The COVID-19 has taken a heavy toll on every sector of society and economy. While it has posed a serious threat to the health and life of citizens, it has battered business, industry and development at all levels. The budget execution and development performance are underachieved and there are no symptoms of early economic revival. Work at some large development projects is either halted or slowed despite the efforts to take the human resources and construction materials to the site. In such a scenario, the National Planning Commission (NPC), the apex planning body in the country, is putting its efforts to coordinate with the respective agencies to facilitate the development programmes. Modnath Dhakal of The Rising Nepal talked to Prof. Dr. Pushpa Raj Kandel, Vice-Chairman of the NPC, on the issue. Excerpts:
The COVID-19 pandemic has battered the economy causing serious damages to the public and private sector. How is the NPC studying the effect of the pandemic on the national economy?
The commission has conducted a study to gauge the exact impact of the pandemic on the national economy, including the private sector. Consultants have submitted the draft report to the NPC and the internal team of experts is studying it. This report will give the picture of the economy after the COVID-19 hit the nation.
The economic downturn had begun in early March this year. Since then the projection of the Gross Domestic Product (GDP) has been the subject of continuous correction and has come to below 2 per cent from the earlier estimates of 8.5 per cent. Hospitality, tourism and education were the hardest hit sectors. While there is a gradual opening of the tourism and hotel sector, there is still no sign of opening the schools. Manufacturing sector is also significantly affected. The closure in businesses and industries has resulted in the growing liquidity in the banking system which is not a good sign. There is no demand for loan as no one is making investments. Agriculture is the least affected sector and due to the timely plantation and good rain we hope that it might be the sector supporting the economy during the distress.
What are the repercussions on the development and construction sector?
Initial days were chaotic. Things happened so fast that nobody could grasp the situation, and it happened everywhere around the globe. Most of the development projects stopped the work and sent the workers home. At that time no one realised that the workers could have been kept at the site in isolation and the work could have been continued. When we realised this, it was already late. However, work at many infrastructure projects is continue after a couple of months although the number of workers is still short and the foreign workers, especially Chinese, haven’t returned yet.
Especially the coronavirus pandemic and the subsequent lockdown hit hard the large infrastructure development including the national pride projects and it has been projected that their time and cost would overrun. What is their position now?
Certainly, there is a profound impact of the pandemic on the development projects which will propel the time and cost overrun. The 456 MW Upper Tamakoshi Hydroelectricity Project is postponed to December 2020 from July. International airport projects in Bhairahawa and Pokhara will also be delayed. However, we are trying to recover some projects like Bhairahawa airport. Melamchi Water Supply Project has got glitches with the damage of its gates. It is surprising that these projects witnessed serious challenges at the last stage of development. I think every project in implementation has been affected to a certain extent by the recent crisis.
Delay in the construction of the development project and heavy increment in time and cost have become the characters of the development in Nepal. Who is responsible for it?
There is a serious flaw in our development system. We don’t make sound preparation of the projects before contracting them out to the developers. Implementing the projects with strict and pragmatic timeline, promoting good developers and managers and punishing the corrupt, and timely management of required resources are not taken up seriously. Had there been proper attention to these aspects, the development performance would have been quite different now. We make haste in launching the projects and face multiple challenges later. This is the characteristic of every project from small to large. The NPC is trying to resolve these issues so that the development work could move ahead smoothly, and projects are completed in time. We are planning to create a robust project bank to find new projects and make better preparations. It will address many challenges that our infrastructure development is facing now.
What is the progress in instituting the project bank? Have you thought about maintaining balance among various states?
The project bank is conceptualised to address various development challenges although it's still in the preparation phase and will take another one and a half years to come into being. We have to develop a new system and mentality. The traditional way of taking projects out of the pockets of certain leaders won’t work, each project needs a thorough preparation. I would like to inform you that there has been significant progress in project bank, about 6,500 projects are already registered in the bank. No project will go for implementation without being registered in the bank. Since the resources are largely mobilised to the states and local bodies, major projects from the subnational levels will be incorporated in the bank. They should also be reoriented about the preparedness, financing and construction of development projects.
There is no systematic method to create provincial balances in terms of development, however there are certain provisions developed by the National Natural Resources and Fiscal Commission. There are special developmental needs in the states as well such as Karnali and Sudurpaschim need physical infrastructure and social development while State 2 is lagging behind in social development. Special priorities should be accorded to the areas that have been marginalised and lagging in terms of development and access to basic facilities.
Don’t you think if there was a provision to punish or fine the officials or organisations responsible for the delay in completing the infrastructure projects, the work could be more effective and result oriented?
There should be provisions of reward and punishment at the political and bureaucratic levels. Political leadership can be punished by the people during the elections as well while there should be a robust system to guide, reward and punish the bureaucracy. We are a quasi-regulatory body, we are more focused on policy formulation. The NPC is continuously nudging the concerned agencies and authorities about facilitating and expediting the development projects.
During this crisis, did the NPC try to coordinate and facilitate the development projects in infrastructure and social sector?
Our main roles are the facilitation and coordination while planning is also a regular activity. We are also working to create 25-year strategy for development. Factors like communication gap, ego and indifference to coordination have resulted in repetition of the same work, delay in project implementation and additional cost. Road construction and expansion is a peculiar example but the culture is same across the sectors. The country does not have a resource or coordination centre to observe such practice, warn the agencies and coordinate with them. Therefore, the NPC is the agency that is putting its efforts in coordinating such matters so far although with limited success. The members of the NPC, secretary and sectoral chiefs have been working to facilitate in various development works but there is no limit to such endeavours. The National Development Action Committee is, perhaps, the supreme body designed to facilitate, coordinate and collaborate in the development work. Issues of all sectors are raised in the NDAC meeting. The consecutive two NDAC meetings have been disturbed by the COVID-19 since the meeting should be attended by more than 100 top government officials. Discussions are underway to conduct the meeting virtually.
The coronavirus has created an unprecedented opportunity for the infrastructure and logistics development in the health sector. Is the country making endeavours to grab this opportunity? What has been done in the sector so far?
As a planning body, the NPC does not receive such demand round the year. Its duty is to prepare periodic planning, primarily one year and five year, while we are also working on a 25-year plan. The government was suggested to be well prepared to tackle the challenges of natural disasters and pandemic like the COVID-19. Project monitoring and evaluation and necessary coordination are going even during the pandemic. Likewise, I also chair the NPC in the fund created for the coronavirus prevention and treatment. The fund is working to address the immediate challenges posed by the pandemic while at the same time some long-term projects such as 5-bed hospital in each local body are also announced. Rs. 1 million is sent to each local body. The capacity of national and regional hospitals is being upgraded in order to equip them to fight the battle against COVID-19.
With the implementation of federalism, there is more confusion about infrastructure development. State and local governments are finding it hard to carry on with the development projects while some of the projects handed over to them have bounced back to the federal government. What caused this – capability, leadership or resources?
There are challenges in all aspects – capability, leadership, resources. Likewise, there are so many projects announced or being implemented that no government agency has any idea of or control over them. Major chunks of resources have been mobilised to the subnational governments but they lack the capacity to implement development work, they don't have enough human resources and managerial capabilities. Some projects that span more than one local body fall between the state and local governments but there are less efforts to forge collaboration in such projects. One way to resolve the constraints in infrastructure development could be applying the suggestions put forward by the Office of the Auditor General. It has offered some pragmatic recommendations.
The federal government should play the role of a guardian in guiding the local governments and enhancing their capacity in terms of planning, budgeting and development. On the other hand, the local bodies must be focussed on increasing their capacity and must work within the limits set by the constitution. There are hundreds of sick projects across the country and many projects are left in the middle of development. The NPC is partnering with the Ministry of Federal Affairs and General Administration and state governments and their planning commissions to run programmes to build and enhance the capacity of the local governments in devising plans and development programmes. We will be focusing on the local bodies that haven't developed their periodic plans. We will coordinate with the stakeholders in identifying the needs of the respective local body and devise the capacity development or skill development programme to enhance their capacity. The central government should guide the local governments while the latter must develop an effective system and follow the guidelines laid down by the constitution.
You have said a couple of times that the NPC is for quite some time facing human resource shortage and is unable to conduct effective coordination and facilitation in development works. What is the major challenge?
First thing that I would like to tell you is about the institutional setup or requirement of the planning body. There are experts, even the government officials and ministers, who deny the need of NPC-like institution while others recommend it to make a think tank, policy institute, coordinating body or planning or monitoring agency. During the political transitions, the neoliberals come up to say that the entire planning system is not needed for the state while there are no other options for the developing countries other than the state leading in planning and development. Some scholars who advocate for socialism also say that planning is not needed. How can you lead the society to socialism without planning? However, we are not talking about absolute planning mechanism but policy guidance to the planning. In the federal structure, there is no agency to coordinate among the different levels of government and guide them in policy and planning. Federal ministries and agencies are busy in their thematic areas.
So far as the human resource shortage is concerned, every agency or institution in the country is facing a similar challenge. We are not getting the experts on the thematic areas, planning and programming.
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