THE ECONOMIC WEEKLY ANNUAL January 1956 Has a Five-Year Plan Y P Pant "Nepal is not at the moment, and will be for some time, in a position to produce a regular plan in the true sense of the term:" Thin sentence occurs in the Preface to the First Five-Year Plan for Nepal which was announced by a Royal Proclamation by King Mahendra of Nepal on October 10, 1955. In view of almost complete lack of statistics and of a cadestral survey of the country, this is not sur- prising. The Plan makes adequate provision for removing this basic limitation to planning and has allotted 7 per cent of the total proposed outlay of Rs 210 million to geological aerial and cadestral surveys. Transport and Communications, however, get the highest priority and hare been allotted 33 per cent of the total-—t-he largest allocation under arty one head. 7 his is called for by the special topographical features of the country and almost complete absence of roads. Nepal's isolation, sedulously preserved under the Rana regime, will soon be a thing of the past. Develop­ ment of tourist traffic is one of the items in Nepal's First Five-Year Plan. As we go to press, Nepal Radio has announced the formation of a Central Planning Commission with nine members of whom the author is one. The main work of the Commission will be to draw up the final Plan on the basis of the Draft Outline and to assess the progress of the Plan from time to time.

ON October 10. 1955. King Mahen- ever, was done to give effect to any availability of statistics leaves much ' dra issued a Royal proclamation of these proposals and shortly after to be desired even in highly deve­ announcing a Five-year Plan for the Plan was announced, the idea loped countries, but in Nepal, even Nepal for attaining self-sufficiency was given up and the Planning Com­ on the Governmental level, collection and for establishing a Welfare State. mittee was dissolved all of a sudden. of economic facts are few and far be­ The formation of a seven man Cen­ tween and one has to depend on Separate Ministry for Development scrappy information. tral Planning Commission was also After February 1951, however, announced, the membership of which more serious efforts were made and Secondly, the inadequacy of admi­ was to be decided later. a separate ministry was formed for nistrative, technical and scientific Under the old regime also, plan­ promoting national development. In personnel required for planning is ning had been talked of. For in­ the beginning of 1952, the then Prime another severe limitation, which in stance, just before the outbreak of Minister, announced at a press con­ turn may render any developmental the second world war, when Shri ference that a Planning Sub-com­ plan somewhat unrealistic. Thirdly, Juddha Shamsher was the Premier, mittee was soon going to be appointed the sources of income are so limited the Nepal Darbar had announced a to advise on problems of development as to present insurmountable obsta­ 20 year plan, but, nothing was done and to co-ordinate the various deve­ cles to effective planning. Because of about it. In fact, not to speak of lopment activities of the State. In the budgetary deficits (annual deficit planning, Nepal did not have any March 1952, Nepal had joined the being more than one crore of rupees systematic policy for economic deve­ Karachi session of the Colombo Plan in a budget of about Rs. 5 crores) lopment until the end of 1949. as one of the member countries. But and lack of capital, the country's in­ Again, on October 31, 1941, till the recent announcement, not ternal resources alone cannot pro­ the Rana Prime Minister Shri much progress had been made in vide the base for any substantial Mohan Shamsher, had set up planning. The efforts so far made long-term economic development, a National Planning Committee were based on ambitious assumptions judged by the criterion of expansion. which was entrusted with the but no thorough and detailed investi­ Main Features task of preparing a 15-year gation of the various problems facing Bearing these basic difficulties in plan of economic development the country had been undertaken. mind, one should proceed to examine for making Nepal completely self- The efforts also suffered from lack the Draft Plan, The document pre­ sufficient in all respects. Without of perspective and inaccurate prac­ sented by the King to the people of any survey of the country's resources, tical observations. There was also Nepal covering 60 foolscap typed the Committee came out with a plan little integration among the various development activities that had been sheets tries to do justice to various of which the main features were the problems of economic development. following: envisaged. The development of transportation 1. Expansion of agricultural pro' Economic Limitations and communication gets the highest duction. In an atmosphere of haphazard priority in it. In every country, eco­ 2. Cultivation of indigenous herbs and uncoordinated efforts, King: nomic progress depends on the pro­ and plants in the plains. Mahendra's desire for the country's per development of transport. This 3. Development of medium-sized planned economic development is is even more so in Nepal, because of and cottage industries for exports, much to be welcomed, Before ex­ the country's topography, and of its 4. Improvement in means of trans­ amining the Draft Outline of Nepal's 278 miles of highways. Again, the port and communications. First Five-Year Plan, it is necessary extremely restricted mail service, It was also broadly emphasized to refer to some of the basic defi­ small number of telephones and that due regard should be paid to the ciencies of the country's economy, as radios, and shortage of news organs national, regional and rural needs of in many respects, these deficiencies make it difficult for the Government Nepal and that provision should be may hinder the working of the Plan. to maintain proper contact' for the made for adequate finances for im­ First and foremost of them is the promotion of development pro­ plementing the Plan' Nothing, how­ ' absence of statistical data. No doubt, grammes and for the proper admi- 113

THE ECONOMIC WEEKLY ANNUAL January 1956

nistration of the country, it Is, like­ lands, to distribute expropriated pressure of population in the hills. wise, a. tremendous handicap from lands among the landless, organise The shifting cultivation practised in the standpoint of defence also. agricultural credit and classify land the hills leads to deforestation, land­ Thus it is obvious that until the according to its productivity for re­ slides and flood, both in Nepal and in country's economy is integrated venue purposes. India. The development of these through a well-developed transport valleys is. therefore, considered im­ system, no substantial programme of Medium Sized and Cottage- Industry perative both for attaining regional development involving a continuous Agricultural development, however, self-sufficiency and restoring the na­ movement of goods and men from is incomplete without a corresponding tural ecological balance of the Hima­ the centres of production to the cen­ process of industrialisation. There layan submountain region. tres of distribution can be success­ is a provision for 8 per cent of the The Rapti Valley is one of the most fully undertaken. Realising all total outlay for the development of beautiful river valleys in Nepal, rich these difficulties, the Draft Plan has large scale and cottage industries. in natural resources, centrally locat­ quite properly given the first priority In view of the failures of managing ed and easily accessible from Kath­ (more than 30 per cent of the total) agency In Nepal in the past, the Plan mandu. An intensive cultivation of to the development of transport and seeks to reorganise the existing in­ food and cash crops in the Rapti communications. Highways, airways, dustries and recommends the setting Valley would also enable the setting railways, ropeways and waterways up of a high-powered commission to up of industries subsidiary to agricul­ are the main types of transport examine the existing industries and ture. The development of the valley which are to be extended luring the to recommend ways and means was scheduled to commence forth­ Plan period. for reviving them. It is only after with and be completed in 1961. Cadas­ Development Sectors for Agriculture the revival and restoration of the tral survey, irrigation, malaria con­ virtually crippled industries that the trol, road building, settlement of The Plan also aims at increased Plan advises establishment of new landless peasants, introduction of production in the agricultural sector industrial units, e.g. a cement better farming, setting up of co­ through irrigation and agricultural factory, a medium sized pulp mill operative credit. extension service, extension schemes, and puts ade­ and a sugar mill in central Nepal. provision for social welfare and wild quate emphasis on development The Draft Plan also recommends life preservation are the important from below. Since 85 per cent of the that possibilities should be explored, features of this Multipurpose Pro­ total population eke out a precarious both in Hilt and Tarai regions, for ject, Besides, finance permitting, living from agriculture, a concerted setting up various medium-sized in­ establishment of medium sized indus­ programme of development of agri­ dustries through private enterprise tries like match factory, tobacco culture needs no special pleading. in the Plan period, with emphasis on curing, cigarette manufacture, oil The Plan proposes to .set up 8 deve­ processing export goods. A well mills, saw mills, and rice mills, lime lopment sectors in 16 districts com­ planned Cottage Industry develop­ kilns, fruit, canning, and power gene­ prising both Hill and Tarai areas in ment Scheme and a financial corpo­ ration programmes will be taken up. five year:;. ration have also been mentioned. This will be a pilot project to help Forests. the greatest above- The possibility of developing tour­ solve unemployment and food short­ ground natural resources of the coun­ ism has also been suggested in the ages; it will also be the training try, will get about 2 per cent, of the Plan. If properly managed and or­ ground for Nepali administrators and total outlay envisaged in the Plan, ganised. Everest, Pokhara, , technicians, If it succeeds, it will be­ The Plan-frame seeks to implement Muktinath and , because come the model for future develop­ Mr. Chaturbedis and Mr. Robbes' re­ of their international reputation, can ment for many parts of Nepal. ports and suggests that, a commission attract a considerable number of Pattern of Allocation should be immediately deputed in tourists from all over the world. Tarai to demarcate the forest land. The Plan outlines the following Again, pilot projects like the Rapti which could be turned over for colo­ programmes of development: due' Valley Multi-purpose Development nisation. emphasis on statistical data as well (scheduled to commence from the as cadestral and other surveys, agri­ Surveys, Geological. Aerial and end of 1055 and to be completed in cultural development with due em­ Cadestral 1961) is expected to help in solving phasis on speeding up the process of unemployment and food shortage as As Nepal lacks carefully collected transformation of the social and eco­ well as to demonstrate how, in statistics, winch are the fundamental nomic life of the villages through future, many Nepalese valleys can basis and pre-requisite of planning. village development and agricultural be successfully developed through the Draft Plan justifiably allocates extension programme; high priority multi-purpose projects. about 7 per cent of the total expen­ to transport and communication and diture to basic and cadestral surveys. A Pilot Project diversified industrial development, It is only after the economic poten­ Nepal has a number of fertile and with greater stress on small-scale tials of the country have been sur­ and cottage industries. veyed that comprehensive and more beautiful valleys all of which, except reliable plans can be formulated in Kathmandu are malaria ridden and The Plan envisages a total outlay succeeding periods. The Plan pro­ have remained completely undevelop­ of about Rs. 120 million, to be distri­ vides for geological, aerial and ed due to lack of transport, irrigation buted as follows; and drinking water. The develop­ cadestral surveys. The cadestral Percentage Distribution of the Pro­ surveys will enable the country to be ment of these valleys would not only greatly increase the quantity of cash posed Total Outlay on Nepal's First properly mapped for the first time Five-year Plan and to demarcate various types of and food crops in Central Nepal, land. This will naturally help the where the shortage of food has led Transport and' Government to improve the adminis­ to encroachment upon the forest land Communications 30 tration of forests and other public of poor fertility, but also relieve the Power 11' THE ECONOMIC WEEKLY ANNUAL January 1956

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Village Developments 14 balance her budget and to meet the not unimportant in the context of de­ Large and Cottage development expenditure. velopment. With expanding invest­ Industries 8 ment, profits in a developed or deve­ Surveys and Statistics 7 Threefold Rleforms loping economy also tend to increase, Irrigation 6 The following reforms have been, and it is only by skimming the in­ Social Servces 4 recognised as "the crying needs of crease in profits and taxing capital Forests 2 the hour'' in Nepal gains accruing that the State can Others 15 provide social services by which 1, Land Reform. Land Reform the conditions of living for the mass Commission has submitted several of the people can be improved. Un­ 100 proposals to Government all of which less the corresponding processes in Finance for the Plan it may not be possible to implement an under-developed economy like fit a time. But the recommendations A. Sources which the Government Nepal are firmly grasped and resour­ regarding Birta and Land Tenancy of Nepal can top to increase internal ces are tapped at the points where Right should be implemented in 1956, revenue: they tend to accumulate, development followed by other measures. 1. Birta Land will be taxed. cannot be continued nor can adequate 2. Agricultural Tax. All land rent 2, Currency Reform. One of the means be found for social services- should be raised On a graduated scale greatest obstacles to the economic for development purposes. development of Nepal is the instabi­ Lastly, the financial provisions in lity of the .Nepali currency. Nepali the Plan are not at all impressive 3. Cadestral Survey, Land, unre­ rupee alone will be made legal tender In any plan worth the name, the gistered or improperly registered, fundamental question centres on should be brought under record soon. and a State Bank should be set up to take over the function of the exist­ finance. The sources of finance enu­ 4. Irrigation. The flow irrigation ing Mall Adda. collect revenue and merated in the Plan which the development programme which the to conduct all foreign exchange tran­ Government can tap both internally Government has undertaken will sactions. An Exchange Equalisation and externally are hopelessly inade­ fetch a substantial amount of re­ Fund should be created in order to quate and are nothing more than venue, stabilize the rate of exchange. guess-work, How to get the resour­ ces to meet the total expenditure that 5. Nepal gets very little revenue 3, Administrative Reform. from forest. An organized forest is envisaged in the Plan? The sour­ service would result in the increase No Statement of Economic- ces indicated, both internal and ex­ of forest revenue. Policy Yet ternal, are not adequate. Even the financial needs of the Plan have not 6- Leakage from customs is fairly When we study the present Plan in the light of the existing limitations been properly set out. in view of regular and large. Proper supervi­ these deficiencies one can definitely sion would increase the revenue of of the economy, certain glaring de­ ficiencies, stand out. The draft out­ state that with a little more serious­ the State. line appears to be patah-wot-K in ness, greater care and consolidated 7. .Also revenue could be increased which pieces have been collected effort, it should have been possible by nationalising air transport and from here and there, without proper to formulate a better Draft-outline, from tourist trade, Post offices and co-ordination. Most of the facts are with more accurate estimates, des­ tel e-communicatton. unrelated and the different targets pite the acknowledged limitations of 8. Imposition of new taxes better­ put in the plan are quite inconsistent. Nepal's economy today. ment tax. income tax, and sales tax. Moreover, the Flan does not give Bold and Progressive B. Finance from External Resour­ even a rough indication of the Gov­ ces. ernment's economic policy. In fact, The Preface to the plan disarms it does not indicate the direction in If a proper plan based on survey the critics by this moderate confes­ which Nepal is to move in the future. sion: reports prepared Toy experts is avail­ Even annual budgets are more able, finances could be obtained helpful in understanding the basic "Nespal is not at the moment, and from; economic policy of a Government. will not be for some time, in a posi­ 1. Member countries of Colombo True, in the Preface to the Plan, the tion to produce a regular plan in Plan, establishment of a welfare state has the true sense of the term". been stated as the aim; to this, every 2. United States International Co­ With scarcely any statistical data. one in Nepal is pledged. The Plan operation Administration, scant financial resources and inade­ also aims at national self-sufficiency. 3. S U N F E D quate administrative personnel, But it does not give a ciearcul 4. World Bank, Nepal's First Five-year plan is bound outline of the economic policy of the to suffer from many limitations. 5. Ford Foundation, and Government to any extent. Its incompleteness, inevitable under 6, Other countries which are Keen Corning" to the allocation under the circumstance, can be gradually to help development in under-deve­ different heads, the financial provi­ removed. King Mahcndra deserves loped countries. sion proposed for social .services to be congratulated on boldly putting C. Government has Rs. 2.5. crores is extremely inadequate. This is it up. With it. has been initiated a in reserve for the development of hardly in Keeping with the proposed new era in the economic development Nepal. There is also an assurance aim of creating an welfare state. of Nepal, This is only a beginning from the Government of India to Where not more than two per cent find no one should expect miracles. Nepal to spend Rs 3 crorea on the of the population are literate the ex­ The First Five-year Plan, notwith­ Trisuli Hydroelectric Scheme. penditure of about 4 per cent on so­ standing its limitations, lays the D. It the 5-Year Plan is to he im­ cial services in a mere drop in the foundation of a new social order and plemented. Nepal will need an ocean, AS a matter of fact, the in- has set Nepal on the road to progress. additional Rs 4 crores per year, to come distribution aspect is certainly 117 January 1956 THE ECONOMIC WEEKLY ANNUAL

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