Nefsearch Issue 7 - The Public Policy Discourse in Nepal

NEPAL ECONOMIC FORUM

nefsearch

January 2015 Issue 7

A SPECIAL REPORT ON PUBLIC POLICY FORMULATION

THE PUBLIC POLICY DISCOURSE

THE PUBLIC POLICY DISCOURSE IN NEPAL

PUBLIC POLICY FORMULATION ASSESSING ITS EFFICIENCY IN NEPAL

N

EPAL HAS LONG BEEN DEFINED BY VALUES STRONGLY ROOTED IN THE AUTONOMOUS POWER OF THE MONARCH

who made all the crucial decisions for the state. Historically, the state had been con-

structed from the top down with little or no interaction, discussion or pressure from organized societal interest, resulting in the public being recipients of policy but not a part of the policy ma king process. Before policy liberalization in the 1990s, Nepal’s policy making practices emphasized political considerations over economic development. It was only after policy liberalization that Nepal’s policy making practices witnessed rapid changes and a parliamentary monarchy was established with a system that incorporated public representation through elections in the parliament. Despite the progressive reform in policy making, the process has been plagued by slippage and implementation delays arising primarily due to political uncertainty and conflict.

Public Policy Formulation

WHO SHOULD PLAY WHAT ROLE?

Nepal’s political transition from a Monarch based mono-centric government to multi-party pluralistic governance necessitates conceptual and structural adjustments at multiple levels of policy making.1 Public policy is not in the sole domain of the State but has come under the civil domain with policy concerns being voiced by non-state actors and public goods being serviced by market players.

Non-state actors such as market players and international players now play a substantial role in influencing and shaping public policies. The policy process in Nepal however is still governed majorly by government and donor agencies.2 Has the Government Any Role?

Governments have a dual role in public policy- as the policy maker in formulation of policies to guide its actions, as well as the actual implementation of the policy. When governments engage in policy formulation, their principles are guided by an interplay of interests and powers in the society, and as such governments have a strong role in facilitating and supporting the voice of multiple stakeholders in the policy formulation process.

Although public policy does not only provide guiding principles in delivering public goods, it is an important aspect of public policy.

Assuming that the market mechanisms of developing economies were unreliable, many governments in such economies took central responsibility for economic activity. A similar value system in Nepali public

policy has over-burdened the government’s administrative capacity and weakened the voice of market and private sector players in supporting the formulation of efficient public policy in the country. Especially in the case of developing countries like Nepal, because of limited resources, it becomes crucial that public goods are provided in the most efficient and cost effective manner. Facilitating the market’s voice in public policy, especially in the allocation of public goods, can also have the added advantage of bringing efficiency in the allocation of vital goods and resources.

The market-oriented view of government sees its role in two folds, either by supporting private sector engagement for goods that can be supplied by the market, or by stepping in to supply those goods that the private sector is unable (lack of capacity) or unwilling (does not make financial sense) to supply. One of the issues of public policy in Nepal is the government’s inability to trust the private sector in the supply of public goods, as a result, policy formulation disregards the vital role of the market.

In the presence of a capable private sector, government interventions through the public sector can result in inefficiencies and wastage of resources.

For instance, the energy sector in Nepal has long been under the monopoly of the public sector. While the demand for energy continued to rise within the country, the public sector was unable to keep up with it,3 which led to massive shortages of

electricity, stifling the growth of the economy. Only after the energy sector was opened up for the private sector have new investments been coming in where by the prospects of minimizing the country’s energy gap appears to be increasingly plausible.

What role should the market sector play?

Markets can play a key role in increasing accountability and efficiency in public policy formulation. Efficiency may be brought in through efficient allocation of resources, as detailed above, or by bringing in market mechanisms for performance accountability. For instance, the telecom industry is a classic example. The state owned telecom enterprise was enjoying near monopoly in the telecom industry and the entry of Ncell, a private player, created stiff competition wherein the new market player started expanding its network by establishing towers in otherwise inaccessible areas of Nepal, providing good quality service to its customers. The public now has an alternate option for accessing telecommunication services. This compelled the state owned enterprise to start reforming and restructuring itself and improve its services.

Nepal is beginning to understand the value of private sector and it is encouraging to see the market more engaged in the serving of public goods and its increasing interest in how public policies are shaped. Although market players already play a role in the public policy making domain, a stronger role would further help

3

nefsearch January 2015

[

to make policies more dynamic and adaptive to the changes in the market and public needs.

Who does civil society represent?

Similarly, civil society’s engagement in public policy can facilitate acceptability and hold positions of power accountable for their actions. Unfortunately in Nepal, many civil society organizations (CSOs) are plagued with issues of inconsistency and lack of accountability and politicization.

CSOs are known to shift their focus area based on the interest of donors and political interests putting their credibility into question. Many CSOs are also unwilling to be accountable to anyone not in government or donor institutions, who fund them.4 Further, public policy discourse in Nepal is plagued by jargons such that the discourse is inaccessible to the majority of the Nepali public. As such, the CSOs are far from representing the interests of multiple stakeholders and do not facilitate a diversity in policy ideas. This results in policy discourse being captured by the elite.

ISSUES AND CHALLENGES

Nepal’s Public Policy has been plagued by a lack of participatory planning processes. The degree of freedom provided to policy makers by the state has led to irregularities in the policy making process. Similarly a lack of dialogue, debate and discussion among the concerned stakeholders has resulted in an absence of clarity among policy makers on the underlying implications of the policies they formulate. Public policies within the country have therefore not been able to maximize gains and benefits for the general public. Nepal faces tremendous gov-

[

4

A Public Good is defined as a good or service

provided to society wherein a large number of

people derive benefit from it at the same time. The population of the state and its resources determines the state’s ability to provide a public good.

ernance challenges in public policy formulation and resource allocation because of the following key reasons: Rule of Law

Rule of Law governs policy making processes and holds the actors accountable when the due process is not followed. The presence of a strong rule of law helps to ensure horizontal and vertical accountability. If the general public does not get access to public goods then there must be a clear system of contesting the policy: they should know where to go, whom to approach and how to approach.

This clarity of process and accountability is not possible without a strong rule of law. Countries with strong public policies may not necessarily have the presence of strong rule of law which gives rise to low accountability issues. In a democratic environment, public policy can only advance in the presence of a strong rule of law as it assures the credibility of policy process and its fair implementation.

In Nepal, there is excessive storytelling in Public Policy, and the alternative narratives also come from story-telling rather than scientific

research and evidence based narratives. In the absence of research or evidence, story-telling becomes poor and there arises claims and counterclaims on every piece of knowledge.

At present, there is absence of a deliberate mechanism to sort out these claims and counter-claims with some political settlement, because of which there is always the feeling of bull-dozing by monopolistic states.

Representation

In a democracy, every person should have a representative voice during the making of the policy. In Nepal’s context, there are huge power disparities between various interest groups that represent public needs.

The interest of weaker groups becomes hard to represent as the stronger groups end up skewing the policies in their favor. In the absence of an effective mechanism for representation, public needs are mostly expressed through strikes and protest with little room for negotiations. This has resulted in the adoption of strikes as the channel of imposed and forced representation. The anarchic form of imposed and forced representation leaves little room for holistic and

Public Policy Formulation

integrated development of policies.

While the Government of Nepal has signed a number of agreements following strikes and protests, these agreements are not binding for the government and may not necessarily be implemented.

The issue of representation is clearly visible in the hydropower sector. The politicization of attaining survey licenses has hindered the representation of true interest of power developers. Consecutive political failures have resulted in growing citizen distrust to the formal political representation system. Furthermore, irregular democratic renewal process at both the national and local level has constricted meaningful representation of citizen claims and demands in state operation.5 Contestation

Every policy decision is the end product of debate on how to solve a

given problem or how to achieve a desired result. It is through different levels of interpretation that policies get refined. In a democratic culture, the general public should be able to challenge, talk and write about policies. Since policies in general will not be acceptable to all people, contestation provides a voice to those who do not agree with the policy. This provides a platform for discussing alternative ideas which will help the policy to take better shape. In Nepal, contestation is not part of the standard operating procedure of policy formulation, because of which policy formulation may be skewed and does not take into account the values and needs of different groups of people.

Policy Inconsistencies

One of the problems with political instability is policy inconsistencies.

Because policies in Nepal are wisdom based rather than evidence based, there is political interference in the

CASE OF THE CONTEMPT OF COURT BILL

O

n June 8th 2014, the Government of Nepal registered a bill in Parliament Secretariat for a separate law on Court Contempt. The bill stated that

“publishing falsified documents regarding sub justice cases, or materials that may influence a verdict or erode people’s trust in the court or create confusion about the activities of the court shall be regarded as contempt of court�.6 Although this bill tried to discourage any disruptions to the court proceedings, it did not take into account its effect on freedom of speech. Had the government considered alternative interpretations of the bill by reaching out to members of the media for example, it would not have to face the backlash that it did. Key stakeholders, in this case the media, felt vulnerable and unable to voice their opinions through the system. In turn, the media groups, which felt that the bill will be used to restrict press freedom and freedom of opinion and expression, launched a huge campaign. Fortunately, this campaign was able to push the draft policy into public consultation.

bureaucracy and infighting among political parties; Nepal is plagued with policies that contradict each other or are frequently changed. In the hydropower sector for example, the long gestation period of hydropower projects makes it sensitive to changes in short term and long term policies.

Earlier the Electricity Act 1992, provided tax holiday for hydropower companies for 15 years and then levied 10% tax from the 16th year, this provision however was withdrawn by the Income Tax Act 2001 and again reinstated by the Finance Act 2009 with some changes.7 The withdrawal and re-implementation of the same provision clearly shows how policies are being implemented and modified without proper study or supporting evidence. Moreover, this has opened grounds for claims and counter-claims by various parties on how stakeholders are influencing policies to meet their needs. The lack of policy discipline has caused an unstable policy environment, which is often seen as the major hindrance for the growth of this sector. The introduction of new policies and revision of old policies should have paved the way for development but instead causes confusion and conflict.

Effect of Populism

All public policy measures may not be popularly accepted for one reason or another. While policies providing short term benefits can easily garner recognition and support, these policies are seldom sustained and do more harm than benefit to the country. Vulnerable leaders are also more inclined to support such policies, against policies that contribute towards long-term prosperity

5

6

nefsearch January 2015

as such leaders are more focused on satisfying popular demands.

A glaring example of this populist attitude of Nepali political leaders was seen after the second constituent assembly election, where a majority of legislators across various party lines launched a campaign demanding disbursement of NPR 50 million (USD 509,476) each for their constituencies.

The amount was later reduced to NPR 10 million (USD 101,895) and approved by the Constituent Assembly.

Despite protests among various sections of society that such piecemeal disbursement of income would be counterproductive in the materialization of any long term development goals, and would more likely be squandered for appeasing the constituency in the short run, it was still carried out.

Collective populism greatly undermines the value of collective social benefits and social costs. The subsidy in diesel and LPG, which is meant to relieve the burden of high prices on poorer

LEARNING FROM INDIA: POLICY EFFECTIVENESS INDEX

I

ndia has adopted the study of Policy Effectiveness Index (PEI) in order to measure the performance of its States in isolation and in comparison with each

other over time. This index looks at development in terms of securing a broadbased notion of human wellbeing wherein the success of policy measures to attain corresponding outcomes or development goals are assessed.8 The Index also encourages a culture of evidence-based policy making, presents a framework for policy effectiveness for a developing country and supports periodic assessment of policy outcome. The outcomes of the study has been presented in the recent Indian Public Policy Report (IPPR) which has pointed out several issues that need to be addressed in order to improve the policymaking process.

sections of society, is mostly beneficial to the urban dwellers and provides little or no benefit to rural communities because they use very little, if any, diesel and LPG in their day to day lives. This policy is largely an instance of populism, which has been putting undue negative pressure on Nepal’s foreign exchange resources.

CONCLUSION AND OUTLOOK

The process of policy formulation in Nepal is still weak. Without appro-

priate policy formulation, public policy will not be able to maximize welfare gains. In order for public policy formulation to address the needs of the public, it needs the appropriate mechanisms for representation, contestation and rule of law. Further, diversity in policy ideas and robust policy discourse is not possible unless the government takes necessary steps to facilitate interaction of multiple stakeholders and most importantly, the civil society becomes apolitical.

Endnotes 1. Dev Raj Dahal, “Public Policy on State-Building in Nepal”, New Spotlight, February 25, 2011, accessed 01 December 2014 http://www.spotlightnepal.com/News/Article/-Public-Policy-on-State-Buildingin-Nepal2. Kushal Pokharel, “A Critical Overview of Planning Process in Nepal”, Prashasan: The Nepalese Journal of Public Administration 3. Rabindra Nepal, Tooraj Jamasb, “Reforming small electricity systems under political instability: The case of Nepal”, Energy Policy, Elsevier, January 2012 http://www.econ.cam.ac.uk/dae/repec/cam/pdf/ cwpe1133.pdf 4. Uttam Uprety, "A reflection on the legal framework for civil society in nepal", USAID, The International Journal of Not for Profit Law, Volume 13, Issue 3 (June 2011) http://www.icnl.org/research/journal/ vol13iss3/art_3.htm 5. Saumitra Neupane “ Non-electoral Representation in Public Policy: Institutional capacity of Community Electricity User Groups in Nepal,” SJPG, Volume 34, Number 1 (June 2014) http://sjpg.pactu.edu. np/system/files/journal/articles/4_saumitra-neupane_non-electoral-representation-in-public-policy_institutional-capacity-of-community-electricity-user-groups%20in-nepal.pdf 6. Contempt of Court bill faces lawmakers’ snub”, The Kathmandu Post, June 24, 2014, accessed on 05 December 2014 http://www.ekantipur.com/2014/06/24/top-story/contempt-of-court-bill-faceslawmakers-snub/391243.html 7. Hydropower of Nepal- Slow Development”, Krishna Sunuwar, August 3, 2014, accessed on 15 December 2014 http://www.krishnasunuwar.com.np/2011/08/hydropower-of-nepal-slow-development/ 8. Rajeev Malhotra, Indian Public Policy Report 2014.

NEPAL ECONOMIC FORUM

Issue 7, January 2015 I Publisher: Nepal Economic Forum I www.nepaleconomicforum.org P. O.Box 7025, Krishna Galli, Lalitpur-3, Nepal I Phone: +977-1-5548400 email: info@nepaleconomicforum.org nefsearch team: Chandni Singh, Subrina Shrestha Design: Big Stone Medium, contact@bigstonemedium.com