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The transition from Five-Years to new trends in Nepal’s economic development

The economy of Nepal, one of the poorest countries in the world, began to develop through five-year plans. Five-year plans were introduced to improve the economic condition of the country, connectivity, and create more jobs for the population.

 

The first five-year plans focused on the creation and development of infrastructure, including the transportation system, as well as the provision of social goods and services. In essence, this was how the country was laying the foundations for economic growth. However, the implementation of the plans was not without foreign assistance.

THE FIRST FIVE-YEAR PLAN (1956-1961)

The first five-year plan was marked by huge investments in the railway system (36%) and agriculture (20%). But the plan could not be fulfilled: it was planned to build 1500 km of roads, but less than 600 km were laid.

SECOND FIVE-YEAR PLAN (1962-1965)

The dissolution of Parliament shortened the Second Five-Year Plan from five to three years. Investment again went mainly to communications (39%). Industry, tourism and the social sphere were sidelined.

 

The main objectives have not been achieved. In addition, the state recognized the shortcomings in the work of the National Planning Commission: projects were formulated inaccurately and there were no statistics to assess the results.

THIRD AND FOURTH FIVE-YEAR PLAN (1965-1975)

During this phase, infusions went directly to local committees elected for five-year terms (the panchayat system). Cooperation with the international community at the local level proved more effective than the centralized distribution of funds.

FIFTH AND SIXTH FIVE-YEAR PLANS (1975-1985)

For the first time, the main task of the five-year plan was to fight poverty, establish exports of agricultural products (mustard, sugar cane, tobacco) and develop industry. Birth control and improved social services were also among the priority goals of the five-year plan.

SEVENTH FIVE-YEAR PLAN (1985-1990)

The main objective of the five-year plan was to encourage non-state investment in order to increase productivity and take the country out of foreign tutelage. Thus, Nepal was to become more self-sufficient. In 1990, the country proclaimed a constitutional monarchy.

EIGHTH AND NINTH FIVE-YEAR PLAN (1992-2002)

During these five-year periods, the main emphasis was on improving the living conditions of the poorest sections of the population. The country conducted a campaign to eliminate illiteracy and paid more attention to maternity and childhood.

TENTH FIVE-YEAR PLAN (2002-2007)

The Tenth Plan prioritized the fight against poverty. To achieve the goal, the plan focused on improving economic, human, and social indicators. The plan also aimed to strengthen the capacity of the private sector and encourage its participation in social development activities.

Conclusion

Five-Year Plans of Nepal generally strove to increase output and employment; develop the infrastructure; attain economic stability; promote industry, commerce, and international trade; establish administrative and public service institutions to support economic development; and also introduce labor-intensive production techniques to alleviate underemployment. The social goals of the plans were improving health and education as well as encouraging equitable income distribution.

 

Although each plan had different development priorities, the allocation of resources did not always reflect these priorities. The first four plans concentrated on infrastructure—to make it possible to facilitate the movement of goods and services—and to increase the size of the market. Each of the five-year plans depended heavily on foreign assistance in the form of grants and loans.

 

In Nepal today, the government is focused on poverty reduction. In the past decade, the number of the poorest population has decreased from 42% in 2002 to 25% in 2011.