Sunday, November 21, 2010

Book Review -- The Maoist Insurgency in Nepal: Revolution in the Twenty-First Century

A book review of The Maoist Insurgency in Nepal: Revolution in the Twenty-First Century published in Journal of South Asian Development, October 2010 5:300-303.

[Mahendra Lawoti and Anup Kumar Pahari (eds). 2009. The Maoist Insurgency in Nepal: Revolution in the Twenty-First Century. New York: Routledge. 354 pp. $150. ISBN 978-0-415-77717-9 (HB). DOI: 10.1177/097317411000500208]

The book aims to explain the dynamics and growth of the violent decade-long insurgency, led by the Communist Party of Nepal (Maoist), which started in 1996 from rural districts in Nepal. Various aspects of the rebellion are explored in an attempt to provide a diverse picture of the nature of the insurgency, its modus operandi, and success in recruiting and keeping intact a sizeable support base.

There are 15 chapters, with contributions ranging from the Maoists’ tactics in recruiting cadres by mobilising a plethora of means such as cultural programs, indoctrination, and political education, the governance of a growing parallel bureaucracy, the role of ethnicity in inciting conflict to the comparison between the PLA and the security forces in flaring up the violent movement. The role and consequences of external actor’s engagement and the quest for identification of causes behind the growth of insurgency are also explored. The two editors of the book, Lawoti and Pahari, delve into what is at stake for the nation and the CPN-M in the post-insurgency era, that is, after the successful revolution in 2006 that culminated in the end of the two-century long monarchy and signing of the Comprehensive Peace Agreement (CPA) with democratic parties. Given the breadth of issues explored by the authors, from various perspectives, the book is not only useful to researchers interested in the nature, causes and consequences of a home-grown insurgency but also to a general audience having interest in conflict studies and conflict resolution professionals interested in understanding and solving ideology-based insurgencies.

Despite presenting rich information, the contributors of Part II, which deals with the extensive use of indoctrination and political education, cultural programmes, the use of student unions and the mobilisation of landless rural poor against elites to generate popular support for the insurgency, fall short of making their point convincingly. There is little analytical rigour in their analysis as all of them are informational and interpretive in nature. Readers would have benefited tremendously had there been analytical examination of the Maoists’ tactics and the level of success in methods used to recruit insurgents and enhance the support base.

While attempting to explain why the Maoists were successful in recruiting rebels through indoctrination of Maoists ideology, Eck just explains the modes of indoctrination while failing to convincingly explain why indoctrination was successful and to what extent it contributed to the growth of Maoist support bases in rural areas. Eck’s claim that the focus on ‘local knowledge and the understanding of local grievances’ (p. 45) was the main reason for enticing recruits is partially refuted by Acharya, who shows that grievances, caste and ethnic divisions and ideology are insignificant variables (pp. 264–84). In fact, using econometric analysis, Acharya shows that the main cause of longevity of the insurgency and its mass appeal are incentives, that is, the opportunity cost of joining the rebellion is low due to limited employment opportunities, difficult physical geography and personal security amidst the absence of state. Meanwhile, Tiwari asserts that initially development inequalities and poverty increases the likelihood of conflict, but once conflict kicks in, the intensity is guided more by social variables, that is grievances are not primary causes (pp. 243–57).

Mottin’s contribution on the use of cultural programmes such as dance, theatre and songs that circulate through tapes, CDs and videos to keep cadres intact and tempt more people to join the rebellion is largely based on observations and anecdotes from fieldtrips in the Maoists’ strongholds. Mottin, however, falls short in explaining how the Maoists’ songs and dance were any different, if they really were, from that of the United Marxist-Leninist (UML), which were once very popular among the rural impoverished masses. In Chapter Four, despite providing valuable insights into the evolution and contribution of the Maoist student’s union in raising awareness about its parent party’s rebellion, Snellinger struggles to justify how the All Nepal National Independent Student Union-Revolutionary (ANNISU-R) is a ‘scientific organization’. By blindly following the CPN-N’s ideology, restricting the upward mobility of competent members in the management body of ANNISU-R and using violence to put forward their demands contradicts the author’s claim that the student body is a scientific organisation.

In the next chapter, Joshi looks at the tussle between poor landless people and rural elites, and the effect of liberalisation on rural households. Joshi’s claims that the insurgency is mostly related to the grievances of rural landless poor and the apathy of the political establishment in reforming the feudal economic system that only benefited the ‘landed elites’ are not fully backed by convincing evidence. Nepal has been feudal since its inception as a sovereign state. Why the revolution after two centuries of the existence of feudalism? Plus, it is quite wrong to attribute the continuation of feudal land holdings as a trigger. Unequal distribution of land cannot be solely attributed for the disgruntlement among the poor during and after the insurgency in Nepal. Nepali people are fiercely individualistic in nature, which is evident from their dissatisfaction with collective production units and communes in the Maoist’s model village, which were considered as breeding grounds of the Maoist insurgency. Not even in the Maoist’s model village—Deurali—were residents satisfied with collective production units and communes, as is shown by Lecomte-Tilouine (pp. 116–32). They were forced to follow the Maoist’s utopian model of governance that consisted of Marxist education in schools, communes and kangaroo courts.

Examining the trajectory of insurgency with the participation of indigenous groups and the role of the Madhesi community during and after the insurgency, Lawoti and Kantha do an excellent job to fill the void on the ethnic dimension of the insurgency. The Maoists raised issues such as language equality, secular state and self-determination rights, and incorporated proportionally high indigenous representation in their organisational structure, leading to an increase in support from the indigenous people. In fact, the insurgency began from the land of one of the indigenous groups, the Kham Magars. By comparing Maoist movement in Nepal with that of Peru and India, Lawoti shows that the latter countries’ inclusive policies helped blunt the growth of insurgencies. One important implication of this finding is that alienating and excluding ethnic groups is a recipe for disaster. This is further confirmed by Kantha, who argues that due to the Maoist’s hostile attitude towards the Madhesis’ interests, especially on instituting a single Madhes state with a right to declare autonomy and their pro-India stance, they could not garner popular support in the Terai region. Kantha, however, fails to explain whether the leaders of Madhes, most of whom once belonged to mainstream political parties that ignored ethnic minorities’ rights, are genuinely interested in securing the rights for Madhesi people or are they simply seizing the political opportunity and creating a niche for ethnic politics? The higher echelons of the newly formed Madhesi parties are virtually void of lower caste people, which indicate more of a repackaging rather than a genuine push for empowerment of marginalised Madhesis by the upper caste Madhesi elites.

On the military dimension, comprehending the inability of a large, well-trained and equipped state army to contain effectively an insurgency is always intriguing and surprising. Mehta and Lawoti fault the fickle political situation; the coup in

2005 leading to withdrawal of support to the security forces by India, the United Kingdom and the United States; and the inability of the army to win the support of the public for the weakness of the state army. The Maoists emerged triumphant due to their ‘political foresight and strategies and not through military victory’ (p. 191). They, however, do not talk about the moral and material support pro- vided by India to the Maoist insurgents. They also do not talk about the political will, which was at best halfhearted, to fight the Maoist insurgency. Pahari compares the Maoist movement in India and Nepal and argues that the Maoists gained an upper hand because of the extreme centralisation of political, administrative and governance powers in Kathmandu. Upreti looks at another important dimension of the conflict—the role of external actors, who showed ‘inconsistency and duplicity’ while dealing with the government and security forces. The international actors severely criticised the state for violating human rights during the insurgency. Meanwhile, they also supported the security forces by supplying arms, logistics and training before the royal takeover and imposition of state of emergency.

Most analysts were surprised when the Maoists gained the largest number of seats in the 2006 CA election. In a forward-looking chapter, Lawoti unravels the causes of this surprising election victory—projecting themselves as the only agent for change; creating an environment where other parties could not freely and fairly seek votes; and the undemocratic intra-party culture among the democratic parties (pp. 287–303). This strategy worked once, however, if the Maoists employ the same strategy again in future elections, then ‘democracy, freedom, and the Nepali people will be victims’ (p. 301).

Despite populist talks, the Maoists have not formulated policies for economic transformation. The economic policies they formulated when they were in government backfired because the economy saw a negative growth in manufacturing sector. Meanwhile, domestic and foreign investment nosedived. Several factories closed down due to threats from the Maoist-affiliated militant youth wing and trade unions. Looking at the Maoists’ method of operation even after their emergence as the largest party in the parliament, there is very little evidence that the Maoists will reform and do things differently. From the Maoists’ perspective, it however makes little sense to do things differently, when their current modus operandi is paying hefty political dividends. The book does not include studies on crucial issues such as the economic cost, the stagnation of income growth and the effect of Maoists ideology on private sector investment and growth during the insurgency.

[Reviewed by Hari Bansha Dulal, The World Bank, Washington DC, USA, and Chandan Sapkota, Carnegie Endowment for International Peace, Washington DC, USA.]

Nepal’s fiscal budget 2010-2011

Here is the skeleton of Nepal’s fiscal budget 2010-2011 presented by Finance Minister Surendra Pandey today after yesterday’s Maoist party’s inexplicable drama.

Budget for FY 2010-1011 
Rs, billion Percent of total budget Percent increase from last FY
Total expenditure 337.9 100 30.4
Recurrent  190.32 56.3 25.8
Capital 129.54 38.3 44.8
Principal repayment 18.42 5.4
Development programs 178.61 52.9
General administration 159.29 47.1
Projected total revenue 281.99
Revenue 216.64
Foreign grants 65.34
Deficit 55.91
Deficit financing 55.91
Foreign loans 22.23
Domestic borrowing 33.68

 FY 2010-11 full annex

Even though Mr. Pandey claims that this budget is in line with the Three Year Plan (2010-2013), which I think is not, politically, thanks to the Maoist party, he is restricted to bring a budget that will more or less be in line with the plan.  He is constrained by other parties’ reluctance to add new development programs. So, pretty much everything looks like a continuation of the ongoing programs.


  • Infrastructure: construction and reconstruction of roads, bridges, highways, Tamakoshi Hydropower Project, irrigation projects in Karnali
  • Transport: Rs 2.52 billion for regular and periodic repair and maintenance of roads (my take: the sum is too little to tackle the binding constraint to economic growth); construction of railway, metro, cable cars and water ways (my take: forget these and divert money to constructing roads and building hydropower; link up villages and markets first, where there is the highest marginal rate of return on public investment); upgrading and construction of bridges over roads and those linking highways; 4 six lane highways
  • Hydropower: budget for completion of Trishuli III “A” (60 MW), Kulekhani III (14 MW), Chameliya (30 MW), and Rahughat (30 MW); at least one large and medium sized reservoir projects in each development region-- Budhi Gankadi (66 MW), Naushyalgad (400 MW), 300 Tamor (300 MW) and Aandhikhola (175 MW) projects to be brought into operation; micro hydropower production to be encouraged; national grid expansion and construction of inter-country transmission line of high capacity (my take: Good one. But, let us also ensure that they happen on time. It would have been better to put a time horizon for completion of these projects and institute a proper governance body to ensure that they are completed on time)
  • Tourism: NTY 2011 promotion to bring in one million tourists; Rs 5 lakhs for any organizer bringing in more than 100 foreign passport holders via air; Lumbini, Pokhara, Janakpur to be promoted; airport infrastructure to be upgraded (my take: the cash incentive could divert some of the regional conferences to Kathmandu; good for the economy!)
  • Private sector development: black topped roads reaching premises of manufacturing units employing more than 100 people; tax payment days reduced by 12 working days; sub health post staffed with health workers to any productive industry employing more than 500 Nepali workers; a police post of 5 police personnel near any manufacturing firm employing more than 500 Nepali workers; direct purchase of diesel from NOC at dealer’s price for manufacturing industries and hotels; along with 25% tax exemption, 2% of incentive in NRs to exporters on submission of bank document that they have received convertible currencies earned from exports; 3% and 4% tax tax incentive, along with 25% income tax exemption, if value addition in exported commodities exceeds 50% and 80% respectively; safeguard economic protection of industrial workers who have contributed to Social Security Fund; high priority to completion of road construction and electricity transmission lines to encourage cement industries in Udayapur, Makawanpur, Dhading, Rolpa, and Dang; grants for registration of collective trademarks for tea and coffee in the international market; price carteling and syndication to be illegal; Youth Self-employment Program (my take: Good incentives, but unsure how much of it will be picked up by the private sector, for whom any amount of incentive by this resource-strapped nation is insufficient; I like the idea of constructing roads up to premises of manufacturing units if they employ more than 100 people. It would better if this is used in as carrot-and-stick style, i.e. if firms employ more than 100 just to get roads to their premises, and fire 50 percent employees after getting the roads built for free, then they should be held liable for the costs incurred in constructing the roads. There should be hooks to this incentive. Also, let us start with breaking up the syndicate in transport sector. Consumer surplus is being deliberately squeezed by unfair pricing by syndicates and cartels. Also, export promotion measures are laudable. We’ll have to see how much risk abatement there will be with these tax incentives.)
  • Financial and capital markets: capita restructuring of NBL and RBB; Infrastructure Development Bank; NRNs allowed to invest in capital market (my take: Why not totally reform and privatize NBL and RBB? What is the point in resuscitating them time and again? Let us make infrastructure development bank a reality. First, increase funding for it. Also, how about selling infrastructure bonds with relatively attractive high long-term interest rates?)
  • Social security: social security allowances (distribution to be initiated through banking system), child protection grant for poor-Dalit families in Karnali, human development of backward and marginalized groups, one percent income tax as social security tax
  • Women empowerment: 17.9% of total budget allocated for women empowerment, including campaign against gender based violence, legal expenses of small girls and teens rape cases to be covered by the state treasury
  • Sports: incentives for medal winners at international events, development of sports infrastructure, construction of regional sports complexes, construction of cricket grounds of international standard at Mulpani, Kathmandu and Bhairawa, Rupendehi (my take: We badly need it. Let us boost our athletes’ morale)
  • Targeted poverty alleviation: social mobilization, income generation, self-employment, small community infrastructure development, skill enhancement and creative programs through PAF; target groups are Dalit, Madhesi, ethnic groups and backward groups BPL; Karnali Employment Program
  • Reconstruction, Rehabilitation … : monthly allowances and livelihoods for combatants (my take: if they are really in a combative mood and support their parent party in any moves, then why pay them with taxpayer’s money? I hate to think of giving hard earned tax rupees to idly sitting, potentially destructive and politically indoctrinated militants!)
  • Agriculture: livestock development by concessional loans to be self sufficiency and to promote exports of meat (my take: its fine to aim for self sufficiency, which I doubt, but don’t aim for exports as of yet because we hardly meet international sanitation standards; it is a useless chatter to show that something is going to happen); Karnali Zone Special Agriculture Development Program, which is an extension to last year’s program, with provision of transportation of fertilizers, seeds, small scale irrigation, training… all aimed at reducing food scarcity; Rs 2.75 billion subsidy to farmers on chemical and organic fertilizer; 50% capital subsidy to cooperative of small farmers to purchase machinery and equipment for processing of cardamom, ginger, tea, coffee and honey; R&D; incentives for cooperative farming; 50% subsidy to insurers on the premium they pay for agriculture and livestock insurance (my take: I like these calibrated incentives, but think that they are not enough to bring about a substantial change; though it is tiny amount, it is better than nothing) 
  • Irrigation: Rs 9.01 billion allocated for irrigation facility in additional 81,475 hectares of land in this fiscal year; construction of irrigation projects in Bara and Bardiya; continuation of People’s Embankment Program
  • Land-use: Land to be classified into six categories -- agricultural, industrial, forestry, commercial, residential and public community
  • Education: Rs 57.65 billion (17.1% of total budget) allocated,an increase of 24.5% over last year’s education budget; teacher-student ratio mapping; internet facilities in every community school; 5400 schools to be handed over to communities during this fiscal year; girls’ toilet mandatory in each community school; a total of Rs 1 billion for teaching grant for schools facing scarcity of teachers
  • Health: Rs 24.51 billion allocated; expansion of free of cost maternity service; free basic health services; promotion of infant and maternal health
  • High-Level Public Enterprises Management Board proposed to reform overall management of public enterprises (my take: why another bureaucratic board? We know the problem. We know the solution. Let us privatize some, offer public shares of some, and have PPP models for some. No point perennially pumping in money in the loss making public institutions.) 
  • Rs 150 million for periodic review of both physical and financial performances of projects outlined by the budget; Finance Minister to chair the high level committee (my take: I really would like to read the final assessment report of not only the projects, but also how this committee spends the proposed sum)

Tax policy and incentives:

  • Permanent Account Number for all employees
  • Compulsory VAT registration for educational consultancy, discotheque, health club, catering, party palace business, mechanically operated dry cleaning service and restaurant with bar operating in municipality areas and other areas specified by IRD
  • 40% tax exemption in income accruing from investment in construction and operation infrastructure development sectors like roads, bridges, airports and tunnels
  • 25% rebate tax for people earning money out of exports of goods produced by using local raw materials
  • 50 tax exemption for software development, data processing, cyber-cafĂ© and digital mapping industries located within technology, biotech, and IT parks
  • Tax incentives to facilitate merger of banks, finance and insurance companies
  • 50% exemption on land registration tax for purchase of land by firms giving direct employment to 300 or more Nepali workers
  • 30% exemption on land registration tax on land transferring ownership to women in rural areas
  • An advance lump sum payment of land and house taxes for 5 years at existing rates

For this fiscal year, on July 12, 2010, Mr. Pandey was allowed to present a budget that was equivalent to one-third of last fiscal year’s actual expenditure. This barely sustained expenditures for the first four months of this fiscal year. During this period, revenue growth decelerated primarily due to low economic activities caused by budgetary uncertainty. Rural economy suffered. Government had to borrow from budget allocated for principal repayment as fiscal crunch got severe.

Nepal’s economic policy should focus on narrowing down trade deficit, achieving high economic growth, enhancing efficiency of public institutions, reducing poverty, lunching efficient public workfare programs for the rural poor, curbing corruption, reducing inflation, and maintaining fiscal stability. This year’s budget aims to lead the country to “industrialization by developing sustainable, self-sufficient and self-reliant economy through optimum mobilization of domestic resources”. Good luck!