National Conference
"LEADERSHIP BUILDING IN SOCIAL DEMOCRACY"
Presentation paper
"RETROSPECT AND PROSPECT OF NEPALESE POLITICAL ECONOMY"
Prepared by
Suraj Raj Kafle
[email protected]
Organized by
B.P. Thought Academy
Supported by
Fredric Ebert Stiftung
April, 2015
Historical Perspective
Nepal achieved a status of modern Nepal after its unification by Prithivinarayan Shah in the year 1768 B.S. Before its unification, it was divided into small states, he conquered these small states and unified them into one Nepal. It was one step breakthrough after golden age of 'Lichhivi dynasty'. The clever shah dynasty's matured decision for territorial politics, high moral and bargaining power of Bhakti Thapa's bravery leadership secured nominal ground to Nepal's sovereignty rescuing its territories from British artillery after signing treaty of Sugauli in 1816 B.S. Then, stretched the map from Mahakali in the West to Mechi in the East. After all, Britain recognized the absolute independence of Nepal in 1923 B.S. Up to Rana regimes, Nepalese history revolved around the conflict of 'power and politics'. It was a period of establishing culture and tendency of 'nepotism and favouritism'.
We assumed and reality was, majority of Nepali people were very poor. Subsistence agriculture was the mainstay of economy and employment. Industry and manufacturing activities was meagre. People in general and lower cast were severely exploited by higher caste ruling elite. Ruling elite treated the national resources as their heir-loom. Thus the relationship between Ruling and ordinary people was Patron- Client type. Before 1951 A.D., there was no such admirable archive of economic policy making.
Revolution: 1951A.D.
Rana Pri-minister held supreme power before 1951. They had authority to make law, implement and, amend it and sign treaties with other countries. People could not raise any voice against the Rana regime. The regime was also supported by British ruler in India.
In India, British followed the policy of divide and rule. Rana were guided by this policy inside the country. Rana family were divided into ABC classes. Only a class Rana's had right of succession and C class Rana's were therefore against a class. Social behaviour and its institution favoured higher caste and lower caste were exploited by them.
The economic sectors were prevailed by the subsistence agriculture. The Jimmawal, Mukiya, Talukdat, Dware, Amlai, Rajauta, Birta and Kipat were the privileged landholder's symbol existed to exploit the tenants to the maximum extent. Private sector's economic activity was minimal. Handful industrial and manufacturing enterprises existed.
Nepali leader inside the country and living in India mobilized the Nepali people in favour of democracy, educating them about the advantage of democratic governance and organized them against the Rana Regime. The freedom movement of post-world war two, independence of India in 1947 A.D., King Tribhuban left the country in support of Revolution for democracy led by Nepali congress and eventually Rana's proved utterly incapable of providing the kind of foresight and statesmanship demanded by changed circumstances both domestically and externally helped in the success of the Revolution of 1951 A.D.
Politics from 1951A.D. to 1958 A.D.
The Tripartite Delhi agreement ended the autocratic Rana rule in Nepal and a coalition of Rana and Nepali Congress was formed on the basis of the declaration in 1951. Under the Prime ministership of Mohan Shumsher. King Tribhuban in his historical proclamation agreed to remain a constitutional monarchy under the constitution drafted by elected representative of the people. For interim period, interim constitution was drafted which provided policies and guiding principles of the Citizen Rights and representative democratic system.
Rana and Nepali congress coalition could not remain for a longer time due to the dispute between the two parties of the coalition. In 1952, coalition government was dissolved and five days later King Tribhuban formed another government with Matrika Prasad as the Prime Minister. The cabinet was assigned four important task for nation building '1) setting up independent department for Justice 2) To hold constituent assembly election within 1953)To ensure Civil Rights of the citizens 4) implement the provision of Public Service Commission' effectively as far as possible,. But it also could not last longer and was dissolved in Aug 1955. This transitional period was politically unstable characterized by change of Prime-minister of his choice by the king every six months. Political parties could not become stronger because of inner dispute within the party.
Failing the task, Matrika resigned from the post in Jan, 1955A.D. In the meantime, King Tribhuban became sick and went Zurich, Switzerland for treatment. The powers to form Government were surrogated to the then Royal prince Mahendra. He formed the government under the leadership of Tanka Prasad Acharya, the president of People's Council in 1956 A.D. It was also dissolved. In 1957 A.D., 1st of Falgun Constitution was proclaimed by the king which was against his previous proclamation which accepted to work under the constitution drafted by Constituent assembly. Political parties protested the king's step and launched Civil disobedience movement against the King's proclamation. King did not yield to the protest. B.P. Koirala, president of the largest party accepted the election to the parliament as a step forward to democratization, though he was not fully satisfied with King's decision. Election to the parliament was held in Feb, 1958 A.D. whereby Nepali congress swept away 74 seats out of 109 constituencies, Rightist Gorkha Parishad got 19 and leftist communists got 4 seats.
In 1951 A.D., King Tribhuban proclaimed his wishes to remain a constitutional monarch under the constitution made by Constitutional assembly. His latent intention was to regain his previous executive authority. This steady accretion of power by the monarchy started in 1951A.D. and culminated in the imposition of direct monarchical rule in 1960 A.D. The King's practice of policy of divide and rule among the political parties was the planned step which postponed the constituent assembly election for four years and declared constitution by Mahindra virtually attacked on multiparty democracy.
IV. B.P. during (1958 -1960) A.D.
B.P. Koirala's Nepali congress was the social democratic party. After coming to power, it started sweeping reforms consistent to its ideology. Rajya rajwuta Unmulan (Abolition), Birta Unmulan(abolition), introduction of land ownership ceiling, compulsory saving scheme were introduced. He emphasized massive resources drive for the development. Koirala visited many countries for external resources generation. Co- operatives were organized for mobilization of small saving. As the majority of countrymen were very poor, the government made poverty alleviation its principle agenda and targeted to uplift all the people to the level of middle class within a period of fifteen years. He also gave impetus to private sector entrepreneurial activity and did set up Nepal industrial development corporation with an objective for providing finance and technology to private sector. BP was a diehard social democrat and was of the view that newly introduced democracy could sustain only by the implementation of socialist programme. In foreign policy front, his policy towards India and China reflected the 'nation's geo political realities'. He expanded diplomatic relation with many countries of the world. His foreign policy was based on three principles '1) Nationalism 2) Realism and 3) Idealism'.
B.P. was of the opinion the sustainability of democracy hinges upon its adoption and implementation of socialist programme so he emphasized on such programmes and started adopting it in the planning process. It was these steps which antagonise the traditional and regressive forces of the country. King Mahendra on the other side was also not happy with his constitutional role and was trying to restore his previous executive role. King Mahindra's Royal coup to oust BP Koirala's Government and circumvent the democratic system of the country had the tacit approval of 'traditional and regressive forces'.
V. Politics between (1960 -1990) A.D.
After Royal coo of multiparty political system, the thirty years dark tragedy began where political parties did exist and operated secretly. There was no room for multiparty political participation and exercise. Prominent leaders of political parties operated their policy decisions from exile, escaping from harassment or imprisonment inside the country.
Organizations that Panchyat had made practice were of peasants, labourers, students, women, former military personnel, and college graduates which were controlled by the system. These organizations King Mahendra anticipated could be a substitute as the political instrument in the absence of political parties which could provide channels for the articulation of the national--interests. Contrary to this expectation, the professional and class organizations were however warned repeatedly against engaging in political activity because that would tantamount to sharing of King's centralized authority. Nevertheless, they offered a forum open to many Nepalese, and even some former Nepali Congress and communist workers who considered them worthy of infiltration. This professional organization therefore limited to their class interest and could not become an alternative political institution in the absence of political parties.
The late King Mahendra, a master tactician, used considerable skill to avoid emphasizing certain aspects of his political system. To justify his dissolution of parliament and present his subsequent political practices to favourable light, he attempted to create a cultural myth about the Panchyat to support claims of legitimacy by Royal authority. He put vigorous plea that his "democratic' Panchyat system with its roots in the soil of the country was better suited to the socio – psychological climate of Nepal than parliamentary democracy which was alien to its tradition and genius. In support of his Climate and Soil theory, King Mahendra refurbished the Panchyat on a model of traditional authority that basically derived its authority from the spirit of reverence for hierarchy based on seniority and age in a caste ingrained society.
Mahendra, while dissolving BP Koirala's democratic government blamed its leader's apathy towards Socio / economic development of the country. King Mahendra named socio\ economic upliftment of Nepal as his Number one priority of his government. To give progressive image to his authoritarian regime, he continued the land and agriculture reform, compulsory saving scheme decided by BP Koirala's Government. He repeatedly spoke that Nepal should achieve national development task in 25 years what others achieved in 100 years. Despite all these rhetoric, economic growth remained little higher than 1% while population growth surpassed 2%.
Besides that, Panchyat launched many projects for its survivor and fitness. Among them, Back-to-the-Village National Campaign (BVNC) was one of the strategy intended to avoid the possibility of opposition within the Panchayat. It was assumed to create an active elites loyal to the system as well as favour to select and endorse candidates for political office. The weapon mobilized to neutralize the influence of underground political forces officially envisioned as a means to mobilize the people for the implementation of development plans and projects. Actually, it was an ideological campaign to underpin the importance of the party less system and counteract the whim of multiparty politics.
Whereas political parties banned during this period massively utilized the student fronts for the movement of multiparty democracy. Value based student organizations conducted demonstrations against the political system and norms based students' agendas were thrown to university authority. Student organizations put academic agendas for the political purpose. As the strategy was, if academic agendas were taken into consideration then there has been huge mass collection of students so that they could utilize the mass in to their political purpose. They raised many genuine academic agendas. They symbolically asked the government for multiparty democracy for the foundation of movement. It was built by the case of democratically elected Pakistani Premier's death penalty. The mass uprising compelled to announce referendum of 2036 B.S. for political choice and gave mandate to establish FSU at different campuses. Even though, the result of referendum was not in favour of demonstrators but made conducive environment of future movement for democracy aspirants.
During Panchyat era, Nepali Congress and Communist Party of Nepal were the momentous opposition to the monarchy operated from Nepal and India. There were problems within communist fractions about splitting and joining even in a tiny agenda. The Communist Party of Nepal, divided on the strategic question to seek the direct and immediate overthrow of the monarchical system or to work within it. Again, it was risky to design and implement program. There were lots of cases even in a high brass leadership about Panchyat orientation. Again, getting tactical advantages, some party members entered into Panchayat system with the tacit approval of the palace. That was why, it was very difficult to Nepali Congress to build a consensus among the oppositions for democracy movement.
In an economic front, after Mahendra passed on, King Birendra gave the concept of Regional development dividing the country in five development region. National Development Council an apex body for counselling to national planning commission was constituted in his period. Bikes Ko Mull futon was his popular slogan. In the later part of his regime, he initiated the liberalisation of financial sector which was also continued and expanded by Post 1990 A.D. regimes. Thus under the Panchayat System, institutions were established in public sector as public corporation, some industries were established under the bilateral aid and concept of balanced development under the Regional development concept were introduced. But both Agricultural and industrial development remain sluggish and overall economic growth remained less than the growth of population.
Actually, the Panchyat period was begin to challenge after 1976 A.D. by BP's policy of National reconciliation and Student movements. Democratic leaders exiled in India were organizing Struggle for restoration of democracy in Nepal. Indians had the tacit and logistical support to the movement. In order to defame the movement, King's regime propagated" Anti Indianism "as the bedrock of its Nepali Nationalism. The autocratic royal regime also used China card against India time to time. This policy of Mahendra was continued by King Birendra in a different manner. Birendra also adopted Anti – Indianism as the core element of Nationalism. Until 1989, the difference between King and India reached at the point of culmination. When Birendra purchased arms and ammunition from China it reached at the point of no return.
VI. Revolution: 1990 A.D.
There were different causes and circumstances led to 1990 movement. The beginning was the Indo-Nepal Trade and Transit disagreement that significantly made economic hardships to Nepalese mainly living in the Kathmandu Valley. It was the suitable time to over through the authoritarian regime. Seven left parties and Nepali congress jointly organized mass demonstration against the political system for the restoration of democracy which were supported by Nepali and international communities. The pro-democracy joint movements, mounting casualties of ordinary people and fearing for the survival of his own monarchical status forced King Birendra to lift the ban on political parties on April 8, 1990 and then announced multiparty system on April 16, 1990.
VII. Democracy era after 1990 A.D.
Under the leadership of K.P. Bhattarai, an interim government was formed which proclaimed constitution on November 9, 1990. Elections to the House of Representatives were held on May 12, 1991. In May 1991 with the first truly free elections in over thirty years, ushered in a new political era. The Nepali Congress Party obtained a workable majority although the Communists made a strong showing within the framework of a constitutional monarchy. The new government faced the immediate problems of restoring law and order, providing economic relief to the populace, and establishing its claim to sound administration, a somewhat difficult task because the parties of the interim government had been in the opposition for a long period of time.
Nepali congress was the political party who adhere to the policy of Democratic socialism. The new government of Nepali congress changed it its socio – economic policy and adopted Neo liberal policy. Nepali people struggle for the restoration of democracy was unparalleled in the annals of world history both in terms of hardship people suffered and longevity of the movement. So, people had high hope, faith and expectation from democratic system. It was also the reason for the spontaneous participation of the general people in the movement of 1990. But the delivery of the Government was dismal and people felt alienated from the system. New government did not devise any effective policy and measures for participation and empowerment of under privileged and weaker communities like lower caste, adiabatic, janajati and women. Political parties were also becoming weak and the Government's became instable because of dispute within their party. Taking advantage of this situation CPN (Maoists) who had opposed 1990 A.D. constitution started armed conflict for the establishment of "Peoples Republic" through violent movement. Lower caste, janajati, women and Muslim' the suppressed and exploited people participated in the movement. It was the reaction to poverty, hunger, starvation, suppression and state discriminatory policies prevailed since a very long period in the Nepalese society.
On June 1st 2001, King Birendra and crown prince Dependra were killed in palace Massacre together with 19 members who attended the dinner in Royal palace that evening. Although the high level investigation committee formed by Gyanendra had given report, people are still doubtful about the causes of massacre as it was given in this report. King Gyanendra, brother of King Birendra was crowned as the King of Nepal after the death of his brother. In Oct 2002, King Gyanendra dissolved the constitutionally formed government through Royal proclamation led by Deuba terming his government as ineffective, corrupt, and unable to conduct election in given time and failed to maintain peace and security in the country. The decision made so far brought the main stream political parties in a single forum.
In the time being, King declared a state of emergency and ordered the army to crack down on the Maoist insurgents. The rebel fighters strengthened their campaign, and the government retorted with equal intensity, killing hundreds of Maoists, the largest toll after the insurgency began. In Jan, 2003 government signed a cease-fire for peace talks with guerrillas but in Aug, they withdrew the agreement that alighted the turning point for 2006 joint movement with agitating parties against king's proclamation.
In Feb 2005, King Gyanendra fired the government and assumed direct power. Political leaders were arrested, and restricted civil liberties. In Sept. 2005, the Maoist rebels declared a unilateral cease-fire, and made conductive environment for April movement. 2006. In April, Seven parties and the Maoist's alliance organized massive pro-democracy protests that ultimately pressurised King to reinstate parliament. The new parliament quickly moved to diminish the king's powers which in May, unanimously declared Nepal a secular nation.
VIII. Political economy of Nepal: prospect and challenges
The Delhi 12 point understanding among seven party alliance and the Maoist after all succeeded to restore democracy in Nepal. The political developments were the Nepal Army confining itself to barracks, UCPN-Maoist joined on interim government, reinstated parliament, comprehensive peace agreement, CA election, declaration of federal democratic republic Nepal, integration of Maoist army to Nepal army, resolved hundreds of disputes in CA's thematic committees, peaceful second CA election and others.
The major challenge is, constituent assembly has not been successful to draft constitution in a stipulated time within a year (Magh, 8, 2071). The constitution making process has been in a state of deadlock as political parties are polarized in the procedural issue of majority vote or census. The major unresolved issues are of state restructuration, judicial system, Governance model and electoral system. It has polarised national politics between Nepali congress and UML in one side and Madhesi parties ,UCPN (Maoists), Janjati parties on the other side.
As we know, Nepal is among the poorest and least developed countries in the world, with almost one-quarter of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for two-third of the population. The contribution of agriculture, foreign employment, industries and commerce and tourism are one-third, one-third and one-third in ratios in our GDP. Industrial activity largely involves the processing of agricultural products. It has considerable scope for taking advantage in potential of hydropower, with an estimated 42,000 MW of feasible capacity.
Constituent Assembly (CA) election, paved the way for federal inclusive republic Nepal imagining social diversity, social harmony, sustainable economic growth and peace in one hand where as in others the achievement so far are again in risky due to uncertainty of constitution making on stipulated time. Again, there are probability of massive social movements in terai and hilly regions by the population demanding their identity on federal structure. The issue of self-determination is most crucial.
There is an issue of constitution making. When do we get? Nobody has its answer. We do spend our time talking about constitution or make an economic policy, plan, and action for economic transformation of Nepal. We are going late in raising questions about Nepal's economic future. How does Nepal fit into today's global economy? What are its comparative advantages? How does Nepal attract foreign investment? How does Nepal provide an enabling environment for its economy to grow? How does Nepal's business culture change to compete and grow the economy? How does Nepal leverage its development resources for private/public sector-led growth? How do Nepal solve its social security issues? What are its social sector development policy, plan and action? How do Nepal manage this? How does Nepal as a nation-state responsible to manage, monitor and advocate the issues of corporate social responsibility?
There are hundreds of questions. Nepal would be economically viable only if it address the following questions: what are the economic sectors viable for the development of Nepal? Without which, Nepal will even more dependent on external remittances and trade with India. It must carefully think about its competitive advantage in today's globalized economy. Nepal must be creative and identify new markets, new niches, and new opportunities. To fulfil development endeavour of Nepalese people, it is necessary of foreign investment. Domestic capital alone is not sufficient for a country like Nepal. Loans and grants from World Bank, IMF or ADB are not sufficient. Country must attract and develop private capital. Motive must be self-reliance.
As we know, investors want security, they want attractive returns, and they want to be able to get their money out. Investors look for stability and predictability in economic policy and regulatory decision-making. They expect clear guidance and consistent policies – not shifting rules.
The creation of the Investment Board, BIPPA, PTA, PDA and ongoing dialogue about mega projects and its operation are the important signal to international investors. When international companies enter into Nepali market, Nepali companies will increasingly have to compete. There will be no possibility of getting political or bureaucratic support to Nepalese one through illegal means. They must rely on their business skills and creativity. The competitiveness makes Nepalese companies stronger and more profitable.
There is necessary for public-private partnership. State must be responsible to control economic instability. Liberalization is today's requirement but state should be responsible for its regulation. Private ownerships do their business but they must make responsible to distribute their wealth to social sectors. State should take nominal tax prioritizing small and medium scale industries. State must have strategy to grow its economy from the bottom prioritizing the downtrodden community. Nation should have enough space, environment and legislation for bargaining international investment. Our economy does not depend completely on neo-liberal and state led development approach. It should go from middle of these extreme approaches.
The stability of the domestic labour market is a crucial factor for potential international and local investors. Trade unions have an important responsibility not to promote the narrow partisan agenda of one or the other political party. They must be professional.
In Nepal, youth population is very high and our today's global trend is to empower youth by entrepreneurship skill. They have creative ideas and the skills to build businesses and create jobs. Meeting these objectives there should be bold leadership, determination and action.
In our second three year interim plan, there are six policy priority pillars important to our development endeavour:
Achieve pro-poor and employment-generating, sustainable, and broad-based economic growth with the concerted effort of all sectors-the state, private sectors and civil society;
Infrastructural development with due consideration to federal structure of the country, and provincial economic growth;
Social inclusion, and social justice-oriented development for sustainable peace;
Socio-economic transformation: strengthening financial and social services;
Result oriented development works to support good governance and effective service delivery;
Strengthen economic growth and its sustainability by streamlining development of private and civil society sectors, industrialization, business, and other service areas in the national development.
Beside this the informal sectors have to be consider for better political economy of Nepal.
Support to agriculture beefs up the informal sector, small enterprises, and handicrafts. Access to land, water, credit, seeds, education, and technology are the basic necessary condition.
A basic reform in public revenue by progressive taxation
Integration of informal sector workers in social security and access to education, health, and income.
Grassroots civil society, Ngo's, community based organizations, and local federations express various needs of people, conscientize them about their rights and duties in a broader national and global framework of social justice.
Building gender equality issue stronger will erode traditional institutions', gender and caste biases, weaken the elite capture of resources, and make local economy competitive in the future.
Increase in productivity of farmers: budgetary allocation to agriculture, coordination on agricultural trade, investment, and financial markets lower consumer prices and increase the income of rural population.
IX. Conclusion: Democracy discussion of the topic
Despite the high hope surrounding 1990 movement and movement of 2062-2063 and also ouster of Kingship and establishment of Republic, there has not been clear break from the past. Instead democracy has disguised the continued influence of Nepal traditional elites and has re-legitimized their power because the in egalitarian social and economic system is now sanctioned through the ballot box. The holding of free election and unfettered operation of political parties are welcome advances along the road towards democratic Nepal, but they alone do not constitute genuine democratization. Democracy requires democratization of economic order and corresponding measure of social justice. It also demands the development of local level participatory democracy which will draw the politically marginalized in the decision making process. Democracy in Nepal has failed to alter the distribution of power and wealth in favour of majority of Nepali who are poor.
The democracy has been most successful in those societies in which political competition and development and institutionalization of parties preceded the adoption of a democratic election system. But Nepali society faces double challenge. Not only has it to institutionalize the democratic system of government, but the political parties themselves had to be institutionalized. All political parties are immature and unstable. Their ideological position is confused and competing faction within themselves threaten to tear them apart.
The failure of leadership has been immensely damaging to Nepal's democratic prospects. Censual, pragmatic, accommodating leadership is vital to the survival of democratic system.
Although there is some debate over the relationship between the level of economic development and the success of democratic systems, in the case of Nepal, there can be little question that economic failure will ultimately undermine the functioning of democratic government.
Nepali democracy emerged at a time when the ideology of right had established as a global truth. State intervention in the economy was anathema to those preaching the benefits of economic liberalism. Given the compromise nature of Nepali transition and the country's abject poverty, extensive state intervention was not only ideologically unacceptable but it was difficult to implement. Yet, ironically, the transition to democracy in classical western models was not accompanied by economic liberalism but was characterized by increasing state intervention in social welfare provision. This gave the newly enfranchised masses a stake in the system and fosters a belief that democracy meant greater individual prosperity and not simply commitment to abstract principles. Poverty stricken Nepali democracy, by contrast, has been incapable of providing such reward to its citizens.
Nepali democracy is hardly owned. Its history in terms of its longevity and intensity of hardship Nepali people suffered is unparalleled even in World history. So the political leaders should understand this vested interest of Nepali people. Therefore the sustainability of our democracy depends upon the pragmatic and people centered economic and social policy of the political parties and Government in future taking into account Nepal's sluggish growth, mass poverty, inequality, low level of saving and investment and its need for regional and global connectivity.
