Nepal is gearing up for parliamentary elections and the major parties including Nepali Congress (NC) and the left alliance (UML-MC) have each come out with their respective manifestos. This #neftake provides an economic perspective on both manifestos.
As per their manifesto and as highlighted in the table above, Nepali Congress (NC) aim to increase Nepal’s per capita GNI to USD 1500 in five years. Considering that the current per capita GNI is USD 900, GNI would need to grow by 14% each year to achieve the targeted growth. If the targeted growth is achieved, Nepal will officially graduate to a lower middle-income nation. Moreover, in ten years, NC envision Nepal to be an upper middle-income nation, requiring an annual per capita GNI growth rate of 16% – 30%. As per the World Bank, GNI per capita of a country needs to be in between USD 3956- USD 12,235 to be categorized as an upper middle-income nation.
Similar to the commitment of NC, the left alliance aims to graduate Nepal to the status of lower middle-income nation in five years. As per the World Bank, GNI per capita of a country must range in between USD 1006 to USD 3995 to be categorized as a lower middle-income nation. In this regard, the economy needs to grow annually by 2.25%-28%. In 10 years, the left alliance anticipate the economy to grow by 19% annually and achieve the targeted GNI of USD 5000, which is almost 6 times the current GNI.
As indicated by the table above, both NC and the left alliance want to achieve significant growth in the hydropower sector. The level of investment required to meet the targeted growth, however, is very large. Given that the cost of each MW is approximately USD 1.8 million, the total investment required to generate the targeted hydropower capacity of 15,000 MW would be USD 27 billion, 17 times higher than the current level of investment. Moreover, considering the theoretical framework of saving = investment, even when all investments are made for hydropower, the level of investment required would be 2.4 times the current national saving.
Both NC and the left alliance have also come up with other ambitious economic commitments. For instance, both parties aim to complete the construction of major highways within 5 years. Likewise, NC plans to build 5 international airports within 10 years, whereas left alliance aims to construct at least 3 international airports within the same frame of time.
Going through both manifestos, one can see the promise of a prosperous Nepal. However, considering the current economic dynamics of Nepal—characterized by low saving rate, presence of comprador capital and insignificant productive/manufacturing industries—achieving the targeted growth will be easier said than done.