What ails Nepal’s eco growth

A study has identified four constraints, namely weak governance, inadequate infrastructure, poor industrial relations and inability to address market failure as impeding private investment and growth.
The report titled ‘Nepal: Critical Development Constraints’ prepared jointly by the Asian Development Bank (ADB), the UK Department of International Development (DFID) and the International Labour Organisation (ILO) has also suggested short-, medium- and long-term measures to be taken to address these constraints.
According to the report, Nepal's governance condition worsened over the last one decade due to civil war that nurtured political instability, crime and insecurity, political and criminal extortions, trade union militancy, strikes and road blocks.
"Both public and private sector investments are constrained by a lack of government capacity to enforce its authority for ensuring good governance," the report states.
The report made public on Thursday stated that both public and private investments in infrastructure had been low. Investment levels in infrastructure were well below the estimated annual investment needs at 6-7 percent of Gross Domestic Product (GDP) for South Asian countries, the report says.
During 1990-2007, government spending on electricity, gas and water declined by 58, 49 and 32 percent respectively. Lack of reliable electricity supply, higher power tariff rates, inadequate and unreliable transport network and poorly maintained irrigation infrastructure are hampering growth.
Labour related laws and regulations in Nepal, which are among the most rigid in South Asia, coupled with militant labour are hampering the business environment in Nepal.
On the other hand, the report has also mentioned that economic growth has failed to benefit the poor, disadvantaged and excluded.
The report has suggested strengthening governance, accelerating infrastructure development, improving labour relations and promoting economic and social inclusion by making short-, medium- and long-term plans.
Speaking at the launching ceremony, Muhammad Eshan Khan, lead author of the report, said that Nepal needed accelerated inclusive growth to create and maintain stability in the long run. "The difficulties are related to internal and structural which can be addressed only through political will," he added.
ADB country director Barry J. Hitchcock said that the report suggested to the international community not to made excessive development demands from Nepal given its limited resources
and the country's political transition.
Source: Ekantipur