In today’s dynamic era of nation building, the European project has been hailed as a new step towards creating a free world. The same is echoed by the ‘four freedoms’ that serve as the foundations of amalgamating societies across lines of culture, traditions, history and geography. With Brexit in 2016 and the following negotiations thereafter, one of the four freedoms has come under heated debate, the free movement of persons. While the British Prime Minister has been vehemently opposing this freedom, the EU Leaders have been stressing their strong support to this freedom. While the negotiations continue, its interesting to see how the world fares on the free movement of persons.

    From the start of 1900s till date, an approximate of ten such agreements exist all over the world with the first being Britain and Ireland in 1923 with the enactment of the Common Travel Agreement. Apart from the EU (Schengen Agreement), Russia and Belarus have a similar arrangement under the name of Union State (1996), the Nordic countries signed a passport union (1954) while the Andrean Community, CARICOM, Gulf Cooperation and the East African Community are a product of the 21st century. While every single arrangement is varied in text and composition, two other such relationships exist, ones not only based on economic rights but also on the ideals of friendship. The Friendship Treaty that exists between India-Nepal (1950) and India-Bhutan (1949) are one of their kinds and certainly one of the first amongst developing nations. That is a feat in itself that even the EU cannot claim as the pioneer having begun the process via the Treaty of Rome signed in 1957 and enacted in 1958.

    The friendship treaty between India and Nepal does not limit to free movement of persons but also in matters of property, trade and commerce and residence. The result of which is that Indians and Nepalis have made their homes on either side of the border, people transcend the abstract notion of borders whereby the great Nepali Sherpa hero, Tenzing Norgay took his last breath on Indian land while the ex-crown prince found his princess in India. However, in recent times the relations between the two nations have come under heavy criticism. Flared up by nationalistic notions on both sides of the border, petitions have also called for a wall and stricter border controls. I do not wish to comment on the political face of the issue, rather, I would take a look on the economic advantages and disadvantages that the open border brings.

    Countries are prone to experience labour shortages, especially when the case of specific skilled positions are required in the rapidly advancing age of technological progress. The National Health Service of the UK is a fine example to be quoted here, about 10% of the staff at NHS are not British. Similarly, in an economy, there may appear shortages in certain professions such as teaching and nursing. These vacancies can take a long time to fill because of the time taken to undertake training. If there is free movement of labour, qualified workers will be attracted to fill these vacancies making the economy more flexible and overcome shortages quicker. Countries which suffer from lack of workers due to a rapidly increasing ageing population also see benefits from countries rich in demographic dividends.

    Moreover, if an economy experiences labour shortages, it will put strong upward pressure on wages; higher wages can easily lead to inflationary pressures. Free movement of labour means rising wages will attract more labour into a country and this will prevent excess wage inflation. Remittances according to Pew Research Centre’s latest report indicates the survival of many countries depend on this very income coming from migrant workers abroad and help the home country. Nepal is known to be a very big beneficiary of about 31% of the GDP. Apart from these, migration is also know to create additional demand in the host country boosting consumption and hence the GDP. Additionally, it saves huge costs of maintaining force for verifications at borders and from creating them in the first place.

    However, freedom of movement of persons does create certain lags in economic terms. Large net flows of people cause infrastructure problems especially for housing. Further more, due to increase in immigrants, a high population density may create problems of congestion leading to a decrease in quality of life. Furthermore, the labour market theoretically might see a dip in wages due to over supply of labour. However, the same has seen contrary results by academicians such as Manacorda, Dustmann and, Nickell and Saleheen as they note, “Empirical research on the labour market effects of immigration to the UK finds little overall adverse effects of immigration on wages and employment for the UK-born…The less skilled are closer substitutes for immigrants than the more highly skilled. So any pressures from increased competition for jobs is more likely to be found among less skilled workers. But these effects are small.” There is also the case for shortage of workers and brain drain cases in under developed economies. A fine example of the same could be seen in Dhadhing in Nepal which did not have workers for the reconstruction work post the 2015 earthquake.

    While no extensive study is available on the case of economic implications of the India-Nepal free movement of people, nationalistic rhetoric has caused injury to a feat that India-Nepal achieved at the very beginning of their respective contemporary histories.

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  • Candidates chosen by People vs Political Parties

    Total elected persons chosen to govern Nepal at Federal, State and Local Levels


    NA: National Assembly (Upper House, Federal Parliament)

    HoR: House of Representatives (Lower House, Federal Parliament)

    FPTP: First-Past-the-Post, (Directly elected majority vote, people choose candidates)

    PR: Proportional Representation (People vote for political parties, parties choose candidates)

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  • Land Rights for Women in Nepal

    “Earlier, we had tongues but could not speak. We had feet but could not walk. Now that we have the land we have the strength to speak and walk!” This quote from women who received land titles in India’s Bodhgaya Land Rights Movement perfectly portrays how land rights empower women.

    The struggle for women rights in Nepal has been an on-going battle with property rights being an important component. Although the situation as detailed below is pretty dismal, we have come a long way. From a civil code that limited inheritance rights for women and biases that determined property rights according to marital status and age, to passing of the Gender Equality Act and the Constitution forbidding gender based discrimination, thus granting daughters and sons equal rights to inherit property, progress is evident.

    Furthermore, numerous progressive policies are currently in place to help increase land ownership of women. These include:

    • Tax exemptions of 25%-50% (depending on geographical area) available to women during land registration, provided she does not sell the land within three years.
    • 35% tax exemption for widows during land registration.
    • 50% tax exemption when land is transferred within three generations of daughter or granddaughter.
    • Joint Land Ownership which can be obtained for just Rs.100.

    Why then is women land ownership in the country still dishearteningly low?

    • Many women are unaware of the rights and benefits they possess.
    • Women do not receive help in the implementation of their rights.
    • Deep seated patriarchal norms make women feel that they do not need to own land, especially because of the fear that they risk divorce if they ask for land.
    • Families are concerned that women owning land will deprive the family of an asset in the event of marriage or re-marriage and so they are discouraged from getting citizenship certificates.

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  • Laws Passed By Transition Government Applicable in Federal Structure

    In Sep 20, 2015, the constitution of Federal Republic of Nepal was adopted. It has been more than two years. Last year, the elections of all three orders of government are complete. The last remaining election for the National Assembly is schedule on February 7. Till date Government of Nepal has executed the following laws and directives to aid the process of federalizing the country.

    • National Assembly Member Election Ordinance, 2074
    • National Medical Education Ordinance, 2074
    • Rajshree Janak University Act 2074,
    • Education (Ninth-Amendment) Act, 2074
    • Disaster Risk and Management Act, 2074
    • Employee Adjustment Act, 2074
    • A law made by law enforcement agencies to determine legal punishment and to enforce such punishment
    • An Act made to arrange health insurance
    • An Act made to amend and integrate cooperative laws
    • An Act made to arrange for some amendment, integration, adjustment and dismissal of Nepal law(193 existing acts of Nepal were amended in line with the Federal Constitution of Nepal)
    • An Act made to arrange for remuneration and convenience of State Chief
    • An Act made to amend and integrate the law related to the Devani issue procedure
    • The law made for the amendment and integration related to the law of criminal offense
    • An Act made to amend and integrate Devani Law
    • An Act made to arrange for Language Commission
    • An Act made to amend and integrate the prevailing laws related to criminal offenses
    • The law governed by the local government to operate
    • An Act made to arrange for Rapti Health Science Foundation
    • An Act made to amend and integrate the law regarding the rights of persons with disability
    • National Women’s Commission Act, 2074
    • National Dalit Commission Act, 2074
    • Muslim Commission Act, 2074
    • Act, 2074 of the Honorable Judge and the Supreme Court Judge, the remedial, the convenience and other terms of service
    • Tharu Commission Act, 2074
    • Act of the High Courts and Judges of district court, remuneration, convenience and other conditions of service, 2074
    • National Inclusive Commission Act, 2074
    • Inter-government finance management act, 2074
    • An Act regarding the election of the Vice President and Vice President, 2074
    • National Natural Resources and Finance Commission Act, 2074
    • Tribal People’s Commission Act, 2074
    • Regarding the President and Vice President’s Service, 2074
    • Madheshi Commission Act, 2074
    • Local level election law (including first amendment)
    • A Political Party Related Act, 2073 (including the first amendment)
    • Number of wards of VDCs and municipalities
    • Deployment Act 2074
    • Labor Act, 2074
    • Electricity Regulation Commission, 2074
    • State Assembly Member Election Act, 2074
    • Representative Assembly Member Election Act, 2074
    • Monetary Markets Act, 2074
    • Economic Act 2074
    • Federal Contingency Fund Act
    • Contribution based social security
    • Bonus Fifth Amendments
    • Company (First Amendment) Act, 2074
    • International Wildlife Control Act of Wildlife and Vegetation, 2073
    • National Park and Wildlife Protection (5th Amendment) Act, 2073
    • A Political Party  Act, 2073
    • Bank and Financial Institution Act, 2073
    • Regarding local level elections
    • An Act made to amend and integrate the prevailing laws of election lawsuit and punishment
    • Revision and integration of voter registration law
    • Amendment and integration of the law related to the duty and right of the Election Commission
    • The law made to arrange for the remedial and convenience of the officials and members of the Federal Parliament
    • An Act made to amend the Forest Act 2049
    • The law made to arrange the national debt raising rights
    • An Act made to amend the Nepal Rastra Bank Act, 2058
    • An Act made to amend Loan and Bail Act 2025
    • Deposit and Credit Protection Fund Act-2073
    • Vehicle and Transportation Business Second Amendment Act, 2073
    • Special Economic Area Act 2073
    • Audit First Amendment Act, 2073
    • The first amendment of the banking lawsuit and punishment is 2073
    • Employee Sanction Fund, New Amendment Act, 2073
    • The Act made to amend the Supreme Court Act
    • An Act made to amend and integrate the duties and rights of the Justice Service Commission
    • An Act made to amend and integrate the law of justice administration
    • An Act made to amend and integrate the duty of the Judicial Council to the law of duty
    • Education Act Eighth Amendment

    The Constitution of Nepal has provided both executive and legislative powers to all three form of government. Hence the provincial and local government has also to come up with various laws required for the effective implementation of federalism. The Ministry of Law, Justice and Parliamentary Affairs in a research has identified  that 110 federal laws, 22 provincial laws and 6 local level government laws  has to be made for the implementation of Constitution of Nepal.  In Nepal about 315 laws and 270 regulations are in implementation with the promulgation of federal constitution. 73 out of 315 acts need no amendments, 170 acts need minor amendments and 40 acts needs different amendment bill.

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  • PAN Registration Process in Nepal

    We can observe from the infographic that an entrepreneur who wishes to obtain PAN registration certificate for his/her business has to go through three desks and six steps before he/she finally gets a PAN certificate. Out of the entire procedure, it seems that we can remove at least two steps without hampering effectiveness of the registration process but making it more efficient, instead. Firstly, after entering information provided by applicant into the computer system and issuance of the submission number, it seems unnecessary to take it back to the Tax Officer for corroborating information provided by the applicant with the information entered into the computer. This process could be reduced if entry is done carefully enough at PAN registration desk. If this could be achieved, PAN certificates could be printed at second step itself. Thus, the applicant would not have to go to Tax Officer (third step) and again come to PAN registration desk (Fifth step), reducing the process to four steps from six. This makes the registration process faster and more efficient.

    In order to make PAN registration process easier, the number of documents that need to be submitted by the applicant could also be reduced. PAN registration is a secondary registration. A business initially has to get registered at Office of Cottage and Small Industry, Department of Industry, Office of the Company Registrar or Commerce Office before applying for PAN registration. Hence, documents such as Citizenship certificate, Estate ownership document/ rental contract and Location map of the proposed industry/trading business have to be presented during the primary registration as well. If there was a proper co-ordination between the primary registration agencies and Inland Revenue Offices, applicants would not have to go through the redundant process of submitting the same documents again.

    It is really disappointing that in the world where technological advancement has reached great heights, our government agencies still does not have any mechanism by which information could be shared digitally. Now, the task of submitting same document again might not be a laborious one but it would at least liberate entrepreneurs from submitting same documents at multiple places. This could also be a small step towards digitization of all the government works which would make government’s service delivery more efficient.

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  • On Funding Public Education Locally

    The constitution of Nepal has listed basic education as a prerogative of the local government which will also include the financing of the education. As local government will require funds in order to finance the basic education, an important thing to look into will be the various sources through which the local government can generate funds.

    Article 60 of the Constitution of Nepal grants local governments to generate revenue though taxes, fines and fees on matters relating to their jurisdictions.  The same article also lays down the basis by which local government can receive funds from federal and provincial governments. Inter-Government Financial Management Act, 2017 furthers this provision and specifies four different categories of grants that local governments qualify for.

    On the recommendation of Natural Resource and Fiscal Commission (NRFC), the federal government can distribute fiscal equalisation grant on the basis of expenditure need and revenue generation capacity of provincial and local governments; the provincial government will further distribute fiscal equalisation grant to the local governments on the basis of the same principle.

    Federal government, according to criteria set by the NRFC, can distribute conditional grant to provincial and local governments to implement their programs. Likewise, provincial government can grant conditional loans to local governments on the basic of provincial law and criteria set by NRFC.

    Additionally, there is a provision for the federal government to provide complementary grant to provincial and local governments to implement infrastructure development projects. Also, provincial government as per their law can distribute complementary grant for infrastructure development to local governments.

    Finally, there is a provision for federal government to provide special grant to provincial and local governments and likewise for provincial government to provide special grant to local governments for implementation of the special plans and programs as mentioned in Section 4 of Inter-Government Financial Management Act, 2017.

    Apart from these, local government can also generate funds through borrowings. Local government can apply for the loans with the federal government specifying the use of fund, methods of repayment and the time within which the amount will be repaid and, receive loan from the federal government.

    Also, local governments, following the limit recommended by NRFC and by taking permission from the federal government, can acquire funds through internal borrowing.


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