Economy becoming the victim of wrong policy

Nepal is an underdeveloped nation, which means, we have a shortage of investment capital and we are far behind in infrastructural development. Investment capital plays an important role in Nepal like countries. Due to lack of information, lack of proper study and also ill-intention of the policymakers, the country is wasting precious investment capital and the economy is suffering from the unhealthy competition. Earlier, the government had not permitted running commercial banks to the private sector. Along with the open-up of the economy, the government decided to permit the private sector to run commercial banks without proper study on the size of the economy and the number of banks needed for the country. Almost all businessmen wanted to establish a bank. Running a business and running banks are two separate jobs. In other countries, bankers are not allowed to do business, simultaneously, businessmen cannot run a bank. It became possible in Nepal. Serious to note, within a few years, the number of commercial banks increased to the extent that they were unable to get business for their survival. When the government saw the possibility of the collapse of the banking sector, it asked the private sector banks to go for a merger. The merger process of the banks still continues.

The same scenario has been witnessed in the insurance sector. Earlier, there were a limited number of insurance companies. They too were not getting necessary business, in the meantime, with the attraction of commission and bribe, the government authorities opened licenses to run more insurance companies. Now, there has been seen an unhealthy competition in the market. It is sure, some other day, the government may ask the insurance companies for a compulsory merger. Of course, private sector participation is important for economic development. However, the government experts, instead of taking personal benefit by providing license to run a business, should provide the necessary information and market position for any start-up investment. The most important thing is that the government has to establish an information bank.

Nepal is an agricultural country but the farmers are doing traditional farming as their ancestors were doing. As farmers are unable to get the return from their investment, they are less interested to continue their traditional job. This is why many farmlands are left without cultivation. If the government would have supported the farmers with new technology, detailed information about the farming process and market price, farmers could have been attracted towards farming and earning profit. Such support by the government could help to substitute imports of the agroproducts from foreign countries.

Will the government think about it?