A fast growing neighborhood, Taxing Nepal

In 10 years, India's manufacturing sector has expanded at an annual rate of 11.6 percent and now accounts for 17 percent of India's gross domestic product (GDP). It was followed by an annual growth rate of 8.5 percent in the construction sector. The growth rate of private consumption, which accounts for nearly two-thirds of GDP, has also increased by an average of 3.5 percent annually. Currently, the Indian economy is worth 3,700 billion US dollars and it has aspired to be 5,000 billion dollars in the financial year 2025/26 and 7,000 billion dollars in 2030.

Another neighboring country of Nepal, China, which has already become the second largest economy worth 18,500 billion US dollars in the world, has also achieved a growth rate of 5.2 percent, surpassing the initial estimate of 5 percent growth in 2023. The International Monetary Fund has estimated that its growth rate will be around 5 percent even in 2024. Although there are some problems in the real estate sector, the contribution of industrial production (manufacturing), mining and consumer goods to the economy is one-third and this sector is expanding at a rate of about 10 percent annually. Although the world's GDP growth rate is estimated to be only 3.1 percent on average in 2024, the large economy that occupies 17.7 percent of the world economy ($150 trillion) is growing at this pace.

The current state and direction of Nepal's economy, which is right between these two largest and fastest growing economies in the world, is extremely disappointing. The latest 'Asian Development Outlook' published by the Asian Development Bank has predicted that Nepal's economy will grow by 4.3 percent in the current financial year. The World Bank estimates that this growth rate will be only 3.9 percent. In the previous fiscal year, the economy of Nepal grew by only 1.9 percent, even though it was estimated to grow by 4.1 percent.

In the last 30 years, while the Chinese economy has grown by an average of 9 percent and the Indian economy by more than 7 percent, during the same period, the average annual growth rate of Nepal is barely 4 percent. As the economic history of the world shows, no economy can make visible leaps in economic development and prosperity without economic expansion at an average rate of more than 7 percent for at least 10 years. A growth rate of 4 percent when adjusted for inflation (inflation adjustment) is no stretch. This is the reason why Nepal's economy is like a malnourished child, whose life has been taxed in such a way that it cannot progress.

Commentary on development

In the beginning of the 1990s, why did the pace of economic transformation of the economies of Nepal and India, which simultaneously followed the path of open market economy through economic reforms, differ like that of a chipmunk and a deer? How could the economic openness adopted by China, a communist-ruled country, be more comprehensive and fruitful than the liberalization adopted by Nepal under the democratic system? There has been no meaningful debate on these questions in Nepal's political-governmental circle and intellectual-civic circle.

Regardless of the political system, the political leadership of any country can create a strong commentary that expresses the aspirations of development and prosperity, it is an indispensable prerequisite for determining the model, path and pace of development. In that, it is inevitable that the political leadership should demonstrate the ability to move in the same direction unhindered by including the sentiments of the state machinery, domestic and foreign investment partners and the beneficiaries. It is called

, for economic development it is necessary to have political stability first. The reality is that when such positive commentary is created, such political stability becomes a self-fulfilling desire. Because, a political leadership capable of creating an environment of hope, trust and confidence is repeatedly or consistently approved by the people and governs for a long time. It ensures both the stability and policy predictability required for continuous economic growth.

For example, it is generally assumed that this data of economic growth coming in the run-up to the upcoming parliamentary elections in India will help Prime Minister Narendra Modi to be elected as Prime Minister for another term. Likewise, Chinese President Xi Jinping's announcement that China will overtake the United States as the world's largest economy in the next twenty years has overshadowed all other possible political distractions. And has made his power unchallenged.

hollow speeches and political claims alone are certainly not enough to establish such commentary. The statistics and experience of that comment being translated into practice at a considerable speed should be seen in the public. Both these leaders have greatly increased government spending on major infrastructure projects in recent years. Modi's priority is to expand the road network and improve rail services. C's campaign to make the 'high speed' rail network nationwide has been extremely popular. The governments of both countries have given necessary policy incentives to compete in the international market, especially in the manufacturing sector, especially the production of mobile phones, electronics, drones and semiconductors. China has seen construction industry services and India export pharmaceuticals as its areas of special strength.

In particular, the justification of power and political principles and leadership is not the caliber of its ideological benevolence (ideological benevolence), but the economic progress it 'delivers' is a direct return to the people. This is why the discussion and expectation of 'benevolent dictator' rulers in development has increased in world politics. Turkey's President Mustafa Arktuk (1923-1938), who was seen as a dictator in the eyes of the outside world, Joseph Tito of Yugoslavia (1953-1980), Park Chung Hee of South Korea (1963-1979), Lee Kwan Yew of Singapore (1959-1990), Malaysia Rulers such as Mahathir Mohamad (1981-2003) dramatically transformed the economies of their respective countries and continued to be popular among their people. Modi and Xi of the present world have been in power for the past decade, Bangladesh's Sheikh Hasina and Hungary's Viktor Orbán have been in power for fifteen years. In this way, their strategy to remain in power is to create a commentary on economic development and make it result-oriented by giving energy to the aspirations of the people for prosperity. The single voice that "the country is progressing economically" has made all other political-social demands of the opposition and critics unheard and no one has been able to stop them from moving forward by ignoring them.

Nepal's

How much is the same story about Nepal that is so stupid and unattractive? Nepal has not been able to build a model of economic development, prosperity and common aspirations in any period of history. The panchayat period's village division campaign and the mirage of Asian standards, economic development led by the private sector behind the restoration of democracy, and the "socialism-oriented" three-pillar economy with the investment of the "national" capitalists after the advent of the republic, did not become a complete blueprint of any concept. Even though the cover of the state apparatus is of a federal nature, the political consciousness that the foundation of the future economic development is the unconditional implementation of financial federalism does not seem to be over. Leaders or political parties who prefer to stay in power as long as possible have not been taught the common knowledge that if a leader or a political party can create the trust of the common people by creating a commentary on the economic development of a country, then the life of their power will automatically be extended. In a democracy, no one can remove a leader from the throne who has been applauded by the people. There is no need for dirty tricks, alliances or empty speeches. However, no leader or party is ready to listen to this story these days.

No matter what party or leader comes to power, the important time of the country is being wasted by throwing the same unimaginative and delusional gossip and fulfilling the interests of a limited circle. The perennial 'confusion' that has become irrelevant four decades ago, rusted machine tools piled up, whether to run government-owned industries closed for years, whether to hold the ritual of investment conference or whether to claim that the economy is on the road to reform or cry that it is on the road to crisis. in the state. A cotton farm that supplies enough to run a yarn and textile factory profitably, enough rubber to run a tire factory, or an iron ore mine for a steel factory. For that you need your manpower, energy and management. The state needs its own investment capacity or policy and structural infrastructure to attract private investment. It requires unwavering faith in the state. Without such a mutually complementary 'ecosystem' operating, the same old political gimmicks are a joke on development.

Why is the compulsion of the people to memorize the terrible statistics of Nepal's development now more painful, because at this time Nepal is standing at the choice point (infection point) of an opportunity that is rarely available in history. And, due to the government's blindness and inaction, the country is failing to take advantage of this opportunity. Easy foreign exchange reserves, good inflow of remittances, availability of investable liquidity in the banking system, the beginning of the second five-year cycle of federalization implementation, the 'space' of public finances within acceptable limits, booming demographic advantage and gradually increasing demand for consumption are rare coincidences. It may take a long time to create a virtuous cycle of industrialization, urbanization, infrastructure development and job creation by making only small policy changes.

Furthermore, due to failure to utilize this opportunity properly, if the economy goes into a deep recession, there may be no return from it. It's not just a mind-blowing lakh. For example, energy transition is inevitable for the country. But it is quickly posing a major risk to government revenue. Currently, the country's biggest source of revenue is the tax and customs duty imposed on the import of vehicles, their parts and petroleum products. Now, it is not possible to impose such a high tax on the import of electric vehicles and the import of petroleum is automatically reduced. Right now it is difficult to find the revenue target. It is not possible to imagine the development expenditure after the source of government income dries up.