There is no policy to uplift the economy: Dr. Raghab Dhoj Pant

The promised peace dividend for the people of Nepal seems to have vanished into thin air as the national economy is subjected to incessant bouts of crises one after another. As it was just recovering from decade-long conflict, the economy is now affected by constant strikes, bandhs, labour unrest, power cuts and so on. Dr. Raghab Dhoj Pant, executive director of the Institute for Development Studies (IfDS), is an economist who is known well for incisive comments backed with hard economic data. The former acting vice chairperson of the National Planning Commission (NPC), Dr. Pant spoke with Sanjaya Dhakal of Nepalnews, on the overall situation of economy. Excerpts:

What is your take on the current economic situation?

I see that all the actors – the government, the financial sector and others – are feeding on poverty. In fact, it is poverty that is sustaining our economy. Poverty itself is very high, but statistically declining. Since poverty is important to sustain our economy, I doubt there is any target to alleviate poverty.

So, how is the economy running, then?

Population is growing and young people have left for overseas due to lack of jobs in the country. They send back billions of rupees as remittances, based on which the banks and other financial institutions are running. This has increased our foreign exchange deposit. Consumer spending has also been pushed by the remittance leading to fairly growing revenue (out of imports) for the government. As such, the government is under no pressure to do anything more since the macro-economic indicators are fairly stable. This is how our economy is running.

What about the government’s economic policies?

There is no policy to uplift the economy. As I said earlier, the authorities have no motivation to do anything more. They are content at just getting by. Unless they face serious crises to economy, they won’t feel tempted to take any constructive initiative.

What about the impacts of bandhs and strikes on the economy?

Till now, there has not been any study to measure the impact of such bandhs. But, of course, the bandhs hit at the transport, trade, manufacturing, consumption etc. The continuous bandhs have definitely hurt the economy. But as I said earlier, without the crisis our leaders will not be inclined to take any initiative.

Do you think there can be a big economic crisis in Nepal?

There is no indication that Nepal’s economy will collapse because there are still resources pouring into the nation in the name of remittances or foreign aid. Besides, though it is small, Nepal is in a strategic location and other countries will not allow its economy to totally collapse. But if our leaders are to prevent economic crisis, they must address the issue of employment, first and foremost. I do not think depending on remittance income is wise or appropriate. Already we are noticing huge social costs of the unbridled growth of foreign employment. nepalnews.com Mar 12 07

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