Has democracy been successful to reduce poverty in Nepal?

In order to answer this question, we must, at first, try to find out in what ways ‘democracy’ and ‘poverty’ are related in context of Nepal. Implicit in this statement are answers about why democracy came in the country during 1950s-for the first time in history, and again in 1990s- as an effort of restoring democracy. In the mean time, ‘poverty’, in case of Nepal, appears to be an outcome of the past autocratic regimes, and as a gifted challenge to the democracy. On that ground, I will make an attempt to see -to what extent- democracy has been successful to address the problem of poverty in the country.

Poverty, in case of Nepal, is an outcome of the past autocratic regimes, by all accounts. For instance, until 1951 i.e. during the 104-year-old autocratic Rana regime, Nepal experienced the picture of severe economic stagnation. The hills areas experienced an acute shortage of labor even for normal agricultural operations, leading to conditions of acute scarcity on famine (Shaha, 1990). This was because Nepalese people who were abroad, mainly in India, did not wish to return because of their growing dissatisfaction with the condition of life inside their own country. In contrary, the Rana administration lived the most luxurious life ever with the wealth of the country on their side, while Nepalese people were subjected to extreme poverty. Shaha writes that in those days, as even now to an extent, Kathmandu presented a striking picture of contrast between extreme poverty and vast wealth (1990). In such a scenario, Democracy, for the first time in Nepal in 1951, became a tremendous hope for Nepalese against their extreme poverty situation.

The interim democratic era (1951-1960), nine years of infant democracy, could not produce much in terms of reducing the problem of poverty, but it achieved significantly in terms of signing new treaties, agreements, admission, etc. For instance, conclusion to Delhi Agreement, first foreign aid agreement with United States in 1951- named four point program which was soon followed by India (in the same year), China (1956) and USSR (1958), membership of UN (1955), etc (Aryal, Subedi, & Thapa, 2010)  . In addition, the spirit of the first five years plan (the beginning of the planned development initiatives in the history of Nepal), launched in 1957, was overshadowed by another political upheaval in 1960 i.e. the beginning of the Panchayat Era.

Then King Mahendra overthrew democracy, established Panchayat-which lasted for another thirty years till 1990. In between this time frame, six development plans were launched in the country, each had its own set of objectives, but none of them explicitly state ‘Poverty’ in its objectives except the seventh plan starting from 1985-1990 (HMG National Planning Commission Nepal, 2003, p. 9). Although, the seventh plan brought a new change in the trend of the objectives of the Nation’s development plans, however it can be assumed that it was done as a part of preparation for establishing agreement with International Monetary fund (IMF) on Structural Adjustment Policy (SAPs) in the following year 1986. Despite all these, Panchayat came to an end in 1990 with the restoration of Democracy.

One of the main reasons behind the fall of Panchayat was the accumulation of huge wealth by the corrupt Panchas. It was believed that the morass of debt, which the Panchayat system had forced poor Nepalese into, cannot be settled in hundred of years (Thapa, 2002). However, the restored democracy struggled to come out of all these issues of poverty, corruption, unemployment, etc, mainly because the greed of the so called-champions of democracy had led them to copy the Panchas (Thapa, 2002). By then, the corruption was at its upsurge and foreign loans went high that resulted to increase in debt per individual. In 1981- it was Rs 163 (during Panchayat), in 1991- it increased to Rs 3000 (immediately after the restoration of the democracy), and it reached Rs 6000 in the year 1995 (few years after democracy) (Nepal National Intellectuals' Organization, 1997) . However, the restoration of the democracy gave a new motion to poverty reduction.

After the restoration of the Democracy in 1990, the country introduced two development plans, mainly Eighth plan (1992/93 – 1996/97) and ninth plan (1997/98- 2001/02), which had poverty reduction as their major objective (National Planning Commission Nepal, 2003). Second, the tenth plan (2002-2007) was introduced in the name of “Poverty Reduction Strategy Paper” with an aim to break the vicious cycle of poverty with effective strategies. But again, the political turmoil disturbed the spirit of these development plans; King Gyanendra, in October 2002, dissolved the then democratic government, and formed government under his supervision. Another important factor to be mentioned here is after a decade of fairly robust growth, Nepal's Real GDP growth became negative (-0.6%) in 2001/02, for the first time in nineteen years  (National Planning Commission Nepal, 2003) . The primary reason behind this negative growth was the effect of decade long Maoist conflict (started in 1995 and went in parallel with democracy).

Keeping these issues in mind, let us now see, with the help of facts and figures, the achievement of democracy in reducing poverty. A list of collected figures is shown below that talk about poverty reduction and the success of democracy.

Year

Era

Source

Methodology

Indicator

Poverty

1977

Panchayat

Central Bureau of Statistics (CBS)

-

Employment, Income Distribution

36.2 %

1984

Panchayat

Nepal Rastra Bank

-

Family Budget

42%

1995/96

Democracy

CBS

Proposed by World Bank

Cost of Basic needs (CBN)

Poverty line,

Population   below poverty line

Living Standards Measurement Survey Methodology (LSMS)

Rs 5089

41%

2003/2004

King Gyanandra’s active rule (2002-2006)

CBS

LSMS

CBN

Rs7696

30.8%

2010/2011

Democratic Republican Era (2006 onwards)

CBS

LSMS

CBN

Rs 19261

25.2%

CBS claims it to be more effective than previous years because it has been done by taking New Food basket.

Source

Methodology

Indicator

Poverty

World Bank

International Poverty Line

Purchasing Power Parity (PPP)

Below $1.25 per day, 35.5%

Below $2 per day, 62.8%

Oxford University

Multidimensional   Poverty Index (MPI)

Health Education and Living Standard

65 per cent

SOCIAL AND ECONOMIC INDICATORS

Indicator

Year

Result

Year

Result

Infant Mortality Rate (IMR)

1990/91

97/1000

2006

48/1000

Maternal Mortality Rate (MMR)

1996

539/100 thousand

2010/11

281/100 thousand

Total Fertility Rate (TFR)

1996

4.6

2010/11

3.4

Average Life span

2008

64.1

Net Enrollment Rate (NER)

1995/96

57

2010/11

69

Access to the primary school within 30 minutes

1995/96

88.4%

2010/11

94.7%

Access to the health centers within 30 minutes

1995/96

57

2010/11

69

Average growth rate of Gross Domestic Product (GDP) within ten years

3.76% per year

Millennium Development Goals (MDGs)

Achievement (2010)

Target (2015)

1 Proportion of population living on less than US$ 1 per day (PPP) (%)

19.7

17

Proportion of population below national poverty line (%)

25.4

21

Proportion of employed people living on less than US$ 1 per day (PPP) (%)

22

17

Human Development Index (HDI)

0.428 (position 138 in the list of the world nations)

Source: Recent report of CBS regarding its say on measuring poverty.

Each figure presented above must not be studied in isolation. These figures belong to different time frames (changing political atmosphere, and varying socio-economic and geographic conditions). Also, the result must not be studied in general, as the indicators and methodologies are different. However, the positive result in every indicator in recent time as compared to 1990s shows that democracy has been acceptably successful to address the issue of poverty and its reduction. . Likewise, the achievement of first goal (on poverty and hunger) of MDG is praiseworthy. In contrary, the Gini Coefficient (which measure the inequality between the rich and the poor) has been increased to 0.46 in recent years from 0.41 in 2003/04, while, the same 0.41 (2003/04) had risen from 0.32 (1995/96) (CBS). It means though poverty is reducing but the unequal distribution of income is increasing. Also, the increasing corruption, social injustice, poor governance, etc have also acted as major barriers to poverty reduction. Albeit massive foreign loans and aid has backed up our economy, and helped to bring some satisfactory results in poverty reduction, but equally it has made our economy more dependent on foreign assistance. However, the historic peoples’ movement II of April 2006 has again given Nepalese people new zeal of hope and it is yet to see how far the new federal Republic Nepal will show its effects.

  

References:

Aryal, D., Subedi, R. P., & Thapa, S. (2010). Diplomatic Dealings. Kathmandu: Vareity Press.

Hamal, Y. B. (2010). Ecology of Nepal's Foreign Policy. Varanasi: Kabra offset.

HMG National Planning Commission Nepal. (2003). The tenth Plan (Poverty Reduction Strategy Paper) 2002-2007. Kathmandu: NPC.

National Planning Commission Nepal. (2003). Poverty Reduction Strategy Paper (2002-2007). Kathmandu: NPC.

Nepal National Intellectuals' Organization. (1997). Nepalma JanaYudhha. Kathmandu: Nepal National Intellectuals' Organization.

Shaha, R. (1990). Modern Nepal: A Political History 1769-1955 (Vol. II). New Delhi: P.L. Printers.

Thapa, H. B. (2002). Anatomy of Corruption. Kathmandu: Format Printing Press.