Political movements have been taking place in Nepal at a rapid pace. After the recent movement of the Genji generation, politics has taken a new turn. Public dissatisfaction and anti-government activities have increased due to lack of economic development and delivery of public services as per people’s expectations, aspirations and needs.

As a result, there is a rapid change of government and political instability is continuing. In this context, an attempt has been made to discuss the vicious cycles that have plagued the Nepalese economy. Unless these vicious cycles are broken, it will be difficult for the expected and necessary positive changes to take place in the Nepali economy. Economic prosperity cannot be achieved only through political change.

Vicious Cycle of Poverty

There is a lot of talk about the vicious cycle of poverty in development economics. There is an understanding that the pace of development cannot increase because this cycle continues in poor and developing countries. Residents of the least developed countries have lower incomes, which in turn reduces their savings. When savings decrease, investment decreases, so that capital formation is not possible. As a result, job creation and productivity decrease, leading to lower incomes.

In this way, the situation of low income cannot be improved and will always have to live in poverty. This situation can be understood as a vicious cycle of poverty. The concept of foreign assistance has been started to break this vicious circle. Foreign aid can help increase investment in the context of low savings due to low income and increase investment and increase employment and productivity and break the vicious cycle of poverty. On this basis, developed countries have started giving foreign aid to poor and less developed countries. Especially after the Second World War, the concept of foreign assistance has increased.

Vicious cycle of political instability

This article attempts to highlight some of the other vicious cycles in the Nepali economy. The first is the vicious cycle of political instability. Poor countries like Nepal are also caught in a vicious cycle of political instability. Unlike the vicious cycle of poverty, foreign aid cannot break such a vicious cycle. Due to political instability, the government cannot maintain good governance and develop institutional capacity. As a result, corruption will increase and the performance of the government will be weak. As a result, capital expenditure will remain weak, investment will not increase and employment will not be created. Public service delivery and unemployment create discontent in the society and start anti-government activities.

The government and the governance system are changed on the assumption that if the government is changed, the problem will be solved. This will create more political instability. Along with political instability, there is administrative instability. There has been a continuous change in the government and governance system in Nepal since 2007 BS. Since 2007 B.S., the Constituent Assembly elected by the people has been saying that it would be pro-people and political stability would be achieved only if the constitution was drafted. This was the main demand of the Maoist armed war that began in 2052 BS. A new constitution was promulgated in 2072 BS after two Constituent Assembly elections. It has made Nepal a federal republic.

Due to political instability, the government cannot maintain good governance and develop institutional capacity. As a result, corruption will increase and the performance of the government will be weak. As a result, capital expenditure will remain weak, investment will not increase and employment will not be created. Poor public service delivery and unemployment create discontent in the society and anti-government activities start

{

}

Elections have been held only twice after the promulgation of the constitution. Before the end of the second term, the Genji generation has agitated due to public discontent, which has caused a huge loss of life and property. More government and private infrastructure have been destroyed than the agitation so far. This has again caused a big blow to the Nepali economy.

Vicious Cycle of Foreign Employment

Foreign employment is another threat to Nepal’s economy. Many Nepalis have gone abroad for foreign employment due to lack of internal employment. During the internal armed conflict waged by the Maoists from 2052 BS to 2062 BS, the process of being displaced from the villages and then going to the cities and then to foreign employment has started. But now some people are going for foreign employment.

This has created a cycle of more foreign employment. There has been a decrease in demand in the domestic economy as a large number of youths are going out for employment and studies due to lack of employment or work in the country. Due to the decrease in demand, the sale of products has decreased and investment in the economy has decreased. Job creation has decreased due to low investment. Due to the decrease in employment generation, the remaining youths are also compelled to go for foreign employment.

The government and the governance system are changed on the assumption that if the government is changed, the problem will be solved. Which creates further political instability

In some cases, investment and production have not taken place even though the required manpower is less. This is especially the case in agriculture and construction. On the other hand, the remittances sent by those who have gone for foreign employment can easily be imported from any part of the world as they provide foreign currency. The more it imports, the more domestic production it replaces. Weak domestic production has further weakened job creation and more people have been forced to go abroad. In this way, the vicious cycle of foreign employment is becoming stronger in Nepal.

Natural Disaster Vicious Cycle

}

Natural disasters are the third vicious cycle of Nepal’s economy. Nepal has a high risk of floods and landslides due to its hilly terrain and rivers and streams. Floods and landslides during the rainy season destroy physical infrastructures such as roads, hydropower and other infrastructures built during the winter. Natural disasters cause huge loss of life and property every year. This has caused a huge blow to the economy.

Natural disasters affect the poorest households the most. In recent times, road construction has gained more priority. Road construction has been done in the priority of the local level as well as the provincial and federal governments. Similarly, the demand of the voters is also for the construction of roads. Road construction is also a priority to show the voters that they have done something. Lack of scientific road construction has resulted in more soil erosion and more natural disasters. There is a huge loss of life and property.

Vicious cycle of dependency created by landslides

The fourth major vicious cycle in Nepal is land-poverty. As Nepal is a landlocked country, it cannot export easily. Also, due to this, the cost of domestic production is high. As a result, Nepali products cannot compete with imported goods. As a result, domestic production cannot increase. Lack of domestic production reduces job creation. When employment is not available, youths have to go for foreign employment. Remittances from foreign employment increase imports even more. This has also helped in the vicious cycle of foreign employment.

Nepal’s development gap with developed countries has increased a lot.TAG_OPEN_strong_69 This has also disappointed the youth. Many studies have shown that the foreign aid received is not properly utilized, and there is corruption at various stages {

}

Ways to Break the Vicious Cycle

Nepal started receiving foreign aid in 1951 to break the vicious circle of poverty. At the same time, it is also trying for planned development. Nepal has been receiving foreign grants and concessional loans bilaterally and multilaterally. Compared to 1951, there has been a lot of socio-economic development in Nepal. Poverty has decreased. Access to education and health has been reached. Literacy rates and life expectancy have increased. At the same time, per capita income has also increased. However, Nepal lags far behind some Southeast Asian countries that have started development at the same time.

Nepal’s development gap with developed countries has widened. This has also disappointed the youth. Many studies have shown that the foreign aid received has not been properly utilized, and there is corruption at various stages. Although a large part of the foreign aid has been returned to donors in some form, the vicious cycle of poverty has been broken and broken to some extent.

In recent times, the income from foreign employment is also increasing national savings and reducing poverty. Financial means are being made available for investment. However, the available financial instruments have not been utilized for production-oriented consumption and investment. As a result, despite the availability of financial resources, it is not able to reduce poverty at a rapid rate by increasing domestic employment and income. Other vicious cycles mentioned above also play a role in this. In fact, in order to break the remaining evils of poverty, it is necessary to break the other vicious circles above.

The hardest part is to break the vicious cycle of political instability. Financial tools and technology can also be imported from outside. However, political culture and culture cannot be imported. Nepal has so far used various systems in the world.

Junary rule, non-party monarchy, constitutional monarchy, republic and parliamentary federalism. The only directly elected executive left to use now is the prime minister or the president. The political and governance system has changed in about 10 to 15 years. However, there have been frequent revolts and agitations as everyone’s expectations have not been met. There is no straightforward answer as to when and how the vicious cycle of political instability can be broken.

We have a habit of consuming imported goods. There is a tendency to increase social dignity while consuming imported goods. This should be changed to

}

As long as the people and stakeholders do not understand that governance is only a means and not an end, the tendency to seek solutions only through political change will continue. Perhaps the vicious cycle of political instability can be broken only if good governance, institutional and individual capacity development, transparency, accountability and credibility are enhanced. This vicious circle can be broken only through a common concept and responsibility for the development of the country, minimum understanding among diverse societies and ideologies, coexistence and cooperation.

To break the vicious cycle of foreign employment, investment and production should be made in the domestic economy. Domestic production should be consumed. We have a habit of consuming imported goods. There is a tendency to increase social dignity while consuming imported goods. This needs to be changed. On the other hand, there is a culture of disdain for labor, so there is a tendency not to do some work available within the country but to go abroad and do the same work happily.

In the agriculture and construction sectors, there is a real shortage of workers coming from neighboring countries. Even if it is small, there is a need to create a tendency to do the available work and increase capacity. Although the salary is comparatively low, it is appropriate to give priority to internal employment as one can live together in the family and society. If this employment continues, it would be possible to contribute to Nepal itself and break the vicious cycle of foreign employment in the future.

Even now, if we can move towards entrepreneurship by investing the knowledge and money earned in foreign employment, this kind of vicious cycle can be broken gradually. There is a need to carry out development works in an environment-friendly manner to stop the vicious cycle of natural disasters caused by climate change and our unscientific road construction. The digging of roads in the hilly areas should be stopped by using dozers unnecessarily. Measures should be taken to prevent landslides on the dug roads.

The impact of climate change should be studied and analyzed and measures should be adopted to reduce human and physical damage. Settlements at risk of floods and landslides should be relocated on time. Nepal is more seismic zone. There is experience of earthquakes from time to time causing large-scale loss of life and property. Earthquakes destroy mud houses and cause loss of life and property. Therefore, it seems that weak house structures can and should be strengthened by demolishing them without being destroyed by earthquakes. This will increase the demand for construction materials in the economy and the economy will gain momentum. Disaster-oriented social security has to be provided.

In Nepal, there is not only a vicious cycle of poverty, but also a vicious cycle of political instability, a vicious cycle of foreign employment, a vicious cycle of natural disasters and the vicious cycle of dependence created by landslides{{

The land conditions given by nature cannot be changed. As a result, foreign trade has become costlier and our dependence has increased. As a result, the competitiveness of Nepali products is weak. There is a need to give priority to information technology and tourism to break the vicious circle of dependency created by land-locking. Geo-constraints cannot stop the export of information technology services. Similarly, on the basis of Nepal’s natural beauty, if more tourists can be brought in, then demand can be created in the domestic economy. Agriculture and industry can be promoted on the basis of tourism. In fact, economic nationalism should be promoted internally to break the internalized interdependence and vicious cycle of foreign employment created by geo-dependence. Peace and security should be maintained in the country to attract tourists. At the same time, tourism infrastructure and information flow should be efficient.

Conclusion

Although politics and government have changed rapidly in Nepal, economic development has not been as per the expectations and needs of the people. Although Nepal has economic development compared to the past, its pace is comparatively weak. This is due to some vicious cycles in the Nepali economy, due to which the pace of development of Nepal has not been able to increase. In Nepal, there is not only a vicious cycle of poverty but also a vicious cycle of political instability, a vicious cycle of foreign employment, a vicious cycle of natural disasters and a vicious cycle of dependency created by land instability. Unless these vicious cycles are addressed, the pace of development will not pick up, but public discontent will increase. To break such vicious cycles, there is a need for an effective governance system with a common approach, development of individual and institutional capacity, cooperation and good governance. If this vicious cycle is broken, political stability can also be achieved.

(Views of Dr. Prakash Kumar Shrestha, former member of the National Planning Commission)