Tuesday, March 11, 2014

Economic agenda of major political parties in Nepal

Prior to the second Constituent Assembly (CA) election on 19 November 2013, the major political parties published their election manifestos, which among others included their economic vision and plans for an accelerated and inclusive economic growth. Following the peaceful election, Nepali Congress (NC) emerged as the party with the highest number of CA representatives, followed by Communist Party of Nepal Unified Marxist-Leninist (CPN-UML), and Unified Communist Party of Nepal (Maoist) [UCPN-M].

The economic agenda of the main three political parties have a lot of similarities. Overall, they agree on a strong economy based on three pillars— namely public, private and cooperatives sectors— and are committed to liberal economic principles with a greater role of the private sector. There is also agreement on the special role of cooperatives in agriculture sector, and the need for foreign direct investment and foreign aid to bridge the financing gap, particularly in physical and social infrastructures. The political parties have underscored the importance of a favorable investment climate to facilitate investments in the priority sectors, particularly energy, tourism, agriculture and industry. In energy sector, the political parties’ focus is on meeting the growing energy demand and ending load-shedding in the short term. In agriculture sector, the focus is on modernization, commercialization and diversification of production. In tourism sector, the political parties accentuate the need to build vital tourism infrastructures and to entice domestic as well as foreign visitors. In industry sector, they have committed to promote an investment friendly environment, including cessation of bandhs/strikes. Human resources development with a focus on critical skills to sustain a high growth rate and to generate employment opportunities is also a common feature in the political manifestos. The other common priorities include transport and communications, road and rail networks, and completion of national pride projects.

The major highlights of economic vision and agenda of the three largest political parties are as follows.

Nepali Congress (NC)
  • Achieve 8-10% GDP growth by creating favorable investment climate and by initiating second phase of industrial reforms. Graduate Nepal to a middle income country within 20 years. 
  • Raise average per capita income to NRs.100,000 per annum (US$1000) in the next five years. 
  • Reduce agriculture dependent population to 55%. Increase manufacturing sector’s share to 10% of GDP in next five years. Ensure an inclusive economic growth by promoting energy, infrastructure, agriculture, tourism, and industrial sectors. 
  • End load-shedding in the next three years. Additionally, end load-shedding in industrial areas and Kathmandu in the next two years. Develop National Energy Security by consulting with all political parties. Generate 5,000 MW of electricity in the next five years.
  • Develop a competitive and globally integrated economy. Promote export-oriented and import substituting industries, and construct dry ports inside industrial zones itself. Ensure good industrial relations and promote industries to utilize domestic raw materials and generate employment opportunities. 
  • Establish at least one chemical fertilizer company under a PPP model in the next five years. Increase year-round irrigated land from 36% of agricultural land to 50% in the next five years. Increase number of foreign visitors to 2.5 million in the next 10 years. Develop tourism sector as the main foreign currency earner and employment generator, and ensure adequate funding for the development of Lumbini area.
  • Develop 20 modern secondary towns along the Mid-hill Highway. Develop Biratnagar, Hetauda and Nepalgjunj as industrial city; Birgunj as commercial city; Bharatpur as medical city; Butwal-Bhairahawa as tourist city; Dhangadi as green city; Pokhara as film and tourist city; and Dhulikhel-Banepa as educational and medical city. 
  • Address barriers constraining access to education/skills, and access to financial and capital markets. 
  • Guarantee 100 days of employment per year to a member of a household living below the poverty line. 
  • Build modern, 21st century infrastructure through reliable road, railway, airport and communication networks. Connect each Village Development Committee with all-weather roads. Complete Postal Highway, Mid-hill Highway, and Kathmandu Nijgarh Fast Track roads in the next five years.  
  • Gradually reduce dependence on foreign aid by strengthening internal revenue system. Foreign aid to be mobilized in national pride projects and infrastructure development, commercialization of agriculture and development of skilled human resources as well as technology transfer.
Communist Party of Nepal (CPN UML)
  • Graduate Nepal from LDC category to a developing country status in the next five years by making substantial progress in per capita income, social and infrastructure development, and human development indicators. 
  • Distribute NRs5 million grant to each Village Development Committee. 
  • Guarantee housing to 0.5 million homeless people in the next five years and ensure zero homeless people in 10 years’ time. 
  • Absorb at least 300,000 new entrants to the job market by creating employment opportunities.
  • Reduce maternal mortality rate to zero in the next five years. 
  • End load-shedding, ensure universal access to energy, and connect all district headquarters with electricity grid in the next five years.  
  • Connect all district headquarters with blacktopped all seasons road and ensure road access to at least 95% of settlement in the next five years. Complete Upper Karnali, West Seti, Budi Gandaki, Upper Marsyangdi, Lower Arun, Tamakoshi III, Arun III, and Upper Tamor hydropower projects in the next 10 years by involving the private sector.
  • Develop one model village and ensure facilities at par with those available in developing countries.
  • Initiate construction of an international airport in Nijgarh, and finish construction of regional airports in Bhairahawa and Pokhara in the next five years. Increase the number of visitors to two million.
  • Ensure good industrial relations and ensure labor security through contribution based Social Security Fund. Promote domestic and foreign investment, and develop export-oriented industries that use domestic raw materials.
  • Human resources development through technical and scientific education, and integrated skills development training. 
United Communist Party of Nepal (Maoist) [UCPN-M]
  • Graduate Nepal from LDCs to a middle income country within 20 years and a developed country within 40 years. Increase annual per capita income to $1,400 within 5 years, $3,300 in 10 years, $10,700 in 20 years, and $40,000 in 40 years. 
  • Employment and production centric double-digit growth and in 15 years times attain self-sufficiency with shared prosperity. Achieve 7.9% growth in the first five years, and 11%, 12.4% and 12.2% growth in the next 10, 20 and 30 years. 
  • Formulate action plan for rapid modernization and commercialization of agriculture sector; develop hydropower and energy with utmost priority and as a national campaign; and develop road, railway, ropeway, airport, canal and large physical infrastructure to achieve double digit growth.
  • End load-shedding in the next three years. Develop 10,000 MW, 20,000 MW, and 25,000 MW of electricity in the next 10, 20, and 40 years. The ratio of reservoir to run-of-river projects to be maintained at 30:70. Ensure universal access to electricity within 10 years. Achieve an average 13.2% growth in industry, hydropower and construction sectors. 
  • Raise Nepal’s Human Development Index score to 0.781 from the current 0.462.
  • Ensure two-thirds investments from private sector by attracting domestic and foreign investors. Gradually increase domestic investment to completely substitute foreign loans in 40 years. 
  • Ensure 180 days of employment to a member of each household living below the poverty line. 
(This is adapted from Nepal Macroeconomic Update, February 2014, Vol.2, No.1, published by ADB. Executive summary here.)