Polls Possibilities

Successful holding of local level polls will definitely be a step forward towards implementation of constitution but this alone, which is still doubtful, cannot ensure lasting stability because serious political differences on some issues are resurfacing and the growing trust deficit between Kathmandu and the Terai remains unchecked. Most of the recent political developments are interesting, a few of them being serious as well.

Issue Name : Vol.10,No 16,April 7,2017 (Chaitra 25,2073)

After the second largest political party(UML) showed some flexibility by ceasing House disruption and not pushing the Mechi-Mahakali National Campaign as aggressively as designed, specifically after the unfortunate Saptari incident of March 3,looked like there was a change in the heart of Madhesi leaders as well. After vowing to disrupt the announced local polls and severing it’s about seven-month- old ties with the government, the United Democratic Madhesi Front (UDMF) seemed ready to back down for now from its demand of province demarcation if the major three parties agreed to its call for a powerful federal commission. The largest party (NC) wasted no time in deciding that disputes on provincial boundaries shall be resolved by creating a powerful commission. It also decided to take the initiative to forge consensus on constituting the commission and passing three other component of the constitution amendment bill before local polls.UML had no problems because its major reservation is related to provincial boundary demarcation and Dahal-led Maoist Center could not hide its happiness because things began to move their way. It may be mentioned that Prime Minister Dahal was trying his best to convince the agitating leaders to participate in the polls, floating his proposition that he would get the constitution amended but without addressing the row over provincial boundaries for now. Notwithstanding some tantrums from UML chair Oli, the three major political parties are expected to have undivided opinion on the formation of the commission and resolution of resolvable constitution amendment issues prior to the polls. It may be remembered that UML had demanded that the government come up with a final proposal to ensure Madhesh-based parties’ participation in the local polls. This welcome political development and news about the polls-related preparation of the Election Commission (EC) made people happy.

The country is hoped to vote on May 14 to elect representatives at 744 local units, filling the vacuum at the local level after some 20 years. Except a few, most of the political parties have already started campaigns and EC seems making all needed preparations for the announced polls. The EC has begun to print the ballot papers and believes that there will be no backtracking from elections even in controversial Province 2.The election code of conduct is in force since March 1 and EC has asked Prime Minister and Cabinet ministers to strictly comply with it. Almost all districts in Terai have demanded additional security forces because the existing pool of security personnel falls short, they feel, of meeting the security needs of the region, which is likely to face threats from polls-opposing elements. The security threat, however, is likely to be reduced substantially with the much-hoped participation of Madhesh-based parties in the polls. The possibility of election being deferred in Province 2 cannot be ruled but people could vote on May 14 elsewhere in the country. Successful holding of local level polls will definitely be a step forward towards implementation of constitution but this alone, which is still doubtful, cannot ensure lasting stability because serious political differences on some issues are resurfacing and the growing trust deficit between Kathmandu and the Terai remains unchecked. Most of the recent political developments are interesting, a few of them being serious as well.

Deputy Prime Minister Kamal Thapa took to the street along with his followers in protest against the EC decision of striking out ‘Hindu State and monarchy’ from the statute of his party and to express his unhappiness over the police action in  which about three dozen supporters of the party were injured. Supporters of the party clashed with police when the Party’s rally led by its senior leaders tried to enter the prohibited zone to submit a memorandum to the EC. The decision was taken on the belief that some parts of the statute that called for reviving Nepal as a Hindu state and democracy with space for monarchy were against the constitutional provision of secularism and republican order.  It does not look like the stance of unified RPP on these two issues of monarchy and religion can be easily brushed aside because besides the party’s own strength, dormant supporters of these two issues are found in many other parties as well. Moreover, senior politician Prakash Chandra Lohani has announced formation of a new party resolving to restore monarchy and Hindu state. Just weeks after he resigned from the newly unified RPP, citing serious differences with party chair Thapa, Lohani created Ekikrit Rashtriya Prajatantra Party (Rastrabadi) whose twenty-point manifesto also states the party would work to eliminate poverty, unemployment, corruption and economic downturn. Lohani is likely to pursue the issue of monarchy more vigorously than Thapa. Likewise, influential leader of Nepali Congress Khum Bahadur Khadka is aggressively pursuing the idea of revival of Hindu state. Although not many leaders in NC have opened up on some sensitive issues thus far, it can be safely observed that those in favor of Hindu religion and inclined to give some space to monarchy are not difficult to find in NC, too. It looks like the monarchists, in the event of failing to secure a space for the institution in the new constitution through regular ways (dialogue, protests and procession), would even welcome a referendum on it for the final settlement. So could be the case with Hindu religion. One should not forget to note is the fact that if these two issues are left unresolved, they will continue to shake this politically instable country. Another political development that could be taken note of is the decision of the Madhesi Janadhikar Forum (Loktantrik) that it will withdraw its support to the government if its demand is not met within seven days. The party’s demands related to ‘Tharuhat Madhesh’, leaders say, have not been addressed. This could be a case of some concern and anxiety for Dahal but is likely to be settled with the inclusion in the government of a few party leaders with lucrative portfolios. It may also be noted that this decision has come amid talks about the Gachhadar-led party joining the government. Dahal will have to be careful in not letting this party be an element, no matter how small, of instability.  Kamal Thapa’s observations are worth noting that his party will rather quit the government than support the constitution amendment bill if it is put vote. Dahal will have to be cautious that the man (Thapa) brought in for stability of the government and to ensure elections does not become a factor aggravating instability. Dahal must be frustrated that his efforts to get the Morcha on board elections is not getting the expected level of cooperation from the ruling partner NC, which has ruled out the possibility of calling off polls and holding them in two phases. Deuba, waiting in the wings to take over the government leadership, is very clear about it. RPP has also objected to postponement proposal. With Oli keenly observing from a distance the handling of issues related to polls and amendment, Naya Shakti Nepal coordinator Dr.Bhattari getting arrested while staging a protest in front of the EC, demanding rights for parties to use own election symbols, and Madhesi leaders wanting  other components of the constitution amendment bill, excluding demarcation, passed along their lines before anything else and the EC asking the government to resolve the issues soon so as to ensure holding of polls on the announced date, it is difficult to say with certainty about the polls on May14.If NC continues to object to Dahal’s proposal of holding polls in two phase, which he is vigorously pursuing, chances of the ruling coalition  falling apart well before May 14 cannot be ruled out. The fluid political situation has opened door for anything and this environment of uncertainty will continue to hurt Nepal and its economy.

There is no sense in differing with the recent estimates of multilateral bodies such as the Asian Development Bank (ADB) and The International Monetary Fund (IMF) that the economy of Nepal could grow by anything between 5 to 6 percent because timely rain from the sky had encouraged many of us to conclude long ago that it would be a significant improvement over the frustrating growth of (0.77 percent) last fiscal year. Improvement in supply of agricultural inputs is also said to be a contributing factor. Marked improvement in supply of electricity, satisfactory progress in private reconstruction work and weak base effect seem to be making positive contribution towards growth. Let us hope the encouraging increase in paddy production of this year (exceeding target by 5.26 percent to reach 5.23 million tons) is sustained through timely availability in adequate quantity of factor inputs. In this context, government’s recent decision to provide 5 percent interest subsidy on loans given to agriculture by financial institutions is praise worthy. It is learnt that a sum of Rs.500 billion will be placed at Nepal Rastra Bank (NRB), which will execute the program and has already come up with a list of agricultural activities to come under the scheme. Hope the money does not remain unspent at NRB like more than 180 billion of government’s money still lying idle there on account of very low level of capital expenditure, which remained at 21.5 percent till last week of March.NRB also seems a bit concerned about hiking of rates on loans by commercial banks at a time when liquidity crunch appears to be easing gradually. It is natural for financial institutions to hike interest on loans when they have to pay more to their depositors but an astounding increase of 7-8 percent is difficult to justify.NRB has done its bit such as introduction of core capital-cum-deposit (CCD) ratio and allowing banks to calculate it by deducting 50 percent of loans extended to the productive sector, which means half of some 254 million extended to the productive sector thus far will be immediately added to the stock of loan worthy funds.IMF has raised objection to this temporary regulatory relief, asserting  it could allow continued rapid credit growth, creating macro financial risks. IMF’s act of drawing NRB’s attention is not unusual but it would be unwise to insist on immediate withdrawal of a measure to remain in force only till mid-July. Indeed, entrepreneurs are hit hard by the rise in cost of loans which will eventually make our products, whatever little production is there, less competitive in both internal and external markets. Talking of the position of our products in the external market (exports), it is pathetic that our trade gap is ever increasing. Compared to the seven months of last fiscal year, foreign trade in the current fiscal year has increased by 52.3 percent to reach Rs.599 billion, leaving a trade deficit of Rs.515 billion. It may be noted that in the corresponding period of last two fiscal years, exports remained at Rs.38billion last fiscal and Rs.51 billion a year ago. Let us hope Dahal succeeds in taking decisions on a new charter amendment proposal, formation of a federal commission and increasing the number of local units in the plains, which could ensure polls on the announced date and also help create a stable situation in which economic activities could be carried out in a meaningful manner.

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