Constitutional amendment

By NAGENDRA CHHETRI

Nepal today is staggering back to the situation which was prevailing before King Prithvi Narayan Shah the Great initiated the campaign of unification. The evil forces of disintegration seem mushrooming up from east to west and north to south under the banner of many pretexts. In circumstances like this a nation needs and looks for a strong leadership that can act as a cohesive force to keep united, consolidated and further strengthen the multi-ethnic, multi-lingual, multi-religious and parliamentary characteristics of this country. A nation needs something solid to fall back on as a last resort when normal and regular machinery do not/cannot function. For crisis can engulf every nation in history but the greatest assets to manage the crisis are always the people/citizens of that country. But what really matters is the all encompassing leadership which can impress, influence, motivate, discipline, manage and lead these people during crisis and get them out of trouble. Nepal right now needs a leadership that can visualize, choose colleagues and place the right man in the right place at the right time, punish, reward and take the risk of bold decisions in the larger and longer interest of the country. A leader who is versed in statecraft is a gambler in this sense.

There is loud talk today inside and outside parliament on amending the 1990 constitution with a glimpse of different aims and objectives. One is to form an all-party government during election and the other is to form a government during election but from non-political and neutral individuals. Both schools of thought have their own agendas to put forward and factors that can impact on the election results. They may have their own merits and demerits. But what is strongly felt in this country over the last one decade is that the basic law of the land is neither well balanced nor implemented according to the spirit and letter of the document. Basically, it does not matter much what is written in the basic law, what really matters is how it is implemented. It is often heard that this is the best constitution in South Asia and one of the finest in the world. If this is what it is, why does it need to be amended?

Well! If the whole exercise is directed towards forming an all-party government during elections i.e sharing power to win elections, the democratic institutions could become weaker rather than stronger and political rivalry could be much more intense than it is today, negating the very fabric of the democratic set-up. If the aim is to form a neutral government to conduct fair and clean elections through non-partisan individuals, yes constitutional amendment may be welcome. If the aim is to remove the major flaw from the existing constitution by amending it in order to create a happy and practical balance, then the exact role of the head of state and chief executive must be clearly identified and defined. What is really important to understand here is that the environment in this country and in fact, in all third world democracies does not allow people to vote with their conscience. There are influencing and forceful factors like hunger, disease, illiteracy and age-old social taboos that compel voters to cast their ballot against their will. It is not their conscience that decides. In such a situation voters are unduly influenced and coerced through unhealthy practice taking undue advantage of their innocence and poverty. To strike a proper balance and maintain a happy medium the monarchy must be empowered with some constitutional and residual authority to pull the string when the nation is in major national crisis.

Now it must not at all be understood that this scribe intends to make the monarchy a dictatorial institution. Instead, monarchy being the symbol of Nepalese nationality and the unity of the Nepalese people and the existing constitution being the end result of the widest possible consultation amongst the people as well as the result and by-product of the tri-partite agreement amongst democrats, leftists and monarchists, the monarchy is very much an important actor in the constitution. Monarchy is the only institution that can act as a balancing force in Nepal for the foreseeable future. Also when the governing principle of king in parliament is accepted it is logical, legitimate and natural that he be consulted if and when the constitution is amended. The national interest and the interest of the monarchy become synonymous here. The perpetual interest of the monarchy is to make sure that an independent sovereign, indivisible country, Nepal exists through ages to come and its national integrity is maintained, consolidated and further strengthened. In this sense, the monarchy must be empowered to exercise some ultimate constitutional powers whenever the captain on duty in the ship of state dithers. Monarchy, therefore is a bed-rock on which the nation can fall back whenever it needs to come out of a major crisis.

The experiences of the past 12 years proves that there has been extreme politicisation in areas/sectors where not even a shred of it should appear. Everybody including the political leadership accepts that from security agencies to bureaucracy, from educational institutions to corporations there has been politicisation and many infrastructures like the Trolley Bus, Janakpur Cigarette Factory, Bhrikuti Paper Factory, Sajha Yatayat and Leather & Shoes Factory have collapsed because of unhealthy political pressure and influences. Extreme political instability, economic mismanagement, social and communal cracks have further eroded the cohesive nature of Nepalese national integrity. Therefore, in a country like Nepal which has awkward geographical compulsions and geo-political constraints and with meagre resources, a permanently institutionalised watchdog body, or referee to oversee the national scheme of things is a simple must. For example, the security agencies have been forced to compromise their efficiency, effectiveness and professionalism due to undesirable interference in their legitimate and regular systems. Consequently, the nation is paying and suffering and the democratic institutions are losing public trust. Instead, all security agencies can be put under unified command during operations coordinated by the National Security Council. All security chiefs could be appointed by the king on the recommendation of the National Security Council so that undue political interference could be avoided. This can make the security forces totally loyal to the institution. If not, Parliamentary democracy in the prevailing situation cannot establish a foothold in order to further consolidate and strengthen democratic norms and values. Therefore, serious thought must be given if and when the constitution is amended. Say, for example, all security agency’s operational roles could be co-ordinated by the National Security Council of which the elected Prime Minister is the chairperson. This will allow security agencies to function without political interference.

Finally, what must be clear is that the existing constitution is the sum total of the widest possible public consultations and opinions; it is the result and product of the tripartite agreement between leftists, democrats and monarchists; people in a country like Nepal are compelled to cast their ballot against their conscience and will; the governing principle of king in parliament means monarchy is equally responsible and accountable to the nation as the executive, legislative and judicial bodies are. Therefore, monarchy has equal role to play in consolidating and strengthening democratic institutions in this country. If this is what it is the king has a right to be consulted whenever the constitution is amended because he has a role to play in it as he is the indispensable and unquestionable leader who has to take on the constitutional burden of national leadership.

Mission unification

By RAZEN MANANDHAR

Ifully agree with those enthusiastic left analysts who said that the recent unification of the Communist Parties of Nepal UML and ML is similar to the about 300 year old unification of Nepal. Both of them had only one objective, to consolidate power.

Being in power means quite a lot for the leaders. Especially the self-declared leftists, they may do anything, just tell them that they can obtain power. This is the secret of the scores of splits and one or two unifications Nepal’s communist history has witnessed. The philosophy of communism, the leaders they adore, the books they read, all evaporate when they see any chance of wearing a bigger cap. This is what the people believe is devotion, nation-building and fulfilling their election promises.

More than what resulted at the sixth general convention, it was the looming election that drove them to cleavage four years ago. Simple, the mission was becoming a prime minister of this pained country. Only Girija Prasad or God Prasad can tell of the charm of being seated in the Singha Durbar office. But, if one asks about its taste, nobody can explain it more picturesquely than the Madhav Kumars or Bamdevs who were seated very near the seat, saw, touched, smelled it but could not sit on it even for a while. "Not enough..." was their final reaction.

That is the secret of how the group of neo-rich people started rising in number in the capital city. Those who led the poor classes and taught the masses about fighting against the so called well-to-do people constructed huge mansions in the capital one after another. They even forgot that they used to live in some common locals’ houses and ate free dalbhat in the name of starting a revolution against the high-class people. All was relinquished when the idea of making a fortune out of power came.

Time changed. As they saw that it was impossible for two persons to sit in the same chair, they made a drama of splitting and experienced the pleasure of fighting the polls with two separate names. The result was obvious — damn their relations with the voters, the major agony was that neither of them could win the marathon.

What could be more ridiculous than that the presumed Prime Minister to be could not get one single elected lawmaker in the country. It was enough to show how deep he was in water. But being a loser gave him quite a big name. He had his stand among the people (albeit they were merely a handful). They did a series of "politics" like faxing press releases and demanding a new electoral system (in which a loser can become Prime Minister) and halting city traffic flow.

And, the other half of the battalion was doing nothing less significant for the country. They invited a hurricane in the capital’s air with the A to Z of the Lauda scam (until people started grumbling about CSW retaliation), took to the street many times and sat on public roads. They hit a world record by refusing to execute the minimum duty of sitting inside parliament for two whole months and gulping the allowance without a hiccup.

The lesson was too bitter for both parties. And the season is coming for the next rice-planting — the turmoil inside the Nepali Congress was showing that election can take place anytime. What could be a better way to share the Singha Durbar seat than by jointly fighting the election? They can later share their seats as the mayor and deputy mayor of Kathmandu did.

NRB effort needs some appreciation

BY SANTOSH PANDEY

Nepal Rastra Bank has many roles to play. On one hand it has to formulate and lay down policies to stabilize the money market, and on the other, it has some tasks to perform such as printing currency notes for the nation. Being the central bank of the country, it also has the very important role of the bank of banks. There are many tools used by Nepal Rastra Bank to control and monitor the commercial banks of the country. One such important tool is the circular that it issues from time to time. One of the major functions of commercial banks is to act as a bridge between people in need of funds and people with surplus funds. In banking terms, they accept deposits and disburse loans.

Nepal Rastra Bank has been in action in the recent past over loans disbursed by commercial banks. In the last couple of years, it has come up with new directives on loan classification and loan provisioning. The new directives have been the talk of the town. There are various schools of thought on the impact of such directives on the commercial banks.

The banking sector has been one of the major players in the lone stock exchange of our country, Nepal Stock Exchange. The contribution of the banking sector to the exchange index can be seen from the figures. On average, this sector contributes 68 percent of the total capitalisation of companies listed on the exchange, and among the top ten companies with respect to the number of shares traded; six to seven of them are financial institutions in the form of commercial banks or finance companies. Also, looking at figures on the growth rate of various sectors in the economy in the past decade, banks have always been at the forefront.

So, what actual impact will the new circulars relating to loan classification and provisioning have on these banks? The circulars have been a bit stringent. For instance, the duration of the arrears for a loan to be categorized as bad has been reduced. This means that some of the previous doubtful loans will come under the category of bad loans, thus increasing the provisioning. Increment in the provisioning amount means decrease of profit. This decrease in profitability will ultimately affect the dividend of the shareholders. As a consequence, the price of shares will go down and public confidence will deteriorate. Also, this will instigate the banks to become more careful before disbursing loans. This will reduce the credit exposure of the banks, thus affecting the various industries and a fall in investment will be imminent.

Besides, the directives will have impact on the human resources of the banks. So far, in our country, the banking sector is believed to be one of the most lucrative places to work. The staff members of banks have been enjoying good salaries and handsome bonuses. Banks provide 10 percent of their profit to staff as bonus. A decrease in profitability will therefore reduce the bonus amount for employees. This will affect their motivation and there will be every chance that the cream of the human resources will flock out of the country looking for alternate career opportunities. This will be devastating not only for the banking sector but for the entire nation. Similarly, other such directives will also have an impact on the various aspects of banks.

So much for the negative impact. But Nepal Rastra Bank, inspite of knowing about all this, has taken these steps because the positive impact overweighs the negative. The more the provisioning the more will be the strengthening of the banks. It makes the financial position of the banks more solid. The stock prices of banks in the past have been at their peak. They are still hovering far above their actual prices, in some cases, even three times their book value. The new provisions will help bring the stock prices to their true value. Although the circulars will bring down the profits, this is temporary. The long-term effect will definitely be positive. It will increase the soundness of the banks because they will take more care before disbursing loans and there will be less chance of default. Also, public confidence towards the banks will increase when they know that there is Nepal Rastra Bank acting as a watchdog. These directives will also help the donor countries repose confidence in our country. Such countries will be more certain that the funds they are providing are being properly utilised.

Bearing in mind the negative and positive sides of the steps taken by Nepal Rastra Bank, there would be no harm in saying that it is trying to strengthen the financial position of banks in the country so that they can meet international standards. At the same time, it is trying hard to clean up the credit portfolio of banks and stabilise them. Our economy is going through the worst of phases, and something needs to be done to bolster it. In this age of globalisation, we need to be efficient enough to meet the ever-growing competition, and in view of this, we need to take positively the steps taken by the authorities concerned. People need to trust them. This positive attitude is the need of the hour if we wish to see Nepal competing in the world economy. The effort of Central Bank to renew the circulars needs appreciation and not criticism.