Proposition of Social Justice & Economic Prosperity for Nepal

Dr. Baburam Bhattarai
28 June 2018


Distinguished participants of the conference, Ladies, and Gentlemen
I am honored to deliver a keynote speech at this important forum and in front of such eminent personalities of Nepal and from abroad. At the outset, I would like to congratulate and thank the organizers for their hard work in organizing this conference on the pertinent topic at this critical juncture for Nepal, and also for South Asia.

I am asked to talk on ‘Proposition of Social Justice and Economic Prosperity for Nepal’. So let me start with historical context shaping and Nepal’s quest for creating a just and prosperous society. After years of struggle against absolute Rana Regime, a hereditary prime-ministerial rule, Nepal embarked towards democratic transformation process in 1950s. However, the infant democracy didn’t last long and was subdued by an autocratic monarchial rule that lasted till the 1990s. These political developments created a state that is highly centralized, a society that is less-plural and an economy that is frail. As a result, economic prosperity remained a far-cry and people’s struggle continued.As a result of number of violent and non-violent struggles since then autocratic monarchial rule came to an end in 2008 and the country entered into a federal democratic system and, finally Nepal got its constitution through an elected Constituent Assembly in 2015. Despite its few shortcomings, the constitution has set-up the ground for creating a just and prosperous Nepal. Federalism, if implemented as per its essence, can be one such means to get an inclusive development for which Nepal has been striving for.

Since Nepal has completed, in general term, the political struggle and achieved political transformation, now is the time to work for the transformation of the economy and tackle social issues. After the recent elections, Nepal has got a stable government, and I see an opportunity for this government to create a conducive political environment for rapid socio-economic transformation.

I will first talk briefly on regional and national scenarios on prosperity and social justice; and then will speak on conceptual framework before coming to the proposition on economic prosperity and social justice, the topic I was given to talk, in this forum.

2. Regional and National Scenario on Socio-Economic Prosperity
2.1. Socio-economic Status of Selected Countries of this Region

Bangladesh, China, India, Nepal, Pakistan and Sri Lanka are chosen to see some of the socio-economic indicators of this region i.e. income ratio between rich 10% to poor 10% of the population, Gini Coefficient, Gender Inequality Index, Multidimensional Poverty Index (MPI) including Human Development Index (Table 1). The figures in the table show that the income ratio of the rich to the poor is quite high, as much as 22 in China and 16 in Nepal. Having high ratio of income between the rich and poor and low Gross National Income (GNI) depicts low level of economic development of Nepal. Gini Coefficient also shows the high income inequality of the countries considered here. Gender inequality and MPI are also quite high except China. The difference between GNI and HDI ranks gives an indication how a country is performing in terms of economic and social sector. Positive value of this difference shows social sectors like education and health are performing poorer than economic sector and vice versa. For the sustainable development both of these sectors should be in balance, a challenge for general prosperity of a county.

Nepal has made progress in poverty reduction and human development in the last two decades, i.e. absolute poverty declined by one percentage point each year and Human Development Index (HDI) improved by one basis point per year. However, the absolute poverty is at 21.6%, the highest in South Asia, and the country is at the bottom in middle human development status (NPC, 2017a). As per UNDP report 2015, Nepal’s rank in HDI is 144 out of 188 countries of the world (UNDP, 2016). Nepal’s per capita income of 2017 is US$ 862 (MoF, 2017). Nepal stands in 197th rank among 217 countries in per capita GDP (Gross Domestic Product) at constant 2010 US$ as per 2015 data reported by World Bank (WB, 2018). Life expectancy of a Nepali is 70 while expected years of schooling and mean years of schooling are respectively 12.2 years and 4.1 years. Nepal stands 118th position in life expectancy, 121st position in expected years of schooling and 168th position in mean years of schooling among the record of 188 countries of the world (UNDP, 2016).

The Multidimensional Poverty Index (MPI) identifies multiple deprivations at the household and individual level in three dimensions i.e. health, education and standard of living with equal weights. Nepal’s Position on it is 52nd with MPI value of 0.116. Gender inequality index of Nepal is 0.497; 115th position among 188 countries of the world (UNDP, 2016). The Environmental Performance Index (EPI) is based upon two policy objectives: Environmental Health, which measures threats to human health, and Ecosystem Vitality, which measures natural resources and ecosystem services (Yale, 2018). The 2018 EPI ranks 180 countries in which Nepal’s status is 176th.

2.3. Socio-economic and Environmental Status within the Country
Socio-economic status of the people of Nepal varies for different regions. Nepal Human Development Report 2014 depicted that per capita income of Bajhang district in Far-Western nepal is almost one sixth of Kathmandu. The HDI is maximum to the people living in Kathmandu (HDI=0.632) whereas it is minimum in Bajura District, almost half of Kathmandu (NPC, 2014).

Per capita income and HDI of seven provinces of Nepal shows very high disparities. Similarly per capita income is better in Provinces 1, 3 and 4 i.e. greater than 1000 PPP$ while it is quite less for other provinces. Only two provinces have HDI value more than 0.5. Provinces 6, 7 and 2 have quite low HDI values. Further the rural-urban HDI gap is also as high as 19%.MPI estimates of the Provinces shows that Province 2 and Province 6 have higher level of multidimensional poverty

3. Conceptual Framework for Prosperity
3.1 Prosperity is a dynamic process than a given or acquired condition. It is more than just the accumulation of material wealth; it is also the joy of everyday life and the prospect of an even better life in the future. Prosperity can be defined as a cumulative process having the following four dimensions:
(i) High Economic Growth for Economic Prosperity
(ii) Inclusive Development for Social Justice
(iii) Environmental Conservation for the Sustainability of the Development Process
(iv) Spiritual Enhancement for Personal Happiness

3.1.1. Economic Growth
Economic prosperity of a nation, society or an individual can be defined as the ability to afford goods and services beyond basic necessities. It can be achieved through increasing production of goods and services. For this we need development of economic infrastructures like transport and energy, development of human resources, modernization of agriculture, massive industrialization, improvement in the quality of service sector and substantive use of modern technology. It requires high capital investment. All these cumulatively lead to high economic growth.

3.1.2. Social Justice
Social justice can be termed as a right relationship between and among persons, communities, social groups and nations. It is in fact a concept of fairness in the assignment of fundamental rights and duties, economic opportunities, and social conditions. People require jobs, food, education, energy, health care, water and sanitation. It can be achieved through inclusive development by means of fair distributive justice among different class, nationalities, gender, caste and social groups.

According to Rawls, Professors at Harvard University, theory on social justice asks what would be the characteristics of a just society in which basic human needs are met, unnecessary stress is reduced, the competence of each person is maximized, and threats to well-being are minimized. He identifies two principles regarding social justice:
• That each person should have equal rights to the most extensive liberties consistent with other people enjoying the same liberties; and
• Social and economic inequalities are to satisfy two conditions: First, they are to be attached to offices and positions open to all under conditions of fair equality of opportunity, and second, they are to be to the greatest benefit of the least-advantaged members of society (the difference principle).

3.1.3. Environmental Conservation
Environment provides food and raw materials, water and air required for the existence of all life forms. Actually it is required for the perpetuation of mankind and other forms of lives.The conservation of environmental heritage and natural resources is a must for sustainable development of a nation. For it economically viable solutions must be developed to reduce resource consumption, stop pollution and conserve natural habitats. It can be accomplished through due consideration achieving Sustainable Development Goals (SDGs).

3.1.4. Spiritual Enhancement and Happiness
Ultimate measure of prosperity is the quality of life and inner happiness of the individual. In modern life, it is common to face various forms of stress, exhaustion, and problems in daily routine. An increasing number of people are suffering mental and chronic ailments due to the following of erred lifestyle. In this scenario, various measures of removing mental stress and spirituality could be important factors in maintaining positivity in life. It increases the inner strength and supports the mental health of an individual even in testing moments. It can, thus, be considered as an index of happiness.

3.2 Economic Prosperity and Social Justice: Complementary to Each Other
Generally people see economic prosperity and social justice as contradictory. However, my belief is that they are complementary to each other as I just mentioned in previous section. I would, therefore, like to talk about the relationship between economic development and social justice in brief.

Low productivity along with inflation, huge trade deficit, high rate of poverty and high inequality, very low rate of employment combine and contribute to the eroding nature of Nepalese economy. It is because of much of the shares of means of production which is meant for the effective modernization of our economy is concentrated in the hands of wealthy people. At the same time, most of the people who are relegated to the lower ladders of society are amid poverty. This is an obvious example of poverty amid plenty in Nepal.

If a large number of young educated people who stroll jobless across the world, and are taking up jobs which are not in terms of their qualifications and talents, it shows an inefficiency of our planning strategies. Unemployment must be wiped out from our society so that economic development becomes a reality. For it to happen, sufficient employment-oriented development projects which are meant to tap the potential of skilled workforce is a must at this point of time. Until the great mass of the people shall be filled with the sense of responsibility for each other’s welfare, social justice can never be attained and economic prosperity cannot be achieved. Economic development should be an outcome of collaborative efforts of people belonging to various layers of society. A society ensuring social justice that will provide opportunities for individuals to develop their potentialities and facilitates overall personality development without considering their class or economic status, gender, religion or caste or region of residence is a must for overall prosperity of a nation. However, economic prosperity with social justice is possible if and only if there is a stable and visionary government with a progressive stance and dynamic governance.

Our policy is, thus, to be designed in such a way that it envisages the functioning of an economic system that restricts the amassing of wealth and the means of production by a few people. It is in this context that social justice has its significance for economic prosperity through inclusive development. Social justice and economic development are therefore, complementary to each other to create socio-economic prosperity. To achieve this aspect, the followings are the required conditions of functioning of a nation.

• The state has to regulate market in a manner that will not unjustly favor certain groups. Production of public goods could be taken a shared partnership between the public and the private sectors in order to distribute benefits fairly and promote equitable economic growth.
• The state also has to take up the responsibility of providing equal access to services such as health, and education, since the private sectors often fails to economically provide such services.
• The state also has to be able to provide social protection to groups that have been historically excluded and marginalized, so that all citizens have an equal opportunity to fulfill their aspirations.

4. Prospects of Social Justice and Economic Prosperity in Nepal
Constitution of Nepal, legal provisions and policy as well as international commitments made by Nepal are pro-inclusive development with adequate social justice measures. Since Nepal is rich in natural as well as human resources. I am presenting these aspects very briefly for the conformity of bright prospects of social justice and economic prosperity in Nepal.

4.1. Constitutional Provision
Nepal is recognized as multi-national, multi-lingual, multi-cultural and regionally diverse country by the Constitution. It ends all discriminations relating to class, caste, region, language, religion and gender including all forms of untouchability. The principles of unity in diversity, social and cultural solidarity, tolerance and harmonious attitudes and a determination to create an egalitarian society on the basis of the principles of proportional inclusion and participation and equitable economy, prosperity and social justice are enshrined in the Preamble itself.

These principles are further elaborated in the definition of the nation, state, its structure and policy, directive principles and structure of the state and appointment to constitutional bodies and agencies. Rights of women, dalits and Adibasi, Janajati, AdibasiJanajati, Madhesi, Tharu, minority groups, persons with disability, marginalized groups, Muslims, backward classes, gender and sexual minority groups, youths, peasants, workers, the oppressed and the citizens of backward regions, and economically poor KhasArya are guaranteed based on the principle of proportional representation. Fourteen policies regarding social justice and inclusion are mentioned in the Constitution itself. Even in the formation of Council of Ministers, appointment of Nepali Ambassadors and Emissaries and entry to the government services the principle of inclusion has to be followed. 33 percent representation of women in the federal Parliament has been guaranteed by the Constitution.

4.2. International Commitments
Nepal has undertaken a number of international commitments to nondiscrimination, gender equality, and social justice. The Convention on the Elimination of All Forms of Discrimination Against Women, which was ratified by Nepal in 1991, includes articles on the elimination of discrimination in public life, civil status, education, employment, health care, and other aspects of social and economic life.

Most development partners have adopted gender equality and social inclusion as crosscutting issues in their programs while implementing even infrastructure developmental projects. More recently, development partners have formed a Social Inclusion Action Group to share knowledge and experience and to influence policy development at the national level.
However, much is to be done to implement these constitutional provisions and international commitments in practice.

5. The proposition of Social Justice and Economic Prosperity for Nepal
To achieve the goal of prosperity with social justice or inclusive development in Nepal a multi-pronged strategy of interrelated factors is proposed herewith

5.1. Rapid Economic Growth
The foremost strategic goal should be to achieve a rapid economic growth. Low level of productivity in all sectors (primary, secondary and tertiary) undermines meaningful structural economic transformation. Structural economic transformation involves the movement of labor from low to higher productive activities. This could entail movements within the sector, for example from subsistence farming to high value crops or between sectors, for example from agriculture to manufacturing to services. The structural economic transformation must be viewed in terms of productivity changes (within or between sectors) through the application of science and technology at the utmost level.

In order to achieve rapid economic prosperity, we need to have a growth rate of double digit for the coming two decades. To attain and sustain high economic growth, sufficient investment should be made in priority sectors. The main priority sectors should be:

i) Development of Physical Infrastructures
 Strategic Transport Infrastructure : roads, airports, railways
 Energy Sector
ii) Modernization of Agricultural Sector
iii) Industrialization
iv) Tourism Development and Service Sector
v) Development of Urban and Economic Centers
vi) Human Capital Development

5.2. Economic Equality & Social Inclusion
Social inequality has been a serious issue that has persisted for a long time in Nepal. Historically, structural barriers such as caste and untouchability have excluded and discriminated against certain groups in society. Such structural barriers have limited their access to equal rights and equal economic opportunities which has imparted negative impact even in economic growth of the country. Gender inequality is also prevalent as discussed above. In order to overcome inequality in society, social inclusion has to be at the forefront of the national development agenda. The newly promulgated constitution provides a solid foundation to eradicate social inequality with the provisions of proportionate representation for the excluded, deprived community and marginalized groups. Proper laws and policy are to be formulated and implemented to address this issue as soon as possible.

5.3. Good Governance and Ethical Conduct
Issues of good governance and ethical conduct have always marred the political landscape of Nepal. Impunity and rampant corruption has fuelled the public disenchantment with Nepal’s democratic political parties. Instances of high-level corruption in all spheres are rampant. Even political parties are not exception in this matter. Further state organs are also often perceived to be inefficient, distant and unapproachable. Having an accountable and transparent government with ethical conduct is required for socio-economic transformation of the country as both an end and means.

5.4. Protection of National Sovereignty

Nepal being a landlocked country between India and China and with low economic growth and political instability, it has had to always rely on one of its two powerful neighbors, whomever was deemed close during the time of need. Foreign influences other than the two neighbors also have had considerable influences over Nepali politics as Nepal has had to heavily rely on foreign aid for its social and economic development. Heavy economic dependency with India needs to be checked through a judicious strategy at the earliest.

In order for Nepal to project itself as a sovereign nation, it has to have a balanced foreign policy that maintains an equal relationship with all the countries that it interacts with. Nepal’s unique position between two large neighbors also could be developed as a bridge between the two large economies. This would not only foster trade growth and economic ties but also help build a cordial political stability in the region.

5.5. Progressive Socialism
Ever since the dawn of democracy, the Nepali state has often been tagged as a “crony capitalist state”. Most political parties that emerged after the 1950s have all promoted some form of socialism but at present the scenario is quite the opposite. In a free-market economy, the government acts as a neutral regulator. In a crony capitalist state, political parties, big business and bureaucracy form a nexus and thrive on systematic corruption. Political parties and big businesses go hand in hand in awarding big contracts and bending regulations in order to unfairly extract from the state and the market all the while stamping out competition. This system promotes unequal distribution of opportunities and benefits of the state, and consequently enriches the position and wealth of those in power and groups close to them. To address this issue the government has to regulate market in a manner that will not unjustly favor certain groups. It should ensure the distribution of the benefits and resources equitably to its citizens. However, it should respect each individual to foster his or her potentially in its fullest form and promote genuine participatory democracy. Such approach would take the country into Progressive Socialism based on democracy as envisioned in the Constitution. Only this could ensure a sustained state of economic prosperity and social justice in the country, as both neo-liberalism and state socialism are in deep crisis all over the world.


My propositions for social justice and economic prosperity are given briefly in Table 2


6. Concluding Remarks
Required pre-requisite are present in Nepal, ranging from constitutional provision to resource availability for socio-economic transformation of the country through the rapid economic development and social justice. It requires willpower and strong commitment of the government of Nepal. The propositions I put forward are achievable, if planned and implemented properly. By doing so, Nepal can upgrade into a developing country’s status by 2022, reach medium level income country’s status by 2030 achieving sustainable development goals and graduate to a high income developed country by 2040.

I once again would like to thank the organizers for giving me this opportunity to share my views on the propositions of social justice and economic prosperity in Nepal.
Thank you!