With the promulgation of the new Constitution of the Federal Democratic Republic of Nepal in September 2015, Nepal switched from a unitary system of governance to a federal system with three parallel forms of government – the federal, the provincial and the local. The Constitution confers both legislative and executive powers to all three forms of government. Schedule 8 of the Constitution of Nepal particularly confers exclusive power to the Local Governments on 22 matters, including matters relating to public finance (raising taxes, fees, and fines), management of local services, local infrastructures, local statistics and records, and local market. Furthermore, the Constitution also enshrines ‘prosperity’ as a national agenda. Along this end, creating employment through necessary economic policy reforms for an investment-friendly business environment has been widely accepted as Nepal’s mantra of prosperity. Having legislative and executive powers that can be exercised to achieve the goal of prosperity creates space for local governments to forge a shared vision of growth and prosperity together with local stakeholders. Continue reading
Read more here.
I believe it will be worthwhile to repeat these numbers once again, before we begin. So currently, 66% of Nepal’s total workforce is engaged in agriculture. This two-thirds chunk contributes one-thirds to the GDP of Nepal. According to the World Bank, Nepal ranks among the lowests in terms of agricultural productivity in the whole of South Asia. One of the major contributing factors to this is that 85% of the total workforce involved in agriculture is in it for subsistence. Furthermore, average land holding stands are mere 0.67 hectare (ha). These people lack access to improved technology. So much of the people involved in agriculture solely for subsistence, along with fragmentation of land at such a scale also means commercial agriculture is not feasible at present.
International experience over the last century shows that development of agriculture happens not by more people being involved in agriculture, but by modernization (video also available below) through newer technologies and commercialization of agriculture. In the process, a big chunk of the workforce involved in agriculture leaves this sector and shifts towards manufacturing and service industries. All the while, productivity of the sector increases and this, coupled with progress in other economic sectors of the country, leads to the growth of entire economy.
Identifying the need to increase the agricultural productivity and to diversify the sector such that it can lend inputs for the industrialization of the Nepal, Government of Nepal (GoN) has committed to (including in the budget for the FY 2016/17) modernization, diversification, commercialization and marketing of the agriculture sector. Scores of policies, plans and strategies have been laid out to “achieve” these. But, do they?
I was in Birgunj in May, 2016 (part of a longer visit to the districts in the Terai region) to meet entrepreneurs and local-level government agencies to learn the functions of regulatory agencies at such local level, and also test what kind of government services were available to the people. Unfortunately (but expectedly), I saw once again that government promises and practices do not resonate very frequently.
Lorik Prasad Yadav (with not much education, but very innovative), a resident of Sugauli, Birta -6 purchased a tractor with an initial investment of Rs. 1 million. He used it as a mobile mill to mill cereals like wheat and paddy. This was a huge service to the locals and made lives easier for everybody. Firstly, the women did not have to travel hours to the stationary mills anymore. Lorik would come to their doors. These women could now invest this time into some other economic activity. His was a cheaper service, too. He charged only Rs. 1.5 per kilogram while the other stationary mills were charging Rs. 2.5. In other words, people were now able to save. He’d leave the chaff (bhoos) behind so the farmers could use it further. Since it operates on diesel, load shedding has no effect on it; so people could get service anytime.
Now, innovations and new technologies always threaten the status quo. The people running stationary mills were facing a massive competition. Either they had to upgrade their business and make lives easier for their customers as well in order to retain their customers and save their business. Or, they’d have to shut down. Of course, they chose a different alternative. They filed a complaint against Lorik at the Department of Cottage and Small Industries (DoCSI), Parsa.
The same government that has committed to modernisation of agriculture to enhance Nepal’s agriculture productivity came to their rescue. Citing reasons that there is no provision of registering mobile mill business in the Act, the DoCSI intervened and closed down Lorik’s business. Right across the border, in India, there are others like Lorik who are freely operating the same business.
On one hand, the GoN spends billions of rupees on agriculture subsidy for productivity enhancement, while on the other, the same government kills innovation that would in fact enhance productivity.