Insights in Economic Development Of Nepal & Early

“US” Assistance

Presented By: Regmi Milan National College, Center for Development Studies

Baluwatar, Kathmandu

Economic Development: Case of Nepal

Nepal being a developing Country now, was found to be interested in economic development even before 1950’s revolution.

During the revolution , the Rana’s negotiated POINT FOUR PROGRAM with the United States.

As a result of which M.P koirala made first request for loan from India.

(But he was told that, Nepal was required to develop set of activities i.e. plans and policies to utilize the loan amount in productive sectors (health, education, and infrastructure development)

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What led to NPC??

Then, Subarna Sumsher (finance Minister at that time ) made a comphrensive statement of Government’s assets and plans for development.

Deficit were supposed to be partly financed from the reserves of $15.1 million in gold, silver and coins.

Finance Minister then said that , the Government will form a planning and development committee under the prime minister’s Chairmanship to coordinate development efforts and projects which is currently known as NATIONAL PLANNING COMISSION.

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System Reforms: The minister was optimistic about domestic sources of

funds to finance development in some cases some schemes were productive whereas m some were not.

This would be accomplished by raising export duties and by abolishing birta i.e. tax free lands, by changing tax collection methods.

Since, there was appreciation in difficulties involved in income tax collection(lack of IT, Inefficient HR, Mal practices: Tax evasion),

The minister suggested that national –saving schemes are beneficial to the nation which can be raised through

issuing Government Bonds.

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Nepal Expectation & Possibility

Discussions and plans centering on economic development and aid however , were pushed into the background by the volatile political situation.

And this political volatility isn’t settled yet , that’s the main reason why Nepal has not been able to reap maximum benefit from the Point four program, the Swiss technical Aid program, and the Colombo plan .

This situation was visualized by D.R. Regmi (Cabinet minister ), which is found to be applicable in today's context as well.

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EARLY UNITED STATES ASSISTANCE

United states and Nepal doesn’t seem to have sound relation earlier because:

a) There was some fear among Nepalese leaders at that time, that US might be attempting to replace British Influence in Nepal.

b) M.P Koirala always outspokenly , said that “The American designers of war do not want democracy in Nepal”

c) He further said “ This plan has failed only because of protests from the Nepalese citizens”.

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Nepal –US Relationship

Nepal- “US” Relationship..

Though ambassadors were exchanged, they were not resident in Nepal.

a) The Nepalese ambassador in London served concurrently in Washington,

b) Where as, The United states ambassador to India served in Kathmandu, Nepal.

Such arguments makes clear that , there were not good diplomatic relations between Nepal and United states.

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How did it settled…???

This conflict between two nations ended when , both the nations signed a “POINT FOUR AGREEMENT” on 23rd Jan , 1951.

This program called upon Nepal to coordinate all the developmental efforts involving American assistance.

It is not with in the scope of this study to analyze in detail the motives and assumptions of the American Aid, but in general some points , which had a greater significance are mentioned below:

a) The first assumption is about “ rising expectations”, which has served as the foundation to the economic development of Nepal.

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Concept of Rising Expectation

This was one of the logical concept , which says that “If people were eager for change, helping the make changes was relatively simple”

It also advocates that , if the people of underdeveloped areas are unable to fulfill their reasonable aspirations, then that ultimately increases their ground for misery and sorrow’s.

The problem in aiding economic development is “know-how” and “show-how”. In other words, if people saw how it was done , they would do it themselves.

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The second point relevant to Nepal:

was an extension of the concept “Economic and political stability are interdependent and together increase the capacity and the will to resist internal and external conflicts and communist aggressions”

The maintenance of political stability is dependent upon the capacity of these countries to improve the productivity and the status of the agricultural population.

Therefore , the proposed program of economic assistance is designed to bring about improvements in the status of the agricultural population.

Hence, the problem of political instability can be overcome by assisting economic development as the agricultural sector was more vulnerable now and then. Thus American assistance would be focused on Agricultural sector strengthening and Development.

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THANK YOU

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