Nepal Vision 2100
A brief overview of the presentation by Dr. Biswash Gauchan, Executive Director of the IIDS
In preparation for the upcoming 2024 Policy Conclave, the Institute for Integrated Development Studies (IIDS) is focusing on developing the "Nepal @ 2100 BS" blueprint, which outlines Nepal's economic development strategy for the next two decades. Dr. Biswash Gauchan, Executive Director of IIDS, presented a comprehensive evaluation of the long-term development agenda currently undertaken by the Government of Nepal. He emphasized the necessity of setting realistic and sustainable development goals and strategies. Dr. Gauchan began by addressing the unique and persistent challenges that currently impede Nepal's growth. These challenges include geographical barriers, high migration rates, expansionary credit and fiscal policies, political instability, rising debt levels, trade imbalances, and excessive land monetization, among others. Central to IIDS's strategy is the transformation of Nepal into a knowledge-based economy focused on service exports and the utilization of information technology. For Nepal to adopt a new growth model based on value creation, Dr. Gauchan stressed the importance of integrating practical skills into university curricula, establishing specialized institutions in high-potential sectors such as healthcare, hospitality, IT, finance, and security, and developing robust IT infrastructure. Additionally, he advocated for the creation of facilities such as specialized incubation and training centers that can help upskill workers and assist Nepal in transitioning towards a vibrant service-based knowledge economy. Dr. Gauchan believes that this approach will enable Nepal to establish strong connections to the global service market and ultimately overcome long-standing challenges, paving the way for a prosperous future.
The Nepal @ 2100 concept builds on the Structural Reform 2.0 agenda launched by IIDS last year. It also acknowledges the essential role of the Nepali diaspora in realizing this vision through the 'Decade of Nepali Diaspora' initiative, which IIDS has launched for the period from 2081 to 2090 BS.
Questions and Suggestions
Mr. Enzo Diaz, Intern, IIDS: Considering the high levels of corruption in Nepal, how can we ensure that the initiatives outlined in Nepal @ 2100 are implemented with reduced corruption?
Dr. Gauchan: Unlike in countries like China, where corruption exists but projects advance despite it, Nepal faces political-level corruption that impedes major progress. To address this, measures such as financing elections with public funds could ease the financial pressure on political parties and potentially reduce corruption. This approach could also help minimize petty corruption at local levels and ensure it does not obstruct growth and progress.
Mr. Maneet Dhungel, Fellow, IIDS: What can we expect from the current monetary policy, especially regarding land monetization and credit?
Dr. Gauchan: The current monetary policy remains highly expansionary, mirroring the policies implemented during the COVID-19 pandemic. The central bank's coordination with the government allows for economic accommodation but falls short of stimulating significant economic growth. While this policy may facilitate recovery in land monetization and credit markets, and provide short-term benefits to the share market, it may not necessarily tackle the fundamental problems in the economy. The policy reflects a full circle in the governor’s approach: it began with an extremely loose stance at the onset of COVID-19, shifted to a reform agenda during his second year, and concluded with a return to a loose monetary policy, rather than continuing the reforms he had initiated earlier. There is concern that this approach may impede necessary structural reforms. Overall, while the policy may boost economic activity to some extent, it is unlikely to drive substantial economic growth or address the systemic issues that have long hindered development in Nepal.
Dr. Niranjan Devkota, Head of Research at Kathmandu Model College: How will people comprehend the idea of Nepal Vision 2100? What is the think tank's role in enhancing capacity building?
Dr. Gauchan: Capacity building is crucial for the successful implementation of Vision 2100. IIDS plans to launch the Policy Entrepreneurs Network (PEN) to foster a larger community network and enhance capacity building. The objective is to use the expertise of such policy specialists to generate evidence-based results and make policy recommendations to the government.
Mr. Sangram Bahadur Shah, Faculty at the Prince of Songkal University: Should we invest in disaster risk reduction and early warning systems for the 2100 plan?
Dr. Gauchan: Nepal's vulnerability to climate change necessitates proactive adaptation measures. While mitigation is costly and dependent on international funding, focusing on adaptation could effectively address climate risks.
Dr. Prem Jung Thapa, IIDS: How can GDP be increased through hydropower and other sectors, considering high production costs compared to India? Could currency devaluation help by improving price competitiveness? If we continue to maintain a fixed exchange rate with India over the next 20 years, we might struggle to reach our growth targets.
Dr. Gauchan: Given Nepal’s high cost of living and business operations, devaluing the currency might further increase these costs without significantly improving competitiveness. Even with a currency devaluation, Nepal could quickly adjust to a new equilibrium without gaining much advantage out of it. The extent of devaluation is also a concern; a modest devaluation might not have a noticeable impact, and a significant devaluation could cause substantial economic disruption. Therefore, focusing on strengthening the service sector and targeting exports to high-income countries like the USA might be more effective instead of devaluing the currency. Nepal is already competitive in services and does not need currency devaluation to maintain this edge. Conversely, the manufacturing sector in Nepal lacks the comparative advantage to compete effectively, given its higher costs compared to countries like Bangladesh. Therefore, the strategy should be to concentrate on sectors where Nepal has a competitive advantage, such as services and agriculture, and explore opportunities in natural resources. Investing in public infrastructure using earnings from natural resource exports could enhance productive capacity and support sustainable economic growth.
Mr. Durga Prasad Bhattarai, IIDS: How can we sensitize think tanks and bring them on board? Do you think we need the planning commission as it is functioning today, or do you have any alternatives regarding this? If the targets have been so unrealistic, what can be done in this context?
Dr. Gauchan: Collaborations and interactions with think tanks are crucial. The planning commission's credibility needs restoration, given the mixed outcomes of past plans. The National Planning Commission (NPC) must deliver realistic and effective plans to regain its essence and NPC under the new Constitution, as there are critics who claim that this constitution does not officially recognize the NPC. The NPC's current effectiveness is questioned primarily due to past 5-year plans, such as the 15th plan, which were considered to be ineffective and led to a decrease in its relevance. To regain credibility, the NPC needs to produce successful and impactful plans, such as the 14th plan, which was viewed positively. Despite these issues, the NPC remains an important institution. It could be valuable either in its current form or with necessary reforms to enhance its effectiveness. Consideration of alternatives or improvements is essential to ensure the NPC can fulfill its role effectively.
Dr. Gauchan's presentation outlined a forward-looking approach to Nepal's economic growth by emphasizing the importance of a knowledge-based economy and leveraging Nepal's potential in the service sector. The IIDS’ Nepal @ 2100 initiative aims to navigate Nepal’s unique challenges and set a course for sustainable development and long-term prosperity.
This event summary was prepared by Mr. Aaryan Rijal (Research Assistant, IIDS), Ms. Arju Pokharel (Research Assistant, IIDS), & Mr. Shreesh Tripathi (Research Intern, IIDS)