Econ-ity » July 17, 2014

Daily Archives: July 17, 2014

Who says we don’t need more schools?

no new schools?Nepal’s education system has long been pointed fingers at—enrollment rates, dismal performances, and education-market mismatch are just a few points of accusation. We said that the public schools lacked infrastructure and quality services and we also said that private schools charged too much for the services they provided. While we continued to raise concerns over the kind of education system we have, the government went a step further and put a ban on the registration of new private schools. Their usual sense of reasoning brought forth these replies—private schools have been growing like mushrooms; we have enough schools already, we need to focus on strengthening the existent public schools—well of course!

The ban on registration has meant that no new schools have been registered for quite some time and that many hold school licenses so that they can sell them at premium rates. Adding to the artificially hiked prices of schools are the additional costs pertaining to the Institutional School Criteria and Operations Directive 2013. Following the directive (which is mandatory) means that the schools need to undergo a lot of infrastructural changes—the size of classrooms to playgrounds as prescribed—all of which cost money. And the only way through which such private schools can make money is through hike in fee. The fees, however, has been regulated by the government as the Supreme Court has passed a decision on the price ceiling for school fees.

If these were not enough, private schools have to comply with end number of contradictory regulations. Private schools, as such, can be registered as a profit making company as per the Company and once they are registered they have all legal rights to make profits. If only the government stopped interfering then and there. Sadly, it does not. The same schools as per the Education Act as required to provide scholarships to a certain percentage of their students. Provided that most schools do not have problems complying with the same; just that to regulate every bit of their operation seems too strangling to an entity. The Company Act allows schools to be opened in any location deemed necessary for business while the Education Act asks the same schools to follow a lot of procedural requirements when it comes to choosing a location (taking permission from two neighboring schools is included in the deal). And taxes are an altogether different ball game. Schools pay 25% income tax as any other private company as per the Company Act and on top of that the government levies 1% as Education Service Tax. There is no clarity over whether the government wants to treat private schools as profit making companies or service oriented organizations. This this ambiguity has translated into laws that have repercussions on the operations of private schools.

With these many contradictory policies in place; with the kind of regulations that exist—it sure is a climb up steep hills for any school that wants to provide services at competitive prices.  And yet, they say that we need no more schools (probably in the light of their capacities in not being able to monitor existent schools).

Anita Krishnan

About Anita Krishnan

Krishnan holds dual degrees--in law and sociology. Currently, she works as a Research Associate at Samriddhi, The Prosperity Foundation.

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Wedding Bells & Prosperity Swells

nepali wedding‘Tis the season to be jolly, fa la la la la … Nope it’s not Christmas! But it sure is a time for joyous celebration all over the country. Bright lights, women donning beautiful colorful attires and fancy jewelry, men in handsome suits, groovy music, delicacies of all sorts; Kathmandu is buzzing with wedding festivities this time of the year. I love weddings just as the next person and these past couple of years I’ve noticed in these revelries that the clothing are a little more refined, decorations a little more tasteful, food a little more lavish and well the parties a little more grander. When all is said and done quite a lot of people may see unnecessary profligate spending and wasted opportunity to invest in productive economic activities beneath all this merriment; however I see prosperity with plentiful economic activities in action.

Just the fact that exclusive boutiques are so swamped with work that they cannot accept additional orders even with 2-3 weeks’ notice and ultra-expensive pieces of clothing and jewelries sell like hot cakes; the economy certainly does seem to be doing well compared to a few years back. People are increasingly able to spend more and so they do and economic prosperity seems to be on the rise. While investing somewhere else is obviously the smarter thing to do in terms of monetary return for themselves; monetary gains isn’t always the most important thing. Why do people earn if not for consumption of goods and services that give them the most utility? Everything has opportunity costs and tradeoffs and if throwing a grand party is what makes people happy and they can afford to do so; so be it!

Caterers, flower shops, decorators, boutiques, hotels, party palaces, party planners, beauty parlors are just a few of the many sectors that are flourishing due to wedding celebrations. So to say that wedding celebrations have no productive economic impact when in fact it generates plentiful entrepreneurs and with that numerous jobs; is flawed. It is of course unfortunate to see people succumb to societal pressures and spend more than they can afford by taking loans which take some years and in some extreme cases entire lifetimes to pay off. This ugly side unfortunately surfaces way too many times. The celebration of two people tying the knot should be a fun and enjoyable affair which embraces our rich culture and reflects the families’ happiness; instead of a stressful show of wealth. I believe it’s important for the society to accept all types of celebrations be it huge parties or simple gatherings of well-wishers, without any judgments.

Economically speaking, spending lavishly in weddings is actually helping a lot of industries to grow and prosper. Does that mean the NRs. 20, 000 you spent on that lehenga or party shoes couldn’t have been put to a better use? Absolutely not! It most definitely could have been spent on a number of other more important things; invested to get higher returns, or given to charity. However, it does mean that you are helping the retail industry prosper and also indirectly create job opportunities; thus you don’t have to be too guilty for your splurge as long as you can afford it and it makes you happy. The wedding expenditures show that the nation or at least the capital is getting a little more prosperous and the standard of living has potentially increased. On that positive note, I wish you all a very happy wedding season and happy spending!

Sneha Pradhan

About Sneha Pradhan

Sneha Pradhan is a Researcher at Samriddhi Foundation with an interest in good governance. She is a graduate student at Heinz College, Carnegie Mellon University in Pittsburgh, Pennsylvania, pursuing a Master of Science degree in Public Policy and Management. She also has a Bachelor of Arts Degree in Economics and Statistics with a minor in Complex Organizations from Mount Holyoke College, South Hadley, Massachusetts.

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