How to do Business

Nepal can join the ranks of de­vel­op­ing coun­tries through sus­tained eco­nomic growth and an in­crease in per capita in­come.

Southasia - - REGION NEPAL - By Hus­sain H. Zaidi

Nepal may be one of the poor­est and least de­vel­oped of coun­tries but the Nepalese are an amaz­ing peo­ple. A few years back, they waged a heroic strug­gle to oust the monar­chy and es­tab­lish a mul­ti­party repub­lic. In the process, Nepal, hith­erto hav­ing Hin­duism as its of­fi­cial re­li­gion, also be­came a sec­u­lar state. Since then, the re­pub­li­can­cum-sec­u­lar Nepal has been in the throes of po­lit­i­cal in­sta­bil­ity and un­der­stand­ably so. Yet, no one can dis­count the na­tion's achieve­ments on this ac­count.

The strides in the po­lit­i­cal sphere need to be matched by those in the eco­nomic realm. Is Nepal – a land- scarce, land­locked coun­try sit­u­ated be­tween two gi­ants, namely China and In­dia, on the course of do­ing so? Well, the na­tion has set it­self to achieve the sta­tus of a de­vel­op­ing coun­try by 2022 and cho­sen eco­nomic lib­er­al­iza­tion to at­tain that goal. This would re­quire sus­tained eco­nomic growth to­gether with an in­crease in the per capita in­come.

Be­tween 2010 and 2013, the econ­omy of Nepal regis­tered a mod­est av­er­age an­nual growth of 4.2 per­cent. The per capita in­come rose from $594 to $694 dur­ing this pe­riod. The coun­try has a healthy in­vest­ment-GDP ra­tio of 37 per­cent, which is above the av­er­age for South Asia. Based on earn­ing – $2 a day – 56 per­cent of the pop­u­la­tion lives be­low the poverty line. With ex­ports of $2 bil­lion and im­ports of $7 bil­lion, Nepal faced a trade deficit of $5 bil­lion in 2013. The trade deficit is met largely through re­mit­tances and for­eign aid – in both cases In­dia is the prin­ci­pal source.

Nepal's growth strat­egy rests on open­ing up of the econ­omy and cre­at­ing an in­vest­ment friendly en­vi­ron­ment. It was in the mid1980s that the coun­try be­gan to im­ple­ment a se­ries of struc­tural adjustment pro­grams spon­sored by the In­ter­na­tional Mon­e­tary Fund.

Such pro­grams typ­i­cally pro­vide for neo-lib­eral poli­cies, such as

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