The Nepali Congress is known for ushering in economic liberalisation to the country. Ever since the restoration of democracy in 1990, the party, founded in 1950, has championed the free market economy. Communist forces, which have made socialism their goal, have always chided the Congress as capitalist, “which serves the interest of the capitalists”.
The liberalisation push by the Congress after it came to power in the 1990s had invited fierce criticism, particularly from the leftist forces, as state-owned enterprises were privatised and private sectors were allowed to do business without licence in almost all sectors.
One of the main complaints against the free market economy, also known as ‘neo-liberal’ policy at that time, was that poor people who needed social protection were forgotten as the role of the state was reduced substantially.
It has been more than three decades, and now as the country is holding its local elections, the second after the country became a federal republic following the promulgation of the constitution, the Congress has come up with its election manifesto with an increased focus on the role of the state in social protection.
The ‘grand old party’ has presented itself as one that supports people from pregnancy period to death.
Schemes ranging from free-of-charge medical tests for pregnant women to reducing the age limit for eldery people to receive the elderly allowance and providing allowance for performing death rites have been included under the slogan “Kokh dekhi shok samma”—‘from womb to tomb’.
The manifesto says that the Congress would provide an allowance to the eldery over 65 years and give sanitary pads to all women for free.
Some other announcements include: free health check-up for people over 40 years for high blood pressure, kidney problem, diabetes and uterus cancer once a year; free health test and delivery allowance of Rs5,000 for new mothers; free insurance coverage for people aged 65 and older, women health volunteers, the extremely poor, Dalits and single women; free electricity for farming, livestock rearing and fishery; and 50 percent tariff exemption on electricity for agriculture processing activities.
Political leaders and analysts wonder if the Congress is taking a left turn in a bid to counter the communist forces which have made electoral gains riding on populist schemes and freebies.
“The Congress appears to be trying to prove that it is more socialist than others and has adopted the socialist redistributive model of the economy, deviating from its policy of free market economy,” Achyut Wagle, a professor at the Kathmandu University School of Management, told the Post last week. “After seeing the communist forces making electoral gains by promising freebies, the Congress also appears to be in a bid to woo voters with giveaways.”
Congress leaders did not disabuse the notion but insisted that the party has not given up the free and liberal economic model.
“Even though the Congress-led government introduced several social security schemes in the past, we failed to take advantage,” said Govinda Raj Pokharel, a Congress central working committee member. “So we have now put the social schemes at the forefront of our narrative.”
Congress leaders say they are aware of the fact that the CPN-UML has been taking advantage of the policy of providing allowances to the eldery which the latter introduced in the mid-1990s.
The government led by Man Mohan Adhikari introduced the elderly allowance scheme in 1994, when the country saw its first communist government. The allowance was Rs100 a month. The scheme was not only continued but expanded later by incorporating single women and the differently abled people, members of the communities on the verge of extinction, Dalit children, widows and Dalits from the Karnali region.
“Except for the elderly allowance, most other social security schemes, including insurance coverage and social reforms measures, have been adopted under the Congress leadership. But we failed to develop the narrative around those schemes for electoral gains,” claimed Pokharel, who is also a former vice-chairman of the National Planning Commission. “We were accused of forgetting the social sector by adopting neo-liberal policies. We want to change that narrative.”
He, however, said that the Congress has not given up the liberal economy model as it continues to adopt the policy of promoting private investments, creating jobs and collecting more taxes, which are essential to fund the social sector.
Post-1990, the Congress has faced accusations that it remained aloof and complacent, paying little attention to the needs of the electorate. It boasted its vote base across the country. Critics say its leaders were under the impression that people would easily vote the party to power—or at least to make it the single largest party that would give it a chance to lead the government.
But that changed in 2017. The electoral alliance between two communist forces—the UML and the CPN (Maoist Centre)—made the Congress face a spectacular defeat.
The communists were then voted to power for a full term, first time since 1990.
The Congress was left to lick its wounds. But as they say politics is a game of immense possibilities—the communist government got dissolved in three and a half years, largely due to infighting among the top leaders.
The Congress came back to power suddenly with the backing of at least two communist forces. After local polls, which are scheduled for May 13, there are two more elections due later this year. The Congress doesn’t want to squander the opportunity to lead the government again. And it’s resorting to some populist schemes and freebie politics.
Analysts and experts, meanwhile, argue that political parties’ plans to spend more on social security stem from the constitution, which defines the country as a socialism-oriented one and talks about an economic objective that aims to develop an independent and prosperous economy.
They say the Nepali Congress also cannot escape from its constitutional obligation.
“The Congress calls itself a socialist party and has moved to adopt policies that the communist forces want to adopt. So I want to call all the parties including the Congress left-leaning,” said Hemanta Dawadi, a former director general of the Federation of Nepalese Chambers of Commerce and Industry, who has extensive knowledge about the country’s private sector.
With political parties focussing on distributing state resources for electoral gains, experts have long been questioning if this is sustainable.
For example, the erstwhile KP Sharma Oli administration increased the social security allowances by 33 percent for all types of beneficiaries for the current fiscal year 2021-22, including allowances for the elderly to Rs4,000 from Rs3,000 per month and the new Sher Bahadur Deuba-led government continued the policy.
As a result, budgetary allocation jumped to Rs100 billion for social security allowances. Spending on social security means increasing the spending for inactive or less active populations and investing on them would yield little results.
“Investment in them should be relative to wealth creation in the country. Otherwise, it will be unfair to the active working population,” said Rameshore Khanal, a former finance secretary.
But the Congress has moved one step ahead of other parties in reducing the age limit for elderly allowance.
The party’s decision comes at a time when the average life expectancy of Nepalis has gone up. In 2020, Nepal’s average life expectancy stood at 71 years, up from 68 years in 2010, according to the World Bank.
“Such a policy will contribute to turning the productive workforce into an inactive workforce, putting financial burden on the state,” said Khanal. “For a poor country like Nepal, increasing the number of people dependent on the state is unsustainable.”
It is not the first time the Congress has attempted to reduce the age limit for elderly allowances.
Even in January 2018, the Deuba-led government had decided to lower the age of eligibility for the elderly allowances to 65 years from 70.
It was the time when the alliance of the CPN-UML and the CPN (Maoist Centre), which later merged to become the Nepal Communist Party (NCP), was voted to power. But the new government had not been formed. The new government didn’t implement the decision of Deuba’s Cabinet.
Congress Leader Pokharel, however, defended the plan to reduce the age limit for elderly allowances.
“Data two years ago showed that the average life expectancy of people in 52 districts was below 70 years. It means more people from richer districts got the elderly allowance but people from poor districts were denied allowance because of the higher age limit,” he said.
He, however, admitted that such allowances should be given only to the people who don’t have an alternative source of income.
The Congress manifesto does not talk about providing elderly allowance selectively while reducing the age limit.
Former finance secretary Khanal says the Congress’ election manifesto is guided by communist forces, particularly the Maoists.
“In fact, the Nepali Congress, particularly Prime Minister Deuba, has been treading the path of the Maoists,” said Khanal.
All Congress leaders, however, are not in favour of distributive programmes announced by the party.
Ram Sharan Mahat, a senior Congress leader and former finance minister who is one of the key figures to launch economic reforms in the early 1990s, said that he and some of his friends have called for revisions in the manifesto to cut down the distributive schemes and focus on programmes that help sustainable economic development.
“People who are under the poverty line should be supported with social security schemes too,” said Mahat. “Our main focus should be on sustainable high economic growth.”
Experts and analysts don’t believe that the parties would be able to fulfill their promises as the country lacks the means to implement all such schemes.
The question is whether the government is making money.
The government’s revenue collection has been far short of target in the current fiscal year with the Inland Revenue Department reporting a deficit of Rs32 billion as of the first nine months of the current fiscal 2021-22.
“Without wealth creation, you cannot distribute wealth,” said Dawadi. “All the political parties, including the Congress, don’t have plans for creating more wealth.”
According to him, the distributive programmes announced by political parties would only help to distribute poverty as long as the country fails to develop its economy.
“The question,” said Dawadi, “is whether to make the country rich first or make everybody poor first.”
