ON October 10. 1955. K i n g Mahen-' d r a issued a Roya l proclamation

announcing a Five-year P lan for Nepal for a t t a in ing self-sufficiency and for establishing a Welfare State. The fo rmat ion of a seven man Cen­t r a l P lanning Commission was also announced, the membership of which was to be decided later.

Under the old regime also, plan­n i n g had been ta lked of. Fo r in ­stance, just before the outbreak of the second wor ld war, when Shri Juddha Shamsher was the Premier, the Nepal Darbar had announced a 20 year plan, but, no th ing was done about i t . In fact, not to speak of planning, Nepal d id not have any systematic policy fo r economic deve­lopment u n t i l the end of 1949.

Aga in , on October 31, 1941, the Rana Prime M i n i s t e r Shri Mohan Shamsher, had set up a N a t i o n a l P lanning Committee w h i c h was entrusted w i t h the task of preparing a 15-year p lan of economic development for m a k i n g Nepal completely self-sufficient in a l l respects. W i t h o u t any survey of the country's resources, the Committee came out w i t h a plan of w h i c h the main features were the fo l l owing :

1 . Expansion of ag r icu l tu ra l p r o ' duct ion.

2. Cu l t iva t ion of indigenous herbs and plants in the plains.

3. Development of medium-sized and cottage industries for exports,

4. Improvement in means of trans­por t and communications.

I t was also broadly emphasized t h a t due regard should be paid to the na t iona l , regional a n d r u r a l needs of Nepal and tha t provision should be made for adequate f inances f o r i m ­plement ing the P lan ' Noth ing , how­

ever, was done to give effect to any of these proposals and short ly after the Plan was announced, the idea was given up and the P lanning Com­mit tee was dissolved all of a sudden.

Separate Minis t ry for Development Af t e r February 1951, however,

more serious efforts were made and a separate min is t ry was formed for

p romot ing nat ional development. In the beginning of 1952, the then Pr ime Minister , announced at a press con­ference tha t a P lanning Sub-com­mit tee was soon going to be appointed to advise on problems of development and to co-ordinate the various deve­lopment activi t ies of the State. In M a r c h 1952, Nepal had joined the K a r a c h i session of the Colombo P lan as one of the member countries. Bu t t i l l the recent announcement, not much progress had been made in planning. The efforts so far made were based on ambitious assumptions but no thorough and detailed invest i ­ga t ion of the various problems fac ing the country had been undertaken. The efforts also suffered f r o m lack of perspective and inaccurate prac­tical observations. There was also l i t t l e in tegrat ion among the various development act ivi t ies tha t had been envisaged.

Economic Limitations In an atmosphere o f haphazard

and uncoordinated efforts, King: Mahendra's desire fo r the country 's planned economic development is much to be welcomed, Before ex­amin ing the D r a f t Outline of Nepal's F i r s t Five-Year Plan, i t is necessary to refer to some of the basic defi­ciencies of the country's economy, as in m a n y respects, these deficiencies may hinder the w o r k i n g of the P l an . F i r s t and foremost of them is the

' absence of s tat is t ical data. No doubt,

ava i l ab i l i ty of statistics leaves much to be desired even in h igh ly deve­loped countries, but in Nepal, even on the Governmental level, collection of economic facts are few and f a r be­tween and one has to depend on scrappy in format ion .

Secondly, the inadequacy of admi ­nistrat ive, technical and scientific personnel required for p lann ing is another severe l im i t a t i on , w h i c h in tu rn may render any developmental plan somewhat unrealistic. T h i r d l y , the sources of income are so l imi t ed as to present insurmountable obsta­cles to effective planning. Because of the budgetary deficits (annual deficit being more than one crore of rupees in a budget of about Rs. 5 crores) and lack of capital , the country 's i n ­ternal resources alone cannot pro­vide the base f o r any substantial long- term economic development, judged by the cr i ter ion of expansion.

Main Features Bearing these basic difficulties in

mind, one should proceed to examine the D r a f t Plan, The document pre­sented by the K i n g to the people of Nepal covering 60 foolscap typed sheets tries to do justice to various problems of economic development.

The development of t ranspor ta t ion and communicat ion gets the highest p r io r i t y in i t . In every country, eco­nomic progress depends on the pro­per development of transport . This is even more so in Nepal, because of the country's topography, and of i ts 278 miles of highways. A g a i n , the extremely restricted m a i l service, small number of telephones and radios, and shortage of news organs make i t difficult for the Government to ma in t a in proper contact ' for the promotion of development pro­grammes and for the proper a d m i -

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"Nepal is not at the moment, and will be for some time, in a position to produce a regular plan in the true sense of the t erm:" Thin sentence occurs in the Preface to the First Five-Year Plan for Nepal which was announced by a Royal Proclamation by King Mahendra of Nepal on October 10, 1955.

In view of almost complete lack of statistics and of a cadestral survey of the country, this is not sur-prising. The Plan makes adequate provision for removing this basic limitation to planning and has allotted 7 per cent of the total proposed outlay of Rs 210 million to geological aerial and cadestral surveys.

Transport and Communications, however, get the highest priority and hare been allotted 33 per cent of the total-—t-he largest allocation under arty one head. 7 his is called for by the special topographical features of the country and almost complete absence of roads.

Nepal's isolation, sedulously preserved under the Rana regime, will soon be a thing of the past. Develop­ment of tourist traffic is one of the items in Nepal's First Five-Year Plan.

As we go to press, Nepal Radio has announced the formation of a Central Planning Commission with nine members of whom the author is one. The main work of the Commission will be to draw up the final Plan on the basis of the Draft Outline and to assess the progress of the Plan from time to time.

Nepal Has a Five-Year Plan Y P Pant

January 1956 THE ECONOMIC WEEKLY ANNUAL

n i s t r a t i o n o f the count ry , i t Is, l i ke ­wise, a. tremendous handicap f r o m the s tandpoint of defence also. Thus i t is obvious t h a t u n t i l the country 's economy is integrated th rough a well-developed t ranspor t system, no substant ia l p rogramme of development i n v o l v i n g a continuous movement of goods and men f r o m the centres of product ion to the cen­tres of d i s t r ibu t ion can be success­fu l ly under taken. Real is ing a l l these difficulties, the D r a f t P lan has quite properly given the first p r i o r i t y (more than 30 per cent of the t o t a l ) to the development of t ranspor t and communicat ions. Highways , a i rways , ra i lways , ropeways and wate rways are the ma in types of t ransport which are to be extended l u r i n g the Plan period.

Development Sectors for Agriculture The Plan also a ims at increased

product ion in the ag r i cu l t u r a l sector th rough i r r i g a t i o n and ag r i cu l tu ra l extension schemes, and puts ade­quate emphasis on development f rom below. Since 85 per cent of the to ta l populat ion eke out a precarious l i v i n g from agr icul ture , a concerted programme of development of agr i ­cul ture needs no special pleading. The P lan proposes to .set up 8 deve­lopment sectors in 16 dis t r ic ts com­pr is ing both H i l l and T a r a i areas in five year:;.

Forests. the greatest above-ground na tu ra l resources of the coun­t ry , w i l l get about 2 per cent, of the total out lay envisaged in the Plan, The Plan-frame seeks to implement Mr . Chaturbedis and M r . Robbes' re­ports and suggests that, a commission should be immedia te ly deputed in T a r a i to demarcate the forest land. which could be turned over for colo­nisat ion.

Surveys, Geological. Aerial and Cadestral

As Nepal lacks careful ly collected statistics, winch are the fundamenta l basis and pre-requisite of p lanning . the D r a f t Plan jus t i f i ab ly allocates about 7 per cent of the to ta l expen­di ture to basic and cadestral surveys. I t is only after the economic poten­t ia ls of the country have been sur­veyed that comprehensive and more rel iable plans can be formula ted in succeeding periods. The P lan pro­vides for geological, aer ia l and cadestral surveys. The cadestral surveys w i l l enable the count ry to be proper ly mapped f o r the f i rs t t ime a n d to demarcate var ious types of l and . This w i l l n a t u r a l l y help the Government to improve the adminis ­t r a t i o n of forests a n d other public

lands, to d is t r ibute expropr ia ted lands among the landless, organise ag r i cu l tu ra l credi t and classify l and according to its p roduc t iv i ty for re­venue purposes.

Medium Sized and Cottage- Industry

A g r i c u l t u r a l development, however, is incomplete w i t h o u t a corresponding process of indus t r ia l i sa t ion . There is a provision for 8 per cent of the t o t a l out lay for the development of large scale and cottage industries. In view of the fai lures of manag ing agency In Nepal in the past, the P lan seeks to reorganise the ex i s t ing i n ­dustries and recommends the se t t ing up of a high-powered commission to examine the exis t ing industries and to recommend ways and means for r ev iv ing them. I t is only after the rev iva l and restorat ion of the v i r t u a l l y crippled industries t h a t the Plan advises establishment of new indus t r i a l units, e.g. a cement factory, a medium sized pulp m i l l and a sugar m i l l in centra l Nepal . The Dra f t P lan also recommends tha t possibilities should be explored, bo th in Hi l t and T a r a i regions, for set t ing up various medium-sized i n ­dustries th rough private enterprise in the Plan period, w i t h emphasis on processing export goods. A wel l planned Cottage Indus t ry develop­ment Scheme and a f inancial corpo­ra t ion have also been mentioned.

The possibil i ty of developing tour­ism has also been suggested in the Plan. I f properly managed and or­ganised. Everest, Pokhara , Lumbin i , M u k t i n a t h and Ka thmandu , because of their in te rna t iona l reputat ion, can a t t r a c t a considerable number of tourists f rom a l l over the w o r l d .

Aga in , pi lot projects l ike the Rapti Val ley Multi-purpose Development (scheduled to commence f rom the end of 1055 and to be completed in 1961) is expected to help in solving unemployment and food shortage as wel l as to demonstrate how, in future, many Nepalese val leys can be successfully developed th rough multi-purpose projects.

A Pilot Project

Nepal has a number of fer t i le and beaut i ful valleys a l l of which , except K a t h m a n d u are m a l a r i a r idden and have remained completely undevelop­ed due to lack of t ranspor t , i r r i g a t i o n and d r i n k i n g water . The develop­ment of these val leys w o u l d not only g rea t ly increase the quan t i ty of cash and food crops in Cen t ra l Nepal , where the shortage of food has led to encroachment upon the fores t l a n d of poor f e r t i l i t y , b u t also relieve the

pressure of populat ion in the h i l l s . The sh i f t i ng cu l t i va t ion practised in the h i l l s leads to deforestat ion, land­slides and flood, both in Nepal and in I n d i a . The development of these val leys is. therefore, considered i m ­perat ive both for a t t a i n i n g regional self-sufficiency and res tor ing the na­t u r a l ecological balance of the H i m a ­layan submounta in region.

The Rap t i V a l l e y is one of the most beaut i fu l r iver valleys in Nepal, r i ch in na tu ra l resources, cent ra l ly locat­ed and easily accessible f rom K a t h ­mandu. An intensive cu l t i va t ion of food and cash crops in the Rap t i Va l l ey would also enable the set t ing up of industries subsidiary to agr icu l ­ture. The development of the val ley was scheduled to commence f o r t h ­w i t h and be completed in 1961. Cadas­t r a l survey, i r r i g a t i o n , m a l a r i a con­t ro l , road bu i ld ing , settlement of landless peasants, in t roduct ion of better f a rming , set t ing up of co­operative credit. extension service, provis ion for social welfare and w i l d life preservation are the impor t an t features of this M u l t i p u r p o s e Pro­ject, Besides, finance pe rmi t t ing , establishment of medium sized indus­tries l ike match factory, tobacco cur ing, cigaret te manufacture , o i l mi l l s , saw mi l l s , and rice mi l l s , l ime k i lns , fruit, canning, and power gene­r a t i o n programmes w i l l be taken up. This w i l l be a pilot project to help solve unemployment and food short­ages; it w i l l also be the t r a i n i n g ground for Nepali admin i s t ra to r s and technicians, I f it succeeds, i t w i l l be­come the model for future develop­ment for many parts of Nepal .

Pattern of Allocation The Plan outlines the fo l lowing

programmes of development: due' emphasis on s ta t i s t ica l data as wel l as cadestral and other surveys, ag r i ­cu l tu ra l development w i t h due em­phasis on speeding up the process of t r ans fo rma t ion of the social and eco­nomic l i fe of the villages th rough v i l lage development and ag r i cu l tu ra l extension programme; h igh p r i o r i t y to t ransport and communica t ion and diversified indus t r i a l development, w i t h greater stress on small-scale and cottage industries.

The P lan envisages a to ta l out lay of about Rs. 120 m i l l i o n , to be distri­buted as fo l lows;

Percentage D i s t r i b u t i o n of the Pro­posed T o t a l Out lay on Nepal 's F i r s t

Five-year P lan

Transpor t and ' Communicat ions 30

Power

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1 1 '

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V i l l a g e Developments 14 L a r g e and Cottage

Industries 8 Surveys and Statistics 7 I r r i g a t i o n 6 Social Servces 4 Forests 2 Others 15

100

Finance for the Plan

A. Sources which the Government of Nepal can top to increase in ternal revenue:

1. Birta L a n d w i l l be taxed. 2. Agr i cu l t u r a l Tax. A l l land rent

should be raised On a graduated scale for development purposes.

3. Cadestral Survey, Land, unre­gistered or improperly registered, should be brought under record soon.

4 . I r r i g a t i o n . The f low i r r iga t ion development programme which the Government has undertaken w i l l fe tch a substant ia l amount of re­venue,

5. Nepal gets very l i t t l e revenue f r o m forest. An organized forest service would result in the increase of forest revenue.

6- Leakage from customs is fairly regular and large. Proper supervi­sion wou ld increase the revenue of the State.

7. .Also revenue could be increased by nat ional is ing air t ranspor t and f r o m tour is t trade, Post offices and tel e-communicatton.

8. Imposi t ion of new taxes better­men t tax. income tax, and sales tax.

B. Finance f r o m Externa l Resour­ces.

If a proper plan based on survey reports prepared Toy experts is ava i l ­able, finances could be obtained f r o m ;

1. Member countries of Colombo P lan ,

2. Uni ted States In te rna t iona l Co­operation A d m i n i s t r a t i o n ,

3. S U N F E D

4. W o r l d Bank,

5. F o r d Foundat ion, and 6, Other countries wh ich are Keen

to help development in under-deve­loped countries.

C. Government has Rs. 2.5. crores in reserve for the development of Nepal . There is also an assurance f r o m the Government of I n d i a to Nepal to spend Rs 3 crorea on the T r i su l i H y d r o e l e c t r i c Scheme.

D. It the 5-Year Plan is to he i m ­plemented. Nepal w i l l need an add i t i ona l Rs 4 crores per year, to

balance her budget a n d to meet the development expenditure.

Threefold Rleforms

The fo l lowing reforms have been, recognised as "the crying needs of the hour' ' in Nepal

1, Land Reform. Land Reform Commission has submit ted several proposals to Government all of wh ich it may not be possible to implement fit a t ime. Bu t the recommendations regarding B i r t a and Land Tenancy Right should be implemented in 1956, followed by other measures.

2, Currency Reform. One of the greatest obstacles to the economic development of Nepal is the instabi­l i t y of the .Nepali currency. Nepali rupee alone wi l l be made legal tender and a State Bank should be set up to take over the function of the exist­ing M a l l Adda. collect revenue and to conduct all foreign exchange t r a n ­sactions. An Exchange Equal isa t ion F u n d should be created in order to stabilize the rate of exchange.

3, Admin i s t r a t i ve Reform.

No Statement of Economic-Pol icy Yet

When we study the present P lan in the l i g h t of the exis t ing l imi t a t i ons of the economy, certain g l a r i n g de­ficiencies, stand out . The d ra f t out­line appears to be patah-wot-K in wh ich pieces have been collected f r o m here and there, w i t h o u t proper co-ordination. Most of the facts are unrelated and the different targets put in the plan are quite inconsistent. Moreover, the F l an does not give even a rough indicat ion of the Gov­ernment's economic policy. In fact, i t does not indicate the direct ion in which Nepal is to move in the future . Even annual budgets are more helpful in understanding the basic economic policy of a Government . True, in the Preface to the Plan, the establishment of a welfare state has been stated as the a im; to this , every one in Nepal is pledged. The P l a n also aims at na t iona l self-sufficiency. But it does no t give a ciearcul outline of the economic policy of the Government to any extent.

Corning" to the al locat ion under different heads, the f inancial provi ­sion proposed for social .services

is extremely inadequate. Th i s is hard ly in Keeping w i t h the proposed a i m of crea t ing an welfare state. Where not more than two per cent of the populat ion are l i tera te the ex­penditure of about 4 per cent on so­cial services in a mere drop in the ocean, AS a ma t t e r of fact, the i n -come d i s t r ibu t ion aspect is cer ta in ly

not un impor t an t in the context of de­velopment. W i t h expanding invest­ment, profits in a developed or deve­loping economy also tend to increase, and i t i s on ly by s k i m m i n g the i n ­crease in profits and t a x i n g capi ta l gains accruing t h a t the State can provide social services by wh ich the conditions of l i v i n g for the mass of the people can be improved. U n ­less the corresponding processes in an under-developed economy l i k e Nepal are firmly grasped and resour­ces are tapped at the points where they tend to accumulate, development cannot be continued nor can adequate means be found for social services-

Last ly , the financial provisions in the Plan are not at all impressive In any plan w o r t h the name, the fundamental question centres on finance. The sources of finance enu­merated in the Plan wh ich the Government can tap both in te rna l ly and external ly are hopelessly inade­quate and are no th ing more t h a n guess-work, How to get the resour­ces to meet the t o t a l expenditure t h a t is envisaged in the Plan? The sour­ces indicated, bo th in te rna l and ex­ternal , are not adequate. Even the financial needs of the P l a n have n o t been properly set out. in view of these deficiencies one can definitely state tha t w i t h a l i t t l e more serious­ness, greater care and consolidated effort, it should have been possible to formula te a better Draf t -out l ine , w i t h more accurate estimates, des­pite the acknowledged l imi ta t ions of Nepal's economy today.

B o l d a n d P r o g r e s s i v e

The Preface to the p lan disarms the cri t ics by th is moderate confes­sion:

"Nespal is not at the moment, and w i l l no t be for some t ime, in a posi­t ion to produce a regular plan in the true sense of the t e rm" .

W i t h scarcely any s ta t is t ical data . scant f inancial resources and inade­quate adminis t ra t ive personnel, Nepal's F i r s t Five-year p l a n is bound to suffer f rom many l imi ta t ions . I t s incompleteness , inevitable under the circumstance, can be gradua l ly removed. K i n g Mahcndra deserves to be congratula ted on boldly put t ing it up. W i t h it. has been in i t i a ted a new era in the economic development of Nepal , This is only a beginning f ind no one should expect miracles. The F i r s t Five-year Plan, no tw i th ­s tanding i ts l imi ta t ions , lays the foundation of a new social order and has set Nepal on the road to progress.

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