Prime Minister KP Oli has chosen technocrat economist Yuba Raj Khatiwada as Finance Minister just like Indian Prime Minister PV Narasimha Rao appointed Manmohan Singh as Finance Minister in 1991 — unexpectedly and disappointing other aspirants from their own parties.
Singh went on to serve as India’s Prime Minister for two full terms, and Khatiwada has also not concealed his aspiration to rise higher in politics. Will Khatiwada emulate Singh’s success? It depends how effectively he will help PM Oli deliver his electoral promise of economic prosperity.
Khatiwada has been consistent in advocating for a greater role for the state in regulating the free market. As Nepal Rastra Bank (NRB) governor, he discouraged banks from investing in unproductive sectors, prompting CEOs to dub him ‘an anti-liberal authoritarian’.
After being appointed as Finance Minister, Khatiwada has clearly hinted that he will be following his own principles. He told BBC Nepali Service that it would be pointless to encourage more investments in real estate, capital market and automobiles.
He told us that he is for reviewing real estate policies, arguing that land prices have been artificially inflated across the country. The Constitution defines land ownership as a fundamental right of citizens, but Khatiwada argues that the State is the ultimate custodian of the territory, and people are just borrowing it from the state. This is why after his appointment as Finance Minister, real estate owners and capital market brokers are terrified.
With his expertise in monetary policies and an ability to eloquently explain complicated economic issues, Khatiwada impressed all five Finance Ministers under whom he worked to push through banking reforms.
Khatiwada is not only argumentative, but resolute and fearless. He froze Ajey Raj Sumargi’s Rs2.19 billion after the businessman failed to reveal his income source. He did not back off even when Sumargi reportedly ‘threatened to make CIAA Chief Lokman Singh Karki go after him’.
It was Khatiwada who restricted TeliaSonera from repatriating capital gains from the sale of Ncell. He raised taxes on the import of luxury cars, and pushed through policies to maintain fiscal discipline.
His tenure as governor was widely hailed, but he is now in an even more powerful position. Unlike past Finance Ministers, he is in the right place at the right time. He will be leading the Finance Ministry for five years, and his party has formed governments not just at the Centre but in six of the seven provinces. With Madhesi parties by its side, the government will have a two-third majority to push through any economic reforms that Khatiwada comes up with.
A business lobby led by Ichcha Raj Tamang of the ruling UML was against Khatiwada’s appointment as Finance Minister, fearing major upsets in real estate market. But Oli still went on to appoint Khatiwada, showing how much he trusts this technocrat.
Khatiwada knows the economy inside out, and is expected to plug legal loopholes that businessmen have been using to evade taxes. Those who know him say that he cannot be easily tempted or manipulated by business lobbies. But that does not mean he is flawless, bearing criticism for promoting nepotism after transferring his son-in-law from Biratnagar to the ministry.