Instability distracts focus when national economy needs it most

Kathmandu, Mar. 5: Nepal’s domestic politics is passing through power shifts and volatility since the erstwhile Prime Minister KP Sharma Oli dissolved the House of Representatives in December 2020.  

The Oli-led government was the strongest ever, formed after decades of political instability, including the decade-long armed conflict. The election alliance of the two communist parties — CPN-UML and the CPN (Maoist Centre) — garnered nearly two-thirds majority in 2017 elections. Later, the two parties got unified, creating Nepal Communist Party (NCP). Then many had expected that Nepal would overcome the instability of decades and usher the country in an era of economic development. 

Sadly, the NCP-led powerful government could not complete five-year term and collapsed in three and a half years because of intra-party bickering. Oli dissolved the House twice in a span of seven months but the Supreme Court reinstated it on both occasions, forcing him to leave office in July 2021.  

No Prime Minister in Nepal’s history has completed his five-year term since the democratic movements of 1951. 

After the ousting of Oli, Sher Bahadur Deuba, president of Nepali Congress, became the Prime Minister in support of the rebel faction of the NCP. Multiple political forces, including the then ruling Nepal Communist Party (NCP) witnessed a split after that. Since then, the political leaders of the country got sharply divided and engaged in a political blame game.

Amid looming political instability and economic crisis, the parliamentary election held in November last year was expected to restore political stability but it could not do so. It gave rise to a hung parliament, making it impossible to form a stable government. Even the pre-election alliance formed between NC, CPN (MC), CPN (Unified Socialist), Loktantrik Samajwadi Party and Rastriya Janamorcha also fell short of two seats to secure 138 seats required to show majority in the 275-strong HoR. NC emerged as the largest party winning 89 seats and the UML second largest with 78 seats. 

Post-election, the coalition that was in place during the polls could not continue and a seven-party alliance managed by the CPN-UML was created which formed a government from federal to the provincial levels. This government, fresh after the election, was short lived. The new ruling coalition of the Maoist Centre and the CPN-UML collapsed in 64 days after they formed the government.

Since no political party and alliance has secured a majority of seats, Nepal’s major political parties took longer to break the impasse over the formation of a new government. The two big parties in the parliament, NC and UML, failed to grab the opportunity. So the Maoist Centre, third biggest party in the parliament with 32 seats became successful to elect its chairman Pushpa Kamal Dahal ‘Prachanda’ the new Prime Minister.

As the five-party NC-led alliance failed to forge consensus on the leadership of the new government, Prachanda rose to the helm of power on December 25 last year by garnering support outside of the five-party alliance, including UML and three independent parliamentarians.

As a result of longstanding political instability, people have lost trust in the capability of the leaders to steer the country out of the crisis.

Two months after the 7-party coalition government formation, a new development occurred on February 24, when PM Prachanda decided to support the NC candidate in the presidential election, breaking the agreement reached between him and UML chair Oli on December 25 while forming the government. 

The UML had made its claim for the presidential post. Now the ruling CPN (MC) has renewed political equation with NC and seven other parties in the run-up to the presidential election, leaving the UML, Rastriya Prajatantra Party and Rastriay Swatantra Party in the opposite alliance. 

With the change in alliance in the centre, provincial governments in three provinces (Koshi, Gandaki and Lumbini) are likely to collapse soon. 

Every passing day, the crisis in Nepal is becoming intense due to power-centric activities which may eventually breed more corruption, economic crisis, and frustration in the public. Political analysts blame unhealthy competition among the political parties and geopolitics for Nepal’s perennial instability and entrenched poverty. 

“There is no single reason behind the political instability in the country. The problem of political uncertainty is the manifestation in cumulative form,” said Dr. Hari Roka, a political analyst. 

He said that the political leaders diverting from their goals was one of the major reasons behind the longstanding political instability. 

Politics is done to bring positive changes in everyday lives of common people by implementing policies that have social and economic impacts, he said. “But our political leaders who have succeeded to bring political changes failed to institutionalise the transformation. And the matter was never seriously debated by the parties.”

Talking about geopolitics and its impact on the national politics of Nepal, Roka said, that geopolitics is not the main cause of the political volatility. The only reason is that our political leaders lack clear vision to advance the nation towards the path of development and prosperity.  “We are too dependent on others and we always seek other’s support in our own affairs,” Roka said.

Since the country lacks strong internal policy, the external forces always get space to interfere, he added. 

Resolving the never-ending political instability requires determined leadership to set aside differences entrenched in political positions and have vision to guide national discourse that supports socio-economic transformation, he added. 

As a result of longstanding political instability, people have lost trust in the capability of the leaders to steer the country out of the crisis. 

History shows that political instability affects government performance because along with the changes in the government, parties change the policies in line with their ideologies. 

As the national politics gets unstable, it has negatively impacted the economic growth of the country. A palpable frustration can be noticed among development agents, stakeholders and others.

Dr. Achyut Wagle, an economic analyst, said that the workers lose excitement in their work, agencies working for development lack harmony in policies, and the tendency of work delays and corruption increase when there is instability.

“Development is a continuous process. Instability does not impact it directly but makes society hollow from inside,” he added. He, however, noted that instability was not the only reason behind economic recession.

The economic growth forecast for FY 2023-2024 in Nepal is 4.9 per cent, which grew by less than 5   per cent in FY 2021-22 and is projected to be 5.1 per cent in FY 2022-23. The overall outlook of the country’s economy is not positive. Only 20 per cent of total capital budget has been spent for the projects till date. 

Government data shows that national pride projects and other projects have seen only a negligible growth. The Nepal Rastra Bank strives for policy measures to guide the economy on a better course, but there has been difficulty to achieve results due to unpredictable political climate.

Wagle said that policy harmonisation and a clear roadmap for the plans and projects of the government are necessary for steady growth. Development is a continuous process, it does not happen overnight. 

“The political leadership should ensure that the development process does not get hampered despite changes in the government,” he added.

But due to unpredictable political developments, commitments made to the development partners seem to be disoriented. The political alliance formed after November 20 election broke within two months. The entire winter session of the Federal Parliament was devoid of any business because of political uncertainty. It even did not work on the 27 bills, which have been inactive with the end of previous House of Representatives. 

Bills on Banks and Financial Institutions (1st Amendment)-2076, Nepal Rastra Bank (3rd Amendment)-2076, Export-Import Integration related bills, bill to amend Public Procurement (2nd Amendment)-2077, bill on Securities Board of Nepal and the customs related bills are still inactive.

“Our extended efforts have gone in vain as the crucial bills are still left in disregard. Politics is still volatile, and we have to start it all over again from where we left it,” Vishnu Agrawal, President of Confederation of Nepali Industries  (CNI), said. 

The government was neither able to provide business to the parliament nor to make any notable achievement except the constituents fought themselves for some constitutional posts, he said.

Agrawal said that growing political instability is a matter of concern for development.

However, Kewal Prasad Bhandari, Member Secretary at the National Planning Commission, said that some days’ disruptions in the government would not impact the pride projects or the priorities of the government. “Budget is already allocated for those projects, the secretaries in their respective ministry can work efficiently if they so desire,” he said. 

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