Infrastructure for Economic Growth

Lack of infrastructure is considered one of the greatest challenges in Nepal’s economic growth, especially lack of adequate transport infrastructure such as roads, air connectivity and bridges etc. which make economic activities possible and viable across the country. In this context, a lot of discussions revolve around the need to construct new transport infrastructures if we are serious about growth in Nepalese economy.  However, the existing scenario of Nepal’s transport infrastructure provides a lesson that simply construction of new infrastructure (with the vote banking approach of political decision making in infrastructure sector) may not be enough to accelerate economic growth. Due priority has to be given on other aspects such as the quality, efficiency, reliability and utilization in the process of planning and building transport infrastructure. Without proper attention on these aspects, transport infrastructure may fail to contribute to economic growth and merely add to environmental and maintenance burden. 

At the end of the Three Year Interim Plan (2007-2010), only four district headquarters in Nepal were without road connection. While the government’s focus remains on connecting all 75 districts through road, one of the important issues is the impact of the constructed infrastructure and its role in increasing economic gains and subsequently the standard of living of people in the areas where such transport infrastructures are built. It is obvious that for transport infrastructure to play an important role in increasing economic activities, the network needs to be efficient, reliable and should ensure a minimum level of quality to the users. However, when it comes to quality, the transport network fails miserably. More than one-third of the road network of Nepal is not in trafficable condition and around 50% of the road network is only passable during fair weather. Also, only 55 % of the Strategic Road Network roads are paved with bitumen or gravel. The high rates of disruptions and accidents on the highways during the ongoing monsoon are also indicative of the poor road conditions of Nepal. Therefore, the existing quality of roads do not provide for a strong base for growing economic activities as expected as no business can grow or sustain when transportation is so risky. Additionally, transportation has grown more costly over the years owing to a number of reasons. Combined with the poor quality of roads, lack of alternate routes, frequent strikes, existing transport syndicating and low utilization has led to rising costs in transportation. Significant percentage of trucks carrying goods still return empty  and  hence, when the transport network is so costly, economic activities do not flourish. 

From a purely economic view point, it could also be said that Nepal’s transport infrastructure is ahead of its economic growth. The Department of Road’s 2011 report on traffic volume and vehicle count reveals that 41 % of Strategic Road Network (SRN) still has traffic level below 100 Vehicles Per Day (VPD) (excluding motorcycles) and 33 % of SRN has traffic level below 50 VPD (excluding motorcycles). Hence, the data is indicative of the low utilization rates of constructed transport infrastructure and limited economic returns on a large investment. Though the road network grew by 27% between 2000 and 2010, Nepal’s growth has remained stagnant over the period and from this perspective, it could be said that the growth in transport infrastructure has not been able to play a significant role in delivering economic benefits to the people. 

Hence, it is important to realize that while delivering transport network, mere focus on connectivity (for political reasons) not only wastes the resources without contributing to actual growth and betterment of quality of life for the people, it also invites environmental degradation, becomes a maintenance burden and such quality compromised roads results into being ‘killer roads’ which is evident from the rising accident rates we have witnessed in the recent times. Hence, when it comes to transport infrastructure, there is an acute need for prioritization based more on the facts rather than political vote banking.

In order to facilitate the process of economic growth through the development of transport infrastructure, the government should make it a serious priority to provide guaranteed quality and level of service to the road users. For this, applying asset management with proper maintenance is important which requires adequate funding, effective monitoring and there is a need of allocating maintenance resources according to the network usage. Hence, in the context of Nepal where a large portion of the road network remains underutilized, measures should be taken to increase viability which depends on how much extra traffic can be generated or diverted to enhance the transport sector project. This should be considered while infrastructure planning is being done. Focus and priority should be laid on building and implementing viable infrastructure network that will deliver on the economic front thus helping people to increase their standard of living.