Social development in Nepal: An economic perspective

Dr. Bishwa Keshar Maskay, T.U

People’s participation in development, devolution of power to the grassroots, poverty alleviation and employment generation for the fulfillment of basic needs constitute the priorities in development literature. As an alternative concept the notion of development also puts people’s needs at the center stage. Market and state response to social goals particularly in addressing the problems of socially marginalised and disadvantaged groups, and in promoting social integration to offer equal opportunities is embedded in the philosophy of social development. In the context of Nepal too, the development strategies of the trickle-down pursued so far have proved quite inadequate in addressing these issues. Unquestionably, the process of top-down planning embraced by Nepal has failed to mobilize popular participation in modernizing the economy. As a result, development plans at best became an intellectual game. At the institutional level, this game got translated in to bureaucratism and centralism where decision-making and implementation of programs became the sole prerogative of the power. Thus development instead of yielding demonstrative effect spawned backwash effect-quantitatively increasing the number of poor people and qualitatively contributing to the intensity of poverty phenomenon. What are the reasons? The fundamental factor to which this sorry state of affairs can be safely attributed to the lack of people’s participation in the process of governance, grossly undermining even the elemental human notion that those affected by the decisions have a right to participate in the making of those decisions.

Strengthening social development: The government presently faces two-way pressures: a ; from below-for the devolution of power and de-concentration of wealth, and b, from above- for greater integration of Nepalese economy in to the global market. The globalization of Nepalese economy sans the social safety net threatens all segments of society, not because it has reinforced outward integration but because it has nurtured a state of perpetual policy dependency. The underlying rationale of both the processes is expected to transform the Nepalese economy and society in to a modern democracy consistent with the principles of social justice, self-governance and self-reliant development.

Faced with no choice other than to adapt itself to the tone set by precedents, the first elected government legislated a number of acts pertaining to the Local Government Institutions-LGIs- in accordance with the directive principles of state policy embodied in the Constitution of the Kingdom of Nepal 1990. 1992 completed Democratic institution building and elections of representatives. Since then, notions of local self-government, people’s participation and self-reliant development have been the dominant features of official discourse and the Planning Commission’s vision. Are these measures sufficient enough to rescue the Nepalese economy from a near stagnation stage? How can political equality guaranteed by the Constitution be translated in to social reality? What do we mean by social development in Nepal? And, how is economic perspective relevant to social development? We will discuss later.

Context analysis: In fact the capacity of the Nepalese multi-party democracy to spur development is primarily contingent upon how the constitutional procedures on the devolution of power are transformed in to processes to affect a change in the political economy from below, change in the pattern of production, consumption and distribution of resources to ensure fulfillment of popular aspirations. The economic perspective does call for broader democratic planning of development with the people and social control over the market and the state. Imposition of alien models will not be able to enlist the people’s participation-a vital precondition to nurturing democratic legitimacy, sustainability and accountability.

The social scene of Nepal involves diversity in family size, ethnic and caste hierarchy, racial, religious and cultural ethos and glaring inequality in status. There are more than 60 ethnic and caste groups in Nepal. It is a multilingual and multi religious entity. The non-egalitarian social and economic power pyramid has thus become a cause of powerlessness for those below the social and economic ladder. In fact, a broad correlation does exist between the degree of inequality in society and the inability of the poor to participate in the development process. This means that greater inequality at the economic level is a precondition for greater participation as the economy functions within a set of social relationships. This also means reforms in economic policy, which depends largely on the social capacity of the people to absorb and adopt new policies without destabilizing effect on the society.

Poverty scenario: Nepal figures in the least developed economic configuration with a meager US$ 202 per capita income. More than 90 percent of people live in rural areas and are fully dependent on agriculture with livestock and cottage industries as supplementary sources of livelihood. Estimated GDP growth rates of 2.9 percent just about balances out population growth rate of 2.1 percent. Physical diversity has not only posed serious problem in developing transportation and other services but also hindered functional integration. Male literacy rate is 36.6 percent as opposed to only 25 percent of female literacy. Fifty-five percent of people live below poverty line. World Rural Poverty published by the International Fund for Agricultural Development in 1991 ranked Nepal as the 12th poorest among 114 countries, while the World Development Report put her as the fifth poorest country of the world. Land distribution system is highly skewed. Top three percent of landlords hold nearly 40 percent of land and income disparity is perhaps the highest in Asia. The lowest 40 percent in Nepal receive only 8.6 percent of the total income. The income inequality is higher in Terai than in the hills and higher in rural-Gini: 0.5- than in urban areas-0.55- to use the value of the Gini coefficient for Nepal.

The socio-economic situation has been made all the worse by the increasing marginalization of the poor, women and disadvantaged. This has induced hill-to-Terai and rural-to-urban migration in vain search for a better future,

The gap that separates the country’s vastly unorganized traditional sector from the embryonic organized modern sector, if not minimally bridged, is likely to expose the very socio-economic fabric of the society. The glaring instances of in-and-out migration of the able-bodied youths from the rural area, burgeoning population of unemployed and under-employed in urban areas, the ever increasing environmental degradation due to the encroachment on marginal land for land, fodder and fuel, increasing incidence of drug and flesh trade along with growing social harmony and political alienation warrant close scrutiny by an effective response from the country’s ruling classes. The official statistics puts the level of unemployment in Nepal at 3.1 percent with a higher percentage of the unemployeds among the female populace. This puts the number of job seekers at 1.65 million, 19.3 percent of the total labor force. Creating jobs for the young people entering in to the labor market is thus critical to achieving social peace and harmony. Without doubt, participation of the labor force in the nation’s economic life, employment intensive growth and cooperative business are the key factors in any poverty alleviation endeavor.

Need for changing economic perspective: The stratification of Nepalese society along ecological, economic, social and political lines is predominance of archaic practices bears a strong sign of economic inertia. This might be called fatalism-a state in which an individual perceives that his/her fortune is determined more by his/her fate rather than hard labor. This inertia has made the people a subject, rather than an object, of development. The disorganized masses remain passive spectators, incapable of advancing and articulating their interests. Change in economic perspective is, therefore, vital for initiating change in attitudes, value systems and expectations. The prevailing inertia has to be changed in to a productive culture essential for transformation of subsistence agriculture into an industrial, market-driven, surplus-oriented economy and to a steady growth in internal market and geographic integration of the national economy. Similarly, mobility of capital, goods and technology and growth of a national entrepreneurial class have to be encouraged to realize the potentials of society. The new economy of civil society thrives on popular control and participation in the decision-making process and humanization of development as a whole. A measure of decentralized management is essential to foster a proper balance between public control and the private initiative, between internal needs of poverty alleviation and external demand for structural adjustment in an effort to render people-centered development.

If the prime objective of development is self-fulfillment and creative partnership in the use of nation’s productive forces and its full human potential, the Nepalese context so far strikingly exemplifies a poor payoff. It is because democracy has not enabled the majority of poor Nepalese to organize themselves and grasp political power to advance their economic interests. The struggle for wealth in Nepal, like in other soft-states, has mainly been confined to individuals and groups in the upper class. The process of economic transformation in Nepal can nonetheless be expected to bring about the growth of a nationally sensitive entrepreneurial class and professionals. Unlike nineteenth century Europe where transformation was the product of tangible process of industrialization, the goal of Nepal’s popular movement of 1990 appeared more to be the restoration of multi-party democracy of the 1950s and less a preparation for entry in to the unknowns of the twenty-first century. This is the reason why there is such a strong continuity in the tradition of wealth-creation rather than the change in the culture. The process of transformation however, entails "a movement towards self-determination and self-government, rather than one that reinforces narrowly self-interested motivation and reproduces people as alienated objects to be manipulated.

In fact, a system alienated from the people, with whatever democratic façade, or having inordinate power over them, is essentially antithetical to the objective of civil society, one that make the system accountable to the people. Seen in the Nepalese context, the "Local Government Institutions" rules and procedures though geared to " maximizing people’s participation to institutionalize multiparty democracy" and "creating opportunities for involving people in the governance of the nation", appear only tantalizing in the absence of three critical components-autonomy, accountability and financial resource base at the local level where majority of the people live and operate.

Devolution of power not just political but also economic and social is a must to facilitate structure and cultural transformation of hitherto deprived grassroots organization and marginalised section of the society vis-à-vis their role in the nation-building process. The notion presupposes the granting of autonomy and decision-making authority to the local government by His Majesty Government for the attainment of local materials, moral and cultural goals. The rationale for devolution envisaged in the eighth five year plan –1992/1997 and LGIs acts is that it enables localized area to make progress, with its deceptiveness in tact. Devolution continues to offer a steady rate of fulfillment of the aspirations of various pluralised people without disturbing their distinctive identity, values and institutions. Devolution rather reflects the sentiment of local-self governance than mere de-concentration of decision-making and delegation of authority. The local-self government in the Nepalese context, however, only raises hopes that may not be realized at least in the immediate future, not because there is no popular demand for it, but because the constitutional, financial and socio-economic realities are not as and conducive as they ought to be. Ranaism-1856-1950- symbolized the centralized feudatory state, while the panchayat system-1960-1990-resembled a guided system of patrimonial nature that restricted institutional pluralism for popular participation. The top-down pattern of administration and authoritarian depositions only to degrade the economy and environment.

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