Economic rumblings

When Nepal’s two largest communist parties announced unification ahead of last year’s elections, the Nepali Congress accused them of conspiring to impose an authoritarian regime.

As the election result showed, the people rejected that notion. However, with its two-thirds majority, the new coalition can amend the constitution at will. That the two leftist parties will form a united Communist Party has raised fears that they may become too powerful, become politically authoritarian, and introduce a command economy.

UML-Maoist leaders have often publicly praised ex-Malaysian Prime Minister Mahathir Mohamad, and Prime Minister K P Oli is a fan of Singapore’s Lee Kuan Yew. The Maoists do not hide their admiration for China’s rise.

Prime Minister Oli’s pick of technocrat Yuba Raj Khatiwada as Finance Minister, while widely hailed, has raised business eyebrows because of his backing for a greater role for the state in regulating the free market.

Sources say Oli is consulting other top UML-Maoist leaders about creating a separate development authority with a clear mandate to expedite big-ticket projects and regulate the private sector. UML leader Bamdev Gautam, chief architect of the communist merger, is likely to head this entity.

During a mid-term budget review this week, Finance Minister Khatiwada justified creating such an authority, arguing that it will fast-track delayed infrastructure projects.

Oli has moved quickly to make the Prime Minister’s Office (PMO) more powerful by bringing two departments responsible for investigating tax fraud and money-laundering under his own jurisdiction.

Oli’s confidante Pradeep Gyawali, who sacrificed his chance to become Finance Minister, is said to be in

line for a new portfolio that will interface between the PMO and Cabinet.

The UML-Maoist leaders know perfectly well that the people will boot them out in the next election if they do not deliver on their promise of prosperity, and seem to have reached the conclusion that the only way to accelerate development is to centralise control.

Economist Keshab Acharya believes a powerful development authority will indeed streamline capital spending, and kick-start the economy. But other economists like Bishwa Poudel are wary: “A separate authority to guide development could encourage lack of accountability.”