Planning experiences in Nepal
Combination of success and failure
ASHOK SHUMSHERE JBR PHD
The first five year plan (1956-61) allocated about Rs 576 million for development expenditures. Transportation and communications received top priority with over 36 per cent of the budget allocation in agriculture, including village development, and irrigation took second priority with about 20 per cent of budget expenditures. A second plan was introduced in 1962 which covered only a three-year period (1962-65). The second plan had expenditures of about 615 million, transportation and communication again received top priority with 39 per cent of the budget expenditures. Industry, tourism and social services were the second priority. Although targets were missed, only the organizational improvement area of the target was met.
The third five-year plan (1965-70) and fourth five-year plan (1970-75) also focused on transport, communications, industrial and agricultural development. The fifth five- year plan (1975-80) and sixth five-year plan (1980-85) also gave priority to agricultural development. The seventh five-year plan (1985-90) proposed expenditures of Rs 29 billion. For the first time, since the plans were devised, specific goals were set for meeting the basic needs like availability of food, clothing, fuel wood, drinking water, primary health care, sanitation, skill-based education and minimum rural transport facilities.
It all came to a different setting with the ninth plan (1997/98-2001/02). The objective of the five-year plan was poverty reduction. With a different priority, by and large, the ninth plan’s performance was mixed. Given the ambitious nature of the plan, achievements generally fell short of the target. Significant progress was made in some important areas e.g. human development indicator showed notable improvement, key macroeconomic indicators such as balance of payments and control of inflation indicated good performance. Compared to the plan target of 6.0 per cent GDP growth averaged only 3.6 per cent, agriculture grew by 3.3 per cent and non-agricultural sector at 3.9 per cent compared to a plan target of 4.0 per cent and 7.3 per cent respectively. The evaluation of the ninth plan and the poverty situation clearly demonstrates that past development efforts have fallen short of meeting the expectations of poverty reduction. In this context, the sole objective of the tenth plan (2002-2007) was to bring about a remarkable and sustainable reduction in the poverty level in Nepal over the next five years. It may be worthwhile noting that the key goals and targets of the tenth plan was aimed at reducing the overall poverty ratio from 38 per cent, estimated at the end of the ninth plan (2001-02), to 30 per cent by 2006-07. Of this, the projected growth rate in the agriculture sector was 4.1 per cent while it was 7.5 per cent in the non-agriculture sector. The annual average for agriculture was 2.8 per cent and non-agriculture sector was 5.2 per cent. The GDP growth rate achieved was only 4.3 per cent. In the same way, in the agriculture sector the annual average growth rate remained at 2.7 per cent as estimated, and was less by 0.1 per cent from the normal growth rate. In the non-agricultural sector, annual average of 3.8 per cent was estimated to be the growth rate, which was less than the normal growth rate by 1.4 per cent.
During the tenth plan period, the contribution of the agricultural sector in the GDP was 37.4 per cent, which, however, gradually reduced and reached 33.1 per cent. Similarly, the contribution of the non-agricultural sector was 63.5 per cent in the base year which gradually increased and reached 66.9 per cent. Analyzing all the categories, the overall poverty and human development indices had significantly improved.
The main objectives of 3 year interim plan (TYIP)-2007-2010 was to generate an experience of a direct feeling of change in the life of the general public by supporting the establishment of peace, and reducing the existing unemployment, poverty and inequality in the country. The TYIP that had targeted a growth rate of 5.5 per cent, but the actual economic growth rate came to only 4.4 per cent. The reason behind the lower growth rate is that most of sectors have underperformed.
The growth target rate of agriculture sector was 3.60 per cent, but it registered only 3.3 per cent growth rate, whereas the non-agricultural sector had a growth target set at 6.50 per cent, but it also came down to 5.1 per cent. The growth target rate of employment sector was 3.6 per cent, but it registered only 3.0 per cent. The target of recurrent expenditure was 11.6 per cent, but it increased to 14.3 per cent.
The current three year plan (2010- 2013) has the objective to boost agricultural productivity, set up conducive environment for promoting FDI, creation and expansion of employment opportunities in the internal and external sectors and provide a boost to tourism and export promotion. It has allocated Rs 1,018 billion for the plan period. The planning experiences exhibit that development performance has been both a combination of success and failure.