BY Rajendra Prasad Adhikary

Despite numerous agitations carried out by the Nepali people to change the political system since 1950, including the political revolution of 2005-06 that resulted in the overthrow of the monarchy and ended the Maoist insurgency, the envisioned improvement in the socioeconomic conditions of the people through these historical movements has not materialised. None of the major political parties have been able to demonstrate significant achievements in terms of good governance or effective economic reforms to govern the country efficiently. As a result, Nepal is currently in a deplorable state with no immediate prospects of recovery. The economy relies heavily on the earnings of the youth working abroad. When remittances become the primary source of government revenue, and the productive sectors of the country stagnate with little or no productivity, the economy is considered to be ailing. In such a situation, the economy cannot contribute significantly to the country's GDP growth nor provide formal employment opportunities for the youth. This creates a vicious cycle where the majority of the poor and marginalised population are excluded from the country's economic activities and are forced to seek livelihoods elsewhere. The desperation of Nepali voters has recently been evident in the by-election held in Tanahun, where a young economist, Dr Swarnim Wagle, achieved a landslide victory in his first electoral contest. Dr. Wagle easily secured the votes that previously went to President Ram Chandra Poudel, who contested the general election in November last year from the Nepali Congress party. The voters in the constituency, yearning for a rapid transformation of the socio-economic status of the country under more capable leadership, When remittances become the primary source of government revenue, and the productive sectors of the country stagnate with little or no productivity, the economy is considered to be ailing. Unlocking Nepal’s Potentials Economic transformation is the need of the hour  expressed their democratic opinion through the ballot paper. It is a bitter truth that Nepal is facing the challenges of increasing youth unemployment and unchecked import of household commodities. One of the key reasons behind this is the lack of comprehensive economic strategies from the major political parties, both in the agricultural and industrial sectors. The dysfunctional growth mechanism of the country has resulted in nearly 500,000 youth migrating either to major Indian cities or abroad every year in search of livelihood opportunities. The major political parties in Nepal lack a defined economic doctrine that can effectively drive the country's growth. As a result, the guiding principles of the government's economic plans and programs remain largely unchanged, regardless of which political party is holding the finance portfolio in the government. In a way, the guiding principle of our economic reform, as mentioned in the constitutional prelude, which states that the state directly or indirectly controls the mechanisms of production, distribution, and consumption, contradicts the liberal and free market economic principles that efficiently drive market-oriented global economies. Our economic policy does not reflect strategies to harness the benefits of rapidly expanding market demands, the increasing global consumption culture, the free market economy, or engagement with the international marketplace. We are neither in a position to develop a state-protected economy that promotes subsidy-led entrepreneurship like China, nor can we adopt an economic policy that embraces open market principles. Our political parties seem to ignore statistical data and research and development experiences from economically prosperous nations around the world, as they forge ahead without a guiding framework when making plans, programs, and budgetary allocations. As a result, our economic system has become entrenched in a path that offers no perceivable improvements in growth and prosperity. Apart from the significant informal economic transactions that are part of our socioeconomic system, Nepal is engaged in a wide range of economic activities. Substantial resources are involved in the buying and selling of real estate, with prices comparable to those in developed countries. Over 3.5 million imported vehicles, including more than one million four-wheelers, are in circulation in the country. Nepal ranks fifth in terms of expenditure on higher education in foreign countries, with the United Kingdom in fourth position. Nearly 30 international airlines serve Nepal, catering to the large number of Nepali youths working abroad. Each year, more people are spending money on recreational and medical tourism outside the country. The trend of Nepali consumers purchasing imported foreign-made commodities is also increasing, with imports valued at $13.8 billion in 2020. However, despite these economic activities, our tax system does not adequately capture the scale of income and expenditure, making it difficult for the government to develop strategies to systemize and regulate the country's growing economic activities. It is commonly understood that for national security and self-sufficiency, a sovereign nation should produce basic commodities to meet the needs of its people within its own territory. Internal production not only prevents money from leaving the country but also generates employment opportunities. Commodities that have a comparative advantage in the international market should be exported, while cheaper ones can be imported. To fulfil global market demands, it is important to create a foreign investment-friendly environment within the country, as relying solely on domestic efforts may not be sufficient for infrastructure development and production. Banks and financial institutions play a crucial role in channelling funds into the productive sector, particularly when they are decentralised to serve people at the grassroots level. However, sector banks such as agricultural development banks, small-scale entrepreneurship financing cooperatives, and infrastructure development banks are currently lacking effective plans, programs, and investments to reach their target groups. The merger of sector banks with national banks, Unl ocking Nepal ’s Potentials Internal production not only prevents money from leaving the country but also generates employment opportunities. Commodities that have a comparative advantage in the international market should be exported, while cheaper ones can be imported. Our political parties seem to ignore statistical data and research and development experiences from economically prosperous nations around the world, as they forge ahead without a guiding framework when making plans, programs, and budgetary allocations in the name of collaboration and efficient capital flow, has rendered them inefficient or stripped them of their identity. These banks, which are meant to serve as intermediaries between depositors and lenders, safeguarding entrepreneurs from the high interest rates of unscrupulous local lenders, have lost credibility due to their investments being largely tied up in unproductive toxic assets. The directive from the central bank to allocate 25% of their investments to productive sectors, with a specific focus on agriculture and industries, has been misused. Only landholders in urban areas and big entrepreneurs are benefiting from these privileges, while poor farmers and young startup business owners are deprived of lending facilities. In a modern market-centred economy, there should be a well-established linear linkage from local markets to the international stage. Nationally acclaimed products and services should be able to enter neighbouring countries through mutually agreed regional support services. By being competitive in terms of cost and quality, these products can secure a place in the international market. This is how local indigenous commodities can achieve significant market value on the international arena. However, the major political parties and their respective governments lack a strategic approach to leveraging diplomatic missions, such as consulate offices and embassies in foreign countries, to enhance the country's trade and economic activities as part of the government’s economic diplomacy.

More than two decades ago, the Ministry of Foreign Affairs established a special wing to strategically plan and analyse financial policies in order to attract financial investments from countries with diplomatic relations. However, despite having diplomatic relations with 178 countries worldwide, Nepal continues to experience an increasing trade deficit and a sluggish foreign investment program. This indicates that the objectives set by the foreign ministry have not been effectively met. Nepal has not given sufficient importance to mobilising diplomatic missions to achieve its objectives, nor has it undertaken enough domestic efforts to define the country's specific economic advantages. Although economic diplomacy is recognized as an important component of overall diplomacy, the deployment of foreign diplomats lacking experience in economics and foreign relations has hindered bilateral and multilateral trade and investments, which could have been transformative for the country's growth and modernization. Activities such as export promotion, investment conferences, feasibility studies for employment generation, and various tourism promotion programs can be actively conducted by the country's diplomatic missions with the enthusiastic participation of the Nepali diaspora living abroad. When evaluating the viability of educational, medical, and sports tourism on a national and regional level, it becomes apparent that there are numerous cities in Nepal that can serve as educational hubs for both national and international students.

Certain accessible mountainous areas with pleasant year-round climates can flourish as destinations for medical tourism. IT companies can establish their subsidiaries in Nepal. Furthermore, Nepali cities with airports and hotel accommodations can serve as gateways to showcase the country's diverse landscape, including its flora and fauna, to tourists. Given that our economic backbone relies on the diversified natural resources spanning from low-lying plains to high mountain peaks and valleys, as well as our active youth population, we are currently in a critical period for economic activity and reform. It is essential to undergo a drastic transformation from conventional economic development agendas in order to align with global economic development trends. By addressing the existing shortcomings in the economic landscape, extending viable facilities, and encouraging innovation and modernization in all sectors of economic activity, we can capitalise on the ever-increasing demand for services and commodities within the national economy. This provides a wide avenue for the country's economic growth while utilising the Nepali market. (Adhikary is an engineer and served Nepal government in various high level capacities.)