Making The Welfare State Functional

Nepali constitution envisions a welfare state seeking to synergise the political economy through the collaboration of the public, private and cooperative sectors aiming to create an egalitarian society. Mutual aid of these sectors is the vital pillar of its development which has also been aligned with Sustainable Development Goals of the UN. The welfare state seeks to maximise cooperative opportunity to all actors in the market economy but also distribution of gains to all stakeholders. In Nepal, however, formulation of a policy of dual education, health, communication and economy of the public and private realm has produced dual societies of urban and rural areas and perpetuated a gap between the rich and the poor.

The welfare state aims to depolarise the condition of existence and eases social mobility disposed to the civic culture of entrepreneurialism that decentralises wealth and power ownership to make people its stakeholders. Nepali welfare state needs to achieve a balanced budget, smooth supply of public goods and acquire an ability to execute all constitutional and human rights of people. This requires a tangible improvement in the tax base of the nation to subsidise social justice, social security, social protection of the vulnerable, infrastructure growth, education and health so that no one is left out of the opportunities. 

Investments in social development

It equally needs huge investments in social development, education, training and the introduction of clean and green technologies for an adaptation to climate change.  The welfare state is expected to socialize the cost of living of the poor by a fair tax system without mounting people’s undue dependence on welfare paternalism. Such a state must have a lawful monopoly on power to control violence and anomie, enforce rule of law, abide by its social contract and enable people to pursue a life of choice. A participative, decentralised, democratic and ecological culture requires social efficiency of Nepalis as well.   

A state, which is largely based on its own tax revenue, is more accountable to the people than those dependent on outside for revenue to sustain its survival. This is one of the reasons public protest against the government’s tax relief to businessmen is mounting in the nation. The contribution of remittance to GDP in Nepal is more than 26 per cent. It is higher than the tax contribution of about 17 per cent. This shows that labour's share in the national GDP is bigger than the corporate sector which is about 3 per cent, foreign aid 6 per cent, foreign direct investment 0.1 per cent and tourism 7 per cent. 

When the share of income mostly goes to the capital, people will continue to nurse their grievances and demand their constitutional rights to social justice and work, a core value of the welfare state.  Welfare state aims to bridge the huge capital labour-gap and increase the efficiency of both under social contract. The Labour Act of Nepal has given the workers right to collectively bargain for the adjustment of their income, fair return of the work and increased welfare outcomes. Progressive tax on inherited and earned wealth can help to subsidize the poor by growing their opportunity and mobility and spur the ability of the state to remain autonomous of interest groups.

The official bent to ease the outbound flow of labour, students, businessmen, etc. should not be vaulted as they are key locomotives of entrepreneurialism. Three areas: hydropower, tourism and IT hold great potential for the modernisation of Nepal’s economy.  Remittance, aid, loan and import-dependent economy weakens the policy making autonomy of the parliament. It cuts the need for domestic resource mobilisation, whets corruption and distorts national priorities. Nepal's debt-to-GDP ratio is swollen to 44.14 per cent beyond the ability of Nepalis to bear. 

Likewise, the welfare state becomes burdensome if it tolerates free-riding of interest groups, commission agents and thieves of state allowing them to consume most of resources leaving only trickle-down to the people who are required to earn, save and invest in productive sectors. It cuts the meritocratic values, integrity and honesty of the governing class upon which the nation’s welfare depends. Adam Smith rightly says, “The wealth of a nation is that of its people, not its government.” The anti-liberal global trends have resurrected the expanded welfare role of the state, certain regulation of markets and monitoring of financial flows. 

Similarly, the elevation of human rights, alleviation of poverty, drop of inequality, job loss and management of climate change have allowed the active role of Nepali state. Ironically, clash of sub-national solidarity and growing disharmony between the old patrimonial politics and information-driven participatory revolution have bred anxiety. These broad structural factors require building the capacity of the state to enforce rule of law, develop public security, manage anomic politics and frail economy, enhance investments in social progress and ramp up Nepalis purchasing power.

The number one priority of leaders is to create the authority of the state and its ability to foster popular trust in its institutions, coordinate the public, private and foreign affairs and dodge the tussle of geopolitical forces.  Can Nepal recover from its economic change propelled by neoliberal privatisation of public industries, cuts in agricultural subsidies, destruction of jobs and introduction of elite educational, health and communication institutions against the constitutional spirit of the egalitarian society? Obviously this paradox shows the crisis of national imagination and a gap between the vision of the constitution and sterile posturing of super-structural change. 

The inequality of opportunity sustained across generations, genders and social classes yield uneven outcomes for social mobility of Nepalis. This inequality would continue to widen if the power of solidarity of workers does not balance the political clout of capital and avert the commercialisation of labour and land which in no way shifts subsistence to a surplus economy. The participation of women in the labour market, politics, administration and adjudication has increased owing to the policy of social inclusion, quota and positive discrimination. The union driven minimum wage has given moderately enhanced welfare outcomes to those engaged in the formal sector while Nepal’s economy is predominantly informal. 

Agriculture sector workers especially face low wage traps. It is here Nepali state has to act prudently to modernise this sector so that decent jobs are created, meet food deficits, formalise the informal sectors and spur an equal playing field. Welfare state grants its people a minimum income for survival and social security. In Nepal also social struggles have politicised people, expanded their rights and activated those rights through social and political agencies. Constitutional Nepali state has embraced sectoral rights for children, women, single women, indigenous, Dalits, senior citizens, disabled person, minorities, etc. and inclusive national commissions as well to oversee them.

 These have raised unrealistic expectations of people. Popular exuberance has surged with the restoration of democracy but soon dissipated with the formation of various kinds of government and their inability to execute those rights and carry out international duties the nation has committed to.   Local self-governing polity upholds democratic and participatory forms of institutions where resources can be deployed  to expand productive sectors where every Nepali is capable of paying for and receiving the benefits of welfare outcomes, not just accumulating subsidies or asserting rights without contribution and performing due duties. 

The modernisation of economy, education, health, infrastructures, communication, skills and opportunities can overcome system dysfunction appearing at the top generated by the risks of political instability, cycles of grievance-driven stirs and power lust of leaders that deter investments-friendly milieu. They have dampened job opportunities forcing the people to leave the nation. One problem associated with Nepali constitution is the gap between the vision of the welfare state and lack of matching policies and resources to animate it. 

The other is the system of election which is circulating the same elites over and over again in power with their patronage network, control of money and organisational structures of political parties, despite leadership pledges of social transformation, stability and prosperity. The democratic expectation and peace dividends of Nepalis cannot be reduced to electoral competition among parties and individuals and formation of a syndicated regime. Nepali welfare state cannot function impersonally if leadership of all constitutional and public institutions is strewn to establishment without a proven meritocratic record of executing welfare mandates and bearing accountability to future generations.  

Unequal social classes

Diverse geography and unequal social classes in Nepal indicate uneven distribution of means of production, human capital formation, grounds of efficiency and standards of living. It is here Nepali state needs to mediate and control political vices, inflation and pilfering of state resources, create jobs and incentivise people to engage in productive activities. A consensus of various parties on building a welfare state exists in the nation but they have to work together to balance the demand and supply sides of the political economy. Mere demonstration of crowd for seeking power without performing can create a stateless society governed by anomie, not laws and norms, social discipline and a sense of duty. 

Without sustainable economic growth, Nepali state cannot generate sufficient money to enlarge welfare benefits.  The welfare state must be protected from neo-liberal right, radical left and conservative forces seeking their elite privileges. Only then Nepali politics can thrive on the conscious reflection of national context of the state-society ties, build inter and intra-party trust, popular faith in the government and open possibilities for people for better life, liberty, prosperity and dignity thus enlivening them from economic funk and sparing its people the best outcome in life. 

(Former Reader at the Department of Political Science, TU, Dahal writes on political and social issues.)