Sunday, 24 October, 2021

Time For Economic Leap

Prof. Balmukund Regmi


The time has come for Nepal to make economic strides by utilising its demographic dividend, women's participation in outdoor production, internal stability, and rapid economic development of neighbours.
According to a study by a trilateral cooperation of the National Planning Commission, UNICEF and the Population Council, New York, the growth rate of Nepali population is declining, the proportion of the elderly population is increasing. At present, the average age of Nepali is 21.6 years, the population of the elderly is 4.1 per cent. Nepal will become an ageing society (with 7 per cent of the population above 65 years) by 2034 and aged society (with 14 per cent of the population above 65 years) in 2054.
In the Nepali context, the age group of 15 to 65 years is considered as a productive population. The proportion of non-productive population to the productive population is called the dependency ratio of the population, which indicates the economic pressure on the labour force. At present the dependency ratio is 56.56 per cent for children, 7.1 per cent for elderly, and 63.7 per cent in total. We should invest in water, environment, child health, child nutrition, child development, child education, child protection and social security, with priority, to ensure a tremendous contribution to the development of the country from the youth in future. Relatively a large number of healthy and educated young work force is necessary for overall development.
More and more women are shifting from their traditional role as housewives and agriculture workers to the modern one getting involved in industry and service sector. Adult female literacy has increased from 17 per cent of 1991 to present 57 per cent. The current female contribution of labour is 55 per cent in agriculture, 25 per cent in government civil service, 9 per cent in police, 7.5 per cent in armed police forces, and 5 per cent in army. Female participation in industry, trade and services is increasing very fast which is a fortunate trend in the Nepali economy.
The northern neighbour China, 11th largest global economy in 1978, became the second largest economy in 2010. Now her contribution to the world economy is 19.3 per cent. India is estimated to have become the fifth largest global economy with a share of 7.8 per cent. This means 27 per cent of the global market is just across our border. We can easily attract the foreign investments from them, and export our products and services to these neighbours. Nepal is becoming a centre of attraction for Chinese tourists. Religious tourism in Nepal has potential to attract Indian Hindu and Chinese Buddhist tourists.
As a result of concentrated emphasis and investment in hydropower, the country is becoming self-reliant in electricity. If we get the right investment policy, employment and labor policy, the country can move towards industrialization.
Nepalis are now moving from village to city, and abroad, in search of employment. Lately young people are abandoning farming; they go abroad to earn money. From the point of view of development, this trend should be discouraged, they should be given a chance of development in the country. Likewise, the growing trade deficit is casting doubts over the continuity of Nepal's sound economic growth rate over the past few years. Last year, Nepal's trade deficit reached Rs 1.3 trillion, of which Rs 200 billion was due to imports of agricultural products. The population involved in agriculture is getting older. Despite the large amount of subsidies in agriculture, it has not reached the target category.
One-third of the agricultural land has remained barren. Nepalis working overseas have been facing death, spouses have been disbanded, children and elderly have been left unattended. In absence of youth, there is no work force in the villages to bring the sick people to the hospitals and to carry out funeral procedures. Those physically fit youth remaining in villages have assumed the roles of lords, middlemen traders and contractors in the villages. Even those living abroad display unhealthy nature when returning to Nepal in the name of NRN. Those who have left Nepal in search of livelihood are reciprocated with various types of new taxes, penalty rates on them for their inability in cultivation of their lands, and import taxes on the goods they bring with them back home by different levels of governments. Should those in power fail to make wise decisions on time, the public dissatisfaction may turn Nepal into a second Chile.
Instead of emphasising in urban management, we have to deliver urban services in rural areas. This will help create other non-agricultural opportunities in rural areas, which can increase farm income and employment, which in turn encourages young people to stay in rural areas.
Rural tourism can be an option. We can learn from the Italian experience. After World War II, small farmers in Tuscany could not earn enough to survive. They abandoned their villages, farms and rural settlements and cities of the country. After that the government developed agricultural tourism, financial and technical support was provided to them to make the house suitable for hospitality. Transport and other infrastructure were also built. But in order to receive such subsidy, the farmers were required to produce their own food or buy from the local farmers. In 2017, Tuscany received 84 million visitors, leading to the prosperity and employment of Tuscany, and this contribution is likely to increase further in the future.

One more example is from Sri Lanka. The Pookulum tank in the war-ridden village of Thevupuram was breached during the 2008 monsoon rains. Then the village was abandoned. Under the support from the FAO and the EU, the tank bund, a new sluice gate spillway and supply irrigation channels were restored, thanks to the participatory irrigation management approaches. Now the village has attracted back the villagers.
In Nepal, upgrading of the villages is possible by developing them into hubs of tourism, herbal or fruit farming, livestock and dairy industry, educational centre, health and recreation centre, cultural centre, research center, through reducing various taxes and increasing attractiveness. Such an approach will create employment, maintain regional balance, mitigate the population pressure in the cities, reduce outbound migrations, and develop the country. We have very little time to complete all these tasks.

(The writer is a professor at Tribhuvan University.)