Nepal Human Development Report 1998

NEPAL HUMAN DEVELOPMENT REPORT 1998

Copyright  1998 Nepal South Asia Centre

Published by: Nepal South Asia Centre Post Box No. 8248, Tripureshwar Kathmandu, Nepal

Telephone: 977-1-247656; Fax: 977-1-240685 E-mail address: [email protected]

This study is submitted to the United Nations Development Programme, Nepal.

Nepal Human Development Report 1998

Nepal South Asia Centre

FOREWORD The 1990s began in Nepal with one of the most significant political developments in its history. Not only was multi-party democracy restored but a liberal constitution was promulgated that granted the nation an unprecedented level of political freedom, civic liberties and human rights. With democracy beginning to take root and a fertile political landscape gradually taking shape, the country presently allows a big space for people's participation and involvement in all aspects of public life. These momentous expansions in individual freedom must now be matched with equally enlarged opportunities for economic and social advancement. However, there are challenges that lie ahead. And they are huge; despite remarkable progress that the country has made in its very brief existence as a modern nation-state, the majority still lives in absolute poverty. A fresh national effort to take up this challenge and steer the country towards equitable and sustainable improvements in peoples' lives will need to be a concerted one; and it is in this connection that we feel the importance and validity of this report ought to be judged. At a global level, the 1990s also witnessed a significant reassessment of development thinking. With the publication, among others, of the first global Human Development Report in 1990 under the aegis of UNDP and Adjustment with a Human Face by UNICEF a little earlier, the focus was shifted back to the people who, they emphasised, should be the focus of development. Seemingly obvious, this was nevertheless forgotten in many countries' pursuit of increasing national incomes, almost as if they were an end in itself. The human development reports stressed that development must go beyond the aim of enlarging people's incomes and concentrate on expanding people's choices regarding their education, health, political freedom, cultural identity and a myriad of other factors affecting human well-being.

Kathmandu 1 May 1998

With the annual editions of these global reports proving influential in re-orienting development minds to a re-found objective, it was increasingly felt that national reports could best reflect national concerns and serve better the identification of state-specific priorities. These reports were also envisaged to reexamine past development paradigms and instigate some sort of a national soul-searching on policies that directly improve the capabilities of people and reduce human deprivation. The Nepal Human Development Report 1998 is a testament to that initiative. It is the first report of its kind to be produced in Nepal, and we at UNDP are very grateful to a team led by two eminent scholars, Devendra Raj Panday and Chaitanya Mishra, which has prepared this report. Drawing inputs from a wide cross-section of people from the government, academia and civil society, the preparation of the report marked a highly consultative process. We are particularly pleased to note that the report has been a truly Nepali product. Written by Nepalis and published within Nepal for a largely Nepali audience, it is being published in both the Nepali and English languages to ensure as wide an outreach as possible. As its preparation was an independent exercise, we hope the candid and critical manner in which most subjects are treated will contribute significantly to a greater understanding of the state of affairs in Nepal. Attempting to cover an entire gamut of the development canvas, the report has turned out to be a richly comprehensive document touching on very relevant, but often neglected, subjects like society and culture for example. It is our sincere expectation that this report − and its sequels − will initiate and continue the debate and gradually facilitate a serious exploration of human development programming in Nepal.

Carroll Long Resident Representative UNDP in Nepal

ABOUT THE REPORT When the authorities at the United Nations Development Programme (UNDP) in Nepal asked us to do this study, we approached the offer with some ambivalence. Would we be able to do justice to their trust? That was only the first of many reasons for the hesitation. We were not sure what a national human development report really meant. How was it to differ from the character of the numerous reports on development that were written over the decades? Did it merely imply filling up numbers to standardised forms and coming up with the usual indices on the status of human development in the country − and making attractive headlines in the media? Would NESAC have the freedom to set the agenda and scope of the study independently in order to address the reality as perceived by the authors of the report? Would the report have to be an apology for the policymakers and their partners in development with the requirement of an appropriate mixture of critical assessment and “success stories” on development? Is it possible to honestly discuss human development in Nepal without being truly and constructively critical of the country’s history of social relations, development patterns and the performance of major political structures? And most importantly, would the final output be of as much interest to the country’s policy-makers and opinion builders as to the UNDP for whom, for all their goodwill, Nepal is only one of many countries for which such report is prepared? Indeed, as things go in the country, would it be possible to make a dent in the values and visions of the main political, economic and cultural actors − without which the best of the reports can do no better than gather dust on the shelf? While answers to most of these questions must wait the future, we are happy to report that the UNDP has given us full intellectual freedom and editorial autonomy to design and complete the study. In the end, even as we are aware − as is always the case when equipped with hindsight − that the report could have been better, we are glad that we have this privilege to prepare and present Nepal Human Development Report 1998 to the national and international community whose interest and contribution in terms of the

values, ideas, resources and skill they contribute to the process will determine much of what happens in the future. This report is the first of its kind in Nepal. For that reason, as also because of the preferences of the report preparation team, we have located human development within a considerably broader canvas than is conventional. The readers and the principal actors we have identified for the promotion of human development should judge whether such a canvas is appropriate. As a result, it has not been possible to examine some issues at the depth they deserved. On the other hand, we have tried not to overlook key issues even if such issues are tabooed for discussion in some circles. We are certain that, with this report, we have a concrete basis for delineating issues that are critical for human development promotion in Nepal. These issues may now be pursued in greater depth by other agents and institutions for policy analysis and programming. On our part, apart from policy debates, we see a need for debating values and ideology. We find the current trend − in Nepal and elsewhere − to the contrary worrisome. There is little emphasis these days on fostering competition of ideas as there is for competition in the market of goods and services. The study is presented in four parts. Part I comprises the introductory chapter (chapter 1) whose purpose is slightly different from a conventional introduction. The chapter which covers subjects from the “mundane” to the “sublime” (i.e., economy to culture) introduces the readers to Nepal, not to the report. The purpose is to sensitise the readers to those areas of national and local life that are not often seen as directly relevant to human development. The structures of society, the character and trends of the polity and the status and performance of the economy are presented here in brief. This part of the report should also give a flavour of how inclusively human development is viewed in the rest of the report. Part II, comprising chapters 2 and 3, deals with the concept and components of human development as observed in the literature and as perceived by the authors of the report. Human

development, as a development term, has already found its way into policy statements of the planners and leaders of the country which can be taken positively. However, this also makes it all the more necessary that the concept be comprehended in all its ramifications by the readers and principal actors. It needs to be situated in the country’s own historical experience with development and the strategies followed in the past and in the human development potential that can be harnessed in the future. The computed values of measures and indices of human development are presented in chapter 3. Almost all measures and indices associated with human development, and utilised for global comparison, have been computed for Nepal. Data have been disaggregated at the human-geographical (i.e., ecosystemic and development regions, districts, rural-urban residence), social (i.e., gender and caste-related) and temporal axes to the extent possible and relevant. The most recent sets of data have been utilised to compute the values of indices and measures. Such data sets and data analysis techniques have been explained in the annex to the chapter. Part III of the report (chapters 4,5,6,7,8,9 and 10) dwells on the various components of human development in detail. This includes investigation of access to health, education, work and employment and income. Issues related to barriers to access, quality and trends have been examined in considerable detail. In addition, care has been taken to ensure that the analysis is sensitive to the geographic, gender, and ethnic variations. It will be noticed that in keeping with the perspective of human development, work and employment are considered as significant intrinsically (in terms of the dignity attached to a working woman or man in contrast to one without work) as for instrumental reasons (in terms of income). Access to political and cultural participation, in human developmental terms, is valuable both intrinsically and for instrumental reasons, including for the promotion of access to other components of human development, e.g., health, education, income. Chapters 8, 9 and 10 investigate the access, barrier, quality and trend dimensions of participation and link it to political and cultural structures and institutions. Human development is conceptualised as an inclusive, holistic process wherein the location of the individual citizen in the political and cultural space assumes an importance of its own. The status of the protection and observation of

human rights, too, becomes critical. Political freedom and political participation are an end as well as means of human development. If participation is the essence of democracy, and if democracy is to be conducive to human development, the character of polity in relation to the instruments, domains and extent of participation becomes critical for human development promotion as well. On the cultural front, belongingness and cooperation, seclusion and exclusion, social security and alienation, etc. are viewed as intrinsic components of human development. These chapters bring political and cultural issues into the mainstream of human development analysis for Nepal. The last five chapters (chapters 11,12,13,14 and 15), constituting Part IV of the report, on the basis of preceding presentation and analysis, look ahead to the future. They focus on the possibilities and instruments for human development promotion. They can be labelled the “vision” chapters. Collectively, the chapters argue that human development promotion requires a substantive reorientation of society, polity, economy and finance. Chapter 11 concentrates basically on the need to reclaim and regenerate the commons in political, economic and cultural spheres in order to intensify social action geared at enhancing the promotion of human development. It also highlights the significance of devolution for human development promotion. Chapter 12 captures certain political themes which are already voiced in public discourses but which await both forceful articulation and linkaging with human development. It makes the point that a successful implementation of the cultural, economic and financial reorientation required for human development may significantly depend upon the success in reorienting the polity. Chapter 13 focuses on the macro-level and sectoral reorientations necessary to promote human development. Chapter 14 concentrates on the financial requirements for the promotion of human development. Chapter 15, without attempting to summarise the whole report, briefly outlines the key challenges that lie ahead. The study was prepared by a team led by Devendra Raj Panday and Chaitanya Mishra. Posh Raj Pandey, Yubaraj Khatiwada and Prakash Dev Pant were the other members of the core team. Harsha Narayan Dhaubhadel, Bharati Silwal-Giri, Ram Pradhan and Prem Sangraula contributed various drafts of the chapters. Tanka Karki, Durga Prasad Bhandari, Sudhindra Sharma, Roshan Chitrakar, Hridaya

Bajracharya, Vijaya Thapa, Umesh Upadhyaya, Dibya Deo Bhatta, Dhruba Maharjan, K. K. Panday and Baburam Shrestha provided substantial inputs on specific issues as resource persons. The report was edited by Anand Aditya. Devendra Chapagain and Shizu Upadhya lent substantive as well as editorial skills to the report. Mohan Bahadur Dahal provided the administrative support. Damodar Joshi took responsibility for seeing the report through its numerous drafts at the computer. In this task, he was assisted by Mohan Pandey, Mahesh Nepal, Jawaharlal Yadav and Shiva Ghimire. The cover was designed by Rajan Kafle. Credit for the photograph highlighted on the front cover goes to the UNICEF, Kathmandu. Credit for all other photographs, including the one on the back cover, goes to Usha Tiwari. It is our duty to acknowledge the help we received during the preparation of this report. Foremost, we thank the UNDP office in Nepal for entrusting us with the task and providing the necessary resources to carry it out. In particular, we must express our appreciation to Carroll Long, UN Resident Coordinator, for her interest and support during the study.

We thank many individuals and international agency personnel who shared insight and information with us. We received such support, in particular, during the eight thematic workshops organised to seek comments on the early drafts of the chapters. Approximately 120 government officials, academics, journalists and NGO workers participated in the workshops. Finally, we are grateful to the vicechairpersons and members of the National Planning Commission (both past and present) for their encouragement. The first draft of the full report was reviewed at a workshop participated by over 40 professionals, including the current and previous members of the National Planning Commission, high-ranking government officials, university teachers, researchers and donor representatives. Nine experts reviewed designated chapters in detail and their comments together with the full draft report were discussed extensively. The feedback received has been incorporated to the extent necessary and possible. Our thanks go to the reviewers and other participants in the workshop. In particular, we thank Krishna Bhattachan, Indira Rana, Bihari Krishna Shrestha, Suman Sharma and Bajra Raj Shakya who made additional written comments as well.

ACRONYMS USED ADB ADB/N AIC APP APROSC ARC ARI BCG BPEP CBO CBS CDPS CEDA CERID CIAA CNAS CPI CPM CRC CTEVT CWS DANIDA DDC DEC DEO DHS DOL DPT EPI FAO FCHV FIA FUG FY GDI GDP GDS GEM GER HDI HDM HDR HMG HOR HPI ICIMOD ICPD IIDS ILO IMF IMR INGO INSEC

Asian Development Bank Agriculture Development Bank/Nepal Agriculture Inputs Corporation Agriculture Perspective Plan Agriculture Projects Services Centre Administrative Reforms Commission Acute Respiratory Infection Vaccine Used Against Tuberculosis Basic and Primary Education Project Community-Based Organization Central Bureau of Statistics Central Department of Population Studies, Tribhuvan University Centre for Economic Development and Administration, Tribhuvan University Research Centre for Educational Innovation and Development, Tribhuvan University Commission for Investigation of Abuse of Authority Centre for Nepal and Asian Studies, Tribhuvan University Consumer Price Index Capability Poverty Measure Constitution Recommendation Commission Council for Technical Education and Vocational Training Children Welfare Society Danish International Development Agency District Development Committee District Education Committee District Education Office/Officer Demographic and Health Survey Department of Labour Diptheria/Pertussis/Tetanus (vaccine) Expanded Programme of Immunisation Food and Agriculture Organisation Female Community Health Volunteer Farmers’ Irrigation Association Forest Users Group Fiscal Year Gender-Sensitive Development Index Gross Domestic Product Gross Domestic Savings Gender Empowerment Measure Gross Enrolment Ratio Human Development Index Human Deprivation Measure Human Development Report His Majesty’s Government of Nepal House of Representatives Human Poverty Index International Centre for Integrated Mountain Development International Conference on Population and Development Institute for Integrated Development Systems International Labour Organisation International Monetary Fund Infant Mortality Rate International Non-Government Organization Informal Sector Service Centre

KU LGI MOA MOE MOF MOH MOL MP MHBS MRD MSU NARC NBA NC NEC NER NESAC NESP NFHS NGO NLSS NMIS NPC NRB OECD OPV3 PCRW PDDP PE PEM POLSAN PSSA RPP SAARC SAAT SAP SFDP SSA SSNCC STD TBA TFR TI TT3 TU TVEC UML UNDP UNICEF VAT VDC WUA

Kathmandu University Local Government Institution Ministry of Agriculture Ministry of Education Ministry of Finance Ministry of Health Ministry of Labour Member of Parliament Multi-Purpose Household Budget Survey Movement for Restoration of Democracy Mahendra Sanskrit University Nepal Agriculture Research Centre Nepal Bar Association Nepali Congress National Education Council Net Enrolment Ratio Nepal South Asia Centre National Education System Plan Nepal Family Health Survey Non-Government Organisation Nepal Living Standard Survey Nepal Multiple Indicator Surveillance National Planning Commission Nepal Rastra Bank Organisation for Economic Cooperation and Development Oral Polio Vaccine (3 doses) Production Credit for Rural Women Participatory District Development Programme Public Expenditure Protein Energy Malnutrition Political Science Association of Nepal Priority Social Sector Allocation Rastriya Prajantra Party South Asian Association for Regional Cooperation South Asian Multidisciplinary Advisory Team South Asia Partnership Small Farmer Development Programme Social Sector Allocation Social Service National Coordination Council Sexually Transmitted Diseases Traditional Birth Attendants Total Fertility Rate Transparency International Tetanus Toxoid (3 doses) Tribhuvan University Technical and Vocational Education Council United Marxists-Leninists United Nations Development Programme United Nations Children’s Fund Value Added Tax Village Development Committee Water Users Association

CONTENTS SUMMARY

i-xxii Part I

CHAPTER 1 BASIC DEVELOPMENT STRUCTURE AND PROCESSES 1.1 INTRODUCTION 1.2 CULTURE 1.2.1 History 1.2.2 Households and communities 1.2.3 Gender 1.2.4 Caste and ethnicity 1.2.5 Interaction with state, market and world order 1.3 NATURAL RESOURCES AND ENVIRONMENT 1.4 HUMAN RESOURCES 1.4.1 Demographic process 1.4.2 Health and nutrition 1.4.3 Literacy and education 1.4.4 Labour and employment 1.5 ECONOMY 1.5.1 Structure of economy 1.5.2 Income, consumption and saving 1.5.3 Distribution of productive assets and income 1.5.4 Recent economic trends 1.5.5 Physical infrastructure 1.5.6 Development policies and implications for human development 1.6 POLITY 1.6.1 Constitution 1.6.2 Electoral system 1.6.3 Political parties 1.6.4 Government 1.6.5 Decentralisation and local government 1.6.6 Sources of political power

1 1 2 4 5 7 8 8 10 10 11 12 12 12 13 13 13 14 14 16 17 17 18 18 19 19 20 20

Part II CHAPTER 2 UNDERSTANDING HUMAN DEVELOPMENT 2.1 INTRODUCTION 2.2 THE CAREER OF HUMAN DEVELOPMENT 2.2.1 Economic growth and human development 2.2.2 Human capital and human development 2.2.3 "Growth with equity" and human development 2.2.4 Basic needs and human development 2.2.5 Liberalisation, structural adjustment and human development 2.2.6 Social capital, social development and human development 2.3 HUMAN DEVELOPMENT: THE CONCEPT 2.3.1 Means and ends 2.3.2 Universalism 2.3.3 People as subjects 2.3.4 Capability and deprivation 2.3.5 Use of capabilities 2.3.6 Sustainability 2.4 THE LEGITIMACY OF HUMAN DEVELOPMENT 2.5 COMPONENTS OF HUMAN DEVELOPMENT 2.6 LIMITS OF HDI

21 21 21 24 26 26 27 27 28 29 29 30 30 30 31 31 32 33 34

2.6.1 Adequacy of standard components 2.6.2 Universally equal salience of standard components 2.6.3 Salience of politics and culture Chapter 3 HUMAN DEVELOPMENT IN NEPAL: MEASURES AND INDICES 3.1 INTRODUCTION 3.2 HDI FOR NEPAL IN A COMPARATIVE PERSPECTIVE 3.3 TRENDS IN HUMAN DEVELOPMENT 3.3.1 Disagregated human development index 3.4 GENDER-SENSITIVE DEVELOPMENT INDEX (GDI) 3.5 GENDER EMPOWERMENT MEASURE (GEM) 3.6 CAPABILITY POVERTY MEASURE (CPM) 3.7 HUMAN POVERTY INDEX (HPI) 3.8 HUMAN DEPRIVATION MEASURE (HDM)

35 36 36

38 38 39 39 40 44 49 52 53 54

PART III CHAPTER 4 HEALTH 4.1 HEALTH AND HUMAN DEVELOPMENT 4.2 STATUS OF HEALTH 4.2.1 Life expectancy 4.2.2 Survival among infants 4.2.3 Morbidity 4.2.4 Disability 4.2.5 Maternal mortality 4.3 ORGANISATION OF HEALTH AND MEDICAL SYSTEMS 4.3.1 Home-based system 4.3.2 Faith healing 4.3.3 Ayurvedic, homeopathic and unani system 4.3.4 Allopathic system 4.4 ACCESS TO PUBLIC HEALTH FACILITIES AND SERVICES 4.4.1 Family planning, fertility and contraception 4.4.2 Reproductive health and motherhood 4.4.3 Immunisation 4.4.4 Perception on access to health facilities and services 4.5 NUTRITION 4.5.1 Consumption patterns 4.5.2 Access to food and nutrition 4.5.3 Nutritional deprivation: anthropometric evidence among children 4.6 ACCESS TO SAFE WATER AND SANITATION 4.7 FINANCING OF HEALTH 4.7.1 Public expenditure 4.7.2 External sources 4.7.3 Private household expenditure 4.7.4 Non-governmental organisations 4.7.5 Quality of health sector expenditure 4.8 KEY POLICY ISSUES AND ACTIONS REQUIRED 4.8.1 Universalising primary health care 4.8.2 Recognising and intensify inter-sectoral linkages 4.8.3 Engaging local bodies and community 4.8.4 Ensuring food security 4.8.5 Investing additional resources and enhancing efficiency 4.8.6 Producing more and appropriate health workers

56 56 56 56 57 58 58 59 60 60 60 60 61 62 62 62 63 64 64 65 65 67 68 69 70 70 70 70 71 71 71 72 72 73 73 74

Chapter 5 EDUCATION 5.1 EDUCATION AND HUMAN DEVELOPMENT 5.2 LITERACY AND PRIMARY SCHOOLING 5.2.1 Literacy 5.2.2 Student enrolment, drop-out, repetition and promotion 5.2.3 Students, schools and teachers 5.2.4 Literacy through non-formal education

75 75 75 76 77 80 80

5.3 ACCESS TO SECONDARY, TECHNICAL AND TERTIARY EDUCATION 5.3.1 Secondary education 5.3.2 Access to technical and vocational education 5.3.3 Access to tertiary education 5.4 ORGANISATION AND MANAGEMENT OF PUBLIC SCHOOLS 5.5 QUALITY OF PUBLIC SCHOOL EDUCATION 5.6 PRIVATE SECTOR AND EDUCATION 5.7 FINANCING OF EDUCATION 5.7.1 Financial policies 5.7.2 Public financial support 5.7.3 Public expenditure by level of education 5.7.4 Public vs private expenditure in education 5.7.5 Quality of public investment in school education 5.8 RETURNS TO EDUCATION 5.9 KEY POLICY AND ACTIONS REQUIRED 5.9.1 Universalising literacy and primary education 5.9.2 Generating and investing additional resources 5.9.3 Devolving rights of school management 5.9.4 Making administration more effective and efficient 5.9.5 Raising the quality of education 5.9.6 Reforming and learning from the private sector

82 82 84 85 86 86 87 88 88 89 90 90 92 93 94 94 95 96 96 97 97

Chapter 6 WORK AND EMPLOYMENT 6.1 WORK, EMPLOYMENT AND HUMAN DEVELOPMENT 6.2 STRUCTURE AND GROWTH OF WORKERS AND LABOUR FORCE 6.3 WORKERS AND LABOURERS 6.4 SELF-EMPLOYMENT 6.5 EMPLOYMENT, UNEMPLOYMENT AND UNDEREMPLOYMENT 6.5.1 Unemployment 6.5.2 Underemployment 6.6 WAGE EMPLOYMENT 6.7 MIGRATORY EMPLOYMENT 6.8 WORK IN THE INFORMAL SECTOR 6.9 WOMEN AND HUMAN DEVELOPMENT 6.9.1 Women and work 6.9.2 Women and directly productive work 6.9.3 Women and underemployment 6.10 CHILD LABOUR 6.10.1 Efforts undertaken 6.11 BONDED LABOUR 6.12 GOVERNMENT POLICIES, WORK AND LABOUR

98 98 99 101 101 101 102 102 103 104 105 106 106 107 109 109 110 110 111

CHAPTER 7 INCOME, CONSUMPTION AND POVERTY 7.1 LEVEL AND GROWTH OF INCOME 7.2 LEVEL AND COMPOSITION OF INCOME AT HOUSEHOLD LEVEL 7.3 DISTRIBUTION OF INCOME 7.4 OWNERSHIP STRUCTURE AND USE OF PRODUCTIVE RESOURCES 7.4.1 Structure of landownership 7.4.2 Distribution of land 7.4.3 Land tenure and tenancy 7.4.4 Credit 7.5 WOMEN AND INCOME EARNING OPPORTUNITIES 7.6 LEVEL AND STRUCTURE OF CONSUMPTION 7.6.1 Housing 7.7 STRUCTURE OF HOUSEHOLD SAVING AND INVESTMENT 7.8 INDEBTEDNESS: SCALE, TRENDS AND CORRELATES 7.9 INCIDENCE OF POVERTY 7.9.1 Concepts and measurement 7.9.2 Poverty incidence trends 7.9.3 Correlates of poverty 7.10 GOVERNMENT POLICIES, PRIORITIES, FINANCING AND PERFORMANCE

114 114 114 116 117 117 117 118 118 120 122 123 123 124 125 125 126 128 132

Chapter 8 PEOPLE'S PARTICIPATION IN PUBLIC AFFAIRS 8.1 INTRODUCTION 8.2 CONSTITUTIONAL AND OTHER PROVISIONS ON PARTICIPATION 8.3 DOMAINS OF PARTICIPATION 8.3.1 Political participation 8.3.2 Participation in development activities 8.3.3 Civil society and NGOs 8.3.4 Media 8.4 DISTRIBUTION OF POLITICAL PARTICIPATION 8.4.1 Ethnicity, gender and elections 8.4.2 Gender and caste/ethnic access in party and bureaucracy 8.5 INTENSITY OF POLITICAL PARTICIPATION 8.5.1 Politics of protest 8.6 DEVOLUTION AND PARTICIPATION 8.7 CONCLUSION

135 135 136 137 137 138 139 143 143 143 145 146 146 147 147

CHAPTER 9 POLITICAL FREEDOM AND CITIZEN'S ACCESS TO STATE 9.1 INTRODUCTION 9.2 HUMAN RIGHTS 9.2.1 Human rights performance 9.2.2 Women and human rights 9.3 ACCESS TO THE EXECUTIVE 9.3.1 Bureaucracy 9.3.2 Police 9.4 ACCESS TO THE LEGISLATURE 9.5 ACCESS TO LAW AND JUDICIARY 9.5.1 Judicial review 9.5.2 Impediments to law and justice 9.5.3 Delay in justice 9.6 CITIZEN AND LAW

149 149 150 151 151 153 154 165 156 157 158 159 160 160

CHAPTER 10 SOCIAL INSTITUTIONS AND SOCIAL CAPITAL 10.1 SOCIAL INSTITUTIONS, SOCIAL CAPITAL AND HUMAN DEVELOPMENT 10.1.1 Nature of social capital 10.1.2 Levels of social institution 10.1.3 Social institutions and change 10.1.4 Social institutions unfriendly to human development 10.2 COOPERATION 10.2.1 Households 10.2.2 Kins, neighbours and community and sub-community groups 10.2.3 VDCs 10.2.4 Schools, media, health posts and other local institutions 10.3 SOCIAL SECURITY 10.3.1 Households and social security 10.3.2 Communities and social security 10.4 JUSTICE AND ADJUDICATION OF DISPUTES 10.5 EXCLUSION 10.5.1 Gender 10.5.2 Caste, ethnicity and region of residence 10.5.3 Income-poverty

162 162 163 164 165 165 166 166 167 169 169 170 170 171 171 172 172 173 175

Part IV Chapter 11 REORIENTING SOCIETY FOR HUMAN DEVELOPMENT 11.1 SOCIAL ACTION FOR HUMAN DEVELOPMENT 11.2 CENTRE-STAGING HUMAN DEVELOPMENT AND ITS PROMOTION 11.2.1 Generating optimism and commitment 11.2.2 Organising 11.2.3 Encouraging voluntary cooperation

177 177 178 178 179 179

11.2.4 Sharpening political discourse and politicisation 11.2.5 Ensuring devolution of rights and responsibilities 11.3 UNIVERSALISING HUMAN DEVELOPMENT 11.3.1 Reordering local priorities 11.3.2 Universalising primary health and education 11.3.3 Universalising access to work and a human level of living 11.4 RESISTING EXCLUSION 11.4.1 Resisting exclusion of women 11.4.2 Resisting caste and ethnic discrimination 11.4.3 Resisting exclusion of the income-poor

180 181 182 183 183 185 187 187 188 188

CHAPTER 12 REORIENTING POLITY FOR HUMAN DEVELOPMENT 12.1 POLITY AND CRISIS OF LEGITIMACY 12.2 TOWARDS A NEW POLITICAL COMPACT IN THE BODY POLITIC 12.2.1 Managing a dynamic stability 12.3 DEMOCRATISING THE STATE 12.3.1 Reforming political parties 12.3.2 Reforming the electoral process 12.3.3 Reforming the conduct of constitutional bodies 12.3.4 Honouring the civil service 12.3.5 Combating corruption 12.4 DEEPENING DEMOCRACY 12.4.1 State of local government 12.4.2 Towards an effective civil society 12.5 CREATING A SOCIALLY RESPONSIBLE PRIVATE SECTOR

190 190 192 193 194 195 197 197 200 201 203 203 205 206

CHAPTER 13 REORIENTING ECONOMY FOR HUMAN DEVELOPMENT 13.1 RATIONALE 13.2 STATE VERSUS MARKET: TRANSCENDING THE CONCEPTUAL AND POLICY BARRIERS 13.2.1 State as a resource 13.2.2 Scope for intervention and reorientation 13.2.3 Reorienting market and liberalisation 13.3 PROMOTION OF "HIGH QUALITY" GROWTH 13.4 RESTRUCTURING THE ECONOMY 13.4.1 Restructuring agrarian relationships: land reform 13.4.2 Reorienting agriculture 13.4.3 Promoting agro-enterprises 13.4.4 Industrial promotion 13.4.5 Tourism development 13.4.6 Water resources 13.4.7 Human resource development 13.5 TRANSLATING ECONOMIC GROWTH INTO HUMAN DEVELOPMENT 13.5.1 Poverty alleviation 13.5.2 Social infrastructure

208 208 210 210 211 212 213 214 214 218 220 221 222 223 223 224 224 226

CHAPTER 14 REORIENTING PUBLIC FINANCE FOR HUMAN DEVELOPMENT 14.1 INTRODUCTION 14.2 EXISTING STRUCTURE OF GOVERNMENT EXPENDITURE 14.3 FINANCING GOVERNMENT EXPENDITURE 14.3.1 Revenue 14.3.2 Domestic borrowing 14.3.3 External resources 14.4 NEED AND SCOPE FOR BUDGET RESTRUCTURING 14.4.1 Mobilisation of additional resources 14.4.2 Reforming the tax system 14.4.3 Restructuring foreign aid 14.4.4 Restructuring inter-sectoral budget 14.4.5 Restructuring intra-sectoral budget

227 227 227 229 230 232 232 233 234 234 236 239 241

CHAPTER 15 HUMAN DEVELOPMENT: SOME KEY CHALLENGES 15.1 DEPARTURE AND STANCE 15.2 ECONOMY, CULTURE, POLITY 15.3 MACRO, MESO, MICRO 15.4 PRINCIPAL ACTORS 15.5 HUMAN DEVELOPMENT PROMOTION AND GLOBALISATION 15.6 RETHINKING FOREIGN AID 15.7 MONITORING HUMAN DEVELOPMENT 15.8 HOPE

245 245 246 247 247 249 250 251 252

BOXES 1.1 Fatal attraction to the Kathmandu Valley 1.2 Allocation of budget in the social sector

11 16

2.1 Human quests in Nepali poetry

24

5.1 5.2 5.3 5.4 5.5

Jean Drèze and Amartya Sen on the value of education What is literacy? Reliability of enrolment and literacy data Access to pre-school education Training programmes implemented by government and parastatal agencies

76 76 78 80 85

6.1 6.2 6.3 6.4

Women's work and right to income The WHY of street children The tradition of bonded labour Prerequisites and actions needed for abolition of bonded labour

108 109 111 113

8.1 8.2 8.3 8.4 8.5

Rights delayed, rights denied Participation in irrigation and drinking water projects Community forestry: participation through consensus Jarajuri experience Shifting modes of NGO participation

138 140 141 141 142

9.1 9.2 9.3 9.4 9.5

The human rights regime in Nepal Law and women: according to Muluki Ain (Public Law), 1962 Public litigation: some examples Justice delayed Society and corruption

150 152 159 160 161

10.1 Local initiatives for economic, political and cultural action 10.2 Community action for food security is Sindhuli district

168

10.3 Caste exploitation and insecurity

171 174

12.1 Decalogue of rights 12.2 Questions on alternative democratic model 12.3 Seven principles of public life

194 195 202

13.1 Government and incompetent state 13.2 State as a resource in liberal democracy 13.3 Lessons of experience with land reform 13.4 The APP strategy

210 211 216 218

14.1 Human allocation ratios 14.2 Hounding the state coffers

228 239

TABLES 1.1 Structure of consumption and domestic savings 1.2 Trends of major economic indicators

14 14

3.1 3.2 3.3 3.4

Distribution of human development across districts Distribution of gender-sensitive development across districts Distribution of GDI/HDI ratios across districts Distribution of gender empowerment across districts

42 47 49 51

4.1 Infant mortality rate by sex, 1971-1994 4.2 Infant mortality rate by place of residence, 1978-1994 4.3 Major morbidity and mortality patterns 4.4 Distribution of morbidity by type of ailment, 1995 4.5 Trends in reproductive health, 1991 and 1996 4.6 Access to maternal and child health care by place of residence, 1991 and 1996 4.7 Household perception on adequacy of access to health care services by place of residence, 1996 4.8 Per capita daily access to nutrition, 1987-95 4.9 Household perception on adequacy of access to health care services by place or residence, 1996 4.10 Nutritional deprivation among children by place of residence, 1996 4.11 Distribution of households by selected sanitation indicators and rural/urban location, 1991 and 1996 4.12 Level of total health expenditure by source, 1994/95 4.13 Annual household expenditure on health by outlets, 1994/95

58 58 59 59 63 63 64 65 67 67 69 69 71

5.1 Literacy rate by ecosystemic and development regions, 1996 5.2 Primary school-age children and enrolment rates, 1995 5.3 Promotion, repetition and drop-out rates at primary grades, 1994 5.4 Lower secondary school-age children and enrolment rages, 1995 5.5 Promotion, repetition and drop-out rates at lower-secondary grades, 1994 5.6 Secondary school-age children and enrolment rates, 1995 5.7 Gradewise promotion, repetition and drop-out rates at secondary level, 1994 5.8 Themes of skill training provided by NGOs and private organisations 5.9 Number of schools and campuses by public and private categories, 1995 5.10 Percentage of the education budget allocated to different years 5.11 Sources of annual income of public and private schools 5.12 Per capita expenditure on primary education, 1995 5.13 Average annual household educational expenditure by level and type of schools 5.14 Mean expenditure pattern of primary schools 5.15 Expenditure pattern of primary schools 5.16 Expenditure pattern of secondary schools

76 77 79 82 82 83 83 86 87 90 90 91 91 92 93 93

6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9

Population and work force by gender and age, 1971-1996 Work participation rate by age group Work participation rate by ecological region Distribution of workers by major industry group Rage of underemployment by region Levels and trends of real wage by sector, 1985-1996 Nationality of industrial workers (surveyed districts), 1995/96 Work force participation rate by gender, 1971-1996 Kamaiya families, labourers and indebtedness

7.1 Per capita GDP growth rate 7.2 Level and source of household income by place of residence 7.3 Size distribution of income by rural and urban areas (Gini coefficient) 7.4 Size distribution of income by region, 1996, 1996 (Gini coefficient) 7.5 Distribution of per capita household income by income category and place of residence 7.6 Distribution of household income by farm size and region 7.7 Size distribution of agriculture landownership by household and region 7.8 Size distribution of agricultural land operatorship by household and region 7.9 Distribution of households by land entitlement status and region 7.10 Distribution of participation of women in economic activities by region 7.11 Distribution of employment by type, region and gender 7.12 Distribution of work participation of women by economic activity 7.13 Distribution of household consumption expenditure 7.14 Distribution of household saving and investment by size of farm 7.15 Household indebtedness by source and purpose of borrowing, 1992 7.16 Trend of household indebtedness by source of credit

99 99 100 100 102 103 105 107 110 114 115 115 116 116 117 118 118 119 121 121 122 122 124 124 125

7.17 Incidence of poverty, 1997 7.18 Incidence of poverty by region, 1984/85 7.19 Incidence of poverty under different poverty lines by rural-urban residence, 1989 7.20 Incidence of rural poverty by region under different criteria, 1992 7.21 Incidence of poverty by regions, 1996 7.22 Trends in incidence of poverty by rural-urban residence 128 7.23 Inter-regional variation in incidence of poverty 7.24 Correlates of poverty, 1996 7.25 Selected socio-economic and demographic indicators for the poor and non-poor

126 126 127 127 128

8.1 Presence of NGOs by region and sector 8.2 Elected member of parliament by caste/ethnicity, 1959, 1991, 1994

142 144

9.1 Disposal of cases in courts, 1995/96

160

14.1 Government budget allocation for human priority areas, 1985/86-1996/97 14.2 Per capita budget allocation in different sectors, 1992/93 and 1996/97 14.3 Financing of public expenditure, 1986-1996 14.4 Composition of revenue, 1985-1996 14.5 Composition and growth rage of foreign resources, 1986-1996

229 230 230 231 232

15.1 Correlation between district-level HDI, GDI and other socio-demographic and economic variables

246

129 129 131

FIGURES 1.1 Distribution of population by ecological region 1.2 Structure and growth of gross domestic product 1.3 Per capita income by geographical group

12 13 13

3.1 Nepal's achievement in human development and regional perspective 3.2 Trends in human development 3.3 Human development in urban and rural locations 3.4 Human development across ecological regions 3.5 Human development across development regions 3.6 Human development across eco-development regions 3.7 Human development by caste and ethnicity 3.8 Trends in gender-sensitive development 3.9 Gender-sensitive development in Nepal in a comparative perspective 3.10 Gender-sensitive development in urban and rural locations 3.11 Gender-sensitive development and ecological regions 3.12 Gender-sensitive development in development regions 3.13 Gender empowerment in a comparative perspective 3.14 Gender empowerment across ecological regions 3.15 Gender empowerment across development regions 3.16 Capability poverty in comparative perspective 3.17 Capability poverty in rural and urban locations 3.18 Capability poverty across ecological regions 3.19 Capability poverty across development regions 3.20 Nepal's human poverty in a regional perspective 3.21 Human poverty across ecological regions 3.22 Human poverty across development regions 3.23 Human deprivation in rural and urban locations 3.24 Human deprivation across ecological regions 3.25 Human deprivation across development regions

39 39 40 40 41 41 44 44 45 45 45 47 49 51 51 52 52 53 53 53 54 54 54 55 55

4.1 4.2 4.3 4.4

57 57 61 62

Life expectancy at birth by sex, 1976-96 Life expectancy at birth in selected South Asian countries 1993 Health personnel per 100,000 population and its growth between 1975 and 1994 Hospital beds and growth between 1975 and 1994

5.1 Literacy trend in Nepal for persons over 6 years old (gender and year) 5.2 Literacy rages by ethnic group 5.3 Distribution of higher secondary schools

77 77 84

5.4 Growth of share of education in total national budget 5.5 Trends in mobilisation of external and internal resources in the education sector 5.6 Annual household expenditure on education

89 89 90

6.1 Distribution of self-employment and wage employment by region 6.2 Rate of unemployment by rural urban location, 1997-1996 6.3 Self-employment and wage employment by gender

101 102 107

8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8

144 144 145 145 145 145 146 146

Share of population relative to seat in parliament ethnic and gender composition of DDC, 1997 Ethnic and gender distribution among DDC chairpersons and vice-chairpersons, 1997 Ethnic and gender distribution among mayors and deputy mayors, 1997 Caste/ethnic composition of political party leadership, 1997 Distribution of government gazetted officers by gender, 1997 Voter participation in national elections and referendum Voter participation in VDC and municipality elections, 1997

9.1 Arbitrary arrests and detentions, 1992-96 9.2 Number of legal practitioners by category, 1986/87-1996/97

151 158

13.1 Size of government expenditure

211

14.1 Pattern of foreign aid disbursement by sector, 1985-1996 14.2 Social priority expenditure scenarios, 1998-2002

233 234

MAPS 3.1 3.2 3.3 3.4

Distribution of human development across districts Distribution of gender-sensitive development across districts Distribution of HDI/GDI across districts Distribution of gender empowerment across districts

4.1 Food-deficit areas, 1995

43 46 48 50 66

ANNEXES 1.1 Distribution of population by ecological region, 1952-1991 1.2 Structure and growth of gross domestic product

253 253

3.1 3.2 3.3 3.4 3.5 3.6 3.7

254 255 262 262 263 264 266

Source of data Computation of indices Nepal's achievement in human development in global and regional perspective Trends in human development Human development across regions, 1996 Human development across districts, 1996 Human development by caste and ethnicity, 1996

3.8 Trend of gender-sensitive development 3.9 Gender-sensitive development in Nepal in a comparative perspective 3.10 Gender-sensitive Development Index (GDI) across regions 3.11 Gender-sensitive development across districts, 1996 3.12 Gender empowerment in a comparative perspective 3.13 Distribution of values of Gender Empowerment Measure (GEM) across regions 3.14 Gender Empowerment Measure (GEM) across districts 3.15 Capability poverty in a comparative perspective 3.16 Distribution of capability poverty across regions, 1996 3.17 Human poverty in Nepal in a regional perspective 3.18 Human Poverty Index (HPI), 1996

266 266 267 268 269 270 271 272 273 273

3.19 Distribution of human deprivation across regions, 1996

274 275

5.1 Literacy trend in Nepal for persons over 10 years old by gender and year

276

6.1 Distribution of population and work participation rate by ecological region

277

7.1 7.2 7.3 7.4 7.5 7.6

278 278 278 278 279 297

Landholding pattern of households Occupational classification of female labour force by rural-urban areas Distribution of self-employment/off-farm employment by gender Trend of level and growth of consumption 1976/1980-1990/1995 Target and achievement in income growth by plan period Financial performance of government by sector, 1981/85-1992/97

14.1 Desired and trend-projected public expenditure in the human priority sector, 1992/93-200102 14.2 Projected public sector resource gap, 1996/97-2001/02 14.3 Government budget allocation for human priorities, 1985/96,1992/93, 1996/97 14.4 Actual expenditure ratio over budget estimate, 1984/85-1996/97 14.5 External assistance in education by basic and non-basic categories, 1985/86-1996/97 14.6 External assistance in health by basic and non-basic categories, 1985/86-1996/97 14.7 Subsidy provisioned in the budget, 1985/86-1996/97 14.8 List of human priority sector projects

280 281 282 283 283 284 284 285

Some Indicators of Human Development Notes References

286 287 290

SUMMARY Human Development: Concept and Agenda Human development is a specific conceptual and strategic mode of re-viewing human beings and re-formulating the developmental problematic. Unlike some other conceptual and strategic frames, where discourses and strategies are woven around the imperatives of economic growth, financial capital, technology or, at the micro level, of income and/or welfare growth − and where the human element is made to revolve around such concerns, the central imperative of the human development frame is using and enhancing human capability. Because human beings are the end of development, all other imperatives and concerns are of instrumental significance, i.e., all such imperatives and concerns must be seen and utilised as means toward enhancing human capabilities and furthering human development. The reduction of capability poverty constitutes the central agenda of the human development frame. In addition, the strategic agenda of human development also mandates that each human person, individually and through institutions they create and recreate together, are the active agents of human capability enhancement: received, passive human development is a contradiction ab initio. Human beings have potentially infinite capabilities. But certain human capabilities are more fundamental than others. The capabilities required to lead a healthy and knowledgeable life and to acquire a decent level of living are certainly fundamental. Because human beings are essentially creative beings, the capabilities required to work productively is fundamental as well. In addition, because human beings are social beings as well, the capabilities required to access and participate freely, equally and effectively in public affairs in the political, economic and cultural domains at various levels of organisation of the society − and where necessary, to redefine and restructure the different domains − constitute fundamental human capabilities as well. Human development promotion, thus, focuses on enhancing these capabilities through appropriate reorientations in the political, economic and cultural spheres. Because of various political, economic and

SUMMARY

cultural reasons, fundamental human capabilities are unevenly distributed not only at the global scale but within countries as well. Distribution of such capabilities generally remains skewed in favour of particular human-geographical and social groups. Some groups are structurally excluded from using and enhancing their capabilities. While the agenda of human development calls for the enhancement of capabilities of the people as a whole, universalism − and thus struggle against exclusion and a more even distribution of capabilities − remains a fundamental objective of the agenda.

Nepal: Basic Developmental Structure and Processes The level, distribution and dynamics of capabilities are intimately connected to Nepal's basic developmental structures and processes. Such structures and processes work to retard or promote human development, i.e., the relative “friendliness” of such structures and processes to human capability formation, use and enhancement on the one hand and the reduction of deprivation on the other varies widely. The structures and dynamics of polity, economy and culture, together with those of natural and human resources, are of crucial significance in this context. Politically, the 1990 constitution, an outcome of the immediately preceding popular movement for the restoration of democracy, prescribes a parliamentary − democratic form of governance and enshrines all of the fundamental rights under the liberal mould. In addition, it, among others, directs the state to: •

•

Promote conditions of welfare on the basis of the principles of an open society by establishing a just system in all aspects of national life; Establish and develop, on the foundation of justice and morality, of a healthy social life, by eliminating all types of economic and social inequalities and by establishing harmony amongst the various castes,

i

•

•

•

tribes, religions, languages, races and communities; Maintain conditions suitable to the enjoyment of the fruits of democracy through wider participation of the people in governance of the country, and decentralisation and promotion of general welfare by making provisions for the protection and promotion of human rights; Raise the standard of living of the general public through emphasis on education, health, and employment of the people of all regions, and through equitable distribution of economic resources for balanced development in the various geographical regions of the country; and Promote the interests of the economically and socially backward groups and communities by making special provisions with regard to their education, health and employment.

The democratisation of the polity since 1990 has certainly led to a higher level of political consciousness, more informed political discourse and, possibly, to more intense political participation. However, there has been little discernible rise in the rate of progress in most other human capability-related fronts in the last eight years. Part of the reason for this state of affairs is the salience of the non-formal sources of political power, including those of the feudal, mercantile, bureaucratic and caste and genderrelated interests, all of which resist broad-based development. The formal, democratic dispensation is not only forced to continually compromise with such interests but often colludes with such interests. The economic structure is largely characterised by semi-feudal and subsistence agrarian regimes and high-underemployment and low-productivity agricultural patterns. Nearly four-fifths of the total population depends upon agriculture as its primary source of earning. Nearly four-fifths of all workers are also selfemployed, almost all in the agricultural sector. Sixty-nine percent of the agricultural holdings, however, are less than one hectare in size. The agricultural GDP grew annually by only 2.3 percent during the last two decades. Indeed, per capita agricultural GDP did not increase at all during the period. While the service sector has grown considerably within the last decade, the highly narrowly based mercantile sector

ii

continues to remain the most dynamic force in the economy. Due to these features, the average per capita income of the people of the country is only US$ 210 (PPP$ = 1,186). Disparities in the distribution of assets (particularly land), income-earning opportunities and access to decision-making have significantly influenced income distribution. The bottom 20 percent of the households receive only 3.7 percent of the national income while the top 10 percent claim a share of nearly 50 percent. The scale of income-poverty is massive, with about 45 percent of the population under the absolute poverty line. Gender disparity in income distribution is acute as well, due to the command of male household members over family income, near-absence of property rights for women and the unpaid domestic work the vast majority of women are engaged in. Such disparities in assets and income, in turn, influence access to education, health, nutrition, employment and level of living. While the GDP growth rate increased marginally (to 5.2 percent per year) during 199196, liberalisation measures have so far failed to induce export diversification and to reduce trade deficit. On the fiscal front, due to the low level of revenue yields (at 11.3 percent of the GDP for 1996), public development financing remains heavily dependent on international assistance. The annual rate of inflation is approximately 10 percent. The share of social sector in public expenditure has increased rapidly in the last decade (from 16 percent of total annual budget in 1986 to 29 percent in 1997 and from 3.7 percent of the GDP in 1986 to 5.8 percent in 1997). However, because of the low base, the increased allocation remains far from adequate. In addition, spending on human priority areas remains low. Within the cultural sphere, physical ruggedness, the relative salience of feudal and subsistent modes of production and weak articulation of market within the national space have historically led to enduring resilience of the localised cultures. The large number of caste and ethnic groups, languages and regionalised conglomerations are expressions of such localisation as are the high intensity and durability of household and community level cooperation. Even as more encompassing cultures are being generated at a slow pace, local representative bodies remain largely unequipped to tap the potentials of local cooperation. Decentralisation of authority and empowerment

NEPAL HUMAN DEVELOPMENT REPORT 1998

in favour of such bodies remain extremely weak. Exclusion is a highly salient feature of culture in relation to women, the “low caste” groups and some ethnic groups. The poor also suffer a variety of cultural exclusions. Such groups face severe barriers against the use and enhancement of capabilities. The status of the people in relation to health, nutrition and education − the key components of “human resources”-remains poor. Despite some progress, PEM and other nutritional deficiencies remain extremely high. Infant, child and maternal mortality rates remain very high as well. Only about 40 percent of the 6+ age group is literate. Safe drinking water is available to a small proportion of the population. While additional space for extensive agriculture has been exhausted and much of the large-scale forest resources have dwindled, much scope remains for intensifying and diversifying agriculture. Successful reforestation has been reported in a number of locations, signifying the potential for fruitful replication. Large scale and intense microclimatic variations can be utilised as a valuable resource for a variety of ends as well. Very large-scale potentials exist for the development of medicinal plants, tourism and hydropower.

Human Development: Achievement, Distribution, Trend The human development index (HDI) is computed as an unweighted average of values achieved in level of living, knowledge and health. The index has a maximum value of 1. The national HDI for Nepal is 0.378, which shows that the level of human development in Nepal is low. The absolute value of Nepal’s HDI is only 45 percent of the global HDI. The value of HDI for Nepal scales at 38 percent of the HDI of industrial countries and 61 percent of the HDI of the developing countries even as it fares slightly better in comparison with the HDI for the least developed countries as a whole. Within the South Asian region, all countries, with the exception of Bhutan and Bangladesh, enjoy a higher HDI than Nepal. The HDI value of Sri Lanka is more than double that of Nepal; India and Pakistan are higher by nearly one-fourth and the Maldives’ HDI is 62 percent higher. Trends show that Nepal has made very slow but gradual improvement in human development. Componentwise, the rate of progress in raising the level of living (measured by means of

SUMMARY

income) is much slower than the rate of progress in health and knowledge. Disaggregation of HDI across regional and social collectivities shows that the level of human development among the rural residents is only two-thirds of that among the urban residents. Residents of the Hills and the Tarai enjoy a higher level of human development than residents of the Mountain region (figure 1). The western, eastern and central development regions enjoy a higher level of human development than the mid-western and far western regions (figure 2). Among the various caste/ethnic groups, the Newars, a majority of whom live in urban areas, have the highest level of human development followed by other high caste groups. The level of HDI among the Newars is twice that for the “untouchable” caste, the most deprived group. Inter-district disparities in human development are high as well. The level of human development in Kathmandu is more than four times that of Mugu, the most deprived district. However, in terms of global categorisation, none of the districts falls in the high human development category. Two districts, Kathmandu and Lalitpur, fall in the medium human development category, i.e., 73 out of 75 the districts fall in the low human development category. The distribution of human capabilities varies saliently by gender. The values of the gendersensitive development index (GDI), which compares the distribution of life expectancy, education and income among men and women shows that men rank much higher than women compared both to the global as well as South Asian contexts. The overall capability attainments in human development in Nepal are reduced by approximately one-sixth if disparity in men’s and women’s capability attainments is taken into account, i.e., the depth of gender disparity is one-sixth. The relative magnitude of gender disparity is similar in the rural and urban areas. Among the ecological regions, gender disparity in human development is highest in the Mountains. Among the development regions, gender disparity in capabilities is highest in the western development region while it is the least in the far western region. At the district level, Kathmandu, Kaski and Lalitpur districts record highest GDI values while Mugu, Bajura and Bajhang record least. In general, however, the intensity of discrimination against women at various socialorganisational levels, e.g., national, regional and

iii

household levels, in basic capabilities in Nepal is very high. Nepal, thus, faces the challenge not only of enhancing the overall level of human capability but also ensuring a just distribution of these capabilities among men and women. The gender empowerment measure (GEM) is another composite measure of gender disparities in income, share in professional/ technical and administrative/managerial jobs and seats in the parliament. Values of GEM show that gender empowerment in Nepal is very low in comparison to the global level. In addition, women in all South Asian countries, barring Pakistan, are more empowered than women in Nepal. Within Nepal, significant variations exist in the level of women’s empowerment across eco-systemic and develop-ment regions and districts. The distribution of GEM across these spaces, in general, follows the pattern of the distribution of the GDI. Although the direction of causation between women’s empowerment and their capability level remains unclear, the low achievement in basic capabilities may very well be seen as an outcome of the low level of empowerment among women. Poverty in human capability in Nepal is very high as well in comparison to other countries of South Asia. People in Nepal are much more capability-poor than income-poor. Significantly, people are relatively more capability-poor as one ascends the income scale: paradoxically, capability poverty is relatively higher precisely in those areas which are better off in terms of income. This clearly indicates that under the existing economic, political, and cultural arrangements, access to economic resources alone will not significantly enhance human capability formation. Consequently, major

iv

reorientation in policies and practices at various levels, including at the levels of state, market, districts, communities and house-holds, is called for.

Health Good health is fundamentally and intrinsically important to living a worthwhile human life. In addition, access, use and enhancement of all other basic human capabilities are fundamentally contingent on continued survival and maintenance of good health. In addition, ill health enhances dependence and diminishes selfworth.

♦ Status Average life expectancy, within the last two decades, has increased by 13.5 years, i.e., by approximately eight months annually. Nonetheless, average life expectancy is only 55 years (1994 figure). Women, contrary to the global rule, have a life span which is shorter by two years compared to men. Infant mortality, while decreasing by approximately eight percent annually within the last two decades, nonetheless claims one out of every 10 births. Infants in the rural areas are exposed to 1.6 times the risk of death compared to those in the urban areas. Infants in the mountain region are more than two times as likely to die as those in the hill and tarai regions. There is a very high incidence of diarrhoea and ARI among children. The incidence of tuberculosis is also very high at approximately 3.5 per 100 persons. Incidence of maternal mortality is one of the highest in the world. The morbidity rate is high as well. High

NEPAL HUMAN DEVELOPMENT REPORT 1998

mortality and morbidity, in turn, are attributed to insufficient food intake, early marriage and early child bearing, poor housing, lack of safe drinking water, insufficient sanitary facilities, abuse of alcohol and tobacco and insufficient coverage of health services. Nearly three out of five households report that they do not have adequate access to health facilities and services. Independent data sources report low coverage of immunisation programmes. Such sources suggest that BCG coverage was limited to 72 percent of all infants. DPT, OPV and antimeasles coverage was limited to approximately one-half of all children. One independent source reports even lower figures. In addition, efficacy rates of vaccines have been found to be extremely poor: the efficacy of measles vaccines is rated at only 22 percent. Malnutrition is widespread. The incidence of PEM is very high. Over one-half of all households report that their food intake is inadequate. Approximately one-half of all children under 3 years of age are stunted, i.e., suffer from sub-normal weight for height. Similarly, two-thirds of all pregnant women suffer from iron deficiency. Two out of five persons suffer from iodine deficiency. Vitamin A deficiency is also widespread. Access to piped water has increased substantially in the last 5 years but piped water, especially in urban areas, is unsafe. Nearly 3 out of four households in the rural areas have no access to sanitary toilet facilities. Approximately 26 percent of urban households also lack such facilities. Medical facilities have increased considerably in the last two decades. The formation of the grassroots-level women volunteer health workers and the ongoing programme of establishing health sub-posts in each of the 3,912 VDCs in the country have been particularly sound policy decisions. Approximately 45 percent of the households can physically access a medical institution with a travel time of 30 minutes. The community health workers, however, suffer from a very low level of paramedical training. The large-scale programme of establishment of health sub-posts, on the other hand, is marred by pronouncedly sub-quality services. Supplies of medicines, medical technologies and health manpower remain highly inadequate. Approximately 5.3 percent of GDP is spent on health. This ratio compares favourably with those of other South Asian countries. Three-

SUMMARY

fourths of this expenditure, however, is made by households. The share of public expenditure on health, while rising, is relatively low. More than 40 percent of the total public expenditure is allocated to curative facilities. Public health issues receive far less emphasis compared to curative ones. In addition, the almost exclusive emphasis of the government on the allopathic medical system has alienated other widely prevalent medical systems and obstructed the upgradation of such medical systems and fruitful cross-fertilisation of alternate systems. Health promotion is often seen by the government as a sectoral and technical exercise. In consequence, ministries other than the Health Ministry have little stakeholding in the promotion of health. Similarly, the space for health promotion by and through local representative bodies and communities is almost non-existent. Finally, health remains to be promoted as a legitimate public political agenda.

♦ Recommendations •

•

•

Universalising primary health care. Universalising primary health care must become the fundamental goal of health policy. All other objectives must be reduced to a secondary status. Such a commitment cannot flow out of transient and soft developmental and sectoral policies alone. It must flow out of national level political commitment and be concretised constitutionally. In other words, the recognition of primary health as a fundamental right of all citizens must manifest itself in a constitutional amendment. Intensifying intersectoral linkages. Health is far more than medicine. This truism, however, is often lost not only within the MOH but within the governmental system as a whole. The recent draft-stage Second Long-Term (1997-2017) Health Plan, for example, is totally silent on the significance of intersectoral coordination. Such a lapse, it must be emphasised, is serious. Steps must be taken to coordinate health-promotion policies and programmes, at the least, among the ministries of health, agriculture and education. Coordination with the private sector is also important. Engaging local bodies and community. Primary health care must move away from

v

•

•

•

vi

technocratisation and towards much broader popular participation. Bureaucracies, by themselves, are inherently illequipped in primary health care at the community level. On the other hand, community engagement, not health delivery, can potentially ensure universalisation of primary health care. The promotion of devolution in favour of local representative bodies can become a potent weapon in eliciting popular participation in primary health care. Ensuring food security. The extremely high incidence of malnutrition shows that existing health interventions are both puny and misdirected. Interventions, both public and private, must be therefore, directed at increasing agricultural production and productivity at the household level. Expansion of employment opportunities is of fundamental significance as well. Sharply targeted public food distribution systems, subsidised for the extremely deprived, can go a long way in reducing the incidence of malnutrition. Investing additional resources and enhancing efficiency. The scale of public investment in the health sector in general and primary health in particular is low. Mobilisation of additional resources, including by local bodies, therefore, is of vital importance. Local bodies, in addition, can mobilise non-financial resources to generate and disseminate health information and to develop strategies to overcome high morbidity and mortality. Intersectoral and interorganisational coordination can contribute to a higher level of efficiency. Formulation and implementation of an essential drugs policy and enforcing usercharges on non-primary health care in public health institutions, therefore, remain key priorities. Producing more and appropriate health workers. While administrative firmness and incentives can combat the very high rate of absenteeism of medical personnel from the vast rural areas, production of more and appropriately qualified health workers must be regarded as a priority. The elitist, medical-specialist professional bias, therefore, has to give way in favour of the production of low and

medium grade health workers. In addition, a higher level of investment must be made in the retraining of community health volunteers and village and district level health workers.

Education Knowledge − including information, attitude and skills − is one of the fundamental capabilities a person needs to make sense of oneself and of the world one lives in. It helps one to re-learn, reassess, re-act and to change oneself and one’s world. Knowledge is analogously fundamental to the functioning of a society. That is why all societies develop multiple structures and agencies for the generation, validation and transmission, including intergenerational transmission, of knowledge. Schooling, in turn, has emerged as the prime avenue for the acquisition and transmission of knowledge.

♦ Status Literacy rate has been increasing very slowly in Nepal. The current national literacy ratio is 40 percent. But women, many caste, ethnic and regional groups and the poor have much lower literacy ratio. For some groups the ratio is as low as 10 percent. Only about 72 percent of the 2.7 million 6-10-year-old children are enrolled in school (1995 figure). Two-thirds of those not enrolled in primary schools at this age group were girls. Gross enrollment in primary schools, however, nearly doubled from 1.75 million in 1884 to 3.26 million in 1995. In 1995, the gross enrollment rate was 114 percent. Physical access to primary schools has improved greatly in the last decade. The number of primary school teachers nearly doubled between 1984 and 1995. Rates of repetition and drop-out are very high even at the primary level. Only 10 percent of all the children enrolled in grade one complete primary school (i.e., grade five) without repeating any grade. In 1995, the failure rate in grade one was 21 percent in addition to a drop-out rate of 42 percent. Among the 5th graders, in turn, the failure rate was 17 percent in addition to a drop-out rate of 16 percent. (On the positive side, however, there was little difference in failure and drop-out rates between boys and girls.) Low enrolment and high failure and dropout rates are generally attributed, among others, to household work burden of children, irregularity of school operation, income poverty, NEPAL HUMAN DEVELOPMENT REPORT 1998

physical distance to schools, caste and ethnic discrimination, neglect of mother-tongue in schools, presence of under-age students and low perceived relevance of education among parents. Non-formal education programmes have contributed significantly to the promotion of literacy. Some non-formal programmes focussed on out-of-school children enable such children to join school at upper primary grades. Non-formal programmes focussed on adults are reported to have imparted literacy skills to 0.93 million persons between 1992 and 1997. While access to lower secondary (grades 68) and secondary (grades 9-10) levels are expanding, the net (appropriate-age) enrolment rates at these levels are low at 26 percent and 16 percent, respectively. In addition, gender discrimination in enrolment at these levels is high: for every 10 girls enrolled, the number of boys enrolled is 16 at the lower secondary level and 18 at the secondary level. There is little gender variation in repetition and drop-out rates, however. Higher secondary education (grades 11-12) is a recent innovation. Access to vocational schooling remains highly limited. Access to tertiary, i.e., post-school, education is limited as well. In 1991, only 0.83 percent of the total population had acquired a Bachelor’s degree. Among all the college graduates, only 18 percent were women. Despite announced policies, public school education is not totally free. Almost all schools charge one-time, non-tuition annual fees. Access to free textbook is limited to girl students at the primary level and to the small body of (all) primary school children in the designated “remote areas”. A significant, although not an overwhelming, proportion of parents is discouraged from sending their children to schools because they are unable to pay these costs. Much improvement needs to be made in the overall quality of public investments in education. On the other hand, while the total educational expenditure and state support to education have increased gradually in the last half-decade (from an average of 2 percent of GDP and 10 percent of the annual public expenditure during 1975-1990 to an average of 2.6 percent and 13.2 percent, respectively, during 1992-1997), such levels of expenditure are far from adequate. The government, rather than local representative bodies, community, parents and teachers, have an overwhelming presence in the

SUMMARY

public school management system. Despite the high regard schools and teachers are held in, local stakeholding in public schools, as a result, remains low. This is also one of the major reasons for the relatively low physical, academic and pedagogical quality of the public education system. Other reasons for the relatively low quality of education are: rapid expansion of the number of schools disjunctions between school curriculum and the information, attitude and skills required in the wider society; the low ratio of trained teachers; ineffective supervisory system; and high level of absenteeism among teachers. During the last 15 years, private, commercially organised educational institu-tions have made rapid gains due to the abovementioned deficiencies of the public school system, rise of income and decrease in the level of fertility among urban households and the anticipation that return from educational investments might be higher than those from productive physical assets. While the quality of commercially organised schools, in general, is noted to be better than that in publicly organised schools, the highly expensive nature of such schools means that private education cannot be a substitute for public education for the vast majority of the households. (Private primary schooling, to illustrate, is 13 times as expensive as public primary schooling.)

♦ Recommendations •

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Universalising literacy and primary education. Ensuring universal access to literacy and primary education must become the overriding goal of educational policy. Attainment of this goal requires the formulation and implementation of appropriate political, economic, financial and cultural policies. Some such policies are already in place. Much more needs to be done, however. Literacy and primary education must be constitutionally recognised as a fundamental right of all citizens. Enhanced attention must be given to ensure social and regional equity, particularly in relation to girls and women, the poor and the lowest caste groups. Generating and investing additional resources. While appropriate use of political and cultural resources is germane in order to universalise literacy and

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primary education, generation and investment of larger public financial resources are called for. Graduated and judiciously discriminating (in terms of ability-to-pay principle) user-fees at nonprimary levels can become an important revenue source. Broadening of the tax base, introduction of new tax measures and effective revenue administration can increase the overall level of revenues. Taxes on private schools and on foreign exchange facilities for students wishing to study abroad can add to such revenue. Reduction of large-scale inefficiencies, e.g., as manifested in the very high repetition and drop-out rates, is mandated as well. Devolving rights and responsibilities of school management. Rights and responsibilities for the management of public schools must be devolved to ward committees, VDCs and municipalities. In order to raise the level of local stakeholding, such bodies must have the rights, among others, to modify, within broad limits, local learning needs − and thus the syllabi, modes of instruction, the school calendar, as well the hiring and firing of teachers. The jurisdiction of the DEOs and the DECs, in turn, should be limited to the performance of oversight and professional leadership responsibilities. Making administration more effective and efficient. Entrusting the DEOs with the full range of supervisory responsi-bilities has remained a major source of inefficiency and ineffectiveness of educational administration. Apart from devolution of authority to representa-tive bodies, delegation of requisite authority to lower administrative levels and continuous monitoring of perfor-mance can improve educational admi-nistration. Dismantling of the “project system” can also enhance information and reduce turf protection within the MOE. Raising the quality of schooling. Almost all of the recommendations forwarded above impinge on the quality of education. More narrowly, and within the school setting, the quality of schooling needs to be improved by making available more and better non-textbook learning materials and introducing modes of

•

instruction which de-emphasise rote memory and emphasise activities which allow enhanced classroom participation among students. Overcrowding in grades 1 and 2, which is normal in many schools, needs to be gradually reduced. Absenteeism among teachers needs to be combatted. Reforming and learning from the private sector. While commercially organised schooling cannot substitute public schools in terms of access and while the rise of such schools has effectively muted the demand for reforms in public schooling, they enjoy a decisive edge in terms of quality and efficiency. The public schools must learn from these features of the private schools even as the private schools must learn to increase access. The MOE must create an environment in which such mutual learning can take place.

Work and Employment Work and employment are intrinsically human development-promoting. They lead both to the use of the existing stock of capability and to the enhancement of capabilities. Instrumentally, they also contribute to raise the level of living through enhanced production and productivity. They also inherently promote self-respect, equity, participa-tion and empowerment.

♦ Status The economy is overwhelmingly rural and agriculture-based. The rate of growth of the working-age population is high at 3 percent/year. The work participation rate, particularly of women, is very high compared to those in most other countries. Work participation starts at an early age. More than four-fifths of the workers/labourers are engaged in the low productivity agricultural sector. The service sector accounts for one-sixth of the work force. Only a small proportion of the workers are engaged in industry, of which two-thirds are in manufacturing. Of all workers, nearly four-fifths derive their primary livelihood from self-employment. The scale of wage employment is relatively higher at approximately 25 percent in the eastern and central regions and relatively lower in other regions. In part because of the implementation of the structural adjustment programme, real wage

NEPAL HUMAN DEVELOPMENT REPORT 1998

rates, both in the agricultural and industrial sectors, remained stagnant during 1987-1996. The minimum-wage levels in the organised, industrial sector is insufficient even to cover consumption at the subsistence level. In civil service, the salaries and allowances of the nonofficer level employees in 1996 remained below those in 1985 in real terms. Real wage rates, however, have risen somewhat subsequently. Unemployment rate is high at 14 percent (1997 figure). The rate of unemployment is highest in Tarai followed by the Hills and Mountains. The scale of underemployment is higher still: approximately one-half of the total labour force works for less than 40 hours a week. The rate of underemployment is also highest in the tarai region. Seasonal and long-term movement of labour is large in scale and has grown further within the last decade. Such migration is no longer limited to workers from the Hills and the routine has picked up considerably among the workers in the Tarai. While the landless, the highly indebted and members of the “low-caste groups” appear to migrate in larger proportions, even the relatively well-off individuals and households join the ranks of the labour migrants. The scale of international (principally India-Nepal) labour movement also appears to have increased within the last decade. The inflow of labourers from India, who are engaged in various sectors, e.g., agriculture, industry, construction and informal sector trades, is also adversely and significantly affecting the employment opportunity of Nepali labourers. Most women are simultaneously engaged in three distinct arenas of work: reproduction, householding and income generation. Viewed in this perspective, the work burden of women in Nepal is much higher than the global average. As far as directly productive work is concerned, the participation rate among women in 1996 was 66 percent against 75 percent for men. Taking into account reproduction and householding, women’s work participation rate can be seen to be significantly higher compared to that for men. On the other hand, a significantly larger proportion of women remains engaged in the low-productivity, low-wage and high underemployment agriculture sector. Only four percent of all “economically active” women are engaged in formal sector employment. Most women are discriminated against in relation to wage rates as well. Although a larger proportion of men are unemployed than women,

SUMMARY

underemployment − in relation to directly productive work − is much more prevalent among women than men. In addition, women’s control over their wage (or other earnings) continues to remain weak. The regime of child labour is relatively large in scale, despite a significant drop during 19811991. Although small in scale, bondage labour remains alive as well.

♦ Recommendations •

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Creation of additional employment has been a consistent and key theme of government policies and plans for the last several decades. In the current climate of confusion in values and priorities, there is a danger that this objective may again be undermined in the pursuit of "efficiency" and by policies that succumb to the "lure" of global finance and modern technology. It is, therefore, imperative for the government to accept the intrinsic merit of the "right to work" and shun the growth process that is not labour-intensive or jobcreating. Supporting self-employment. Self employment is the dominant component of total employment structure as well as livelihood of most of the people. Improvement in income in this component depends more on the development of skills, introduction of new technology and managerial innovation rather than on the wage structure per se. The emphasis of the employment strategy should, therefore, be on supporting selfemployment through macro and micro economic measures, transfer of technology and investment in human development. Effective implementation of labour legislation. Though wage employment is relatively low, wage worker labour under a precarious regime. The minimum wage legislation should be effectively enforced and wage indexation, incentive package for compensation and and adequate social security should be integrated with the labour market. Control on migratory workers. As inflows of international migratory workers have distorted the supply side of the labour market, resulting in increasing instances of underemployment and/or unemploy-

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ment of available domestic labour force, such migratory flows substituting and/ or competing with domestic labour force need to be checked. Safeguarding women’s right. The working condition of the female workers − both in the formal and informal sectors − is inferior not only because the sociocultural environment forces them to work in inhumane condition but also because they lack access to as well as ownership of the productive resources. Political, cultural and legal interventions encompassing central issues, such as ensuring property rights, and abolition of kamlari, bukarahi, beglari, organi, are direly needed. A gradual strategy which puts due emphasis on prevention, protection and rehabilitation of the child labour needs to be formulated and implemented. Universalising primary education directly contributes to reduce the intensity of child labour. With regard to the bonded labour, there is a need for the formulation and effective implementation of Bonded Labour Abolition Act along with a programme of rehabilitation of the homeless and landless labourers.

Income, Consumption and Poverty Unlike other components of standard HDI, income is also a means for the achievement and functioning of human capability. Human deprivations like malnutrition, illiteracy and illhealth are closely related to the level and structure of income and thereby consumption.

sectors. The agricultural sector recorded a negative growth rate in per capita term. Income growth, thus, was narrowly based, had a low employment intensity and helped to intensify a pattern of uneven income distribution across sectors, regions and households. Low rate of income growth, skewed income distribution, and deteriorating terms of trade of the agricultural sector vis-à-vis other sectors have intensified poverty. Farm income is the major source of household income followed by non-farm income (wage, non-farm enterprise income, nonagricultural rental income, etc.). Households earn less than two-thirds of total income in the form of cash. Household total incomes largely coincide with the size of the landholdings. However, the rate of dependency on farm income varies across regions and income groups, e.g., its share is four times higher in the rural areas compared to the urban areas and it is highest in mid-western region. The share of farm income is highest among the lowest consumption quintile households. Income disparity is much wider in the more urbanised central region and is much narrower in the almost fully rural mid-western region. Furthermore, the more developed tarai region has the highest disparity compared to the hill and mountain regions. The pattern of income distribution has deteriorated over the last decade. Low level of household income has resulted in a high ratio of consumption to the level of income. In addition, the consumption income ratio has been increasing (from 84 percent in the late 1970s to 90 percent in the 1990s).

♦ Status The average level of income is one of the lowest in the world. Incomes are unevenly distributed as well across the regional and social groups and urban income is more than double that in the rural areas (figure 3). Despite the fact that the rate of income growth was relatively rapid during the last decade, the rate was lower than in other South Asian economies. The average rate of growth of per capita income in the 1990s has been 2.9 percent per year, attributable entirely to relatively rapid growth in the non-agricultural

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Nonetheless, household income is inadequate to meet even basic needs. Food expenditure alone accounts for 62 percent of household income in the rural areas and approximately 50 percent in the urban areas. Clothing expenditures, particularly in urban areas, consume a significant proportion of household income. Expenditures on education, health and other necessities, therefore, are far from adequate. Access to credit is highly limited. The informal financial market, with diverse and exorbitant rates of interest, is the sole source of credit for four-fifths of the rural borrower households. Despite a large expansion of financial institutions and products due to the establishment of joint-venture banks, the financial system remains decidedly lopsided in favour of urban centres and larger borrowers. The recent expansion of credit-based NGOs has been able to mitigate this shortcoming only to a small extent. Women, because few of them own and control assets, have minimal access to credit. Traditional, collateral-based lending and the increasing trend toward wholesale banking is depriving the small, marginal and landless households of institutional borrowing opportunities. Government-owned/controlled banks have almost stopped opening new branches. The centralisation of economic opportunities in urban centres is further inducing flow of resources from the rural areas to the urban centres. The number of absolutely poor persons has nearly doubled in the past 20 years approaching the 9 million mark − 45 percent of the total population − in 1996. The growing incidence of poverty is the outcome of an economic process which is both growing very slowly and being distributed unevenly. Highly limited access to productive resources, high level of underemployment and/or unemployment, low wage rates and indebtedness of the poorer strata, among others, are exacerbating poverty. The incidence of poverty varies across various caste/ethnic groups, place of residence, occupation, sector of employment, education, source of income, family size, etc. The incidence of poverty is lowest among the Newars and highest among those in the “lower caste” categories. The relative incidence of poverty in the rural areas is 2.6 times higher than in the urban areas. The illiterate are much more prone to be poor than the literate. Households with agricultural workers are more prone to poverty. In particular, agriculture wage workers are likely

SUMMARY

to be poor. Households exclusively or largely dependent on agriculture income are closer to poverty than those who rely on other sources of income. Despite an initial and small-scale spurt of economic growth following the adoption of liberal economic policy, poverty has been worsening due to deterioration in real wage rates, withdrawal of subsidies, retrenchment of civil servants, wage freeze, deregulation of administered prices and upward revision in the prices of the goods and services generated by public enterprises.

♦ Recommendations The level of income of individuals and households holds sway over the status of human capabilities in a mutually reinforcing manner. Accelerated growth that is derived from increased human capabilities impacts on the level of living and improved provisioning for basic needs. But such growth needs to be pursued in a manner which simultaneously enhances the command of the people, especially the poor, over the means of capability formation. The necessary policy orientation that needs to be addressed by the state institutions and other societal agents are discussed in the section on reorientative actions. That section will also deal with the shift that is necessary on how the functioning of the economy is to be viewed at the macro and meso levels. Some sector-specific policy recommendations are listed below. •

•

Increasing the access to productive assets. The level and structure of incomes determine the status of the human deprivations and income level, in turn, is largely determined by the ownership of and access to the productive assets − both physical and human. The government should ensure the ownership of and access to such assets through politically feasible redistributive measures such as tenancy rights and fiscal and monetary interventions and credit programmes particularly focused on the hard core poor. Prioritization of agricultural sector. As farm income is the major source of household income, high priority should be accorded to the agricultural sector in the process of accelerating growth. A comprehensive programme of agricultural

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development which integrates technological development, infrastructural development, provisioning of agricultural inputs and marketing systems needs to be implemented. This would help not only to increase income level but also to reduce urban- rural income disparity. Imparting skill-oriented knowledge. Lack of skills has forced most of the labour force to engage in low-paid agricultural activities and menial jobs in households and services sectors. The government should take initiative as suggested for the education sector to endow its labour force with technical and other activities to enable them to participate in high income generating activities. Provisioning of basic health and education. Although the proportion of consumption to income is high, it does not adequately meet all the basic needs of the households; for, most of the consumption goes on food items leaving little income for education, health and nutrition. Thus, the state should take the responsibility of provisioning for such basic needs for the hard core poor with efficient targeting. Effective implementation of povertyrelated programmes. All poverty-related programmes should be effectively implemented so that the gaps between the objectives and their realisation, programme formulation and its implementation and its effectiveness are substantially narrowed down.

People’s Participation in Public Affairs Participation in public affairs is an intrinsic component of human development because it is, in part, through such participation that the people, individually and collectively, derive the worth of their existence, enhance self-respect and can effect adjustments and transformations within themselves as well as upon the political, economic and cultural systems they live in. The active subject status of human beings, which is a central tenet of human development thinking, can be realised only through the establishment of a culture of participation − in national political life, local decision-making, community affairs and in the economic market place. A review of current status in this respect as hereunder indicates a need for some basic reform and xii

reorientation in the organisation of the polity, economy and social institutions. These aspects are discussed in the section on reorientative actions. The 1990 Constitution affirms people’s participation as a central means to attain the constitutional goals. However, and while the constitution as a whole provides a framework for democratic governance at the macro level, it is silent on many critical domains of participation, e.g., local self-government and devolution of power. Despite the creation of various local bodies − village development committees (VDCs), municipalities and district development committees (DDCs) through the promulgation of various acts and laws, there has been little substantive change from the pre-1990 arrangements in relation to their autonomy. The central government still holds the power to regulate virtually all aspects of the local governance system. It can even suspend or dissolve local bodies. Local bodies are expected to operate as extensions of the central administration rather than as autonomous institutions of local self-government accountable to a specific electorate. The 1997 ordinance, which enlarged the size of electoral positions (to 188,010 in the 3,912 VDCs) and made provisions to ensure the participation of women and local caste/ethnic groups in the local bodies, has been a welcome departure. But the ordinance failed to induce legislations which could enable local bodies to claim and build autonomy. Participation has been reasonably high both in the two national and two local elections since 1991. Approximately two dozen political parties, in addition to a large number of independent candidates, were represented in the national elections. Voters in a significant number of VDCs, however, boycotted or were forced to boycott elections within a climate of Maoist insurgency. Political participation means much more than voting during elections. Electoral candidacy and electoral office-holding continues to remain highly restrictive in favour of upper-caste groups and men. (This holds true within the government and the political party hierarchy as well.) None of the major parties nominated women candidates in excess of the minimum five percent required by the constitution. Participation in developmental actions is another key domain of participation. A very large number of autonomous community-based organisations remain the primary vehicle of local

NEPAL HUMAN DEVELOPMENT REPORT 1998

developmental actions. In addition, statesupported resource user and conservation groups, credit groups, etc. are also promoting participation. A fairly large number of NGOs are also active on these fronts. A number of programmes seek to strengthen the institutional capacity of local government institutions. Most NGOs, however, continue to remain dependent on outside donors both for their agendas and finances. Their autonomy, locally-based voluntarism, responsiveness and accountability, therefore, remains weak. While protest-focused participation, e.g., strike, demonstration, is often expressed in negative terms, the proliferation of organised groups and associations and the political, economic and cultural actions they undertake are germane to the promotion of participation. Despite its stunted history, the civil society is beginning to come into its own since the restoration of multi-party democracy in 1990. The growth of civic associations during this period has been phenomenal. Political debate is now more frequent than before. The latest successful example of the role played by such groups is the withdrawal by the government of the proposed “anti-terrorist bill” which sought to undermine the fundamental rights of citizens. Trade unions, professional associations, citizens’ rights groups, groups which play advocacy roles in relation to rights of women, children, the disabled and consumers, environmental conservation groups etc. have multiplied manyfold. Individual citizens have become active in public litigation at courts of law. Nonetheless, as of yet, the overall performance of the civil society in promoting participation remains weak. The extent to which the media has promoted participation has attracted conflicting views and assessments. It is, however, generally agreed that, with the freedom of press and right to information available under the new political dispensation, the media has contributed to enhancing government transparency and creating a relatively more informed civil society. Much of the media, however, does not stand independently of the government, political parties or big business houses for them to be able to play the role of a potent watchdog. The imperative of the need to peddle views and publicity for its patrons takes precedence over a commitment to disseminate news and objective analysis.

SUMMARY

Political Freedom and Citizen’s Access to State Human development is about the promotion of human dignity and self-esteem that also stem from the enjoyment of citizenship rights. Political freedom and access to state indicate the status a citizen Commands in relation to the state. The 1990 constitution of Nepal has transferred sovereignty to the people from the crown. If sovereignty is understood as the source from where all state power emanates, citizens need to feel empowered beyond the role they play as voters in periodic elections. Access to state level decision-making is not merely a right of citizens, but it is also necessary as an instrument for contributing to the empowerment of the civil society as also to ensure the responsiveness of the state system. This, in turn, presupposes citizens’ access to information and necessary channels to make specific demands and shape decision-making by the government. The state, in turn, must become accountable to the bona fide needs and grievances of citizens. The citizens of Nepal enjoy unprecedented civic liberties and political rights at present. The rights of the citizen are embraced by the constitution so tightly that they are not subject to amendment by any act of parliament. Measures required to operationalise the constitutional provisions on fundamental rights are falling in place, but only slowly. An important step was taken recently with the enactment of the Human Rights Act, 1995, which provides for the establishment of a Human Rights Commission. However, as of yet, inequality in access to the state remains widespread. Unequal and discriminatory access by gender and caste/ethnic affiliation, in particular, is the norm. In addition, and contrary to the constitutional guarantee of the right against arbitrary arrest and detention, human rights groups have documented evidence that political opponents are arrested on false charges. For a citizen, the government usually means the executive body. It is with this organ that he/she normally deals for access to public services, to seek redress of personal and collective grievances, to pay taxes and fees and to make representations for development programmes deemed necessary by the community. The general impression and experience, however, is that a common man or woman does not fare well in relation to the access to the executive organs. In addition,

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pervasive corruption, which is widely noted to be growing under the protection of the political bodies and senior administrators, is not only hurting citizens but weakening the legitimacy of the state and efficiency of the economy. Access to the legislature can be had through a variety of means. Lay citizens can approach their representative and offer counsel on a variety of issues. While citizen-representative interaction is generally intense, few of such interactions are focussed on public issues. There are currently seven committees in the House of Representatives and two committees in the National Assembly. A parliamentary committee is legally empowered to involve lay citizens, representatives of interest groups and the media in committee meetings. The frequency with which this is implemented, however, is very low. More importantly, the level of legislators’ interest in committee work, compared to their interest to join the executive organs, remains low. Key pieces of legislations, as a result, remain pending. Finally, legislative bills are not made public. Access to the judiciary is available in all 75 districts and all citizens are entitled to file a writ petition against personal damages and for a judicial review in matters of public concern. Access to the judiciary has also increased with the growth in the number of legal practitioners. Provision has been made for the availability of one salaried lawyer in every court for legal services free of cost. However, the process of accessing justice is notoriously and painfully slow. It has also been reported that there is considerable corruption inside the judiciary. There is also an opinion among law professionals that syndicalism among judges is increasingly leading to abortion of justice.

Social Institutions Capital

and

Social

The context of human development is essentially social in its nature. Human social relationships, in turn, are organised in terms of social institutions. Social institutions, apart from organising human relationships in particular ways, also produce various forms and degrees of social capital. Some ways of organising social relationships, particularly those which are built on the bases of cooperation, equity, universalism, more intense promotion and use of capability, sustainability etc., are intrinsically human development promoting than others. xiv

Social institutions regulate human values and actions impinging on human development at various levels of the society, right from the household level to the level of the state. All social institutions embody multiple form of social capital some of which may be friendly to human development while others may retard it. Social institutions form zones of contestations − from within and outside. Such contestations can lead to large-scale transformations or incremental reforms in the nature of social institutions. Such changes may promote or weaken social capital for the promotion of human development. A number of micro and meso level social institutions in Nepal are of key significance for the promotion of human development. The household is one such institution. Households produce much cooperative capital necessary for the promotion of human development. Household cooperation spans the arenas of material production and consumption. More immediately, household cooperation is of key significance for social reproduction, which is both much more intense and extended in comparison to that in the developed/industrial societies. Households, illustratively, play key roles in the promotion of health and education/skill of its members. Households also function as key anchors of personal identity and belongingness, and shape the world of social relationships outside. Households, in addition, provide a high level of security during infirmity, old age and other times of need. The kinship networks and the community similarly produce much long-term and more or less stable social capital, including those of belongingness, social security, cooperation and mutual help, conservation of resources − including indigenous knowledge, and the creation and recreation of local institutions. More recently, communities have come to occupy a significant space in the crystallisation of demands for economic and social services from the central and local governments and other parastatal bodies. In addition, communities mediate between households and the government in the implementation of development programmes. Ward Committees and VDCs are increasingly, although slowly, emerging as important sources of social capital. The spaces created by Ward Committees and VDCs enhance local political and social participation and empowerment. Such spaces are also utilised to

NEPAL HUMAN DEVELOPMENT REPORT 1998

contribute to the welfare of the residents, adjudication and settlement of local disputes, mediation with outside bodies, including the DDC, line agencies, NGOs, parastatal bodies, etc. The VDC, which is represented in the management boards of local schools, health posts, etc., can promote human development to a significant extent. Beyond such political and social resources, considerable financial resources also flow through the agency of the VDC. These can be used to enhance the promotion of human development as well. A number of other institutions, e.g., schools, media, health posts etc., also produce human development-friendly social capital. The schools, apart from imparting literacy and education, mobilise key community actors for local development, aid in the generation of a more informed debate and promote literate culture. The media is supplementing and strengthening the promotion of such a culture as well. Modern local health institutions, similarly, are directly promoting both health and health consciousness. As noted earlier, not all social institutions are human development-friendly. In particular, exclusionary social institutions, because they negate universalism by partitioning off specific political, economic and cultural spaces against particular social groups, retard both the use and enhancement of capabilities among such groups. Such institutions, in essence, generate negative social capital. Exclusionary rules and practices in relation to women, low-caste groups (and some ethnic groups) and the poor, in this context, are particularly salient. Exclusions based on gender are both pervasive and deep. Exclusion-led discrimination against women covers domains of physical survival opportunities for education, health, wage employment, income-earning, property ownership, decision-making, access to public positions, mobility, independence and overall cultural status. Exclusions that women face span right from the household level to the state level and cover the political, economic and cultural domains. Caste and ethnicity-based exclusions are pervasive and, for the lowest-caste groups, very deep as well. The extent of political and social participation in public decision-making and access to positions of public authority is much lower among such groups as well. Members of the lowest-caste groups suffer from lower longevity and much higher infant mortality rates as well as much lower literacy

SUMMARY

rate in comparison to the high-caste groups. Absolute poverty among such groups is 1.5 times that for the high-caste groups. The absolutely poor, who number approximately 10 million, also suffer from low access to educational and medical facilities. Their level of political and social participation is much lower. Many poor people are locked in a dependent relationship with the non-poor, the more severe form of which is expressed in the kamaiya labour system.

Reorientative Actions Two key aspects of the macro-scale reorientative actions required to promote human development need to be emphasised at the outset. First, economic and financial reorientations, while necessary, will not suffice. Exclusive reliance on economic growth-led human poverty reduction will not only prolong deprivation but will also lose much efficacy without political and cultural interventions. Reorientative actions, thus, must be crystallised and implemented on all three domains. Second, human poverty reduction must engage not only the large-scale, i.e., the global, state, market, structures, but also structures at the meso, i.e., district, and micro, e.g., community, household, individual, levels. It should be emphasised that the downplaying of the latter two levels has been highly counterproductive. Such downplaying also goes against the key tenet of the conceptual and strategic frame of human development.

♦ Reorienting society It is generally assumed that promotion of human development ought to be pursued only by means of macro structures and policies and without the active involvement of lay human beings themselves. The stance, in this specific sense, smacks of the top-down, supply-driven strategy. Such a stance denies the contribution human beings can make to promote their own development and views human beings as objects, rather than subjects of economic and financial structures and policies. In addition, the stance fails to consider how people can be empowered to promote the agenda of human development as also to resist and confront anti-human development structures and processes on a sustained basis. All reorientative processes, therefore, should be pushed forward and sustained with popular will, organisation, self-

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initiative and self-help, strategic cooperation and struggle. Such reorientative social action should be focussed on the following themes. •

Centre-staging human development and its promotion. Macro structures should not and cannot be fully relied upon to promote human development. Local level mass involvement in defining and identifying issues and problems of human development is an important part of the solution. Centre-staging human development and its promotion is contingent on intensified popular stakeholding in enhancing capabilities and reducing deprivation. • Generating optimism, commitment and organisation. Deprivations are not natural or inevitable. These can be reduced through conscious and committed individual and collective action based on optimism. Optimism is immensely empowering. Sustaining optimism and commitment requires, among others, organised effort. The recently expanded ward committee is ideally suited to carry out this grassroots- level leadership role. Similarly, political parties could initiate and mobilise social action towards this goal. • Encouraging voluntary cooperation. Voluntarism needs to be revived and strengthened. The high moral edge of voluntarism makes it a unique and powerful instrument of social action. At the very least, it invites a higher level of commitment from non-volunteer participants and raises the overall quality of social action. Voluntarism is also a key component of self-initiative. Actions promoting voluntary service also lead to a significant reduction of financial costs. • Ensuring devolution of rights and responsibilities. The theme of human development intrinsically favours devolution. Devolution of rights and responsibilities encourages locallysensitive crystallisation, organisation and implementation of human developmental actions. It forces self-initiative and selfhelp at the local level. • Reordering local priorities. Social action for human development should be geared to a reordering of local developmental priorities. Such action has to be based on

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a conscious stock-taking of local structures and processes leading to human deprivation. Such stock-taking and reordering should be dense and engage all local institutions, e.g., households, neighbourhoods, CBOs, ward committees, political party units, women’s groups, groups geared to ethnic upliftment and struggle, schools and health facilities, under the overall coordination of the VDC. Universalising primary health and education. Universalising primary health and primary education should be the fundamental objective of all social action for human development. For this to materialise, communities should mobilise its resources, e.g., sustained dialogue, commitment, organisation, voluntarism, upscaled financial involvement etc. The advocacy component of social action for universalisation of primary health and education must stop only with a corresponding amendment of the constitution. Universalising access to work and humane level of living. Local social action can expand work and income opportunities as well as economic security for the destitute. Social action on this front should be focussed on multiple measures such as irrigation, rural roads, appropriate technology, crop diversification and intensification, expansion of community forestry, soil and water management, use of local labour and reform of tenurial practices. Resisting exclusion. Reorientative social actions have to consciously resist all form of exclusions in an encompassing manner. Social actions against exclusion must pay particular attention to the traditionally excluded and ensure that they are included in the process. Such action should begin by foregrounding and problematizing deprivations among women, the lower caste and ethnic groups and the income poor.

♦ Reorienting polity With the restoration of democracy in 1990 and the subsequent promulgation of a new constitution, the nature of the relationship between the state and the people has undergone a

NEPAL HUMAN DEVELOPMENT REPORT 1998

qualitative shift. The people now enjoy much more political freedom than ever before, are ruled by those they elect to power and, as "sovereign", are assumed to be the ultimate arbiters of public authority. However, even with the restoration of democracy, the process of transferring power to the people is incomplete. The government apparatus continues to be centralised and remains far too remote from popular concerns and needs. Access to public institutions and political power continues to remain monopolised within a narrow circle. Women, the lower-caste groups and the poor, on the other hand, continue to be excluded except as voters and as recipients of small scale “development projects”. The human development process, on the other hand, is a complex human enterprise that requires contribution of not only the invisible hand of the market but conscious and coordinated action of a variety of other societal agents and processes as well. The polity, as a critical domain of human development and an instrument of cooperation and struggle among various constituent elements of the society, assumes special significance from this perspective. The reorientation of polity for the promotion of human development should, among others, be focussed on the following themes. •

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Seeking and enforcing a national political compact. While political parties must remain competitive and while pluralism must become the platform of political culture, a compact must be sought and enforced among the various political forces. Such a compact, in turn, must be based on the directive principles of the state as enunciated in the 1990 constitution. All political forces must agree to fully abide by these directive principles. Reforming conduct of constitutional bodies. Reforms in the legislature have become essential. The legislature has been neglectful of its duty, e.g., in not formulating a comprehensive set of bylaws to govern its internal affairs (it is still governed by the provisional bylaws formulated by the interim government eight years ago). The flouting of the spirit of the party system, which has taken place a number of times, remains to be properly addressed by it. The oversight functions, e.g., with respect to the auditor general’s

SUMMARY

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report, needs to be decisively acted upon. The abuse of public resources by legislators, e.g., the increased perks of the legislators must be stopped forthwith. The judiciary must deliver justice much more speedily and ensure its incorruptibility. The “contempt of court” rules need to be amended as they are anachronistic to a democratic system. Similarly, the Commission for Investigation of Abuse of Authority, another constitutional organ, which has been fully empowered since 1996, must become able to use its authority effectively. The unconstitutional practice of ignoring the Public Service Commission by the government in the recruitment, promotion and punishment of civil servants must end. Furthermore, the size of the cabinet itself, which has shown a tendency to grow very large, needs to be limited by law. Reforming political parties. Political parties must engage in value-based, rather than “pragmatic” politics. Party finances must be made transparent and properly audited. Donations to parties must be regulated and enforcement mechanisms for this purpose must be instituted. Similarly, assets and incomes of party and government leaders must be made transparent. Reforming the electoral process. The Election Commission and the polling staff must remain competent and nonpartisan. The government must fully equip the Election Commission with all necessary resources. The political parties, in turn, must agree upon stringent electoral codes of conduct and enforce them diligently. Discussions can be initiated on the relative benefits of a proportional representation system. Further, discussions should be initiated to render the National Assembly more representative, including by reconstituting its modes of representation. Combating corruption. Corruption corrodes every fabric of human society, subverts the political process and makes the economy inefficient. The climate of permissiveness permeating the state as well as the society must, therefore, be checked. Corruption by political bodies and politicians, in particular, must be

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rooted out. In addition, the donor community must become far more transparent in its finances than is the case. Devolution of authority. Despite the fact that a well-placed structure of elected local bodies, legislation and polices for empowering them are severely lacking. The VDCs, for example, have been provided with wide-ranging functions, very few of which are able to perform autonomously. Successive governments have resisted against the empowerment and autonomy of local bodies. This needs to be urgently remedied, preferably through a constitutional amendment. Promoting participation and empowerment. Participation of the people at large needs to be intensified within the political domain. In addition, social groups who generally suffer from exclusion from the political domain, i.e., women, the lowcaste groups and the very poor, must be assisted by the political process to access capabilities and to expand their stakeholding in the affairs of the state.

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♦ Reorienting economy There is a good deal of confusion about the role of the state vis-a-vis the market in relation to development in general. There is now a wide acceptance of the need to promote the role and efficiency of both the market and the state in creating and harnessing a development producing economic environment. Yet there is little rigorous work on how, for example, the requirements of equity and justice – values inherent in the pursuit of human development – can be addressed. A reorientation of the economy, among others, must therefore emphasise the following themes. •

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Utilising state as resource. The neoclassical assumption that an economy automatically finds its way to an equilibrium growth path in the absence of distortions introduced by government interventions does not hold in cases where institutional foundations are nearly primitive. At Nepal’s stage of development, the required institutions are not automatically built by the market process, but should be created with intervention by the state. This is not an argument for allocating a dominant role to

•

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an inefficient, corrupt and regulationdriven, predatory government. But, at the cognitive and policy levels, it must be accepted that the state, too, is a resource that must be harnessed, not wasted or subverted. The state should certainly work in partnership with the market. On the other hand, the government should be utilised as a resource in the promotion of human development. Promoting “high quality” growth. Economic growth does not automatically lead to the reduction of human poverty. For this to take place, the growth process must be anchored on spheres that are supportive of human development. The growth process should not be at the cost of social equity. It should be sustainable. Above all, it should be broad-based and widely participatory, and should empower all strata of the society. Restructuring agrarian relations. It has long been recognised that land reform, encompassing both redistribution/security of tenure and technological inputs, is the most potent means of restructuring the rural economy. Land redistribution has the potential to increase both output and equity. In addition to transforming agriculture, it can help achieve faster industrialisation, enhance growth and promote human development in both rural and urban areas through improvement in nutritional status, health, education and level of living. Refocussing on agriculture. Nepal, at the current stage of development, has no choice but to focus on developing the predominant agricultural sector. The basic rationale behind this strategic imperative is detailed in the Agriculture Perspective Plan. Not only is there enough space for growth within the agricultural sector, but the sector is both large and broad-based. A re-emphasis on agriculture intrinsically supports both employment and equity considerations. Promoting agro-enterprises. Agroindustries exert a strong productivity as well as distributive effect. They are highly labour-intensive, have wide employmentgenerating backward and forward linkages, can be undertaken with modest capital and skill, and can be located in rural areas.

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Expanding micro-credit. The micro-credit operation of the government, rural development banks and some NGOs has contributed, to some extent, to creating job opportunities, reducing the burden of usury and alleviating poverty, At the moment, the programmes cover a small number of poor households only. Emphasis should be given to expanding the related service network to serve especially the poorer households. Promoting tourism. Nepal’s potential competitive advantage in the tourism sector is high. Tourism (including internal tourism), to the extent that the use of local goods and services used by this sector is augmented, could enlarge employment opportunities for a large number of people. Development of rural tourism can have a highly positive impact on the rural economy. Promoting appropriate development of water resources. Water is an important resource for Nepal. Harnessing water for drinking, irrigation and energy can become an instrument for human development. It can promote sanitation, generate additional employment in agriculture and off-farm activities, and conserve the biomass. Promoting human resource development. Promotion of human resources has been shown to be of key significance for economic growth, particularly in East Asia. Promotion of basic education, skills, primary health, etc. is in keeping with the promotion of human development as well.

sector budget so as to allocate a higher proportion to human priority concerns and for limiting expenditure in other sub-areas. In addition, it is also necessary to utilise the financial resources efficiently, to enhance the absorptive capacity of the government machinery, and to ensure the sustainability of the increased allocation, primarily by enlarging the production base of the economy. Mobilising additional resources Reforming tax system. The possibilities of raising tax revenues vary, in general, with the structure of the economy, the stage of development and institutional capacity. In Nepal, opportunities exist for reform in the structure of taxation as well as tax administration. •

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♦ Reorienting public finance

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Both the scale and ratio of budgetary allocation to social priority areas are low. The human priority expenditure ratio is only 3.4 percent (1996 figure) as against the international norm of 5 percent. The size of social priority spending itself is small. In order that the allocation shortfall in expenditure for the social priority sector is fully met − and basic capability formation universalised, it is necessary to mobilise additional domestic and international resources to bridge the expenditure gaps, restructure the overall annual budgets in a manner such that the social sector receives higher allocations, and restructure the social

•

SUMMARY

Given the unequal distribution of income and low private savings, the adoption of a progressive expenditure tax, i.e., taxation on consumption, would enlarge the tax base. One likely area for such taxation could be the expenditure on foreign education, travel and health care. Given the very high erosion of tax base (of about 85 percent), the income tax base should be broadened by encompassing all incomes above the threshold level. Direct taxes such as land tax, urban property tax and individual income tax should be progressive in nature. Such taxes, which are redistributive in nature and neutral to price rise, ensure vertical equity. Vertical equity could be further reinforced by introducing taxes on bequest or inheritance. The contribution of private corporate bodies to income tax revenue is significantly low compared to the contribution of public enterprises. In order to curb corporate tax evasion, investigation should be carried out if this tax can be replaced by a system of collection of minimum taxes based on a company’s net worth. Part of the expenditure burden for enlarging the human priority sector expenditure should lie at the local level. In order to empower local bodies, authority for all taxes with a localised base, e.g., property tax, vehicle tax, land revenue and entertainment tax, should be transferred to the local bodies.

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Tax administration has to be restructured with simplification of the tax return procedure, introduction of transparent system of tax assessment, well trained manpower and adequate physical facilities for tax offices. Taxpayer code numbers for all individuals engaged in activities such as manufacturing, export and import, and supply of services, including professional services, should be instituted. The donor community should consider how they can fully cooperate with the government in the collection of taxes due from expatriate and domestic project personnel and national consultants engaged in projects and other related activities financed under their assistance.

Restructuring foreign aid. Although partnership between the donor and recipient states is a cornerstone of development efforts, the government must set the development agenda. This agenda must realistically be based on the assumption of declining foreign aid inflows in the near future. In the mean time, the government must strive for aid mobilisation focussing on the human priority concerns. INGO assistance should also be monitored and focussed on human priority concerns. INGO assistance also needs to be coordinated. Existing mechanisms, including that of the Social Welfare Council, are inadequate and ineffective in this regard. Inter-sectoral budget restructuring In order to narrow down the gap between desired and actual social sector expenditure, the government should carry out a serious exercise in order to increase allocation to this sector − even without an increase in the size of the overall budget. Allocation to priority programmes. A firm commitment is essential ito avoid thinly spreading the limited resources and to identify the key areas of intervention. These include resources necessary, among others, to universalise primary education and primary health, implement a comprehensive land reform programme and restructure the agricultural sector through effective implementation of the APP. Reducing defence and police expenditure. While defence expenditure has not grown in real terms during the last five years, political parties

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need to consider if defence expenditure can be frozen at the current levels for the immediate future, implying a reduction in real terms for some time. Similarly, policing expenditure can also be reduced through devolution, promotion of equal opportunities, democratisation and political stability. Reducing debt and debt servicing. Domestic debt could be converted into equity by offering the shares of public enterprises likely to be privatised to investors. Alternatively, the sales proceeds of public enterprises could be used in paying off domestic debt, which is probably the best means of servicing debt in the short term. In the long term, the government must reduce the debt burden by mobilising more resources and resorting to low levels of borrowing. Administrative reform. The Administrative Reform Commission’s recommendation to downsize the bureaucracy should be implemented impartially. There should be no political appointment or appointment of temporary staffs on non-existent slots. This step alone can release substantial resources for the social priority sector. Decentralisation of development activities and local resource mobilisation. Increased emphasis on mobilising local resources to implement small-scale infrastructural activities would release considerable resource for use in the human priority sectors. In this respect, the government should speed up financial decentralisation and facilitate local governments and other community-based organisations to undertake small-scale development projects on their own strength. Encouraging private sector in infrastructure. The private sector should be encouraged to undertake infrastructural projects such as road construction, civil aviation, telecommunication, hydroelectricity and drinking water facilities. International participation in such projects should also be encouraged. Intra-sectoral budget restructuring Given the small size of the total budget and its low (even if increasing) level of allocation to the social sector, one way to increase government expenditure toward areas of human priority is to switch expenditures from the non-priority subsectors to the social priority subsectors through intra-sectoral budget restructuring. This ensures higher social benefits without disturbing

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macro-economic balance and without adding to the debt burden. Education. The existing budgetary allocation pattern does not leave much room for enlarging expenditure on basic education sector through intra-sectoral budget restructuring. However, the government should undertake full responsibility for resources necessary to finance primary education. Besides, budgetary provisions should be made to enhance access to basic education for the children of the deprived households and communities. Health. As expenditure on primary health services has a greater bearing on child survival, health and longevity, health sector spending should be reoriented in favour of preventive services. More resources should be allocated to child immunisation, family planning, maternal and child care, nutrition, health communication. Subsidy to urban hospitals must be reduced drastically. Drinking water and sanitation. Capital expenditures for drinking water and sanitation programmes in rural areas need a higher budgetary allocation. The running cost, however, should not be subsidised. Local development and other priority sectors. Budget should be allocated on a priority basis on local development activities which directly focus on enhancing basic capabilities, e.g., primary health, primary education. Streamlining transfers and subsidies. Subsidy has become a debated issue not so much for its magnitude as for its lack of direction in targeting and monitoring for its impact. From the perspective of food security, small and marginal farmers need to be supported with subsidies on their most essential production inputs (fertilisers, seeds and irrigation), credit and marketing. Specific agro-enterprises as well as cottage and small enterprises with high employment creation and exports potential will have to be subsidised in terms of cost of capital, electricity, transportation of the products for exports (if located in remote areas) and research and development. Capital and interest subsidy to small irrigation, biogas and plantation should continue and should be extended to those areas which directly address poverty and unemployment. There should be subsidy for institutions for skill development, employment generation, export promotion, training and technology transfer and research and development. Micro-credit institutions which deal in small-scale loans at the grassroots level

SUMMARY

should be subsidised as should institutional support, e.g., training and insurance and oversight. Extending social security schemes. The notion that growth will take care of social security provisions leaves the majority of the population in continual deprivation and misery. Thus, the support of the state is critical for relieving the most needy sections of the population from deprivation and hardship. It is also the case that sustainability of interventions in social security requires continued growth of the economy to generate the resources necessary for this purpose.

In lieu of conclusion: Principal actors for the promotion of human development Each individual is an active agent for the reduction of human deprivation and poverty. Similarly, institutions at all levels can become active agents of human poverty reduction. These truisms, however, beg the question: who or which institutions are charged with a higher level of responsibility, more equipped and potentially more able to promote human development and reduce deprivation? Without denying or diluting the significance of other institutions, it is necessary to affirm that the principal role for the reduction of human poverty has to be played by the state. Apart from the executive, legislative and judicial branches of the (central) government, local representative bodies are intrinsic components of the state. Human poverty reduction is a constitutionally mandated duty of the state. No other single institution is mandated by all the people to perform such a role. Besides, no other single institution has a similar level of access to political, economic and cultural resources as the state. Nor does any other single institution have a level of legitimacy as the state. Political parties functioning within a multiparty regime necessarily have a dual nature. Parties (which broadly uphold the constitution) are components of the state (although only one or some may form the executive). In addition, however, they are also people’s organisations. This dual nature privileges them to act as the primary mechanisms of linkage between the people and the state and its representative, i.e., the government. Their nature and the privileges they enjoy position them to play the role of a principal actor for the reduction of human

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poverty. In particular, in their status as people’s collective representatives, political parties can play a potentially key role in the promotion of human development. The bureaucracy is another principal actor for the reduction of human poverty. While politics determines or influences whether the human developmental frame receives the attention it deserves, whether adequate political, economic and cultural resources are mobilised, whether they are allocated for human priority concerns, and whether the allocated resources are utilised effectively as intended, it is the experts who help the politicians with these tasks. In addition, only the bureaucrats have the corporate knowledge which is necessary for refining the policy focus. Individual civil servants can contribute to the dignity of the society and self-esteem of individual citizens including themselves by simply acting with integrity and civility with citizens and group of citizens they are assigned to serve. The cultural institutions and civic groups are viewed as the principal actors for the reduction of human poverty as well. While specific components of existing cultural institutions and some civic groups harbour a high level of anti-human developmental bias, particularly in relation to its universalistic underpinnings, these institutions and groups, in general, have historically shouldered the major share of responsibility for human development. No other principal institution is equipped with such experience. In addition, cultural institutions and civic groups possess a deeply intimate knowledge of the ground-level reality which no other principal institution can match. Engaging these institutions and groups can add much to efficiency as well. Alienation of these

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institutions and groups, on the other hand, lies at the roots of unsustainable interventions. We also view the market as a principal actor for the reduction of human poverty. Historically, the institution of the market led to the demise of the feudal system which was narrowly sectarian and overtly anti-human development. It has opened significant fronts for the flowering of private initiatives. It has also led to the enhancement of human capital (which, both as a conceptual and a strategic frame, has affinities as well as contradictions with those of human development). In addition, public initiatives on human development can learn much, particularly in relation to efficiency, from market-based institutions. Markets, however, also resist the prioritisation of human development promotion. They can be anti-universalistic. They can limit access or force discriminatory access to the use and enhancement of human capabilities. Finally, back to the individual and to the collective manifestation of individuals, i.e., groups and peoples. We view them as the most principal of all actors for the reduction of human poverty. Accordingly, it is our view that individuals, groups and people must promote themselves, and enter into strategic alliance with all other principal actors/institutions friendly to human development promotion. In addition, they should be able to discern which of the programmes and actions of the principal actors are friendly to human development promotion and which are not. Engagement in struggles against all forces and actors unfriendly to human development promotion in this respect emerges as a key policy imperative for all concerned rather than just a matter of individual, arbitrary choice.

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CHAPTER 1

Basic Development Structure and Processes The central purpose of the programme is to raise production, employment, standards of living and general well-being throughout the country, thus opening out to the people opportunities for a richer and more satisfying life. First Five Year Plan 1956 The country is caught in a vicious circle of poverty, and difficult as it is to break this circle, the next five to ten years may represent Nepal’s last chance to do so without having to become completely dependent upon the goodwill of aid donors. World Bank 1979 As the year 2000 draws closer, the people of Nepal stand poised to enter the new century on a track of prosperity. They now have the resources to experience the same greatly accelerated growth enjoyed in many parts of East, Southeast, and South Asia. Past decades have provided an increasingly educated public, multiplicity of complex institutions, and a substantial physical infrastructure. The time has come to convert that past development into rising living standards for all through dynamic growth. The Agriculture Perspective Plan (APP) is designed to do just that. Nepal Agriculture Perspective Plan 1995

1.1 INTRODUCTION

B

y referring to “the opportunities for a richer and more satisfying life” as the goal of development, Nepal’s very first development plan (1956-61) visualised human development as the end of improvements in production, employment and standard of living. The innocence of the time permitted the planners and policy-makers the overly optimistic perspective of a country situated amidst world’s highest mountains, valleys and scenic terrain metamorphosing into an Asian Switzerland. The long experience along an arduous path, however, has helped only to expose the myth against the hard social and economic reality. At a time when, along with the rest of humanity, Nepal should be grasping the promises of a new millennium, we are still struggling to find the ideological, institutional and managerial wherewithal to escape from the dismal past into a condition of more dignified being and living. Will the human development paradigm be a helpful guide and a fruitful mission for this purpose? Are the structural rigidities of the Nepali economy and society more amenable to

institutional and policy instruments associated with human development than with the traditional approaches to development that Nepal tried to practice in the past? What useful lessons can be culled from the country’s experience to date and how could these lessons be used for the future? This study primarily attempts to explore these issues for policy debate and social and political discourses in the country, while it computes and presents human development index (HDI) and associated indices with the requisite rigour for the first time. The emergence of human development approach as articulated by the United Nations Development Programme (UNDP) has been widely acclaimed by development fraternities around the world. At the operational level, the concept requires better prioritisation of public and private efforts in relation to the socioeconomic condition and status of development of the country. It so happens that, when measured in terms of human development, Nepal’s status and performance already appears better than when measured by the conventional scale of per

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capita GDP. In the Human Development Report 1997, Nepal is ranked twenty-second from the bottom while its relative position measured in terms of per capita GDP would be sixth. But does it necessarily imply that the country is inherently batter conditioned for human development than development understood otherwise? If so, the country’s leaders and other policy-makers have a relatively simple task ahead. They can concentrate on the technical aspects of prioritisation of policies and programmes and allocate resources accordingly. They need not worry much about the structural problems of the society and the economy. On the other hand, if the failures of the past stem from social, political and other structural rigidities, they need to be addressed appropriately and effectively as the country adapts itself to the demands and opportunities presented by the new paradigm. No doubt, the country may once again lapse into irresponsible complacency if the government and the donors assume that the shift into liberalisation-cum-human development paradigm is by itself a breakthrough. In case it does, it will not be the first time that Nepal mistakes a change in nomenclature for a conceptual and/or strategic change. For a country with a history of failed development, the most promising part of the new paradigm is that the pursuit of human development does not necessarily require a high level of “material” success. This fresh way of looking at development, however, does need to be firmly grounded on a holistic understanding of the country’s development structures and processes including “the other side of development”: the country’s cultural traditions and experiences. This study is an attempt to facilitate that process. The report analyses the status and correlates of human development in Nepal. It presents the standard human development indices based on available data. The data are presented with all possible disaggregations in order to highlight the variations and inequities in capabilities and deprivations. It argues that, in addition to health, knowledge and level of living, which are the standard components of human development, social and political access to participation − and thus the nature of society and polity − also deserve adequate consideration in the human development literature and allied strategies. It, therefore, focuses on initiatives and measures in the economic, social, cultural and political fields that require attention of public leaders. It takes

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cognisance of the fact that the performance of political and social institutions has a crucial bearing on the country’s development performance. The agenda for the country is daunting for more than one reason. Failing in development may have become a habit and thus difficult to shed like any other habit. As explained later, the resources at the country’s command may decline in the future instead of increasing. The country is not particularly rich in natural resources, its condition exacerbated by the demographic dynamics. The financial resource base is threatening to become more precarious with uncertain international environment and weak national will to mobilise domestic resources. As already alluded to, the political institutions and practices have distinguished themselves only by their poor performance. This chapter examines the relevant underlying natural, social, cultural, economic, political and developmental structures and processes as a background to understanding what is involved in understanding and enhancing human development in Nepal. We begin with culture as an overarching expression of where the Nepali people are as a nation today and why.

1.2 CULTURE The nature and dynamics of culture in Nepal, as elsewhere, are rooted in specific geographical, economic and political histories and structures. Some of the key features of such structures and processes have been highlighted in other sections. This section seeks therefore, very broadly, to analyse how these structures and processes have shaped certain key cultural institutions and defined social relationships. These key institutions are households and communities, gender, caste and ethnicity, and state, market and world order.

1.2.1 History The mountainous terrain of much of the country, traversed by a dense multitude of physical barriers, e.g., extreme slopes, seasonally swollen and impassable rivers, snow-blocked tracks and passes, dense and highly malarial forests, combined with the dominance of subsistenceoriented and feudal agrarian modes of production, historically led to the evolution of localised cultural patterns. In such a regime, cultural ideologies and practices, as well as polities and economies, were internally highly

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articulated and consolidated at the same time that they were outwardly highly diverse, distanced and segregated. The regime, characteristically, fostered intense interaction, cooperation and unity at the level of the household and community at the same time that it fostered seclusion and resisted the creation of, and incorporation into, more encompassing political, economic and cultural organisations. At the settlement level, highly restricted exchange regimes − both in relation to the number of participants and number and scale of commodities and services involved − were in operation. Barter was the predominant form of exchange, both in relation to commodities and services − the inter-household labour-exchange regime. The jajmani system that regulated the exchange of goods and services between agricultural and non-agricultural households survives to this day. The immense cultural diversity that characterises the country today both in terms of systems of beliefs, material and symbolic culture and social structure is largely rooted in such localised patterns of culture. It has, until recently, also remained a pattern that has been historically highly stable. Indeed, this may arguably be the single most important element of the cultural domain at present as well. This does not imply, however, that the overarching cultural themes have been weak altogether. The Hindu religion, which is professed by 86 percent of the population, has anchored key cultural ideologies and structures, even though locally syncretized versions of Hinduism, Buddhism and animism retain an overwhelming salience in practice. Buddhism, animism, Islam and Christianity also provide overarching cultural themes to smaller proportions of the population in that order. The subsistence-oriented and weakening feudal agrarian modes have similarly provided an overarching cultural − and political and economic − pattern as have the universal and largely uniform cultural regime imposed by agricultural and pastoral production routines. The caste framework, which has hierarchy and exclusion as its principal themes, and the ethnic framework, whose main motif is one of differentiation and seclusion, have been, and continue to provide, an overarching cultural coherence both in relation to intra−as well as inter-caste/ethnic relationships. The Nepali language, mother tongue to just over one-half of the population and a “link language” to a large majority, forms another anchor of cultural

symbols and social participation as do many other languages within more localised settings. The pronounced bi-lingual and multi-lingual and, to a more limited extent, bi-cultural and multi-cultural competence among a substantial proportion of the population has also led to the development of less localised and more cosmopolitan overarching cultural anchors. Finally, the universalised and historically strongly entrenched institutions of private ownership and patriarchy have also furnished key cultural themes, which regulate human relationships. Many of these themes, however, have also formed zones of contestation. State support to the Hindu religion and Nepali language, contested historically by non-Hindus and nonNepali speakers, reached a peak during the formulation of the present constitution in 1990. Conventional concepts and usages related to against patriarchal structures and laws are also being challenged of recent by women’s rights activists. The localised nature of the society is being challenged by nationalistic agendas, including those in education, health and mediarelated sectors − as well as by market-related forces. The ascendance of the capitalist mode of production in North India in the mid-19th century was an important milestone in the evolution of culture and society in the South Asian region as a whole. In the context of the historically open-border regime between Nepal and India, the long-standing and large-scale people-level interaction and trade routine between them, political pressures brought to bear by the East India Company/British India on the state of Nepal, and economic advantages the ruling houses, timber and other forest-product contractors, producers of agricultural surplus, traders and underemployed peasants sought to derive from inclusion in this new regime meant that the capitalist mode was legitimised in Nepal as well. This inclusion brought together with it a number of major changes in the cultural (and political and economic) structures, processes and relationships. Among others, this inclusion led to the emergence of a highly centralised, militarised and undemocratic family-oligarchic state which prohibited people’s political participation even at the local level, arrogation of culture and society within the domain of the state (e.g., the enunciation of the first Public Laws in 1854, which, among others, incorporated legal strictures on areas which had hitherto remained

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under the domain of local society and culture). It led to the disempowerment of community institutions and systematic negation of cultural regimes which regulated management of local public resources (e.g., through state-sponsored clearance of large patches of community managed forests, denial of usufruct and tenancy rights in agricultural land, irrigation water and mines, encouragement to contract farming, wage work and commercial and export crop promotion). These and other additional measures, which essentially promoted the state and the market, in turn, weakened the autonomy and self-reliant nature of the local society and culture and sought to redefine human relationships within a newer frame. Apart from undertaking these initiatives, the state strictly limited its functions to revenue collection and the maintenance of “law and order” and, in particular, disowned any responsibility for social development and popular welfare. “Development”, however, did become the raison d’être of the newly democratised state of Nepal in the post-1950 period. It should be noted that the values of developmental indicators in Nepal in the ’50s were very modest: during the mid-’50s for instance, per capita income was estimated at approximately $45, literacy ratio was approximately five percent and life expectancy was hardly above 35 years. Modest as the values of these developmental indicators were, they were not exceptionally low when compared against the norm in the “underdeveloped” countries. Besides, it was a considered opinion at the time that Nepal possessed considerable “unutilised resources”, principally, uncultivated land, large standing forest, much of it in a pristine form, and a vast network of rivers that could be exploited to fuel the project of modernisation and development. (Little attention, it must be emphasised, was given to human, political and cultural resources.) Moreover, high global optimism also ruled the international climate regarding the sincerity and developmental efficacy of the newly instituted global developmental assistance regime. The search, then, was focused on finding appropriate economic and administrative structures and policies to “deliver development to the people”. Correspondingly, the strategy foreclosed the possibility of a similar search within the domains of polity and culture: indeed, both political and cultural themes were regarded as being far-too-removed from development at best and as explicitly anti-developmental at

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worst. The emergence of this new culture of paternalistic, technocratic, centralised and pseudo-democratic agenda of development, in turn, tended to underline the dispensability of people, their institutions and cultures in their role as subjects in the process of development and, thus, drove a deep schism between the people and cultures, on the one hand, and development, on the other. It also gradually undercut cultural regimes which underlay the tradition of local initiative, local resource generation and largescale political and administrative accountability creating a vast, eminently abusable space thereby for developmental demagoguery at both the national and international levels. Despite a large number of scattered and localised political, economic and cultural movements and struggles undertaken locally as well as a relatively limited number of national-level, and predominantly political, struggles waged by the banned political parties, the agenda for human social development remained largely uncrystallized. The strategy of development generally changed following the shifting emphasis in global development thinking (Panday 1983) − not the least because of the over-dependence on foreign assistance. But except for certain isolated, oneshot programmes, development remained tied to the trickle-down model vis-à-vis employment and income. It also neglected political participation, fundamental human and citizenship rights, devolution and community rights as well as cultural pluralism − the latter particularly because it was construed to threaten “nationalism”. On the positive side, caste and gender-based discriminations were abolished at the legal level. (The currently ongoing women’s movement for equal inheritance rights to parental property and, indirectly, to a level playing field for identity formation, indicates that gender discrimination may not have been abolished, after all, even at the legal level; see also 9.2.2.) Considerable emphasis was given to expanding educational facilities and services since the 1970s and health facilities and services, including drinking water and family planning since the 1980s. These emphases have led to sizeable increases in literacy rates and decreases in fertility and mortality rates. Even as state-initiated development policies and programmes were predominantly donor-and bureaucracy-driven − partly as a consequence of the stateempowerment effect of international financial assistance − and even as there was little political/

NEPAL HUMAN DEVELOPMENT REPORT 1998

administrative, economic/financial de-volution in favour of local political bodies, the state selectively assisted in the formation of local peoples’ groups to implement and manage local as well as larger public infrastructural facilities, Thus, local “farmers’ groups” recommended credits for their members; “user groups” increasingly became the norm in local irrigation, drinking water and forestry sectors; and hospitals and some other public facilities came to be administered, at least at the formal level, by “development committees” outside of the bureaucratic set-up. On the other hand, and despite the formation of nearly a score of decentralisation expert groups, devolution of political, administrative and financial authority to the locally elected bodies was systematically rejected, largely because both the non-partybased political system and paternalistic and technocratic developmental frame severely and successfully resisted democracy and popular politics. The restoration of the multi-party political form in 1990 has led to rapid gains in popular political participation and political organisation. The liberal democratic nature of the constitution has also empowered the citizen vis-à-vis the state in a number of fronts and facilitated the rise of a large number of interest groups and organisations which are pursuing a variety of cultural and political agendas, ranging from the highly conservative to the transformational. (Many of these organisations, however, particularly most of the NGOs, work upon rather than with local cultures and peoples, almost fully dependent as they are on non-local, primarily international, initiatives and financial resources and upon fully-paid work rather than one based on volunteerism.) The creation of representative political bodies at more encompassing levels of social and cultural organisations has, to a certain extent, both weakened seclusion and enabled people to press local claims upon the state. The 1992 VDC, municipality and DDC acts are under pressure to yield more autonomy and authority to the locally elected bodies, which have gone through two successful rounds of elections since then. Largely in response to such claims, public expenditures in education, health and drinking water have risen considerably in the last seven years even as open public grants to local representative bodies and communities have increased sharply: between FY 1992/93 and FY 1996/97 expenditures in these sectors, on the average, rose by 116 percent (NPC-UNICEF

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

1997a). There are evidences that continuing − although slow − progress is being made in reducing illiteracy and mortality, including infant and child mortality. On the other hand, agendas at both the government and political party levels have consistently managed to evade or peripheralise issues related to universalisation of primary health and education, expanded employment generation and employment guarantee, asset and income redistribution, de facto devolution of authority to local bodies as well as inequalities based on caste and gender. On the other hand, cultural assertiveness and pride, one of the principal sources of individual self-respect and collective identity, have suffered because of rising unemployment and underemployment, economic impoverishment, increasing inequality and excessive dependence upon foreign aid. According to official statistics, the level of absolute poverty is very high, at 45 percent of the population. (Unofficial estimates describe the situation more gravely and calculate the ratio at 60 to 70 percent.) The rate of underemployment is very high as well. Thus, a very large number of people cannot meet even the minimum necessities and are forced to live under a very high level of deprivation, insecurity, dependence and individual and collective self-denial. The high level of inequality in agricultural landownership, the principal productive resource for approximately four-fifths of the households (Gini coefficient 0.54), and large economic disparities at the settlement, district and regional levels, and, most pronouncedly, between the vast rural areas and urban locations − home to only 12 percent of the population − have also tended to diminish and de-legitimise the production and distribution of the cultures of the less well-off locations and peoples.

1.2.2 Households and communities Households form the core of the social and cultural structure and constitute the key locus of cultural reproduction. As elsewhere, households are also the key mediators between individuals and the more encompassing levels of cultures. However, and while the internal structure and outside role of households have by no means been historically uniform in the multiecosystemic, multi-cultural and even otherwise heterogeneous social settings of Nepal and while almost all households have been undergoing fairly rapid transition of recent, the cultural specificity of households can be traced to a set of

5

key structures and processes. Among such structures and processes are the modes of generation of livelihood in which agriculture is overwhelmingly important − and in which the predominant peasant-based, subsistence-oriented mode exists side by side with a weakening feudal mode and a rising capitalist mode, and the seasonal, largely rain-fed and low-productivity nature of agriculture. The coparcenary nature of the household property ownership regime forms another key structure. The inclusion/exclusion and hierarchy-maintenance rules flowing out of kinship, community and caste/ethnic and intercaste/inter-ethnic affiliations form another subset of cultural rules which define the household. The household-dominant, “arranged” marriage system and the patrilineal inheritance system − which is often combined with the patrilocal residence pattern − form still another set of cultural rules which define the household. The overwhelming reliance on subsistence agriculture and the relative lack of other sources of generation of livelihood, together with the coparcenary nature of the household property ownership regime, have made the household an extremely closely knit social unit and, to a certain extent, insulated them from outside social units and forces. Within such a frame, and except for culturally legitimised outlets, e.g., the regular cycles of formation of new households and separation among the patriline (between father and son or between/among brothers or, in occasional instances, between husband and wife), individual dissension is systematically minimised or, on occasion, overtly suppressed. Marriages, generally agreed upon by households, bring two households and kinship groups together within a long-lasting network. While the data on the stability of marriage are extremely poor − the legally defined divorce rate, which is very low, does not truly capture the higher de facto rate of separations and remarriages. Available information strongly indicates that marriages, in general, are highly stable. Marriage, apart from its economic, political and social dimensions, also bears a pronounced spiritual underpinning. Because the household combines the functions of both production and consumption within an ideologically legitimised multi-generational time frame, social reproduction by households is intense, reaches well into the adulthood of its members, and outweighs, by far, the impact of other institutions of social reproduction. The coparcenary nature of the household

6

property ownership regime, even as it often ensured some degree of joint decision-making, made the head of the household a powerful and contentious figure within the household. While the extant cultural citations of father-son and, more particularly, fraternal feuds have tended to question the sincerity of the trustee in impartially managing the joint household property vis-à-vis all members of the household, recent literature on women has dwelt extensively on the genderbased exploitative agency of the patrilineal inheritance regime (Acharya 1997; Acharya and Bennett 1981; also, for recent legislative, judicial and public discourse on women and ancestral property rights, Pant 1996). The rules of patrilineality and patrilocality, of course, also encouraged a variety of gender-based discriminations against women, e.g., higher female infant, child and adult mortality rates as well as a high maternal mortality rate, lower literacy rate, higher rate of involvement in non-paying and low-paying work, very high rate of exclusion from the public domain and pervasive subordination. The currently weakening institutions of very-early-age marriage, under which 44 percent of women and 19 percent of men are married by 19 years of age, the weakening but alive institution of polygamy, which currently covers 6 percent of all marital unions (MOH 1997c: 80), and the high level of trafficking in women, among others, are outcomes of these rules as are the various gender-based cultural regulations of ritual purity and pollution. As noted earlier, households have recently been undergoing a fairly rapid transition. Impoverishment, unemployment and underemployment have led to large-scale permanent and seasonal migration within and outside of the country. The regime has weakened the authority of the household over the migrating members and is instrumental in the break-up of stem households and formation of new ones. Other forces and processes, apart from migration, have also contributed to a rapid transformation of the household structure and function. The rise and expansion of institutions for enhancement of individual-based knowledge, skills, health, work, income, e.g., schools, non-home-based places of training, hospitals, wage work and entrepreneurship, etc., are not only changing the functions of the household but also leading to changes in its structure. The proportion of economically active children 10 to 14 years of age, for example, went down dramatically

NEPAL HUMAN DEVELOPMENT REPORT 1998

between 1981 and 1991 − from 54 to 23 percent − largely because schools supplemented homes as centres of learning and socialisation for children of those ages. Increasing literacy, together with an increasing level of access to mass media, has generated a new culture of wellinformed public awareness and public discourse, including at the local level. Health facilities, illequipped and ill-serviced as they are, have been established in three-fourths of all VDCs (clusters of villages with an average population of 5,000) and are providing service to an increasingly larger number of clients and supplementing family-based and other indigenous health care systems. Between 1981 and 1991 alone, the proportion of total population with agriculture as the primary occupation came down by 10 percent (CBS 1995b). The village community has historically remained another fundamental locus of social and cultural interaction. Largely isolated as the village communities were from one another, from market institutions and from the organs of the state, they formed an intense interactional space, among others, for local exchange of goods, labour as well as other services; development, conservation and maintenance of public goods and resources; and consensus building and conflict resolution as well. While the expansion and intrusion of the market and state system have considerably limited and diminished the exclusiveness of the community, rural settlements continue to retain many of these functions. Inter-household exchange of goods and services is still a widespread routine. While the key axes of heterogeneity, inequality and segmentation such as those based on gender, caste, ethnicity, class, etc., do exist as well, community and sub-community groups remain active in resolving various local conflicts, uniting against other communities and in building local consensus.

As elsewhere, gender is a key locus of the cultural structure in Nepal. While the construction of gender and gender relations varies to some extent by age, life-cycle-related positions within the family, caste, ethnicity, class, region, etc., patrilineality and patrilocality contribute to an extremely unequal level of life opportunities and attainments between men and women. The high ritual and other values

attached to sons as against daughters, pronounced emphasis on gender-specific socialisation and highly gender-segregated access to household productive resources, income and, to a certain extent, household decision-making and schooling, paid economic participation, unequal access to public decisionmaking structures and public facilities, among others, are the manifestations of this disparity. Given the patrilineal inheritance regime, high public exclusion of women and the highly limited rate of expansion of the economy, few parents expect their daughters to earn an independent living and fewer still expect to be supported by married daughters during their infirmities and old age. These structures and rules of social organisation have wide and intense ramifications on the life experiences of the two genders. The female infant and child mortality rates are significantly higher than the rate for the male child. The girl child spends approximately 1.4 times as much as a boy sharing in householding and production responsibilities, including on sibling care and farm work. Schooling and other public experience, partly as a result, remain much more limited for the girls. Thus, the primary school non-enrolment ratio for girls is uniformly higher than for boys. Educational participation ratios and rates get even more skewed at the higher levels of schooling. Cultural norms which prescribe early marriage (44 percent of all women are married by 19 years of age), early childbirth (13 percent of all married women give birth by 19 years of age) and high fertility rate (TFR 4.6; all data for 1996; MOH 1997c) inhibit women’s educational and other opportunities. Both maternal morbidity and mortality are very high: only 10 percent of all the mothers receive professional help during child delivery − with another 23 percent being assisted by local traditional birth attendants who have varying, often questionable, levels of skills; 44 percent of all the new mothers do not receive any professional antenatal care; and at least 539 mothers die per 100,000 live births (MOH 1997c: 116-20,111-4, 157-8). Nonetheless, the relative intensity of public exclusion of women from the labour force is considerably less in degree and the division of labour by gender somewhat more relaxed than in other countries of South Asia (cf. Nussbaum in Nussbaum and Glover 1995: 1-36; Chen in Nussbaum and Glover 1995: 37-60; Acharya and Bennett 1981). The male-female discrepancies in

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

7

1.2.3 Gender

well-being are, however, pronounced. Women work much harder than men do. The work burden of the adult woman is 1.4 times as much as that of the adult man (Acharya and Bennett 1981). It is likely that decreasing per capita agricultural productivity and the continuing expansion (in terms of both the number and proportion of households involved) and intensification (in terms of the length of time involved) of seasonal as well as more permanent migratory regime may have increased the already high absolute work burden of both men and women since the late ’70s, the reference period for Acharya and Bennett’s study. Older women − especially those with sons and, therefore, daughters-in-law − however, do make a gain in social status, physical mobility and decisionmaking power within the household as well as in the public sphere (Acharya and Bennett 1981).

1.2.4 Caste and ethnicity The people of Nepal are socially segmented along lines of caste, sub-caste and ethnic and sub-ethnic groups. The number of such groups cannot be stated with sufficient precision, partly because it is dependent on the definition employed. While the 1991 census records more than 60 such groups and 20 major languages, the National Ethnic Groups Development Committee has identified 61 such groups and the National Language Policy Advisory Commission lists 60 living languages. Many of them groups are endogamous, perform mutually distinct rites de passage, and maintain various types and degrees of commensal and other forms of groupexclusiveness. The caste system lies fundamentally rooted in Hindu religion, the mutual cultural isolation of communities and the pre-1962 state which not only upheld the caste system but occasionally, also redefined caste/ethnic belongingness (of individuals, households, clans) through the implementation of specific laws and directives. The ethnic system, on the other hand, has been rooted mainly in mutually exclusive origin myths, historical mutual seclusion, and the state’s intervention in redefining and recreating individual, household and more collective ethnic belongingness (cf. Holmberg:1989:13-37). The sub-ethnic and inter-ethnic categories may contain elements of hierarchy, but the predominant feature of the ethnic world is differentiation. The caste frame, on the other

8

hand, is primarily hierarchical. In particular, deep social rift and distance separate the high caste groups from those caste groups regarded as untouchables, not only in relation to ritual domain but also in political power and economic privileges. Despite the legal abolition of discrimination along caste and ethnicity (enacted in the Public Laws of 1962), and the steady, if slow decline these structures, in particular in the urban areas, caste and ethnicity continue to function as universal and salient social and cultural classificatory categories. Caste affiliation, which is inherited, is still germane to individual, household and larger collective identities and, to a substantial extent, opportunities and attainments. While the overarching structure of the caste system in Nepal is considerably different from that in its heartland − the Gangetic plain of India − and while several variants of that structure are in operation even within Nepal (Sharma 1983), the caste system not only differentiates and hierarchizes individuals, households, kinship groups, clans and lineage but it also sets a particular caste group apart − horizontally and vertically − from the rest. Such segregation, however, does not at all imply an absence of inter-caste and inter-ethnic interaction − only that the domains of such interaction are very specifically and rigidly defined.

1.2.5 Interaction with state, market and world order Cultures everywhere remain in constant interaction with states and markets and, increasingly, with international and global institutions and processes. It is this interface, together with the internal dynamic of the social and cultural structures, which has determined evolution of such structures, as also of the people who live and work within such structures. Correspondingly, state, market and global policies constitute, ipso facto, social and cultural policies and vice versa. The more encompassing level of organisation of the state, the market system and the global order vis-à-vis local, and even national or regional societies and cultures and the much larger and increasing level of financial and other resources at the command of the macro structures during the recent historical periods, however, have disturbed the balance of interaction against societies and cultures

NEPAL HUMAN DEVELOPMENT REPORT 1998

globally. Even cultures at the national, regional or the increasingly frequently invoked civilisational levels, despite the encompassing nature of their organisation, have been much weakened such that their legitimacy among their carriers is mediated and surfacial rather than direct and intense. The economy and, to a lesser extent, the polity, at both the local and global levels, have been, and are being, brought to the centre stage even as the social and cultural dimensions are being relegated to the category of the residuals. This process of relegation has been extremely rapid in economically developed settings. However, even as they are being transformed at an unprecedented pace, new political, economic and emergent cultural structures are also taking on some of the functions once fulfilled by long-established cultural structures, e.g., social security. But because “old” cultures retain some of their old vitality and because of the failure of new political and economic structures to take on some of the extant functions of the cultural structures, such relegation threatens to be particularly violent in the economically underdeveloped countries. Thus, resource ownership regimes, in the last 50 years, have been increasingly negating community level usufruct rights vis-à-vis a variety of resources and centralising these rights at the level of the district or the centre or privatising them outright. There has been an emphasis on community forestry and user groups. Their legitimacy, however, is underscored and guaranteed not by the community but by the state. Even as devolution appears to have received a greater emphasis of late, not only has its implementation remained lukewarm but it has also stopped much short of the community level on the pretext that going “further below” is administratively infeasible (see chapter 10). The national planning and budgeting process continues, despite the democratic nature of the political system, to systemically exclude the direct participation of citizens − unless pushed by the donor agencies in their wisdom or for their own reasons. This in turn, raises the problem of sustainability to a new height. The mass media and the academic centres, mostly urban-based, have, moreover, peripheralized rural political, economic, social and cultural concerns homogenising them into a purported “national mainstream”. The nation's

existing school curriculum does not allow students to learn about, seek value in and respect local culture. While state policies have considerably expanded opportunities for schooling, access to such opportunities, due both to state inaction and the rules of the market, remains highly skewed in favour of specific gender, caste, regional and other groups. This, in turn, has produced skewed distribution of employment, income and other opportunities in the non-traditional sectors as well. The lower castes and women have minuscule representations in the electoral and upper administrative bodies. Women occupy only 11 percent of all staff positions in the state and parastatal organs and manufacturing firms employ far fewer women following mechanisation (Acharya 1994). The literacy gap between the traditionally privileged and underprivileged regions and the high-caste groups and the “untouchables” is widening. The rapid expansion of the private sector in education in the last 15 years, even as it has arguably upgraded the quality of education, threatens not only to make the much larger body of public-school graduates redundant in the job market but also to diminish their self-respect. The near-monopolisation of the relatively smallscale, new market-based opportunities by very narrowly based social and cultural groups appears to have not only buttressed the traditional structure of inequality and discrimination but also expanded to new arenas of life and, thus, fortified them. All this apart, a largely homologous process is also at work at the national-global interface. Cultures, cultural expressions, values and institutions at the local and national levels are increasingly compared with those at the “global” level − popularly identified with the EuropeanWestern culture. In this context, the local and national cultures are almost invariably found to be inferior and wanting. Nor is such a perception limited to the cultural sphere. Most of the salient differences, including those in the political and economic spheres, are hierarchized and the relative gap in the presumed hierarchy serves, among others, as a basis for the deprecation and diminution of the local and national culture, institution and values and personal and collective self-respect. The legitimacy of local and national cultures as anchors for individual and collective goal-setting, action and reflection, in this process, is seriously damaged.

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

9

1.3

NATURAL RESOURCES AND ENVIRONMENT

Nepal is not a small country by any standard; it appears small only because it is situated between two large and most populous countries in the world. Nepal is also a crowded country with 21 million people living in an area of about 147,181 sq km. Agricultural land, the main natural resource of the country, is the major determinant of economic activities and the nation's sociopolitical identity. However, cultivable land, which comprises 20 percent of the total area, is limited and unevenly distributed. The country is not rich in mineral resources. But it has abundant surface and underground water resources. Approximately 200 billion cubic metres of water per second flows in its river systems. Of the tremendous hydroelectric potential of these river systems, 45 thousand MW is commercially viable, which, if harnessed in an environmentally sound manner, can provide a considerable amount of resources, physical and financial. Water resources can be used similarly to benefit a large number of farming households in Nepal where 90 percent of the cultivated area is irrigable (Basnyat 1995). Forest is another important natural resource of the country. It covers about 38 percent of land area. But the forest cover has been drastically reduced on account of growing population and the pressure for arable land, pastures, fuelwood, fodder and farm implements. The immense climatic variations in the country within short distances can also be used as a resource The high pressure on agricultural land has led to considerable deforestation and use of fragile slopes. The annual rate of soil loss due to depletion of forest, overgrazing and use of marginal land for cultivation is estimated at 2025 metric ton per hectare of land (Basnyat 1995). Floods and landslides present additional problems. Such ecosystemic processes, which contribute to poverty, have also led to high rates of distress migration from the Mountains/Hills to the Tarai, and from the rural to the urban locations. Unplanned urban settlements and industrial establishments, rapid increase in vehicles, inadequate anti-pollution laws (and laxity in enforcement), and receding forest cover have together created problems of water, solid waste and air pollution. The over-concentration of

10

economic opportunities in urban areas and of political and administrative power in Kathmandu is further aggravating environmental pollution in urban locations (box 1.1). In the absence of strict anti-pollution law and industrial regulations, industrial wastes, hazardous matters and polluted water are not properly treated and disposed off. Recently, a Ministry for Population and Environment has been created. A regulation for checking environmental pollution has been announced and awareness campaigns have been launched by various governmental and non-governmental organisations. These are positive initiatives which need to be firmly monitored. The use of chemical fertilisers, pesticides and insecticides, nonetheless, is limited. In 1995/96, the quantum of total nutrient consumption stood at 90 thousand metric ton and insecticide sales at 147 metric ton and 744 litres. Nitrous oxide emissions from chemical fertilisers measured 1,026 MT in 1994/95, a figure which grew by an average of 8 percent during the period 1985-95. Similarly, methane emitted by rice fields is very low, and rose less than one percent during 1985-95. Pollution on account of agricultural activities is thus negligible. On the more positive side, the natural diversity of the country and its cultural heritage have boosted the tourism industry. There is immense potential for achieving more on this front. A significant breakthrough is expected from the “Visit Nepal Year 1998”. Tourism, however, has caused rapid depletion of forest cover and environmental degradation in selected areas, and opening new peaks for mountaineering and introducing attractive trekking routes have aggravated the situation further. But these problems can be addressed relatively easily through appropriate policy and institutional interventions.

1.4

HUMAN RESOURCES

Nepal is potentially rich in human resources. However, rapid population growth and sustained poverty at the household level are two critical obstacles to the realisation of this potential. The country’s labour force is handicapped by low levels of skills and productivity, on one hand, and high unemployment/underemployment, on the other. The contribution of women to the national economy, moreover, is not adequately reflected in the national statistics.

NEPAL HUMAN DEVELOPMENT REPORT 1998

Box 1.1

Fatal attraction to the Kathmandu Valley!

Kathmandu Valley is experiencing a strange meteorologic process nowadays, which is known as temperature inversion, that is aggravating the air pollution problems of this Himalayan metropolis. What happens is that because cities and larger settlements radiate more heat, the air above them tends to be warmer and less dense, creating winds called “country breeze” that blow from the surrounding area into the city centres. A natural process, inversion, takes place, especially in winter nights, when the dense cold mountain air sinks into the valley creating a stable layer of coldest air − instead of warmest − at the bottom. Back radiation of heat by the city structures pushes the base of the inversion upward, leaving a thin layer (commonly about 100 metres thick) of unstable warm air over the ground. Here fog, smoke, pollution etc. accumulate. Unable to rise past the stable cold air in the inversion mechanism, pollutants remain near and on the ground until the day-time sunlight warms the air enough to destroy the inversion. Because mountains surround Kathmandu valley, strong horizontal winds cannot carry pollutants out of the valley. Pollutants from cooking with kerosene and industries such as the dye, brick kilns, cement factory and others, outside of settlements that burn a mixture of coal, old vehicle types, rice husk, used motor oil and fuelwood, diesel, kerosene etc. tend to concentrate in the closely located towns and cities of Patan, Kathmandu, Bhaktapur and Kirtipur. Almost all the changes of “modernity” in Nepal, concentrated in its political, economical and transportation centre, Kathmandu, have taken place over the last 50 years, since the end of the British rule in neighbouring India. Air quality monitoring is not done here in an organised and scientific manner. There were 175 industries identified by the National Planning Commission in 1991 as polluting industries located in the Kathmandu Valley. People are yet to be aware of the impacts of the problems linked to pollution and are not organised to resist the so called “development” that is not in their long-term interest. Life in these towns is not by any means comfortable. Even the basic of basics, drinking water, remains scarce. Except for a rivulet Nakhu flowing past Bhardeo and Lele villages in the south, no river flows into the valley. The drinking water system uses aquifers for most of the supply. The valley’s agriculture system uses large quantities of chemical fertilisers that end up in the rivers. The Bagmati river, flowing out through a vary narrow gorge, carries only the rainwater, wastewater and sewerage effluents, with negative implications for the downstream settlements which use river-water for all purposes. Over the dry period, the difficulty in getting rid of the sewerage effluents and wastewater aggravates the chronic sanitation problem. The valley’s settlements have attracted many small-scale industries, apart from a large number of people from outside. The population of the valley grew by 3-4% from ca 700,000 in 1981 to over a million in 1991 constituting almost five percent of the country’s population. The population of the

city of Kathmandu tripled and that of Patan city doubled over the period between 1971 and 1991. A few villages of Kathmandu and Bhaktapur districts are located outside the valley rim and Lalitpur district has about 40% of its communities located outside the valley. But it is not the mere presence of people that creates the polluting industries. There is also the vehicular and air traffic. There was a four-fold increase in the number of enginedriven vehicles plying the 1,000 km of roads between 1986 and 1996. In 1992 about 55,000 vehicles were registered in the valley. Four to five percent of all these vehicles were owned by diplomatic and aid communities. Despite a recent increase in vehicular traffic, the rate of accident decreased to an all-time low. This can partly but paradoxically be attributed to the increase in the number of vehicles. What actually happened was that the limited length of road decreased generally the traffic velocity, which, given the propensity of the drivers to keep engines on between the stops, contributed to air pollution. Mandatory emission control has been recently introduced, but no attempt has yet been made to take the most polluting vehicles such as the buses, trucks and certain types of threewheelers off the road, given the difficulty in replacing them by better vehicles. In response to the worldwide call for environmental protection Nepal established in 1992 the Environment Protection Council, chaired by the country’s powerful prime minister, passed the Environment Protection Act in 1997 and formed an environment protection cell in each ministry of the government. The emission standards for vehicles were fixed: for petrol-driven motors, it is 3% vol. CO and for diesel-driven vehicles 65 HSU. Many of the buses and trucks are decades-old and lack spare parts. Many of the cars and jeeps discarded in their country of origin were imported after being reconditioned into Nepal. It would need a heavy investment to bring them to tolerable standards of emission. Aggravating the condition of the vehicles, the fuel used in Nepal is of low octanic and high carbon residue and lead content. What is still lacking is a serious study and reliable information on the overall impact of pollution and solutions to this modern problem of an ancient but poor country. No concerted, committed efforts have been directed at addressing the valley’s unique problem that has root in the nature’s complexity and man’s development interactions. The problems related to pollution in the Kathmandu Valley can not be solved, unless an overall perspective of the valley’s role and development activities is reconsidered, some of its functions are changed, roles are shifted over the country and residents, controls measures are undertaken. In looking for models of problem solving, Kathmandu Valley cannot be compared with any other valley in South Asia, because of its ambient climate, ancient history, rich culture and religious significance. The problems have to be understood adequately first before arriving at any solution. Its proximity to the mighty Himalayas and to the rich Ganges plain makes it very attractive to visitors from all over the world. But such an attraction may prove fatal to Kathmandu Valley in the long run.

Adapted from Arnico Kumar Panday’s “Kathmandu: Another Mexico City?” The Rising Nepal, August 20, 1993 (also see Dependra Joshi, “Kathmandu: The Inhuman Side of Development", The Kathmandu Post, September 27, 1997).

Available demographic data show that the total population of the country doubled between 1961 and 1991 (figure 1.1). Together with rapid

growth, the age structure and the density and distribution of population render development of human resources a challenging task. The proportion of population aged 65 years and over during the same period has increased such that

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

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1.4.1 Demographic process

mortality. Protein Energy Malnutrition (PEM) and Vitamin A deficiency, particularly among children and women of reproductive age, persist. Communicable diseases including tuberculosis, leprosy, malaria, kala-azar, meningitis, Japanese encephalitis and hepatitis are compounded by the emergence of newer diseases like HIV/AIDS. The incidence of non-communicable diseases such as cardiovascular diseases, diabetes and cancer is growing as well. High incidences of undernutrition, early marriage and child bearing, poor housing conditions, inadequate access to safe drinking water, insufficient sanitary facilities, outdoor and indoor air pollution, and abuse of alcohol and tobacco continue to contribute to the nation’s poor health standards.

1.4.3 Literacy and education the dependency ratio that was 85.4 for 1971 increased to 93.1 in 1991. The sex composition shows that women outnumber men slightly (see chapter 4 for detail). Population in the Tarai is increasing more rapidly than elsewhere (figure 1.1). An examination of the three determinants of population change (fertility, mortality and migration) suggests that migration is the main contributor to this high growth rate. The exodus of people from the Hills and Mountains to Tarai (and beyond in India) indicates the high degree of hardship there. The urban areas also receive a large number of migrants. Yet, 88 percent of the people still live in rural areas with limited access to health and educational services and other facilities that could help to augment their capabilities. The country’s level of urbanisation is low, compared with other developing countries.

1.4.2 Health and nutrition A majority of the people living in the rural areas have very limited access to modern health services. Most children do not receive treatment when they are sick or in need due to lack of knowledge, inaccessibility to medical facilities and services as well as a lack of confidence in modern medicine (UNICEF 1992a: 16). Infant mortality rate, a good indicator of personal wellbeing and the level of larger socio-economic development, is improving, but is still one of the highest in the region. Diarrhoea, pneumonia and measles remain the main determinants of infant

12

Education has received a fairly high public priority since the 1970s. In 1965, the total number of primary schools was 3000, each served by only one teacher (NPC 1965: 124). This figure increased to 21,473 in 1995. The national literacy rate, which was 14 percent in 1971, increased to 40 percent by 1991 (CBS 1995b: 376). Enrolment of primary school children increased from 8,000 in 1960 (Luhan 1992: 11) to roughly 3 million in 1992 (CBS 1995a: 358). The adult education programme contributed to the literacy of 1,000,000 illiterate adults during 1992-97 only (see chapter 5). Despite these efforts, the goals in the education sector are far from being met. Not only is the literacy rate very low at 40 percent but, by 1991, less than 3 percent of the total population had completed 12 years of schooling. Furthermore, most schools are poorly equipped and served by untrained teachers. The relevance of curricula has repeatedly been questioned by parents and experts. On the other hand, the government has reiterated its goal of reducing illiteracy from 61 percent in 1991 to 33 by the year 2000 (NPC 1997).

1.4.4 Labour and employment The labour force in Nepal grew at 3.5 percent per annum during 1980-1990, a rate that exceeds the overall population growth rate (ILO/SAAT 1997). The growth rate of labour force is higher in Tarai compared to the Hills. Unemployment rate is estimated at 4.9 percent (CBS 1997). Underemployment, however, is very high

NEPAL HUMAN DEVELOPMENT REPORT 1998

(approximately 45 percent) which is more pronounced in rural areas due to the seasonal nature of agricultural employment. The structure of employment shows that 79 percent of the employed labour force is engaged in self-employment 71 percent of which remains concentrated in agriculture. Of those in wage employment, 12 percent are in agriculture and 9 percent in other organised sectors(see chapter 7).

heavily agriculture-based. Moreover, the terms of trade of the agricultural sector vis-à-vis the non-agricultural sector have deteriorated during this period. This has intensified poverty in the rural and agricultural households. The intensity of poverty, which is correlated with illiteracy, malnutrition and other forms of deprivation, has hindered the overall pace of human development.

1.5 ECONOMY

1.5.2 Income, consumption and saving

1.5.1 Structure of economy

Nepal, with a per capita income of US$ 210 (PPP $ = 1,186), belongs to the group of very low-income countries in the world. Economic growth averaged at 3.9 percent per year from the '70s to the ’90s. Given the high population growth rate of 2.5 percent, per capita income grew by only 1.4 percent per annum during the last 25 years. With about half of the population below poverty line, the marginal propensity to consume remained very high at 0.867 during 1986-96. The high share of consumption in income is attributed to rapid growth in both the private and public sector consumption, which grew by a compound rate of 15.4 percent and 13.8 percent respectively during 1986-96 (table 1.1). Escalating administrative and operational expenses of the government enterprises, subsidies on consumption and swelling recurrent expenditures led to a high growth of public consumption. Liberalisation, since the late ’80s, of the external trade and tariff regime has also contributed to high consumption through imports1.

The country depends heavily on agriculture. Agriculture contributes more than one-half of the household income, provides employment to 80 percent of the population, and has a significant bearing on the manufacturing and export sectors. The share of agriculture in GDP, however, has declined consistently in the last two decades when agricultural production grew by only 2.3 percent annually. The service sector is now assuming a more prominent place in the structure of the economy (figure 1.2). The marked increase in the share of the service sector to GDP is mainly attributed to the expansion of trade and tourism services, which increased by more than 10 percent on average during this period. The growing share of the services sector in GDP and concentration of these activities in urban areas (where only 12 percent of the population resides) imply that income is being redistributed in favour of the urban population (figure 1.3). Per capita agricultural GDP did not increase during the period 1970-1990, an ominous sign in an economy where employment continues to be

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

13

Table 1.1

Structure of consumption and domestic savings

2

(in million rupees)

1. Consumption Private Public 2. Gross Domestic Saving Public Private 3. Gross Domestic Product Consumption as % of GDP GDS as % of GDP

1985

1990

1995

40,348 35,977 4,371 6,239 -454 6,693 46,587 86.6 13.4

95,273 86,314 8,959 8,143 328 7,815 103,416 92.1 7.9

192,436 174,394 18,042 27,146 6,533 20,613 219,582 87.6 12.4

1996

Annual growth rate (%) (1986-96)

222,392 200,917 21,475 27,504 6,418 21,086 249,896 89.0 11.0

16.8 15.4 13.8 14.4 11.0 16.0

Source: MOF 1996.

The country’s gross domestic savings (GDS) is very low: on average, it stood at about 10 percent of the GDP during the last decade. Public savings remained either negative or marginally positive throughout the ’80s. Despite financial liberalisation and tax reforms, the saving performance of the country has remained poor, due both to the low scale and slow increase in real income. The low level of savings both in the public and private sectors has led to an unsustainable dependence on foreign aid, the disbursement of which is further constrained by insufficient investment capability.

1.5.3 Distribution of productive assets and income As noted, agricultural land is Nepal’s principal productive resource. It is, nevertheless, both an extremely limited and unevenly distributed resource. Sixty-nine percent of the landholdings are less than 1 hectare in size, and 88 percent are below 2 hectares. Disparities in the distribution of productive assets (particularly land), income earning opportunities and access to decisionmaking have significantly influenced income distribution. The bottom 20 percent of households receive only 3.7 percent of the national income while the top 10 percent claim a share of nearly 50 percent (CBS 1997a). There is also a marked variation in the spatial distribution of income (figure 1.3). Gender disparity in income distribution is acute as well due to the command of male household members over family income, absence of property rights for women and the unpaid domestic work the vast majority of working women are engaged in. Disparity in distribution of both assets and income, in turn, influences access to education, health, nutrition and standard of living. Any effort to enhance human development, therefore, must facilitate asset and income redistribution, in addition to enhancing productivity. This is a

14

difficult and politically sensitive task now complicated further by the denial of a redistributive role to fiscal policy due to the ascent of optimum tax principles in public policy-making.

1.5.4 Recent economic trends The performance of the agricultural sector has been affecting the growth rate of GDP closely. Real GDP which had increased, on the average, by 2.1 percent in the ’70s, grew by 4.9 percent during the ’80s, and by 5.2 percent in the ’90s. Agricultural GDP had increased by only 0.5 percent per annum during the ’70s. It accelerated to the rate of 4.6 percent during the ’80s to fall again to 2.2 percent in the ’90s. Non-agricultural GDP rose annually by 7 percent during the ’70s and decelerated to 5.2 percent during the ’80s. During the ’90s, the growth of the nonagricultural sector accelerated to 7.8 percent (table 1.2). The country’s economy continues to remain inflationary. The average rate of inflation, as measured by the CPI, stood at a two-digit level during the ’80s. Various adjustment measures, Table 1.2 Trends of major economic indicators (annual percentage change)

Indicators Real GDP Agriculture Non-agriculture Prices (Consumer price index) (GDP deflator) Government expenditure Regular Development Revenue Exports Imports In percent of GDP Government expenditure Revenue Trade deficit Current account deficit BOP (+Surplus) (-Deficit) Foreign debt

1971-80 1981-90 2.1 0.5 7.0 7.9 7.1 17.8 18.6 17.7 15.4

1975 9.1 6.1 5.6 0.7 2.5 2.1

4.9 4.6 5.2 10.6 10.3 19.3 19.2 19.4 17.6 19.4 18.4 1985 18.9 8.8 11.3 4.2 -1.95 20.7

1991-96 5.2 2.2 7.8 10.7 10.1 12.3 21.0 7.4 18.0 28.7 27.8 1996 19.7 11.3 22.8 9.5 -0.54 56.0

Source: MOF: Economic Survey, various issues; NRB Quarterly Economic Bulletin, various issues.

NEPAL HUMAN DEVELOPMENT REPORT 1998

ranging from exchange rate devaluation to upward revision of administered prices, along with excessive monetary expansion, resulted in a high rate of inflation during this period. The price situation has not improved during the ’90s. During 1991-96, inflation stood at more than 10 percent due to similar causes as during the late ’80s effecting adversely the overall cost of living, income distribution as well as the savings of the poor and the fixed-income groups. Starting in the mid-’80s, Nepal adopted outward-oriented economic policies to promote trade for more rapid economic growth. With the gradual opening of the economy, the volume of total trade grew from 16 percent of GDP in 1975 to 40 percent in 1996. In rupee value, the exports increased, on average, by 19.4 percent in the ’80s and by 28.7 percent in the ’90s. After a setback in the mid-’90s, exports have recently picked up. The growth rate of imports, which stood at 18.4 percent, on the average, during the ’80s, accelerated to 27.8 percent during 1991-96. Whereas from the mid-’80s onward, the balance of payments remained continuously favourable until 1994, in 1995 and 1996 it recorded a deficit. The decline in total exports, coupled with higher imports, resulted in an increase of current account deficit from 4 percent of GDP in 1994 to 6 percent and 9.5 percent in 1995 and 1996 respectively. Trade liberalisation measures have so far failed to induce export diversification and reduce trade deficit. The carpet and garments industries, two of the economy’s strongest exports, continue to show a healthy trend, with occasional setbacks for internal and external reasons. But their future remains uncertain in the new trade environment which will not only require greater competitiveness but also firm adherence to international standards regarding the use of child labour, environmental protection and product quality. The new trade agreement with India is promising since it abolishes most of the traditional restrictions on Nepali exports to India including those concerning origin and valueadded. As a result, new products including vegetable ghee, soap and detergents, toothpaste, cotton yarn and noodles are now allowed to enter the Indian market −when all that Nepal exported to India earlier was unprocessed primary products (ignoring “unofficial” exports). The recent opening of a new trade route to overseas via Bangladesh may also provide additional impetus for export. On the fiscal front, the government adopted

an expansionary posture in the ’80s. As a result, government expenditure recorded an average annual growth rate of 19.7 percent during the first half of the ’80s compared to 17.8 percent in the ’70s. The resulting fiscal deficit and adverse impact on the balance of payments invited intervention of the International Monetary Fund under its standby arrangements in 1985 together with the subsequent introduction of structural adjustment and other reform programs in 1987. The growth of expenditure slightly decelerated to 18.7 percent on average during 1986-90 and further to 12.3 percent since then. However, it is not certain that the principal problems of inadequate rigour in programming and budgeting public sector expenditure have been checked in these ten years. The recent instability in government and frequent changes of principal personnel in central organisations such as the National Planning Commission added to the problem of confusion in priority and choice of projects. The laxity in public expenditure management, high repair and maintenance costs due to poor quality of construction, political intervention in the management of public enterprises, growing debt service and weak tax administration also continue to burden public sector management. In improving expenditure management in the public sector, it is not enough to reduce its size. Apart from a greater need for the better allocation and management of such expenditure, there is also the question of the potential level of revenue mobilisation. The size of public expenditure, at less than 20 percent of the GNP in 1997, is moderate by any standard. But fiscal deficit (after grant), which is as high as 5-6 percent of the GNP, implies that resource mobilisation and restructuring of public spending may be more urgent, not only for growth but also to generate necessary resources for human development-friendly areas. Government revenue, which had increased by an average of 15.4 percent in the ’70s, grew by 18 percent during the ’80s and the ’90s. As a percentage of GDP, government revenue increased from 8.8 percent in 1985 to 11.3 in 1996. Due to the low level of revenue surplus, development financing of the government continues to be highly dependent on foreign aid. The share of foreign aid in development expenditure stood high, at approximately 55 percent in the ’80s, a figure which continues to hold in the ’90s. The share of loans in total foreign aid has been growing and external debt

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

15

of the country has increased from 2 percent of GDP in 1975 to 56 percent in 1996. Whether and to what extent this level of concessional aid flows can be sustained will determine the future of the economy of Nepal and its relation to human development. Lately, the share of budgetary allocation to the social sector has been increasing. The share for education increased from 9.5 percent in 1986 to 13.5 in 1997; for health it went up from 3.0 percent to 6.0. As a percentage of GNP, however, the share of social sector spending remained less than 6 percent during the last decade (box 1.2). Analysis of intra-sectoral budgetary allocation reveals a large proportion of spending on education has gone to subsidise higher education. Likewise, a large percentage of health sector expenditure subsidises the operation of hospitals covering limited areas. Budgetary allocation for human priority sectors remains approximately 3 percent of GNP. Since all the allocated expenditure has not actually been spent, the actual expenditure on human priority sector is less than even 3 percent. Apart from the government sector, there are a number of non-government organisations (NGOs) injecting financial resources into the social sector. The NGOs have been engaged in various promotional activities, including literacy, adult education, health education, health clinics, provision of family planning and maternity services, rehabilitation of sex-workers and street children, provision of water supply and sanitation and environment protection. The financial investment of the NGOs and INGOs in these activities stood as high as Rs. 1.1 billion in 1995 (Shrestha 1997), which is more than onetenth of the total government expenditure in the Box 1.2

Allocation of budget in the social sector (in percent)

1986

1993

1997

15.8 9.5 3.0 7.5 7.9

21.8 12.7 3.6 9.2 13.0

29.2 13.5 6.0 8.1 13.6

* Expenditure on HPS

8.3

14.8

17.3

As % of GNP * Social sector Education Health * Police & defence * Debt service * Expenditure on HPS

3.7 2.2 0.7 1.7 1.8 1.9

4.2 2.4 0.7 1.8 2.5 2.8

5.8 2.7 1.2 1.6 2.7 3.4

As % of Budget * Social sector Education Health * Police/Defence * Debt service

HPS: Human Priority Sector. Source: MOF Budget Speeches (various years).

16

social sector. Nearly two-thirds of this went to the health sector. A proper monitoring of Nepal’s NGO sector, therefore, is essential to ascertain the contribution of various agencies and funds to this sector.

1.5.5 Physical infrastructure A country with difficult topography and poor in financial resources, Nepal still lacks the basic physical infrastructure for development. Ever since the government initiated planned developmental efforts beginning in the mid-’50s, physical infrastructure has been given a high priority in financial allocation. Considerable progress has been achieved as well. Yet, to this day, at least 15 districts do not have access to motorable roadway, power supply is heavily deficient, and most of the arable land is still rainfed. Safe drinking water facilities, moreover, are accessible to only one-half of the total population. The development of transport and communication remains a challenge due, among others, to the land-locked position, hilly terrain which occupies more than four-fifths of its total land area, complex river systems and poor public resource base. Black-topped roads per 10,000 persons stand at a mere 2 km and only 5 persons out of 1,000 have telephone connections − despite the fact that the transportation and communications sectors absorbed more than one-third of the total foreign aid during the sixties and seventies. Virtually all of Nepal’s development plans have emphasised the agricultural sector and identified irrigation as a priority for its developmental input. Irrigation facilities are available for one-fourth of the arable land. Most large irrigation projects irrigate less than onehalf of their “command area”. In the 1980s, the government made an allocation, on the average, of more than 10 percent of all development expenditure on irrigation. Large-scale projects were favoured over smaller projects and minimal attention was paid to considerations of project maintenance, effective management and people’s participation. Public investment, therefore, suboptimally benefited irrigation projects. In the nineties, however, governments have shifted attention to smaller irrigation projects and been more sensitive to institutional support.

NEPAL HUMAN DEVELOPMENT REPORT 1998

1.5.6 Development policies and implications for human development Recent development policies adopted by the government have followed a two-pronged strategy, i.e., enhancing the role of the private sector in economic activities while increasing public investment in infrastructure and social sectors. At the same time, the government is also playing a catalytic role in the development of the infrastructure and social sector. These policies have emphasised the growth and stability aspects of economic management. In what ways the requirements of equity and justice − values inherent in the pursuit of human development − can be addressed adequately is a challenge which remains to be faced. Economic reforms initiated in the latter part of the eighties involved revision of the industrial, trade and financial policies. During the nineties, more aggressive reform measures were introduced. Industrial de-licensing was implemented, foreign trade was completely liberalised, foreign investment encouraged and one-window policy formulated to create an atmosphere more conducive to private and foreign direct investment. At the same time, the foreign exchange regime was also liberalised to ensure easier access to industrial raw materials and machinery imports and for repatriation of foreign investors’ investment proceeds. Fiscal expenditures during this time were geared towards enhancing the role of the private sector and the market. Aggressive tax reform measures were adopted, though the positive outcome of these measures is still awaited. Most subsidies have been withdrawn, with the exception of a few (transport subsidy to transfer foodgrains to the food-deficit remote areas, price and transport subsidy to chemical fertilisers and interest subsidy to small loans extended to small farmers or specific sectors). So far, 16 public enterprises have been privatised and the government has signaled its intention to go ahead with many others. The public enterprises that are to be retained with the public sector are those which are natural monopolies. Although some of the privatised enterprises have fared well in financial terms, many others have not. In addition, the economy has suffered from adverse changes in prices and employment rates and related welfare shocks. A study of the real wage situation in selected areas of the country shows that it has declined both in agricultural and industrial sectors (Acharya 1996).

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

It is not clear if the somewhat higher rates of growth attained since the eighties will be sustainable in the face of continued low growth rates in agriculture, and a low savings rate − which is causing a low rate of capital formation with little scope for competitive advantage in the trade sector due to geographical, technological and managerial factors. More seriously, economic policies have so far failed to make a dent on poverty, unemployment and income inequality. The reasons are many. First, the reform and adjustment measures are not hinged to the agrarian structure and the agricultural sector at all, which has the most pronounced bearing on poverty alleviation and employment generation. Second, though the growth rate has gone up, the rate has not been as high and broadbased as expected from the reform measures. The growth in output, confined largely to the service sector, has not translated into a growth in employment, as a result of which income and employment in the rural areas have not improved. Third, there are not enough safety measures to protect those who are vulnerable to adjustment programmes. Moreover, the retrenchment of government and public corporate employees, privatisation of public enterprises, blanket withdrawal of subsidies in many areas and deregulation of administered prices of essential commodities have each adversely affected real incomes. The pursuit of fiscal balance, without adequate attention to public welfare (or to areas where austerity steps could be taken with greater effectiveness, such as control of perks and privileges and leakages and corruption), has also left an unfavourable impact. Enhancing broad-based economic growth, improving living standard and ultimately raising human development status, therefore, call for restructuring the whole gamut of economic policies, strategies and programs to this end.

1.6 POLITY The Nepali state is now 229 years old. Through much of its history, the Shah dynasty has presided over the destiny of Nepal, alternately playing the roles of conqueror, titular head of state, absolute ruler and, at present, a constitutional monarch. Through the vicissitudes of this period, including British imperialism in the region, two world wars and the cold war, and the imperatives of a feudal order, the country has remained independent, which is a source of great national pride. Nearly eight decades, however,

17

were spent in stabilisation of the state’s borders and ruling regimes, and more than a century was lost in isolation. The idea of a polity with modern political and legal institutions interacting with the need and aspirations of the members of the society organised along diverse communities is, therefore, of recent origin.

• • • •

1.6.1 Constitution In the country's rather brief constitutional history, the 1990 constitution is politically the most liberal and socially progressive. It is the product of the 1990 Movement for Restoration of Democracy (MRD) which did away with the 30-year-old Panchayat polity in the belief that, among other things, switch to a liberal political dispensation would facilitate a more rapid and equitable development. The 1990 constitution envisages a parliamentary democracy with constitutional monarchy, along the lines of the Westminster model. It guarantees the standard civic and political rights of the citizens, provides for an elected government accountable to the parliament and declares that "the source of sovereign authority of the independent and sovereign Nepal is inherent in the people…." The directive principles and policies of the state, as enunciated in the 1990 constitution, are intimately related to human development. Some of the salient features of these principles are as follows: • •

•

Promotion of conditions of welfare on the basis of the principles of an open society by establishing a just system in all aspects of national life; Establishment and development, on the foundation of justice and morality, of a healthy social life, by eliminating all types of economic and social inequalities and by establishing harmony amongst the various castes, tribes, religions, languages, races and communities; and Maintenance of conditions suitable to the enjoyment of the fruits of democracy through wider participation of the people in governance of the country, and decentralisation and promotion of general welfare by making provisions for the protection and promotion of human rights.

Under such principles, some of the policies, which the state is directed to adopt, relate to: •

18

Raising of the standard of living of the general public through emphasis on education, health, housing and employment of the people of all regions, and distribution of investment of economic resources for balanced development in the various geographical regions of the country;

•

• •

Protection of environment including wildlife, forests and vegetation; Participation of female population in national development through special provisions for their education, health and employment; Arrangements to safeguard the rights and interests of children, and gradual arrangements for their free education; Protection and welfare of orphans, helpless women, the aged, the disabled and incapacitated persons through provisions for education, health and social security; Promotion of the interests of the economically and socially backward groups and communities by making special provisions with regard to their education, health and employment; Creation of conditions for the acceleration of the speed of rural development, keeping in view the welfare of the majority of the rural population; and Provision of free legal aid to indigent persons for their legal representation in keeping with the principle of the rule of law. 3

The constitution stipulates that the principles and policies are fundamental to the activities and governance of the state. However, as is the tradition with all democratic constitutions with such provision, these principle and policies are not legally enforceable. Nonetheless, the constitution clearly visualises the country as a nation with aspirations to become not only economically prosperous but also socially just and equitable with highest regards for the rights and welfare of the human person. The constitution clearly expects governments to draw legitimacy from it in order to deploy resources and the means available in the country for attaining the aforementioned goals.

1.6.2 Electoral system The constitution envisages two houses of parliament, Rashtriya Sabha (National Council or the Upper House) and Pratinidhi Sabha (House of Representatives, HOR; the Lower House). The lower house consists of 205 members elected by secret ballot under adult franchise. Citizens 18 years of age and above are eligible to vote. The upper house has 60 nominated and indirectly elected members. The constitution provides for an independent Election Commission (EC) to conduct elections for both houses of the parliament and local bodies at the district and village levels. Elections to the parliament are based on plurality or firstpast-the-post system. For election to the HOR, the country has been divided into 205 singlemember constituencies. A constituency is

NEPAL HUMAN DEVELOPMENT REPORT 1998

delimited on the bases of “the boundaries of administrative districts, geographical factors, density of population, transportation facilities and communal homogeneity or heterogeneity of the local residents”.

1.6.3 Political parties Political parties are playing a critical role in the development of democratic polity. Much of the struggle against the non-party, monarchydominant Panchayat system was directed to the restoration of the party system as a basis for organising the political affairs of the state by the peoples and their representatives. The first reconciliatory act of the king at the culmination of the 1990 movement to restore democracy was to rescind the law of partylessness from the previous constitution. Today, two principal parties are engaged in political competition. They are the Nepali Congress (NC) and the Communist Party of Nepal, Unified Marxist-Leninist (CPN-UML). The NC has a long history of struggle for democracy. A party which led the "revolution" against the Rana oligarchy in 1951, it formed the first elected government under the "first parliament" in 1959 dismissed by King Mahendra in December 1960 to install the Panchayat regime. It was the NC which, together with the United Left Front (ULF), led the MRD in 1990. The CPN-UML, in turn, is the principal left force following the amalgamation of the Communist Party of Nepal, MarxistLeninist and the Communist Party of Nepal, Marxist − the two most important constituents of the ULF set up in 1990. (The former has been the vanguard of the more militant or "revolutionary" section of the communist movement. The latter, a rather ineffectual faction with internal schisms of its own, belonged to the moderate school of the left movement.) Currently, UML is an important political force in the country with a Marxist-Leninist nomenclature and matching rhetoric on occasion. However, for all practical purposes, UML, perhaps barring some factions within it, appears to be metamorphosing itself into a social democratic party, a political space vacated by Nepali Congress which historically professed this ideology. Both UML and NC have been under pressure from forces of globalisation "to reform" themselves, the burden becoming greater when in power as a result of the state’s heavy dependence on foreign resources.

BASIC DEVELOPMENT STRUCTURE AND PROCESSES

The posture of a third party in recent months has been largely responsible for the apparent stability of the government and, in particular, the continuity of the current parliament elected in 1994. Rastriya Prajatantra Party (RPP), a new party formed after the restoration of democracy by the ruling functionaries of the erstwhile Panchayat regime, exercises an influence at the state level disproportionate to its presence and power at the popular level. The principal reason is erosion of political support to the more established parties, Nepali Congress in particular. There are smaller parties, formed before and after the restoration of democracy in 1990, which have yet to make their presence felt in the nation’s evolving political scenario. Their potential contribution to adversarial politics, however, cannot be underestimated. Overall, all major parties suffer in varying degrees from the inability to fully embrace the political culture required in a democratic polity. The perversion is manifesting most nakedly in divisions and oppugnancy in the leadership of all major parties.

1.6.4 Government The constitution provides for institutions and processes that meet the prerequisites for good government. Following the principles of separation of power within the state apparatus, the state expresses itself through three branches of the government: the executive, the legislature and the judiciary. An important element of the state structure is the provision of the Constitutional Council which nominates officebearers to the constitutional bodies. Headed by the prime minister, the council is comprised of the chief justice, the speaker of the HOR, the chairman of the National Assembly and the leader of the main opposition party in the HOR. The intention of this structure is to check and balance executive discretion in sensitive appointments of office. In practice, however, it has yet to adopt an impersonal, non-partisan and professional approach in its work. There is a Judicial Council, which is similarly empowered with regard to appointments to the judiciary. Another special feature of the new institutional arrangement is the provision of the Commission for Investigation of Abuse of Authority, an office of critical significance in a country where corruption has grown to be a principal threat

19

both to the democratic process as well as development policies and actions. The executive functions are exercised by the council of ministers headed by a prime minister. The king, in accordance with the will of the parliament (expressed in favour of the leader of the party with majority in the HOR or a member of parliament who can otherwise command its confidence), appoints the prime minister. Constitutionally, the judiciary is fully independent for the first time in Nepal’s history. It consists of a district-level system, the courts of appeal and a Supreme Court, the apex court in the judicial hierarchy. The supreme court is empowered to enforce fundamental rights and interpret the provisions of the constitution.

1.6.5 Decentralisation and local government Nepal is a unitary state with a history of overcentralised and non-participatory system of governance. Surprisingly, decentralisation has been a long-standing item on the public agenda. The Panchayat system had even pronounced the process as a fundamental element of the regime. Over the years, before and after 1990, while many legislations have been enacted and even elections held for the local bodies at the village and district levels, very little has been done to respect and enforce local autonomy. The local government structure comprises the Village Development Committees (VDCs) with a Chairperson and Vice-Chairperson and members consisting of representatives elected from various wards on the basis of adult franchise, and District Development Committees (DDCs) elected indirectly by them. The urban areas have municipalities with a similar structure, which also becomes a part of the electorate for election to the DDCs. The demand for greater devolution of power is unanimous at the district level, irrespective of party, religious or caste affinities. The activities of the ubiquitous NGOs harbour implications for decentralisation and local government in their own way. NGOs can be regarded as a medium for promoting participatory democracy at the grassroots. If they could be truly representative of the local people whose aspirations they claim to reflect, the NGOs could become a complementary set of

20

local institutions working together with the elected institutions of local self-government. The donors' perception of the role of NGOs, as to whether they want them to be their implementing agents or partners in advocating the norms and values of development across geographic, political, social and ethnic boundaries, has its own relevance.

1.6.6 Sources of political power Underneath the constitutional structure and the political institutions and structure of government it embraces, there is an element of continuity in the country's political economy and social traditions that is likely to have a decisive role in the consolidation of democracy in Nepal. The central problematique of the Nepali polity is its domination by a historic coalition of the landowning class with the military-bureaucratic aristocracy at the apex of the power pyramid, supplemented by a new political class not committed to the pursuit of broad-based development. Agriculture produces about 40 percent of the national output, providing livelihood for twice this percentage of population. Had the base of this economic activity been more egalitarian than it actually is, the distribution of political power, too, would have become more democratic. There is continued concentration of landholdings in a narrow section of the population. That the new sources of economic power, e.g., industry, trade and professional services, are not dispersed widely (or even distinctly divorced from the landed interests) has made it difficult to make transition to more widely based distribution of political power. The concentration of political power can also be observed along the lines of caste, ethnicity and regions. Likewise, patriarchal family tradition and related social and economic orthodoxies have effectively barred women from political participation. The constitution requires all political parties to reserve for women at least 5 percent of their electoral candidacy to the HOR. This "floor", however, is being treated as a "ceiling" by the major political parties who have never exceeded it in their nomination lists for the two elections held since 1990 (for detail, see 8.4).

NEPAL HUMAN DEVELOPMENT REPORT 1998

CHAPTER 2

Understanding Human Development [The human development] approach reclaims an established heritage rather than importing or implanting a new diversion. (emphasis added) Sudhir Anand and Amartya Sen 1996: 5 The human dimension of development is not just another addition to the development dialogue. It is an entirely new perspective, a revolutionary way to recast our conventional approach to development. With this transition in thinking, human civilisation and democracy may reach yet another milestone. (emphasis added) Mahbub ul Haq 1996: 11 Planners have to choose at the margins between human development and other activities and between different human development activities. The choices are not easy, nor should they be the same in all countries.... In considering human development and other steps to reduce poverty, the low-income countries of Africa and Asia, for example, must perforce put strong emphasis on economic returns. (emphases added) World Bank 1980: 64

2.1 INTRODUCTION

W

hat are the political, economic and cultural roots of the concept of human development? How did it evolve and what has been its career like? Is there anything new and valuable to the human development paradigm of the 1990s? Does the legitimacy of “human development” constitute a paradigm shift or was this paradigm reinvented? What are the other paradigms it is currently competing against? How can we explain the current legitimacy of the notion of human development in a historically conscious, specific and concrete frame? Does the notion of human development have a universal validity independently of political, economic and cultural heterogeneities and inequalities which are among the hallmarks of the contemporary world order? Questions such as these are germane to an inquiry on the concept of human development. Second, there is also the question of whether or not the standard components of human development, i.e., longevity, knowledge and a decent level of living, constitute the most highly valued and exclusive or nearly exclusive human developmental goals.

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Finally, there is the overwhelming instrumental emphasis given to the economic domain and economic growth in general and public expenditure in particular in the literature on human development. In view of this, it also becomes pertinent to inquire on the significance of the political and cultural domains for human development, i.e., whether or not realignments of political and cultural structures and commensurate social actions can promote human development.

2.2

THE CAREER OF HUMAN DEVELOPMENT

At the risk of de-emphasising historicalstructural specificities, it is probably the case that all human civilisations, as a rule, emphasised human development as an important social goal at various social-organisational levels. Certainly, within written history, concerns with rendering the human condition better and prescriptions for “living worthwhile lives” have been with us for as far back as we care to go. Intimate knowledge of physical and social environments, good health and

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appropriate technical and social-organisational skills, all of which enhanced the capability to interact with the physical and social environments, were prized in all, including the foraging, societies. In almost all societies, human capability formation has been disaggregated into life-stage-specific milestones and a person encouraged to traverse through a well defined range of individual and social developmental markers through one’s lifetime. All known societies have attached importance to the appropriate modes of child care and socialisation, inter-generational transmission of knowledge and technical and cultural skills and to the performance of rites de passage, which were markers of socially approved individual developmental achievements towards maturity as full-fledged social beings, who could independently pursue culturally legitimate modes of livelihood and personal fulfilment. It can be argued that various world religions have similarly been concerned with the normative and behavioural issues of public good (e.g., moral principles and sanctions) and human development (e.g., codes related to healthy and educated life, enlightened livelihood and proper conduct of social organisations), and, of course, also with otherworldly public and private goods (e.g., salvation). It is little wonder, then, that human development was an issue of concern also for saints, political office-holders, litterateurs and philosophers, whether in the East or the West (e.g., Kautilya, Aristotle). Yet the highly stratified and segregated nature of the society contravened universal and sustained intervention in favour of human development. Such a nature of the society was legitimated, among others, through religious injunctions and ecclesiastical organs, the feudal mode of production, racism, patriarchy, the military-security-based nature of the state and the overwhelmingly ascriptive character of distribution of social positions. All of these structures, in turn, invidiously segmented people and presented them with inherently discriminatory and extremely skewed opportunities for capability formation. In later periods, capabilities to own/access productive resources, access to self-employment/ employment opportunities and acquisition of wealth/income were also regarded as the key dimensions of human development. Of course, otherworldliness, renunciation, salvation, etc. also qualified as legitimate dimensions of human development in many world regions, as did, for example, a sharp lack of universalism. The

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historically late – but currently universal and increasingly powerful – invention of nonprimary, yet encompassing social organisations (e.g., the formal workplace, the state, the global system) and the intensification of vertical and horizontal division of labour have together led to a massive and fast-increasing expansion of cultural symbols, the competence over which – and the management and intergenerational transmission of which – has legitimately been considered to be a key component of human development. Competence over this dimension, of course, begins with literacy, the absence of which seriously and simultaneously impairs communicative and interventionary ability with/upon the physical and social environment. In Europe, the rise of capitalism beginning in the 16th century, the spread of Protestantism, the French Revolution and Enlightenment started to alter the parameters of human development to a substantial extent – but often in contradictory directions. On the one hand, the process vanguarded a revolutionary dynamic which led, among others, to the near renunciation of otherworldliness and its metaphysical correlates and the dismantling of some of the impregnable structures of segregation, hierarchy and ascriptiveness. It also led to the realisation of unprecedented achievements in some dimensions of human development, an impressive measure of democratic politics as also to the creation of welfare states, which upheld, to varying degrees, universal public support to selected human developmental concerns. On the other hand, and even within the developed capitalist settings – and apart from the creation of sweatshops and other ghettos of human miseries – it led, among others, to the weakening and diminution of primary agencies of human belongingness and development, e.g., the family, the community, and to the creation of the “unattached” individual (effected primarily through the uncoupling of the household/community organisations and the production regime, on the one hand, and the invention of wage labour, on the other), the celebration of unabashed consumerism as the near-exclusive end of human pursuit and the generation of unprecedented levels of economic inequality. In the mean time, the progressive globalisation of this economic, political and cultural process, particularly since the 1950s, has also led to ambivalent results in the underdeveloped countries. While almost all countries have made mild-to-impressive gains in

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health, education and income-related indicators, the gaps in international as well as intra-national achievements have been widening progressively as well. Economic stagnation has also been a pronounced feature in a large number of countries (UNDP 1996: 1-3, 11-14). Unprecedented loss in world-cultural pluralism, which translates into an extremely high level − and increasing − loss of self-respect in underdeveloped countries and a commensurate growth of arrogant and self-serving pronouncements and prescriptions from the developed countries, has been another important outcome of this process of unequal economic development. Legitimacy of local economic, political and cultural orders is undergoing a sharp decline. As a correlate, institutions which upheld the legitimacy of these orders, whether conservative or progressive, have undergone sharp diminution or been transformed altogether. Loss of self-initiative has been pronounced at various levels of the society and the state. At the global level, unprecedented levels of militarisation and exploitation and centralisation of natural resources, both of which imminently threaten human security/civilisation as a species, have been two other singular outcomes of this process. Many latter-day academic writers, including writers on the economy, have emphasised aspects of human development as the ends of human, including overtly “economic”, endeavours (UNDP 1990: 9) at various levels of social organisation, most prominently at the level of the state. On the other hand, the economic and development literature and, more importantly, public policies have tended to pursue ends that were several times removed from, or even contravened, human developmental goals. A number of interconnected historical developments appear to have led to this lack of concern with/contravention of human developmental goals. The fundamental logic of ceaseless accumulation of the capitalist mode − and its upscaled version, the capitalist world-economy − despite the revolutionary role it played in the democratisation of political space by means of systemic, continuous and decisive struggles against feudalism and other pre-capitalist forms − remained, of course, at the heart of this process both at the national and international levels. The central, active logic of accumulation pervaded both the economic and developmental literature and public policies. The far narrower

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notion of economic growth usurped the far more encompassing notion of development as it also completely overshadowed other salient dimensions, values and goals of human and social life. To the extent that human developmental concerns were embraced, these concerns were pursued instrumentally, as long as and to the extent that the achievement of such goals facilitated the attainment of the central imperative of accumulation. The formation and rise of state structures, including those which were otherwise armed with a “democratic mandate”, controlled and stifled “lower-order” social-political organisations by virtue of their superordinate status and the rights of the “eminent domain” also peripheralised issues and processes of human development. The socialist states went much further than other regimes in universalising and promoting economic equality and in accomplishing high levels of achievement in some dimensions of human development, e.g., longevity, knowledge and a decent standard of living. Nonetheless, they, too, pursued state-level accumulation, accorded unequivocal priority to state and party interests and increasingly de-emphasised the centrality of peoples, non-state and non-party social-political organisations as creative subjects in their own rights while at the same time promoting the centrality of the state and the party. The underdeveloped states, on the other hand, remained preoccupied with agendas which focused on strengthening of the state structure and on seeking appropriate locations within the extremely dynamic and uncertain global economic process, while at the same time selectively resisting complete envelopment by international market forces, generating appropriate national policies for international financial assistance and building up physical infrastructures and pursuing economic growth. In most such states these agendas were adopted as the raison d'etre of the state structure. One important consequence of such an agenda was that human developmental concerns, once again, remained peripheralised. The overarching position remained that while such concerns could not be avoided altogether, it would be “unproductive” to bring such concerns to the centre-stage because they were not directly and immediately growth promoting. Human developmental concerns were also widely regarded as promoting consumptive expenditures and hijacking investments from the “productive” sectors.

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Box 2.1 Apart from looking at the glory, beauty and boredom of human existence, creative writers from Bhanubhakta Acharya to Bhupi Sherchan have shown a serious concern for the temporal problems of their society and country. More than 150 years ago, Bhanubhakta was moved by the widespread poverty and ignorance in Nepali society. Social injustice, bribery, flattery and political indifference of the day became at times too outrageous for his poetic sensibility and, in guarded idioms, he expressed his rage. Lekhanath Poudyal, poet laureate, and classicist by training and temperament, was both a traditionalist and humanist who made a veiled satire on the repressive political dispensation of his time. He pleaded for the upliftment of the poor and the deprived. To him, the terrible economic inequality among humans is a disgrace and a challenge to our civilisation and moral conscience. Balakrishna Sama, the celebrated dramatist, captured the essential spirit of Nepali reality, aspiration and vision. Development, for Sama, was not limited to material development; the development of heart, mind and soul was equally important, perhaps even more important. Dharanidhar Koirala long ago exhorted his countrymen, particularly the youth, at the very beginning of his poem "Naivedya" to arise from their prolonged sleep to fight against the Rana autocracy. Laxmi Prasad Devkota was a romantic who perpetually gravitated to the earth. Opposed to tyranny of all kinds, political, social, economic, religious and domestic, he gave a message of emancipation of the underprivileged, the women and the country from poverty, ignorance, superstition and lethargy. Another well-known poet, Siddhicharan Shrestha, sought to awaken his countrymen to the colossal poverty of the country and hoped that the poor will soon be able to get over the essential necessities Kedarman Byathit is a contemporary of Devkota and Siddhicharan Shrestha. He is skeptical about the working of democracy in Nepal which was restored in 1990.

It should be emphasised that human development has not been a monopoly of social scientists and development practitioners. Human predicaments and quests have been the singlemost important themes in philosophy, religion and literature (box 2.1). Such concerns have often eloquently described the human condition and exhorted and inspired listeners and readers to build a more humane world.

2.2.1 Economic growth and human development The powerful notion of economic growth was brought to the centre-stage as the end goal of not only overtly economic but all human endeavours in both economic and developmental literature as well as public policies starting with the mercantilist phase of capitalism in Europe. This singular emphasis gathered further force and

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Human quests in Nepali poetry Among the story writers and novelists, B.P. Koirala is a distinguished name. Although he was a great statesman and thinker as well, he never focussed directly on politics and economic development in his literary writings. But he insinuatingly pointed out the ills of a tradition-ridden society. One of B. P.'s low-born women in his novel Sumnima retorts to the high-born orthodox Brahmin: "The hawk does not commit violence, nor do we by eating beef. The hunting by your princes is nothing but violence; the Mahabharat war, highly respected by your religious books and scriptures, is, in fact, a violence. Your religions have disturbed the equilibrium of nature. Therefore there is violence in the world." Oh! valiant sons of Nepal; Arise from the slumber. Liberate the nation from the shackles of slavery; And look around the world. (Dharanidhar Koirala) Oh! were there such perpetually Flowing waves pure and beautiful In the heart of human beings! What a shock! The world is still engulfed in darkness! (Laxmi P. Devkota) What should I do for this country? Should I dance or sing or embrace, Or cut my head to dedicate it, And pour out my whole soul into my country ? …………………………… Who is Arya? Who is Mongol? Who is Kirat? We are but one nation and one caste. Having taken the same sun, air and water With different colours and forms We are one. (Siddhicharan Shrestha)

speed during and following the Industrial Revolution and the competitive and colonial phases of capitalism. Economic growth, however, became the singular preoccupation at the global level following the Second World War. “Development” since then has largely been defined in dominant economic and developmental literature − and generally pursued in public policies of most of the global states as well as international political, economic and cultural bodies – as being coterminous, even synonymous, with economic growth. Capital and technology were taken to be the two key ingredients in pushing growth ahead, with human beings reduced to the category of labour. Labour itself was taken to be a generally homogeneous, replaceable and residual factor of production. This led to the creation of the model of a “modern sector” (which was essentially a

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monetised, market-dominant sector) which functioned within a condition of unlimited supply of labour that had to be hitched to capital and technology which were scarce and, therefore, had to be provided the driver’s seat. Human developmental concerns, under this model, were tolerable as long as such concerns were compatible with the policies and measures enforced to ensure abundant supply of wage labour and instilled wage-worker discipline and adequate skill among the labourers, and to the extent that it did not hijack investment from the “productive” sectors. Under this conceptualisation and practice, economic growth was an attribute which was to be established primarily, if not exclusively, at the national level. Measurement at this level not only facilitated cross-country comparisons in the newly emerging international world but also masked issues of distribution at the global and national levels. The actual distribution of wealth and income, on the other hand, started to take a much more skewed path immediately following the globalisation of the growth model and, barring a few “miracle” countries, primarily in East Asia, has become progressively more acute. The underdeveloped countries, with 80 percent of the global population, generated less than 22 percent of the global GDP of $23 trillion in 1993 and the ratio of share of the poorest 20 percent of the global population in global income was reduced from 30:1 to 61:1 between 1965 and 1995 (UNDP: 1996:2). As noted by the UNDP (1996: 59), “Income inequality is clearly on the rise in many countries that have opened their economies”. The Gini coefficient for income, which measures the degree of inequality in income distribution, rose rapidly in Sri Lanka, China, Mexico and Chile immediately after they started to liberalise their economies. This conceptualisation readily recognised that global and national measures of growth could hide massive levels of inequality, poverty and deprivation at the geopolitical (e.g., regions, countries, communities) and social (e.g., class, gender, ethnic and other groups) levels as also between sectors (e.g., between “formal” and “informal” sector workers.) Under this conceptualisation, however, such inequalities had to be recognised as a “fact of life”. Such inequalities, at best, merited only residual attention because mainstreaming such problems into the growth model went fundamentally against the sacrosanct logic of growth. Indeed, increases in international and national inequality and expanded recreation of poverty were readily

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rationalised early during the post-war years, among others, by means of the “Kuznets curve”, which argued, on the basis of the experience of a handful of countries at particular points in history, that exacerbation of inequality was an unavoidable rite de passage for all countries during the early phase of the growth process and that the degree of inequality would subside during the medium term. The underlying reasoning was that investments into production were a function of private savings and that savings, to be transformed into investments, needed to be concentrated into a fewer number of hands rather than being “scattered” among a large number of poor people. It was further argued that such investment would open up various sectors of production wherein the poor would be employed and receive wages which, in turn, would reduce inequality and poverty. As a corollary, it was also argued that heightened inequality in a country was an indicator of the fact that the country in question had climbed onto the growth path. The “medium term”, however, was left undefined and there was no assurance either that an economy would not stagnate once into the growth path. Stagnation at particular points along the growth path, on the other hand, has been a key feature of the growth process of a majority of countries in the last 40 years (cf. UNDP 1996: 3; also: “in pure economic terms the 1980s were a ‘lost decade’ for nearly 70 countries”, UNDP 1996: iii.) This was, essentially, an enunciation of what later came to be known as the “trickle-down” theory of growth, a theory which remains the dominant theory of economic growth currently in operation. There has been considerable emphasis in recent expositions of a somewhat revisionist theory of growth that economic growth is of fundamental importance, among others, for advancing human development. It has been rather loudly argued that the most assured strategy to advance human development in underdeveloped countries is to adopt the growth model in its full-fledged, “liberalised” form – wherein the market rather than the state or the community and the economy rather than polity or society/culture provide the most valid and reliable “signal” of the inputs required as well as the outputs to be produced. Such a model, of course, necessarily expands the domain of the market at the expense of the state, society and peoples, and seeks to unidimensionalize the plural richness of human lives and to reduce human beings, people, citizens, etc. and to

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transform them (and their varied economic, political and social/cultural organisations) into consumers and consumers’ bodies. The shrill advocacy of “consumer sovereignty” and the sustained celebration of “the right to choose” can be seen as the unidimensionalisation − and, thus, diminution and underdevelopment − of the quality of individual and collective human lives.

2.2.2 Human capital and human development The human capital approach, which is often also referred to as human resource development approach, began to make its mark in the late ’50s by locating itself in opposition to the earlier perception and theorisation of labour as a homogeneous category. Essentially, this approach was a product of the fast expanding and maturing industrial culture which demanded much more educated, skilled, specialised, differentiated, healthier and more disciplined (from the point of view of capital) labour force. This approach was, simultaneously, a product of the recognition of the fact that enhancement of production, productivity and economic growth could no longer, in the next phase of market-led development, be sustained only by means of additional physical and financial capital. The immensely complex, intricately integrated and therefore highly risky production cycle demanded workers of a commensurate quality. In addition, high inter-firm, inter-industry and inter-national competitiveness and the increasing relative costs of physical and financial capital meant that the quality and resourcefulness of the worker could prove to be of decisive significance. Education, for example, was found to induce “positive externalities” and to offset decreasing marginal returns to capital and to contribute to the elevation of the efficiency of all factors of production (cf. UNDP 1996: 51). That the bulk of the cost incurred in making the worker resourceful was borne by the public sector (e.g., basic education, primary health) certainly added to the demand for such workers by employers. Education, skill, health, “discipline”, etc. among workers, i.e., qualities which raised worker productivity, thus came to be regarded as important components of the total stock of available resources and capital which could be used to increase the rate of economic growth. Obversely, productivity-neutral enhancement of the quality of life of labourers and enhancement of the quality of life of nonlabourers, e.g., housewives and the old, by

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means of increased public expenditure were regarded to be frivolous and wasteful. This approach was thus essentially an argument for fitting people to the production function, for treating people as objects. The human development approach, on the other hand, reaffirms universalism and negates discrimination between labourers and nonlabourers, men and women, privileged and under-privileged, nationals and non-nationals and between ethnic groups. It is also an approach that brings to the fore the faith that enhancement of human life is something that is valuable in and by itself and negates the idea that such an enhancement is legitimate and prudent only so long as it is pursued for instrumental reasons (e.g., for growth in income). That is, human development is the end of all human endeavours as well as all intermediate outcomes (UNDP 1996: 54-5). In addition, it is also an argument for reaffirming the role of human beings and people as the sole active subjects who give structure and direction to the unfolding of collective and personal futures. In principle, the approach is a reaffirmation of the indivisibility and wholeness of the human person and human life and of the economic, political and cultural organisations and processes – right from the local to the global levels – which protect and enhance this wholeness.

2.2.3 “Growth with equity” and human development The “growth-first” or “trickle-down” theory was rationalised by its academic proponents and political and economic practitioners on the basis of three separate claims. First, it was claimed that an unhindered operation of the market forces would generate a higher level of savings and investments which, in turn, would increase productivity, reduce price levels and create a higher demand for labour and, thus, expand opportunities for income earning for a much larger body of workers. The high rate of growth would, after a short time lag, be redistributed by means of a higher level of employment and increased wage bills. Second, it was claimed that a substantial proportion of the increased wealth would find its way to the public treasury through increased tax and other revenues which, in turn, could be used for enlarging and strengthening the public support system. Third, the model was claimed to be of universal validity, i.e., it asserted that the theory was as much applicable

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to the underdeveloped countries and economies as to the developed ones. The failure of the theory in terms of creating expanded job opportunities and reducing income inequalities in the developed economies and generating a high growth rate in the underdeveloped economies, however, became obvious by the mid-’60s. In most of the developed economies, the employment rate either remained stagnant or came down immediately following the post-war years. There was a general increase in income inequality and poverty which together generated considerable class-related, racial and other social conflicts in these countries during the late ’60s and early ’70s. Among the underdeveloped countries, while a few did manage to generate high rates of growth, most others not only failed in terms of growth, employment and equality but also came to increasingly face large-scale social, political and military convulsions. These processes also threatened to severely scale down the post-war boom in production in the developed economies, in global trade and in the overall global growth rate. These processes called for a revision of the “growth-first” theory. The notions of “growth with equity” and “basic needs” were the two main, nearly simultaneous, outcomes of this revision carried out in the early ’70s. The first notion basically started off by underlining the urgency of the reinvigoration and creation of well targeted public support measures for the benefit of the poor and went on to concretise such support measures. Creation of productive assets for the poor was recommended as a priority area of redistribution. Such measures were seen as contributing not only to reduce income inequality and to expand employment and self-employment opportunities but also to push the growth rate to a higher plateau. Within a short term, it was argued, public support to the poor would start bringing in returns and would not call for “sacrifices” from the rich. Essentially, then, this notion was a more sophisticated version of the “growth school” and continued to insist on growth as the end product of all human activities.

2.2.4 Basic needs and human development The premises underlying the notion of “basic needs”, in some specific ways, premonitioned the notion of human development and thus could be seen as legitimate forerunners of the present theme. In particular, the universalism, noted to

UNDERSTANDING HUMAN DEVELOPMENT

be intrinsic to the notion of human development by Anand and Sen (1996: 1-4), was already incorporated as a key dimension of development in the basic needs approach. The approach also partially cut through the “means-end confusion”, often noted in the UNDP Human Development Reports (HDRs) as a distinctive contribution of the notion of human development. “Basic needs” zeroed in on universal human needs on a universalistic basis. In addition, it also anticipated another key dimension of the human development frame − that of regarding human beings as active subjects of development rather than as objects and passive recipients of development. Concern on behalf of the poor was also a key element of the basic needs approach. Despite the rather balanced emphasis of the basic needs approach on a set of three key themes, employment and income, public services and participation, various political regimes in underdeveloped countries tended to blow up the public service theme and to misinterpret the basic needs approach as a supply-driven, statist programme, thus largely excusing themselves from the responsibility of generating additional employment and incomeearning, on the one hand, and from the responsibility of devolving authority and working for peoples’ empowerment, on the other. In addition, few underdeveloped countries possessed the political determination and financial resources to aggressively pursue the public service component recommended by the basic needs approach. That part of the expanded public service programme was expected to be financed through international assistance was alarming to the donor countries who were not at all prepared to move ahead to assist in financing it, especially when the responsibility appeared interminable. Furthermore, this was also the period when notions of liberalisation, stabilisation and structural adjustment were being thematised and implemented by some developed countries domestically as also by global development financial institutions including the IMF, the World Bank, and the Asian Development Bank. As a result, and after a nearly one-decade-long hibernation, the approach was quietly shelved and the strategy abandoned.

2.2.5 Liberalisation, structural adjustment and human development Liberalisation, including stabilisation, structural adjustment and “reform” measures of a similar nature were conceived and implemented

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primarily under an aggressively resurrected theme of economic growth. Among the additional features of this approach were: scaled up, early and full integration of the local economies into the global economy; unchallenged supremacy of the market; and reduction of the role of the state from that of a committed, responsible, or even interested player to that of a rather disinterested facilitator and arbitrator. Global growth and the capacity of the heavily-indebted countries to service debts by expanding exports became the paramount concern – with all other objectives accorded secondary and instrumental status. The approach called for large-scale reduction of public expenditures and for privatisation of even the most essential public services (e.g., primary health care), which, under other approaches and historical dispensations (including the liberal approach/dispensation), were considered to be a legitimate domain of the state. It also called for the abandonment or severe watering down, among others, of earlier global commitments on health and education as issues of universal human rights. The “reform” measures do aim to reduce poverty. Nor can this likelihood be rejected outright. Markets can become people-friendlier than they are at present. But that is a potential which has to be realised in the future rather than assumed to be the case at present. Equipping people to enter the market, ensuring a level playing field, implementing appropriate regulations and corrective actions and provision of safety nets, among others, are absolutely essential in order to ensure that the market remains people-friendly (UNDP 1993: 30-53). Nor will it be adequate to ensure these conditions at the national scale alone. The global nature of the new market demands that such conditions be fulfilled also at the global scale. While this remains a distant dream at present, even a people-friendly market cannot be relied on fully to advance human development, given the inherently accumulative nature of the market system under the capitalist mode. People, their collective will and their local organisations together with their state, therefore, have to be relied upon to continue to shoulder the major responsibility not only to advance human development but also to counteract human development-unfriendly features and outcomes of the historically unprecedented powers and privileges of the new globalised market upheld by the approaches of liberalisation.

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2.2.6 Social capital, social development and human development The general features of the “social capital”, “social development” and other allied approaches and strategies may be identified as consisting of the following four themes (UNDP: 1996: 51-2; de Vylder 1996: 12-23): (a) the social organisation as a whole and not its artificially delineated sub-components, e.g., economy, should form the legitimate unit of analysis both for valid conceptualisation and sustainable intervention; (b) social capital − and not only physical and financial capital − including modes of “social reproduction,” such as socialisation of children, continuous renewal of social institutions, such as marriage, family, community, democracy, press, trade unions, etc. are crucial both in relation to development and human development and in relation to economic growth; (c) growth and development are primarily social and cultural rather than individual attributes; and (d) as such, it is not only necessary to broaden the scope of the production function to include specific characteristics and qualities of social capital but also to pursue social development both for its intrinsic value as well as for advancing individual development. There are, of course, key differences between the two approaches, with the “social capital” approach, emphasising the instrumental or “means” nature of social attributes for growth and development and the “social development” approach emphasising the “end” character of social development. The key issue of relevance for the present, however, is the fact that both approaches maintain a crucial distance with approaches and strategies which highlight the exclusive importance of individual initiative and individual outcomes for/from growth and development. Even if the “social capital” approach is preferred to the “social development” approach, as has been cogently argued by de Vylder (1996: 12-23), human development is far more compatible with a social capital enhancement strategy than with a private capital enhancement strategy. This is because social capital has a far more egalitarian, public-goods character, because sustainability is a societal rather than an individual goal and agenda, and because capability itself is a social and relational rather than individual attribute. In specific instances, social capital may benefit the poor much more than the rich, e.g., through universal primary education system, primary health care system,

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employment guarantee system, adult-franchisebased electoral system. One may also surmise that were it not for the constant struggles of the “middle class”, the poor and the workers for strengthening the state (and its responsibilities), local autonomy, democracy, political power and cultural legitimacy, in addition to economic resources, might very well have been controlled by the oligarchs of private capital.

2.3 HUMAN DEVELOPMENT: THE CONCEPT The conceptual frame of human development draws our attention to a different set of developmental parameters from those identified or hinted at by frames discussed in the preceding section. It leads to a different set of public policy actions. It may also lead, possibly, to different policy actions at the non-profit-earning, but private, agency (e.g., at the household, community, NGO) levels. The specificities of the concept of human development can be identified as follows.

2.3.1 Means and ends The frame of human development forces a fundamental distinction between the means and the ends of development. Because the development of human beings is – or should be – the aim of all genuine development, all other developmental objectives and strategies which run parallel with, or counter to, this singular goal run the risk of becoming anti-human development. Often, such objectives and strategies celebrate the achievement of developmental goals which either maintain a pronounced distance from or are in conducive to human developmental goals. At best, they work towards and celebrate the achievement of potential means towards human development as the achievement of the overriding goal of human development itself. (In the understatement of the UNDP, they lead to a confusion between the means and the ends.) The economic growth model and the more recent liberalisation, privatisation and structural adjustment models can be noted as pursuing goals which can be unfriendly to the end goal of human development. As the HDRs have repeatedly stressed (e.g., UNDP 1992: 1-11), the relevant question in the context of human development is not one of the quantity of economic growth but of the quality of growth:

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The real wealth of a nation is its people – both women and men. And the purpose of development is to create an enabling environment for people to enjoy long, healthy and creative lives. This simple but powerful truth is too often forgotten in the pursuit of material and financial wealth (UNDP 1995: 11).

The human development frame provides much reduced significance to growth in income. Growth in income is seen as a necessary but insufficient input towards advancement in human development. This version has been argued consistently in the UNDP Human Development Reports since 1990. In these reports, international comparative data have been marshalled to show that advancement in human development does not necessarily follow the same path as economic growth. It has been shown that countries with low levels of income and low rates of income growth may nonetheless contribute to the advancement of human development to the extent that they adopt and implement specific sets of policies, particularly those which give primacy to “human priority” sectors and subsectors. Sri Lanka and the state of Kerala in India are the prominent South Asian examples (cf. Drèze and Sen 1995). It has also been shown in the UNDP reports that countries with high levels of per capita income and high growth rates may score relatively poorly in human developmental performance. Summarising such diverse country experiences on the relationship between the level of national income and human development, Anand and Sen (1996: 9) note: It is certainly true that the higher the average income of a country, the more likely it is to have a higher average life expectancy, lower infant and child mortality rates, higher literacy, and a higher value of the “human development index”. A number of recent studies have confirmed this general pattern. The associations are far from perfect, however. For example, income variations in cross-country comparisons tend to explain only about half of the differences in life expectancy or infant or child mortality, even less of the differences in adult literacy rates.

The relatively low significance of income growth for human development, longevity in particular, is also underlined by Anand and Ravallion’s findings (in Anand and Sen, 1995: 10) that “where life expectancy variations are linked with public health spending per capita and an index of poverty, the addition of GNP per person as a further explanatory variable yields a coefficient that is close to zero”. Furthermore, “In recognising the importance of economic growth as a means for human development, we

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must also take full note of the contingent nature of its effectiveness and its non-uniqueness (there are other means, including social organisation)". (Anand and Sen 1996; emphasis added)

2.3.2 Universalism The frame of human development upholds a distinct universalistic bias. As UNDP (1994: 14) notes, the notion of human development “demands non-discrimination between all people, irrespective of gender, religion, race or ethnic origin”, or any other individual attribute. Exclusion from opportunities for capability formation and enhancement, therefore, is a highly salient area of focus within this frame. The frame is strongly tied to notions of equality and justice, at least at the level of opportunity.

2.3.3 People as subjects The frame of human development is much more pro-people than many of the others notions examined above. This pro-people character flows, in part, from the above-mentioned concerns with human development and universalism. The notion of human development, however, is also pro-people in another specific sense: it regards all human beings as empowered, or empowerable in relation to their development. It brings universal participation to the foreground and regards this as a prerequisite for genuine human developmental action. It, thus, puts emphasis on human beings as active subjects of and towards development rather than as objects and passive recipients of benefits from governmental, market-related and other agencies. As Amartya Sen (1992: 57) would say, agency achievement, i.e., what a person achieves by doing and being through his/her own activity/participation and thinking, is at least as important as well-being achievement, i.e., achievement of a level of utility/welfare. More simply, as the UNDP (1993: 3) notes: Human development is the development of the people for the people by the people. Development of the people means investing in human capabilities, whether in education or health or skills, so that they can work productively and creatively. Development for the people means ensuring that the economic growth they generate is distributed widely and fairly.... Development by the people [means] ... giving everyone a chance to participate (emphasis in original).

2.3.4 Capability and deprivation The contemporary discourse on human development is framed around the twin notions

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of capability and deprivation. The capability approach, as Nussbaum (1995a: 5) clarifies: focus[es] on the question, ‘What are the people of the country in question actually able to do and to be?’ This focus on capabilities ... unlike a focus on opulence (say, GNP per capita), asks about the distribution of resources and opportunities – for ... the approach asks how all the groups in the population are doing, and insists on comparing ... one group ... to another. Unlike an approach that focuses on utility [emphasis supplied], where utility is construed as the satisfaction of subjective preferences, the capability approach maintains that preferences are not always reliable indicators of life quality, since they may be deformed in various ways by oppression and deprivation. Unlike an approach that focuses on equal distribution of resources [emphasis supplied] the capability approach maintains that resources have no value in themselves, apart from their role in promoting human functioning [i.e., what people do and what they are or, in short, “doings and beings”; emphasis supplied]. It therefore directs the planner to inquire into the varying needs individuals [and groups] have for resources, if they are to become capable of an equal level of functioning.

Furthermore: ... the central goal of public planning should be [to enhance] the capabilities of citizens to perform various important functions. The questions that should be asked ... are: ‘How well have the people of the country been enabled to perform the central human functions?’ and, ‘Have they been put in a position of mere human subsistence with respect to the functions, or have they been enabled to live well?’ (Nussbaum 1995b: 87).

Viewed in this specific sense, the central issue of human development is one of the stock and relative capability of peoples to achieve values rather than the relative stock of values, welfare or utility consumed. Deprivation, correspondingly, does not consist primarily in the relative loss of stock of values, welfare and utility but in the relative loss of avenues for using or enhancing capabilities. As Drèze and Sen (1996: 9-10) note, within the frame of human development: Poverty is ... ultimately a matter of ‘capability deprivation’.... What is crucial in all this is to judge the different policies, ultimately, by the impact on the enhancement of the capabilities that the citizens enjoy....

Thus, low income, a debilitator in almost all circumstances, is a crucially significant individual attribute or social feature to the human developmental frame to the extent that it detracts an individual or a society either from enhancing personal or institutional capabilities or from using existing capabilities. (Nor does income-poverty, whether of an individual, a group or a society as a whole, necessarily imply

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poverty in all components or dimensions of human development.) The same conceptual frame applies to all other individual or institutional attributes and features. Good health and education, the key dimensions of human development, are significant not only because of their intrinsic value but also because they enable possessors to use their other capabilities even as they facilitate the enhancement of all capabilities. Income can facilitate the use of other capabilities even as it allows the maintenance of a given level of living. Work and employment give meaning to peoples’ lives, bring to the fore the use of their other capabilities, e.g., health, education, belongingness, participation, while at the same time providing an opportunities for enhancing these capabilities. Lack of work, on the other hand, may deprive people − at least relatively − of the use and enhancement of these capabilities. Exclusionary economic, political and cultural institutions, on the other hand, systemically debar specific categories of people from the generation, use or enhancement of various capabilities. Such institutions, in effect, lead to various levels of deprivation of capabilities among those excluded. To summarise, the concept of human development foregrounds the key notions of capability and deprivation. Indeed, the human development index (HDI) is a measure of capabilities – and its obverse, deprivation – of peoples located in particular spaces, whether physical, e.g., district, country, world; social, e.g., men and women, income-poor and incomerich, high caste - low caste; or temporal, e.g., past and present. The HDI, in particular, is not a measure of the stock of utility or welfare or, for that matter, of growth, human capital, basic needs, “development”, etc. All other HDIassociated indices are constructed on the same frame as well (see 2.5). The capability-poverty measure (CPM) measures deprivation from capabilities. The gender-related development index (GDI) is a measure which incorporates gender disparities in capability formation. The gender-empowerment measure (GEM) compares men and women vis-à-vis one particular component of human development, that of participation in decision-making in political and economic life.

2.3.5 Use of capabilities The frame of human development emphasises not only the enhancement of capabilities but also

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use of such capabilities. Creation and reorientation of political, economic and cultural structures and processes conducive to the use of enhanced capabilities at various organisational levels, i.e., from the household to the global level, therefore, is of central concern to the discourse of human development. Capabilities which cannot be used productively not only demean the possessor but also harm the society by being put to unproductive or anti-social use. In addition, achieved capabilities, i.e., functionings, which remain unused, depreciate with time. Public policies, which lead to an appropriate use of the existing capabilities, enhance them. The productive use of capabilities so enhanced is, therefore, of key significance. In other words, public policies must be sensitive both to the process of enhancement of capabilities and the process of use of capabilities.

2.3.6 Sustainability Finally, the frame is sensitive to the issue of sustainability. Creation of political, economic and cultural conditions which allow continual productive use of capabilities is one facet of sustainability. The frame, however, is also sensitive to inter-generational sustainability. This specific form of sustainability can also be seen as an extension of the emphasis on universalism: the future generation is entitled to inherit at least the same level of endowments as the present generation. The concept of human development, thus, has evolved by selectively incorporating and internalising certain key themes of relatively extant approaches to the understanding of peoples, their societies and development at this particular juncture of human condition and global history and, in this process, it has led to a new re-construction of the developmental imperative. The re-establishment of the primacy of human beings as participants or potential participants in the creation of their own future, the singular emphasis on peoples’ capabilities and on enhancement of their capabilities, the analysis of institutional conditions conducive to the use and enhancement of peoples’ capabilities, the renewed emphasis on universalism and focus on exclusion and deprivation have certainly coaxed the traditional developmental fraternities – within the academia, governments and global politics and finance – to re-examine the received notions afresh and to re-focus their lenses.

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2.4 THE LEGITIMACY OF HUMAN DEVELOPMENT The human development frame certainly has an affinity to the humanist and universalist concerns. These concerns, of course, have an old history. Had the human development frame merely reiterated these concerns, it certainly would not have acquired the legitimacy that it has in the last eight years. The relative legitimacy of the conceptual and policy frames of human development, essentially, has to be sought in the diverse and even contradictory global, national and local experiences of the post-World War II era. This legitimacy, among others, has to be sought in proven successes and estimated potentials, on the one hand, and evident failures and fears of failure, on the other, of economic globalisation; in the current dominance of non-universalistic structures, on the one hand, and the vision of a genuinely nonparochial, non-exclusionary global universalism, on the other; in global and national emphases on democratisation, on the one hand, and economic, political and cultural centralisation, on the other; and in the extremely highly upscaled but narrowly based consumerism, on the one hand, and the vision of a widely-based participation and empowerment, on the other. Its relevance also has to be sought in the highly imbalanced current emphases on the economic domain and the vision of the creation of a nearly unidimensional “economic man”, on the one hand, and the creation of a wholesome society and individual, on the other. Finally, it also has to be sought in the way in which the experience of the last five decades has been read and implemented, principally in relation to the ideology of economic growth, and its limits and ill consequences, on the one hand, and the visions of individually and socially responsible development, on the other. The last 50-year period has witnessed unprecedented economic growth at the global level. More significantly, considerable progress has also been made in specific dimensions of social development, e.g. health and education, during this period. It has also witnessed the creation of institutions, e.g., global multilateral bodies, states, the private enterprise, and cooperative-community initiatives, which can push these processes forward. Progress has also been made in relation to specific dimensions of democratisation, e.g., rule of law, adult franchise, competitive political party system and devolution. Yet, economic growth has been

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extremely uneven globally. The creation of a distinct global hierarchy of nations has been one of the most salient features of this period. Stagnation along the growth path and sudden swings in “growth fortunes” have also been a pronounced feature of the experience of the majority of countries. These features have had a highly significant impact on the promotion and prospects of human development. The low – and for a substantial number of countries, negative – rate of economic growth, combined with doubts over its sustainability has rendered governments, private entrepreneurs, communities and households, less able and/or less willing to invest in human development even as the prospect of growth and the possibility of human development-based growth has added to the legitimacy of this frame. Similarly, while the high rate of economic expansion and globalisation has given impetus to human development – by way of human capital promotion – the centralisation of economic benefits and the enforcement of exclusion, implemented principally through severe limits on transnational mobility of labour, and very high global levels of unproductive expenditures, e.g., on the military/security apparatus, have tended to lower the legitimacy of the frame. The rapid spread of consumerism and allied structures and cultures, which lead to the transformation of wants into needs and needs into greed and make people subservient to commodities, have distinctly sought to downplay the legitimacy of human development − indeed, to equate human development to the level of consumption − even as the unprecedented rise of spread of structures, fronts and movements, which have struggled for participation, empowerment and inclusion during the last five decades, have legitimised the frame of human development. Of particular importance in this context has been the growing democratisation of political space in many countries. Despite the fact that democratisation in most countries remains relatively limited to selected aspects of the formal political sphere and has only been weakly extended to the economic and cultural spheres, and despite various powerful exclusionary institutions, it has probably been the single most powerful force in favour of human developmental. Democratisation has opened considerable space for peoplebased politics. It has provided instruments for the excluded, unheeded voices to be heard; it has brought the issues of participation and empowerment to the fore; it has directed

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attention to the local issues; and it has compelled governments to rethink and reprioritise public policies and public expenditures. Finally, while the market-dominant economic growth approach has reigned supreme at the conceptual/ideological level, alternative paths to growth have been successfully followed in practice in many countries and regions with no adverse implications for growth per se and to the benefit of human development, e.g., the Scandinavian and East Asian countries. These experiences have substantially contributed to the legitimisation of the human development frame. Growth in these countries certainly has not suffered on account of their social emphases. Instead, it has been widely recognised that such emphasis has contributed to growth. The examples of Sri Lanka and the Indian state of Kerala, where the rate of growth has been low of recent, but which have attained high levels of human development, have also been instrumental in legitimising that frame. Lowincome and low-growth countries continue to be inspired by their achievements on the human development front. On the one hand, the recent trend towards jobless growth, and the spectre of high unemployment, privatisation of essential services, shortened duration of welfareeligibility etc., on the other hand, and the implementation of various profit enhancing measures (e.g., downsizing, contracting, relocating, etc.) in market-dominant developed countries are often correctly seen not only as being anti-people and threatening human development in these countries but also, given their clout, as diluting the legitimacy of the human development agenda at the global level. To summarise, the conceptual/ ideological as well as policy legitimacy of the human development frame, at present, lies in a contested zone. To the extent that the human development frame can be labelled a paradigm, it can be seen that it is competing against many other paradigms. Principal among the paradigms it is competing against is the much more powerful market-dominant economic-growth paradigm under which needs, capabilities, deprivations, etc. – the anchoring themes of the human development frame – are systematically peripheralised, i.e., become adjuncts to the processes and outcomes of market-led growth. Surely, markets are not unfriendly to all human developmental themes: expanding markets have historically promoted skills and employment, battled against exclusion, generally – although not always – promoted public expenditures in

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the social sectors and given a helping hand to political democracy. But markets have also been extremely expedient even in relation to these themes and processes. Historically, all these themes and processes have been expendable in the search for profit as well. The future strength of the human development frame and its competitive edge over other approaches, therefore, depend on reforming the markets and the rules under which they operate and on creating allies in the political and cultural spaces which have, of recent, been much more friendly to it.

2.5 COMPONENTS OF HUMAN DEVELOPMENT Despite occasional attempts, principally by philosophers and psychologists, to describe and measure it, the notion of human development has generally been regarded as a multidimensional concept. As such it has often been seen as an abstraction which defies definition and measurement. Yet, the fact that the concept itself has had a long history across all cultures and countries, together with the fact that global economic policies continue to peripheralise it – despite reaching a condition of potential global readiness to universally promote a few selected, relatively tangible and fundamental components of human, as distinguished from economic, political, cultural, etc., progress – has led to the concretisation of the theme of human development and to its corresponding measure, the HDI. The components which are currently prioritised are health, knowledge and level of living. These are currently seen as being universally fundamental to human progress. In this context, the UNDP has played the lead role in developing and legitimising the frame of human development and in crystallising and refining the HDI. The HDI has been conceptualised by the UNDP’s annual (1990-97) HDRs as a composite construct comprised of the unweighted average value of a set of three different categories of human capabilities: longevity, as a proxy for health-related capabilities; education, as a proxy for information-and knowledge-related capabilities; and income, as a proxy for capabilities to acquire a particular level of living. (The human freedom index, HFI, was measured separately from the HDI in the 1992 HDR but has since been discontinued. Also, the various indicators of the three components of the HDI have been defined somewhat differently over this period.)

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Longevity has been operationally defined as life expectancy at birth. Education, since 1995, has been operationally defined as a composite of adult literacy ratio (2/3 weight) and combined enrolment ratios at the primary, secondary and higher secondary levels. (In 1990, it was measured as adult literacy ratio and, during 1991-94, as a composite of adult literacy ratio – 2/3 weight – and mean years of schooling – 1/3 weight). The enrolment indicator was used to incorporate the flow of educational attainment rather than its stock. Income has been operationally defined in real per capita GDP in purchasing power parity (PPP) dollars with severe and progressive correction at the upper end of the spectrum under the assumption of diminishing marginal utility of income in enhancing human development at the upper levels. The HDI is a universal index, in the sense that it seeks to measure and compare countryspecific achievements in human development within the frame of a single scale assumed to be equally valid globally – across human, geographical, social and temporal categories and across economies, polities and cultures. The index values – whether for specific dimensions or in aggregate − range from 0 to 1 and countries can be compared in terms of their relative distance from one another. “The measure of distance is the difference between the actual value of the variable in a country (or a region or a subgroup; for example, women) and a minimum value divided by the range of the variable – that is, the difference between the maximum and the minimum” (UNDP 1993: 104). The HDI (or the values of specific components of the HDI), of course, can also be used to compare the achievements of particular countries across time periods. As is repeatedly emphasised in the HDRs, this latter facility can be utilised to great effect for policy purposes. A number of other useful indices have piggy-backed on the potential utility of the HDI. The gender-related development index (GDI), gender-empowerment measure (GEM), capability poverty measure (CPM), human poverty index (HPI) and human deprivation measure (HDM) are the more important ones of this genre. GDI and GEM, while hinting at the eminent possibility and potentiality of disaggregating human developmental achievements at the level of various and diverse subgroups of people within a country, are specifically used to compare the achievements and deprivations of men and women. GDI is used to compare

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disparities in the achievements of men and women in longevity, education and income, and is, thus, akin to a gender-sensitive HDI. GEM is used to compare the relative empowerment of men and women in relation to economic participation and decision-making power as reflected in gender-specific share in earned income, administrative and managerial positions as well as political participation and decisionmaking power.

2.6 LIMITS OF HDI The human development frame and HDI have attracted both praise and criticism following the publication of the annual HDRs. The criticisms have spanned a fairly wide range – from the validity and relevance of the frame to the intricacies of measurements. More concretely, the key contentions against HDI are: that it is redundant as a measure of human progress (Srinivasan 1994); that the three selected dimensions do not adequately encompass the rich variety of human developmental capabilities and deprivations; that the three dimensions are multicollinear rather than fully independent measures; that specific dimensions and indicators may not have uniform salience or relevance for different countries, peoples or “population subgroups”, rendering the equalweight provision invalid for some people at best and – at worst – rendering specific components superfluous and irrelevant for other people; that measurement errors might be large enough to vitiate not only one-shot portrayals but also inter-country or inter-temporal comparisons; and that the minimal and maximal values fixed for the dimensions/indicators are arbitrary, etc. (cf. UNDP 1993: 104-112). The UNDP and its key contributors on the human development theme (in particular, Anand and Sen 1994, 1996; UNDP 1993: 104-112), and Meghnad Desai (in UNDP 1993: 104-112) have responded to the critiques on the concept, components, indicators and measurement of human development (apart from the preceding citations, see also UNDP 1994: 90-101). While some of the criticisms have been handled well by the UNDP (1993: 104-112, 1994: 90-101, 1995: 11-23, 1996: 50-56), it appears that the UNDP, of recent, has restricted its innovativeness at the level of the indicators and has been quite conservative at extending innovativeness at the more encompassing levels of concepts and dimensions. Among these various criticisms, those

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which question (a) whether the three selected components can adequately subsume human developmental experiences and potentials, (b) whether the selected dimensions are equally salient universally, and (c) whether the income component deserves the same emphasis as the other two components within a human developmental frame – or whether political and cultural resources could partially substitute for income resources – are the more salient ones. In general, it should be noted that the response of the UNDP to criticisms on these themes has been quite ambivalent.

2.6.1 Adequacy of standard components On the adequacy of the three selected components, the HDRs have consistently made the point that the HDI is an evolving measure. On the other hand, the HDRs have, also consistently, been ambivalent in their response to this criticism and, in general, sought to deflect the issue rather than face it head on. (The HDRs have even claimed that the shifts in the indicators of specific components of the HDI during the last seven years constitute evidences of a process of conceptual evolution). Among the responses that the HDRs have made to this criticism are: It should be made clear at the outset that the concept of human development is broader than the measure of human development. Thus, although the HDI is a constantly evolving measure, it will never perfectly capture human development. (UNDP 1993:104; emphasis in original)

The 1994 HDR puts up the question, “why only three components?” and goes on to answer it in the following manner: The ideal would be to reflect all aspects of the human experience [in the HDI]. The lack of data imposes some limits on this, and more indicators [?] could perhaps be added as the information becomes available. But more indicators would not necessarily be better.... adding more variables [?] could confuse the picture and detract from the main trends. (UNDP 1994: 91)

The 1995 HDR, in turn, while addressing criticisms urging inclusion of additional/better critical dimensions and subdimensions of human development, came out with a curiously ambivalent reply (p. 121): The overall assessment: the HDI ... should still be regarded as a partial measure of human progress. It should thus be supplemented by other qualitative and quantitative studies of aspects of human progress .... [Some potential dimensions] are more difficult to measure quantitatively, and any attempt risks

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diminishing the concept itself.... The main point is that adding more variables [?] is not likely to make the HDI better or more sensitive. If the gradual improvement of social and human data permits the inclusion of more variables in the HDI, they should be added over time and on their own merit. Meanwhile, the HDI should be kept simple and manageable.

The response was restated in the 1996 HDR in essentially same terms: The concept of human development is much deeper and richer than what can be captured in any composite index or even by a detailed set of statistical indicators. Yet it is useful to simplify a complex reality – and that is what the HDI sets out to do. (UNDP 1996: 28)

The above responses highlight three main reservations on the part of the HDRs: lack of urgency to include “other” components; guarded openness, nonetheless; and lack of data. The last reservation is easy to dispose of. Data in itself can hardly be an insurmountable hindrance to conceptual clarity. (Nor can data, it may be noted, prove its own merit.) Certainly, the obligation to generate comparable data sets across all countries can become a practical problem. But inclusion or exclusion of specific dimensions is a conceptual rather than a practical problem and demands, in the first instance, a solution at the theoretical level. That such an exercise is of singular importance can be hardly overemphasised. As regards the two other rather overlapping reservations, the 1996 HDR itself recognised empowerment, cooperation, equity, sustainability and security – in addition to health, education and income –as genuine dimensions of human development. As stated, political freedom was also utilised as a key component of human development in the 1992 HDR. Of late, the UNDP itself has started preliminary exercises to incorporate the abuse of natural resources as a salient dimension of sustainable human development and, possibly, to adjust HDI values accordingly. There have also been arguments that self-employment/ employment ought to be regarded as an important dimension of human development because it enables people to participate and to be creative and because the income dimension cannot subsume the significance of selfemployment or employment. Similarly, arguments have been raised that the deprivations caused by resilient exclusionary institutions and practices, e.g., those related to gender, race, ethnicity and caste, impact on many more other components than health, knowledge and levels of living. The HDRs, however, and as of yet, have consistently refused to develop and

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incorporate these and other dimensions within the HDI. That such an exercise is of singular importance cannot be overemphasised. After all, the legitimacy of the HDI, the measure, is only as good as its proximity to human development, the concept. Conceptually, as also policy-wise, the HDI stands or falls depending upon whether or not it succeeds to capture authentic human development in all of its major dimensions. Use of “supplemental” components – which highlight aspects of human development but which do not get incorporated within the HDI, and which the HDRs encourage – can only be regarded as a less than satisfactory interim measure both as a conceptual frame and as a policy instrument.

2.6.2 Universally equal salience of standard components On the second issue, i.e., on whether the three dimensions are equally salient universally, it should be noted that the HDRs have remained conscious of the problems involved. The recent shift in favour of the use of school enrolment ratios over the use of adult literacy rates to measure educational capability, which emphasises the measurement of flows rather than stocks, is a pointer in this regard. Likewise, Anand and Sen (1994: 12-3) have noted that high-HDI, medium-HDI and low-HDI countries may employ different supplemental indicators to measure all of the three components. While such measurement strategies are certain to raise questions on the universal equality of human beings – the linchpin of the frame, as also of the HDRs – it bears mention that these strategies and discussions, once again, remain focused at the level of indicators and measurements rather than at the level of the concept and components themselves. It is also the case, however, that the world today is tremendously diverse in terms of polity, economy and culture. Not all of this diversity is attributable to the extreme level of inequality, which is also a salient feature of the world today. This not only implies that there is a large diversity, as distinguished from inequality, in the existing stock of human abilities but also that the capabilities required in order to achieve appropriate mental and behavioural features, or “functionings”, in Amartya Sen’s terms, are diverse as well. In the other words, a valid identification of capabilities must be sensitive to these diversities. To put it in still another way,

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capabilities are necessarily linked to the organisation of society – and of polity, economy and culture. Illustratively, education may be a less sanguine capability in a subsistenceagricultural society where the majority is selfemployed than in one where the majority is engaged in manufacturing/service wage work. Similarly, personal-income generation capability may be less fundamental a component in a setting with strong social security institutions, whether at the level of the state or society, than in settings which rely on the market to a much greater extent. It follows that a single set of components and/or subcomponents of human development may not claim universal validity to the extent that plural, even if increasingly interlinked, social-organisational forms are simultaneously in existence. The HDRs, generically, do make a passing note of this requirement (also see Nussbaum, 1995b), but they neither pursue it to its logical conclusion nor draw out its implications for the identification of plural, yet potentially equally valid, components of human development. Much more importantly, the HDRs refuse to conceptualise variations in economic, political and cultural organisational forms as genuinely plural forms of organising peoples’ lives and, instead, view them as being reducible to differences in the level of development, implying not only that diversities are transient but also that genuine socialorganisational pluralism is a hopeless, even undesirable, and therefore illegitimate, agenda.

2.6.3 Salience of politics and culture The third issue – that of whether the income component deserves the same emphasis in the HDI as health and education and whether political and cultural resources could at least partially fill in for income/financial resources – is really a subset of the second issue discussed above. Allied to this issue, there is also the question of whether income can be categorised on the same plain as health and education, particularly in view of the fact that the former is a means while the latter two are ends of human development. While this last debate has been left hanging, it must be noted that the human development frame (and the HDRs) has focused on specific aspects of this issue consistently, e.g., by pursuing its trenchant critiques of the dominant growth model and through its arguments in favour of job-creating, participatory, egalitarian,

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culture-sensitive and sustainable growth. The empirically derived conclusions by Anand and Ravallion and Anand and Sen, which showed that the level of public expenditure explained at least as much variations in life expectancy and education as levels of personal income, also tended to question the relative significance of the personal income component. Despite these criticisms, and despite the preference of the human development frame for an egalitarian, participatory and culture-sensitive growth, the frame continues to waver on the relative significance of the economic, political and cultural domains and processes for human development promotion. In particular, while the notion of growth-led human development has found increasing attention in the human development literature, a discourse on polityand/or culture-led human development has remained conspicuously absent. The polityhuman development and culture-human development linkages remain unexplored territories. Indeed, what potential supplemental roles the political and cultural domains could play in economic growth/income-led human development promotion programme also remains unexplored. The gap may very well lead, if it has not already, to a human development promotion policy and strategy which may (a) overvalue the importance of the economic domain in human development, (b) undervalue the significance of political, cultural and other dimensions in human development, and, in doing so, (c) lead to the policy prescription that the economic growth strategy – after all is said and done and particularly during the current period of liberalisation and structural adjustment – is the most concrete, actionable, and therefore most promising, strategy for human development. One example may be seen in the tendency to conceptualise and operationalise the values of good governance as an administrative or management project rather than a political/ cultural one. That such a strategy might be implemented in countries where the rate of growth has remained historically low or has stagnated midstream, where the pursuance of aggressive liberalisation/growth strategy has exacerbated inequality, and where debt repayment eats up an increasing/large proportion of potential public investments in human development makes the exclusion of political and cultural dimension more ominous. On the other hand, ample grounds exist to

UNDERSTANDING HUMAN DEVELOPMENT

argue that politics and culture can potentially be made human development promotion-friendly. To take a surface-level example, the quality of public expenditure, as also the level of public revenues, is crucially influenced by the political system in question. That is, public revenue and expenditure decisions are, by nature, political decisions. The rapid rise of the quality of life – including in health and education – in the relatively income-poor socialist systems is a telling case in point. Of course, the income-rich capitalist systems have achieved, over a longer course of time, broadly equivalent or slightly higher human developmental results based on social democratic or liberal – but not libertarian or fully market-based – political principles. The Asian “tiger economies” with high-paced human development and income growth strategy achieved a similar result through well articulated, “embedded” market and state intervention – rather than fully relying on growth-led human development promotion. Sri Lanka achieved a high level of human development through state intervention and the state of Kerala in India achieved a similarly high level of human development through the use of state government and politicisation of people’s social organisations. Thus, while income growth can be potentially utilised for improving human development, the economic, political and cultural commitment required for such improvement is neither an inherent feature of the market-dominant system nor is income growth an absolutely necessary condition for improvement in human development. Indeed, given the inherent tendency of the market to produce inequality in control over resources, life opportunities and uneven development at the country and global levels, economic growth, left to itself, could be expected to produce the opposite result – i.e., towards further underdevelopment of human lives. It thus appears that the human development frame needs to foster much deeper academic as well as global public inquiry and debate on components and alternative strategies of human development promotion and human deprivation alleviation. As it stands, the frame of human development has enjoyed some success at piercing the autarchy of the economic domain in relation to human development. It may be that the time has come to give explicit recognition to polity and culture as independent instruments for human development promotion.

37

CHAPTER 3

Human Development in Nepal: Measures and Indices 3.1 INTRODUCTION

T

he primary objective of this chapter is to measure and describe the state of human development in Nepal. It reports on human development index (HDI) and other associated indices with disaggregations along various social, geographic and temporal axes using the latest data available. As yet, only a few studies have been carried out in Nepal explicitly within the human development framework, e.g., Bhattacharya (1994), and Thapa (1995a, 1995b). These three studies have marshalled a large body of data to compute HDI at the national and selected disaggregative levels. All three studies, however, are relatively weak in relation to conceptual, trend and policy analyses. More recently, ICIMOD (1997) has published a profile of the 75 districts and ranked them by various socio-economic and infrastructure development indices. Bhattacharya's report estimates the HDI at the national and regional levels and presents income distribution and gender-sensitive indices. Substantial data problems encountered during the study, however, render the indices suspect. For example, national-level aggregate data 1992 were projected unto the regional level in relation to real per capita income and the mean years of schooling at the national level were employed to measure real per capita income and educational attainment of 1994. While the report also deals with social initiatives required for human development promotion, it fails to explain why low human development persists in Nepal. In addition, little is said on how policy initiatives can be reoriented. Thapa’s two research papers provide estimates of national as well as district level HDIs for Nepal. In addition to being limited to the descriptive level, the papers deviate from the methodology adopted by UNDP’s post-1993 global HDRs in the selection of the maximum

38

and minimum values of dimensions of human development. To measure knowledge, the author (1995a) utilises one indicator, the literacy rate, rather than the more acceptable procedure of constructing a weighted average of the literacy rate and mean years of schooling. His education index also utilises information on the overall literacy rate (6+ age group) rather than the adult literacy rate, which is the conventional measure. His reliance on district-level rates of bank deposits and credit outlay to measure real per capita income is also unsatisfactory, but he is effective in demonstrating a strong correlation between education and life expectancy. Thapa further correlates the magni-tude of HDI with the magnitude of other key components of wellbeing, an exercise which indicates a strong and positive relationship between HDI and wellbeing. His second paper (1995b) analyses human development by caste and ethnicity in which he reports that high-caste groups, with the significant exception of the Thakuris and Chhetris, are far ahead in human development than the lower-caste groups and untouchables. The paper, however, does not compute HDIs for different caste groups as such but infers them on the basis of the spatial location of such groups. The data used, therefore, are rather imprecise. This chapter goes much beyond. It constructs a number of HDI-associated indices and measures, i.e., the gender-sensitive development index (GDI), the gender empowerment measure (GEM), the capability poverty measure (CPM), the human poverty index (HPI) and the human deprivation measure (HDM). Because indices and measures at the national level, though eminently useful to assess national achievement in human develop-ment (as also to appraise the relative national position in global ranking), hide disparities in the levels of achievement among the various regional and

NEPAL HUMAN DEVELOPMENT REPORT 1998

social groups, the chapter puts considerable emphasis on the disaggregation of the indices, including by ecosystemic and development regions (and eco-development subregions), districts, rural/urban locations, on the one hand, and gender and major caste/ethnic groups, on the other. It should be emphasised here that disaggregations are of invaluable help in targeting human development-related policy initiatives to relatively deprived regions and groups. Trends in the levels of HDI are much more intensively analysed and presented in a comparative perspective. The HDI values are also projected to a future date in order to facilitate a better sequenced policy discussion on human development.

3.2 HDI FOR NEPAL IN A COMPARATIVE PERSPECTIVE The 1996 HDI value for Nepal as a whole is 0.378, indicating a low level of human development. This is close to the value reported by UNDP’s HDR for 1994. Even when Nepal’s 1996 value is compared against the 1994 HDI value for 175 countries, Nepal finds itself located in the 154th position (figure 3.1). The absolute value of Nepal’s HDI is only 45 percent of the global HDI. Correspondingly, Nepal’s HDI scales at 38 percent of the HDI of the industrial countries and 61 percent of the HDI of the developing countries, while faring slightly better in comparison with the least developed countries as a group. Within the South Asian region, all countries, with the exception of Bhutan and Bangladesh, are better placed than Nepal. The HDI value of Sri Lanka is more than

double that for Nepal: it appears that Nepal will approximate the Sri Lankan HDI level sometime around 2012, provided all the economic and social targets set by the government (cf. NPC 1997) are realised. The HDI values for India and Pakistan are higher than for Nepal by nearly one-fourth, whereas the Maldives’ HDI is 62 percent higher. Nepal could achieve the current level of HDI values for India and Pakistan in the next four years provided all the policy targets, as noted, are achieved (figure 3.2).

3.3 TRENDS IN HUMAN DEVELOPMENT The HDI values for Nepal for selected years during the period 1960-1996 and projected values for the years 2002 and 2012 are shown in figure 3.21. The projections are based on the long-term economic and social targets of the government and the maximum and minimum values of the HDI components as of 1994 (provided in the 1997 HDR). The figure shows that Nepal has made very slow but gradual improvement in human development in all years except 1993. The indices show that deprivation in access to income is much higher than deprivations in health and knowledge which means a more egalitarian distribution of health and education than of income (annex 3.4). The projected HDI value at the end of the Ninth Plan (2002) stands at 0.496, which is a little higher than for Myanmar in 1994 (0.475). The projection for the end of the Twelfth Plan (2012) is 0.738, which is slightly higher than the figure for Algeria in 1994 (0.737). The projected value, at first sight, appears reasonable, if judged

HUMAN DEVELOPMENT IN NEPAL: MEASURES AND INDICES

39

on the basis of past achievements in human development. On the other hand, if we analyse the trend of each of the three components of the HDI separately, it can be seen that the rate of progress in the components of life expectancy and educational attainment has been twice that for income (annex 3.4). If this is an indication of the value of public expenditures in the priority human sectors, there is enough prima facie ground to suspect that meeting targets in health and education may be difficult to sustain with the available level of income/financial resources. It, therefore, appears that meeting the HDI target will require either (a) rapid expansion of personal income or (b) higher and/or more efficient allocation of public expenditure in the human priority sectors than at present, or (c) combination of “a” and “b” above. Additionally, it will also demand a much higher level and rate of generation of political and cultural resources than at present.

disparities in welfare levels are known to be very high. In principle, and within the constraints imposed by available data, disaggregation can be carried out along a multitude of variates. However, the exercise must serve two basic purposes, that of highlighting disparities in capabilities and deprivations and assisting in policy actionability. Human Development in Rural and Urban Areas. Nepal is largely made up of rural areas. Only 12 percent of the population resides in urban locations. The current rate of urbanisation, however, is fairly rapid. Private investment is concentrated in urban areas. Public investment has also been urban-biased. Welfare measures have long shown a high level of disparity between the urban and the rural areas. The HDI value for rural areas is approximately two-thirds that of urban areas while the HDI for urban areas is approximately 60 percent higher than that for the nation as a whole (figure 3.3). The higher per capita income and better access to social infrastructure in the urban residents are the proximate causes underlying such conspicuous disparities. Ecological Regions and Human Development. The Mountains, Hills and Tarai are the three principal ecosystemic regions of the country. These regions exhibit a high level of cultural variation. The Tarai plains, in particular, have long been seen as an area of relatively higher levels of economic opportunities. The mountain region, on the other hand, has historically been viewed as an area of much hardship and inaccessibility.

3.3.1 Disaggregated human development index The national HDI, like the GNP, does not measure the distribution of human capabilities in a country. It hides gaps and disparities among the various human geographical and developmental/ administrative regions and among the various social groups. Disaggregated HDIs not only cut through the overall national average but also highlight disparities in capabilities. They furnish invaluable tools for policy-making and policy analyses at various social-organisational levels. Disaggregation of HDIs is particularly important for Nepal where

40

NEPAL HUMAN DEVELOPMENT REPORT 1998

People in the Hills and Tarai enjoy a higher level of human development than those in the Mountains (figure 3.4). The HDI values for the Hills and Tarai are slightly higher than for the country as a whole while the HDI value for the Mountains is much below the national average. However, such achievements are not equally distributed even within the better-off ecological regions. In particular, the fact that a number of urban areas (including the three main urban municipalities of the Kathmandu Valley), which have relatively high HDIs, are included in the hill region, has significantly – but illegitimately – raised the HDI for the (hill) region as a whole. Development Regions and Human Development. The five “development regions” of the country, which run east-west (map) constitute both cultural and administrative entities. (It is in the latter sense that they have acquired the “development region” nomenclature.) Physical and social developmental attributes are unequally distributed across these regions. The midwestern and the far western development regions, in particular, are noted for their ruggedness, low levels of public and private investment and very low levels of human and social welfare. The distribution of human development across the development regions is shown in figure 3.5. The HDI values indicate glaring disparities in human capabilities among the development regions. The western development region has the highest HDI value, followed by the eastern and central development regions. Each of these three regions has an HDI value higher than the national HDI. In contrast, the mid-western region, with lowest levels of

achievements in education, life expectancy and level of income, ranks lowest in terms of the HDI. The values for the mid-western and far western development regions are significantly lower than for the country as a whole: their HDI is less than 80 percent of the HDI of the western development region. Although deprivations exist in all of the three components of human development, resource deprivation appears to be the most acute. Eco-Development Regions and Human Development. The 15 eco-development regions are products of the three ecosystemic regions and the five development regions. Most importantly, they are relatively internally homogeneous units compared to the ecosystemic or developmental regions not only physically but also in relation to economic and cultural attributes. In addition, they are larger units than districts, the delineation of which is primarily

HUMAN DEVELOPMENT IN NEPAL: MEASURES AND INDICES

41

political and administrative in nature. Disparities in human development become more stark when we compare HDI values for the 15 eco-development regions. The central Hills, which include the mostly urban Kathmandu Valley, score the highest rank with an HDI value 1.8 times higher than that of the lowest scoring region, the mid-western Hills. Other ecodevelopment regions where the levels of human development are relatively higher are eastern Tarai and eastern hills. The mid-western Mountains, far western Mountains and far western Hills have the lowest levels of human development. That level is higher in a number of regions (i.e., the eastern Mountains, eastern Hills, eastern Tarai, central Hills, western Hills, western Tarai and far western Tarai) than for the country as a whole (figure 3.6). A componentwise analysis of the HDI, moreover, indicates that the high level of disparities is not due to extreme skews in any single component but due to uneven distribution in all the three components of capability. Human Development at District Level. While districts do form relatively homogeneous economic and cultural units as well, they are primarily political and administrative units. They constitute the second tier of political, administrative and financial governance in the country. The districts are also governed by elected local bodies, DDCs, which have specific authority and responsibilities, together with a small administrative and technical staff at its disposal. In addition, at the district level, there is a sizeable presence of the field offices of line

Table 3.1

ministries, parastatal and other agencies. From the point of view of governance, including policy and programme setting and financial governance, the district constitutes a potentially highly actionable level. Disaggregation of human developmental capability at the district level shows that interdistrict disparity is high (annex 3.6). The level of human development in Kathmandu is more than four times that of Mugu, the most deprived district. Only Kathmandu has an HDI value higher than 0.6. Similarly, only Lalitpur, part of which lies within the urbanised Kathmandu Valley, enjoys an HDI level within the 0.6-0.5 range. Four districts score between 0.5 and 0.4 while 45 districts, the majority, score between 0.4 and 0.3. The HDI attainment of 21 other districts lies between 0.3 and 0.2. The remaining three districts have an HDI score of less than 0.2. Thus, in 66 out of the 75 districts, the level of human development falls between the 0.4-0.2 range (table 3.1 and map 3.1). In terms of global categorisation, none of the districts falls in the high human development category. Two districts, Kathmandu and Lalitpur, fall in the medium human development category and 73 of the 75 districts fall in the low human development category. The ranking of districts based on the HDI is broadly comparable to a ranking based on the Composite Index of Development prepared by ICIMOD (1997) which uses 39 individual and household socio-economic indicators in addition to broader scale resource indicators. But, in some cases, the rankings are not compatible

Distribution of human development across districts Range of HDI Value Less than 0.2 0.2 - 0.3

Low HDI<0.5

0.3 - 0.4

Medium 0.5
0.4 - 0.5 0.5 - 0.6 Above 0.6

Districts Kalikot, Bajura, Mugu Kailali, Dang, Sindhuli, Darchula, Kapilbastu, Sindhupalchok, Rukum, Dadeldhura, Rolpa, Dhading, Baitadi, Salyan, Doti, Dailekh, Rasuwa, Humla, Achham, Jumla, Dolpa, Jajarkot, Bajhang Bhaktapur, Tehrathum, Tanahu, Sunsari, Ilam, Kabhrepalanchok, Syangja, Lamjung, Saptari, Chitwan, Sankhuwasabha, Taplejung, Rupandehi, Parbat, Surkhet, Parsa, Udayapur, Solukhumbu, Bhojpur, Siraha, Okhaldhunga, Dolakha, Baglung, Palpa, Kanchanpur, Arghakhanchi, Dhanusha, Panchthar, Sarlahi, Gulmi, Pyuthan, Mahottari, Khotang, Mustang, Ramechhap, Nuwakot, Myagdi, Bara, Makwanpur, Banke, Rautahut, Gorkha, Manang, Bardiya, Nawalparasi Kaski, Morang, Jhapa, Dhankuta Lalitpur Kathmandu Total

Number of Districts 3 21

45

4 1 1 75

Source: Annex 3.6.

42

NEPAL HUMAN DEVELOPMENT REPORT 1998

(e.g., the HDI scale ranks Manang at the 49th position while the Composite Index of Development places it at the 2nd position among the 75 districts). Major Caste and Ethnic Groups and Human Development. The institutions of caste and ethnicity are salient categories of society and people’s lives (see 1.2). These institutions hierarchize and differentiate among peoples not only in religious and ritual terms but also in political and economic terms. It has long been known that caste and ethnic belongingness correlate substantially with levels of welfare. There is a high level of disparity in human capabilities as well among the major caste and ethnic groups (figure 3.7)2. The Newars, a majority of whom live in urban areas, have the highest level of human development. The level of the HDI among the Newars is twice that for the “untouchable” castes, the most deprived group. The level of HDI is also relatively higher among the Brahmins and Chhetris. The HDI for all of the three caste groups is above the national value. The HDI values of the other major caste/ethnic groups such as the Gurungs, Magars, Sherpas, Rais, and Limbus (all of whom belong to the hill region) and the Rajbansis, Yadavs, and Ahirs (all of whom belong to Tarai) lie in between these two extremes.

3.4 GENDER-SENSITIVE DEVELOPMENT INDEX (GDI) Gender disparity has been one of the most widespread and persistent features of human society. The 1995 HDR has successfully drawn attention to the persistence of severe gender disparities in human developmental capabilities as well. As it notes (p. 125), “women and men share many aspects of living together, collaborate with each other in complex and ubiquitous ways, and end up – often frequently enough – with very different rewards and deprivations”. In order to highlight this disparity within the human development frame, as also to render it intuitively gender-sensitive, the 1995 HDR developed another measure to supplement HDI. This new measure, the gender-related development index (GDI), portrays gender disparities in basic human capabilities. It works with the same components and indicators as the HDI, but focuses on comparing the attainments of women in relation to those of men in a given country. GDI is an HDI index adjusted for gender inequality and GDI/HDI ratio is an

44

approximate indicator of the depth of gender disparity under which the lower the ratio, the higher the magnitude of disparity. The GDI, accordingly, is prepared by using gender-equal distributions of indices of life expectancy, educational attainment and income. The equally distributed indices generally adjust the overall achievements downward, the extent of the downward movement depending upon the magnitude of gender disparity in achievements. GDI is the unweighted average of these three indices and has a value which can range from 0 to 1. The computation of an equally-distributed index of life expectancy recognises the fact that women live longer than men and, therefore, the GDI life expectancy index works within the range of 27.5 years to 87.5 years as the minimum and maximum values for female life

NEPAL HUMAN DEVELOPMENT REPORT 1998

expectancy and the range of 22.5 years to 82.5 years as the minimum and maximum values for male life expectancy3. For educational attainment and earned income, no such distinction is made by gender. The income component in the GDI reflects women’s earning power (UNDP 1995: 75). The GDI values for Nepal for the period 1970 to 1996 are shown in figure 3.8. It shows that there has been substantial improvement in the capabilities of women in relation to men during the period. Nonetheless, gender disparities are high: the overall capability attainments in human development in Nepal are reduced by approximately one-sixth (17 percent) if the disparity in men’s and women’s attainments is taken into account. The movement towards gender equality does not look impressive when judged in the regional and global context either. Not only is gender inequality high in human capability in Nepal, it is higher even within the overall South Asian context (figure 3.9). The average global GDI is 2.3 times higher than Nepal's while the GDI for the developed countries is more than three times higher. Within South Asia itself, the GDI for Sri Lanka is 2.5 times that for Nepal while India’s GDI value is 1.5 times higher. Turning to an examination of the distribution of gender-sensitive development within Nepal, figure 3.10 compares the GDI value for the rural and the urban areas. While one would expect a relatively lower level of gender disparity in the urban areas, this is not borne out by the data. Women are in an equally disadvantaged position irrespective of their place of residence, i.e., the magnitude of gender

disparity is similar in the rural and the urban areas. GDI values disaggregated at the level of the eco-regions are presented in figure 3.11. Interestingly, GDI values are the same for the Hills and Tarai. These values are also above the national value. Gender disparity in development is highest in the mountain region. In terms of development regions, GDI is highest in the western region followed by the eastern and central development regions. The far western region has the lowest GDI. [However, the level of disparity in achievement between men and women does not follow the pattern of the absolute level of the overall gender-adjusted achievement. The highest levels of gender disparity are recorded in the far western and mid-western development regions, whereas the

HUMAN DEVELOPMENT IN NEPAL: MEASURES AND INDICES

45

eastern development region shows the lowest levels of gender disparity in Nepal.] (figure 3.12). Distribution of the GDI values across the 15 eco-development regions affirms that the magnitude of the GDI varies across the country. GDI is highest in the eastern Tarai and the central and eastern Hills. The far western Hills, mid-western Mountains and far western Hills rank lowest. Deprivation among women in relation to men (measured by the ratio of GDI to HDI) shows that the degree of disparity is relatively low in the eastern and western Mountains and also in eastern Tarai. The highest level of gender disparity is found in the far western Hills and Mountains and central Hills (annex 3.10). At the district level (see annex 3.11), the computed values of GDI range from 0.094 to 0.460. Districts such as Kathmandu, Kaski and Table 3.2

Distribution of gender-sensitive development across districts

GDI Value Less than 0.2

0.2 - 0.3

More than 0.3 to 0.4

Above 0.4

Lalitpur record highest values. Mugu features lowest, followed by Bajura and Bajhang. The frequency distribution of GDI value shows that only two districts, Kathmandu and Kaski, register values higher than 0.4, whereas 22 districts are positioned in the range between 0.4 and 0.3, and 33 districts between 0.3 and 0.2. Eighteen other districts score less than 0.2 on the GDI scale. Thus, two-thirds of the districts show a GDI value of less than 0.3 which is approximately the value of national HDI (table 3.2 and map 3.2). The GDI/HDI ratio is an approximate indicator of the depth of gender disparity. The lower this ratio, the higher the magnitude of disparity. For all the districts of Nepal, the value of GDI is less than the value of HDI (i.e., the computed ratio is less than one). In a large majority of districts, there exists a glaring disparity between men and women in the levels of capability. The intensity of disparity, however, varies across the districts. Bajhang ranks at the top in the degree of disparity. Disparity is also very high in Bajura, Mugu and Kalikot. Relatively lower gaps are recorded in Taplejung and Sankhuwasabha, giving the eastern Mountains a relatively better rank in this respect. The highest- scoring district on both measures, HDI and GDI, is Kathmandu, which ranks 51st for gender disparity as measured by the GDI/ HDI ratio. Of the 75 districts, one district records GDI value that is 90 percent or more of the HDI value. The majority of the districts (43) have GDI values equivalent to 8090 percent of the HDI figure. The GDI value of a group of 22 districts ranges between 60-70 percent. In one district, it is less than 60 percent of the HDI value (table 3.3 and map 3.3). It can thus be observed that the intensity of

Districts

Number of districts

Rasuwa, Rukum, Rolpa, Humla, Doti, Salyan, Dailekh, Dadeldhura, Baitadi, Dhading, Achham, Dolpa, Jumla, Jajarkot, Kalikot, Bajhang, Bajura, Mugu

18

Parsa, Panchthar, Solukhumbu, Surkhet, Mustang, Baglung, Dolakha, Kanchanpur, Kabhrepalanchok, Gulmi, Dhanusha, Bardia, Sarlahi, Manang, Myagdi, Arghakhanchi, Khotang, Gorkha, Banke, Mahottari, Nawalparasi, Bara, Kailali, Dang, Rautahat, Pyuthan, Kapilbastu, Makwanpur, Sindhupalchok, Sindhuli, Darchula, Ramechhap, Nuwakot Lalitpur, Morang, Jhapa, Dhankuta, Tanahu, Terhathum, Sunsari, Chitwan, Ilam, Sankhuwasabha, Taplejung, Saptari, Lamjung, Rupandehi, Parbat, Siraha, Syangja, Bhakatpur, Bhojpur, Udayapur, Palpa, Okhaldhunga Kathmandu, Kaski

Total

33

22 2 75

Source: Annex 3.11.

HUMAN DEVELOPMENT IN NEPAL: MEASURES AND INDICES

47

Table 3.3

Distribution of GDI/HDI ratios across districts

Range of GDI/HDI ratio (in percent)

Districts

Number of districts

Less than 60

Bajhang

60 – 70

Dadeldhura, Baitadi, Dhading, Ramechhap, Nuwakot, Mugu

Bajura,

9

More than 70 – 80

Surkhet, Rasuwa, Rautahat, Humla, Sindhupalchok, Bhakatpur, Kathmandu, Doti, Lalitpur, Makwanpur, Salyan, Pyuthan, Darchula, Dailekh, Dolpa, Sindhuli, Jajarkot, Rolpa, Kabhrepalanchok, Jumla, Rukum

21

More than 80 – 90

Sankhuwasabha, Bardiya, Tanahu, Mustang, Chitwan, Palpa, Morang, Dhankuta, Jhapa, Kaski, Manang, Panchthar, Rupandehi, Sunsari, Okhaldhunga, Siraha, Myagdi, Parbat, Saptari, Bhojpur, Ilam, Gorkha, Terhathum, Banke, Lamjung, Nawalparasi, Udayapur, Khotang, Parsa, Gulmi, Sarlahi, Baglung, Dhanusa, Kanchanpur, Kapilbastu, Solukhumbu, Bara, Arghakhanchi, Kailali, Syangja, Mahottari, Dolakha, Dang

Above 90 Total

1 Achham,

Kalikot,

43

1 75

Taplejung

Source: Annexes 3.6 and 3.11.

discrimination against women at various socialorganisational levels, e.g., national, regional and household levels, in basic capability formation in Nepal is quite high. Nepal, thus, faces the challenge not only of enhancing the overall level of human capability but also enhancing a more just distribution of these capabilities among men and women.

3.5 GENDER EMPOWERMENT MEASURE (GEM) As discussed above, GDI values show pervasive and, in selected instances, acute disparity among men and women in basic capability at all levels of disaggregation. Yet women’s deprivation may not always be linked conveniently and invariably to deprivations in health, education and income alone. The Gender Empowerment Measure(GEM), introduced in the 1995 HDR, seeks to look at gender deprivation against an additional perspective − that of participation and empowerment. GEM focuses on the participation of females in economic, political and professional spheres as a means of their empowerment. GEM calculates participation by aggregating three classes of variables: genderadjusted per capita income in PPP dollars, male/female share in professional/technical and administrative/ managerial jobs and male/female share in parliamentary seats. The income component, within the GEM frame, is seen not as a means for achieving basic human capabilities but a “source of economic power that frees the income-earner to choose from a wider set of possibilities and exercise a

broader range of options” (UNDP 1995:82). Women’s share in administrative/managerial and profes-sional/technical jobs is used to measure women’s access to professional opportunities and participation in economic decision-making. Similarly, the share of parliamentary seats is a surrogate of access to political opportunities and participation in political decision-making (UNDP 1995; see also annex 3.2). The values of GEM confirm that gender empowerment in Nepal is abysmally low in relation to the achievements at the regional and international levels (figure 3.13). The global GEM is more than double that of Nepal. The level of gender empowerment among the industrial countries as a group stands at more

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49

Table 3.4 Range of GEM Values More than 0.20 > 0.15 ≤ 0.20 > 0.10 ≤ 0.15

0.05 ≤ 0.10 ≤ 0.05

Distribution of gender empowerment across districts Districts Lalitpur, Kathmandu, Tanahu, Lamjung, Bhaktapur Syangja, Gorkha, Parbat, Kaski, Terhathum, Palpa, Bhojpur, Ilam, Jhapa, Dhankuta, Sindhupalchok, Sankhuwasabha, Sunsari, Kavreplanchok, Chitawan Rupandehi, Dang, Makwanpur, Banke, Gulmi, Myagdi, Nuwakot, Nawalparasi, Panchthar, Mustang, Bardiya, Kapilbastu, Morang, Rolpa, Baglung, Khotang, Parsa, Rukum, Kanchanpur, Okhaldunga, Surkhet, Rasuwa, Dolkha, Jumla, Jajarkot, Dhading, Solukhumbu, Pyuthan, Udayapur, Kailai Taplejung, Doti, Bara, Manang, Arghakhanchi, Ramechhap, Saptari, Mahottari, Rautahat, Dhanusha, Siraha, Sarlahi, Darchula, Sindhuli, Salyan, Dadeldhura, Kalikot Bajhang, Dailekh, Bajura, Humla, Dolpa, Mugu, Achham, Baitadi Total

Number of Districts 5 15

30

17

8 75

Source: Annex 3.15.

than three times that for Nepal. Women in all South Asian countries, except in Pakistan, are more empowered than women in Nepal. A component-wise analysis also reveals that Nepali women lag conspicuously behind in participation at the professional and technical levels. As the table shows, women’s attainments are extremely low in all of the four dimensions of participation. Gender inequality in political, economic and professional domains is higher in the Mountains and Tarai as compared to the Hills. Such inequalities are particularly acute in the far western and mid-western development regions (figure 3.14-3.15). The values of GEM disaggregated at the district level show that women in Lalitpur and Kathmandu are much more empowered than women in other districts. Achham and Baitadi rank at the bottom (annex 3.14). There are five

districts with a GEM value above 0.2. Fifteen districts lie in the 0.2 - 0.15 range and another 30 districts lie within the range of 0.15-0.10. Seventeen districts fall within the range of 0.100.05 while the GEM value for eight districts is less than 0.05 (table 3.4 and map 3.4). It can be inferred from the strong positive association between women’s empowerment and their achievement in basic capabilities [r (HDI,GEM) = +0.72] that low GDI is the outcome of a relatively low level of empowerment among women (annexes 3.11 and 3.14). Although the line of causation between the development of women’s capabilities and their empowerment may not be absolute, it appears that the best policy option is to empower women in order to enhance their capabilities even while working to close the gender gaps in capability.

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51

3.6 CAPABILITY POVERTY MEASURE (CPM) Conventional measures of the spread and degree of deprivation of women and men relative to a socially acceptable minimum standard of living define the poor as those who live below a predefined cut-off poverty line. Such measures may successfully measure the access of the poor to economic resources necessary to maintain the pre-defined level of welfare or utility. However, such poverty indices focus exclusively on the income dimension of poverty and, correspondingly, exclude from their purview a host of other, non-income domains of deprivation. In order to address this shortcoming, the 1996 HDR developed the Capability Poverty Measure (CPM) as a “multidimensional index of poverty focused on capabilities’’ wherein “deprivation is reflected in a lack of basic human capabilities” (UNDP 1996:109) rather than in the levels of lack of welfare. CPM draws attention to a set of capabilities which are basic for human functioning: capabilities to lead a life free of avoidable morbidity, to be informed and educated and to be well nourished and able for healthy reproduction. This report employs a set of proxy indicators, the percentage of underweight children under five, the percentage of births unattended by trained health personnel and the percentage of illiterate female adults to measure capability poverty. CPM is a simple index which gives equal weight to these three indicators, under the assumption that “one basic capability is not a substitute for another that is lacking”

52

(UNDP 1996: 109). Figure 3.16 shows the values of CPM for Nepal and other South Asian countries. The level of capability poverty in Nepal is very high compared to the levels for Sri Lanka and the Maldives. Only Bangladesh is poorer in capability than Nepal. The CPM values and the values of its components along with the CPM/incomepoverty (based on the head count index) ratios for Nepal are presented in annex 3.16. Notwithstanding a 7 percentage point improvement compared to that in 1993, Nepal remains a country with the highest level of capability deprivation among 101 ranked countries (UNDP 1996). In 1996, nearly threefourths of the total population were poor with respect to basic human capabilities. percent higher in the rural areas than in the urban areas. Deprivation due to morbidity and malnourishment is relatively higher than deprivation due to lack of information and knowledge in the rural areas compared to the urban areas (figure 3.17). The distribution of capability poverty, however, is not even. Poverty in capabilities is 60 The disaggregation of CPM at the level of ecological region shows that capability deprivation is highest in the Mountains (figure 3.18). Among the development regions, capability poverty is acute in the far western and mid-western regions (figure 3.19). In terms of eco-development regions, capability deprivation is extremely high in the far western, midwestern and central Mountains. It is relatively lower in the central Hills and eastern Tarai (annex 3.16).

NEPAL HUMAN DEVELOPMENT REPORT 1998

A juxtaposition of capability-poverty with income-poverty shows that income-poverty underestimates capability-poverty at the national level by two-thirds. More intuitively, and despite the high incidence of income-poverty in Nepal, people are much more capability-poor than income-poor. Significantly, people are relatively more capability-poor as one ascends the income scale: capability poverty is relatively higher precisely in those areas which are better off in terms of income, e.g., in the urban areas, central Hills and Tarai (the eastern Tarai in particular), where capability-poverty/income-poverty ratios are highest. This clearly indicates that under the existing economic, political and cultural arrangements, access to economic resources alone will not significantly enhance human capability formation. Consequently, major

reorientation in policies and practices at various levels, including at the levels of the state, market, districts, communities and households is called for.

3.7 HUMAN (HPI)

POVERTY

INDEX

Poverty, from the human development perspective, is a state in which “opportunities and choices most basic to human development are denied” (UNDP 1997: 15). The human development frame shifts the focus of poverty from income deprivation to capability deprivation and to impaired human functioning. The human development frame maintains that poverty should not be narrowly linked with the denial of economic resources alone but with the denial to live a valuable and worthwhile human life. A poverty index which incorporates this latter concern has been developed in the 1997 HDR. This new Human Poverty Index (HPI) is an extension of CPM and brings together different components of deprivation in relation to the quality of life. Once again, the lack of globally comparable data and considerations of parsimony have meant that human poverty − a multi-dimensional issue − has to be measured by the same components as the HDI. HPI, therefore, is the obverse of the HDI and, hence, they are interpreted in terms of deprivations rather than in terms of capabilities attained. The first deprivation relates to lack of opportunities for survival which has as its indicator the probability of not surviving to age 40. The second deprivation is lack of access to knowledge indicated by the percentage of adults

HUMAN DEVELOPMENT IN NEPAL: MEASURES AND INDICES

53

who are illiterate. The third deprivation is lack of opportunities for a decent standard of living, with particular focus on hunger and malnutrition indicated by an unweighted average of the percentage of people without access to health services and to safe water and the percentage of malnourished children under five years of age. HPI is calculated as the unweighted mean of these three categories of deprivation. The value for HPI for Nepal for 1996 − as well as for other South Asian countries − has been shown in figure 3.20. Nepal has a high level of human poverty − the highest among the South Asian countries. The level of human poverty in Sri Lanka, for instance, is only 40 percent that of Nepal. The magnitude of human poverty, when

disaggregated, is highest in the Mountains, followed by Tarai and the Hills (figure 3.21). Among the development regions, human poverty is lower in the eastern development region than elsewhere (figure 3.22). Disaggregation at the level of the eco-development region shows that human poverty is highest in central Tarai, followed by the central Mountains and far western Hills while it is lower in eastern Tarai and the central Hills (annex 3.18). The values of the HPI clearly support the inferences made during the analysis of the CPM − that reducing income-poverty is not sufficient to improve human capabilities and functionings. The HPI value substantially exceeds the incomepoverty headcount index (of 45 percent of the total population) at the national level. The ratios of HPI to the head count poverty ratio show that HPI values exceed the poverty ratio for all ecological and development regions, except for the Mountains among the ecological regions, and the mid-western and far western development regions where poverty, as indicated by the head count ratio, is more pervasive. Yet the findings do not indicate that these regions are necessarily better placed in terms of deprivations in longevity and knowledge. A comparison of the HPI and the head count ratio at the level of eco-development regions shows mixed results but generally supports the idea that income generation is not sufficient to reduce human deprivation.

3.8 HUMAN DEPRIVATION MEASURE (HDM) In most societies, deprivation is distributed unequally and the main burden of deprivation is

54

NEPAL HUMAN DEVELOPMENT REPORT 1998

borne by women and children rather than by men and adults. In order to measure deprivation among the under-privileged strata of society, the Human Development Centre, Islamabad (HDC), has recently developed a Human Deprivation Measure (HDM). HDM, like the CPM and the HPI, is an obverse of HDI and focuses on the same three indicators − health, education and income. However, HDM is interpreted in terms of deprivations suffered particularly by children. HDM is based on three variables: health deprivation (measured by access to safe drinking water and by underweight children under five years of age), educational deprivation (measured by adult illiteracy and children out of school) and income deprivation (measured by the lack of minimum income needed for the basic necessities of life). Since HDM includes the

measure of income poverty, it has been claimed that it is more representative, realistic and broader than CPM or HPI (Haq 1997: 16). The values of HDM are presented in figure 3.23. Nearly 44 percent of Nepal’s total population is deprived of basic human capabilities. Deprivation ratio for the rural areas is more than double that for the urban areas. Human deprivation is highest in the Mountains (figure 3.24). Similarly, among the development regions, human deprivation is highest in the mid-western and far western regions (figure 3.25). Among the eco-development regions, the highest deprivation is recorded in mid-western Hills, eastern Hills and western Mountains. The eastern Mountains and central Hills exhibit a relatively lower level of human poverty.

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55

CHAPTER 4

Health

...social development is central to the needs and aspirations of people throughout the world ... In both economic and social terms, the most productive policies and investments are those that empower people to maximise their capacities, resources and opportunities. Declaration of World Summit for Social Development, 1995 To examine social policy in the field of health care today is to be immediately overwhelmed by a series of fundamental disagreements. Nothing seems settled any more–not the ethics that should underlie the patient- doctor relationship, not the limits that should define medical intervention, and not the principles that should determine health insurance. In some cases, it seems we have too much doctoring, so the physician intrudes with his advice, in others too little, so the poor lack necessary services. Sheila Rothman 1981 The quality of medical care is an index of a civilisation. Dr. Ray Lyman Wilbur 1932

4.1 HEALTH AND HUMAN DEVELOPMENT ood health is fundamentally and intrinsically important to living a worthwhile human life. Good health, of itself, is an end of all human endeavour. In addition, access to all other human developmental opportunities and use and enhancement of all other human capabilities are fundamentally contingent on continued survival and maintenance of good health. Ill health inhibits access to opportunities in education, work, income earning, political and cultural participation and other salient and valued dimensions of human life. Ill health enhances dependence and diminishes selfrespect and self-worth. It inhibits individuals and collectivities from enriching their lives and from realising their potential contributions to the larger society. The promotion of human development, therefore, is crucially dependent on economic, political and cultural policies and practices on the health front. Such policies and practices, in keeping with the central tenets of the concept and strategy of human development (see 2.3.3), must be universalistic, sustainable and provide full space to individual and collective initiatives to

G

56

maintain and promote good health. Such policies and practices must also, necessarily, be based on the existing status of health of the people.

4.2 STATUS OF HEALTH Good health has broadly and appropriately been defined as a condition of overall human wellbeing. The emphasis here, however is considerably narrower. The status of health is described and assessed here in relation to life expectancy, infant, child and maternal mortality, morbidity and disability. In addition, nutritional status, which is a key component of health status, is described and assessed as well (section 4.5).

4.2.1

Life expectancy

In 1994, the average life expectancy at birth in the country, estimated at 55 years (see chapter 3), was very low. This fundamental deprivation from the capability to survive is attributable, at the proximate level, to a low (life expectancy) base, very limited access to health facilities and services

NEPAL HUMAN DEVELOPMENT REPORT 1998

(section 4.4), very low level and quality of nutrition (section 4.5) and acute problems of sanitation (section 4.6). It is also attributable to the low effectiveness and inefficient health-related institutional structures which, among others, are much too technocratised, narrowly sectoral and therefore insular vis-à-vis not only local needs and local health-related institutions but also in relation to other governmental organs with intimate connection to public health, e.g., the MOA, the MOE. Such a stance has also been unsuccessful at enhancing local stakeholding in the promotion of health. At a more systemic level, high deprivation in relation to survival is linked to low rates of literacy and education (chapter 5), high underemployment, low income and widespread poverty (chapters 6 and 7) and exclusion from political and social participation, particularly of women, members of the low caste groups and residents of the mountain region (chapters 8, 9 and 10; also chapter 3). Women in Nepal, on the average, have a life span which is shorter by about two years compared to men (figure 4.1). This pattern, in addition, has remained stable at least for the last 45 years. In contrast to such a pattern, globally, women live considerably longer than men. Lower life expectancy among women in Nepal is a stark indicator of the human developmental deprivations women encounter here during their lives. Such a deprivation is intimately related to higher childhood mortality rate (compared to male children), very high maternal mortality rate and educational, economic, political and cultural exclusion (chapters 5-10). Life expectancy also differs significantly by place of residence. Residents of the mountain region, on the average, die 7 years earlier than the residents of the Tarai. Similarly, life expectancy among the rural residents is lower by nearly 10

HEALTH

years compared to that in the urban areas. Nonetheless, average life expectancy increased by 13.5 years during 1976-1996. That is, on the average, it increased by eight months every year during that period. (The crude death rate declined from 21.4. in 1971 to 13.3 in 1991.) Increases in life expectancy have been possible due, among others, to increasing control over epidemics of cholera, smallpox, malaria, measles, etc., increased control over some childhood diseases, higher rates of immunisation (see section 4.4.3, however), considerable expansion of the public health system (sections 4.3.3 and 4.3.4), slowly expanding access to curative measures − particularly for those at the upper end of the income scale, and slow but growing urbanisation. Life expectancy, however, remains much lower than in other South Asian countries (figure 4.2).

4.2.2 Survival among infants The infant mortality rate is widely and legitimately regarded as a key indicator of the level of public health achievements as well as general socioeconomic development. More importantly, however, it is a fundamental indicator of human deprivation in as much as it signifies, to a large extent, an avoidable end of human life itself. Estimates of the infant mortality rate in the country, however, diverge widely both at the aggregate level and by sex depending on whether censal or survey data are utilised, the attributes of particular estimates and on assumptions governing the sex ratio at birth. In particular, censal data generally show a significantly higher rate of mortality among the female infants than among the male. The survey data, on the other hand, generally show a higher rate of mortality among

57

Table 4.1

Infant mortality rate by sex 1978-1994 Reference year 1971

1973-74

176 168 172

175 167 171 0.2

1976

1978

1981

1986

1987

1989

1994

156 148 152 5.6

148 140 144 2.6

120 114 117 6.3

110 104 107 1.7

108 102 105 1.9

104 100 102 1.4

100 96 98 0.8

IMR/1000 Male Female Both sex Percent reduction per annum

Source: CBS 1987b, 1995b; CEDA 1996; MOH 1992, 1997c.

the male infants. The presentation here utilises the estimated IMR in both the censal and survey data with the added assumption of a sex ratio of 105 male births per 100 female births. Infant mortality rate in the country, at 98 (per 1,000 live births), is very high1. Nearly one child in every ten dies before reaching the age of one (table 4.1). Contrary to expectations, however, male infant mortality rate is slightly higher than the female rate. The NPC-UNICEF (1996) findings, which report that there is no gender difference among children 6-36 months of age in relation to nutrition, also lend credence to these infant mortality figures. Infant mortality, however, varies substantially by region. Infants in the rural areas are exposed 1.6 times more to risk of death compared to infants in the urban areas (table 4.2). Similarly, infants in the mountain region are two times as likely to die as infants in other ecosystemic regions. Furthermore, infants in the mid-western and far western regions have a very high mortality rate compared to others. On the other hand, many more infants now enjoy an opportunity to survive than in the past.

4.2.3 Morbidity Available information indicates that the morbidity Table 4.2

Infant mortality rate by place of residence, 1978-1994

1978 Rural-urban place of residence Rural 105 Urban 67 Ecological region Mountain 187 Hill 164 Tarai 124 Development region Eastern 130 Central 1,387 Western 148 Mid-Western 177 Far Western 169

1986

1989

1994

110 82

105 69

102 62

163 104 100

155 83 112

180 86 89

99 94 86 124 136

82 92 79 119 121

Source: CBS 1987b, 1995b; CEDA 1996; MOH 1997c.

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is high. However, information on morbidity and its causes is very poor. Gautam and Shrestha (1994) argue that most health problems can be attributed to insufficient food intake, early marriage and early-age child bearing, poor housing, lack of access to safe drinking water, insufficient sanitary facilities, outdoor and indoor air pollution, abuse of alcohol, tobacco and drugs, natural disasters, insufficient coverage of health services and socio-economic deprivation. These conditions give rise to distinct patterns of morbidity which, in turn, have definite consequences in terms of mortality (table 4.3). Data on morbidity compiled from cases reported in public health institutions (sub-health posts, health posts, primary health centres and district, regional and central hospitals) are far from complete. Nonetheless, they provide a simpler, even if tentative and less than definitive, indication of the scale and the leading causes of morbidity (table 4.4).

4.2.4 Disability Data on disabled persons are sparse. The disability rates reported are contentious as well. A disability rate of 10 percent (of the total population) is often regarded as the global “norm”. But it should be taken as a sharp indicator of governmental apathy towards the disabled that the censuses fail to report even the total number of disabled persons in the country and, instead, provide information on disability only when reporting the “economic activity” rate. That is, disability, in the censuses, acquires salience only on account of the economic inactivity it presumably signifies. The censuses, as such, report disability rates only for those 10 years age and older. In addition, disability is apparently highly under-enumerated. The censuses of 1971, 1981 and 1991, put the proportion of the physically and mentally disabled population aged 10 years and over at 1.1 percent, 1.5 percent and 1.3 percent, respectively. On the other hand, various organisations struggling for the rights of the disabled have put forward much higher

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 4.3 Exposed group Children

Major morbidity and mortality patterns Disease Diarrhoea ARI Vitamin A deficiency

Iodine deficiency consequences Anaemia

Mothers

All ages/categories

Haemorrhage, sepsis, labour, abortion, anaemia, urinary tract infection Tuberculosis Leprosy Malaria Kala-azar Meningitis Japanese Encephalitis HIV/AIDS

Rabies Cataract Mental disorder Injuries/poisoning

Morbidity patterns/mortality consequences 16-25 percent of childhood death. 30-40 percent of childhood death. Bitot’s spot in over 2 percent of children. 57.6 percent in 1979-82; prevalence rate of cretinism 2.8 percent in 1979-82 (based on spot survey between 1979 and 1982). 39.7 percent in 1985-86; prevalence rate of cretinism 2.8 percent in 1979-82 (based on spot survey done in 1985-86; prevalence rate of cretinism 2.8 percent in 1979-82). 19.6 percent of children aged 6-23 months and 25 percent of those aged 2472 months; 78 percent of women in reproductive ages suffering from anaemia. Abortion accounted for 5 percent of total obstetric admissions 25 percent of maternal death were abortion-related.

35/10,000 in 1993. 11/10,000 in 1992 (commonly found in 13 districts.). Reported cases: 23,234 in 1991 (a major problem in the Tarai; however, steadily declined since the late 1950s and came to a standstill by 1980). 21/100,000 in 1992 (major problem in the eastern Tarai). 14.8 percent of 759 cases died in 1992 (cases reported at Teku Hospital, Kathmandu). Incidence rate 21/100,000 in 1992; discovered in the Tarai 1978; fatality rate 18 percent compared to 46 percent in 1982). Over 5,000 persons estimated to be infected with HIV in 1993; of the 191 reported HIV cases in 1993, 24 found to have full-blown AIDS; governmental figures, however, report only 434 HIV infected persons and 52 persons with full-blown aids for 1995/96. 1,800-20,000 persons/annum attending anti-rabies treatment. 0.84 percent of population blind of which 66.5 percent cataract. Estimates range from 0.13 to 15 percent. 0.49 percent of the total population.

Source: Gautam and Shrestha 1994, NPC 1991, MOH 1996b.

estimates of disability, sometimes well above the global “norm”. A survey on disability among children up to six years of age, which utilised parental reports on the disability of their children (NPC-UNICEF 1997b: 21), found that 2 percent of the children had hearing difficulty. The survey also found that 0.7 percent had difficulty seeing at night. 2 percent up to 3 years of age suffered from physical

Table 4.4

Distribution of morbidity by type of ailment, 1995

Type of Ailment Skin Worms Diarrhoea Upper respiratory tract infection Dysentery Gastritis Headache Fever (unqualified) Cough/chest pain Total Source: MOH 1995.

HEALTH

Number 867,643 432,304 366,654 298,954 221,884 203,229 187,951 171,486 159,670 2,909,775

Percent 29.82 14.86 12.60 10.27 7.63 6.98 6.46 5.89 5.49 100.00

disability and another 0.2 percent suffered from mental disabilities. While there are sufficient grounds to believe that the censuses significantly under-enumerate the disabled, it is probably unfair to define disability solely on medical grounds. Disability (and, more generally, health and illness as such) and, more importantly, disability-led deprivation are culturally − and economically and politically − constructed as well. In particular, the fact that the scale of self-employment in the country is high (and the scale of wage employment low; chapter 6), leads to a considerable muting of the extent of deprivation due to partial disability.

4.2.5 Maternal mortality Maternal mortality is one of the key indicators of the status of reproductive health care service delivery and utilisation, as also of women’s overall status in the society. The maternal mortality rate in the country, at 875 per 100,000 women aged 15-49 years, however, is one of the

59

highest in the world (1990-1996 figures). This rate is based on the age of surviving sisters, the age at death of sisters who died, and the number of years since the death of sisters (MOH 1996a). This estimate suggests that 27 percent of all deaths of women aged 15-49 years is attributable to child-birth complications. The maternal mortality ratio which, on the other hand, indicates the extent of obstetric risks associated with live births, is estimated to be 539 per 100,000 live births (for the same period). The level of maternal mortality in the country, thus, is one of the highest in the world, proximately linked, among others, to the low level of access to antenatal, delivery and postnatal care. Over 90 percent of births in the country takes place at home and without professional assistance.

4.3 ORGANISATION OF HEALTH AND MEDICAL SYSTEMS Multiple health and medical systems coexist simultaneously − and sometimes uneasily − in the country. Such systems, for the present purpose, can be divided into four broad categories: the home-based system, the traditional faith healingbased system, the ayurvedic, homeopathic and unani systems, and the modern allopathic system. The allopathic system has been ascendant for the last several decades, not the least because much of the state as well as market support is concentrated in its favour. The other three receive miniscule state support. The home-based and traditional faith healing systems receive little direct support from the state, but efforts at linkaging them with the public health system have been made in the last 15 years. Such efforts, nonetheless, have been peripheral and lukewarm.

4.3.1 Home-based system The primacy of the household (see 1.2.2 and 10.2.1) extends to the domain of health and medication. Almost all households, at least at the initial stage of sickness, utilise the fairly wide stock of intergenerationally transmitted as well as newly acquired knowledge and practices of healing to nurse the sick back to good health. The localised nature of the society, limited access to, and relatively low quality of, public health institutions and the prohibitive costs of allopathic medicine and modern health services also force most households to rely on home remedies which span from divination to faith healing and the use of local herbs. Increasingly, they also involve the

60

use of off-the-counter allopathic drugs, which remain almost completely unregulated.

4.3.2 Faith healing In general, the failure of home remedy to cure the sick invites intervention from community-level healers. Such healers base their treatment on an intimate knowledge of the sick person and the latter's physical and social niche assurance, divination/ancestor invocation and herbal remedies. Healers often specialise in particular techniques and which specialist is consulted is a function of illness itself (Stone 1976: 75). The number of such healers is very large, which can itself be taken as an indication of the legitimacy of the system. One study estimated the number of various categories of local faith healers at 400,000 to 800,000 (Shrestha and Lediard 1990, cited in UNICEF 1992b: 123), which roughly translates to one faith healer for every six households. The significant role of local healers has been widely noted (Pandey 1980: 113; Blustain 1976: 84; Okada 1976: 107; Wake 1976: 118-119). The majority of the sick persons in the rural areas who eventually visit the allopathy-dominant health posts had first consulted a traditional healer (UNICEF 1992a: 123). The majority of the women in the central region utilise the services of local traditional birth attendants (Reissland and Burghart 1989: 44), partly because women there

prefer to deliver a baby at home.

4.3.3 Ayurvedic, homeopathic and unani systems The ayurvedic system of healing has been practised in South Asia since ancient times. It bases itself on a well developed system of the physiological characteristics of the sick person, symptoms of sickness and detailed pharmacological knowledge of herbs and their processing techniques. The herbal treatments that households and local healers perform are often borrowed from the =OKHLA@E? system. This system, therefore, has a wide reach. Most ayurvedic healers work within the private domain. In addition, the system is also supported publicly. )OKHLA@E? healing in the public sector is performed through one central ayurvedic hospital with 50 beds, one 15-bed zonal hospital, 172 dispensaries in 55 districts, and a central drug manufacturing unit (MOH 1997b).

NEPAL HUMAN DEVELOPMENT REPORT 1998

Homeopathy was introduced Nepal as early as 1920 as a natural healing system. Homeopathic healing is largely a private sector initiative which encompasses approximately 500 practitioners and 100 clinics (MOH 1997b). Within the public sector, there is only one homeopathic facility with hospitalisation facilities for six patients. The unani healing system, which provides preventive, promotive and curative services, has an extremely limited reach. In addition, the Tibetan healing system and naturopathy are also practised in selected areas of the country.

4.3.4 Allopathic system Nepal embarked upon implementing a modern, allopathic public health system at the end of the 19th century when the Bir Hospital was established in Kathmandu. Vaccination against smallpox was available after the First World War (Kansakar 1981, cited in Shah 1987: 32). By 1955, there were 34 small-scale allopathic hospitals with a total of 623 beds and 24 dispensaries. In addition, 63 =OKHLA@E? dispensaries had been established (Pandey 1980: 108). Nearly one-half of all services delivered through these institutions were concentrated in the Kathmandu Valley (Shah 1987: 32). Organised, national-level, public efforts at the development of modern health services started in the mid-1950s (Pant and Acharya 1988: 144; Shah 1987: 32; Pandey 1980: 108). A large-scale malaria control programme was launched in 1955; the leprosy and tuberculosis control projects were initiated in 1966; the smallpox eradication programme was launched in 1968; and a family planning and maternal and child health board was established in 1968 (CBS 1989: 211-313). In 1971, the division of basic health services was formed within the Department of Health to provide basic health services to the maximum number of people (Justice 1986: 53). Small-scale public hospitals were established at various regional and district centres. In 1977, the successful smallpox project was converted to the expanded programme for immunisation. Other vertical programmes such as the nutrition support and diarrhoeal disease control programmes were integrated with EPI in 1980 (World Bank 1989: 54). Private and INGO initiatives also led to the establishment of rural health posts, clinics, hospitals and drug retail outlets. One teaching hospital was also established within the public

HEALTH

sector. Public health offices were established in all of the districts. Significant steps were taken by successive governments to expand the public health network at various levels. Of particular salience were two policy decisions taken in the mid- ’80s and the early ’90s. The first policy led to the formation of a cadre of community-based women volunteer health workers. At present they number more than 42,000. The level of their paramedical training is very low. But their achievements in terms of local sensitisation and referral are significant. The other policy decision, currently in the final year of implementation, is related to extending the reach of public health institutions right to the VDC level and the creation of an integrated institutional structure of public health. Implementation of this policy is leading to the establishment of community level sub-health posts in all VDCs in the country. Better equipped health posts, covering 6-8 VDCs, would cater to cases referred by the sub-health posts. Finally, a primary health centre, with a qualified doctor, would serve each of the 205 electoral constituencies each of which comprises, on the average, 18-20 VDCs. These and the preceding steps, together with expanding private initiative, have led to a gradual, although very slow, growth of trained health personnel and health facilities at various levels. As of 1997, sub-health posts have been established in 3,187 of the 3,912 VDCs. Similarly, 754 health posts and 117 primary health centres are functioning. A total of 75 public hospitals are functioning today in the different regional and district centres. Eleven of the districts, however, do not still have a public hospital (UNICEF 1996b: 67). Approximately 40 hospitals and nursing homes were also established under private initiative. In addition, a large number of health clinics and laboratories have been set up under the private sector as well. In addition, there has also been a significant increase

61

in the number of health personnel and hospital beds (figures 4.3 and 4.4) per unit of population. The large-scale expansion of the public health

households consulted modern health practitioners during illness (CBS 1997a). This section focuses on the utilisation of selected health care services, particularly by mothers and children under five years of age.

4.4.1 Family planning, contraception

infrastructure, however, has not paid off in terms of the commensurably improved coverage and quality of health services. Most public health institutions are still ill equipped. The annual drug rations allocated to health posts are adequate for only 3-6 months. A rational drug dispensing policy at the patient level is not in sight either. Medical personnel often remain absent from the rural-based sub-health posts and health posts, and even from regional and district hospitals. Thus, in a 1995 survey of 10 districts, out of the 94 positions of doctors sanctioned, those on duty were only 28. Similarly, out of the 117 positions of nurses sanctioned, only 42 were on duty. Also, of the 18 positions for laboratory technicians sanctioned, only 12 were on duty (MOH 1996b: 10). Moreover, it was recently reported by Nepal Television (December 27, 1997) that there were no doctors on duty in at least 35 out of the 75 districts. The scale of training and re-training programmes for the medical and paramedical personnel is inadequate at the same time that the training programmes are much too costly. Equally significantly, there is little interaction and linkage between the public health institutions and local representative and other community-level bodies. Such linkages are generally not mandated in public health policies.

4.4 ACCESS TO PUBLIC HEALTH FACILITIES AND SERVICES The emphasis given to health sector development in the past years, nonetheless, has resulted in significant progress in the extension and expansion of basic health services and medical care. In 1996, approximately 45 percent of the households could access a health post within a travel time of 30 minutes and three out of five

62

fertility

and

The Family Planning Association of Nepal, a nongovernmental organisation, introduced the family planning programme for the first time in 1959 when family planning services and information on contraception became available in Kathmandu. Public sector intervention in family planning were introduced in 1968 (Pant and Acharya 1988: 213) with the formation of a Family Planning and Maternal Child Health Board. Its implementing body, the Family Planning and Maternal Child Health Project, was instituted under this board (CBS 1987b: 317-318). The Family Health Division, which is the eventual successor of the project, carries out various family health services in all districts of the country. Private and NGO sector initiatives have also played a key role in assuring access to family planning. Despite these efforts, and despite the professed desire of most mothers to limit the number of children, TFR remained constant at around six during 1961-1986 (CBS 1987a: 284; MOH 1987). That figure declined marginally to 5.8 in 1991 (MOH 1992, 1996a) and more rapidly, to 4.5, in 19962 (MOH 1997c). Access to knowledge on contraceptive methods, modes of procurement and use have increased sharply within the last two decades, however. While only 21 percent of the currently married women were knowledgeable about such methods in 1976, the proportion increased to 56 percent in 1986 and 98 in 1996. The percentage of currently married women aware of at least one method of family planning as well as its accessibility increased from 6 percent in 1976 to 33 in 1986. Use of contraception among the currently married and non-pregnant women of reproductive age increased from 3 percent in 1976 to 15 percent in 1986 (MOH 1977: 63; 1987: 137) and to 29 in 1996 (MOH 1997c).

4.4.2 Reproductive health and motherhood The ICPD programme of action defines reproductive health as "a state of complete physical, mental and social well-being and not

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 4.5

Trends in reproductive health, 1991 and 1996

Indicators Percent of all women married by age 19 Percent of married women who give birth by age 19 Percent of pregnant women with anaemia Percent of women with TT2 Percent of births attended by trained health personnel, including TBAs Mean duration of breast-feeding (months)

merely the absence of disease or infirmity, in all matters relating to the reproductive system and to its functions and process” (ICPD 1994). The reproductive process, however, remains a serious health hazard for women in Nepal. As already noted, the maternal mortality ratio is extremely high. Such a ratio can be linked to a number of social and health-related features. Approximately 44 percent of all women are married by age 19 and 42 percent of all married women give birth to a child by that late teen age (table 4.5). Approximately two-thirds of all pregnant women are anaemic. An overwhelming proportion of women do not have access to professional health facilities and services during child birth. The duration of breast-feeding is very high − probably the highest in the world. While this is undoubtedly beneficial for the child, many mothers remain deprived from adequate nutritional and other support during this period. Data for 1991 and 1996 show that the extent of deprivation among mothers has increased with respect to the incidence of early child birth and anaemia. More mothers, however, been able to access immunisation against tetanus and to receive semiprofessional support during childbirth. Access to professional or semi-professional ante-natal care has improved a great deal between 1991 and 1996. For every woman receiving such care in 1991, 2.5 women received such care by 1996 (table 4.6). Increase in such access has been pronounced for women in the Tarai. While far more women in the urban areas enjoy such access than women in the rural areas, the trend shows that such care is increasingly available in the rural areas as well. Yet, nine out of 10 deliveries occur Table 4.6

1991 47.3 38.3 33.0 26.8 17.7 28.0

1996 44.0 42.4 64.0 32.6 32.6 28.0

Source CBS 1995b; MOH 1996a, 1996b MOH 1991, 1996a World Bank 1993 MOH 1991, 1996a MOH 1991, 1996a MOH 1991, 1996a

at home. Even in the urban areas, the majority of women give birth at home. Most births continue to be assisted by friends and relatives. Indeed, 11 percent of all births are totally unassisted and present great risk for both the mother and the child. Only 13 percent of all mothers have access to professional post-natal care. Another 24 percent access post-natal care from traditional birth attendants with varying levels of skills (MOH 1997c: 122). Recently, a more organised safe-motherhood programme has been initiated in the public sector. In its first phase, it is being implemented in 10 districts. The programme, among others, seeks to strengthen community-based maternal health services and the referral system, to standardise maternity care practices and to upgrade the quality of maternity care in institutions.

4.4.3 Immunisation Neonatal tetanus, pertussis, measles, acute respiratory tract infection, polio, tuberculosis and diarrhoea are the major killers of children in most of the developing world. They are also the major causes of morbidity and disability. In Nepal, the expanded programme for immunisation, which has been internationally organised as a major initiative against these diseases, was started in 1977. At its initial stage, it covered only three districts with one antigen. In addition, the coverage of immunisation until 1985 was limited to a small proportion of eligible children, often only those who lived in district headquarters or close to health institutions (UNICEF 1992a: 62).

Access to maternal and child health care by place of residence, 1991 and 1996 (in percent)

Region

Nepal Mountains Hills Tarai Urban Rural

No access to professional/ semi - Child delivered professional ante-natal care at home 1991 82.3 90.8 84.4 79.1 44.7 84.5

1996 55.7 74.3 60.0 49.0 32.6 57.2

1991 92.5 95.6 93.2 91.3 61.1 94.2

1996 91.7 96.3 90.0 92.4 56.2 94.1

TT injection (two doses) 1991 26.8 12.1 21.6 33.9 44.9 25.8

1996 32.6 13.8 26.7 40.6 48.3 31.5

Delivery assisted by friends/ relatives 1991 58.2 79.7 71.5 42.6 35.6 59.5

1996 56.0 74.4 62.4 47.7 36.7 57.3

Delivery assisted by no one 1991 9.6 12.4 13.2 5.8 3.4 10

1996 10.9 8.6 17.0 5.9 4.1 11.3

Source: MOH 1992 and MOH 1997c.

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63

By 1989, however, it was implemented, with six antigens, in all districts. By 1990, according to the data generated by the government, more than 90 percent of the children below one year of age were immunised against tuberculosis. The coverage rate for DPT3 and OPV3 was 78 percent while, for measles, it was 67 percent. Evidence from MOH (1997c), however, indicates that the high immunisation rates reported may have been inflated. Relatively independent data sources, accordingly, report a much lower immunisation rate for the more recent years. The 1995 NMIS (NPC-UNICEF 1996a) study indicates that BCG coverage for children under 12 months was only 72 percent. Access to DPT and OPV was limited to 50 percent of the children. Only 47 percent of all eligible children had access to immunisation against measles. Furthermore, another set of 1996 data (CBS 1997a) shows that only 36 percent of all children under five years were fully immunised. Children in the rural areas and the mountain region are particularly deprived from immunisation (MOH 1997c). For 1995, the WHO ranked Nepal as one of the 12 countries which accounted for 80 percent of the global estimated neonatal deaths from tetanus. In addition, the WHO has classified 21 of the 75 districts as highrisk areas. The rates reported on immunisation inflated their impact in another extremely worrisome way as well. The efficacy rates of vaccines under field conditions are generally found to be very low. Illustratively, the protection that measles vaccine provides has been estimated at only 22 percent (NPC-UNICEF 1996a: 18). That is, only one out of five children vaccinated against measles is likely to be fully protected against it. Failure to maintain the cold chain, which is extremely important in keeping the vaccine potent, is the main reason underlying such a low efficacy rate. Access to immunisation against TT, among women aged 15-49 years, also remains very poor. In 1996, only 19 percent of the women in this reproductive age category had access to more than one dose of the TT vaccine (MOH 1997c).

4.4.4 Perception on access to health facilities and services Overall, nearly 3 out of 5 households in the country report that they do not have adequate access to health care services. Many more households in the western and far western regions express such a view in compared to other regions.

64

Similarly, residents in the mountains report a lower level of access than those in the Hills and Tarai. This distribution of household perception on access to health care services is in keeping with the information from more “objective” sources.

4.5 NUTRITION Nutritional status is determined by various factors operating at various levels. At the individual and household level, availability of food items, their processing, timing of intake and intra-household food distribution regimes can impact on nutritional status. Access to productive resources (principally agricultural land), work and employment and income can also crucially impact on household nutritional status. Mechanisms of redistribution and general prosperity among the kin and in the community can also affect nutritional status significantly. At the macro level, nutritional status remains crucially linked to overall food production, marketing (including import and export) and non-market support to food security provided by the state. Low man/agricultural land ratio, skewed land and income distribution, widespread poverty (see chapter 7), rapid population growth, poor performance of the agricultural sector and the overall employment market (see chapter 6) and irresponsive political structures have all contributed to making Nepal a food-insecure region − notwithstanding the fact that agriculture is the mainstay of its economy. Thus, food security, which is defined as a state of affairs Table 4.7 Household perception on adequacy of access to health care services by place of residence, 1996 (percent)

Place of Less than residence adequate Nepal 58.70 Ecological region Mountains 63.13 Hills 59.70 Tarai 56.90 Development region Eastern 51.19 Central 56.73 Western 65.24 Mid-Western 55.91 Far Western 75.14

Just adequate 40.57

More than adequate 0.62

36.64 40.00 41.84

0.22 0.11 1.19

46.64 42.93 34.56 43.78 24.53

2.16 0.20 0.20 0.00 0.00

Source: CBS 1997a.

where “all people at all times have access to safe and nutritious food to maintain a healthy and active life” (FAO, cited in Koirala and Thapa

NEPAL HUMAN DEVELOPMENT REPORT 1998

1997), remains a distant dream for the majority of the people. Regardless of its determinants, however, access to food security and adequate nutrition is a fundamental human requirement for using and enhancing human capability. Food insecurity and inadequate nutrition lead to multiple ill consequences for health, including high morbidity, heightened susceptibility to diseases and upscaled mortality. Food insecurity and inadequate nutrition are also immensely depriving and demeaning.

4.5.1 Consumption patterns Cereals form the predominant item of daily consumption. Rice is the main staple food in Nepal. Wheat and maize are the supplementary staples in the Tarai and the Hills respectively. In addition, millet, buckwheat and barley are consumed in the Hills and Mountains. Various kinds of grams and oilseeds provide protein and fats. In addition, potato and onions are consumed regularly by a large proportion of the population. Consumption of green vegetables is growing but a significant proportion does not have regular access to it. The consumption of animal protein is low. Food items and quantities consumed vary substantially by season and economic status. In particular, the planting seasons are also seasons of great food scarcity and undernutrition for the majority of the households. During such seasons, the poor often have to subsist on one meal a day. Borrowing for consumption, to be repaid after the harvests, also reaches a peak during these seasons. A large portion of the household income is spent on food items. In 1984/1985, the poor spent as much as 70 percent of their household income on food. In 1884/85, the proportion of household income spent on food items in the rural and urban areas were 62 percent and 51 percent, respectively (NRB 1988: 115-118). Available statistics for 1995 indicate that 55 of the 75 districts are food deficit (map 4.1). As a

Table 4.8 Particulars Energy (kilocal/capita/day) Protein (grams) Fat (grams)

exchange earnings for the country until 1979, dwindled by the mid-’80s. The country now imports a significant quantity of foodgrain. The scale of food imports, in addition, has been increasing. The food and live animals import/export ratio, which was 1.46 for 1986/87, increased to 2.75 in 1995/96 (CBS 1997b).

4.5.2 Access to food and nutrition The recommended minimum caloric requirement for an adult in the country is 2,250 kilocalories per person per day. Adult caloric requirements, however, vary by a number of conditions. Among such conditions, only a rough regional classification has been made in the country. According to this classification, 2,140 kilocalories person/day is recommended for adults in the Tarai while the corresponding recommendation for the Hills and the Mountains is 2,340 kilocalories. In addition, for both men and women, 2,250 kilocalories are recommended. Refined and fully reliable data on actual food intake and their calorific values, however, are not available. Information on the distribution of food and nutrition across regional, socioeconomic, gender and age groups is not available either. A very rough approximation prepared by the MOA (1992, 1996), however, shows that substantial caloric shortfall exists in relation to the recommended minimum norm (table 4.8). For 1994/1995, the latest year for which the data are available, the shortfall amounted to 112 calories (or 5 percent) person/day. The level of consumption of protein and fats is also low. The 8-year data do not allow any assessment on the trend of access to nutrition. Given the close link between agriculture and nutrition, on the one hand, and the close link between adequate and timely rainfall and a successful agricultural year, on the other, it can be surmised that the years in which the minimum caloric recommendations were met were precisely those when the rainfall was adequate and timely.

Per capita daily access to nutrition, 1987-95 1987/88 2000 53.29 27.15

1988/89

1989/90

1990/91

1991/92

1992/93

1993/94

1994/95

2077 55.77 29.04

2125 56.86 31.91

2288 61.52 30.39

2258 59.83 29.62

2077 52.49 26.68

2429 61.70 30.76

2138 64.47 32.84

Source: MOA 1992, 1996.

result, the export of foodgrains (particularly rice and maize), which was the major source of foreign

HEALTH

Significant proportions of the people also

65

Table 4.9 Household perception on adequacy of food consumption by place of residence, 1996 (percent)

Place of residence Nepal Mountains Hills Tarai

Less than adequate 50.86 63.16 54.67 44.86

Just adequate 47.31 33.55 43.11 53.96

More than adequate 1.83 3.29 2.22 1.18

Source: CBS 1997a.

face mild-to-severe micronutrient and vitamin deficiencies. Iron deficiency is common, especially among pregnant women. As noted earlier, two-thirds of all pregnant women suffer from iron deficiency. Residents of the mountain and, to a lower extent, the hill region, face severe iodine deficiencies. In 1990, at the national level, iodine deficiency was prevalent among 40 percent of the population. The prevalence rate of goitre, accordingly, was 40 percent as well. Furthermore, 0.4 percent of the population was afflicted by cretinism (UNICEF 1996). Iodine deficiency also results in mental retardation among a significant proportion of the population. A significant part (1.6 percent) of the population in the Tarai faces Vitamin A deficiency, which leads to various degrees of blindness (NPC-UNICEF 1996a). That rate is lower in the Mountains and Hills (0.4 percent and 0.5 percent, respectively). Nightblindness among children 2-3 years of age has been estimated at 0.5 percent (NPC-UNICEF 1996a). Nationally, the Vitamin A deficiency rate has been estimated at 0.9 percent of the population. Household-level self-perception provides one additional way to assess access to food and nutrition. For 1996 (CBS 1997a), over one-half of all households reported that their food Table 4.10

consumption was less than adequate (table 4.9). Almost all of the remaining households reported that the level of their food consumption was just adequate. Perceived inadequacy of food consumption was considerably higher in the Mountains and Hills compared to the Tarai − a perception which tallies with information generally regarded as “more objective”.

4.5.3 Nutritional deprivation: anthropometric evidence among children Growth statistics of children are often, and legitimately, regarded as a good proxy for assessing the nutritional status and welfare of an entire population. In addition, and for the present context, such measurements are of key value in as much as they measure deprivation among children − a key group for the conceptual and strategic frame of human development. Anthropometric evidences are preferred measures of nutritional status in comparison to clinical measures because of the scarcity of clinical signs suggestive of nutritional deficiency, their lack of specificity, and the notoriously limited extent to which results can be reproduced by different examiners. Anthropometric measures usually rely on the distribution of a set of three indicators to assess

Nutritional deprivation among children by place of residence, 1996 (percent)

Height-for-age (stunted) Place of Percent residence below 3SD Nepal 20.2 Urban/rural Urban 10.5 Rural 20.9 Ecological region Mountains 27.5 Hills 19.9 Tarai 19.4 Development region Eastern 14.5 Central 22.0 Western 20.4 Mid-Western 22.2 Far Western 22.7

Weight-for-height (wasted)

Weight-for-age (stunted/wasted) Percent Sample size below 2SD 46.9 3,705

Percent below 2SD 48.4

Percent below 3SD 1.7

Percent below 2SD 11.2

Percent below 3SD 16.1

35.4 49.3

0.6 1.7

5.8 11.6

6.4 16.8

29.8 48.1

237 3,468

56.6 48.7 46.9

2.5 1.5 1.7

13.6 9.3 12.6

22.7 13.5 17.4

53.2 44.4 48.2

270 1,611 1,824

38.3 50.9 50.0 51.0 53.2

1.3 1.9 1.5 1.3 2.6

10.2 10.1 11.2 11.9 16.5

11.4 17.5 15.2 16.3 22.7

38.0 48.2 47.7 48.8 56.3

765 1,247 762 555 376

Source: MOH 1997c.

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67

nutritional adequacy: height-for-age, weight-forheight and weight-for-age. Each of these indicators bears a certain specific significance as well. Height-for-age measures skeletal growth (and the degree of stunting) which does not vary quickly in response to short-term health and economic changes. Short-term changes in the growth pattern, therefore, cannot be detected from this measure. It, instead, measures consequences of long-standing problems in food intake and health. This measure is also used as an indicator of long-term human-scale deprivation due to serious and long-term social and economic problems. Weight-for-height measures the body size according to the height attained (i.e., the degree of wasting). The volume of tissue mass can change quickly depending on the quantity and quality of food intake in the recent past and the general health condition. Deficits in weight for a given height can develop and disappear very quickly; as such it is a useful indicator to assess short-term changes in nutritional status. Weight-for-age shows the extent and distribution of under-weight persons of that age in the population. A low weight-for-age signifies a general deprivation of food and nutrition. It is also often used as a summary indicator which subsumes the effects of the previous two indicators. As a summary indicator, however, it is less refined than the two other indicators. All of the three indicators are expressed as standardised (z-score) deviation units from the median value of a reference population as recommended by the WHO. Persons whose indicator-values lie in the -2 SD to -3 SD range from the median value of the reference population are considered below normal and those whose indicator-values lie beyond the -3SD range are considered severely undernourished. The distribution of children under 3 years of age on the three anthropometric indicators shows a very high level of undernutrition and/or malnutrition (table 4.10). Nearly half of all the children are stunted 3. The degree of stunting is severe for one-fifth of the children while it is moderate for approximately one-half of all children. Thus, the extent of nutritional deprivation among children is both pervasive and deep and is rooted in long-term inadequacies in food intakes. Wasting (i.e., low weight for height), while significant, is both much less common and much less severe. While stunting is very high nationally, it is even higher in the mountain region. As many as five out of six children suffer from stunting in the

68

region. Similarly, children in all of the development regions, except the eastern one, suffer from a level of stunting which is higher than the national average. The degree of stunting is also higher in these regions. Data disaggregated at the 15 eco-development regions (not shown) indicate that the rate of stunting is highest in the western mountains.

4.6 ACCESS TO SAFE WATER AND SANITATION The status of public health, in addition to the level of access to nutrition and health/medical facilities and services, crucially depends upon the level of access to safe drinking water and sanitary facilities. Despite continuing improvements, however, the level of such access in the country is very low (see also chapter 7, section 7.6.1). Water, particularly safe drinking water, is a scarce good in many parts of the country. Most settlements and households do not have access to piped water. In such instances, fetching water from a distant source daily consumes considerable time and energy − particularly of girls and women, who generally perform this task. The onerous nature of this task implies that households make do with as little water as possible. This is particularly true of the hill and mountain regions. The level of per capita consumption of water, therefore, is very low. The highly limited use of water, on the other hand, is one of the principal causes of a low level of sanitation. Furthermore, in areas in which water is more accessible and/or is piped to the settlement or to the house, the safety of the water for human consumption is increasingly questioned. This is particularly true in the urban areas where the health workers and the mass media regularly counsel residents to drink only boiled water. In urban areas, e. coli counts in drinking water are reported to be high and increasing. In addition, it has also been reported that contamination of drinking water, including in the rural areas, occurs because of unsanitary storage and utilisation mechanisms. Drinking water, on the positive side, has become much more accessible than in the past. Piped and hand-pumped drinking water facilities, which are also comparatively safer, have expanded considerably due to governmental, NGO/INGO, CBO and private initiatives in the rural and urban areas. Thus, within a span of five years (between 1991 and 1996) access to piped water in the rural areas has nearly doubled (table

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 4.11

Distribution of households by selected sanitation indicators and rural/urban location, 1991 and 1996 (in percent)

1991 Rural Urban

1996 Indicators Rural Urban Sources of drinking water Piped water 16.3 51.3 29.1 57.4 Well water 12.1 6.4 7.0 8.7 Hand pump 26.5 38.6 33.3 27.3 Spring water (kuwa) 32.9 2.9 20.8 0.0 River/stream 9.09 0.2 7.6 3.3 Stone tap 2.7 0.6 1.6 1.8 Others 0.6 0.1 1.4 0.6 Not stated 0.3 0.9 Toilet in the house Yes 16.5 69.8 17.7 73.7 No 83.5 30.2 82.3 26.3 Persons per sleeping room 1-2 32.5 55.2 37.8 52.0 3-4 37.1 29.2 37.5 31.9 5-6 19.9 11.4 17.4 12.7 7 plus 10.5 4.2 7.1 2.8 NA NA 3.5 3.0 Mean person/room Sample size of households 23,124 1,621 7,366 716 Source: MOH 1992, 1997c.

4.11). Access to hand-pumped groundwater has also increased substantially and use of the uncovered spring water and river/spring water has decreased. Access to latrines, however, is extremely low in the rural areas. It is also the single most potent source of environmental pollution. The very high prevalence rate of diarrhoea and dysentery and other water-borne diseases owes principally to the low level of access to latrines. Access to latrines, furthermore, and unlike access to drinking water, increased only marginally during 1991-1996. The MOH data on latrines are fully corroborated by the 1996 NPC-UNICEF (1997a) data as well. Limited housing space, which is proximately rooted in the relatively large family size and broad-based poverty, also leads to a variety of pollutions. Indoor smoke pollution and diseases associated with such pollution are endemic, particularly in the northern areas with a cold climate where the fuelwood-based hearth is also utilised as a living room and the kitchen heat is utilised to heat the home. Communicable diseases find a receptive condition in such settings. The very high incidence of skin diseases there, noted earlier, can be linked to such housing conditions. The high incidence of tuberculosis, measles, etc. can be similarly linked as well.

4.7 FINANCING OF HEALTH Several internal and external funding agencies provide financing for health (ADB 1994). The

HEALTH

internal funding agencies consist of the government, private companies and private households. The external agencies consist of external development partners and donors inclusive of multilateral and bilateral agencies, as well as international non-governmental organisations and religious/philanthropic missions. In 1994/95, the total expenditure made by these agencies in the health sector amounted to Rs. 10.94 billion (table 4.12), equivalent to 5.3 percent of GDP. This level of health expenditure/GDP ratio is substantially higher than in Bangladesh and Pakistan. Among the South Asian countries, only India, which spends approximately 6 percent of its GDP on health, exceeds the ratio for Nepal. Households provide, by far, the largest share of the health expenditure funds, while the government, development partners and donors, and the profit-making private sector accounted for much smaller levels. Of the total health expenditure of Rs 10.94 billion for 1994, households accounted for over 76 percent (Rs. 8,278.6 million). Development partners and international donors accounted for 14 percent (Rs. 1,505.04 million), and the government for 10 percent (Rs. 1,160.93 million). Within the government, the MOH accounted for over 90 percent of the public sector health expenditure. The remaining portion was allocated by the Ministry of Defence via the Army Hospital, by the Ministry of Home via the Police Hospital, and by the Ministry of Education via the Tribhuvan University's Institute of Medicine. In 1994, per capita health expenditure was Rs. 538.35 (US$ 11.0). Of this, households spent nearly 400 rupees. The share of the government was approximately 57 rupees and the share of

Table 4.12

Level of total health expenditure by source, 1994/95

Expenditure by In million Rs. source 8,278.60 Private Sources 8,102.10 Households 176.50 Private enterprises 1,505.04 External Sources1 1,360.72 Donors/development partners 101.29 INGOs 43.03 NGOs 1,160.93 Government Sources 1,079.40 Ministry of Health 1.00 Ministry of Education 52.13 Ministry of Defence 28.40 Ministry of Home Total 10,944.57

Percent 75.65 74.04 1.61 13.74 12.43 0.92 0.39 10.61 9.86 0.01 0.48 0.26 100.00

Per capita expenditure 407.20 398.53 8.68 74.03 66.93 4.98 2.12 57.11 53.10 0.04 2.56 1.40 538.34

Source: ADB 1994.

69

development partners and donors 67 rupees. The contribution of INGOs and NGOs was approximately 7 rupees, and the share of the private sector was close to 9 rupees.

4.7.1 Public expenditure As noted, the MOH administers over 90 percent of the health expenditure in the public sector. Between 1991/92 and 1996/97, it increased approximately four-fold at current prices and twofold at real prices. MOH expenditure as a percent of the total national budget grew from 3.47 percent in 1991/92 to approximately 6 in 1996/97. However, as a percent of GDP, this amount still accounts for slightly more than one percent only.

4.7.2 External sources A large part of the country’s development expenditure is met through international assistance. The health sector is no exception. International assistance to the health sector, as a proportion of total governmental expenditure on health, ranged from 36 percent in 1991/92 to 49 in 1994/95. However, of the total flow of international assistance in 1994/95, only 4 percent was allocated to the health sector.

4.7.3 Private enterprises The financial investment made by the private sector organisations, in recent years, has been substantial. The share of health services delivered by the private sector through nursing homes and hospitals, particularly in the urban areas, has been growing. Illustratively, the private sector, which started with 2 nursing homes in 1985, comprised 45 functioning nursing homes in 1996. The number of beds in the nursing homes also grew from 10 to 1126 during this period. Many nursing homes are well equipped. It is estimated that 4-5 thousand sick persons receive medical services a day in the outpatient departments of private nursing homes (MOH 1996b). Expenditures made by nursing homes in 1994/95 amounted to Rs 37.67 million. The combined expenditure figure for the private sector (nursing homes, private diagnostic centres, private pathological laboratories) in the health sector is estimated to be Rs 130.69 million in 1994/95. Drug retail outlets are very largely privately owned as well. No attempt has yet been made to estimate the expenditures made by the private manufacturing establishments in the health sector. A preliminary

70

survey carried out by the ADB in three districts, however, shows that these establishments make significant investments in drug and equipment manufacture. Except for the manufacturing sub-sector, health benefits arising out of the private sector investments are very largely limited to the middle and upper income group residents in the urban areas. Further, they are exclusively concentrated in the provision of curative and specialised services. Some such enterprises, some nursing homes in particular, are motivated by short-term financial benefits accruing out of governmental incentives − which provide for preferential import customs duties − to such enterprises. The rate of closure of nursing homes, therefore, has been high. Between 1984 and 1996, 16 nursing homes stopped functioning after a short duration.

4.7.4 Private household expenditure Household expenditures for health include payments made by households for drugs and health services available at hospitals, health clinics, mobile clinics, private nursing homes, and private visit by doctors, pharmacies, INGO/NGO facilities and traditional medical outlets. As noted, household expenditure in health amounted to Rs. 8,102 million in 1994/95. Health expenditures accounted for 6 percent of the total household expenditures (CBS 1996). This represents an increase in health expenditure by households compared to 1984, when households spent approximately 4 percent (of their total expenditure) on health. A large proportion (59 percent) of the household expenditure on health is spent on accessing governmental health care outlets and for the procurement of drugs prescribed by such outlets (table 4.13). Slightly more than one-third of all household health expenditure is spent on private outlets. Only 5 percent is spent on “traditional” (see 4.3.2) outlets. Despite the fact that MOH administers only 10 percent of all governmental health sector expenditures, popular reliance on governmental health care services is very high. (The MOH, of course, also mobilises much of the resources contributed by developmental partners and donors and, to a much lower extent, the contributions of the INGOs and NGOs.) As noted earlier (table 4.4), in 1995, governmental outlets served 2.9 million persons. The cost structure by outlets, in addition, also highlights the low-cost nature and preference for, and legitimacy of, “traditional” outlets.

NEPAL HUMAN DEVELOPMENT REPORT 1998

4.7.5 Non-governmental organisations The financial contribution made by the INGOs and NGOs in the health sector is often underreported (as is apparently the condition with the information reported in table 4.12). A recent survey shows that 18 INGOs spent a total of Rs. 386.02 million in 1994/95 on health-related activities. Among the INGOs, the United Mission to Nepal alone spent Rs. 177.72 million on community health care, hospital assistance and TB control activities. Of the 18 INGOs, 10 are working in primary health care activities in different parts of the country. Such activities range from primary health care to child survival, family planning, reproductive health services, AIDS and STD control and eye care. In addition, according to a case study, 32 NGOs spent a total of Rs. 284.67 million on health-related activities in 1994/95. Among the NGOs, the Nepal Red Cross Society contributed the largest amount, followed by the Family Planning Association of Nepal.

4.7.6 Quality of health sector expenditure Per capita governmental expenditure (inclusive of both regular and development expenditure) allocated to the health sector was Rs. 284 in 1996/97. The overall allocation was less than half of the allocation for the police and defence put together. Measured as a ratio of the total government expenditure, allocation for health was approximately 6 percent. While this represents a doubling of the allocation ratio compared to 1985/86, the distribution of funds over the priority and non-priority areas have remained constant. More than 40 percent of the governmental health sector expenditure continues to be allocated to the maintenance of hospitals and curative health care (see annex 14.1 for definition of priority and nonpriority areas and section 14.2 for trends of budget allocation to the priority and non-priority areas).

4.8 KEY POLICY ISSUES AND ACTIONS REQUIRED Promotion of health has remained a salient dimension of public policies for two decades. Health was already identified as a basic need in the mid-’70s (e.g., in the fifth- 1975/76-1979/80 development plan). A 15-year long-term Health Plan (1975-90) was prepared for the promotion of health. The 1978 Alma Ata conference provided a new impetus to prioritise primary health care, and

HEALTH

Table 4.13 Annual household expenditure on health by outlets, 1994/95 Health/medical outlets Governmental outlets Hospitals Clinics Mobile camp Sub-total Private outlets Pharmacies Home visits Other private facilities Sub-total INGO/NGO outlets “Traditional” outlets Total

Million Rs

Percent

2,225.01 2,448.44 104.71 4,778.21

27.46 30.22 1.29 58.97

540.44 119.78 2,176.46 2,836.69 68.61 418.60 8,102.11

6.67 1.48 26.86 35.01 0.85 5.17 100.00

Source: ADB 1994.

subsequent health sector plans in the country have had some imprints of the declarations made there. The Basic Needs Programme enunciated in 1985 was committed to provide universal primary health care for all by the year 2000. In conformity with the 1990 declarations of the World Summit for Children, the country also developed a tenyear (1991-2001) national plan of action for children which prioritised health, education and water supply and sanitation. Similarly, a new health policy, which prioritised access to public primary health services, was announced in 1991. The policy, in addition, prioritised access to multi-level and potentially well-integrated preventive and promotive health care, as also to community participation and local resource mobilisation in the health sector. It also entailed the promotion of ayurvedic, “traditional” and other medical systems and a revamping of the public health organisation and management system. The 1991/92-1996/97 eighth development plan sought to implement these priorities as well. While the level of overall expenditure remains inadequate, and needs to be increased, the existing level is by no means extremely low. As noted, the level is one of the highest in South Asia. Indeed, the existing level of per capita expenditure on health falls only marginally below the average for the “least developed” countries. Households, in particular, allocate a substantial portion of their income on health. Such policies, investments and programme implementation designs have led to significant achievements. Access to health facilities, including in the rural areas, is increasing. Some categories of epidemics have been brought under control. Life expectancy is increasing. Mortality

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rates − whether among the infants and children, mothers or the population as a whole − have declined considerably. Yet, the level of deprivation is still extremely high. The rate of progress, too, has been extremely slow. Improvements in health in the last two decades, in addition, have been highly unequally distributed across the regions, rural and urban people and income groups. In addition, a review of the trends of the last decade indicates that, in the absence of a re-prioritised set of public health interventions, inequities in the status of health and health-related capabilities will continue to widen even more sharply. The very low emphasis on reducing the extremely high maternal mortality ratio, in particular, also shows that health interventions continue to incorporate a distinct gender bias. Reduction of such deprivations will call for a number of interventions.

constitutionally. In other words, a political agenda for universalising primary health care must recognise that primary health care is a fundamental right of all citizens. Such recognition, in turn, must manifest in the form of a constitutional amendment. All political organs, e.g., the executive and the legislative branches of the government, political parties, local representative bodies, trade unions and other professional associations, etc. must actively promote such an amendment to the constitution. The implementation of universalisation, in turn, presents a huge challenge. All secondary and tertiary objectives, long-term, periodic and annual macro as well as sectoral plans and outlays, and institutional structures and inter-sectoral linkages must be rendered consonant to this overriding goal. Many of the established regimes of health promotion, too, must change.

4.8.1 Universalising primary health care

4.8.2 Recognising and intensifying inter-

sectoral linkages Universalising primary health must become the fundamental goal of health policy. All other goals and objectives must be given a secondary (or tertiary, as the case may be) significance. While primary health care, as noted, has been emphasised in the existing policies as well, the emphasis has been much too diluted because the secondary and tertiary objectives − and entrenched lobbies which pursued such objectives − competed for priority attention. Thus, despite the professed emphasis on primary health, there has been little de facto prioritisation. Under the existing de facto prioritisation scheme, hospitals and infrastructural programmes continue to be allocated a large share of the MOH and development partner/donor funds. Illustratively, for the last several years, approximately 20 percent of the MOH budget has been allocated to a single hospital. If primary health care is to become the fundamental objective of health policy, such muddled “prioritisation” must cease. The MOH, however, cannot universalise primary health care by itself. This is an objective that demands national priority. That is, such a priority cannot flow out of sectoral, or even central-governmental, enunciation of policies. As such, and at the first level, it demands national political commitment. That is, such a commitment cannot authentically flow out of the transient and soft developmental policies alone, nor from the periodic plans or annual budget statements and outlays. Such prioritisation and commitment, instead, must flow out of, and be concretised,

72

Health is far more than medicine. This truism, however, is often lost within the governmental system as a whole. This is particularly the case within the MOH. Run predominantly by physicians over a long period of time, health has lost much ground to medicine within the MOH. At the personal level, few physician-administrators within the MOH would disagree that intensification of intersectoral emphases would benefit the promotion of health. Such issues, however, are marginalised at the medicalprofessional level. Finally, at the institutional level, such emphases are almost as good as lost. Thus, within the MOH structure, and illustratively, the institution-level concern with the extremely salient and broad issue of nutrition has been segmented and reduced to a concern for deficiencies in iodine and Vitamin A. While such concerns may be entirely legitimate, the solutions sought and being implemented are very narrow. More importantly, protein energy malnutrition (PEM), despite the staggering deprivation reported in section 4.2.3, is not regarded as an institutional concern of the MOH. Indeed, the draft-stage Second Long-Term (1997-2017) Health Plan (MOH 1997b) remains totally silent on inter-sectoral coordination. In fact, healthnutrition linkage does not find even a bare mention (cf. Mishra 1997). Such a narrowly sectoral and technocratic regime cannot foster the promotion of health. Promotion of health requires new modes of

NEPAL HUMAN DEVELOPMENT REPORT 1998

organising institutions. Intersectoral coordination is the essence of such institutions. They may also demand the development of new institutions. Promotion of health, at the least, requires a coordination of policies and actions among the ministries of health, agriculture, education and agencies looking after drinking water and sanitation. In addition, they require coordination with representative bodies and other institutions at the local levels.

4.8.3 Engaging local bodies and community Implementation of the idea of universalisation of primary health care requires policies and actions which can promote active engagement of the local representative bodies, political parties, and many other community institutions (see chapter 11). But bureaucracies of the day are inherently illequipped, by themselves, to promote primary health care at the local level. Such engagement cannot flow out of bureaucratic good will either. Only local institutions, under enabling conditions, can promote organised demands for primary health care, and only such institutions can effectively and continuously monitor effective access to primary health care. Community engagement, not health delivery, can potentially ensure universal primary health care The promotion of local institutions, representative bodies in particular, for the promotion of primary health care (as also for local action on other human developmental fronts) requires, in the first instance, empowerment of such bodies. Such empowerment, once again, has to flow out from the constitution itself. Devolution, however, and at best, is only hinted upon in the constitution. Existing laws on devolution (e.g., the 1991 VDC, municipality and DDC acts), on the other hand, have serious shortcomings (see chapter 11). Empowerment of local bodies alone, however, is not sufficient. They need to be fully supported as well. In addition, recent policy emphases (such as those in the draft-stage Second Long-Term Health Plan) which seek to force the ultimate responsibility for primary health care on the communities are highly inappropriate (Mishra 1997). Such emphases constitute blatant attempts at absolving the state from its responsibility of making primary health care available to all and seek to obfuscate the fact that what they are after is a much enhanced presence of the private, profitmaking, sector in the primary health care front.

HEALTH

Within the domain of health, in addition, there must be a much more intense engagement between the “modern” and the “traditional”(or local) systems. MOH initiatives on the FCHVs and the training of local birth attendants have had productive results. Such initiatives need to be intensified and expanded. However, the modern sector should not focus exclusively on incorporating the traditional sector within itself. Instead, the opportunity and process should be utilised for mutual learning and exchange. In particular, the modern sector can learn much from the traditional sector about the value of the use of locally available medicinal herbs and low-cost intervention strategies.

4.8.4 Ensuring food security The extremely high incidence of PEM not only highlights an extremely high level of human deprivation but also provides the evidence that the existing interventions for health promotion are puny and misdirected. Efforts, therefore, must be made to enhance agricultural production and productivity at the household level. These entail both organisational and technological reforms (chapter 6). In addition, transportation and marketing systems need to be expanded and made more efficient. A sincere implementation of the APP can, in this respect, be highly fruitful. Expansion of employment opportunities is also germane to enhancing food security (chapters 7, 11). Sharply targeted public food distribution systems can go a long way in reducing PEM. For the extremely deprived, public distribution needs to be subsidised as well. While the market has to play the predominant role, access to the minimal level of food security must become a public responsibility. Local bodies and institutions, in addition to the (central) government, can play a significant role on this front (chapter 11). Provision of mid-day meals in schools can also be a useful supplementary intervention.

4.8.5 Investing additional resources and enhancing efficiency As noted, household contributions make up threefourths of the total health expenditure. The scale of governmental investments in the health sector in general and primary health care in particular, on the other hand, remains low. Low governmental expenditure in the health sector is primarily rooted in a traditional regime which make health an

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almost exclusive concern of the household. Education, illustratively, is a far more public issue than health. Public health, on the other hand, needs to be brought into the public domain. The low but consistent expansion of the health sector budget within the last half-decade does, however, indicate that the process of bringing health into the public domain might have begun. The ratio of governmental allocation to the priority sectors in health needs to be increased. A firm implementation of the tax regime in relation to the private health sector can generate additional revenues. In addition, the existing preferential rate of tax assessment for physicians, under which their personal income is taxed at the rate of 5 percent only, must be revoked. Local bodies, in addition, need to provide more funds to primary health care. Local bodies also need to be more active in collecting, disseminating and discussing health-related information at the household and community levels (see chapter 11). In addition, they need to generate organised political pressure for a higher level governmental allocation to the local subhealth posts. Intersectoral and inter-level coordination will enhance both effectiveness and efficiency substantially. In addition, financial as well as cost efficiency can be increased by developing and implementing an essential drugs policy and mandating user-payment for non-primary health care in governmental outlets. Efficiency can also be enhanced by expediting the implementation of health projects according to schedule. The administration of health projects, it should be emphasised, has remained extremely tardy.

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4.8.6 Producing more and appropriate health workers The very high rate of absenteeism among the medical and paramedical staff in almost all areas of the country, excepting the Kathmandu Valley, has remained a matter of perennial concern for successive governments. Most measures taken to counteract absenteeism have failed, and there is, at present, a continuing impasse as well. Health promotion has become a victim of market and greed. While administrative firmness − which has been seriously lacking − and “incentives” can alleviate absenteeism to some extent, enhanced production of appropriately qualified health workers appears to be the only long-term solution. The overwhelming emphasis of medical education and training, therefore, must be focused on the production of low and medium grade health workers. In this respect, the elitist, class-based and medical-professional bias, which led to the abandonment of the earlier system of medical training at the teaching hospital of the Tribhuvan University, must be struggled against and the old system restored. The fact that the system abandoned here has been recently introduced in teaching hospitals in a number of other countries which are seeking to expand their primary health care system must not be lost sight of. In addition, a much higher level of investment must be made on the training and retraining of Female Community Health Volunteers (FCHVs) and village and district level health workers.

NEPAL HUMAN DEVELOPMENT REPORT 1998

CHAPTER 5

Education Development does not start with goods; it starts with people and their education, organisation and discipline. E. F. Schumacher 1975 ... Education must be universal. It must reach all the people.... free... compulsory ... and [adapt to] individual differences …. Education in Nepal: Report of the Nepal National Education Planning Commission 1956 ... Colloquial Nepali makes a very clear distinction between “knowledge from experience” and “knowledge out of books”.... Both ... are necessary for human learning process, but, at the same time, one seems to exclude or repulse the other. It seems that a great conscious effort is needed to fill out distanced knowledge (padhera) with experience and engagement (parera). Rudolf Hogger 1997

5.1 EDUCATION AND HUMAN DEVELOPMENT nowledge − broadly defined and including attitudes and skill − is one of the fundamental capabilities that a person needs to make sense of oneself and of the world one is living in. It enables one to comprehend, compare, analyse, communicate, relate to, act upon and assess the self, the nature and fellow human beings. It also enables one to establish linkages between the past, present and future, between the public and the private and between the self and the world (Mills 1959). It helps one to re-learn, re-assess, re-act and to change oneself and one’s world (box 5.1). Knowledge is analogously fundamen-tal to the functioning of a society. That is why all societies develop multiple structures and agencies for the generation, validation and transmission, including inter-generational transmission, of knowledge-systems, knowledge, attitudes and skills. In modern societies, formal schooling and schools have emerged as the prime structures and agencies for the transmission of knowledge. This, however, does not imply that schools are the only channels open for the acquisition of knowledge. There are

K

EDUCATION

many other structures and agencies which impart knowledge, e.g., the family, religion, mass media. The workplace is an important knowledge-related agency for adults. Nonetheless, for the formation and enhancement of basic knowledge-related capabilities of the young, schools have emerged as the most significant transmitters of knowledge, including attitudes and skills. This is the case in Nepal as well, despite the fact that it has a relatively short history of formal schooling.

5.2 LITERACY AND PRIMARY SCHOOLING Literacy is a singularly significant human capability. It opens access to the printed (and audio and visual) world (and word) and to the preservation, systematisation, manipulation and transmission of symbols in a way which would not be possible within the oral tradition. Literacy opens up communication beyond the primary group. Literacy also opens up windows for education at upper levels.

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Box 5.1

Jean Drèze and Amartya Sen on the value of education

Education ... can be seen to be valuable ... to ... a person in at least five distinct ways. 1. Intrinsic importance: Being educated ... is [a] valuable achievement[...] in [itself], and the opportunity to [gain it] can be of direct importance to a person’s effective freedom. 2. Instrumental personal roles: A person’s education ... can help him or her do many things − other than just being educated ... that are also valuable. [It] can, for instance, be important for getting a job and more generally for making use of economic opportunities. The resulting expansion in incomes and economic means can, in turn, add to a person’s freedom to achieve functionings that he or she values. 3. Instrumental social roles: Greater literacy and basic education can facilitate public discussion of social needs and encourage informed collective demands (e.g., for health care and social security); these in turn can help expand the facilities that the public enjoys, and contribute to the better utilisation of the available services. 4. Instrumental process roles: The process of schooling can have benefits even aside from its

explicitly aimed objectives, namely formal. For example, the incidence of child labour is intimately connected with non-schooling of children, and the expansion of schooling can reduce the distressing phenomenon of child labour.... Schooling also brings young people in touch with others and thereby broadens their horizons, and this can be particularly important for young girls. 5. Empowerment and distributive roles: Greater literacy and educational achievements of disadvantaged groups can increase their ability to resist oppression, to organise politically, and to get a fairer deal. The redistributive effects can be important not only between different social groups or households, but also within the family, since there is evidence that better education (particularly female education) contributes to the reduction of gender-based inequalities. These influences need not work only for the person who receives education.... There are also interpersonal effects. For example, one person’s educational ability can be of use to another (e.g., to get a pamphlet read, or to have public announcement explained.... From Drèze and Sen 1995, pp. 14-15.

Education in public primary schools is “ tuition free”. Most public primary schools, however, do charge some non-tuition fees to meet various expenses of the schools (see the section on financing below). Textbooks are also free for all the children up to grade three. Besides, children in the designated “remote areas”, which cover all of the mountain districts and some of the districts and VDCs in the hill region, as also all fourth and fifth grade girl

children, receive free textbooks. These measures are seen by the government as constituting the key steps towards the universalisation of literacy and primary education. On the other hand, private primary schools are free to charge tuition and other fees at market rates.

Box 5.2

What is literacy?

Census data, collected systematically since 1952/54, have been the main source of information on literacy. For the censuses of 1952/54, 1961 and 1971, literacy was defined as the ability to read and write in any language. The 1981 census, however, defined literacy as the ability to read and write in any language with understanding. The 1991 census made a further improvement and defined literacy as the ability to read and write with understanding and to perform simple arithmetic calculations (Manandhar 1995, p. 376). The Central Bureau of Statistics (CBS), however, cautions that it was not able to administer a functional literacy test during the censuses and that the reported literacy figures may overestimate functional literacy. CBS suggests that biases may be caused due to reporting or enumerator errors or due to parents who exaggerate the degree of literacy achieved by their children. CBS further notes that reported literacy rates throughout Asia are usually exaggerated − in relation to functional literacy − by 10 to 25 percent (IEES 1988).

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5.2.1 Literacy status The literacy rate (see box 5.2 for definition and usage) has increased slowly but progressively over the last 45 years (table 5.1). Starting from the extremely low 5 percent literacy ratio, the

Table 5.1 Literacy rate by ecosystemic and developmental regions, 1996 Population 6 years and older Male

Female

Total

Development Region Eastern Central Western Mid-West Far West

54.20 50.19 58.24 46.94 48.98

29.57 20.75 32.82 17.60 14.85

41.80 35.21 44.47 31.89 31.31

Ecosystemic Region Mountains Hills Tarai

43.44 61.75 45.44

13.42 31.00 19.92

27.73 45.51 32.61

Source: CBS 1997.

NEPAL HUMAN DEVELOPMENT REPORT 1998

ratio in 1997 has climbed to approximately 40 percent. Literacy among the 6-14 year age group is much higher: 77 percent of the boys and 56 percent of the girls in the 11-15 year age group are literate compared to 29 percent and 2 percent among those above 60 years of age. Increasing literacy has been possible both due to the increasing popular demand for literacy as well as the responsiveness of public policies and investments. The National Educational System Plan, which was implemented since 1971, created the conditions leading to initial spurt in growth in the literacy rate. Investments in education, primary education in particular, have continued to show gains since. Despite the gains, however, the national literacy rate is very low. Only two out of five persons are literate. Two-thirds of the total population, thus, remain deprived of the basic capability of literacy. While more than one-half of boys and men are literate, only one of four girls and women is literate − despite the fact that literacy among girls and women, in terms of percentage ratio, grew much faster than for boys and men (figure 5.1). Gender differences in other domains of life, thus, is being reconstituted in differential access to opportunities to literacy. Access to opportunities to literacy is highly unequal between the urban and rural areas and

Table 5.2

Boys Girls Total

the ecosystemic and developmental regions of the country. The literacy rate in 1991 was 37 percent in the rural areas while it was 67 percent in the urban areas. Literacy rate was lower in the Mountains and the Tarai compared to the Hills, and the mid-western and far western regions had a considerably lower literacy rate than the three other developmental regions (table 5.1). Furthermore, there is a large number of districts, primarily in the mid-western and far western regions where literacy ratios are in the 20 -30 percent range. In addition, literacy is highly unequally distributed among the various caste and ethnic groups. The high-caste groups and a few of the smaller ethnic groups are located in the upper literacy-ranges while the lowest-caste groups are relegated to the bottom of the literacy hierarchy (figure 5.2).

5.2.2 Student enrolment, drop-out, repetition and promotion Children under 15 years of age constitute about 43% of the total population. Approximately 20 percent are under 6 years of age. According to a projected estimate of population for 1995 (CBS 1994), a little more than 2.7 million (13.1%)

Primary school-age children and enrolment rates, 1995 Total number of children in agegroup (6-10) (a) 1,477,687 1,381,269 2,858,956

Number enrolled

Number not in school

Gross enrolment rate (b/a*100)

Net enrolment rate (a-c/a*100)

(b) 1,961,410 1,301,640 3,263,050

(c) 314,268 613,756 928,024

132.7 (100) 94.2 (72) 114.1 (86)

78.7 (67) 55.6 (46) 67.5 (57)

Source: MOE 1997c. Figures within parentheses are 1996 NERs and GERs calculated from CBS 1997c.

EDUCATION

77

children belong to the primary school age cohort (6 to 10 years). Only about three-fourths of these children (72%) are enrolled in schools (NPC/UNICEF 1996b; also box 5.2). Approximately 928 thousand children 6 to 10 years of age do not have access to opportunity for primary education. A very large number of children, thus, are denied opportunity even to get enrolled in schools and to acquire the basic capability of literacy. On the other hand, the record of gross enrolment percentage over a decade (1985-1994) does show that there has been a gradual improvement in school enrolment rates. Enrolment in primary schools nearly doubled from 1.75 million to 3.26 million between 1984 and 1995. (The number of primarily schools and teachers has also nearly doubled during the period; see 5.2.3.) For 1995, the primary school gross enrolment rate was 114 percent, showing that a large number of underage and/or over-age students were enrolled in primary schools. The high gross enrolment ratio may also be taken as indicating that primary education is highly valued by children and/or parents. On the other hand, the low ratio of net enrolment, at only two-thirds of the appropriate age-group population, shows that a large number of children are deprived from enhancing their educational capabilities at a very early age, even before they enter the primary level1. Gender-based inequality in enrolment has remained a persistent feature of the primary education system. In 1995, of the 928 thousand children not enrolled in schools, approximately two-thirds were girls. Of the total number of children enrolled at the primary level, 60 percent were boys compared to 40 percent of girls (table 5.2). Access to literacy and further education, thus, remains extremelyunequally distributed by gender. In addition, systematic discrimination against enrolment of girls in primary schools exists in all geographical regions and social groups, including in the urban areas. In addition, and despite the increasing rate of primary school enrolment, the rate of repetition as well as dropping out (defined as failing to attend schools continuously through the primary level) of the primary grades is very high. The rates of promotion − within each primary grade − as well as of completion of primary education, as a corollary, are very low. Using the 1994 rates of promotion, repetition and drop-outs, it is expected that of the total students enrolled in 1994, 63 percent will drop out from primary school before the completion

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Box 5.3

Reliability of enrolment and literacy data

The gross and net enrolment rates for 1995 reported by the Ministry of Education (MOE) and the Central Bureau of Statistics (CBS), both of which are government organs, are drastically different (table 5.3). The literacy rates reported by the two sources have also been discrepant (table 5.1). Neither the MOE nor the CBS (or its parent body, the National Planning Commission) has seen it fit to clarify this discrepancy. The MOE data are based on the information that the ministry receives from schools while the CBS data are based on a representative national sample survey of 3,388 households. The MOE data have been utilised both nationally and internationally. But the new rates reported by CBS, which are likely to be more reliable, have exposed the risks of relying on institutional sources alone − the staple of the MOE. On the other hand, reliable data on basic indicators such as net and gross enrolment rates are extremely important for the formulation of appropriate and sensitive public policies and for effective and efficient management of resources and activities. It should be emphasised here that while the present study consistently reports − and bases the textual discussions on − the MOE data for reasons of consistency and congruence (in relation to public policymaking and programming), there are a number of salient grounds to question the reliability of the MOE data. For this reason, while reporting data on enrolment at the primary, lower secondary and secondary levels, both the MOE and CBS figures have been reported. Given the key significance of the data on literacy, enrolment, etc., it is of vital importance for the different public organs to explain divergences existing at present and to develop uniform definitions and data collection procedures for the future.

of primary grades. Only about 37 percent of the primary school-age children are expected to complete their primary education within a period of 5 to 13 years. Only 10% of children enrolled in grade one are expected to complete primary school without repeating1 any grade. According to the 1995 MOE data, the annual drop-out rate in the first grade is 21 percent and the repetition rate is 42 percent. Only about 38 percent are promoted to the next higher level. The annual drop-out rate at grade 5 is 16 percent. Approximately 17 percent repeat the fifth grade. Only 37 percent of girl children, compared to 38 percent of boys, are expected to complete the primary level within 5 to 13 years (table 5.3). Dropping out of primary grades for a year or two − and rejoining the school later − is considered to be normal by many parents (NPC-UNICEF 1996b). High drop-out and repetition rates can be attributed to a number of causes. The more significant among them are:

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 5.3

Promotion, repetition and drop-out rates at primary grades, 1994 ( percent)

Promotion Grade 1 2 3 4 5

Total 37.6 70.1 77.3 73.2 67.0

Repetition Girls 37.0 71.1 77.8 75.4 66.8

Total 41.9 18.9 17.0 16.9 17.4

Drop-out Girls 40.5 19.1 15.8 16.9 16.8

Total 20.6 11.0 5.7 9.9 15.6

Girls 22.5 9.8 6.3 7.7 16.5

Note: Unlike in many other countries, the primary level of education in Nepal is completed in five years. Source: MOE 1997.

•

•

•

•

Household work burden of children. Many children, particularly girls, are involved in household chores and family farms (chapter 6). Involvement in work is intense during the peak agricultural seasons. Not only does this increase absenteeism in schools (5.2.4), but it also means that many children cannot keep up the required study schedules at home and, as a result, do not feel academically comfortable in schools. Daily attendance in the first and second grades, partly due to these reasons, is in the 55 percent-70 percent range (NPC-UNICEF 1996b). The attendance rate of boys is marginally higher than that of girls. Irregularity of school operation. Many schools are lax in strictly implementing seasonal, daily and periodic school and class hours. Often, at least some of the teachers are missing. As a result, most schools do not run for the mandated 180 days in a year. Furthermore, despite the fact that a school day is mandated to run for six hours, primary grades, on the average, run only for three hours/ day and the secondary schools run for four hours/day (NPC-UNICEF 1996b). Income poverty. Despite the fact that primary schooling is “free”, households do have to incur some direct financial costs in sending their children to schools (see the section on financing). A large number of households, extremely incomepoor as they are, find it impossible to incur these costs. Physical distance. While the average home-school physical distance has been drastically cut in the last two decades, they are located at a relatively longer distance for a significant proportion for the primary school-age children. This is particularly the case in the mountain

EDUCATION

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•

•

region as well as in some areas of the hill region. Low perceived relevance of education. Many parents perceive literacy and education to be of low relevance to an enhancement of the values of daily work and social lives. Householding, subsistence agriculture and agricultural wage work, perceived as immutable routines of life, including the future adult life of the children, are seen to be connected only marginally, if at all, with literacy and education. Standardised textbooks, which highlight non-local and urban themes, buttress such a perception. The limited access of the literate to nonagricultural jobs and unemployment among the literate support such a perception further. Among some parents, therefore, the level of psychological distance from schools and schooling remains high. Caste and ethnic discrimination. Most communities, schools, teachers and fellow students harbour and express attitudes and practice which are discriminatory − to various degrees − against particular caste and ethnic groups. Negative attitudes and practices prevail intensely against children belonging to the lowest-caste groups. Such attitudes and practices also contribute to a high drop-out rate. Neglect of mother-tongue in school. Nepali language, which is mother tongue to only slightly over one-half of the population, is the medium of instruction in all primary schools. In addition, all students are obliged to study Nepali language as a separate course. In this setting, children whose mother tongue is not Nepali find themselves to be handicapped learners. Their continuation and performance in schools, as a result, is likely to suffer.

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5.2.3

Under-aged children. A significant proportion of the primary-level students, particularly those in the first grade, are under-aged. Often, in such instances, an appropriate-age school-going child in effect is more or less regularly called upon by parents to “baby-sit” an younger sibling at school. School authorities generally do not discourage such a practice and formally enrol the under-age child in the school − not the least because government grants and allocation of additional teachers to schools depend, in part, on the number of students enrolled. The high drop-out and repetition rates, thus, also reflect the under-achievement of the under-age children. Such “babysitting” also harms the educational performance of the appropriate-age child.

Students, schools and teachers

Provision for primary education has been a salient concern of state policy and action in the last 25 years − in addition to a rather lukewarm concern for pre-primary education (box 5.4). In

Box 5.4

Access to pre-school education

Pre-school education remains a nearly exclusive domain of the private sector − and, generally, the urban residents − with the exception of the Shishu Kakshyas (nurseries) of the Basic and Primary Education Project of the Ministry of Education. A total of 781 Shishu Kakshyas are being run in 36 of the 40 project districts. Most private schools are likely to run pre-school classes. As such, a minimum of 3,000 pre-schools may be operating under private management. The total number of pre-schools, however, is puny in relation to the number of primary schools. Opportunity for early-childhood education, thus, is not available for the vast majority of children. Studies, on the other hand, have shown not only that children who attend pre-schools tend not to drop out from primary schools but also that their performance at the primary level is better (CERID 1997a,b). The government has not yet framed a clear national policy regarding pre-school education. Nor has it assumed the responsibility of supervision of existing private preschools. While the Ninth Plan (1997-2002) has made a provision to raise the number of the Shishu Kakshyas to 10,000 by 2002 (NPC 1997), this is merely an ad hoc arrangement. On the other hand, a much more involved and systematic public policy is called for in relation to preschool education. Among others, the groundwork for such a policy should investigate and weigh the relative human developmental benefits of publicly subsidised secondary and tertiary education, on the one hand, and publicly subsidised pre-school education, on the other.

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consequence, the number of primary schools and primary-level teachers has expanded considerably. Overall, the number of primary schools increased three-fold between 1971 and 1995 (from 7,634 to 21,473; MOE 1997c). Between 1991 and 1995, on the average, 600 new primary schools were added each year, and the number of primary school teachers nearly doubled between 1984 and 1995 (from 46,484 to 82,645).

5.2.4 Literacy through non-formal education Non-formal literacy, skill acquisition and education, as in most other societies, has a long history. Non-formal literacy programmes organized under state policies, however, are relatively recent in origin. At present, large-scale non-formal literacy programs are being implemented in the country. They can be seen as falling into two categories, i.e., those that cater to adults and those that cater to school-age children. The first category focuses upon literacy, and sometimes links it up with postliteracy as well as skill and income generation. The second category focuses upon the basic literacy of children who did not enrol in or dropped out of primary schools. While successive governments have taken a pro-nonformal literacy position, and made progressively larger investments in non-formal literacy and education, many of the programmes are sponsored and implemented by international and national non-government organizations and parastatal bodies as well.

•

Non-formal literacy programmes for school-age children

The non-formal education programs focus on out-of-school children between 8 and 14 years of age. While literacy per se remains an important objective of such programmes, such literacy programmes are also initiated as components of a wider rural development programme. The Seti Education for Rural Development project, which initiated the trend towards non-formal literacy for out-of-school girls, spotted illiteracy of young girls as one of the main impediments to rural development. The Cheli-Beti (Sisters/Daughters) Programme provided a model for other parts of the country. Since 1992, the MOE’s Basic and Primary Education Project (BPEP) has been the main provider of non-

NEPAL HUMAN DEVELOPMENT REPORT 1998

formal education to school-age children. The BPEP out-of-school literacy programmes organise nine-month non-formal literacy sessions in seasons and hours convenient to the learners. The graduates are eligible to enter, if they wish, the fourth grade in regular primary schools. While other out-of-school literacy programmes do not enjoy this particular privilege formally, local schools do use their discretion and generally enrol willing graduates to the fourth grade. A substantial number of organisations, including international non-governmental organisations, have remained active in organising and implementing out-of-school literacy programmes. There has been no systematic national-scale evaluation of the policy and performance of the literacy programmes for out-of-school children. Information on the levels of output and impact, therefore, is lacking. Nonetheless, informed analysts believe that the programme has helped a significant proportion of children to become literate. Such analysts also believe that the approach is appropriate, given the high illiteracy ratio among children and the inability of a large proportion of children to participate in the formal schooling system. However, the programmes are fragmented and piecemeal. Not only are many of such programs run on a project basis but the extent to which the state shall support it in the future is uncertain. Such programmes are also organised in relatively limited areas. For example, the largest initiative, the BPEP programme, is organised only in those districts where the project is being implemented. Thus, a large number of children who are deprived of formal primary education still do not have access to non-formal avenues of literacy and education.

•

Non-formal literacy and education programmes for adults

The adult literacy programme is much larger in scale than the out-of-school literacy programme for children. During 1992-97, nearly 1.4 million people registered in literacy classes, of which 934 thousand acquired literacy (Smith and Shrestha 1996). The government, including those at the district and local levels, as well as several parastatal bodies and many CBOs, national and international non-governmental organisations are involved in the programme. The number of national-scale non-government organisations and international non-

EDUCATION

governmental organisations involved in adult literacy programmes is estimated to be more than 500 (CERID 1997a). Some of the agencies operate at a large scale and run hundreds of sixmonth literacy sessions concurrently. Some have produced more than 50,000 graduates. Some others are rather small and focus on particular districts or particular settlements in a district. Some of these agencies are also involved in strengthening local non-government and government organisations and building their capacities in the field of non-formal education as well. Many of these agencies prioritise literacy and functional skills among women. While the adult literacy programme is seen to be fairly successful, whether it is adequately effective and efficient remains to be answered. One of the major shortcomings of these programmes is that there is little sharing of experience and mutual learning among the sponsoring and implementing organisations. There is little coordination among the disparate programmes. The government-led National NonFormal Education Council, the apex coordinating body, has been particularly ineffective. Of late, it has increasingly assumed an implementational role, which is contrary to its mandate. National-level coordination, which could add to the effectiveness and efficiency of the programme, as a result, has suffered. In addition, the participation of local people, political parties, and local representative and expert bodies in non-formal literacy programmes remains neglected. In the absence of these conditions, and despite the relatively large scale involvement of local people, government, and national and international non-governmental agencies, the social-political and organisational drive which could have pushed the programme forward in the form of a national movement has failed to materialise. In addition, concerns have been expressed that a significant proportion of neo-literate adults relapses into illiteracy after a couple of years due to the lack of use of literacy skills. While the scale of such relapse remains to be investigated, it can be reduced sharply only within the context of an engagement of such skills in the performance of daily tasks, e.g., agriculture, water and soil conservation, health promotion. A number of efforts which seek to combine themes on work, income generation, health promotion etc., on the one hand, and literacy retention, on the other, have led to excellent results on this front.

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Table 5.4

Lower secondary school-age children and enrolment rates, 1995

Total number of children in agegroup (11-13) 783,591 731,428 1,515,019

Boys Girls Total

Number enrolled

Number not in school

Gross enrolment (percent)

461,310 264,990 726,300

528,583 593,447 1,122,030

58.9 (46) 36.2 (31) 47.9 (39)

Net enrolment (percent) 32.5 (23) 18.9 (14) 25.9 (19)

Source: MOE 1997c. Figures within parentheses are 1996 NERs and GERs calculated from CBS 1997c.

5.3 ACCESS TO SECONDARY, TECHNICAL AND TERTIARY EDUCATION Enhancement of educational capability does not cease with literacy and primary schooling. Education at higher levels is increasingly becoming necessary for both intrinsic and instrumental reasons. Education at the secondary and tertiary levels and technical education, therefore, is of key significance for human development.

5.3.1 Secondary education The secondary education system is divided into three levels. The lower secondary level comprises grades 6-8 and caters to children who are 11-13 years of age. The secondary level comprises grades 9 and 10 and caters to children who are 14 and 15 years of age. The higher secondary level comprises grades 11 and 12 with the 16 and 17 year-olds as students. The higher secondary level is a recent innovation and is being gradually introduced. Most students, as of now, graduate from school after 10 years of successful performance. The 10-year school graduates normally earn graduation from universities after five years of study while the 12-year school graduates earn graduation from universities in three years.

•

Lower-secondary education

In 1995, only 26 percent of all children aged 1113 were enrolled at the lower secondary level Table 5.5

(table 5.4). Almost three-fourths of all children in this young age group thus remained deprived of education. The high repetition and drop-out rates at the primary level, as previously noted, are clearly expressed here at this level in the form of age-specific educational deprivation. Many such children, in effect, have already “lost” a couple of years of educational capability formation at this early age. A significant proportion of primary level graduates is deprived of opportunities to enrol at the lower secondary level as well. Only slightly more than one-third of all girls could access lower secondary education, in contrast to three-fifths of all boys. The extent of gender discrimination in access was far higher than at the primary level: for every 10 girls enrolled, the number of boys enrolled was 16 (or more). Increasing work burdens of girl children at home (including care of younger as well as older male siblings) − and thus higher “opportunity costs”, cultural and economic constructions related to the dispensability of educational capability for girls and women, etc., − appear to start impacting on the enhancement of girls’ educational capability at this early age and educational level. On the other hand, there has been a sizeable expansion of the lower secondary education within the last 25 years. The number of lower secondary schools increased by more than seven times between 1971 when there were only 677 schools and 1995 when the number of such schools increased to 5,041 (MOE 1997b). Between 1991 and 1995, on the average, approximately 200 new lower secondary schools were added each year. While the urban areas

Promotion, repetition and drop-out rates at lower-secondary grades, 1994 ( percent)

Grade 6 7 8

Promotion Total Girls 79.4 81.2 81.1 80.0 71.2 72.3

Repetition Total 13.2 11.1 18.9

Girls 13.2 11.0 17.9

Drop-out Total Girls 7.4 5.6 7.8 8.9 11.9 9.8

Source: MOE 1997c.

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NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 5.6

Secondary school-age children and enrolment rates, 1995 Total number of children in agegroup (14-15) 472,109 447,437 919,456

Boys Girls Total

Number enrolled

Number not in school

189,976 100,167 290,143

366,769 393,587 760,356

Gross enrolment (percent)

Net enrolment (percent)

40.2 (16) 22.4 (6) 31.6 (11)

22.3 (13) 12.0 (6) 17.3 (9)

Source: MOE 1997c. Figures within parentheses are 1996 GERs and NERs calculated from CBS 1997c.

attrition due to lack of adequate academic performance, increasing involvement in household and farm work as well as wage work and household income-poverty, and low degree of relevance of school education in terms of finding solutions to the problems faced in daily lives force many children to forego opportunities to secondary education. Even as process indicators within the secondary level do not show a pattern by gender (table 5.7), gender discrimination in access is very high as well: for every 10 girls enrolled, the number of boys enrolled is 18 (or more). The onset of adolescence, which marks the period of gender seclusion, early marriage and appropriate preparations for early marriage − and the ideology and practice of a dependent and nonautonomous marital life severely and systematically discourage continued enrolment of girls in secondary schools. In 1991, only 24 percent of all school graduates were women (Acharya 1997:16).

have been the primary beneficiaries of such expansion, a large number of rural areas have struggled and successfully established lower secondary schools within one-hour walking distance from the adjoining settlements. Process (i.e., promotion, repetition, dropout) rates at the lower secondary level show that students at this level fare far better than those at the primary level (table 5.5). Approximately three-fourths of all students at various grades in this level are promoted to the next higher grade. Repetition rate is fairly low and the drop-out rate is lower still − although both rates increase significantly at grade 8 compared to those at earlier grades. None of the rates, in addition, and highly significantly, are patterned by gender. All three rates, however, apply only to children who are enrolled at the level. Gender neutrality within the level does not imply that access to lower secondary education is equally available to boys and girls. The proportion of girls who enrol at the level is significantly lower than the proportion among boys.

•

•

Higher secondary education

Secondary education Higher secondary education, which comprises schooling at grades 11 and 12, is a new concept in Nepal’s educational history. Although the Higher Secondary Education Board was formed in 1989, it remained dormant until recently. This new level of schooling has two distinct streams − general and technical. The role of Higher Secondary Education Board is limited to overseeing the development of the general stream of this level of education. The Council for Technical Education and Vocational Training (CTEVT), on the other hand, oversees the

There has been a large expansion of secondary schools as well. Between 1971 and 1995, the number of secondary schools increased more than five-fold, from 494 to 2,654. Between 1991 and 1995, on the average, 110 new secondary schools were added each year. The distribution of additional secondary schools, however, shows a distinct urban bias. Among all appropriate-age (14 and 15 year-old) children, only about one-sixth enjoy such an access (table 5.6). Apart from the Table 5.7

Gradewise promotion, repetition and drop-out rates at secondary level, 1994 ( percent)

Grade 9 10

Promotion

Repetition

Drop-out

Total

Girls

Total

Girls

Total

Girls

76.8 -

80.4 -

12.0 18.3

13.6 20.8

11.2

6.1

-

-

Source: MOE 1997c.

EDUCATION

83

development of the technical stream (5.3.2). At present, education and training parallel to the higher secondary level in both the general and technical streams is also being offered at the Proficiency Certificate Level in Tribhuvan University. However, the government plans to gradually transfer this level to the higher secondary schools and the CTEVT. Students enter the higher secondary level as they successfully complete secondary education by passing the School Leaving Certificate examination at the end of the tenth year of schooling. The higher secondary level allows students entry into university education at the undergraduate level. Students in the general stream are required to pass two annual boardexaminations to be eligible for the entry into the university education. Specific provisions for university-level education for the technicalstream graduates have not as yet become very clear. Despite the recommendation of the National Education Commission (1992: 40) that “His Majesty’s Government should make special efforts to open higher secondary schools in remote and rural areas”, all of the 332 higher secondary schools currently in operation are not only owned and managed by the private sector but are also concentrated in urban areas and in the relatively better-off (figure 5.3). Furthermore, despite the recommendations of the commission that higher secondary education consists of five separate educational streams (i.e., general, professional, technical, polytechnic and Sanskrit education), only general education with specialised streams in education, humanities, science and management has been instituted. Approximately 40,000 students are

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currently enrolled at the higher secondary level (Board of Higher Secondary Education 1997b).

5.3.2 Access to technical and vocational education Given the low level of technology, the rather rudimentary level of division of skilled labour and the low rate of growth of the economy, an overwhelming proportion of technical manpower is produced informally, i.e., at households and communities − rather than in formal schools. The formal educational system, on the other hand, is overwhelmingly oriented to the supply of clerical and, to a certain extent, managerial rather than technical and vocational skills (IEES 1988). The latter orientation, in turn, has resulted in a short supply of technical manpower. The relative irrelevance of education, noted above, is also rooted in this lack of opportunities for technical education. Large-scale access to technical and vocational education, attempted under the NESP in 1971 and under the TVEC in 1979, is no longer operative. Technical education is currently offered through five approaches: •

•

To a minimum extent, it is offered through the general secondary schools. The purpose is to provide students a general orientation to various vocational areas. The curriculum of the general secondary schools at present consists of one subject (with a weightage of about 14%) as the vocational subject. Practical instruction and skill acquisition are almost absent. Under the CTEVT system, there are now nine technical schools in nine different subregions of the country. International assistance has been made available to meet the heavy cost of building infrastructure, installing the required machinery and training of personnel. In seven of these schools, students are paid stipends ranging between Rs. 300 and 475 per month. A grade-10 diploma is the prerequisite in order to enrol in these schools. The schools provide instruction in 16 different skills. Access to vocational training in the CTEVT schools is highly limited: in 1996, the nine CTEVT schools provided fullfledged specialist training to only 100

NEPAL HUMAN DEVELOPMENT REPORT 1998

Box 5.5

Training programmes implemented by government and parastatal agencies

The government implements a number of technical training programmes. The Ministry of Labour operates training programs in a variety of skills, e.g., painting, weaving, wiring, brick-making, fitting, welding and machine-shop and sheet-metal work. The Ministry of Industry, through its Department of Cottage and Village Industries, provides training in mechanical and electrical trades, textiles, carpentry, electricity, leatherware, knitting and tailoring. The department maintains training centres in all five development regions. The Ministry of Communica-

•

•

•

students (CTEVT 1996b). In addition, however, the schools provide annual short-term training to approximately 6,000 trainees on specific trades (CTEVT 1996a). The Council also affiliates privately owned and managed technical schools. At present, 118 technical schools affiliated with the CTEVT system are in operation. Besides the Ministry of Education, which oversees all of the educational initiatives noted above, other ministries, e.g., those of labour, women and social welfare, industries, communications, tourism and water resources also provide vocational training on related themes. Several national and international NGOs as well as private organisations are organising technical and vocational training programs on various skills (table 5.8). Tribhuvan University (TU), through its technical institutions, produces skilled technicians at the post-secondary level. These institutions offer programs at the proficiency certificate (equivalent to the higher secondary) level. Such centres of learning are distributed unevenly and tend to be concentrated in the eastern, central and western development regions. Limited access is also available to higher level technical studies.

5.3.3 Access to tertiary education Access to tertiary, i.e., post-school, education has been expanding within the last decade. Nonetheless, in 1991, only 0.83 percent of the total population had acquired a Bachelor’s degree by age 24. Only 0.44 percent of all

EDUCATION

tions organises training in telecommunications. Training on air traffic control and communications is provided by the Department of Civil Aviation and the Royal Nepal Airlines Corporation. Other short-term training programs are organised by the Hotel Management and Tourism Training Centre, National Computer Centre, Women’s Training Centre, Training Division of Nepal Electricity Authority, Small Vocation Training Project, Survey Training Division and Ministry of Health Training Division. Access to such skill training is highly limited in scale, however.

women had acquired a Bachelor’s degree compared to 1.29 percent among men. Among all college graduates, only 18 percent were women (Acharya 1997: 16). Tertiary education is being provided through three higher centres of learning: TU, Mahendra Sanskrit University (MSU) and Kathmandu University (KU). A fourth institution, Purbanchal University started operating earlier this year. TU and MSU, organised under the state, have an autonomous status while KU is a private initiative. TU, the oldest, is very large with over 150,000 students and 62 constituent and 132 affiliated campuses relatively well distributed across the country. The other universities are relatively much smaller. MSU and KU together provide tertiary education access to less than 2,000 students. Access is available to a large number of faculties in these universities, e.g., humanities, social sciences, physical, biological and information sciences, management, agriculture, forestry, engineering, medicine, law, education, journalism, social work. The costs of tertiary education are very low at TU and MSU while they are high at KU. The quality of tertiary education, on the other hand, is widely noted to be low at the state universities. Given the constraints and challenges within primary and secondary education in the country, issues related to tertiary education are of relatively peripheral significance in terms of human development. Nonetheless, the extent of access to, and quality of, tertiary education can have a significant impact on the promotion of high-quality primary and secondary education through the production of appropriately qualified teachers and educational administrators and researchers. Tertiary education, in addition, produces leaders well beyond the confines of the

85

Table 5.8

Themes of skill training provided by NGOs and private organisations

Programs of NGOs In-plant training for workers Private technical schools Training operated at local levels

Programs of private organisations Apprenticeship training Typing, secretarial, and tailoring training Training related to building construction provided at construction sites

Source: IEES 1988.

educational sector. The extent of access and quality of tertiary education, thus, assumes a critical role in the shaping of the future of the country, including in the human developmental front. It has also been argued that, in this encompassing sense, public tertiary educational institutions have to share a much larger responsibility than the private ones, since fewer graduates from the latter category of institutions are likely to take on political or public service roles (Wagle 1996).

5.4

ORGANISATION AND MANAGEMENT OF PUBLIC SCHOOLS

The government and its regional and, in particular, district-level line agencies have an overwhelming presence in the public school management system. The NPC, in consultation with the MOE, formulates the medium-term and annual policies, plans and targets in the education sector. Standard government regulations specify the composition of the management committees of each public school. The academic content, the textbooks, the examination system are also uniform throughout the country. Governmental grants, which form the bulk of school revenues, are also relatively uniform, depending mainly on the size of the student body in the school. The teachers, including the headmaster, are appointed by the government. Under the laws governing educational management (and allied regulations), the non-ex officio members to a school management committee, including that of a local primary school, are nominated by the District Education Committee (DEC), which is itself appointed, under specific regulations, by the government. The DEC, chaired by the DDC chairperson, and designed to be a representative and coordinating body at the district level, nonetheless has an overwhelming governmental representation. The DEO, as a specialised and relatively well organised government body, has a pronounced programmatic and executive clout within the DEC. Under the regulations, the school management committee is allocated a large

86

number of responsibilities. The committee, however, is generally beholden to the DEO and severely lacks the authority and facilities required to carry out the specified responsibilities. The school headmaster carries out DEO-delegated rather than managementcommittee-delegated or autonomously defined tasks. It is the DEO, not the local management committee, which sets the school calendar, provides salary to the teachers, organises training programmes, supervises pedagogical practices and audits the financial books of the school. The dilapidated physical nature of most schools, the illegitimate and frequent absence of teachers, the short seasons and limited hours of school operation, and the overall low academic quality of public schools, thus, can easily be linked to the absence of devolved or autonomous rights of school teachers, local representative bodies and local citizens to manifest local stakeholding in school affairs and education. Ward committee and VDC members are also represented in the committee but, in most instances, they play a relatively passive role: the school system is widely seen as a governmental system. Under the existing school management system, therefore, local people, guardians and students are effectively rendered voiceless.

5.5 QUALITY OF PUBLIC SCHOOL EDUCATION Over the last decade, widespread concerns have been expressed over the unsatisfactory quality of public education and schools. The relatively low quality of public education, in turn, has been linked to the rapid expansion of the public school system, the highly inadequate level of physical facilities in most schools, the disjunctions existing between school curicula, on the one hand, and knowledge, attitude and skills required to perform everyday responsibilities during studentship and after-school years, on the other. Low-quality public education has also been linked to the increasing alienation between the local school system and the community, the high level of absenteeism and unprofessional conduct among school teachers, the ineffective

NEPAL HUMAN DEVELOPMENT REPORT 1998

school supervisory system, the faulty student evaluation system and a number of other shortcomings. As it is, most primary schools are illequipped both physically and educationally. Primary schools, on the average, have only four teachers, despite the fact that most of them concurrently run five separate grades. (Those primary schools which are recently established may, however, begin only with the first and second grades and this may partially explain the low teacher/school ratio.) The mean student/teacher ratio, at 39, is considerably higher than would be conducive to the educational development of the child at the primary level. In addition, the student/teacher ratio is unevenly distributed across the country such that the ratio is much higher in the Tarai generally and the densely populated villages, towns and cities in the hill areas. In almost all of the mountain region and some areas of the Hills, on the other hand, that ratio is quite low. Reflecting an overall paucity of trained teachers, the student/trained teacher ratio at the primary level is 93. Furthermore, while the state has stuck to its policy of encouraging the hiring of women teachers in schools as a means of encouraging education among girl children, the “average” primary school has only one woman teacher (all data for 1995; MOE 1997). There were, on the average, only three teachers for the three grades comprising the lower-secondary level. The average student/teacher ratio in lower secondary schools was 43−a ratio which does not allow a system of individualised attention of students. Trained teachers, at this level, were in extreme by short supply, with the student/trained teacher ratio as high as 134. Some of the quality indicators at the secondary level are considerably better compared to those at earlier levels. There are, on the average, five teachers available to teach the two grades at that level. As a result, the student/teacher ratio is only 20. The student/trained teacher ratio is 45. Notwithstanding these indicators, however, the overall quality of education in public secondary schools is noted to be unsatisfactory (CERID 1996). Annually, and on the average, 3 out of 5 secondary-school students fail in the nationally organised school leaving examination. Students from public and rural schools are disproportionately represented among those who fail in the examination. More generally, for all

EDUCATION

levels of education, evaluation systems are geared towards testing the rote memory of students rather than towards assessing the creative use of learning materials.

5.6 PRIVATE SECTOR AND EDUCATION Private sector initiative in school education has a long history in the country. Indeed, till the ’60s, a large proportion of schools were organised and operated privately, some with minimal financial assistance from the state (see also chapter 11). Enlightened public concern and social work lay at the base of such initiatives. Transmission of literacy and education was widely seen to be an ennobling and virtuous act. The newer cycle of private initiative, which began after the gradual weakening and effective demise of the NESP in the late ’70s and the early ’80s, on the other hand, was primarily based on commercial interests. Private sector involvement in education has expanded rapidly since the early ’80s (table 5.9). At present, it covers all levels of education, with the exception of non-formal education. (Noncommercial private sector involvement, however, does exist within the sphere of nonformal education.). Thus, while the public school/private school ratio at the lowersecondary and secondary levels in 1984 was respectively 30:1 and 5:1 (IEES 1988: 5-12), in 1994 the ratio stood at 1.1:1 and 0.94:1 respectively. While educational opportunities available in many of the private educational institutions are of higher quality, they have also given rise to distinct modes of educational and social exclusion and segregation. Concerns were already expressed seven years ago (MOE 1991: 144) that the country may end up with a five-tier basic-education model due to enhanced marketisation of schools and privatisation of knowledge: the expatriate model for the affluent, Table 5.9 Number of schools and campuses by public and private categories, 1995 Level Pre-primary Primary Lower Secondary Secondary Technical and Vocational Higher Secondary Tertiary

Number of school/campus Public Private Total 781 n. a. 18,396 3,077 21,473 2,624 2,417 5,041 1,284 1,370 2,654 8 n. a. 0 332 332 71 132 203

Source: MOE 1997a, 1997b.

87

the private model for the less affluent, the public model for the middle class, out-of-school model for the poor and no model for the poorest. The experience since then has tended to confirm both the validity and the acuity of the concern. While private schools − particularly at the pre-primary and primary levels, in the last decade, have tended to spring up in rural areas as well, they are disproportionately concentrated in urban areas. Most lower secondary and secondary − as well as tertiary – private educational institutions are located in urban areas. Private schooling is far more expensive than public schooling (5.7). Macroeconomic liberalisation, together with the rise in urban employment and urban household income − in addition to increasing rural-urban inequality in income − has been primarily responsible for the general rise as well as specific distribution of private education. Additionally, while privatisation has contributed to the rise of the quality of education within the private domain, it has been instrumental to a corresponding rise of quality of education in public schools. The public-sector system and authorities have failed to learn − at least selectively − from private schools. The gulf between the two systems appears to be widening. The rise of the private sector, on the other hand and ominously, appears to have had the effect of stifling public concern for quality in public schools. Most urban residents, senior public servants and senior politicians, the groups with voice, no longer depend on public schools for the education of their children. Concerns on the quality of education in public schools are increasingly being mooted.

5.7 FINANCING OF EDUCATION Finance is a key instrument for the organisation and mobilisation of stakeholders and resources geared to the enhancement of educational capability. The nature, scale, distribution and efficiency of financial allocation can play a highly significant role in the promotion of education. Public finance, as a key component of total financial resources available to the education sector, plays a key role in accessing opportunities for education to the people.

5.7.1 Financial policies Before 1951, very few educational institutions were fully financed by the government. Most

88

schools were established with private individual or group initiative and funded mostly with charitable donations from communities and individuals. During the next phase from 1951 to 1971, there existed three types of educational institutions: fully government-financed institutions, government-aided institutions and privately financed institutions. Fully government-financed institutions were those which were established by the state prior to 1950. Such schools were very few in number. Government-aided institutions were those which, although initiated privately, had established an excellent reputation. Such schools received regular grants-in-aid. Some such schools were also provided with one-time lump-sum grants. The third type included those which were initiated privately with the anticipation of grantsin-aid from the government (Agrawal 1983). With the inception of the NESP in 1971, not only did state financial support to existing schools increase but new primary schools began to be established rapidly across the country. The government implemented clear-cut financial guidelines governing grants to educational institutions. Under the NESP, financing of education was conceived as a shared responsibility between the government and the people. Most of the recurrent costs of education were borne by the government. The government decided to bear 100 percent, 75 percent and 50 percent of teachers' salaries at the primary, lower secondary and secondary levels respectively. Additional costs for teachers were covered mainly by tuition fees. However, in the remote areas of the Mountains and Hills, teachers were fully supported by the government. Responsibility for developing and maintaining physical facilities, on the other hand, was delegated to local communities, a decision which is still in effect. The scale of state involvement in financing education increased further after 1975. Primary education was made tuition-free and free textbooks were made available to all students in grades 1-3. In addition, in order to further promote girls' education, textbooks were provided free to girls in grades 4 and 5. At present, all girls studying in primary schools (grades 1-5) receive free textbooks; in the case of boys, students in grades 1-3 in the non-remote areas and grades 1-5 in remote areas receive free textbooks. In addition, 5 percent of all girl students receive scholarships and another 5 percent are provided with free school uniforms (or equivalent cash amount) throughout the country.

NEPAL HUMAN DEVELOPMENT REPORT 1998

During the early 1980s, further changes were made in the grants-in-aid system. Apart from bearing the total recurrent costs of primary education and the total costs of technical education, the government provided 75 percent and 50 percent of the teachers' salaries to lower secondary and secondary schools. The number of teacher public supported in each school was calibrated to the number of students enrolled in the school. A school, however, was free to support additional teachers out of its own resources. In view of the rapid increase in the number of schools and escalating public-financial expenditures, the government stopped providing additional teachersupport in the late ’80s, with the result that schools instituted by local communities on the expectation of additional government support were forced to operate as private schools instead. However, in the midnineties, the government agreed to support costs of additional teachers in such schools. State support to education began to increase following the restoration of democracy in 1990. The manifestos of all major political parties included provisions on free secondary (including lower secondary) schooling. The policy of free secondary education was implemented on a phased basis. At present, all the ten grades are tuition-free. While the policy had been successful in enlarging enrolment in schools, it has also raised the problem of financial sustainability at the state level. Local schools, in turn, have fought back by charging non-tuition fees from students, including at the primary level, thus effectively nullifying the free school education policy. The de facto policy of charging (non-tuition) fees is certain to impede mass access to education. In addition, the state is yet to enunciate financial policies for the higher secondary school. All such schools rely on revenues generated through student tuition fees and other private and community support.

5.7.3

of tuition- (and, up to certain grades, textbook-) free schooling, which have led to a rapid increase in the number of schools and students at all levels (the primary level in particular), expansion of teacher-training facilities and increased levels of benefits to teachers have been primarily responsible for the rise in educational expenditures in the public domain. Policies leading to a higher level of access to education, among others, have also led successive governments to seek an increasing level of international assistance to finance educational expenditures (figure 5.5). For the current financial year, the foreign assistance component forms nearly 52 percent of the total outlay in the education sector. In 1996-97, foreign assistance financed as much as 60 percent of the total public expenditure at the primary level. While the need for international assistance-financed investments cannot be denied, it also highlights the urgency of ensuring financial sustainability. It foregrounds the issues of effective and efficient utilisation of financial resources. It should force rethinking on the extent to which social capital and communitylevel resources can be harnessed for financing

Public financial support

Total investment in education, which remained around 2 percent of GDP during the 1975-1990 period (MOE 1991: 191), increased to 2.6 percent during 1992-1997 (MOE 1997b: 217). Correspondingly, annual government expenditure on education, which remained at around 10 percent of the total budget during 1975-1990, increased to approximately 13.2 percent during 1992-1997 (figure 5.4). (This public expenditure ratio compares favourably with corresponding ratios in other countries in South Asia.) Increasing popular demand for schools, democratisation of the polity and a conscious state decision in favour of expansion

EDUCATION

89

Table 5.10

Percentage of the education

Table 5.11

Sources of annual income of public and private schools

budget allocated to different levels

(in Rs.)

in different years (percent)

Level Primary Secondary Higher

1981 29.7 20.7 39.1

1985 40.7 17.4 38.1

Year 1990 1995/96 1997/98* 48.0 49.2 47.7 15.5 18.3 21.2 23.0 17.3 21.0

Notes: * Estimate. The secondary level for the last two years includes the higher-secondary level also. Source: IEES 1988, MOE 1992, MOE 1997, Red Book 1997/98.

Income sources

Mean of 58 public primary schools Amount %

Mean of 9 private primary schools Amount %

Fees 1,757.60 1.20 328,837.90 95.70 Government grant 131,842.20 87.70 School property 2,689.70 1.80 22.20 0.00 Donation 3,061.20 2.00 183.33 0.10 Other 10,972.20 7.30 14,456.30 4.20 Total 150,323.00 (100.00) 343,499.8 (100.00) Source: Thapa and Singh 1995.

education and on developing appropriate strategies to facilitate such harnessing (chapter 11). Finally, it should also force rethinking on the optimal use of enhanced educational capability.

tends to subsidize the private sector: most teachers and researchers/consultants at private higher institutions of learning and consultancies are full-time paid staff of the TU.

5.7.3 Public expenditure by level of education

5.7.4 Public vs private expenditure in education

Till the early ’80s, higher education was allocated the largest proportion of public expenditure within the education sector. Allocation to the primary level increased sharply in the ’80s and ’90s: its intra-sectoral share increased from 30 percent in 1981 to 49 percent in 1995/96 (table 5.10). Suspension of support to additional teachers during the late-’80s and early ’90s, noted above, led to a dip in the proportion of financial resources allocated to secondary education during the period. The withdrawal of suspension together with the enunciation of the new policy to make secondary education tuitionfree, on the other hand, led to increase in allocation to the secondary level in the mid-’90s. Intra-sectoral allocation to higher education, however, has declined significantly in the last 15 years, although a modest rise in its relative share is estimated for 1997/98. Access to higher education in Nepal is not free but, as in many other countries, highly subsidised. TU, the largest centre of higher education, internally generates only 9 percent of its resources and is dependent upon the government for all remaining resources. Tuition fees contribute only 6 percent of the total revenue of the TU (Manandhar 1991). Private institutions of higher learning charge at least 510 times more tuition fees compared to TU. This disjunction underlines the dilemma of access to higher education: state universities provide a far higher level of access to higher education at the same time that they pose heavy burdens on the state exchequer. In addition, the state sector also

90

Although primary education is tuition-free, in most of the cases, schools do charge once some annual fee to parents at the beginning of the academic year. The government has set a maximum limit for the fee and the School Management Committee together with the District Education Committee can decide on the exact amount. A study by Thapa and Singh (1995) shows that fees from students constitute 1.2 percent of the total income of primary schools (table 5.10). The growth of private schools has been rapid in this decade. In 1995, 14.3 percent of all primary schools were under private management

NEPAL HUMAN DEVELOPMENT REPORT 1998

and 7.7 percent of all primary school children were enrolled in these schools. Nearly 96 percent of the total income of such schools is derived from tuition fees (table 5.11). Unlike at the primary level, however, parental contribution forms a highly significant proportion (35%) of the total revenue of the public secondary schools (METCON 1996). Government grants form approximately 48 percent of the total revenue. Nearly 12 percent of the income is derived from interests on bank deposits. In the case of private secondary schools (which constitute 48 percent and 52 percent of all lower secondary and secondary schools respectively, and which provide access to secondary education to 20 percent and 36 percent of all students at these levels respectively) parental contribution is far higher, at nearly 85 percent. Parents, however, have to bear a number of other indirect costs as well, e.g., on school uniforms, stationery and incidentals (table 5.15). If opportunity costs are included as well, the proportion of private expenditure in total educational expenditure in the public schools will be about 70 percent of the total investment in education (IEES 1988).

•

Per capita expenditure: Public and private primary schools

Based on the total 1995 government expenditure on primary education and the total number of primary school-going children, the per student government expenditure on primary education is Rs. 970.30 (table 5.12). (Per student expenditure at the public primary school level is slightly higher.) Per student expenditure in private primary school is more than double this amount. This discrepancy in per capita expenditure between the private and public schools is one of the major causes of the difference in the quality

Table 5.12 Based on

Govt. Budget* School Budget** Public Schools Private Schools *

Per capita expenditure on primary education, 1995 Total expenditure 3,166,132,000 11,776,133 8,629,461 3,146,672

Source: Red Book of MOF, MOE 1997;

EDUCATION

**

Total no. Expenditure of / student students 3,263,050 Rs. 970.30 11,886 Rs. 990.77 10,269 Rs. 840.35 1,617 Rs. 945.96 Thapa and Singh 1995.

Table 5.13 Average annual household educational expenditure by level and type of schools (in Rs.)

School Level

Total

Public

Private

838.76

362.16

4699.08

Secondary

2168.50

1340.49

8737.12

Higher Secondary

3817.41

3239.40

6834.95

Higher Education

5894.43

5329.71

8837.06

Primary

Source: CBS 1997a.

of education in the two categories of schools. •

Household expenditure on education

The central development region includes major urban locations, including the urban Kathmandu Valley. The region, therefore, also houses the bulk of private educational institutions. There is a large difference in average household expenditure on education between the rural and urban areas: urban households spend nearly six times as much as rural households. Household expenditure on education is contingent on the number of children in the household attending school, their level of schooling and whether they are attending public or private schools. Households which send children to public schools, on the average, spend Rs. 838 on each child at the primary level while they spend Rs. 2,168 for a child at the secondary level (table 5.13). Thus secondary public education is 2.6 times as expensive as primary education for the households. This is one of the major reasons for the much lower access (in terms of enrolment ratios) at the secondary level compared to the primary level within the public school system. The lower enrolment ratio of girl children in public secondary schools can also be attributed to this factor. Under conditions of income crunch, households almost invariably opt to enrol a son, rather than a daughter, to secondary schools. For households, private primary schooling is 13 times as expensive as public primary schooling (table 5.13). This ratio decreases at the higher levels of schooling. Nonetheless, the differences are stark, differences which underline the fact that privatisation of education, especially at the primary level, imposes an impossible burden for the majority of households. Policies in favour of enhancing privatisation thus severely limit access to schooling. Such policies (as noted in 5.5 above) directly contribute to

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unequal education and social segmentation and exclusion. On the other hand, the fact that private schools are rapidly gaining ground − including in the rural areas-goes to show that inequality in household income has been exacerbating in recent times. There is no unanimity on the costs that households incur on various items for the schooling of their children, e.g., fees including boarding fees to schools, textbooks and supplies, transportation costs and private tutoring (table 5.14). Conflicting household cost estimates, moreover, pose a severe barrier for sensitive public policy-making. To the extent that the per student household expenditure of Rs. 839 at the primary level is reliable, households can be said to incur nearly as much (86 percent) cost as the government, which spends Rs. 970 per primary level child. “Free primary education”, to this extent, can be appropriately characterised as a half-truth. While a state-community/parent compact is necessary for expanding access to education − primary education in particular state support to education, in this respect, appears to be inadequate from the perspective of most parents and children. Enforcement of a more efficient regime of public expenditure can certainly be access-promoting (cf. 5.6.4). Policies seeking to maintain a balance between “free education” and a household’s ability to pay − as far as nonprimary education is concerned − can also promote access of children of the poorer households. Promotion of access to education − universalisation of access to primary education in particular − however, also demands a substantially upscaled financial involvement of the state.

5.7.5 Quality of public investment in school education By far, the major portion of government expenditure for school education is spent on remuneration and fringe benefits of teachers and support staff. During the last 6 years, however, much more is being invested in physical construction, teacher training, textbook preparation and distribution, development and implementation of management tools, intensified supervision, etc. During 1992-1996, under the Basic and Primary Education Project (BPEP), for example, 31 percent of the total allocation was made for non-salary components. During the period, and under the BPEP, 16,000 new

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Table 5.14

Mean expenditure on specific items for primary schools

Item

All Primary Public Only NLSS NMIS# NLSS NPC*

Fees

450

448

108 52

Textbooks & Stationery 229

443

158 91

Uniforms and Shoes

634

Other** Total

-

--

45

-

27 29

839***

-

362 172***

# 1995 Survey of children attending grades I and II only. * NPC 1996. ** Includes expenses for transportation and private tutoring. *** Total does not match because of differences in the number of respondents by item types. Sources: CBS 1996, NPC-UNICEF 1996b, NPC 1996.

classrooms were constructed or rehabilitated. In addition, 231 buildings to house “resource centres”, which support educational and school activities in the local regions, were completed. The Primary Education Development Project is expected to complete the construction of 2,400 classrooms by the end of 1997. The Earthquake Affected Areas Reconstruction & Rehabilitation Project (EAARRP) completed the construction of 15,578 classrooms by 1996. Similarly, under other initiatives, 25 Secondary Education Development Units, designed to provide training and other teacher support activities at the secondary schools, were recently completed. That such facilities are crucial for promotion of access to education is highlighted by two recent reports. The MOE (1997), for instance, noted that 50 percent of all the secondary school buildings are in need of rehabilitation. Similarly, a status review by CHIRAG (1995) indicated that, with the currently available mechanisms and rates, it will take more than 60 years to train all school teachers in the country. Recent interventions have led to mild improvements on these fronts. Such improvements − as highlighted, among others, by the two reports noted above − are far from adequate. Promotion of education and enhancement of the quality of education crucially depends upon the quality and rate of such improvements. Nor can an improvement be seen as a one-shot affair. Improvements, instead, have to be sustainably built into the educational system, including its financial component.

•

Quality of investment at the primary level: Micro evidence

Patterns of expenditure at the school level can provide an additional perspective on the quality

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 5.15

Expenditure patterns of primary schools (thousand rupees)

Mean of 58 Public Primary Schools Item Amount % Salary 127,309.82 85.6 Stationery 1,642.15 1.1 Instructional material 697.92 0.5 Construction 12,636.51 8.5 Maintenance 1,324.57 0.9 Extra-curricular 169.62 0.1 Scholarship 659.47 0.4 Others 4,343.75 2.9 Total 148,783.81 100.0

Mean of 9 Private Primary Schools Amount % 221,543.83 63.4 11,055.44 3.2 10,964.80 3.1 19,777.78 5.7 11,971.22 3.4 11,626.22 3.3 4,690.56 1.3 58,000.40 16.6 349,630.22 100.0

Source: Thapa and Singh 1995.

of investment. Such expenditures differ significantly by the level of school and by its (public or private) ownership status. Public schools spend nearly 6/7ths of the total income in salaries (table 5.15). Approximately 10 percent is spent on construction and maintenance. Very little is left for investing on educational materials and themes. Such a pattern of expenditure can hardly contribute to enhance the quality of education. Nor can it instil confidence in parents on the quality of public schools. Private schools, on the other hand, allocate considerably higher ratios on such materials and themes. At the secondary level, the salary component in public schools is significantly reduced − to approximately three-fourths of the total expenditure (table 5.16). While the private schools allocate a much lower share to salaries, they also spend more on teaching materials. The

Table 5.16

Expenditure patterns of secondary schools

overall pattern, however, becomes much more similar at this level. (The much higher allocation to the “domestic” category in private schools apparently reflects expenses incurred in boarding facilities in some of them. In addition, expenses under the transport category in private schools cannot be interpreted as an educational investment. Thus, despite the fact that private secondary schools allocate a much lower proportion of their total expenditure on salaries, there is no evidence that they spend more on quality components of education. In particular, neither public nor private schools appear to allocate a significant sum to develop libraries and other educational aids.

5.8 RETURNS TO EDUCATION While education is an end objective of human development, it is also a means for enhancing the level of utility at both the individual and collective levels (cf. box 5.1). That is, education provides economic, political and cultural returns to an individual as well as the society. Economic returns to education, in particular, have been investigated extensively and internationally. Summarising such investigations, Psacharopoulos (1985) has concluded, among others, that: •

•

•

(thousand rupees)

Mean of 19 Public Secondary Schools Item Amount % Salary (Teachers) 11,962 67.7 Salary (non-Teachers) 1,495 8.5 Administration 274 1.6 Teaching 772 4.4 Domestic 26 0.1 Operational & Maintenance 369 2.1 Extra-curricular 195 1.1 Transport Others 2,561 14.5 Total 17,654 100.0 Source: METCON 1996.

EDUCATION

Mean of 8 Private Secondary Schools Amount % 4,566 45.7 709 6.5 175 1.6 1,017 9.3 1,563 14.3 416 3.8 126 1.2 1,021 9.3 1,344 12.3 10,937 100.0

•

•

In developing countries, investment in people may be more conducive to economic growth than investment in machine. Rates of return are highest for primary education. Secondary and higher education provide returns at successively decreasing rates. The more developed the country, the lower is the rate of return across all levels of education. While private returns are higher than public returns at all levels of education, the ratio of public return is highest at the primary level. Private rates of return are higher for women than for men.

Investigations on return to education for Nepal are relatively limited. Nonetheless, empirical studies on the returns to education in Nepal show that significant relationships exist between education and agricultural productivity, female education and health, and education and population control. It has been shown, for

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example that literacy, controlling for other variables, leads to mild but significant (3-5 percent) increase in the productivity of wheat and rice (Sharma 1974; also see Pudasaini 1976; Calkins 1976). A strong negative relationship has been reported between the female literacy rate and infant mortality rate at the level of the districts (Shrestha et al. 1987). This study indicated that a one percent point increase in the female literacy rate (at the district level) lowered the incidence of infant mortality by 4 (per 1,000 live births). Further, it has been shown that female education leads to a higher rate of immunisation of children which, in turn, results in a reduced mortality rate (NIV 1992). This study also provided clear empirical evidence that educated women tend to marry later, want fewer children and are better acquainted with modern methods of contraception and are also more likely to use contraceptives. A more recent and conclusive evidence (MOH 1997c) shows that the total fertility rate among women with no education is 5.53 as against 3.03 for those with education beyond the primary level.

5.9 KEY POLICY ISSUES AND ACTIONS REQUIRED Despite the fact that substantial progress has been made in raising educational capabilities in the country, much remains to be done. The fact that 60 percent of the people are illiterate, that the drop-out and repetition rates even at the primary level are very high, that financial resources are inadequate, that the quality of education is low, that the efficiency rate is low, that local stakeholding in education is weakening, and that the education system is increasingly growing inequitous, both in terms of the overall distribution of opportunities and in terms of the distribution of quality, demands substantial and sustained intervention from the state, local organisations and people themselves.

5.9.1 Universalising literacy and primary education Ensuring universal access to literacy and primary education must become the overriding goal of educational policy. This goal must no longer be classed together with multiple other goals of educational policy. Attainment of this goal, in turn, requires the formulation and implementation of appropriate political, financial

94

and cultural policies and actions. Some such policies and actions are already in place: physical access to primary schools is far better than it used to be; much more attention is being given to the physical condition of schools than in the past; the education sector receives a larger share of total public expenditure than it used to and the primary level receives a far larger share of the education budget than it used to till the mid-’80s; mild improvements are visible in the teacher-training front; and the out-of-school and adult literacy programmes are gaining in size as well as popularity. However, these policies and actions are inadequate to meet the goal of universalising literacy and primary education. They fall far short of the single-minded determination that is required for successful universalization of literacy and primary education. Such policies and actions do not sufficiently recognise the intensity of deprivation due to illiteracy. Nor do they sufficiently recognise the instrumental “developmental” value of literacy and education: politicians and policy-makers, in fact, continue to value investments in physical infrastructures much more highly than investments in education (and other human and social sectors); and education, to a very large extent, continues to be viewed as a consumptive sector. The determination required to universalise literacy and primary education, at the political level and in the first instance, must manifest itself in a constitutional recognition of literacy and primary education as a fundamental right of all children and citizens which is actionable under law. It requires that political parties recognise universalisation of literacy and primary education as the key plank of their political and electoral manifestos. It requires that local organisations, e.g., the VDCs and ward committees, themselves prioritise and demand and struggle for the prioritisation of the agenda from political parties and the various organs of the state. Financially, allocation of much larger resources will be called for. A very rough estimate, based on additional resources required to enrol the 32 percent of children currently not enrolled in primary schools − and at the current per student public expenditure of Rs.970 at the primary level − indicates that an additional annual allocation of Rs. 900 million (929,160 non-enrolees at the primary level multiplied by per student public expenditure of Rs 970) is needed for the first year for universalising primary education (see also chapter 14). In

NEPAL HUMAN DEVELOPMENT REPORT 1998

addition, such universalisation calls for a much enhanced production and use of social and political capital (chapter 11). Effective universalisation will demand far more attention to ensuring social and regional equity, particularly in relation to girls and women, the poor and the lowest castes. It will demand that literacy and much of primary education be conducted in the mother tongues of the students, bi-lingually wherever necessary. It will also demand that the causes underlying the current high drop-out and repetition rates be closely investigated and measures implemented to counteract them.

5.9.2 Generating and investing additional resources Raising educational capabilities from its present low level involves investment of much larger level of resources. Political and cultural resources can and must be utilised to meet part of the shortfall (chapters 11 and 12). Investment of additional financial resources is of crucial importance as well. Such investments have to be generated through multiple channels (chapter 14). Among others, effective and efficient revenue administration, broadening of the tax base, introduction of new tax measures, taxes on private school incomes and taxes on foreign exchange facility for students studying abroad can become important sources of additional revenue. Graduated and discriminating (in terms of ability-to-pay principles) upscaling of user fees at non-primary levels can become another important source. A regime of prioritised public expenditure allocation to the education sector in general and primary education in particular can go a long way in meeting the required resources. The remaining shortfall would have to be met through international assistance. More efficient use of existing resources can reduce at least part of the need for additional resources. Indeed, there is no merit in allocating additional resources to an inefficient system. As it is, the educational system is running with large-scale inefficiencies. The very high dropout and repetition rates are a major source of financial inefficiency. Physical and human resources in educational institutions remain under-utilised. Despite the fact that both teachers' training and salary levels in the public schools are better than those in the private schools, their time-on-task is believed to be considerably lower than that of private schools.

EDUCATION

Lack of adequate monitoring at the overall policy level is another source of financial inefficiency. Inadequate monitoring at this level can be very expensive. Without adequate monitoring there would be no way to know whether the large resources expended while pursuing specific policies are being used efficiently. One such policy is that of across-theboard “free education” up to the secondary level. Given the very low literacy and net primary school enrolment rates together with the very high drop-out and repetition rates at the primary level, across-the board free secondary education can very well be seen as an unaffordable luxury. A more discriminating and circumspect policy of free secondary education to children from poor households, the lowest castes and women would free a considerable amount of financial resources which can be put to a more deserving and universalism-promoting use, e.g., expansion of pre-primary education, raising the quality of primary education, and provision of additional scholarships to the deserving. The freed resource could be used to augment the internal efficiency of education, which has been calculated at 42.5 (on a scale of 0 to 100; Thapa 1997; also see CERID 1996). Symptomatically, in 1995, not a single student from 140 secondary schools (out of 2,338) was successful in the SLC examination. In addition, 384 schools achieved a pass-rate of 12 percent or less. It has been noted, for example, that free education to grades 6-7 for a ten-year period would increase government expenditure by US$ 34 million, which is equivalent to 38 percent of the education sector budget (Jeria cited in CERID 1996; also see NEC 1992: 48). The impoverishment of schools under the free education policy has not been monitored either. That the across-the board free education policy may be one principal reason for the weakening stakeholding of local bodies and peoples in the school system and for the loss of accountability of school authorities to local bodies and peoples has gone unmonitored as well. The grant-in-aid system to schools is operating with several inefficiencies. One principal inefficiency is rooted in the fact that grants have been only weakly associated with the effectiveness of schools and teachers. As noted earlier, the grant system gives far more weight to student size rather than educational quality. Monitoring of the various scholarship schemes has been inadequate as well. A lack of

95

proper follow-up has defeated the scholarship policy in many cases (CERID 1997). Financial inefficiency has also been associated with lack of innovation in devising alternative methods of educating children in remote and sparsely populated areas. Fullfledged primary schools continue to be supported, in a significant number of instances, even where (and when) the number of school-age children is low. Unit costs, in such instances, are understandably very high. Inefficiency is also associated with the limited ability of school education to address problems of everyday life of the individual and the community. The existing system of education is widely seen as being directed towards preparing graduates for white collar, urban jobs. It is geared to promote out-migration from rural areas. The lifestyles of most school graduates who do not migrate to urban areas remain almost unchanged. In consequence, school graduates, their parents and the community fail to experience the impact of school education on human lives. Local stakeholding in school education, as a result, is rendered weak.

5.9.3

Devolving rights of school management

As noted, the rights to the management of local schools are much too closely controlled by the MOE, the DEOs and, to a certain extent, by the DEC. The nationally standardised educational regulations are frequently changed at the behest of these bodies, often for political expediency and without wide consultations with local stakeholders. The lack of consultative process, together with the cooptation of the school management committee by the DEO and the DEC can promote local accountability of school authorities. Its absence directly contributes to reduced local stakeholding and to reduced quality and efficiency. Devolution of school management is also a key component of the promotion of a low-financial cost educational strategy. A much more devolved school management system, therefore, needs to be developed and implemented. Rights to the management of schools must be devolved to local elected bodies, i.e., the municipalities, VDCs and ward committees. Such bodies should have the authority to modify, within broad limits, local learning needs − and thus the syllabi, modes and

96

media of instruction, the school calendar as well as the hiring and firing of teachers. Such measures make the school system more responsive to local settings, render education more relevant to everyday life and ensure a much upscaled local stakeholding. The DEOs and the DECs, in turn, should be limited to the performance of oversight and professional and political leadership responsibilities. The local elected bodies, in turn, should ensure representation from parents, CBOs, students and other local stakeholders within the management committee.

5.9.4 Making administration more effective and efficient Entrusting the DEOs with major supervisory responsibilities is a major source of educational inefficiency and ineffectiveness. According to school headmasters, DEO supervisors visit only 70 percent of the schools they are assigned to. In addition, such visits were made only once a year (CHIRAG 1996). The number of times a DEO supervisor is mandated to visit and supervise schools within his/her jurisdiction, on the other hand, remains unspecified in the rule books. Absenteeism among teachers is widely and very frequently reported in the press. The school system and the teachers are publicly unaccountable (CERID 1996). Allocation of teacher support has not been fully rationalised: some schools have inadequate teacher-quotas while others have surplus teachers. Schools widely inflate enrolment figures in order to qualify for more teachers. Ineffective and inefficient administration is a major cause of these systemic shortcomings. Supervisory responsibilities at the project level are performed inefficiently as well. Most project-level initiatives have not met the targets stipulated. An international review mission fielded in 1995 found the progress of the Secondary Education Development Project “very disappointing” (CERID 1996). Similarly, the Primary Education Development Project did not complete the construction of any of the eight primary teacher training centres mandated within the time stipulated (Wagley 1996). Inefficient administration necessarily contributes to unnecessarily delay in implementation of projects, to cost over-runs and to loss of valuable educational opportunities. They also lead to a blockage of funds: out of the Rs. 100 million allocated to higher secondary education for

NEPAL HUMAN DEVELOPMENT REPORT 1998

1992-1997, less than Rs. 20 million was disbursed by 1995. Administrative inefficiency can be improved through the institution of a few major steps. Devolution of authority, discussed above, is one such step. Well-defined job description, delegation of requisite authority to lower administrative levels − including to the district level and regular monitoring of performance can go a long way in improving educational administration. Further improvements can be secured by dismantling the “project system”, which has led to considerable turf-protection and inhibited necessary communication and coordination among the various cells in the MOE.

5.9.5

Raising the quality of education

All of the policy, financial and administrative shortcomings discussed in the preceding subsections are generically related to the low quality of education. In other words, upscaling of the overall quality of education depends on the success in removing the aforementioned shortcomings. More narrowly and within the school setting, however, the quality of education has suffered because of the low quality of many teachers, high absenteeism among teachers, high student/teacher ratio and extremely low expenditures on teaching-learning materials. A large proportion of teachers regards teaching as a secondary occupation rather than a full-time profession. A very large proportion is untrained: as noted, with the existing mechanisms and at the present pace, it is highly unlikely that most of the teachers will be trained even within a mediumterm (e.g., 15 year) period. In a majority of schools, the primary level is overcrowded with students, particularly al levels 1 and 2. There is very little opportunity, in such a setting, for a teacher to make provision for some degree of individualised teaching or to experiment with alternate pedagogical modes. Lecture, group recital and rote, as a result, have become the predominant modes of imparting and imbibing education. Learning materials, in an overwhelming proportion of schools, are limited to textbooks and the blackboard. Clearly, there is a vast space here for improvement through teacher -training, and administrative and financial means.

EDUCATION

5.9.6 Reforming and learning from the private sector As noted, the private sector, even though noncommercial, has had a long and inspiring history in the country. The public sector, with all its intrinsic shortcomings, has rendered literacy and education accessible to a large, even though far from universal, proportion of children − a feat which is impossible to attain under a private sector regime, whether non-commercial or otherwise. The newer regime of private, commercially managed education, in turn, has proved to retain a decisive edge in terms of quality and efficiency. It has also shown that new and additional resources can be raised in the educational sector. On the other hand, the rise of the private sector has had distinct negative implications for education in the public domain. As noted earlier, the private sector can legitimately be seen to have siphoned off potential resources from the public sector and stifled demands legitimate demands for higher-quality education in the public sector. At a more general level, the entry and rise of the private sector in education has buttressed and enhanced regional, social and economic inequality and seclusion. The interface between the public and the private sector in education, however, also bears potentials for mutually benefiting implications. For one, the public education system can learn immensely from the quality promoting features of the private sector. It can also learn much from the efficiency and discipline promoting measures adopted in the private sector. On the other hand, private sector schools can learn much about access promotion from public sector schools. It can also take voluntary initiative in creating an environment under which public schools can learn from experience in the private sector as also in generating financial resources for the benefit of the public sector. The challenge lies both ways. Should the private sector fail to take such initiatives voluntarily, the state should intervene and oblige the private sector to fulfil its public responsibilities.

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CHAPTER 6

Work and Employment The proceeding of the international conference on child labour at Oslo faced a jolt when a young 13-yearold girl from Senegal stood on the dias and demanded that children be given the right to work. The young girl noted that decision makers had no right to talk of education and elimination of child labour since poverty of the parents dragged children to work. The girl questioned: “What right do you have to criticise my right to work when you have failed to provide me education and put an end to my poverty?” The Statesman, October 29, 1997 …economists are interested in the dynamics of unemployment but not in what the experience of unemployment is like …. And it is simply not credible that the dynamics of unemployment should have nothing to do with the experience of being unemployed. Robert Solow 1995 People value their work for many reasons beyond income. Work allows them to make a productive contribution to society and to exercise their skills and creativity. It brings strong recognition that fosters self-respect and dignity. And it gives them opportunities to participate in collective effort and to interact socially. Human Development Report 1996

6.1 WORK, EMPLOYMENT AND HUMAN DEVELOPMENT

W

ork and employment are highly salient components of human development. All human beings, almost all through their adult lives, are engaged in work/employment. People who do not find work and those who do not find their work worthwhile are busy looking for (alternative) work. Much of childhood socialisation, schooling, training, health care, etc. is geared to the world of work. Nor does work cease after “retirement”. Work ceases to be an important component of human life only under extremely serious conditions of physical, mental and/or social impairment. To a large extent, it is work that connects adult human beings to other fellow beings, whether family members, co-workers or employers. Human societies have historically been structured to value work as well. A human person, whether as an individual or as a collective being, to a large extent, finds his/her worth and self-respect during and through work. Work is fundamentally connected to the twin notions of capability and deprivation − the

98

points of departure of the human development frame − as well. Work does not only lead to the use of the existing stock of capability but is also of fundamental significance for the enhancement of capabilities, particularly on the knowledge/ skill front. Lack of work, on the other hand, limits and deprives human beings from both human developmental opportunities. Work is also very closely connected to other issues and processes of human development: work is an arena in which participation and empowerment can be durably structured; equity is an issue that arguably needs to be engineered, in the first instance, in work settings; work is intimately connected to production and productivity. Freedom from lack of work must thus be seen as a fundamental political freedom. Whether work is a means measure or end measure of human development is not an issue that has found much space in current human development literature, including the HDRs. While the HDRs have given some emphasis to the desirability of job-promoting growth, this

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 6.1

Population and work force by gender and age, 1971-1996 (in million)

1971

1981

1991

1996

Male Female Total Male Female Total Male Female Total Male Female Total Total population Population 10 yrs or more Work force Participation rate (%)

5.8 4.1 3.4 82.9

5.7 4.1 1.4 35.1

11.6 7.7 8.2 5.4 4.8 4.5 59.3 83.1

7.3 5.1 2.3 46.2

15.0 10.5 6.8 65.1

9.2 6.2 4.3 68.7

9.3 6.5 3.0 45.5

18.5 12.7 7. 3 57.0

10.6 7.2 5.4 75.2

10.5 7.4 4.9 66.4

21.1 14.6 10.3 70.6

Source: CBS 1995b, 1997a.

has come by way of characterising growth models and patterns rather than as part of a discourse which recognises the intrinsic significance of work within the conceptual and policy frames of human development. The significance of work, as of yet, has remained extremely devalued in the literature on human development. Indeed, current human development literature appears to have assumed that the significance of work/employment lies only in the level of living that it may buy. While this is regrettable, the perspective outlined in the preceding two paragraphs − borrowed from humanistic philosophy and from the spirit of various constitutions which recognise work as a fundamental human right − makes one optimistic that work will prevail as a fundamental and intrinsic component of human development in future. The nature, growth and distribution of work and employment opportunities are fundamental in relation to capabilities and deprivations (including in relation to access to a decent level of living) and, thus, to human development. The following sections describe and analyse these issues in the case of Nepal.

6.2 STRUCTURE AND GROWTH OF WORKERS AND LABOUR FORCE In 1991, Nepal had a population of 18.5 million. Estimates, based on a growth rate of 2.3 percent/year (NPC 1997) indicate a population of 21.1 million in 1996 (table 6.1). A significant proportion of the population is very young. Approximately 31 percent of the population is below 10 years of age; another 12.4 per cent is between 10-14 years of age; and 5.5 percent of the population is above 60 years of age (CBS 1994b). Further, almost 88 percent of the population is in rural areas. Demographically, Nepal is at an early phase of the demographic transition. A large proportion of the population is young, marries early, has a high fertility rate1 which, in turn, implies a continued high rate of

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growth of population, workers and labour force for some more time in the future. The current rate of growth of the working-age population is 3 percent per year. Nepal is overwhelmingly a rural and agricultural country. Only 12 percent of the population resides in urban areas and agriculture forms the primary occupation of 81 percent of the population. Characteristically, participation in work starts from an early age. Official data, including the decennial censuses, report on work participation2 of population 10 years of age and above. The work participation rate in the country has remained high, at 71 percent in 1996 compared with 65 percent in 1981 and 57 percent in 1991 (table 6.1). The low rate of work participation in 1991 may be attributed, among others, to falling work participation rate of children aged 10-14 and young adults aged 15-19 (table 6.2) due to higher school attendance rate (see chapter 5). The reversal in the work participation rate in 1996 is due to definitional differences of participation rate in the census and NLSS survey. Analysis of the labour force distribution by ecological regions shows the trend in the stock of labour force generally followed the trend in population growth; that is, the share of labour force has been declining in the Mountains and Hills, while it has been growing in Tarai (annex 6.1). The rate of work participation is highest in the Mountains and lowest in Tarai. Low work participation in Tarai is largely due to relatively lower female work participation. The culture of veil, practised in most of the Tarai society, bars

Table 6.2

Work participation rate by age group ( in percent)

Age Group 10-14 15-19 20-59 60 & above

1971 50.5 61.7 64.6 31.4

1981 56.9 60.7 69.2 55.7

1991 22.9 49.8 71.5 33.6

1996 38.6 65.7 85.6 50.0

Source: CBS 1995b.

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Table 6. 3

Work participation rate by ecological region (in percent)

Region Mountains Hills Tarai

1971 70.0 62.9 51.3

1981 75.7 68.8 58.8

1991 74.5 62.8 48.6

1996 81.5 70.5 69.0

Source: CBS 1995b, 1997a.

well-off females to work outside home. The distribution of work participation by major industry groups helps to clarify both the nature of work and the work force in Nepal (table 6.4). A very large proportion (four-fifths) of the workers/labourers is engaged in agriculture. (It may be emphasised that this ratio may be the highest in the world. Both UNDP 1997 and Haq 1997, on the other hand, report figures which are quite old.) The pastoral culture, including livestock raising and forestry, are key components of the agricultural regime. Almost all agricultural land is privately held at the household level. Holdings are generally very small. More than 40 percent of all holdings are under 0.5 ha in size and nearly 70 percent are under one hectare. Per capita landholding, the principal productive resource for majority of the population, is only 0.15 ha. However, inequality in landownership is high (Gini coefficient 0.54). The subsistence mode is predominant; although both feudal/ absentee ownership and the tenancy and sub-tenancy regimes as well as some degree of commercialisation − both in relation to labour and produce − coexist side by side. Only 9.5 percent3 of the agricultural land is under perennial irrigation. Another 25 percent is intermittently irrigated, i.e., during the rainy season (CBS 1993). Cropping intensity4, which has been increasing in the last two decades, is approximately 1.7 (NRB 1994). Crop diversification is at a low level, such that the demand for work peaks at just about the same period within the ecological regions. Agricultural productivity is very low, which is evident from the fact that involvement of 81 percent of the economically active population in agriculture makes up only 42 percent of the GDP. Despite heavy dependence on agriculture, only half of the total households are observed to be food-secure (CBS 1997a). Per capita income in agriculture has deteriorated and the terms of trade remain biased against the agricultural sector. All of this contributes to a very low level of living for the vast body of agricultural households and workers.

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The service sector accounts for another 6 percent of the work force. Only 3 percent of the population is engaged in industry of which twothirds are in manufacturing (as a primary occupation). While a slow shift from agriculture to other sectors has been visible during 19811991, only 10 percent of the increased work force each year finds work in the nonagricultural sectors (ILO-SAAT 1997). The specific nature of agriculture, together with the overwhelming predominance of agriculture for a large majority of the households and population, bears a singular significance not only from the economic, political and cultural points of view but from the human development point of view as well. In particular, they underline the fact that income growth faces severe constraints and that growth-led human development is an utterly inadequate, even inappropriate, policy. This certainly does not imply that income growth needs to be deemphasised within the policy matrix. On the other hand, this does imply that health, education and other components of human development warrant a much higher level of direct emphasis in public policies. The levels of achieved capabilities in the health and education components are very low (chapters 4 and 5). Enhanced emphasis on these components is, thus, fully warranted in human developmental terms. Such as emphasis on these components, however, is also fully warranted in terms of the frame of human resource development. The severe limits on physical assets (in the present context, agricultural land)-based growth in household and national income, together with the widely recognised productivity-enhancing nature of investments in health and education,

Table 6.4

Distribution of workers by major industry group

Major Industry Group

1981 1991 (in '000) (in %) (in '000) (in %) Agriculture, forestry and fishing 6,244 91.00 5,962 81.00 Mining and quarrying 1 0.01 2 0.03 Manufacturing 33 0.48 150 2.04 Electricity, gas & water 3 0.04 12 0.15 Construction 2 0.02 36 0.48 Trade/commerce 1.59 256 3.48 110 Transport & communication 8 0.10 51 0.69 Finance and business service 10 0.14 21 0.28 Personal/community service 314 4.57 752 10.24 Others 28 0.38 Industry not stated 127 1.85 70 0.95 Total 6,685 100.00 7,339 100.00 Source: CBS 1995b.

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underline the priority and urgency of such an emphasis.

6.3 WORKERS AND LABOURERS The preceding two sections have consistently sought to force a distinction between work and labour, on the one hand, and between workers and labourers or employees, on the other. This distinction does not seek to rake up and reinvent an “arcane” discourse. Yet forcing of such a distinction is mandated by three fundamental considerations: two of them conceptual and the other contextual. Conceptually, the frame of human development mandates that attention be focussed exclusively on those components which qualify as end measures (of human development) rather than on means measures (for human development). This is the reason why, for instance, the level of living rather than the level of income has qualified as a component of the HDI. Correspondingly, while work can (and should, for reasons emphasised in 6.1 above) legitimately qualify as a component of human development, labour and employment, to the extent that they only generate means for human development, may not qualify as an authentic component of human development. Conceptually as well, the fact that the categories of labour and employment generally exclude certain key categories of human work (and, thus, human workers), e.g., unpaid work, from their purview, together with the fact that such excluded work can (and should) be incorporated into human development/deprivation accounts and indices, legitimises such a distinction. The powerful discourse on “women’s work” is illustrative of this theme. Contextually, as discussed and shown in the next section, 78 percent of all workers in Nepal work for themselves, i.e., are self-employed. The quality and level of individual and collective independence, self-initiative, self-reliance and self-respect that such a work regime − under which the workers control their means of production − might engender in an authentic calculus of human development is something that cannot be captured without forcing a distinction between the categories of work and labour/employment. In addition, a society where such a work regime is dominant potentially bears a different set of implications for policymaking, including in the domain of human development, than in a society with a work regime in which the category of labourer/employee is dominant.

WORK AND EMPLOYMENT

6.4 SELF-EMPLOYMENT Of all workers (including those who are wageworkers), nearly four-fifths are self-employed. While the scale of self-employment is very high (57 percent) in urban areas as well, it is even higher (80 percent) and dominating in the rural areas. According to the Population Census of 1991, 92 percent of the work-force in the Mountains, 84 percent in the Hills and 74 percent in the Tarai were engaged in agriculture. Interestingly only 8 percent of the workers in the Mountains worked as wage labourers, whereas the share was 13 per cent and 35 percent in the Hills and Tarai respectively (ILO-SAAT 1997). The remaining large proportion of work force was self-employed, including unpaid family workers. The 1996 NLSS data set also largely corroborates 1991 census data (figure 6.1). As self-employment is the dominant component of the total employment structure, improvement in income of this component depends more on the development of skills, introduction of new technology and managerial innovations rather than on the wage structure per se. The emphasis of the employment strategy should, therefore, be on supporting selfemployment through macro-economic measures, transfer of technology and investment in human development.

6.5 EMPLOYMENT, UNEMPLOYMENT AND UNDEREMPLOYMENT As noted earlier, the status and conditions of employment of the work force not only determine the opportunity to earn income but

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also affect development of personality, social status and quality of life. An unemployed person faces severe deprivation. Irrespective of whether or not he/she is living an income-adequate life, lack of employment deprives a person from worthwhile individual and collective life.

6.5.1 Unemployment A person 10 years of age or above who is not at work at least one day in a year or one hour in a week but is seeking work or is available for work and who is not a student or household worker or physically unable to work is defined as unemployed. Owing to this narrow definition, the scale of unemployment has historically been observed to be relatively low. In 1984/85, the rate of unemployment was slightly above 3 percent (NRB 1988). The rate in the rural areas was approximately 3 percent while it was slightly above 8 percent in the urban areas. In 1996, unemployment rate increased to 5 percent (CBS 1997b). The rural and urban rates remained slightly below 5 percent and more than 8 percent respectively (figure 6.2). For 1997, however, the National Planning Commission has estimated a higher unemployment rate (14 percent) after making the necessary adjustment on the definition of economically active population and the work participation rate (NPC 1997). This clearly suggests that the rate of unemployment has suddenly started to increase within the last decade. The rate of unemployment varies significantly by eco-systemic regions: 2.1 percent in the Mountains, 3.7 percent in the Hills and 6.5 percent in the Tarai (CBS 1997b). Disaggregation by development regions shows that the rate is relatively higher in the eastern, central, and mid-western regions and relatively lower in the western and far western regions

(CBS 1997). Excepting anomalies, data at the levels of eco-systemic and development regions indicate that areas which have a larger “modern sector” and a larger body of wage labour tend to produce a higher rate of unemployment. That women have a lower unemployment rate than men (CBS 1997b) also tends to confirm this pattern (see section 6.9 for detail).

6.5.2 Underemployment A person is treated as underemployed if he/she does not work for 40 hours a week or 8 months a year. As employment has been defined very broadly encompassing even those who have worked for just one day in a year, the intensity of underemployment is vividly understandable. The relatively modest − although increasing − rate of unemployment, circumscribed by its very narrow definition, hides large-scale underemployment. In 1991 (CBS 1995b), almost 35 percent of the employed persons worked for less than eight months in a year. Similarly, the 1991/92 agricultural census shows that nearly 39 percent of the agricultural workers worked for less than 40 hours per week. (It should be noted here, however, that such a less-than-full-time involvement is built into the seasonality of agriculture. During the peak season workers put in far more than full-time work). The extent of underemployment in 1996 was 47 percent for the country as a whole and at the level of the eco-systemic regions, it was 51 percent for Tarai, 45 percent for Hills and 36 percent for the Mountains (table 6.5). This set of data also tends to lead to the conclusion reached in the preceding section that deprivation from work, under the existing political-economic structure, is more characteristic of the “modern” rather than the “traditional” sector. On the other hand, the rate of underemployment is much higher in the rural areas than in the urban areas as evidenced by the fact that in the rural areas, only 52 percent of the labour force works for more than 40 hours a Table 6.5 Rate of underemployment by region (in percent of labour force)

Region All Nepal Rural Urban Mountains Hills Tarai

1977 63.1 44.7 -

1984/85 46.4 33.6 -

1995/96 47.0 47.5 38.1 36.5 45.1 50.8

Source: ILO-SAAT 1997.

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Development Region where it was 47 percent (CBS 1997a). Wage workers labour under a precarious regime because of the fact that no minimum wage legislation is in effect (as discussed in the following sections). Similarly, provisions for wage indexation, incentive packages for compensation and adequate social security have not been introduced in the labour market. Actually, the existing level of wage income is insufficient even to meet the minimum caloric requirement of the workers. The high rate of inflation, which has averaged 10.6 percent during the last decade, together with a slow increase in nominal wages, has resulted in a downswing in real wages and level of living of the labourers. Adoption of the Structural Adjustment Programme (SAP) since the mid-’80s has also had a significant bearing on this downswing. The SAP normally includes a strategy to freeze nominal wages so as to ensure competitive advantage due to exchange rate depreciation. In part, because Nepal accepted nominal-wage freeze as one of the conditionalities under the SAP since 1986, the rise in nominal wages was very low compared to the rise in prices during the last decade. As a result, real wages, both in agriculture and manufacturing, either did not improve significantly or slid down outright (table 6.6). In the civil service, the salaries and allowances of the non-officer level employees in 1996 remained below those in 1985 in real terms. No minimum wage has been fixed for the unorganised sectors, mainly agriculture which accounts for 56 percent of the wage

week compared with 62 percent in the urban areas (CBS 1997). This means that lack of work is primarily attributable to the nature of the specific agrarian and agricultural regimes outlined in the beginning of this chapter. This is also the sector in which the wage rates are very low. Underemployment and unemployment, together with low wage rates, in turn, have aggravated income-poverty preventing a large proportion of the population from using and enhancing their capabilities, including the capability to work. Lack of work haunts even those with fairly high levels of capabilities: the unemployment rate among persons with secondary or higher education is 3.9 percent for the age group 25-29 years and 20 percent for those 30 years and above (CEDA 1994).

6.6 WAGE EMPLOYMENT In 1996, only 21.7 percent of all workers were in wage employment, 12.2 percent in agricultural and 9.5 percent outside agriculture (figure 6.1). Disaggregation by location shows 21 percent (13 percent in agriculture and 8 percent outside agriculture) of rural work force and 43 percent (5 percent in agriculture and 38 percent outside agriculture) of the urban work force in wage employment. By development region, wage employment was 26 percent of the total employment in the Eastern, 24 percent in the Central, 20 percent each in the Western and Mid-Western and 12 percent in the Far Western development regions, and more than half of all wage employment was in agriculture in all development regions except for the Far Western

Table 6.6

Levels and trends of real wage by sector, 1985-1996

1. Real wage by industrial activity* (Rs/month for unskilled labour, at 1985 prices) Region/Sector Kathmandu Agriculture Industry Labour** Biratnagar Agriculture Industry Labour 2. Real wage in civil service Job\ year Peon Level III (Junior clerk) Level II (clerk) Level I ( senior clerk)

1985

1990

1994

1995

636 313 -

657 280 631

658 360 775

739 421 783

523 301 -

478 304 478

506 431 619

472 507 629

1985 410 545 650 815

1991 469 580 654 770

1995 404 495 569 697

1996 795 412 852

444 381 592 1996 441 520 583 694

* Nominal wages in Kathmandu and Biratnagar deflated by Consumer Price Index for Kathmandu and the Tarai as a whole, respectively. ** Other unorganised sector labour. Source: Calculated with information collected from Nepal Rastra Bank and Ministry of General Administration, HMG, Nepal.

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employment. The minimum wage fixed by the government in the organised industrial establishments employing more than 10 workers is Rs.1,000/month for unskilled labour and Rs.1,350/month for highly skilled labour. Daily wage in the organised sector is fixed at Rs.40/day. In the tea estates in the eastern region, where a large number of labourers are concentrated, the minimum wage is fixed at Rs.850/month or Rs.34/day. The minimum wage levels are insufficient even to cover consumption at the subsistence level. Even if only the need for minimum calorie intake is taken into consideration, the cost exceeds Rs. 1,800/month5. Other incentive categories, which upscale wages, are very few and provide a low level of benefit. Even gratuities and provident-fund facilities do not cover a considerable part of the wage-earners in the organised sectors. As wage-indexation is not under practice, real wages are not protected from going down due to a rate of inflation which is higher than the rate of increase in nominal wages.

6.7 MIGRATORY EMPLOYMENT Migratory movement of labour (defined as interdistrict/international out-migration for work) is relatively large in scale and has been further strengthened in the last three decades. Such movements can be divided into two categories, seasonal (or circular) movement and permanent movement. While both streams of movement are highly significant in scale, most data sets have failed to capture the scale of seasonal stream adequately. There is enough evidence (cf. McDougal 1968; Okada 1970; Dahal, Rai and Manzardo 1977; Mishra, Pandey and Uprety 1993, for review of literature), however, to indicate that the seasonal stream is large in scale. Lack of work in the Mountains and Hills during the slack agricultural season in the winter, low wage rates and lack of income from nonagricultural sources and high levels of human deprivations, including in relation to education and health there, annually force a large number of workers to Tarai and cities and towns of Nepal and India looking for work. Such a migratory stream has been noted to be extremely large in the mid-western and far western Mountains and Hills. It has been noted that more than one-half of all households are involved in such a routine (McDougal 1968; Okada 1970). It has further been noted that income from migrant labour forms a high proportion of the total

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household income for the seasonal migrants’ households. In addition, seasonal migration is no longer limited to peoples from the Hills; the routine has picked up considerably among the peoples in Tarai as well, who mostly migrate to urban areas in Nepal or to the green revolution areas of North India. Not only are more seasonal jobs available in both of these areas, but the wage rates are much higher as well. The censal and some other data sets, however, do capture the scale of permanent migration. Data from different population censuses show that 0.44 million people during 1961-1971, 0.93 million during 1971-1981 and 1.23 million during 1981-1991 migrated permanently. Censal data also show that during 1981-1991, 3.5 percent of the population in Mountains and 5.9 percent of the population in Hills moved away permanently, mostly to Tarai. While not all of these were labour-migrants − “marriage migration” and “migration of the better-off” are significant in size as well, and the censal data are not discriminating enough − the migrant population as a proportion of the total population was 2.9 percent, 1.6 percent and 2.4 percent in 1971, 1981 and 1991 respectively. While the landless, the highly indebted and members of the “low caste” groups appear to migrate in larger proportions, even the relatively well-off individuals and households join the ranks of labour migrants. Most international outmigrants work in India. But approximately 12,000 labourers are also reported to be working in countries other than India. A third migratory stream, that of inmigration, principally from India, is also sizeable and significant. Migrant workers from India, whether seasonal or permanent, can be found engaged in various sectors, e.g., agriculture, industry, construction and informal sector trades. While the number of such workers is large in the agricultural sector, in terms of proportion, they are quite significant in the manufacturing sector where they form nearly 13 percent of the total (manufacturing sector) workers (ILO-SAAT 1997), e.g., tea estates, carpets, printing press, rice mills, metal works, etc. (table 6.7). While adequate information on the total volume of Nepal-India labour migration is sketchy (see Gurung et al. 1983) − not the least because of its political sensitiveness − the popular impression in Nepal remains that labourers from India to Nepal are much more skilled than labourers from Nepal to India. It has been argued that the wage rates of labourers

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 6.7 District Jhapa Sunsari Chitwan Nawalparasi Makawanpur Rupendehi Banke Total

Nationality of industrial workers (surveyed districts), 1995/96 Number of industries 58 85 56 27 70 87 44 427

Nepalese 5,175 5,881 2,061 2,289 4,135 4,158 840 24,539

Manpower employed Percent Non-Nepalese* (85.5) 879 (82.3) 1,269 (83.8) 397 (95.5) 107 (95.9) 175 (93.2) 304 (63.6) 481 (87.2) 3,612

Percent (14.5) (17.7) (16.2) (4.5) (4.1) (6.8) (36.4) (12.8)

*Almost all non-Nepalese workers are from India. Source: DOL 1996.

from India, because they are more skilled, are higher as well. It has further been argued that such a pattern of labour migration tends to discourage skill development among the Nepalese workers (Verma et al. 1996). Such arguments, in part, have led the government to establish a few skill-training centres in different parts of the country. Though localised and less significant in terms of magnitude, the labour displacement effect created by nearly 100 thousand refugees from Bhutan in camps in the eastern districts of Nepal has also been highlighted in the media. While migration, including some level of labour migration (whether seasonal and permanent), can be regarded as a “normal” process − and one which benefits both the migrant and the macro-scale work regime − whether a similar generalisation holds in the case of labour migration in Nepal is not clear. That the act and process of migration has facilitated the use as well as (some degree of) enhancement of capabilities is not an issue that needs to be debated. What does need to be debated, however, is the continued recreation of conditions in the labour “supplying” regions − and among the people there−where the levels of human deprivations are extremely high. In the first instance, these regions, and the people living in these regions, suffer from very high levels of capability-poverty. In the second instance, and this completes the cycle of capability-poverty, even those few who have enhanced their capabilities find that they cannot make use of their capabilities. Capabilities are social products in the sense that it needs a capable person to add to the capabilities of others less capable. Capabilities are social products also in the sense that their use and enhancement requires sustained institutional intervention. Migration severs the social connection of capability by individualising it, at

WORK AND EMPLOYMENT

least in relation to those peoples and regions which need them sorely. Migration also weakens the social connection of capability by eroding the sustainability of institutions which carry it forward.

6.8 WORK IN THE INFORMAL SECTOR Since the overwhelming majority of the work force is engaged in subsistence agriculture and since it remains “unorganised” in the form of firms, the “informal sector” − to the extent that self employment can be described as such − predominates the world of work. Even within the non-agricultural sector, whether rural or urban, most of the work activities are organised by households. The organised sector, which is defined in terms of commercial establishments employing 10 or more workers, makes the share of the organised sector in total employment small and somewhat ambiguous as well.6 In 1992, the total number of workers employed in the organised sector was 0.22 million (CBS 1994a). Subsequent surveys relating to the industrial sector have put the number of employees in the manufacturing sector at 0.35 million. If the number of government employees (0.34 million) is added to this, the number of organised-sector workers stands at 0.69 million or 7 percent of the total employment (figures for 1993). The World Bank estimate for 1993, on the other hand, puts employment in the organised sector at 0.97 million, which is almost 10 percent of total employment (ILO-SAAT 1997). Another estimate, which regards the agriculture sector as a totally unorganised sector, puts total employment in the organised sector at 0.84 million (or 8.5 percent of the total employment, including self-employment) (ILO-SAAT 1997). Despite variations in measurement, above

105

estimates agree that the organised sector covers only a small proportion (7 to 10 percent) of all workers. Smallness of the organised sector, among others, implies that wage legislative process would impact only a small body of labourers. The wage-based informal sector, on the other hand, is characterised by diversities in wage rates, conditions of employment, and discriminations based on gender and age.

6.9 WOMEN AND HUMAN DEVELOPMENT Economic and developmental literature, as also public policies and statistical documents, have remained extremely unsure of their conceptual footing in relation to the theme of women and work. The current debate, in particular, has centred around the issue of whether or not unpaid work, most of which is performed by women, can/should be recognised, valued and accounted for in market-economic terms. The ascendance of feminism, and the fact that more women are in public decision-making levels now than in the past, have put the apologists of conventional wisdom on the defensive. The future outcome of the debate, however, is still uncertain. At issue, of course, is more than whether a housewife ought to be paid and pensioned. The political and cultural legitimacy of the human agency of the woman is at stake as well. The human development literature is much less guilty on the gender front. Its emphasis on universalism, end measures (of human development) and agency-achievement (as contrasted to welfare-achievement; see also 2.3) make it a potentially rich instrument to capture the predicaments and deprivations of women (as well as other “disadvantaged” groups). The construction of allied gender-sensitive human development measures, e.g., GDI and GEM, which capture the levels of capabilities and deprivations among women and explicitly or implicitly compare them against those for men, also render it more sensitive to gender disparities. Incorporation of these conceptual emphases into policy frames at various levels of organisation of social life would not only contribute to a reduction of gender disparities but also would lead to an overall enhancement of human capabilities. Yet, the conceptual frame of human development has also altogether neglected to encompass the fundamentally far more diverse life and work experiences of women. In

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particular, it has refused to frontally inquire on the human developmental correlates and consequences of reproduction (including rearing) and householding − the key and nearly exclusive dimensions of women’s lives − at the level of women as well as the society as a whole. To put it rather awkwardly, these are not only developmental acts per se but these acts also open up future developmental possibilities for the larger society, including women. The issue, as in the case of unpaid work, is one of social recognition and valuation − and of the selfdignity it may instil in the person. On the other hand, incorporation of measures such as female/male labour participation ratio, while legitimate enough, also makes it appear as if a higher value necessarily enhances human development among women − which, unfortunately, does not appear to be the case, e.g., when juxtaposed against the fact that twothirds of the global working hours are put in by women. More generally, the frame of human development focusses only on the public, and primarily market-economic, domain and, by doing so, disvalues human developmental achievements and contributions of women who are much more salient within the private domain. The issue of contributions, generically, is something that has been totally neglected in the human development frame, despite that fact that the issue is of fundamental policy relevance.

6.9.1 Women and work Women in Nepal, as elsewhere, hold the triple work responsibility of reproduction, householding and employment. However, reproduction is not treated as work and householding is not considered a productive job at least by the state organs. Women suffer from discriminatory practices in opportunities for education (chapter 5). Personal mobility, which is required, among others for skill development and independent decision-making, is highly restricted. Such a practice has wide ramifications, including in entry in to the job market, where they are directly discriminated as well. As in most of the world, women in Nepal work for longer hours than men, have much lower opportunity to gainful employment and possess extremely limited property rights (see 1.2). As elsewhere again, women in Nepal precariously juggle themselves among the three principal work regimes, reproduction, householding and income generation. The work burden of women in Nepal,

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however, is much higher than the global average for women. First, the reproductive work is much more intense not only because the fertility rate is much higher but also because the home continues to be the centre of nurture and socialisation to a much greater extent than in most of the world. The average duration of breast-feeding in Nepal, for example, is one of the highest in the world (chapter 4). Many children do not go to school and both the school season and the daily school hour are short (chapter 5). Second, householding, primarily because the home also functions as a unit of production of subsistence, is highly workintensive, particularly during the peak agricultural seasons. Third, and in addition to the high work-intensity of reproduction and householding, the rate of participation of women in Nepal in directly productive activities is one of the highest in the world.

6.9.2 Women and directly productive work Data sets on directly productive work participation rates, particularly for women, diverge widely (table 6.8). According to the 1991 census, the directly productive work-force participation rate among women is approximately 46 percent compared to approximately 69 percent for men (CBS 1995b: 466). The 1996 NLSS data set (CBS 1997a), on the other hand, reports a rate of 66 percent for women (and 75 percent for men). Another 1996 data set (MOH 1997c: 28) reports a 77 percent participation rate for women 15-49 years of age and tends to corroborate the NLSS data set. While definitional issues lie at the heart of such a divergent measurement, and while reproductive and householding works do limit women’s involvement in directly productive work, extant literature as well as experience tell us that very few women keep away from directly productive work for long periods in the rural and agricultural areas of Nepal. It is this agricultural Table 6.8

Work force participation rate by gender, 1971-1996 (in percent)

Year

Men

1971 1981 1991 1996

82.9 83.2 68.7 75.2

Women

All

35.2 46.2 45.5 66.4

59.3 65.1 57.0 70.6

Source: CBS 1995b,1997a.

WORK AND EMPLOYMENT

sector, it must be emphasised, which overwhelmingly dominates women’s directly productive work routine: in 1991, 90 percent of all “economically active” women, in contrast to 75 percent of men, were engaged in this sector (CBS 1995b). Only four percent of all “economically active” women, in contrast to 12 percent of men, are in formal sector employment. On these counts, the latter sets of data, rather than the 1991 census data, would appear to be more credible. This, of course, also means that women are involved, to a greater extent, in a lowproductivity, low-wage and high-underemployment sector. A larger proportion of women, on the other hand, is self-employed and is in the agricultural sector (figure 6.3). To the extent that women participate in the nonagricultural/formal sectors, they are confined to less productive and less remunerative jobs. Women workers in agriculture can be classified, roughly, into four categories: unpaid family workers (who do not have right over what they earn), self-employed workers (who enjoy right over their earnings), wage-labourers and long-term dependent labourers (domestic servants, kamaiyas). Only 35 percent of all farm families employ others for farm work. The rest, two-thirds of all farm families, work on their own with occasional assistance of casual agricultural labour and/or long-term dependent workers. As noted earlier, this latter category is where women workers predominate. Since wage employment is relatively limited in magnitude and since men are the main beneficiaries of such wage work, demand for women wage workers is high only during the planting and harvesting seasons: only a very small proportion of women is in permanent wage employment in agriculture. On the other hand, most women participate in

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Box 6.1

Women’s work and right to income

A case study (Bhatta et al. 1994) has examined the increased workload of females without corresponding increments in the access and command over resources and highlighted how poverty has been feminised after the implementation of development projects in the Gushel VDC of Lalitpur district. In the context of Small Farmer Development Project (SFDP) credit facilities and dairy initiatives, farmers have increasingly moved into livestock production, particularly buffalo raising. It indicates, positively, a structural transformation in agricultural sector in Gushel VDC. But the transformation seems to be biased against females. Unlike agricultural production, livestock production in the hills occurs year round, and requires rigorous daily routine. Care for each buffalo involves a myriad of timeconsuming and arduous tasks such as preparing feed, cleaning stalls, milking, collecting fodder and fuelwood, and bathing the buffalo. Most, if not all, of the responsibilities fall on the shoulder of females including young girls. Male involvement is centred on monetary transactions and crisis situations requiring external assistance, such as, calling for veterinary assistance or a faith healer, or transporting livestock except for some young boys who are taking responsibility of buffalo care. Combined with daily chores, the added responsibility has considerably lengthened female work hours, to almost 16 hours a day, which restricts their mobility and lessens or erases their leisure and eventually results in girls droppings out of school. Households with few daughters seek early marriage for their sons in order to gain the bride’s helping hand.

accruing to family members as a whole, females receive little or no personal gains from these activities but are forced to more work than before. The study shows that only a few rich and relatively well educated females are aware of the credit programme and reap benefits just to tuck away or invest in jewellery. Many women are unaware of such programmes. They received, as they disclosed, two sarees a year prior to raising buffalo, and receive two now. They have to bear the brunt of caring for animals but virtually have no financial access or control over the returns from livestock production and milk sale. They are unaware of even the income earned by selling milk in the market, as done by the male counterpart. Men regard purchase of buffalo primarily as an investment. They consult with their families regarding the purchase of buffalo not to gauge whether women are inclined towards the purchase, but rather to determine whether new livestock can be adequately attended. Such advice is sought not for their concern about the excessive workload on women but to work out the probable risk and yields on new investment. Men are quicker to manage monetary transactions. Lump sum payments from dairy every fifteen days have provided men with ready cash and daily interaction with fellow farmers has created new gambling partners. Payment days witness increased drinking and gambling. There were stories of gambling losses resulting in loss of livelihood, land and other assets. In fact, alcoholism and gambling have become an issue of grave concern for the household as well as community.

Source: Bhatta, Nina et al., Managing Resources in a Nepalese Village: Changing Dynamics of Gender, Caste and Ethnicity, May 1994.

unpaid inter-household exchange of agricultural labour (parma labour system). Wage-earning women workers are relatively more concentrated in Tarai. Since collective bargaining is not possible in the agriculture sector at present, a diversity of wages and modes of payment can be found. Equal remuneration for equal work is violated even in government farms (tea estates, agricultural farms). Within the unorganised sectors, wage rate for women in urban areas is only about two-thirds of the wage rate for men while it is equivalent to 87 percent of the wage rate for men in urban areas (Acharya 1997). The most exploitative form of female agricultural labour exists within the kamaiya labour system in five Tarai districts of the midwestern and the far western regions (section 6.11). While the magnitude of this system of labour is relatively small, it is extremely exploitative for the women and households involved. It has been reported (MOL 1995) that the system, as far as women workers are concerned, makes space for four different categories: kamlari who is a bonded labour, bukarahi who is forced to work without

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compensation on account of the fact that her husband (or a male member of her family) is working as a kamaiya in the household of the landlord, organi who can be a sex-worker for landlord and his guests, and beglari who is a seasonal worker working for one meal per day. Sex-work, however, is not limited to organi women. It is much larger in scale and encompasses a large number of men and women from various regional and social backgrounds. Patrilineality-led landlessness among women, unemployment and under-employment, intense income-poverty and the high and increasing rate of migration − which assures, among others, anonymity are encouraging trade in flesh. While sex trade is significant in the urban areas in Nepal as well, it is reported to be very high among women migrants to the cities in India. Social deprivations that urban workers, particularly migrant workers, suffer in the cities of India, apparently create the demand-side of the trade. It has been reported that 100,000 200,000 women from Nepal are currently engaged in such trade in the cities of India. It has also been reported that approximately 5,000 women from Nepal enter such trade annually in

NEPAL HUMAN DEVELOPMENT REPORT 1998

India. Furthermore, it is reported that more than 3,000 women from one single district of Nepal entered into such trade in 1996 alone (Pradhan 1996).

6.9.3 Women and underemployment Various studies and surveys reveal a lower labour participation rate for females than for males, and hence a higher rate of underemployment for females in relation to males. The NLSS survey (CBS 1997a) shows an activity rate of 66.4 percent for the female labour force compared to 71 percent for the male. Although unemployment rate for women (4.1 %) is lower than that for men (5.6 %), the underemployment rate for women is much higher than for men7. The situation of gainful employment is more distressing for the employed women. Women are discriminated against not only in job opportunities but also in wage rates. Most women are confined to the informal sector where wages are low, working hours are longer, working conditions are poor and non-wage compensations are non-existent. The lack of access/control over productive resources, mainly landed property and credit, have deprived women of gainful selfemployment opportunities. This is evident from the NLSS (CBS 1997a) which shows that only four percent of women are engaged in selfemployment outside agriculture compared with 11 percent of men. In the absence of wage and self-employment opportunities outside agriculture, most (81 percent) of the women are confined to self-employment in the agricultural sector where their productivity is low and even high productivity is not properly recognised. Low income earning opportunities together with absence of right to property has limited the role of women in decision-making about the allocation of household income. Lack of decision-making power has deprived women more than men of the basic elements of a decent life such as food and nutrition, education and skill development and health and family planning. This has ultimately undermined their access to gainful employment opportunities, participation in professional jobs and mainstreaming in the developmental and political processes.

6.10 CHILD LABOUR8 Globally, approximately 250 million children of the age group 5-14 work for livelihood in

WORK AND EMPLOYMENT

conditions of various degrees of exploitation. Among them, 120 million work full time. Regionally, 61 percent of all child labour lies in Asia. Moreover, the number of children victimised by sexual exploitation in Asia alone is almost 1 million. The problem of child labour is re-emerging even in advanced industrial countries (CWIN 1997). Despite many laws and regulations, child labour and servitude is an alarming problem in South Asia. Over 80 million children9 in this region are working in the most difficult circumstances. In Nepal, children in the 5-14 age group numbered 5.7 million in 1996. In 1991, the number of economically active population in the age-group 10-14 years was more than half-amillion. In 1996, the number was estimated to be more than 1 million which constitutes around 10 percent of the total work force (CBS 1995b, 1997a). The proportion of economically active children declined drastically during 1981-1991. For the 10-14 age group, the proportion of the economically active population declined, during the same decade, from 57 percent to 23 percent10 (CBS 1995b), although a far higher proportion of boys than girls benefited from this transition. Increased enrolment in schools, particularly of boys, has been noted to have contributed to this decline (chapter 5; CBS 1995b). Whether children’s economic activity can be equated with child labour and, by implication, with exploitation and current and future Box 6.2

The WHY of street children

The street has been the workplace for about 26 thousand children in Nepal. It has also been the home for approximately 4 thousand children. The growing number of street children is a challenge not only to the pundits of development economics but also to those who champion human rights and human development. However, the growing number of street children has hardly drawn the attention of the government and the human rightists either. A few NGOs have been involved in their rehabilitation. But the sustainability of their effort is under question. A survey of some major cities in Nepal showed the highest concentration of street children in Kathmandu. The main reasons why they were on the street were: temptation to earn more and live a better life, lack of food at home, peer influence, maltreatment at home, and abusive and alcoholic parent. But these were only some of the reasons why they were on the street. Death of parents, lack of opportunity for schooling, and abandoning by parents were some of the other reasons. This means that the problem of street children is the culmination of many socio-economic problems and the problem could be solved only by restructuring the polity, society, and the economy. Both preventive and curative approaches are needed to solve the problem permanently. Source: CWS 1996.

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deprivation, is an issue that has begun to be debated rather intensely. One position regards all economically active children as being inherently exploitative and the other one regards child work in households and family farms as “normal”, if not enriching. Extremely divergent figures are forwarded in support of either of these two positions. However, while child work cannot be equated with child labour, the fact that many children, especially girls, absent themselves from schools frequently or forego schooling altogether due to the high demand for work at home (chapter 5) certainly implies a high level of deprivation. Such over-demanding work definitely detracts them from building their capabilities. Additionally, it is also a fact that even as more children are entering schools, the number of children who are destitutes is showing an upward trend as well (box 6.2). 6.10.1 Efforts undertaken After 1990, the government has expressed serious concern about children and child labour. It has ratified the UN Convention on the Rights of the Child and prepared a status report on children. It has endorsed the World Declaration on the Survival, Protection and Development of Children. At the regional (SAARC) level, the Colombo Resolution, in which the government commits itself to work for eliminating child labour in a progressive and accelerated manner, has been endorsed and a task force has been formed for the elimination of child labour. The Labour Act 1992 and the Children’s Act 1992 have clearly defined, regulated and prohibited employment of children with a number of provisions. In order to translate these policies into action, a number of activities have been carried out by the government, e.g., formulation of a 10year National Programme of Action for Children, formation of Child Welfare Board at the national and district levels and of the Children at Risk-Networking Group (CARNWG), and collection and processing of first Table 6.9 District Dang Banke Bardiya Kailali Kanchanpur Total

few rounds of the Nepal Multiple Indicator Surveillance data sets − which are to be used for local dialogue and planning purposes. Besides, NGOs related to child development and child labour as well as the trade unions have made efforts to address child-related issues.

6.11 BONDED LABOUR Despite the fact that slavery was abolished in 1924, labour bondage has not quite been eradicated. The magnitude of such labour, according to available evidence, is not very large − although under-reporting may also be pronounced. For those involved in bondage, however, the deprivations that they − and other members of their households − suffer are acute. Three principal forms of labour bondage can be identified at present. The first form, which forces the wife (or another female member of the family) within a bondage, by virtue of the fact that the husband works within a relationship of bondage to the master (almost always a feudal landlord), has briefly been described above (in 6.9.1). The second form is that of debt bondage under which the debtor is forced to work for the creditor in lieu of interest payments (and in certain cases, payment of the principal amount as well). Bonded labourers in this category are not necessarily agricultural labourers. They work in various sectors, ranging from agriculture to manufacturing, e.g., the carpet industries, to domestic service. Indeed, it is inherent in a bondage relationship that the bonded labourer has to bide by the wishes of the master and cannot control his/her area of work. The kamaiya bondage system, prevalent in five districts of the mid-western and far western Tarai, constitutes the third form (box 6.3). Within the kamaiya system, however, the intensity of bondage is not uniform. Kamaiya labourers under debt bondage suffer from the most intense deprivations. Almost all kamaiya labourers also belong to the Tharu ethnic group. The total number of kamaiyas in the five

Kamaiya families, labourers and indebtedness Number of kamaiya families 3,032 1,066 5,119 6,245 1,973 17,435

Number of kamaiyas 3,824 2,037 9,617 7,902 2,382 25,762

Number of Indebted kamaiya families 1,253 354 2,071 4,184 1,362 9,224

Total debt in ‘000 Rs. 5,581 1,313 6,039 19,260 11,939 44,132

Debt/family (in Rs.) 4,454 3,709 2,916 4,603 8,766 4,784

Source: MOL 1995.

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NEPAL HUMAN DEVELOPMENT REPORT 1998

Box 6.3

The tradition of bonded labour

Bonded labour, while not large in scale, exists in different forms. In some instances, children from rural areas are assigned to work in urban households/manufacturing units on debt bondage (against debts incurred by their parents). Cases of child debt bondage can be found even within rural areas. A sizeable number of adults also labour under debt bondage. In the mid-western and far western hills, the debt-bonded agricultural labourers, haliyas, mainly from “untouchable” castes, work under this system. The Anti-Slavery International and INSEC in 1996 rarely observed haliyas from among members of the high caste groups (ASI-INSEC 1997). Their report also revealed that in the regions noted above, members of “untouchable” households were charged very high rates of interest − as high as 10 percent/month − on loans forwarded by their landlords, while members of “high caste” households were generally charged only 2-3 percent/month. Such discrimination was designed to keep alive and intensify the system of debt bondage. The “low caste” Tarai groups like Musahar, Dusadh, Dom, Chamar, etc. face a similar problem: repayment of loan is actively discouraged by the landlords (ibid.). Because the primary interest of the landlord lies in continued cultivation of his land and in regular assurance of labour supply, his lending is not directed towards earning interest in cash (NRB 1988). The kamaiya bonded labour system is prevalent in five Tarai districts − Dang, Banke, Bardiya, Kailali and Kanchanpur. kamaiyas are mostly landless and homeless, and belong to the Tharu ethnic group. All the Kamaiyas are not under debt bondage but they are nonetheless dependent upon landlords for their living. Some of the landlords, relying upon the illiteracy and innocence of the kamaiyas, are reported to illegitimately upscale the loans

taken by the kamaiyas. A kamaiya is heavily burdened with debts and often remains as such for a long period. Debts are inter-generationally transferable. Frequently, therefore, a kamaiya household remains in bondage through multiple generations.Kamaiyas with large debts cannot change their masters even if they do not like to serve them since no one is ready to employ them at the cost of paying back the large debt. As a result, such kamaiyas are forced to remain with the same master despite unfair terms and conditions. However, they do succeed in changing their masters frequently if the amount of debt incurred is small . A kamaiya who is unwilling to continue to serve the current master for the next year starts looking for another master during the third week of January. Traditionally, such a kamaiya comes out of his house with his head wrapped in a piece of cloth and carries a stick on his shoulder − the identification of a potential bonded labourer looking for a new master. If he acquires another master, the new master goes to the former master, pays back the debt and takes the kamaiya to his house. No work-hour is fixed and kamaiyas work long days, sometimes up to 18 hours a day. Exploitation of the children and women of the kamaiya’s family by the master is common. One of the main reasons for employing/recovering a kamaiya is to acquire full access to the labour of the kamaiya's wife. If the kamaiya does not have a wife, a sister, mother or a brother's wife are eligible substitutes. She is usually assigned to domestic work at the master's house for which she does not receive any wage. Children of a kamaiya are also used by the master in domestic work and cattleherding.

districts is 25,762 (MOL 1995). They live in 17,435 households which have a total population of 78,146 (table 6.9). The total number of kamaiyas under debt (saunki) bondage is 53 percent of all kamaiya households. (In addition, 58 percent of all kamaiya households are landless and 38 percent suffer both from bondage and landlessness.)25. Three-fourths of the families inherited the kamaiya status. The scale of debt that keeps the indebted kamaiyas bonded is not very large: the average debt per indebted family is only about US$ 80. But their income is so small in scale that they cannot pay it off. Public repayment of debt does not appear to be a sustainable solution either: unless the kamaiyas have access to an independent means of production, they are likely to incur debts in the future as well. Capability enhancement by means of education, skill and employment, apart from providing access to small plots of agricultural land, therefore, is the only sustainable policy option available. Kamaiyas who are not indebted (47 percent of all kamaiyas) also suffer from bondage, because they are homeless and landless and the only

labour that is readily available is kamaiya labour. Approximately 60 percent of the kamaiyas had reported that they accepted the status because of extreme deprivations.

WORK AND EMPLOYMENT

6.12 GOVERNMENT POLICIES, WORK AND LABOUR Creation of additional employment, principally self-employment, has remained a consistent and key theme of government policies and plans for the last two decades. A number of themes and strategies have followed this direction. The principal themes and strategies emphasised have been, among others, agricultural intensification and diversification, expanded emphasis on irrigation, expansion of credit facilities, subsidies on technological inputs, e.g., chemical fertilisers, emphasis on rural roads which make access to markets easier and, over the last decade, liberalisation. In addition, tenancy regulation, fixation of minimum wages in the formal sectors and other significant measures have also been instituted. Quite a few publicwork programmes have been launched as well.

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The scale of additional employment generated, however, has been far from adequate. Both the number and proportion of the unemployed and underemployed has increased annually. While the Ninth Plan(1997-2002) speaks of providing work to at least one member of a household, it is not altogether clear whether it should be taken as a statement of intention or as a commitment of the government. The Agricultural Perspective Plan, adopted by the government in 1994, provides the newest and, in many ways, the most promising strategy for large-scale expansion of opportunities for work and employment (see 13.4.2). So far as the formal sector is concerned, their job-creation potential has remained historically limited. At present, only 10 percent of the annual entrants to the work force can find job in this sector. Adoption of the liberal regime in the last 10 years, and as of yet, does not appear to have contributed to the expansion of work opportunities. Indeed, adjustment measures, in particular, have squeezed employment opportunities in the civil service, reduced real wage rates by freezing nominal wage hike, escalated prices through devalued exchange rate, withdrawal of subsidies and deregulation of administered prices without ensuring competitive environment in the private sector. As far as conditions of work in the formal sector are concerned, a few acts regulating labour relation have been in existence for the last four decades, e.g., the 1959 Factory and Factory Workers Act, the 1974 Bonus Act, the 1983 Industrial Trainees Training Act, and the 1986 Foreign Employment Act. A number of labour-related acts, however, have been implemented following the establishment of the multi-party system in 1990, e.g., the Labour Act, and the Trade Union Act, both formulated and enacted in 1992. The key features of these acts are right to association and collective bargaining, provision against gender discrimination, and concern for minors in the work place. A number of other acts, e.g., the 1992 Transportation Act, the 1992 Child (labour) Act and the 1994 Working Journalist Act, also form key components of labour legislation. The 1995 Labour Court Regulation Act and the establishment of labour court is also significant in this regard. However, the Labour Act, the most significant labour legislation, concentrates mainly on the organised sector and excludes the huge work force in the selfemployed and informal sectors. In addition,

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weak enforcement mechanisms have made a number of provisions ineffective. A number of other acts also suffer from implementation-level shortcomings. Gender-conscious discourse, as also policy changes, may be said to have started in Nepal in 1975 − in course of the celebration of the International Women's Year. Significant legal changes were made in the late ’70s in relation to women’s property rights. A National Plan of Action for Women was prepared in 1981. The Sixth Plan (1980-1985), for the first time, incorporated specific policies and programmes for women. Nepal also ratified the UN Convention on Elimination of All Forms of Discrimination Against Women in 1990 and has recently submitted its first report (see also 9.2.2). Credit programmes for women, which sought to support self-employment among women and to make them more productive, were initiated in the mid-’80s. The Production Credit for Rural Women (PCRW) project and the women component of the Small Farmers’ Development Programme are two prominent examples. In the ’90s, Rural Development Banks have been established to provide production credit to poor women. However, the scale of credit intervention has been extremely small. The quality of interventions has not been adequate either. As a consequence, the results of these interventions have remained unsatisfactory. One underlying factor for this failure is that these interventions are peripheral: they do not address the larger economic, political and cultural issues which continue to subordinate women. Illustratively, a policy emphasis on income generation among women necessarily produces very limited results without a concurrent legal and cultural emphasis on the personal property rights of women. A new bill, under discussion in the parliament, seeks to entitle daughters to an equal share of parental property. But, under the bill, the entitlement shall revert back to the family at the time of a daughter’s marriage − a solution which is hardly satisfactory from the point of view of a woman’s identity and status. As it is, women have very little say in disposing the incomes that they earn; and spending decisions made by their male guardians are often found to be sub-optimal from the point of view of either the woman earner or the family. With regard to child labour, even if child work is defined differently from child labour, and even if elimination of child labour is

NEPAL HUMAN DEVELOPMENT REPORT 1998

Box 6.4 Prerequisites and actions needed for abolition of bonded labour A.Prerequisites • Formulation and implementation of Bonded Labour Abolition Act to translate the spirit of the constitution into practice • Coordination among government and non-government organisations to avoid duplication • Financial transparency of activities related to the abolition of bonded labour • Establishment of effective supervision and monitoring mechanism B. Actions • Rehabilitation of the homeless and landless kamaiyas • Political and cultural campaign against bonded labour • Fixation of minimum wage and working hours • Creation of alternative employment opportunities • Development of agricultural farms and plantations for regular wage employment • Awareness building, literacy campaign and free formal education to school-age children

prioritised, it is not possible to do so within a very short period of time, particularly in view of the probability that more child workers may enter the labour market. A graduated strategy which puts due emphasis on prevention, protection and rehabilitation needs to be formulated and implemented. The preventive strategy should focus upon literacy, primary schooling, health care and awareness campaigns as well as poverty alleviation measures. As the label suggests, implementation of the strategy should decisively prevent children from entering labour force even as it reduces the burden of child work, including in the family farms. Such a protective strategy should lead to the protection of the rights of working children, initiate welfare programmes and formal/nonformal education, and implement phased efforts to eliminate child labour from hazardous to light works. The rehabilitative strategy in turn should facilitate rescue of children at risk, as well as

WORK AND EMPLOYMENT

liberation from conditions of bondage and social and medical rehabilitation. Despite the long history of the kamaiya bondage labour, the government took notice of the problem only after 1990. During 1990-94, however, government initiatives were focussed on a highly limited-scale extension of educational and vocational opportunities through training to the kamaiyas. But the training remained incomplete and the trainees could not compete in the labour market. Many of them suffered because they were left on their own and extremely insecure. Such a situation created considerable dissatisfaction against the government and the kamaiyas came to the streets to protest collectively. Thus, in the absence of farsightedness, the government exacerbated their deprivation. A few NGOs have been active in empowering the kamaiyas as well. Literacy and awareness programs as well as income generating schemes are being launched by these organisations. In addition, efforts to organise kamaiyas within the national trade union movement are in progress. But this is not sufficient to address the problem of bonded labour (box 6.4). Employment promotion is intimately related with human development. Work and employment, as emphasised at the beginning of this chapter, not only provide key avenues for the use of existing capabilities but enhance them as well. Deprivation from work constitutes a fundamental deprivation from human developmental opportunities. On the other hand, work opportunities are fundamental to individual and collective creativity and self-respect. In the present context of Nepal, the committed implementation of the Agriculture Perspective Plan, in combination with land reform, on which the plan is silent, can go a considerable way in expanding work opportunities. Expansion of the private market sector should also form a key arena for policy formulation.

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CHAPTER 7

Income, Consumption and Poverty “ … the deeper tragedy is that the glass is almost totally empty for too many. Indeed, for too many, it is the worst of time, as huge disparities persist across and within countries.” James D. Wolfensohn at the IMF-WB Group Meeting, Hong Kong, September 1997 Poor countries need not wait to get rich before they can improve the lives of their citizens. A. K. Sen, 1993

7.1 LEVEL AND GROWTH OF INCOME

H

uman deprivations like malnutrition, illiteracy and ill-health are closely related to the level and structure of income and consumption. Absolute poverty severely limits household capability to even meet the basic human needs such as food, shelter, clothing, primary education, basic health facilities and safe drinking water. This chapter analyses the incidence of poverty and its correlates with various economic, geographic, ethnic, social and demographic attributes which have implications for policy-making and for restructuring the economy with a view to giving development a human dimension. Nepal’s level of income (US$ 210 per capita) is one of the lowest in the world; more than half of the population survives on less than one dollar a day. The rate of income growth is lower than that of the Asian and South Asian countries (ADB 1997). Growth was most rapid during the last decade when the economy grew by about 5 percent compared with the average growth rates of 8 and 6 percent for the Asian and South Asian economies respectively. Moreover, Nepal’s economic growth is narrow-based and has a low employment intensity, with the result that income distribution is uneven. Overall, low rate of income growth, skewed income distribution, and particularly, deteriorating terms of trade of the agricultural sector vis-à-vis other sectors have intensified poverty1 During the ’70s GDP growth averaged 2.1 percent per annum. With the population growing by 2.6 percent per annum during the same time,

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real per capita income declined by 0.5 percentage point. As the agricultural sector grew by just as 0.5 percent, per capita agricultural income declined by 2 percentage points. During the ’80s, growth rates in both the agricultural and non-agricultural sectors remained higher than the rate of population growth. As a result, per capita income in the agricultural and nonagricultural sectors grew by 2.3 and 2.9 percent respectively. During the ’90s so far, although the growth in per capita income has remained 2.9 percent on average, per capita agricultural income has recorded a decline (table 7.1).

7.2 LEVEL AND COMPOSITION OF INCOME AT HOUSEHOLD LEVEL The NLSS (CBS 1997) shows Nepal’s average per capita income as $142 (with a regional variation as follows: $298 for urban areas, $131 for rural areas, $446 in Kathmandu, $ 146 in Eastern Tarai, $110 in the Mountains and $107 in Western Tarai)2. (The per capita income Table 7.1

Per capita GDP growth rate (percent)

Indicator\Period Real GDP growth rate Agricultural GDP Non-agricultural GDP Population Per capita income growth Agriculture

1971-80 2.1 0.5 7.0 2.6 -0.5 (-2.1)

1981-90 4.9 4.6 5.2 2.3 2.6 (2.3)

1991-96 5.2 2.2 7.8 2.3 2.9 (-0.1)

Source: MOF 1997.

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 7.2

Level and source of household income by place of residence (in thousand rupees at 1996 prices)

Region

Development Region East Central West Mid-West Far West Eco-Region Mountain Hills Tarai Rural vs Urban Urban Rural Kathmandu Nepal

Total average income

Farm income

Share distribution of total average income (in percent) Non farm Other Wage SelfOther income income income income employment income

40.9 52.4 39.2 36.4 37.3

66 56 59 71 62

22 26 19 20 19

12 18 22 9 19

33 30 25 20 26

58 50 52 65 54

9 20 23 16 19

32.3 45 44.5

62 58 64

18 24 22

20 18 14

34 22 33

54 59 50

12 20 17

86.8 40.4 118.9 40.7

16 65 3 61

54 20 63 22

31 15 34 16

36 27 42 28

33 56 24 58

31 17 34 18

Source: CBS 1997a.

shown is lower than in the national account figures because it takes into consideration only the household sector and does not incorporate business, government and external sectors of the economy) Farm income is the major source of household income accounting for 61 percent of the total household income in 1996. Income from non-farm enterprises accounted for 22 percent and income from other sources (mainly financial assets) accounted for 16 percent of the total household income. Urban income is more than double the rural income levels, reflecting the wide intra-country disparities in per capita income. The same applies for household level incomes as well (table 7.2). The spatial variation in the source and composition of household income is similarly significant. In the Mid-Western Region, farm income accounted for 71 percent of household income in 1996 compared with 56 percent in the central region. Farm income as a proportion of household income was 65 percent in the rural areas and 16 percent in urban areas. The share of wage income in household income has been relatively low (27 percent) in the rural areas compared to that in urban areas (36 percent). By consumption group, the share of farm income was highest for the lowest consumption quintile of households. The same applies for the shares Table 7.3

of wage and non-wage income: for the lowest consumption quintile of households, share of wage income in total income was as high as 35 percent and only 23 percent for the highest consumption quintile. Classification of household income into cash and kind components is also significant in analysing the structure of production, distribution and consumption. These reveal the economy’s levels of subsistence, specialisation and monetisation, and their implication for resource allocation efficiency, access to facilities and intra-household distribution of income and consumption. In 1985, the average share of cash income in total income was 41.8 percent (NRB 1988). In the rural areas, cash income comprised only 38.8 percent of total income. The situation was quite the opposite in urban areas: the average proportion of household cash income was 67.8 percent. In 1996, wages in kind comprised 40 percent of total the household wage income. This averaged to 41 percent in the rural areas compared to 29 percent in urban areas (CBS 1997). The higher proportion of cash income in urban areas has facilitated better access to basic services such as education, health and personal care, but it has also deteriorated the nutrient consumption of the households, particularly of women and girl-children. This is

Size distribution of income by rural and urban areas (Gini coefficient)

Survey NPC 1977 (Household income) NRB (MHBS 1985) (Household income) NRB (MHBS 1985) (Per capita income) CBS (NLSS 1996) (Per capita income) CBS (NLSS 1996) (Household income)

Rural Areas 0.60 0.55 0.23 0.31 0.51

Urban Areas 0.50 0.85 0.26 0.43 0.55

National 0.57 0.24 0.34 0.57

Source: NPC 1977; NRB 1988; CBS 1996a.

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Table 7.4

Size distribution of income by region, 1996 (Gini coefficient) Eastern 0.46

Gini coefficient

Gini coefficient

Development Region Central Western 0.66 0.52 Geographical Region Mountains 0.21

Mid-Western 0.25

Far Western 0.35

Hills 0.53

Tarai 0.66

Source: CBS 1996.

because intra-household consumption pattern tends to be more gender-biased if consumption is financed through cash income. Nutrient intake by women and children is also likely to deteriorate with a growing cash share of household income3.

7.3 DISTRIBUTION OF INCOME Studies on income distribution reveal a large inter-survey variation. This is also due to the treatment of income in terms of household income in one survey and per capita income in another. As households with higher levels of income also tend to have smaller families, distribution of income on a per capita basis tends to be more even than that on a household basis. This is substantiated by the fact that the Gini coefficient for income distribution calculated on the basis of NLSS data for 1996 was 0.34 in terms of per capita income and in terms of household income (table 7.3). In recent years, income distribution appears to have worsened: the Gini coefficient for 1996 was 0.34 in comparison to 0.24 in 1985. Income disparity tends to be wide in the urban areas where the Gini coefficient went up from 0.26 in 1985 to 0.43 in 1996. Although the parameters are not directly comparable because of differences in sample areas and their size, they nevertheless hint at the deterioration of income distribution over the decade. Table 7.5

Regionwise, income distribution appears to be worst in the central region; with the least disparity in the mid-west (table 7.4). The Gini coefficient for the central region is 0.66 whereas it is only 0.25 in the mid-west. By geographical region, the coefficient for Tarai is highest, indicating the greatest income inequality (0.66). Its value was lowest (0.21) in the mountain region. Although there is little variation in income distribution across the ecological regions, wide variations exist between the rural and urban areas (figure 1.3). The average household income in Kathmandu is double that in other urban areas and nearly four times that in the rural areas. The income distribution pattern as a share of total income gives a more revealing picture of the concentration of income (NRB 1988 and CBS 1996). MPHBS shows that the bottom 40 percent of population share only 23 percent of total income while the top 10 percent claim 23 percent (table 7.5). Regionwise, the share of the top 10 percent of population in rural income ranges from 13 percent in the Mountains to 23 in Tarai, and the share of the bottom 40 percent ranges from 23 percent in the Hills to 33 percent in the Mountains. The income share in urban areas ranges from 24 to 27 percent for the bottom 40 percent of population and 20-21 percent for the top 10 percent of population. Income distribution is more uneven according to the NLSS: the share of the bottom

Distribution of per capita household income by income category and place of residence (percentage share of income)

Rural Areas Hills

All Nepal

Tarai

MPHBS, 1985 Bottom 40% Middle 50% Top 10%

23 54 23

24 53 23

23 56 21

33 54 13

27 52 21

24 56 20

All Nepal 11 37 52

Tarai 15 48 37

Hills 7 37 56

Mountains -

Rural 18 53 29

Urban 2 27 71

NLSS, 1996 Bottom 40% Middle 50% Top 10%

Mountains

Urban Areas Tarai Hills

Income Group

Source: NRB 1988; CBS 1996.

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NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 7.6

Distribution of household income by farm size and region (Rupees/month)

Farm Size* R.Tarai R.Hills R. Mount. Large 3,380 1,882 1,735 Medium 1,822 1,218 1,167 Small 1,210 923 875 Marginal 787 674 631 Landless 633 764 871

R. Nepal 2,024 1,316 1,028 736 683

* The definition of farm size is: large farm size = holding of more than 5.4 ha in Tarai and 1.04 ha in the Hills and Mountains; medium farm size = 2.73 to 5.4 ha in Tarai and 0.52 to 1.04 ha in the Hills and Mountains; small farm size = 1.03 to 2.73 ha in Tarai and 0.21 to 0.52 ha in the Hills and Mountains; and marginal farm size = up to 1.02 ha in Tarai and up to 0.21 ha in the Hills and Mountains. Source: NRB 1988.

40 percent people in total income is just 11 percent and that of the top 10 percent is as high as 52 percent (CBS 1976). There is a strong relationship between the size of landholding and household income. In 1985, the household income of large farm households was nearly 3 times higher than that of the marginal farmers (NRB 1988). Similarly, household income of the large farm households was more than 50 percent higher than that of the medium size households, and nearly double the income of small size households. The average income of the landless households in the rural areas was just one-third that of the large size households (table 7.6). This indicates the positive association between household income distribution and size of landholding. Household level income or consumption is a major determinant of household capabilities to improve the welfare of members. This capability is manifested in a range of attributes such as school enrolment and drop-out, medical consultation, child immunisation, fertility, adoption of family planning services and gender discrimination in these services and elsewhere. NLSS shows that 71 percent of the family members in the lowest quintile group of households never attended school, compared with 39 percent in the highest quintile. The ratio of female to male school attendance is 41 percent for the lowest consumption quintile, compared with 74 percent for the highest one. The NLSS reports income as one reason for school non-attendance; nearly 20 percent of the households felt that schooling was too expensive while another 21 percent engaged their children in farm and household activities. Only 4 percent of the children in the lowest quintile of households were enrolled in private schools (which are widely perceived as providers of better education) compared to 17 percent in the

INCOME, CONSUMPTION AND POVERTY

highest quintile of households. Fifty percent of the family members in the lowest consumption quintile group of households never consulted a doctor, whereas this proportion in the highest quintile group of households was only 26. Only 22 percent of the children in the lowest quintile were immunised, compared to 60 percent in the highest one. The mean number of children in the lowest quintile was 3.1 compared with 2.1 in the highest quintile. This was mainly due to better awareness in the high income/ consumption group of households regarding family planning methods. In fact, 24 percent of the couples in the highest quintile group were adopting some method of family planning, against 8 percent of the couples in the lowest quintile.

7.4 OWNERSHIP STRUCTURE AND USE OF PRODUCTIVE RESOURCES 7.4.1 Structure of landownership Only about 17 percent of the total land area of the country is comprised of agricultural land. The per capita landholding is 0.14 ha. Land ownership is highly fragmented. About 69 percent of landholding is less than 1 ha in size and about 89 percent are less than 2 ha. The average size of landholding is only 0.24 ha, with, on average, more than four land parcels per holding (CBS 1993). Regional variation in the distribution of agricultural land is substantial. The Tarai covering only 17 percent of the total land area comprises 49 percent of the total agricultural land. The Hills and Mountains cover 63 and 20 percent of the total land area, and account for 40 percent and 11 percent of agricultural land respectively. Most of the agricultural land in Nepal is apparently cultivated by the owners themselves − it accounts for 97 percent of the total landholding. The proportion of rented out land is thus only 3 percent. The larger the size of landholding, the higher the proportion of land rented out: the proportion of land rented out is less than 5 percent for landholding of less than 1 ha, 11 percent for holdings of more than 3 ha and more than 19 percent for landholding size of more than 5 ha (annex 7.1).

7.4.2 Distribution of land The bottom 40 percent of the agricultural

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Table 7.7 Size distribution of agricultural landownership by household and region (in percent)

Region/holding Mountains Hills Tarai Nepal

0.5 ha 41.6 45.8 33.2 40.1

0.5–2.0 ha 44.3 47.6 47.1 47.0

< 2.0 ha 14.1 6.6 19.7 12.8

Source: CBS 1997.

households operate only 9 percent of the total agricultural land area, while the top 6 percent occupy more than 33 percent. The concentration index for agricultural land is 0.54 reflecting a highly uneven distribution of the most dominant productive resource of the country (CBS 1997A). NLSS (CBS 1997A) indicates 40 percent of the agricultural households own less than 0.5 ha of land and 13 percent more than 2 ha. The proportion of households with less than 0.5 ha is as high as 46 percent in the Hills and 42 percent in the Mountains. Furthermore, about 20 percent of the households in Tarai have a holding of more than 2 ha, compared with only 6.6 percent in the Hills. This points to the relatively small size of landholding in the Hills, compared to the average size of landholding in the Mountains and Tarai (table 7.7). The smaller size of landholding in the Hills is also manifest in the higher incidence of poverty in this region.

7.4.3 Land tenure and tenancy The dominant type of land entitlement in Nepal is owner-tiller. About 85 percent of the operated land is owner-operated and the remaining 15 percent is rented in (table 7.8). Amongst the agricultural households, 95 percent operate their own land whereas 6.4 percent also rent out part of their land. About 29 percent of the households work on rented land along with their own land. About 5 percent of the households work on rented land only (table 7.9). Land system in Nepal is besieged by Table 7.8

multifarious problems despite many attempts for reform. First, there is the problem of land tenure, which embodies dual ownership between the owner and the tenant, with neither party motivated to invest on land and benefit from the resulting gains. The rural credit survey (NRB 1994) reports that investment in land improvement is less than 3 percent of household income. The unequal distribution of land together with the very low size of holdings of the majority of the households is another problem. In addition, studies indicate a deterioration in land fragmentation accompanied by a further fall in the average size of holdings4. As a part of this vicious cycle, the incidence of landlessness has been increasing rapidly and the small holders are being marginalised and transformed into landless workers relying on scarce wage employment. This tendency is adding to the number of the rural poor, as real wages and the number of working days are not rising. In addition, technical changes are also limited by the size of the holdings, in addition to other institutional obstacles, viz., inadequate credit facility, illiteracy, low expenditure on education and unfocused government policies.

7.4.4 Credit Access to credit is extremely important for those households with inadequate savings of their own. The informal financial market is the sole source of credit for 80 percent of the borrowing households in rural areas. The remaining 20 percent borrow from formal financial institutions (NRB 1992). All borrowers of formal credit also access informal sources of financing. Distribution of formal sector credit remains highly unequal: in 1990 only 9 percent of the landless households had access to such credit compared to 38 percent of the large farm households. A more recent survey shows that 59 percent of the households are borrowers of one kind or the other; 35 percent in the urban areas and 66 percent in rural areas are borrowers (CBS 1997).

Size distribution of agricultural land operatorship by household and region (in percent)

Region/Operation Mountains Hills Tarai Nepal

Percent of total operated land Owner operated Rented in 89.4 10.6 89.1 10.9 80.1 19.9 84.7 15.3

Percent of total owned land Owner operated Rented out 97.0 3.0 95.9 4.1 90.0 10.0 93.2 6.8

Source: CBS 1997.

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Table 7.9

Distribution of households by land entitlement status and region (in percent)

Region Mountains Hills Tarai Nepal

Self-owned land 97.4 97.5 92.2 95.2

Rented out land 6.2 6.2 6.6 6.4

Rented in land 26.5 22.6 36.3 28.7

Rented in only 2.6 2.5 7.9 4.8

Source: CBS 1997.

Moneylenders and relatives account for more than 80 percent of total credit whereas the share of the banks is just 16 percent. Most of the loans (71 percent) is used for household consumption and personal expenditure only; 29 percent goes to business and production purposes. The lower income households tend to have a higher borrowing rate, and, correspondingly, incur larger volumes of debt finance consumption. The lowest consumption quintile of households utilise as much as 62 percent of the loans for consumption compared with 42 percent in the case of the highest quintile (CBS 1997A). Since the mid-’80s, there has been a landmark expansion in the financial institutions and financial products. The number of commercial banks has now increased from 2 to 11. Of them, 9 are in collaboration with foreign banks. More than 40 finance companies and five rural development banks have come into operation within a period of five years. Besides, more than 30 NGOs and 20 cooperative societies are also conducting limited banking activities. The share of total deposits in the financial system increased from 18 percent of the GDP in 1985 to 28 in 1996, indicating a good deal of financial deepening in one decade. However, all these expansions have failed to cater higher level of formal credit in the rural areas. The lopsidedness of the financial system in favour of the urban sector has brought about many distortions in the system. First, the introduction of new financial services and products notwithstanding, lending practice is still traditional. More than 80 percent of the formal sector financing is collateral-based. Those who do not possess land and other bankable property have no access to such credit in areas where targeted and micro-credit programmes do not exist. Secondly, with the structural adjustment and financial liberalisation programme, the government-owned or-controlled banks with an extensive network in the rural areas have almost stopped opening new branches. Instead, they have been closing, amalgamating or transferring the existing branches to ensure their profitability. The policy cannot be contested on

INCOME, CONSUMPTION AND POVERTY

the grounds of efficiency of the banking sector. Nonetheless, the question arises: what about the economic future of the rural people tied to the exploitative informal financial market? Besides, it is not necessarily the lossmaking branches of the commercial banks in the rural areas that are entirely responsible for the general inefficiency of the banking sector. Even in the urban areas, banks have been generally an impediment to productive investment because of punitive interests charged on loans. Almost all financial institutions show a very high spread between deposit and lending rates, ranging between 6-10 percentage points. The reasons are high service delivery cost, heavy loan loss and imperfect competition. This has benefited neither the depositors nor the lenders; it has restrained financial intermediation instead. Performance of the financial sector should be a good lesson to the policy-makers in Nepal that deregulation, by itself, may not be able to contribute to the change expected in important areas in economy. Joint-venture banks opened with foreign participation have been especially hesitant to extend services by opening bank branches in rural areas. The directive of the central bank requiring two branch offices (later reduced to one) in the rural area for every one in the urban area is systematically breached by them. But the older and bigger of these banks have collected dividends for their shareholders many times over the initial equity investment in a relatively short period. One consequence of this situation is that there has been a reverse flow of financial resources from the rural to urban areas. This tendency also indicates that opening banking services in the rural areas is not a sufficient means of bringing about a reversal in favour of the rural households. The flow of resources from the rural to the urban areas is mainly the contribution of deposits collected by the statecontrolled commercial banks in rural areas used for financing business and industrial activities in urban areas. Even the Agricultural Development Bank which was expected to check this tendency

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has failed in its mission because of its own inclination towards commercial banking as opposed to development financing. Collateral-based lending practices have deprived the small, marginal and landless households of institutional borrowing opportunities. NLSS shows that 86 percent of the formal credit is issued against collateral in the form of land or other property and only 12 percent of borrowing is collateral-free. As 49 percent of the households possess less than 0.5 ha of land, and women are as yet denied legal rights to parental property, pledging collateral for large loans is virtually impossible. Access to institutional credit similarly depends upon location, the purpose underlying the request for loan and social status of the borrower. These practices clearly discriminate against borrowers in the rural areas. The consequence is that households are compelled to resort to informal borrowing at exorbitantly high interest rates and to mounting indebtedness. Growing landlessness, migration, deprivation and poverty have in turn intensified their indebtedness. Besides, lack of credit has hindered utilisation of labour, the only productive resource of the poor, in productive activities. Realising that general expansion of the financial system does not necessarily ensure formal credit to the rural economy in general and the poor households in particular, a number of targeted credit programmes have been initiated during the last two decades or so. The programmes which are targeted to the poor in Nepal are Small Farmers Development Programme (SFDP), Production Credit for Rural Women (PCRW), Micro-Credit Project for Women (MCPW), Credit to the Deprived Sector, Rural Development Banks and credit operations of the NGOs engaged in banking services. Presently, more than 30 NGOs are also working as micro-credit institutions with permission to operate from the Nepal Rastra Bank. Together, they constitute an important channel of credit delivery to the grass-roots level along with other support services. In addition, there are other NGO programmes like (Rural Self-Reliance Swabalamban Development Programme) which was initiated in the mid-eighties under the umbrella of an NGO (IDS) and has expanded since then with other NGOs also embracing its concept and philosophy. There are now similar activities like self-reliant development programme for marginal women, Nirdhan, self-help banking programme and others which are more focused

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on women (IIDS 1997). Evaluation of such programmes has shown noteworthy results. Besides, the Intensive Banking Programme (IBP) also takes into consideration the small and marginal income households for its credit operation. The common characteristics of most of these credit programmes are: (a) they are targeted to specific sectors and people with low income; (b) they extend credit on group guarantee and with no physical collateral required; (c) they include in their programme other services along with credit; (d) their principal aim is poverty alleviation; and (e) they are external donor-dependent for resources. There are some exciting success stories related to some of these activities. In general, and from the standpoint of sustainability, however, these programmes suffer from a variety of problems including high cost of service delivery, low rate of loan recovery and inadequate commitment of the concerned institutions. Erosion of cohesiveness among the group members constituted for credit and community building purposes and intrusion of partisan politics and donor agenda have also contributed to low performance − even in cases where the programme was extremely successful at the initial stages. The sustainability of micro-credit programmes has been questionable from the viewpoint of high service delivery cost. The service delivery cost is 12 percent of the loan for SFDP, 42 percent for PCRW and 10-20 percent for rural development banks. The cost of fund is between 8 to 10 percent of the loan (except for PCRW whose cost of fund is only 4 percent) and notional provision for non-repayment loan loss may be between 10-20 percent. This means that the operating cost of these programmes is as high as 35 percent for SFDP and more than 20 percent for most others. The operating income, however, ranges between 16-20 percent of the loan. Besides, the outreach of micro-credit to the hard-core poor is low because of their location in remote areas, relative lack of initiative on their part to form groups, low skill for off-farm enterprise and the hostile social environment they face. Since these are factors that make them poor in the first place, successful programmes need to demonstrate how they can transcend these barriers.

7.5 WOMEN AND INCOME EARNING OPPORTUNITIES Women contribute a substantial portion of the

NEPAL HUMAN DEVELOPMENT REPORT 1998

Distribution of participation of women in economic activities by region

Table 7.10

(as percent of total economically active population)

Participation in Economic activity Labor force Agricultural work Non-agricultural work Manufacturing

Urban 31.5 26.4 34.4 12.2 12.5

1981 Rural 47.2 35.1 36.4 17.9 16.5

Total 46.2 34.6 36.4 16.6 14.9

Urban 20.3 23.8 37.8 19.5 27.3

1991 Rural 48.1 41.6 45.2 20.7 20.9

Total 45.8 40.4 45.0 20.2 22.9

Source: Acharya 1997.

country's labour force. The share of women in the total labour force was 45.5 percent in 1991, a slight decline from 46.2 percent in 1981 (a detailed analysis of surplus labour force has been done in chapter 6). Women work longer hours than men. Women spend much more time than men on subsistence activities and domestic work. In these activities, the workload of women exceeds that of men by more than 25 percent (NPC/UNICEF 1992). Subsistence activities also confine women to conventional activities including domestic work and agricultural labour. A pioneering study on the status of women in Nepal (CEDA 1979) revealed that 86 percent of all domestic work and 57 percent of subsistence agricultural-activities were undertaken by women. Women’s contribution to household income is estimated at 50 percent compared to 44 percent for men and 6 percent for children (Acharya 1979). Various census and survey reports show a Table 7.11 Employment status All Nepal Male Female

Distribution of employment by type, region and gender Paid job 19.6 32.1 7.3

Income earning 36.8 44.0 29.8

Unpaid work 43.7 23.9 63.0

Mountain Male Female

15.1 23.9 6.6

52.0 52.9 51.1

32.9 23.1 42.3

Hills Male Female

17.6 29.6 5.9

43.3 47.4 39.3

42.3 23.0 54.7

Tarai Male Female

22.3 35.9 8.8

27.8 39.2 16.6

49.9 24.8 74.6

Rural

18.7

38.0

43.3

Male Female

30.6 6.9

44.9 31.2

24.4 61.9

Urban Male Female

28.2 46.4 11.1

24.2 34.3 14.7

47.5 19.2 74.2

Source: CDPS 1997.

INCOME, CONSUMPTION AND POVERTY

lower rate of participation of women in economic activities compared to that of men. There has been no improvement in the rate of female participation in economic activities through the last decade. In 1981, 46.2 percent of the total female population were participating in economic activities. This figure declined to 45.5 percent in 1991 (table 7.10). Despite the fact that the bulk of the household work such as crop farming, kitchen gardening, livestock raising and forestry development is done by women, their recorded low participation is indicative of the dearth of gender-sensitive data in Nepal5. There has been a drastic reduction in participation of urban women population in economic activities, falling from 31.5 percent in 1981 to 20.3 percent in 1991. Similarly, their share in labour force fell from 26.4 percent in 1981 to 23.8 percent in 1991. This shows the negative effect of urbanisation on women's participation in labour force. Participation of women in agricultural and manufacturing activities has gone up, which remains at around 20 percent of the total population (Acharya 1997). The pattern of work participation indicates a large proportion of women working as unpaid family workers. The proportion is 63 percent for women and 24 percent for men. Region-wise, the proportion of women engaged in unpaid family works is 75 percent in Tarai and 55 percent in the Hills. The proportion of unpaid men workers in these regions is respectively 25 and 23 percent (table 7.11). This shows that women's share in income is severely limited by their status of being unpaid workers. Interestingly, the proportion of unpaid female workers is higher in the urban areas than in rural areas. Which means urbanisation has adversely impacted on women's income earning opportunities. Trade and industrial reforms have had some favourable impact on women's participation in wage-earning jobs in the manufacturing sector; particularly, carpet and garment industries. The type of work in which women are mostly

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Table 7.12

Distribution of work participation of women by economic activity (as percent of population 15-59 years of age)

Rural

Agriculture Industry and mining Electricity, gas and water Commerce Construction and transport Personal and community services Others (including “missing”)

Male 58.4 5.7 1.0 7.5 7.0 16.5 4.8

Urban

Female 60.9 2.3 0.2 3.0 0.7 17.8 15.1

Total

Male 13.7 10.2 2.9

Female 14.7 4.6 0.7

Male 54.1 6.2 1.2

Female 56.4 2.6 0.3

29.0 12.3 27.2 4.5

11.1 1.8 52.1 14.9

9.6 7.5 17.5 -

3.8 0.8 21.1 3.8

Source: CDPS 1997.

involved also indicates the status of their income earning opportunities in comparison to that for men. Majority of women are involved in agriculture and personal and community services, where income generation is very low. On the other hand, their participation in income generating activities such as commerce, transportation and industry, and electricity, gas and water, is very low. Women’s participation as a ratio of men’s participation amounts to 42 percent in industry, 39 percent in commerce and only 11 percent in transport and construction (table 7.12).

7.6 LEVEL AND STRUCTURE OF CONSUMPTION A low level of household income and high propensity to consume has resulted in a high ratio of consumption to the level of income. The proportion of consumption to income was 84 percent in the late ’70s which increased to 88 percent in the ’80s and rose further to 90 percent in the ’90s (annex 7.2). Although the proportion of consumption is high, it does not adequately meet all the basic needs of the households; for, most of the consumption goes to food items leaving little income for education, health and other non-food expenses. The intra-household distribution of consumption is more unequal: boys are better fed than girls, husbands get a bigger share of food than wives, and pregnant and lactating women are treated no better than the average family member even if they are not maltreated. The pattern of household expenditure shows that food is the major consumption item for most of the households. In the rural areas, food items constitute nearly two-thirds of the consumption expenditure, whereas these items account for nearly half of the consumption expenditure in the urban areas. Expenditure on other goods and services (such as clothes, housing, medicine and

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education) amounts to about 38 percent of the total consumption expenditure in the rural and 45 to 51 percent in urban areas (table 7.13). The MPHBS (NRB 1988) shows that grains or cereal products constitute nearly 37 percent of the consumption expenditure followed by housing expenses (17.3 percent), clothing (11.7 percent), vegetables (5.3 percent) and medical and personal care (3.7 percent). Nearly 3 percent of the expenditure is spent on alcohol and tobacco; the level spent on education. The expenditure incurred on medical and personal care is only slightly higher than that on alcohol and tobacco. The composition of consumption is different in the rural areas in comparison with the urban areas. Households in the urban areas spend less than one-fourth of their total expenditure on the consumption of grains and cereal products compared to 38 percent in rural areas. On the other hand, households in urban areas spend 28 percent of their income on housing, as against 16 percent in rural areas. Table 7.13

Distribution of household consumption expenditure (percent)

Items/Expenditure Rural 62.3 Food and beverage Grain/cereal products 38.3 Pulses 2.6 Vegetables 5.3 Milk and milk products 3.3 Spices 1.8 Meat, fish and egg 2.5 Oil and fats 2.7 Alcohol and tobacco 2.6 Others* 3.2 37.7 Other goods and services Housing 16.2 Clothing 11.9 Medical and personal care 3.7 Education 2.7 Others 3.2

Urban 51.0 24.0 2.5 5.4 3.1 1.5 2.9 2.7 2.5 6.4 49.0 27.6 10.1 3.9 4.1 3.3

Nepal 61.2 36.9 2.6 5.3 3.3 1.7 2.5 2.7 2.6 3.6 38.8 17.3 11.7 3.7 2.9 3.2

Note: *Others includes fruits and nuts, tea, coffee, sugar, sweets, restaurant meals and transport. Source: NRB 1988.

NEPAL HUMAN DEVELOPMENT REPORT 1998

Similarly, households in urban areas spend more on education, medical and personal care and other consumption (such as tea, sugar, fruits and sweets) compared to those in rural areas (table 7.13). However, as they have to spend a higher proportion of their income on dwelling, income left for spending on education, health, recreation and personal growth is very low causing an impeding effect on human development.

7.6.1 Housing Housing is an important component of level of living and of human development. Approximately 94 percent of all families, irrespective of income status, own their dwellings. Even in the urban Kathmandu Valley, owner-occupancy rate is 66 percent. (Illegal home construction in urban areas, however, is high at 27 percent.) The average dwelling is approximately 876 sq ft. in size, with the urban dwelling smaller by about 100 sq ft. Average per capita dwelling space is about 155 sq ft. and a room is shared by 2.2 persons. The average homestead area is about 1,340 sq ft. However, homesteads in Tarai are 3.7 times and 2.3 times as large as those in the Mountain region and Hills respectively. Both the homesteads and dwellings of the poor are smaller in size, by about one-third, compared to those of the nonpoor (CBS 1997a). While the ownership and distribution of housing presents a fairly satisfactory picture, the same cannot be said of the physical quality of housing and, thus, of well-being. The walls of slightly more than one-half of all housing structures are built with bricks or stones − with mud used as mortar in most of the cases. Cement-bonded brick or stone houses form only 11 percent of all houses and most of these are located in urban areas. Nearly 40 percent of the houses are constructed with bamboo strips and plastered with mud. Another 5 percent are made of wooden planks. One-half of all houses are roofed with straw or thatch or grass. Furthermore 90 percent of all dwellings have an earthen floor. A much larger proportion of houses in urban areas, however, have more impervious roofs and floors. Overall, on the basis of the materials used in walls, roofs and floors, 54 percent of all houses were assessed to be substandard (CBS 1997a). Drinking water and electricity. Only onethird of all households have access to piped water facility. Slightly more than one-third obtain drinking water from tube wells or covered

INCOME, CONSUMPTION AND POVERTY

wells. The rest utilise open wells and open reservoirs and streams as sources of drinking water. Access to piped water is available to 58 percent of urban households while only 31 percent of the rural households enjoy this facility. Access to electricity is even more limited: only 14 percent of all households and just 9 percent of all rural households have access to electricity (CBS 1997a). Sanitation and health. The kitchen, which is heavily smoky during the cooking hours (and, in the colder mountain regions, at almost all hours) and which otherwise needs to be kept clean, is not allocated a separate room in 42 percent of all households. The proportion of such households is 67 percent and 51 percent in the mountain and hill regions respectively. Almost 94 percent of all households use wood, dung and leaves as cooking fuels. Only 22 percent of all households use sanitary toilets. Covered drainage facilities are available only in parts of the urban areas and cater to 34 percent of the households in such areas (CBS 1997a). Housing has not been a salient space for government policy-making and action, except in relation to extension and maintenance of drinking water facilities. Physical planning, zoning, land development, etc. remain highly under-emphasised even at the level of policy. There is little government involvement in housing investments. The recent National Housing Policy has proved a non-starter.

7.7 STRUCTURE OF HOUSEHOLD SAVING AND INVESTMENT Low levels of income have constrained the ability of the household to save. Further, as a significant proportion of the households lie below the poverty line, they have become dissavers and debtors. As debt is mostly owed to the informal sector, the rate of interest is as high as 100 percent, the average rate being 37 percent further eroding the rural households’ capacity for capital formation. The Rural Credit Survey conducted in 1992 by the Nepal Rastra Bank reports an average saving of just 7 percent of household income (NRB 1994). The saving propensity is directly related to level of income, which in turn is determined by the size of landholding. That survey reveals that households with large landholdings save as much as 15 percent of their income while the marginal farmers dissave at an average rate of one percent of their income. The

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Table 7.14

Distribution of household saving and investment by size of farm (in Rs.)

Description Gross income Gross savings Savings as percent of income6 Investment Purchase of physical assets Land dev. & construction Investment as % of income Purchase of financial assets

All Farms 26,066 1,949 7.5 4,452 3,716 736 17.1 1,260

Large 71,165 10,330 14.5 14,624 9,651 4,973 20.5 6,055

Medium 43,044 5,520 12.8 5,094 3,872 1,222 11.8 1,901

Small 26,286 2,030 7.7 5,008 4,429 579 19.1 1,266

Farm size Marginal 16,928 -226 -1.3 3,047 2,595 452 18.0 603

Landless 17,044 1,201 7.0 1,076 904 172 6.3 656

Source: NRB 1994.

rate of saving is found to be negative in 25 percent of the districts surveyed. Even large landholders are found dissaving in 28 percent of the surveyed districts. The marginal farmers are dissaving in 69 percent of the districts. Interestingly, the landless households are found to have a high propensity to save, and in 60 percent of the districts surveyed, such households are found as savers (table 7.14). As the landless households include the rural business class, semi-skilled labour and nonagricultural wage earners, their income levels and hence saving rates are higher than those of the marginal landowners. The structure of investment shows that 17 percent of household income is spent as gross capital expenditure on physical assets, of which average investment on financial assets is just 5 percent of the income. Investment on physical assets is as high as 20.5 percent of the income for large landholders, compared with 11.8 percent for medium landholders. Larger the landholding size, higher the proportion of income invested on financial assets as bank deposits, securities and shares. Large landholders invest as much as 8.5 percent of their income on financial assets, compared with just 3.5 percent for small landholders. Large landholding households also invest a higher proportion of their income on land improvement and construction. The proportion of income spent for this purpose is 7 percent for large holders and 2.7 percent for marginal holders. Table 7.15

7.8 INDEBTEDNESS: SCALE, TRENDS AND CORRELATES The latest source of information on indebtedness at the household level is Rural Credit Survey (NRB 1994). According to this survey, 58 percent of the rural households were indebted in 1992. The proportion of indebtedness was higher for the medium and small landholding households compared with the large and landless households. Among the indebted households, average debt per household stood at Rs 9987 in mid-July 1992. Of this, institutional debt stood at 30 percent, the rest was non-institutional or informal market debt (table 7.15). More than two-thirds of the borrowing households borrowed for consumption purposes. Eighty-seven percent of the consumption credit was financed from the informal sector borrowing compared to just 13 percent of institutional borrowing for consumption purposes6. The average interest rate on borrowing was as high as 31 percent (table 7.15). It is obvious that borrowing for consumption and high interest cost has contributed to growing indebtedness of the borrowing households. As a consequence, the amount of debt for the indebted households grew by 4.3 percent from 1970 through 1992. The share of institutional debt in total household debt increased from 17 percent in 1970 to 30.4 percent in 1992 (table 7.16).

Household indebtedness by source and purpose of borrowing, 1992

Proportion of indebted households (in %) Average outstanding debt per borrowing household (in Rs) Average borrowing per household (in Rs.) Average interest rate (in percent) Purpose of borrowing Production (as percent of total borrowing) Purpose of borrowing Consumption (as percent of total borrowing)

Institutional 17 3,040 983 17 77 23

Non-Institutional 49 6,947 2,326 37 13 87

Total 58 9,987 3,309 31 32 68

Source: NRB 1994.

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Table 7.16

Trend of household indebtedness by source of credit (Rupees)

Source Institutional Non-Institutional Total

1970 668 3,262 3,930

1977 2,437 3,498 5,935

Percent annual change 20.3 1.0 6.1

1992 3,040 6,947 9,987

Percent annual change 1.5 4.7 3.5

Source: NRB 1994.

The expansion of banking services along with the extension of specialised credit programmes in the rural areas has expanded access for institutional borrowing. In particular, extension of the Priority Sector Credit Program and Small Farmers Development Programme has contributed to an increased flow of institutional credit in the rural areas. However, loan extension without proper project assessment, use of credit for consumption purposes, crop failure, market failure, diversion of institutional borrowing for re-lending in the informal sector, high interest rate differentials between the formal and informal sectors and laxity of financial institutions in loan recovery have led to high rates of institutional loan delinquencies and indebtedness. On the other hand, heavy dependence on a low productivity agriculture, frequent production and market failures, demonstration effect on consumption behaviour and borrowing for consumption purposes, high cost of borrowing, chronic illness, death of livestock and natural calamities have resulted in higher indebtedness of the households. Lack of insurance and social security provisions has further aggravated the problem.

7.9 INCIDENCE OF POVERTY The growing incidence of poverty in Nepal is the outcome of an economic process that is associated with a worsening income distribution among the households. Poverty has further been exacerbated by limited access to productive resources, high levels of underemployment and/or unemployment augmented and perpetuated by the indebtedness of the poor. High incidence of poverty not only signifies inhuman living conditions; it also blocks all avenues of capability formation and functionings of an individual.

7.9.1 Concepts and measurement In general, poverty can be defined as “a state of economic, social and psychological deprivation occurring among people or countries lacking sufficient ownership, control or access to

INCOME, CONSUMPTION AND POVERTY

resource to maintain minimum standard of living” (World Bank 1980), implying that poverty means more than low income. It is a state in which "opportunities and choices most basic to human development are denied − to lead a long, healthy, creative life and to enjoy a decent standard of living, freedom, dignity, selfrespect, and respect for others" (UNDP 1997: 15). All these concepts suggest that an investigation of poverty focusing exclusively on the physiological needs alone is incomplete and, thus, should be complemented with the use of indicators of other concepts such as “basic needs”, “capability” and “social exclusion”. The mainstream approach to identifying poverty has been to specify a cut-off ‘poverty line’, defined as the level of income below which people are diagnosed as absolutely poor. Initially, the poverty line was defined on consumption space, based on normative nutritional daily per capita requirements and other non-food basic consumption requirements. The conventional measure of poverty counts the number of people below the poverty line − the so-called “head count index”, defined as the proportion of total population that happens to be below the poverty line. However, the issue of how consumption information at the household level could be translated into consumption of individuals has not been resolved. Correcting for household composition takes us into the still controversial areas of estimating adult equivalent scales. But even if this problem is solved, translation of household consumption into individual level consumption by simply dividing total consumption by the number of equivalent adults assumes that consumption within household is distributed according to need, thus ignoring the problem of intrahousehold distribution of poverty and its effects. The major drawback of the head count method is that it measures neither intensity of poverty nor distribution of income among the poor. The so-called ‘income gap’, which measures the additional income that would be needed to bring all the poor up to the level of poverty line, i.e., the minimum extra income that would be sufficient to wipe out poverty, is used to address this lacuna. But the income-gap ratio

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Table 7.17

Incidence of poverty, 1977 (percentage of households and population below poverty line)

Poverty Criteria

Percentage of households below poverty line

Percentage of population below poverty line

Rural

Urban

Rural

34.3 41.2

19.9 22.1

Minimum subsistence consumption Minimum subsistence income

National 33.7 40.3

32.1 37.2

Urban National 20.0 17.0

31.5 36.2

Source: NPC 1977: 1171-19.

is completely insensitive to the number of heads counted and it takes note only of the average gap of income of the poor from the poverty line. The major weakness of both of these indices is that they do not take into account income distribution among the poor.

7.9.2 Poverty incidence trends Literature available on income-poverty in Nepal does not seem to have dealt adequately with the issue of poverty, its causes and consequences. Most of it has tried to quantify incidence of poverty focusing on characteristics of the poor rather than on 'poverty' or “institution” which links up the poor and the non-poor and on generational reproduction of poverty including capability poverty. In 1997, the National Planning Commission (NPC 1977) defined the poor as individuals with income/consumption levels below the physiologically required level. NPC has also defined poverty in terms of basic needs (NPC 1985). However, no attempt has been made to measure poverty in terms of “deprivation of material requirements for minimally acceptable fulfillment of human needs” (UNDP 1997:6). We choose here, however, not to fall into the conceptual debate of poverty measurement. We, instead, accept a definition of poverty line which is expressed in terms of consumption required to maintain a family in “good nutritional health” as well as to satisfy “minimum conventional needs” adopted by NPC

(1977), NRB (1988) and World Bank/UNDP (1990). It has been argued that consumption is a more appropriate variable than the level of living because utility depends directly on consumption and not on income per se. Current consumption is a better indicator both of the current standard of living and long-term average well-being. Thus, we have chosen consumption expenditure rather than income to assess the level of living. Our analysis of the trends in incidence of poverty in Nepal is constrained by limitations set by various surveys and is restricted to the normative criteria of the minimum consumption bundle of food items related to the bare physiological needs of survival. As indicated by the NLSS (CBS 1996), around 9 million Nepalis – 45 percent of the population – are defined as poor, an increase of nearly 9 percentage points from the level of 1977. In 1977, the proportion of households falling below the poverty line was estimated at 33.7 percent (34.3 percent rural and 19.9 percent urban)7. However, the incidence of poverty based on income levels indicates that 40.3 percent of the households (42.2 percent of rural and 22.1 percent of urban households) fall below the poverty line. In terms of the total population, the absolute incidence of poverty (based on subsistence consumption) is estimated as 31.5 percent (32.1 percent of rural and 20.0 percent of urban population). Alternatively, in terms of subsistence income, 36.2 percent of the total population (37.2 percent rural and 17.0 percent urban) is estimated to be poor8 (table 7.17). In 1985, the national incidence of poverty

Table 7.18

Incidence of poverty by region, 1984/85 (percentage of households and population below poverty line)

Percentage of households below poverty line Ecological Region Tarai Hills Mountains Nepal

Rural 34.1 49.8 36.0 40.7

Urban 20.2 12.6 6.1

National 33.0 47.1 36.0 -

Percentage of population below poverty line Rural Urban National 35.4 24.1 34.5 52.7 14.5 50.0 44.01 44.1 43.1 19.2 42.6*

* National incidence of poverty computed for the 7th Five Year Plan. Source: NRB 1989: 136.

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Table 7.19

Incidence of poverty under different poverty lines by rural-urban residence, 1989 (in percent)

Poverty criteria NPC* US dollar 150 Lipton**

Rural 29 69 70

Tarai Urban 17 51 5

Total 28 68 58

Rural 55 78 65

Hills Urban 13 32 52

Total 52 75 64

Rural 42 74 68

Nepal Urban 15 42 51

Total 40 71 66

* Per person per month poverty cut-off points of Rs. 210 in Hills and Rs. 197 in Tarai. ** Percentage of population which spends 70 percent or more of the total expenditure on food. Source: World Bank/UNDP 1990: 8.

was 42.6 percent (NRB 1988)9. However, there was significant variation across the ecological regions. Incidence of poverty was highest in the Hills (47 percent of households and 50 percent of the population), followed by the Mountains (36 percent of households and 44 percent of the population), and Tarai (33 percent of households and 35 percent of the population). The survey also revealed that incidence of poverty was more pronounced in the rural than in urban areas. In the rural areas it was 40.7 percent of the households which is 41.3 percent in terms of the total population. Within rural areas, geographical variations in the extent of poverty were found to be wide and distinct. Both in terms of households (49.8 percent) and population, (52.9 percent), Hills showed a higher incidence of poverty than Tarai. In Tarai, 34.1 percent of households (comprising 35.4 percent total population) were found to be under the poverty line. In urban areas of the Hills, 12.6 percent of households (14.5 percent of the total population) were found poor. Moreover, the incidence of poverty was higher in urban Tarai than in urban Hills (table 7.18). A 1989 reprocessing of the 1985 MPHBS data (NRB 1988) has calculated the proportion of population below the poverty line under three sets of assumptions (World Bank/UNDP 1989). The first was the poverty line defined by the National Planning Commission (NPC) on the basis of level of income required to supply the minimum caloric requirements (2250 kcals), at 1988/89 prices. This amounted to Rs. 210 per person per month in the Hills and Rs. 197 in Tarai. It suggested that about 40 percent of population were absolutely poor. The second poverty line was defined in terms of the internationally accepted threshold of US dollar

Table 7.20 Region\criteria Tarai Hills Mountains

150 per capita per annum. The proportion of population with an income level below this poverty line was estimated at 71 percent nationwide and at 75 percent in the Hills. The third approach defined the poor as suggested by Michael Lipton, i.e., as those whose expenditure on food consumption absorbs 70 percent or more of total expenditure (Lipton 1983). This suggested that two-thirds of the population were below the poverty line, comprising 68 percent in the rural areas and 51 percent in urban areas, and 58 percent in Tarai and 64 percent in Hills (table 7.19). Another study (Chhetri 1996), based on 1992 data,10 evaluated household levels of income and expenditure based on the prevailing prices without adjusting for the inter-district variations. This estimates the incidence of poverty at 34 percent in Tarai and 64 percent in the Hills and Mountains. The study indicated no significant difference in the incidence of poverty measured either in terms of per capita income, or consumption expenditure, or in terms of food expenditure (table 7.20). It has to be noted that the level of 'absolute poverty' computed at the household level might vary significantly from the incidence of poverty calculated for the entire population. But as we have calculated the nutritional requirements at per capita level to compute the poverty cut-off point, household level nutritional requirements could be obtained by multiplying per capita requirement by household size. Thus the headcount ratios computed for the total population as household level incidence of poverty, in our case, would not provide any additional 'relevant' information. The head count index, based on per capita consumption using NLSS data,11 is presented in table 7.21.

Incidence of rural poverty by region under different criteria, 1992 Per capita income 34.3 64.0 64.2

Per capita consumption expenditure Per capita food expenditure 34.0 34.0 64.0 64.0 64.1 63.9

Source: Chhetri 1996.

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Table 7.21

Incidence of poverty by region, 1996 (Head Count Index in percent)

Development Region Eastern Central Western Mid-West Far West Rural Urban Total

Ecological Region Mountains Hills Tarai 57 68 27 48 31 34 52 46 44 72 66 47 80 73 49 63 50 37

Total 43 34 45 59 65 47 18 45

Note: The NLSS was designed to capture aggregative information, particularly at the development region and ecological zone levels; sizable sampling errors are likely at the sub-regional level. Source: CBS 1996.

On the basis of the above-defined poverty lines, the incidence of poverty in rural areas is 2.6 times higher than in urban areas. Since about 88 percent of population live in rural areas, the incidence of poverty is overwhelmingly a rural phenomenon. The incidence of poverty disaggregated at the ecological and developmental region levels shows that it is highest in the Mountains, followed by Hills and Tarai among the ecological zones. Among the development regions, the worst poverty is found in the far west followed by the mid-west, western region and the central development region. At the sub-regional level, the far western Mountains recorded the highest incidence of poverty, followed by the far western Hills and mid-western Mountains. The incidence of poverty only in the eastern, central and western Tarai and central Hills is found to be less than the national average (table 7.21). Poverty estimates based on an identical level of daily per capita minimum caloric requirement of 2,250 kcals are presented in table 7.22. These figures show that there is no evidence to substantiate that the incidence of poverty has declined over time. Conversely, there are indications that the absolute number of the poor has increased over the two decades since 1977. Poverty thus has increased at an annual rate of more than three percent and the Table 7.22

number of absolute poor has almost doubled in the past 20 years. The variation in incidence of poverty across regions is worsening over time. In 1997, the incidence of poverty in the rural areas was 2.2 times higher compared to urban areas. This ratio has gone up to 2.6 in 1996, implying that the relative incidence of poverty in the rural areas has increased relative to the national average over time. With the majority of population residing in rural areas, national incidence of poverty has moved in tandem with rural incidence. Similarly, the ratios of regional incidence of poverty to the national average indicate that poverty is consistently more severe in the Hills and Mountains compared to Tarai. In 1996, the incidence of poverty in the Mountains had gone up significantly in relation to that in Tarai, whereas it had declined in Hills (table 7.23).

7.9.3 Correlates of poverty Poverty is not merely an economic issue, it is also an issue related to human dignity. Accordingly, the economic definition of poverty has to be linked with the broader spectrum of socio-economic parameters. This sub-section attempts to identify the poor in terms of various socio-economic variables such as caste, location, occupation, sector of employment, education level, composition of income and family size. It is expected that this will help trace the correlates of poverty as well as indicate areas of government intervention for redressing it. Table 7.24 depicts the dimensions of poverty according to household characteristics and location. The first column lists the various caste/ethnic characteristics, and locational attributes. The distribution of the sample population by defined attribute is presented in the second column. The third column indicates percentage distribution of the poor by variable. The fourth column indicates the high-risk poverty groups. The last column presents the relative incidence of poverty.

Trends in incidence of poverty by rural-urban residence (percentage of population below poverty line)

Source

Year

NPC MPHBS World Bank/ UNDP CBS

1977* 1985 1989 1996

Rural

Urban

Nepal

37.2 43.2 42.0 47.0

17.0 19.2 15.0 18.0

36.2 42.5 40.0 45.0

Poor population (in '000) 4,897 6,852 7,694 9,507

Annual change (percentage) 5.00 3.07 3.36

* Minimum caloric requirement per person per day is 2256 kcals. Source: NPC 1977, NRB 1989, World Bank/UNDP 1990, CBS 1996..

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Table 7.23

Inter-regional variation in incidence of poverty All Nepal = 100

Year

Urban Rural

Rural/Urban Ratio Mountains Hills

Tarai

Mountains/Tarai Ratio Hills/ Tarai Ratio

1977

46.96

102.76

2.19

-

-

-

-

-

1985

45.18

101.65

2.25

103.52

117.37

80.99

1.47

1.28

1989

33.33

105.00

3.15

-

130.00

70.00

-

1.86

1996

40.00

104.44

2.60

140.00

111.11

82.22

1.70

1.35

Source: Same as for table 7.22.

Major observations emerging from the analysis of the correlates of poverty are summarised below. The analysis, however, does

not explicitly consider the causal relationships between poverty and socio-economic and demographic variables listed in table 7.24.

Table 7.24

Correlates of poverty, 1996 (in percentage)

(1)

(2) Proportion in sample

(3) Proportion of poor in sample

(4) Proportion below poverty line

Caste/Ethnicity Chhetri Brahman Magar Tharu Newar Tamang Kami Yadav Muslim Rai Gurung Damai Limbu Sarki Other *

17.71 14.85 6.48 8.24 4.98 4.10 4.76 4.26 5.50 1.39 2.70 1.50 2.20 1.48 19.82

19.48 11.33 8.28 8.74 2.74 5.35 7.16 3.79 4.64 1.74 2.70 2.22 3.44 2.13 16.27

50 34 58 48 25 59 68 40 38 56 45 67 71 65 37

1.10 0.76 1.28 1.06 0.55 1.31 1.50 0.89 0.84 1.25 1.00 1.48 1.56 1.44 0.82

Place of Residence Urban Rural

6.94 93.06

2.82 97.18

18 47

0.40 1.04

Development Region Eastern Central Western Mid-Western Far Western

22.52 34.58 20.31 12.90 9.69

22.05 26.24 20.61 17.07 14.04

43 34 45 59 65

0.98 0.76 1.01 1.32 1.45

Eco-Region Mountains Hills Tarai

7.87 42.97 49.16

11.07 48.56 40.36

63 50 37

1.41 1.13 0.82

Sub-Region Eastern Mountain Central Mountain Western Mountain Mid-Western Mountain Far Wwestern Mountain Eastern Hills Central Hills Western Hills Mid-Western Hills Far Western Hills

2.02 2.34 0.15 1.39 1.96 7.83 13.30 11.77 6.30 3.76

2.59 2.53 0.18 2.25 3.52 11.84 9.10 12.14 9.31 6.16

57 48 52 72 80 68 31 46 66 73

1.28 1.08 1.20 1.62 1.80 1.51 0.68 1.03 1.48 1.64

Selected characteristics

INCOME, CONSUMPTION AND POVERTY

(5) Relative incidence of poverty [column (3)/(2)]

129

Eastern Tarai Central Tarai Western Tarai Mid-Western Tarai Far Western Tarai Sex of Household Head

12.67 18.94 8.38 5.21 3.97

7.61 14.61 8.28 5.50 4.36

27 34 44 47 49

0.60 0.77 0.99 1.06 1.09

Female Male

8.59 91.41

8.01 91.99

42 45

0.93 1.01

Age of Household Head Less than 25 years 25 – 40 years 41 – 50 years 51 – 60 years 61 years and above

3.71 38.49 24.26 18.10 15.43

4.08 43.53 22.29 16.38 13.72

49 51 41 40 40

1.10 1.13 0.92 0.90 0.89

Education of Household Head Illiterate No schooling but literate Primary Secondary High school Above high School

63.34 20.33 7.17 3.87 3.77 1.52

75.88 15.68 6.87 2.50 1.68 0.40

51 34 43 29 20 12

1.15 0.77 0.95 0.64 0.44 0.26

Occupation of Household Head ** Professional and technician Administrator Clerical worker Sales worker Managers Agricultural workers Production workers Other

5.02 0.35 6.14 0.89 2.20 55.29 29.15 0.97

1.17 0.00 2.51 0.36 1.72 61.24 32.01 1.00

12 0 20 20 39 55 55 51

0.23 0.00 0.41 0.40 0.78 1.11 1.10 1.03

Employment of Household Head Wage work in agriculture Wage work outside agriculture Self-employed in agriculture Self-employed outside agriculture

12.09 14.47 62.17 11.28

13.13 15.64 60.13 10.89

55 35 47 34

1.10 0.92 1.03 0.96

Household Size Less than three 3 - 5 persons 6 - 8 persons 8 + persons

2.79 31.77 41.63 23.80

1.39 24.97 47.36 26.28

22 35 51 50

0.50 0.79 1.14 1.10

Number of Children 0 1 2 3 4 and more

7.65 13.73 19.24 21.69 38.05

4.08 8.18 16.07 22.75 49.02

23 27 37 47 58

0.53 0.59 0.83 1.05 1.29

Land Ownership *** Without own land Less than 0.5 ha 0.5 - 2.0 ha 2.0 ha and above

15.10 32.95 39.10 12.85

13.47 39.90 39.05 7.58

40 54 45 26

0.89 1.21 1.00 0.59

Share of Farm Income No farm income Less than 25 percent 25 – 50 percent 50 – 75 percent 75 percent and above

6.55 11.75 15.44 20.29 45.97

4.61 8.05 14.94 22.24 50.16

31 31 43 49 49

0.70 0.68 0.97 1.09 1.09

Note: The distribution of sample may differ with census distribution in relation to all the major categories. This applies particularly to those with multiple variates. * Over-represented caste/ethnic groups of Tarai in this group. ** Definition of occupation categories is provided in annex to chapter 3. *** The result may vary significantly among for the urban areas, given the small urban sample. However, it is unlikely that the results for the rural areas will be distorted. Source: CBS 1996.

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•

•

•

Among the various caste/ethnic groups, incidence of poverty is highest among Limbus, followed by socially downgraded formerly untouchable castes (Kami, Damai and Sarki). Chhetri, Magar, Tharu, Tamang and Rai are similarly overrepresented among the poor. Incidence of poverty is lowest among Newars followed by Brahmans. Stark differences exist in the incidence of poverty by place of residence. Relative incidence of poverty in rural areas is 2.6 times higher than in urban areas. Poverty is less severe in the eastern and central development regions compared to other development regions. Similarly, poverty is less rampant in Tarai compared to other ecological regions. Incidence of poverty is most intense in the mid-western and far western Mountains, followed by the eastern and far western Hills. It is relatively less severe in eastern Tarai, and central Hills and central Tarai. Contrary to the general belief, the situation of deprivation is better among the femaleheaded households compared to maleheaded households12. This is likely to be a result of defective reporting and data collection procedure. It may be that women receiving remittances from migrant husbands were over-represented in the sample. The age of the household head seems to affect poverty significantly. Incidence of poverty is higher among households with the age of their heads from 25 to 40 years. It is likely to be due to the high rate of dependents per household in this category. Educational attainment is a valuable safety-valve to neutralise burden of poverty. Thus the illiterate are much more

Table 7.25

•

•

•

prone to be poor. However, data show that the achieved level of education does not necessarily reduce the severity of poverty proportionately, particularly at the low levels of education. Incidence of poverty is higher among households whose heads have completed primary level education than among those whose heads are simply literate and had not attended school. In terms of occupation, households made up of agricultural and production workers are found to be more prone to poverty. In particular, agricultural wage employees are likely to be poor. Administrative workers, in contrast, are non-poor. Similarly, salaried workers in the sample have a low incidence of poverty. There is a strong positive association between the size of the household and the number of children per household on the one hand, and the incidence of poverty on the other. As the size of the household/number of children increases, the incidence of poverty goes up. However, for very large households, such an “incremental association” disappears. Date linking the size of landownership and incidence of poverty indicate that households with small farm holdings are more likely to be poor than those that are landless. This is likely to be a result of the relative occupational instability of small landowners in terms of household dependence on agricultural income. This is found to be positively related to incidence of poverty. Similarly, families dependent on agricultural income to meet their livelihood are much more prone to poverty.

Table 7.25 points to the impact of poverty on levels of well-being. Calculating the mean

Selected socio-economic and demographic indicators for the poor and non-poor Poor

Indicators

Non-Poor

Rural

Urban

Total

Rural

Urban

6.64

4.95

6.59

6.54

5.46

6.35

28.94

54.43

29.59

41.41

59.41

43.01

Average number of children per household

2.96

3.05

2.96

2.06

1.80

2.03

Average household size

6.23

6.31

6.24

5.32

5.24

5.31

% of children out of school

49.49

42.53

49.27

32.81

13.54

31.02

Adult literacy rate (percent)

26.31

41.34

26.72

38.41

68.00

41.64

0.99

0.40

0.98

1.18

0.92

1.17

68.10

64.52

68.00

69.93

39.74

65.58

Reported Illness (percent) % of fully immunized children

Average area of owned land (ha) Population without adequate sanitation (percent)

Total

*Access to safe drinking water used as proxy variable. Source: Computed from CBS 1996.

INCOME, CONSUMPTION AND POVERTY

131

differences by the level of achievement of the poor and the non-poor, it shows that child immunisation, sanitation facilities, school enrolment of the children, adult literacy and ownership of productive assets are significantly high among the non-poor households compared to the poor. Poor households reported about 50 percent more dependent children, mostly malnourished, than non-poor households. However, the rates of morbidity are found to be higher among the non-poor households as are household sizes. Disaggregation by rural/urban sector reveals a higher morbidity rate among the urban non-poor than the urban poor. This might be a result of low levels of health awareness among the poor. The figures for child immunization and adult literacy among the urban poor are more than 50 percent that of the rural poor, and are even higher than those of the rural non-poor.

7.10

GOVERNMENT POLICIES, PRIORITIES, FINANCING AND PERFORMANCE

Ever since the government initiated development planning, efforts were made to enhance the living standard of the people by increasing per capita income. For this purpose, the agricultural and infrastructure sectors were given top priority in almost all development plans. However, per capita income did not increase because the rates of economic growth remained below the rates of population growth throughout the ’70s. The situation improved marginally in the ’80s and ’90s. The marginal growth in per capita income was highly skewed in favour of the nonagricultural sector and urban areas. Gaps between the objectives and their realisation, programme formulation and their implementation, and programme implementation and their effectiveness lie behind this policy failure. Since implementation of the various development plans could not ensure a minimum quality of life for the people, the Basic Needs Approach to development planning was initiated in the ’80s. The Seventh Plan (1986-90) was formulated with this approach. The basic needs identified by the plan were food, clothing, fuelwood, drinking water, primary health service and sanitation, basic education and skill and minimum rural transportation facility. To attain these objectives, the plan laid emphasis on development of agriculture, water resources, industries, trade and tourism. After the people’s movement of 1990 which

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restored multi-party democracy, the Eighth Plan adopted a market-oriented economic policy aiming to reduce incidence of poverty from 49 percent of the population in 1992 to 42 percent by the end of the plan (1997). But no specific measures were taken to this end. Instead, adoption of market-oriented liberal economic policies has had an adverse effect on poverty. The withdrawal of subsidies, mass retrenchment of civil servants, wage freeze, deregulation of administered prices and upward revision in the prices of the goods and services delivered by public enterprises have had an adverse effect on the situation of poverty. Although overall growth rate has remained in line with the objective (annex 7.5), the distribution of income has been more adverse. This is evident from the deteriorating terms of trade of agriculture on which 80 percent of the population subsists, deteriorating levels of real wages, and high rates of inflation (Acharya 1996). The rate of inflation averaged 10.3 percent during the plan period due mainly to faster price rises on non-agricultural goods which left an adverse effect on agricultural households and fixed income (wage) earners. Besides, the development plans aimed at generating more employment opportunities by improving cropping intensity in agriculture, promoting off-farm activities, developing an industrial base and providing institutional credit so as to improve the level of income and reduce poverty. Yet employment growth has been slow during this period and employment elasticity of the economy remained low (about 0.34), implying that each 3 percent growth could generate only one percent employment growth. Sectoral interventions including the programmes for Food for Work, Targeted Credit, and Integrated Rural Development added few employment opportunities. While labour demand has been growing at around two percent per annum during the last two decades, the labour force has grown by three percent per annum on the average. This has intensified both unemployment and underemployment. The approach paper to the Ninth Five-Year Plan (1997-2002) prioritises poverty alleviation as its first objective. The Plan aims to lower the national incidence of poverty from 45 percent in 1997 to 32.5 percent by 2002, and eventually to 10 percent by 2017. Among the proposed sets of programmes to achieve this objective are: effective implementation of the land reform program, provision of subsidised agricultural inputs, improvement in agricultural marketing system and employment promotion.

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In the process of economic liberalisation and restructuring, a number of reform measures have been introduced since the mid-’80s. Accordingly, there has been industrial de-licensing, trade liberalisation, incentives for foreign investment, some privatisation and general pursuit of economic and administrative environment that is conducive to private sector participation in the economy. These reforms have given mixed results to the economy in terms of growth and equity. One of the positive aspects is that macrostability has broadly been attained with a favourable balance of payments, single digit inflation rate and fiscal restraint. However, many more issues have cropped up as a trade-off to this stability. First, economic growth has remained narrow-based; it has failed to create adequate employment opportunities and to alleviate poverty. Second, the terms of trade of agriculture have deteriorated because price deregulation affected much more the non-agricultural products. Third, the workers’ share in income has deteriorated, as real wages have not improved. Fourth, civil service reform and privatisation have propelled mass retrenchment of public sector employees without enough job creation in the private sector. Fifth, the withdrawal of subsidies and deregulation of prices have increased the prices of basic consumption items of the poor, more than increase in their income, resulting in a deteriorated level of real consumption. Sixth, opening of the economy without enhancing the competitiveness of domestic industries has shaken the industrial base, and industrial capital has eroded. Seventh, emergence of market forces has displaced people lacking skill, enterpreneurship and landed property, has added hardship to women and children (box 6.1, chapter 6) and eroded the social fabric (as every activity turns out to be commercial). And, eighth, regional imbalances in development have widened due to the skewed development of the market and the investment left to be driven by the market. Although opening the industrial sector through delicensing and inviting foreign investment has led to some industrial expansion, a number of distortions have emerged. The postliberalisation industrial environment has discouraged indigenous industrial activities like cottage and small industries. It has exposed the weak domestic industrial base of the state to market competition. The little foreign investment that has come in is mainly in the capital-intensive services sector. Financial liberalisation initiated since the

INCOME, CONSUMPTION AND POVERTY

mid-’80s was expected to support poverty alleviation and human development through enlarging access to credit for the people who have no physical or financial assets. But, this has not happened. First, banks have widened the spread between lending and deposit rates and hence made credit more expensive in relation to the return for deposit. Second, banks have closed or merged loss-making branch offices situated in the rural/remote areas and thus deprived people from banking services. Third, banks have started resorting to wholesale banking, thus depriving the masses even in the urban areas from banking services. Fourth, banks overlooked their commitment to channel at least 12 percent of the total credit to the priority sector and 3 percent to the deprived sector. The squeeze on rural credit which has a direct bearing on poverty alleviation has aggravated the problem of joblessness and wastage of human labour. And, fifth, agriculture and industry continue to remain deprived of institutional credit despite a large extent of financial deepening. Fiscal restructuring in the process of liberalisation and adjustment has had a significant implication for human development. Past experience shows a severe budget squeeze in the social sector with the adoption of adjustment programmes (NPC 1994). This has had an adverse effect on human development. Besides, most of the loan associated with structural adjustment went to economic sectors and only about 10 percent of the loan has gone for the social sector. Subsequently, government investment on social development through external sources remained low. The foregoing discussion shows that the country has exercised various development policies on a trial and error basis with little success in each of them. Irrespective of all the policy measures and institutional set-ups for economic growth, poverty alleviation and social development, the country is likely to remain in a low profile of human development unless the structure of the economy, and for that matter, the economic policies, strategies and programmes are reoriented and focused towards broader distribution of growth, creation of more jobs in the process of growth and allocation of public resources for human priority concerns. Beside government sponsored poverty alleviation programmes, there are large numbers of international non-governmental organisation (INGOs), national non-governmental organisations (NGOs) and traditional self-help groups and self-help organisations. The available

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scattered information suggest that these programmes might have had a better impact on poverty alleviation albeit in limited areas, than government sponsored programmes. Experience has shown that economic growth increases income and hence the capability for access to education, health and nutrition, and a decent standard of life of the people in general only if it is significant, broad-based and employment-creating. If only a moderate growth

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rate could be achieved with the limited level of resources, then selective and effective state intervention would be called for. As Nepal falls in the latter category owing to several structural barriers, enhancing the level of human development along with economic growth demands a number of institutional and policy reforms which the subsequent chapters discuss in detail.

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CHAPTER 8

People’s Participation in Public Affairs

The first principle of an effective development programme is that its motive power must be found in the awakened interests, the new hopes, the aroused energies, and the co-operative endeavours of the people. Government leadership is crucial at all levels, but effectual leadership in a democracy is that which calls forth, welcomes, and responds to the creative urges of the people, and points to ways in which they can be channelled into joint efforts for the benefit of all. First Five Year Plan 1956 The people have, subsequent to the restoration of democracy through the historic People’s Movement of 1990, entrusted the responsibility of the country’s development to the Nepali Congress by giving its mandate with a clear majority in the general elections. (emphasis added) Eighth Five Year Plan 1992 Our party will strive for realising the concept of self-governance and autonomy in practice through increased decentralisation of power with areas of responsibility to village, municipal and district development committees. Election Manifesto, CPN (UML) 1994

8.1

INTRODUCTION

I

f political freedom is necessary for human development (a subject discussed in the next chapter), the other side of freedom is participation, which is an end as well as a means to the process. Public participation is thus a key component of human development. It is through participation that we, individually and collectively, derive the worth of our existence, enhance self-respect and can effect adjustments and transformations within ourselves as well as upon the political, economic and cultural systems we live in. The active subject status of human beings, which is a central tenet of human development thinking, can be realised only through participation. In order to explore the linkage between the character of polity and participation, this chapter seeks to answer a series of key questions of intrinsic relevance to the theme. What has been the extent of social recognition of participation as a value and as a public practice historically? What institutional set-up is in place to elicit and encourage participation in national political life,

PEOPLE'S PARTICIPATION IN PUBLIC AFFAIRS

local decision-making, community affairs or, for that matter, in the economic market place? Are these institutions and practices accessible to all people without discrimination? If not, how is the political space for participation distributed among different groups and communities? What are the policies and priorities of the government on participation? People's participation as an integral element of change and development has long been acknowledged − though not necessarily practised − in Nepal. Evidences indicate that in the Lichchhavi era, the state was expected to be accountable, if not subservient, to the local communities rather than to the bureaucracy and the army (Dahal 1996). Local resources were under the control of the community and a consensual culture of governance among the citizens and the state has been reported (Vajracharya and Shrestha 1978: 60-106). The Shah kings have always claimed that their dharma is to rule by the consent of the governed, i.e., in a participatory manner. When

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King Prithvi Narayan Shah embarked on the historic task of unifying fragmented principalities into a single political entity, he relied on various mechanisms to seek counsel. While at the formal level, the king routinely consulted his close and trusted lieutenants with respect to the strategy, means and timing of the upcoming expedition, informally, as the legend has it, he sought the counsel of his subjects, often interacting with them incognito, regardless of their caste or creed in order to gauge the public mood. However, even as he recognised the cultural plurality of the lands and peoples he had conquered to form present-day Nepal, Prithvi Narayan Shah and his successors did not opt for a people-centred administration. In his Dibya Upadesh, in which he propounded his policies on governance (Sharma 1992), there is little recognition of the role of the people, except as the beneficiary of the ruler’s patronising wisdom and benevolence. When he described the unified kingdom as “a garden of four varnas and thirtysix jats”, the conqueror from Gorkha established the social divide of caste that continues to impede democratic participation in governance and public affairs to this day. The Rana regime (1846-1951), with its emphasis on family- and clan-oriented top-down governance, had little respect for people’s rights. The Muluki Ain promulgated in 1854 by Jung Bahadur, the first Rana premier, represents the regime’s institutionalisation of “selective justice.” This Ain mandated punishments according to the castes of the offender and the victim. The Muluki Ain introduced by King Mahendra in 1963 did not do away with the idea of caste but made discrimination on this ground in education, and in employment, illegal in courts of law. The unification of Nepal and promulgation of the two Muluki Ains provided historic but lost opportunities for introducing participatory process into the Nepali social structure, which could have transformed it into a truly democratic and egalitarian nation. The loss of these opportunities has had highly unfortunate repercussions for Nepal’s political economy in general and participation in particular. The institution of a democratic polity, which is a fundamental requirement for enhanced participation, remained a missing element for long periods. Except during the 1951-1960 period, and the current post-1990 period, in which democracy has been re-established, the polity in the country has ranged from patrimonial to autocratic. The legacy of such a

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history continues to haunt the post-1990 period as well.

8.2 CONSTITUTIONAL AND OTHER PROVISIONS ON PARTICIPATION People’s participation in national affairs, at all levels, is central to the attainment of the liberal and egalitarian goals set forth in the constitution. Article 25 (4) defines the state’s responsibility as that of maintaining democracy in the country through wider participation of the people in governance through the medium of decentralisation of power. The next chapter examines in greater detail the key constitutional and legal themes on the present status of governance in Nepal. Here we concentrate on the status and issues of participation in the realm of local government. The problem is that article 25 (4) forms a part of the Directive Principles and Policies of the State, which means that the document does not go further into how to go about guaranteeing the implementation of this “principle”. While the constitution as a whole provides a framework for democratic governance at the macro level, it is silent on many critical domains of participation, e.g., local self-government and devolution of power. The leaders of political parties have thus been free to interpret devolution and decentralisation in a manner that suits their parochial interests. As a result, local bodies still exist as extensions of the central administration rather than as autonomous institutions of local self-government accountable to the electorate. The local bodies − Village Development Committees (VDCs), Municipalities and District Development Committees (DDCs) − were created by the parliament in 1992. In terms of their autonomy, there is no change from the pre1990 arrangements when similar bodies existed with a different nomenclature, which bore the stamp of the then political regime. Now, as before, there is little indication of the political will manifesting to introduce substantive devolution measures in practice. Besides, the government at the centre is vested with statutory powers that are far too draconian to be consistent with the spirit of devolution. The government has the power to regulate virtually all components of the local governance system, including its formation, boundaries, jurisdiction, membership, structure, composition and mode of elections, and, in addition, to suspend or dissolve local bodies, if deemed necessary.

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Whatever the principles and norms of decentralisation and people’s participation on paper, these have long been subverted to protect the interests of urban and rural elite groups. The government and political and social leaders of Nepal have a good opportunity to make amends for the missed opportunities for involving the people in governance as they finalise and go on to implement the Ninth Plan (1997-2002). The stress of the approach paper of the plan (NPC 1997) on the issue of empowerment is an encouraging sign, especially with regard to women. A high level Decentralisation Committee, formed in 1996 to institute an effective decentralisation framework, pinpointed a number of faults in the existing system: • • • •

local bodies lack institutional and technical capacity; there is no clear delineation between the executive and legislative functions; the concept of people’s participation in governance is not clearly stipulated; field offices of line agency exercise overriding influence over local government institutions.

As a consequence, a Decentralisation Law Drafting Committee was formed to frame legislative proposals in line with the recommendations of the report. The committee proposed the integration of three existing statutes, namely, the VDC Act, the Municipality Act and the DDC Act. With change in government, the code went into suspended animation in early 1997. The new coalition government that then came to power set aside many substantive issues and promulgated an ordinance to expedite the process of local elections that were due. The controversial decree brought about changes in the composition, electoral process and representation of VDCs, Municipalities and DDCs but not in their powers and functions. A bright feature of the ordinance is undoubtedly its specific bias in favour of the women community and wider representation from the oppressed groups to the VDCs. A mandatory requirement for representation of women members at the ward level facilitated election of a minimum of 35,000 women in the 1997 local elections.

8.3 DOMAINS OF PARTICIPATION A vibrant democratic community provides for a

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free and willing participation of its members in all aspects and levels of public and community life. It is such participation that ensures fair play in a liberal society by requiring accountability in governance at all levels and eliciting civic and communitarian interests from all citizens. It is such participation that also ensures fair distribution of rights, responsibilities and returns for the diverse membership of the society. The actual representative character of a nominally representative government depends upon such participation. The concept of people’s sovereignty becomes a farce without it. A broadbased development is predicated on it. And, even the market economy cannot really function or sustain itself − as theoretically envisaged − without it.

8.3.1 Political participation The Nepali people have so far had a limited opportunity to participate politically as citizens − even in the exercise of a relatively simple democratic right as voting. After the unceremonious dissolution of the first democratic elected parliament in December 1960, direct elections did not take place till 1981. A year earlier, the people had the first opportunity to vote in a referendum on the future of the Panchayat regime. This first − and so far the last − political exercise of its kind in the country may be noted as an important event in the context of the present discussion, since by all accounts referendum is the highest form of popular participation in governance. The third amendment to the Panchayat constitution that followed the referendum provided for universal adult suffrage for direct election of the legislature (Rastriya Panchayat). But no identical election symbols were allowed even for two candidates, lest any group activity might encourage party feeling in a partyless dispensation. Nor were the constituencies delineated. The 75 administrative districts became constituencies, each returning one or two representatives to the legislature, depending on the size of the population. The election was fought entirely on a personal basis, without focusing on any burning local or national issues. The candidate's personality, resourcefulness and, of course, administrative support and royal endorsement tilted the balance in favour of one or the other candidate. Caste, ethnicity and other non-political considerations also became an important factor determining participation in elections. This notwithstanding, voter

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participation rates at the election was respectable (see 8.5). The opportunity for participation was considerably enhanced after the promulgation of the 1990 constitution. Two general elections and two local elections have been completed since 1990 − a great feat for a nascent democracy. During the 1991 general elections, voters voted for a political party for the first time in 33 years. Twenty-odd political parties and hundreds of independents contested the election. Altogether, there were 1345 candidates (1265 male, 80 female). During the 1994 mid-term elections, following the dissolution of the parliament, a total of 1442 candidates representing 24 political parties and 385 independents contested. However, the authorities showed less meticulous concern in holding the mandatory by-elections (box 8.1). The 1997 local elections involved a total of 3,912 VDCs and 188,010 positions were open for election. In a country with little infrastructure and of difficult terrain, this was no mean exercise. Due mainly to the Maoists' interventions mentioned elsewhere, more than 70 VDCs in the Mid-Western Development Region were debarred from participating in the VDC elections of 1997. Elections for the DDCs were suspended in all 15 districts of that region as a result of an election law, which requires Box 8.1

Right delayed, right denied

First time around, official indifference denying the enlightened voters of Kathmandu One electoral constituency their basic right to be represented in parliament for eight months following the sudden death of communist leader, Madan Kumar Bhandari, in mid-1993 did not generate as much dissent and disquiet at the popular level. But the second time around, it was a different story. The premature mid-term parliamentary polls in November 1994 returned three former prime ministers − rightist Lokendra Bahadur Chand, centrist Girija Prasad Koirala and leftist Manmohan Adhikari − to parliament, each armed with the verdict of two electoral constituencies instead of the normal one. As the law would have it, they were made to retain one and forgo the other. Thus followed a period of incredible indifference to people's right to be represented on a continuous basis as mandated by the constitution. The sovereign electorates of Kathmandu One (Adhikari), Sunsari Five (Koirala) and Baitadi Two (Chand), for no fault of theirs, were forced to wait for twenty-six months, at a stretch, before they were finally allowed to choose their new representatives to parliament. The by-polls were held only in February 1997. Whether the people’s right to participation in the democratic process is in fact observed in the country therefore needs a closer scrutiny. There is no indication that the three former prime ministers ever cared, either singly or collectively, to persuade the agencies concerned to expedite the timetable for the by-polls in their erstwhile constituencies.

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elections for all districts in a development region to be held the same day. Participation, however, is much more than voting during elections. Its domains, distribution and intensity need to be examined much more intensively: who participates in what and why are important questions. We will return to this point presently. Participation, however, is recently also being expressed in negative terms, i.e., as an expression of “over-politicisation”. The strikes and bandhs, proliferation of organised groups and associations and their demands, and the disarray in centres of education, in particular, are seen in this light. But many of these events and processes do have a positive side to them from the standpoint of participation. One paradox in the realm of popular politics today is that people seem to be increasingly apathetic to politics. Mistrust of political parties and their leaders is a common phenomenon across the country. Yet, even the ordinary people participate in politics, taking sides and exhibiting their interests. This popular culture has its costs, especially when people are distracted from work and other productive engagements. However, from the standpoint of participation, this is also a welcome feature in a country where the majority of people are illiterate and, allegedly, “unaware” politically. In essence, this particular culture of participation only underscores the shortcomings of a process where the elected officials are alienated from those who elect them and who, therefore, resort to non-acquiescent forms of expression.

8.3.2 Participation in development activities Until 1990, state-propagated “people’s participation” overemphasised its non-political nature. This was understandable for a time when development itself was promoted as an apolitical exercise. In fact, the panchayat political thought was anchored on the premise that political consciousness and popular participation in politics were impediments to economic and social progress. Yet, “people’s participation” was an expression constantly used by political leaders and government functionaries. The strategy was to enlist the support of people in programmes envisaged at the centre and, through this process, gain legitimacy for the political regime. Interestingly, both Nepali and foreign scholars lent credence to this idea by isolating certain “positive stories” of supposed incidents of “participatory development”, some

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of which continue to this day. Admittedly, a few of these programmes have shown relatively positive results, but in most cases their sustainability, institutional and resource-wise, has never been confirmed. The Small Farmers Development Programme and self-reliance development programmes, community forestry projects and small irrigation schemes are especially noted for their achievements in social mobilisation. These examples constitute the most vivid testimony of a positive participatory culture that is emerging in the country at present (see 8.4). Lately, some new initiatives have also been started, e.g., the Participatory District Development Programme (PDDP), supported by the UNDP which seeks to augment the institutional capacity of local government institutions (LGIs) and to catalyse social mobilisation through initiatives such as group formation, local savings mobilisation and local leadership development. In the relatively successful cases of social mobilisation (see 8.3.3), participants identify themselves with the goals of the programme in more concrete and personal terms than in others. These are also areas where what economists call “pareto optimality” does not hold. In the community forestry programmes, for example, nobody has to be rendered “worse off” in order to make some others “better off”. This is not, however, necessarily the case in the sphere of credits. Notwithstanding the value of isolated bright spots, efforts for “social mobilisation” cannot cover a wider front without massive efforts from the government and the development fraternity. The challenge facing Nepal is to transform the discreet and disjointed endeavours in participation enhancement into an institutionalised movement embedded in the politico-developmental culture of the country.

8.3.3 Civil society and NGOs People’s participation, in order to have a broad impact on governance and development, needs a robust society where citizens, professional groups and social organisations take a deep interest in activities that affect their lives and the well-being of their community. Cultural, artistic, and other fields of social imagination can also inspire and lend support to movements that aspire for social change in favour of human dignity and development. It is an interesting facet of Nepal’s modern political history that,

PEOPLE'S PARTICIPATION IN PUBLIC AFFAIRS

during the Rana regime, a book on Maize Farming (Makaiko Kheti) was taken as an act of treason and the author severely punished. This did not deter some powerful literary figures, masters in the use of metaphor, from doing their bit to raise the consciousness of the people on citizens’ rights and duties. Given the risks involved, it is remarkable that citizens and citizen groups started several civil society initiatives. Madhav Raj Joshi’s Arya Samaj, Tulsi Mehar’s Malami Guthi and Shukraraj Shashtri’s Nepal Nagarik Adhikar Samiti are only some of the prominent ones. Many of these good men and their colleagues became victims of state repression and some were put to death. During the panchayat period, too, citizens were not free to express a political opinion, let alone organise themselves freely, for collective civic and political thinking and action. The nation was divided into two political communities: those who were with the panchayat state and those who were not. The latter group was the enemy of the state and thus branded “anti-national”. Under these conditions, civil society was threatening. Even the rather impressive growth of artistic fields such as music and drama was subsumed under the paramount goal of supporting the panchayat system. The near-monopoly of the government in the sphere of employment obliged many members of the civil society to become a part of the system. Majority of the teachers, lawyers, other professionals, intellectuals and the media were directly or indirectly co-opted by the state. Non-governmental organisations were incorporated into a quasi-governmental framework under the Social Services National Coordination Council (SSNCC) headed by the queen. Since 1990, the civil society is beginning to emerge into the mainstream of national activities. The growth of civic associations and NGOs during this period has been phenomenal. Occupational and professional associations have sprung up as never before. Trade unions have grown in size and diversity. Human rights groups taking special interest in the rights of women, children, the disabled and consumers have grown. Corruption, though growing rampantly, is being challenged. The interest of environment conservation is being expressed similarly − as in the case of Arun III project, Bagmati pollution, Godavari marbles and Bara forests. Individual citizens are inducing “judicial activism” by increasingly filing petitions at the Supreme Court (see 9.5.1).

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Box 8.2

Participation in irrigation and drinking water projects

Irrigation: Two large-scale irrigation programmes, the Irrigation Sector Project, 1989-1996 (ISP) and the Irrigation Line of Credit Pilot Project, 1988-1997 (ILCPP), implemented respectively in the western, mid-western and far western regions and the central and eastern regions, emphasised popular participation both in the design and implementation of the project. The ISP envisaged capacity building of Water Users’ Associations (WUAs) for improving irrigation system performance in addition to improvement of physical facilities. It was envisaged that WUA would undertake management of the system after improvement of its physical facilities. In addition, ISP mandated cost sharing between government and farmers under which the farmers would contribute between 7-25 percent of the total cost. ILCPP, while not mandating that farmers organise themselves prior to sub-project approval, sought participation at all stages of the project cycle immediately prior to and following the approval stage. The principal obligations of the farmers were to formalise and legalise the Farmer Irrigation Association (FIA) constitution, draw up bylaws of FIA, and formally agree to the memorandum set up between the government and FIA. Farmers were required to share in the capital cost by contributing cash and/or labour amounting to 15 percent in the case of rehabilitation schemes and 10 percent in the case of new schemes. A recently prepared report (Upadhyaya 1997b),, which assessed farmers’ participation in several areas, e.g., planning and design, sub-project agreement, construction and supervision, labour-days contributed, etc., found that the level of participation of Water Users’ Associations (WUAs) in implementation processes and procedures had been fairly good. About 83 percent of the farmers were involved in planning and design, 35 percent were involved in sub-project agreement and breakdown of cost, and 64 percent were involved in construction and supervision. The number of average labour days provided for construction/rehabilitation work was also high, at 153. About 59 percent of the

beneficiaries felt that their involvement in planning and design was effective. Similarly, 83 percent felt that the supervision by WUAs was effective. About 69 percent felt that individual beneficiaries’ cooperation was good. Nearly 72 percent of the beneficiaries contributed cash and/or labour as well. On almost all indicators, the hills fared better than the plains. However, participation was of low quality in relation to the process of “hand- over”. A recently conducted study, System Performance and Impact Evaluation of Selected ILC Sub-projects (Halcrow and Partners 1997), found that approximately 70 percent of the WUAs were active in the performance of their duties, the rest being dormant. Effective farmer participation was 51 labour days per ha and the farmers’ total labour/cash contribution was around 12 percent. Drinking water: The Third Water Supply and Sanitation Sector Project commenced from 1992/93 and is implemented in the rural areas of the eastern, mid-western and far western regions. Participation was an essential component of its design. Beneficiaries were required to complete the formation of a water users’ association, which would “take over” the scheme after completion, contribute at least 10 percent of the total cost, collect at least Rs. 500 per public stand post, employ a prospective maintenance worker and collect water tariff for the maintenance of the scheme. According to the Evaluation of the Drinking Water Sub-Projects Constructed Under the Second and Third Sector Projects (New Era 1996), all the sub-projects constructed under the Third Sector Project have currently functioning WUAs. All the schemes constructed under the Third Sector Project had successfully collected the maintenance costs. Villagers were active in discussing matters related with the identification of water sources and in contributing free labour during the construction of the scheme. On average, 2-4 hours of time per household per day had been saved because of the success of the drinking water schemes.

No doubt, the opportunity for participation for many social groups remains limited because of the concentration of political power at the centre. However, growing interest in community organisation and community building across the breadth of the country stands in contradistinction to what has just been said about poverty and social mobilisation. In the midst of despair and frustration, activists are accumulating and demonstrating an increasing sense of ownership and collective interest in some of the major areas affecting their lives even without support from the state. Community forestry, farmer-managed irrigation systems and self-reliant development groups emerging in different parts of the country comprise the well-recognised oasis in the desert of failed ideas, schemes and activities in Nepal’s development. In irrigation and drinking water, people have demonstrated that they can build,

operate and manage the systems better than the state machinery (box 8.2). Similarly, the ordinary rural households organised as user groups have earned accolade all around for their efforts in managing and conserving resources so important to them (box 8.3). Their performance and accomplishments in this respect go beyond what is normally noticed under the official banner of the community forestry programmes. Scattered communities have been involving themselves in these activities traditionally − a process, which has gathered a new momentum with increased awareness and exchange of success stories inspiring such efforts across the country (see box 8.4). Locally initiated forest protection activities of the household began in the ’60s (Panday 1997: 27-28), though they picked up speed later in the ’80s and ’90s. The examples of successful forest management at the household and community

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BOX 8.3

Community forestry: participation through consensus

The role of forestry and foresters is being redefined in Nepal. Within the framework of community forestry projects, forests are being handed over to the identified user groups for local management. Revised approaches to people and trees, forests and their use and afforestation and the processes involved in social organisation for local management are being explored. The success rate, it is officially acknowledged, is quite high as compared to similar other experimentations. By the end of 1995, about 200,000 ha of forest had been handed over to 4500 user groups in different parts of Nepal, with thousands of other user groups waiting for formal registration. Local community forest management activities vary, depending on the number of users and the product priorities of the groups concerned even though the Master Plan (1988) for the Forest Sector specifically notes, the community forest objectives are "to meet the people's basic needs for fuelwood, timber, fodder and other forest products on a sustainable basis, and to contribute to food production through an effective interaction between forestry and farming practices." More recently, the Forest Act (1993) recognised forest user groups as "autonomous and corporate institutions with perpetual succession" with rights to acquire, sell or transfer forest products. Although in theory the recent forestry legislation gives user groups control over community forests and the funds accrued from forestrelated activities, in practice many forest group members − especially disadvantaged social segments such as women and low caste artisan groups − remain unaware of their rights and responsibilities.

The Samudayik Ban Upabhokta Mahasangh (Federation of Community Forestry User Groups, Nepal − FECOFUN) was founded in mid-1995 with the purpose of mobilising and articulating the interest of the forest user groups (FUGs) of Nepal by increasing awareness, and expanding and strengthening the role of FUGs in a coordinated fashion. FECOFUN constituents do believe that the governmental efforts alone are not adequate for achieving the development potential through community forestry. The members have jointly declared : "We, as users of community forests, also believe that it is our duty to assume responsibility for effectively realising the collective rights and responsibilities legislatively endowed to user groups through community forestry in Nepal." Incorporated into the principles, policies, rules and regulations of FECOFUN is participation through consensus in decision-making. But sometimes the reality is somewhat different. The marginalised groups are often left out of the decision-making process either by default or choice. The full development potential of community forestry is likely to be realised only if this particular group is fully incorporated into the collective process through confidence-building and awareness-enhancing measures. Only in this way, will the "marginalised members" be able to participate in the decision-making process with full knowledge of their rights and responsibilities. As this group plays just as important a role as others in community forestry management, its empowerment is an absolute must. Apart from managing the forests, doesn't the question of minimising socio-economic disparities and divides deserve an equally serious consideration ?

level may provide some clue for the resolution of the macro-level conflict regarding the role of the market as against the state. It is well known in Nepal that the country’s forest resources came under severe threat and faced depletion from 1957 onwards with their nationalisation. The market forces that have worked in collusion with the predatory state in this respect, however, are nowhere near about to compensate for the failure

of the government. On the other hand, households and communities have been engaging themselves in resource conservation and management even in an environment where the government is hostile to their efforts. An additional plus point of increased participation of households in these areas is that, since these activities are generally communitycentred, participation tends to be relatively more inclusive ethnically and socially as well. Yet, the civil society in Nepal has not been able to significantly impact the political culture and institutions of the country. This begs a question about the interests and efficiency of civil society groups situated in urban areas which are free to express views, advocate issues, put pressure and potentially impact on multiple spheres. There is an apprehension that their substantive quality and potency as a civic instrument may have been blunted (see 8.3.4). The tradition of non-state support to civic political activities is absent in Nepal. As a result, directly or indirectly, academia, professional classes, the press and intelligentsia are still dependent upon the state. Moreover, many civic groups and associations are blatantly partisan, adversely affecting their credibility and

Box 8.4

Jarajuri experience

The experience of Jarajuri Trust, a non-governmental effort to recognise and encourage autonomous endeavours for resource conservation and management, is pertinent. Jarajuri does not support implementation of an activity; it identifies conservation work done independently by individuals or groups of individuals on their own in rural Nepal and gives the visibility and recognition they deserve by way of Jarajuri Award given in Kathmandu. That in its 12-year history there have been two dozen awards given by Jarajuri to the country’s “grassroots environmentalists” indicates how far ahead the people may be than the government (cf. Panday 1997). Now that the government has decided to institute three awards with the same objective (one of the three to bear the name of the country’s foremost democratic leader, Ganesh Man Singh) is definitely the most concrete sign yet of the recognition of people’s efforts at all levels.

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Table 8.1 Sector Child Health Disability Community Development Women Youth Environment Education Aids Moral Development Total

Presence of NGOs by region and sector Far western 2 1 2 128 12 27 3 0 1 4 180

Mid-western 3 3 211 182 32 50 20 2 1 10 514

Region Western Central 6 363 5 116 48 58 335 1,398 112 293 169 591 35 200 7 26 0 21 20 105 737 3,171

Eastern 16 7 8 291 55 101 26 4 0 18 526

Total 390 132 327 2,334 504 938 284 39 23 157 5,128

Source: Unpublished data, Social Welfare Council, January 1997.

effectiveness as a popular force. Similarly, the NGOs are as much dependent upon foreign aid as the state, if not more. This dependence denies it the autonomy required for effective policy debate and advocacy. NGOs, like state institutions, are concentrated in and around Kathmandu. Over 60 percent of them are active in the central development region while the share of the far western and mid-western regions together is approximately 13 percent. Interestingly, even in the case of the community-development-related NGOs, nearly 60 percent are located in the central region (table 8.1). There is also an apprehension that the NGO sector may indeed be drifting away from its original objective of promoting participation and advocacy. They are now expected by the donors, including the INGOs, to be “professional” in their work ethos and contribute to efficient delivery of project activities rather than in advocacy and social mobilisation as such (box 8.5). Civil society activities should be able to engage as large a section of the citizenry as possible. This is what provides a sense of participation and empowerment to the broader public than just the “target groups”, as the project-centred approaches emphasise. Time may, therefore, be ripe now for self-evaluation of the NGOs by the NGOs themselves and for an assessment of the existing anomalies and the future agenda. Corrective measures can certainly be taken to make the NGO theme and movement more purposive, value-based, accountable and transparent, and in the process raise the morale and effectiveness of those who are engaged in this sector. None of the above arguments implies that there should be no project implementation work at all from the non-state institutions in the society, especially when there is demonstrated

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evidence that many NGOs have successfully contributed to community building, income generation and self-reliant development. Many of these activities may be necessary if the government takes some serious steps towards devolution and if the capacity of the local government institutions is upgraded. On the other hand, many community-based organisations (CBOs), which have been involved in the promotion of participatory development, are not even recognised in popular discourses as NGOs. Much of the controversy surrounding NGOcivil society relations at the moment arises from the lack of legal clarity on the concept of NGO. Anything from “the association of rickshaw drivers to religious organisations” (Khadka 1997) to elite institutions doing contract research is embraced under this nomenclature. A research institution doing contract research, a non-profit

Box 8.5

Shifting modes of NGO participation

A number of NGOs have been performing excellently in areas of social and civic concerns such as the promotion of human rights, women’s rights and empowerment of the poor. However, the potential of NGO participation in advocacy work is coming under threat. NGOs are increasingly regarded by the funding agencies as vehicles for service delivery rather than development advocacy. Engagement of the NGO sector in service delivery has cost it its spirit of volunteerism. When the advocacy role is undermined, the relation of the civil society to the state gets obliterated altogether. If anything, an incompetent state becomes “good for business” because there is bigger space available for “project work”. It is even alleged that “international agencies create artificial NGOs to get their job done” (Khadka 1997). The delivery fetishism of donors would probably have been a welcome development if the formal structures of the polity – the state institutions, political parties, and the local development institutional system – were properly in place. However, this is not the case.

NEPAL HUMAN DEVELOPMENT REPORT 1998

organisation attempting to help local community building efforts and an advocacy and oversight organisation engaged in the field of human rights, all of which have different objectives, agenda, audience, support base and work culture, cannot possibly be regulated by one law.

8.3.4

Media

The extent to which the media have been able to disseminate information and motivate participation continues to attract conflicting views and assessments. It could be an exaggeration to hold that, both before and after the Jana Andolan 1990, the media failed to perform the function of a true watchdog as some (e.g., Bhattachan 1997) have argued. It can even be counter-argued that with the freedom of press and right to information available under the new political dispensation, the media have contributed to enhancing government transparency and creating a relatively more informed civil society. However, it is the case that the media in Nepal, like other civil society agents, do not stand independently of the government, political parties or big business houses for them to be able to play the role of a potent watchdog. The post-1990 media, actually, are split into three broadly defined political camps − the left, the centre and the right. The credibility of the print media under state control is very much in question for the simple reason that it falls short in professionalism and integrity. It reports highly biased news items, as if its only role is to justify the official policies and decisions and to contribute to the survival of the party in power − more specifically, the faction heading it (SilwalGiri 1997). On the other hand, the private print media does less to disseminate news and analysis than to peddle views and publicity for its patrons. According to a recent survey, about 95% of the news content is “highly political and sensational (Pokharel 1997). Nevertheless, the media − print and electronic − particularly in the private sector, retain some role in building opinion and in motivating people's participation in governance and public affairs. Their potential may be even greater, given the interest the public has been demonstrating, as seen from the ever-increasing number of newspapers/magazine shops and stalls in the cities and rural towns. In terms of reach, newspapers occupy the third position − after radio and television. The total readership is believed to be less than one

PEOPLE'S PARTICIPATION IN PUBLIC AFFAIRS

million. In the absence of certified circulation figures, guessworks abound (Pokharel 1997). As of 1996, the number of registered print media journals (newspapers and periodicals) totalled 1,982, of which 874 were newspapers (dailies, weeklies and fortnightlies). Most newspapers are confined to urban centres and large portions of rural Nepal, with increasing share of literate population, remain neglected. Gross imbalance is noticeable not only in the spatial distribution of media resources and reach but also in public access to mass media channels. The reach of television is confined to 40 percent of the geographic area but the number of actual users may be much lower because only about 16 percent of the area is covered by power supply. Television access is also notably restricted by the high cost of TV sets, especially for the poor in the rural areas (Pokharel 1997). By comparison, radio broadcasts are cheaper and universally accessible. But the Radio Nepal signals are weak and have to compete with more powerful international channels. Opportunities for the development of more appropriate forms of media accessible to local communities, therefore, need to be further explored. Pamphlets and newsletters published by field-based NGOs are innovative and go some way towards meeting that gap.

8.4 DISTRIBUTION OF POLITICAL PARTICIPATION With centralised politics and administration and persistent socio-cultural rigidities, the distribution of political participation in the country is most restrictive for a democracy. An investigation of the composition of leadership of major political parties and nomination of candidates for national and local elections fully bears this out.

8.4.1

Ethnicity, gender and elections

The choice of candidates of the three major parties (NC, RPP and UML) is an indicator of access to political participation of various caste and ethnic groups. Of the 1,442 candidates fielded for 205 constituencies in the 1994 elections, the NC, UML and RPP together accounted for 604 (42 percent) of the contestants. (Nearly one-third got elected.) Among all the three parties, members of the upper-caste groups dominated the composition of nominated candidates. The NC and the UML had a predominance of Brahmin candidates

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while the RPP was just as accommodating, if not more, with regard to the Chhetris and the Thakuris−all high-caste groups. Among caste groups in the Tarai, Yadavs outnumbered others in all the three parties (table 8.2). All the three parties displayed a blatant upper-caste bias with 80 percent of their candidates nominated from this group. Of the 26 ethnic groups represented during the elections, members from only 10 groups were elected to the house of representatives. The end result is that 61 percent of the members in the house of representatives belong to three caste/ethnic groups, i.e., Brahmins, Chhetris and Thakuris, who constitute only 31 percent of the total population. The occupational-caste groups comprising more than 10 percent of the population do not have a single representative in the House (figure 8.1). Table 8.2 Region and Caste/Ethnicity Hills Brahmin Chhetri/Thakuri Newar Other ethnic groups Occupational castes Tarai Brahmin Yadav Bhumihar Kayastha Rajput Other Ethnics Tharu Muslim Total

Actually, the social distribution of electoral participation has worsened since 1959. Representation of hill-ethnic groups in the lower house has declined from 20 percent to 12 whereas Brahmins, Chetris, Thakuris, and Newars as a group went up from 60 percent to 68 (table 8.2). Access to electoral nomination by gender is even worse. None of the major parties nominated women candidates in excess of the minimum required by the constitution. Of all the candidates for elections to the lower house, only 6 percent were women. Among those who were elected, the proportion was even lower. There are now only seven women MPs in the lower house of 205.

Elected members of parliament by caste/ethnicity, 1959, 1991, 1994 1959 Election Number Percent

1991 Election Number Percent

31.0 30.0 5.0 22.0 1

28.4 27.5 4.6 20.2 0.9

80.0 35.0 15.0 33.0 1

39.2 17.0 7.3 16.5 0.5

13*

11.9

23*

11.2

7.0

6.4

18.0

8.8

109

100

205

100

1994 Election Number Percent 86.0 40.0 13.0 25.0 0

42.0 19.5 6.3 12.2 0

6 8 1 5 3 1

2.9 3.9 0.5 2.4 1.5 0.5

13 4 205

6.3 2.0 100

* Includes Muslim representatives. Source: Tamang 1991.

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Election at the district level (DDC) shows a similar distribution (figure 8.2): only five women were elected out of a total of 823 in 1997, not one from an ethnic or non-upper caste group. The high-caste members constitute 59 percent of the DDC members. The caste and ethnic distribution of DDC Chairpersonship and Vice-Chairpersonship reveals a similar picture (figure 8.3). Elections for the VDCs and municipalities, however, do embrace a wider distribution of ethnicity and caste, if not of gender. Of the 116 mayors and deputy-mayors elected in 1997, none is a woman. Here, too, Brahmins, Chhetris and Newars occupy 59 percent of the positions. However, 11 persons from the “untouchables” group are now mayors or deputy-mayors (figure 8.4).

8.4.2

Gender and caste/ethnic access in party and bureaucracy

them, the UML leadership has the highest representation of Brahmins (24 out of 41) compared to the NC’s 11 out of 24 and 10 out of 41 for RPP. If Newars take the second place in the UML (8), they are not so well represented in the NC (2) and the RPP (1). The Chhetris, though influential in all the three formations, occupy the second position in RPP (12), fourth in UML (3) and third in NC (4). Essentially, the parties thus hardly differ in terms of caste/ethnic distribution of leadership − except that the RPP, with 18 members representing non-high-caste groups, appears more egalitarian than others (figure 8.5). The composition of leadership in the state bureaucracy mirrors the condition in the political sphere (figure 8.6). There is an astonishing continuity in the predominance of the high caste and specific ethnic groups in state administration since the formation of the Nepali state more than two centuries and a quarter ago, which appear to have occupied 98 percent of the top civil service posts in 1854. More than one century later, in

The central committees of the three major political parties are highly unrepresentative in terms of both gender and ethnicity. Among

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1969, this percentage came down only marginally, to 93 percent (Panday 1989, Seddon 1987: 232). At present, of the 454 top-level civil (Special Class and First Class) positions, 417 (92 percent) are still occupied by the same groups. Similarly, only about 5 percent of high civil service positions are held by women (figure 8.4) and only one out of the 75 Special Class positions.

8.5

INTENSITY OF POLITICAL PARTICIPATION

With the restoration of multiparty democracy, the level of public awareness and action has risen by many-fold. This is reflected, among others, in the increasing politicisation of citizens and citizen groups, in the escalation of demands and demand-making capacity of the people and in the high intensity of pre-election politicking. This section, however, examines the intensity of participation mainly in terms of the exercise of franchise by the electorate. Figure 8.7 shows that, with the exception of the first general elections, voter participation has been reasonably high. The highest rates were registered in the 1980 referendum and the first election under the present constitution, perhaps an indication of high popular expectations from political change. While one analysis shows that electoral violence is substantial (Aditya 1995), another identifies a distinct growth in the share of high turnout constituencies over the 5 electoral events that took place between 1959 and 1991 (high turnout being defined as a voting rate of 60 percent and over, which itself grew from 1.8 percent of the constituencies during the early elections to 74.2 percent later). Voting skill, measured in terms of the percentage of valid ballot, also underwent a significant rise over the same period (Aditya 1991). Defining community vote as the total vote accruing to the candidates of a particular caste/ethnic group in

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each constituency, a third analysis has, moreover, identified a distinct change in the flow of the community vote of at least two communities between 1959 and 1994: the Brahmins witnessed a near-double hike-up from 20.9 percent to 35.4 percent and the hill Chhetries suffered a clear decline from 26 percent to 19.6 percent (Aditya 1996). Voter participation among the rural electorate has been more intense than among the urban electorate. During the 1997 local elections, 71 percent of the eligible voters cast their votes in VDC elections compared to 59 in the municipal (i.e., urban) elections (figure 8.8). The municipal rate was highest in the midwestern region where the proportion of urban electorate is small1. In the central region, which includes the Kathmandu Valley and its dense urban population, it was only 40 percent. Another study has divided the Nepali voters into three broad categories (IIDS 1993): apathetics ("those who are not involved psychologically in politics”), spectators (those with a "moderate level of motivation" and involved as observers), and auxiliaries (who tend to be highly motivated, and physically involved in the election process − leaders, cadres, students, media persons, academics, lawyers and so on). According to that study, nearly half the electorate claimed to be apathetic (47 percent) with 28 percent falling into the category of auxiliaries and 24.7 percent into the category of spectators. The study also showed that political awareness was not ethnically unbalanced.

8.5.1

Politics of protest

Activist advocacy groups with high frequencies of (and potentials for) protest comprise students, teachers and proponents of human rights, gender equality and ethnic empowerment. Awareness of consumer rights is also increasing. All these groups have played an active role in the movement for the restoration of democracy in 1990. Since then, many of them have been

NEPAL HUMAN DEVELOPMENT REPORT 1998

struggling for a better deal for the aggrieved − generally, women, children and the next generation (i.e., on matters concerning environment). They become active also during international conferences including the United Nations conferences on environment, women, population, children and so on. Protest has also been triggered when the government is seen as becoming a party to unfavourable international treaties and agreements, particularly with India. Examples include Indo-Nepal agreements on water resources, the long-standing controversy about the Indo-Nepal Treaty of 1950 and the border issue with India at the eastern and western frontiers. All in all, protests, though ugly when they take a violent turn, have been instrumental in sensitising the government on its responsibility to uphold transparency and accountability in public affairs. Non-partisan citizen groups are also gradually emerging in the country in support of democracy and constitutional government. Sober and constructive political debate is now more frequent than before. The latest example of a successful role played by these groups is the case of the aborted “anti-terrorist bill”, which sought to undermine the fundamental rights of

citizens 2.

8.6

DEVOLUTION AND PARTICIPATION

Devolution in Nepal has rarely been understood as a mechanism of sharing political power among the central and local levels of governance. When the expression “local body” is used in Nepal, it does not necessarily denote a unit of “local self-government”, even if the “body” is elected through adult suffrage. The elected local bodies are often lumped together with the field offices of the line agencies, both taken simply as an arm of central authorities designed to execute their command (see 8.2). A politically sinister consequence of this arrangement is that the elected bodies draw their legitimacy and are accountable to the Centre than their own electorates. There is some possibility of decentralisation in the sense of sharing “public power” vertically through “interventions” from outside the state apparatus. This is currently a very popular idea and method of empowerment, where people learn to increase their own capacity and effectiveness vis-à-vis the state by organising themselves to take over some of the functions they would otherwise expect the government to

PEOPLE'S PARTICIPATION IN PUBLIC AFFAIRS

perform − at the local or central levels. The various community level organisations and user groups are prominent examples. The paradigm of market economy is, in fact, based on this premise. However, experiences of many developing countries testify that without the democratisation of state institutions, it is not possible to build self-reliant and self-determining local entities capable of responding to the increasing demands of diverse groups in a polity. In a multi-ethnic, multi-lingual and multi-religious society such as Nepal, there can be no substitute for democratic devolution of power where people can manage their affairs themselves without surrendering their rights and responsibilities to the distant central government. Frequent changes in the government, a crisis of confidence among political parties, unwillingness of the bureaucracy to delegate power to local levels and the lack of judicious mechanisms of budget allocation have all held back the realisation of power-sharing that lies at the heart of devolution. Centralisation also remains pronounced in sectoral development programmes which are designed at the ministry/department levels and sent to the district levels for approval of the District Development Committee (DDC). Projects selected at the local levels are often discarded or amended by the centre on various pretexts. The central government also disapproves or cuts the budget due to local organisations without prior notice. Similarly, central authorities approve projects, allocate resources and recruit and transfer personnel on grounds which are unrelated to administrative effectiveness and efficiency.

8.7 CONCLUSION Participation, devolution and decentralisation, as stated objectives of the state, are not new to Nepal. During the thirty years of the Panchayat regime (1960-1990), the phrase “people’s participation” was popular, but only as a rhetoric to seek legitimacy for an authoritarian regime. The Panchayat system was all too aware of its suitability to a nation of scattered, often isolated village communities of great diversity, the members of which were likely to be best informed of local needs and requirements. The legacy left behind by the seven or so “five year plans” of the Panchayat period expresses that reality eloquently.

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Today, the conditions are considerably better. In particular, the potential for the realisation of a higher level of access to participation is much higher. But this potential is still to be realised. Illustratively, while successive governments of the multi-party era have pledged to implement devolution, decisive steps from the state are still awaited. The growing alienation of the people from

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the state within a democratic frame is an indicator of the inadequate access of citizens for a voice in governance and the conduct of public affairs. Without a sincere attempt to involve people vertically and horizontally in matters that affect their lives, democracy may very well remain superficial. This, however, is a theme that demands closer consideration and hence will be examined further in the next chapter.

NEPAL HUMAN DEVELOPMENT REPORT 1998

CHAPTER 9

Political Freedom and Citizen’s Access to State Our voters expect us to bail them out [when] in trouble, pull strings for promotion and appointment and be there for their every need, failing which they question our credibility. Bimalendra Nidhi, M.P. 1997 Our society is such that a judge functions in an environment where everyone is known to another, and a criminal suspect soon discovers a cousin, an in-law or the friend of a friend of a forgotten aunt. N. Soglo, President of Benin 1994 A recent study of the relationship between civic participation and governance found that in those civic communities marked by active participation in public affairs, citizens expect their governments to follow high standard, and they willingly obey the rules that they have imposed on themselves. Transparency International Source Book 1996

9.1

INTRODUCTION

I

n the evolution of human development reporting by the UNDP there was an attempt earlier to incorporate “political freedom” as an integral element of human development. The 1992 Human Development Report discussed five elements in this respect: personal security, rule of law, freedom of expression, political participation and equality of opportunity. A “political freedom index” (PFI) was computed accordingly. This attempt was discontinued for want of data and some other conceptual and practical problems. While this report, likewise, does not present a PFI, it investigates the nature of relationship between Nepali citizens and the state which directly impinges on well-being and, hence, human development. Human development is about human dignity and self-esteem that stem from the enjoyment of citizenship rights and constructive participation in national and community affairs. The latter part has been covered in chapter 8. Here the concern is with the status a woman or a man commands as a citizen in relation to the state. The 1990 constitution of Nepal has transferred sovereignty to the people from the crown. If sovereignty is understood as the source from where all state power emanates, citizens

POLITICAL FREEDOM AND CITIZEN'S ACCESS TO STATE

need to feel empowered beyond the role they play as voters in periodic elections. Even freedom of expression may not mean much if the dominant coalition is so entrenched that what is popularly expressed is rarely heard. The accountability of the state to the citizens must express itself in responsiveness of state institutions to the bona fide sentiments − not to mention the needs and grievances − of the citizens. The social and economic diversity of Nepal and the unequal opportunities for participation, as discussed earlier, complicate the issue further. Importantly, however, it is precisely this diversity which makes the issue of access critical. A citizen can be he or she, a pahari or a madheshiya, an Indo-Aryan or a Tibeto-Burman, an urban intellectual or a simple rural folk, an “income-poor” or a lucky rich and so on. Under the given structure of values and institutions, how do they go about exercising their constitutional rights? How do they secure access to the state? How successful or satisfied are they likely to be in this respect? Is a person likely to be discriminated because that person is a woman? Do the rich and the poor have equal access to the state? And the various ethnic, religious, or linguistic groups? We may not have much data

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beyond impressions, perception and informed judgement to go about this task. But the fact that there are citizens who are more equal than others even as everyone is expected to be equal before the law cannot be ignored in any meaningful discussion of human development and its practices. Today women are challenging the concept “biology is destiny” which suppresses their potential to live their lives in full. The rigidity of a social system impairing the right of citizens to equal opportunity, irrespective of their gender, caste or creed, cannot be sustained or legitimated by the myth of pre-ordination or fate or as something that can be explained away as socially and historically established. The development of information technology and access to education is leading to growing political awareness. The movement from the rural to urban areas leads to a discovery that opens up new vistas of change, relative prosperity and comfort, which one can see for oneself and compare. The realisation of the possibility of a better life also creates new demands (e.g., political rights, material goods) and new aspirations (e.g., self- and group identity). The right to participate in decision-making that influences one’s individual and collective life is the essence of democracy. This presupposes the right of access to information and channels to make specific demands in order to influence and shape decision-making by the government, be it the Executive, Legislature or Judiciary. Having access is not merely a prerogative or a right of citizens, but it also contributes to the empowerment of the civil society and ensures the responsiveness of the system. While merely having access may be no guarantee of successful influence, its absence is detrimental to not only the material well-being of members of the society but their sense of selfesteem and self-respect as well.

9.2 HUMAN RIGHTS The citizens of Nepal enjoy unprecedented civic liberties and political rights at present. The universal rights of the citizen are embraced by the constitution so tightly that they are not subject to amendments by any act of parliament. All men and women are declared equal; the right to equality comes with the right to association and right to justice (box 9.1). There are some exceptions to which we will return presently. By and large, however, the fundamental rights are not only guaranteed, but the people are seen to be

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Box 9.1

Human rights regime in Nepal

The Constitution of Nepal 1990 guarantees the following fundamental rights: • • • • • • • • • • • • •

Right to equality (Article 11) Right to freedom (Article 12) Press and publication right (Article 13) Right to criminal justice (Article 14) Right against preventive detention (Article 15) Right to information (Article 16) Right to property (Article 17) Cultural and educational right (Article 18) Right to religion (Article 19) Right against exploitation (Article 20) Right against exile (Article 21) Right to privacy (Article 22) Right to constitutional remedy (Article 23)

In addition, with the restoration of democracy in 1990, Nepal became a signatory to several international instruments on human rights, including: • International covenant on civil and political rights • Optional protocol to international covenant on civil and political rights • International covenant on economic, social and cultural rights • Convention on elimination of all forms of discrimination against women • Convention for suppression of traffic in persons and of exploitation or prostitution of others • Convention on the rights of the child • International convention on the elimination of all forms of racial discrimination • International convention on the suppression and punishment of the crime of apartheid • Convention on the political rights of women • Slavery convention of 1926 • Slavery convention of 1926 (amended) • Supplementary convention on the abolition of slavery, slave trade and institutions and practices similar to slavery • Convention against apartheid in sports • Convention on the prevention and punishment of the crime of genocide Nepal has also ratified the following ILO conventions: • Convention 14 on weekly rest in industries • Convention 98 on freedom of association and collective bargaining • Convention 100 on equal pay for equal work to men and women • Convention 111 on elimination of discrimination in employment and profession • Convention 131 on fixation of minimum wage in developing countries • Convention 138 on minimum age for employment • Convention 144 on tripartite consultation

enjoying them − as far as they go − in the absence of opportunities for economic and social advancements at the same pace.

NEPAL HUMAN DEVELOPMENT REPORT 1998

This has expanded individual freedom as well as some degree of disorder in a society whose members are used to an order nurtured under an authoritarian tutelage. Public complaints against disorder and civic indiscipline, strikes and bandhs, and even injustices (including those concerning minority rights and gender/ethnic discrimination, for example) and crimes are rising proportionately to the freedom they now have to freely express themselves. The disappointing performance of the multi-party parliamentary system of governance has, however, failed to induce any positive change in their collective political behaviour. Measures required to operationalise constitutional provisions are falling in place, but only slowly. The inherited non-democratic legal framework is being synchronised. In this regard, an important step was taken recently with the enactment of the Human Rights Act, 1995, which provides for the establishment of a Human Rights Commission. The commission has not been constituted even after one year since the law came into effect. Further issues on which revised legislation is required are those on capital punishment (which the constitution prohibits), discrimination against women with regard to property rights and equality before the law, and the social and cultural rights of ethnic and low caste groups.

9.2.1 Human rights performance The advancement made in the constitutional and legal position of the citizen in relation to the state in the last seven years has been momentous. Nonetheless, commitment to the principles and provision of the constitution and other laws on human rights and, more generally, the rights of a citizen leaves much ground for improvement. Contrary to the constitutional guarantee of the right against arbitrary arrest and detention, human rights groups have documented evidence that political opponents are arrested on false charges (figure 9.1). Similarly, it is reported that the number of victims of torture at the hand of the state is increasing over the years. During the last five years, over 1206 such cases of victimisation have been reported, mainly in the police custody. Amnesty International has reported cases of rape and attempted rape of women prisoners (INSEC 1996). From 1992 to 1996, 200 people were shot dead, 14 died as a result of torture in custody and 58 lost their lives while in custody (INSEC 1996). The practice of bonded labour is an ugly blot

POLITICAL FREEDOM AND CITIZEN'S ACCESS TO STATE

on Nepal’s human rights record. The issue of kamaiya liberation has remained in the forefront of political and social discourse since the last several years. There is continued pressure from human rights and other social activists on the government on this issue. On their part, the successive governments have formed special committees to address the problem. But not much has come of these initiatives as yet. Similarly, the government’s fidelity to its international human rights obligations may also come under severe scrutiny if progress is not shown in the implementation of the relevant provisions as pledged. Despite the commendable acts of joining and ratifying various international treaties and conventions on human rights, the government, in several instances, has yet to show its firm commitment to enacting its obligatory procedures. As a signatory to the instruments, Nepal is expected to take appropriate legal measures at the national level and is required to submit a report annually on progress achieved to the related agency of the United Nations.

9.2.2 Women and human rights With the promulgation of the new constitution, women have been conferred the following rights and related provisions: (a) for election to the House of Representatives, at least five percent of the total number of candidates contesting an election from any organisation or party must be women candidates; (b) at least three of the thirtyfive members elected by the house of representatives to the sixty-member national assembly must be women; (c) there can be no discrimination against any citizen in the application of general law on grounds of sex; (d) special provisions may be made by law for the protection and advancement of women’s interests; (e) there can be no discrimination in remuneration between men and women for the same work; (f) no person shall be deprived of his or her personal liberty save in accordance with

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law; and (g) trafficking in human beings is prohibited as is slavery, serfdom and forced labour in any form. In addition, the Directive Principles of Policies of State in the constitution require that the state “shall pursue a policy of making the female population participate to a greater extent in the task of national development by making special provisions for their education, health and employment.” The major political parties have taken steps towards amending their party constitutions to allow for a higher representation of women in their policy-making bodies. The 1997 Ordinance on local elections was a welcome and timely initiative in this direction. Every ward, the lowest Box 9.2 •

Law and women: according to the Muluki Ain (Public Law), 1962

Inheritance of property and its succession (a) According to the Muluki Ain (Public Law), under the heading of Partition of Property, section 1, a daughter is debarred from her share of parental property, whereas property right is the birthright of son. (b) Section 16 of the chapter on the Partition of Property grants a daughter the right to parental property if she remains unmarried until the age of 35. The law is silent on how a 35-year-old unmarried daughter can claim her rightful share of property, if it has already been partitioned among the brothers by then. (c) The same section dictates that if the daughter marries after inheriting the parental property, she has to relinquish the property after deducting 10% for marriage cost. (d) Section 2 of the chapter on female property states that an unmarried daughter, having obtained her share of parental property, can dispose of only 50% of her immovable property on will and disposal of the remaining 50% requires the consent of the male guardian . (e) Section 10 of the chapter on the partition of property does not make it mandatory for the fathers to maintain their daughter’s upkeep or give a share of property as specified for the wife and sons if the husband or father fails to provide food and shelter. (f) Section 5 of the chapter on Women's Property grants a daughter the right to her mother's exclusive property (daijo, pewa) at her death only if her father and brother are not alive. (g) Section 2 of the chapter on Inheriting Property allows a daughter to inherit her deceased parent's property only when there is no surviving male (son or son's son) of either parent. (h) According to section 10 (a) of the chapter on Partition of Property, a wife is entitled to a share in her husband's property after attaining 35 years of age and completing 15 years of married life. A wife can legally claim a share in the property only if her husband fails to provide food and shelter.

•

unit in the hierarchy of local elected bodies in villages and towns, is now required to have a woman member. A Ministry of Women Affairs was established in 1995 to mainstream gender issues into programmes of national development and women’s empowerment. Further progress can be expected in the future as NGOs and social activists increasingly bring women’s empowerment to the forefront of policy-making discourse. Still, much remains to be done in effecting legal equality for women in Nepal. Legal discrimination against women persists with respect to criminal punishment, divorce as well as property and citizenship rights (box 9.2).

Husband/Wife

is not obliged to provide maintenance to his wife if she has been physically torturing/deserting her husband or if the divorce take place with the consent of both husband and wife. (b) A husband is granted divorce from an adulterous wife, as absolute fidelity is demanded of a wife to her husband (section 2 in chapter on husband/wife). However, a wife cannot seek divorce from her husband on similar grounds. •

Marriage (a) Section 8 of the chapter on Marriage provides for annulment of a marriage if the bride untruthfully claims to be a virgin. (b) Section 9 of the chapter on Marriage allows a man to marry a second time even if his first wife is living, if she - becomes incurably insane; - is issueless after 10 years of marriage; - turns blind completely; - becomes crippled; - contracts a sexually transmitted disease that is incurable; and - is separated after taking the share of her husband’s property. However, the same rights do not apply to a wife under similar circumstances. (c) Although polygamy is illegal, section 10 of the chapter on marriage recognises the second marriage of a man, after a punishment of 1 to 2 months imprisonment and payment of a fine of Rs. 1,000 to 2,000.

•

Transaction Section 9 of chapter on Transaction does not recognise any transaction carried out by a wife without the consent of her husband.

•

Tenancy Rights Section 26 (1) of the Land Reform Act 2021 has been amended which grants tenancy rights to an unmarried daughter completing 35 years of age and to the daughter-in-law. However, there is no provision for a married daughter to assert her tenancy rights if her parents have no other issues.

(a) Sections 1.1 and 1.3 in the chapter on husband/ wife dealing with divorce say that a husband

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•

Section 10 of the Army Act 2016 bans the recruitment of women into the Royal Nepal Army. •

•

•

Citizenship (a) According to section 6(2) of Citizenship Act 2020, a woman of foreign nationality is granted Nepali citizenship on marrying a Nepali citizen, provided she gives up her foreign citizenship. However, this provision does not apply to a non-Nepali marrying a Nepali woman. (b) According to section 3 of the same act, an individual is entitled to Nepali citizenship if her/his father is a Nepali citizen. An individual cannot obtain Nepali citizenship on the basis of mother's citizenship. (c) Birth, Death and Personal Incident Registration: The Right to Child Registration is recognised under the name of the male head of the family, and, in his absence, under that of the eldest male member of the family (according to section 4 (1) of the Birth, Death and Personal Incident Registration Act 2033). The child’s mother is barred from this right. Adoption Section 12 on adoption states that a family with only one son is prohibited from giving him for adoption. In the case of a single daughter, her adoption would be legal.

•

majority of women so charged are liable to life-long imprisonment.

Army

•

Rape (a)

If the rape victim is below 14 years of age, the assaulter is imprisoned for a period of 6-10 years; if the victim is above 14 years, the maximum number of years of imprisonment is 3-5 years (section 3 of chapter on Rape). Section 8 of the same chapter states that there shall be no punishment if the victim kills the rapist within one hour of the commitment or attempt of rape. But the victim is liable to a punishment of up to 10 years imprisonment, or a fine of Rs. 5,000, if the rapist is killed after the hour.

(b)

Indulgence in a physical relationship with a prostitute, without her consent, is punishable by a fine of Rs. 500 or imprisonment of up to 1 year.

Prostitution/Trafficking Prostitution/Trafficking is recognised under Nepali law, as there is no punishment in cases where a woman declares that the act took place with her consent.

•

Sexual and other Harassment (a)

Abortion Abortion is dealt with under the heading of homicide. It is declared illegal and permitted only when performed for the “welfare” of the expectant mother (sec. 28 of chapter on homicide). The “welfare” clause is not clearly defined as referring to the mother’s physical and mental health. Abortion of a 6 month-old foetus carried out with the consent of the mother is punishable by imprisonment of up to 1 year. Section 32 on abortion states that an abortion committed as an act of calculated revenge by any other person is punishable by only 3 months imprisonment. In case of pregnancy of 6 months or more, this imprisonment increases to 6 months. There exists no provision for abortion in cases of unwanted pregnancies as a result of rape, incest and failure of contraception. As abortion is illegal, it is tantamount to committing infanticide, and the

9.3 ACCESS TO THE EXECUTIVE Nepal is passing through an unprecedented phase in its history. The rulers as well as the ruled are inexperienced in the art and practice of democracy. This, however, is no consolation to the people who are victims of the state’s malperformance. Moreover, realisation is yet to dawn on the state that responsibilities and obligations to the people of different geographic regions and of ethnic/caste identities are not uniform. Historical wrongs and discriminatory practices require a sensitivity and responsiveness on the part of the state that it does not seem to possess at present.

POLITICAL FREEDOM AND CITIZEN'S ACCESS TO STATE

(b)

(c)

The chapter that deals with intentions to indulge in physical relationships states that if any man touches any part of the body of a woman excepting his wife, above eleven years of age with malintentions, he will be fined Rs. 500 or imprisoned for up to 1 year or both. Section 2(g) of the Public Offences and Punishment Act, 2027 states that any person found guilty of maltreating or seducing a woman in public is liable to a fine of up to Rs. 10,000, along with a claim for compensation. Section (8) of the Defamation Act, 2016 states that any person abusing a woman verbally, or by gesticulation. or encroaches upon her privacy, shall be fined Rs. 100-500, along with an imprisonment of up to 6 months. There are no legal safeguards against sexual harassment or domestic violence targeted at women. Such cases are also, however, difficult to prove. Source: Pro Public and SUSS 1995.

The citizens have rights, but it is difficult to claim that they also command the respect, or even the attention, of the political institutions, including the political parties, representing them or created in their name. Much of the time, discussion on the character or role of the state in Nepal revolves around the issue of its efficacy and efficiency vis-à-vis the country’s development objectives and what is expected of the state in that context. But it should not be forgotten that a government, which is not adequately sensitive about its responsibility in development functions, might be just as insensitive about the rights and other universally recognised legitimate security and welfare needs of the people as well. A question arises: what

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happens to a democracy when citizens have a constitutional right to express themselves, but those they address or try to reach out to for response do not hear them? It becomes necessary to ask then, even if rhetorically, what would the country’s human development index be like if the harassment the citizens suffer and the costs they incur at the hands of the state institutions were to be one of its components, too? The silent suffering of the masses, on the one hand, and the increasing sense of public apathy it generates, on the other, cannot be ignored, if the assessment of human deprivation is to be a helpful guide for designing a remedy for future. For a citizen, the government normally means the executive. It is with this organ that he/she normally deals for access to public services, to seek redress of personal and community grievances, to pay taxes and fees and to make representations for development programmes and projects deemed necessary by the community. The general impression and experience, however, is that a common man or woman does not fare well in the exercise of these functions, relations and expectations vis-à-vis the executive. The government offices, even in Kathmandu, are generally a nightmare except for those who profit from them. There is the usual problem of inadequate institutional capacity owing to shortcomings in management, with the issues requiring attention ranging from motivation and morale of the personnel to the availability of physical facilities and the nature of the political milieu. In addition, growing corruption is hurting citizens badly. Bureaucratic corruption is growing under the protection of the political class whose own corrupt practices rob them of any moral authority they may have to check this scourge. It is important that, given the important role and responsibility that the political parties have in a parliamentary system, their leadership start giving some serious thoughts to this issue. Taking the people for granted for long could be a risky business in and for a democracy. As far as the relationship between the state and the citizens is concerned, there is now a new divide which may be more potent than any other in its capacity for exclusion. One may say that there are two classes of people at present: those who have access to the power centres in major political parties and those who do not. The former group has access to the state while the latter does not. In that process, a common woman or man gets excluded both absolutely and relatively − absolutely, because the state is insensitive; and relatively, because of selective access to the state. For an objective assessment of the reality,

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another aspect of the country’s patrimonial political culture also needs to be noted. People in general and the supporters of the part(y)ies in power, in particular, use the access they may have to seek personal favours rather than to pursue public interest. It is even more worrisome when the favour thus sought − for appointments, contracts, etc. − are not consistent with the laws of the land, as is generally the case. The formal structures and arrangements necessary to project the government as one that is interested in public good are available. The cabinet meets twice every week on Mondays and Thursdays for 3 hours approximately depending on the nature of agenda. This is the highest policy-making body in the land, the principal mandate of which is to take and execute decisions in conformity with the constitution. However, as the discussions or decisions taken are not open to the public, it is difficult to say what goes on in these meetings as far as their relation to the well-being of the people is concerned. The “important” decisions of the cabinet that are covered regularly by the news media are about matters concerning hikes on administered prices, duties and fees payable on public utilities and other goods. The promotion and transfers of civil servants, political appointments and medical and financial assistance granted to the powerful people receive similar priority. All ministers including the prime minister have an established rule of meeting people both at their residence and offices on stipulated days and time. In practice, however, most of the time, the only people who have secure access are those who are powerful politically or “connected” socially. This political handicap may not be unique to Nepal, but the problem is aggravated in the country by the growing insensitivity of public authorities accompanied by the growing hardships faced by the people.

9.3.1 Bureaucracy The bureaucracy in Nepal has grown to a strength of approximately 100,000 civil servants. This number does not include those who are hired on a temporary basis, now increasingly at the behest of a minister or other political functionaries who are pressurised by their constituencies to give jobs to the “chosen ones”. Elaborate rules and regulations on recruitment, training and promotion of civil servants do exist in order to keep them meritorious, competent and nonpartisan. There are other numerous rules and

NEPAL HUMAN DEVELOPMENT REPORT 1998

regulations concerning their conduct to keep them accountable to the people they are expected to serve. The established and highly specialised rules and procedures − specific for various departments and organisations within the bureaucracy − define the purpose and responsibilities of the personnel involved. The challenge is to have these rules followed in practice to have a positive impact on the lives of the citizens. The citizens are generally unable to access bureaucratic service to which they are entitled for various reasons. •

•

•

•

First, it is, a cultural problem sharpened by the long feudal tradition where an official, not the citizen, is the master. Furthermore, there also exists now the more recently acquired “cultural” malaise in the Nepali officialdom where even the word of a person in authority does not mean much because there is no requirement that truthfulness be a part of public relation responsibility. To an ordinary citizen in need of relief and remedy, nothing can be more harassing than this systemic pathology. Second, government agencies and functions are concentrated in Kathmandu, far removed from rural areas where their services are more in demand. It is reported that 70 percent of the gazetted officers are based in Kathmandu Valley. Third, there is public corruption, from the so-called petty ones to those that are the product of “criminalisation of politics” and “commissionisation of aid resources”. The damage that the latter category of corruption inflicts on human development process directly and indirectly should not need any explanation. Even petty corruption does not become so petty when it becomes pervasive and adversely affects the lives of the citizens every day. Reportedly, many “lucrative” and nonlucrative (e.g., primary school teacher) posts are regularly “auctioned” by political power brokers who influence the recruitment process. Fourth, the “elite class” within the civil service with its acquisition of education and exposure to progressive norms and values could potentially be the source of “modernising change” in the bureaucracy. This has not happened so far for three principal reasons: (a) often harassed or,

POLITICAL FREEDOM AND CITIZEN'S ACCESS TO STATE

•

•

alternately, co-opted by the political class, they do not feel secure enough to want to “rock the boat”; (b) they are engaged professionally more with the “outside world” including the donor community (with the attendant benefits they themselves may receive from such relation) than with the Nepali public for them to be sensitive to their own potential and responsibility as a “change agent”; and (c) they, too, are a part of the society with its traditional (rent-collecting) and modern (rent-seeking) encumbrances which they cannot transcend (Panday 1989). Fifth, political leaders have not been able to accept, as yet, norms of civil service and its need for independence, and the precedence that merit and other objective criteria must take over partisan, personal considerations in the conduct of public duties. Every successive government that has been formed after the restoration of democracy has invariably wrought changes in the bureaucracy, state-owned media and other public bodies by appointing individuals with close affiliation with the part(y) ies in power or its leaders. This politicisation of bureaucracy, as a consequence, has rendered it unable to respond to the challenges of a democratic administration. Finally, public offices lack physical facilities for public officials to function efficiently. This contributes to its relative ineffectiveness, a weakness that is more severe in government offices coming into greater contact with the public − perhaps, because generally they are outside the foreign aid system. The office space provided for the District Offices, where ordinary citizens visit frequently for service, redress, or relief, for example, is barely enough to accommodate their personnel in almost all cases. A common sight in these offices along with many other similar ones are unorganised files that are bundled up in white cloth and stacked haphazardly. The records are hard to find for the officers, and services even harder to access for the public.

The Administrative Staff College was established in 1982 for upgrading the competence of the civil service. It has been providing various kinds of training on subjects from project appraisal to financial management and basic

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administration. Gazetted officers receive training in personnel management, stress management, coordination, information management, computer literacy and work procedure and rules upon entering into service. The district officers receive similar training in subjects that are of direct relevance for their work. Since 1982, over 11,000 civil servants, including those in the non-gazetted categories, have been accessing training of this kind. There are also regular lectures from visiting dignitaries and scholars that provide opportunity for interaction and assimilation of ideas and methods that are often novel and innovative. Yet, it is apparent that the production and nurturance of a civil service that is proud of the work it performs and perceives itself as “servant” of the people can be addressed only partly through training. This will need greater attention and firmer commitment of the political leadership.

9.3.2 Police Apart from the bureaucracy, it is the police that, on behalf of the government, comes into direct contact with the public on a massive scale on a daily basis. Nepal’s police force has a strength of approximately 42,000 of which only 700 are women. This means that one police official serves approximately 500 people, which is a very light ratio. The police are well dispersed and visible − at traffic junctions, streets, government offices and in immigration and customs − and in the villages where no other public official may be present. After the restoration of democracy, the police force has comparatively been able to function with greater autonomy and, presumably, also with greater sensitivity towards the rights of the citizens. Recently, training in the concept and practice of human rights was introduced in the police training courses. The police have also access to resources and technology not available earlier − even though they are not adequate even now. The image of the police force, however, is somewhat tarnished owing to its history as a protector of the rulers rather than of the life and property of citizens. It will take some time before it regains the confidence of the public. This has been happening even in democracy with the frequent use of the police force for suppressing the demos who are political adversaries of those in power. Also, the general perception is that the police force, too, is at least as corrupt as the rest of the public machinery. The undue influence of politics on the police

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force may have given rise to a triangular nexus between politics, police and criminals. As Nepal opens up its borders for trade and tourists, it has become more difficult to control cross-border trafficking of illegal goods, including drugs and weapons and of women. For human development, it is absolutely necessary that criminals, not common citizens, become afraid of the uniformed security agents of the state.

9.4 ACCESS TO THE LEGISLATURE The executive is ultimately accountable to parliament where it is subjected to intense political scrutiny. During the Zero Hour the Ministers are expected to furnish satisfactory replies to the queries on conduct, performance and decisions taken. The access of the people to public offices and government services therefore depends a great deal upon the effectiveness of the parliamentary proceedings as well. As for the people’s access to legislature itself, there are two different channels and interests. One is the access sought by the constituents where they seek out their representatives for personal favour, relief or redress. The other is by members of the organised civil society who wish to influence the proceedings and outcomes of the legislative activities−such as a bill that is being debated. Three private bills, the Human Rights Commission Bill, the Abortion Bill and the Legal Aid Bill were submitted to parliament with public influence of this kind. Legislators also monitor governmental affairs and expenditures on behalf of the people by means of various parliamentary committees. There are currently seven committees of the House of Representatives and two committees in the National Assembly. The committees deliberate on the following domains: • • • • • • • • •

Public accounts Finance Foreign relations and human rights Natural resources and means and environmental protection Population and social affairs Internal affairs Development and communication Remote areas Delegated legislation and governmental assurances

The Parliamentary Committee Chair is empowered to involve lay citizens, representatives of interest groups and the media

NEPAL HUMAN DEVELOPMENT REPORT 1998

in committee meetings. This is potentially an important avenue of public access to the legislature for citizens. Two separate arguments against this practice have been voiced. First, it has been argued that the informal dialogue that is common during such meetings makes it easier for the legislators to arrive at a consensus without the intrusion of party politics. Such a consensus may not be possible when meetings are conducted under public gaze, which might pressurise members to take a political stance. Second, it has also been argued that the danger of blowing issues out of proportion by the press might transform the meetings into a formal affair, thus destroying the possibility of arriving at a constructive consensus. These arguments, however, cannot be tenable in an age where transparency and accountability have become the highest norms of governance. Besides, the practice of external participation followed by the Public Accounts Committee has already shown its usefulness and efficacy. A more important issue in this regard has to do with the declining efficacy of the parliamentary committees. The reconstitution of most committees following frequent change and expansion of the cabinet is overdue. At present, only one committee out of nine has a chairperson. Nepal now has an array of professional associations and NGOs that have the potential to increase state accountability. There are a number of trade unions, business interest groups, journalists’ associations, women organisations and NGOs working in the area of human rights, child rights, poverty, health, environment, law, trade and water resources. There have been instances of interest group interventions in the legislature seeking to safeguard citizen or community interest. Examples include: the issues of Value Added Tax (VAT), women’s right to parental property, and the anti-terrorist bill which contains draconian provisions. The radio, television and newspapers and magazines are also active means of holding the political leaders and the legislature accountable. The VAT and women’s property rights issues have recently received substantial coverage in the media, for example. The government, after facing stiff opposition in the media, withdrew the bill on “Right to Information”, which had sought to curb this right with respect to ordinances or bills pending in the parliament and with respect to reports of special commissions formed by the government. The opportunity for public access, in actual practice, is governed by several factors. Firstly,

POLITICAL FREEDOM AND CITIZEN'S ACCESS TO STATE

the parliamentary practice is a new experience for the electorate as well as the elected. Though a substantial percentage of the MPs are educated, they have yet to come to terms with their mission in politics. Second, the parliament can be only as representative as the composition of its members. Members of the parliament elected by unfair means do not really represent their nominal constituency. Similarly, with the parties being as fluid as they are now, many of them may not even represent, in effect, the parties they are nominally members of. Third, family ties and relationships in Nepal are still binding and command loyalty beyond what should be possible in a democratic, transparent and accountable system. Communal instincts also reign supreme across all strata. Personal connections, therefore, continue to matter for access.

9.5

ACCESS TO LAW AND JUDICIARY

The most remarkable achievement of multi-party democracy in Nepal has been the establishment of an independent judiciary. Yet, the judiciary, too, is beset by problems of credibility, integrity and competence as are the legislature and the executive. Access to the judiciary, however, has partially increased with a growing body of legal practitioners in the country (figure 9.2). Access to the judiciary is available to the people in all 75 districts. The judicial system has three tiers: the district courts, appellate courts, and the Supreme Court at the apex. There are other agencies with quasi-judicial power to settle disputes regarding landownership, land tenure, customs, tax, forests and so on. Every citizen, irrespective of caste, class, sex and creed is entitled to file a writ petition against wrongdoing and personal damages and for a judicial review in matters of public concern. Provision has similarly been made for the availability of one salaried lawyer in every court for legal services free of cost. The Legal Aid Act proposed by Nepal Bar Association (NBA) and endorsed by the supreme court to serve a similar objective is now in the floor of the house of representatives. The judiciary in Nepal has necessary provisions for the maintenance of impartiality in the delivery of justice. The following may be noted in particular: • •

Debates and decisions arrived at by the judiciary are open to the public. Upon a deposit of a fee, any citizen may demand a record of judgement through a

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focus on what is right even if it is not necessarily popular.

9.5.1 Judicial review Article 88 of the Constitution defines the jurisdiction of the Supreme Court and provides for public litigation by concerned individuals and groups as follows:

• •

• •

•

•

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lawyer. With an assured salary and a fixed tenure of office, it is assumed that judges will discharge their duties with fidelity. The chief justice, who is appointed by the Constitutional Council, cannot be removed from office unless impeached by two-third of the members of the house of representatives. The judicial council, not the cabinet or any part of the executive, is empowered to appoint and dismiss judges. Institutional provisions for review and rectification adjudication allow referral of the verdicts to the appellate court and on to the supreme court. The Nepal Bar Association (NBA), which is a nationwide association of legal practitioners, regularly reviews court judgements. This acts as a good deterrent against miscarriage of justice. Because judges are not elected, they can

(1) “Any Nepali citizen may file a petition in the supreme court to have any law or any part thereof declared void on the grounds of inconsistency with this constitution, because it imposes unreasonable restriction on the enjoyment of the fundamental rights conferred by this constitution or on any other ground. Extraordinary power shall rest with the Supreme Court to declare that law as void either ab initio or from the date of its decision if it appears that the law in question is inconsistent with the Constitution. (2) The Supreme Court shall, for the enforcement of the fundamental rights conferred by this Constitution, for the enforcement of legal rights for which no other remedy has been provided or for which the remedy, even though provided, appears to be inadequate or ineffective, or for the settlement of any constitutional or legal question involved in any dispute of public interest or concern, have the extraordinary power to issue necessary and appropriate orders to enforce such rights or settle the dispute. For these purposes, the Supreme Court may, with a view to imparting full justice and providing the appropriate remedy, issue appropriate orders and writs including the writs of habeas corpus, mandamus, certiorari, prohibition and quo warranto.” Wide-ranging cases of public litigation taken up by the Supreme Court involve a variety of issues including the right to information, right of prisoners to vote, protection of cultural heritage, natural resources, biodiversity, sacred sites, and the preservation of architectural design and consumers’ rights (box 9.3). A number of NGOs are active in advocating the rights of women and children and other disadvantaged groups, providing free legal counselling and literacy services, and public

NEPAL HUMAN DEVELOPMENT REPORT 1998

dissemination of drafts of proposed parliamentary legislation. The NBA is similarly engaged in dissemination of legal information, protection of fundamental rights and conducting legal awareness programme. It has been providing free legal aid service to the poor, women and children through its units in 68 districts of the country. A committee of senior lawyers monitors and oversees the court judgements.

9.5.2 Impediments to law and justice There are traditions in Nepal which, in practice, present on occasion a different system of justice than just outlined. Some of these traditions work well; others contribute to hindering or miscarriage of justice. Disputes, especially in the rural areas, are traditionally settled by a gathering of village elders (males) whose decisions are abided by the parties. Whether justice is always served under such system is a moot point. Those who are legally aware may go to courts. Geographical location plays an important role in this respect. Similarly, untouchability and polygamy, though illegal, have the sanction of the society, especially in the outlying districts. The system of dispensing matrimonial justice to the aggrieved husband through jari kharcha (payment in lieu of the wife surrendered to her new husband) is still in practice. Similarly, child marriage, which is

outlawed and punishable by law, is still practised in various parts of the country. Many mountain districts operate indigenous judiciary systems independent of state courts, resolving disputes related to land, marriage and family and theft according to the age-old traditions. Interestingly, there are no judges appointed to the district courts of Rasuwa, Mustang, Humla, Mugu and Kalikot currently. Locally, the upper caste dominates politics, administration, economy and the law. Hence a poor person from the lower caste would rather tolerate injustice and accept it as a matter of preordained “fate” than complain and go through the lengthy process of accessing justice for fear of reprisal. There can be miscarriage of justice also because of corruption. That the insidious hand of corruption has permeated the rank and file of the Judiciary is borne out also by the fact that corruption was high on the agenda of the seventh conference of the NBA some nine months ago. The declaration issued at the end of the conference took note of the “maligning” of “the sacred temple of justice” by the activities of “a few judges and few law professionals” and recommended that the judicial council act and the law professionals act be implemented effectively. (The Legislature and the Executive were similarly cautioned in this respect.) There is an opinion among law professionals

Box 9.3 •

•

Right to Information - Arun III: A public interest writ petition was registered on June 16, 1994 in the Supreme Court against the Nepal Electricity Authority, Arun III Hydro-electric Project Office, Ministry of Water Resources and Ministry of Finance demanding disclosure of project information and documents in line with article 16 of the constitution. The writ petition also requested for an interim order to stop any agreement with the project contractors and lenders, until the lack of clarity surrounding Arun, including loan conditionalities, was resolved. On May 8, 1994, the Supreme Court was taking into account article 16 of the Constitution, ordered disclosure of project documents and information by the government, established standard procedures of seeking and receiving information of public importance in all matters and defined its jurisdiction of adjudicating matters of public controversy which had a bearing on the Directive Principles of State Policy as well as other constitutional and legal provisions. Voting Rights of Prisoners: A non-governmental organisation, filed a petition in the Supreme Court against the Election Commission protesting its decision to disallow prisoners in government jails

POLITICAL FREEDOM AND CITIZEN'S ACCESS TO STATE

Public litigation: some examples

•

•

to vote in the mid-term elections held in November 1994. This, they declared, amounted to a violation of the fundamental rights of the citizen to exercise her/his franchise. The Supreme Court dismissed the case owing to insufficient information. Protection of Cultural Heritage of Lumbini: A citizen filed a writ petition in the Supreme Court in January 1996 against the government protesting its proposed act of felling the pipal bot (holy Ficus tree) at Maya Devi temple in Lumbini. He demanded of the government that it start maintaining the site at Lumbini where Lord Buddha was born. The SupremeCourt confirming a citizen’s right to information, ruled in the petitioner’s favour, stating the obligatory duty of the government to publicly disseminate information while conducting any activity in an area of public significance. Local Elections: A writ petition was filed in 1996 challenging the interim executive order of the government, according to which voters are not required to produce their citizenship certificate for having their name included in the voters’ list. The Supreme Court cancelled the government’s decision, thus making it mandatory for prospective voters to procure and present their citizenship certificate.

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that syndicalism among judges is increasingly leading to abortion of justice. Unless the judiciary addresses this issue properly and objectively, the faith of citizens in the competence and judgement of the judiciary will erode to the detriment of justice and justiceseeking process in the country. Among other things, the provisions of the Judicial Council Act concerning the appointments, transfer, disciplinary action and termination of service of the judges need to be implemented faithfully.

Box 9.4

A typical case of citizen harassment on account of delayed justice is that of Renu Kanaidiya vs Ratna Lal Kanaidiya concerning judicial establishment of relationship. For the past 20 years, the mother-daughter duo have been making the rounds of courts in order to establish the daughter/father relationship and allowance or property for maintenance. The case that started in 1976 in the Kathmandu district court has now wound up in the Supreme Court. The daughter is now 20 years old and the mother and daughter still have not lost their hope in getting justice that should one day establish the identity of the father. Source: Ekkaisaun Shatabdi, July 1997.

9.5.3 Delay in justice The process of accessing justice in Nepal is notoriously slow. This is so in spite of the official requirements to the contrary. Court Rule No. 14 (Adalati Bandobasta) lays down the following criteria for dispute resolution and execution of justice: •

•

•

A case before a court must be resolved within one year of the date of receiving the rejoinder from the defendant, or from the date when all the procedures have been fulfilled for receiving a rejoinder. Judgement on appeal must be made within 6 months of receipt of the files of a case from the court of first instance, i.e., the district court. Verdict may not be withheld longer than 35 days if receipt and examination of all evidences have been concluded, regardless of the above provisions.

Out of a total of 133,740 cases registered and carried over from the previous year, 70,467 were still pending at the end of the year 1995/96 (the latest year for which such data is available). Most of these cases are with the district courts (table 9.1). The agony, harassment and costs incurred by citizens in delays can be transferred intergenerationally (box 9.4). Ironically, the work burden imposed on the apex court by the increasing tendency of public

Table 9. 1 Level of court Supreme Appellate District Total

Justice delayed

litigation may also contribute to delay in justice if appropriate measures are not undertaken to address this issue properly. Amidst the rising cases of such litigation involving petition for court order against anything from “adding another storey to the Health Ministry building” to “building a Traffic Police Post in the Ratna Park area”, the court seems to have less and less time for hearing “ordinary litigants” (The Kathmandu Post, 1997).

9.6 CITIZEN AND LAW In a democracy, the citizens’ right to representation is derived not only from the periodic elections in which they participate, but also from their own democratic conduct. Such conduct manifests in the law abiding behaviour and performance of other civic duties as citizens − from obeying the traffic rules to paying one’s taxes. On several occasions above, allusions have been made to unbecoming expectations of the constituents from their representatives, which result in a collusion between the two against the norms of democratic, accountable governance. In addition, there may also be a lack of interest in the rule of law, except when it is directly beneficial. The role expectations of the rulers and the ruled may have little to do with what is prescribed officially and legally. Such role expectation/role performance also contribute to

Disposal of cases in courts, 1995/96 Cases filed and carried over 5,879 31,972 95,889 133,740

Cases disposed 1,862 17,419 43,973 63,354

Cases pending 4,017 14,553 51,916 70,486

Percent disposed 31.67 54.48 45.86 47.35

Source: Annual Report of Supreme Court (2052/53).

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Box 9.5

Society and corruption

An important issue related to law and justice is the prevailing attitude in Nepal where generally the lawmakers, law-enforcers and the citizenry do not show adequate interest in the fact that laws are meant to be obeyed and enforced (Panday and Chitrakar 1996). Arrears amounting to billions of rupees in government financial transactions are pointed out regularly by the Auditor General of the country. But little serious attempt has been made so far to clear them and to punish the guilty. The ministers and public officials who owe the government large sums for many years have not been taken to task. They continue to hold important offices without an aura of stigma blemishing their image. The Public Accounts Committee of the parliament, which is constitutionally in charge of establishing financial discipline in the government and enforcing efficiency measures, reportedly has seven members who themselves have to clear dues to the government. Several ministers committing similar excesses are honoured members of the cabinet at present (The Kathmandu Post, April 13, 1996). A situation like this has continued to exist partly because citizens or important agents of civil society are themselves not particular about fulfilling their obligations as citizens. In line with the constitution, the Commission for Investigation of Abuse of Authority (CIAA) has been established as an all-powerful body to combat corruption. The CIAA is empowered to investigate cases of abuse of authority. However, very few have been prosecuted so far, and fewer still have been found guilty as charged.

Legislations for effective enforcement that would go a long way in discouraging or punishing the use of public authority for private benefit do exist. Civil service legislation itself requires that the conduct of all civil servants is appropriate to their role and responsibility in the society. But, in the practice of personnel management with regard to promotion or reward and punishment of different kinds, the intent and provision of the law are ignored and flouted by the government itself. Even if the government cannot always punish the culprit, it could make it a practice to reward the few who are honest, and thus gradually create a culture of integrity in civil service. Some other specific legal provisions generally flouted by the authorities themselves are: (a) the requirement that all civil servants declare their assets periodically is not implemented.; (b) the law which seeks to regulate ostentatious spending on occasions such as wedding remains unenforced; (c) financial rules and regulations, including those related to procurement, are flouted on several occasions; the legitimacy of the decision is established at times as order “from above" rather than from the provision of law. These are problems which the Nepali citizens themselves have to remedy. One curious aspect of governance in Nepal is that many dubious acts of the government and its officials are generally transparent. Experience shows, however, that this transparency does not necessarily lead to a cleaner administration if the civil society is not conscious and active.

corruption (box 9.5). An important issue related to the relation between the citizen and the state is, therefore, change in attitude about the law and society. The elite want reform, but they are not sure what price

they are willing to pay for it. The entire gamut of issues ranging from governance and citizenship rights to public corruption has to be considered in this perspective.

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CHAPTER 10

Social Institutions and Social Capital If we speak of democracy, we do not mean a democracy which maintains the right to vote, but forgets the right to live and work. If we speak of freedom, we do not mean a rugged individualism which excludes social organisation and economic planning. If we speak of equality, we do not mean a political equality nullified by economic and social privileges. If we speak of economic reconstruction, we think less of maximum production (though that too will be required) than of equitable distribution. The Times, London, 1 July 1940 Social development is inseparable from the cultural, ecological, economic, political and spiritual environment in which it takes place. It cannot be pursued as a sectoral initiative.... To promote social development requires an orientation of values, objectives and priorities towards the well-being of all and the strengthening and promotion of conducive institutions and policies. World Summit for Social Development, 1995

... it is important to recognise that what an individual can do with his or her own agency is conditional on many circumstances .... Children who are not sent to school ... might conceivably still do quite well... but the cards are stacked very firmly against them. On the other hand, institutional support from the family, from the public education system and from social cooperation in general can trransform radically what they can or cannot do on the basis of their own agency. Sudhir Anand and Amartya K. Sen 1996

10.1 SOCIAL INSTITUTIONS, SOCIAL CAPITAL AND HUMAN DEVELOPMENT

T

he evident failure of the conventional natural, financial and technological capital-dominant developmental model to lead to economic development in large parts of the underdeveloped world and to explain the historical developmental process in the Western as well as the fast-developing East Asian societies has, in recent decades, increasingly forced development theorists and practitioners to more explicitly consider the significance of two other forms of capital. The emphasis on human capital, as discussed in chapter 2, began three decades ago in recognition of the differentiated and heterogeneous nature of labour in general and the fast-paced and human developmentintensive development of the East Asian countries in particular. It was widely recognised that the East Asian countries laid high value and maintained an internationally and historically

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unprecedented and sustained level of public and private investment on human capital sectors. The second form of capital which has received emphasis recently is that of social capital which can tentatively (see 10.1.1) be defined as institutional features and potentials inherent in social and cultural structures and processes which are currently promoting, and which can be utilised to further enhance individual and collective benefits and capabilities. More simply, these are social and cultural resources which societies utilise to advance desired ends. As resources, they can be classed together with the more conventionally identified natural, financial, technological and human resources and be utilised to complement such resources. In addition, as with the conventionally identified resources, the production as well as effective and efficient

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utilisation of social and cultural resources can be enhanced as well. While the conventional forms of capital have received much emphasis, it may be noted that a concern with social capital is not an altogether new innovation. The linkage between social capital and development formed a running theme at least one century ago among political economists and sociologists belonging to the historical/institutional school, e.g., Max Weber. However, it is not only economic development of large parts of the underdeveloped global regions which has suffered at the hand of the capital-dominant model, regardless of whether such capital is defined in terms of natural, financial or technological resources. Human development has also suffered due to such emphases. While the low HDI attainments of peoples in the underdeveloped regions are a telling indicator of this failure, other human deprivation indicators, e.g., insecurity and loneliness, unemployment, substance abuse, high rates of violence and incarceration, and increasing mining and wastage of natural resources and environmental loss − both of which impinge on local as well as global sustainability of human civilisation, etc. − are taking their human toll in the economically developed regions, countries and peoples as well. It is increasingly being recognised that a healthy respect for social capital may not only restore a measure of human balance in the developed regions but can also contribute to enhancement of human development in economically underdeveloped regions. As de Vylder (1995) notes, while all forms of capital play important roles in the promotion of human development, “an overdose of one [particular] form of capital can be directly harmful” (p.17). He illustrates the significance of social capital and the negative impact of “overdose capital” in the following manner: If due attention is paid to the role of social capital, it is easy to see why the early, optimistic development strategies advocated by many developing country governments and by foreign donors and financial institutions went wrong. Too much investment in machinery and equipment in the early days of import substitution in many developing countries proved unsustainable, and exceedingly costly. Easy access to financial capital in the 1970s − when commodity prices were high, commercial banks more than willing to lend, and aid levels still growing − only served to polish the slippery slope in countries where the development of institutional and social capital lagged behind. Corruption, capital flight and massive indebtedness were the legacies when the financial bonanza was over. (pp. 16-17)

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10.1.1 Nature of social capital “Social capital”, however, remains to be defined substantively and precisely. By and large, it is still perceived as a black box by most development theorists and practitioners and has tended to serve the functions of a convenient, if embarrassingly large, residual category. As such, it has occasionally been subsumed under global rubrics such as “the Christian work ethic”; the underdeveloped countries’ “backwardness”; allegedly culturally-based “propensities” to save, invest and consume; “culture of poverty”; “culture of silence”; “fatalism” and the like. Nonetheless, more discriminating preliminary attempts to isolate its components have been made in the last decade. Nobel Laureate Douglass North (1990), resurrecting the old institutional school, has recently argued that development is an outcome of efficient institutions − rather than the other way around. “Good governance”, as a component of social capital, has entered the developmental lexicon, including of international financial agencies, even though what constitutes the core of good governance and whether the core holds equally valid for all developmental situations, countries and cultures is nearly as debatable as before. A new regime of “second-generation conditionalities” to be laid down by international financial agencies − conditionalities which impinge directly on social and cultural institutions and which seek to transform them − apparently in the interest of debtor countries’ solvency and/or economic development has recently been mooted. “Democracy”, “participation”, “embeddedness”, “state activism”, “minimalist state”, “appropriate legal frame” (particularly in relation to ownership and contract), “press freedom”, etc. are increasingly seen as political and, more significantly, social and cultural preconditions or correlates of economic development. Within the sociological mainstream, value neutrality, universalism (as contrasted against particularistic application of norms/formal rules), achievement orientation (as contrasted against orientation towards ascription), etc. have for several decades been regarded as being friendly to economic development. In more populist, micro and concrete parlance, academics, policy-makers and states for several decades have insisted on the importance of “small-family values” and “social/moral economy”, and urged for avoidance of allegedly culturally-based profligacies, e.g., cultural values which promote

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“unproductive expenditures” or “consumerism”, shunning of “fatalism”, allocation of high cultural value to manual and other labour, establishment of a culture of individual initiative and responsibility, etc. for poverty alleviation and/or growth of welfare at the household and community levels. As de Vylder (1995) notes, “... social capital is difficult to define formally, and even more difficult to measure”. However, at the heart of the notion of “social capital” lies the question of how human social relationships are organised (also cf. de Vylder, and Banuri, both in de Vylder 1995: 12-23). (But because notions of “economy” and “polity” imply, in essence, organisations of human relationship as well, it is convenient to demarcate the “social” as consisting of all structures and processes of social relationships including those within the “economic” and “political” domains and including, of course, the micro structures and processes that are conventionally regarded as the legitimate domains of “society and culture”.) Attempting to define “social capital” further, de Vylder notes: If we broaden the definition of social capital somewhat, we may also include formal and informal processes and structures, that is, how different institutions relate to each other, power structures, norms and networks within and between different organisations, issues related to accountability and transparency, the degree of democratic participation and control, and other issues. The cultural setting, including the family and gender structures, extent of ethnic diversity, the role of customary law and traditions, defines the broader contexts in which social capital is being accumulated or depreciated.

Social capital, then, may be said to reside in specific natures of (a) social institutions which are, in the last analysis, networks of social relationships, (b) relationships among social institutions, and (c) culturally legitimate normative values which regulate intra- and interinstitutional relationships. Such institutions singly or in concert systemically mandate, direct, facilitate and encourage particular kinds of normative values and social/collective actions while at the same time discouraging and prohibiting other kinds of normative values and social/collective actions. In between, there are specific categories of social/collective action vis-à-vis which institutions may be relatively neutral, thus allowing a relatively wide latitude for heterogeneous, mutually incompatible − even mutually contradictory − patterns of normative values and social/collective actions. Anand and Sen (1995: 23-4), elaborating on

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the significance of institutions, write: ... it is important to recognise that what an individual can do with his or her own agency is conditional on many circumstances over which he or she may not have much control .... Institutional support from the family, from the public education system and from social cooperation in general can transform radically what they can or cannot do from their own agency. The complementarity between individual agency and institutional support is crucial for individual opportunities and achievements in different fields, including the capability to lead satisfactory and worthwhile lives.

10.1.2 Levels of social institution Social institutions and cultural values can potentially be categorised at various levels, depending on their relative scope and significance. Institutions and values which are more encompassing, because they provide an overarching and common anchor to multiple other less encompassing institutions and values, are generally regarded as more fundamental to the operation of the total society. Illustratively, religious values can be regarded as more fundamental than caste-related values and patriarchy as an institution is more encompassing than institutions which regulate husband-wife relationships. Correspondingly, conscious collective actions for promotion of social capital are ideally directed at strengthening or transformation of the relatively more encompassing institutions and values. However, because such institutions and values form the core, as it were of a society, they are also less amenable to direct action. While legitimacy is one of the defining criteria of a social institution, no social institution is fully and universally (even within a given society) legitimate. Social institutions are domains of multiple contestations. Such contestations may arise from within, that is, from contradictions built into networks of relationships which comprise and define such institutions, e.g., the widely reported contradictions between mother-in-law/daughterin-law networks within the institution of a joint family. In addition, contestations may also arise out of inter-group/inter-institutional contradictions, e.g., those between caste/ethnic or gender groups; religious and secular institutions; political, economic and social institutions; subsistence-related, feudal and capitalist institutions; national and international institutions. Such loci of contestation can be utilised as potentially fruitful entry points for identifying bottlenecks in the generation of

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social capital as well as for consciously organised collective actions geared towards generating enhanced social capital.

10.1.3 Social institutions and change Social institutions are dynamic entities. The contradictions, contestations and struggles that are inherent within and among social institutions, together with their contradictions and contestations with political and economic structures and processes, necessarily lead to the transformation − of various degrees and intensities − of the nature of all such structures and processes at various social levels. Illustratively, inter-generational conflict within a joint family may lead to formation of nuclear families; weakening of the institution of the state whether in favour of feudal or capitalist institutions may weaken institutions which are promoting human development; rise of a state structure which emphasises devolution may lead to a revitalisation of community-level selfreliance which may, in turn, intensify participation and democratisation; and so forth. Objective and sensitive social analysis can help arrive at relatively valid mappings of the transformatory process which, in turn, can be utilised for the promotion of social capital. As also noted in the preceding extract from de Vydler, social institutions, during the transformatory process, may accumulate additional social capital or lead to a depreciation of the existing social capital. A relatively valid mapping of the transformatory process can also assist in designing and implementing collective action for providing additional impetus for accumulating social capital and for retarding the process of depreciation of social capital.

10.1.4 Social institutions unfriendly to human development Not all social institutions, however, are human development-friendly. It follows, then, that not all forms of social capital can be regarded as human development-friendly. Indeed, almost all social institutions may be seen as embodying multiple forms of “capital” some of which may be friendly to human development while others may retard human development − even as they promote other forms of development. As a rather extreme illustration, educational institutions − one of the bastions of human development promotion − may play a key role in intensifying political, economic and social inequalities by

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facilitating entry and promotion of already privileged groups. The privileged may receive a higher-quality education (see chapter 5). The press may suppress peoples’ predicaments and voices and provide undue space to the powerful. An elected legislature may coopt regulatory institutions and enhance the level of corruption. The institution of the family, another bastion of human development promotion, may institutionalise genderand age-based discriminations which impinge, among others, on capability formation. As Picchio (1996: 89) notes, “the family functions as an institutional enclave within which the general principles which regulate social relationships in other spheres are somehow suspended”. On the other hand, and to the contrary, caste/ethnicity-based institutions and values, which are generally unfriendly to human development because of their hierarchical, discriminatory and ununiversalistic tenor, may nonetheless promote cooperation and unity within particular caste/ethnic groups and provide an institutional vehicle to struggle against injustice in the larger society. The overall lessons that can be learned from the above are: (a) to the extent that there are enough grounds for establishing that social institutions play significant roles in the formation and enhancement of social capital likely to enhance human development, it is of vital importance to analyse social institutions and cultural values and to identify their social capital components in a discriminating manner; (b) the task of identifying the social capital components of a given social institution, however, is far from an easy task; and (c) discriminating between forms of social capital which are friendly to human development and those that are not is a difficult but vitally important task as well, because it is in the absence of such discrimination − which need not and should not degenerate into exercises at splitting hairs − that invalid diagnoses and well meaning but inept policy recommendations are likely to follow. That social institutions are dynamic, that at least some of them may be culture-specific rather than universal and that even social institutions that are − at least at the level of appearance − universal may generate dissimilar social capital in diverse settings substantially add to the problems involved. If the difficulties are numbing, these may also partially explain why so little social scientific work has gone into these themes and why developmental theories, including the new human development

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discourse, as of yet, have continued to deemphasise the significance of social institutions and cultural values. Clearly, at this stage, there can be no other remedy than a faith on gradualism, trial-and-error efforts and what may, at best, be termed perceptive sketching. Such sketching can be carried out in two different modes. The first mode emphasises exhaustive institutional analysis. The other mode emphasises problem orientation and end use, i.e., vis-à-vis immediate relevance to social capital and human development, selective highlighting and much thicker strokes. It does not, of course, do away with institutional analysis, but makes institutional analysis secondary to the analysis of social capital. The following analysis adopts the second mode. In addition, the analysis below is largely, although not exclusively, limited to social institutions, social capital and human development at the micro level. (Analysis of similar themes at the meso and macro, i.e., district and state, levels is carried out in chapters 8 and 9.) The analysis below starts by positing a few key dimensions of social capital, explores their linkage to fundamental social institutions and examines their implications for human development. The dimensions of social capital have been drawn, among others, from the UNDP HDRs, Anand and Sen (1995) and de Vylder (1995).

10.2 COOPERATION How and why and in which specific circumstances human beings relate to one another, the various modes in which such relationships are structured and the norms which regulate such relationships constitute perhaps the most fundamental form of social capital. They also lie at the heart of human development because human development is a social enterprise. Human societies and cultures have historically created, maintained and recreated/transformed multiple, diverse and multi-layered social institutions and cultural values to organise and regulate social relationships both among the constituent individuals and institutions themselves. Cooperative social relationships organise human beings with respect to certain specific ends and with respect to a specific set of means to be employed to achieve such ends and make more possible what would be unattainable if pursued at an individual level, howsoever singleminded the pursuit. Such relationships foster and/or reinforce social bonds, mutual

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obligations, trust and security and impose sanctions against possible breaches of such norms. They assure predictability of mutual expectations. In the language of economists, they not only reduce transaction costs but also make it much more likely that contracts will be honoured. They also make it more likely that the cycle of cooperative effort will continue, possibly in a more enhanced form and expand to more encompassing levels. As elsewhere, social capital in Nepal is generated by multiple social institutions at various levels of social organisation. The central distinguishing feature of the organisation of cooperation in Nepal, however, is that cooperation is much more localised here and remains much more confined to the household, kinship and community levels than in many other societies. Such an organisation of cooperation, as noted earlier in section 1.2, is based, among others, on the predominantly subsistent and feudal agrarian modes, the historical seclusion imposed by physicalgeographical barriers, the (male-based) coparcenary rules of inheritance, caste/ethnic and class exclusion, segmentation of the market and economic disarticulation. Nonetheless, more encompassing institutions, primarily those related to health and education, labour and commodity market, communications and the media, political parties and state and state organisations are also increasingly laying groundworks for expanded cooperation.

10.2.1 Households Households constitute the principal institutional arena for the production, use and enhancement of cooperative capital. Intense cooperation is required in organising the household as a unit of production and in managing work and selfemployment − which provides work to nearly four-fifths of all workers (see chapter 6) − in relation to the allocation of household division of labour involved in the multifarious and sequential agricultural, livestock-related, domestic and other tasks. Such cooperation is also manifested in household-level decisions on who should engage in wage-income generation, non-agricultural activities, labour migration, etc. Inter-generational conservation of the highly limited means of production in the face of destabilising influences of forces arising out of within (the household) and outside forces and process requires a high level of cooperation as well. Cooperation on consumption, like

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elsewhere, is an eminent domain of the household. The low level of living and high material insecurity have to be lived with, confronted and “balanced”, as it were, with high level of cooperative measures such as consensus building, sacrifice and sense of equity and sufficiency. Social reproduction, of male offspring in particular, which often survives chronological adulthood, marriage and even formal formation of new households, involves extended cooperation and gives the household inter-generational material stability and spiritual belongingness. As a corollary, the old, infirm and disabled members of the family are supported exclusively by households. Even households which have long nucleated often continue to provide financial and other supports to needy stem households. The intensity and long duration of socialisation of children, the inheritance system and high level of security during infirmity and old age can be seen to be co-related facets of a single whole. Most households, because of the high value of child work within the household and because of the direct costs involved, also cooperate in making decisions on which of the children should be sent to schools and for how long. The school system, another principal agency of social reproduction, is a relatively recent innovation. The existing regime of low net school enrolment and high drop-out rates at the primary level (see chapter 5) requires households to take on near-full responsibility for subsequent socialisation. In addition, almost all agricultural, trade-related and domestic production routines and skills are learned at home and community rather than at the school. As noted, health care, care of the infirm, the disabled and the old form another key sphere of household cooperation. While access to the health post is easier than in the past and while such facilities find increasing use, home-based care and remedies are the principal antidotes for most ailments. Almost 90 percent of child births take place at home rather than in such facilities. On the other hand, 74 percent of the total annual health expenditure in the country is borne by households (see chapter 4). Households themselves are enmeshed in cooperative action with more encompassing institutions, e.g., communities, local elected bodies, NGOs, the bureaucracy and labour and commodity markets. For a large proportion of the households, the poor, the lowest caste and deprived households in particular, however, at least some of such cooperative action is

SOCIAL INSTITUTIONS AND SOCIAL CAPITAL

increasingly taking an involuntary and forced character (see section 10.5). Households enmeshed in such interactions not only lose their self-respect and self-initiative but also become passive, rather than active, participants to the process of cooperation.

10.2.2 Kins, neighbours and community and sub-community groups Kinship networks provide another platform for cooperation. Kinship groups are graded for their relative “closeness”, but otherwise they form a broad network and include kins who are several times removed. Kinship groups cooperate in various spheres including providing advice, especially on matters affecting the network as a whole, adjudication of intra-household and interkin household disputes, providing financial assistance during times of need, assisting with short-term agricultural or domestic labour services and providing fairly long-term economic and social support to kins who are reduced to destitution. Kinship groups provide assistance during birth, death, sickness and disability. Kinship groups also take interest in providing literacy and skills to children. In addition, kin households residing in schoolaccessible locations often provide free long-term boarding and lodging facilities to relatives’ school-going children. Similar support, on a temporary basis, is also provided to relatives undergoing medical treatment in health post/hospital-accessible locations. Kinship groups, thus, function as significant structures of redistribution. The forms neighbourhood/community another key institution of cooperation. The community, unlike in urban-industrial cultures, and despite systematic reversals on the face of the much more powerful state and market forces, continues to function as a key interactive social as well as task-oriented organisation. Cooperation at the community level has remained historically vital, among others, generating, transmitting and upholding the value of indigenous knowledge systems (Sherchan 1997); natural, human and cultural resource generation and use; inter-household labour exchange; financial and labour assistance to constituent households; adjudication of interhousehold and, much less frequently, intrahousehold disputes. Communities all across the country cooperate in digging and maintaining small irrigation canals and other waterworks; involve themselves in repair and seasonal

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cleaning of village streets, religious sites and other public facilities; conserve and regulate the use of forests and forest products; make labour and, sometimes, cash contributions for construction and physical repair of schools, religious sites and rest platforms along trails and in the village; and provide financial and other assistance towards the management of schools and other public facilities. Communities all across the country cooperate in inter-household exchange of labour during peak agricultural seasons in a sequential manner. Cooperation among agricultural households and “occupational households”, i.e., low-caste households who own little or no land and specialise in providing skilled services, e.g., blacksmithery, tannery, tailoring, barbering and services to agricultural households, has been a longstanding tradition. More importantly, communities cooperate in creating and recreating institutions which motivate, organise and regulate these cooperative actions, often on a long-term basis. More recently, in many communities, cooperation has expanded into domains such as generation and articulation of demands for provision of economic and social services from state, parastatal organs and local elected bodies. Organisation of local collective dialogues and local needs assessment and planning and implementation of small-scale development programmes in cooperation with governmental and non-governmental organisations is also being promoted at an impressive scale. A large Box 10.1

Local initiatives for economic, political and cultural action

In May 1996, a Didi-Bahini Bachat Tatha Reen Sahakari Sanstha (Sisters’ Savings and Credit Cooperative Society) was formed at Amarapuri VDC in Nawalparasi district with a membership of 60 women. An NGO in the district, the Vijaya Development Resource Centre, provided initial guidance and training. Each member of the society makes a saving deposit of Rs. 25/month, generated mainly by cutting down on consumption. By November 1997, the savings generated already amounted to Rs. 35,000. The saving feeds a micro credit scheme for incomegenerating activities such as goat keeping, sewing, and petty trading, with interest ploughed back to the savings pot. In the next ten years, they look forward to a saving of several hundred thousand rupees and to be able to forward larger loans at cheaper interest rates to the poorer members of the society. The group has eliminated gambling in the community and continues to mount an increasingly successful campaign against drinking, a predominantly male indulgence. Immunisation of children, control of diarrhoea, schooling of male and female children, construction and use of private latrine and birth control after two children have been other successful activities of the group. Wives no longer ask

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number of state-promoted “users’ groups”, “farmers’ groups” and “development committees” which organise local cooperation and maintain liaison with outside supporting agencies have come into existence, including in the drinking water, irrigation, community forestry, credit supply, health and a few other sectors (see chapter 8, boxes 8.2 and 8.3). Initiation and management of local savings and loans groups, occasionally assisted by NGOs, has become widespread. Many such groups often pursue and achieve objectives which are cultural and political as well (box 10.1). In addition, local cooperative associations have also begun successfully taking over retail lending responsibilities from development banks (Mishra and Bhattachan 1994). Sub-community groups, formed on the bases of clan, caste, mother tongue, ethnicity, gender, religion, etc., are also active on the cooperative front. The cooperative sphere of such groups can be large and covers domains of economy, polity, culture, customary law, etc. (cf. Bhattachan 1996). Such groups often successfully intensify cooperation at the subcommunity level, assert the legitimacy of subcommunity-level knowledge and culture and resist and struggle against the hegemony of the larger community. Often, as well, some such groups coalesce together and work within the frame of a supra-community regional or national level body. Ethnically and religiously oriented bodies and women’s groups, in particular, have successfully made this transition in the recent

their husbands to pay their children’s school fees. Wife beating has ceased. Learning from this example, a dormant Mothers’ Group of 105 members in the same area, too, bounced back into action by starting its own savings and credit scheme and associated activities. This is not an isolated story. A sizeable wave is spreading across the country for organising the poor and their non-poor neighbours, both men and women, by the poor themselves, into self-help groups. Such organisation, among others, has also led to a weakening or breakdown of caste and class-based traditional barriers to participation. Some groups emerge on their own, but many are promoted through initiatives of NGOs. The Mothers’ Groups in the remote Bajura district in Western Mountains have rendered the whole district almost completely “dry”. Organised women’s groups have stopped gambling; substantially curbed drinking and smoking and curbed wife beating by men and conserved forest; acquired and imparted literacy and skills; built trails, temples and drinking water schemes; saved money; undertaken income generating activities; sent children to school; and taken preventive and curative measures for maintaining good health.

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past and function as pressure groups at the national level as well. These instances clearly indicate that communities have historically constituted an arena of extensive and intense cooperation. In addition, they have continued to create space for cooperation within themselves and with outside organisations even under a newer set of frame conditions. While the newer set of frame conditions has opened a number of new and significant arenas for cooperation within communities and between communitites and more encompassing organisations, it has also considerably squeezed the cooperative sphere of communities. Political, bureaucratic and cultural centralisation, marketisation and expanded creation of income poverty lie at the base of this squeeze. Nonetheless, communities, even under these conditions, are generating and utilizing a variety of cooperative resources at impressive scales. Under supportive political, legal, economic, financial, cultural and administrative frames, communities can enhance the generation and use of various forms of social capital at expanded scales. Some of this capital can be utilised to further promote human development either through the agency of the communities themselves or in cooperation with other/outside institutions.

10.2.3 VDCs Cooperation at the more encompassing micro level − that of the VDC − is much more formalized and mediated, not the least because the VDC is a state organ as well. Each of the 3912 VDCs in the country comprises nine wards. Each ward has an elected ward committee. A VDC, on the average, has approximately 800 households separated, generally, into at least one dozen communities. The VDC, as an elected body, is generally charged to mediate among the different various communities and households, contribute to the general welfare of the residents under its jurisdiction and to represent the best interests of the residents in its interaction with the outside world, including the DDC, the governmental line agencies, parastatal organs, non-governmental organisations and private enterpreneurs at the district and sub-district (ilaka) levels. The VDC is represented in the management boards of the local primary schools, the sub-health post/health post and a number of other public bodies. NGOs are legally required to consult and work together with the VDC while planning and implementing

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development projects within the jurisdiction of the VDC. Thus, much social and political resources are reposed in the VDCs and the wards. Only some such resources, however, are currently being utilized effectively and efficiently. The cooperative space of the VDC has expanded substantially in the last four years due to a large expansion of grants (amounting to Rs. 0.5 million/VDC/year) to the VDCs by the central government. One quarter of the grant is mandated to be invested in “human resource development”; the rest is an open grant which the VDCs can themselves programme for and use. While there has been no systematic evaluation of this rather large-scale programme, the grant-associated activities have been distributed relatively well among various communities. A substantial bulk of the grant has been invested in infrastructural programmes, e.g., construction and repair of road, drinking water facilities and school, sub-health post and VDC office buildings. Considerable supplemental voluntary contribution of labor and cash is provided by local households. Most importantly, the extent and intensity of organised local dialogues and participation on/in cooperative actions have picked up substantially. In general, while the VDCs need to be enabled to carry out further institutional, financial and processual reforms, the above examples illustrate the fact that the VDCs, in cooperation with other agencies, can generate expanded social capital which can be utilized to enhance human development. The extensiveness and high intensity of cooperative actions the VDCs engage in, together with their capacity to create institutions which organise and regulate such actions, underline the urgency of an agenda which simultaneously pursues policies that emphasise local self-reliance and substantially devolve authority and responsibility to these levels.

10.2.4 Schools, media, health posts and other local institutions Schooling facilities and services have expanded fast in the last 25 years (chapter 5). Approximately 89 percent of the primary school children reach school from their homes within half-an-hour (CBS 1997a). Schools form a highly valued cooperative space for households, communities, VDCs, local intelligentsia and the state for the production of informed, knowledgable children. In addition, given the

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high local legitimacy of educational institutions, schools have been successfully mobilising key actors and organising cooperative community actions for wider social change as well. Schools, teachers and students are in the forefront of the creation of a new literate, well-informed culture of discourse and practice which transcends local seclusion. Nonetheless, the cooperationenhancing capability of schools has not been sufficiently utilised not only in the educational front, e.g., in universalising literacy, in enhancing the relevance of education to local life and in raising the quality of education, but also in terms of generating and sustaining debates on wider themes of local cooperation. The mass media are supplementing the creation of this new culture as well. The electronic mass media, which have a wider reach than the print media (see chapter 9), provide political, cultural and, to some extent, technological, information. The print media, which are more accessible in the urban areas, district headquarters and immediately outlying locations and which cater to literate and upperincome groups, have contributed mainly to mass participation on the political front. Yet, the media have not only been over-friendly to entertainment programmes − to the relative exclusion of other themes − but they have also tended to be a one-way street where the rural, agricultural, local themes and people are systematically de-emphasized. Modern health related institutions, which have expanded enormously within the last seven years, form another space for cooperation. Fourfifths of all the VDCs have access to a low-grade primary health facility serviced by a junior health worker. Furthermore, all the nine wards of a VDC are serviced by a woman health volunteer who has a brief training in public health. Larger areas, e.g., the 205 national electoral constituencies, are serviced by fullfledged primary health centres (see chapter 4). While decreasing infant and child mortality rate, decreasing TFR and increasing adoption of family planning devices indirectly support the utility and use of these facilities, some other evidences are more direct. Such facilities, for example, have a very high rate of use during childhood diarrhoeal episodes (NPC/UNICEF 1997a: 9). Still other evidences, on the other hand, indicate that the cooperative space they provide, as of now, is more in the realm of potentiality. Lack of continuous and high-quality service in rural, even district-level, health facilities is continuously and widely reported

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from all across the country. One principal−although not the only−cause for this shortcoming is that health has become much more technocratized than, for instance, education. Technocratization, in turn, has severely limited the space for popular cooperation. Some aspects of recent government health policies which seek to invite greater community involvement in managing health institutions at the local levels can, therefore, expand the space for cooperation.1

10.3 SOCIAL SECURITY Social security, as distinguished from economic and other forms of security, is of fundamental significance for human development. This, of course, does not imply that economic and other dimensions of security are less important. As has been noted and discussed at length in a number of preceding chapters (chapter 7 in particular), nearly one-half of the people in the country are poor. The intensity of poverty among the poor is high as well. Economic insecurity due to poverty, in turn, produces widespread and intense social insecurity. Similarly, politicalcultural exclusions, such as those described in the preceding section, generate high levels of social insecurity among those excluded as well. On the other hand, a number of salient social institutions generate much social security-related social capital, even as specific dimensions of such social institutions contribute to social insecurity.

10.3.1 Households and social security The social identity of a person is largely built on the foundations of the identity of the household. While this would hold true in many other societies as well, the widespread incidence of the joint family system, the (male) coparcenary nature of household property, the predominance of household-based subsistence production and self-employment system, the salience of the collective productive − as against merely consumptive − functions of the household, the marriage system which is generally arranged at the household − rather than individual − level and the salience of inter-generational as well as ancestral spiritual ties foster extremely close ties between an individual and his/her household. The identity of individuals, even adult individuals, is generally established through references to the identity of their ancestors and households. Such bonds, in turn, provide a high

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Box 10.2

Community action for food security in Sindhuli district

Destructive floods hit Nepal during the summer of 1993. In the Sindhuli district, more than a dozen persons were killed and much agricultural land was rendered unproductive. A number of VDCs in the district faced acute food scarcity. Six VDCs, namely Kapila Kot, Kalpa Brikshya, Mahendra Jhyadi, Pipal Madi and Hariharpur Gadhi, faced such a scarcity as well. The scarcity, as could be expected, hit the poor most. The relatively well-off households and outside traders seasonally bought foodgrain from the cashstrapped and indebted poor during the harvest season and sold it at handsome profits during the planting season. For the poor, the planting season is characterised by foodgrain scarcity and hunger. It is also the season when the poor regularly incur debts to buy foodgrain. Following the flood-induced famine-like condition, in 1994, some of the poor households in four of the six VDCs gathered together to seek collective solutions to the problem. The problem was also introduced as a key “generative theme” in discussion among groups formed at the ward level to address the debt crisis in the area. An NGO working in the region, the Society for Participatory Cultural Education (SPACE), worked as a facilitator of these discussions. These efforts culminated in the initiation of a smallscale foodgrain procurement and storage programme for and by the poor.

level of social security at the level of the household. They provide clear and strong anchors of belongingness and social security in reference both to the individual's self and others. Despite the fact that little representative information exists on the stability of households, it is widely believed that households are generally, and in relative terms, highly stable. While official divorce rates do not reflect the relatively larger scale of separations and desertions, marital bonds are far more longlasting than in many other societies (MOH 1997c). Such stability provides a high level of social security to children as well as adult family members. On the other hand, relatively high and increasing rates of seasonal and long-term migration of individuals, urbanisation, and slowly expanding opportunities for individual achievement have tended to weaken belongingness and social security at the household level even as they contribute to the generation of newer sets of identity, belongingness and social security. A large proportion of long-term migrants, however, does continue to maintain affiliation with stem households for considerable periods of time and thus continues to benefit from, as well as

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Under the programme, the poor now sell postharvest “surplus” foodgrain to the organisation they have created for this purpose. The organisation limits its procurement from among the poor households in the area. Poor households are identified on the basis of a checklist prepared by the poor themselves. Buying prices are also determined by the members and generally conform to market prices. SPACE provides interest-free loans for a period of one year for the procurement. The foodgrain thus stored is sold among the members during the planting season at below-market prices. The organisation uses savings to recycle procurements seasonally. Approximately 670 households, which have formed into 62 groups, are participating in the programme. The turnover last year was approximately 53,000 kgs of paddy, in addition to small quantities of other produce, e.g., maize, millet, mustard seed. The programme has made the poor slightly more secure on the food front, reinforced the sense that a higher level of food security is possible with collective action and reduced their chances of being forced to borrow at high interest rates. It has also reduced sharp fluctuations in the price of foodgrain locally. Most importantly, it has expanded the space for collective cooperation − which the members value and are proud of. It, however, remains to be seen if the programme can sustain itself institutionally. Financial sustainability also remains to be proved, particularly in view of the interest subsidy provided by SPACE.

contribute to, social security.

10.3.2 Communities and social security While communities are generally segmented along caste/ethnic and class lines − and, in this sense, are divided into several sub-communities − they anchor and generate high levels of belongingness and social security as well. (The sub-communities perform a similar role as well, even as they also anchor quests for additional or new identities.) Local communities are intensely communicative social entities. Local communities are highly organised social entities as well which provide protection to members and promote their interests against outsiders. They provide linguistic, religious and ethnic security as well. Communities also engage in a variety of social and cultural actions to promote organisational, economic and other local interests (box 10.2).

10.4 JUSTICE AND ADJUDICATION OF DISPUTES Local communities are also active in domains of customary law and justice. Most local disputes are traditionally adjudicated locally with the help

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of kins, members of the community and local elders. Customary law, which may be incommensurate or even contrary to the formal, national-level legislation, forms the guiding principle in the settlement of such disputes. In general, although not always, adjudication is binding on the parties to the dispute. Increasingly, ward committee and VDC members are included in the adjudication team. Increasingly also, disputes are, in the first instance, brought to the ward committee or the VDC for adjudication. Customary laws, and justice based on them, is also often administered by sub-community groups, principally those based on caste, ethnicity and religion (e.g., through the institutional mechanism of dharma panchayat; cf. Bhattachan 1996: 128-132). Customary laws among the diverse caste, ethnic and religious groups often evolved independently and such groups generally abide by the respective customary laws in relation to intra-group interactions and disputes. Most caste-, ethnicity- and religion-based customary laws are implemented at the local, sub-community level. Some of the groups, however, also operate at a supra-community level. In such instances, the local groups function as units of caste, ethnic or religious federations at the regional and/or national level(s). As such, in a limited number of cases, local disputes within caste, ethnic or religious groups are adjudicated at supra-community levels. While customary laws and their administration do tend to reinforce the traditions of seclusion and the various axes of exclusion (see 10.5), such laws are not, by any means, static. Nor are they necessarily archaic. Customary laws and their interpretations are often finely calibrated to the political, economic and cultural changes taking place in the community − and among the sub-community groups − as well as in the larger society. Moreover, parties unhappy with adjudications based on customary laws can always take recourse to national legislations and courts of law. Customary laws and local adjudicatory structures are important forms of social capital. The high level of comprehension of such laws among communities and sub-communities and the absence of bureaucratisation of procedures means that most disputes are settled far more promptly than in formal courts of law (see chapter 9). More directly, from the perspective

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of human development, they reinforce belongingness to a collectivity that is immediate, renew faith in the system one is part of and thus instil a sense of individual and collective selfworth and self-respect.

10.5 EXCLUSION As noted early in this chapter, not all social institutions generate social capital which are friendly to human development. Exclusionary social institutions, by definition, go against the grain of universalism inherent in the principles of human development. They inhibit full play of the principle of people as subjects by systemically partitioning off specific political, economic and cultural spaces and processes in relation to particular social groups. They inhibit not only the enhancement of human capabilities but also the use of achieved capabilities. In essence, they generate, as it were, negative social capital and, in this sense, constitute social liabilities which have to be struggled against in order to promote human development. Human development promotion, in other words, requires systematic efforts directed at weakening and dismantling of all political, economic and cultural institutions which support the exclusionary barriers. Such institutions, in essence, lay down multiple framework of exclusion which inhibit, to various degrees, the realisation of capabilities of specific categories of people. The other, privileged, categories of people, on the other hand, often regard such exclusion and discrimination as “normal, as they had always been”. Institutions and processes which uphold, recreate or exacerbate deprivations based on gender, caste/ethnic and regional belongingness and poverty are the most pronounced axes along which the principles and practices of inclusion and exclusion rotate. (Of course, there are other significant axes as well, e.g., the axis of exclusion of the elderly, the disabled and the illiterate; and of the collective cultural rights and pluralism as such and, in the globalising world, of nations.) Such socially exclusionary institutions have definite correlates in the political, economic and cultural domains. They also traverse right through the level of the individual to the global level.

10.5.1 Gender Exclusions based on gender are both pervasive and deep (see 1.2 and relevant sections in all other chapters). To summarise, exclusion-led

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discrimination against women covers domains of physical survival − especially during infancy, childhood and child birth, health and educational opportunities, work burden, wage employment and income opportunities, ownership of productive and other assets, access to public decision-making positions and public facilities, mobility, independence and overall cultural status. The degree of exclusion is also very deep, as shown, among others, by the values of the GDI and the GEM (see chapter 3, sections 3.4 and 3.5). As shown in the foregoing chapters, the exclusions that women face and confront span right from the household level to the national level and cover the political, economic and cultural spheres. The logic of this pervasive and deep exclusion is multi-faceted and pinning down the fountainhead of exclusion is bound to be a debatable exercise. Nor does the search for a presumed fountainhead obviate the need to battle such exclusion on multiple fronts. Nonetheless, and arguably, the central logic of women’s exclusion can be seen to flow out of a specific construction of the nature of gender and gender relations. Overarching and powerful cultural-political rules have consistently highlighted two overriding themes on gender and gender relations: the theme of separateness of the life-spheres of the male and the female and the theme of incompleteness of a woman’s being. Under these themes, the separateness of life-spheres is not immutable while completeness could be attained only by entering into a life-long dependent relationship with particular categories of men, principally a father and a husband. Independence − and independent capability formation and use, under this construction − is fundamentally antithetical to being a complete human person for a woman. The precarious and highly vulnerable personhood of unmarried, single (i.e., deserted, separated, divorced, widowed) women, those within the Hindu framework in particular, underscores the power of such a construction. Freedom from exclusion (which is, in any case, partial owing to the segmentation of the malefemale spheres of life), thus, is contingent upon entry and continued submission to structures which enforce dependence − a singular contradiction in human developmental terms. Efforts at ensuring completeness and dependence begin early at the household. While the creation of images of future independent work-life is one of the principal features of socialisation in the case of a male child, it is the

SOCIAL INSTITUTIONS AND SOCIAL CAPITAL

image of a dependent married life which is made to loom large in the case of a girl child. These images are further crystallised and concretised with the advancement of childhood through formal education, work routine, social interaction, valuations and, above all, malefemale relationships. Formation of gender identities sharply diverges by the end of childhood. Thus, even as many more girl children attend schools and participate in other public arenas − and thus use and enhance their capabilities − now than in the past, very few of them find themselves in a position to contemplate and practice independence. Similarly, even as adult women contribute more work hours and approximately equal income to the household economy (compared to adult men), an overwhelming proportion continues to function within roles which are self-defined and seen as such by the wider society as dependent ones. Gender discrimination is substantially reconstituted in the non-conventional spheres, e.g., those of school, non-agricultural occupations and politics as well. Thus, school textbooks, student uniforms, etc. generally reinforce the conventional images of the genders. Only a miniscule proportion of officergrade government employees comprises women and the proportion of women in leadership positions in political parties is very small (see chapters 8 and 9). Nonetheless, a variety of processes, e.g., increasing literacy, age at marriage, public participation, politicisationy (whether within conventional political parties or within an organisation with a relatively explicit feminist orientation), control over reproduction and political-cultural movements of various sizes, scopes and durations indicate that a modest battle against exclusion − and separateness and incompleteness − has begun. Such processes indicate that more women have begun to consciously confront the identities they grew up with. The recent, widely participated debate on women’s rights to inheritance, which has crystallised into a bill before the parliament, despite its many shortcomings, can also be taken as a further indicator of this beginning.

10.5.2 Caste, ethnicity and region of residence Approximately two-thirds of the total population of the country are directly tied to the Hindu caste framework. The remaining one-third is

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comprised of various (non-caste) ethnic and nonHindu religious groups. But, given the predominance of the upper-caste groups in the political and cultural domains and, to a much lower extent, in the economic domain as well, the various ethnic and even religious groups tend to be forced within the caste framework and relegated to its middle and lower echelons. The ethnic and religious groups have, in general, historically resisted, to various degrees of success, this political and cultural process of subjugation by inclusion. The caste framework is fundamentally hierarchical and, therefore, exclusionary. A male person is born into a caste/sub-caste group, which is itself pegged to a specific location in the caste hierarchy. A female person, after marriage, on the other hand, generally acquires the caste status of her husband in the case of a Box 10.3

caste-endogamous (which is the mandated form) or caste-hypogamous marriage (thus, once again, underlining the dependent status of a woman’s identity). Within a female-hypergamous marriage, however, the caste status of the woman generally remains unchanged. The classical caste hierarchy consists of four different slots. But because the classical hierarchy undergoes considerable transformation, attenuation and elaboration in local settings, and because each caste group is generally further subdivided and hierarchised into a number of sub-castes, actual slots in the hierarchy number can be very large. While certain domains of exclusion apply to the uppercaste slots as well, the lower slots, the lowest in particular, are forced into extremely debilitating exclusions ranging from the cultural to the political to the economic. These exclusions Caste, exploitation and insecurity

JHARI RAM LOHAR Jhari Ram Lohar has been working as a haliya for six years for a debt of NR 3,000 (US$ 53.00). He lives with his family in Koleuda, a tiny hamlet of “untouchable” houses in Melauli Village Development Committee (VDC), Baitadi District, Far Western Region. He has a wife, two sons and three daughters and has his own house and a small kitchen garden of less them 0.1 hectare. The landlord he works for as a haliya is high-caste, has 2.5 hectares of farmland and also works in government service. Jhari Ram has been juggling debt all his adult life but eventually can not avoid taking work as a haliya. He now sees no way out of the system. “I borrowed NR 3,000 (US$ 53.00) for survival, for food. It's a big problem to feed the family. I work just to pay the interest on the loan. When I need more money I go back to the landlord. The loan is increasing all the time. God knows how I will ever pay it off. If I don't work, then I have to pay five percent interest every month. The hardest months are Jestha and Ashar (MayJune-July). Sometimes I have to work at midnight and continue through. I do all the work on the farm, ploughing, harvesting and the rest. I am busy for about eight months of the year, but I have to be around to do other jobs, too, like portering, taking goods to the market (a day's walk to the nearest road.) Usually, I get two meals a day and at harvest time I get a sack of grain (40-50 kilogrammes, worth NR 200 or US$ 3.60). I can't go for wage labour or the landlord would kick up a fuss and say, ‘You owe me money, so you must work for me’. Usually, the landlord is good. He treats me with respect. It is the system that is very unfair. We are under pressure from all sides because of the loan and because of our caste.”

RAM DEV PASWAN Ram Dev Paswan doesn't know his exact age but he is in his early twenties. He comes from a small village of low

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caste and landless people called Chanti Gau, in Kailadi VDC, Saptari District. He is recently married but does not yet have children. I have been a haliya nokar (servant) for 10 years. My father is one, too. We work for the same landlord, Raja Babu, who owns this village. My father is at the house now − feeding the cattle. (Raja Babu is a respectful term for the landlord Ramananda Prasad Singh who owns a large estate of some 200 hectares in this and another district. He has a large house in Kailadi village.) I do agricultural work and domestic work, too. I come back to the village to eat my food but the rest of the time I stay at the big house. I get up at 4 am every morning and work until about mid-day. Then I come back here to the village to eat; it only takes 15 minutes to walk. I have an hour or so for lunch, depending on what needs to be done. Then I go back to the house or carry out the other duties in the fields. I can be working up to 8 pm looking after the irrigation pumps in the evening. Then I get another meal. I get 50 kilogrammes of rice (un-husked) a month (worth NR 200 or US$ 3.60) and two sets of old clothes each year. I don't get any other food. We sell the rice to buy dal (lentils), and we glean some vegetables from the fields. But it is not enough to survive on. My father took on the loan originally. That is why we are working like this. I had to take a loan as well. I have borrowed two mon (80 kg) of rice (worth NR 320 or US$ 6.00) and NR 4,000 (US$ 72.00) as cash. I have to pay 20 kilogrammes of rice in interest each year and NR 400 (US$ 7.00) interest on the loan. The interest is taken out of my wages but usually I can't pay it and have to borrow more and the interest is added to the debt. This is no life living under someone else. If I get sick, I have to pay for the days I miss but people with proper jobs don't have to do that. Do they? They get sick leave. How will I ever pay this debt off ? I'll always have it. My children will have it, too. Source: ASI and INSEC 1997.

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severely limit the life-chances of the lowercaste, particularly the lowest-caste, groups. The lowest-caste groups are shunned even physically. In terms of residential locations, they are ghettoised into specific corners of a village. The presence in school classrooms of children belonging to these groups creates, at the least, a rearrangement of the seating plan. Even accidental physical touch is considered by all other caste groups as defiling; hence the term “untouchable”. The caste framework is weakening considerably in urban areas, work places and high-migration areas. There are also instances of a household or an individual having upscaled its (his/her) caste status, even within the rural, indigenous areas, on account of the acquisition of wealth/income, learning and adoption of particular modes of life. Much more significantly, the caste system has been legally de-recognised for the last 35 years. Nonetheless, for an overwhelming majority, the caste framework continues to be an extremely salient feature of personal identity, social relationships and access to opportunities for capability formation, use and enhancement. Thus, the literacy rate among the lowest castes is only 18 percent, as contrasted to 47 percent for the upper-caste groups (CBS 1996). The life expectancy of these groups is only 51 years as contrasted with the upper caste average of 57 years. The infant mortality rate among the lowest castes is 118 in contrast to 85 among the upper castes (data for 1994; MOH 1997c). Absolute poverty among these groups is almost 1.5 times higher than at the national level (chapter 7, table 7.24). These figures, it should be noted, hide even more distressing exclusions and deprivations among women within these groups. Illustratively, while the literacy rate among men in the lowest caste is 28 percent, it is only 7 percent among the lowest-caste women (CBS 1996). Young (6-36 month-old) children of the occupational caste groups (i.e., lowestcaste groups) have higher stunting and wasting rates. Similar rules of exclusion apply in access to public decision-making structures and political parties (chapters 8 and 9). Beyond these eminently quantifiable measures of exclusion, the lowest-caste groups suffer from a host of other deprivations, e.g., loss of personal and collective self-respect, dependence, extreme economic insecurity and exploitation of labour (box 10.3). While rules of exclusion are considerably less pronounced in relation to ethnic groups −

SOCIAL INSTITUTIONS AND SOCIAL CAPITAL

and while a couple of such groups score higher (or are approximately equivalent to) both in terms of welfare (chapter 7, table on correlates of income-poverty) and capabilities than uppercaste groups, many such groups suffer from multiple exclusions. As indicated in 3.2.3.6, the capability level of many of these groups is only about two-thirds of the levels attained by the upper-caste groups. Diminution of cultural identity and rights, which are not directly reflected either in economic or conventional human developmental measures, has been fairly high for most ethnic groups. Exclusion has also been pronounced in regional terms. In terms of the north-south ecosystemic regions, people in the mountain region remain relatively excluded from progress made in welfare measures (chapter 7, table 7.24) as well as on all three components in human development (3.2.3.1). In terms of the east-west development regions, the mid-western and far western regions have been similarly been excluded (3.2.3.2; see also Thapa 1995b, ICIMOD 1997). Also, people in the rural areas, who make up 88 percent of the total population, have an HDI level which is only 59 percent of that of the people in the urban areas.

10.5.3 Income-poverty The country has almost 10 million absolutely income-poor people. A state of income-poverty is generally characterised, among others, by extremely small agricultural holdings (<0.5 ha), extremely low-paid agricultural wage work, low share of non-agricultural income, large family size and more than 3 children, rural residence and low-caste status (chapter 7, table 7.24). Income-poverty gives rise to a host of exclusions. The income-poor are disproportionately represented among the illiterates and among those who have a low level of schooling. The poor can afford to spend much less − both absolutely and as a proportion of their total income − on the education of their children (1984 data; NRB 1988: 113-16). As discussed in chapter 5, the recent de facto regime of paid primary schooling, which represents a pronounced slide-down from earlier educational policy positions as well as ground-level practice, is likely to exacerbate further the relatively high exclusion of the poor from literacy and primary schooling. In addition, the fact that private schools, which provide a higher-quality education, are on the ascendant as well as far more expensive implies that the income-poor are

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limited to accessing lower quality education. The income-poor also have a much more limited access to resources for the maintenance and promotion of health. The non-poor spend approximately 1.5 times as much as the poor on food items (1984 data; NRB 1988: 113-16). Access to an adequate level of nutrition among the poor is far lower than among the non-poor. The poor, in addition, have a much lower level of access to public health and medical services (chapter 4). Income-poverty, in addition, is characterised by high levels of dependency, e.g., in relation to attached/bonded labour regime.

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While the kamaiya bonded labour system highlighted in box 10.2 and in chapter 6 expresses the most blatant form, the attached/dependent labour system is far more widespread and encompasses a large proportion of the income-poor. A significant proportion of agricultural labourers and specialised nonagricultural labourers and all of domestic servants and helpers fall into this category. The dependent labourers are, to a large degree, excluded from autonomous decision-making and self-respect. Their political standing, whether at the community or more encompassing levels, remains low.

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CHAPTER 11

Reorienting Society for Human Development The fundamental economic objective of the state shall be to transform the national economy into an independent and self-reliant system by preventing the available resources and means of the country from being concentrated within a limited section of society, by making arrangements for the equitable distribution of economic gains on the basis of social justice, by making such provisions as will prevent economic exploitation of any class or individual, and giving preferential treatment and encouragement to national enterprises, both public and private... Constitution of the Kingdom of Nepal 1990 We acknowledge that the people of the world have shown in different ways an urgent need to address profound social problems, especially poverty, unemployment and social exclusion, that affect every country. It is our task to address both their underlying and structural causes and their distressing consequences in order to reduce uncertainty and insecurity in the life of people. Declaration of World Summit for Social Development 1995 The well-being of children requires political action at the highest level. We are determined to take that action. (emphasis added) World Declaration on the Survival, Protection and Development of Children 1990

11.1

SOCIAL ACTION FOR HUMAN DEVELOPMENT

W

hile the framework of human development has made substantive departures from the conventional frame of economic development, it has nonetheless tended to overemphasise the linkage between economic and public financial policies and human development and has been almost silent on the society and human development linkage (see also 2.6.3 and chapter 6). This stance is both surprising and distressing. It is surprising because the framework of human development requires that human beings be viewed holistically. Under such a view, the economic/financial dimension can have no a priori claim to pre-eminence vis-à-vis the political and sociocultural dimensions. To the extent that the latter dimensions are important components of being, it can be presumed that human development promotion is, in part, necessarily contingent on policies and actions on these fronts as well. The stance is distressing because it tends to give the impression, even if tendentiously, that promotion of human development ought to be

REORIENTING SOCIETY FOR HUMAN DEVELOPMENT

pursued only by means of macro structures and policies and without the active involvement of lay human beings themselves. The stance, in this specific sense, smacks of a top-down, supplydriven strategy. It tends to deny the contribution human beings can make to promote their own development. By doing so, it tends to negate one of the central tenets of the frame of human development itself, which requires that human beings be viewed (as well as view themselves) as subjects on their own rights rather than as objects − in this instance, of economic and financial structures and policies. Human development, as has been noted, is as much of the people as by the people (see 2.3.3). In addition, the stance also appears to hold that human development-friendly policies can be crystallised, put into place and sustained by well-meaning governments without any economic, political and cultural resistance at local levels. As a consequence, the stance also fails to consider how people can be empowered not only to promote the agenda of human development in the first instance but also to

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confront such resistance on a sustained basis. This chapter seeks to weave together these two otherwise neglected themes by sketching a broad contour of social reorientations necessary to promote human development and by placing the human being, both in individual and collective dimensions, at the centre of this reorientative action. It is, in general, assumed that while the state/government, depending upon its nature, can play a key role in initiating and sustaining human development-friendly reorientation, the reorientative process cannot be pushed forward and sustained without popular will, organisation, self-initiative and self-help, strategic cooperation and struggle. It is argued that human development promotion requires social action on three broad fronts: enabling people to centre-stage human development and its promotion, universalising human development and resisting exclusion. The focus, as in chapter 10, is generally, although not exclusively, on the micro rather than meso or macro structures.

11.2

CENTRE-STAGING HUMAN DEVELOPMENT AND ITS PROMOTION

As emphasised earlier, macro structures should not and cannot be fully relied upon to promote human development. Authentic and sustained promotion of human development relies as much on human agents as on macro structures − to the extent that they are human developmentfriendly. Local level mass involvement in defining and identifying issues and problems of human development is an important part of the solution. Enabling the human agency to promote human development, therefore, is vital as a matter of strategy and, indeed, as endachievement as well. Under such a strategy, the human agency, in order to promote human development, would have to take on a number of tasks vis-à-vis macro structures: reorienting or transforming less friendly structures into friendlier structures, sustaining such friendliness, utilising friendly structures to the highest extent possible and raising the quality and efficiency of utilisation. Such tasks, however, can themselves be successfully carried through only to the extent that people are enabled to centre-stage human development and its promotion. Centre-staging human development and its promotion is contingent on intensified popular stakeholding in enhancing capabilities and

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reducing deprivation. Popular stakeholding is already under various stages of intensification with respect to some components of human development, e.g., access to schools and education, access to health facilities, fundamental rights, political freedom, information and press freedom, devolution. Intensified popular stakeholding has led to some degree of reorientation of macro structures and institutionalisation of these components within such structures. Promotion of human development in these instances, therefore, should focus on sustaining such structures and in utilising them effectively and efficiently. Access to schools has increased to a great extent already (which does not mean that they are adequate; see 11.5 below). But sustaining them institutionally and financially is becoming a problem in a large number of instances. Utilisation and efficiency rates − as reflected in enrolment rates, school annual calendar and hours of operation − are generally low (chapter 5). The quality of education, including primary education, is generally low as well. Similarly, while health facilities are available in four-fifths of all the VDCs, their sustainability, utilisation as well as efficiency rates are low (chapter 4). Social action, leading to intensification of popular stakeholding, is necessary in order to rectify these deficiencies. A number of social actions should be taken to intensify and concretise such stakeholding.

11.2.1 Generating optimism and commitment That deprivations are not natural or inevitable, that at least some of them can be reduced through conscious and committed individual and collective organised action, that community help can be available to reduce the level of deprivation needs to be continuously argued and demonstrated in order to generate optimism, especially among communities and households who have been surviving amidst widespread and multi-generational cycles of deprivation. Optimism is immensely empowering. Demonstrations necessarily need to be localised and inter-household and inter-settlement comparisons, involving households and settlements at similar levels of economic and social status, can be enlightening and inspiring. Mutual exchange of information and education are the first frontiers that need to be traversed. Arguments and demonstrations need to be systematised. Collection of information on the

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key facets of human development, e.g., nutrition, mother and child health and survival, household and community sanitation, primary schooling, deprivations facing the girl child, and dialogues based on such information should be institutionalised and routinised. The government-initiated Nepal Multiple Indicator Surveillance (NMIS) cyclical exercise, which comprises collection of representative data at the national, regional, sub-regional and district levels (for at least 20 districts) on the key issues related to children (NPC-UNICEF 1996a,b; 1997a,b) and of situation analysis and policy and implementation dialogues at those levels can serve as a good model for the community level as well.

11.2.2 Organising Sustaining optimism and commitment requires, among others, an organised effort. The recently expanded ward committee, which is elected by members of the community, is ideally suited to carry out this leadership role. A ward, on the average, comprises 100 households. The ward committee, composed of five representatives, can potentially play a key role to generate and process information, organise community dialogues and take the lead in implementing human developmental actions. It can also potentially seek assistance from various CBOs, local school (s), ward health volunteer(s), subhealth post, etc. The VDC, which comprises all ward chairpersons from the nine wards under its jurisdiction, should backstop and coordinate the efforts at the ward levels. The ward committees and the VDCs are extremely significant institutions which can potentially generate high and sustainable levels of social capital for human development. To carry out these efforts, however, both the wards and the VDCs need to be appropriately empowered in legal, administrative, technical and financial terms (see 11.2.5). However, ward committees and VDCs are not the only organisational spaces that the agenda of human development should occupy and utilise. Households, neighbourhoods, kin groups, CBOs, schools, sub-health posts, women’s groups, groups oriented to ethnic upliftment and struggle, etc. can, under a context of optimism and support, intensify social action towards human development. Similarly, political party groups initiate and mobilise social action towards this end (see 11.2.4). In the absence of sustained vigilance and commensurate social

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action by these institutions, even a ward committee or a VDC which is friendly to the human development agenda can lapse into inaction and/or prioritise an alternative agenda. Indeed, these micro institutions, through organised and sustained dialogue, can generate adequate pressure to force reorientation in policies and practices at the ward, VDC as well as more encompassing levels.

11.2.3 Encouraging voluntary cooperation In general, although not necessarily, reorientative social actions need to be rooted in the existing social institutions and work through the existing forms of social capital. As noted in chapter 6, locally based voluntary cooperative action at the inter-household level has a long history and high legitimacy in almost all the communities in Nepal. While voluntary cooperation encompassed multiple domains, the spread of literacy and education till the early 1970s, limited as it was, was largely based on voluntary cooperation. Educational institutions elicit large-scale voluntarism from local inhabitants and institutions at present as well. On the health front, voluntary cooperation is widely manifested during periods of illness, short-term disability, childbirth, etc. Health counselling and related remedial actions, to a large extent, rely on voluntary cooperation as well. Increasing bureaucratisation, technicisation and marketisation of social life in the last three decades, however, have diminished the voluntary spirit, including at the local levels. Nonetheless, the voluntary spirit and commensurate actions are alive in a number of domains. The widespread incidence of CBOs across the country is a more general and telling evidence of the resilience of the voluntary spirit. As noted, the evolution of new institutions such as the ward committee and the VDC has opened non-traditional fronts for voluntary cooperation at the local levels. Voluntarism needs to be revived and strengthened within the human development front. The high moral edge of voluntarism makes it a unique and powerful instrument of social action. As a form of social capital, it is highly contagious as well. At the very least, it invites a higher level of commitment from nonvolunteer participants and, thus, can raise the overall quality of social action. Voluntarism is also a key component of self-initiative. Voluntarism has distinct financial

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implications as well. Given the high level of financial resources necessary for promoting human development and the difficulties inherent in raising resources (see chapters 13 and 14), social action needs to foreground the issue of local self-help. Actions promoting voluntary service can lead to a significant reduction of financial costs due to human development promotion. Organised, sustained and sincere human development-centred social action, in turn, can raise the level of voluntary spirit and invite voluntary action. Given these conditions and given the culturally legitimate tradition of locally based voluntary action, it is highly likely that communities which make sustained requests at the collective level for volunteers will be amply rewarded with offers of service.

11.2.4 Sharpening political discourse and politicisation The discourse of human development is, in part, a political discourse. While enhancing capabilities and reducing deprivation appear to be politically innocuous, its universalistic − and non-discriminatory − tenor, its reclassification of the conventional means and ends categories (and of growth, markets and jobs), its primary emphasis on the active-subject status and agency of the person − rather than of rules and structures, etc. have significant political implications. A reallocation of priorities, corresponding to these intrinsic emphases, can impact differentially on different subgroups. As a corollary, the crystallisation, promotion and implementation of human development is, in part, a political agenda as well. They necessarily envisage alterations in the existing level and distribution of opportunities for the use and enhancement of capabilities and, therefore and more generally, in the distribution of political power, economic and financial privileges and cultural status. At the very least, the scarcity-value of capabilities, which accrues to those who are capable at present, will gradually subside together with a wider distribution of opportunities for capability formation. Alterations in the distribution of opportunities can take place at various organisational levels, e.g., from the household to the community, state or global level. It is likely that such alterations will be politically contested to various degrees and with various outcomes. Promotion of social action for human development, therefore, should explicitly

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recognise the political nature of such action. It should also recognise that it engages politics at two different levels. First, it independently espouses and works for a human developmentfriendly political form. The friendliness or otherwise of a given political form is assessed in terms of the central tenets of the frame: human development, universalism, priority of the human agency and sustainability. Under this independently arrived at set of political principles, social action organises and mobilises people for local cooperation, self-initiative, selfhelp and strategic cooperation with or struggle against outside agencies and forces. Second, social action for human development also strategically allies itself to, distances itself from or struggles against established political forms, depending upon their relative friendliness. Such political forms may be rooted in culture, e.g., exclusionary structures such as those based on gender, caste, region of residence. Alternatively, they may be rooted in the economy, e.g., resilient structures of discriminatory access to productive resources, unemployment and underemployment, wage discrimination, or public finance, e.g., sectoral, regional and other biases inherent in public revenue collection and expenditure patterns. They may, of course, be rooted in more explicitly political institutions, e.g., the executive, legislative and even judicial branches of the government, electoral bodies, political parties. Human development-friendly political parties, in particular, can play a highly significant role in promoting voluntarism, including by mandating a certain level of voluntary service from its members, candidates for membership and even sympathisers. The sizeable and powerful national student unions, professional associations and the proliferating non-governmental organisations can also mandate some level of voluntary service from their members or potential members. Politicisation of human development and its promotion has a number of uses. First, it establishes linkages of local social action with similar action at more encompassing levels, e.g., at the district, national and global levels. Second, it also broad-bases human development by underlining the fact that its promotion impinges on all significant aspects of society. Third, politicisation of human development is a key strategy for its democratisation and for mass participation which is crucial from the point of view of agency achievement. Fourth, politicisation facilitates organisation which, in turn, renders mobilisation for social action

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relatively easier and more sustainable. Finally, it provides a framework under which the welfaredeprived, who are generally also more capability-deprived (see chapter 3), can coalesce together under a common programme of action focussed both on welfare and capability. Sharpening discourses on the political aspects of human development, therefore, is one of the keys to generating stakeholding and organising social action.

11.2.5 Ensuring devolution of rights and responsibilities The theme of human development intrinsically favours devolution. Devolution of rights and responsibilities is more respectful of the subject status of the person both as an individual and collective being. It encourages locally-sensitive crystallisation of components of human development and of strategies for promotion of human development. It also encourages organised participation of local people in defining, organising and implementing locallybased social action for human development. It forces self-initiative and self-help at the local levels by mandating and supporting local definitions and local solutions. It promotes search for financial and institutional sustainability at the local level. It, moreover, promotes access of local people to public and development administration. It also promotes the use of the existing social capital. Finally, it can be an important instrument to establish, or reestablish − as the case may be − the vitality of the community without which social action cannot be organised on a sustained basis. In essence, the strategic emphasis given to social action and societal reorientation for the promotion of human development in this report cannot be fully implemented without implementing devolution as a matter of national priority. Indeed, social action for devolution can be promoted only as a compact between the centre and the local bodies and peoples. The recent and highly encouraging early processual as well as output-related results of the “People’s Campaign for the Ninth Plan” in the Indian state of Kerala, under which local people, coalescing under the local gram panchayat (a body equivalent to a VDC in Nepal), prepare and implement local developmental plans, further substantiate the rationale of such a compact (see Bandyopadhyay 1997, Isaac and Hiralal 1997). It should further be noted that devolution of rights and responsibilities is of fundamental

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importance for Nepal where political, economic and cultural structures and processes are relatively highly localised and where devolution and decentralisation, despite widespread demands and multiple governmental show of intentions, have made no headway. Social action for the promotion of human development, therefore, should promote devolution as well. Promotion of devolution, in turn, is best focussed at the ward committee and VDC levels. Not only do these institutions constitute the lowest political rungs of the state but they are also representative bodies elected by local people. These units are also relatively homogeneous with respect to welfare as well as capability attainments as also with respect to wider political, economic and cultural structures and processes. Such homogeneity facilitates people within their jurisdictions to arrive at a commonly shared identification of the human developmental problems at hand as also to arrive at a widely-shared strategy to overcome such problems. The next political rung of the state, i.e., the district level, is relatively remote, heterogeneous and, therefore, unwieldy except for roles related to coordination and facilitation. Many fruitful reorientative actions at the VDC level, some of them of direct relevance to the theme of human development, are already specified in statute books, e.g., the VDC Act, 1992 (HMG 1996: 11-13). The specified list of responsibilities of the VDC, however, is extremely multifarious and unprioritised. In addition, not only does the law fail to specify how accountability of the VDC is to be enforced, but it also does not provide for adequate administrative, technical and financial instruments to enable the VDCs to fulfil these responsibilities. Furthermore, the ward committee, as far as the statutes are concerned, have no independent status − and responsibility − whatsoever except as a component of the VDC. Given the highly localised nature of the society, however, the institution of the ward committee − and its recent expansion, which can be taken as an attempt towards its empowerment − can become a potent and sustainable organising instrument of social action for human development to the extent that they are suitably supported, including assumption operational independence from its parent body, the VDC. The VDC, as noted, also needs to be empowered with adequate administrative, technical and financial facilities. Their responsibilities also need to be redrawn and refocused. In doing so, the responsibilities of the VDCs should

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incorporate a distinct bias towards human developmental concerns. Their legal, financial, technical and administrative accountability also needs to be spelled out clearly. Furthermore, the statutes also need to spell out the alternative recourses − apart from the eventual politicalelectoral recourse − its constituents can take in the event of failure of accountability. Human development-promoting social action, in addition, needs to promote administrative, financial and judicial decentralisation as well. Locally responsive and responsible, prompt and accountable administration not only facilitates social action but also, indirectly, encourages it. As it is, local administrators and technical − and even NGO − personnel, who are hired and promoted by distant parent organisations, cannot be controlled by local agencies. Local administration, including in the health and education sectors − and including medical and teaching personnel, remains largely inadequate and unresponsive to local needs and demands. Additionally, multiple bottlenecks have remained a pronounced feature of financial administration. In particular, financial administration needs to innovate mechanisms that render it friendlier to local organisations. Under such an innovation, the authority to allocate finances, within the predefined limits and procedures, needs to be devolved as well. The call for devolution and decentralisation, in a broader sense, is essentially a call for reclaiming the commons by local institutions and peoples. The commons encompass more than the physical resources under the community ownership/use regime. The commons include all community institutions and all political, economic and cultural resources that a community is mobilising or can potentially mobilise for the common good, including in the human development front. The commons, moreover, encompass all forms of social capital. Social action geared towards a reclamation of commons within the educational sphere, illustratively, would be directed at several fronts. Use of mother-tongue would be promoted, at least in the primary grades. (The 1990 constitution, on this particular aspect, already includes an empowering provision through article 18 (2): “Each community shall have the right to establish schools for imparting education in the mother-tongue of the concerned child”.) Textbooks would become much more sensitive to local contexts. School management boards would primarily consist of local guardians,

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teachers, students, local health personnel and ward and VDC members. Such representatives, rather than the governmental DEO, will have a decisive voice in supervising the school system, including in the hiring and firing of school personnel, enforcing regularity of school hours and maintaining a transparent accounting system. High failure and drop-out rates would merit public discussion and public commitment to remedial action. Similar reorientative actions would be necessary in relation to other local institutions, e.g., the health post, the agriculture office. In addition, local development activities organised by user groups, ward committees and VDCs would be publicly scrutinised. Their financial accounts would be publicly audited. Reclaiming commons at the local levels does not at all imply delinking from the more encompassing structures and processes. Nor does it hint that the meso and macro public structures, such as the DDC and the central government, should be absolved of their legitimate responsibility of ensuring, whether in terms of policies, investments or end outputs, a high level of sensitiveness in relation to human developmental concerns. On the contrary, it implies utilising and building further on the human developmental spaces created by encompassing agencies in addition to demanding and struggling for a higher level of cooperation from such agencies. It also implies a recognition that not all local structures and processes are human development-friendly and that such unfriendly structures and processes can be weakened by being exposed to other structures and processes. It also implies expansion of domains and opportunities of local cooperation, self-initiative, self-help and strategic cooperation with “friendly” outside agencies. It does, moreover, imply resisting, struggling against and severing ties with all internal and external forces which limit the use and enhancement of social capital and community capabilities.

11.3 UNIVERSALISING HUMAN DEVELOPMENT Capabilities in relation to health, knowledge and level of living, as measured by the HDI, are not only low but highly unequally distributed (chapter 3). Attainments in other components of human development, e.g., access to work and employment, access to public facilities and remedies, political empowerment, are both low and unequally distributed as well (chapters 6, 8 and 9). Universalisation of human development

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can both raise the overall level of capabilities and make its distribution egalitarian. Policies and actions required to universalise human development are broad-ranging and encompass reorientations of the polity, economy and finance (see chapters 12, 13, and 14). Appropriate social policies and actions can facilitate and supplement efforts in other domains.

11.3.1 Reordering local priorities Social action for human development should be geared to a reordering of local developmental priorities. Such action has to be based on a conscious stock-taking and critique of the past and present and a conscious recognition and commitment that the community is engaged in reordering its future. Such stock-taking and reordering, as previously noted, should be dense and engage all local institutions, e.g., households, neighbourhoods, CBOs, ward committees, political party units, women’s groups, groups geared to ethnic upliftment and struggle, schools and health facilities, under the overall coordination of the VDC. The case for reordering of priorities would be drawn from multiple sources. The philosophical foundation of the theme and agenda of human development and the fundamental significance of human capabilities would be one such source. The case would draw from the rich body of folklores emphasising the high intrinsic as well as instrumental values of literacy and knowledge, health, modest and fulfilling living, mutual sharing and cooperation, disciplined work habits, etc.; from live comparative examples of individuals, households, communities, wards and VDCs; and from the historical experiences of the community itself. It would also draw from the logic of the increasing governmental investment on health, education and local development; and from the vision of benefits as well that can accrue to the community as well from fuller and more effective and efficient utilisation of such state-level emphases. A community commitment to reorder priorities would entail some reordering of financing as well. The community should make sustained requests to households which are able to do so to upscale their financial contribution to educational and health services. Many households can make or upscale their contributions in terms of services under conditions of organised and sustained community requests. The communities

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themselves can engage in economic enterprises, e.g., community/leasehold forestry, waste/public land farming, and contribute part of the proceeds to expand or raise the quality of educational, health and other services in the community. Schools themselves, on occasion, can raise funds, e.g., by entering into contract with governmental and other agencies for collection of community information, afforestation, nonformal literacy programmes, etc. Political parties, ward committees and VDCs can agree to allocate larger amounts of resources to upgrade the number and quality of physical and functional features of local educational, health and other facilities and services. The VDC can reorder its expenditure priorities in relation to the sizeable open public grants annually made available by the central government.

11.3.2 Universalising primary health and education Universalising primary health and primary education should be the fundamental objective of all social action for human development. For this to materialise, communities should mobilise all of the resources noted above, e.g., sustained dialogue sessions, commitment, organisation, voluntarism, upscaled financial involvement, politicisation. One particular facet that needs to be emphasised in such actions is the reduction of the work burden of children. While a limited level of involvement of children in home-based agricultural and householding work may be desirable even from the children’s point of view, a high work burden necessarily compromises access to health-related and educational opportunities. That a significant proportion of children are absent from schools because of high work burden, particularly during the peak agricultural seasons, however, shows that social action geared to readjustment of school seasons and hours, sustained counselling of parents, and institutionalisation of additional pedagogical support for those who cannot attend classes during particular weeks/months is necessary. That extremely significant steps towards universalisation can be taken even with local initiatives is clear from the experience of the municipality of Banepa, which lies one hour’s drive from Kathmandu. The municipality, in the last four years, has led the mobilisation of local community and governmental, nongovernmental as well as international agencies to universalise literacy within its jurisdiction. It is reported to have achieved impressive success.

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Steps towards universalisation of primary health, under conditions of community initiative, have been reported within the framework of a number of NGO health projects. In addition, communities should demand and struggle for devolution and decentralisation. Most importantly, however, communities should initiate and pursue organised social action programmes to force the state to universalise primary health and education. Because universalization of primary health and primary education is a fundamental objective, the social action that communities pursue cannot stop merely by forcing relatively transient changes in policy and investment by an existing government. Thus, while the recent enunciation (NPC 1997) of upscaled governmental focus and targets on literacy, health and sanitation and job creation and poverty alleviation should be supported by local social actors and agencies as a minimum measure, the advocacy component of social action for universalization of primary health and education must stop only with a corresponding amendment of the constitution. The amendment should recognise that the state is mandated to provide universal primary health and primary education regardless of all exigencies and that primary health and primary education constitute fundamental rights as well as duties of each child and citizen regardless of his/her political, economic or cultural status and regardless of gender, caste and ethnicity, religion, mother-tongue, location of residence or any other ground. The imperative of forcing universalisation of constitutional amendment and its implementation demands not only that communities take organised and sustained action locally but also that they engage in large-scale and intense mutual linkaging with other communities. Regional and national level solidarity and networking are highly significant social and political instruments which have to be utilised during the struggle for a constitutional amendment. Such linkaging must also include educational and health institutions beyond the community level. Most importantly, however, they demand intensive coordination with larger units of local government such as the DDCs, the regional and national associations of the VDCs and DDCs as well as with public administration. Finally, they require intensive linkaging with political party units in wards, VDCs, DDCs as well as with the central organs of such parties. As it is, the country at present stands at a crossroads in relation to universalisation of

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primary education and primary health. Social sector spending in the last five years has been rising, particularly in the education and local development sectors. (Part of the investments in the latter category benefits education as well, mainly in terms of better physical facilities.) Physical access to primary schools has improved so much that 88 percent of all children can reach their schools within half-an-hour. As noted previously, four-fifths of all the VDCs have access to health facility. The government plans to reach full literacy by 2012 (NPC 1997). Yet, and despite a number of national and international commitments to the effect, the state continues to resist amending the constitution in favour of universalisation of primary health and education. Indeed, universalisation of primary health and education is excluded even from the directive principles of the constitution. Yet, the net enrolment rate at present is only about 67 percent and the drop-out and failure rates even within the primary level are very high (see chapter 5). The quality of education is low. Similarly, while health facilities are available in four-fifths of all VDCs − with the rest of the VDCs planned to be serviced by mid-1998 − their performance is very low in terms of reach, effectiveness as well as efficiency. Their scope of activity is highly restricted as well: local health facilities, for example, have no role in crystallising the demand for and supply of iodised salt whose scarcity implies a serious health hazard for people in the mountain and hill regions. A parallel process of segmentation in demand for higher quality health and educational services, with serious negative implications for universalisation, is proceeding apace. Largely an outcome of increasing inequality in income, the urban middle and upper classes are increasingly turning away from public health and educational services and patronising the private sector, even though it is far more expensive. As noted in chapter 5, primary education in the private sector within the country is 13 times as expensive as that in the public sector. Additionally, a significant proportion of the upper class routinely engages the international private sector for health and educational services. Significantly as well, toplevel politicians, i.e., ministers, legislators, political party members, regularly seek and avail international private sector health services at the expense of the state. While this has buoyed the private sector and, to a certain extent, raised the quality of services in social sectors within the

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private domain, it has (a) drained a large amount of potential financial resources from public social sectors, (b) seriously dampened the demand for high quality service from public social sector institutions, and (c) because of a collusion of interests between the upper class, on the one hand, and politicians, on the other, suppressed both people-level discourse and government-level policy and investment commitments on these themes. The cooption of the economically and politically powerful by the private social sector is not only rendering the agenda of universalisation relatively difficult to push through but is also providing a warning that universalisation, if and when enforced through a constitutional amendment, may not be implemented faithfully. This is all the more reason why genuine and effective universalisation is likely to be contingent on organised, sustained and well-coordinated popular social struggle.

11.3.3 Universalising access to work and a humane level of living As emphasised in chapter 7, a large proportion of people lives in a state of absolute poverty. Underemployment, seasonal underemployment in particular, is very high and only two-thirds of the new entrants to the work force are able to find work (see chapter 6). Income is the “weakest link” within the HDI chain (see chapter 3). Furthermore, unlike in the health and education fronts, there has been little progress on the work and income front for a large majority of people in the last two decades. Indeed, for many, the situation has worsened during the period. Economic insecurity, food insecurity in particular, is widespread (see chapter 4). This is, clearly, a daunting challenge of human development. Nonetheless, local social action can expand work and income opportunities and economic security. Social action on this front should be focussed on a number of local measures, some of them in tandem with the implementation of the APP which, among others, focusses on irrigation, rural roads and technology (see chapter 13). Local social action should actively support these measures. Crop diversification and intensification, emphasised but largely unimplemented over the last two decades, can go a long way in upscaling production and productivity and providing adequate work and income. Local social action which ensures access of the poor to unused “waste lands” and which finds ways to put them to productive use

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can be a significant measure. Ensuring expansion of community forestry, which now covers only about 2 percent of all forested land, is another measure. Leasehold forestry can also be promoted for the benefit of the poor. Social action should also be focussed on ensuring at least partial support, through local contribution, to the local destitutes and the severely disabled who do not have any other source of support. Soil and water management should be a key area of local intervention. It has recently been shown, for example, that inexpensive ponding of excess summer rainwater in the hill areas can, apart from multiple other benefits, increase agricultural productivity by 30 percent to 50 percent (Upadhyaya 1997). The technology, moreover, can be easily adapted at the household, neighbourhood or larger level. Unlike irrigation projects, it has a very short gestation period: benefits begin to accrue with the turn of the season. Conservation and management of the rich biodiversity, which is nearly impossible without local initiative, too, can generate both work and income. Struggling for use of local labour in agriculture can have a significant positive impact in the Tarai region (cf. Mishra, Pandey and Upreti 1993). Similarly, social action should also promote use of local labour in governmental and other construction projects. Land-forirrigation-water projects, under which larger landowners agree to sell a small proportion in exchange for assured supply of irrigation water in favour of the water users’ association, and which the marginal and landless households can buy by accessing loans from the association, can provide another locally-based opening for the poor (Rana 1992: 29-30). Organised social action should also make effort to incorporate such practices within the national irrigation policy. Social action should support measures to lower ceilings on landholding and reform tenurial practices. Not only are smaller holdings economically more productive (see chapter 12), but access to land opens work opportunities to those who are looking for work as it also empowers the landless. Organised social action is a prerequisite of sincere implementation of the newly enacted law on land reform and tenancy. Implementation of the law which seeks, among others, to abolish “dual ownership” of land by abolishing the institution of land tenancy as such, is nearly certain to go in favour of the landowners − and against the interests of de facto sharecroppers − unless the sharecroppers

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find strong local support. To the extent that implementation of the law goes against interests of the sharecroppers, most of them will suffer a serious fall in their level of living. Organised social action is also necessary to ensure that agricultural land does not remain uncultivated through the season or year (depending upon the location) and to ensure that landowners who do not cultivate their land forfeit rights to it. Organised social action programmes should struggle for a host of other national policy measures. Implementation of the recently announced policy of guaranteeing employment to at least one member of the family (NPC 1997) is eminently actionable. Social action in the immediate future should be directed at making governments faithful in its deliverance. Without grass-roots social and political action, the policy may be in danger of being limited to an enunciation of intention at best. Organised and sustained social action can also become decisive in pushing through minimum-wage laws in the agricultural sector and in instituting crop and livestock insurance programmes and support prices for agricultural produce. Such action should also struggle for expanded public works programmes, user-group-based (rather than contractor-based or line-agency-based) construction programmes and labour-intensive technologies (e.g., the “green roads” programmes, in which more than three-fourths of the total cost are spent in the form of wages). With respect to implementation, social action can play a decisive role in enforcing accountability from locally based technical and administrative staff in government offices. Measures to partially delink the household economic status and the food market, on the one hand, and universal food security, on the other, are germane to human development and, thus, can form a key goal of social action. The rather extreme proximate physical consequences of lack of adequate nutrition, in terms of wasting and stunting, wasting, morbidity and mortality have already been reported in chapter 4. That the psychological, social and political correlates of survival under such a food-insecure regime are profoundly disturbing and inhuman needs little elaboration. While strong kinship and neighbourhood-based institutions do mitigate conditions of short-term household food scarcity to some extent, such institutions do not address seasonal or more persistent and generalised conditions of food scarcity. Social action geared towards such delinking should, once again, focus both on building local institutions as well

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as reforming national policies on food and its distribution. Among the local measures, and independently from the mechanisms noted in the preceding paragraphs, social action aimed to reduce the scale of profiteering from food can prove worthwhile. The community, for example, can form a food cooperative which buys foodgrains during the harvests and sells it during the scarce season at a sub-market price. It has been shown that such an initiative can be popular and can save the poor from needless and debilitating indebtedness and from the vagaries of the food market (see chapter 10). Alternatively, a community can agree to a compulsory foodgrain saving programme under which some fixed proportion of harvested foodgrain is stored by the community until the next scarce season. Both of these programmes have proved their worth in a number of locations and have acquired considerable cultural legitimacy. The latter programme has also been instituted − and later discarded for extraneous reasons − under the direct supervision of the state. Social action should also be focussed on nutrition and health education, household and community sanitation as well as on collection of information on food security at the level of the household. Organised social action can also lead to formulation and refinement of national policies which support such a delinking. A well-targeted and well-managed public food distribution system must become one of the principal objectives of organised social action. Not only does such a system assure supply of adequate food during acute scarcity but it also generally controls artificial inflation as well as sharp fluctuations in food prices in the open market. The existing national public food distribution system is quite limited in its utility: it is much too small in scale, ineffective in terms of targeting and reach and generally inefficient in terms of timely intervention. (The last two limitations, in part, arise from the fact that the public distribution system and local institutions have little communication and receive little mutual support. Hence the need for social actors to build and struggle for institutionalising linkage and support.) Organised social action should also promote state-level nutrition support for children, e.g., in the form of mid-day meals at schools. Similarly, social action should demand at least partial state nutritional support for the severely disabled who do not have other sources of support.

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11.4 RESISTING EXCLUSION Resisting exclusion is really a specific front of the agenda of universalisation. However, the high salience as well as resilience of exclusionary principles and practices, together with the very large number of excluded peoples and the depth of their deprivation, imply that a generalised social action agenda towards universalisation runs the imminent risk of bypassing or minimising those who are severely deprived due to resilient and sharp exclusionary rules. Therefore, social action against exclusion, even as it promotes universalisation, must pay particular attention to the traditionally excluded and ensure that they are included in the process. Such action should begin by foregrounding and problematising deprivations among women (the girl children, in particular), the lower castes and the ethnic groups (the lowest castes, in particular) and the poor.

11.4.1 Resisting exclusion of women Exclusion of women from human developmental opportunities is intensive, encompassing − in terms of the domains they cover − and universal (see chapters 3 and 10 and relevant sections in other chapters). In addition, exclusionary rules and practices operate at all levels of social organisation. Reorientative social action, in this context, has to be consciously female-friendly in an encompassing manner. Social action must ensure that more and more women actively participate in such action. Social action at the local levels should ensure that the woman representative of the ward committee, among other women, participates actively in such actions. The fact that exclusion of women is highly salient as well as resilient implies that social action against exclusion has to be organised and sustained as well. It also requires intense networking with outside communities and agencies. At the local level, because intensely held and practised modes − including by and among those involved in the reorientative effort − are being challenged, it has to be intensely dialogical and self-critical as well. The dialogues have to aim at forcing a fundamental conceptual distinction between the notions of sex and gender. They should also review alternative allocations of gender roles, drawing from instances from within the community, and focus on what men, households, the community, the ward committee and the VDC can do to reduce

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deprivations among women. In addition, the significance of wider forces and agencies, e.g., the economy, polity, law and culture, needs to be elaborated during the dialogues. At a more concrete level, local social action, primarily with the help of households, should make a consciously gradual effort directed at redefining the identity of a girl child. The focus should remain on the enhancement of capabilities and on the value of an autonomous, rather than dependent, adult life. Towards this end, social action should be geared to promote the survivability of all infants and children, e.g., by collecting gender-disaggregated information on infant and child mortality and by analysing and discussing it, by highlighting significant gender differentials in infant and child mortality, and by developing nutritional, immunisationrelated and other measures against it. Help can be enlisted from the staff in the sub-health posts to carry out these tasks. Social action should also focus on gender differentials in primary school enrolment and drop-out rates. Organised and sustained encouragement of parents to reduce or reschedule the relatively higher work burden of girl children, supplemented with a house-tohouse visit by local teachers − the lady teacher in particular (present in many primary schools under the continuing “one-primary-school: onelady-teacher” policy) − ward-committee members and other locally respected citizens, can be of decisive significance for the enrolment or re-enrolment of girl children. Additional classes, as noted previously, should be organised, especially for those girl children who miss schools during particular weeks or months. Given the fact that only a small proportion of girl children who graduate from primary schools continue their education, social action should also be focussed on encouraging parents to enrol their daughters in the lower secondary and secondary grades. Organised, sustained and well-networked social action can play a highly significant role in the promotion of female-friendly policies at the national level. Locally-based anti-liquor coalitions of women, despite their lack of success, as of yet, in terms of forcing changes in national policies (attributable in part to lack of broader networking and national-level organisation building), have not only won a popular mandate, but also laid a groundwork for struggle on other oppressive themes as well. The Women’s Pressure Group, a national coalition of multiple women’s groups, and the women’s

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wings of the various political parties have remained quite influential and militant as well. In addition, social action should enlist assistance from the Women Development Officer and her assistants located in the district headquarters and other outlying locations. Local social action can promote the agendas of such groups even as they crystallise and implement new areas of local and national action such as those related to equal inheritance rights, struggles in relation to violence against women, promotion of reproductive health and equal educational opportunities together with expansion of access to work opportunities and to political representation. In addition, organised social action should promote a system of preferential access to women in educational institutions.

11.4.2 Resisting caste and ethnic discrimination Exclusions based on caste and ethnicity are highly salient and resilient as well. The level of human development among those in the lower caste and some ethnic groups is much lower than that of the high caste groups (chapter 3). The lowest castes, in particular, are the most deprived in terms of capability. As noted earlier, most members of the lowest caste groups also survive within a context of dependency upon the higher-caste as well as some of the ethnic groups in relation to access to productive resources (chapter 10). They also are forced to lead a marginal existence within the school, health post and other public settings. Their level of political representation is also very low: despite the fact that the lowest caste group population constitutes 10 to 15 percent of the total population, not a single member of the popularly elected lower house of the parliament belongs to the group. Social action at the local level can promote access of the lower caste groups to schools and health facilities by organising sustained programmes of conscientisation of the upper caste groups and encouragement of parents of the lower caste children, by demanding special attention for these groups from school and health authorities and by prodding and helping local as well as district-level authorities to invoke legal measures which ban discrimination on the basis of caste and ethnic affiliation. Active participation of the elected or nominated lower caste or ethnic representatives to the VDC can be of decisive significance for the success of

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such actions. The institution of a household information collection mechanism on health, education, level of living and other human development indicators, combined with caste/ethnicity-based comparative analyses, can serve as a significant awareness-generating as well as policy tool for the community, ward committee and VDC. Many of the members of the lowest caste as well as ethnic groups possess specialised nonagricultural skills, e.g., leather work, metal work, tailoring, ethnic crafts. While industrial “imports”, including those from larger enterprises from within the country, have supplanted some of these products and services, lack of small capital to buy raw materials and/or processing equipment has also been instrumental in the lack of use of their skills and pushed them to unemployment and extreme poverty, both in terms of income and capability. It has also often led to depreciation of their skills. Social action, complemented with small-scale loan assistance from the VDC, can help them to find work and upgrade their level of living. Small-scale central government funds, under the “Poverty Alleviation Fund for Disadvantaged Groups” budget line, can also be accessed for this purpose. In some locations, NGO funding can also be accessed for the purpose. In addition, social action programs should promote local as well as more encompassing politically oriented bodies of the lower caste groups as well as the ethnic groups. Such bodies can protect the local interests of such groups even as they network with similar bodies outside of the community. Such bodies should also liaison with NGOs and with the National Committee for the Development of Nationalities and the National Committee for the Upliftment of the Depressed Classes, both constituted recently by the government.

11.4.3 Resisting exclusion of the incomepoor While the income-poor form a relatively more fluid category than the categories of gender and caste/ethnicity, inter-generational incomepoverty remains a pronounced feature of the economy and of the life experience of the majority of the poor. In addition, natural calamities, prolonged sickness in the family, loss of traditional product, labour markets and tenancy rights, increase in the number of dependent children and disabled persons in the family, etc. add to the ranks of the income-poor.

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Increasing rates of unemployment and underemployment further contribute to poverty. Seasonal scarcities in consumables also form a significant dimension of poverty as well. Also, while the cultural stigma attached to the poor is much less salient than those attached to women and lower castes, the extent of their exclusion from human developmental opportunities, nonetheless, is high. The infant and child mortality rate among the poor is higher than for the non-poor. Illiteracy among the poor is much higher than among the non-poor. The poor, in general, also have a lower level of access to other public facilities and remedies. Social action for and by the poor for the promotion of human development among the poor, therefore, has to be organised and implemented simultaneously at two separate levels. At the first level, social action has to be geared to alleviation of poverty and ensuring a minimum level of living. Social actions for poverty alleviation should generally be focussed around measures noted in 11.3.3 above, with the proviso that the poor are assured preferential access to such resources. Thus, social action has to ensure that the poor get preferential access to productive use of public “waste land”, community and leasehold forestry, soil and water management efforts, work in public construction projects, etc. The rights of the sharecroppers, most of whom are poor, have to be protected during the implementation of the land reform programme. Organised social action programmes can force the government to implement the recently enunciated policy of guaranteeing work to at least one member of the family which can be of significant import for the

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poor. Similarly, organised social action can play a key role in forcing the political parties, entrepreneurs and the government in taking initiatives to raise, legislate and/or implement agendas on lowering ceilings on landownership, minimum agricultural wages, expansion of public works as well as well-targeted public food distribution programmes and on labourintensive development strategy. Such action can also lead to expansion of credit to the poor and the skilled − rather than to the large landowners, the rich and the urban residents. At the second level, social action should be focussed on promoting the health and educational capabilities of the poor. Social action for promotion of primary education and health among the poor should generally be focussed around measures noted in 11.2.2 above, e.g., organised and door-to-door counselling and encouragement by ward committee members, teachers, health personnel to enrol children in schools, and report illness at the health post. Such counselling and encouragement, in the case of the poor, needs to be much more sustained. Rescheduling schooling seasons and hours and provision of additional pedagogical support may also be necessary. The poor are also likely to derive more benefits from non-formal education. Universalization of primary health and education must remain the singular longer-term objective of social action for the poor. Such action, in addition, must politicise poverty and demand special financial and organisational assistance from the state to raise capabilities in the form of preferential access to educational institutions, scholarships and subsidised health care.

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CHAPTER 12

Reorienting Polity for Human Development If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government, which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. James Madison, Federalist Papers (51) What makes for an effective state differs enormously across countries at different stages of development. What works in the Netherlands or New Zealand, say, may not work in Nepal. World Bank 1997 There is no change without dream as there is no dream without hope…. there is no authentic utopia apart from the tension between denunciation of a present becoming more and more intolerable, and the “annunciation”, announcement, of a future to be created, built − politically, esthetically, and ethically − by us women and men. Paulo Freire 1995

12.1 POLITY AND CRISIS OF LEGITIMACY

T

he advent of human development paradigm in the 1990s when neoliberalism (as expressed in the idealisation of market economy) was at its zenith has steered both development discourse and the underlying policy debate back to the basics. Once again, the development process is being accepted in influential centres of development discourses as a complex human enterprise that requires contribution of not only the invisible hand of the market but conscious and coordinated action of a variety of other societal agents and processes as well.1 The explicit emphasis of this study on the need for a reorientation of the society, economy and polity follows the imperative behind this strategic shift. The polity as a critical domain of human development and instrument of cooperation among various constituent elements of the society assumes special significance from this perspective. Polity, in a broad sense, refers to the organisation of political space in the society. A democratic polity expresses itself in the distribution of this space of political power

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among the major societal entities, state, market and household in all its diversity. Typically, polity faces a crisis of legitimacy when market and state function in disregard of the households or people who, in a democracy, are assumed to be sovereign, as people, citizens and consumers. When this balance is disregarded, a polity may break down also as a traditional mechanism for articulating interests and resolving conflicts − a function performed efficiently even in the remote past by a village community. For most of its modern history, Nepal has been an authoritarian state based on traditional sources of legitimacy. Political power has been exercised by the king (or in his name) in such a way that there was no question of any citizen enjoying any guaranteed right whatsoever. There was not much space for the market to function either, given the country's feudal and subsistential mode of production. After the change in political regime in 1951, the state became even more powerful with its developmental agenda, access to larger economic resources and extensive international support. Local communities that traditionally

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managed their own affairs in accordance with the local milieu and customs also lost their roles gradually as they got drawn into the “modernisation project” of the government. However, as we have already seen, this development project has by and large been a failure. Development plans and the egalitarian rhetoric of those who exercised power made households psychologically dependent upon the state for their welfare but many of their basic needs and aspirations went unattended. As any tool of supplementary support, foreign aid contributed largely to refine and strengthen the dominant tendency, not the forces of change that struggled against it. With the restoration of democracy in 1990 and subsequent promulgation of a new constitution, the nature of relationship between the state and the people has undergone a qualitative shift. People now enjoy greater political freedom than ever before, are ruled by the rulers they elect to power and, as "sovereign", are assumed to be the ultimate arbiter of public authority. However, if the constitutional process appears on track, as discussed, there is a simmering crisis of popular legitimacy with the distance between people's expectations and state performance growing sharper and wider. It is not only the government that is found wanting by popular judgment; the political process as a mechanism for articulating and aggregating interests and resolving conflicts itself is now under increasing threat. The growing sense of insecurity and the widespread public apathy against government, politics, the elite, and even the professions is indicative of the nature and extent of afflictions in the polity. Politics is ridiculed together with the politicians who seem to be capable of defiling the constitution without actually appearing to violate it. This is clear from the statements that politicians themselves make routinely and from the sentiments regularly expressed by the leaders of the society in charge of overseeing the constitutional process. Similarly, the market has so far been a poor substitute for government action as observed in the unfolding dynamics of poverty, deprivation and exclusion in different forms. From the lethargic behaviour of the private sector, the early bursting of the stock market bubble, the apparently unnecessary controversy about the imposition of value added tax (VAT), and the rapid deterioration in financial health of many new and old private enterprises in

manufacturing, finance and insurance and aviation, it can be observed that, in Nepal’s context, market has not been responding to the important role bestowed upon it. Undermining of the state sector and promotion of the private sector have, in the mean time, created a crisis of political credibility. It is necessary to probe deeper into the dimensions and sources of this crisis before an agenda for its reorientation can be discussed fruitfully. First, even with the restoration of democracy, the process of transferring power to the people is incomplete. The government apparatus continues its tradition of centralisation and remains far too remote from the people. The state is equated with central government and the central government with the executive. The executive, in turn, may be no more than a few “like-minded” ministers and associates exercising power as “the executive committee of the parliament”. The government is often run outside of the rules of a democratic dispensation. The parliament itself is regularly molested by the prime minister, a would-be prime minister or party bosses to retain or capture power through amoral adventures and apolitical interventions. Regular use of state resources and other “unparliamentary” means to procure favours by members of the parliament has had a demoralising effect on all responsible sections of the society. Second, a democratic state cannot function well, without being derailed by personal ambition, private greed and public misdemeanor of politicians, in the absence of a robust and credible civil society. Despite some positive signs and accomplishments (see 8.3.3 and 9.5), the civil society in Nepal is yet to acquire the credibility necessary for substantive effectiveness − as a countervailing power or a constructive partner of the state. A major problem here is that the weak or incipient institutions from the academia to the media and NGOs, by and large, are perceived by people to be more or less a part of the ruling establishment rather than independent agents of the society. Third, the behaviour of the major political parties and their leaders and their loss of direction have also enormously helped to fuel anti-government and anti-state sentiments and actions. Parties, leaders and most cadres have shed the militancy required for a pro-active role necessary to strengthen democracy and have, therefore, been unable to make an authentic claim for a decisive role for the state in social affairs. A vacuum has thus been created which,

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first, invited the globally-administered anti-state ideology to further entrench itself in the country. More recently, the forces of the extreme left have been exposing structural problems in the polity by threatening to become the rallying point for people excluded from the political process. The Maoist insurgency, which is gaining ground in some districts and is establishing itself as a credible political movement, may be only the most visible and concrete manifestation of a larger crisis in the making. Finally, the reaction at the other end against state failure has been no less extreme, in as much as the shortcomings in the functioning of the government became an excuse to seek an economic regime devoid of much scrutiny through the political process. In Nepal, the market has been ascending in influence with the impetus from global capitalism since the mideighties. Public authorities themselves have been projecting it as a panacea for the long-standing problems of development − as if they are happy to abdicate the role they were elected or appointed to play. It has been an expensive ploy to explain away their own lack of performance. The downsizing of the state (not so much in size or resource cost for its upkeep, as in its scope of social responsibility) has not helped the cause of the market or of the consumers. World public opinion now shows some signs of reverting back to a more reasonable position in respect of the relative roles of the market and the state. The country desperately needs a state that is effective in traditional government functions, as well as in development, and it needs a civil society that can help make it so − all contributing to human development together. Any loss in the influence of an unkind market cannot be allowed to become the gain of a centralised, insensitive, and predatory state − just as the problem of a state falling short in credibility and performance cannot be rectified by legitimising market hegemony. Nepal should not be found wanting once again with its government matching, not compensating for, failure of the market. It has been said, very pertinently, that excesses do not correct themselves in a natural course. “In political and ideological matters there are no spontaneous ‘balances’ and return to moderation after indulgence in simplistic ideas. New equilibriums are created by a multitude of visible and discreet thoughts and actions, including by reactions to excesses of prevalent ideology. The role of the state will be

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rehabilitated, because it is an imperious necessity and because individuals, groups, political parties and other public and private organisations will struggle for this objective” (Danida 1996:70).

12.2

TOWARDS A NEW POLITICAL COMPACT IN THE BODY POLITIC

The present crisis is not “natural” or preordained (11.2.1). It is the result of moral inertia afflicting the country’s leaders who are self-restrained from producing what they are potentially capable of in terms of vision and dreams. The growing cynicism needs to be checked by fashioning a new compact in the body politic based on new confidence and hope. A triangular compact between the state, the private sector and the civil society agents including the households (Friedman 1996) must help to capture and promote the essence of human development for the country to usher in a productive era of democratic development. The compact suggested here is, however, different from the often talked about need for national consensus. This point needs further elaboration. The chaotic political scene and its adverse effects on developmental policy-making in the country have often driven some political leaders, influential analysts and opinion-makers to plead for a "national consensus" on important "national issues" to guide the decisions and actions of governments that come to power in succession. Some go to the extent of making a strange argument that “politics” should be kept out of the economic policy-making process to permit the latter to freely determine the pace and pattern of development. If the purpose of such argument were merely to ensure that there be no ideological intervention against the free functioning of the market, it would perhaps be understandable, though not necessarily acceptable, given the experiences and ethos of the age. But to argue that the entire macroeconomic policy regime and related development strategy and priorities be predetermined and pursued even in the mediumterm without any debate and with changes in the government is a preposterous proposition that cannot be endorsed in a democracy. There can be two specific motivations behind such arguments. One, such practice would give stability to development policies and create an environment where private investors as well as aid donors can feel more comfortable in

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planning their activities with a degree of certainty and firm knowledge of associated costs and benefits. Two, such consensus would presumably ensure the interest of “economic democracy”, which is wrongly equated at times with the notion of the minimalist state. In this scenario, the latter would not be threatened by political democracy, where a political party with less faith, for example, in stabilisation and structural adjustment as the cradle of economic reform may torpedo an economic policy regime built in support of economic stability and market-led development. When carried to its extreme, such quest for consensus can mean that even budget-making should be divorced from political debate and parliamentary judgement − a point of view one hears occasionally also in India, which has its own problem of short-lived coalition governments ill-equipped to negotiate through the economic reform agenda. What happens if the stability so established works against the interest of the majority of people, and how a regime that closes options for any policy change according to the will of the people can be called democratic are questions that remain moot in this debate. How can even the limited objective of macro-economic stability be maintained if large-scale deprivations and discontent were to result in social and political turmoil, requiring, among other things, larger expenses for security and law and order, is a question that is not seriously debated either. It is not assumed, one has to hope, that civil strife together with loss of some precious human lives is normal for a country like Nepal − simply as a manifestation of the “natural tendency” of the “third world society in transition”. If a national consensus could emerge in terms of the policies and priorities for human development, this would be ideal from the perspective of this report. But, on the grounds of logic and legitimacy, even that would be undesirable if the consensus were contrived or imposed from the outside. Such a consensus has to emerge from a functioning polity where domestic institutions for articulating and aggregating interests are playing their role, accountability is clearly defined and people preside directly or indirectly over the value and destiny of the public agenda. Within the agreed rules of the game, some political forces may push for a consensus on the economic reform package unadulterated by any sentiments about human development. Others may want a consensus on priorities for human development tempered by the need for macro-economic discipline. Some, like those in line with the

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World Bank, may wish for an “effective state” so that it can be supportive of the market economy.2 Some others may look for redefining the role of the state so that it becomes a source of correcting the excesses of market in favour of households, especially those belonging to the low income group. The reorientation that this study is after is about the creation of a polity that permits such debate in the society and leads to a democratic consensus on issues and ideas as they affect the lives of the participants in the debate at different points in time. If democracy means responding to the will of the majority and if the majority would benefit from human development, the process of seeking consensus through democratic competition should produce the ideal result for human development. Since those who are effective participants in the process usually decide the parameters of debate, it is absolutely essential that local governments and community level associations be empowered to become bona fide party to the compact. This points to the need of “deepening democracy” we discuss later (see 12.4).

12.2.1 Managing a dynamic stability The agony generated by governmental instability and its adverse impact on policies and the environment for development is understandable. That political stability sustained for a long period may have contributed more than anything else to the sustained growth of the East Asian countries (though the role of human resources cannot be undermined) makes the agony harder to bear for those who wish to keep their faith in the value of democracy in Nepal. That governmental instability also affects, in many cases, continuity in civil service leadership is distressing as well. However, to want to have this instability replaced by a rigidity that leaves no room for debate of an ideological nature is wishing for a cure that is worse than the disease. The suggestion for reorientation of polity is thus based on the premise that there is a need for stability; but this stability needs to be attained and sustained within a democratic political space. What the compact must strive for is a “dynamic stability” in governance that provides reassuring continuity, not suffocating rigidity. Continuity will be in the rules of game that are arrived at consensually and in the compact for them to be followed faithfully by all concerned. This way, there will be no foreclosure of

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opportunities for expressing a dissenting point of view without which there can be no democracy. Similarly, if democracy is another name for a competitive political process, there must be room for options for a political leader to express and transform her or his vision of a prosperous and fully democratic Nepal into a reality of its own. The compact should therefore embrace in its fold the basic values and principles, but generally not policies and programmes or other instruments of democratic governance. To illustrate, there can be a compact covering the “right to livelihood” or even the “decalogue of citizen rights” as suggested by Friedman (box 12.1), about which there can be very little disagreement at the level of values. However, if the compact were to go further into the “means” area and seek agreement on whether, say, the “professionally assisted birth” should occur under the care of the state or the market, it would spell trouble both as a matter of principle and a practical proposition. It may need pointing out here that the purpose of the measures and policies suggested elsewhere in this report for reorientation of economy is also mainly to better inform the debate rather than to provide a deterministic view. Human history is about opportunities, not determinism (cf. Freire 1995: 89-91). Rejection of determinism promotes a belief that individuals and institutions can have the capacity to alter the course of history (Danida 1996:70). A parallel and overlapping opportunity for such debate is also available in the constitution of the country, where the Directive Principles and Policies of the State are listed. If the parties to the compact are indeed interested in a “national consensus”, what better ground can there be to serve this end than the constitutional imperatives? (see 1.6.1)

12.3 DEMOCRATISING THE STATE It follows from the discussion so far that Nepal may have democracy, but the Nepali state has yet to function democratically. One finds this sentiment expressed more generally by the country’s political leaders and analysts as the need to “consolidate democracy”. The grievances at the moment are mostly centred around the conduct of the political parties, electoral process and practices and the behaviour of principal constitutional bodies. Remedies should similarly be sought in these directions. One important task in this context would be

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Box 12.1 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Decalogue of rights Professionally assisted birth A safe and secure life space Adequate diet Affordable health care A good, practical education Political participation Economically productive life Protection against unemployment A dignified old age A decent burial Source: Friedman 1996; also quoted in Danida 1996

.

to have the compact to include an agreement among the major political forces on what democracy is all about so that an agreement on the requisite norms of political behaviour also can be reached. The constitution is already the most important compact in this respect. It would also help, however, if there is an agreement that a single-party state does not conform with the nation’s current vision of democracy, just as active monarchy, too, does not and the “Panchayat democracy” did not. Similarly, a centralised state with ethnic, linguistic and religious minorities, other historically oppressed groups and ordinary people in general feeling excluded from the process cannot be the nation’s vision of “liberal” democracy. If it is necessary even to amend the constitution to this end and to serve better the values and universal ideals of democracy, there should be no hesitation to do it and institute an amended compact through the constitutional route as well. Democracy as a system of governance has certain universal values and character. It presupposes a political society in which each adult member is entitled to “freedom to govern oneself”. There can be no alternative to this arrangement in a democracy as is the case with the civil liberties and competitive process. Nevertheless, political forces need to keep their options open as far as an alternative to the dominant western institutional model of democracy (i.e., the Westminster system) is concerned. Among others, Nepal must find a way of including the country’s poor and oppressed groups into the political mainstream instead of allowing them to be coopted by the dominant forces to suit their own interests. At this point, all that can be done is raise a few questions in this respect (box 12.2). As the answers to the questions will have to await further study, research and debate, the country’s democratic forces can concentrate on introducing and consolidating reforms in areas

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Box 12.2 Questions on alternative democratic model • Is there an alternative to “unidimensional model” of democracy as expressed in the western liberal tradition? • What is “universal” about democracy and what is not in terms of values and institutions? Is there a room for a search for an Asian Way, a South Asian Way or a Nepali Way to democracy without falling into the trap of authoritarian values that invoke the cultural argument to stifle the democratic urges and aspirations of the people? • What are the changes that can be considered in the present constitutional system that can better approach the ideal democracy without compromising its universal character?

which are necessary anyway. We can be sure that there can be no democracy without reforming the electoral process. Similarly, we can be sure that political parties will have to remain a part of the competitive political process. Hence, the need to reform themselves. No reform, however, can be accomplished by any constitutional expertise alone or through some miracle in management science. Above all, the society’s leaders must work for the development of “habits” in line with the spirit of democracy and democratic governance.

12.3.1 Reforming political parties The success of multi-party polity depends upon the way political parties conduct themselves and the values (and symbols) they project. Reforms within the political parties are central to both good governance and realisation of human development goals. Parties must evolve a new value system, voluntarily shake off the traditional leader-oriented style of functioning and replace it with one that ensures intra-party democracy and compliance with the codes of conduct agreed upon within and among themselves at various times. All major parties are currently found wanting in several important respects, e.g., (a) their sense of political solidarity, as against factionalism − based not on principles but on personalities and short-term gains and losses; (b) lack of accountability to the electorate; (c) weak commitment to devolution of power, i.e., the local communities; (d) unwillingness to broaden representation by allowing adequate room for diverse membership and wider leadership in terms of gender, caste, ethnicity and region; (e) weak commitment to multi-party norms − as against the attraction of power across the organisational and ideological frontiers; and (f)

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weak intra-party democracy. To this list, one must add the issue of party finance and its transparency. The possibility of being financed by dubious sources means that parties cannot conduct themselves democratically or autonomously, not to mention the social and moral dimensions of an evil nexus among parties, corruption and criminalisation of politics. A few positive developments can be seen at present with the major parties either completing or about to begin their party conventions at one level or another. New leadership is elected or about to be elected (or re-elected) in some, with the central organs of these parties being revamped and revitalised in the process. With the passing of the anti-defection bill, which was long overdue, members of the parliament should be subjected to greater party discipline in parliamentary debate and voting (and, hopefully, in preventing a premature fall of government) than before. This initiative should also contribute to the institutionalisation of multiparty conduct outside the parliament by its members. Through such steps, the democratic and parliamentary culture may gradually get established in the country’s political realm. Deliberate and concerted efforts are needed especially on the following fronts: • Promoting values. The current crisis of legitimacy may also be termed the crisis of values. At the larger, societal level, with the influence of consumerism and the march of neo-liberalism, all values are being reduced to monetary values. Any attempt towards value-based politics is derided as an idealistic, if not anachronistic, fancy. In a country where political leaders are also seen and perceived as social leaders, political parties must resume discussing values and promoting the idea that what is not good for society cannot be good for politics. In the Nepali context, the argument may have to be extended to parties themselves in particular, given the moral degeneration that seems to have set in progressively. It should also not be forgotten that at the international level also, despite the onslaught of unbridled individualism and greed peddled as the passport to prosperity and the basis for fulfilment of all needs, values are being debated. The declarations of Rio, Cairo, Copenhagen or Beijing on environment, population, social development and women are essentially all about values (Danida

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1996: 49-61). The ill-advised perversion of pragmatism of today will have to give in. • Relation between party in power and government. The first elected government in post-1990 Nepal, which had enjoyed a comfortable majority in the House of Representatives, fell because of intra-party feud. History repeated itself when a similar feud led to the fall of the Nepali CongressRPP government in early 1997. Such factional behaviour manifested itself in a potent manner when the party leader heading the government was other than the president of the party. This tendency symbolises the influence of the authoritarian culture in the organisation and functions of political parties where individual persons are more important than the institution. In a multi-party competitive political process, a government is elected on the basis of its party’s platform and promises. The party and the platform need to be taken seriously; hence the need for control of party leadership on government policies. On the other hand, government must be able to function independently and be accountable not to party but the parliament, as the constitution requires. To manage relationships as complex as these, the leaders in a party must put their heads not against each other but together, so that they help increase their support base by having the performance of its government match the promises made in the manifesto. All parties must work out the rules of the game that address both these needs − the needs of the party as well as those of parliamentary accountability − and make the operations of the government and the parties more transparent and predictable than at present. • Respect for “loyal” opposition. In a multiparty polity, all major parties cannot be in the government at the same time. In fact, the success of such a system lies in the respect for the opposition in the parliament. If any political party is driven by a mindset that to be in opposition is to be out of political contest, democracy can never succeed. The situation can be worse if the party cadres, too, are motivated only by the opportunity for sharing the spoils when their party is in power. As democracy strives for maturity, it is the responsibility of the political parties to demonstrate that playing the role of a “loyal” opposition (i.e., being loyal to the rules of the game) is as important as that of

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the role of a party in power. • Party finances. Time has come to require that party finances are made transparent. A proper auditing of accounts must be required by law. Donations should be regulated. No business house should be permitted to grant donation beyond a specified amount, which can be exempted from income tax, if necessary. There should be clear guidelines, and enforcement mechanisms should be instituted, with regard to the acceptance and use of foreign donation also. Government funding for the election and other expenses of political parties is emerging as an issue for debate. Varying degrees and types of government support are available to political parties and their candidates in many developed countries including UK,USA, France and the Nordic countries. In Nepal, given the resource position of the government, it may be construed to be a far-fetched proposition for the present. But different practices can at least be studied for adaptation. If parties reform themselves generally along the lines suggested here and as suggested by many other democratic groups and institutions in the country, the overall scale of need of public funding for this purpose may go down (because the parties will not be bogged down in a “prisoners’ dilemma”3). Another alternative would be for the donations of the corporate sector to be deposited into a common fund that can then be apportioned to individual parties under an agreed formula. • Support for constitutional bodies. Constitutional bodies can be only as effective in their conduct and output as the major political parties wish to. If they are partisan with regard to the expectations from the Constitutional Council, Judicial Council, Election Commission, the Commission for Investigation of Abuse of Authority, the Auditor General or the Public Service Commission, no amount of reform elsewhere can produce the result desired. The constitutional bodies may have all the power according to what is written in the constitution, but the effective exercise of this power depends upon whether they have the unconditional support of the political parties and their leaders. • Declaration and monitoring of assets. The assets and income of political and government leaders must be declared

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publicly at relatively short intervals. Both political parties and the government should institute and implement laws to this end.

12.3.2 Reforming the electoral process Just as it is difficult to imagine a competitive political regime without political parties, one cannot think of democracy without elections. Ironically, however, elections themselves have begun to defame Nepal’s democracy. This needs to be remedied urgently. Much of the reform that is necessary in the election process will once again depend upon the political parties. The Election Commission, its secretariat and the polling staff must themselves be competent and non-partisan for people’s will to manifest without impairment. But the rest depends upon the political parties and the government they run. First, in a manner not consistent with the concept of the sovereignty of the people, every major political party has tended to hold the view that incumbency in government − to be in charge of public resources at the time of elections − is essential for success in elections. Political parties seem to be willing to pay any political or moral price for it. This has to change, because this view, even when it is not acted upon but only perceived by them as such, is antithetical to democracy. Second, whether and how the electoral process contributes to the promotion of representative government depends upon the values the contesting political parties attach to it. Their conduct should reflect their faith in people’s wisdom and verdict. The choice of candidates submitted to the people should reflect their commitment to the value and practice of pluralism in addition to other party-specific values. Third, if the substance of representative parliament so requires, a debate should be initiated on constitutional amendment with regard to the electoral system itself. There is room for discussion with regard to the desirability of switching over to some form of proportional representation system, for example. There are also suggestions that the prime minister be elected directly by the people so that he/she has no excuse to indulge in political horse-trading or buying-off of the M.P.s for the sake of “governmental stability”. This, too, may need to be debated more seriously than at present. Similarly, the upper house of the parliament, the National Assembly, could be reconstituted to make it nationally much more representative and given functions that are more

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substantive than at present. Fourth, on the conduct of elections themselves, several recommendations are on board already, some of which are being implemented by the Election Commission. The use of voters’ identification card in polling is one of them. This needs to be expedited. Similarly, the code of conduct for parties and candidates for elections that is agreed upon needs to be enforced diligently. The expenditure limits should be enforced as should be the other “do’s and don’ts” with regard to the various instruments of election campaign. In particular, penalising large donations or large expenses for elections would also have the salutary effect of enabling competent men and women of integrity to enter politics and contest elections. Should the political parties agree to move along the lines suggested, they should have no difficulty in undertaking additional “administrative” steps to further empower the Election Commission in the interest of free, fair and timely elections. The powers and functions of the Election Commission may have to be redefined with special reference to the constraints imposed on the commission’s independence and effectiveness by the financial and administrative controls exerted by the party or parties in power. Legal provisions that have proved to be an impediment to timely election need to be changed. For example, the provision that local polls must be conducted in a given development region simultaneously and on the same day gives no flexibility to the Election Commission to hold interrupted local elections in a staggered manner.

12.3.3 Reforming the conduct of constitutional bodies Nepal is reputed to have one of the best constitutions of its kind. In practice, however, the constitution can be only as good as the performance of the institutions envisaged. Even if the constitutional process is working, one can not take for granted the performance of institutions inside the system. In Nepal’s national context, for instance, it has been stressed that while the constitutional process is working well, the political institutions have not. But it may be difficult for the constitution to preserve its legitimacy while state institutions lose theirs, at least at the popular level. This must be remedied.4 Legislature. The abstract concept of “people’s sovereignty” as sanctified in the

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constitution is given substance by the conduct of the sovereign parliament. However, when the parliament is behind in the fulfilment of legislative responsibility and is not assertive in its oversight role with regard to the functions of the executive and other constitutional bodies, it creates a sinister vacuum in the state structure itself. It is true that members of the parliament are generally handicapped by the lack of resources necessary for them to function professionally and competently.5 But the loss of their credibility is precipitated more by their personal conduct rather than by any genuine lack of institutional support. The credibility of parliament is threatened by many weaknesses: (a) the tendency of M.P.s to flout the spirit of party system in the parliament and the apparent inability of the speaker of the house of representatives to do anything about it; (b) the general perception that M.P.s are busy looking after their own personal interests rather than the role envisaged for them as legislators; (c) the widely publicised misuse of state resources for the benefit of the M.P.s, e.g., increased pay and perks, duty-free privilege for imports of personal vehicles, irregular expenses for transport, communications, medical benefits, international travels and so on. That the parliament is functioning under the provisional bylaws passed by the interim government and has not found time to formulate a more comprehensive and systematic set of regulations (according to articles 63.1 and 63.2 of the constitution) for the conduct of parliamentary business is an example of the negligence of duty by members of the parliament. There is also a need to remedy the controversy with regard to the possible conflict of interest when a person elected as speaker of the House is also an important functionary of a political party. Requisite discipline in the conduct of the members of parliament can come about only with improvement in and sincere implementation of the principles guiding the affairs of political parties. Just as importantly, however, there is a need for looking into areas where a structural improvement can produce better parliamentary output. In this regard, parliamentary committees must be made more powerful and accountable. This is so especially with regard to the oversight functions the parliament is expected to play in respect of the performance report of constitutional bodies. Even the Auditor-General’s report tabled in the House and discussed in the appropriate committee of the parliament is not effectively

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acted upon by the parliament. Some noise is made regularly with regard to the acts of commission and omission of various organs of government leading to misuse of public money. But rarely is a person found guilty and convicted. The parliament is similarly helpless with regard to the reports of cases of lack of cooperation by the executive to the Public Service Commission and the Commission for Investigation of Abuse of Authority. That the parliamentary committees are structurally weak, and remain without the services of a chairperson for long periods, erodes their efficacy (see 9.4). Council of Ministers. The constitution of Nepal envisages a cabinet system of government, not a “prime-ministerial government”. The governing principle is that the prime minister and all other ministers are collectively responsible for all matters proposed and decided upon by the council of ministers. Yet, ministers publicly have expressed opinions against certain decisions of the government. This implies that proper procedures are not adopted with regard to the preparation of agenda and recording of discussions and decisions in the cabinet. Each minister should be responsible, in particular, for the affairs of her/his ministry. Avoidance of undue pressure for the promotion of policies and persons from the office of the prime minister will limit the possibility of a mismatch between authority and responsibility along the vertical and horizontal strata of government. The tendency to increase number of ministries and number of ministers to handle them has led to an increasing problem of coordination. When the first elected government of post-1990 Nepal established its first Administrative Reforms Commission (ARC), the latter had recommended that the number of ministries be reduced from 21 to 18. Now, however, there are 26 ministries supervised by an even larger number of ministers: instead of increasing the number of ministers and ministries, the prime minister and the council of ministers should consider making a more intensive and rational use of the National Planning Commission (NPC). A politically inspired and professionally and technically competent NPC can provide the specialised inputs and the cognitive forum for substantive coordination of policies and perspectives which individual ministries cannot. Unfortunately, the NPC, as it is structured and used now, may not be able to function as a source of sound advice and specialized assistance to political decision-

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making. The government needs to decide whether NPC is to be developed as in institution which is a part of the regular decision-making process, a think-tank or an organisation to be used by the prime minister and finance minister on an ad hoc basis to meet exigencies of one kind or another. In the least, NPC should be a repertoire of information on development, a clearing-house for development research and an authentic source of statistical verification when there are discrepancies. The ministers individually and collectively can themselves bring about a massive improvement in their adherence to the principles of accountability and transparency. For example, there are increasing attempts to justify illegal acts, and abuse of authority by ministers by invoking similar acts committed in the past by other ministers. Democratic sense would require that every public functionary should come clean on his/her own regardless of what others do or have done. If some members of previous government(s) in the past have committed an illegal act, the job of the incumbent is to prosecute them, not to follow their path. Judiciary. The constitution of Nepal is far above the standard of other countries in the region in guaranteeing independence of the judiciary. It is essential that this provision be proportionately sensitive in delivering justice. A good sense of justice can also inspire judicial activism of a nature which can directly contribute to human development. From the point of view of human development and social justice, the fact that the most significant part of the constitution, the Directive Principles and Policies of the State, is not enforceable in a court of law is not very helpful. Yet, an active judiciary can inspire the government into thinking that an important provision that is written into the constitution is not meant to be ignored either. A clean, competent and sensitive judiciary must be developed along these lines for which the legal profession and the larger civil society should be encouraged to provide necessary support (see 1.6.1 and 9.5). There is an increasing tendency to explain away the growing corruption in the judiciary by arguing that “the judiciary, too, is a part of the society” and therefore prone to all its ancient and modern evils. However, the difference is that the “society” has no sanction, even a theoretical one, over the judiciary as it does over the legislature and the executive. Legislators can be punished at least in periodic elections if people so wish. On the contrary, tradition has it

that unelected judges can hold sovereign citizens or their elected representatives to contempt of court should they feel that their honour or pride has been bruised by some critical remarks made. There is a need to reform this anachronistic system to suit the norms of accountable governance, including judicial governance. Judiciary must also develop its own system to check corruption. In addition, the prime minister and the council of ministers, in cooperation with leaders of the opposition, where necessary, must take measures to streamline the functioning of all important constitutional bodies. In particular:

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• The Constitutional Council must not be subjected to perverse influences which may convert it into a body for sanctioning appointments to critical constitutional organs against the spirit of the constitution. The perception that the prime minister and other members of the Constitutional Council apportion among themselves the posts available for new appointments − as in a syndicated arrangement − must be rectified both in procedure and conduct. • The Judicial Council must be encouraged to consider the development of a clean and competent judiciary as its principal responsibility and to execute appointment, promotion and termination of service of the judges accordingly. • The Commission for Investigation of Abuse of Authority (CIAA) must be empowered and given access to necessary resources through appropriate legislative initiatives. At the same time, it needs to be stressed that the CIAA must reform itself internally to be able to effectively use the authority it possesses. For example, earlier, the CIAA had a valid grievance against the CIAA Act of 1991 which denied it a direct jurisdiction over cabinet ministers and members of parliament and some other public functionaries. But this restriction was judged constitutionally ultra vires by the supreme court in 1996. Yet, there is no evidence that the CIAA has felt “empowered” by this verdict. • The unconstitutional practice of ignoring the Public Service Commission by the government in the recruitment, promotion and punishment of civil servants must end.

• The cabinet must be limited to a reasonable size by law if not through a constitutional

amendment itself. If the political parties cannot safeguard their honour and refrain from indulging in minister-making competition beyond the capacity of the country’s economy and the imagination of the citizens, the constitution should do it for them. Limiting the size of the cabinet would also release more MPs for their parliamentary duty including committee work.

12.3.4 Honouring the civil service There have been times in Nepal when the civil service had a better reputation for competence, integrity and professionalism than at present. This means that the pathology currently permeating it is not necessarily a product of the country’s bureaucratic culture. It also means that problems can be remedied through earnest efforts at the political level. The place to begin is to start honouring the civil service, instead of subjecting it to degradation of different forms, so that all public officials can learn to honour citizens and be sensitive to their aspirations in a democracy. Only when the politicians are “civil” to the civil servants, the latter will be “servant” to the people. It is unfortunate that the role of the clean and competent bureaucracy in the muchapplauded development of some East Asian countries is not emphasised as much as the role of the market economy. The ethos of favouritism, nepotism and other loyalties over merit and professionalism in public administration has its roots in the feudal traditions of the Nepali society. The latter has always emphasised patronage, kinship and similar relations that are dysfunctional to development (Panday 1989). But with gradual exposure to higher education, training and access to specialised knowledge, and the general impact of the country’s “modernisation project”, the performance of civil service was improving fast until it began to be subjected to direct abuse towards the end of the ’70s. With the advent of democratic political order, it was reasonably expected that the open, transparent and accountable political system would build on the positive aspects of the civil service traditions to contribute to democratic governance and economic and social development. However, it is now obvious that the inexperience of the political leaders in government affairs, in general, and their inability to understand the concept and norms of a “permanent” civil

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service, in particular, has unfortunately led to a rapid deterioration in the standards and performance of the civil service. More bluntly, the political parties, for whose reinstatement people struggled against the Panchayat regime for thirty years, may have dishonoured the civil service more than any autocratic regime. Nothing can be more degrading to civil service than its polarisation along party lines, as when the distinction between government business and party business gets blurred and overlapped. Acceptance of this bitter truth is a prerequisite for the implementation of remedial measures about which, with the reports of numerous administrative reform commissions and national and international advisers and experts generally pending, no new wisdom may be necessary. The report of the first Administrative Reform Commission (ARC) of the first elected government of post-’90 Nepal still awaits its implementation. The technical aspects of the necessary reform are well-covered in the ARC report including the need to restructure and rationalise the civil service and its size, need for administrative autonomy, system of reward and punishment, delegation of authority, simplification of working procedures, controlling corruption and proper monitoring and evaluation of works and methods (ARC 1994). At a substantive/political level, without improvements in which technical/procedural reforms cannot take shape, there are similar recommendations made by various national and international teams that need immediate consideration and commitment of the country’s political masters such as: • First, as a recent report of an international team (IDEA 1997: 19-21) puts it, the ministers should be discouraged from becoming involved in decision on matters of personnel management within their departments. • Second, civil servants cannot be allowed to be unduly harassed by party cadres, commanded by political party leadership, or pressurised to be involved in electioneering or party conferences and meetings. • Third, frequent transfers of civil servants for any purpose, other than the purpose of the state, must be checked. Ministers must be barred from employing their supporters en masse whether there are vacant posts or not. The rights and responsibilities of the Public Service Commission must be respected. • Fourth, a living wage, security of tenure and post-retirement security that civil servants

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Systemic improvements in state institutions, political parties and civil service that should result from the reform measures discussed above should limit corruption substantially. Personal greed and similar aberrations become easy to fight − perhaps it will be possible even to ignore them − if systemic corruption is reined in through institutional reforms as suggested in the case of, for example, political parties and their funding. More, however, can be done and, indeed, must be done in this respect. First, just because corruption is everywhere and has become more pervasive than ever does not make it legitimate or irreversible. As global a phenomenon as it is, it is also accepted globally that corruption corrodes every fabric of human society, subverts the political process, deranges social values and makes the economy extremely inefficient. If reinvigorating the state is essential for human development, corruption must be combated as an adversary responsible for most other shortcomings of the society. Second, there are now welcome developments in the international arena that must be tapped. It should not be overlooked that amidst violence, social strife, and political hypocrisy, a battle against corruption is now being waged. In the international arena, the subject is no longer a taboo in professional discourse. The end of the cold war and the gradual withdrawal of support by superpowers to their corrupt client regimes in the third world has exposed corrupt rulers to

risks on a truly unprecedented scale. Even as the spread of the market economy has led to a new “eruption of corruption” in many countries in the world today, there are good omens in some other respects. For the first time, the industrialised countries in the capitalist world show an awareness that increased corruption in the developing countries can hurt their economic interests as well. This has led to many constructive initiatives in countries and regions where policy-makers and opinion leaders were hitherto explaining away − if not exploiting − corruption (in Nepal, as elsewhere in the developing world) as an inherent element of the inner cultural structure. In this context, the emergence of Transparency International (TI) as an international movement against corruption is particularly noteworthy as a significant development of the ’90s and a welcome event. It has been instrumental in raising global awareness against corruption, building national and international coalitions and disseminating information on building and consolidating national integrity systems6. The emphasis that TI places in networking with like-minded movements and activities is inducing greater interest in a collective effort to realise clean government and corruption-free international trade and financial transactions. In the area of “grand corruption”, which takes place in international procurement, affecting the very economic and social foundation of the schemes for which the procurement is made in Nepal, the most important development has been in the work that is being done within the OECD. The group of 29 member countries, that produce 70 percent of the world goods and services and international trade and some 90 percent of international investments, has been as much a source of corruption in the developing world as the source of weaknesses in their own political and administrative systems. After many years of efforts, the Council of Ministers of OECD has now recommended, among others, that the member countries “criminalize the bribery of foreign public officials in an effective and coordinated manner by submitting proposals to their legislative bodies by 1 April 1998 and seeking their enactment by the end of 1998” (OECD 1997). Resolutions against corruption have been passed or adopted in the United Nations, the European Parliament, the Organisation of American States and similar forums. The Global Coalition for Africa has just announced a programme of action that includes

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are entitled to are issues about which the political leadership cannot remain nonchalant and non-committal forever. Civil servants, too, need to remain politically neutral and follow dispassionately the policy guidelines of the elected government for execution and follow-up as directed. The political leaders must display their good judgement in creating an environment where civil servants can express their dissenting views as long as they are professional and without any political motivation. This should give the bureaucratic leadership the confidence and selfrespect it needs to be efficient and effective in the discharge of its duties. It is also necessary to review the regulation concerning the association of civil servants. The right of the civil servants to organise themselves needs to be protected. At the same time, it is also imperative that these associations be delinked from any relationship with political parties.

12.3.5 Combating corruption

a “model for procurement.” Leaders of six African nations have reportedly agreed to write to the World Bank president pledging that they will stop bribery. The Lima Declaration issued at the end of the VIII International AntiCorruption Conference in September 1997 is a very potent document in this respect, which recommends actions at the international and regional levels and the national and local levels for mobilisation of efforts to combat corruption. International financial institutions, like the World Bank, are revising their procurement rules to make the bidding procedures and related transactions transparent and to discourage bribery. The International Monetary Fund has shown in the case of Kenya that it can withdraw its support to a country on the grounds of corruption by its leaders. These are all good news. The donor representatives in Nepal, together with the political and administrative leaders of the country, can consider these developments and benefit from the experiences elsewhere as they too fight corruption in a collaborative manner. In simple terms, corruption is understood “as misuse of public power for private gains”. Broadly, there are three types of such corruption: petty, political and grand. Petty Box 12.3

Seven principles of public life

Selflessness. Holders of public office should take decisions solely in terms of public interest. They should not do so in order to gain financial or other material benefits for themselves, their family or their friends. Integrity. Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisation that might influence them in the performance of their official duties. Objectivity. In carrying out public business, including making public appointments, awarding contracts, recommending individuals for rewards and benefits, holders of public office should make choices on merit. Accountability. Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office. Openness. Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands. Honesty. Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest. Leadership. Holders of public office should promote and support these principles by leadership and example. From the "First Report of the Committee on Standards in Public Life" (UK 1995).

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corruption may not affect economic efficiency much (economists and management experts may even justify it in a country like Nepal, given the extremely low pay in Nepal’s public service), but it may affect human development most. Petty corruption also happens to be pervasive, thus affecting the largest number of citizens, both as bribe-takers and bribe-givers. If the latter group is subjected to extortion, the former loses its self-esteem. Human dignity is damaged in both cases. Political corruption, too, hampers human development in more ways than one. It subverts democracy and the fundamental right of the people to choose their own government. It affects economic efficiency because political corruption translates itself into wrong economic decisions. It affects human development directly because it creates inequities and reduces the level of resources available for investment in the interest of the common citizens. Grand corruption, which is distinguished from others because of its scale (as the adjective used implies) and the linkages with the outside world (in Nepal’s case, with the foreign aid system, in particular), is linked with political corruption because corruption of this nature and scale cannot take place without the support and collusion at the political level. It affects every aspect of human development − democratic process, economic efficiency, social equity and sustainability of all efforts for development. After all, it is a perception of unsustainability which prompts corrupt leaders to stack up their stolen money in “Swiss banks”. Petty corruption can be controlled by allowing emulation of good conduct at the higher level and by revision in the pay scales. But this will not happen until political and grand corruption is checked effectively. The analysis and suggestions made here for the reorientation of the polity should help address the problem of political corruption to a large degree. They should also help manage conflict of interests of all strata of functionaries in public service. The values and tasks involved are similar to the recommendation of the Noolan Commission in the United Kingdom (box 12.3). These efforts, together with the impact of the international initiatives just cited, should start impacting on grand corruption as well. In Nepal, there is a need for the creation of an environment where donor representatives can be sensitive to these developments so that the reform process could be expedited. Firstly, the donor agents should not feel pressurised to expedite disbursement. This point needs no

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elaboration in a country where so much waste of resources takes place when the targets have to be met even though the institutional foundation necessary for them is not available. Donors should not promote or provide resources for any activity which is illegal in the country. This includes granting of extra-systemic payments and privileges to public servants. They should consider a better way of supporting the country’s civil society institutions. At present, many civil society institutions and agents themselves are perceived by the people to be corrupt. If corruption is defined more inclusively by calling it an abuse of any “entrusted power” instead of just “public power”, the civil society will first have to reform itself and then help reform the private sector and the government (see 12.4 and 12.5). The donor community can help to bring about a degree of transparency in its transactions with the civil society institutions including the NGOs so that the latter are not deprived of the credibility they need to be effective in their mission.

12.4

DEEPENING DEMOCRACY

The compact to be promoted and negotiated among the political forces will be incomplete and prone to all the pitfalls of social and political exclusion if communities and people at the grass-roots and at the middle level in the districts are not a part of the process. This also means that there is a need to reorient the concept and practice of governance in the country. Too often, there is a tendency in the media as well as policy debates to evaluate constitutional performance on the basis of the activities of the central-level state institutions. In fact, the state itself is identified with the central government and the activities of the central government with the totality of public governance. This gives a wrong impression of our understanding of the concept and spirit of democracy. If democracy is in fact to be relevant for all, it has to become manifest in the structure and functions of local institutions involving the local population to the maximum degree. Localisation of governance increases effectiveness of democracy, helps to combat corruption and enhances relevance of development actions. At another level, when the central government is equated with state, the failures of transient central governments are read as a generic failure of the state. However, the state and the totality of public governing institutions are much broader than the units of central

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government. Institutional arrangements in support of democracy and good governance must express this reality fully. A proper understanding as well as actions towards deepening democracy by involving all stakeholders in the process thus becomes urgent. Localisation of governance is a key remedy against a centralised democracy. In a way, people know “government” does not mean only a central government, especially in the rural districts, where they are subject to exploitation and extortion of different kinds − from district administration, from local leaders, from the police, from the forest rangers and even from some non-governmental initiatives, not to mention the ancient and modern tharis, mukhiyas and zimmawals, the feudal lords. All such institutions and practices need to be democratised for the state and the polity as a whole to become democratised. Likewise, they should be made responsible and their capacities augmented for rechanneling their energy towards development. The private sector, too, needs to be drawn into the compact. This is not the age to regard the private sector as the adversary of development − even human development. Finally, there are people themselves, organised as social communities, professional associations, or citizen groups of various kinds. They will have a critical role to perform in the reorientation of the polity. Popular involvement will also create an enduring vested interest in favour of democracy.

12.4.1 State of local government Nepal has a system of local governments at the district, municipal and village levels. The country can take pride in the fact that it has elected leadership in charge of all of them. However, legislation and policies for the actual empowerment of these bodies are seriously wanting in effect. Local governments are not empowered to act independently and autonomously even in the designated areas of jurisdiction. In terms of the capacity of the communities to take care of their own affairs, it is required that a structure of local selfgovernment be established at different levels in the society. According to the legislation, VDCs have been given seemingly wide-ranging functions. Their responsibilities lie in all sectors, including education, culture, health, population, agriculture and irrigation; forest, environment and

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energy; drinking water; transport and construction; industry, tourism, social welfare and others. In practice, however, everything has meant almost nothing. Most of these responsibilities are executed at the command or discretion of the Centre, not in terms of autonomous political or statutory powers. When functions are not prioritised and when they tend to include everything under the sun, the unspecificity of the regime helps only to maintain the status quo in favour of the allpowerful Centre. Municipalities have been given such diverse functions as creating jobs, organising civic receptions for visiting dignitaries, managing water resources for supply of drinking water, controlling flood and other calamities, designating protected areas, conserving archaeological heritage, promoting trade and commerce, developing public health facilities and providing compulsory education to children. They can levy specified taxes to access resources necessary for the performance of the designated functions. At the moment, however, bulk of the resources comes from only two sources: octroi and central government grants. DDCs in Nepal are the principal units of development and administration next to the central level. In theory, a DDC is empowered to forward for approval of the District Council development-related projects formulated by the government and semi-government offices. Once projects are approved, it can supervise, evaluate and issue directives as and when necessary, coordinate projects run by non-governmental organisations, sponsor human resource development programmes to build technical and managerial skills, implement district level programmes with grants received from government, finance town and village level development projects from allocation received from the centre, monitor such projects and implement the district level programme. It can, moreover, audit accounts of VDCs, prepare income/expenditure estimates, allocate resources to projects and programmes and submit them to the district council for endorsement, regularise irregularities noted in the audit report on the accounts of VDCs and take action against the defaulters. It can also resolve disputes regarding village level projects, settle controversies with respect to public properties between the VDCs, designate villages with township potentials and give directives for physical development of those villages and preserve and promote the ethnic, linguistic and religious culture of

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different groups of people. In practice, however, even the post-’90 governments have shied away from empowering the VDCs and DDCs to enable them politically and financially to execute the functions entrusted to them. VDCs have no predictable and autonomous access to financial and technical resources to take charge of these functions in a systemic manner. Similarly, for example, if the preservation and promotion of ethnic, linguistic, religious and cultural values and properties are legally the responsibility of the VDCs, they cannot even decide what will be taught and who will teach at the primary schools in their areas. Even with the initiation of the Build Your Own Village Programme yourself or Swabalamban and the relatively large sum of money involved as central grants, the roles and functions of VDCs (or DDCs, for that matter) have not transcended the traditional realm of small-scale public works − the unsustainable rural roads, in particular. The possible remedies have been discussed in several reports including that of the high-level Decentralisation Commission. In this context certain basic guidelines that may be considered as parameters for future action are: • First, one of the issues engaging political and social sciences today is the state of the nation-state, and the challenges and opportunities it faces in the 21st century. Nepal must learn from this debate and adapt its intra-state institutions accordingly so that regions and groups do not become alienated from the Nepali nation-state. • Second, the basic guidelines for devolution and structuring of the local government institutions (LGIs) should be written into the constitution through its amendment.7 As the country proceeds to do so, the potentially divisive debate on a unitary as against a federal system can be avoided. The issue is about empowerment of the people and communities, not simply dividing the power and responsibilities of the government between its different layers. In Nepal’s neighbourhood, India’s federal system − and the division and expansion of constituent states along linguistic and other lines − did little to empower the grass-roots people and communities until the recent elections for Panchayat Raj institutions sought to rectify the situation to some extent. Even in the institutional arrangements concerning the centre and the

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state, India thought it proper and desirable to have a unified administrative system. In Nepal’s case, the lack of independent administrative machinery is a principal problem for the LGIs in the exercise of even the limited powers delegated to them. • Third, if the localisation of governance is to induce maximum participation of the people, the country has to find a way of enlivening certain local government structures that are virtually superfluous at the moment: the district assembly, the municipal advisory assembly and the village assembly. The purpose of these provisions is to make local governments accountable to the electorate. In addition, they can also be an effective instrument of human development, should they be given adequate responsibility, resources and powers to handle subjects where their competence cannot be in doubt. There are various suggestions now lying with the government to enhance the effectiveness of these bodies including the series of reports submitted by international experts supported by the UNDP.8 They include measures for changing membership to make them more representative and inclusive, for restructuring institutions at various levels for better coordination of their activities and procedures, as well as for enforcing accountability and inducing mobilisation of local resources.

formulating policy guidelines, the job of the line ministries should be mainly to facilitate DDCs and VDCs in exercise of decentralised functions by the latter. Obviously, devolution also requires a fundamental change in the structure and processes of national planning.

12.4.2 Towards an effective civil society

Decentralisation takes place only when the decentralising authority gives up some powers in favour of the lower units to whom they are decentralised. The tradition, on the other hand, has been that most powers and functions which are “decentralised” also remain with the Centre. Such trivialisation of local government is manifested, in most concrete terms, in the virtual absence of an administrative machinery belonging to the district “Governments” which are saddled with staff appointed by the central ministries to whom they are accountable. The controversy that erupted sometime ago between the Association of District Development Committees and Ministry of Local Government concerning the authority to appoint technical assistants to the DDCs is a good indicator of the pervasive tendency towards centralisation. Any consideration for devolution of power should include in it the concurrent requirement of revision in the objectives and functions of the line ministries at the centre. Apart from

It has been said that the “development business has spent three decades betting on the state and one decade so far gambling on the markets. It is time to try a third, to hedge those earlier bets through checks and balances on the excess of state centralism and market cruelty” (Pope 1996). Nepal, with its weak and incipient civil society institutions, will not be in a position to play such critical role unless conscious and conscientious efforts are made by the state as well as the civil society to render the latter fully independent and effective. Civil society comprises those organisations and activities that support the democratic functioning of the state and complement the state as well as the market in relation to the performance of functions that serve the public good. The academia, professional associations, media and NGOs qualify for civil society membership. “Pressure groups” of various kinds qualify as well − but only if their orientation fits in with the criteria just alluded to. As Alexis de Tocqueville would argue, the consolidation of democracy in the United States of America need not be credited so much to its constitution or its Congress as to the “proliferation and vigour of ‘a thousand different types’ of associations of citizens pursuing its common purpose” (Pope 1996: 35). Any policy or programme for enabling the civil society must consider how such “associations” can be created and sustained by people’s own efforts. There are three related roles for the country’s civil society. One, it has to play the role of a dispassionate watchdog necessary in a democracy in order to ensure that all political institutions are functioning well as envisaged in the constitution. Two, it becomes the mediator between the market and the state when it comes to resolving the conflict between the two in the interest of the people. Third, if state is about power and market about profit, the civil society is about disciplining both even as it recognises the uses of both power and profit as energies that can drive the state and the private sector to the fulfilment of the needs of citizens and consumers. This means that civil society itself

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cannot be driven either by power or profit. This reasoning automatically bars profit-oriented institutions, including private corporations, from membership in the civil society. Many donors, taking cognisance of the fact that creating democratic political structures alone would not result in democratic functioning of the state, have tried to support the process though various “democratisation projects”. On the positive side, these efforts have helped to build awareness both among the political classes and citizen groups. At the same time, however, these efforts have also created a condition of dependence of many activist institutions and groups on foreign resources which may have effected their credibility as well as sustainability. Dependence on the external sources of funds has also meant a lack of balance in the agenda and priorities of the civil society. Many civil society institutions have successfully sensitised the political leadership and functionaries to many important issues including human rights, environment and gender equality. But they have not been as successful in democratising state institutions or sensitising political parties to the need of debating values, reorienting priorities or, generally, just being sensitive to the agonies and aspirations of the common woman and man. Essentially, reform within the civil society has to come from within. Such reform is of fundamental importance. The future of Nepal’s democracy depends substantially upon the success of the civil society. However, the civil society, too, must be legitimate. Major civil society institutions must also become autonomous and find a way towards financial independence. The universities must reform themselves along these lines. The NGOs must do the same. In these respects, the media may have the most important role to play.

12.5 CREATING A SOCIALLY RESPONSIBLE PRIVATE SECTOR Democracy as a system of governance needs to be a part of a world order based on solidarity and justice (Panday 1996). However, the globalisation process, as it is unfolding, has yet to show the requisite sensitivity in this respect − even as the need for it has become more manifest than ever. The process does not even recognise that globalisation as a promoter of global capitalism does not embrace in its fold the whole of the private sector. There are large

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numbers of entrepreneurs and small firms and people engaged in various trades and craft that “have only indirect relationships with transnational corporations and international financiers” and have much “to fear from global capitalism” (Danida 1996: 66-67). Under the circumstances, Nepal’s private sector, almost all of which falls in the category just described, has a community of interest with the larger Nepali society with or without globalisation. The private sector can generate sustained benefits from the globalisation process only to the extent that the Nepali economy as a whole is strong enough to provide the base for its development. This cannot be done by unbridled pursuit of profit impervious to the needs of the larger society. A socially responsible private sector can provide support to the reorientation of the polity for human development in many ways. We can only briefly list them here. First, its wealthgenerating activity must take place within the fold of employment-creating need of the society. It is already doing so in the sense that the government is no longer the only important employer in the country. It has to do more especially as it makes its decision on the choice of projects, technology, use of (local) resources and the content and form of foreign collaboration. Second, together with the state, the private sector has a responsibility for addressing the social issues raised in support of human development. The question of equity, justice, regional and ethnic balance in development, women’s rights, child welfare and the future of the eco-system are subjects that should be, as a matter of routine, of concern to the private sector. It should not be difficult for the private sector to reorient itself in this direction because social stability and the future of the country’s economic growth − not to mention private sector profit − will depend upon how these issues are handled. Third, the private sector has to practise, encourage and support the ethos of solidarity in management. Industrial peace cannot prevail just because there is a wish for trade unionism to be devalued. There must be justice and labour must perceive a sense of partnership in the decision and activities of the management and, as stakeholders, feel proud of the establishment it is associated with. Fourth, the private sector should support all good initiatives of the state and the civil society for combating corruption. It must respect the laws of the land, pay its taxes and be accountable to citizens. Finally, it must promote professional

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business practices in the country. The leading houses must take the lead and draw inspiration and guidance from what is happening elsewhere. Professional business practices mean more than the use of new technology, office systems and modern gadgets. Above all, professionalism is about values − especially the value of integrity, discipline and organisation. Professionalism is about self-regulation, which alone can justify deregulation by the government. At a time when innovative and socially responsible business sectors in the world have begun to practise “ethical accounting” of their work as a “means of operationalising ethics and value-based leadership” in their organisations (cf. Pruzan and Zadek 1996), Nepal’s business houses are still widely believed to be keeping two or three books of accounts, for example. Such practices are gradually becoming a handicap even for the business expansion and profit of these houses. As banks modernise themselves and become keen to base their credit transactions on the creditworthiness of the prospective creditors, however, they would want the latter to be transparent about their financial performance

and net worth. Unless the private sector practices are reformed, it will be subjected to all the shortcomings and constraints generally considered to be the monopoly of the public sector. If the genuine interests of the workers are not heeded in the work they do, the overall productivity is bound to suffer in private enterprises also. Indiscipline, conflict of interest of employees and cases of outright corruption by their staff already beleaguer many private sector houses. There are also cases of partners and shareholders involved in conflict on account of the alleged misappropriations of funds by one against the other. The owners and managers of private business houses can remedy these ills only by improving their own behaviour so that their moral clout supplements their financial clout as they negotiate internally with their staff and externally with the market forces. Such moral clout comes from an expression of social responsibility and practices of ethical accounting, as stated, which also help to monitor the extent to which the organisation has been faithful to its social commitment in practice.

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CHAPTER 13

Reorienting Economy for Human Development …The State shall create conditions for economic progress of the majority of the people, who are dependent on agriculture, by introducing measures which will help in raising productivity in the agriculture sector and develop the agricultural sector on the principles of industrial growth by launching land reform programmes. Constitution of the Kingdom of Nepal 1990 Socialism is the longest path from capitalism to capitalism. A popular joke circulating in Eastern Europe What should be the end of man and how should he choose his means? Economic rationalism, in the strict sense, has no answer to these questions, for they imply motivations and valuations of a moral and practical order that go beyond the irresistible, but otherwise empty, exhortation to be ‘economical`. Karl Polanyi [There is a need for] unification of the two conflicting development paradigms: the UN paradigm of sustainable human development as expressed in the UNDP Human Development Report and the paradigm of growth based on macroeconomic discipline and market orientation underlying the Washington Consensus of the Bretton Woods system. Both paradigms contain important elements of truth waiting to be reconciled and combined. Hans Singer 1996

13.1 RATIONALE

T

he basic structure and trends of the Nepalese economy as discussed in the previous chapters reveal Nepal as a subsistence economy heavily dependent on agriculture. Per capita income growth is very low and skewed in favour of non-agriculture and urban households, resulting in the deterioration of rural household incomes. During the last two decades, there was no growth in per capita agricultural GDP. The unemployment/ underemployment situation is acute in the agricultural sector due to the seasonal character of farm activities and severely limited employment in off-farm activities. Incidence of underemployment is higher in the rural areas than in urban areas and among the female labour force. Agricultural land, the main productive resource for most of the households, is unevenly distributed. The size of more than two-thirds of landholdings is below one hectare and land fragmentation is a serious problem. Disparity in the distribution of productive assets (particularly land) and income earning opportunities has a significant bearing on income distribution (see 7.3 and 7.4). There is

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also a marked variation in the spatial distribution of income: per capita income in both the Hills and Tarai is 1.6 times higher than that in the Mountains. It is 2.5 times higher in the urban areas than in rural areas, and nearly 4 times higher in Kathmandu than in the rural Hills of the western region, an area with the lowest level of per capita income. Gender disparity in income distribution is acute due to the control of the male members on family income, absence of property rights for women and unpaid family work of the female labour force. The incidence of unequal income distribution has been reflected in a high proportion of the population falling below the poverty line. The incidence of poverty in rural areas is two-and-a-half times higher than that in urban areas. Given that 88 percent of the population live in rural areas, poverty is overwhelmingly a rural phenomenon. The growing share of the service sector in GDP and concentration of such activities in urban areas indicate a trend in favour of urban population. Disparity in the distribution of assets and income reflects widening gaps in opportunities and

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access to education, health, nutrition, and other facilities for better living. Hence, any effort to enhance human development must focus on the redistribution of assets and income along with attaining high economic growth. Nepal lacks even the minimum physical infrastructure for development. A large portion of the country is still inaccessible by motor vehicles; power supply is acutely deficient; and most of the arable land is still rained. Safe drinking water facilities cover not more than one-third of the population. Hydropower production is not more than one percent of the country's energy demand. Despite 40 years of planned efforts at development, people’s access to basic facilities is still very low and extremely uneven. The degree of deprivation is most severe in the remote hilly regions of the country. Development policies initiated in the framework of structural adjustment, liberalisation and privatisation have not yet been able to create an environment for “high quality growth”. More importantly, the policies have failed to address major issues like poverty, unemployment and income inequality. Ineffectiveness of reform and adjustment measures is explained partly by their failure to embrace agrarian reforms, while knowing that the latter have a significant bearing on poverty alleviation and employment generation. Similarly, no adequate social security measures have been taken to protect people vulnerable to the adjustment programmes. The current economic trends and policies are also inimical to the country’s environmental health. Agriculture has stagnated over a protracted period of time. The subsistence nature of agriculture is characteristic of low resource productivity which has a direct bearing on the country’s fragile environment. Low productivity in agriculture means that farmers need to continually expand the cultivated land area in order to produce more to meet their subsistence requirements. This compulsion has contributed to encroachment on forest and other public lands and cultivation on steeply sloping and marginal lands that are too fragile. A high-growth agriculture, on the other hand, implies that cultivation is confined to lands that are most suitable for intensive production where farmers can obtain an optimal return on their inputs. This means that only the environmentally robust and relatively more fertile lands will be cultivated, sparing fragile areas that could remain under forests or other forms of permanent vegetation. Thus, the need

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to reorient the economy is also prompted by the disappointing performance in the agricultural and rural sector and its serious consequence for the country’s environment. Indeed, employment, income and consumption are important economic determinants of human development. The manner in which the economy is structured and how it actually performs is equally important to realise human development as it is so for growth per se. A well-designed intervention, even as it supports economic growth, should, in turn, facilitate the generation and reproduction of resources necessary for increased household income and employment along a virtuous cycle. In addition, growth needs to contribute not only to private wealth, howsoever “justly” that might be distributed, but also to public revenue. In taxation policy, due care may be taken to avoid a disincentive to private enterprise and investment, as argued in the optimum tax or “supply side” economic literature. Nonetheless, it is imperative that public revenue is available to support economic and social infrastructure and the expansion and maintenance of human development-friendly services like education, health, drinking water and social security schemes. In addition, reorientation requires restructuring of public expenditure, firstly for a better prioritisation, and secondly, to cut out waste leakage, and unnecessary fat. What is usually known as structural reform in the conventional wisdom of today is a unidimensional and uni-directional shift in policies where it becomes coterminous with economic liberalisation and establishment of market economy. Clearly, both in theory and as observed empirically, this is not appropriate for Nepal. For example, analyses in the preceding chapters reveal that unless the growth process is broad-based, encompassing, above all, the rural economy, rapid economic growth cannot be achieved and sustained. And high economic growth, even if it is attained, does not improve human well-being, unless reform measures pay attention also to the distribution question. An exercise in economic reform, if it is to be indeed a reform, should bring in its fold measures for reorienting the broader economy beyond what happens or does not happen in the state sector. Besides, the structural barriers that remain unattended do not seem to permit a satisfactory performance even in areas that are within the ambit of current reform. Witness the financial profligacy when it comes to serving the interests of those in power.

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The need for restructuring the rural sector has not received much attention in today’s influential development literature, nor in actual practice, mainly because the task is beyond the designated agent of change, the market. But this only means, as emphasised here, that the role of the state in development cannot be belittled. Nepal has to look into the possibilities in such areas as redistribution of the most important productive asset, land, so that agriculture also gets “rationalised” and the rural households become a part of the reform process. Such restructuring and reorientation should also reinforce poverty alleviation measures, rising above the trickle-down process-based rhetoric on the relationship amongst the market economy, growth and poverty alleviation.

13.2 STATE VS MARKET: TRANSCENDING CONCEPTUAL AND POLICY BARRIERS The neo-classical assumption that an economy automatically finds its way to an equilibrium growth path in the absence of distortions introduced by government interventions just does not hold water, at least, in Nepal’s case. And nobody should recognise this better than Nepal’s development partners, many of whom have been involved with the process as long as the government and people of Nepal themselves have been. There is no institutional foundation whatsoever to permit the economy to move automatically towards industrialisation and export-led growth. The fundamental problem of Box 13.1 If poor performance alone were a sufficient ground for relegating the state to the sideline, it would pose an interesting problem. If, as everyone agrees in Nepal, the capability as well as the effectiveness of the state has fallen, this would be so not only with regard to its development role, but also its traditional functions that are still considered legitimate. The government appears increasingly unable to maintain law and order. The rule of law has little value even for those who are responsible for legislating or enforcing it. The concept of accountability is not observed in practice by almost anyone in power. The traditional revenue collection function, as an institutionalised process, is all but a sham. The driving license or even paying government levies and taxes generally attracts an “administered fee”, charged privately but openly. The government institutions that are there to combat corruption are perceived to be corrupt themselves. But can it be possibly argued that all these functions be taken away from the state, because the whole thing is in such a mess? If the state can be and has to be improved for the performance of these important functions −

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Nepal is that its institutions are nearly as primitive in content, as they were at the time the country launched its development campaign half a century ago. This uncomfortable fact of life cannot be brushed aside because without recognising it and responding to it, it is unlikely that Nepal will be able to harness the potentials of the market economy either. And, as we know from the examples of other countries, at Nepal’s stage of development, the required institutions are not automatically built by the market, but are created with intervention by the state. Furthermore, it needs to be acknowledged that the notion that “markets fail, but governments fail too often” is refuted by events, on almost a daily basis, by the current developments worldwide. An attempt to liberalise and privatise the economy, and give market a free hand in all the spheres of economic decision-making, has threatened economic stability and widened inequality in income distribution in many countries (see Taylor and Pieper 1996). The growing evidence of corruption, even in established democracies, is also attributed to the values that are promoted by the individualistic force of unbridled capitalism legitimised by market economy and the attractive idiom of globalisation. If the debate is not yet settled in the industrialised capitalist countries, it cannot possibly be closed in Nepal (Panday, D. 1997).

13.2.1 State as a resource It will be pointless to argue for the continuation Governance and incompetent state without it, the market economy will not survive − it should be possible to do the same about its capability in development roles also. This need should be viewed against the growing tendency among the donors to altogether bypass or circumvent the public sector in channelling development assistance. It is driven by the rather naïve perception that, since the public sector is corrupt and ineffectual, resources are better utilised if delivered to the beneficiaries through alternative channels such as NGOs and the private sector. Whether it is a deliberate attempt on the part of donors to further weaken the bureaucratic set-up so that the ubiquitous virtue of the private sector (read market mechanism) could be exalted, or whether it is based on a sincere but unrealistic impatience to help the Nepali people, there are numerous instances to demonstrate that resources mobilised through alternative routes have been even more misutilised. It is seldom realised that leaving the government out is like cutting out an infected limb. The solution, of course, would be to cure the wound rather than throwing away the entire organ.

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of a dominant role for an inefficient, corrupt and a regulation-driven, predatory government, which ultimately means it has no democratic attributes either. But, at the cognitive and policy levels, it must be accepted that the state, too, is a resource that must be harnessed, not wasted or subverted, as Nepal enters a new era of development (box 13.2). Regarding the respective roles of the state and the market, Nepal still has to find out what works and what does not work in the country. Such a search cannot be conducted fruitfully if important options are closed a priori. The best way to go about it is to begin the mission in full confidence that the debate in Nepal cannot be about the market against the state or vice versa. It has to be about a partnership between the two with the balance of power between them decided by the stage of development in all its ramifications, on the one hand, and “capabilities” of the state, on the other. If the state does not “behave” in a democracy, we have to look at the functioning of that democracy rather than question the legitimacy of a democratic state. This point is elaborated in chapter 12. Nepal’s current problems have partly to do with the incompetence of the state, no doubt; but the general pathology seems to have little to do

Box 13.2

State as a resource in liberal democracy

The state has always been a resource for those who are in power. Can it be the same for those who are powerless because they are landless, illiterate and unskilled, and have no productive resources except their labour? If not, should we not be bowing to the wisdom of Karl Marx, then, who, too, believed that the state would always be captured by those who are powerful, instead of burying him all over again. The legitimacy of liberal democracy in a country like Nepal is derived from the claim that its leaders can bring about the change needed to affect the lives of the people democratically and peacefully which communist regimes try to do through totalitarian or even violent means, when deemed necessary. Among the handicapped who need state as a resource are not only people who have been kept socially backward for economic reasons, but also those who are unlucky to be borne with a low caste or ethnic tag or as a female. These groups need resources which the market cannot offer. For this reason, state intervention has been necessary, historically, in all countries in the world to ensure that economic growth encompasses all sectors, regions and sections of the society and enriches the lives of all peoples without discrimination. In Nepal, too, even as the country pursues economic reform in favour of market forces, its obverse cannot be an abdication of its legitimate and necessary functions by the state.

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with the notion of an overbearing “big government”. Nepal’s is not a case where a socialistic ownership of means of production or the responsibility of a welfare state has overburdened government. The share of public sector output in GDP is less than 10 percent, though a firm estimate is not available. The private sector has been generally free to invest its resources where it wishes − though it has often been encumbered by bureaucratic excesses and controls and by malpractices that it may itself also have been a party to. Nepal’s total public expenditure, measured as a percentage of GDP, is approximately one-third of the average of OECD countries and significantly lower than that in the South Asian countries (figure 13.1). This is also borne out by Nepal’s falling “public expenditure ratio” discussed in the next section. For now, the leaders running the state should not therefore hesitate to adopt an “interventionist” − even radical − frame of mind, without submitting to the limits imposed on their cognitive faculty by the globalisation agenda and rhetoric. Of course, they should not submit to the predatory instincts of the traditional Nepali state either.

13.2.2 Scope for intervention reorientation

and

There is an impression that because of the globalization movement in the world and the country’s dependence on the forces driving it, Nepal has little freedom to set its own agenda on the role of the state in economic management. While this is partly true, it is also true that even

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without an encouragement or inducement from these forces, Nepal should try to tap onto the global capital, technology and market for their potential benefits in any case. However, it is another story if the externally driven set of policies or a particular theoretical framework guiding the set of policies is unsuitable, irrelevant, or contrary to the country’s vision of development and the associated perception of reality. In this case, nothing in the world can intimidate a nation from acting on its own judgement − provided, of course, that the leaders have the vision, will and capacity to make a judgement. At present, the process of economic liberalisation has set industry, trade and services free from government intervention. Most prices have been deregulated, many subsidies withdrawn and administrative regulations relaxed. State enterprises are being privatised. On the whole, the public sector is downsized and its share in aggregate consumption and investment demand has come down from 23.1 percent of the public expenditure ratio in 1985/86 to 19.9 percent in 1996/97 (table 14.1 in the next chapter). The government has maintained some role in areas, such as selective subsidies in food, fertiliser and credit, regulation of prices of a few essential goods and services, and targeted credit programmes and regulation of capital flows across the border. This is in addition to the role it plays in the implementation of development programmes through a development budget financed, in large part, by foreign aid. In the future, it would not be necessary to continue involving the state in some of these activities, while its policy and programmatic interventions may be needed in others. For example, incurring public expenditure for building irrigation schemes, especially if this step is accompanied by land reform as discussed below, should be more beneficial than for subsidising purchased inputs. Similarly, trade liberalisation may remain the mainstream government economic policy, but some attention has to be given by the state to the specific needs of domestic industries. First, the state may need to use its judgement with regard to decisions on the choice of industries and their location, technology (especially as it affects their employmentintensity) and sustainability from environmental point of view. Secondly, the domestic sector may need some incentives in order to provide it with the edge it might need to compete internationally. It is not the physical needs of

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specific economic or social sector(s) per se that should be the focus of attention or domain of distribution of responsibility between the market and the state. Instead, it is the human needs and potential of different interests and groups in society that require attention of the state. Finally, it needs pointing out that any argument against dependence on the market for the performance of a given function does not mean that the relevant role is surrendered automatically to the state. In Nepal’s context, the state means the central government which can be as remote from the ordinary people as the market. Experience tells us that people, especially in rural areas, need services and security for which they cannot access the central government just as they cannot access the market. For a large number of roles, people need to be mobilised as civil society agents in various forms of the social communities including non-governmental associations, and above all, as the elected autonomous bodies in charge of their own affairs. In this sense, there is a dual partnership involved in our vision of the roles of the principal societal agents in human development. The partnership needed between the state and the market has already been mentioned. This partnership has to be complemented by another − between the state and the communities of people variously organised (see 12.4).

13.2.3 Reorienting market and liberalisation Economic liberalisation as implemented in Nepal, as elsewhere, has meant: (a) internal liberalisation in terms of deregulation, delicensing and abolition or adjustment of “market-distorting” subsidies, rebates, taxes, and administered prices; (b) external liberalisation in terms of adherence to the spirit and norms of free trade in a global economy; and (c) privatisation of public enterprises as a part of the process of downsizing the bureaucracy, relieving the government of unnecessary burden from loss-making entities and encouraging private sector involvement in economic activities of all kinds. As stated in the beginning (see 1.5.6), some increase in the aggregate rate of growth of the economy can arguably be attributed to this policy. However, in terms of the overall objective of bringing about a dramatic change in the behaviour and performance of the market as well as the government, the results are still awaited. This is evident from the very slow expansion of industrial activities, poor

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performance of the trade sector and inclination of the private capital − domestic or foreign − towards service sector rather than on production and infrastructure sectors. There are many underlying conditions that need to be fulfilled for the market to function efficiently. The most important of them are: perfect mobility of factors of production between regions and industries, completely flexible commodity and factor prices, free flow of information about market conditions, absence of trade unions and absence of scope for cartelling and syndicating. If these conditions are not fulfilled, liberalisation may remove policy-induced or policy-imposed distortions but it cannot address the structural factors that do not allow relative price movements to reallocate resources to efficient sectors. There are many countries, among which Nepal is one, where most of these conditions are not met, and there is not a single country where all of them are. This is so even without taking into account the equity considerations for which alone many societies would deem it proper to intervene in the market, even if it was functioning efficiently. When markets are not functioning according to the rule-book, and when states do not or are not allowed to intervene, or when they intervene wrongly, the concerned economies suffer badly, and their people even more. This can be observed in many developing countries and in the transition economies of eastern and central Europe and, for that matter, even in the industrialised west, to some extent. In countries after countries, poverty has deepened due to the withdrawal of food subsidy and similar welfare benefits. Unemployment has risen. While the salaries and perks of the “captains of industry” rise − to astronomical levels in the countries of West − privatisation and downsizing adds to the burden of workers looking for a workplace and livelihood. Such a scenario cannot be a point of departure for a programme of human development. A major task ahead for the economic planners and policy-makers in Nepal is, therefore, to identify the areas and ways and means of adjusting the liberalisation paradigm to suit the reality of the country and demands of human development.

13.3 PROMOTION OF “HIGH QUALITY” GROWTH The conventional wisdom of today has it that Nepal needs to accelerate its economic growth in

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order to promote human development and alleviate poverty. This has all the virtues of a partial truth: there is more to the relation between growth and human development than what is implied. The case made in this report for reorienting the economy is that the growth so achieved must be of “high quality” along the line of what has been called “good economic growth”. Such a growth is not just high; it is also anchored on the elements that are supportive of human development. In other words, a good economic growth would be reasonably high while at the same time it should not be at the cost of social equity, and it should be sustainable. Above all, it should be based on values that promote human development now and safeguard its development into the future, and which empower all sections and strata of people in society. There are two ways in which growth assumes such quality and has impact on human development. First, employment and work are essentials in the life of a human adult providing for at least a minimally acceptable level of income and consumption. These enable the individual to acquire a decent life for oneself and one’s family, and participate in, and contribute to, the welfare of the community as a whole in a respectable and dignified manner. Such a minimally acceptable level of living for the majority of people is a precondition to preserve (sustain) their pride, dignity and respect that have been systematically eroded by growing poverty, discrimination and injustice. This lies at the heart of people’s empowerment. High economic growth can contribute to this process by expanding and creating new avenues of employment. A growth process that is not labour-intensive or job-creating is therefore harmful for human development. Second, high economic growth widens the scope for higher levels of public revenue enabling the government to allocate more resources for the social sector, particularly to the human priority sector. The process of empowerment is likely not only to enhance the level of income and support consumption needs but also to make growth more evenly distributed as it creates a favourable environment for making a creative and productive use of labour, the only resource abundantly possessed by the poor. Such an equitable growth is almost always more environment-friendly and sensitive to gender and other forms of social equality than the growth which is lop-sided in favour of one section of the population at the cost of another.

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The emphasis on restructuring of the rural economy has been guided by these considerations. Attainment of a broad-based and widely participatory growth enhances the capability of government to generate extra revenue and spend it on priority human development areas such as education, health and drinking water. These considerations are of critical relevance to Nepal which is burdened by low revenue performance, high degree of aid-dependence and an emerging threat of decline in aid flows. Therefore, the strategic planning for growth and prioritisation of sectors and activities should be tested for their impact on employment, equity (including intergenerational equity) and public revenue. The disadvantaged groups generally overlap with the rural inhabitants. It is, therefore, their future that should be at the heart of any discourse about the future of Nepali economy. We may begin with a question that may appear rhetorical, but that needs to be asked for the sake of clarity of the issues involved. What is to be done with and for the 88 percent of the Nepali population that resides in the rural areas, more or less divorced from the “national” economy, while the rest of the minority is presumably integrated with the globalised market and its associated development process? One likely answer is the government’s often-pronounced (from the Panchayat regime to now) twopronged development strategy1. With it, the government expects the urban economy to make a turn-around through liberalisation and operation of the market forces, while it itself concentrates on rural development and poverty alleviation measures. Yet, even in serious discussions and deliberations, the edge of the “second prong” does not get more than a hurried and abstract attention, as far as its operational dimensions are concerned. It is difficult to see how this dualistic process − resembling apartheid of some genre − is different from what the country has experienced so far. An exercise in economic reorientation for human development should try to get away from this conceptual bind and find a synergistic medium where the rural economy too gets restructured and integrated with the “national” economy to play its role as a part of the whole.

13.4 RESTRUCTURING THE ECONOMY Prima facie, it appears that Nepal has not yet found out what really works in the country in

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terms of economic transformation. A deeper probing would however suggest that a hindsight of the country’s own past experience in development and governance, and the success stories from her immediate neighbours and East Asian countries have provided ample clues to what this country needs to do in order to improve its economic performance and the living condition of the rural masses. In this sense, it would be pretentious to maintain that Nepal is still groping to invent a development strategy relevant to its diverse politicoeconomic, socio-ethno-cultural and agroecological condition. For instance, it was realised in the early 1960s that comprehensive land reform, combining a ceiling on holdings, protection of tenancy rights, improved land administration and rural savings mobilisation, is essential to transform the subsistence-based rural economy. The Lands Act of 1964 and the Compulsory Savings Scheme embodied these considerations. However, the state apparatus began to sabotage the implementation of these policies soon after they took off the ground.

13.4.1 Restructuring agrarian relationships: land reform The issue. Land is the most important asset in rural Nepal. It determines the structure of the rural economy supported by the consequences of exercise of political power by the government in Kathmandu. The importance of land in rural Nepal can be seen with the naked eye. It can be understood better by the inverse relationship between landholding and poverty all over South Asia. (The singular importance of landownership and agriculture has already been discussed in chapters 1, 6 and 7.) It has long been recognised that land reform encompassing both redistribution and tenure is the most potent means of restructuring rural economy. In addition to transforming agriculture, it can help achieve faster industrialisation, enhance growth and alleviate poverty in both rural and urban areas through improvement in nutritional status, health and level of living. It could also contribute indirectly to education and access to other opportunities. It has also been argued that egalitarian land distribution leads to a better status of women in the rural area and to protection of environment, though admittedly this is not a well-researched area yet (Rashid and Quibria 1995). The abovementioned two-pronged strategy should therefore admit a strong commitment to land

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reform to complement emphasis on marketoriented “economic reform”. The synergy between the two may be harnessed, if households without access to market at present can hope to acquire it when with land reform, the rural economy, too, starts churning on a more productive mode than at present. Empirical studies have shown that an owner-tiller uses his land more efficiently than either owner-tillercum-tenant or a pure tenant with rented-in land (IDS 1986). Similarly, studies have also shown a negative relationship between farm size and land productivity (e.g., IDS 1986, NRB 1994). A study of 19 developing countries covering Nepal and other Asian, African and Latin American nations has indicated a marginally negative correlation (-0.014) between agricultural GDP growth rate and land concentration, indicating an inverse relationship between inequality in land distribution and productivity (El-Chonemy 1990). The APP Report (APROSC and JMA 1995) also suggests that land redistribution has the potential to increase both output and equity. If economic logic alone were to rule the society, land reform would become one of the less difficult policy decisions to make. In recent times, there has been an apparent consensus even at the political level on the need for land reform. The agreement has been facilitated by the recommendations of many commissions set up to study and advise on measures to be taken in this respect. The High Level Land Reform Commission of 1995 is the latest in the series. Yet, the reality binding the political economy is such that the country is still far behind in implementing its stated policies. The little progress in implementation that is there has been of a type that has elsewhere been called reform “by grace” and not “by leverage” (Rashid and Quibria 1995). Saddled with backward agriculture and increasingly nonviable rural economy, especially in the Hills and Mountains, the country and its leaders need to get serious about land reform. If they cannot make use of the convenient platform where equity can be pursued without sacrificing productivity, this may mean writing off the harmonious development of the rural sector altogether. On the other hand, if land reform is taken up in earnest, it will complement the economic liberalisation measures and contribute to the structural reform of the entire national economy − not just the “modern” sector. Hence, a sincere commitment to land reform should serve as a litmus test on the ideological stances of major political groups which profess their commitment

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to social justice and poverty alleviation. Two approaches and experiences. Historical experiences reveal two broad approaches to land reform: (i) a radical approach carried out by popular revolution or dictatorial action; and (ii) a slow democratic approach through a constitutional process. Following either of these approaches, various countries made a major breakthrough in land reform bringing the campaign to a peak in the early post-war period in the ’60s and ’70s (box 13.3). However, in the ’80s and ’90s, the concern for land reform subsided2, an understandable phenomenon at a time when the agricultural sector as a whole has been relegated to the backwaters of the economic liberalisation paradigm. Opportunity and possibilities. The two different approaches just mentioned stem from different values subscribed to by the societies with regard to property rights and the relation between the individual citizen and the society. For some countries, land reform has meant righting the historical wrong. For others, the redistribution of land is a political act transforming the balance of power in favour of the weaker sections of the society. Nepal, enjoying the consensus as it does among the major political forces at present, may be lucky that it does not need to make an ideological issue out of the necessary reform. It can regard and pursue reform as merely an economic act which is essential for agricultural growth, community welfare and viability of the rural economy. Yet, Nepal cannot take a radical approach to land reform, i.e., it cannot deny the notion of property rights, because the political forces have committed themselves to democracy and therefore have to use democratic means for its realisation. Nonetheless, it now seems that the leaders may have to be more “radical” than in the past about their commitment to land reform, even as they execute that commitment through the democratic process. Radicalism in the sense of taking an extreme position may not be acceptable. But, as some “radical democrats” (e.g., Heilbroner 1982) would argue, the government needs to be radical in order to get at the root of the problem − in this case, the will to change − if it is serious in doing something about it at all. The report and recommendations of the High-Level Land Reform Commission of 1995, which are yet to be made public, can become a useful guide for adopting the necessary measures. In fact, a legislation has been enacted

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Box 13.3

Lessons of experience with land reform

The rapid and bold land and agrarian adopted reform in the People’s Republic of China from 1949 to 1978 is an interesting evidence. Before the reform, 10 percent of total landowners − absentee and rentier − controlled 70 percent of the cultivated land, with tenancy subsuming 30 to 50 percent of agricultural households and landlessness ranging from another 20 to 30 percent. The communist government attacked the feudal system and provided land to the tenants, sharecroppers and landless agricultural workers. There was no compensation for the land so expropriated. Significantly, technological improvement and mobilisation of agricultural labour force was efficiently matched and managed with skill development and labour-intensive agro-based industries. As a result, the growth rate of agriculture increased remarkably (ElChonemy 1990). In Japan, 69 percent of the agricultural households were tenants who worked on 46 percent of the cultivated land. With reform, the landlords were left with only one hectare of land. The remaining was collected by giving a very low compensation. As a result, 38 percent of the total cultivated land was distributed to tenants and landless agro-households. The positive result of that measure on Japan's economy is history. In South Korea also, landless agricultural workers accounted for 30 percent of agrcultural households in the pre-land-reform period. At that time, 4.5 percent of the landowners received 52 percent of the net farm income. With the reform, 1.15 million hectares of land were acquired and distributed to the landless and tenant families at an average of 0.9 hectares. The rent was also reduced from 50 - 70 percent to a maximum of 33 percent (El-

Chonemy 1990). .In Iraq, before land reform, 1 percent of landholders held 47 percent of agricultural land, while 34.4 percent of the landholders held only 0.3 percent of the land. Revolutionary land reform in 1958 changed that situation in a drastic manner. Forty percent of the agricultural households became the direct beneficiaries of land redistribution and 1.92 million hectares of land was redistributed. In Cuba, prior to land reform, 9 percent of the landowners owned 73 percent of land. Later, the ceiling was fixed at 6.7 hectares. Land in excess of it was expropriated and distributed to peasants. Land reform efforts were initiated in Nepal after the end of Rana Regime in 1951. The relevant steps taken included: Land Reform Commission 1952, 13-point Royal Declaration of 1956, Lands Act 1958, Birta Abolition Act 1959, Agriculture (New Provision) Act 1962 and Lands Act 1964. In actuality, only the Birta Abolition Act and the Lands Act 1964 produced some results. The Lands Act of 1964 put a differential ceiling of 16.9 hectares, 2.6 hectares and 4.2 hectares in the Tarai, Kathmandu Valley and other hill areas respectively. An additional exemption was made to the land for housing purposes. Rent was also fixed at one-half of the output of the main crop. It is a measure of Nepal’s social structure and the political feasibility of the reform programme of this nature that, in the end, only 31,203 hectares (only 1.5 percent of the total arable land) was found to be in excess of the ceiling and, thus, available for distribution. The outcome of tenancy reform measures was hardly better.

by the parliament which, however, is challenged in the court already3. Any land reform measure must respect the right to property as guaranteed by the constitution. A reasonable compensation should be fixed for the landowners. The land in excess of the ceiling and thus acquired by the government could still be provided to the poor families at a below-market price through budgetary subsidy to be financed, in part, by a special levy on urban property. If the ceiling on land were to be lowered to three hectares, for example, it would release 304 thousand hectares of land for acquisition and redistribution4. In addition, there is also a possibility of reclaiming or acquiring land that is wasted either because of disuse or natural factors. However, even for a radical approach, the technical side of the problem is too complex for such a solution. First, there is likely to be a strong voice to have some exemptions for commercial farming, arguing that a breakthrough in agriculture and its potential for creating additional jobs is only possible with large commercial operations. Secondly, redistribution of land may exacerbate the problem of fragmentation further. In view of this, it may be possible to redistribute only two-

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thirds of the land so acquired by the State among the landless labourers, including the bonded households, and others who own less than 0.2 hectare, although purely dependent on land for their livelihood. The second constraint is more credible than the first one. In a situation where seven out of ten households own less than a quarter of a hectare, and nine out of ten households own less than two hectares, the argument for allowing larger “commercial” holdings does not really hold much steam. As a matter of fact, the basic objective of land reform is to create a congenial environment for the majority of small farmers to enable them to transform their current subsistence-ridden farming into a dynamic, commercially-oriented operation. A properly designed and effectively implemented land reform envisages a breakthrough in farm incomes and rural employment through intensification, diversification and specialisation of the overwhelmingly large number of small operations whose aggregate impact in terms of increased employment and income would be several times higher than what a small number of large operations could provide. In the context of poverty reduction and human development,

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the sensible strategy would be to support and promote a broad-based and participatory growth which is possible only through focusing on the small farmers. Besides, exemption for large holdings (except perhaps for plantation crops) carries the risk of negating the very objective of land reform as the powerful landed interests could abuse the system (as has been observed in the past). However, even through this route, not all the needy agricultural families can be provided with adequate size of land. In 1991, there were 32.1 thousand landless households, slightly above 1 percent of the total agricultural households (Agricultural Census 1991/92). Less than 2 percent (49,114 holdings) of the households were reported as pure tenants (i.e., renting land from others for cultivation). The existing land legislation entitles a registered tenant to claim one-fourth of the rented land. This has encouraged landowners to enter into informal tenurial arrangements to prevent tenants from claiming their lawful share. Hence the number of non-registered tenants could far outweigh the registered ones. If the 200 thousand hectares of land acquired is distributed at the rate of 0.5 ha per household, only 400 thousand agricultural families will get land and be able to earn a livelihood. Gainful wage employment in agriculture has to be expanded by crop diversification, improving cropping intensity and creating off-farm employment. Along with this, agro-based small-scale industries will have to be developed to absorb excess rural labour. Supplementary measures. Land reform is a precondition for a growth-with-equity strategy, but it alone is not sufficient. It could turn out to be a mere propaganda, as in the past and an unnecessary political burden to bear − if it is not accompanied by supplementary measures. Without them, in fact, there may be no productivity gains at all from land redistribution or tenure reform. A number of key interventions are required in agriculture, irrigation, rural credit, rural infrastructure and macroeconomic policies, which are discussed in the next section. In addition, the key elements of a comprehensive land reform include: (i) land redistribution; (ii) rationalisation of holding size; (iii) protection of tenancy rights; (iv) well maintained land records and properly functioning land administration; (v) adequate legal and regulatory provisions; (vi) a responsive institutional set-up from the central to local levels to provide essential services in the

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changed context following the reform; (vii) a sensible land use policy to promote productivityraising investment on land; and (viii) special considerations for the economically most deprived individuals, families and communities, such as the female-headed households, landless labourers and marginal cultivators, including the kamaiyas. It is expected that the High-Level Land Reform Commission of 1995 has covered these aspects in a holistic manner. In case it has not, immediate action is required to prepare a comprehensive reform package keeping in view the above-mentioned key aspects. The following aspects also deserve serious attention while implementing land reform as envisaged above. First, the problem of land fragmentation is quite acute, with four parcels per holding on an average. Hence a special drive has to be initiated to discourage further fragmentation and provide appropriate incentives for consolidation. Second, the cooperative movement in Nepal has a chequered history, and has been largely ineffective. This is mainly because of the political influence, bureaucratic control and systematic weakening of the decision-making role of the members themselves. The cooperatives, on the other hand, hold enormous potential to act as effective grass-roots level institutions to organise the farmers and rural entrepreneurs and to protect their interests. The existing constraints to a spontaneous growth and smooth functioning of the cooperatives need to be critically assessed and corrected so that they could emerge as the genuine institutions of the rural majority. Third, since not all the landless and poor agricultural families can be provided land, the agricultural wage structure should be monitored and fine-tuned to address the problem within the limits of the productivity gains accrued to the landowners who have benefited from land distribution and associated measures. It may be necessary to implement a minimum wage policy for agricultural labourers. Fourth, the rural infrastructure, mainly roads, electricity and telecommunication have to be developed not only for promoting cottage industries, and processing and marketing of agro-products, but also to attract competent development workers to stay and serving in the rural areas. One of the main reasons why trained people are presently averse to serve in the rural areas is that these areas lack the basic transportation and communication facilities and minimum health and education services for their

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children and other family members. Fifth, as genuine land reform gets under way, there will be a need for assigning or establishing a specialised financial institution to deal with the financing of poor households for procuring land, either in the process of eliminating dual ownership or for cost sharing to the government-distributed land. Such an institution will also meet the financial needs for land improvement, irrigation and production credit. Sixth, as the agricultural and rural transformation process picks up momentum along the lines suggested by APP, there will be a multiplier effect spilling over the nonagricultural sector, in both the rural and urban areas. This would help expand the nonfarm sector employment and income opportunities in activities such as manufacturing, agroprocessing, trade, services and construction. Hence the behaviour and performance of the nonfarm sector needs to be carefully monitored along with the farm sector, in a coherent and holistic manner in order to ensure balanced and sustainable development. Box 13.4 APP is based on the assumption that it is time for Nepal to commence accelerating growth, and it lays down the basic priorities for doing so. The minimum foundation of physical infrastructure, human capital and institutions has been laid. The place to start accelerated growth is where the mass of people are − rural Nepal; in the sector already commanding the largest share of Nepal’s resources − agriculture; and, with investments to raise the productivity of those people and their resources−agricultural technology generation and rural infrastructure. Thus, APP has four priority inputs − irrigation, roads, technology and fertilisers. They are all technology-related and productivity increasing. APP also gives priority to a few high-value commodities that will bring dramatic increase in farm incomes, especially in the hills. APP is regionally balanced. It has a massive effect in reduction of poverty through its direct effects from agricultural growth, and far more so, from indirect employment-producing multipliers in the non-agricultural sector. The latter will disburse urbanisation over most of the country. What are the essential decisions to make APP work? First, appointment of a high level oversight body reporting to a cabinet sub-committee and an associated independent analytical unit to provide the power of information to that body. Without these, APP will go the way of the several past strategic plans for agriculture. Second, the agricultural road investment plan must be seen as both minimal and proven as feasible by any number of examples (e.g., Himachal Pradesh and western Szechuan). A new department of agricultural roads must be created and staffed; local government must be galvanized and monitored for action, including giving priority to roads that tap major commercial potentials; even while

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13.4.2 Reorienting agriculture Nepal at the current stage of development has no choice but to focus on developing the predominant agricultural sector. The basic rationale behind this strategic imperative is explained in detail in the Agriculture Perspective Plan (APROSC and JMA 1995). The most compelling argument is that, if the country wishes to break the current subsistence trap and forge ahead on a dynamic and high-growth path with built-in equity, this is the only available option. Development of agriculture inherently supports the employment and equity considerations because by its very nature it embraces the entire economy. If pursued within the framework of rural restructuring as argued earlier, this sector has a higher potential for combating poverty than any other. The preparation and adoption of APP has foreclosed the need for any new attempt at this point (box 13.4). APP has been adopted by the

The APP strategy currently known construction techniques are applied, improved methods must be developed; and, foreign donors must be led to vigorous supportive actions. Third, the district administrations in Tarai must put in package groundwater development with roads and other key inputs and ADB/N must give a dominant priority to accelerating its lending programme for groundwater development, even as the government provides land consolidation enabling legislation and settles the land tenure issues. Fourth, AIC must redefine its role to achieve accelerated growth in fertiliser use by full privatisation of retail distribution, assuring that supplies and stocks are increased adequately to meet rapid demand growth, that various constraints to that growth are removed and that the subsidy policy, whatever it may be, facilitates, not retards, growth in fertiliser use. Fifth, NARC and associated extension efforts must set a few priorities for on-farm-oriented research that will provide practical improved technologies for sharply increasing agricultural production and farm income. In that context, the resources available to NARC must be radically increased. The effect of these closely monitored efforts will be to accelerate agricultural growth and to have powerful multiplier effects on other sectors, on poverty alleviation, on the involvement of women and on environmental enhancement. These successes will also raise the returns to myriad other public and private actions and mobilise resources in those activities for productive effect. It is the mobilising of so many now nascent resources that will be the first sign of success of the APP priorities. The essence of APP is simplicity and priorities. It is not a grand plan; it is the opportunity and the prospects that are grand. Source: APROSC and JMA 1995.

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government and has the advantage of being accepted by all major political groups of the country. An earnest implementation of APP is as critical to a widespread rural transformation as is the effective implementation of a comprehensive land reform programme. In fact, these two components need to be fully integrated and implemented as a package. APP identifies four priority inputs whose adequate provision is critical to its successful implementation. These are farmer-controlled and year-round irrigation, fertilizers, technological packages and rural infrastructure (agricultural roads and rural electricity). Irrigation. Nepal has indeed invested considerable amount of resources in developing irrigation infrastructure, but that investment has gone thus far to large surface irrigation projects operated by government agencies. Only recently efforts have been initiated to transfer their operation and management to the beneficiary farmers through user groups. Yet, APP has pointed to the vast potential of developing groundwater irrigation in Tarai which can be less costly and involve little gestation time for completion. Above all, groundwater irrigation is fully within the control of farmers since most of them would be privately owned and operated, and the users can operate the system whenever they need water for their crops round the year. Irrigation increases cropping intensity and expands employment opportunities in agriculture (NRB 1994). Studies have shown that small farmer-managed irrigation projects are more cost-effective and efficient than government-run large projects (also see chapter 10). Therefore, encouraging local farmers in constructing and managing small irrigation projects with financial and technical support from government will not only make better use of the resources but also ensure project sustainability. Farmers can similarly be organised into cooperatives or public (and private) limited companies to build, own and operate irrigation schemes based on groundwater, particularly in Tarai. It is reported that the cost of groundwater irrigation is oneseventh the cost of surface irrigation in Tarai. Involving women in these irrigation schemes as shareholders and members of cooperatives and user groups may provide an additional institutional dimension. In addition, priority can be given to women’s training in organisation and management of irrigation projects, or companies and cooperatives to attract them into management roles.

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Fertilizer. Chronic shortage of fertilizer has become quite common in Nepal due mainly to the failure of the public sector to procure adequate amounts of this essential input. The non-availability of fertilizer on time has been observed to be a more binding constraint than its price, yet there seems to be little effort to resolve this problem in a long-lasting fashion5. Research and Extension. Agricultural research in Nepal has not been able to respond effectively to the opportunities offered by the country’s broad agro-climatic diversities. There are a number of reasons for this. The research system lacks a clear sense of focus and priority in terms of disciplinary areas, commodities and geographic regions. As a result, the scarce resources are scattered across a wide range of activities without making any significant impact in any. Above all, agricultural research in Nepal is grossly under-funded, even though ample evidence exists to demonstrate that investment in research has a very high rate of return. It is generally dominated by productionrelated considerations, leaving unattended the problems associated with marketing, storage, processing, credit and cooperatives. The constraints and opportunities faced by farmers and entrepreneurs under diverse conditions of climate, topography, market accessibility and socio-cultural and politico-economic milieu are not incorporated in the research agenda. Above all, it lacks a broader and holistic approach to developing alternative packages of technology advantageous to the majority farm households and entrepreneurs. This, along with low funding, explains the rather disappointing performance of the sector on the technology front. A number of extension programmes and approaches have been tried in Nepal over the years, such as block development (concentrating delivery of essential inputs and services in a selected irrigated area), training and visit system (extension workers visiting every farm household weekly with a distinct farming-related message given at regular training sessions), integrated rural development approaches, the Tuki (lamp) system (delivering essential inputs through private individuals under a contractual arrangement) and farming systems research. Most of these approaches have been experimented upon and discontinued due either to a shift in policy or withdrawal of donor support. One lesson that has been learnt is that the farmers have to be their own extension agents. Some technical knowledge has to come from outside, but there is a wide range of indigenous

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expertise, experience and wisdom whose timetested relevance and suitability to local conditions could not be surpassed by externally borrowed ideas. Parallel institutional mechanisms have been devised to make best out of the indigenous resource base and skills. One singular element of the ineffectiveness in the country’s extension system is its failure to promote and build on the indigenous resources and skills. This approach has also a bearing on how development is viewed generally and how the farmers are made the subject and not the object of development of their community. In addition, this approach also permits the participation of local communities in agricultural development which has not been the case so far. In addition to the technical agents of the government, the NGO sector can be mobilised to provide necessary support to the VDCs and communities involved. The conventional approach to dealing with agriculture has also been a problem. Agricultural development in Nepal has been viewed narrowly from a sectoral perspective, while its transformation calls for a cross-sectoral effort and a strong macroeconomic policy support. Above all, the importance of rural infrastructure and communication is now well established in linking the production pockets with the market, in promoting agro-based industries locally, in retaining qualified technicians in the field and in helping to speed up the process of commercialisation. The above critical input and support elements have been dealt with in detail in the APP, along with the emphasis that these need to be integrated carefully into a package. The absence of one key element would render the whole package ineffective. The public sector has a critical role here in providing the identified priority inputs and support. While groundwater irrigation will expand mainly through private initiative, it would not materialise unless adequate credit provisions are made by the public sector. Fertiliser could be supplied through the private sector in a competitive environment, but the presence of subsidy complicates the issue. Similarly, both technology and rural infrastructure are public goods for which there would be no private interest in getting involved on a large scale. Even in the case of privately supplied inputs and services, such as seeds and planting materials, and storage and marketing, the government has the responsibility to provide the necessary legal and regulatory instruments and control quality of

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the goods and services delivered. Credit. Reform in the system of credit delivery is an integral part of institutional reform in agriculture. Apart from production credit, the implementation of land reform measures would call for an expanded capacity to provide and administer institutional credit. Acquisition of surplus land with adequate compensation, abolition of dual ownership on land, land consolidation and plotting and provisioning of adequate farm inputs all will require institutional expansion and strengthening for smooth credit delivery and administration. Such credit facilities are important particularly to benefit the indebted and landless households. Women. Uplifting women’s status along with a high growth in agriculture requires additional measures. Special incentive schemes should be designed for those agricultural activities and products in which women particularly play an important role, not only as labourers but also as entrepreneurs. These are livestock and poultry keeping, vegetable production and small-scale income generating activities. Along with this, special attention should be given to developing appropriate technologies for women farmers and entrepreneurs, focusing on measures to reduce drudgery and enhance productivity, and on their access to credit and the income generated.

13.4.3 Promoting agro-enterprises Agro-industries exert a strong productivity as well as distributive effect. They are highly labour-intensive, have wide employmentgenerating backward and forward linkages, can be undertaken with modest capital and skill, and are located in rural areas where there are no activities other than agriculture. The promotion of agro-enterprises should be a critical element of the growth strategy. Agro-industries have been a major driving force for high income growths in the middle-income countries of Asia such as Thailand (FAO 1992). In fact, agroindustries greatly facilitated Thailand’s rapid transformation from a low-income agrarian economy to a prosperous diversified economy through close links with the agriculture and service sectors, and the export market. Even the low income countries of South Asia like India and Pakistan have promoted a growth process based on agro-industries. The growth observed in recent years in the manufacturing sector of Nepal has had little linkage with agriculture, or even the rural

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economy. For example, the two “growth industries” − carpet and ready-made garments − depend upon imported raw materials, and at least in the case of one, on imported labour as well. The growth of this industry is necessary also to attain a better geographic spread of industrial activities. The major manufacturing units will probably continue to remain clustered in certain urban centres. Similarly, agroindustries have had a limited impact on the regional development of the country. Agroindustries can be dispersed and located nearer to the source of supply of raw materials, i.e., the rural areas. At present, however, about 77 percent of the employment and 81 percent of the output of agro-enterprises are concentrated in the central development region (CBS 1992). The following measures may be considered for the promotion of agro-industries in support of human development in general, and employment generation and regional equity in particular. First, in order to promote backward linkages of the agro-enterprises with local production of raw materials, incentives should be provided for such industries, contract farmers producing such raw materials and integrated units that directly link up agro-products with agro-enterprises. research and Second, development efforts have to be invigorated and made responsive to the needs of agro-industries. Private participation in such activities should be encouraged by inducing the private sector through tax incentives on research and development. Third, bank financing of agroenterprises has to be strengthened. Also, schemes should be designed to reduce the financial risks to entrepreneurs and investors in agro-enterprises. The priority sector lending programme has to be revamped in order to develop agro-enterprises. Fourth, institutional arrangements have to be developed for marketing the production of small and scattered enterprises. One way is to strengthen agricultural cooperatives for this purpose. Another is to develop a hierarchy of companies where smaller producers organise into a bigger one (like a holding company, perhaps) to enable them to promote organised production and marketing. And fifth, assistance should be provided to these enterprises by the government for access to information and technology, training and research and development, in addition to the institutional support for credit as stated.

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13.4.4 Industrial promotion Before proceeding further, it should be noted that the above mentioned policy measures and the ones to follow in this section raise a practical point. The question is: what flexibility does the government have in influencing the character and direction of industrial development in the country, given the liberalised trade regime and market economic principles it is expected to follow? Can the government deliberately favour agro-industries, for example, or even those industries in general that are employmentintensive? Will any policy initiative involving incentives of one kind or another mean “distortions” that are not permitted by the liberalisation doctrine? We can do no more, at this juncture, than stress the philosophical and conceptual framework which has guided this study. Industrial growth will have a positive impact on human development only if (i) the industrial structure is labour-intensive; (ii) no gender discrimination is practised at work, and the workers are well-paid; (iii) no child labour is employed in industry; (iv) the productivity growth is passed on to the workers through wage hikes; (v) the work environment is healthy, and industrial hazards and polluting substances are disposed properly; and (vi) job security and retirement benefits are built-in with employment. But structural as well as legal reforms and their enforcement are needed to attain these provisions. An effective and private sector-friendly government and a human development-friendly private sector together can produce the quality growth that can translate the benefits of industrial growth into human development (see 12.5). Some of the measures just cited are not only consistent with, but are required by, a liberal economy. Some others may be more contentious. First, here too, it is necessary that industries based on agriculture and mining be given top priority through institutional support. Second, industries that use local raw materials, generate substantial employment, produce nutritious foods and promote exports should be prioritised for financial, institutional and other support from the government. Third, microenterprises which are highly labour-intensive and use local resources and technology need to be promoted through efficient and strong institutional set-up for financing, marketing and research and development. Fourth, long-term

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financing facilities should be enhanced through financial institutions, stock market development and encouragement of foreign direct investment. However, it needs to be stressed again that not all types of foreign investment contribute to income and employment generation. The government should work for a decision space where it should be possible for it to be selective about foreign direct investment (FDI) without discriminating against domestic investors. Like the national industrial sector, FDI, too, needs to be encouraged in industries where they create employment, promote exports, transfer technology and are generally human development-friendly. Finally, industries having market prospects in India and other SAARC region countries have to be promoted. The prospect of the present SAPTA evolving into SAFTA and consequently the extended South Asian market needs to be kept into consideration in providing public support to new industries.

13.4.5 Tourism development Tourism is one of the few areas where Nepal has a potentially competitive advantage and can compete in the international market with a relatively smaller effort. The observations made in the context of “reorienting the economy” may not have many new things to say in this regard. However, if the authorities take these observations seriously, plan carefully and implement the recommendations, tourism can be of great value to feed economic growth as well as human development. The following measures may be pursued to attain these objectives. First, a high import content (62.3 percent of the tourist expenditure) has constrained the prospect of high value added in the tourism sector and limited the contribution of this sector to less than 3 percent to the GDP. Hence incentives should be given for greater use of indigenous or local goods and services by tourism. This has implications for product line in industries as well as agriculture, and also for training and skill development to compete with the foreign manpower. Second, tourism by itself will have little impact on employment and income in the rural areas if it remains mainly an urban economic activity. Development of rural tourism can have an impact on the rural economy similar to agriculture, and it can yield even higher returns on the efforts made. It should be noted that some attempts are already being made in this respect. This sector can generate employment for women

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and men relatively quickly and has the additional advantage of being conducive to a regionally balanced development. Development of new trekking routes and promotion of resorts can be undertaken by the private sector with and without foreign participation. It should also be noted that some attempts are already being made in this respect. It is the infrastructure, both physical and institutional, that becomes critical because the government has not been very innovative in this respect so far. The recent setting up of the Tourism Promotion Board with the participation of the private sector may be able to lend fresh direction to this sector; but, again, such institutional innovation is not being made for the first time in Nepal’s history of development. There are areas of cultural heritage and historical importance all over the country that require imaginative attention. Besides, religious tourism will have to be developed to attract tourists from India, the rest of South Asia and East Asia. Nepal can be an attractive destination for 15 million Japanese people and a large number of other people from both the Buddhist and Hindu communities in the world. If the government lacks in necessary innovation, preservation and promotion of what the country has to offer, the private sector can do very little on its own. Third, the travel and trekking agencies can and should expand their network in India, and other countries of South Asia and abroad. But the capacity of airlines presently operating in Nepal remains a bottleneck. The private airlines have recently been given the permission to operate internationally, but they have not secured a route that can be profitable even with a reasonable gestation period. The solution does not appear too difficult, at least when considered apolitically and dispassionately. The RNAC should either be privatised or given full autonomy, the latter possibly in conjunction with a collaborative arrangement with a reputed foreign airlines. This can be followed by an increase in the fleet of RNAC and regular scheduled flights to destinations currently agreed with other governments. If tourism is to play its potential as an engine of growth (widely distributed), there should be no hesitation in putting investment in it, especially given the magnitude of resources being wasted by the government and in the public sector. Decision on a new international airport should be taken as soon as possible. Fourth, foreign investment in the tourism industry has to be encouraged and additional

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incentives for ploughing back the profit into the same industry could be provided. Fifth, as internal tourism has a significant effect on income distribution and regional development, efforts have to be made to promote such tourism by arranging package tours for domestic tourists, making provisions for compulsory use of the ‘house-leave’ facility by employees and employers. As Nepal is observing the “Visit Nepal Year 1998”, it is right time that such practices be introduced at the national level. Sixth, quality tourism should be given a high priority by the government. Provisions like minimum amounts to be possessed by the tourists at the time of immigration, minimum amount to be spent during one’s stay and a code of conduct for the tourists during their stay have to be worked out.

13.4.6 Water resources Enough has been said and written about the country’s water resources. Water is definitely a resource which should have been harnessed a long time ago for the benefit of the Nepali economy and society. The little progress that apparently has been made towards the finalisation of some schemes to be implemented in cooperation with India or in participation of the private sector is still shrouded in uncertainty about their immediate future. More uncertain may be the benefits that these schemes have to offer to redress the problems and constraints to human development and poverty alleviation. No doubt, the development of water resources for irrigation, power and navigation promotes economic growth. There is, however, a need for a perspective on how to tie up water resource development with human development. This is where the question of priority and tradeoff comes in. Like people, water is a resource that is scattered all over the country. Harnessing it for drinking water, energy and irrigation equitably can genuinely be an instrument for human development. It helps to generate additional employment in agriculture and offfarm activities, supports extension of education and health facilities to remote areas and helps to protect the environment. A human development approach to water resources development would require emphasis on smaller schemes that can be implemented relatively easily and quickly, and that can be located equitably throughout the various regions. In the use of water, this approach requires that the first priority be given

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to drinking water, followed by irrigation and energy for domestic household and industrial uses.

13.4.7 Human resource development In the often-cited examples of the East Asian countries, the quality of human resources has played a decisive role in the growth of their economies. It has been observed, in the case of these countries, that the traditional factors of production, viz., labour, capital and technology do not explain more than 60 percent of their growth; the rest of the growth is attributed to efficiency parameters associated with the quality of the human resource. A reoriented economy for Nepal should be able to capture the potential that lies in this sphere for the same effect. It will be an exercise twice-blessed because human resource development, apart from contributing to growth, feeds itself directly into the substance of human development that the country now seeks. Developing human beings as a resource requires investment in education, skill development, health and other basic needs of the people. This subject has already been dealt with in other chapters in greater detail. Here, it may be necessary only to draw attention to a few overriding principles and values that should be guiding the state and society in this respect. It is necessary to stress this point because of the danger that development of education, health or other related sectors may once again be pursued in the same mechanical fashion as before without taking cognisance of the intrinsic merit and purpose of this pursuit. Human resource development is not a technical exercise to be handled mechanically by technicians for simply upgrading the technical capacity (or physical capacity) of the population. If technical capacity alone mattered, there would not be a growing number of educated unemployed in the country. Nor would there be a general and growing perception that the professional, technical and other educated classes are as responsible as any other for the present economic, social and moral stasis of the country. The absence of a moral anchor, a professional code of conduct that is abided by all, or even a sense of “citizenhood” in the majority of such cases does not leave much for the uneducated, illiterate and allegedly ignorant people to emulate. Moreover, it also needs to be asked that, if corruption is as rampant as it is perceived to be in the country, what relation

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does it have with education as observed in Nepal? Corruption takes place when “entrusted power” is abused (see 12.3.5). The domain of entrusted power encompasses not only the state but also the professions, the other civil society agents, and even the private sector. At the individual level, it is the educated people who mostly exercise this power. If so, one will have to agree that corruption or abuse of authority is perpetrated by the educated people, most of whom also have better access to health care and other amenities than others. If they also constitute a resource for the country’s development, recognition of this irony should be the first agenda of any programme in human resource development. There cannot be a reorientation of the economy, or of the society for that matter, without a reorientation of values guiding the development programmes in education, health and related sectors.

13.5 TRANSLATING ECONOMIC GROWTH INTO HUMAN DEVELOPMENT The countries that have been successful in achieving high human development have invested heavily on their people, have put in place the right policy fundamentals and have not discriminated against sex, race and region. The tragedy of exclusion cannot be eliminated unless disparities across genders, races and regions are properly addressed by bringing more people into the nation's economic mainstream and promoting equitable access to the benefits of development. Realisation of the key development challenge − inclusion of most of the people into the mainstream of development − and subsequent state actions alone can translate economic growth and development into human development6. Such actions may have to be initiated with an interventionist approach to poverty alleviation, restructuring expenditure, tax and subsidy systems, widening social security provisions and giving economic liberalisation a human face.

13.5.1 Poverty alleviation For poverty alleviation, growth has to be distributed to all the sectors, regions and sections of the population. This, however, depends upon a faithful implementation of almost all the strategies and policies outlined in the various chapters of this study. Agricultural

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development and employment generation within and outside agriculture emerge in that context as two critical imperatives. The present structure of the economy and labour force shows that only two-thirds of the new labour force that enters the job market each year can be absorbed by the existing labour absorption capacity of output growth7. For an economic growth that can fully absorb at least the new labour force entering the job market each year, either the growth rate itself should be very high (more than 7 percent) at the existing labour intensity of output growth, or the structure of production should change in favour of labour-intensive technology so that the employment intensity of growth improves, making more jobs available for even a relatively low growth rate. Any combination of these measures may prevent the economy from swelling up the reservoir of surplus labour. But the existing stock of unemployed and underemployed labour force still remains unabsorbed, and, until they are gainfully employed, poverty can not be reduced. How can economic growth be made more job-creating? The solution lies in restructuring agriculture and industry, along with budgetary reallocations, in a way that makes these sectors mutually complementary. Measures such as the creation of micro-credit institutions, promotion of agro-enterprises and adoption of labourintensive development activities at the local level would all augment the restructuring process. In this regard, some of the policies for enhancing employment may be as the following. First, as agriculture is the most labourintensive sector, economic growth emanating from this sector must be more job-creating. Thus agrarian reform assumes top priority in the agenda for employment creation. Land reform, together with irrigation development and enhancement of credit delivery increases cropping intensity in agriculture, thus inducing employment. Land reform alone can give gainful employment opportunities to 200 thousand landless households who are working as sharecroppers, lowly paid wage workers, or who are totally unemployed. However, the backlog of underemployment in agriculture leaves little room for fresh labour absorption in this sector even with agrarian reform. Therefore, off-farm employment opportunities have to be expanded with institutional support from the government. Such support may come as provision of credit, skill development training, technical help and marketing assistance.

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Second, as labour-intensive industrial expansion creates opportunities for more employment, emphasis should be laid on microenterprises which are less capital-intensive and more labour-intensive. Studies show that microenterprises can generate one employment for about Rs 10 thousand of investment in some of the sectors (Sharma et al. 1996) whereas large enterprises create one job for every Rs 90 thousand of investment (CBS 1992). Employment potentials should also be given due attention while inviting foreign direct investment in industries. It must be understood that foreign investment, which does not either create job, promote exports, or transfer technology, has little contribution to growth and poverty reduction, and therefore, needs a close scrutiny. Third, development activities in the public sector need to be made more labour-intensive. Civil construction is one area where a trade-off between the use of labour-intensive or capitalintensive technology can be exercised. Roads, canals, drinking water and sewerage, flood control and embankment projects and public construction should give priority to labourintensive technology wherever possible, and people's participation in development work should be mobilised not in terms of financial contribution, but in terms of physical labour itself. Fourth, development activities must be made participatory whereby the government efforts and the people’s initiative can go hand in hand in developing rural infrastructure like rural roads and bridges, small irrigation canals, school and health centre buildings, drinking water and sewerage, small hydropower projects and community buildings for library, sports and cultural activities. Such programmes could be run under the food-for-work programme, with wages sufficient for meeting the basic food needs and with adequate budgetary provision for participatory work. Fifth, as the micro-credit programme has been highly successful in creating job opportunities and thus in reducing poverty in many countries (Rahman and Khandker 1994), an extensive micro-credit programme focused on the poor should be implemented. This is all the more necessary because land, the major productive resource, can not be made available to all the asset-less households, and credit is the only resource that can help in making a productive use of abundant labour, the only asset of the poor. The micro-credit programme has covered a

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very small number of poor households, although some studies claim its coverage to be as high as 19 percent of the population below the poverty line (Sharma and Nepal 1997). In this regard, emphasis has to be given to establishing new micro-financing institutions, expanding the service network, strengthening the capital base, lowering the service delivery cost and continuing subsidy to the targeted sections of the society, particularly women and the poor. Sixth, unemployment exists not only because of the lack of job opportunities, but also because of the lack of skill on the part of unemployed labour. The dualistic nature of the labour market − abundance of unskilled labour and short supply of skilled labour − has given access to immigrant workers in the Nepalese labour market. This anomaly has to be addressed by the provision of skill development training and reorienting the education system to the country’s manpower needs. In particular, semiskilled workers like those involved in manufacturing, construction and services have to be prepared for the displacement of immigrant workers by domestic labour. Seventh, social mobilisation is also necessary for employment generation. NGOs can work with the local governments and people to chalk out employment and income generating activities through literacy and awareness campaigns, credit delivery, skill development and marketing support. With decentralisation of the central government's role and responsibility to the local government, the latter has to work together with the central government and NGOs for promoting employment generating activities at the local level. However, creation of employment opportunities in general does not by itself address the problem of regional imbalances in job opportunities due to the disintegrated nature of the labour market. Similarly, the female unemployment problem may remain unaddressed due to gender discrimination in job opportunities. It has already been observed that most of the job opportunities created in the process of growth have been absorbed by men, and the situation of women unemployment has become worse. This calls for empowering women for access to jobs, enforcement of laws which protect women against job discrimination and a time-bound reservation of organized sector jobs for women. The right to property, education, skill development, attitudinal changes of the society and enforcement of the right of women as envisaged in the constitution itself

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would distribute job opportunities induced by the growth process and by government interventions more favourable for women. Even with all these measures, poverty may still prevail in some remote and inaccessible geographic areas and most deprived sections of the population. To address that problem, a social security programme needs to be introduced, initially targeted on such areas and groups. For the poorer sections, deprived communities and remote areas, the state should guarantee a minimum package of sevices, including free education up to the secondary level, unemployment benefits, old age pensions, survivor allowances, disability allowances, medical insurance and maternity insurance. Those who can not afford the market price for meeting their basic needs must be supported by the state. Food rationing up to a certain quantity for the target groups, and delivery at subsidised prices, particularly in the remote areas, is also necessary, as people in these areas are not in a position to buy food at the market price due to very high transportation costs. However, targeted food subsidy is only a stop-gap measure for poverty reduction. In the long run, all the able-bodied people must be empowered to afford their consumption at the market price.

13.5.2 Social infrastructure Together with roads, as provisioned in APP, it is necessary that every village have access to piped drinking water, electricity where possible, a health post, a high school and community centres where they meet to exchange ideas and debate on issues of interest to them. These facilities are necessary on their own merit, and for human development in general. But there is more to it than this. People in the rural areas have to feel confident that they are also human beings and that they are also noticed by the power that be. In this manner, they will gain the necessary self-respect on the basis of which they can work for real vikas, not development delivered from the heavens, or outside. In sum, they need to see a future for themselves, which,

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for many of them, is best not thought about at present. If they can think optimistically about the future, they have a jest for life without which no development is possible, and human life worth living. When a reoriented economy paves the way for a more focused and socially desirable process of economic transformation, the issue of sustainability assumes critical importance. Sustainability is critical not only from the standpoint of environment and resource management, but also for sustained efforts which require, among other things, an egalitarian perspective about them. As some analysts have put it, “…when a change makes conditions better for some, it may result in worsening of conditions elsewhere” (Axinn and Axinn 1997: 70). From a human development perspective, a further note of caution, to quote the same authors again, may be that “The growth of cities, for example, may offer higher levels of living to some people. Like a magnet, rural people are drawn to their fringes, and urban populations grow. But then pressures increase for urban people to extract food and other goods from rural people, and economic and political consequences may lead to turbulence”. The measures for the reorientation of economy thus must take cognisance of both the potential and the problems involved. Development does not always have to be at the cost of the environment, and the two can augment each other if carried out with proper care. Some groundwork has already been made in integrating environmental considerations into the development process8. The country now needs to develop the necessary institutional capacity and manpower to effectively implement the existing policies and regulations. Public sector resource allocation needs to be fully consistent with the above priority programmes and the first chunk of the available resources should obviously go to them. The anomaly, thus far, has been that a distinct mismatch exists between prioritisation, on the one hand, and the scale of budget allocated, on the other. This is the subject of the next chapter.

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CHAPTER 14

Reorienting Public Finance for Human Development The state shall pursue a policy of raising the standard of living of the general public through the development of infrastructure such as education, health, housing and employment of all the people of all the regions, by equitably distributing investment of economic resources for balanced development in the various geographical regions of the country. Constitution of the Kingdom of Nepal 1990 The lack of political commitment, not of financial resources, is the real cause of human neglect. Human Development Report 1991 The Commission recommends for thoroughgoing tax and land reforms as a prerequisite to financing education on national scale, and the decentralisation of taxing, financing and fiscal control, all to the end of meeting educational costs … Education in Nepal: Report of the Nepal National Education Planning Commission 1956 When it comes to providing social goods − better education, say, or better health as measured by greater life expectancy and lower infant mortality − heavy-spending governments seem to be doing little if any better than governments that spend much less. This only deepens the mystery of the ever-expanding state. The Economist, 20 September 1997

14.1

T

INTRODUCTION

he preceding chapter concentrated basically on how to broaden the “bases” of income for society and its individual members, sustain the enlarged and “just” opportunities in a way that enables them to exchange in the market-place the means for enlarged capabilities and improved functioning. The policy prescriptions emphasised the agricultural sector including the need for agrarian reforms and supporting infrastructure. Agriculture as the initial engine of growth can create a favourable situation for the expansion of economic activities and growth of public sector capacity to generate resources needed for financing human development. A judicious mix of public financing that ensures a broad-based growth encompassing the majority people in the rural areas and enhances the basic components of human development is indispensable if Nepal is to transcend the poverty and deprivation trap discussed extensively in this study. Adequate public expenditure towards social sectors such as nutrition, health care, drinking water, sanitation and education will facilitate basic

capability formation as a “social right” of the citizen. It also acts as an effective meso-policy link between the macro- and micro-level activities. The basic objective of this chapter is to assess the pattern and adequacy of government investment on the formation of human capabilities and the possibility of restructuring the budget in favour of areas that directly bear on people’s lives. Another related objective is to evaluate the existing and potential resources − both domestic and external − to finance human development in general and to overcome the worst forms of human deprivation in particular.

14.2 EXISTING STRUCTURE OF GOVERNMENT EXPENDITURE Any incumbent finance minister of Nepal has preferred to present a larger budget than that of his predecessor. During the past 11 years (19861997), government expenditure grew annually at the rate of 14.4 percent in nominal terms. Yet,

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the size of public expenditure has historically remained less than the prescribed norms. The size of the government in Nepal measured by the public expenditure ratio (see box 14.1 for the definitions of various expenditure ratios) of around 20 percent in 1996/97 seems to be trivial compared with the average of 46 percent of the industrialised countries, 47 percent of OECD countries and 67 percent of Sweden in 1996 (The Economist, September 20, 1997; see also section 13.2.1). The ratio was 23.1 percent in 1986, close to the desired minimum level (25 percent of GNP), but it gradually declined in subsequent years as a result of the structural adjustment programme which focussed on squeezing the size of the budget (table 14.1). During the last 11 years (1986-1997), the budget allocated to the social sector increased at a significantly higher rate (21 percent) than the annual average increase in the total budget expenditure. As a result, the social allocation ratio exhibited an upward trend; it stood at 29.2 percent of the total government expenditure in 1997 compared to 15.9 percent in 1986. But the ratio remained far below the established norm of 40 percent of the total expenditure. In 1997, the largest share (13.5 percent) of public expenditure went for education (representing about half of the social sector allocation), followed by local development (7.1 percent) and health (6.0 percent). Expenditure growth rates in health and local development have remained higher compared to that in education. Increased budgetary allocation to the social priority sectors in recent years has largely been due to the direct allocation since 1995 of a lump sum amount to the local governments to finance development activities of their own (barring expenditure under certain headings). The social allocation ratio is silent with regard to the composition of social expenditure, and does not differentiate between social expenditures which contribute directly to enhancing human capabilities by addressing the “primary” concerns of the people, and other non-priority social sector expenditures. These human development priority areas are defined to include primary health care, basic education, rural water supply, essential family planning services and nutrition programmes for the most deprived groups in society (Haq 1995: 179). Expenditure on the social sector versus human priority sector can be contrasted with expenditures on university versus primary education, preventive versus curative health expenses, hospitals versus primary health care

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Box 14.1

Human allocation ratios

Realising the needs of human development concern, UNDP has proposed four indicators for the government budgetary allocation (UNDP 1991). For a credible government committed to upgrade the social status of people, the following norms of budgetary allocation ratio must be satisfied. • Human Expenditure Ratio: the percentage of national income (GNP) earmarked to human priority concerns. This ratio has to be at least 5 percent of the GNP for effective impact of budgetary allocation on human development. • Public Expenditure Ratio: the percentage of national income (GNP) that goes to the public expenditure. According to the international norm, it should be at least 25 percent of GNP. • Social Allocation Ratio: the percentage of public expenditure earmarked for social services. This ratio is expected to be at least 40 percent for adequate human development achievement. • Social Priority Ratio: the percentage of social expenditure devoted to human priority concerns. The social priority allocation should be at least 50 percent of the social sector allocation, if the government is really concerned for human development. UNICEF has recently proposed a "20/20" vision of budgeting strategy. The "20/20" vision advocates that a minimum of 20 percent of government expenditure and 20 percent of donor expenditure (foreign aid) should target the basic human services at the grass-roots level if the benefits of development are to reach the people. These indicators closely monitor the ultimate success or failure of national efforts to enhance human development through direct budgetary action.

expenditures, and projects focussed on urban centres versus rural areas. Thus the social priority ratio is a better indicator to gauge the government’s efforts towards human development than the social allocation ratio. During the period 1986-97, budget allocation to the social priority sectors1 grew annually at 22 percent, which is higher than the growth rate of either total expenditure or social sector expenditure (MOF 1997). As a consequence, the social priority sector expenditure increased from 52.6 percent of total social sector budget in 1986 to 59.1 percent in 1997, a rate higher than the norm of minimum 50 percent (of social spending). Allocation for basic education as a share of the total education budget increased to 79 percent in 1997 from 58 percent in 1986. Similarly, the proportion of local development expenditure spent on human priority areas has increased significantly. However, the share of basic health and water supply did not improve during this period (table 14.1). Other social priority sector allocations, which are directly related to the children, women, minority caste or ethnic groups, geographic regions and vulnerable sections of

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 14.1

Government budget allocation for human priority areas, 1985/86-1996/97 ( percent)

Allocation Ratio

1985/86

Public Expenditure Ratio (PE/GNP) Social Sector Allocation Ratio (SSA/PE) Education Health Water supply Local development Other Total Priority Social Sector Allocation Ratio (PSSA/SSA) Education Health Water supply Local development Other Total

1992/93

1996/97

International Norm

23.1

19.2

19.9

25

9.5 3.0 2.1 1.1 0.0 15.8

12.7 3.6 3.6 1.9 0.0 21.8

13.5 6.0 2.5 7.1 0.1 29.2

40

58.2 58.7 46.9 0.0 25.9 52.6

66.2 74.6 83.4 35.0 45.8 67.7

79.3 58.9 50.4 23.5 96.7 59.1

50

1.3 0.4 0.2 0.0 0.0 1.9 8.3

1.6 0.5 0.6 0.1 0.0 2.8 14.8

2.1 0.7 0.3 0.3 0.0 3.4 17.3

5 20

Human Allocation Ratio (HDP/GNP) Education Health Water supply Local development # Other** Total "20/20" (HDP/PE)

Note: HDP =Human Development Priority or Priority Social Sector Expenditure PE = Total Public Expenditure SSA= Social Sector Expenditure PSSA= Priority Social Sector Expenditure # Assuming 25 percent of Rural Development Fund to go directly to human priority sectors. * GNP for 1996/97 is estimated assuming a 13.5 percent growth over 1995/96. ** Includes other social services and some expenditure under the Ministry of Labour. Sources: Economic Survey, MOF, Details of Expenditure Account and Budget Speech (various years).

the society, have increased over the years. Further classification of social priority expenditure into recurrent and capital expenditure would provide a deeper insight into social sector expenditure and deserves further study. While meeting the established norm, budgetary allocation to social priority areas in relation to the social sector does not, however, signify a satisfactory situation. The human priority ratio is still low (3.4 percent in 1996 against the international norm of 5 percent), and the size of social priority spending itself is small. In an absolute sense, the per capita government budget allocation in 1996/97 for basic health, drinking water and local development was respectively Rs. 94 (US $ 1.60), Rs. 34 (US $ 0.58) and Rs. 44 (US $ 0.75). The total amount per capita (Rs. 172) committed to these priority areas was lower than that allocated to police and defence, and it was only 25 percent higher than the amount set aside for external debt amortisation (table 14.2). The abysmally low per

capita public spending on social priority sectors is not because of a lower priority accorded to these sectors, as the social priority ratio shows; it is so due to the low share of total budget expenditure in GNP and lower allocation of the budget to the social sectors. This implies the need for not only restructuring the budget for meeting human priority spending norms, but also enlarging the size of the budget itself with increased efforts to raise revenue.

14.3 FINANCING GOVERNMENT EXPENDITURE About one-half of the government budget is financed by revenue sources: tax and non-tax. After meeting the regular expenditures, only a small fraction is left as revenue surplus for financing development programmes. The remaining part is largely financed by foreign grants and loans, out of which the share of grants has been decreasing over time. Since 1991, the share of revenue surplus has

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Table 14.2

Per capita budget allocation in different sectors, 1992/93 and 1996/97 (in Rs)

1992/93

1996/97

(at current prices) Social sector expenditure

(at current prices)

(at 1992/93 prices)

375.47

777.11

568.11

Social priority expenditure Education

144.20

284.20

207.76

Health

46.44

94.13

68.81

Drinking water

51.97

33.5

24.49

Local development

32.50

11.25

44.45

Other

0.36

2.72

1.99

Total

254.23

458.99

335.55

Police and defence

157.92

215.33

157.42

External debt amortisation

109.31

126.98

92.83

Source: MOF 1997, CBS 1994.

marginally increased. However, this increase has resulted not because of a faster rate of growth in revenue or success in containing regular expenditure but because of deceleration in the growth of development expenditure. The revenue surplus is still insufficient even to finance social sector expenditure alone adequately. In order to increase budgetary allocation to the areas of human priority concern, the authorities have therefore no option than to mobilise domestic resources efficiently and effectively. Heavy reliance on uncertain foreign resources is not a viable option any more (table 14.3).

14.3.1 Revenue Tax Revenue. Tax revenue accounts for around four-fifths of the total revenue and non-tax

Table 14.3 Description

sources yield the remaining one-fifth. The most outstanding characteristic of Nepal’s tax system is its heavy dependence on indirect taxes and rigidity in its structure. The ultimate concern of the authorities is more on monitoring the bottom line of the total revenue collection from one year to the other, and less on the performance of individual components of revenue or the efficacy of the tax structure. This has resulted in a structural disorder of the tax system (Panday et al. 1988: 44). Indirect taxes contribute more than 80 percent of the total tax revenue and their relative share has not changed over the period. Taxes on international trade alone contributed on an average about 35 percent of the total tax revenue during 1991-96. This share had declined during this period as compared to 1985-90. But, if the sales tax levied on imported goods and collected like custom duties at the entry point is added to the customs duties, the decline would Financing of public expenditure, 1986-1996 1986-90

Average annual 1991growth rate* 96 18.14 39.90

Average annual growth rate* 22.58

Regular expenditure ( percent of total expenditure)

34.20

Development expenditure ( percent of total expenditure)

65.80

19.18

60.10

12.10

Total revenue( percent of total expenditure)

48.40

19.10

54.50

20.31

Revenue surplus

21.50

25.37

24.40

20.92

Domestic borrowings

16.80

8.64

12.70

11.31

Foreign aid Grants**

59.30 (29.40)

25.35 19.33

54.60 (28.3)

10.91 27.74

Loans**

(70.60)

29.08

(71.7)

9.52

Cash balance surplus

2.40

8.20

27.60

30.90

Financing of development expenditure ( percent)

Percent of social sector expenditure in development expenditure * Growth rates in nominal values. ** Percent of total foreign aid. Source: MOF 1997.

230

NEPAL HUMAN DEVELOPMENT REPORT 1998

Table 14.4

Composition of revenue, 1985-1996 (in percent)

1985-90 Sources of revenue

Share

Tax revenue

1991-96

Average annual growth rate 77.90 18.46

Share

Average annual growth rate 77.06 20.17

Customs

35.97

21.14

34.80

18.72

Tax on consumption and product of goods and services

45.21

15.82

46.87

20.70

6.43

15.83

5.77

15.45

Tax on property, profit and income

12.40

24.31

12.56

26.44

Income tax from public enterprises

25.86

22.25

24.19

37.56

Land revenue and registration

Income tax from semi-public enterprises

0.30

16.49

0.20

6.44

Income tax from private corporate bodies

0.17

178.07

5.54

385.94 16.95

Income tax from individuals

59.36

27.90

55.82

Income tax from remuneration

5.02

30.16

4.68

18.87

Urban house and land tax

2.38

10.96

1.28

1889.72

Vehicle tax

4.00

16.16

3.07

21.85

Tax on interest

2.08

21.96

4.05

78.51

Other taxes

0.09

-37.23

0.13

1440.36

Non-Tx revenue

22.10

Charges, fees, fines and forfeiture

38.41

Receipts from sales of commodities and services Dividend

23.76

22.94

21.64

58.92

15.72

-5.70

22.97

9.74

25.28

27.91

10.03

24.33

19.86

36.99

Royalty and sale of fixed assets

2.47

20.74

2.30

63.92

Principal and interest payment

24.72

56.29

36.30

35.57

1.65

178.07

0.55

8.01

Miscellaneous items Source: MOF 1997.

be doubtful. Taxes on consumption and production of goods, largely involving sales tax and excise duties, generated on an average 47 percent of the total tax revenue during 1991-96, recording an increase of about 2 percentage points as compared to 1986-90. Again, the overwhelming dominance of sales tax coupled with a low tax base of excise duty signifies the system’s failure to fully reflect the existing industrial structure of the country (table 14.4). Direct taxes contribute less than one-fourth of the total tax revenue. The composition of direct taxes shows that the taxes on property, profit and income are the major contributors and their share has increased during 1991-96 compared to 1985-90, whereas the share of land revenue and registration fees has recorded a decline during the same period. However, within the first category, some anomalies are discernible. First, although income tax is the major source of direct taxes, its declining growth rate does not augur well for better domestic resource mobilisation. In the context of privatisation and liberalisation, the second anomaly is that the income tax contribution from

private corporate bodies to the national treasury was less than one-fourth of that from public enterprises. Nevertheless, the recent high growth rate of tax revenue from private corporate bodies, although from a low base, should be a potential source of increased tax revenue for the future. The third anomaly is that the relative contribution of urban property and land taxes has declined despite the fact that the number of urban centres as well as the pace of urbanisation has increased over the period. Non-Tax Revenue. Within the non-tax revenue sources (mainly charges, fees, fines, receipts from the sale of services and commodities, dividends, royalties and fixed asset disposal and principal and interest payments), the composition has changed significantly during the reference period. During the period 1985-90, charges, fines and fees contributed about 40 percent of the non-tax revenue on average, followed by principal and interest payments (25 percent) and receipts from sale of commodities and services (23 percent). During 1991-96, the share of principal and interest payments increased to about 40 percent,

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231

receipts from the sale of commodities and services constituted 26 percent, and dividends provided 20 percent, whereas the share of charges, fees and fines declined to 13 percent (table 14.4).

Table 14.5

Composition and growth rate of foreign resources, 1986-1996 (in percent)

Headings

14.3.2 Domestic borrowing During the reference period, the rate of domestic borrowing had been growing faster than that of both gross domestic product and foreign borrowing. As a result, as a ratio of GDP it increased from the average of 14 percent during 1986-91 to 17 percent during 1991-96 and the debt amortisation cost rose to the tune of 12 percent of the total revenue in 1996. A rapid growth in domestic loans without any productivity gains adversely affects intergenerational equity by transferring resources from the future to the present generation. It may also suppress growth by crowding out the private sector from access to productive resources. One can observe some healthy developments lately where the claims of the banking sector on government and public enterprises have gone down from an average of 60.9 percent in 1986-90 to 45.9 percent in 199196.

14.3.3 External resources The structure and trend of foreign aid during the last decade shows some distinct features. First, although the magnitude of aid increased, its growth rate slowed down in the eighties and thereafter. The aid to GDP ratio declined from the average of 6.4 percent during 1986-90 to 5.6 percent during 1991-96. Second, the composition of aid has been shifting from grant to loan, and source-wise, from bilateral to multilateral. The share of grant in total aid dropped to the average of 28 percent during 1991-96 from 32 percent during 1986-90. Similarly, the share of bilateral aid recorded a decline of 2 percentage points during the same period. Third, sectoral allocation of aid has not substantially changed over the last decade. Social service sectors received on average 21 percent of total aid disbursement during 1991-96 compared with 17 percent for 1986-90. The share of infrastructure sectors like irrigation, transportation, communication and power registered a slight decline. Fourth, aid utilisation has increasingly been poor due to weak administration. The proportion of aid disbursement to commitment stood as low as

232

Composition of Growth Rate Aid 1986-90 1991-96 1986-90 1991-96

Aid/ GDP ratio

6.39

5.58

Grants

31.55

28.63

20.72*

14.87*

Loans

68.45

71.47

Bilateral aid

37.80

36.25

Multilateral aid

62.20

63.75

Agriculture, irrigation and forestry Transport, power and communication Industry and commerce

28.34

27.93

9.20

30.95

46.81

41.26

26.99

23.79

Social services

7.16

10.79

67.95

-2.89

16.77

20.60

33.93

22.78

Education Health

28.09

32.15

20.43

63.60

23.35

11.96

8.78

23.31

Drinking water

19.47

28.81

55.32

57.74

Other+

29.09

17.48

107.06

15.46

Other++

0.91

0.48

62.31

126.52

Sectoral allocation of aid

* Growth rate of total foreign resources in rupees. + Local development, supply and other social services, tourism, labour, hydrology and meteorology and others only. ++ Statistics, administrative reform, planning and contingencies. Source: MOF 1997.

one-third in some years. Some improvements have been realised in the 1990s, but it was mainly due to the increasing utilisation of loans including the highly fungible resources associated with structural adjustment programmes. Grant components remain highly unused. The need for enhancing the absorptive capacity to utilise aid more effectively, especially of the social sector, has been a longstanding issue in aid management (table 14.5). Although aid allocation to the social sector has improved during the period referred, there is a conspicuously high variation in the allocation ratio, implying a lack of firm commitment to the process. In one year, that ratio dropped from 28 percent in 1992/93 to 13 in 1993/94. Compared to the economic sector, the social sector lagged behind in foreign aid commitment in terms of both allocation and disbursement (figure 14.1). More importantly, no significant improvement could be observed in the allocation of foreign aid for human priority sectors. Aid disbursement within the health sector has gone in favour of the non-priority areas. Education, however, shows a slightly better record. Of the total aid in social services, about 70 percent has been allocated in social priority

NEPAL HUMAN DEVELOPMENT REPORT 1998

sectors (UNICEF 1997a). Of the total foreign aid, about 57 percent of aid for education and 78 percent of aid for health has been allocated to human priority areas during 1993-1997 (annexes 14.5 and 14.6). A decomposition of aid into grant and loan components is more revealing; loan in the social sector constitutes just 13 percent of the total loan, a result of the past legacy in government where a thinking prevailed that it was unwise to borrow for social sector financing. This implies not only the need for rethinking and restructuring foreign aid in favour of the social sector but also its better programming in favour of human development, and enhancing the absorptive capacity of the social sector to utilise aid more effectively. The above is an incomplete picture of resource utilisation in the social sectors. Government budgets do not reflect the expenditures made by INGOs and NGOs, and no official accounts are available on such expenditures. It is believed that a substantial amount of external assistance is being channelled directly by INGOs themselves and through the local NGOs. It is estimated that about $ 150 million (or 30 percent to 40 percent of the total volume of foreign assistance) was utilised through NGOs in 1996 (UNICEF 1997a), which is about one-third of the total government expenditure on the social sector2. It is generally acknowledged that foreign aid has positively contributed to what has been achieved in the course of efforts for development. One cannot, however, overlook issues that have been sharpened with growing dependence of the country on foreign aid. Very briefly, first, efforts to mobilise domestic resources have been shadowed by easy access to aid. Second, foreign aid projects face the sustainability problem. Many donor-funded

projects have turned into unsustainable ventures and many such programmes have discontinued despite their continuing need (UNICEF 1997a). Third, heavy operational and maintenance costs and technical weaknesses have caused many aided projects to terminate prematurely or remain ineffective. Fourth, policy shifts on the part of the donors have derailed many national priority projects and compelled the government ultimately to abandon the projects. Finally, from the standpoint of current study, there is now a conceptual issue: where and how to account for the resources spent on social sectors and human priority concerns through the NGOs? These flows are neither transparent nor recorded in a central repertoire. If the resources channelled through the government and the NGOs and INGOs are taken together, it is possible that the allocation ratios match the required standard. If so, the question would be one of efficiency and productivity of capital rather than a resource gap. This, however, is a subject that will require further study.

14.4 NEED AND SCOPE FOR BUDGET RESTRUCTURING Various resource allocation ratios reveal that wide gaps exist between the desired and actual expenditures in the human priority sector (ignoring the NGO sector). Given the present trends in resource mobilisation and allocation, that gap is likely to get much wider in the future. As stated, the principal reason has been the relatively small size of the government budget relative to the level of gross domestic product. In order that the allocation shortfall in expenditure for the social priority sector be fully met, and universal capability formation be ensured for all citizens irrespective of their gender, caste and place of residence, three inter-related measures have to be pursued concurrently. They are: (i) mobilisation of additional domestic resources and foreign resources to bridge the expenditure gaps, and restructuring of budgetary allocation with a focus on social priority sectors; (ii) intersectoral budget restructuring for higher allocations in the social sector; and (iii) intrasectoral budget restructuring for allocating a higher proportion of the social sector budget to human priority concerns and for limiting expenditure in areas of lesser priority. In addition, there is also the need for efficient utilisation of resources, for enhancing the absorptive capacity of the government

REORIENTING PUBLIC FINANCE FOR HUMAN DEVELOPMENT

233

machinery to use increased resources and ensuring its sustainability by enlarging the production base of the economy, a subject discussed elsewhere.

14.4.1 Mobilisation of additional resources A simulation exercise done with the assumption3 that the government follows the social priority sector expenditure norms as developed by the UNICEF and UNDP shows that in 1997/98, social priority expenditure should have been as much as Rs. 16.2 billion, almost double the amount currently allocated in the budget (figure 14.2). Also, the social sector expenditure should have been in the order of Rs 32.5 billion. This amount comes close to the size of the present development budget itself. Similarly, such a level of resource allocation to social and human priority sector could have been possible, only if the size of the total budget were Rs. 82.1 billion, higher by one-third of the actual provision. The shortfall in the government expenditure is thus expected to be to the tune of Rs. 28 billion to Rs. 34 billion in the year 2000, depending upon the alternative growth rates assumed for GNP and government expenditure (annexes 14.1). Despite this clear need for enlarging the scale of government expenditure, the government can not do so without generating corresponding additional resources.

14.4.2 Reforming the tax system Since the mid-’80s, there have been several tax reforms in Nepal as a part of the structural adjustment programme. Tax rates, both direct and indirect, have been revised downward, tax slabs have been reduced, a system of selfassessment of income taxes has been introduced, and the urban land and house taxes have been rationalised. Besides, collection of some taxes, such as land revenue, has been transferred to local governments, while octroi has been abolished and replaced by adjustments in other forms of tax such as urban property tax (however, octroi collection by local governments still continues due to the poor or non-implementation of the other taxes expected to replace it). Starting from November 15, 1997, the sales tax, hotel tax, entertainment tax and contract tax have been replaced by the value added tax (VAT). The Industrial Enterprises Act has been revised to streamline concessions and rebates given to industries and the

234

Decentralisation Act, specifying tax measures likely to be undertaken by the local governments, is under consideration of the parliament. Notwithstanding these reforms, the tax efforts of the government remain unsatisfactory. Elasticity of the tax system remains very low and even buoyancy has come down in recent years to less than unity. There is no recent estimate of tax elasticities. Available data show that they are low because of the government’s inability to design and rationalise the tax structure which could, among other things, also automatically adjust the growing inequality in the distribution of income and wealth (Panday et al. 1988: 49). The potential base for additional tax revenue has been further eroded because of several flaws in the tax system, such as (i) discretionary powers vested on the tax authorities and arbitrariness in their method of tax assessment; (ii) provision of various types of deductions, rebates and exemptions (agriculture and exports are totally exempted from taxation); (iii) complicated tax return procedures; (iv) rentseeking practices in revenue administration; (v) tax evasion in the form of under-invoicing of imports and under-reporting of production; (vi) no or nominal reporting of service income including those by the professional classes; and (vii) lack of political commitment to introduce progressive taxes such as property tax, inheritance tax or capital gains tax. Laxity and inefficiency in revenue mobilisation has adversely affected the process of human development. First, the low level of total resources available with the state exchequer has limited the ability of the government to adequately allocate for the social sector. Second, tax evasion and non-compliance of the rules regarding perks and privileges have widened

NEPAL HUMAN DEVELOPMENT REPORT 1998

income inequality and social injustice, and have provided a fertile ground for the mushrooming parallel economy. And third, the economy suffers from a lop-sided development process in which some select groups such as the trading community, urban centres and limited service industries prosper while the lot of the majority worsens. Distressingly, these phenomena are instrumental in fuelling the feeling of “perceived failure” of the existing socio-political system itself. The areas of tax reform revolve around the issues of revenue adequacy, allocative neutrality, equity and efficiency of the tax administration. The major challenge for a tax reform programme from the revenue perspective is to conceive a tax system that produces higher responsiveness so that revenue grows faster than national income. At the same time, the structure of taxation should be at a level, which the economy can afford. The existing tax ratio (9 percent of GDP) in Nepal is low by any standard. There is room to raise this ratio, at least by 50 percent. The possibilities of raising tax revenues vary among countries, depending, among other things, on the structure of economy, stage of development and institutional capacity (Musgrave 1997). In Nepal, there is plenty of opportunity for reform in tax structure and tax administration for strengthening internal resource mobilisation efforts. Given the administrative capability and the grass-roots realities of the Nepali economic environment such as poverty, illiteracy, large size of traditional sector, weak information system and poor law abidance, reform of tax system can, however, be only gradual and slow. •

In principle, there is a dilemma in redesigning the tax structure of Nepal. It, on the one hand, broad-based taxes on income may retard the private savings rate, on the other, broad-based taxes on consumption could further squeeze the majority of people who are already poor and whose consumption levels are quite low. Given the unequal distribution of income and low private savings (chapter 7), a prima facie option would be the adoption of a progressive expenditure tax, that is, taxation on consumption out of high incomes. One likely area for such taxation could be expenditure on foreign education, travel and health care. It is our estimate that foreign exchange worth approximately Rs. 2 billion is sanctioned

•

•

•

REORIENTING PUBLIC FINANCE FOR HUMAN DEVELOPMENT

for these purposes annually. Taxing the conspicuous expenditures involving foreign currency right at the time of exchange not only checks misuse of the foreign exchange facility, it also provides substantial resources for basic education and health care facilities at home. (A 15 percent levy would yield sufficient revenue to finance schooling of one-third of the children currently out of school (see 5.9.1)). Given that 1.7 percent of the labour force (0.64 percent of total population) pays income tax, there is a wide scope to raise the income tax-GDP ratio from the present level of 1 to 1.5 percent to at least 3 to 7 percent, as suggested by a UNDPfunded study (Harvard University 1997). At the currently estimated erosion of tax base of about 85 percent (ibid.), the income tax base should be broadened by encompassing all incomes above the threshold level. Similarly, blanket tax concessions, exemptions and rebates should be done away with. It would not only raise total revenue, But would also improve horizontal equity. Contradicting the argument of the Jcurve,4 no clear evidence of large or significant negative impacts of high tax rates has been observed on revenue and efficiency (Shome 1993). Thus, direct taxes such as land tax, urban property tax and individual income tax can be progressive in nature. However, it does not suggest exorbitantly high tax rates that negatively impact the compliance rate even among the generally socialminded citizens. Such taxes, which are distributive in nature and neutral to price rises, ensure vertical equity. Vertical equity could be further reinforced by introducing taxes on bequest or inheritance. Exemptions to small inheritances should ensure social justice and general acceptability. Theoretically, the value-added tax (VAT) should be introduced to broaden tax base and check possible tax evasion. But given the existing efficiency of tax administration, cautious steps need to be taken to avoid possible “revenue loss” due to the abolition of other taxes. At the same time, VAT has to be implemented with due care for its regressive implication on income distribution and

235

•

•

•

236

social justice. It should exclude basic consumption goods and services from the tax net in order to safeguard the poor from tax burden. Such provisions in the legislation regulating VAT are commendable. Most importantly, it should be noted that a country cannot maintain what might be called the traditional ethos of tax system` permissiveness with regard to crossborder smuggling, undervaluation of imports and over-valuation of exports at customs points, and the unholy alliance between tax inspectors and tax payers ` and, yet, introduce a modern, sophisticated tax like VAT at the same time. Perversions should not be tolerated, let alone promoted by the government, if it is serious about VAT. The contribution of private corporate bodies to income tax revenue is significantly low compared to the contribution of public enterprises. In order to curb corporate tax evasion, there should be some investigation if this tax can be replaced by a system of collecting prescribed minimum taxes on a company’s net worth. It has been reported that most thirdcountry imports have been underinvoiced for customs clearance purposes by at least 50 percent of the actual import cost (Khatiwada et al. 1994). Imports from India are also undervalued by the customs officials in order to prevent illegal entry of goods through unauthorised routes along the long and porous border. Import valuation strictly on the basis of current international market prices could generate substantial additional revenue. The government can at least try to perform better in one of its traditional functions, i.e., policing and regulating the country’s borders. The final burden of developing the human priority sector lies at the local level. In order to empower local bodies, all taxes having localised base such as property tax, vehicle tax, land revenue and entertainment tax should be transferred to the local bodies. Such taxes at the local level not only increase efficiency in tax administration, they also enhance accountability of the local bodies regarding the use of resources.

•

•

•

Tax administration has to be restructured with simplification of the tax return procedure, introduction of transparent system of tax assessment, well trained and specified manpower and adequate physical facilities for tax offices. Adequate budget for revenue administration, particularly for border surveillance, is likely to discourage smuggling at the border points and increase duty compliance on imports. There must be a taxpayer code number for all individuals engaged in activities such as manufacturing, export and import, and supply of services including professional services. Similarly, bank transactions have to come within the purview of the tax authority. Computer networking across customs offices, manufacturing establishments, banks and tax offices would help a lot in identifying and discovering the taxable income. Plugging the existing leakage in the tax system through proper networking would contribute significantly to mobilising more revenues even at the existing levels of income and tax rates. The donor community should consider how they can fully cooperate with the government in the collection of due taxes from expatriate and domestic project personnel and national consultants engaged in projects and other related activities financed under their assistance.

14.4.3 Restructuring foreign aid Official aid. The declining trend of official foreign aid inflow coupled with increasing outflows does not suggest a smooth sailing, as in the past, in respect of foreign resources available to finance development activities. A responsible government should accept this eventuality as a blessing in disguise. Structural dependency on foreign aid is never in the long-term interest of a nation. All long-term policies related to resource mobilisation should, therefore, be directed towards aid substitution and capacity building to enhance domestic resources. Nevertheless, for medium and short-term periods, the widening resource gap and increasing shortfalls in the social priority sector mean that the gap cannot be met without increased foreign resources (annex 14.2). Although partnership between the donor and recipient states is a cornerstone of

NEPAL HUMAN DEVELOPMENT REPORT 1998

development efforts, the Nepali government and the people must be clear in the exercise of their choice and in setting the country’s own development agenda. This agenda must realistically be based on the assumption of declining foreign aid inflows in the near future. In the mean time, Nepal must strive for aid mobilisation focusing on the needs of the majority of the people, ensuring good quality of the results, encompassing the poor and vulnerable people, maintaining accountability, equity and justice, and ensuring propriety in the process of aid utilisation. Various domestic measures may be taken to improve aid utilisation in general, and better reallocation of aid toward human priority sector in particular. A crucial task for the donors as well as the government would be to ensure that reallocation of aid to the human priority sector would not substitute for any additional aid in totality or lead to reduction of aid to other areas in social sectors. If this is not possible, preference in resource allocation should be given to human priority sectors. After all, this is what priority means. •

•

It is not only that the aid-human expenditure ratio still remains far below the norms set under the “20/20” vision; the vision itself is narrow. It should be broadened to encompass first national capacity building in the five sectors of basic health, basic education, water supply and sanitation, nutrition programmes and family planning services. Secondly, adequate provisions should be made for credit for the poor to open opportunities for self-employment and sustainable livelihood (Haq 1995: 181-82). Under-utilisation of foreign aid has been a bigger problem than its availability, a problem faced by Nepal for several years. There is no point in seeking more foreign assistance unless the absorptive capacity of the country and productivity of aid are enhanced. Therefore, efforts should be made to increase absorptive capacity by making adequate provisions for counterpart funds; expediting administrative and legal procedures; providing proper training to the administrative staff and making them understand the donors’ policy, guidelines and accounting formats; preventing delay in aid reimbursement; and monitoring any possibly misuse of aid. Putting in place an

•

•

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effective monitoring system between the central level and field offices, and conducting joint and periodic meetings with the concerned donors and local project teams should become a regular feature of aid management. Attention should also be given to build up the technical and administrative capacity of the sectoral ministries in project preparation, project appraisal and effective involvement in the negotiation process. Foreign aid should not be expected in each and every development activity; this would only exacerbate dependency syndrome. Prioritisation of areas for foreign assistance is essential. This calls for reorientation of foreign aid from the non-priority areas of social services to the priority areas. Such priority programmes should be initiated, formulated and implemented with local participation to develop a feeling of ownership and involvement in such programmes. Even if a policy of maintaining priority to nonpriority aid allocation at 4:1 ratio is adopted, a substantial amount can still be saved for priority expenditure. This could be done by avoiding prestigious and expensive foreign aided projects. As accountability is obscure in most of the foreign-aided projects, corruption has become a menace associated with foreign aid. This is a long-standing problem especially in procurements financed by aid. More recently, the problem has become more pervasive with the spread of “irregular” practices of rewarding public servants extra-systemically. The donors provide various kinds of allowances and perks to public servants associated with their respective projects as a special motivation apparently because of the low pay scale of the government. As a result, many foreign-aided schemes have become inherently unsustainable, apart from the ethical, moral and professional questions such practices raise. In addition, many projects often turn out to be very expensive with little scope for cost recovery by the sale proceeds of the goods or services produced. The maintenance costs of aided projects tend to be very high and repayment of the loan from the returns of the projects is almost impossible. Thus, such projects are either

237

•

•

•

238

abandoned or privatised. The donor community has begun to show serious concern about this issue, which is a welcome development. The concerns raised by the World Bank and the IMF in a global context are particularly encouraging (see 12.3.5). Other donors including the Asian Development Bank should lend their support to the good cause. The practice of administering projects directly by donors on a turnkey basis should be abandoned. This is against the norm and requirements of the objective of institution-building within the recipient country. This has also led to the proliferation of high-cost and unsustainable physical facilities that, in addition, may become counter-productive in the socio-economic milieu in the country. Foreign debt servicing is another area which is likely to siphon off more government budget in the coming years. Although about 90 percent of Nepal's external public debt is concessional, and about 80 percent of this is multilateral debt with nominal interest rates and service charges (World Bank 1993a), the pressure of debt servicing on regular expenditure has been building up, and it is limiting the resource availability for human development programmes5. Straightforward debt write-offs can precipitate complacency and further irresponsibility in fiscal management in the government. Various ways and means of “debt-swaps” currently popular in aid discourse and negotiations should be studied and implemented as desirable in the interest of human development. Finally, finance ministers should start acting like one, instead of enjoying the de facto role of a "foreign aid minister". It is about time public authorities understood that the primary function of foreign aid "is to buy time ` time enough to mobilise and manage an internally generated momentum" of development (Panday 1983). That this simple truth may be escaping the minds of the public leaders even after half a century of experience with foreign aid must be a matter of serious concern. In other words, there should be a prize for mobilising more domestic revenue and cutting down on

financial profligacy but not for "bringing more aid" into the country. Non-government organisations (NGOs). A substantial amount of external assistance is being directly administered by donors and INGOs themselves and utilised by them directly or through local NGOs without a proper mechanism for ensuing accountability. The Social Welfare Council has proved to be an inadequate instrument even to serve as a repertoire of information of related activities in the country. If a mechanism for regulating NGOs to ensure financial accountability and transparency is necessary, there is also a gap in substantive coordination among the NGOs, among the NGOs and local government institutions, among the NGOs and sectoral ministries, and among the ministries and the National Planning Commission which could bring greater efficiency in the use of these resources. Any such initiative should not lead to restricting the freedom of NGOs and making them a part of the state apparatus. There is no doubt that NGOs and local government institutions are more suited than the central government institutionally to manage areas that are directly related to human development, especially programmes related to women’s issues, people’s empowerment through education, health, and agricultural development and environmental conservation. They need encouragement, not control. At the same time, their credibility and efficiency will suffer if the decline in cohesion and public trust in them continues. In rethinking aid and NGOs, it should be understood that the issue is not about who gets to administer the aid resources, but who benefits from it. If the aid system is inherently such that its first beneficiaries are the aid administrators, the disease affecting the government would also inflict the NGOs (Panday 1995). If this is the ultimate reality, we might as well forget about aid as well as NGOs. Fortunately, this need not be the reality and Nepal's development partners, both official and INGOs, can pay greater attention to effective aid utilisation in the interest of the genuine beneficiaries of foreign aid. As stated, greater transparency in aid transactions will help to clear the air and inform the debate further. That the auditor general of the country complains often of being unaware of substantial expenses incurred even under official aid is not a good commentary on transparency or accountability.

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These expenditures might be directly incurred as those subsidies or transfer to particular individuals or groups of individuals through ad hoc grants, or indirectly incurred as in the duty-free import privileges given to public functionaries. The ever-increasing number of ministers and ministries, advisors, new offices and commissions and committees have similarly become an unbearable burden on the treasury. While the general impression of public servants is one of individuals with high responsibility and low pay (which is partly true), the liability incurred by the government on their behalf on account of the facilities and services to be provided for them can be many times higher than their salaries (see box 14.2). Such obligations need to be rationalised, leakages should be plugged and a rule of austerity should be institutionalized in government. This may not be practical, but it is immensely consistent with the values of human development. After all, why should others (donors) pay for our human development, if we are not willing to do our best?

14.4.4 Restructuring inter-sectoral budget As stated, the desired expenditure pattern shows that about Rs 32.5 billion in social sector expenditures would be needed in 1997/98 (annexes 14.1 and 14.2) as opposed to what is allocated at present. And, if the present trend in annual social sector expenditure growth (13 percent) continues, the level of social expenditure desirable in 1997/98 could be attained only after 2002/03. Alternatively, if the GNP and social sector expenditures follow the same growth rates as in the last five years, a resource shortfall would arise in the social sector amounting to Rs. 17.4 billion in 1998. Simulation exercise shows that this gap continuously increases over the years if effective intervention policies are not pursued. In order to narrow down this gap, the authorities have to examine how to increase the allocation to the social sector with or without an increase in the size of the budget. • Observing austerity in less desirable expenditure items. • Amidst resource crunch, there are everincreasing instances of wasteful expenditures incurred by the government. These are “leakages” over and above the loss suffered through corrupt practices in government.

Allocation to priority programmes. Nepal has an extremely narrow resource base and an uncertain capacity for mobilising additional resources. It is thus virtually impossible to fulfil

Box 14.2

Hounding the state coffers

One can generally spend money in four ways: spending one’s own money for oneself; spending one’s own money for someone else; spending someone else’s money on oneself; or spending someone else’s money on someone else, but for the welfare of the latter. The Nepali authorities at the helm of power seem to have gone for the third option. They never think of the second and rarely the fourth. Take the case of an incumbent minister’s perks and privileges with direct claims on the national treasury. The power that be would have us believe that the salary of a poor minister is Rs. 8,000. In addition, however, a minister is entitled to get allowances for telephone expenses (Rs. 7,000), electricity and water (Rs. 7,000), housing (Rs. 7,000), hospitality and miscellaneous expenses (Rs. 3,000) and the maintenance of personal secretariat at the residence (Rs. 20,620) are adding up to Rs. 62,620 per month. A lump sum is provided rather than on cost incurred basis and the minister is free not to submit the details of expenditure. Of course, the allowances for telephone, fuel etc. are the de facto minimum, and expenses incurred above this ‘floor’ level can be separately sanctioned on a case by case basis. Besides these overt perks, there are a host of other ‘covertly’ enjoyed facilities permissible through executive order of the

council of ministers or through their own discretionary ‘authority’. It includes, among others, one personal car/jeep in addition to one official car which may or may not be returned to garage after the expiry of the ministerial term, official secretariat, personal security, travel allowances, communication facilities, magazines etc., whose imputed value (expenditure borne by the state) is about Rs. 97,000/-. In this way, a minister directly spends 159,000/- per month from the national treasury, even without including use/misuse of the facilities available in departments, corporations, projects directly falling under his jurisdiction, one-time payment for furnishing the residence etc. Such tendency of establishing claims on the state treasury is not limited to the ministers. Legislators and high ranking bureaucrats have always been trying to catch up with the level of the perks and privilege of ministers. Thus, if one could make ministers, legislators and high ranking bureaucrats spend their own money for themselves, a significant amount could be saved from state treasury and be mobilised for the betterment of the masses. As an alternative, we should stop believing that the pay scale of public servants in Nepal is low - except, of course, for the unlucky ones.

Adapted from Bhairav Risal, Mantriko Kharch ra Matrisishu Kalyan, Kantipur, December 23, 1997.

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all demands ` in the area of human development and other competing sectors ` simultaneously. Attempts to do so would result into thinly spreading the limited resources without being able to make a perceptible impact in any sector. Hence a firm commitment is essential to identify the key areas of intervention and accord the highest priority to them at the national level. The preceding chapter outlines the possible directions that the task of prioritisation might take in this respect. These include implementation of a comprehensive land reform programme, restructuring the agricultural sector through an effective implementation of the APP, promotion of agro-industries, human resource development and poverty alleviation. There should be a deliberate effort and unflinching commitment to direct the first scoop of the available resources to these priority areas. Reducing defence and police expenditure. Security is often linked with larger national interests than even human development, and budget allocations for this purpose are made on a priority basis irrespective of whether or not other sectors are receiving enough financial resources or not. Once built in, it is hard to downsize the security force or its budget. Nepal is no exception to this. As a result, expenditures on police and defence have been growing along the same lines as other heads of expenditure. One positive aspect of the trend is that there has been no increase in such expenditure in real terms during the last five years (table 14.2). The major political parties may consider if such expenditures can be frozen at the current levels for the immediate future, implying a reduction in real terms for some time. The expenditure on internal policing can also be reduced through a long process of reorienting the society and the polity through enhancement of civil liberty and democratisation, improved social bondage, economic equality and political stability. One immediate measure could be development of a neighbourhood security system with social mobilisation involving local governments and people in the security system and entrusting them with the responsibility of enhancing local security. Reducing debt and debt servicing. Although internal debt servicing problem is often taken lightly, for it does not cause capital outflow and only transfers resources from one sector of the economy to the other, higher debt servicing siphons off resources which could otherwise be allocated to the productive and social sectors. This calls for measures to reduce

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the debt servicing burden both on a short-term and long-term basis. The proportion of debt servicing in the total budget has been more than 15 percent in recent years. Of late, domestic debt amortisation has tended to outstrip external debt servicing. Efforts should therefore be made to convert domestic debt into equity by offering the shares of public enterprises likely to be privatised to the people. Alternatively, the sales proceeds of public enterprises could be used in paying off domestic debt, which is probably the best means of servicing debt in the short term. In the long term, the government must reduce debt burden by mobilising more resources and resorting to low levels of borrowing. Administrative reform. The Administrative Reform Commission of 1992 (ARC) had recommended a reduction in the total number of civil service employees by one-fourth, both at the officer and non-officer levels. Implementation of this measure could have contributed to a significant saving in government spending which could have been diverted to funding human development programmes. According to one estimate, about a billion rupees could be saved each year by cutting down over-staffing as recommended by the ARC (1994). The administration and development campaign of the government, in general, is besieged by the vicious cycle of low pay, low motivation, low efficiency and high corruption. Yet, it is to be noted that the salaries and allowances of the civil service employees alone account for more than 20 percent of the budget expenditure. With downsizing of the staff, it should be possible to rationalise wages and salaries by taking into consideration productivity levels and general price rise. Pegging the salary bill at a constant proportion of the GDP would take care of both productivity and price rise. Decentralisation of development activities and local resource mobilisation. One distinguishing feature of the highly centralised system of revenue mobilisation and development programming is that the government is overstretched with numerous petty projects, mainly in infrastructure, scattered in all regions with little success. A reorientation leading to increased emphasis on mobilising resources locally to implement small development activities would release some resources to be spent on the human priority sectors. In this respect, the government should speed up financial decentralisation and empower local

NEPAL HUMAN DEVELOPMENT REPORT 1998

governments and other community-based organisations to undertake small development projects on their own strength. The local government should be entrusted with the necessary authority and responsibility, resources and technical support to formulate, implement, supervise and maintain local level development projects (see 12.4). Encouraging the private sector in infrastructure projects. The private sector should be encouraged to undertake infrastructure development projects such as road construction, civil aviation, telecommunication, hydroelectricity and drinking water facilities. Foreign participation in such projects should be encouraged. This would help the government to concentrate itself better on the social sectors and focus budgetary resources on the human priority areas. Populist and “prestige” projects which siphon off large amounts of resources but yield low social returns should be discouraged forthwith.

14.4.5 Restructuring intra-sectoral budget In 1996/97, only about 55 percent of the desired level of social or human priority expenditure was met by budgetary allocations. Assuming that the historical growth rates of GNP and social priority expenditure would continue, a resource shortfall amounting to Rs 7.5 billion will arise in the social priority sector in the year 1998. Further, it is likely that the magnitude of shortfall in the social priority sectors would continuously increase over the years (annexes 14.1 and 14.2). Given the size of the budget and its allocation to the social priority sector, the way to increase government expenditure toward the areas of human concern is to switch expenditures from the non-priority sectors to the social priority ones through intra-sectoral budget restructuring and effective use of resources benefiting the target groups. This ensures higher social benefits without disturbing macroeconomic balances and without adding debt burden. More importantly, the social priority sector should basically be an area of local concern ` a subject intimately related to the call for devolution of powers and functions made in this study. A feeling of ownership and pride has to be developed among the community members for activities related to human priority areas. An effective partnership can help strike a balance between the state and the community in

financing and managing such activities in a manner befitting the country’s ground reality (see chapter 11). Education. Much progress has been made during the ’90s in budgetary allocation for the education sector; nearly 80 percent of the education sector budget is allocated for human priority concerns (see 14.2). Yet, there are several distortions in the education system in terms of access and equity across gender and geographic regions. As discussed in chapter 5, wide disparities are noticeable in the rates of enrolment, repetition and drop-out; and the quality of education given to girls and to students in remote areas is generally low. Mitigating these problems calls for, among others, an increased size of budget for primary education, literacy programmes, technical education and skill development. Additional efforts are needed in the formal education sector to enhance the coverage of basic education and make it more accessible for the majority of people, and improve the efficiency and quality of education. Such efforts include in-service teachers training, continuous updating of curriculum and textbooks, reforming examination procedures, school rehabilitation and management and supervision of teachers training (MOE 1997a, 1997b). In the informal sector, reforms are needed to expand opportunities in a number of areas, including vocational and technical education, population education and nutrition education. It is essential to ensure that the disabled and women have access to these education opportunities. The existing budgetary allocation pattern does not leave much room for enlarging expenditure on the priority education sector through intra-sectoral budget restructuring alone. Even then, a few measures could be taken to ensure more resources to this sector. • The government should undertake full responsibility for resources necessary to finance primary education. Barring some technical areas of national priority (such as agriculture, forestry, engineering, medicine and public health), university education should be run on as low a subsidy as possible. • Budgetary provisions should be made to enhance access to basic education for children of the poor, deprived and underprivileged households and communities. • Special budgetary provisions have to be made for universal access to girl-children for formal education, informal education

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•

•

•

for women and special education for the disabled. Increased budgetary provisions have to be made for such technical and vocational education that can produce manpower in demand at the labour market. There is, however, room for reducing the unit cost of such education from its present levels. A higher proportion of the education budget should be allocated for the basic and primary schools compared to secondary school, and additional budgetary provisions should be made for employing at least one female teacher in every primary school. The education policy should be oriented toward increasing the contributions of the community and private sector in secondary education. In order to establish a culture that adopts education as an integral and indispensable element of the society and community, the school should be transformed as a centre for community activities at the local level. Secondly, some flexibility in the secondary education curriculum should be allowed to address local needs, potentials and problems (MOE 1997b).

Health. There has been a great deal of wavering in the prioritisation of health sector expenditure. A distinct trade-off exits between the establishment of large hospitals and provision for primary health care and it is necessary to make public priority clear on the same basis. At present, non-priority spending absorbs more than 40 percent of the total health sector budget (see 14.2). As expenditure on preventive health services has a greater bearing on child mortality and health, longevity and ultimately on a healthy life itself, health sector spending should be reoriented in favour of preventive services. In this context, more resources have to be allocated to services like child immunisation, family planning, maternity and child care, nutrition, health education and the like. Large hospitals, specialised health institutes, and untargeted medicine supply should get lower priority in terms of budget allocation. A time-bound strategy needs to be implemented to gradually operate specialised services on a cost recovery basis. Specialised services for the poor and deprived communities could be provided under special arrangements such as distributing health cards and hospital bed reservations.

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Drinking water and sanitation. The health condition of people is sensitive to the availability of safe drinking water. High incidence of death, diseases and morbidity can be attributed to the lack of safe drinking water and poor sanitation, both in the rural and urban areas. The gap between the rural and urban areas is also now widening regarding access to safe water and sanitation. Projects directly related to drinking water and sanitation in the rural areas also need a higher budgetary allocation. Local development and other priority sectors. Local development includes a wide range of activities. Here, only those local development activities are included as social priority sector activities which directly focus on enhancing the quality of living of the rural poor through health, education and skill-related programmes, and productivity enhancing and income generating activities. In particular, women development, skill training, nutrition, social awareness and environment protection programmes are directly associated with human development, and hence fall under human development priority expenditure. These programmes need higher budgetary allocation (a detailed list of social priority projects and programmes is given in annex 14.1). Since 1995, there has been a marked improvement in budget allocation for local development either in the form of the Build Your Village Yourself or Rural Self-Help Programme. In many instances, these grants have proved to be a critical resource to initiate the much needed development activities in a number of areas. However, given the uniformity of the amount irrespective of the relative degree of poverty and deprivation across the regions, districts and villages, these programmes have been insensitive to the needs of the relatively poorer and underdeveloped regions. Thus, budgetary allocation for local bodies of the various districts should be linked with their respective levels of human deprivation and absorptive capacity. Local governments are given the authority to spend the grant money on areas of their own need and priority. A systematic analysis needs to be done regarding the effectiveness of the direct grant programme. It is often argued that this amount has been spent either on non-priority areas, or on priority areas with questionable success. In order that such resources contribute more to the development of the priority social services, provisions should be made for allocating at least 50 percent of the local

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development fund in such areas. Besides, technical support in project formulation, physical and financial monitoring and evaluation and auditing of accounts are imperative for an effective use of the resources allocated. Streamlining transfers and subsidies. Subsidy is an issue in Nepal not so much for its magnitude as for its lack of direction in targeting and monitoring for its consequences. The present level of subsidy is less than 3 percent of budget expenditure and 0.5 percent of GDP. A large portion of the transfer and subsidies goes for supporting university education, central hospitals, media/communications and operation of public enterprises of lesser importance from the viewpoint of human development. With regard to subsidies channelled through the public enterprises (annex 14.7), about 50 percent is confined to price and transport subsidy for chemical fertilisers. Subsidies extended to small irrigation, biogas, foodgrains, livestock insurance and credit to small farmers may have a greater relevance for human development through their effects on productivity as well as distribution. In addition, subsidies to these areas are liable to less misuse than subsidies given on fertilisers. The following points on subsidy may be considered for the future: •

•

From the perspective of food security, small and marginal farmers need to be supported with subsidies on their most essential production inputs (fertilisers, seeds and irrigation), credit and marketing. Along with this, the food deficit districts of the country, not linked by road network, may be subsidised either in terms of transportation or production at the local level. Budgetary allocation for developing appropriate varieties of seeds for farmers operating under dryland farming conditions, research and development for innovating crops suitable for specific climatic zones and extending support services like irrigation and fertilisers in these districts would be consistent with the objectives of intrastructural budget restructuring. Fertiliser subsidy is a much-debated issue. Donors have tended to argue against subsidy on this critical input, along with the call for an outright privatisation of its importation and distribution. Those who are more sanguine about the country’s reality would like a gradual, time-bound

•

•

•

•

withdrawal of subsidy, while keeping a close eye on how the prices change across the border. The latter view is based on the fact that it would be impractical for Nepal to pursue an independent fertiliser price policy, given the long and porous border to the south, and the high possibility of cross-border deflection in cases of wide price differentials at the two sides of the border. Full privatisation is difficult due to the complications associated with subsidy administration. Moreover, as the APP has argued, it would be disruptive to withdraw subsidy altogether, since it would result in near doubling of fertiliser price and significant reduction in its application, at least in the short run, adversely affecting the already low yields of major food crops. Since Nepal’s average use of fertilisers is only about 25 kilograms per hectare, the desirable policy option is to promote the application rate to a reasonable level than abruptly disrupt the already low application rate. Specific agro-enterprises as well as cottage and small enterprises with high employment creation and exports potential will have to be subsidised in terms of cost of capital, electricity, transportation of the products for exports (if located in remote areas) and research and development. Capital and interest subsidy to small irrigation, biogas and plantation should continue and should be extended to those areas which directly address poverty and unemployment. Interest subsidy on micro-credit financial institutions targeted towards poverty alleviation and income generation of the poor households should continue. There should be subsidy for institutions for skill development, employment generation, export promotion, training and technology transfer and research and development. Micro-credit institutions which deal in small-scale loans at the grass-roots level should be subsidised in terms of low-cost fund and institutional support like training and insurance and oversight.

Extending social security schemes. In Nepal, GNP growth remains low along with a skewed distributive feature. The notion that

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growth will take care of the social security provisions leaves majority of the population in constant deprivation and misery. Thus, the support provided by the state is critical for relieving the most needy sections of the population from deprivation and hardship. It is also true that sustainability of the intervention policy in social security requires continued growth of the economy to generate the resources necessary for this purpose. The concept of responsibility for social security on the part of the state has not yet been fully promoted in Nepal. Some symbolic actions have been undertaken such as a token amount of old age pension for citizens above the age of 75, and pension for widows and the disabled. Other security measures opted by the government and semi-government institutions are pensions, gratuity, medicare facilities and welfare funds for employees. But, these provisions are grossly inadequate and can hardly protect the employees or promote their well-being. A large number of the needy citizens do not have access to even these limited social security measures. Social security is nothing but an extension of the fundamental rights of the citizens to socio-economic needs. It is more than the public measures usually expressed in legislation, and is

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composed of all preventive, protective and promotional measures adopted by the state to enhance and dignify the life of the deprived and the disadventaged. It transmits benefits of economic growth emanating through market mechanism to the weaker sections of society and hence promotes quality of life of all people, irrespective of whether one can participate in the market process or not. As it is closely related to the minimum standards of living, it helps to free human mind of the fear and threat of hunger, sickness, disability, ignorance and untimely death. Thus expenditure on social security should not be taken as doling out scarce resources from the national treasury, but as a positive contribution towards developing a wholesome and civilised society. Notwithstanding the fact that at its present stage of development the national economy does not have resources to help meet these obligations fully, the government needs to approach this delicate issue with requisite sensitivity. In the end, it is the status of social security and concern of society and the state, through their influence on resource allocation, on the well-being of citizens, that will guarantee the security of the nation in its entirety.

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CHAPTER 15

Human Development: Some Key Challenges ... the reading of a text requires that the one who does it be convinced that ideologies will not die. The practical application of this principle here means that the ideology with which the text is drenched − or the ideology it conceals − is not necessarily that of the one who is about to read it. Hence the need for an open, critical, radical, and non-sectarian position on the part of the reader, without which he or she will not be closed to the text, and prevented from learning anything through it because it may argue positions that are at odds with those of that reader. At times, ironically, the positions are merely different, and not positively antagonistic. Paulo Freire 1995 ... shielded against too violent an impact of disturbing truths, the rulers of mankind are enabled to maintain side by side two standards of social ethics, without the risk of their colliding. Keeping one set of values for use and another for display, they combine, without conscious insincerity, the moral satisfaction of idealistic principles with the material advantages of realistic practice. R. H. Tawney 1931 Between the ideal and practice there always must be unbridgeable gulf. The ideal will cease to be one if it becomes possible to realise it. The pleasure lies in making the effort, not in its fulfilment. For in our progress towards the goal we even see more and more enchanting scenery. Mahatma Gandhi

15.1 DEPARTURE AND STANCE

H

uman development, to borrow from E.F. Schumacher, is about development as if human beings mattered. The concept of human development encompasses all issues that form the staple of conventional development discourses. The difference is one of stance, one of how the world and the issues are read, what conclusions are reached, what institutions are engaged and how the world and issues are acted upon. The stance adopted makes a fundamental difference in perception and action. It forces a new perspective on the old world. It also forces new modes of prioritisation and action. The stance here is that of human development. The focus is on the human person, big and small, rich and poor, and child, woman and man. The emphasis is on using and building human capabilities and on reducing human deprivation and, more generically, on bettering the human condition. The emphasis, in addition, is on inviting all to engage in political, economic and cultural actions which lead to the use and

HUMAN DEVELOPMENT: SOME KEY CHALLENGES

enhancement of human capabilities and to the reduction of human deprivation. Correspondingly, the emphasis here is not on the development and growth of physical, economic, financial and technological resources − the central objectives of the conventional development agenda, except in so far as they serve as means for the promotion of human development. The human being, after all is said and done, is the end of all development and all human endeavours. In addition, the emphasis here is on the universalisation of human development. This, essentially, is what authentic democracy is all about. In Nepal, there are more “small” people than big, and there are many more poor than rich. The rich, however, may also be underdeveloped in human terms. To the extent this is the case, which indeed it is to a significant extent, human development promotion includes them as well. It is the case, nonetheless, that discourses on human development generally get transformed into a debate on the condition of the

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“small” women and men and the ways and means of conserving, creating and recreating appropriate political, economic and cultural institutions which enable them to participate in the conservation, creation and recreation of such institutions and to develop their capabilities.

15.2

ECONOMY, CULTURE, POLITY

Economic and financial institutions and processes are critically linked not only to growth but to the human condition as well. The significance of the economic domain for the promotion of human development, thus, cannot be underrated. While we − and, we are certain, our readers − remain uncertain about the location of the head of the causal arrow, we know that economic and financial conditions and allocations are closely correlated with the level of human development among men and women (table 15.1). Internationally, countries with high average personal incomes generally, although not necessarily − and there are a large number of exceptions − enjoy a higher level of human development as well. We know even more intuitively and intimately that financial allocation can become a crucial determinant of access to basic education, primary health care and work. Illustratively, finances can make or unmake a primary school, a health post or an employment programme. Yet, we feel that conventional emphases on the significance of the economic domain have gone overboard. Thus, even within the strategic frame of human development, there is no shortage of views which espouse an exclusive or near-exclusive reliance on growth-led human development promotion. Indeed, even the conceptual foundations of human development are regarded as much too shaky, unwarranted and, at best, impractical, in circles which idolise growth. Many public planners and administrators, some development partners and donors, and even some of the INGOs and NGOs, who are led to believe that the only instrument they can wield is the financial one, often come to similar conclusions. We do not subscribe to such views. On the other hand, we do uphold the view that the economic domain has a significant bearing both on the status of human development and its promotion. The political and the cultural domains, we believe, are equally (to the economic one) sanguine about the status and promotion of

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human development. These domains, among others, have a crucial bearing both on the scale and distribution of opportunities and effective access to human developmental ends. These domains define and implement rules of seclusion and exclusion. They also define the limits of legitimacy and rights. They have a crucial bearing on political and cultural belongingness, participation and empowerment. They are intimately tied to executive, legislative and judicial actions. All of these, in turn, are closely linked to human development and its promotion. Economic and financial inputs, thus, are not the only inputs available to promote human development (and, for that matter, any development). Political and cultural structures are key resources that can be utilised for the promotion of human development. It should not Table 15.1 Correlation between district-level HDI, GDI and other socio-demographic and economic variables (75 districts)

Variable

HDI

GDI

Infant mortality rate Health institution per population Socio-economic

-0.7630*

-0.7753*

Child labour rate Gender imbalance ratio in nonagricultural occupation Food production per capita Landless and marginal farmer (percentage) Access to agricultural credit Regular public expenditure per capita Development public expenditure per capita Physical

-0.6871*

-0.7131*

0.4646*

0.5189*

0.3405*

0.4145*

-0.5402*

-0.6053*

0.2637**

0.3512*

0.3870*

0.2711**

0.3959*

0.2871**

Cultivated area (percentage) Area of irrigated land (percentage) Road density per capita Area with slope 30 degree and above (percentage)

0.4586*

0.4649*

0.2896**

0.1720

0.6070*

0.4571*

-0.4619*

-0.4608*

Health related

0.2617**

0.1833

Notes: Child labour rate is defined as the proportion of working children 10-14 years old to the total number of children in that age group. Gender imbalance ratio in non-agricultural occupations is defined as the ratio of females to males among the population 15+ years of age engaged in non-agricultural occupations multiplied by the sex ratio in that age group. A landless and marginal farm household is defined as a household which operates agricultural land less than 0.5 ha. Food production per capita is defined as the caloric value of total food (paddy, wheat, maize, barley and potatoes) production divided by the size of the rural population adjusted for adult equivalence. Infant mortality rate is defined as the average number of deaths of children less than one year of age per 1000 live births per year. Irrigated land is defined as agricultural land area which is irrigated yearround. Road density is defined as the weighted sum of different categories of road in kms as a proportion of a 100-sq km surface area. Health institution per population is defined as the number of health institutions per unit of population adjusted for distance. Per capita public budget allocation is for FY 1994/95. * significant at 99.5 percent. ** significant at 97.5 percent. Source: Annexes 3.6. and 3.11, ICIMOD 1997.

NEPAL HUMAN DEVELOPMENT REPORT 1998

be forgotten either that specific political and cultural structures can hinder the promotion of human development. In a similar way, specific financial regimes can retard the promotion of human development as well. For the promotion of human development, such liabilities need to be struggled against. More fundamentally, we do not believe that the three domains operate in an independent and exclusive sphere. The three domains, in essence, are both intricately interactive and embedded in one another. Illustratively, each of the variables listed on the left-hand side of the table above is a simultaneous product of the political, economic and cultural structures and processes. For example, the rate of child labour is not only a component or a product of a specific economic regime per se; instead, it is a distinct and specific product of a particular economic, political and cultural regime. Similarly, it is not only the availability of revenues or lack of it which determines whether a primary school will be funded or not. Making of a financial decision on whether to fund a primary school is, simultaneously, a political and cultural act as well. Hence the need to put the political and cultural domains in the same class as the economic domain and the need to link up the three domains together with human development and its promotion.

15.3 MACRO, MESO, MICRO Many among us, policy-makers and planners in particular, continue to put the “macro” on a pedestal and to relegate the “meso” and “micro” to the backwaters. We continue to believe − and plan and act accordingly − that reforming the macro will, ipso facto, take care of the meso and micro levels. Accordingly, and more concretely, and despite widespread failure, we continue to speak of “delivery of development.” Even those among us who consider ourselves to be reformed, nonetheless, continue to urge and promote a “more efficient delivery of services”. Without going into the virtues and vices of such a pattern of thinking, acting and structuring for the promotion of conventional development or economic development, it has to be said that promotion of human development is contingent on concerted action on all of the three planes. Macro policies and actions can certainly facilitate a movement toward the goal of promoting human development. But promotion of human development-friendly macro policies

HUMAN DEVELOPMENT: SOME KEY CHALLENGES

and actions is itself contingent on the spread and intensity of organised demands and struggles made by peoples, representatives and institutions at the meso and micro levels. The macro-level is neither the fountainhead nor a repository of such friendliness. For macro-level goodwill to manifest, it must be made to do so. In essence, both priority determination and action at the macro, meso and the micro levels are highly interactive. There is no virtue in a priori allocation of priority to the macro level. For human development promotion, the three levels must move in tandem. In addition, human development is the most undeliverable of all developments. Delivery implies the existence of a passive recipient − whether an individual or a meso/micro level institution. It does not promote the capability to achieve. It tends to reduce people into objects who are waiting for delivery. It does not promote the active subject status of a person. The conceptual frame of human development, on the other hand, is intrinsically wedded to promotion of the capability to achieve. It seeks to reduce the existing level of poverty of capability. The delivery mode, in contradistinction, seeks to raise the level of welfare while remaining, at best, neutral to the enhancement of capability. In addition, the delivery mode inherently upstages the macro level and degrades the significance of the meso and micro levels. In doing so, it also diminishes the subject status of the meso and micro levels in their own rights.

15.4 PRINCIPAL ACTORS As noted, each individual is an active agent of human development promotion. Similarly, institutions at all levels can become active agents of human development promotion. These truisms, however, beg the question: who or which institutions are charged with a higher level of responsibility, more equipped and potentially able to promote human development and reduce deprivation? Without denying or diluting the significance of other institutions, we affirm that the principal role for the promotion of human development has to be played by the state. Human development is a constitutionally mandated duty of the state. (The fact that we have recommended a couple of human developmentfriendly amendments to the constitution does not detract from the principal nature of the role of the state.) No other single institution is

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mandated by all the people to perform such a role. Besides, no other single institution has a similar level of access to political, economic and cultural resources as the state. Nor does any other single institution have a level of legitimacy as the state. Furthermore, even under the new themes of “small government”, such roles are largely allocated to the state. (More on this later.) The state does not signify the executive branch alone, nor does it imply the (central) government alone. Apart from the legislative and judicial branches of the (central) government (the last is a part of the state in so far as it defines the limits of infringements of constitutional and legal commitments entered into by the executive and the legislature), local representative bodies are intrinsic components of the state. Such bodies, therefore, ipso facto share the principal responsibility for human development promotion over their respective jurisdictions. For such bodies to play a principal role in human development promotion, however, they need to be legally empowered. They also need to be financially and technically supported by the central government. In essence, authority must be devolved and a new, human development-friendly compact implemented between the (central) government and the local bodies. Political parties functioning within a multiparty regime necessarily have a dual nature. Parties (which broadly uphold the constitution) are components of the state (although only one or some may form the executive). In addition, however, they are also people’s organisations. This dual nature privileges them to act as the primary mechanisms of linkage between the people and the state and its representative, i.e., the government. Their nature and the privileges they enjoy position them to play the role of a principal actor for the promotion of human development. In particular, in their status as people’s collective representatives, political parties can play a potentially key role in the promotion of human development. We pin great hopes on them. While dwelling on the role of the (central) government, local representative bodies and political parties, we have also dwelt upon the significance of the political domain for the promotion of human development. We have done so consciously. The promotion of human development, in part, is a political act. Despite the relatively weak emphasis of the major

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political parties on human developmental themes at present, it cannot be pursued in a political vacuum. To the extent that the state and the political domain have not played the role expected of them, they need to be reformed. The state and political domain cannot opt out and abdicate. The political domain must become the principal platform for the articulation of interests in favour of human development. The alternative path is certain to promote interests which espouse “development without politics”. (Because politics cannot be shunned in any case, what such interests really seek is to occupy the political space themselves.) Such a path, because it bypasses the political process, is certain to derecognise, or pay only lip service to, democracy and democratisation. We, on the other hand, uphold the view that a regime which encourages the exercise of democracy rights is intrinsically human development promoting. Bureaucracy is another principal actor for the promotion of human development. While politics determines or influences whether the human developmental frame receives the attention that it deserves, whether adequate political, economic and cultural resources are mobilised, whether they are allocated for human priority concerns, and whether the allocated resources are utilised effectively as intended, it is the experts who help the politicians with these tasks. In addition, only the bureaucrats have the corporate knowledge necessary for refining the policy focus. As it is, however, the assets of the bureaucracy have not been utilised fully. The challenge is to establish the practice of an independent, professional and permanent civil service which essentially exists in order to aid and advise the political masters in power and to execute decisions that are legal and not repugnant morally. We view cultural institutions and civic groups as the principal actors of human development promotion as well. While specific components of existing cultural institutions and some civic groups harbour a high level of antihuman developmental bias, particularly in relation to its universalistic underpinnings, these institutions and groups, in general, have historically shouldered the major share of responsibility for human development. No other principal institution is equipped with such experience. In addition, cultural institutions and civic groups possess a deeply intimate knowledge of the ground level reality which no

NEPAL HUMAN DEVELOPMENT REPORT 1998

other principal institution can match. The low level of efficacy of the human developmental and other interventions by the other principal actors can at least partially be attributed to their failure at engaging these institutions and groups at various stages of the intervention cycle. Engaging these institutions and groups can add much to efficiency as well. Alienation of these institutions and groups, on the other hand, lies at the roots of unsustainable interventions. We also view the market as a principal actor for the promotion of human development. Historically, the institution of the market led to the demise of the feudal system which was narrowly sectarian and overtly anti-human development. It has opened significant fronts for the flowering of private initiatives. It has also led to the enhancement of human capital (which, both as a conceptual and a strategic frame, has affinities as well as contradictions with those of human development). In addition, public initiatives on human development can learn much, particularly in relation to efficiency, from market-based institutions. Markets, however, also resist the prioritisation of human development promotion. They can be antiuniversalistic. They can limit access or force discriminatory access to the use and enhancement of human capabilities (chapter 5). Finally, back to the individual and to the collective manifestation of individuals, i.e., groups and peoples. We view them as the most principal of all actors for the promotion of human development. Accordingly, it is our view that individuals, groups and people must promote themselves, and enter into strategic alliance with, all other principal actors/institutions friendly to human development promotion. In addition, they should be able to discern which of the programmes and actions of the principal actors are friendly to human development promotion and which are not. Strategic alliance, thus, can be established not only at the level of actors but at the level of programmes and actions as well. On the other hand, we are under no illusion either that the promotion of human development can move apace within a space which is resistance-free. Such spaces will have to be occupied through peaceful struggles. In addition, we also believe that engagement in such struggles is intrinsically promotive of human development. We also hope that individuals, groups and peoples will be in the forefront of such struggles.

HUMAN DEVELOPMENT: SOME KEY CHALLENGES

15.5 HUMAN DEVELOPMENT PROMOTION AND GLOBALISATION There is a gap in comprehending the forces of globalisation and its relation to human development. The occasional allegiance paid by government leaders and some development partners and donors to the cause of human development in Nepal notwithstanding, the dominant view in practice appears to be that what really matters is being a part of the process of globalisation. Witness, in India, the elation about elevation of 20 percent of the population into middle class, which is often peddled as the critical mass that will take India to the twentyfirst century in a globalised world, in utter disregard of the 80 percent that may be left behind. Similar views and strategies are being brought into practice in Nepal. The “modern sector”, which is small and is controlled by a miniscule proportion of the population, is increasingly seen − and assisted − to become the saviour of the “traditional sector” and the rest of the people. Such views and strategies, however, can have no place within human development thinking. It is a fact that a certain level of trade-off exists between being a part of the global system by increasing the competitiveness of economy and being able to address problems of bulk of the population, approximately 45 percent of which are absolutely poor. Bulk of the population is yet to acquire human capabilities necessary for beneficial membership in the global village. While the judgement on trade-off will be pronounced by the balance of forces among the principal actors identified above, we believe the view that no human person can be “programmed” to be dispensed with as a price for a ticket for others to enter the “global village”. We believe that a useful point of departure while proceeding to the judgement will involve the consideration and prioritisation of the constituency to be served by the principal actors. If the primary concern is growth − together with the accolade of an external constituency − the significance of a parameter as simple as foreign direct investment (FDI) may overshadow any concern over human development. On the other hand, if the paramount concern is human development, FDI flows and other related strategies and accomplishments can assume only

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secondary importance, as supplemental means. Accountability to the vast domestic constituency will, illustratively, attract attention to the need for reorientation of the agrarian and agricultural system, and to assistance to agro-enterprises and other small businesses. Human development will mainly be pursued not for instrumental reasons, e.g., to tap the potential of a globalised world, but to mitigate deprivation of the majority within the country. Tourism will be developed not only to cash in on the “upscale market” but also to permit benefits from it to trickle down to the rural population. Similarly, in water resources, concern will primarily be focused on people’s need for drinking water, irrigation, and energy for lighting and cooking. If, in that process, there is a contribution in terms of export earnings, so much the better. A concern for the domestic constituency will also mean that the political process cannot for long ignore the grievances and aspirations of people who may wear different identity tags − ethnic, regional or gender. In our view, such concern alone adds to human development. Nor are we alone in this: many other segments of the external constituency also subscribe to such a concern. Emergence of the global 20/20 vision is the most vivid example, as are various commitments and resolutions made in the interest of women, children, environment and social development. The UNDP’s emphasis, advocated through the annual Human Development Reports, constitutes a critical testimony as well. There are additional reasons for prioritising the domestic constituency. Labour-industry relations, for example. The agenda of liberalisation does not approve of trade unions even though it is difficult to declare unionism a criminal practice within a democratic regime. Agricultural land and industry owners in the country have long presaged the current emphasis on liberalisation by being generally reluctant to hire Nepali labourers − for fear of “unionisation”. However, the negative impact of such practices on the promotion of human development and poverty alleviation cannot be ignored for long. Similarly, globalisation does not relieve the state from its responsibility of mobilising domestic resources. Illustratively, how is Nepal to enter the “global village” with 85 percent of its income tax base outside the tax net? That the scaling down of tax rates has not led to an increase in tax collection is a lesson that may

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apply to other areas of economic policy also. Likewise, the donors could do better in ensuring that the payments they make for services rendered to them are captured in the tax net. Rule of law is necessary no matter which ideology drives a government.

15.6 RETHINKING FOREIGN AID A prolonged addiction to aid is inherently degrading. It is therefore inconsistent with the values of human development. Yet, promotion of human development may suffer if additional aid flows are not ensured. This dilemma stares at the face of politicians and planners in Nepal. However, it is not only the growing number of “aid-bashers” in the country but also the World Bank itself which warned nearly twenty years ago that Nepal was becoming “completely dependent on the goodwill of aid donors” (World Bank 1979). A reversal of this process is absolutely necessary. For this to take place, the government needs to consider seriously when and how it expects the need for aid to start tapering off. A fullfledged white paper on the subject, based on an in-depth investigation of options and outcomes, has become overdue. Is the lessening of dependence on official aid inflow likely to be substituted by private capital inflows? If so, how and when? How will such substitution affect the financing of human development promotion? How and when will domestic resources start replacing foreign aid as instruments of human development promotion? It may not be entirely a wild idea that a special meeting of the donors might be necessary, not to discuss “aid increases,” but to debate on the possible date for the reversal of the process. In addition, it is not only the government which is dependent on aid. NGOs are also creating their own bottomless pits. A few nongovernmental organisations, especially those engaged in community-based efforts, are producing relatively good results, including in matters immediately related to human development. But it is rarely the case that sustainability is an important criterion. The “aid reversal process” needs to be discussed here as well. Aid utilisation issues also need a rethinking. There are, at present, two agendas being addressed, one driven by the Bretton Woods institutions (liberalisation) and the other by the UNDP (human development). There may be new

NEPAL HUMAN DEVELOPMENT REPORT 1998

possibilities for diverting a larger proportion of aid away from traditional economic uses in favour of supporting human development, assuming that availability of aid resources may not be a matter of paramount concern for programmes in support of liberalisation. Private capital, both domestic and foreign, can presumably play the role not only to finance the production of goods and services but also infrastructure development. To the extent that this is the case, the bulk of aid resources should be free to be channelled to human priority concerns. In addition, debt-human development investment swaps may also deserve consideration. Whether such courses are open is an issue for further study, debate and negotiation. In the mean time, efforts to increase the productivity of aid resources must continue through other means as well. Here we only wish to highlight the point that the pressure for disbursement may be the single most significant factor contributing to low productivity or even misuse of aid. Disbursement is not and cannot be allowed to be more important than its expected outcome. The issue of disbursement is understandable a matter of priority for the donors. After all, disbursement is only another name for implementation. However, “disbursement fetishism” often attracts wrong projects and questionable practices in aid management. In order to sidestep such problems, we think that donor agencies should develop internal mechanisms which tolerate low disbursement in a given year without penalising allocations for subsequent years.

15.7 MONITORING HUMAN DEVELOPMENT The domestic constituency for human development is certainly not small in magnitude. All poor and excluded peoples, all women and all children are the subject of this enterprise and its direct beneficiary. In addition, the constituency includes those who are income-rich but poor in capability. Nonetheless, and for all the feel-good pronouncements and the formal homage paid to it, human development promotion may remain unprioritised when realigning policies and allocating resources to this end. Lack of adequate information and weak modes of highlighting available information may also contribute to such an outcome. Lack of adequate information may, moreover, contribute

HUMAN DEVELOPMENT: SOME KEY CHALLENGES

to weak politicisation (i.e., elevation of human developmental concerns as key political agenda) of human developmental concerns, including at the local levels. It is, therefore, essential that a system of monitoring policies, priorities and performance in human development be instituted. Because outputs change relatively slowly, performance monitoring needs to focus on intermediate outcomes. Further, initial research work is necessary in order to identify the appropriate indicators. The monitoring of policies is a more straightforward task. Qualitative policy indicators, measures of allocation of public resources and shifts in orientation of the private sector towards social needs can be assessed through long-term, periodic and annual macro as well as sectoral policies, plans and programmes, annual government budget statements and the structure of private investment. However, more than ex-post monitoring is needed. The commitment of the government to human development promotion can be observed through criteria it uses in evaluating projects and allocating public expenditures. It would be sensible to institute a human development impact assessment procedure in screening policies, programmes, projects, etc. in a way similar to the one suggested and used in the field of environment. Such a procedure should also lead to the preparation of checklists of policies, strategies and programmes that are detrimental to human development. Furthermore, monitoring needs to be institutionalised at the local level. A monitoring system that is limited to the national level and owned only by the central government − and by development partners and donor agencies − is not worth an independent effort. Information on at least some of the components and indicators of human development at the national level becomes routinely available through other national level surveys and assessments, such as those utilised for the preparation of the present reporty (none of which focussed explicitly on human development as such) as well. Monitoring must lead to more than information. In particular, the monitoring-based information must lead to actions − reprioritising, strategy reformulation, allocation of adequate political, economic/financial, cultural resources at local levels. The NPC-UNICEF Nepal Multiple Indicator Surveillance (NMIS) exercise can be a pointer in this regard. Local representative

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bodies should be strongly encouraged to replicate this monitoring and re-strategising design.

15.8 HOPE The report now is with the readers and the principal actors who are, or should be, charged with the promotion of human development. If the report has not yielded a concrete programme of action, this is only because we did not include such a task within the scope of the present study. The challenge for us, at this juncture, was not to come up with a set of programmes but to facilitate an assessment of the ground conditions for better-informed discourse and decisionmaking for human development promotion in all their intricate inter-relationships in the domains of polity, economy and culture and at the macro, meso and micro planes. Long-term blueprints, in

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any case, are more than likely to occupy a space in the shelves rather than in minds and actions. What is expected of the reader and the principal actors is a recognition of the spread and depth of human deprivation, the trade-offs involved in policy and programmatic choices and the potential roles of various agents of government, economy and society in facilitating an outcome that can reduce the massive scale of deprivation. If this hope is vindicated in the future by the behaviour of the major political economic and cultural actors, the necessary programme of action will gradually start to take shape. In turn, if the hope is belied, and if a Social Darwinist version of market competition and capricious politics get further entrenched, a highly concrete programme of action will only serve to further expose the hypocrisy permeating the system, so vividly portrayed, for another setting, by Tawney more than six decades ago (1931).

NEPAL HUMAN DEVELOPMENT REPORT 1998

ANNEXES Annex 1.1

Distribution of population by ecological region, 1952/54-1991 (in percent)

Year 1952/54 1961 1971 1981 1991

Source: CBS 1995b, 1997b.

Population by ecological region Hills Mountains Tarai & Hills

Mountains 9.9 8.7 7.8

52.5 47.7 45.5

Annex 1.2

64.8 63.6 62.4 56.4 53.3

Total

35.2 36.4 37.6 43.6 46.7

8,256,625 9,412,996 11,555,983 15,022,839 18,491,097

Structure and growth of gross domestic product (at 1984/85 price)

Growth rate Sector\Fiscal Year

1975-85

1985-95 1996

Sectoral share 1997

1975

1985

1995

1996

1997

Agriculture

1.4

2.8

5.4

3.3

67.6

51.2

41.7

41.4

40.8

Non-agriculture

8.7

6.8

6.7

6.1

32.4

48.8

58.3

58.6

59.2

Industry

9.3

7.6

5.3

7.4

9.4

15.0

19.2

19.1

19.5

of which manufacturing

6.1

9.2

4.9

12.0

4.8

5.7

8.4

8.3

8.9

Services

8.4

6.4

7.3

5.5

23.0

33.8

39.0

39.5

39.7

of which trade & hotel

14.9

5.9

9.0

6.2

3.9

10.3

11.3

11.6

11.7

Finance & real estate

5.6

6.0

6.1

5.0

7.9

9.0

9.9

9.9

9.9

Gross domestic product

4.3

4.9

6.1

4.9

100.0

100.0

100.0

100.0

100.0

Note:

Other industries include mining and quarrying, electricity, gas and water and construction. For 1975-85, the nominal figures on value- added in the industrial and services sectors were deflated using the non-agricultural GDP deflator. Source: MOF 1997.

ANNEXES

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ANNEX 3.1 Sources of data The study is based on secondary sources of information, collected mostly by government agencies, for purposes other than the investigation of human development as such. In a number of instances, NESAC accessed and used raw data while, in others, use was made of published data. Thus, some of the information, particularly disaggregated information used in the report to calculate human development indices, has not been published elsewhere, even in the publications of institutions which collected the data. For the present purpose, the major data sets we have primarily relied on are: Nepal Living Standard Survey (NLSS) 1996, HMG/N, Central Bureau of Statistics; Nepal Family Health Survey (NFHS) 1991 and 1996, HMG/N, Department of Health; National Census Report 1991, HMG/N, Central Bureau of Statistics; and Local Election Reports 1991, Election Commission. The original objectives of the data collection exercise, sample size, data collection procedures and limitations of these surveys are briefly presented in the following paragraphs. Nepal Living Standard Survey, 1996. Nepal Living Standard Survey was designed as a multi-dimensional survey to collect comprehensive sets of data on different aspects of household welfare, such as consumption, income, housing, labour market, education and health. It followed the Living Standard Measurement Survey methodology with an integrated household questionnaire covering consumption, income, assets, housing, education, health, fertility and migration. It was accompanied by a community questionnaire aimed at supplementing information on service provisions, prices and the general economic environment facing the household. The sample size of NLSS was 3,373 households. It included 409 households from the Mountains, 1,740 households from Hills and 1,224 households from the Tarai. The sample included 717 households from the eastern, 1,320 from the central, 624 from the western, 160 from the mid-western and 352 from the far western development regions. A two-stage stratified sampling procedure was used to select the sample. The primary sampling unit was the ward. Twelve households were selected from each ward. A total of 275 wards were selected. Missing or nonrespondent households were replaced by using a pre-determined random procedure. In the first stage of sampling, wards were selected with probability proportional to size (PPS) from each of the ecological strata, using the number of households in the wards as a measure of size. The sample frame was sorted in an ascending order of districts and wards, which facilitated an implicit stratification with respect to the development regions. Though the sample frame considered all the 75 districts, only 73 districts were represented (excluding Rasuwa and Mustang) in the survey. Data were collected throughout the year (from June 25, 1995 to June 15, 1996) by dividing the field work in four subsequent phases to cover a complete cycle of agricultural activities and to capture seasonal variations in other variables. For the purpose of calculating human development indices, this report has computed per capita income (in local currency) from NLSS. The total income is the summation of crop income, non-crop farm income, income from wage employment, non-farm family enterprise and self-employment income, income from transfers, rental income and income from other sources. Each income component is itself an aggregation of a number of possible revenues and costs. Besides income data, this report has used wage rates, both for males and females, required to compute the Gender Sensitive Development Index (GDI) and Gender Empowerment Measure (GEM). Wage income is calculated on the basis of information on the duration of work and wages and other components of payment which include payments in cash and kind, and other fringe benefits such as bonus, tips, allowances, clothing and other yearly payments. Although the present report has used the information of NLSS for the national and subnational levels (ecological zones, development regions, eco-development regions, castes and administrative districts), it needs to be pointed out that the sample size at the district level was quite small. The disaggregated data should be interpreted with considerable degree of caution. However, for other strata not explicitly defined in the survey itself, particularly for caste/ethnic groups and eco-development regions, the sampling error can be expected to be low. Family Health Surveys. Nepal Family Health Survey (NFHS) adopted the methodology developed for Demographic and Health Surveys (DHS). It is thus comparable to similar surveys conducted in other developing countries. It was designed to provide estimates of population and health indicators, including fertility and child mortality rates. That survey also provides information on nuptiality, knowledge and behaviour regarding contraception, potential demand for contraception, other proximate determinants of fertility, family size preferences, utilisation of antenatal services, breast-feeding and food supplementation practices, child nutrition and health and immunisation. The survey, moreover, provides national estimates and their variation across rural and urban areas, ecological zones and development regions. Estimates are made for most of the key variables (with the exception of fertility and mortality estimates) and for 13 eco-development regions (the Mountains and Hills were combined in the case of western, mid-western and far western regions). In total, 253 primary sampling units were selected: 34 in the urban areas and 24 in the rural areas. The number of interviewed households was 8,429 with a total population of 42,863. The survey collected information at the individual and household levels. At the individual level, basic information was collected on relationship to the head of the household, sex, age, education and martial status. The household level survey provided information on the sources of water, type of toilet facilities, room used for

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NEPAL HUMAN DEVELOPMENT REPORT 1998

sleeping, main materials of the floor, ownership of various consumer durable goods and characteristics of household heads such as religion and ethnicity. In addition, information was collected from women ever married of the age group 15-49, covering variables such as education, religion, reproductive history, knowledge and use of family planning methods, fertility preferences and attitude about family planning, marriage, antenatal and delivery care, breast-feeding and weaning, vaccination of child, maternal mortality, and height and weight of children. This report has used information from the above mentioned source on fertility and crude birth rates for calculating life expectancy for all disaggregations except for the district level. Similarly, information on malnutrition, adult literacy, mean years of schooling, sources of water supply and caste/ethnicity composition is used from this survey. Caste groups have been realigned as follows: Brahmin combines the Brahmins of Tarai and Hills; Chhetri includes Chhetri, Thakuri and Rajput; Gurung, Magar and Sherpa are regrouped to include Gurung, Ghale, Magar, Rai and Tamang; and Rajbansi, Yadav and Ahir have been reclassified as Tharu, Yadav and Rajbansi. Similarly, the occupational castes are defined to include the formerly untouchables and Dhobi; and the “others” category includes Majhi, Kayastha, Kumhar, Baniya, Sundi, Kalwar, Bhujel, Giri, Kanu, Kurmi, Bhumihar, Teli and other castes from the Hills. Such realignment was done in view of the sample size required to calculate life expectancy at birth. Due to the restriction imposed by the sample size, we have used information disaggregated up to the eco-development region level only. National Population Census, 1991. The 1991 population census was conducted by the Central Bureau of Statistics (CBS) during June 5-22, 1991. Unlike in the 1981 census, both household listing and actual field census took place simultaneously in this censal exercise. The census collected information both at the household and individual levels. At the household level, information was collected on caste, number and sex of family members, number of dwellings, age and sex of absentee members (including the duration of absence and reasons for leaving home), age and sex of deceased members, occupation and landownership. At the individual level, information was solicited on demographic and social characteristics (such as sex, age, ethnicity/caste, language, religion, literacy, school enrolment, martial status) and geographic characteristics (such as nationality, place of birth and migration). Besides these, information was collected also on economic activities, such as type and duration of employment, sector of employment, unemployment and its reasons. This report utilises information form the census to obtain fertility and mortality rates, to calculate life expectancy at birth, adult literacy rates and mean years of schooling, particularly at the district level. The census figures are then extrapolated to the current period, distinguishing the relative shares of males and females in professional and managerial work. The Post-Enumeration Survey (PES), designed to evaluate the 1991 census data quality with respect to completeness of coverage, estimated an overall undercount of about 11 percent in the 1991 census (Natrajan 1993). However, the PES estimates were not accepted due to their delayed implementation, problems encountered in matching the PES and census records case by case, and inadequate coverage (Karki 1995). Thus, we have assumed that the census data are free from major statistical deficiencies. However, with regard to the quality of the census data, it has been claimed that respondent age has been lumped together in the case of certain ages due to ‘digit preference'. With regard to fertility, not only children ever born (life-time fertility), but also current fertility is under-reported in the census, thus underestimating the fertility rates. Similarly, it has been claimed that the mortality rate, too, is under-reported (CBS 1995b). District Election Reports. The Election Commission reports election results for each of the 75 districts of Nepal, covering the results from village development committees, municipalities and district development committees. We have used the information of such reports to assess political participation, particularly of females in relation to males.

ANNEX 3.2 Computation of indices The Human Development Index Initially, the human development index (HDI) was formulated in terms of a country’s status of deprivation or shortfall in three dimensions of human development: life expectancy, education (measured in the inception report by adult literacy rate but later modified by adding another dimension, mean years of schooling), and adjusted income (real per capita purchasing power parity -PPP- in dollar terms discounted with Atkinson’s formula). A country’s overall deprivation was defined as the simple unweighted average of these three deprivations. Since 1993, HDI has been defined in terms of attainment rather than deprivations or shortfalls. Similarly, in the case of the first three HDRs, HDI was constructed as a measure of relative performance across the countries. No special significance was attached to the absolute value of the index, the entire analysis being conducted in terms of the ranking of the countries relative to another (Anand and Sen 1994). Obviously, such an analysis could not provide a basis for inter-temporal analysis, for the maxima and minima changed each year following performance of the countries at the end of the scales. For the purpose of comparing the performance of a given country over time, the “goal post” for each variable must be held constant. The 1993 HDR changed the methodology of constructing HDI by introducing a fixed “goal post” with minimum and maximum values for each of the three dimensions based on the most extreme values observed over the previous three decades, or expected over the next three decades (Haq 1995).

ANNEXES

255

Following the 1994 HDR, two changes have been made in the construction of the HDI relating to the variables and their minimum and maximum values. First, the variable of mean years of schooling has been replaced by combined primary, secondary and tertiary enrolment ratios, mainly because the formula for calculating mean years of schooling is complex and poses enormous data requirements. Second, the minimum value of income has been revised from PPP $ 200 to PPP $ 100. This revision was made to make HDI and gender-related development index (GDI) consistent and comparable, because PPP $ 100 was used as the minimum value for income for the construction of the latter index. However, for the HDI, the revision was only marginal, and it had little effect, if any, on HDI values. The HDI calculated in HDR 1997 has adopted the minimum and maximum values for the three components as follows: 25 and 85 years of life expectancy at birth; 0 and 100 percent of adult literacy rate as well as a combined enrolment ratio; and PPP $ 100 and 40,000 of real GDP per capita. The average world income of PPP $ in 1994 (PPP $ 5835 ) is taken as the threshold level and any income above this level is discounted using Atkinson’s formula for the utility of income1. This works out to adjusted/discounted maximum per capita real GDP of PPP $ 6,154. Educational attainment is measured by the combination of adult literacy (with two-thirds weight) ratio and combined primary, secondary and tertiary enrolment ratios (with one-third weight). The unweighted average attainment in these dimensions gives the magnitude of human development index (HDI). Mathematically, HDI for country j could be expressed as 3 Hj=2 ∑ hij i=1 where hij= [Xij - min( Xik ) ]/[max (Xik ) - min ( Xik ) ] k k k is the ith variable’s contribution to the human development index for the jth country. The methodology, along with the definition of variables and their measurement, adopted in calculating the human development index for Nepal, is illustrated below. Life Expectancy Index Life expectancy at birth is calculated based on the number of children ever born and surviving by using the Coale and Demeny (1966) West Mortality Model for three reference periods based on the data of Census 1991, and Nepal Family Health Survey (NFHS) 1991 and 1996. From census data, life expectancy for each of the districts, ecological zones, development regions, place of residence, eco-development regions and castes has been calculated. The life expectancy at birth for the reference period 1989 (based on 1991 census) did not produce plausible results. Therefore, the life expectancy at birth was calculated using the infant mortality rate calculated by Thapa (1996) using the census sample, which was not accessible to us. The growth in life expectancy based on the NFHS 1991 and 1996 was used to extrapolate life expectancy for 1996 for ecological zones, development regions, eco-development regions, place of residence and caste/ethnicity. However, for districts, growth in life expectancy in the corresponding eco-development region was used to extrapolate life expectancy in each of the districts. For districts in which the results appeared absurd, appropriate proxy values were used from the corresponding development region or ecological region. For Nepal, life expectancy at birth is 55 years. The index of life expectancy was calculated as: Life Expectancy Index =[55 - 25]/ [85 - 25] = 30/ 60 = 0.500 Educational Attainment Index The components of educational attainment have been frequently changed in the global human development reports. Initially, in the first report, adult literacy rate was used. In the subsequent reports, another dimension of educational attainment, mean years of schooling, was added with two-thirds weight for the former component and one-third for the latter. Since the publication of HDR 1994, mean years of schooling has been replaced by the combined primary, secondary and tertiary enrolment ratios, mainly because the formula for calculating mean years of schooling is complex and entails enormous data requirements (UNDP 1994). Nonetheless, we have used mean years of schooling instead of combined enrolment ratio because information regarding the years of schooling could be calculated from the National Population Census 1991 and Nepal Family Health Survey 1996, and also because mean years of schooling captures the educational quality of the literate adult and the educational attainment of young people (combined enrolment ratio). Besides this, data on the gross enrolment ratio are usually overestimated and unreliable due to the practice of enrolment-based government grants to the schools. As the NFHS 1996 could not give a reliable estimate at the district level due to its limited sample size, we have used its information only to

256

NEPAL HUMAN DEVELOPMENT REPORT 1998

estimate the level of educational attainment at the national, regional and eco-development region levels. The growth rates in the mean years of schooling obtained from NFHS 1991 and 1996 at the eco-development region level have been used to extrapolate the mean years of schooling of the corresponding districts, using 1991 census data as the base. For Nepal, adult literacy rate is 36.72 percent and mean years of schooling is 2.254 years. The index for educational attainment has been calculated as follows. Literacy Index = [ 36.72 - 0 ]/ [ 100 - 0] = 36.72/ 100 = 0.367 Mean Years of Schooling Index = [ 2.254 - 0 ] / [ 15 - 0 ] = 2.254 / 15 = 0.150 Educational Attainment Index = 2 (Adult Literacy Index + (Mean Years of Schooling)/3 Index) =[2 (0.367) + 1 (0.150) ] / 3 = 0.295 Income Index Since no national estimates are available for per capita income in terms of purchasing power parity dollar (PPP $), we have used the latest available national per capita PPP $ as provided in the World Development Report 1997 and extrapolated it for 1996 by using the per capita income growth rate. For all classes of disaggregation, per capita PPP $ income has been obtained by multiplying the national per capita PPP $ income by the ratio of the income of the corresponding class of disaggregation of the national per capita income at local currency, obtained from NLSS. Such estimation, however crude, enables international comparison. District level per capita income is calculated from NLSS for each district. The respective eco-development/development regional incomes have been used as a proxy for those districts which are not covered by NLSS, as well as for those districts where absurd results were obtained due possibly to large sampling errors. As the regional income levels from NLSS are estimated by adjusting regional price variations, we expect minimum distortion in the estimated per capita PPP $ income at the regional and district levels. As the income levels for the national as well as for all classes of disaggregation fall below the threshold income level (PPP $ 5835), we need not discount per capita income as outlined in the standard HDR methodology. For Nepal, per capita PPP income was $1186 in 1996, and thus its absolute value is used for the computation of Income Index which has been calculated as follows: Income Index = [ 1186 - 100] / [ 6154 - 100 ] = 1086 / 6054 = 0.179 Human Development Index Human Development Index (HDI) is the unweighted average of life expectancy index, educational attainment index and income index, and is obtained by dividing the sum of these indices by 3. HDI = [ 0.500 + 0.295 + 0.179 ] / 3

= 0.325

The Gender-Related Development Index (GDI) The theoretical and mathematical considerations underlying the methodology for computing gender-sensitive indicators are provided in HDR 1995 (technical notes 1 and 2) and Anand and Sen (1994). The computation of GDI requires the calculation of: (a) the equally distributed index of life expectancy; (b) the equally distributed index of educational attainment; and (c) the equally distributed index of income. GDI is the unweighted average of these three equally distributed indices with a value ranging from 0 to 1. Mathematically, GDI for country j could be expressed as GDIj = [1/3 ( pf . Xfk1-ε + pm. Xmk1- ε ) ] 1/ 1- ε for the pair k = 1, 2 and 3. Where pf is the proportion of female population, pm is the proportion of male population, Xfk is female achievement and Xmk is male achievement in the kth component, and ε is the degree of aversion to inequality. Higher the value of ‘aversion to inequality’ or social preference for equality (ε), higher would be the discounting rate for male achievement. The HDRs propose a moderate value of ε = 2, the harmonic mean of female and male achievements. This is calculated by taking the reciprocal of the population-weighted arithmetic mean of female and male achievements. We have also taken 2 as the value of ε.

ANNEXES

257

Equally Distributed Index of Life Expectancy Recognising the biological feature of women outliving men (this, however, is not the case in Nepal which makes the computed disparity even worse), GDI uses the maximum and minimum life expectancies of 87.5 and 27.5 years for females, and 82.5 and 22.5 years for males respectively, thus maintaining the same difference for either gender. The equally distributed index of life expectancy is calculated as follows: Life Expectancy Male

55.0 years

Life Expectancy Index Male (55.0 - 22.5) / 60 = 0.542

Female

52.4 years

Female

(52.4 - 27.5) / 60 = 0.415

The population projected by CBS for 1996 is used to calculate the male and female shares sexes in total population. Percentage share of total population Male 0.502

Female

0.498

The equally distributed index of life expectancy assuming ‘aversion to inequality’ value as 2 = 0.4702 = [ ( 0.498 ). ( 0.415 )-1 + [ ( 0.502). ( 0.542 )-1 ]-1 Equally Distributed Index of Educational Attainment The variable for educational attainment includes adult literacy, with a two-thirds weight, and mean years of schooling with a one-third weight. The method for computing the equally distributed index for educational attainment is shown below. Male and female adult literacy rates are 54.32 percent and 21.33 percent respectively, and the corresponding mean years of schooling are 2.555 and 1.132 years. Literacy index Male [ 54.32 - 0 ]/ [ 100 - 0 ] = 0.543

Female

[ 21.33 - 0 ]/ [ 100 - 0 ] = 0.213

Mean Years of Schooling Index Male [ 2.555 - 0 ]/ [ 15 - 0 ] = 0.170

Female

[ 1.132 - 0 ]/ [ 15 - 0 ] = 0.082

Educational Attainment Index Male [ 2/3( 0.543 ) + 1/3( 0.170 )] = 0. 419

Female

[ 2/3( 0.213) + 1/3( 0.072 )] = 0.167

Percentage share of total population Male 0.502

Female

0.498

The equally distributed index of educational attainment assuming 2 as the value for ‘aversion to equality’: = [ ( 0.498 ). ( 0.167 )-1 + ( 0.502). ( 0. 419 )-1 ]-1 = 0.234 Equally Distributed Index of Income Computation of the equally distributed index of income requires the female and male shares of earned income which, as proposed in the HDRs, is computed by using the ratio of average female wage to the average male wage and the male and female percentage shares of the economically active population aged 15 and above. The HDR uses 75 percent of non-agricultural male wage rate as female wage rate; the weighted mean of the wage ratios for all the countries is obviously a crude proxy for gender income differential. As NLSS reports gender-specific total wages for both agricultural and non-agricultural activities in cash and kind, we have used such information to compute gender differential in earned income instead of indirect estimation as adopted in the HDRs2. The proportional income share is calculated by dividing earned income shares of each gender by its respective population share. For Nepal, the male and female wage shares are respectively 82 and 18 percent of the national wage income, and their respective shares in the total population are 50.2 and 49.8 percent. The equally distributed index of income has been computed as follows: Male and female proportional income shares:

258

NEPAL HUMAN DEVELOPMENT REPORT 1998

Male: Male share of earned income (= wage)/ male population share = 0.82/ 0.502 = 1.633 Female: Female share of earned income (= wage)/ female population share = 0.18/ 0.498 = 0.361 Equally distributed income index assuming 2 as the value for aversion to inequality = [ ( 0.498 ). ( 0.361 )-1 + [ ( 0.502). ( 0.1.634 )-1 ]-1 Equally distributed income Equally distributed income index

= 0.593

= ( 0.593 ) . ( PPP $ 1186 ) = 703.4 = [ 703.4 - 100] / [6154 - 100] = 0.0997

GDI is the unweighted average of equally distributed life expectancy, educational attainment and income indices, and is obtained by dividing the sum by 3. GDI = [0.4702 +0.2395 + 0.0997] /3 = 0.267 Gender Empowerment Measure (GEM) The GEM attempts to measure the relative empowerment of men and women in the political and economic spheres of activity. The percentage shares of men and women in the administrative and managerial positions and in the professional and technical positions are taken to reflect their economic participation and decision-making power. Similarly, women’s share in the parliamentary seats is used to reflect their political participation and decisionmaking power. And lastly, to reflect power over economic resources, the unadjusted real GDP per capita (PPP $) has been used. For all variables, equally distributed equivalent percentage (EDEP), as in the calculation of GDI, has been calculated assuming a value of 2 for ‘aversion to inequality’3. For Nepal, GEM has been calculated as follows: Calculation of representation in parliamentary seats4 Percentage share of parliamentary representation Male 96.59 Female

3.41

Percentage share of population Male 50.2

49.8

Female

Calculation of EDEP for parliamentary representation = [ ( 0.498 ). (3.41)-1 + [( 0.502). (96.48)-1 ]-1 Parliamentary Representation Index

= 6.610

= 6.610/ 50

= 0.132

Calculation of Economic Participation Calculation of index for administrative and managerial position Percentage share of administrative and managerial positions

Male

84.94

Female

15.06

Percentage share of population

Male

50.2

Female

49.8

Calculation of EDEP for administrative and managerial positions = [ ( 0.498 ). ( 15.06 ) -1 + [ ( 0.502). ( 84.94 ) -1 ] -1 Administrative and Managerial Representation Index

= 16.915 = 16.915/ 50

= 0.338

Percentage share of professional and technical positions

Male

90.70

Female

9.30

Percentage share of population

Male

50.2

Female

49.8

Calculation of Index for Professional and Technical Positions

Calculation of EDEP for professional and technical positions = [ ( 0.498 ). ( 9.30 ) -1 + [ ( 0.502). ( 90.70 ) -1 ] –1

ANNEXES

= 25.654

259

Professional and Managerial Representation Index

= 25.654/ 50

= 0.513

Combined Index of Economic Participation and Decision-Making

= [ 0.513 + 0.338 ]/ 2

= 0.426

Calculation of Income Index As in the computation of GDI, we have used the wage rate ratio as the earned income ratio. Female and male proportional income shares Males: Male share of earned income (= wage)/ male population share Females: Female share of earned income (= wage)/ female population share

= 0.82/ 0.502 = 0.18/ 0.498

= 1.634 = 0.361

Equally distributed income index assuming 2 as aversion to inequality = 0.593 = [ ( 0.498 ). ( 0.361 ) -1 + [ ( 0.502). ( 1.634 ) -1 ] -1 Equally distributed income = ( 0.593 ). ( PPP $ 1186 ) = 703.4 Equally distributed income index = [ 703.4 - 100] / [40000 - 100] = 0.0151 GEM = [0.132 +0.426 + 0.015] /3

= 0.191

Capability Poverty Measure (CPM) The Capability Poverty Measure (CPM) focuses on human capabilities and reflects the percentage of people who lack basic capabilities − capability to be well nourished and healthy − represented by malnourished children; capability for healthy reproduction, proxied by the proportion of births unattended by trained health personnel; and capability to be educated and knowledgeable, represented by female illiteracy. It is the unweighted simple average of the three indicators that reflects the percentage of the population with capability shortfall in these three dimensions (UNDP 1996). For Nepal, CPM is calculated as follows. Birth unattended by trained health personnel ( % )5 = 89.9 Malnourished children under age five ( % )6 = 48.4 Female illiteracy rate ( % ) = 78.7 CPM

= [ 89.9 + 48.4 + 78.7 ]/ 3 = 72.3

Human Poverty Index ( HPI ) The detailed theoretical and methodological underpinnings along with the properties of the Human Poverty Index (HPI) are illustrated in the technical notes of the Human Development Report 1997 (UNDP 1997). HPI is the reverse image of the HDI but focuses on human deprivation instead of human achievement. It concentrates on the same components of HDI − longevity, knowledge and decent standard of living. Thus, for the calculation of HPI, we need the indices of deprivation in three dimensions: deprivation in longevity (P1), deprivation in knowledge (P2) and deprivation in a decent standard of living (P3). P1 is typified by the percentage of people expected to die before age 40, P2 by adult illiteracy and P3 jointly by unweighted composite value of the percentage of people without access to safe water (P31), percentage of people without access to health services (P32) and percentage of malnourished children under 5. That is, P3 = [ P31 + P32 + P33 ] / 3. HPI is calculated as outlined in HDR 1997 with the assumption of a generalised mean α = 3 . HPI = [ 1/3 { P13 + P23 + P33 }] 1/3 For Nepal, HPI has been calculated as follows: Deprivation in longevity (P1)7 = 22.5% Deprivation in knowledge (P2)= 63.3% Percentage of people without access to safe water (P31)8 = 33.2% Percentage of people without access to health service (P32)9 = 58.7% Percentage of malnourished children under age 5 (P33)10 = 48.4% P3 HPI

260

= [ 33.2 + 58.7 + 48.4 ] / 3 = 46.7 = [1/3{( 22.5 )3 + ( 63.3 ) 3 + ( 46.7 ) 3} ]1/3 = 49.6

NEPAL HUMAN DEVELOPMENT REPORT 1998

Human Deprivation Measure (HDM) Like the HDI, the Human Deprivation Measure (HDM) also focuses on the same three indicators: health, education and income. The methodology for calculation of HDM for Nepal with the total population of 21.12 million is illustrated below (for detail, see Haq 1997). Health Deprivation Index Total population without access to safe water11 Total malnourished children under five12 Total

=7.01 million =1.48 million = 8.49 million

Health Deprivation Measure (X1) = Total health-deprived population/Total population = 8.49/ 21.12 = 40.2% Education Deprivation Index Total Illiterate Adults Total number of children out of school Total

= 7.71 million = 1.98 million = 9.69 million

Education Deprivation Measure (X2) = Total education deprived population/Total population = 9.69/ 21.12 = 45.87% Income Deprivation Index Total income-poor population = 9.51 million Total population = 9.51 million Income Deprivation Measure (X3) = Total income-poor population / Total population = 9.51/21.12 = 45% The following Atkinson formula was used to calculate HDM: HDM = 100 - [ 1/ε ( 100 - X1 )(1-ε) + 1/ε ( 100 - X2 ) (1-ε)+ 1/ε ( 100 - X3 ) (1-ε)] = 100- [ 1/3 ( 100 - 40.20 )-2 +[ 1/3 ( 100 - 45.87 ) -2 +[ 1/3 ( 100 - 45.00 ) -2 ] = 43.85 %

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261

Annex 3.3 Country Nepal World Industrial Countries All Developing Countries Least Developed Countries Bangladesh Bhutan India Maldives Pakistan Sri Lanka

Nepal’s achievement in human development in global and regional perspective* Life expectancy index 0.50 0.64 0.82 0.61 0.42 0.52 0.44 0.60 0.63 0.62 0.79

Education index 0.45** 0.71 0.93 0.65 0.44 0.38 0.38 0.53 0.86 0.37 0.82

Income index 0.18 0.94 0.98 0.46 0.14 0.20 0.20 0.21 0.35 0.34 0.52

HDI value 0.378 0.764 0.911 0.576 0.336 0.368 0.338 0.446 0.611 0.445 0.711

Rank 1994 154 144 155 138 111 139 91

Relative value Nepal=100 100 220 263 165 97 106 97 129 176 128 204

* The HDI and component values for Nepal are for 1996. For all other regions and countries, the values pertain to 1994. **The education index has been based on combined primary, secondary and tertiary enrolment ratios in order to facilitate international comparison. Use of this measure, however, has the effect of inflating Nepal’s HDI. Cf. table 3.2. Source: UNDP 1997 and NESAC, based on sources shown in table 3.2.

Annex 3.4 Year 1960 1970 1980 1990 1992 * 1992 1993 1994 1996** 2002 # 2012 #

Trends in human development Life expectancy index

Educatio n index

Income index

0.462 0.475 0.480 0.505 0.500 0.575 0.809

0.227 0.354 0.365 0.363 0.455 0.678 0.956

0.179 0.200 0.152 0.171 0.183 0.239 0.457

HDI value 0.128 0.162 0.209 0.278 0.289 0.343 0.332 0.347 0.378 0.496 0.738

Annual % change 2.65 2.90 3.30 11.69 -3.20 4.52 9.22 5.18 4.89

* HDI based on 1991 income. ** The HDI value obtained by using adult literacy and mean years of schooling (rather than enrolment figures) to compute educational attainment index is 0.325 for 1996. In the rest of the chapter we will be using mean years of schooling instead of combined enrolment ratio. # Calculation based on the Ninth Plan Targets and future projections (NPC 1997). Source: UNDP, HDR (various issues); World Bank 1997b; NPC 1997; CBS 1991, 1996; MOH 1991, 1996a; MOH 1997.

262

NEPAL HUMAN DEVELOPMENT REPORT 1998

1186

0.500

Ratio to national HDI Nepal=100

7673

Human Development Index (HDI)

2.254

Income Index

36.72

Educational Attainment Index

Mean years of schooling

55.0

Per capita income (NRs) 1996 Per capita PPP income ( in US$) 1996 Life Expectancy Index

Adult literacy ratio (percent) 1996

Nepal

Human development across regions, 1996 Life Expectancy 1996

Region

Annex 3.5

0.295

0.179

0.325

100.00

Place of residence Urban

63.2

63.50

4.768

15,900

2,458

0.637

0.529

0.389

0.518

159.65

Rural

53.7

34.50

2.013

7072

1093

0.478

0.275

0.164

0.306

94.13

Mountain

52.7

27.50

1.479

5896

911

0.462

0.216

0.134

0.271

83.33

Hill

58.0

40.20

2.468

8403

1299

0.550

0.323

0.198

0.357

109.91

Tarai

59.5

35.90

2.174

7319

1131

0.575

0.288

0.170

0.344

106.03

Eastern

55.4

41.90

2.654

7429

1148

0.507

0.338

0.173

0.339

104.50

Central

55.7

35.10

2.214

9326

1442

0.512

0.283

0.222

0.339

104.33

Western

59.3

39.50

2.383

6999

1082

0.572

0.316

0.162

0.350

107.79

Eco-regions

Development region

Mid-Western

51.2

32.20

1.765

6038

933

0.437

0.254

0.138

0.276

85.01

Far Western

52.1

34.60

1.813

5927

916

0.452

0.271

0.135

0.286

88.01

Eco-development regionas Eastern Mountain

58.9

38.40

2.283

6682

1033

0.565

0.307

0.154

0.342

105.29

Hill

64.2

40.20

2.351

5774

892

0.653

0.320

0.131

0.368

113.37

Tarai

59.8

43.20

2.865

8578

1326

0.580

0.352

0.202

0.378

116.41

Mountain

53.1

22.20

1.147

7111

1099

0.468

0.173

0.165

0.269

82.82

Hill

64.7

45.00

3.076

12103

1871

0.662

0.368

0.292

0.441

135.74

Tarai

56.2

29.10

1.681

7665

1185

0.520

0.231

0.179

0.310

95.51

Mountain

52.7

39.50

2.443

6952

1075

0.462

0.318

0.161

0.313

96.51

Hill

57.2

41.00

2.524

7988

1235

0.537

0.329

0.187

0.351

108.13

Tarai

62.5

37.00

2.147

5609

867

0.625

0.294

0.127

0.349

107.37

Mountain

52.7

19.60

0.953

4981

770

0.462

0.152

0.111

0.241

74.33

Hill

56.8

33.20

1.705

6220

961

0.530

0.259

0.142

0.311

95.61

Tarai

55.7

33.90

2.005

6100

943

0.512

0.271

0.139

0.307

94.58

Mountain

52.7

29.60

1.480

4195

648

0.462

0.230

0.091

0.261

80.32

Hill

48.9

31.50

1.723

5881

909

0.398

0.248

0.134

0.260

80.09

Tarai

55.9

39.50

2.031

6863

1061

0.515

0.308

0.159

0.327

100.89

Central

Western

Mid-Western

Far Western

Source: CBS 1996; MOH 1991, 1996a; World Bank 1997a; MOF 1997.

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263

0.500

0.295

0.179

3,236

0.700

0.590

0.518

0.603

2

Lalitpur

63.0

60.37

4.385

17,689

2,734

0.633

0.500

0.435

0.523

3

Kaski

60.0

53.66

3.387

13,761

2,127

0.583

0.433

0.335

0.450

4

Morang

66.5

48.45

3.192

7,609

1,176

0.692

0.394

0.178

0.421

5

Jhapa

58.5

54.43

3.511

10,950

1,693

0.558

0.441

0.263

0.421

6

Dhankuta

64.3

44.41

2.643

8,247

1,275

0.655

0.355

0.194

0.401

7

Bhaktapur

56.0

52.20

3.535

9,922

1,534

0.517

0.427

0.237

0.393

8

Tehrathum

61.3

52.57

2.920

6,830

1,056

0.605

0.415

0.158

0.393

9

Tanahu

61.0

43.33

2.502

8,828

1,365

0.600

0.344

0.209

0.384

1,257

0.592

0.364

0.191

0.382

0.605

0.389

0.146

0.380

Rank

Human Development Index (HDI) 1996

1,186

20,939

Income Index

7,673

5.354

Life Expectancy Index

2.254

70.62

Means years of Schooling 1996

36.72

67.0

Adult literacy ratio (%) 1996

55.0

Kathmandu

Life Expectancy 1996

Nepal 1

District

Per capita PPP income US$ 1996

Educational Attainment Index

Human Development across districts, 1996

Per capita income NRs. 1996

Annex 3.6

0.325

10

Sunsari

60.5

45.18

2.834

8,130

11

Ilam

61.3

48.63

2.898

6,354

12

Kabhrepalanchok

60.0

32.43

2.119

12,103

1,871

0.583

0.263

0.292

0.380

13

Syangja

58.0

42.69

2.659

10,064

1,556

0.550

0.344

0.240

0.378

14

Lamjung

58.0

39.70

3.222

9,995

1,545

0.550

0.336

0.239

0.375

15

Saptari

62.5

33.09

2.521

9,312

1,439

0.625

0.277

0.221

0.374

16

Chitwan

56.5

49.46

2.531

8,414

1,301

0.525

0.386

0.198

0.370

17

Sankhuwasabha

61.7

41.32

2.283

6,843

1,058

0.612

0.326

0.158

0.365

18

Taplejung

60.7

39.77

2.596

7,337

1,134

0.595

0.323

0.171

0.363

19

Rupandehi

60.5

41.72

2.449

6,807

1,052

0.592

0.333

0.157

0.361

20

Parbat

58.0

43.64

2.816

7,245

1,120

0.550

0.354

0.168

0.357

21

Surkhet

57.0

45.49

2.446

7,719

1,193

0.533

0.358

0.181

0.357

22

Parsa

58.5

32.67

1.679

10,504

1,624

0.558

0.255

0.252

0.355

23

Udayapur

61.3

34.24

1.961

8,020

1,240

0.605

0.272

0.188

0.355

24

Solukhumbu

61.7

32.50

1.896

8,101

1,252

0.612

0.259

0.190

0.354

25

Bhojpur

64.3

37.09

2.209

4,573

0.655

0.296

0.100

0.351

26

Siraha

62.5

24.42

1.888

9,257

0.625

0.205

0.220

0.350

27

Okhaldhunga

64.3

33.63

1.941

4,498

0.655

0.267

0.098

0.340

28

Dolkha

62.0

25.31

1.354

8,613

0.617

0.199

0.203

0.340

29

Baglung

58.0

33.93

1.849

8,290

1,281

0.550

0.267

0.195

0.337

30

Palpa

54.0

42.81

2.467

7,988

1,235

0.483

0.340

0.187

0.337

31

Kanchanpur

54.0

46.84

2.454

6,388

0.483

0.367

0.147

0.332

32

Arghakhanchi

57.0

33.90

2.282

7,857

1,214

0.533

0.277

0.184

0.331

33

Dhanusha

60.5

28.80

2.019

6,857

1,060

0.592

0.237

0.159

0.329

34

Panchthar

59.3

40.66

2.193

4,263

0.572

0.320

0.092

0.328

35

Sarlahi

60.5

24.53

1.296

8,330

1,288

0.592

0.192

0.196

0.327

36

Gulmi

55.0

38.98

2.295

7,163

1,107

0.500

0.311

0.166

0.326

37

Pyuthan

56.0

32.96

1.853

8,141

1,258

0.517

0.261

0.191

0.323

38

Mahottari

60.5

24.51

1.620

7,498

1,159

0.592

0.199

0.175

0.322

39

Khotang

58.3

35.02

2.216

5,209

40

Mustang

52.7

40.78

2.425

6,952

41

Ramechhap

61.0

24.81

1.504

6,421

42

Nuwakot

54.0

24.95

1.549

10,520

43

Myagdi

59.0

35.05

1.871

4,022

44

Bara

58.5

26.42

1.421

6,935

264

982

707 1,431 695 1,331

987

659

805 1,075 992 1,626 622 1,072

0.555

0.283

0.116

0.318

0.462

0.326

0.161

0.316

0.600

0.199

0.147

0.315

0.483

0.201

0.252

0.312

0.567

0.275

0.086

0.309

0.558

0.208

0.161

0.309

NEPAL HUMAN DEVELOPMENT REPORT 1998

45

Makwanpur

53.0

34.12

1.957

8,042

46

Banke

55.5

34.70

2.180

6,061

1,243

47

Rautahat

58.5

22.21

1.284

8,086

1,250

0.558

0.177

0.190

0.308

48

Gorkha

54.0

34.81

2.104

6,985

1,080

0.483

0.279

0.162

0.308

49

Manang

52.7

36.21

2.488

6,952

1,075

0.462

0.297

0.161

0.306

50

Bardiya

60.5

27.90

1.656

4,424

684

0.592

0.223

0.096

0.304

51

Nawalparasi

53.5

38.38

2.102

5,386

833

0.475

0.303

0.121

0.300

937

0.467

0.271

0.189

0.309

0.508

0.280

0.138

0.309

52

Kailali

53.0

34.88

1.767

6,824

1,055

0.467

0.272

0.158

0.299

53

Dang

49.5

38.21

2.150

7,888

1,219

0.408

0.302

0.185

0.299

54

Sindhuli

56.0

27.14

1.668

6,510

1,006

55

Darchula

52.0

38.41

2.032

4,876

56

Kapilbastu

53.5

28.84

1.772

6,541

57

Sindhupalchok

56.0

21.18

1.039

6,571

58

Rukum

51.0

30.39

1.435

6,220

59

Dadeldhura

47.0

37.85

1.974

5,881

60

Rolpa

52.0

29.33

1.451

5,151

61

Dhading

49.0

25.27

1.517

7,435

0.517

0.218

0.150

0.295

0.450

0.301

0.108

0.286

1,011

0.475

0.232

0.150

0.286

1,016

0.517

0.164

0.151

0.277

961

0.433

0.234

0.142

0.270

909

0.367

0.296

0.134

0.265

754

796 1,149

0.450

0.228

0.115

0.264

0.400

0.202

0.173

0.258

62

Baitadi

46.0

36.36

2.149

5,609

867

0.350

0.290

0.127

0.256

63

Salyan

51.0

30.71

1.647

3,640

563

0.433

0.241

0.076

0.250

64

Doti

49.0

30.20

1.582

4,959

767

0.400

0.236

0.110

0.249

65

Dailekh

50.0

32.36

1.475

3,552

549

0.417

0.249

0.074

0.246

66

Rasuwa

52.0

15.13

0.942

7,111

0.450

0.122

0.165

0.246

67

Humla

54.0

17.57

0.881

5,057

0.483

0.137

0.113

0.244

68

Achham

49.0

24.52

1.277

5,035

778

0.400

0.192

0.112

0.235

69

Jumla

47.0

23.41

1.141

4,834

747

0.367

0.181

0.107

0.218

70

Dolpa

48.0

20.57

1.053

4,981

770

0.383

0.161

0.111

0.218

71

Jajarkot

46.0

25.57

1.251

3,889

601

0.350

0.198

0.083

0.210

72

Bajhang

42.0

27.39

1.284

4,930

762

0.283

0.211

0.109

0.201

73

Kalikot

42.0

17.16

0.850

5,184

801

0.283

0.133

0.116

0.177

74

Bajura

41.0

23.34

1.159

3,428

530

0.267

0.181

0.071

0.173

75

Mugu

36.0

18.96

0.813

5,065

783

0.183

0.144

0.113

0.147

1,099 782

Data source: CBS 1991, 1996; MOH 1991, 1996a; World Bank 1997a; MOF 1997.

ANNEXES

265

Human Development Index (HDI)

Ratio to national HDI Nepal=100

1,186

Income Index

7,673

Educational Attainment Index

2.254

Life Expectancy Index

36.72

Per capita PPP income (US$) 1996

Per capita income (NRs.) 1996

55.0

Mean years of schooling 1996

Caste Nepal

Adult literacy ratio (percent) 1996

Human development by caste and ethnicity, 1996 Life expectancy 1996

Annex 3.7

0.500

0.295

0.179

0.325

100.00

Brahmin

60.8

58.00

4.647

9,921

1,533

0.597

0.490

0.237

0.441

135.87

Chhetri

56.3

42.00

2.786

7,744

1,197

0.522

0.342

0.181

0.348

107.31

Newar

62.2

54.80

4.370

11,953

1,848

0.620

0.462

0.289

0.457

140.73

1,021

Gurung, Magar, Sherpa Rai, Limbu

53.0

35.20

2.021

6,607

Muslim

48.7

22.10

1.358

6,336

Rajbansi, Yadav, Tharu, Ahir

58.4

27.50

1.700

6,911

Occupational 50.3 Castes* Other 54.4

23.80

1.228

4,940

27.60

1.880

7,312

979

1,068 764 1,130

0.467

0.280

0.152

0.299

92.21

0.395

0.178

0.145

0.239

73.67

0.557

0.221

0.160

0.313

96.28

0.422

0.186

0.110

0.239

73.62

0.490

0.226

0.170

0.295

90.94

* “Occupational castes” mostly include the “untouchables” of the Hills and the Tarai. Source: Same as for 3.5.

Annex 3.8

Trend of gender-sensitive development Year 1970 1992 1993 1994 1996

GDI Value 0.128 0.310 0.308 0.321 0.267

GDI as % of HDI 83.01 90.38 92.77 92.51 82.15

Note : Abrupt change in the GDI value is due to change in methodology (see annex 3.2). Source : Same as for 3.5.

Annex 3.9 Country/ Region Nepal World Industrial Countries Developing Countries Least Developed Countries Bangladesh India Maldives Pakistan Sri Lanka

Gender-sensitive development in Nepal in comparative perspective* GDI Value 0.267 0.637 0.856 0.555 0.323 0.339 0.419 0.600 0.392 0.694

GDI as % of HDI 82.15 83.38 93.96 96.35 96.13 92.12 93.05 98.20 88.01 97.61

Relative Value Nepal=100 100 238.57 320.59 207.86 120.97 126.96 156.93 224.72 146.81 259.92

* The GDI value for Nepal is for 1996. For all other regions and countries the values pertain. Source: Same as for 3.5.

266

NEPAL HUMAN DEVELOPMENT REPORT 1998

Annex 3.10

Gender-sensitive development index ( GDI ) across regions Life expectancy 1996 Female

Nepal

52.4

Adult literacy Mean years of Proportion of GDI Relative GDI/ HDI (percent) schooling total income 1996 value (percent) 1996 1996 Nepal = 100 Male Female Male Female Male Female Male 55.0

21.33

54.32

1.132

2.555

0.361

1.634

0.267

100.00

82.15

Place of Residence Urban

60.3

63.2

51.50

76.70

5.630

3.877

0.333

1.615

0.450

168.53

86.78

Rural

51.3

53.7

19.50

52.00

2.933

1.147

0.377

1.631

0.266

99.63

87.10

Mountain

50.4

52.7

11.80

44.20

2.273

0.707

0.374

1.522

0.225

84.27

83.13

Hill

55.5

58.0

24.30

58.40

3.427

1.610

0.296

1.724

0.296

110.86

82.91

Tarai

57.0

59.5

19.90

52.30

3.098

1.251

0.432

1.536

0.298

111.61

86.63

Eastern

53.0

56.0

25.90

58.80

3.628

1.711

0.445

1.544

0.297

111.23

87.53

Central

52.9

55.7

19.90

50.80

3.093

1.340

0.301

1.693

0.273

102.24

80.51

Western

56.5

59.3

26.50

55.60

3.221

1.670

0.385

1.664

0.305

114.23

87.15

Mid-Western

48.8

51.2

14.50

50.40

2.681

0.861

0.345

1.635

0.220

82.39

79.87

Far Western

49.4

52.1

12.70

59.90

2.987

0.765

0.332

1.700

0.216

80.89

75.67

58.3

57.3

25.40

52.40

1.626

2.923

0.454

1.560

0.307

113.71

89.72

Ecological Regions

Development Regions

Eco-development Region Eastern Mountain Hill

61.0

64.0

23.50

58.50

1.470

3.321

0.278

1.735

0.313

116.00

85.00

Tarai

58.0

60.0

27.30

59.70

1.860

3.388

0.492

1.485

0.338

125.44

89.52

Mountain

51.0

53.0

8.50

37.10

0.490

1.843

0.301

1.695

0.210

77.68

77.93

Hill

52.0

65.0

29.20

61.60

2.164

4.017

0.291

1.657

0.332

122.96

75.25

Tarai

54.0

56.0

13.90

44.20

0.794

2.550

0.357

1.584

0.256

95.06

82.68

Mountain

50.4

52.7

26.50

55.60

1.634

3.270

0.428

1.502

0.280

103.61

89.19

Hill

55.0

57.4

29.60

56.80

1.900

3.313

0.354

1.748

0.304

112.76

86.63

Tarai

60.0

63.0

20.80

54.00

1.244

3.083

0.428

1.549

0.308

114.25

88.40

Central

Western

Mid-Western Mountain

50.4

52.7

3.00

35.70

0.130

1.794

0.472

1.502

0.185

68.55

76.62

Hill

55.0

57.0

13.10

53.70

0.725

2.708

0.198

1.815

0.238

88.28

76.70

Tarai

54.0

56.0

18.50

49.80

1.176

2.830

0.407

1.572

0.266

98.60

86.61

Mountain

50.4

52.7

7.70

52.80

0.468

2.539

0.176

1.866

0.185

68.59

70.95

Hill

46.0

49.0

9.80

60.20

0.578

3.156

0.269

1.793

0.181

67.03

69.53

Tarai

54.0

56.0

17.90

62.60

1.070

3.032

0.457

1.551

0.273

101.27

83.45

Far Western

Source: Same as table 3.5.

ANNEXES

267

Annex 3.11

Rank District

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

268

Nepal Kathmandu Kaski Lalitpur Morang Jhapa Dhankuta Tanahu Tehrathum Sunsari Chitwan Ilam Sankhuwasabha Taplejung Saptari Lamjung Rupandehi Parbat Siraha Syangja Bhaktapur Bhojpur Udayapur Palpa Okhaldhunga Parsa Panchthar Solukhumbu Surkhet Mustang Baglung Dolkha Kanchanpur Kabhrepalanchok Gulmi Dhanusha Bardiya Sarlahi Manang Myagdi Arghakhanchi Khotang Gorkha Banke Mahottari Nawalparasi Bara Kailai

Gender-sensitive development index across districts, 1996 Life expectancy Adult literacy 1996 % 1996

Mean years of schooling 1996

Female Male 52.4 53.8 57.5 50.6 64.1 56.4 61.0 58.5 58.1 58.3 54.2 58.1 59.2 58.3 60.3 55.6 57.8 55.6 60.3 55.6 45.0 61.0 58.1 51.8 61.0 56.2 56.2 59.2 54.9 50.4 55.6 59.5 52.0 48.2 52.7 58.1 58.2 58.1 50.4 56.6 54.6 55.3 51.8 53.4 58.1 51.1 56.2 51.0

55.0 67.0 60.0 63.0 66.5 58.5 64.3 61.0 61.3 60.5 56.5 61.3 61.7 60.7 62.5 58.0 60.5 58.0 62.5 58.0 56.0 64.3 61.3 54.0 64.3 58.5 59.3 61.7 57.0 52.7 58.0 62.0 54.0 60.0 55.0 60.5 60.5 60.5 52.7 59.0 57.0 58.3 54.0 55.5 60.5 53.5 58.5 53.0

Female

Male

Female Male

21.33 57.18 44.59 44.64 29.22 36.43 27.24 30.63 33.08 25.73 31.80 34.42 28.82 27.86 13.31 29.61 25.64 31.66 9.72 32.11 32.74 21.52 17.00 31.79 18.91 15.66 21.74 17.34 24.98 27.82 21.64 9.94 22.08 15.87 25.97 12.91 13.98 10.03 23.17 23.39 20.80 17.88 24.55 21.14 10.99 21.04 10.19 15.27

54.32 84.99 67.27 77.42 67.72 72.64 63.26 59.90 75.33 65.01 68.50 64.09 56.09 52.17 53.31 53.87 58.84 61.13 36.82 59.05 72.89 55.11 51.68 58.52 50.66 49.08 60.59 47.46 67.12 56.88 50.08 43.21 73.48 50.49 58.13 44.46 41.85 38.72 52.26 49.48 50.94 54.07 47.85 48.12 38.01 57.28 42.38 55.75

1.132 2.555 4.318 5.430 2.799 4.277 3.359 4.634 2.237 3.632 2.733 3.776 1.729 3.656 1.924 3.327 1.959 4.009 1.874 3.331 1.599 3.427 2.132 3.725 1.702 2.865 1.907 3.283 1.185 3.363 1.831 3.267 1.493 3.439 2.211 3.757 0.776 2.592 2.129 3.507 2.476 13.321 1.361 3.177 1.084 2.895 1.915 3.295 1.068 2.882 0.721 2.611 1.329 3.137 1.172 2.560 1.316 3.580 1.673 3.204 1.252 2.664 0.574 2.218 1.377 3.583 1.250 2.578 1.739 3.168 1.057 2.955 0.923 2.380 0.525 2.058 1.533 3.444 1.289 2.634 1.660 3.178 1.243 3.313 1.597 2.803 1.313 2.995 0.667 2.552 1.259 3.007 0.527 2.313 0.879 2.686

Proportion of earned income 1996 Female Male 0.361 0.292 0.424 0.304 0.451 0.485 0.533 0.489 0.338 0.510 0.556 0.244 0.433 0.493 0.619 0.370 0.450 0.353 0.645 0.207 0.325 0.347 0.462 0.496 0.457 0.426 0.660 0.278 0.201 0.426 0.314 0.357 0.450 0.396 0.307 0.297 0.590 0.382 0.433 0.345 0.328 0.448 0.349 0.316 0.275 0.421 0.359 0.421

1.634 1.653 1.661 1.681 1.522 1.505 1.479 1.581 1.669 1.472 1.450 1.735 1.587 1.521 1.358 1.665 1.525 1.752 1.328 1.899 1.655 1.702 1.534 1.604 1.549 1.507 1.341 1.730 1.791 1.508 1.810 1.653 1.576 1.616 1.858 1.629 1.397 1.552 1.486 1.803 1.926 1.581 1.696 1.619 1.650 1.575 1.575 1.575

Gender sensitive Development Index (GDI) 1996 0.267 0.460 0.400 0.392 0.376 0.374 0.357 0.344 0.339 0.338 0.330 0.328 0.328 0.328 0.325 0.320 0.319 0.313 0.309 0.308 0.305 0.304 0.302 0.301 0.300 0.298 0.291 0.290 0.284 0.283 0.280 0.276 0.274 0.273 0.273 0.272 0.272 0.272 0.272 0.271 0.271 0.270 0.266 0.265 0.262 0.256 0.253 0.244

NEPAL HUMAN DEVELOPMENT REPORT 1998

48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75

Dang Rautahat Pyuthan Kapilbastu Makwanpur Sindupalchok Sindhuli Darchula Ramechhap Nuwakot Rasuwa Rukum Rolpa Humla Doti Salyan Dailekh Dadeldhura Baitadi Dhading Achham Dolpa Jumla Jajarkot Kalikot Bajhang Bajura Mugu

47.6 56.2 53.9 51.1 42.6 53.8 45.0 49.9 49.0 43.4 49.9 49.1 50.1 51.8 46.2 49.1 48.2 44.3 43.4 39.3 46.2 46.0 45.1 44.3 40.3 40.3 39.3 34.5

49.5 58.5 56.0 53.5 53.0 56.0 56.0 52.0 61.0 54.0 52.0 51.0 52.0 54.0 49.0 51.0 50.0 47.0 46.0 49.0 49.0 48.0 47.0 46.0 42.0 42.0 41.0 36.0

19.98 9.26 15.10 13.64 18.59 7.95 11.14 11.93 7.71 10.83 5.33 9.77 8.72 2.22 10.73 9.70 10.26 11.29 12.48 11.16 5.73 3.37 4.32 8.86 2.33 6.12 5.60 2.42

58.26 34.94 55.74 43.80 49.45 35.18 43.43 65.48 44.09 39.27 24.56 50.25 50.75 32.24 55.53 50.73 53.31 72.23 67.73 40.05 50.11 36.85 41.56 40.65 32.00 50.84 41.69 35.12

1.273 0.497 0.918 0.865 1.264 0.448 0.891 0.864 0.619 0.858 0.379 0.511 0.509 0.031 0.576 0.621 0.497 0.696 0.821 0.852 0.278 0.063 0.355 0.413 0.037 0.275 0.329 0.028

3.071 2.060 2.943 2.672 2.248 1.654 2.092 3.249 2.096 1.914 1.497 2.361 2.449 1.694 2.822 2.672 2.434 3.563 3.824 1.873 2.532 1.912 2.090 2.057 1.633 2.357 2.006 1.583

0.377 0.232 0.186 0.373 0.473 0.241 0.543 0.317 0.276 0.281 0.316 0.200 0.196 0.484 0.394 0.202 0.204 0.267 0.191 0.280 0.304 0.471 0.348 0.200 0.345 0.096 0.177 0.600

1.633 1.694 1.945 1.585 1.500 1.755 1.451 1.697 1.745 1.714 1.617 1.804 1.835 1.467 1.626 1.784 1.769 1.807 1.886 1.722 1.774 1.504 1.623 1.797 1.637 1.983 1.848 1.374

0.243 0.242 0.240 0.235 0.231 0.216 0.215 0.212 0.209 0.202 0.195 0.193 0.190 0.190 0.189 0.187 0.182 0.177 0.170 0.164 0.162 0.160 0.155 0.153 0.116 0.114 0.110 0.094

Data source: Same as for annex 3.3.

Annex 3.12 Country

Nepal World Industrial Countries All Developing Countries Bangladesh India Maldives Pakistan Sri Lanka

Gender empowerment in comparative perspective* Seats held in parliament by women (percent)

Women administrators and managers (percent)

3.41 12.9 13.6 12.7 9.1 7.3 6.3 3.4 5.3

15.06 14.1 27.4 10.0 5.1 2.3 14.0 3.4 16.9

Women professional and technical workers (percent) 9.30 39.3 47.8 36.7 23.1 20.5 34.6 20.1 24.5

Women’s share of earned income (percent) 17.38 30 40 30 23 26 35 21 34

GEM value

0.191 0.418 0.586 0.367 0.273 0.228 0.330 0.189 0.307

Relative value Nepal =100

100.00 218.85 306.81 192.15 142.93 119.37 172.77 98.95 160.73

* The GEM and component values for Nepal are for 1996. For all other regions and countries, the values pertain to 1994. Source: UNDP 1997 and NESAC, based on source shown in 3.13.

ANNEXES

269

Nepal

3.41

15.06

9.30

17.38

Gender Empowerment Measure (GEM)

Women's share of earned income (percent) 1996

Women in Administrative Jobs (percent) 1991

Women in Professional Jobs (percent) 1991

Seats held by women in Parliament ( percent) 1991

Distribution of values of gender empowerment measure (GEM) across regions

Region

Annex 3.13

0.191

Eco-Regions Mountain

0.45

8.74

6.28

20.57

0.111

Hill

0.81

17.87

11.68

13.71

0.180

Tarai

0.57

12.69

4.30

28.15

0.117 0.125

Development Region Eastern

0.88

12.69

5.21

22.26

Mountain

0.73

10.59

8.03

22.12

0.126

Hill

1.12

11.57

9.52

11.59

0.142

Tarai

0.72

13.73

3.91

24.97

0.123

Central

0.59

19.76

10.47

15.12

0.182

0.59

10.07

10.34

14.66

0.134

Mountain Hills

0.82

27.21

11.77

13.23

0.224

Tarai

0.40

10.14

3.59

19.00

0.098

Western

0.83

14.14

11.38

18.41

0.159

0.54

12.02

4.69

22.19

0.119

Hill

1.00

13.78

14.81

16.90

0.172

Tarai

0.52

15.43

5.74

21.74

0.136

Mid-Western

0.52

10.42

5.51

16.40

0.109

Mountain

0.22

7.23

2.04

25.50

0.066

Hill

0.35

8.86

5.25

9.91

0.093

Tarai

1.04

13.86

6.05

20.89

0.137

Mountain

Far Western

0.19

8.26

3.20

17.71

0.076

Mountain

0.13

5.33

2.59

8.60

0.052

Hill

0.16

6.02

2.95

12.83

0.059

Tarai

0.33

13.45

3.50

23.17

0.109

Source: CBS 1991,1996; Election Commission 1991.

270

NEPAL HUMAN DEVELOPMENT REPORT 1998

Gender Empowerment Measure ( GEM )

Female's % share in income 1996

Female's % share in administrative work 1991

Female's % share in professional job 1991

Rank

Female's share in parliament ( % seats ) 1991

Gender empowerment measure (GEM) across districts

District

Annex 3.14

Nepal

3.41

15.06

9.30

17.38

0.191

1

Lalitpur

1.02

36.21

14.67

15.13

0.263

2

Kathmandu

1.56

34.70

11.66

14.92

0.258

3

Tanahu

0.19

13.49

33.22

27.34

0.229

4

Lamjung

0.65

11.31

33.33

17.19

0.228

5

Bhaktapur

0.78

27.34

9.17

16.80

0.206

6

Syangja

1.55

13.45

18.37

8.91

0.193

7

Gorkha

0.71

12.21

20.28

16.87

0.189

8

Parbat

1.23

12.65

17.80

17.16

0.182 0.178

Kaski

2.70

18.50

5.77

21.49

10

9

Tehrathum

1.90

9.62

15.15

16.78

0.172

11

Palpa

1.14

17.52

9.17

24.39

0.168

12

Bhojpur

1.51

10.35

14.29

16.09

0.161

13

Ilam

0.98

13.08

11.38

10.74

0.160

14

Jhapa

1.54

18.89

4.20

24.78

0.160

15

Dhankuta

0.80

15.12

9.52

29.33

0.159

16

Sindhupalchok

0.78

9.76

15.19

11.77

0.158

17

Sankhuwasabha

0.35

9.85

15.79

23.20

0.156

18

Sunsari

1.09

17.56

5.60

24.37

0.155

19

Kabhrepalanchok

0.67

13.48

9.65

20.87

0.155

20

Chitwan

0.94

16.14

6.51

30.30

0.150

21

Rupandehi

0.84

18.58

4.43

23.72

0.148

22

Dang

0.82

12.67

9.13

19.35

0.144

23

Makwanpur

1.00

14.84

5.88

25.46

0.144

24

Banke

1.31

15.74

4.54

14.29

0.143

25

Gulmi

0.93

10.83

12.73

14.06

0.143

26

Myagdi

0.41

12.67

11.36

16.00

0.138

27

Nuwakot

0.55

10.22

10.42

14.01

0.137

28

Nawalparasi

0.53

12.69

8.15

20.81

0.135

29

Panchthar

0.59

9.19

11.27

41.63

0.134

30

Mustang

0.91

11.26

6.98

21.94

0.134

31

Bardiya

0.87

13.05

6.41

34.10

0.133

32

Kapilbastu

0.19

12.54

7.84

19.33

0.132

33

Morang

0.90

16.31

3.04

22.21

0.131

34

Rolpa

0.18

5.46

16.67

9.65

0.129

35

Baglung

0.43

11.46

9.68

14.57

0.128

36

Khotang

1.47

11.60

6.06

21.94

0.127

37

Parsa

0.13

14.10

4.23

20.67

0.123

38

Rukum

0.30

7.39

11.54

9.96

0.122

39

Kanchanpur

0.27

13.21

5.29

28.53

0.116

40

Okhaldhunga

1.00

13.48

3.33

22.89

0.115

41

Surkhet

1.05

11.73

4.23

9.15

0.113

42

Rasuwa

0.74

8.98

6.25

17.02

0.112

43

Dolkha

0.23

10.73

6.33

18.15

0.111

44

Jumla

0.40

10.08

6.25

16.51

0.110

ANNEXES

271

45

Jajarkot

0.12

9.66

7.89

10.01

0.109

46

Dhading

0.78

9.42

5.00

12.74

0.103

47

Solukhumbu

0.79

12.16

2.50

13.86

0.102

48

Pyuthan

0.09

10.18

6.90

8.69

0.101

49

Udayapur

0.60

9.10

4.94

22.80

0.101

50

Kailali

0.36

13.64

1.81

20.80

0.100

51

Taplejung

0.98

10.14

2.50

25.23

0.095

52

Doti

0.12

9.89

4.59

20.80

0.092

53

Bara

0.45

8.58

3.55

17.96

0.090

54

Manang

0.00

13.75

0.00

23.54

0.089

55

Arghakanchi

0.53

9.66

4.08

13.54

0.085

56

Ramechhap

0.15

9.00

3.51

12.89

0.081

57

Saptari

0.20

6.43

3.86

30.89

0.079

58

Mahottari

0.56

7.36

2.82

13.53

0.079

59

Rautahat

0.13

6.61

4.40

11.29

0.078

60

Dhanusha

0.32

8.69

1.96

15.58

0.077

61

Siraha

0.40

7.26

1.81

39.61

0.074

62

Sarlahi

0.59

9.35

0.00

21.39

0.073

63

Darchula

0.11

5.05

4.88

16.11

0.066

64

Sindhuli

0.65

8.37

0.00

31.45

0.066

65

Salyan

0.49

8.47

0.00

10.17

0.060

66

Dadeldhura

0.20

5.35

2.78

13.37

0.055

67

Kalikot

0.25

7.68

0.00

16.36

0.054

68

Bajhang

0.11

4.85

2.56

4.17

0.047

69

Dailekh

0.07

6.68

0.00

10.33

0.044

70

Bajura

0.18

6.39

0.00

9.12

0.042

71

Humla

0.00

5.63

0.00

23.43

0.041

72

Dolpa

0.33

5.00

0.00

27.67

0.041

73

Mugu

0.00

5.47

0.00

34.89

0.040

74

Achham

0.20

5.52

0.00

14.01

0.038

75

Baitadi

0.11

4.12

1.56

8.17

0.038

Data source: CBS 1991, 1996; Election Commission 1991.

Annex 3.15

Capability poverty in comparative perspective

Country

CPM Value

Nepal Bangladesh Bhutan India Maldives Pakistan Sri Lanka

72.3 76.9 68.2 61.5 35.5 60.8 19.3

Relative Value Nepal =100 100.00 106.32 94.29 85.03 49.08 84.06 26.68

Source: UNDP 1996, and NESAC, based on the source shown in 3.16.

272

NEPAL HUMAN DEVELOPMENT REPORT 1998

48.4

78.7

1.69

Urban

46.13

53.5

35.4

49.5

Rural

74.40

92.4

49.3

81.5

2.56 1.58

CPM/ IncomePoverty (Head Count Index)

89.9

Nepal

Female illiteracy ratio (percent)

72.33

Region

Births unattended by health professional (percent)

Chronic malnutrition among children 6-36 months of age (percent)

Distribution of capability poverty across regions, 1996 Capability Poverty Measure (CPM)

Annex 3.16

Residence

Eco-Zones Mountain

80.63

97.1

56.6

88.2

Hill

71.13

89.0

48.7

75.7

Tarai

72.17

89.5

46.9

80.1

Eastern

67.00

88.6

38.3

74.1

Mountain

70.67

93.4

44.0

74.6

Hill

70.40

92.8

41.9

76.5

Tarai

64.50

85.5

35.3

72.7

Central

72.53

86.6

50.9

80.1

1.28 1.42 1.95

Development Regions

Mountain

80.90

98.1

53.1

91.5

Hill

64.60

78.9

44.1

70.8

Tarai

76.90

89.7

54.9

86.1

Western

71.10

89.8

50.0

73.5

Mountain/Hill

69.13

88.1

48.9

70.4

Tarai

74.50

92.7

51.6

79.2

Mid-Western

77.27

95.3

51.0

85.5

Mountain/Hill

80.10

97.0

56.4

86.9 81.5

Tarai

71.07

92.3

39.4

Far Western

78.43

94.8

53.2

87.3

Mountain/Hill

82.03

97.0

58.9

90.2

Tarai

72.47

91.3

44.0

82.1

1.56 1.24 1.03 2.38 2.13 1.68 2.08 2.26 1.58 1.50 1.69 1.31 1.21 1.51 1.21 1.24 1.48

Note: Due to data inadequacies, the Mountains and Hills are not always disaggregated. Source: MOH 1996a; CBS 1996.

Annex 3.17 Country Nepal Bangladesh India Maldives Pakistan Sri Lanka

Human poverty in Nepal in regional perspective HPI value* 49.7 48.3 46.3 36.7 46.8 20.7

Relative value Nepal=100 100.00 97.18 93.16 73.84 94.16 41.64

* HPI value for Nepal is for 1996. For other countries it pertains to 1994. Source: UNDP 1997a; NESAC, based on the source shown in 3.18.

ANNEXES

273

Annex 3.18 Regions

Nepal

Human Poverty Index ( HPI ), 1996 Chronic Malnutrition among children (6-36 months) (percent) 48.4

Adult illiteracy rate (percent)

63.3

Population without Proportion of population access to access to with life expectancy safe water health (percent) service < 40 years (percent) (percent) 22.53 33.2 58.7

Human Poverty Index ( HPI )

Relative value Nepal=100

49.66

100.00 119.07

Ecological Regions Mountain

56.6

72.5

42.84

43.3

63.1

59.13

Hill

48.7

59.8

20.46

44.6

59.7

49.10

98.87

Tarai

46.9

64.1

21.24

21.0

56.9

48.63

97.92

Eastern

38.3

58.1

19.25

36.9

51.2

45.26

91.13

Mountain

44.0

61.6

27.79

28.7

66.8

49.13

98.94 107.36

Development Regions

Hill

41.9

59.8

14.67

59.5

84.4

53.31

Tarai

35.3

56.8

20.64

26.5

29.8

41.89

84.36

Central

50.9

64.9

21.09

24.6

56.7

49.70

100.09 119.43

Mountain

53.1

77.8

43.67

33.3

38.2

59.31

Hill

44.1

55.0

17.66

27.9

39.1

42.03

84.63

Tarai

54.9

70.9

20.70

18.8

74.0

54.46

109.67

Western

50.0

60.5

19.06

26.8

65.2

48.13

96.92 116.89

Mountain*

65.8

54.5

46.29

59.5

81.0

58.05

Hill

48.9

59.0

20.53

35.7

69.1

48.79

98.26

Tarai

51.6

63.0

16.12

15.1

59.0

47.81

96.27

Mid-Western

51.0

67.8

29.49

56.9

55.9

55.04

110.83

Hill

56.4

68.94

30.99

73.1

49.9

57.54

115.86

Tarai

39.4

66.1

27.19

31.7

57.5

50.56

101.81

Far Western

53.2

65.4

34.2

29.3

75.1

53.71

108.15

Hill

58.9

69.05

39.07

43.2

72.7

58.05

116.90

Tarai

44.0

60.5

27.51

11.9

71.4

47.36

95.37

Note: Due to data inadequacies, the Mountains and Hills have been aggregated together in some cases. * Estimated from the growth rate of the Western Development Region. Source: Same as for 3.6.

274

NEPAL HUMAN DEVELOPMENT REPORT 1998

Distribution of human deprivation across regions, 1996 Human Deprivation Measure (HDM ) (percent)

34.1

45

43.85

Urban

35.4

11.6

36.5

13.9

18

21.47

Rural

49.3

36.2

65.5

35.8

47

45.99

Mountain

56.6

43.3

72.0

41.8

63

57.58

Hill

48.7

44.6

59.8

25.9

50

48.32

Tarai

46.9

21.0

64.1

40.7

37

39.40

Children out of school (percent)

62.8

Adult illiteracy rate (percent)

33.2

Nepal

Population without access to safe water (percent)

48.4

Region

Income poor (percent)

Chronic malnutritio n among Children (636 months) (percent)

Annex 3.19

Place of Residence

Eco-Regions

Development Regions Eastern

38.3

36.9

58.1

27.8

43

42.26

Mountain

44.0

28.7

61.6

20.8

57

47.05

Hill

41.9

59.5

59.8

31.0

68

62.49

Tarai

35.3

26.5

56.8

26.9

27

33.79

Central

50.9

24.6

64.9

39.5

34

40.08

Mountain

53.1

33.3

77.8

39.0

48

55.72

Hill

44.1

27.9

55.0

22.5

31

34.86

Tarai

54.9

18.8

70.9

53.2

34

43.13

Western

50.0

26.8

60.5

25.7

45

40.79

Mountain

65.8

59.5

60.5

56.8

52

59.10

Hill

48.9

35.7

59.0

15.6

46

42.58

Tarai

51.6

15.1

63.0

43.3

44

40.93

Mid-Western

51.0

56.9

67.8

44.3

59

59.41

Hill

56.4

73.1

66.8

38.6

66

74.01

Tarai

39.4

31.7

66.1

46.5

47

45.64

Far Western

53.2

29.3

65.0

34.0

65

53.94

Hill

58.9

43.2

68.5

35.0

66

57.81

Tarai

44.0

11.9

60.5

27.8

49

39.56

Data Source: Same as for 3.16.

ANNEXES

275

Annex 5.1

Literacy trend in Nepal for persons over 10 years old by gender and year Intercensal Literacy Rate (percent)

Total Male Female

1952/54 5.3 9.5 0.7

1961 8.9 (0.45) 16.3 (0.85) 1.8 (0.14)

1971 14.3 (0.54) 24.7 (0.84) 3.7 (0.19)

1981 23.5 0.92) 34.9 (1.02) 11.5 (0.78)

19861 34.8 51.8 18.0

19912 39.6 (0.96) 54.5 (0.54) 25.0 (1.4)

1995/963 37.8 (-0.36) 52.2 (-0.46) 24.4 (-0.12)

1

Source: CBS-Demographic Sample Survey 1986/87, First Report (1987). The figures are for age 6 and above. Therefore, the annual growth has not been calculated. For 1991 census and 1995-96, literacy percentages are also for persons over 6 years of age. The annual growth rates correspond to this age group. Source: CBS 1996. Figures within parentheses are average annual increases between censuses or between sample survey and census. Source of censal information: CBS 1995a. 2 3

276

NEPAL HUMAN DEVELOPMENT REPORT 1998

Annex 6.1

Distribution of population and work participation rate by ecological region (in percent)

Region\Year Mountains Hills Tarai

1971 9.9 52.5 37.6

Population 1981 1991 8.7 7.8 47.7 45.5 43.6 46.7

1996 8.8 45.3 45.9

Labour force participation rate 1971 1981 1991 1996 12.2 10.2 10.3 7.6 55.9 55.0 50.5 45.0 31.9 34.8 39.2 47.4

Source: CBS 1995b, 1997c.

ANNEXES

277

Annex 7.1

Landholding pattern of households

Size of holding Under 1 ha 1 ha and under 2 ha 2 ha and under 3 ha 3 ha and under 4 ha 4 ha and under 5 ha 5 ha and under 10 ha 10 ha and over Total holding with land Holding without land Total area of holding

Total 1,877.7 529.5 168.5 59.6 28.6 31.9 8.2 2,704.0

Rented out (69.4) (19.6) (16.2) (2.2) (1.1) (1.2) (0.3) (100.0)

88.7 32.2 15.0 6.4 3.8 6.2 1.6 153.9

32.1 2,736.1

Non-rented 1,789.0 (95.3) 497.3 (93.9) 153.5 (91.1) 53.2 (89.3) 24.7 (86.4) 25.7 (80.6) 6.6 (80.5) 2,550.1 (94.3) 312.0 2581.3

(4.7) (6.1) (8.9) (10.7) (13.6) (19.4) (19.5) (5.7) 0.9 154.8

Note: Figures in parentheses are percentage shares. Source: CBS 1993 .

Annex 7.2

Occupational classification of female labor force by rural-urban areas (percent)

Rural Agricultural work (of which, farm work and help) Production work Construction, transport and communication Professional, technical., administrative and managerial Sales Officer work and service General labour

Male 76.6 (27.0) 3.7 1.5 2.7 3.5 4.7 7.5

Female 88.3 (63.4) 2.5 – 0.2 1.9 0.8 6.3

Urban Male Female 23.5 54.6 (6.9) (35.2) 13.9 9.3 6.3 0.2 7.9 3.2 16.0 8.4 21.9 11.9 10.5 12.4

Source: NRB 1988.

Annex 7.3

Distribution of Self -employment/off-farm employment by gender Rural (Tarai)

Working days per household/year Days utilised Farm Animal husbandry Non-agri. family enterprise Other household activities* Off-farm employment Unutilised days Underemployment (percent)

Male 524 309 117 51 25 6 109 215 41.0

Urban Female 338 150 61 13 11 4 61 188 55.6

Male 319 243 25 9 116 4 88 76 23.8

Female 238 127 31 11 37 5 43 111 46.6

*Includes unpaid mutual exchange of labour. Source: NRB 1988.

Annex 7.4

Trend of level and growth of consumption, 1976/1980-1991/1995 (percent)

Average growth rate of GDP(at current price) Average growth rate of total consumption (at current price) Share of consumption on GDP (of which public) APC (consumption/GDP) MPC (intercept term and income included)

1976–80 7.54 5.13 83.7 (7.1) 87.9 68.03

1981-85 13.42 14.05 86.1 (8.5) 90.38 104.69

1986–90 17.44 18.31 89.8 (9.2) 93.77 104.98

1991–95 15.46 14.73 90.0 (9.2) 90.91 95.27

Source: MOF 1997.

278

NEPAL HUMAN DEVELOPMENT REPORT 1998

Annex 7.5

Target and achievement in income growth by plan period (in percent)

GDP growth target Non-Ag Total 4.5 3.2 5.6 4.3 3.5 5.7 4.5 3.7 6.1 5.1 Ag

1976-80 (Fifth Plan) 1981-85 (Sixth Plan) 1986-90 (Seventh Plan) 1991-92 (No plan) 1993-97 (Eighth Plan)

Actual GDP growth Ag. Non-Ag -1.0 9.0 5.2 4.9 4.1 5.6 -

Population growth Total 2.4 5.0 4.8 5.5 5.0

Source: NPC Planning Document (various) and Economic Surveys (various years)

Annex 7.6

Financial performance of government by sector, 1981/85-1992/97 (in million Rs.)

Sectors

Agriculture/forestry Industry Electricity Commerce/tourism Transport/comm. Social sector Other Total

1981-85 (Sixth Plan)1/ Target Achievement (A) as % (T) (A) of (T) 6,600 4,354 66.6 5,600 4,230 5,160 160,404 21,750

3,380 3,009 4,437 252.4 15,584

60.4 71.1 86.0 151 71.6

1986-90 (Seventh Plan)2/ 1992-97 (Eighth Plan)3/ Target Achievement (A) as % of Target Achievement (A) as % of (T) (T) 8,868 8,828 99.5 29,193 2,545 1,996 78.4 2,245 4,813 5,626 116.9 23,719 154 186 120.8 1,481 5,132 5,141 100.2 20,030 7,337 9,054 123.4 35,808 1,873 1,240.4 1,003 29,000 32,704 112.8 113,479 117,281 103.3

- Not available. 1/ at 1979/80 prices. 2/ at 1984/85 prices. 3/ at 1991/92 prices. Source: NPC Planning Documents (various) and Economic Surveys (various years).

ANNEXES

279

Annex 14.1

Desired and trend-projected public expenditure in the human priority sector, 1992/93-2001/02 (Rs. in million)

Items/Year

1992/93

1993/94

1994/95

1995/96

1996/97

1997/98

1998/99

1999/00

2000/01

2001/02

I. Desired expenditure A. Scenario 1: assuming 13 percent GNP growth rate from 1996/97 onwards 1. Gross national product*

174,617.0 203,079.0 224,399.0

254,349.0 288,686.0 324,778.2 366,999.4 414,709.3 468,621.5 529,542.3

2. TE (regular + dev.) /1

43,654.3

50,769.8

56,099.8

63,587.3

72,171.5 81,194.6 91,749.9 103,677.3 117,155.4 132,385.6

3. Social sector exp. /2

17,461.7

20,307.9

22,439.9

25,434.9

28,868.6 32,477.8 36,699.9

41,470.9

46,862.2

52,954.2

8,730.9

10,154.0

11,220.0

12,717.5

14,434.3 16,238.9 18,350.0

20,735.5

23,431.1

26,477.1

4. Social priority sec. Exp. /3

B. Scenario 2: assuming 14 percent GNP growth rate from 1996/97 onwards 1. Gross national product*

174,617.0 203,079.0 224,399.0

254,349.0 288,686.0 329,102.0 375,176.3 427,701.0 487,579.2 555,840.2

2. TE (regular + dev.) /1

43,654.3

50,769.8

56,099.8

63,587.3

72,171.5 82,275.5 93,794.1 106,925.3 121,894.8 138,960.1

3. Social sector exp. /2

17,461.7

20,307.9

22,439.9

25,434.9

28,868.6 32,910.2 37,517.6

42,770.1

48,757.9

55,584.0

8,730.9

10,154.0

11,220.0

12,717.5

14,434.3 16,455.1 18,758.8

21,385.1

24,379.0

27,792.0

4. Social priority sec. Exp. /3

C. Scenario 3: assuming 15 percent GNP growth rate from 1996/97 onwards 1. Gross national product*

174,617.0 203,079.0 224,399.0

254,349.0 288,686.0 331,988.9 381,787.2 439,055.3 504,913.6 580,650.7

2. TE (regular + dev.) /1

43,654.3

50,769.8

56,099.8

63,587.3

72,171.5 82,997.2 95,446.8 109,763.8 126,228.4 145,162.7

3. Social sector exp. /2

17,461.7

20,307.9

22,439.9

25,434.9

28,868.6 33,198.9 38,178.7

43,905.5

50,491.4

58,065.1

8,730.9

10,154.0

11,220.0

12,717.5

14,434.3 16,599.4 19,089.4

21,952.8

25,245.7

29,032.5

98,519.8

4. Social priority sec. Exp. /3 II. Projected (trend) expenditure #

D. Scenario 1: projection carried out assuming historical trend Public expenditure (reg.+dev.)

30,897.7

33,597.4

39,060.0

46,542.4

51,168.1 58,331.6 66,498.1

75,807.8

86,420.9

Social sector

8,214.8

8,456.9

10,666.2

12,987.8

13,303.7 15,033.2 16,987.5

19,195.9

21,691.3

24,511.2

Priority sector

5,562.2

5,533.8

6,745.2

7,937.6

9,658.5

10,624.3

11,686.8

12,855.5 98,519.8

7,982.2

8,780.4

E. Scenario 2: projection carried out by assuming same growth rate among sub-sectors Public expenditure (reg.+dev.)

30,897.7

33,597.4

39,060.0

46,542.4

51,168.1 58,331.6 66,498.1

75,807.8

86,420.9

Social sector

8,214.8

8,456.9

10,666.2

12,987.8

13,303.7 15,166.2 17,289.5

19,710.0

22,469.4

25,615.1

Priority sector ##

5,562.2

5,533.8

6,745.2

7,937.6

9,099.7 10,373.7

11,826.0

13,481.7

15,369.1

7,982.2

II. Expenditure gap[I-II] Scenario 1: [A-D] Public expenditure (reg. + dev.)

12,756.6

17,172.4

17,039.8

17,044.9

21,003.4 22,862.9 25,251.8

27,869.5

30,734.5

33,865.8

Social sector expenditure

9,246.9

11,851.0

11,773.7

12,447.1

15,564.9 17,444.6 19,712.4

22,275.1

25,170.8

28,443.0

Priority sector expenditure ##

3,168.7

4,620.1

4,474.8

4,779.8

10,111.1

11,744.3

13,621.7

6,452.1

7,458.5

8,691.5

Scenario 2: [A-E] Public expenditure (reg. + dev.)

12,756.6

17,172.4

17,039.8

17,044.9

21,003.4 22,862.9 25,251.8

27,869.5

30,734.5

33,865.8

Social sector

9,246.9

11,851.0

11,773.7

12,447.1

15,564.9 17,311.6 19,410.4

21,760.9

24,392.7

27,339.1

Priority sector

3,168.7

4,620.1

4,474.8

4,779.8

8,909.5

9,949.4

11,108.0

64,52.1

7,139.2

7,976.3

Scenario 3: [B-D] Public expenditure (reg. + dev.)

12,756.6

17,172.4

17,039.8

17,044.9

21,003.4 23,943.9 27,296.0

31,117.5

35,473.9

40,440.3

Social sector

9,246.9

11,851.0

11,773.7

12,447.1

15,564.9 17,877.0 20,530.1

23,574.2

27,066.6

31,072.8

Priority sector

3,168.7

4,620.2

4,474.8

4,779.9

10,760.8

12,692.2

14,936.5

6,452.1

7,674.7

9,100.3

Scenario 4: [B-E] Public expenditure (reg. + dev.)

12,756.6

17,172.4

17,039.8

17,044.9

21,003.4 23,943.9 27,296.0

31,117.5

35,473.9

40,440.3

Social sector

9,246.9

11,851.0

11,773.7

12,447.1

15,564.9 17,744.0 20,228.1

23,060.1

26,288.5

29,968.9

Priority sector

3,168.7

4,620.2

4,474.8

4,779.9

9,559.1

10,897.3

12,422.9

6,452.1

7,355.4

8,385.1

Scenario 5: [C-D] Public expenditure (reg. + dev.)

12,756.6

17,172.4

17,039.8

17,044.9

21,003.4 24,665.6 28,948.7

33,956.0

39,807.5

46,642.9

Social sector

9,246.9

11,851.0

11,773.7

12,447.1

15,564.9 18,165.7 21,191.2

24,709.6

28,800.1

33,553.9

Priority sector

3,168.7

4,620.2

4,474.8

4,779.9

11,328.5

13,558.9

16,177.0

6,452.1

7,819.0

9,430.9

Scenario 6: [C-E] Public expenditure (reg. + dev.)

12,756.6

17,172.4

17,039.8

17,044.9

21,003.4 24,665.6 28,948.7

33,956.0

39,807.5

46,642.9

Social sector

9,246.9

11,851.0

11,773.7

12,447.1

15,564.9 18,032.7 20,889.2

24,195.5

28,022.0

32,450.0

Priority sector

3,168.7

4,620.2

4,474.8

4,779.9

10,126.8

11,764.0

13,663.4

6,452.1

7,499.7

8,715.7

1. 25 percent of GNP. 2. 40 percent of total expenditure. 3. 50 percent of social sector expenditure. GNP series for 1996/97 to 2001/2002 is projected. # data from 1992/93 to 1996/97 area actual and rest of them are projected on the basis of last five years growth. ## Data from 1992/93 to 1996/97 are calculated on the basis of priority social sector allocation ratios and rest of the them are projected on the basis of growth rate. * Source: MOF 1997.

280

NEPAL HUMAN DEVELOPMENT REPORT 1998

Annex 14.2

Projected public sector resource gap, 1996/97-2001/02 (rupees in million)

Items/ year

1996/97RE 1997/98

GNP##

288,686

Total expenditure (TE)

329,102

1998/99 375,176.3

1999/00 42,7701

2000/01 487,579.2

2001/02

Imputed growth rate 555,840.2 14

51,168.1

59,285.9

68,773.5

79,874.1 92,876.4

108,122.5

Regular expenditure (RE)#

24,720.9

29,665.1

35,598.1

42,717.7 51,261.3

61,513.5

20

Development expenditure (DE)#

26,447.2

29,620.9

33,175.4

37,156.4 41,615.2

46,609

12

Total revenue (TR)# Scenario 1 (TR1)

31,214.1

36,832.6

43,462.5

51,285.8 60,517.2

71,410.3

18

Scenario 2 (TR2)

31,214.1

37,456.9

44,948.3

53,938

64,725.6

77,670.7

20

8,568

9,255.9

9,896.8

11,220.2 13,464.3

16,157.2

Financing of DE Revenue surplus (RS = TR-RE) Revenue surplus 1 (RS1)

6,493.2

7,167.6

7,864.4

Revenue surplus 2 (RS2)

6,493.2

7,791.8

9,350.2

Domestic borrowing (DB)*

4,405.6

3,291

3,751.8

4,875.8

5,558.4

Foreign aids (DE-RS-DB)**

15,548.4

19,162.3

21,559.2

24,311.4 27,483.4

4,277

31,153.8

Social exp. from dev. exp. (SED) @

11,901.2

13,329.4

14,928.9

16,720.4 18,726.8

20,974.1

Scenario 1 (FSED 1)

-6,161.8

-7064.5

-8,152.3

-9,470.9

-11,077.3

Scenario 2 (FSED 2)

-5,537.5

-5578.7

-5,500.1

-5,262.5

-4,816.9

Scenario 1 (FSED 1)

-9,745.6

-10,996.7

-12,436.4 -14,098.9

-16,025.7

Scenario 2 (FSED 2)

-9,433.5

-10,253.8

-11,110.3 -11,994.7

-12,895.5

Financing of SED from Rs

Financing of SED from 50 percent of Rs

RE: Revised Estimate. # Data from 1992/93 to 1996/97 are actual and rest of them are projected on the basis of the growth in last five years . * Data from 1992/93 to 1996/97 are actual and rest of them are projected, assuming that domestic borrowing remains at 1 percent of GNP . ** Includes grants. @ Assuming 45 percent of social expenditure to go for development 1. Scenario 1 represents historical growth whereas scenario 2 is considered moderate improvement. Source: MOF 1997.

ANNEXES

281

Annex 14.3

Government budget allocation for human priorities, 1985/86, 1992/93, 1996/97 (in million rupees)

Item GNP* Budget estimate Public exp. (reg. + dev.) Social sector allocation Education Health Water supply Local development Other Total Priority social sector allocation Education Health Water supply Local development # Other Total Allocation ratios Public exp. ratio (PE/GNP) Social sector allocation ratio (SSA/PE) Education Health Water supply Local development Other Total Priority social sector allocation ratio (PSSA/SSA) Education Health Water supply Local development Other Total Human allocation ratio (HDP/GNP) Education Health Water supply Local development Other@ Total "20/20" (HDP/PE)

1985/86 56,443.0

Fiscal year 1992/93 174,617.0

1996/97 288,686.0

13,052.6

33,595.2

57,565.6

1,240.7 396.1 270.9 148.4 5.4 2,061.5

4,250.0 1,214.6 1,215.1 627.6 15.5 7,322.8

7,759.3 3,458.0 1,437.8 4,102.3 60.8 16,818.2

722.5 232.4 127.1 0.0 1.4 1,083.4

2,812.3 905.8 1,013.6 219.4 7.1 4,958.2

6,150.6 2,037.1 725.0 962.0 58.8 9,933.5

23.1

19.2

19.9

Int'l Norm 25

9.5 3.0 2.1 1.1 0.0 15.8

12.7 3.6 3.6 1.9 0.0 21.8

13.5 6.0 2.5 7.1 0.1 29.2

40

58.2 58.7 46.9 0.0 25.9 52.6

66.2 74.6 83.4 35.0 45.8 67.7

79.3 58.9 50.4 23.5 96.7 59.1

50

1.3 0.4 0.2 0.0 0.0 1.9 8.3

1.6 0.5 0.6 0.1 0.0 2.8 14.8

2.1 0.7 0.3 0.3 0.0 3.4 17.3

5 20

Note: HDP = Human Development Priority or Priority Social Sector Expenditure. Figures may not add to totals due to rounding. # Assuming 25 percent of the Rural Development Fund to go directly into human development. * GNP for 1996/97 is estimated; assuming 13.5 percent growth from the level of 1995/96. @ Includes some portion of Labor Ministry and other social services. Source: MOF, Economic Survey, Details of Expenditure Account and Budget Speech (various years).

282

NEPAL HUMAN DEVELOPMENT REPORT 1998

Annex 14.4

Actual expenditure ratio over budget estimate, 1984/85-1996/97 (in percent)

Headings

1984/85

1989/80

1994/95

1995/96

1996/97

Defence

96.0

92.2

103.3

96.6

99.9

Police

98.2

94.5

99.6

99.6

99.7

Health

81.5

74.0

72.3

67.6

79.3

Education

88.5

85.3

91.6

86.9

91.8

Security

Social sector

Economic sector

74.7

96.3

92.0

95.5

88.2

Agriculture, forest

76.0

85.6

92.9

84.0

86.7

Irrigation, mining and power

63.0

132.5

84.9

80.9

84.1

Transport and communication

97.3

65.0

98.9

121.2

94.5

100.0

100.0

100.0

95.2

100.0

86.6

100.5

86.9

83.7

91.6

Debt amortisation Domestic Foreign Source: MOF 1997 and MOF, Budget speech (various years).

Annex 14.5

External assistance in education by basic and non-basic categories, 1985/86-1996/97 (in million rupees)

1985/86 Description Basic education BPEP Pri. edu. dev. Project (PEDP)

1992/93

1993/94

1994/95

1996/97

Amount Percent Amount Percent Amount Percent Amount Percent 48.8

17.4

-

Amount Percent

331.0

32.6

641.5

63.8

984.7

60.8

1,405.3

68.8

129.5

12.8

344.4

34.3

591.7

36.5

743.1

36.4 15.4

18.0

6.4

20.4

2

55.2

5.5

106.7

6.6

313.6

Technical education

9.9

3.5

10.5

1

9.2

0.9

22.5

1.4

21.4

1.0

Population education

1.7

0.6

1.9

0.2

2.9

0.3

6.9

0.4

11.1

0.5

Nutrition programme

1.4

0.5

1.7

0.2

1.6

0.2

1.8

0.1

175.9

8.6

Literacy programme

1.6

0.6

17.5

1.7

17.1

1.7

15.3

0.9

2.3

0.1

Free textbook

6.5

2.3

30.0

3

13.0

1.3

13.0

0.8

-

-

CTVET

1.6

0.6

114.1

11.3

198.2

19.7

195.6

12.1

137.9

6.8

Girl's hostel

8.1

2.9

5.5

0.5

-

-

-

-

-

-

School roofing

-

-

-

-

-

-

31.2

1.9

-

9.8

3.5

1.5

0.2

-

-

-

-

-

-

231.5

82.6

682.9

67.4

363.6

36.2

634.5

39.2

637.1

31.2

Engineering institute

74.6

26.6

123.1

12.1

95.7

9.5

255.8

15.8

284.9

14

Medical institute

88.5

31.6

445.0

43.9

35.0

3.5

75.4

4.7

9.5

0.5 0.1

Other* Non-basic education services

Agri. and animal service inst. Forestry institute Science and technology ins. Research centres TU, central office Secondary education project

8.6

3.1

79.4

7.8

88.7

8.8

98.8

6.1

1.9

36.9

13.2

5.1

0.5

4.2

0.4

3.0

0.2

-

-

-

-

-

-

1.6

0.2

1.4

0.1

1.5

0.1

3.3

1.2

-

-

2.4

0.2

1.9

0.1

-

-

-

-

-

-

101.5

10.1

113.8

7

164.1

8

15.1

5.4

4.6

0.5

11.0

1.1

56.4

3.5

162.3

7.9

Miscellaneous projects

2.0

0.7

1.0

0.1

1.0

0.1

1.5

0.1

2.9

0.1

Cultural heritage preservation

0.2

0.1

21.5

2.1

22.5

2.2

26.4

1.6

-

-

-

-

3.2

0.3

-

-

-

-

-

-

2.3

0.8

-

-

-

-

-

-

10.0

0.5

100.0 1,013.9

100.0

1,005.1

100.0

1,619.2

100.0

2,042.4

100.0

Regional education directorate RONAST Grand total (basic+non-basic)

280.3

* Includes girls, distance, IRD (Education component), Women Education etc. Source: MOF, Detail Accounts of Government Expenditure (various years).

ANNEXES

283

Annex 14.6

External assistance in health by basic and non-basic categories, 1985/86-1996/97 (in million rupees)

1985/86 Description Basic health services

1992/93

1993/94

1994/95

1996/97

Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent 196.1

80.9

297.9

94.9

391.6

90.1

498.0

63.0

964.9

65.6

9.6

4.0

37.9

12.1

72.5

16.7

35.0

4.4

44.8

3.0

51.1

21.1

32.0

10.2

31.8

7.3

78.3

9.9

46.0

3.1

CDD

-

-

13.1

4.2

13.6

3.1

5.7

0.7

0.5

0.0

CHSP

-

-

38.5

12.3

2.0

0.5

-

-

-

-

FCHV

-

-

17.7

5.6

38.9

9.0

24.2

3.1

14.2

1.0

Indent procurement

2.2

0.9

-

-

20.0

4.6

75.2

9.5

158.1

10.8

Leprosy control

6.2

2.6

11.0

3.5

6.4

1.5

5.8

0.7

1.4

0.1

SHP

-

-

21.0

6.7

24.4

5.6

-

-

-

-

Aids and VD control

-

-

0.2

0.0

20.9

4.8

7.6

1.0

-

-

6.8

2.8

19.1

6.1

8.9

2.0

7.5

0.9

40.9

2.8

EPI FP/MCH

Nutrition Goiter & cretinism

7.6

3.1

35.4

11.3

28.6

6.6

18.1

2.3

-

-

Goiter control

8.6

3.6

-

-

43.1

9.9

44.1

5.6

47.1

3.2

Health education

0.3

0.1

0.5

0.2

0.3

0.1

12.4

1.6

20.9

1.4

Health information system Malaria

0.0

0.0

0.5

0.2

0.5

0.1

-

-

-

-

50.4

20.8

50.0

15.9

60.0

13.8

70.0

8.8

21.3

1.4 -

7.3

3.0

-

-

0.3

0.1

-

-

-

Central reg. H. services

Blindness control

-

-

10.0

3.2

9.7

2.2

-

-

-

-

Public health training

-

-

3.3

1.0

2.8

0.6

56.6

-

77.2

5.3

Nursing improvement Other* Non-basic health services

0.4

0.2

5.6

1.8

6.0

1.4

-

-

-

-

45.5

18.8

2.2

0.7

1.0

0.2

57.7

7.3

492.5

33.5

46.2

19.1

16.0

5.1

43.0

9.9

293.0

37.0

505.2

34.4

Drug administration

0.3

0.1

4.5

1.4

1.5

0.3

1.0

0.1

0.4

0.0

Hospital construction

2.8

1.1

7.5

2.4

10.0

2.3

-

-

-

-

19.7

8.1

3.0

1.0

-

-

100.0

12.6

80.0

5.4

Health laboratory service

2.3

0.9

1.1

0.3

1.6

0.4

-

-

2.2

0.1

Kanti Children's Hospital

-

-

-

-

30.0

6.9

12.0

1.5

-

-

1.0

0.4

-

-

-

-

30.0

3.8

-

-

20.0

8.3

-

-

-

-

-

-

-

-

0.2

-

-

-

-

-

-

-

422.7

28.7

242.3

100.0

314.0

100.0

434.6

100.0

791.0

100.0

1470.1

100.0

B.P. Memorial Cancer Hospital

Health planning (MOH) Bir hospital Other** Grand total (basic+non-basic)

* Includes Environmental Health, PHC, Hill development, TB control, HP construction, Regional store, IRDP, NTP, Population– Family health, TBA, etc. ** Include B.P Medicine Institute, Supervision, medical research etc. Source: MOF, Detailed Accounts of Expenditure (various years).

Annex 14.7

Subsidy provisioned in the budget, 1985/86-1996/97 ( in million rupees)

Subsidy on Interest and capital (through ADB/Nepal) Food and fertilisers Others Total subsidy ( percentage of GNP)

1984/85

1989/90

1994/95

48.2 43.1 41.5 132.8 (0.3)

685.8 325.1 66.9 1077.8 (1.0)

217.1 500.0 1.2 718.3 (0.3)

1995/96 243.5 925.2 1.2 1169.9 (0.4)

1996/97 313.5 930.0 1.5 1245.0 (0.4)

1997/98 285.1 844.1 2.5 1131.7 (0.4)

Note: Subsidy excludes transfer items provisioned for research, education, training and local development grants. Source: MOF Book of Detail Expenditure Accounts (various years).

284

NEPAL HUMAN DEVELOPMENT REPORT 1998

Annex 14.8

List of human priority sector projects Health

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 1 2 3 4

13 Blindness control Services Malaria 14 Acute respiratory infection (ARI) Leprosy 15 Control of diarrhoeal disease (CDD) Public health program 16 Health post Expanded program for immunisation (EPI) 17 Nursing improvement Nutrition 18 AIDS and VD centre Goitre and cretinism 19 Public health training Goitre control 20 Female community health volunteer (FCHV) Family planning/maternal child health (FP/MCH) (CHSP) 21 Health education Integrated hill development program (IHDP) 22 Environmental health Indent procurement 23 Health information system Community-based health service programme 24 Sub-health posts TB control Education Basic and primary education project (BPEP) 9 Adult education Primary education development project 10 Population education Free textbook 11 Girls’ hostel Women/female education 12 Education for the disabled Nutrition 13 Technical school Council for technical and vocational education training (CTVET) 14 Primary student scholarship programme Radio/distance education 15 Health training Primary education 16 Physical education Drinking Water Rural water supply 10 Human resources development Tarai tube-well 11 ADB-financed water supply scheme I, II, III Rasuwa-Nuwakot (water supply) 12 Karnali-Bheri integrated rural development (water supply) Seti integrated rural development (water supply) 13 Mechi (water supply) project Helvetas-financed water supply 14 Dhulikhel development project (water supply) UK-financed water supply 15 District water supply Lumbini zone rural water supply 16 Sanitation programme Pipe fitting project 17 Dharan water supply Butwal water supply Local Development Women development 7 Urban basic services (UBS) School roofing 8 Praja bikas programme Women training centre 9 Manpower development Karnali-Bheri (women) IRD project 10 Participatory rural development project District IRD projects 11 Deprived/low caste empowerment programme Population education Other Social Priority Sectors* Vocational training centres 5 Women training centre Women development 6 Skill development programmes Social welfare project 7 Kamaiya women skill development Carpet and child labour

* Derived from "Ministry of Labour" and "other social sector expenditure" heads. Source: MOF, Detail Accounts of Expenditure (various years).

ANNEXES

285

Some Indicators of Human Development Indicator\ Year Population (million) Sex Ratio (Male per Female) Crude Birth Rate (per '000 persons) Crude Death Rate (per '000 birth) Population Growth Rate (%) Total Fertility Rate (%) Infant Mortality Rate (per '000 persons) Life Expectancy at birth (years) Population per sq km Persons/ hectare of cultivated land Proportion of Urban Population (%) Mean Age at Marriage (male) Mean Age at Marriage (female) Dependency Ratio Maternal Mortality (per '0000 births) Married during 10-14 years of age (%) GDP per capita (Rs at current prices) GDP per capita (Rs at constant prices) Consumer's Price Index (1981=100) Composition of GDP (in %) Agriculture Industry Services School Enrolment Ratio (in %) Primary Lower Secondary Secondary Pupil/Teacher Ratio ( in %) Primary Lower Secondary Secondary Population per Doctor (in '000) Population per Nurse (in '000) Population with Safe Drinking Water (%) Labour Force Participation Rate (%) Male Female Employment Structure (%) Agriculture Industry Services Self Employment (%) Male Female Wage Employment (%) Male Female Total External Debt (% of GDP) Debt Service Ratio (% of exports) Human Development Index (HDI) Gender Development Index (GDI)

1971

1981

11.5 1.03 41.0 21.0 2.0 5.5 172.0 37.0 79.0 4.7 4.0 20.8 16.7 85.4 8.2 13.4 NA NA 45.0

15.0 1.05 39.0 14.0 2.7 6.3 117.0 50.0 102.0 6.1 6.3 21.8 17.1 88.8 NA 14.2 1,820.0 1,820.0 100.0

NA NA NA

65.5 5.8 28.7

NA NA NA NA NA NA NA NA NA 5.7* 59.3 82.9 35.1

NA NA NA 37.0 48.0 14.0 29.0 30.0 9.0 10.8** 65.1 83.1 46.2

NA NA NA 85.9 84.6 89.0 9.3 11.7 3.6 NA NA NA 0.128*

91.0 0.5 8.5 85.5 83.2 90.0 9.1 11.8 3.8 9.0 1.6 0.209** NA

1991 18.5 0.99 41.0 13.0 2.1 5.6 97.5 54.0 126.0 7.8 9.2 21.4 18.1 93.1 5.8 7.6 6,277.0 2,409.0 260.6 47.7 17.5 34.8 106.0 40.0 32.0 37.0 39.0 29.0 34.0 16.0 6.0 37.0*** 57.0 68.1 45.2 81.0 2.6 16.4 75.3 69.5 83.7 21.4 27.8 12.0 51.2 7.2 0.278*** 0.310#

1996 21.2 1.01 37.0 12.0 2.3 5.0 86.1 57.0 144.0 NA NA NA NA NA NA NA 11,348.0 2,668.0 425.4 40.2 22.0 37.8 114.1 47.9 31.6 37.0 38.0 43.0 21.0 10.0 5.0 NA 67.2 71.0 63.7 NA NA NA 78.4 70.5 86.2 21.6 29.6 13.8 53.5 5.6 0.378 0.270

Note:* =1970; ** = 1980; *** = 1990; and # = 1992.

286

NEPAL HUMAN DEVELOPMENT REPORT 1998

NOTES Chapter 1 1.

2. 3.

In the absence of segregated data on private consumption, the consumption behaviour of the household and the business sector cannot be analysed separately. As separate price deflators for consumption and savings are not available, the figures are in nominal terms. See part four of the Constitution.

Chapter 3 1. 2. 3.

For detailed methodology and illustration, see annex 3.2. For a simplified classification of the caste and ethnic groups, see annex 3.1. Detailed methodology is provided in annex 3.2.

Chapter 4 1.

2.

3.

4.

The most recent estimate (MOH 1997c) reports an IMR of 79. However, it is based on a direct estimation technique and is difficult to rely on in the absence of other reliable estimates for comparison. Besides, it is also not directly comparable with previous estimates based on indirect techniques. Another recent estimate, based on a representative sample survey carried out in 1996 (CDPS 1997) puts the IMR at 96. To overcome these inconveniences, the IMR for the purpose of this study is estimated by using an indirect technique, which puts it at 98. However, other studies do not support this sharp decline. Indirect estimates based on the MOH 1996a yield a TFR of 5.3, which is a more plausible figure. Besides, this latter estimate also corresponds with the results of other nationally representative sample surveys, e.g., CBS 1996 and CDPS 1997. For 1995, another survey (NPC-UNICEF 1996a: 8) estimated chronic malnutrition among children 6-36 months of age at 63 percent. The proportion, however, came down to 53 percent in 1996 (NPC-UNICEF 1997b: ii). No explanation, however, has been provided on the reasons for the reduction. INGO and NGO expenditures shown may be highly underestimated; see 4.7.5. In addition, not all of the expenditures NGOs incur can be attributed to external sources.

Chapter 5 1.

3.

CBS 1996 reports that 39.6 percent of the agricultural land was irrigated throughout the year. 4. Cropping intensity is defined as the ratio of gross cropped area to operational land area. 5. Calculations by GEFONT. 6. Ambiguity arises because registered firms running small enterprises are not, under the law, treated as an organised sector, which in fact they are. 7. The MHBS survey shows that off-farm employment opportunities constitute only 18 percent of the days available for work in the rural Tarai and 18.1 percent in the urban areas in the case of women, compared with 20.8 percent and 27.6 percent respectively for men. In the rural areas, the underemployment rate for women is as high as 56 percent compared with 41 percent for men. In the urban areas, the rate is 47 percent for women compared with 24 percent for men (NRB 1988). 8. The definition of child labour is controversial. In the present report, those who work for others as paid workers and those who perform household work at the cost of their education, good health, or better upbringing are treated as child labourers. However, quantification of such labour is not possible without undertaking a fresh conceptual analysis on this theme. 9. Kathmandu Declaration of Child Worker's Forum, 1996. 10. CBS 1996, however, reports participation rate at 38.6 percent for this age group. 11. Report of the Landless Problem Resolution Commission, 1995.

Chapter 7 1.

2.

3.

4. 5.

Cohort flow analysis based on promotion, repetition and dropout rates for 1994.

Chapter 6 1. The recent fertility rate is estimated at 4.6 (MOH 1997c). 2. The censuses of 1971 and 1981 defined economically active persons as those who had worked at least for eight months either at a single stretch or at intervals for pay, profit or remuneration in cash or in kind during the year preceding the day of enumeration. In the 1991 census, a person working for any length of time during the twelve months proceeding the census date was treated as economically active. However, “work” as such was not clearly defined while carrying out the enumeration during these censuses. Information was collected on the enumerator’s own perception of “productive work”. CBS 1996 defines, more definitively, economically active persons as those who have either worked or been involved in any activity, except household chores, such as gathering firewood, fetching water, making mats, baskets, etc. for home use, for at least one hour during the seven days prior to the interview, or those who have been looking for work.

NOTES

6.

7.

8.

The relative price ratio of agricultural to non-agricultural production, which had come down to 0.82 in 1985 (from base year 1975), further fell to 0.78 in 1996 (all at 1975 prices). (MOF, Economic Survey, various years). Regional per capita income in rupee converted into US dollar by applying average annual exchange rate of Rs. 54.2 per US dollar. Changing consumption patterns show that commercialisation of agriculture has expanded the market for agricultural products whereby households sell nutritious food items such as milk, fruits, eggs and beans in the market in order to buy nutritionally inferior and health-hazardous items such as liquor, tobacco and processed foods for consumption. See Basnyat 1995, El Chonemy 1990, NRB 1994. If household activities of women are included in the national accounts, the gross domestic product may rise by one-fourth to one-third. A study for Bangladesh shows that if women’s activities are properly taken into account, the gross domestic product goes up by one-third (Hamid 1994). If three outlier districts are excluded, the savings rate for the marginal and landless groups will come down to (-9) percent and 2 percent, respectively. Although commercial banks do not lend directly for consumption purposes, most of the credit extended against a collateral of gold and silver is expected to be allocated for consumption. The first-ever national household survey of income/consumption was conducted in NPC 1977. The sample size was 4,969 households (4,037 rural households and 932 urban households), covering 37 districts. The NPC had fixed Rs. 60 (at 1977 prices) per capita per month as the minimum national subsistence level. The minimum level of expenditure per capita was derived by identifying the composition of cereals and pulses considered as sufficient to acquire 2,256 calories per capita per day, the minimum calorie requirement based on the recommendations of FAO/WHO. This amounted to 605 grams of cereals (rice, maize, millet or wheat) and 60 grams of pulses. These quantities were multiplied by the average prevailing prices in four development regions (eastern, central, western and far western). The average

287

9.

10.

11.

12.

13.

daily consumption expenditure of the rural households, and the urban households in the lowest income quintile on other basic necessities were added to the regional expenditure on cereals and pulses to obtain the total consumption expenditures. This gave Rs. 2 per person per day as the bare subsistence expenditure and formed the cut-off point for defining the poor. This estimate contradicts both the general belief and empirical evidence that the larger the household size, the higher the incidence of poverty. This also means that there is lower incidence of poverty at the household level than at the level of the total population. (Also see 7.9.3 and NRB 1988.) The second national household survey, the 1984/85 Multipurpose Household Budget Survey (NRB 1988), was conducted by Nepal Rastra Bank in 1984/85 covering 3,662 households in rural areas (with a population of 22,572) and 1,661 urban households (with a population of 9,126). The MPHBS measures the incidence of poverty by comparing the actual level of monthly per capita income of households with the level of basic needs income (BNI) fixed by the NPC. According to this method, the annual per capita basic needs income worked out to be Rs. 2,168 for the Mountains/Hills and Rs. 1,719 for Tarai, at 1985 prices. The basic consumption expenditure on food items was estimated on the basis of the minimum daily calorie requirement of 2,250 calories at the national level (2,340 for the Mountains and Hills and 2,140 for Tarai ). Based on the average retail commodity prices for April 1985, the required food expenditure worked out to Rs. 3.86 and 3.07 for the Mountains and Hills, and the Tarai respectively. Adding 35 percent to the annual expenditure for necessary non-food commodities, the per capita BNI was estimated at Rs 2,168 for Mountains/Hills and Rs. 1,719 for Tarai (all at 1985 prices). The Nepal Rural Credit Survey 1992 (NRB 1994) was also conducted by Nepal Rastra Bank. It covered 7,336 rural households (2,816, 3,525 and 995 households selected from the Tarai, Hills and mountains, respectively) in 32 districts. It provides information on the socio-economic conditions of the households, with special emphasis on the credit behaviour of rural households. The minimum subsistence nutritional norms to define the poverty line, as in previous household surveys, has been fixed as 2,340 kcals per person per day for the Mountains and Hills and 2,140 kcals for the Tarai, which is equivalent to 2,250 kcals at the national level. A consumption basket required to attain such nutritional norms is identified from the actual average expenditure pattern of the second to the fifth consumption deciles. Each food item included in the consumption basket had been priced to obtain the expenditure needed to purchase the subsistence food basket. The expenditure required for non-food items have been added to obtain the final poverty line. The poverty line has been worked out, taking regional price variations into account, as Rs. 5,570 for the Mountains and Hills and Rs. 4,390 for the Tarai. A similar result was reported by Chhetri (1996).

2.

3.

4.

5.

6.

7.

8.

development, as the fundamental challenges for humanity which needed concerted actions beyond what could be possible through the market forces. Also, see the initiative of the Danish Government and the Copenhagen Seminar it sponsors (DANIDA 1996). Questions like “What institutional arrangements best allow markets to flourish? What is the role of the state both as a direct agent (mostly in the provision of services) and as a shaper of the institutional context in which markets function?” are the current concerns of the World Bank (1997: 29). This is all that is allowed even under its much-acclaimed and welcome shift in focus regarding the role of the state. The term, stemming from Game Theory, uses decision problems of arrested criminals to illustrate how “rational behaviour” at the micro level leads to an irrational macro outcome. By “cooperating or acting altruistically”, the prisoners get lesser sentence than when acting selfishly. In our case, too, the political parties are well-advised to cooperate so that each benefits more through cooperation in reform than when they try to maximise individual gains through non-cooperation. The following analysis also draws on the work of the Citizens’ Campaign for the Consolidation of Democracy, an informal advocacy and pressure group of citizens, and on its submissions to the prime minister, the speaker of the House of Representatives (HOR) and leaders of political parties. The M.P.s generally have no access to staff assistance. For comparison, it may be noted that each member of the US House of Representatives can have up to 18 persons on his/her staff. On the other hand, the M.P.s in Nepal are not careful to appoint a capable personal assistant – the one post they have been allowed to fill. Among the advocacy instruments against corruption, the national integrity system is understood as a set of mechanisms designed as part of the national effort to combat corruption. “This system of checks and balances, designed to manage conflicts of interest in the public sector, limits situations in which conflicts of interest arise or have a negative impact on the common good” (Langseth et al. 1997). According to some members of the Constitution Recommendation Commission (CRC), the absence of such provision in the constitution is not an oversight or a result of inadequate importance attached by the CRC. The constitution was prepared and adopted in a record period of less than six months. The CRC just did not have the time to attend to this aspect of governance. The reference here is mainly to the reports of Quentin W. Lindsey, UNDP Consultant on Participatory District Development, that remain unpublished. These reports have not been adequately noticed and debated even within the political parties. The recommendations are as imaginative as they are bold and controversial. They need to be publicised, discussed and adopted, where consensus emerges, possibly through constitutional amendments.

Chapter 8

Chapter 13

1.

1.

2.

Many new municipalities extend into the rural area to capture the necessary population size in order to qualify as a “municipality”. With the possibility of interpreting all political opposition as terrorism, if the government so desired, the proposed bill sought to provide the government with arbitrary powers to scuttle all political opposition and public dissent of any kind.

2.

Chapter 10 1.

On the other hand, the policy enunciated in the draft Second Long-Term Health Plan which seeks to abdicate state responsibility in health by transferring the ultimate responsibility (MOH 1997b: 10] on health to communities is downright regressive and anti-human development.

Chapter 12 1.

288

Among others, this point is stressed in all of the United Nations conferences of the 1990s that took up issues concerning environment, women, population, children and, above all, social

3.

4. 5.

This has its roots in the dualistic model of development, which treats the larger subsistence-based rural economy as a storehouse of surplus labour, ready to be drawn into the market-oriented, technology-driven modern sector. In 1979, the World Food Conference organised by FAO on Agrarian Reform and Rural Development adopted a declaration with a strong commitment to ensure a fuller and more equitable access of the rural poor to land, water and natural resources together with a widespread sharing of economic and political power. All developing countries participating in the conference also agreed to impose ceilings on private holdings, implement land redistribution with speed and determination, and fix specific periodic targets for the reduction of rural poverty. But, due to the lack of political commitment, no significant policy and programmes ceilings and on redistribution of private land has come out since 1980. Distribution of public land has also slackened. Though we look at the growing civil society and judicial activism in a favourite light (including in chapters 8 and 9), one cannot help wondering if the country is becoming more “litigious” than democratic. Based on CBS 1993. In November 1997, the government announced a policy to allow the private sector to compete fully with AIC for importation and

NEPAL HUMAN DEVELOPMENT REPORT 1998

6. 7.

8.

distribution of fertilisers. The private sector will henceforth receive the same level of subsidy and access to foreign exchange as the public sector. It is too early to comment on the impact of this policy shift on the price and timely availability of fertilisers. See also Wolfensohn 1997. The historical relationship between economic growth and employment generation shows that a one percent increase in employment is linked with each 3 percent growth in GDP. An estimated 300,000 persons enter the job market each year, and if the GDP grows by 6 percent/year, the estimated employment elasticity of growth at 0.34 implies an additional 200,000 jobs created each year. The Environmental Policy and Action Plan was officially adopted in 1993 and the Environment Protection Act was passed by the parliament in 1996. A number of sectoral EIA guidelines have been developed to ensure that sectoral development actions do not unduly harm the environment and its components such as air and water quality, soil fertility, biodiversity, species habitats, human settlements and human health.

Chapter 14 1. 2.

3.

4.

5.

Programmes included under the definition of social priority areas are listed in annex 14.8. The UNDP’s Nepal Development Cooperation Report 1996 shows that, in 1996, INGOs, mostly through official channels, provided $ 20.4 million as development assistance. Three scenarios of desired expenditure are projected for three alternative growth rates of GNP according to the expenditure requirement ratios developed by UNDP, as discussed earlier. On the other hand, two scenarios of government expenditure for the period 1997/98-2001/02 are projected on the basis of the last five years’ growth rate assuming a moderate rise in the scale, and improvement in the pattern, of government expenditure. Finally, four scenarios of expenditure gaps, which show differences between the desired and actual expenditures, are presented. The J-curve states that a reduction in the tax rate leads to a decrease in revenues initially and, after a short time lag, improves it. About 14.2 percent of regular and 6.4 percent of total budget allocation have been earmarked for external debt servicing in 1997/98. Debt servicing can be a serious problem from the standpoint of external stability as well if the country’s exports do not get diversified beyond “two commodities” (garments and carpets) and two countries (USA and Germany).

NOTES

Annex 3.2 1. 2.

For detail on methodological issues, see Anand and Sen 1994. Wage ratios for those districts which simultaneously satisfy two conditions (a. female sample size is greater than 20, and b. more than 20 percent of the sample is comprised of females) are taken from NLSS 1996. For other districts, wage ratios of ecodevelopment regions are used as proxies. 3. For detail on methodology and the rationale for variables used, see UNDP 1995. 4. For development regions, ecological zones, eco-development regions and districts, percentage shares of representatives in local bodies − district development committees, municipal councils and village development committees − are used to indicate political participation. 5. Percentage of births unattended by a doctor, nurse, auxiliary midwife, maternal-child health worker, village health worker, health assistant and health post staff, as obtained from NFHS 1996. 6. Information on the nutritional status of children is reported in NPC-UNICEF (1996a, 1997b) and NFHS 1996 both of which report malnutrition of children 6-36 months of age. We have adopted the information from NFHS 1996 in order to be consistent with the data source, assuming that there is no significant difference in the pattern of malnutrition between the children under age 5 and those 6-36 months of age. 7. Percentage of people not expected to survive to age 40 is obtained from the life table calculated at NESAC based on the information from NFHS 1996 using Coale-Demeny west regional model. 8. Refers to the percentage of households who obtain water from sources other than pipe, hand-pump and stone tap, which we assume to be safe sources, as shown in CBS 1996 9. Measurement of access to health services is quite controversial. The physical structure of the health care centres does not reveal whether people are, in fact, using the health centre or whether such a centre can actually provide adequate health care. Thus, we have attempted to define access to health service in terms of perception of households. The number of people reporting inadequate health services in CBS 1996 has been considered as an indicator of deprivation in health care. 10. See note 6. 11. See note 9. 12. See note 6.

289

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