We are mulling on a seven-year plan which focuses entirely on country's graduation to group of developing nations

The National Planning Commission, the apex body that formulates the country’s development plans, has been coming up with periodic plans for almost six decades to steer the country’s development process in a planned and organised manner. In this regard, the Commission was supposed to launch the Thirteenth Plan at the beginning of this fiscal year. However, due to political wrangling in the last fiscal, it could only come up with an approach paper on the Thirteenth Plan. Now, with the installment of an elected government, the NPC is all set to introduce a full-document of the three-year Thirteenth Plan which will be effective till fiscal year 2015-16. Rupak D Sharma of The Himalayan Times spoke to newly appointed Vice Chairman of NPC, Govind Raj Pokharel, on various aspects of the Thirteenth Plan and how the government plans to achieve the targets mentioned in the document.

So when is NPC planning to officially launch the full document of the Thirteenth Plan?

I have been focusing on it since I joined the office little more than a month ago. NPC officials are currently conducting sector-wise review of the Plan in coordination with different ministries. If things go according to schedule, we will be able to make the Plan public before the launch of the annual budget. If not, we will launch it before the end of the fiscal year in mid-July.

Is the full document of the Thirteenth Plan in line with the approach paper?

The framework is the same as we cannot change it. However, some of the action plans have been slightly modified. For instance, we have added targets like electrifying every household by the time the Plan expires.

The aim of the Thirteenth Plan is to lay a foundation for the country’s graduation from the group of least developed countries to that of developing nations within 2022. To attain this target, Nepal needs to achieve GDP growth rate of over eight per cent per year till 2022. But the approach paper has limited average growth rate to six per cent.

The approach paper came up with the target based on the economy’s condition of that time. But what you said is true: six per cent growth rate is not enough. This is because per capita income in the country should rise by almost 200 per cent in the next seven years if we are to jump from group of LDCs to that of developing nations. For this, the economy has to grow by at least 10 per cent per annum. In this regard, we are holding internal discussions on introducing a seven-year plan that focuses entirely on the country’s graduation plan. The document will identify areas where policy interventions are required and include resource mobilisation plans to attain the growth target.

A document prepared by NPC before you joined office said the country needs to invest Rs 19.80 trillion in various sectors by 2022 to graduate to the group of developing nations. Can the country mobilise such huge financial resources?

That figure was a bit vague. First of all, we have to chart out a resource mobilisation plan as the government cannot shell out such a big amount on its own. On top of that deployment of resources alone does not guarantee outcomes. So, we have to focus more on efficient use of resources. Currently, five rupees is being invested to give a one-rupee boost to gross domestic product (GDP), which is not efficient at all. To minimise this cost, greater participation of the private sector in development process is needed, as the private sector is more efficient than the government. So, public investment should be aimed at providing leverage to private sector investment. Simultaneously, we also have to identify areas that are more productive and can help us achieve the growth targets. For instance, energy, agriculture and tourism sectors can help us attain sustained growth as they are less vulnerable to external shocks. So, we have to focus on development of these areas.

Along with that public finance management systems also need an overhaul, isn’t it?

Yes, the government has not been able to fully utilise the budget. One of the reasons for this is low absorption capacity of the government. Also, the private sector has not been able to make efficient use of financial resources. This may be because of weaknesses in legislative frameworks like the Procurement Act. For instance, bid documents for national- and international-level bidding are accepted after 30 days and 45 days, respectively. If we could cut short the process, projects can be implemented at an earlier date. Similarly, we also have to put an end to the practice of selecting projects haphazardly.

Another problem faced by the economy is rapid outflow of workers which has created severe shortage of human resources in labour-intensive sectors such as agriculture and manufacturing. How are you planning to arrest this problem?

Human resources are movable assets. They always look for better opportunities. To create better opportunities in the domestic jobs market, we need to make huge investment. But the paradox is that even if we have money we may not be able to make optimal use of it because of lack of skilled human resources. We do not have quality human resources because of severe flaws in the educational system. Do you know that people who have completed intermediate level of study in humanities and those with BEd degree are currently accepting placements in the Gulf? Had they undergone quality vocational training right after they completed high school, they would have performed better and earned more money. So, we need reforms in the educational system, which has highly subsidised primary- and higher-level education, leaving those in the middle in a lurch.

But this problem is also the result of societal norms, as jobs like carpentry, masonry or plumbing are looked down upon, and even employers list education degree as the most important qualification.

This may be a problem. But from my perspective the bigger problem is lack of equitable access to technical education institutions. Most of the technical and vocational education institutes are located in urban areas, whereas academic institutions, which are cheaper to establish, are present in many rural and sub-urban areas. So, people from rural areas prefer to stay back in their hometowns and enroll themselves in academic institutions rather than visit an urban centre to take vocational training. This way rural people are being deprived from the opportunity to secure a brighter future. In this regard, we have asked the government to establish at least one school or college for technical and vocational education in every constituency.

You are known as an expert in the energy sector. Would Nepalis be able to see an end to the problem of power outage during your tenure at the NPC?

To end the power crisis, the government should start giving target on electricity generation to the private sector. For instance, if the government says it needs 500 megawatts of electricity from the private sector within four years and pledges to give incentives to those who commission the projects within the deadline, I think the private sector would be more than willing to make investment. However, the government should extend cash incentive and the amount should be anywhere between Rs 15-20 million per MW. If the government extends Rs 20 million in cash incentive for every megawatt of electricity generation, it will be spending Rs 10 billion on 500 MW of power production, which is lower than annual spending of Rs 20 billion on diesel to power generators.

But government always seems reluctant to extend cash incentives.

No, I don’t think that will happen this time as the government is pretty serious about ending power crisis. Do you know that industries are losing around Rs 75 billion per year because of loadshedding. This has affected job creation, and more and more people are going abroad. In that sense, incentive of Rs 15-20 million per megawatt of electricity generation is nothing.

Source: THT