Releasing the Current Economic Status Paper in April, the RSP-led government set an ambitious goal of doubling Nepal’s economy or the gross domestic product (GDP), which is currently a mere $45 billion, to $100 billion with a growth rate of 7 percent in five years or by 2031. This has triggered a debate on development vis-à-vis the Nepali economy, which transformed from near autarky until the 1980s into a rapidly liberalised one after the early 1990s. The debate has mostly focused on one obvious question: Has Nepal been developing or deteriorating economically since then?

Debates on development among ordinary Nepalis are often unfounded and politically prejudiced. Authoritarians believe that development has deteriorated due to political changes in the country, whereas pluralists see economic progress following the demise of absolutism. In reality, the explanation of development is pointless without a database and cross-comparison.

Let’s look at Nepal’s GDP at current prices over the last 50 years. Nepal’s economic growth lingered until the early 80s. Till then, the Nepali economy was partially protected, manifesting the ‘license raj’. GDP, which was less than $2 billion until 1980, surged, albeit slowly, to $3.63 billion in 1990 and $5.5 billion in 2000. The figure barely doubled in these two decades. However, in the following decade, it almost tripled to $16 billion. Then the trend reflected constant growth: Nepal’s income crossed the $33 billion mark in 2020, and stood at $45.5 billion in 2025. If this is any indication, achieving the $100 billion target should not be a big deal, given the country’s higher propensity to consume. Yet the relatively smooth economic expansion in recent years has two major explanations.

Firstly, it is the consequence of the economic reform that induced growth, propelled by extensive private-sector participation and backed by trade and investment liberalisation. This is an exemplary development if the economy is viewed in isolation. However, this raises the next important issue: Nepal’s growth still looks trivial compared with its peer economies in the region. Consider Bangladesh’s 2025 GDP; it is approximately eight times bigger than Nepal’s. Similarly, Sri Lanka’s economy is twice Nepal’s size. Despite its tiny economy and a GDP equivalent to less than $4 billion, Bhutan’s per capita GDP is almost four times that of Nepal’s. And the Indian economy is simply incomparable at almost $6,000 billion. All this suggests that Nepal is still a growth laggard.

Yet a country’s economic progress does not rest solely on growth. Economists distinguish economic growth from economic development in order to sketch a country’s true economic progression. In principle, economic growth is all about quantitative measures as it overlooks qualitative parameters. The rate of growth is affected when population and inflation are considered. The system prioritises per capita income, which is the average income per person, and GDP, which is the national income adjusted for inflation.

Thus, growth does not give a clear picture of the economy unless it considers how it is generated and distributed. This is because most unskilled, uneducated and unemployed people are deprived of the benefits of growth despite its expansion in numbers. But development is a shared responsibility of a community, which ensures indiscriminate access to health and education, as well as other livelihood amenities, for all people.

Less developed countries like Nepal see economic growth and other aspects of well-being as complementary parts of their development trajectory. Thus, the essence of their economic advancement is reflected not only by the rate of growth but also by the status of human development, which includes people’s well-being or the status of health, education and living standards in general. Without economic welfare, people cannot actively participate in economic activities, share the benefits of growth or improve their livelihoods. Nepal fared better on the Human Development Index (HDI) after economic reforms. Ranking 145 out of 193 countries, Nepal scored 0.622 on the HDI in 2025; the higher the value and the closer it is to 1, the better the welfare situation.

Despite these positive indications, what has held back Nepal’s development endeavour, and why does it continue to remain a growth laggard? In essence, Nepal has lacked a visionary leader with the political will to inject new impetus into the economy. This is indispensable for promoting good governance and institutions that focus on practical solutions to core economic problems and protect entrepreneurs and innovators. Unfortunately, the system is led by either ideologically rigid politicians or voracious populists who violate their own commitments to development. That has created a distrustful and unpredictable economic and business environment.

One shouldn’t forget that the most successful global leaders were neither ideologues nor populists, but pragmatists. Take Lee Kuan Yew of Singapore, for example, who tackled corruption and transformed his poverty-stricken country in the sixties into one of the most prosperous states today. To protect both entrepreneurs and investors, Yew was willing to set aside his ideology to adapt to changing circumstances. He was tough when necessary and refused patronage to powerful groups. If we have such a visionary leader, there is no reason why the government cannot target an economy of even $500 billion in the next five years.