The only game
By BISHAL THAPA:
Our constitution must challenge the primacy of government and finality of State political power In the end, it is the colour of our skin, the shape of our nose, the slant of our eyes that has separated us. Our last names and our ethnicities have kept us apart. The constitution, and in particular the question of how to draw the boundary of federal states, has become the battleground of this divide.
By reducing the search for a new constitution to a question on how states should be drawn, proponents and opponents of ethnic-based states have confirmed the dismal reality of governance in Nepal—political power is critical. All structures support the primacy of government.
Historically in Nepal, governments were the only game in town. They were selective, delivering benefits and patronage to specific individuals and communities based on the interest of those holding political power. Nepal’s endemic problems of patronage were synonymous with the unchallenged primacy of government; patronage was delivered entirely through the instruments of the State.
Recent changes removed some of the historical basis for patronage. The monarchy and State sponsored Hinduism, which provided socially accepted justifications for systemic exclusion and selective benefits are now gone. Nepal has become a republican secular state. But these changes have done little to challenge the primacy of government or to prevent the misuse of State instruments for patronage.
Government continues to remain the only game in town. Instruments of the State remain the only mechanisms through which social, political and economic services and opportunities can be delivered. In fact over the last decade, the importance of government has grown.
The increased emphasis on government programs and social services spending, for example, highlights the centrality of State instruments. Between fiscal years 2002-03 and 2009-10, government spending on capital expenditures increased five times, growing at an average rate of 21 percent annually. Much of this growth, almost 45 percent, was on social services—health, education, drinking water, local development and other social services. In FY 2002, social services accounted for approximately 30 percent of government capital budget. By FY 2010, it had grown to about 43 percent, the largest component of government’s capital expenditure budget.
GOVT SUPREMACY DEBATE
By contrast, the growth of capital expenditures on economic services over that same period has been significantly lower. Capital expenditures on economic services relate to investments in agriculture, irrigation, land reform, forest, surveys, electricity, transportation, communication, industry and mining. In FY 2002-03, economic services were the largest component of capital expenditures, accounting for about 60 percent of those investments. But by FY 2009-10, its share had slid to 42 percent, marginally below the share for social services.
This shift from economic to social services partly reflected the need to build social infrastructure. But it also opened government spending to the risk of political patronage.
Investments in social services are more vulnerable to political patronage than economic services. Spending on social services can be more easily adapted to the political priorities of those at the helm. Investment in economic services, where political choices can influence who gets a contract, lends itself to corruption. But benefits of investments in social services are delivered to communities, not individuals, and are better suited to political patronage. Unlike economic services, benefits of social services translate quickly into immediate political gains.
A productive private economy could have helped offset the primacy of government. But that failed to emerge. Years of turmoil and political uncertainty resulted in low investment. Nepal’s fixed investment rate as a share of GDP has remained low at around 20 percent, one of the lowest in the region. Chronically low investments have meant that capital stock—productive assets that help produce economic growth—is too low to kick-start higher growth.
Although the role of private sector has grown, accounting for about 75 percent of fixed investments last year, it has failed to translate those investments into economic growth. A large part of private investments has gone into speculative, but less productive sectors such as real estate, rent and trading. Private investments continue to be highly dependent on government largess. Despite the private sector owning the larger share of the country’s productive assets, government remains the primary driver of economic growth.
Nepal’s development partners, who contribute to about 60 percent of Nepal’s budget, could have hemmed in government but they have misfired. They made two tactical errors that further increased the stakes for political power.
First, they continued to invest heavily in social services. In the last five years, the already high development assistance in social sectors has continued to increase, growing to approximately 65 percent of total foreign assistance by FY 2010. This was a time to shift aggressively into economic productive sectors, such as agriculture, power, transport and industry. Such a shift would have diffused some of the pressure for political power. It would have helped to shore up productive capacity of the private sector that had been waylaid from war and neglect.
Second, they misread the speed of political transition and the strength of government institutions. Many development agencies began to funnel their aid through government channels by co-financing government’s initiatives, priorities and programs rather than developing projects of their own. The larger share of Nepal’s development assistance began to be channelled as government budgetary support.
Donor agencies adopted this approach believing that political transition would occur quickly. They assumed that government spending priorities reflected a wider political consensus. With the old basis for patronage removed, they believed government channels would now remain relatively free of pilferage and patronage. They would turn out to be wrong on all counts.
Political uncertainty persisted far longer than anticipated. It was unclear that government’s programs had broad endorsement from across the polity. Old justifications for patronage were replaced with new ones. As the importance of government grew, control of the State machinery became the most critical factor for political success.
The current divide on the question of state boundaries reflects nothing more than the perception that government is, and will remain eternally, the only game in town.Our discourse must move away from the superficial fear of ethnic divide towards addressing the fear that originates from the primacy of government.
Our constitution must challenge the primacy of government. It must challenge the finality of the State’s political power. It must allow for a nation where there are safeguards against government outside of government.
One way to do that would be to offer a participative democracy that allows for political representation from within and outside the government. Provide the constitutional space for non-governmental agencies, activists, civil society, business, media and other non-State actors to influence social, political and economic developments from outside the government.
We may then discover that ethnic based states, particularly ones that offer marginalized communities a better sense of political inclusion, should be no threat to other groups. We may then realize that the differences in the colour of our skin, the shape of our nose, the slant of our eyes, our last names and ethnicities are not troubling enough to stop a constitution dead in its tracks.
The author is a consultant on energy and environment, and founder of ReVera Information, a market research firm in New Delhi.