The Ministry of Finance is working to prepare the final draft of the new Economic Policy within mid-May, which, once finalised, will help subsequent governments to steer the economy as per the vision set by the new constitution.

The new constitution, promulgated by the Constituent Assembly in September 2015, has envisaged formation of a “socialism-oriented independent and prosperous economy”. This basically means creation of a welfare state. In other words, the new economic policy will not only focus on raising production of goods, services and ideas, but on redistribution of wealth generated through sales of these goods, services and ideas.

This overarching economic policy, it is said, will promote inclusive growth and help Nepal’s economy to grow in a sustainable manner.

Nepal has been focusing on sustainable economic development since the restoration of democracy in the early 1990s. Yet growth, over the years, has been too low because of various reasons, including political and social. In the last one decade, for instance, average economic growth of Nepal stood at less than 4 percent per annum.

“Over the years, Nepal has been focusing on political, social and economic transformation. To a large extent, we have even been able to transform politics and the social sector. But we have lagged behind in transforming the economy,” Vice Chairman of the National Planning Commission, Min Bahadur Shrestha, told an interaction organised by the Ministry of Finance on Tuesday. “So, it is high time we focus on economic development.”

Nepal has currently set a target of enrolling itself in the group of middle-income nations within 2030, for which per capita income of the country should jump from existing $752 to $4,200. “The economic policy will spell out measures to achieve this target,” said Shrestha.

The policy will incorporate measures to mobilise the public and private sectors and cooperatives to spur economic growth. The three sectors have been identified as the three pillars of the country’s economy.

Also, focus will be laid on development of four core areas-infrastructure, tourism, energy and agriculture-referred to as I-TEA to accelerate the pace of economic development, according to Finance Secretary Shanta Raj Subedi.

Development of these sectors, the government believes, will help the country attract domestic and foreign private investment, resulting in creation of jobs and opportunities for enterprises. Further, the policy will also incorporate measures to ensure fair competition in the market so that businesses can grow without any obstruction. 

To frame this policy, the Ministry of Finance (MoF) has formed a nine-member steering committee under Punya Prasad Regmi, chief economic advisor at the MoF. The committee has formed a four-member technical committee under former lawmaker Hari Roka, which has held consultations in all seven provinces to frame the policy.

“The technical committee will submit a draft report within mid-May,” said Regmi.