Written by Surath Giri, the “Macroeconomic Policy Direction for a Prosperous Nepal” discusses on the economic growth of Nepal. The first generation of economic reform was marked by liberalization of economy under the Structural Adjustment Policy. The Industrial Policy 1992, Foreign Investment and Technology Transfer Act, Local Self Governance Act fostered economic growth. The impact of economic reforms on economy was positive until 1996 and GDP growth rate reached as high as 7.5% in 1996. But the trade deficit increased as the country plunged into civil war in 1996.
Critics point out decline of Nepalese manufacturing industries and increased exodus of Nepali manpower in foreign countries as a sign of failure of liberalization of the economy. The exclusion of poorest of the poor from the mainstream of economy has failed to spur industrialization and growth. The liberalization attempts so far has been focused on sectors directly related to upper and middle class.
For a common man, liberalization is yet to come. There is no entering the market or possibility of competing with existing players. The bureaucratic hurdles discourages small business players to play in the market. The government should focus on transforming the informal economy in to formal sector by eliminating bureaucratic and regulatory hurdles faced by small and medium enterprises. For the liberalization to come into real terms, there needs to be easy access to economic activities in order to bring poorest of the poor in mainstream economic activities.