Views of a Nepali Economist

.
This article talks about Obama's Global Health Initiative (GHI) and why it has not been able to maximize its potential in Nepal. The main reason for this failure is the GHI's inability to fund abortions in Nepal due to a US government federal decree, since 1973, banning foreign aid to abortion services.

Having lived in the US for over 9 years, I can attest to the fact that "abortion" has always been a controversial topic in US politics. Presidents fear losing elections if they support abortion. Even liberal icons like Obama run their election campaign by avoiding the issue.

But, what the American people need to realize is the fact that the ground situation in Nepal is completely different from what it is in the US. So, comparing these two countries and trying to apply the same decree in Nepal is not going to help if the USAID is serious about serving the Nepalese populace.

Also, the US agencies and people have no right to push their religious beliefs into the Nepalese population seeking health benefits. The only reason why abortion is opposed in the US is because a large section of the US public's religious belief is that life starts at conception, and, therefore, aborting is like killing a human.

US agencies and US citizens should understand that abortion is legal in Nepal. If the USAID and the GHI is not providing support for it, it is not doing its job well. If abortion is legal in Nepal, then why can't they fund it? If the political pressure from back home is too much to handle for USAID and GHI, maybe they should halt the aid altogether. Pack your bags and leave. I have a philosophy: you either commit fully, or you don't. There's a saying in Nepali: the elephant passed through the hole, but his tail got stuck. This is a similar situation.

Here's a slice from the article explaining the differences in the US and Nepalese attitude towards abortion:

Unlike in the United States, abortion is not a political issue here. To these young women, they said it’s simply a decision they’re making regarding their bodies and families. When GlobalPost asked the doctor present if the clinic ever faced protests, pickets or people handing out anti-abortion pamphlets, she laughed at the questions.

Some numbers from the article:

*Only 29 percent of married women in Nepal used a modern method of contraception in 1995
*that number jumped to 48 percent in 2006
*Nepal had a high maternal mortality ratio of 539 deaths per every 100,000 live births in 1995
* the ratio came down to 281 deaths per every 100,000 live births as of 2006

Labels: abortion, GHI, USAID

.
1. Public Accounts Committee recommends liquidation of Public Enterprises

...the PAC suggested the liquidation of National Construction Company, Nepal Engineering Consultancy Service Centre and Timber Corporation of Nepal

The report has asked the government to merge Krisi Samagri Company and National Seed Company, Industrial Estate Management Ltd with National Productivity and Economic Development Centre, and Herbs Production and Processing Corporation with Nepal Medicine Ltd and Singhdurbar Baidhyakhana, and Rural Housing Company with Nepal Housing and Finance.

...it has recommended the government to convert Nepal Television and Gorkhapatra Santhan into company to make them more competent.

2. Ilam's remarkable rise in milk production

*In 2009, they produced 96,342 metric tons
*In 2010, they produced 99,200 metric tons
*Ilam is the second largest milk producer district after Kavre in the country
*140,000 cows including hybrid-cows and 2,768 hybrid buffaloes have been reared in the district
*80 percent of milk produced in Ilam is sold in Biratnagar

3. Build roads, and they'll overcome poverty. An exmaple from Myagdi district.

4. Govt apathy puts lives of people in danger. An example from the Nepalese LP gas industry.

5. Bahrain Air resumes Ktm flights

6. Department of Labor to study, and record foreign workers in Nepal

...around 7,000 foreigners are currently working in the private sector with work permits...but DoL estimates that more than 20,000 foreign nationals are working with NGOs and INGOs alone...government and private sector organizations estimate the actual number of foreign nationals working in Nepal to be over 50,000

7. Israel's Prime Minister's wife accused of ill-treating the Nepali nurse hired to take care of her elderly father.

8. Some basic health indicators of Nepal and its neighbors

Labels: airlines, Bahrain, DoL, health, Ilam, Israel, LP gas, migration, milk, myagdi, PAC, ring road

.
1. $1.6b Chinese loan for West Seti Hydel Project

...Beijing has agreed the loan for the 750 MW project...

2. Handicraft exports rise 11 percent on strong demand from China, US

Exports of Nepali handicraft products climbed 11.71 percent in the last fiscal year...amounting to Rs 3.1 billion in fiscal year 2010-11, up from Rs 2.7 billion in the previous year

Sales to mainland China:
*Rs 92.89 million in 2009/10
*Rs 207.12 million in 2010/11

Sales to Tibet Autonomous Region:
*Rs 33.16 million in 2009/10
*Rs 181.40 million in 2010/11
*That is a 500 percent increase

Sales to the US:
*Rs 739.48 million in 2009/10
*Rs 889.27 million in 2010/11
*US is the main market for Nepali silver handicrafts with exports amounting to Rs 152.9 million last year

*Exports of textile-based goods decreased by 5.08 percent
*Exports of non-textile-based goods increased by 31.72 percent

*Metal crafts were the largest export with a value of Rs 679.3 million
*Woolen goods were second with Rs 495.4 million

*The 10 largest importers of Nepalese handicrafts are (in order): US,Germany, China, Canada, Tibet, Japan, UK, France, Italy and Netherlands.

3. $7.7m Japanese grant assistance for poverty reduction

...for three projects in Nepal aimed at reducing child malnutrition, poverty reduction and greater access to clean energy for rural poor

First of the three projects, ‘Reducing Child Malnutrition through Social Protection’, seeks to enhance the system and processes for planning and delivering the government’s cash transfers, particularly the child grant in Karnali districts

Second project, ‘Support for Targeted and Sustainable Development Programe for Highly Marginalized Groups’ will provide targeted support to Dalits and Janajatis in hills

The third project, ‘Improving Gender Inclusinve Access to Clean and Renewable Energy in Bhutan, Nepal and Sri Lanka’, a regional programme for South Asia, will support the rural electrification programme of the Nepal Electricity Authority

4. Brace for costly Chinese clothes this Dashain

...rise in transportation charges and strengthening of Baht will make garments imported from Thailand expensive by around 10 to 15 percent...Also...price of readymade garments and footwear items imported from China will go up by as much as 40 percent...this Dashain

...valuation of Chinese currency has been increasing at a rate of 4.5 percent every year

...the price of cotton ...hit a 15-year high recently...it has become 80 percent more expensive this year as compared to the start of the last year

5. Jumla apples to be costlier

District Cooperatives Association (DCA), Jumla, has increased prices by 17 percent as compared to prices of the past year

The association has set differential prices based on quality of apples...
Grade ´A´ organic apples at Rs 35 per kg
Grade ´B´ at Rs 30
Grade ´C´ at Rs 20
Grade ´A´ non-organic apples at Rs 30 per kg
Grade ´B´ at Rs 25
Grade ´C´ at Rs 20

Apples produced in 14 wards of Kartikswami, Mahat and Patmara VDCs have received organic food certification from Organic Certification of Nepal.District Agriculture Development Office (DADO) plans to apply for organic certification for apples produced in all 30 VDCs in the district

And, this news should be worrying our government:

The district had produced a total of 3,300 tons of apples last year. But only 55 tons of apples produced in the district could be taken to market last year.

Labels: apples, dashain, foreign aid, handicraft, hydroppower, jumla, poverty, west seti

.
The following opinion piece was published in Republica on August 30, 2011. I wrote it in collaboration with Mr Nanda Kaji Budhathoki, a fellow Economist at IIDS. The direct Republica link is here.

In recent years, we have seen unprecedented changes in our political and social landscapes. We overthrew the monarchy, and became the only country in world history to elect the Maoists by a majority. Overthrowing the monarchy was only a matter of time as the discontent with the monarchial system had been brewing ever since the first democracy in 2007 B.S. However, the overthrowing of the two hundred year old monarchial system has thrown us headfirst into previously unchartered waters of “federalism”. The problem is, we as people still do not agree on what it means, how it should be set up, and what direction it should be headed towards.

Under a federal system, power is divided between the central and the state governments. The idea for this division of power arises from the understanding that the center and states have separate functions. Therefore, they must have separate powers, including the economic power of spending and taxing. In addition, longstanding practices of caste and ethnic discrimination, greater power privileges in the hands of the social upper castes, centralization of authority in the capital city, uneven development and persistence of mass poverty in remote geographical regions are some of the key reasons why the demand for federalism in Nepal has gathered momentum in the last few years.

Mass internal migration occurred during the years of the Maoist insurgency where people moved from rural and insurgency affected areas to urban centers. Also, centralization of all economic and political powers has resulted in the Kathmandu valley becoming an urban giant that gets difficult to manage and control each passing year. Our largest city receives disproportionately large share of public and private investments, as well as incentives for investments when compared to the country’s second largest or other large cities. In development economics, this is called the first city bias, and it is a massive hindrance to the development of the rest of the country.

Kathmandu district alone generates 42 percent of the total revenue in Nepal. Top 12 revenue generating districts in Nepal generate 94 percent of total revenue. The remaining 63 districts generate only 6 percent of total national revenue. These numbers clearly suggest that something is terribly wrong in Nepal in terms of distribution of economic powers. The Eastern, Central and a few parts of Western regions are economic powerhouses whereas the Mid-western and Far-western regions languish in poverty and zero opportunities.

All the opportunities in Nepal, today, seem to be concentrated only in the Kathmandu valley and a handful of other urban centers. Given this, the discontent among the Nepalese populace for the central government is understandable. Most see this as a failure of the central government system. Therefore, a federal structure is more preferable.

The manifesto of the three major political parties—Nepali Congress, UML and Maoist—show that they, pretty much, agree on how the powers should be divided, and how jurisdictions should be assigned. Also, there is a consensus that foreign policy, currency, national security, international trade, monetary policy, central bank, large hydropower projects, mega projects, railways, airways, national highways, customs duty and other issues of national interest should be controlled by the central government. Issues like water, land, forest resources, education and health should be under the control of provincial or state governments.

However, discussions on the economics of federalism have been lacking in Nepal today. We do not seem to be seriously analyzing the economic ramifications of a federal republic structure. We have to ensure that the federalism that we design preserves the market structure while providing more incentives for economic growth and development, and not less. Economically, state governments under a federal structure have to work frugally and on the margin due to their inability to print money and borrow limitlessly. So, the federal structure that we create should help and augment the capability of the states to govern and run themselves without engaging in free-riding.

Jurisdiction over the environment and welfare responsibilities should be federal responsibilities. Ramifications of water and air pollution from one state could be borne by another. Therefore, assigning environmental responsibilities to the states is probably a bad idea. Similarly, if the states are given the welfare responsibility, some states will lure the rich and wealthy with unfair practices like lower taxes. As a result, poorer states will not be able to fulfill their welfare obligations like education and healthcare.

Also, the decentralization theorem of federalism suggests that if consumption of public goods depends on geography, states are more efficient in providing such goods. Since much of public service delivery in Nepal is adversely affected by our rough geographical terrain, devolving the delivery of public goods to the state level is better.

While designing the federal structure, more focus should be given to disadvantaged areas in the Mid-western and Far-western regions. These areas lack developmental infrastructures and opportunities. So, creating a federal structure and asking these areas to run themselves via their own revenue generation is undesirable and dishonest. The imbalance between states in these regions and rest of the country should be corrected through intergovernmental transfer from the central to state governments.

The concept of such transfers, as well as from richer to poorer state governments, is common among federal nations. In the United States, taxpayers in New York and Connecticut help out those in Louisiana and Alabama. Similarly, in China, taxpayers in Shanghai help out those in the poorer western and central provinces. So, in principle, taxpayers in Kathmandu and Morang have an obligation to help out those in Dolpa and Rukum until these regions experience economic growth sufficient enough to make them self-sustaining. The magnitude and duration of such transfers will start decreasing as these states start growing economically.

Federalism discussions in Nepal have been hijacked by political parties and their interests. Each party has brought its own bias and greed into the table while proposing the design of the new federal states. What we need today is to rise above the petty politics of it all. The new federal states should be designed such that they are politically stable, socially harmonious, and, above all, economically sustainable.

Labels: economics, federalism

.
The BIG NEWS: Baburam Bhattarai becomes the 35th (and the most educated) Prime Minister of Nepal. Here is his short profile.

1. Half of households have one member abroad

...52.8 per cent of the total households have at least one member away from home...indicating the startling rise in loss of human capital in the country

...32 per cent families have members away in foreign countries...55 per cent of the total households receive remittance from the members abroad

...Over 354,000 Nepalis left the country last fiscal year to work in foreign destinations...and...that has created dearth in agricultural and industrial labour back home

...Nepal earns about Rs 210 billion from remittance coming in from abroad annually...but...79 per cent of total remittance is spent on daily consumption...and...only a meagre 2.4 per cent of the remittance contributes to capital formation

Although there are people in Nepal that praise remittance for its role in reducing poverty and inequality (both of which have NOT been proven empirically by any studies), there are some aspects of this heavy role of remittance that do not bode well for the country in the long run, especially because:

...empirical evidences also show that the development process of the economy that is dependent on remittance is relatively slower by about 1.5 percent

2.Banks deposit growth rate slows down

...average deposit growth rate slowed down by more than two times compared to a fiscal year ago

Deposits in the commercial banks grew by:
32.25 percent in 2008/09
12.9 percent in 2009/10
10 percent in 2010/11

Deposits with Janata Bank saw surging by 300 percent...Rastriya Banijya Bank has the largest deposit base with Rs 74 billion...Nepal Investment Bank has Rs 50 billion deposits

...saving and credit cooperatives were found to be mobilising deposits worth Rs 122 billion

3. Strike cripples life in 9 eastern districts

...the demand is to make Taplejung, Panchthar, Ilam, Jhapa, Morang, Sunsari, Dhankuta, Sankhuwasabha and Terhathum districts...into the Federal autonomous Limbuwan state

4. Protesting Mustang folks warn of barring tourist entry

...unless the government allocates 60 percent of the tourist royalty for the development of the region

Upper Mustang has not received its share as provisioned by the Local Self Governance Act for the last 16 years...despite the government of Nepal collecting...Rs 770 million in revenue annually through tourism from Upper Mustang since 1993...The government only provides ...a nominal Rs 70 million to the district. As a result, the region still lacks electricity, roads, schools and hospitals. Food shortage is a perennial problem as the topography of Upper Mustang is unfavourable for crops.

2,162 tourists visited Upper Mustang in 2010, up by 30.3 percent compared to the previous year

5. Preparation for Dashain; NRB ups note circulation by 40pc

...Last Dashain saw use of notes worth Rs 20 billion...According to NRB, it is sending clean notes worth around Rs 28 billion for this year’s Dashain

6. Only 10 companies hold 56 percent of Nepal stock exchange's total market capitalization

Company// Share in total market capitalization(%)

Nepal Telecom// 19.43
Standard Chartered Bank// 8.95
Nabil Bank// 7.85
Nepal Investment Bank // 3.83
Himalayan Bank// 3.56
Nepal SBI Bank// 3.26
Everest Bank// 2.81
Bank of Kathmandu// 2.40
Butwal Power// 2.32
Chilime Hydropower// 1.85

7. NOC hikes diesel, kerosene price by Rs. 1.50 per litre

The price of the diesel and kerosene has now reached Rs. 75 per litre from Rs. 73.50 per litre....the price of petrol is constant at Rs. 102 per litre which was increased from Rs. 97 some two months ago

8. Buddha Air tops domestic carrier operations

...in the first half of 2011 with a market share of more than 40 percent

The airline recorded an increment of 21.73 percent in passenger carriage. Except for Buddha Air and Sita Air, all the domestic carriers posted a negative growth in their passenger movement in the first six months.

Buddha’s nearest competitor Yeti Airlines saw its passenger movement dip by 1.55 percent. However, the airline is still the second largest carrier in domestic aviation with 224,062 passengers flying it in the first half of 2011.

...domestic airlines carried 761,043 passengers in the first six months, up 36,160 from last year...

Rate of Growth in Passenger Movement in first-half of the year:
32.05 percent in 2009
19.82 percent in 2010
4.98 percent in 2011

9. Nepalese Internet ...some numbers

*65,000 subscribers at the end of 2009/10
*52,527 subscribers at the end of 2010/11
*Between 2009/10 and 2010/11, number of dial-up users lowered by 33 percent
*Between 2009/10 and 2010/11, number of wireless users increased by more than 70 percent
*Between 2009/10 and 2010/11, wireless users increased by 10,000

*Worldlink is the leading internet provider with 19,858 subscribers
*Broadlink is second with 11,792 subscribers
*Mercantile Communication has 9,445 users
*Subisu Cablenet has 5,276 users
*Web Surfer has 958 users

*Internet penetration of the country has reached 10. 89 percent as of mid-June 2011
*But, nearly 98 percent the total users are GPRS users

Labels: airlines, banks, cooperatives, dashain, internet, migration, mustang, NRB, petroleum, remittance, share market, shutdown

.
A few years ago, the Pahade-Madhesi riots were everywhere in Nepal. People in the hills were beating up the "madhesi" people. People in the terai were beating up "pahade" people. Quite a few people died in those riots. I was not in Nepal, but I did not like what was happening in Nepal. However, there was not much I could do. So, I wrote the following story. Bear in mind that it is over three years old.

A much shorter version of this story was published in The Kathmandu Post last year.


There was nothing special about this day. The sun rose like any other day. The birds chirped on their way to finding the early worms just like any other day.

Children stood at the bus-stops in the nippy morning, arms folded as if to conceal themselves away from the cold, legs shuddering because of the icy morning breeze, hands clasped together as if that would make them warmer, shirts nicely tucked, sweaters over the shirts washed, and hair neatly combed, just like any other day.

****************************************************************

“Dude, they should have thought before doing so, no?” Kapil asks non-chalantly.

“I don’t know man” I reply with frustration after being asked the same question every single day of his school life.

“But it’s a girl’s name—Resham—no?” Kapil asks the same question again, the umpteenth time he’s done so.

“I don’t know” I answer for the umpteenth time.

“But then again, ‘Reshma’ is a girl’s name. So ‘Resham’ could be a boy’s name, because ‘Reshma’ is a girl’s name. No?” Kapil goes in circles trying to find a logical sense in my name.

“Seriously, I don’t care anymore. Everyone’s used to my name. So I don’t care anymore if it’s a boy or a girl name. Let’s go; I’m hungry” I change the topic.

“Where do you want to go? Let’s go to that chatpate-walah.” Kapil proposes.

“Didn’t we just go there yesterday” I ask.

“Yeah. So? He makes good chatpate.”

“Let’s eat samosas today. I’ve had enough chatpate yesterday.”

“Come on, man. Let’s go for chatpate, and I’ll buy you some panipuri.”

“No, man. Let’s eat samosas today, and we’ll eat chatpate tomorrow again. Is that okay?”

“Works for me” Kapil sighs.

**************************************************************

“Shivnaraine’s Samosa Pasal” the sign says. It’s more like a hut with some hay straws acting as walls, the floor is pure mud. To be honest, I don’t think there’s even a floor; the floor is just the ground on which the meek structure for his “pasal” was built. The roof is thatched, and the rain pours inside if it’s the monsoon season.

We stoop underneath the doorway to get into the pasal. For some unknown reason, Shivnaraine’s Samosa Pasal has a door that is only five feet tall. Every single person walking into the pasal has to stoop to get in.

Shivnaraine is a thin man. He must be around five feet eight, and close to fifty-five kilos. Because of his thin build-up, he looks taller than he actually is; people often mistaken him for being six feet tall. Thin arms, thin legs, sunken cheek, short crew-cut grey hair, dark skin, and two missing teeth on the inner bottom right side of his mouth. That’s Shivnaraine. Nobody knows what his last name is.

“Nepali kahilinus hajur. Shivnaraine Nepali kahilinus” is how he answers every time someone asks him for his last name.

Despite his seemingly unending poverty, he always looks happy. He haggles with customers who don’t want to pay three rupees for a samosa. “Samosa ma aalu matra halyo bhane quality bhayena bhanne. Ani badaam, bhatmaas, kaaju, kismis halyo bhane pheri mahango bhayo bhanera bhani-liney. Ta ma ke garum?” he yells at customers who refused to pay the full price. Yet, if that very customer came to his pasal the next day, he would serve him with a smile.

“O Shivnaraine Nepali, dui plate samosa yaha…jhattai la jhattai” Kapil barks orders at Shivnaraine as soon as we stoop and enter the pasal.

“Basdai garnus Kapil babu” Shivnaraine stretches his mouth wide open with a smile.

“So, how did you do in Optional Maths?” Kapil turns to me.

“Not bad. Could not figure out the answer to three of the coordinate geometry questions at the end.” I say.

“So you didn’t do them?”

“I did. But I’m sure I just bluffed. I’m not getting any marks for those three questions.”

“Yeah, I got all the coordinate geometry problems right. I could not do some trigonometry problems.”

“That’s because you focused too much on coordinate and not on trig.”

“That’s true”

We see Shivnaraine walking towards us with two plates of samosas. His smile grows wider and wider with each step he takes towards us.

“babuharu ko padhai wadhai sakiyechha ki aaja ko lagi?” He asks as he puts the two plates on our table. He pulls the red “gamchha” that’s been around his neck all day, and wipes our table. He lifts one of our plates and wipes the portion of the table underneath, and does the same for another plate. I wonder how many times throughout the day he’s cleaned tables with that gamchha, and I ask myself why does he keep that filthy cloth around his neck.

“Aru kehi khaane ho babuharu? Resham babu, laalmohan khaane ho ki?” he turns to me and asks.

“Aaja nakhaau holaa. Dui ota coke lyayi deu baru” I say.

“Ekaichhin ma bhayi halchha hajur” he says and leaves. He turns back midway through, and asks Kapil, “Kapil babu khaanu hunchha laalmohan?”

“Aaja khaadina hola” Kapil replies swiftly.

Shivnaraine turns back, and goes to fetch our samosas and coke.
*******************************************************************

I look outside from my window. It’s a sunny afternoon in the winter. Usually, I see Jeevan uncle drinking his usual afternoon tea from the street tea vendor Ramu. It’s like a ritual to both of them; Jeevan uncle drinking tea and having long, unending conversations with Ramu.

But today, Ramu is all by himself in the street making some tea.

“Resham babu…Jeevan sir lai kehi bhayi liyechha ki? Aaja ta cheeya khaana nai aaunu bhayi liyeko chhaina” Ramu yells towards my window from the street, asking me whether something happened to Jeevan uncle because he missed a morning tea appointment with him.

“Hoina Ramu. Jeevan uncle Birganj jaanu bhayeko chha.” I yell back at him from my window.

“Tyahi ta bhanchhu ma pani….aaja kina Jeevan sir cheeya khaana aaunu bhayena bhanera. Ta Birganj gayi linu bhayechha…..haina ta? Bijinis ma gayi linu bhayeko?” Ramu yells towards me again, with another question.

“Business ma gayeko hoina. Madhesi Mukti ko manchhe haru le Jeevan uncle ko bhai lai kidnap gareko chha re. Paisa magdai chhan re. Tyahi bhayera bhai lai chhuta-oona gayeko” I tell him the truth.

“Badaa naramro bhayi liyechha ta….madhesi haru le tyaso bhaye Jeevan sir ko bhai lai kidnip gari liyechhan” He repeats the things I said to him.

That’s one of his habits. Some people scold him for that. I’m indifferent.

Ramu is well-built, around five feet six, and seventy-five kilos. He is a keen businessman and takes his tea-vendor job seriously. He keeps himself clean, always has oiled and combed hair, a pencil-line mustache, and ironed shirt and pants. If I didn’t know he was a street tea-vendor, I would have guessed him to be a “thekdar” on a construction company. He is loud, boisterous, cheerful and cunning—all at the same time. I’ve seen him selling a cup of tea to a homeless man for one rupee, and to an office manager for seven rupees. It’s that nature of his business that fascinates me.

Ramu stands for a while doing nothing. I have known him for a while now, so I know that means he’s thinking. After standing there and wondering for a few minutes, he turns to me.

“Resham babu le cheeya khaayi linu bhayo ta aaja?” he asks.

“Ma diuso tira tyati cheeya khaanna” I answer back.

“Aba aaja Jeevan sir hunu hunna….tyahi bhayera aayi linus ek glass cheeya ko laagi….tapai ko laagi aaja mufat ma” he yells at me again.

“La ma aayi halchhu” I yell back.

I can’t refuse the tea offer. He makes a fine tea. I put on my flip-flops and walk out the door towards Ramu’s tea-cart.

“Eeskool kasto bhayi rahechha ta babu hajur ko?” Ramu begins a casual conversation.

“Thikai chha. Jaanch chali raheko chha ahile.” I answer casually.

As we keep chatting casually, we both see Kapil walking towards us.

“Kapil babu cheeya khanu hunchha?” Ramu asks him from a distance.

“Hunchha. Ek cup.” Kapil replies.

“Dui rupiya matra linchhu Kapil babu sanga ma” Ramu lets Kapil know his price.

“Hunchha” Kapil agrees. He then turns to me, and says, “Did you find out about Jeevan uncle?”

“Yeah, he’s in Birganj” I reply.

“Not only that. More.” Kapil says nervously.

“More what?” I ask.

“His brother, Kiran uncle….the Madhesi Mukti people killed him.” Kapil gives me the news.

“Kina maari liyechhan ta Kiran sir lai madhesi haru le?” Ramu asks Kapil.

“Khai…thaha bhayena…” Kapil answers him.

“Badaa naramro bhayechha” Ramu shakes his head, and keeps stirring the tea-pot.

Not knowing what to say next, both Kapil and I keep staring at the tea-pot. Ramu keeps stirring the pot, occasionally halting to add sugar. He lets the tea boil until it reaches the top of the pan, then he lifts it in the air and stirs it at the same time with the spoon. Eventually the tea is ready. He pours it into two glasses, and hands it to Kapil and me. We finish our tea, with occasional chat in between the sips.

Kapil reaches into his pocket and hands Ramu a two-rupee note. We both then thank him and walk away. After a few steps, Kapil turns to Ramu and asks, “Resham sanga chahi khoi paisa liyeko?”

“Resham babu le tapai aaunu bhanda agaadi nai paisa tiri saknu bhayi liyeko thiyo” Ramu tells Kapil.

Kapil says “A ho?” and we both walk towards my house.
*****************************************************************
It is late afternoon, early evening, and the birds are flying back towards their nests. People too. Some are walking, some pedaling, and some driving. The city street fills with people, each one marching towards his/her own nest. The sun sets in the horizon behind that hill, all orangey and reddish and yellowish…beautiful colors. The entire scene, from the city street to the panoramic hills creates a beautiful picture, almost like a landscape art.

I watch outside through my windows, biology book in hand, coffee cup in the other hand, a notebook on my lap, pencils and pens all around me. I can see Ramu, outside in the street, still making that delicious tea, for people of different occupation and social status.

That’s what he does, every second, every minute, every hour, every day, every week, every month and every year. He pulls his tea-trolley to that particular spot in the street across from my house, and makes tea for thousands of people walking that busy street.

The phone in the living room rings twice before my father, who until then is watching CNN on television gets off of the sofa and picks the phone up.

“Oh! Really. That is very sad, indeed.” I can hear him say from across the room.

He listens for a while to the person on the other end of the line, and lets another “Oh! Really. That is very sad, indeed.”

I walk out of my room, and enter the living room. My father is still on the phone, his face bearing a sense of loss and grief. Finally, he puts the phone down.

“The madhesis got Jeevan also” he turns to me and says.

“What do you mean they got Jeevan uncle?” I ask anxiously.

“They killed him too, just like they killed Kiran.” My father told me with sadness in his voice.

“But, Jeevan uncle was there to pay the kidnappers and free Kiran uncle. Weren’t they supposed to take the money and free Kiran uncle?”

“That was what was supposed to happen. But Jeevan did not go to Birganj with money.”

“I thought he went there with money to free Kiran uncle” I cannot understand what was happening.

“The Madhesi Mukti people asked for fifteen lakhs. Jeevan makes only 7000 rupees a month. How’s he supposed to get fifteen lakhs in a day to free his brother?” my father’s voice starts shuddering, as if almost crying.

“So, why did he go there then?” I wanted clarifications to Jeevan uncle’s visit to Birganj. If he did not have the money, what was he thinking going there.

“One of the Madhesi Mukti leaders is Jeevan’s good friend. They went to school together, gave their SLC together, and were even roommates when they were studying B.Com. in Mahendra Morang Campus in Biratnagar.”

“And Jeevan uncle thought he would help him free Kiran uncle” I understand what Jeevan uncle was thinking.

“Yes. When Jeevan’s college roommate tried to talk to the Madhesi Mukti people, they killed him, too.”

“You mean Jeevan uncle’s Madhesi Mukti friend was also killed? Why would the Madhesi Mukti people kill one of their own?” I ask.

“Yes. Poor fellow. He was only trying to help his college roommate.” My father sighs.

“Yeah” I whisper.

Both of us stand in that living room floor drenched in our own personal thoughts. Neither of us moves for the next few minutes. Finally, I grow tired of just standing there and saying nothing. So I leave the living room and enter my room. I have a big exam tomorrow. I have always had hard times memorizing biology stuff.

I can see my father from my room, still standing there in the living room floor, shaking his head to himself from time to time, not saying a word, staring at the ceiling now, and staring at the floor the next moment.
**************************************************************

I am flying in the air. But it’s not a plane. I am on a kite, flying and soaring high in the sky, alongside the birds flocking towards their unknown destination. I say to myself “how am I able to fly on a kite?” The human weight ratio should not allow me to do that. Am I defying gravity? Wow! That would be so cool!”

“Hey! Wake up? Did you hear what happened?” I hear Kapil say to me.

Kapil’s heavy-handed body shake wakes me up from my high-flying dream. I notice I am drenched in sweat.

“Why is it so hot in Poush?” I ask myself, and realizing Kapil’s presence I ask him, “Why? What happened?”

“Look out the window?” Kapil signals with his index finger.

I stand up from my bed, put on my flip-flops, let a long yawn with both my hands stretched as far back as I can from my chest, and look out from the window.

“What?” I ask Kapil after I don’t see anything.

“Don’t you see? Ramu is not there.” Kapil says.

“So? He must have gone home. What time is it? Nine o’clock?”

“No, it’s not nine o’clock. It’s only seven o’clock.”

“So? He could have gone home.”

“No, he always goes home after eight o’clock”

“Just tell me what you’re trying to say. I don’t have time for this quiz session.” I tell Kapil.

“Okay, here it goes. Now don’t quote me on this because I wasn’t here when it happened. But there was an anti-Madhesi riot at around six this evening. The rioters marched just in front of your house, and saw Ramu selling tea. So they beat him up, and he had to be taken to the hospital.” Kapil explains.

“So, he’s okay now, then?” I ask.

“Here’s the news. My dad just went to see him in the hospital, and he says Ramu’s dead because the rioters beat him on his head with cricket bats and stones.”

“Are you serious? They killed him?” I cannot believe Ramu’s dead.

“Yeah, man. This whole madhesi and pahade thing is starting to boil up. Pahade people have been beating madhesis here, and madhesis have been beating pahade people in the terai towns. It’s all in the news right now.” Kapil gives further details.

“Man, it sucks! That’s bad, man.” I can’t help showing my frustration.

“Also, you know what?” Kapil asks me again. I cannot wait to hear more details. But Ramu’s already dead. What more could Kapil tell me about Ramu.

“What” I ask.

“Those pahade rioters also attacked and burned the samosa pasal”

“What? Shivnaraine’s Samosa Pasal?” I cannot fathom my favorite hang-out place being destroyed and burned.

“Yeah, man. I just got the news from one of the guys who were eating there. The rioters did not even ask anyone inside to vacate the place. People were eating inside the pasal, and the rioters were hurling flames in the thatch roof at the same time. The whole place burned down.” Kapil now gives more details.

“How did all this happen so quickly? How long have I been sleeping? Six months?” I cannot believe the rapid turnout of events.

Just this morning we ate samosas at Shivnaraine’s and this evening I drank Ramu’s tea. And now Ramu is dead, and Shivnaraine’s place is destroyed.

“Did they do anything to Shivnaraine?” I ask with the realization that Shivnaraine could as well have suffered the same fate as Ramu.

“I don’t know. Let’s go check” Kapil suggests.

“That’s a good idea” I say and put on my shoes.
*************************************************************

Kapil and I walk quietly along the road. I don’t know what he’s thinking. But I’m thinking nothing. I don’t know what to think. It’s around eight o’clock now, and the streets are starting to get quieter. There’s only a bunch of people still negotiating and buying vegetables from the street vendors in the vegetable market. It’s not really a market, though. It’s a group of people selling vegetables along a busy city street.

“This should not happen to anyone, man.” I finally utter a sentence.

“What should not be happening?” Kapil doesn’t understand.

“This. Now, what’s that poor Shivnaraine supposed to do? How about Ramu? He’s not even alive anymore.”

“Shit happens” Kapil answers briefly.

“Yeah, but why does it happen always to the poor guys?” I ask with frustration.

“It didn’t happen to them because they’re poor. It happened to them because they were madhesis in a pahade neighborhood. That’s all. Wrong people at the wrong place at the wrong time” Kapil tries to bring sense into the discussion.

“You’re right.” I concur.

We reach Shivnaraine’s Samosa Pasal. The whole place is burned down to the ground. But I see Shivnaraine making samosas and puris in a two-stove oven that burns kerosene. The gentle breeze lifts the ash from the ground and pushes it gently towards the people eating on makeshift brick benches around the kerosene stove. Shivnaraine is busy serving five or six people around him.

“Shivnaraine, what happened here?” I unashamedly ask even after seeing the whole hut being burned down to the ground.

Shivnaraine looks at me, and then at Kapil and gives his big smile.

“Arree Resham babu and Kapil babu. Aaayi linus, ke khaanu hunchha? Samosa?” he asks us as if nothing has happened.

“Hunchha. Dui plate samosa banau na ta” I say.

“Pasal ta saaf bhayechha ni?” Kapil asks Shivnaraine.

“Ke garne hajur. Yo sab pahade madhesi bhanera jhagada suru bhayi liyechha ni. Ta kuchh pahade log haru aayera sabai gharai jalayi diyo.” Shivnaraine says with a bigger smile, as if he enjoyed the whole burning down thing.

“Pheri aayera kutla tyo manchhe haru le bhanerra darr lageko chhaina?” I ask him.

“Darr lagera ke garne hajur? Yaha yo sabai manchhe haru lai khaajaa banayera khwayena bhane ta mero ghar ma bachha haru lai pheri kasle palchha hajaur? Mero kamayi bhaneko yahi ho saab.” He explains in the simplest of tone.

“Tyo ta ho” I concur.

“Tara aba ta pasal nai chhaina ni. Ke garchhau?” Kapil asks Shivnaraine of his future plans.

“Yo ta jhan badhiya bhayo ni Kapil babu. Pasal jalera ta jhan badhiya bhayi liyechha yaha” Shivnaraine says with a smile.

“Pasal jalera jhan kasari ramro bhayo ra?” Kapil cannot understand.

“Aba baahira khula hawa ma tato tato samosa puri khaye pachhi pasina wasina pani aaudaina nit a saab hawa le garda. Ta jhan bijinis lai jhan ramro bhayechha aba” Shivnaraine keeps smiling.

“Haha. Sacho bhaneko ki jiskiyera bhaneko?” Kapil cannot seem to understand Shivnaraine’s logic.

“Ma tapai haru lai jhooth kina bolu saab. Aba ta jhan local municipality lai tax pani tirnu pardaina saab. Pasal nai nabhaye pachhi ke ko tax? Hoina ra saab?” He smiles again.

“Khoi timro kura timi nai jaana” Kapil doesn’t see the humor in Shivnaraine’s words.

“Saab haru lai coke pani lyayi diu ki, saab?” Shivnaraine looks at both of us and asks.

“Hunchha. Ek ek ota.” I say.

“Ekaichhin ma aauchha saab” he says and leaves to get our cokes.

Kapil keeps looking at Shivnaraine, not knowing how a man can stay smiling with his whole business burnt down to ashes. I keep staring at the different people eating around the burning stove. Shivnaraine is right; I don’t see any one of them sweating because of the hot food. They all seem happy and smiling in the gentle breeze that is blowing in the area.

Shivnaraine Nepali, still smiling even after everything he has is ruined to dust, still smiling with blood clots hanging in his right earlobe, a big cut in his forehead with dry blood covering the wound, the thumb in his left hand wrapped with a piece of cloth and a small bamboo twig because he probably broke it in the shuffle with the rioters, and still serving his customers with a limp in his left leg.

I stare at the sky. It’s a beautiful night. I can even count every single star in the sky if I want; the sky is that clear. I see the ash from the ground being raised into the air gently by the soft breeze. I see the moon, big and bright. I have always loved the dark spot on the moon. It’s that imperfection in its perfect surface that makes the moon beautiful. I compare the bright moon to the dark Shivnaraine. The dark spot on the white moon makes it beautiful. The smiling white teeth of the dark-skinned Shivnaraine makes him a good and humble human being. I say to myself, “they’re both the same, and, yet, they’re not”.

***************************************************

There was nothing special about this day. The sun rose like any other day. The birds chirped on their way to finding the early worms just like any other day.

Children stood at the bus-stops in the nippy morning, arms folded as if to conceal themselves away from the cold, legs shuddering because of the icy morning breeze, hands clasped together as if that would make them warmer, shirts nicely tucked, sweaters over the shirts washed, and hair neatly combed, just like any other day.

*************************THE END********************

Labels: riots, shivnaraine, story

.
1. Recessions are always and everywhere a monetary phenomena

2. How do you know who is truly poor? Ask the neighbors---concludes an MIT study conducted in Indonesia

...based on fieldwork conducted in 640 Indonesian villages

There are two striking results...First, when citizens are asked to make collective judgments about the relative wealth of their neighbors, the outcomes are very close to those produced by objective measures. Second, citizens are far more satisfied by the results when they are consulted than when they are left out of the process.

...the researchers found no evidence of “elite capture,” the attempt by local leaders to manipulate the rankings for the benefit of their own relatives or political allies.

3. How accurate are policy expectations? Evidence from the US

4. Apples, wheat, and haircuts: output and demand

Actual investment equals actual saving in all three economies all the time. As it must. But the three economies are different. The output of apples takes forever to adjust to bring desired investment equal to desired saving. The output of wheat adjusts in one year. The output of haircuts adjusts instantly.

All three economies are, of course, ideal types. The real world is a mixture of all three, and a lot more complex, with different firms operating in different stages of the production process, so that goods-in-process (intermediate goods) must also be bought and sold.

But, is the real world moving slowly towards a haircut economy? Or is it moving the other way, towards an apple economy?

5. Is Economic inequality linked to biased self-perception?

Labels: demand, expectations, Indonesia, inequality, monetary economics, output, poverty, recession

.
This is exactly how I feel when I watch the TV pundits talk about the Economy:

Source: http://abstrusegoose.com/

Labels: abstrusegoose, Nepalese Economy

.
1. In The Land of the Buddha, a Buddhist nun awaits justice

2. Nepalese Rupee continues to weaken

Nepali rupee weakened by 42 paisa against a US dollar over the week, as the greenback bounced back in India with which currency the rupee is pegged. On Friday, a dollar was valued at Rs 73.91.

3. Chandan writes about Imprudent unions & weak industries

4. Prices of building materials fall as demand drops

According to dealers, brick, cement and steel prices have dropped significantly in a year due to low demand and rising competition.

...price of cement price has come down by Rs 100-150 per bag depending on the brand, of which there are more than 30 in the market.

...price of steel...has come down by over Rs 10 per kg in a year

Brick prices have also gone down 10-22 percent

5. Nepal’s Election Commission among world’s best five

...more than 9.5 million voters have registered their names along with their photographs...Out of them 52 per cent are women...and...some 157 belong to the third gender

6. The State of Nepalese Banks and Financial Institutions

7. On Nepalese housing market

8. Paddy fields have shrunk 59,000 hectares in the last two years

...land under paddy cultivation has shrunk to 1.49 million hectares from 1.55 million hectares within two years...due to...increasing urbanization and crop diversification

Nepal has lost 59,464 hectares of paddy fields since 2008-09. The Eastern Tarai, the country’s major paddy producing region, lost 77,556 hectares of paddy fields within two years.

The five districts of Eastern Tarai contained 375,208 hectares of paddy fields in 2008-09 which have now diminished to 297,652 hectares. Dhanusha, Mahottari, Sarlahi, Rautahat, Bara, Parsa and Chitwan districts of Central Tarai have 310,679 hectares of land under paddy plantation. Paddy fields in the Western Tarai districts—Nawalparasi, Rupendehi, and Kapilvastu—expanded to 190,190 hectares from 188,950 hectares in 2008-09. In the Mid-Western Tarai districts of Dang, Banke and Bardia, the area under paddy cultivation rose to 117,550 hectares in 2011 from 112,458 hectares in 2008-09. The Far Western Tarai districts of Kailali and Kanchanpur together have 106,655 hectares under paddy cultivation.

The Numbers:(in hectares)
Tarai Belt// 2008-09// 2011-12

EASTERN

Jhapa// 96,700// 82,400
Morang// 88,200// 78,200
Sunsari// 51,158// 53,791
Saptari// 68,400// 37,691
Siraha// 70,750// 45,570
TOTAL// 375208// 297652

CENTRAL

Dhanusha// 55,000// 61,972
Mahottari// 40,250// 34,716
Sarlahi// 38,750// 39,350
Rautahat// 46,800// 42,396
Bara// 55,335// 52,725
Parsa// 46,200// 46,690
Chitwan// 32,755// 32,770
TOTAL// 315090// 310619

WESTERN

Nawalparasi// 46,490// 46,690
Rupendehi// 72,500// 71,500
Kapilvastu// 69,960// 72,000
TOTAL// 188950// 190190

MIDWEST

Dang// 37,458// 38,500
Banke// 36,500// 36,500
Bardia// 38,500// 42,550
Total// 112458// 117550

FAR WEST

Kailali// 60,000// 60,000
Kanchanpur// 46,655// 46,655
TOTAL// 106655// 106655

Labels: banks, construction, election commission, garment, housing, IRs, labor unions, NRs, nun, paddy

.
The following opinion piece was published in the Republica on August 21, 2011. The direct link to Republica is here. A more detailed version of this article was posted in my blog here.

On May 29, I wrote an op-ed piece in Republica titled “Time to ditch the peg”. It was about the pegging of Nepali Rupee with the Indian Rupee, and I presented my opinions on why I think it should be abolished.

I wrote that the easy substitutability of the two currencies makes it harder for the Nepal Rastra Bank to carry out effective monetary policies to combat inflation in Nepal. If NRB lowers the interest rates in Nepal to help improve the investment climate by making it cheaper for investors to borrow money in the Nepali market, money from Nepal will simply move to India to take advantage of the comparatively higher interest rates in India. NRB has always kept the interest rates in Nepal slightly higher than that in India to avoid this from happening. This has hurt the investment climate in Nepal because investors cannot get low interest loans.

I concluded that if the pegging is removed, our higher interest rates would attract more capital into Nepal. Also, our devalued currency would mean that our export industry would gather momentum while our imports would reduce. All in all, I suggested that getting rid of the peg would benefit the economic climate in Nepal.

Then, a week or so later, in June, Sukhdev Shah wrote an op-ed piece in Republica titled "Keep the Peg" as a counter-argument to the points I had raised earlier. I wish to provide a rebuttal.

Shah wrote that “trade outcome from devaluation would be a larger trade deficit and higher inflation due to rise in the prices of imported goods” and that “restrictive fiscal and monetary policies that would be needed to subdue inflation can cause recession and undermine growth”. Is Shah suggesting that we should not get rid of the peg because it might bring more inflation or a recession? I disagree with such avoidance tactic. We will not learn how to slay the beast if we never face the beast.

If the results of abolishing the peg do turn out to be as damaging as Shah suggests, we always have the option to go back to the peg. Whatever the results may be, we will learn valuable lessons in monetary policy making.

Shah also mentions that while floating exchange rate might seem like an easy way out, it has elements of risks and that we will have to face dire challenges if we get rid of the peg. He says that “the first issue to be faced would be to change the public mindset, which has come to view a fixed exchange rate with the Indian rupee as sacrosanct and inviolable”. This reasoning that we should stick with the peg just because the public has come to identify with it in the last 50 years, and that getting rid of the peg would cause minor discomfort to the public, is not the right approach in terms of thinking about it policy wise.

We also thought letting women burn in the pyres of their dead husbands was okay, remember? But, we abolished that system, and we have got used to the fact that women no longer burn in their husbands' pyres. Of course, this is only an example. I am not implying that the issues of pegging and women burning in their husbands’ pyres are of equal importance. The important point is: society evolves according to the new set of rules. Let us make the new rules. People will adapt themselves according to them.

While linking the issue of pegging with that of inflation, Shah says that getting rid of the peg would not provide lasting relief. He mentions that “the best option would then be to reduce our consumption and increase productivity which, in turn, would require a large measure of fiscal discipline, political stability, and lowering of the risks faced by producers and investors”. If you ask me, one of the best ways to reduce consumption and increase productivity is getting rid of the peg.

A devaluation of our currency would make our exports cheaper, and imports expensive. We would be making more money from exports, and consuming less from imports. Also, a devalued currency would make it enticing for our farmers to start producing again with intent to supply to domestic as well as overseas markets. One of the main reasons why we have become so gluttonous is because of the fixed peg which enables us to import too much food from India and produce too less in domestic farms.

On July 4, another op-ed piece titled “To peg or not to peg” appeared in Republica by Hari Bansh Jha. Professor Jha mentioned towards the beginning of his article that if we adopted the floating exchange rate, our exchange rate with IRs would be determined by market demand and supply just like “it happens in relation to the exchange rate of Nepali currency with all other currencies, including Euro or US dollar”.

Prof. Jha has this fact wrong. The Nepali rupee does not float with Euro or US dollar. NRs is pegged with IRs, and IRs floats with Euro and US dollar. So, the exchange rates for NRs to Euro or NRs to US dollar are actually adjusted rates calculated directly via the peg of NRs with IRs. I just wanted to clear up that misunderstanding.

Prof Jha goes on to say that “the value of Indian rupees is increasing due to the growing strength of the economy”, and that if the NRs would float with IRs, “the value of the Nepali currency would have been far lower than what it is today”. I do not understand why Prof Jha, an Economics professor, should have any objections with this. I, as an Economist, actually like the sound of that argument.

Here’s why. Since the IRs is getting stronger, the NRs is getting stronger. Since NRs is getting stronger, our exports have become expensive. We want our NRs devalued so that we can export more and import less. I think, the main mistake everyone has been making in this pegging argument is that, for some reason both Shah and Prof Jha think devaluation is harmful. Devaluation can do a lot of good to Nepal's sagging export industry.

Prof Jha further writes that a floating exchange rate is impractical because “the central bank of the country is not fully equipped to run independent monetary policy for its own limitations”. He then mentions the limitation being the NRB’s inability to “do very little to control inflation through its monetary policy” because “until inflation is controlled in India, the central banking authority can do little about it in Nepal”.

Nepalese inflation is always 1 to 2 percent higher than Indian inflation due to transportation cost and customs duty for bringing goods into Nepal. Therefore, our inflation is directly tied with Indian inflation because of the peg. The reason NRB's policies are weaker is because the peg dampens any monetary policy. Once we get rid of the peg, NRB will gain its muscles to control inflation the way it pleases in Nepal.

Prof Jha ends his article writing that abolishing the peg will “promote capital flight from the country and thereby affect business, trade and other economic activities” and that “it would also bring about hyper inflation in the country”. I agree about inflation but not about capital flight. Prof Jha has his theory wrong on capital flight. Higher inflation would mean that we will have higher interest rates than in India. So, our higher interest rates will actually attract more capital into Nepal. Also, inflation isn't bad if it is actually resulting in higher economic growth. We can tolerate inflation as high as 10 percent if we are growing at around 7-8 percent. If you don’t believe me, ask India.

Despite my disagreements with both Shah and Prof Jha, I am very happy to see these discussions getting highlighted in Republica. Usually, nobody talks about removing or keeping the peg. I am just happy to see at least a couple of people talking about it in Nepal.

Labels: IRs, NRs, peg