The Communist Party of Nepal – Unified Marxist Leninist (CPN-UML) and the Communist Party of Nepal – Maoist Center (CPN-MC), through their alliance, secured a majority in the three tier of elections for institutionalizing federalism. The alliance formally agreed to form a unified party, the “Communist Party of Nepal (CPN)” on 17 May, 2018. As per the agreement, the unified party will form a central committee with 441 members comprising of 241 members from the CPN-UML and 200 members from the CPN-MC. Likewise, it will have a 43 member standing committee; 25 from the CPN-UML and 18 from the CPN-MC. The new wave of consolidation embarks an era of political stability; with the people anticipating steady and comprehensive development in the country.
The CPN aims to graduate Nepal to the status of lower middle-income nation within five years. As per the World Bank, a lower middle-income nation has the GNI per capita between USD 1,006 to USD 3,995. In this regard, the economy needs to grow 2.25%-28% per year. Although it is an ambitious plan given the stipulated time, focusing on crucial aspects such as enabling a favourable business climate by increasing capital spending and improving domestic and foreign investment climate in productive sectors, mainly agriculture and manufacturing sector, would pave the path for achieving those targets.
The CPN government has aimed at breaking the cartel conundrum that has plagued various sectors of the country like transportation, health, education, banking, among others. In the first quarter of its tenure, the CPN government took crucial steps in dismantling the transport cartel by refusing to renew the license of transport associations that functioned as a cartel. If the government continues such stringent actions against the cartels across various sectors, fair competition and confidence of the private sector players in the market will unleashed which will work towards economic prosperity.
The unified party claims that its ideology will ensure socialism-oriented people’s democracy which means the country is likely to observe social ownership, control over means of production and cooperative management of the economy; and the focus might shift towards reducing wealth disparities, unemployment and inflation. Moreover, budgetary expenditures on social welfare like unemployment benefits, crop insurance and pension are likely to increase.
Concerning neighborhood diplomacy, Nepal will continue to act as a buffer between China and India. Given the investment being made by both the countries in Nepal’s big infrastructure projects, Nepal’s development will be highly dependent on how the government manages the political affairs with its immediate neighbors. Also, given the agenda of regional connectivity that both the countries have adhered to their national policies, Nepal is already seeing projects of rail and road networks being built to join parts of Nepal to both the countries. Given the scenario, there are prospects that Nepal will act as a link between the two Asian giants by converging the agenda of regional connectivity that is in the national interest of both the countries.
About political scenario, a sustained dominance of a single political force might lead to polarization in the party system. In the context of policy making, it might threaten the capacity of major established parties to internalize socio-economic and other conflict of interests issues and their ability to guarantee consensual and incremental policy making. In addition, the adoption of a one party political regime can perpetuate and institutionalize the current practices of crony capitalism. It will be easy for political elites to collude with businessmen and seek private gains. Considering the historical and political events, crony capitalism seems inevitable in the Nepali economy.
A decisive move has already been taken towards a participatory and decentralized decision making process which has the potential of reorienting development towards disadvantaged segments of the society. But the potential benefits can dissipate if the power struggle continues. There remains a great challenge to build stronger macroeconomic policy frameworks and institutions. The abundant natural resources, geopolitical positioning and the youth population are noted as great assets that can be leveraged for economic development. The initial phase of institutionalizing federalism will take some time, therefore, there is high chance of failing on achieving the targets unveiled in the manifestos of the unified parties but, the country will definitely see economic rise.