Nepal's Development Plans (1985 - 2019 )
1.Introduction
A plan is a set of thing or activities to operate in systematic order to achieve definite target or objectives. In other words, the process of making plans, to meet definite goods in planning. Development planning is closely related to economic activities of a nation. Therefore, it is known as economic planning. Economic planning is a mechanism for economic coordination contrasted with the market mechanism the economic plan refers to the development plan which targets to promote economic development and to achieve national goals. The concept of developing planning was first introduced in 1917 A.D. in former Soviet Union. It became very popular after the end of 1930s great depression and Second World War. The systematic development planning in Nepal was started in 2013 B.S which was for five years (2013 B.S. to 2018 B.S.). In short, economic planning may be defined as the deliberate control and direction of the economy by the state for achieving certain targets and objectives with in a schedule time.Planning can be undertaken at the national, subnational or multinational levels. Multinational plans straddle more than one country or national jurisdiction, and may include a whole regional bloc (e.g. the African Union Agenda 2063). Sub-national plans, on the other hand, refer to the development plans of provinces, localities and other decentralized bodies within a nation. The priorities and characteristics of a development plan are country-specific, and evolve over time in the same country. The priorities and institutional structures that underpin planning in underdeveloped or developing countries are likely to differ from those of advanced countries. Development plans also vary depending on their ideological basis. Planning in socialist economies is markedly different from planning in mixed economies. Overall, while access to resources, availability of skills and managerial and technical competence are important elements in the operationalization of a plan, the operational fate of a development plan often hinges on the institutional capacities of the country and its level of development.
2. Development Planning in Nepalese Context
Nepal began its move toward an open, market-oriented economy in the mid-1980s with the adoption of policies involving greater liberalization of the domestic economy and trade. Interest rates were partially deregulated and barriers to entry for joint-venture banks were lowered. Relations with the People’s Republic of China were also strengthened during these years. A trail of reforms followed in the 1990s and early 2000s, particularly to improve the financial sector, improve access to microcredit, and strengthen government institutions. These reforms included the Co-operative Act of 1991, the Development Bank Act of 1995, the Financial Intermediary Societies Act of 1998, the establishment of the Rural Self-Reliance Fund in 1990, the establishment of Grameen-like regional rural development banks in 1992, and the establishment of the Rural Microfinance Development Center in 1998 Besides, several laws were passed in the early 1990s to improve the capabilities of institutions in the power sector, such as the Hydropower Development Policy and Electricity Act of 1992. In the mid-1990s, Nepal was hit by political instability, double-digit inflation and ballooning external debt, and a current account deficit. To address the fiscal deficit, several tax reforms were passed, including introducing a value-added tax in 1997 to cover a wide range of businesses. This was followed by the new income tax and new excise tax laws, and establishment of the Large Taxpayer Office in the early to mid-2000s. Revenue generation generally shifted from customs duties to the value-added tax and other sources. Several laws were also passed to improve the banking sector, particularly the credit culture. Some of the salient laws include the Nepal Rastra Bank Act, the new Directive on Credit Information and Blacklisting in 2002, and the new Bank and Financial Institutions Ordinance in 2004. (ADB, 2009)
Other
key reforms accomplished include privatization of state enterprises, greater
flexibility of the currency, and a trade policy that has increasingly abandoned
import substitution in favor of export promotion (ADB 2002). These reforms helped pave the way toward Nepal’s
membership to the World Trade Organization in 2004. Another major institutional
reform has been adopting a planning approach to development. This began in
Nepal in 1956 with the formulation of the First Five Year Plan (FYP),
1957–1961. Nepal’s FYPs generally set the government’s overall goal and
specific targets for the medium term. While the plans have different
priorities, they usually have common objectives—to increase output and
employment; develop infrastructure; attain economic stability; promote the
industry, commerce, and international trade; establish administrative and
public service institutions to support economic development, and introduce
labor-intensive production techniques to alleviate underemployment. The social
goals of the plans were to improve health and education as well as to encourage
equitable income distribution. Ten FYPs have been implemented and the Three
Year Interim Plan (2007/08–2009/10) is currently being carried out (NPC various
years). The first four FYPs emphasized the development of infrastructure,
especially roads and electricity. Under the Fifth and Sixth FYPs, emphasis
shifted toward agriculture and industry. Poverty reduction has been explicitly
stated as a development objective since the Sixth FYP (1980–1985). Poverty
alleviation was a major objective of the Eighth FYP (1993–1997), the first
national plan formulated after the restoration of multiparty democracy in 1991.
The Ninth FYP (1998–2002) adopted poverty alleviation as its sole objective.
And the Tenth FYP was generally based on the Poverty Reduction Strategy Paper
(NPC various years). Table 1 summarizes the thrusts in the FYPs
since 1986
While
poverty reduction has always been an overriding concern in development planning
in Nepal, only since the Sixth FYP (1981–1985) has it been explicitly stated it
as a development objective. The Ninth FYP (1998–2002) adopted poverty
alleviation as its sole objective and intended to reduce poverty through (1)
sustained and broad-based growth, (2) development of rural infrastructure and
high priority social sectors, and (3) specific programs targeting the poor. The
FYPs recognize accountability, democratic systems, and market-oriented economic
structures that avow social and ecological responsibility as key factors in
sustaining growth. A comprehensive poverty reduction strategy was developed and
fully integrated into the Tenth FYP (2003–2007).
Table 1: Nepal's Development Plan and
Policy Highlights
|
Nepal's
Development Plan |
Policy Highlights |
|
Seventh
Five Year Plan (1986-1990)
|
·
During the Seventh Five Year Plan
(FYP) period (1986–1990), the Government formulated its Program for the
Fulfillment of Basic Needs, the first separate plan for reducing poverty.
This ambitious long-term program envisaged eliminating poverty in Nepal for 15
years. It targeted increasing productivity of all sectors, expanding
opportunities for productive employment, and fulfilling the minimum basic
needs of the people. However, the FYP was later abandoned during the period
of political upheaval. The Seventh FYP proposed expenditures of NRs29
billion. It encouraged private sector participation in the economy (less than
NRs 22 billion) and local government participation (NRs 2 billion) ·
Because of the political upheavals
in mid-1990, the new government postponed formulating the next plan. The July
1990 budget speech of the minister of finance, however, implied that, for the
interim, the goals of the seventh FYP were to be continued. During this
period, foreign aid was expected to play a major role in development; thus,
approximately NRs 11.8 billion, or 44.4 percent of the total budget of NRs 26.6
billion, was expected to be derived from foreign loans or grants. |
|
Eighth
Five Year Plan (1993–1997)
|
·
Poverty alleviation was a major
objective of the Eighth FYP, the first national plan formulated after the restoration
of multiparty democracy in 1991. |
|
Ninth
Five Year Plan ( 1998–2002) |
·
The Ninth FYP adopted poverty
alleviation as its sole objective and, unlike previous plans, established
long-term goals for improving development indicators in all sectors based on
the potential of each for reducing poverty. One of the goals of the Ninth FYP
was to lower the poverty incidence from 42 percent to 32 percent by the end
of the plan period in 2002, with a long-term goal of reducing this to 10 percent
within the coming 2 decades. In addition to these targets, the FYP identified
several other variables relating to “human poverty” (literacy, infant
mortality, maternal mortality, and average life expectancy at birth) as
opposed to “income poverty,” and set target levels for each of them. ·
The Ninth FYP intended to reduce
poverty through (1) sustained and broad-based growth, (2) development of
rural infrastructure and social priority sectors, and (3) specific programs
targeting the poor. In addition to integrating the “moderately poor” into the
mainstream and providing targeted assistance to extremely poor households,
the Ninth FYP included components to benefit the poor, the two most important
being maintaining macroeconomic stability and restructuring government
finances to increase the flow of resources to the social sectors |
|
Tenth
Five Year Plan (2002–2007) |
·
The Tenth FYP set a target to
reduce the poverty level to 30 percent. A 10 percent improvement in Nepal’s
human development index ranking is expected due to the improved social
indicators. In the context of development goals, 6.2 percent economic growth
was targeted. ·
The strategy of the Tenth FYP was
to implement self-employment creating, income-earning, and social protection
programs that directly benefit economically, geographically, and socially
disadvantaged groups and castes, disabled and helpless people, and people
living below the poverty line. The Ninth FYP focused on (1) high, sustainable,
and broad-based economic growth; (2) social sector and infrastructure
development; (3) targeted programs; and (4) good governance. |
|
Three
Year Interim Plan,(2007/08 2009/10) |
·
The Interim Plan’s main goal is to
lay the foundation for economic and social transformation to build a
prosperous, modern, and just Nepal by supporting the establishment of peace
and reducing unemployment, poverty, and inequality in the country. ·
The plan’s strategy includes (1)
giving special emphasis to relief, reconstruction, and reintegration; (2)
achieving employment-oriented, pro-poor, and broad-based economic growth; (3)
promoting good governance and effective service delivery; (4) increasing
investment in physical infrastructure; (5) emphasizing social development;
and (6) adopting an inclusive development process and carrying out targeted
programs. |
|
Twelfth year Plan(2010/11-2012/13) |
·
The twelfth year plan has a vision of graduating
Nepal from LDC category to a developing country status by 2022. It is
consistent with the Istanbul Plan of Action, an outcome of the UNLDC, IV meeting
held in Istanbul on 9-13 May 2011. ·
The government is targeting an
average growth rate of 6.0% over the next three years, with agriculture sector
growth and non-agriculture sector growth at 4.5% and 6.7% respectively. It is
combined with mining and quarrying, and the combined growth target is 4.7%.
Mining and quarrying itself was growing at over 5% in the last few years. ·
The government is targeting to
reduce proportion of population living below the national poverty line to 18%
from 25.2% in FY 2011 and an estimated 23.8% in FY 2013, net enrolment rate at
primary education target is 100% from 95.3% in FY 2013, and area under forest
cover is targeted at 40%, marginally up from 39.6% in FY 2013. ·
Of the total investment required to
realize the growth rate, the government is expecting the private sector to
contribute 68.7%. The government is expecting 100% private sector investment
in real estate, rent and commercial services, and construction. ·
The government is targeting average
annual revenue growth rate (FY 2013 constant price) of 13.8%. Based on the
assumption that at the end of FY 2013, revenue will be 17% of GDP, the government
is targeting revenue of 21.1 % of GDP by FY2016. |
|
Thirteen
Year Plan(2013/14-2014/15) |
·
The thirteen year plan's main goal
is to decrease the proportion of the population living below the poverty line
to 18 percent point. ·
The plan's strategy includes (1)
develop physical infrastructure (2) the increment of access uses and quality in
social services (3) promotion of good governance in public and other sectors
(4) conduction of development activities favorable to climate change (5)
Enhances access to social services and improve the use quality of those
services. |
|
Fourteen Year Plan (2016/17-2018/19) |
·
The fourteen year plan's main goal
is to reach the level of middle income country through welfare state with
social justice. ·
The plan's strategy includes (1) to
increase production by transformation of the agriculture sector and expansion
of tourism, industrial and small and medium enterprises (2) to build infrastructure
for energy, road and air transport, information and communication and rural-urban
and development of trilateral connectivity (3) to achieve high and
sustainable reform in human development by emphasizing on social development
and social security as well as social protection (4) to promote overall good
governance by economic, social and governance reform, efficient and accountable
public finance , clean, transparent and people friendly public service as
well as protecting and promoting human rights (5) to enhance institutional capacity along with
gender equality, inclusion, environment protection and maximum use of science
and technology. |
Source:
National Planning Commission (Various Year)
3. Development Plan Formation Process and Functions
Plan formation is a challenging issue because it's success, usually depends on it rationality and appropriateness. In Nepal Development council (NDC) gives direction to NPC (National Planning Commission) in plan formulation the process of plan formulation in Nepal consists of the following activities.
Table
2: Process of Plan Formulation in Nepal
|
S.N |
Activities |
Explanation |
|
1 |
Past Plan and
estimation of new Plan |
At the time of making
new plans, NPC evaluates past and current plans; it gives the clear ideas and
projections for making new plans. On the process of evaluation drawbacks
should be changed with improvement and should be included unsuccessful plans
and policies in new plans. |
|
2 |
Collection and proposal
of new project |
NPC collects project
proposal from each District Development committee (DDC). District level
government organization also sent proposals through their respective
ministries. Then, NPC presents all proposals including some proposals propose
by himself to NDC. |
|
3 |
Discussion |
Discussion is one of
the most important steps in plan formulation. NDC, NPC, ministries,
secretaries, Experts of concern field, NGO, representatives of donor agencies
etc. take part on discussion. Then, NPC prepares plan document according to
the conclusion derived from discussion. |
|
4 |
Determination of
objectives, targets and priorities |
Objectives should be
determined in a complete plan document to meet the desired goal according to
the economic condition. For good development plan, target and priorities
should be determined which guide the overall activities and programs during
the purposed plan period. |
|
5 |
Authorization and
implementation of plan |
The final plan document
prepared to NPC for Authorization. After the authorization, it is presented
to the cabinet for its approval. Finally, the plan is executed after the
cabinet approval. Then, the plan is implemented in association with
government, private sectors, NGOs and general public. |
|
6. |
Monitoring and
Evaluation |
Monitoring and
Evaluation is necessary in the process of plan formulation. It helps to
determine the success by evaluating the implemented plan whether plan whether
it is according to objectives, strategies of plan or not. |
Table
3: Four Functions of Development Planning -Practiced in Nepal
|
S.N. |
Function
of Development Planning |
Explanation |
|
1. |
Long Term Vision;
Formulation of Policies Plans: |
·
Formulates national policies and
priorities, and management systems for change and development. ·
Decides duration of plan
(short-term, medium-term, & long-term); and formulates periodic and
annual development plans. ·
Formulates goals and long-term
targets, objectives, strategies, policies, and sectoral priorities. ·
Sets sectoral indicators, sectoral
activities, & modalities ·
Approves sectoral programs &
projects (features: multi-sectoral; and longer period (BEP; ADS; PAF) ·
Allocates resources according to
national priorities; and sets strategies for resource mobilization (foreign,
domestic, and local) ·
MTEF process contribute to
realistic priority setting and resources estimation ·
Allocates resources for plans, programs
and projects at national and sub-national levels. |
|
2. |
Monitoring and
Evaluation |
·
Assess the effectiveness and efficiency
in implementation and provide feedback in improving formulation of plan,
programs, projects and allocation of resources. |
|
3. |
Vertical Coordination
with Provincial and Local Governments |
·
Focuses on the agglomeration of
programs of macro, meso, and micro levels; Manage institutional coordination
and sets implementation strategies |
|
4. |
Research and Study |
·
Assess the effectiveness and efficiency
in implementation and provide feedback in improving formulation of plan,
programs, projects and allocation of resources. |
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