons irrespective of their social status are charge-sheeted and tried; if national consensus is achieved to promote democracy and national interest, and if the squabbling within the party hierarchy is checkmated, it is not hard to crack the upheavals of the insurgency.

New cabinet near, work culture far behind?

By Damakant Jayshi

Only a few days back, there were reports that Prime Minister Girija Prasad Koirala gave a dressing down to all his ministers and the secretaries. He was particularly sore with them, an early bird reports, because he had come to know that the most of them were not doing the very job for which they were in their respective ministries: to go through the files and take decisions.

For once, PM Koirala showed no-nonsense attitude vis-�-vis the mounting backlog files. It is yet to be seen how sincerely the ministers and secretaries will honour the work culture that the Prime Minister wants to establish in various ministries and the branches of the government. Our current experience shows that the work culture will be reduced to just pious intentions, a phenomenon not so uncommon in Nepal.

Oh yes, we have had plenty of them. After all, it doesn’t cost a dime to publicize some honest intentions. You don’t need to pay any taxes; neither any VAT is levied.

Our Prime Minister should keep in mind the example of West Bengal, an eastern state in India where I have had the privilege of staying for a long, long time. It was not unusual for the then dynamic Chief Minister Jyoti Basu, who holds a Guinness record for being the longest-serving elected ruler, to issue circulars on the clearance of backlog files and punctuality in the government offices, particularly in the Writers’ Building, the seat of the government. He failed each time.

Hopefully, our Prime Minister will not meet the same fate. Though it like hoping against hope, one cannot help but wonder that he will ever succeed in instilling the much-needed work culture in the government offices on the days they are allowed to open, that is if someone does not call bandh.

Although the time to meet any minister or official is 2 pm. onwards on any working day, it will be nearly a miracle if we can meet the concerned minister or a secretary. They are either out or busy in meeting or in some important work. Judging by their "business", it is amazing why they have had no nervous breakdown. Either they have Herculean stamina or…

It is really much more confounding than a mythological Greek maze. If they are working all the time, then why do the files keep piling up? And why does work remain in limbo in every sector?

Maybe PM Koirala should seriously consider creating a new ministry in the next Cabinet reshuffle about which the rumours are rife in the capital. A Ministry of Inspection For Establishing Work Culture in the Ministries: How does it sound? I know, it is too long, but don’t forget, the longer the better. After all, most of the recent Bollywood mega hits have had long names. Even our own Tan Ta Sarhai Bigris Ni Badri is minting money. This Nepali blockbuster has a long name too. It seems that long names are salable these days.

Coming back to the political scenario, I must add that ours is a parliamentary democracy and the prerogative of choosing ministers is solely that of the Prime Minister. I respect that. But do they, bearing long names, stand a chance?

Business unity and proposed CNI

By Dr Hare Ram Sharma

The major reason for the slow eco nomic growth and seriously sluggish employment generation in the country is the disunity among the businessmen. The influence of business organizations, like Nepal Chamber of Commerce (NCC) and Federation of Nepalese Chambers of Commerce and Industries (FNCCI), in the decision making process of the government, is very ineffective, so is their hold among their members to make them follow the business ethics and competitive strategies.

The business sector has always been disintegrated -- be it in the forms of different lobbies within the Federation or differences and competition between the FNCCI and NCC. There are hosts of other issues to resolve between the FNCCI and NCC. Both organizations are always at loggerheads when it comes to the issuing of certificate of origins, which is a major source of revenue for these organizations.

However, in recent days the rift among the business people seems to have narrowed a bit as both groups have reached to the position of unanimous selection of the president in the forthcoming elections. The incumbent president and other members of the executive committee have clearly expressed their support to Rabi Bhakta Shrestha for the president. Interestingly, there has been no opposition seen against Shrestha from any other quarters.

It seems that instead of meddling into the FNCCI politics, a group of industrialists are coming up with a different concept, that is a proposal to establish Confederation of Nepalese Industries (CNI). Though a different association of the industrialists has been raised many a time in the past, it has put forward very strongly this time, and most likely CNI would now be established as another major force in business sector.

Whether or not, yet another umbrella organization for the business sector was needed at the current situation, is still debatable. The debate would, however, be more appropriate if the role of CNI would be analyzed vis-a-vis that of FNCCI. If CNI acts as a complementary force to the business sector, it is certainly very positive for the economy of the country as such, but if CNI tries to replace FNCCI completely the establishment of CNI would be yet another tragedy in strengthening of the business sector.

At the age of extra dynamism and requirement of more specialized institutions, CNI can definitely play an important role in improving industrial environment of the country. Due to the lack of a proper representative organization, different sectors are coming out with proposals time and again to establish their own federation. The tourism sector, manufacturing sector, export sector, financial sector and others have raised voice time and again to establish their own federation. In the place of many weak and disintegrated associations, it would definitely be better to have one strong federation to represent the interest of all different industrial, manufacturing and service oriented sectors.

The need of CNI is also important because FNCCI has too many issues to focus. It would be certainly in the interest of all the small business people and district level chambers that FNCCI provide them with required support, infrastructure and protect their interests in the national level. With over 70 district chambers scattered across the country and their problems like VAT, under cutting, corruption et al it is definitely not possible for FNCCI to look into other issues more expeditiously.

The business sector has many ailments to look after besides the district problems. The major problem of the economy at the moment is the dearth of foreign investment. The existing joint-venture industries are running out of the country and new are showing no interest to step-in. The one-window policy became useless as dozens of doors were created within, the banking systems are not capable to provide both capital and services to the big industries and the industrial confidence and security environment has hit the rock-bottom situation. The proposed CNI could look into all such major industrial issues.

The only major hindrance of the CNI would be cross involvement of our big houses, in both industries and commerce. As we know there are instances when certain decision can be beneficial for the industrial sector but harmful for the commercial sector. In such cases a big house involved in both areas would look into its profit motive and not the welfare of the employees, nor revenue to the government. Similarly, there will be a great risk that the same people would be taking cross membership in both organizations and play politics as per their interest. If same set of people start running both organizations, and if CNI will also be used only as a platform to highlight own image, and if its revenue is again misdirected by executives, then there will be no relevance of establishment of CNI. The initiators of CNI should take these points into consideration before it is too late.