Wednesday, September 3, 2008

Maoist's economic plan for Nepal

Here is what the newly appointed Finance Minister of Nepal, Baburam Bhattarai, the Maoist party's second-in-command, wants to do for the country to lead it into a high growth trajectory. His priorities are as follows:

  1. "industrialization of agriculture"
  2. infrastructure development and hydropower (Rs 300 billion liquidity in the banking sector plus Rs 100 billion annual remittances as a source of finance)
  3. tourism development
  4. health and education

In my latest Op-ed, I put a bet on #2 and #3 as the top most industries for prioritization in a new industrial policy. I believe Mr. Bhattarai's #1 choice can be solved from #2, #3, and manufacturing industry (which I would put in #3 on my list). My list of prioritization of industries as a short term fix to two main problems of the economy (sluggish economic growth and unemployment) would be, in order of preference, infrastructure and hydropower, tourism, manufacturing, health and education, and agriculture. I put agriculture at last because if we fix the other four industries, then the surplus labor would be automatically absorbed in these industries. This means that Nepal would not require prioritizing "industrialization of agriculture" (frankly, I don't know what Mr. Bhattarai exactly means by this) as a top most choice in economic policymaking. Agriculture sector alone would not sustain growth rate and increase employment. This industry is important but it is not just as important as we have been thinking for decades. A successful transition of labor from agriculture to other industries is needed to solve the two most pressing problems of Nepal's economy.