Friday, May 30, 2008
Sunday, May 11, 2008
Thursday, May 8, 2008
Wednesday, May 7, 2008
Bright Lights and Big Money in India’s New Cricket League
By SOMINI SENGUPTA
NAVI MUMBAI, India — With an infusion of bling, Bollywood and go-go boots, a new cricket league is trying to spin off India’s colonial inheritance into a money-making symbol of a brash, emerging nation.
Whether the Indian Premier League, as it is called, will ultimately succeed in cultivating a loyal fan base at home, challenging cricket’s world order and globalizing the game of the former British Empire remains to be seen. Already, it has upturned many conventions of an erstwhile gentleman’s game, drawn corporate sponsorships from multinational firms selling everything from cellphones to real estate and, with salaries comparable to the English Premier League of soccer, lured some of the top names in international cricket, including players from India’s traditional rivals, like Australia and even Pakistan.
The game itself is a fast and furious brand of cricket called Twenty20 — referring to 20 overs per team — in which games are played in about three hours. In contrast to the leisurely, ritualistic five-day matches played by men in white, this form of cricket is a loud and powerful display of batsmanship geared to grab eyeballs on prime-time television, and sponsored by Adidas (and Nike and Reebok).
“Less time, more fun,” was the verdict of Harshal Kini, 20, at a Sunday night match pitting the Mumbai Indians against the Deccan Chargers of Hyderabad.
Renuka Tahiliani, 49, seated in the front row with her husband and their 14-year-old son, said, “It’s too hot to sit out here for the whole day.”
Cricket is only part of the spectacle. The 10 matches played so far have featured laser shows and stilt walkers, American-style cheerleaders and plenty of Bollywood stars blowing kisses from the stands.
It is a coming of age for both the business of sports in India and for Indian billionaires, who for the first time are staking their prestige on sports teams. The league’s most expensive franchise, at nearly $111.9 million, is the Mumbai Indians, fittingly owned by India’s richest man, Mukesh Ambani. The flamboyant liquor baron Vijay Mallya picked up the Bangalore-based Royal Challengers for $111.6 million, and the actor Shah Rukh Khan is backing the Kolkata Knight Riders for $75.09 million.
“It is cricket’s version of tabloid journalism,” said Rajdeep Sardesai, the son of a professional Indian cricketer and editor in chief of CNN-IBN, a news channel. “It is much more now about glamour and entertainment than about what happens between the players.” (He said he was not yet a fan, but said it was the only kind of cricket that appealed to his son, now 14.)
By upending convention, the league has also invited its share of controversy. Cheerleaders, including the squad belonging to the N.F.L.’s Washington Redskins, whom Mallya imported for the opening match in mid-April, have been greeted by a mixture of enthusiasm and lewd comments from the stands, and indignation from politicians who have found them obscene and in contravention of Indian tradition.
“We live in India, where womanhood is worshipped,” said Siddharam Mehetre, a politician in Maharashtra state, where Mumbai and Navi Mumbai are located, according to the Press Trust of India.
Local police were on the lookout here at Sunday’s match to see if obscenity laws were being violated. But by then the cheerleaders for the Deccan Chargers, who had worn tartan miniskirts, fishnet stockings and halter tops, were covered in short-sleeve T-shirts and black tights. On the steamy coast of the Arabian Sea, the cheerleaders, who had come from Australia, were drenched in sweat.
Later in the week, the Delhi Daredevils took their cheerleaders away altogether.
Another embarrassment arose after Harbhajan Singh, the acting captain of the Mumbai Indians and notorious bad boy of Indian cricket, was accused of having slapped S. Sreesanth of Kings XI, who immediately began bawling.The league swiftly fined and barred Singh.
One of the most striking things about the new cricket is how patriotism has been scrubbed out of a game.
“Cricket has been the major vehicle for Indian nationalism, of a special and aggressive kind,” said Ramachandra Guha, a historian and cricket writer.
At a recent night match here, the Mumbai Indians were defeated by the Deccan Chargers, but fans in the packed 55,000-seat stadium kept cheering — for the away team, no less, and its star batsman, Adam Gilchrist, an Australian.
“We still don’t have our loyalties set yet,” said Dhwani Karania, a 21-year-old college student. “Whoever wins, it’s O.K.”
Karim Premji, walking out of a corporate box with his wife and three children, said: “I just appreciate good cricket. Gilchrist was hitting good sixes. I was happy for him and his team.”
Sneha Jadav, 20, was riled by the whole concept. “Brothers — brothers are fighting,” she said. “They have divided our team.”
Jadav said she preferred the cricket that she had grown up watching, where nations play each other. India versus Pakistan, she said, is her favorite.
Indeed, the usual passions of cricket have been turned on their head. A few months before Singh was punished, the entire Indian cricket establishment rallied around him when he was accused during a match of lobbing a racial slur at Andrew Symonds, a member of the Australian national team who is black. Symonds plays for the Deccan Chargers and is one of the highest-paid players in the league.
The real challenge, Guha said, would come if the Indian Premier League cut into the international cricket calendar, forcing established tournaments to rearrange their schedules.
“Whether you’re now going to see cricket as just entertainment, it’s premature to say,” he said.
The Indian Premier League was started by the Board of Control for Cricket in India, cricket’s governing body in India, just as a rival effort, the Indian Cricket League, floated a similar international league.
So far, the television ratings have surprised even the Premier League’s biggest boosters, who staked their bet on its format, prime-time slot and the star cachet to draw audiences beyond the fans of traditional cricket.
“It’s a marriage between two major entertainment properties — cricket and Bollywood,” said Lalit Modi, the chairman of the Premier League, who added that another necessary factor was deep pockets to back each franchise.
“The key is fan following,” Modi said. “Passion for the team — that will be critical in determining whether it succeeds or not.”
Will the Premier League make money for the tycoons who have staked their wealth and prestige on the line? Certainly, each team will make money — television rights were sold to Sony’s Indian arm for $1.026 billion — but the real profits will pour in if teams perform well and attract more corporate sponsorships.
At the game between the Mumbai Indians and the Deccan Chargers, Ambani was in his box with his wife, Nita, and their three children. The whole family wore blue, the team color. Nita Ambani had slapped a Mumbai Indians sticker on the back of her flowing chiffon salwar kameez. The team logo, she pointed out, was a ball of fire, a divine weapon known as a chakra lifted from Hindu mythology.
No matter. Mumbai was losing badly. The Ambanis’ children looked ashen. “I have to keep reminding myself, it’s only a game,” she said.
Mukesh Ambani sounded upbeat. “Wait until the Australians go home,” he whispered.
The top Australian players were scheduled to return home soon to play for their national team in an international tournament,
“Those who win after losing really win,” Ambani said.
Two days later, Ambani’s Mumbai Indians beat Khan’s Kolkata Knight Riders. The Indian news media dubbed it the billionaire versus Bollywood.
NAVI MUMBAI, India — With an infusion of bling, Bollywood and go-go boots, a new cricket league is trying to spin off India’s colonial inheritance into a money-making symbol of a brash, emerging nation.
Whether the Indian Premier League, as it is called, will ultimately succeed in cultivating a loyal fan base at home, challenging cricket’s world order and globalizing the game of the former British Empire remains to be seen. Already, it has upturned many conventions of an erstwhile gentleman’s game, drawn corporate sponsorships from multinational firms selling everything from cellphones to real estate and, with salaries comparable to the English Premier League of soccer, lured some of the top names in international cricket, including players from India’s traditional rivals, like Australia and even Pakistan.
The game itself is a fast and furious brand of cricket called Twenty20 — referring to 20 overs per team — in which games are played in about three hours. In contrast to the leisurely, ritualistic five-day matches played by men in white, this form of cricket is a loud and powerful display of batsmanship geared to grab eyeballs on prime-time television, and sponsored by Adidas (and Nike and Reebok).
“Less time, more fun,” was the verdict of Harshal Kini, 20, at a Sunday night match pitting the Mumbai Indians against the Deccan Chargers of Hyderabad.
Renuka Tahiliani, 49, seated in the front row with her husband and their 14-year-old son, said, “It’s too hot to sit out here for the whole day.”
Cricket is only part of the spectacle. The 10 matches played so far have featured laser shows and stilt walkers, American-style cheerleaders and plenty of Bollywood stars blowing kisses from the stands.
It is a coming of age for both the business of sports in India and for Indian billionaires, who for the first time are staking their prestige on sports teams. The league’s most expensive franchise, at nearly $111.9 million, is the Mumbai Indians, fittingly owned by India’s richest man, Mukesh Ambani. The flamboyant liquor baron Vijay Mallya picked up the Bangalore-based Royal Challengers for $111.6 million, and the actor Shah Rukh Khan is backing the Kolkata Knight Riders for $75.09 million.
“It is cricket’s version of tabloid journalism,” said Rajdeep Sardesai, the son of a professional Indian cricketer and editor in chief of CNN-IBN, a news channel. “It is much more now about glamour and entertainment than about what happens between the players.” (He said he was not yet a fan, but said it was the only kind of cricket that appealed to his son, now 14.)
By upending convention, the league has also invited its share of controversy. Cheerleaders, including the squad belonging to the N.F.L.’s Washington Redskins, whom Mallya imported for the opening match in mid-April, have been greeted by a mixture of enthusiasm and lewd comments from the stands, and indignation from politicians who have found them obscene and in contravention of Indian tradition.
“We live in India, where womanhood is worshipped,” said Siddharam Mehetre, a politician in Maharashtra state, where Mumbai and Navi Mumbai are located, according to the Press Trust of India.
Local police were on the lookout here at Sunday’s match to see if obscenity laws were being violated. But by then the cheerleaders for the Deccan Chargers, who had worn tartan miniskirts, fishnet stockings and halter tops, were covered in short-sleeve T-shirts and black tights. On the steamy coast of the Arabian Sea, the cheerleaders, who had come from Australia, were drenched in sweat.
Later in the week, the Delhi Daredevils took their cheerleaders away altogether.
Another embarrassment arose after Harbhajan Singh, the acting captain of the Mumbai Indians and notorious bad boy of Indian cricket, was accused of having slapped S. Sreesanth of Kings XI, who immediately began bawling.The league swiftly fined and barred Singh.
One of the most striking things about the new cricket is how patriotism has been scrubbed out of a game.
“Cricket has been the major vehicle for Indian nationalism, of a special and aggressive kind,” said Ramachandra Guha, a historian and cricket writer.
At a recent night match here, the Mumbai Indians were defeated by the Deccan Chargers, but fans in the packed 55,000-seat stadium kept cheering — for the away team, no less, and its star batsman, Adam Gilchrist, an Australian.
“We still don’t have our loyalties set yet,” said Dhwani Karania, a 21-year-old college student. “Whoever wins, it’s O.K.”
Karim Premji, walking out of a corporate box with his wife and three children, said: “I just appreciate good cricket. Gilchrist was hitting good sixes. I was happy for him and his team.”
Sneha Jadav, 20, was riled by the whole concept. “Brothers — brothers are fighting,” she said. “They have divided our team.”
Jadav said she preferred the cricket that she had grown up watching, where nations play each other. India versus Pakistan, she said, is her favorite.
Indeed, the usual passions of cricket have been turned on their head. A few months before Singh was punished, the entire Indian cricket establishment rallied around him when he was accused during a match of lobbing a racial slur at Andrew Symonds, a member of the Australian national team who is black. Symonds plays for the Deccan Chargers and is one of the highest-paid players in the league.
The real challenge, Guha said, would come if the Indian Premier League cut into the international cricket calendar, forcing established tournaments to rearrange their schedules.
“Whether you’re now going to see cricket as just entertainment, it’s premature to say,” he said.
The Indian Premier League was started by the Board of Control for Cricket in India, cricket’s governing body in India, just as a rival effort, the Indian Cricket League, floated a similar international league.
So far, the television ratings have surprised even the Premier League’s biggest boosters, who staked their bet on its format, prime-time slot and the star cachet to draw audiences beyond the fans of traditional cricket.
“It’s a marriage between two major entertainment properties — cricket and Bollywood,” said Lalit Modi, the chairman of the Premier League, who added that another necessary factor was deep pockets to back each franchise.
“The key is fan following,” Modi said. “Passion for the team — that will be critical in determining whether it succeeds or not.”
Will the Premier League make money for the tycoons who have staked their wealth and prestige on the line? Certainly, each team will make money — television rights were sold to Sony’s Indian arm for $1.026 billion — but the real profits will pour in if teams perform well and attract more corporate sponsorships.
At the game between the Mumbai Indians and the Deccan Chargers, Ambani was in his box with his wife, Nita, and their three children. The whole family wore blue, the team color. Nita Ambani had slapped a Mumbai Indians sticker on the back of her flowing chiffon salwar kameez. The team logo, she pointed out, was a ball of fire, a divine weapon known as a chakra lifted from Hindu mythology.
No matter. Mumbai was losing badly. The Ambanis’ children looked ashen. “I have to keep reminding myself, it’s only a game,” she said.
Mukesh Ambani sounded upbeat. “Wait until the Australians go home,” he whispered.
The top Australian players were scheduled to return home soon to play for their national team in an international tournament,
“Those who win after losing really win,” Ambani said.
Two days later, Ambani’s Mumbai Indians beat Khan’s Kolkata Knight Riders. The Indian news media dubbed it the billionaire versus Bollywood.
Monday, May 5, 2008
Sunday, May 4, 2008
INFlation Pain in the Ass for UPA goverment ..........
The Indian coalition government led by Sonia Gandhi, the Congress party leader, and Manmohan Singh, the prime minister, is watching the return of inflation to India with understandable alarm.
Political analyst Ashutosh Varshney remarked recently that inflation was the only economic statistic with any bearing on Indian elections. Economic growth impresses foreign investors but not Indian peasants, as the previous government led by the Bharatiya Janata party discovered when its “India shining” slogan failed to convince voters in 2004.
This time it is the Congress party that faces the wrath of the electorate. Another election is due in the next year and inflation has risen to 7.6 per cent, well above the Reserve Bank of India’s “comfort level” of 5 per cent. Rising food and fuel prices threaten to reverse the trend of poverty reduction that has benefited tens of millions of south Asians in the past few years. High inflation is likely to undermine what public support there is for the further economic liberalisation essential to India’s future prosperity.
Like China, where inflation is also politically sensitive, India is doing what it can to suppress the problem, although – unlike in China – its task is made harder by a weakening currency. Last week the RBI raised the banking sector’s cash reserve ratio by another 25 basis points to 8.25 per cent, the third increase in as many weeks and the thirteenth since mid-2004. The central bank might yet be forced to raise its benchmark interest rate, which has been held at a six-year high of 7.75 per cent for over a year.
Indian monetary tightening and credit restrictions will not have much impact in the current circumstances. Inflation is driven more by constraints on supply and by rising international prices for food and fuel than by surging local demand. Mr Singh admitted as much when he accused the developed world of failing to do enough to counter rising food and energy prices.
The solutions for India therefore lie not in short-term monetary policy but in longer-term efforts to promote investment in agricultural productivity, energy efficiency and the country’s woefully inadequate transport infrastructure.
Yet Indian governments, often with an eye on the next election, have a poor record of implementing long-term policies that could benefit the economy and perhaps redound to the credit of administrations other than their own. This government, although it has presided over three years of high economic growth averaging 8.6 per cent, is unfortunately no exception.
Political analyst Ashutosh Varshney remarked recently that inflation was the only economic statistic with any bearing on Indian elections. Economic growth impresses foreign investors but not Indian peasants, as the previous government led by the Bharatiya Janata party discovered when its “India shining” slogan failed to convince voters in 2004.
This time it is the Congress party that faces the wrath of the electorate. Another election is due in the next year and inflation has risen to 7.6 per cent, well above the Reserve Bank of India’s “comfort level” of 5 per cent. Rising food and fuel prices threaten to reverse the trend of poverty reduction that has benefited tens of millions of south Asians in the past few years. High inflation is likely to undermine what public support there is for the further economic liberalisation essential to India’s future prosperity.
Like China, where inflation is also politically sensitive, India is doing what it can to suppress the problem, although – unlike in China – its task is made harder by a weakening currency. Last week the RBI raised the banking sector’s cash reserve ratio by another 25 basis points to 8.25 per cent, the third increase in as many weeks and the thirteenth since mid-2004. The central bank might yet be forced to raise its benchmark interest rate, which has been held at a six-year high of 7.75 per cent for over a year.
Indian monetary tightening and credit restrictions will not have much impact in the current circumstances. Inflation is driven more by constraints on supply and by rising international prices for food and fuel than by surging local demand. Mr Singh admitted as much when he accused the developed world of failing to do enough to counter rising food and energy prices.
The solutions for India therefore lie not in short-term monetary policy but in longer-term efforts to promote investment in agricultural productivity, energy efficiency and the country’s woefully inadequate transport infrastructure.
Yet Indian governments, often with an eye on the next election, have a poor record of implementing long-term policies that could benefit the economy and perhaps redound to the credit of administrations other than their own. This government, although it has presided over three years of high economic growth averaging 8.6 per cent, is unfortunately no exception.
Saturday, May 3, 2008
Rising food price in South asia
I usually go to eat Nepali food in the Week end . SO I went to get some dall ,bhaat ,mashu and Achar in a local Nepali restaurant .Only one in town ..Food was delicious . After i was done ,I went to pay . Owner said that he has increased the price for the food because of rising food price globally.It made me think about how people are affording rice in South Asia .especially those people who earn ,less than a dollar a day ??
1)In india left and BJP were opposing and asking to stop trading in future commoties .India emposed a ban in rice export .
2)President bush in his recent statement said " Prosperity in countries like India is "good" but it triggers increased demand for "better nutrition" which in turn leads to higher food prices,"
Its true that dispobale income and population of India is growing , people are consuming food and services more .Which is one of the main reson for food price to go up butwe need to think about the poor people who still lives in India earing less than a dollar or People in rest of the south asia ,where per capita income is far less than in India.
Nobel laureate Dr. Borlaug wrote an article in wall street journal called "Africa Does Not Have to Starve"
I think this is what ...which is need to be done in South Asia ...
Rapidly increasing world food prices have already led to political upheaval in poor countries. The crisis threatens to tear apart fragile states and become a humanitarian calamity unless countries get their agricultural systems moving.
Now, with conference committee negotiations over the final shape of the Farm Bill at a critical stage, Congress needs to change the foreign food-aid program and help avert this calamity. The Bush administration has urged, rightly, that the U.S. Agency for International Development (USAID) be allowed to buy food locally, particularly in Africa, instead of only American-grown food.
The U.S. government currently buys grain and other foodstuffs from American farmers for free distribution in poor countries where a disaster has occurred, or sells it in food-deficit nations to generate funds for food-security development programs. Under the law, the food must be shipped almost exclusively on American vessels.
Ocean shipping costs are 20%-30% of the food-aid budget; and it takes on average over four months to order, buy, ship, offload and transport food by ground. In a famine, people can die waiting for the food to arrive.
Other problems arise. One food shipment sunk in a storm off the coast of Asia in 1996. In 2006, two food shipments were hijacked by pirates off the coast of Somalia. Hurricane Katrina nearly shut down much of the foreign food-aid delivery system in the Mississippi Delta.
Purchasing food locally simplifies the process, cuts down the time delay in delivery, reduces the logistical risks, and saves transport costs. These savings can be used to buy more food. At the same time, higher prices will probably reduce the purchasing power of USAID's food-aid programs by at least $200 million this year. While President George W. Bush has released food aid from a reserve fund, it is not sufficient.
Direct food purchases in local countries could also help improve their agriculture. In Africa, for example, two-thirds of the 200 million people who suffer hunger are small-scale farmers, primarily engaged in subsistence production because they find too few buyers for any larger harvest.
In Ethiopia in 2003, for example, widespread drought occurred in the low-lying areas of the country and the very dry northern highlands. Some 12 million to 15 million people were at risk of hunger and starvation. But in the central and southern highlands of Ethiopia, farmers were producing a bumper crop of corn and other cereals. Yet with no market for the locally produced grains, prices collapsed.
If USAID could have purchased and helped distribute some of this excess, up to 500,000 small farmers would have benefited, as well as the millions at risk of starvation. But its only option was to import surplus food grain from the U.S.
Seventy-five percent of USAID food aid goes to Africa, the most food-deprived region of the world. More robust agricultural growth there will help in a period of rising food prices. More prosperous African nations will become better trading partners, expanding imports of U.S. agricultural commodities, machinery and technology. Any near-term losses will lead to longer-term gains for the American economy.
What we are advocating is already in place. The World Food Program, the food-aid agency of the United Nations, has been buying food in African agricultural markets successfully for years using European aid funding, while Canada announced this week they were moving to 100% untied food aid.
The Bush administration's reform would have little or no impact on U.S. grain markets. President Bush urged action on his reform before the General Assembly of the U.N. and in his State of the Union address. Even if this authority were exercised fully, it would equal 0.3% of U.S. agricultural exports and a much smaller fraction of U.S. agricultural production.
Congress should amend the Farm Bill to allow up to 25% of the appropriation for USAID's food-aid program to be used to purchase food locally, when the program's administrator deems it appropriate to do so. A great many people's lives depend on this reform.
Dr. Borlaug won the Nobel Peace Prize in 1970. Mr. Natsios, former administrator of USAID, teaches at Georgetown University.
NEPAL’S ECONOMY IN CAPSULE
This article was first printed in New Business age...This is an excellent article to read to know the present economics senario of the country ..
By Madhukar SJB Rana
Since Fiscal Year 2001/02 Nepal’s economic performance has been very disappointing as compared to 1991/92-2000/01. During this period GDP growth rate dropped from an annual average of 4.8 percent to 2.8 percent, which is just a little above the annual population growth of around 2.3 percent. Such decline by 58.3 percent is significant because all the gains from the donor-driven structural adjustment programmes, started in 1982, have possibly reversed. This implies that future reforms to liberalize the economy would have to be even more radical should the government wish to jumpstart economic growth to catch up with lost opportunities. The stagnancy in average per capita income has, undoubtedly, added to the chronic economic hardships faced by households of the common person, especially the urban poor.
The Gini coefficient, which measures income inequality, is 0.41 in Nepal and is one of the highest in the world. This indicator does not inform on the prevalent regional, ethnic and caste inequalities. It appears that inequalities grew even more so between regions, castes and ethnicities, since 2001, as most growth was centred in and around a few urban areas like Kathmandu, Pokhara, Birgunj and Biratanagar. There are indications that in the last decade Kathmandu witnessed comparable growth rates to China’s at over 10 per cent per annum.
Most of the fall in GDP is accounted for by the miserable performance of the non-agricultural sector. To say the least, sector perspective planning in agriculture can be described as a ‘national disaster’ due mainly to the deteriorating investment climate on account of the heightened civil war, on the one hand and persistent political instability following Jana Andolan II, on the other.
Nepal is yet to be blessed by a ‘peace dividend’. On the contrary, the political and social instability, symbolised by the territorial bandhs in Terai and elsewhere and frequent labour strikes resulted in the disruption to the free flow of goods and services causing cost push inflation. These factors also led to poor performance of exports and decline in the capital expenditure of the government. Ironically, the opportunity cost of the ‘peace dividend’ might be more than the civil war as more GDP setbacks have occurred after the peace.
Total exports during 2001/02 to 2006/07 increased by 9.9 percent per annum compared to the growth of 24.3 percent in the 1990s. Similarly, import growth is estimated to be about 15.9 percent in the review period, compared to 19.9 percent in the 1990s. Increasing imports and decreasing exports have resulted in higher trade deficit. Export-import ratio as a percentage of GDP declined from 43.7 percent in 2002 to 32.4 percent in 2007.
Negative annual average growth of export and import underscores the underlying weakness in the national economy with declining comparative advantages and capacity to import. This also indicates that the aggregate output is lying well below the capacity or production frontier. Unemployment is bound to shoot up in such a scenario.
Nevertheless, it is remarkable that the fiscal deficit was managed at 3.5 percent of GDP in 2005. However, the deficit has started increasing after 2005, chiefly because of increase in non-budgetary expenses related to subsidies on petroleum products, rehabilitation of the Maoists and election expenses, which kept on being postponed three times.
Resource gap, measured by saving-investment differences, increased from 11 percent in 2002 to 18 percent in 2006. The average annual inflation measured by the national consumer price index recorded a rise of 5.1 percent during 2001/02-2006/07. However, it increased to eight percent in 2005/06 and remained close to seven percent in 2006/07 mainly because of rise in petroleum product prices. Further rise in inflation will cause a real strain on the body politic in this critical period of transition. More inflation is to be expected since rising food prices, commodity and energy prices has been a global phenomena.
However, the current accounts and balance of payments positions remain strong. Current account surplus which stood at NRs. 18.2 billion in 2001/02 is estimated to be at NRs 8.2 billion in 2006/07. The surplus in the current account has been observed primarily due to the high growth in the inflow of remittances which is over $ 1.5 billion as per official statistics but could be nearly double of that if one can gauge the inflows through the hundi market and individuals.
Remittance has helped tremendously to keep the balance of payments favourable. We learn from the Finance Minister’s mid-term review of the economy (March 5, 2008) that it has kept growing to the tune of 18.5 percent from the same period last year. Thus, the balance of payments position has been in surplus since 2002/03 after a deficit of NRs 3.3 billion in 2001/02.
In 2006/07, the balance of payments surplus is estimated to be NRs 9.0 billion. However, the rising value of NRs against US dollar is leading to increasing trade deficits and such an artificial forex rate with respect to the dollar could have an adverse impact on remittance earnings as NRNs choose to keep their savings abroad.
If remittance flows should slow down, such a scenario will adversely affect the foreign exchange reserves causing pressures on the NRS-IRS parity since it was the reserves in dollars that helped keep that forex rate fixed in terms of Indian rupees. Should pressures on forex appear, the long standing macroeconomic stability, since mid-1980s, would be under severe test.
Immediate Future Scenario
The immediate future economic scenario is pretty bleak as law and order situation continues to deteriorate. It is expected that a new constitution defining and demarcating the nature and scope of the polity of the new Nepal is not likely to be in place before the end of 2010 or early 2011. Given the weak government at the centre and the continual erosion of its power while the existing bureaucratic institutions remaining in limbo one could reasonably expect the investment climate to deteriorate further.
It looks even bleaker with the power outage for eight-hour a day and the queues for kerosene, petrol and diesel that could absorb four to six hours of productive time. One could expect further curtailment of non-agricultural output, especially in manufacturing industries.
The inability for successive governments to respond to market-driven forces in pricing petroleum products has meant that the government has to pick up the tab of around Rs. 9 billion to meet the expenses of the Nepal Oil Corporation causing further fiscal imbalances. With oil prices now hovering above $ 100 per barrel— some expect it to rise further, say up to $ 149 per barrel — the government will be forced to bring forth a supplementary budget sooner than later as the treasury has no extra resources to draw on.
The government is also expected to float bonds at seven percent to meet its fiscal deficit, which means that there will be a liquidity crunch in the economy as bank deposits will switch to bonds and treasury bills thus leading to rise in interest rate and fall in investment by the private sector.
In the immediate future, one does not see performance in the agriculture sector improving with the virtual absence of government agencies in the rural areas. Without massive rural electrification, rural irrigation, rural road building and the spread of improved seeds, the desired transformation in agriculture looks unlikely.
The scale of the challenge requires mass mobilization of the people in all nooks and corners of Nepal to actively participate in local development which, alas, has been a development phenomenon in deep void since 2002. No political representation to boot exists in the local bodies. Furthermore, there are no signs of this void being filled— ideally through local elections.
The sad reality is that expenditure in agriculture declined from annual two percent of GDP in the ninth Plan period to 1.4 percent in the 10th Plan period. Budget allocation in irrigation is declining in real terms and the performance of extension service is not satisfactory.
One will not expect to see a spurt in budgetary expenditures for the agriculture sector given the fact that the Ministry of Finance has a severe liquidity crisis faced with unprecedented rise in regular expenditure that is growing by 40 percent compared with revenue growth of around 26 percent! More demands are likely to be set upon it post-CA elections as populist policies scale new heights amidst the newly found national legislature that has risen from 205-member to over 601-member.
Tourists arrivals increased by 6.5 percent per annum in the 1990s only to decline by 1.1 percent per annum between 2000 and 2006. It has started to pick up since 2006 especially after the peace agreement was signed between the Maoist rebels and the government of Nepal. There are high hopes that it will gain further momentum. However, the reality is that tourism is a very volatile service industry which can take a new downturn if there is a global economic recession or regional wars or breakdown to the peace process in Nepal.
Thus, well designed innovations are needed to attract more tourists from the region. Much would depend on whether Nepal allows FDI in the real estate, civil aviation, hotel, and trekking sub sectors. Similarly, a new policy of ‘resident tourists’ may be tried to attract people to come and make Nepal their second home as is the case in Malaysia, Thailand, Sri Lanka, Mexico etc. Much more than simply a paltry three percent of GDP should be obtained from this sector with such immense potential. Nepal’s per capita tourist earning is the lowest in South Asia.
Experiences of other countries show that the economic and social costs of political transition and transformation can be very high in the post-conflict situation, particularly with low probability of strong, visionary leadership to be seen in the horizon. Thus, adverse impact on investment and growth is expected as political instability will compound in a polity of full proportional representation. In such an unstable environment, transaction costs of doing business will soar.
Nepal is now in the vortex of the democracy-growth dilemma. Without economic growth no democracy can be strong, stable and sustained. Possibilities abound for regression where good governance is not grounded on accountability, transparency and competition. These three acid tests of good governance are meeting tough times with the political parties in dire need to find new space and meaning in the emergent federal Nepal not to mention finances to keep party workers happy.
The tendency has been, so far, to weal and deal and resort to cartelization of the political and economic spaces to maximize the spoils of power with no checks and balance from the judiciary, bureaucracy and the civil society.
Unity-in-diversity, henceforth, has to be redefined with the rejection of the traditional institutions in the quest for inclusion and social justice. Unguided pluralism in the wake of a fragile, non-visionary leadership, driven by dynastic party politics, will add to the tension in society as all castes and creeds, and races and regions, clamour for what is called ‘horizontal equity’. That too is beginning to take root just when the macro economy is glaringly vulnerable to shocks from outside that are beyond the control of the government. .
Silver Lining
Every cloud has a silver lining. So the incidence of poverty declined from 42 percent in 1996 to 31 percent in 2004. Net enrolment of girls in primary school increased from 57 percent to 87 and under five mortality declined from 139 to 61 during the same period. These are solid achievements despite the civil war
Urban poverty stands at only 9.5 percent which can be completely eradicated with sound municipal governments empowered with sound devolution of development responsibility to work in tandem with new NGOs like Rotary Nepal, Lions Club Nepal as well as other NGOs and INGOs to be given the chance to enter the process of social mobilization of the urban poor.
Steady flow of remittances, wide ranging devolution activities and community ownership and management in a number of areas including small scale rural development activities, school management, health system, drinking water and increased motivation to educational achievements have provided strong stimulus to the socio-economic activities of the rural areas. These have been the reasons for whatever success achieved since 2001. Nepal must build on them with maximum devolution of authority and responsibility to local communities.
The above positive scenario reveals that an increased level of devolution, delegation, decentralization and social mobilization of the poor are critical. Increased resources are required by the rural areas. A vital need is this: stronger people’s ownership and participation in development activities. Local communities at the village levels must take leadership of the development process pursuing models that befit their own capacities and cultures and not blindly pursue models made in donor capitals or Singha Durbar. Re-discovery and revival of the traditional voluntary organization (TVOs) must be at the core of local community development.
Now is the time to strengthen critical central bureaucratic institution to make them function as technocracies even as the shape and form of federal Nepal are being worked through. We should introduce the concept of a ‘managerial civil service’. In doing so we can learn much from the experiences of Malaysia as to how they modernized their bureaucracy so rapidly in the 1980s.
Finally, as remittances will continue to be the salvation for our economy it is necessary for Nepal to be engaged in skill development for global markets. More qualified can obtain jobs overseas. Higher quality of vocational and technical skill help meet both national and international manpower demands.
This necessitates that we give top most priority to manpower planning to meet the most difficult of all national planning challenges; namely, how to create employment for the 300,000 youth entering the job market each year?
Having youth endowed with the right skills is one positive approach to meeting the challenge. Youth unemployment, alienation and angst are at the core of the conflict and violence in Nepal. A National Youth Policy and Action Plan is needed to allow for the fostering of national pride and patriotism and for leadership mobilization and development in new Nepal.
(The author is former finance minister)
By Madhukar SJB Rana
Since Fiscal Year 2001/02 Nepal’s economic performance has been very disappointing as compared to 1991/92-2000/01. During this period GDP growth rate dropped from an annual average of 4.8 percent to 2.8 percent, which is just a little above the annual population growth of around 2.3 percent. Such decline by 58.3 percent is significant because all the gains from the donor-driven structural adjustment programmes, started in 1982, have possibly reversed. This implies that future reforms to liberalize the economy would have to be even more radical should the government wish to jumpstart economic growth to catch up with lost opportunities. The stagnancy in average per capita income has, undoubtedly, added to the chronic economic hardships faced by households of the common person, especially the urban poor.
The Gini coefficient, which measures income inequality, is 0.41 in Nepal and is one of the highest in the world. This indicator does not inform on the prevalent regional, ethnic and caste inequalities. It appears that inequalities grew even more so between regions, castes and ethnicities, since 2001, as most growth was centred in and around a few urban areas like Kathmandu, Pokhara, Birgunj and Biratanagar. There are indications that in the last decade Kathmandu witnessed comparable growth rates to China’s at over 10 per cent per annum.
Most of the fall in GDP is accounted for by the miserable performance of the non-agricultural sector. To say the least, sector perspective planning in agriculture can be described as a ‘national disaster’ due mainly to the deteriorating investment climate on account of the heightened civil war, on the one hand and persistent political instability following Jana Andolan II, on the other.
Nepal is yet to be blessed by a ‘peace dividend’. On the contrary, the political and social instability, symbolised by the territorial bandhs in Terai and elsewhere and frequent labour strikes resulted in the disruption to the free flow of goods and services causing cost push inflation. These factors also led to poor performance of exports and decline in the capital expenditure of the government. Ironically, the opportunity cost of the ‘peace dividend’ might be more than the civil war as more GDP setbacks have occurred after the peace.
Total exports during 2001/02 to 2006/07 increased by 9.9 percent per annum compared to the growth of 24.3 percent in the 1990s. Similarly, import growth is estimated to be about 15.9 percent in the review period, compared to 19.9 percent in the 1990s. Increasing imports and decreasing exports have resulted in higher trade deficit. Export-import ratio as a percentage of GDP declined from 43.7 percent in 2002 to 32.4 percent in 2007.
Negative annual average growth of export and import underscores the underlying weakness in the national economy with declining comparative advantages and capacity to import. This also indicates that the aggregate output is lying well below the capacity or production frontier. Unemployment is bound to shoot up in such a scenario.
Nevertheless, it is remarkable that the fiscal deficit was managed at 3.5 percent of GDP in 2005. However, the deficit has started increasing after 2005, chiefly because of increase in non-budgetary expenses related to subsidies on petroleum products, rehabilitation of the Maoists and election expenses, which kept on being postponed three times.
Resource gap, measured by saving-investment differences, increased from 11 percent in 2002 to 18 percent in 2006. The average annual inflation measured by the national consumer price index recorded a rise of 5.1 percent during 2001/02-2006/07. However, it increased to eight percent in 2005/06 and remained close to seven percent in 2006/07 mainly because of rise in petroleum product prices. Further rise in inflation will cause a real strain on the body politic in this critical period of transition. More inflation is to be expected since rising food prices, commodity and energy prices has been a global phenomena.
However, the current accounts and balance of payments positions remain strong. Current account surplus which stood at NRs. 18.2 billion in 2001/02 is estimated to be at NRs 8.2 billion in 2006/07. The surplus in the current account has been observed primarily due to the high growth in the inflow of remittances which is over $ 1.5 billion as per official statistics but could be nearly double of that if one can gauge the inflows through the hundi market and individuals.
Remittance has helped tremendously to keep the balance of payments favourable. We learn from the Finance Minister’s mid-term review of the economy (March 5, 2008) that it has kept growing to the tune of 18.5 percent from the same period last year. Thus, the balance of payments position has been in surplus since 2002/03 after a deficit of NRs 3.3 billion in 2001/02.
In 2006/07, the balance of payments surplus is estimated to be NRs 9.0 billion. However, the rising value of NRs against US dollar is leading to increasing trade deficits and such an artificial forex rate with respect to the dollar could have an adverse impact on remittance earnings as NRNs choose to keep their savings abroad.
If remittance flows should slow down, such a scenario will adversely affect the foreign exchange reserves causing pressures on the NRS-IRS parity since it was the reserves in dollars that helped keep that forex rate fixed in terms of Indian rupees. Should pressures on forex appear, the long standing macroeconomic stability, since mid-1980s, would be under severe test.
Immediate Future Scenario
The immediate future economic scenario is pretty bleak as law and order situation continues to deteriorate. It is expected that a new constitution defining and demarcating the nature and scope of the polity of the new Nepal is not likely to be in place before the end of 2010 or early 2011. Given the weak government at the centre and the continual erosion of its power while the existing bureaucratic institutions remaining in limbo one could reasonably expect the investment climate to deteriorate further.
It looks even bleaker with the power outage for eight-hour a day and the queues for kerosene, petrol and diesel that could absorb four to six hours of productive time. One could expect further curtailment of non-agricultural output, especially in manufacturing industries.
The inability for successive governments to respond to market-driven forces in pricing petroleum products has meant that the government has to pick up the tab of around Rs. 9 billion to meet the expenses of the Nepal Oil Corporation causing further fiscal imbalances. With oil prices now hovering above $ 100 per barrel— some expect it to rise further, say up to $ 149 per barrel — the government will be forced to bring forth a supplementary budget sooner than later as the treasury has no extra resources to draw on.
The government is also expected to float bonds at seven percent to meet its fiscal deficit, which means that there will be a liquidity crunch in the economy as bank deposits will switch to bonds and treasury bills thus leading to rise in interest rate and fall in investment by the private sector.
In the immediate future, one does not see performance in the agriculture sector improving with the virtual absence of government agencies in the rural areas. Without massive rural electrification, rural irrigation, rural road building and the spread of improved seeds, the desired transformation in agriculture looks unlikely.
The scale of the challenge requires mass mobilization of the people in all nooks and corners of Nepal to actively participate in local development which, alas, has been a development phenomenon in deep void since 2002. No political representation to boot exists in the local bodies. Furthermore, there are no signs of this void being filled— ideally through local elections.
The sad reality is that expenditure in agriculture declined from annual two percent of GDP in the ninth Plan period to 1.4 percent in the 10th Plan period. Budget allocation in irrigation is declining in real terms and the performance of extension service is not satisfactory.
One will not expect to see a spurt in budgetary expenditures for the agriculture sector given the fact that the Ministry of Finance has a severe liquidity crisis faced with unprecedented rise in regular expenditure that is growing by 40 percent compared with revenue growth of around 26 percent! More demands are likely to be set upon it post-CA elections as populist policies scale new heights amidst the newly found national legislature that has risen from 205-member to over 601-member.
Tourists arrivals increased by 6.5 percent per annum in the 1990s only to decline by 1.1 percent per annum between 2000 and 2006. It has started to pick up since 2006 especially after the peace agreement was signed between the Maoist rebels and the government of Nepal. There are high hopes that it will gain further momentum. However, the reality is that tourism is a very volatile service industry which can take a new downturn if there is a global economic recession or regional wars or breakdown to the peace process in Nepal.
Thus, well designed innovations are needed to attract more tourists from the region. Much would depend on whether Nepal allows FDI in the real estate, civil aviation, hotel, and trekking sub sectors. Similarly, a new policy of ‘resident tourists’ may be tried to attract people to come and make Nepal their second home as is the case in Malaysia, Thailand, Sri Lanka, Mexico etc. Much more than simply a paltry three percent of GDP should be obtained from this sector with such immense potential. Nepal’s per capita tourist earning is the lowest in South Asia.
Experiences of other countries show that the economic and social costs of political transition and transformation can be very high in the post-conflict situation, particularly with low probability of strong, visionary leadership to be seen in the horizon. Thus, adverse impact on investment and growth is expected as political instability will compound in a polity of full proportional representation. In such an unstable environment, transaction costs of doing business will soar.
Nepal is now in the vortex of the democracy-growth dilemma. Without economic growth no democracy can be strong, stable and sustained. Possibilities abound for regression where good governance is not grounded on accountability, transparency and competition. These three acid tests of good governance are meeting tough times with the political parties in dire need to find new space and meaning in the emergent federal Nepal not to mention finances to keep party workers happy.
The tendency has been, so far, to weal and deal and resort to cartelization of the political and economic spaces to maximize the spoils of power with no checks and balance from the judiciary, bureaucracy and the civil society.
Unity-in-diversity, henceforth, has to be redefined with the rejection of the traditional institutions in the quest for inclusion and social justice. Unguided pluralism in the wake of a fragile, non-visionary leadership, driven by dynastic party politics, will add to the tension in society as all castes and creeds, and races and regions, clamour for what is called ‘horizontal equity’. That too is beginning to take root just when the macro economy is glaringly vulnerable to shocks from outside that are beyond the control of the government. .
Silver Lining
Every cloud has a silver lining. So the incidence of poverty declined from 42 percent in 1996 to 31 percent in 2004. Net enrolment of girls in primary school increased from 57 percent to 87 and under five mortality declined from 139 to 61 during the same period. These are solid achievements despite the civil war
Urban poverty stands at only 9.5 percent which can be completely eradicated with sound municipal governments empowered with sound devolution of development responsibility to work in tandem with new NGOs like Rotary Nepal, Lions Club Nepal as well as other NGOs and INGOs to be given the chance to enter the process of social mobilization of the urban poor.
Steady flow of remittances, wide ranging devolution activities and community ownership and management in a number of areas including small scale rural development activities, school management, health system, drinking water and increased motivation to educational achievements have provided strong stimulus to the socio-economic activities of the rural areas. These have been the reasons for whatever success achieved since 2001. Nepal must build on them with maximum devolution of authority and responsibility to local communities.
The above positive scenario reveals that an increased level of devolution, delegation, decentralization and social mobilization of the poor are critical. Increased resources are required by the rural areas. A vital need is this: stronger people’s ownership and participation in development activities. Local communities at the village levels must take leadership of the development process pursuing models that befit their own capacities and cultures and not blindly pursue models made in donor capitals or Singha Durbar. Re-discovery and revival of the traditional voluntary organization (TVOs) must be at the core of local community development.
Now is the time to strengthen critical central bureaucratic institution to make them function as technocracies even as the shape and form of federal Nepal are being worked through. We should introduce the concept of a ‘managerial civil service’. In doing so we can learn much from the experiences of Malaysia as to how they modernized their bureaucracy so rapidly in the 1980s.
Finally, as remittances will continue to be the salvation for our economy it is necessary for Nepal to be engaged in skill development for global markets. More qualified can obtain jobs overseas. Higher quality of vocational and technical skill help meet both national and international manpower demands.
This necessitates that we give top most priority to manpower planning to meet the most difficult of all national planning challenges; namely, how to create employment for the 300,000 youth entering the job market each year?
Having youth endowed with the right skills is one positive approach to meeting the challenge. Youth unemployment, alienation and angst are at the core of the conflict and violence in Nepal. A National Youth Policy and Action Plan is needed to allow for the fostering of national pride and patriotism and for leadership mobilization and development in new Nepal.
(The author is former finance minister)
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