Economist Adam Smith said, “No society can surely be flourishing and happy of which by far the greater part of the numbers are poor and miserable.” It holds true if one closely looks at Nepal’s state at the moment.
Nepal has taken significant steps to ensure inclusion of women, indigenous communities and marginalized groups in political as well as social spheres. While those steps are pivotal in fostering a just society, there still hasn’t been any remarkable achievement when it comes to reducing income inequality.
Though Nepal has kept economic growth rate as a national priority, the focus should be on how that economic growth has been distributed among the people till date.
Income shared by the poorest 20 percent of the population was 9.12 percent of national income in 1984 which has further decreased to 8.34 in 2010. While the income shared by the richest 20 percent of the population has kept on increasing with 39.49 in 1984 rising to an astounding 50.76 percent in 2003 and an all-time high of 56.2 percent in 2010.
Another means to analyze income inequality is the Gini coefficient; a value of 0 representing absolute equality, a value of 100 absolute inequality between the groups looked at. The Gini coefficient which was 29.55 percent in 1985, increased to 32.8 percent in 2013 leaving us behind our South Asian neighbours India, Bhutan and even Bangladesh.
Why is this happening? While a neo-liberal market approach has worked in increasing economic growth rate in many countries, it has also increased inequality. The free market economic policies after 1990 gave priority to privatization as part of the
structural adjustment programme, resulting in ownership transfer of a number of state enterprises, from the public to private sector. Similarly, subsidies on fertilizer, essential goods and services were drastically reduced. As a result, the rich became richer while the poor further suffered. This privatization could be beneficial to all if private sector participated in development creating equal opportunities for the poorest 20 percent who haven’t seen economic growth. But the private sector refrains from doing so given the risks posed by political instability in our country and limited possibilities of returns.
Now, the country is moving towards a federal structure, we are bound to see high inequalities among provinces as well. A study recently published by National Planning Commission of the Government of Nepal together with Oxford University has found that the level of poverty is higher in provinces 6 and 2 than other five provinces of the country
Even if we achieve economic development considering today’s inequalities as its price, development won’t be sustainable over the long run. Therefore, while Nepal should continue its efforts for economic growth, it should also focus on reducing inequality and introducing economic policies that share the benefits equitably to the larger population. Though entrepreneurs and private businesses should be encouraged to work as creating more jobs and promoting healthy market competition, it is also a fact that free market alone can’t bring overall development. Thus, the role of the public sector is crucial, particularly in the social sector along with infrastructure development while private sector's investment is always confined merely to profitable areas.
We must accept that an absolute equality is a utopian idea. However, reducing the severity of inequality and its grave consequences are definitely achievable with the correct steps. That is where the focus should be given right now by the government! And civil society organizations can play a catalytic role in this process.
On this note, RRN fully supports the Civic Campaign against Inequality being organized under the coordination of Nepal SDG Forum from 23-24th January 2017. We urge everybody to join us in solidarity to raise voice against inequality of all forms.
Gyan Bahadur Adhikari
Rural Reconstruction Nepal (RRN)