Inclusive institutional structure and innovative financial mechanism are necessary for economic prosperity and sustainable development of the country. The Constitution of Nepal 2072 laid the foundation of a federal democratic republic and ensured decentralization of power, inclusive representation and civil rights. However, much work remains to be done in terms of policy implementation, resource mobilization and institutional reform.

This article will discuss the development of inclusive institutions, Singapore's financial model, the need for an alternative development finance fund recently suggested by Finance Minister Vishnu Paudel, the role of the Investment Board and the necessary reforms in the Nepal Electricity Authority.

Policy making

The Constitution of Nepal has guaranteed equal opportunities and rights to all citizens. By decentralizing power and resources at the union, state and local levels, it has opened the way to increase citizen participation in policy making and implementation. However, we have the fact that problems like political instability, institutional inefficiency, non-transparency and lack of accountability and corruption have made it difficult to put the essence of the constitution into practice.

economist Darron S. Akermoglu and James A. Robinson argues that the key to the success of nations lies in developing inclusive institutional structures. Inclusive institutions provide economic and political opportunity to all citizens, leading to sustainable development and prosperity. Although we have prepared the basis for building an inclusive institutional structure through the Constitution of 2072, we have not been able to work consistently and firmly in policy implementation and institutional reform in practice.

The collected revenue is not enough for economic development along with institutional reforms. Even in that, Nepal's tax system is narrow. Public revenue is limited by under-target tax collection, tax evasion and weak tax administration. A deficit budget may be acceptable during a recession, but in the long run, a balance between revenue and expenditure is essential. In our case, the target of revenue collection remains incomplete every year. The government is indifferent to expanding the tax base, improving tax administration and controlling tax evasion.

Budget and monetary policy focus on promoting aggregate demand, job creation and inclusive growth. The active role of the government and the National Bank, investment in social security, infrastructure and agricultural development can show positive signs in economic growth. However, delays in implementation, underutilization of capital expenditure, weak tax collection, lack of good governance and limited access to finance have hampered policy effectiveness. Sustainable, inclusive and high economic growth can only be achieved by improving long-term strategy, transparency and implementation.

In this Serofero, Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel has said that since the aspirations of the citizens for development and prosperity cannot be fulfilled only by spending from the government's account, new laws are necessary to find alternative sources and gain profit from them.

In the meeting of the Finance Committee under the House of Representatives, he said that this fund is necessary to mobilize and manage resources from outside the government's "Treasury" in the discussion on the "Bill, 2082, made to make arrangements regarding the mobilization of alternative development finance". Alternative development finance funds can be arranged to invest in agriculture, forestry, mining, minerals, electricity, infrastructure, industrial sector, public-private partnership projects. It is expected to contribute to economic development by mobilizing alternative financial sources apart from traditional investment.

Building and sustaining

Nepal can learn important lessons from Singapore's development model regarding the establishment and operation of alternative development finance funds. After gaining independence in 1965, Singapore managed to become one of the world's most prosperous nations despite its limited resources, small geography and diverse ethnic composition. One of the main reasons is that Singapore has set up a separate fund for development (Temasek Holdings) to professionally manage state-owned assets and foreign exchange reserves.

The organization ensured long-term returns by investing in government-owned companies. Foreign exchange reserves were also invested in various projects around the world, contributing to Singapore's economic stability and growth. These funds were operated with full transparency, professionalism and accountability. Collaboration between government, the private sector and civil society, policy continuity and institutional reform have been the cornerstones of Singapore's success.

Nepal should prioritize transparency, professionalism and long-term thinking when establishing a separate development fund like Singapore. The fund's investment policy should be clear. It is important to be sure in which area, with what kind of return and with what kind of risk management the investment is made. Even if the fund is owned by the government, it should have professional management and an independent board.

As in Singapore, qualified, experienced and independent individuals should be appointed to key fund officers. The annual report of the fund should be made public and monitored by civil society and parliament. It ensures transparency and accountability in the fund and prevents misuse of resources and corruption.

Lessons can also be learned from the experience of the Investment Board for the success of alternative development finance funds in Nepal. The purpose of establishing the investment board is to increase cooperation between the private sector, foreign investors and the government in major infrastructure projects. However, the functionality of the board needs to be strengthened.

Delays in project selection, environmental assessment, land management and permitting processes, lack of transparency and political interference have reduced the board's effectiveness. The investment board should be empowered with full professionalism, independence and clear mandate. Transparency in project selection, strictness in environmental and social assessment and one-door system in permitting process should be implemented. This increases investor confidence. Accelerates project implementation. And, it contributes to sustainable development.

Nepal Electricity Authority is very important for the sustainable development of Nepal's energy sector. But due to institutional weakness, political interference and lack of management in the authority, the expected return has not come. Professional management, transparency and accountability are essential for reform.

The electricity authority should also be run on a professional board, independent audit and profit-loss basis. Attracting private sector and foreign investors requires policy clarity, assurance of investment security and ease of project approval. The authority should invest in technology and innovation to increase efficiency in production, transmission and distribution and improve customer service. For this, emphasis should be placed on human resource development, incentive system and institutional reform.

Democratic basis

In order to put into practice the inclusive and democratic basis given by the constitution, it is necessary to improve policy formulation and implementation, mobilize alternative financial sources and emphasize the development of inclusive institutions. The development history of the last two centuries has shown that no nation has been able to achieve sustainable development without inclusive institutions and a transparent governance system. Building a prosperous, stable and just society is possible only if Nepal improves all these aspects and moves forward.

The challenges seen in the economic, social and political context of Nepal, such as: the country being in the 'grey list', weakness in economic crime control and reduction in the effectiveness of government mechanisms are additional challenges in the journey of nation building. In order to solve such problems, development of inclusive institutions, decentralization of power and resources, transparency, accountability and citizen participation should be increased according to the spirit of the constitution. Nepal can achieve the goal of building an inclusive, just and sustainable nation only if measures such as timetables, clear plans and institutional coordination are effectively implemented in policy implementation.

Annual disappointment

Every year when the budget and monetary policy comes, it is important to get out of the cycle of hope rising in the heart and that hope also dying at the end of the year. Hope because every government brings relatively good policies. Hope will die again due to incompetence and indifference of the same government. In the absence of leadership capacity, the policies, plans and programs of the government are limited only on paper and are not implemented in practice. It does not bring any direct change in the lives of citizens.