Check and balance

Chief Justice Keshav Prasad Upadhyay has denounced the bill that empowers the Commission for Investigation of Abuse of Authority (CIAA) to probe and prosecute corrupt judges. The bill as cited by the Chief Justice stands directly against the will of judges, besides undermining the "independent" legal system of this country. The government or in that case any so-called autonomous body must respect the "independence" of legal system. Such respect can only strengthen democratic values and dispense fair and impartial justice to all. He spoke this at a symposium organized by SAARC Nepal the other day. However, the Chief Justice did not elaborate why he said so, nor did he suggest suitable measures to contain rampant corruption within the judiciary. The Chief Justice said that the control and evaluation of judges or any disciplinary action against them must come from within the judicial circle, instead of the CIAA. Does he mean that a judge is immune to any disciplinary action that comes from outside the judiciary? What does he mean by the term "independence"? In any democratic setup, all the three organs of the government are equally important, and one cannot be singled out for special treatment. Without proper separation of power, and the check and balance mechanism, democratic values will become farcical, and the whole system will be thrown into disarray. Empowering constitutional organs like the CIAA should be accompanied by regulations for checking them, if they tend to go wayward. So far, the CIAA has filed more than three dozens of corruption cases against various organizations and individuals. There are also a dozen cases filed at the Supreme Court against the investigations carried out by the CIAA. But it is also not above any disciplinary action. No constitutional organ is independent by itself, and is in one way or the other checked by other organs. And this should apply to judiciary as well. The Chief Justice opinionated that all disciplinary actions, involving judicial employees, would be settled by the Judicial Council itself. But so far how many have judicial employees been brought to justice? Unless the judiciary takes a bold and exemplary action against them, and makes it transparent, it will be difficult for the public to believe in its "independence". The judiciary system of this country lacks transparency and efficiency. Numerous cases are piling up and gathering dust at the courts across the country, and consequently, hundreds of thousands of people are being denied justice. But virtually nothing noteworthy has been done to revamp the system of dispensing justice. This undoubtedly deserves immediate attention and action.

Chief Justice Upadhyay argued that "judicial immunity is restricted by judicial liability only". This indicates that only the judges have their rights to impose the code of conduct on judges. No doubt, the judiciary is a revered institution, and must be given due respect. But this does not mean that there should not be any mechanism to ensure that it walks on the right track. The Constitution of Kingdom of Nepal 1990 clearly underlines that the Judicial Council of Judges maintains the judicial order of courts and judges. However, the government reserves the right to empower the Judicial Council, only if the Council lacks adequate power. There are provisions for appointment and disqualification of judges in the Constitution. The Parliament can exercise these provisions whenever it sees necessary. If need be, the Constitution should be amended, as in the other democratic countries, to take disciplinary actions against the judicial employees. It is better if the government, as well as legal experts, resolve this controversy before such bill is tabled in Parliament.

Rupee versus US dollar

By Dr Hari Pokharel

The currency of each country has geographical limitations within which it can function as legal tender. But trade does not always take place within these geographical limitations. A quick look at history indicates that the Nepalese rupee is a non-convertible currency. Following the devaluation of the Indian rupee in June 1966, the Nepalese government enforced the Foreign Exchange Regulations Act 1962, prohibiting the use of any currency other than Nepalese currency.

The term devaluation is used here loosely to refer to any substantial and deliberately engineered nominal depreciation of the currency. Those who are skeptical about devaluation suggest that it tends to have stagflation effects, that the response to the changed price incentives will be small and that it tends to place excessive demands on government’s abilities to manage their economies.

When a devaluation is substantial, it is also quite common for domestic producers and traders, reliant on imported supplies, to suffer a squeeze on their working capital, for they now have to pay larger amounts of local currency to permit an unchanged volume of business in advance of their ability to pass their increased costs on to final consumers.

Nepalese currency devaluation against the US dollar has reached Rs 76.40 for one unit of dollar. Two weeks back, the government exchange rate was fixed at 75.40. It is learnt that the present decline of the NC price is due to the continuous weakening of the Indian currency against the dollar. Nepalese currency maintains a fixed exchange rate with Indian currency. Although, the present devaluation is related to the Indian currency, some business observers say Nepalese currency will have to face a heavy devaluation in the near future. Those observers indicate that the declining trend in the investment sector, capital flight and stopping of LC openings due to the Maoist threat, among others, will compel the government to devalue our currency.

For the fourth time in less than two weeks, the Nepalese rupee depreciated by 20 paisa against the American dollar to touch a record low closing on September 21. The official selling rate of NRs vis-a-vis the US dollar skidded to Rs 76.60 against Rs 76.40. The continuous weakening of Indian currency (IC) against the US dollar is the chief reason behind such a series of depreciations of the domestic currency. At the present rate, the rupee has depreciated by 1.32 percent (Rs 1) against the dollar since the deadly terrorist attacks on key American installations on September 11.

Nepalese media reported on Sept 19 that according to an official with the country’s monetary authority there was no possibility of devaluation of the Nepalese currency. Spokesman at the Nepal Rastra Bank (NRB) Tul Raj Basyal said there was no question of devaluating as the central bank had plenty of foreign currency reserves. According to the NRB, the central bank, as of mid-July this year, had total foreign currency reserves worth Rs 105.17 billion out of which convertible currency equalled Rs 80.16 billion. He said the devaluation of the Nepalese currency against the US dollar by one rupee was a temporary phenomenon. The NRB had intervened in the monetary market, selling 22 million US dollars to commercial banks to meet their demand for the greenback. Nepal maintains a fixed exchange rate only with the Indian currency.

The exchange rate places a value on a unit of a country’s currency in terms of the amount of a foreign currency it will buy. It is therefore a price. Like other prices it conveys information and incentives to guide decisions about what to produce and consume. In particular, it determines the relative prices of tradable and non-tradable goods.

Devaluation would increase the incentive to produce tradable goods rather than non-tradable. Where the government controlled the domestic prices received by exporters, or taxed these heavily, it might review its policies to ensure improved producer incentives, an action that would be easier to reconcile with avoiding large budget deficits caused by devaluation.

A devaluation must be accompanied by supporting measures, and implementing such a package successfully is difficult, particularly in light of the potentially large effect of devaluation on the government budget. Fiscal, monetary, and regulatory policies have to be consistent with exchange rate policies.

When it comes to devaluation, whatever techniques the government uses, fiscal, monetary and exchange rate policies need to be made consistent with one another. The estimated per capita annual income of the rural poor is less than 45% that of the rural non-poor and of the urban poor less than 40% that of the urban non-poor. A 1984/85 survey estimated the per capita income of rural poor as US$ 69 in the Terai and US$ 81 in the hills (at Rs 17.8 per US$). The per capita income of the urban poor was estimated as US$ 69 and US$ 95 in the Terai and hills respectively.

Since the rise in income of the poor is lagging behind the devaluation of Nepalese currency, the current estimate of per capita income of the poor in dollars would be less than those reported above. As a result the poor in Nepal spend about 74% on food only (about 90% on food, fuel and clothes), and a negligible amount on education and health (less than 19 cents per capita per month). Without public support, therefore, there can be no human progress for the poor in Nepal.

In 1993, the Nepalese government like that of many other countries had set only a buying and selling rate for the rupee, and not different buying and selling rates depending on the nature of the transactions. This neutrality was supposed to improve efficiency, promote growth and remove yet another example of government interference in decision making in the private sector.

The Nepali rupee was fixed with respect to the Indian rupee at 1.60. Exchange rates for other currencies could be gotten by taking the free market exchange rate in Bombay for that currency and multiplying by 1.6. This was a vital step in the liberalization of the Nepali economy. Government interference in the determination of exchange rates led over the years to an overvalued Nepali rupee. The overvalued rupee meant that those with access to foreign exchange could make money without being productive, while those with products to sell overseas were penalized.

While the fixed exchange rate with India made sense at that time, Nepal now will have to review this exchange rate periodically to ensure that it is appropriate. Eventually, Nepal will have to consider floating the Nepali rupee via-a-vis the Indian rupee and allowing the market to determine the appropriate exchange rate.

An undervalued currency stimulates outward orientation of the economy by providing higher returns on exports, and thereby production in terms of domestic currency. An overvalued currency does the reverse. Some economists are of the view that though depreciation of the Indian currency against the dollar continues to pull the Nepali currency down, irrespective of the state of the Nepali economy, it would be too early to float the Nepalese currency against Indian currency.

Beacon of hope and acceptance

By Truus Boom

18th of September. When I came to Kathmandu to work for the Mentally Handicapped in Nepal, my first impression was: "There seem to be only a few mentally handicapped people in Nepal"! Only to find out that in Nepal, like everywhere else in the world, there are people with a mental handicap.

I discovered however that in Nepal mentally handicapped persons are often hidden away or locked inside. So to their difficult situation is added. "The worst disease that only human beings can experience: "Being Unwanted"- Mother Teresa.

The essence of human rights is to protect the weak and vulnerable from the tyranny of the strong and powerful. We can only do so by accepting the mentally handicapped and by abandoning discrimination, abuse, misunderstanding and neglect.

We celebrate Intellectual Disabled Day, because improvement of the fate of the mentally retarded is possible. By accepting the mentally handicapped, by helping them to find a place to exist and lead a meaningful life among us. We cannot cure the mentally handicapped child, but we can help, teach and train them. Pity and sympathy is not enough, they need help. And always something can be done. Isolation and mere pity leads to situations where a 3 years old boy with mental handicap could not sit, crawl, walk or grasp things. He could not even relate to his surroundings, or make his wishes and needs noted. Physically nothing was wrong with him, but since he was never stimulated and challenged he could not develop his possibilities. His loving but desperate parents kept him inside whilst working. Within three months of professional help and training, he could walk and started to make contact with the world. A different boy emerged, a happy little boy with possibilities of progress. A boy looking for contact and encouragement from others, who was later on accepted by his family and included him in their lives.

We celebrate international Intellectual Disabled Day, because the parents of a handicapped child need not feel abandoned and isolated any more. Medical knowledge has proved that mental disability is caused by brain damage during pregnancy or early childhood. Parents are not guilty and should never be blamed. On this special day, we try to convince the parents of the mentally handicapped that they are not alone. Everywhere in the world there are people in the same situation and everywhere there are people who are aware of their plight.

In Kathmandu and other districts, professional trainers and teachers are to be found who will understand and support them. There are family counselling centres and opportunities to share worries, experience and hopes with other parents who are in the same situation. Help and advice is available and nobody needs to be ashamed to ask for assistance.

We celebrate Intellectual Disabled Day, because we want to make clear that also the mentally handicapped can be happy, especially when they feel accepted and included. They can enjoy life and most of them can give happiness to others.

Urban develoapment and housing policy

By Sameer P Shrestha

Housing is a basic human right. It is an essential requirement for a person, and peace and economic prosperity for the nation.

Yet decent housing is wantonly denied to a large number of people all over the world. So many of them live under bridges, on the streets, in the squalid slums and in bed space worse than animal cages. And the situation is getting worse primarily due to land speculation, an ever-growing foreign debt and the trend towards privatization. There are, however, efforts all over the world which promote housing for the poor. They are for the beacon of hope that decent shelter is indeed possible for all.

The Human Settlement Sector is as varied and complex as the physical places where people congregate in a continuous social and economic interaction. Nepal is consistently ranked among the world's five poorest countries. Over the past two decades, the per capita GNP growth has been modest. The GNP per capita is $ 190, and it has virtually remained unchanged over the years.

Nepal’s balance of trade deficit is largely offset by international donor assistance, which has increased by about more than 80 percent in the past few years. Nepal’s likely foreign exchange earners are the tourism industry, and carpets and readymade garments. The government has been pursuing a policy of liberalizing its industrial and trade regimes, and promoting domestic and foreign private investment.

In Nepal, the economically active population over the age of 10 is estimated to be 71 percent in the rural areas and 54 percent in the urban areas. Unemployment is relatively low - although it reaches 8 percent in urban areas - while underemployment is high, estimated at 46 percent in rural areas and 34 percent in the urban areas.

Of the total 4,000 settlements, Nepal has 36 officially-designated "municipalities", which contained 1.66 million people in 1991, or about 9.1 percent of the national population. The main criterion for designating the municipalities is that they should have at least 20,000 people. Some municipalities are made up of an extensive rural area surrounding a small urban core of a few thousands. Thirteen new municipalities have been established since 1991.

In Nepal, the municipality is governed by the Municipality Act, 1992. The government may describe any urban area within the Kingdom of Nepal, which has a population of at least 20,000 and possesses electricity, road, water supply and communications arrangements, as a municipal area by prescribing the boundaries on four sides.

Urban development: Kathmandu was declared a metropolitan city, seventy four years after becoming a municipality. Naturally this adds new responsibilities to a city that is plagued by lack of resources, that has an ever increasing population, and the ensuing environmental and sanitation problems. At this stage, its residents are still unsure how the change in status will affect Kathmandu’s future and if the metropolis is ready to take up this task.

There have been several urban planning studies, most recently by HFA (1991). This reflects the fundamental nature of problems that are not easily tackled, as well as the existence of other priorities. The HFA study is wide-ranging, but was inevitably unable to delve deeply into many crucial issues. An extensive reform of urban infrastructure and institutions was recommended but, in preparation for actual implementation these recommendations were whittled down to core set objectives which can be more readily realized (DHUD/ADB, 1992).

Urban development is planned in reaction to urban population growth. Measures to control growth are given less emphasis ( The HFA has pointed out that government ability influence over this is limited). Urban infrastructure would be stressed even if there was no migration to Kathmandu Valley, but migration is a major cause of population growth. The population density has already strained resources, and the problem cannot be resolved until economic disparities between Kathmandu Valley and the rest of the country are reduced. As the World Bank (1993) pointed out, the water supply would be less of an issue if the Valley population were prepared to pay the cost of increasing the water resources (which are available from Melamchi). However they do not even pay the full cost of operating and maintaining the existing facilities, and SMEC (1992) believes that they are not prepared to do so on in the near future.

The HFA regards river pollution as the most pressing environment problem, for which an efficient sewer system is seen as a national solution. To some extent, the HFA sees the general environmental problem to be solved by the individual projects (such as watershed management). But for the most part the recommended urban infrastructure is expected to meet environmental objectives. Implementation of such projects is expected to meet environmental objectives.

Local government: As such, urban centres of the Kathmandu Valley have been economically and politically important for hundreds of years. The Kathmandu Metropolitan City and the Lalitpur Sub-metropolitan constitute 45 percent of the total urban population. It remains the key economic and administrative centre of the country, and is expected to grow at about 4 percent per year in the next 10 to 20 years.

Under the 1991 Municipality Act, the government placed the municipalities of Lalitpur Pokhara and Biratnagar in the category of Sub-metropolitan Municipalities. The Act defined a sub-metropolitan municipality as one with a population of at least 100,000, an annual income of at least Rs 2 million, and amenities such as electricity, roads, drinking water, and communications.

The government decided to pay a monthly remuneration of Rs 15,000 to members of the District Development Committees effective from July 17, 1995. This step was meant to further enhance their important role in regular monitoring and supervision of local development projects.

The government has also decided to appoint technical assistance in all 3,995 Village Development Committees (VDCs) of the country for the implementation of local development programmes with the grant of Rs 500,000 that had been allocated to each VDC under the Village Development and Self Reliance Programme.

The share of the municipal population was only about 4 percent of the total population in 1971 which increased by about 6.4 percent in 1981. Despite the small urban population, the country could be said to be heading towards rapid urbanization, which may be further supported by an annual rate of urban population growth of about 6.7 percent during 1971-1991.

With the restoration of democracy, and after adopting a liberalized market policy, the following shifts in the roles of government and the private sector can be expected. The government should shift its role from prescriptive to demonstrative; from doer to enabler, from singularly-initiated to concerted action, from traditional management to innovative management role, from top-down to broad-based decision making approach, from fate-accompli to quick-response mode, from system-protected security to performance-based security jobs, from rigid civil service performance oriented to a flexible civil service system.

In the private sector, the shifts in emphasis are from rent-seeking to competitive mode, from government-driven to assertive mode, from permissive-response to quick-response mode, from individual-based operation to group action, from apathetic participation to active participation, from government-induced to opportunity-driven business.