Chapter 1

Review of the Eighth Plan

1. Background
The process of planned economic development has commenced in Nepal since 1956
with the inception of the First Five-year Plan (1956-1961). Eight periodic plans have
been implemented so far. Some progress has been made towards laying socio-
economic infrastructure, which has supplemented national development over a little
more than four decades; however, achievements of these plans do not measure up to
the expectation. No substantial progress has registered in the agriculture sector, upon
which the majority of people mainly rely for subsistence. Only a limited number of
industries have been established. Internal savings have remained low. External
assistance has not been utilised gainfully. Foreign trade has recorded increasing
deficit. Unemployment and economic inequality have not been able to reduce. As a
consequence, the problem of poverty still remains unresolved.
Poverty still persists as a formidable challenge as population growth has not been able
to bring down and the increase in the income of the people has remained minimal.
Against the backdrop of 42 percent of the population living below the absolute poverty
line, it is highly essential to promote investment and employment and render
sustainable and dynamic economic development in order to increase the income of the
poor within a certain time span.
2. Review of the Eighth Plan
The Eighth Plan, which was implemented following the restoration of multi-party
system, set the objectives of attaining sustainable economic growth, alleviating poverty
and reducing regional disparity. For the attainment of those objectives, it was
underlined in the Plan to allocate the limited economic, human and institutional
resources in a priority order given below:
• Agricultural intensification and diversification
• Energy development
• Rural infrastructure development
• Employment generation and human resource development
• Control in population growth
• Industrial development and tourism promotion
• Export promotion and diversification
• Macro-economic stabilisation
 • Reforms in development administration
• Monitoring and evaluation
The development approaches to the Eighth Plan were as follows:
• To lead development through the market-oriented, open and liberalised
economy,
• To effectively implement the decentralisation policy through the devolution
of power to the local bodies,
• To create a condition whereby all the people could enjoy the fruit of
development through enhancing regional development with rural
development,
• To confine the role of the public sector mainly to the creation of physical
infrastructure and rendering basic social services in the rural areas,
• In order to mobilise the private sector and the NGOs in the development
activities to the greatest extent possible:
• administrative procedure would be simplified and made clear,
• administrative decision would be made prompt,
• Government policies would be made more liberal, simplified and
clearer,
• defined policies would be effectively implemented, and
• On the basis of their experiences and comparative advantage, the INGOs
would be encouraged to operate in regions where they could function
more effectively.
Attempts were made during the Eighth Plan period to encourage private sector
participation and investment and to confine the role of the government more to
developing socio-economic infrastructure. Thus attempts were made to make the role
of the government limited but effective by gradually replacing the command economy
by open market system. During the Plan period, efforts were made to create an
environment conducive to liberal and market-oriented economic system. Preparations
were made to introduce value -added tax (VAT). Privatisation of public enterprises
was initiated. Protections, which the public enterprises were enjoying in various areas,
were removed to encourage private sector participation. Subsidy was controlled.
Exchange rate was left to determine by market forces; and commercial banks and
financial institutions were encouraged to establish.
The Eighth Plan envisaged transforming the village into a centre of development and
attempted to channel a big chunk of public investment towards its upliftment. In this
context, power was devolved to the local bodies and various policies and programmes
were executed to transfer resources to the local bodies. All these were carried out to
implement the decentralisation policy effectively. Thus, a policy of inter-weaving the
concept of regional development with that of village development and decentralisation
policy was being adopted. Likewise, new programmes directed towards alleviating
poverty and reducing regional disparity were initiated. An Agriculture Perspective
Plan (APP) was prepared, which gave a clear direction to national development
programmes. A basis was worked out in regards to land reform to put an end to dual
land-ownership. Potential areas were identified for the development of irrigation and
energy. Likewise, new programmes were initiated to uplift the deprived and the down
trodden class and special programmes were started for the homeless, kamaiya
(bonded labour), the old and the helpless.
Status of Economic Progress:
Gross Domestic Product
The Eighth Plan had set a target of attaining an average economic growth of 5.1
percent per annum. To attain this growth rate, the value added had to grow by 4.8
percent per annum on an average. Similarly, agricultural growth rate had to be 3.7
percent and non-agricultural growth rate had to be 6.1 percent. Based upon the
estimated population growth by 2.1 percent during the Plan period, the per capita
income was estimated to grow annually by 3 percent on an average.
As per the plan target, gross domestic product (at producer's prices) increased by 5.1
percentage point and the same (at factor cost) was estimated to have increased by 4.9
percentage point. Average agricultural growth rate stood at 3 percent while non -
agricultural growth rate remained 6.3 percent during the plan period. (Table 3).
The progress made in the agriculture, irrigation and forest; industry, geology and
mines; power, public works, trade, hotel and restaurants sectors fell below the set
growth target. However, the progress in transport and communication, finance and
real estate and social services exceeded growth targets (Table 3). In the fiscal year
1992/93 and 1994/95 - the first and third year of the Plan, inclement weather and
resultant flood and landslides caused great destruction in men and materials, which
had adverse impact upon the agriculture sector. In addition, the internal situation that
transpired within the country has caused a set back in the growth of industrial
production. Beside this, as Arun Third Project failed to take off, the power sector did
not record expectant progress, which rendered its contribution to GDP quite low.
Likewise, no improvement could be made on the existing international air service. The
garbage problem within the Kathmandu Valley defied solution. As a result, the trade,
hotel and restaurant sector recorded low growth rate.
In the financial sector, progress exceeded the target due to the establishment of
numerous new commercial banks, financial institutions and insurance companies
following the adoption and execution of open market and liberal economic policies.
Likewise, the transport and communication and the social services sector registered
high progress in comparison to the target owing to expanded investment during the
Eighth Plan.
Despite growing private investment in the industrial sector, the average annual growth
rate remained a low of 6.8 percent due to load shedding and political instability during
the Pla n period. Although some foreign investment was attracted to the industrial
sector during the period, more effort was felt as needed for the same. Following the
policy of reducing public investment in the industrial sector, some public enterprises
were privatised. While some industries had record high production after privatisation,
the government losses scaled down.
Changes were seen in the economic structure due to various growth rates recorded in
different sectors. Contribution of the agriculture sector to GDP which stood at 44.89
percent in the fiscal year 1991/92 came down to 41.02 percent in the final year of the
Plan. The transport and communication sector recorded a high increase in its
contribution to GDP, which rose from 6.89 percent in 1991/92 to 8.03 percent in
1996/97 (Table 4).
Savings and Investment
Based upon the incremental capital output ratio (ICOR), it was estimated that an
investment of Rs 170,332 million (at constant price of 1991/92) was needed to achieve
the growth target set in the Eighth Plan. Of this, 35.9 percent (Rs 61,139 million) was
to be invested by the government and 64.1 percent (Rs 109,193 million) was to come
from the private sector. For the capital investment from the government side, an
outlay of Rs 113,479 million was estimated as the development allocation.
During the period, gross fixed capital formation reached Rs 188,892 million at 1991/92
prices. Investment in the first year was Rs 35,918 million, which reached Rs 48,359
million in the final year. In the gross capital formation, the share of the private sector
stood at Rs 128,624 million and public investment constituted Rs 60,267 million. (Table
6).
In the year 1991/92, the base year of the Plan, total investment constituted 21.2
percent of the gross domestic product, which reached 25.1 percent in the final year of
the Plan. Likewise national savings rose from 13 percent to 14.8 percent of the gross
domestic product. In 1991/92, total national savings formed 61.4 percent of the total
investment. The same increased to 68.3 percent in 1991/92 and decreased to 59.1
percent in 1996/97 (Table 7).
Thus, as against the estimation of 15 percent, national savings remained 14.8 percent
of total gross domestic product.
Status of Public Finance:
Financial Resource Mobilisation
Internal resource mobilisation plays a significant role in bearing public expenditure,
increasing investment rate and maximising the utilisation of foreign assistance.
Keeping this in mind, the Eighth Plan had set a target of raising revenue up to 13.4
percent of the GDP. For this purpose, the Plan adopted a series of policies which
aimed at bringing required changes in tax system: making a tax guided by a single
objective rather than multiple; introducing value added tax; evolving a tax system for
the agriculture sector; bringing uniformity in custom duties; gradually removing excise
duty; making income tax simple and comprehensive; enhancing land revenue as a local
resource; making property tax systematic; and rendering the revenue administration
more capable and efficient. As regards to foreign assistance, the Plan laid emphasis
on its maximum utilisation and stated that external loan would be taken only for
directly productive programmes and that for the rest grant would be sought.
As against the target of making the revenue administration capable and efficient as a
first step, formation of the revenue group was completed during the Plan period. To
bring about a desired change in the tax structure, attempts were made to bring about
uniformity in country-wise import duties and reduce number of import rates to a mere
five, including a special rate. Sale taxes were fixed at only 10 and 20 percent and
excise duty was limited only on production of alcohol, cigarettes, and tobacco. To
introduce value added tax, the number of commodities, which had to pay sales tax at
two levels, was increased. Besides this, Acts were enacted, preliminary administrative
arrangements were made and various activities, including raising public awareness
about the tax, were carried out.
As per the policy of developing land revenue as a local resource, a system of
allocating 55 percent to District Development committee (DDC), 40 percent to Village
Development Committee (VDC) and depositing 5 percent in the government of the
total revenue collected was introduced. The budget for the fiscal year 1995/96
provided 75 percent of the total land revenue and land tax to be allocated to
municipality and VDC and 25 percent to DDC. Steps were taken to make income tax
simple and comprehensive. Attempt was made to increase the number of income tax
payers. A system of self-assessment of income and pre-tax collection was put in
place. Despite formulation of policies to systematic property tax, various practical
obstacles came in its enforcement. As such, this tax was revoked and a policy of
effectively executing house and land tax in its place was adopted.
Regarding evolving and introducing tax system in the agriculture sector, various rates
of land revenue were fixed for lands which had not been surveyed and tea estates and
urban land area were imposed. Yet substantial amount of revenue could not be
mobilised. During the Plan period, prioritisation and classification of projects into the
core and non-core projects were carried out, and execution of three-year rolling plan
was initiated.
Public Finance
It was estimated that during the Eighth Plan period the regular and development
expenditure at the constant prices of 1991/92 would be Rs 53,759 million and Rs
113,479 million, respectively.
Regular Expenditure
During the Plan period, the regular expenditure at constant prices of 1991/92stood at
Rs 68,339.6 million,which exceeded the target. In the first year of the Plan the
expenditure reached Rs 10,553.3 million which decreased by 0.85 percent in the
second year and came to Rs 10,463.1 million. But in the third year the expenditure
rose by 44.21 percent and reached Rs 15,088.6 million. The main reason for this
expected rise in the regular expenditure had been the transfer, from the development
head to regular head, of Rs 352 million (at the current prices) and Rs 2,718 million (at
the constant prices), which were of regular nature. In the final year of the Plan, the
regular expenditure stood at Rs 16,614.6 million (Table 8).
Development Expenditure
It was estimated that during the Plan period, the development expenditure (at constant
prices) would reach Rs 113,479 million, which turned out to be Rs 111,824.4 million (at
current prices) and Rs 87080.3 million (at constant prices) which was 76.74 percent of
the target (Table 9).
Development expenditure (at constant prices) rose by 8.04 percent and reached Rs
17840.1 million in the first year; increased by 0.14 percent and reached Rs
17,865.3million in the second year; and decreased by 13.22 percent and came down to
Rs 15,403.5 million in the third year. The main reason for a decrease in the
development expenditure in the third year of the Plan had been the transfer of Rs
2,718 million (at constant prices) from development head to regular head; and holding
of election and consequent political instability, etc. In the fourth year of the Plan, the
development expenditure grew by 16.73 percent, which came down by 1.78 percent
and remained Rs 17774.9 million in the fifth year.
As against the target of development expenditure of 29.6 percent in economic
services sector, 31.6 percent in social services sector and 39.6 percent in physical
infrastructure sector in the Eighth Plan, the actual expenditures were found to be
30.94 percent, 33.29 percent, 34.37 percent, respectively. In this way, it was found
that the expenditure was less against target in physical infrastructure while it was high
in economic services and the social services sectors. (Table 10)
Sources of Development Expenditure:
The total development expenditure of the plan period was envisaged to be Rs 113,479
million at 1991/92 prices and was expected to be borne from the following four
sources: (a) revenue surplus (b) internal loan (c) foreign grant, and (d) foreign loan.
Revenue
Against the target of mobilising revenue by 13.4 percent of GDP during the plan
period, it stood at 8.97 percent in 1992/93, and reached 9.83 percent in the second
year, 11.09 percent in the third year, 11.00 percent in the fourth year and 10.94
percent in the final year.
Revenue collection in the first year of the plan was Rs 15,148.4 million (at current
prices) which reached Rs 19,580.8 million, Rs 24,605.1 million, Rs 27,893.1 million and
Rs 31,214.1 million respectively in the second, third, fourth and final year respectively.
At 1991/92 prices, revenue collection figures from first to final year of the plan were
Rs 13,920.6 million, Rs 16,509.9 million, 19,270.9 million, Rs 20,206.5 million and
20978.6 million in the first, second, third, fourth and final years of plan, respectively.
As against the target of increasing revenue mobilisation by an annual average of 9.7
percent at 1991/92 prices, the annual growth rate reached 9.20 percent. In the first
year of the Plan, revenue growth rate unexpectedly went down to 3.02 percent. It
increased to 18.60 percent in the second year, 16.72 percent in the third year, 4.86
percent in the fourth year and decreased to 3.82 percent in the final year. Revenue
growth rate was decreased in the first year due to low import tariff rates imposed on
various commodities. Although the revenue growth rate was good enough in the
second and third years, it was very low in the fourth and final years of the Plan.
During the Plan period, highest revenue was collected from import duty, sales tax and
income tax while lowest revenue was collected from land revenue and export duty.
However, from the view point of annual average growth rates, the income tax, import
duty and sales tax had high growth rates. The trend of revenue mobilisation from land
tax was decreasing while revenue from excise duty had decreased in the initial years
though increased in the final year. Property tax could not be raised as expected. Due
to administrative and other difficulties, this tax system was removed in 1995/96 and
policy was adopted to mobilise house and land taxes.
Non-tax revenue had increased by 3.12 percent on an annual average reaching the
amount to Rs 4240.4 million from Rs 3637.1 million at 1991/92 prices. In non-tax
revenue high growth rates have been observed on miscellaneous, principal and interest
and government properties, and sales of services and commodities. (Table 14)
It was observed that during the plan period the contribution of tax and non-tax revenue
in total revenue collection was 78.68 percent and 21.32 percent respectively. In
accordance with the objective of imposing value added tax (VAT) during the plan
period and removing excise duty, number of commodities levying excise duty had been
gradually decreased. Consequently, it was observed that the contribution of exercise
duty on revenue had been decreased while the contribution of sales tax had been
increased. The contribution of income tax, which had an important role in direct tax,
had been increasing every year. Its contribution in total revenue was 6.33 percent in
1991/92 while it reached to 12.69 percent in the final year of the plan.
The proportion of direct tax in total revenue was 11.8 percent in 1991/92, while it
increased to 15.7 percent in the third year and reached to 16.1 percent in the final
year of the plan. Likewise, the proportion of indirect tax in total revenue was 61.3
percent in 1991/92, while it increased to 64.3 percent in the third year and remained at
63.69 percent in the final year of the plan. The contribution on non-tax revenue in total
revenue was 26.92 percent in 1991/92, it was decreased to 20.1 percent in the third
year and reached to 20.21 percent in the final year. Thus, the increasing contribution
of direct tax in total revenue showed a positive change in tax structure (Table 15).
Budget Deficit and Deficit Financing:
Budget deficit was Rs 11,261.5 million in the base year of the Eighth Plan. However,
it remained at Rs 10,987.3 million in the first year, Rs 9,800.2 million in the second
year, Rs 8,315.7 million in the third year, Rs 10,014.7 million in the fourth year and Rs
10,003.3 million in the final year of the Plan. Thus, it was observed that there was a
gradual decrease in budget deficit in the first three years of the plan. Though there
was some increase in the final two years, it was lowered down in comparison to the
base year.
The figure of deficit financing was Rs 4,444.8 million in the base year of the Plan.
However, it remained Rs 4,627.0 million (at constant prices) in the first year, Rs
2,073.7 million in the second year, Rs 2,533.8 million in the third year, Rs 3,158.7
million in the fourth year and Rs 2,961.0 million in the final year of the plan. Against
the target of keeping deficit financing to 0.9 percent of GDP, it remained at 2.94
percent in the first year, 1.23 percent in the second year, 1.48 percent in the third
year, 1.77 percent in the fourth year and 1.58 percent in the final year of the Plan.
Thus, it could be observed that though the proportion of deficit financing in GDP was
gradually decreasing, the set target of the plan was not achieved.
The proportion of deficit financing in internal resources was 55.20 percent in 1991/92.
However, it remained at 57.88 percent in the first year, 25.53 percent in the second
year, 38.17 percent in the third year, 40.78 percent in the fourth year and 40.42
percent in the final year of the plan. (Table 18).

Foreign Assistance:
Though it was estimated that the total amount of foreign assistance during the Eighth
Plan period would reach to Rs 74355 million at 1991/92 prices, it reached to Rs 49203
million, which is only 66.2 percent of the target. It was estimated that the amount of
foreign grants and foreign loans (at constant prices) would be Rs 19761 million and Rs
54594 million respectively. It reached to Rs 15491 million and Rs 33712 million
respectively (Table 17).
The total development expenditure of the plan period (at 1991/92 prices) was Rs
87080.3 million, of which Rs 37823 million (43.4 %) was borne through internal
sources and Rs 49203 million (56.5%) was borne through external sources. Amongst
the internal sources, Rs 22998 million (26.4%) and Rs 15354 million (17.6%) were
borne through revenue surplus and other internal sources, respectively. As against the
target of limiting internal loan (including cash reserves) to 7 percent of development
expenditure, it reached to 17.6 percent (Table 17).
The proportion of foreign assistance in total development expenditure during the plan
period was estimated to be 65.5 percent, which remained at 55.19 percent in the first
year, 54.55 percent in the second, 56.83 percent in the third, 57.20 in the fourth and
58.79 percent in the final year. Likewise, the proportion of foreign loan in total foreign
assistance remained at 64.60 percent in the first, 79.29 percent in the second, 65.00
percent in the third, 66.23 percent in the fourth and 67.39 percent in the final year of
the plan (Table 20).
During the plan period, foreign assistance could not be mobilised as per the target and
the proportion of foreign loan in total foreign assistance decreased in comparison to
the base year although it increased to some extent from that of the beginning year of
the Plan. Thus, as against the target of mobilising 65.5 percent foreign assistance, it
remained at 56.5 percent. Consequently, the mobilisation of internal loan and cash in
reserve was increased.
Monetary and Credit Situation:
Monetary and Credit Policy
The main objectives of banking and credit policy in the Eighth Plan were to mobilise
internal resources, to maintain internal and external balance through ensuring
monetization ratio as per the demand of economy, to create healthy and competitive
monetary environment, and to disburse credit in prioritised sectors such as agriculture,
cottage and small industries.
During the plan period, policy was adopted to regularise the monetary and banking
sector through indirect measures without interfering directly in accordance with the
concept of liberal and market oriented economic system. Likewise, policy was
adopted to encourage the commercial banks and financial institutions to run on a
competitive basis and let them determine interest rate and other conditions on their
own. Policy to limit the credit from the banking sector was adopted by the government
with the objective of reducing the budget deficit and channeling more credit to the
private sector.
Policy was adopted that commercial banks would compulsorily invest 12 percent of
their total credit to the priority sectors as direct intervention. Otherwise, they had to
deposit their un-invested amount in the Nepal Rastra Bank as interest free investment.
Financial feasibility was considered to be the main basis for expanding the branches. It
was also mentioned in the Eighth Plan that rural banks would be gradually established
in order to smooth disbursement of credit in rural areas and to minimise government
interference in credit disbursement.
In the beginning of the Eighth Plan, there was a compulsory provision of maintaining
12 percent of the total deposit as cash in reserve and investing 24 percent of total
deposit in treasury bills of the government or Nepal Rastra Bank. The compulsion of
investing 24 percent of total deposit in treasury bills of government or Nepal Rastra
Bank was decreased to 22 percent in 1992/93. This provision was removed in
1993/94. This system enhanced the credit disbursement capacity of the commercial
banks and had a positive effect on credit disbursement to the private sector. Status
quo was maintained in the provision of keeping 12 percent of total deposit as cash in
reserve. In the absence of such compulsory provisions, financial programmes of the
government and buying and selling of treasury bills of Nepal Rastra Bank became
main indirect instrument to control the liquidity. For instance, in 1992/93, in order to
absorb liquidity the government reduced the budget deficit through controlling
expenditure and mobilising revenue, and Nepal Rastra Bank issued treasury bills of
additional Rs 1.71 billion.
With the view of mobilising internal resources and providing more competitive services
in the financial sector, establishment of financial institutions was encouraged. As a
result, 11 commercial banks including Himalayan Bank, Nepal S.B.I. Bank, Nepal
Bangladesh Bank, Everest Bank, Bank of Kathmandu and Nepal Bank of Ceylon
were established and involved in banking transactions during the plan period. As
regards the financial companies, more than 40 such companies were involved in
transactions. Moreover, some cooperatives and non-governmental organisations also
started limited banking transactions.
With the increased number of financial institutions and the authority delegated to
determine interest rates, there was some decrease in interest rates on deposit but
substantial decrease was not realised in interest rates on credit. As a result, the spread
rate between savings and credit could not be narrowed down. The main reason for
such a situation was observed as the lack of expected improvement in professional
efficiency and financial status of government-owned commercial banks. Other joint
venture banks also did not make efforts to minimise this gap. In the process of
improving financial position of the commercial banks, second phase of commercial
banking policy and strategic study (CBPASS) was started in 1992/93.
Some branches of Nepal Bank and Rastriya Banijya Bank were closed according to
the policy of opening up and closing down of branches of these commercial banks on
the basis of financial viability. Most of the branches situated in urban areas were also
closed. With the objective of smooth credit disbursement in rural areas, rural
development banks were established in two development regions, Eastern and Far
Western, in 1992/93. Additional two Rural Development Banks were operationalised
in Western and Mid Western Development Regions in 1994/95 and after that one rural
development bank was established in Central Development Region as wll.
Monetary Situation
There would be an adverse impact on balance of payments and price situations if
there was excessive liquidity in the economy while development would be hindered
with the lack of required liquidity. Realising this contradictory situation, it was targeted
to keep the growth of money supply at annual rate of 12.1 percent during the plan
period. Through this, it was expected that inflation would be maintained at 9 percent
annually. But, it was observed that the average growth rate of money supply was 14.6
percent during the plan period. Money supply was increased by 22.5 percent in the
first, 19.6 percent in the second, 15.7 percent in the third, 10.6 percent the fourth and
5.4 percent in the final year of the plan. (Table 21). The main factor for the growth of
money supply in the initial years was the credit to the private sector. In the context of
the credit to the government was the main factor for the expansion of money supply,
the credit to the private sector indicated that the use of indirect instruments for
controlling money supply had not been effective and increasing role of the private
sector.
In comparison to the mid-July 1992, money supply (M 1) increased by Rs4375.3 million
in the corresponding period of 1993, Rs 4,677.4 million in 1994 as compared to the
same period of the previous year, Rs 4475.0 million as of mid -July 1995, Rs 3512.6
million as of mid-July 1996 and Rs 1962.3 million in the corresponding period of the
previous year (Table 22).
Domestic Credit
The annual growth rate of domestic credit, the main expansionary factor of money
supply, remained at 18.74 percent in the first, 17.05 percent in the second, 24.83
percent in the third, 22.75 percent in the fourth and 13.02 percent in final year.
Minimal role had been played by the credit to the government and public enterprises in
the growth of domestic credit. In the first year, credit to government and public
enterprises had increased by 16.85 percent while it increased only by 0.10 percent in
the second year. It increased by 7.09 percent in the third year, 12.99 percent in the
fourth year and only by 5.65 percent in the final year. The growth in domestic credit
was resulted mainly due to credit to the private sector. It was observed that the credit
to the private sector had increased by 20.81 percent in the first, 35.11 percent in the
second, 38.83 percent in the third, 28.69 percent in the fourth and 16.97 percent in the
final year of the plan.
Thus, it was observed that the growth rate of credit to the government and public
enterprises had decreased, while credit to the private sector had increased in the initial
years, and slightly decreased from the fourth year. In the initial years, increased credit
disbursement indicated that the private sector had growing confidence on the policies
adopted in the process of strengthening it in accordance with the concept of liberalised
economic system. However, it was observed that the growth in economic activities of
private sector had decreased in the final years of the plan.
Net Foreign Assets
The growth rate of net foreign assets, another expansionary factor of money supply,
was 40.07 percent in the first and 24.35 percent in the second year. It was limited to
1.74 percent in the third, 1.67 percent in the fourth and 6.60 percent in the final year
of the plan. Decrease in export had been observed as the main factor for lowering
down the growth rate of net foreign assets.
Time Deposit
One of the contractionary factors of money supply was the growth rate of time
deposits (fixed and savings). It remained at 31.57 percent in the first, 19.65 percent in
the second, 16.31 percent in the third, 17.00 percent in the fourth and 16.21 percent in
the final year of the plan. Though the growth rate of time deposits was high in the first
year of the plan, it decreased in the remaining years, for which growing attraction
towards monetary markets and low interest rates had been observed as the main
reasons.
Net Unclassified Liabilities
Net unclassified liabilities, another contractionary factor of money supply, had
increased by 20.4 percent on an average in the first two years, by 16.55 percent in the
third, by 18.98 percent in the fourth and by 8.79 percent in the final year of the plan.
Deposit and Credit Situation
The sources of funds and their use by commercial banks had increased by 27.40
percent in the first, 24.63 percent in the second, 14.19 percent in the third, 19.95
percent in the fourth and 16.73 percent in the final year of the plan. In the first year of
the plan, the growth rate of total resources had been observed high because of
average high growth rate in fixed deposit and other deposits as well as high growth
rate in resources of commercial banks. In the initial years, growth rate of resources of
the commercial banks had been observed low due to decreased growth rate in fixed
deposits.
The main source of the commercial banks, total deposit, had increased by 19.60
percent during the plan period. Although the total deposit had increased by 30.65
percent in the first year, there was a gradual decrease from the second year. Total
deposit had increased by 19.85 percent in the second, 16.97 percent in the third, 16.65
percent in the fourth and 14.51 percent in the final year of the plan. There was some
decrease in the growth rate of fixed deposits in the second and third years of the Plan.
This was due to decreased interest rates offered by the banks, establishment of
finance companies and attraction of fixed depositors towards such companies since
they offered more interest rates on deposits of long-term nature (not possible to draw
immediately) and growing tendency to invest in share markets. However, there was
some increase in fixed deposits of commercial banks from the fourth year of the Pan
although there was slackness in share markets.
As regards the use of resources by the commercial banks, cash in hand and cash in
reserve had increased by average 23.43 percent during the plan period. Amongst the
subtitles under cash in hand and cash in reserve, it was observed that in all other
subtitles, except in foreign exchange, growth rate was high. Particularly, the average
growth rate of balance with Nepal Rastra Bank (including the investment on treasury
bills of Nepal Rastra Bank) was 23.30 percent. This growth rate was highly increased
by 139.02 percent in the first year, and decreased by 22.52 percent and 15.51 percent
in the third and fourth years respectively. Likewise, the growth rate of balance held
abroad and cash in hand grew by an average of 26.31 percent and 19.86 percent
respectively. As regards the annual average growth rate of foreign exchange, it
remained at 8.64 percent only.
The average growth rate of total credit and investment during the plan period
remained at 19.58 percent. There was some decrease in credit disbursed to the His
Majesty's Government and the public enterprises. Credit disbursed to the government
and public enterprises during the plan period had decreased by average 3.39 percent
and 1.74 percent respectively. But credit disbursed to the private sector had increased
by average 27.91 percent. As regards the foreign bills purchase, it increased by an
average of 10.58 percent only. Thus, it was observed that the sectoral composition of
the credit disbursement of the commercial banks had moved to the positive direction.
Credit disbursed to His Majesty' Government and the public enterprises had been
decreasing, while credit disbursed to the private sector had been increasing. (Table
23).
When analysing credit by objective, highest percent of credit 39.32 percent was
disbursed in trade, 29.86 percent in industry, 25.38 percent in consumption, 2.95
percent in services and 2.48 percent in agriculture from the existing credit disbursed
by commercial banks as of mid -July 1992. Of the total credit disbursed by commercial
banks as of the end of the Eighth Plan (mid-July 1997), 42.32 percent was disbursed in
industry, 37.07 percent in trade, 14.33 percent in consumption, 4.00 percent in services
and 1.82 percent in agriculture. (Table 24).
Many branches were opened as per the policy of providing services of one bank to 30
thousand population during the plan perio d; therefore, run-in loss banks had to bear
additional financial liability. In the above context, policy was adopted to open the
branches on the basis of financial viability and merging the branches located very near
to each other with the objective of improving financial status of the banks and make
them competitive.
Price Situation:
Price Policy
Price has an important role to play in anopen, liberal and market oriented economy. If
the rate of price rise is high, currency is devalued and purchasing power decreases,
and if the price remains constant or falls, investors will be unenthusiastic. So, price rise
at some percentage point is desirable in the process of economic development. From
this viewpoint, it was targeted to limit the rate of price rise at 9 percent on annual
average during the plan period.
Various steps, such as artificial control of price, control in internal flow of goods and
services, separate price fixation on goods imported from different countries through
custom rates, providing subsidies to enterprises, and monopoly affecting the
competition were not appropriate in the context of open and market-oriented
economy. Such steps would create unnecessary fluctuation in price and lead towards
inappropriate allocation of resources. Keeping these facts into consideration, the
Eighth Plan had adopted the policy of decontrolling the internal flow of goods and
services. Likewise, policy was adopted for allowing the private sector to import goods
on competitive basis, which used to be imported by public enterprises only.
Efforts were made to bring uniformity in custom rates, on one hand, and custom rates
were reduced in order to promote competitions by removing protectionism, on the
other. Efforts were also initiated to remove subsidies. In the context of competitive
environment created through avoiding monopoly of public enterprises, financial
institutions and airline services established in the private sector contributed to the
increase in the economic activities. Even in essential commodities like foodstuff, Nepal
Food Corporation had adopted the policy of stabilising the price by controlling supply
through its stocks, but not by controlling the price. Thus, according to the policy of
affecting the price level through supply and market instead of directly controlling it,
private sector's role in various economic activities had been increasing.

Price Situation
During the Eighth Plan period National Urban Consumer's Price Index increased by
8.8 percent in 1992/93, by 9.0 percent in 1993/94, by 7.6 percent in 1994/95, by 8.1
percent in 1995/96 and by 7.8 percent in 1996/97. Thus, the average annual growth
rate of price was maintained at 8.3 percent, which was less by 0.7 percent than the
target set by the plan.
After the adoption of open economic system by the country, signs of positive
improvements appeared in the economy and accordingly, positive impacts were
observed in price situation also. The main reasons for decreased price level could be
attributed to control in government expenditure, stability in exchange rate and
improvement in supply situation, and so forth.
As regards to the classification of consumption goods, less price increase was
observed in food items. During the plan period, the rates of price increase on food and
non-food items were 7.9 percent and 8.9 percent respectively. In the first year of the
plan, the increase on many non-food items was observed in double digit while it was
limited in single digit in the remaining years. But, it was observed that the price of
many food items had increased in the remaining years in comparison to the first year
of the plan. Price was increased particularly on pulses, sugar, fish and meat, milk and
milk products, beverages, restaurant meals, vegetables and fruits etc.
Foreign Trade and Balance of Payments Situation:
Foreign Trade
In accordance with the policy to consider foreign trade as an inseparable medium of
economic development but not as a medium of supplying necessary goods only, the
Eighth Plan stressed on the overall adjustment of policies and programmes for
development of commercial sector along with productive sectors of the economy.
Accordingly, emphasis was put on the adjustment of commercial sector with the tax
policy, customs policy, policy regarding professional organisations in the public sector
and privatisation policy in order to make foreign trade open, transparent and simplified.
For the promotion of export and for providing facilities to the exporters, Nepalese
currency was made full convertible in current account during the Plan period. In
order to increase the export of Nepalese industrial products in Indian markets, simple
provision of export on preferential treatment on the basis of certificate of origin of
product was made after the amendment in Nepal-India Trade Treaty. For importing
necessary raw materials and machinery equipment at a cheaper price from India for
Nepalese industries, provision was made for allowing import of such commodities in
convertible foreign currencies.
In an effort to run the activities for the promotion of foreign trade and increasing the
exports effectively, various activities, such as production of woollen carpets, quality
enhancement and import management of raw wool and increasing the export of
Nepali woollen carpets, had been undertaken. In order to promote the increased
export of high quality carpets from the Kingdom of Nepal, policies of enhancing the
quality in the production of woollen carpets, allowing to import quality raw wool
necessary for producing woollen carpets, prohibiting import to low quality wool, were
adopted. In order to systematise the export of readymade garments, which occupied
the second main position in Nepal's exports, and to increase its export, transparency
was maintained in quota fixation and distribution system for readymade garments by
strengthening Readymade Garments Exports Promotion Committee. For simplifying
export system of gold and silver jewelry for increasing the export of jewelry and
handicrafts made of gold and silver, provision was made to supply gold and silver to
exporters at a cheaper price by importing gold and silver from international markets
through the Nepal Rastra Bank.
Foreign Trade Situation
The Eighth Plan had set a target to increase export by 19.1 percent and import by 11.7
percent on an annual average. On the basis of the anticipated growth rates in exports
and imports, trade deficit was expected to be 13.5 percent of the GDP by the final
year of the Plan. The average growth rate of trade deficit was expected to be 4.1
percent. In order to achieve the targeted annual growth rate of export, annual targets
of some principal commodities to be exported were estimated during the Eighth Plan.
Accordingly, export of woollen carpets was estimated to increase by 23.0 percent,
readymade garments by 5.4 percent, pulses by 1.0 percent, hides and skins by 13.7
percent and handicrafts (including gold and silver jewelry) by 19.5 percent.
At 1991/92 constant prices, total export increased by 15.77 percent in the first and by
2.52 percent in the second, declined by 15.08 percent in the third, and increased by
only 4.25 percent and 4.91 percent respectively, in the fourth and final years of the
Plan. This decrease in export was caused, mainly due to the decline in the export to
the third countries. In comparison to 1993/94, export of principal exportable
commodities, such as woollen carpets, readymade garments and pulses had decreased
in 1994/95, while export of hides and skins and handicrafts had increased.
Although the total export and the export to the third countries decreased, export to
India increased by 20.47 percent in 1994/95 in comparison to 1993/94. But export to
India in the first year of the Plan increased by 2.78 percent only. The main reasons
for increased export to India in the third year of the Plan were the improvement in
export process after the renewal of trade and transit treaty between the two countries,
and the decline in the proportion of raw materials and labour used for producing
exportable commodities. Even wit h the revaluation of Nepalese currency by 1.79
percent in July 1992 and by 3.03 percent in March 1993, export to India increased in
these years. It indicated the possibilities of exporting Nepalese commodities with
value added to India on a competitive basis in the absence of non-tariff barriers.
As far as the matter of exportable commodities to India was concerned, there was no
uniformity in their export intensity. Fluctuation in annual export of various exportable
commodities could be observed clearly. This fluctuation showed that none of the
commodities had got stability in the export to India. Regarding the export to the third
countries, since fluctuation in the export of some principal commodities affected the
quantity of total exports, it pointed to the fact that Nepal's export trade was dependent
only on some commodities.
It was observed that the export target by commodities set in the Eighth Plan had not
been achieved clearly due to annual fluctuations in exports. The export of woollen
carpets was found increased by 4.73 percent on an annual average, while export of
readymade garments was increased by 12.81 percent on an annual average.
Although there was some increase in the export of pulses to India, it was decreased in
total by 14.32 percent on annual average. As regards to the hides and skins, its
exports had increased by 8.01 percent on annual average. It was observed that the
export of handicrafts had decreased by 6.08 percent on annual average during the
Eighth Plan period. Thus, export to other countries could rise only by 6.80 percent on
average (Table 29).
As regards the import, total import at 1991/92 constant prices increased by 15.10
percent on annual average. In the first year of the Plan, total import had increased by
12.80 percent, while the growth rate of import remained at 20.69 percent in the
second year, 14.70 percent in the third year, 8.15 percent in the fourth year and 19.63
percent in the final year. Import growth rate from India stood at 2.49 percent in the
first year of the Plan, while it increased by 24.63 percent in the second year.
Likewise, it had increased by 6.96 percent and 15.05 percent in third and fourth years
respectively, while it had declined by 1.73 percent in the final year. Import from third
countries had increased by 18.40 percent in the first, by 18.84 percent in the second,
by 18.52 percent in the third, by 5.07 percent in the fourth and by 30.04 percent in the
final year of the Plan.
Thus, that the growth rate of import was not decreasing and the growth rate of export
was declining caused the increased growth rate of trade deficit. During the Plan
period, trade deficit at 1991/92 constant prices increased by 22.07 percent on annual
average. Trade deficit had increased by 10.57 percent in the first, by 34.99 percent in
the second, by 32.50 percent in the third, by 9.64 percent in the fourth and by 24.99
percent in the final year of the Plan. Thus, trade deficit at current prices reached to
Rs 73,525 million in the final year of the Plan, which was 26.43 percent of the GDP.
This figure of trade deficit was very high as compared to the earlier estimation that it
would be 13.5 percent of GDP by the end of the Plan. At current prices, export was
increased by 10.40 percent only while import was increased by 24.62 percent on
annual average during the Plan period (Table 26).
Balance of Payments Situation
In the first year of the Plan, balance of payments situation of the country was
remarkably favourable. In 1992/93, balance of payments surplus at current prices
was Rs 7,742 million and stood at Rs 6,283.3 million in the second year, while balance
of payments deficit reached to Rs 313.9 million in the third year of the Plan. In the
fourth year, the deficit further increased to 1,050.1 million, while there was a balance
of payments surplus of Rs 3,214.3 million in the final year of the Plan. In comparison
to 1992/93, trade deficit increased by 47.05 percent in 1993/94 and by 42.54 percent in
1994/95. Likewise, this deficit stood at 18.67 percent in 1995/96 and 34.67 percent in
1996/97. During the Plan period, service income (net) and transfer income (net) had
increased by 58.84 percent and 28.64 percent respectively, which contributed to
minimise the growth of current account deficit, to some extent. It was observed that
the current account deficit had increased by 13.67 percent during the Plan period.
Current account deficit was declined by 1.01 percent in the first and by 19.50 percent
in the second year while it increased by 46.83 percent in ht e third and by 82.78
percent in the fourth year of the Plan. But it declined by 11.26 percent reaching the
amount of current account deficit to Rs 19,116.1 million in the final year of the Plan.
The main reason for current account deficit was the trade deficit caused by rapid
increase in import in comparison to exports. (Table 30)
The growth in foreign loan flow and the flow of other capital and unclassified amount
(net) played prime role to minimise the current account deficit. But the growth rate of
other capitals and unclassified amount (net) was negative in the second, third and final
years of the Plan.
Foreign Currency Reserves
Soon after the country had adopted the open and liberal economic policy, some
changes were introduced also in foreign exchange system. In this context, foreign
exchange was made fully convertible in 1992 and single exchange system was
introduced removing the dual exchange system in foreign exchange. Nepalese
nationals were also provided the facility to open bank accounts on foreign exchange.
In comparison to July 1992, foreign cash reserves increased by 38.18 percent
amounting to Rs 33,510.4 million in July 1993. In the total cash reserves, the amount
of convertible foreign exchange reached to Rs 30,767.2 million from Rs 23,145.8 in
that year. In comparison to 1993, total foreign cash reserves increased by 25.38
percent totaling Rs 42,015.7 million in July 1994, of which the proportion of convertible
foreign currency was Rs 38,137 million. Total foreign cash reserve increased merely
by 2.54 percent in July 1995 amounting to Rs 43,084.9 million. In this year, convertible
foreign currency reserves declined by 5.25 percent reaching Rs 36,136.7 million. But
inconvertible foreign exchange increased by 79.14 percent reaching Rs 6,948.2 million.
Total foreign cash reserves increased by 3.14 percent totaling Rs 44,438.3 million in
July 1996, while it reached to Rs 48,541.4 million increasing by 9.23 percent during the
same period of 1997. The total foreign cash reserve in July 1992 had sustained the
imports of 9.1 months while the sustaining capacity of foreign cash reserve in July
1993 was for 6 months of imports (Table 31).
In the beginning year of the Eighth Plan, the exchange rate of one US dollar was Rs
42.80 while it reached Rs 57.30 by the final year of the Plan due to the devaluation of
Nepalese currency by 33.88 percent.
It was observed that the implementation of financial reform programmes during the
Eighth Plan was helpful for maintaining macroeconomic stability as well as for
creating positive impacts in non-agricultural sectors. But, dependency on monsoon for
agricultural production had not improved yet. Although there was a positive progress
in price, revenue, etc., in the Plan period, development expenditure targets could not
be achieved due to the low mobilisation of foreign aid. There were some negative
impacts on the economy due to the increasing deficit financing and widening trade
deficit. No substantial changes in the living standard of rural people were observed
due to the low growth in agriculture. In addition, mainly due to political instability,
financial management aspects remained weak towards the end of the Plan.
The economic policies without proper strategies based on clear priority and resource
allocation have been unable to increase national productivity and maintain high
economic growth rates as well as improve the living standard of poor community.
Therefore, the formulation of concrete policies and their implementation for achieving
higher economic growth and alleviating poverty have become today's main necessity
and challenge. Also, to ensure effectiveness in the policy measures introduced in
development policies and the infrastructure developed during the Eighth Plan, priority
should be given to the related implementation strategies in the above line as well as to
legal and institutional infrastructures by putting special emphasis on integrated
development of agriculture.
3. Status of Physical Progress
Agriculture, Irrigation and Forestry:
Agriculture
During the Plan period, only 3.0 percent of growth in agricultural production was
achieved as against the set target of the Eighth Plan to increase agricultural production
by 3.7 percent. The target to increase food crops production by 400,000 MT on annual
average was not achieved. Crop-wise production of millet, barley and cereal crops
was more than the set targets. On the cash crop side, tea (including the private sector)
and sugarcane productions met the target. Although there was some progress in
production of other crops except tobacco, the overall target was not achieved. The
productions of minor crops such as coffee and mushroom were much lower than that
of the set targets. On the horticulture sector, production of vegetable met the target
whereas potato production was somewhat lower. Reassessing the statistics of
horticulture products, it was observed that the production was not so discouraging
while evaluating the growth rate in relation to the decreased base year data. Fish and
meat production had achieved the target, whereas milk, eggs and wool productions
were somewhat lower.
The productivity of all crops in the last year of the Plan was lower than the target.
The productivity of rice, the main contributor of food crops, was targeted to increase
by 2.85 MT per hectare. But it increased only by 2.46 MT per hectare. The supply of
chemical fertilizer was not satisfactory. The supplies of improved seeds, plants and
high breeds were not effective from quantitative as well as qualitative point of view.
Irrigation
During the Eighth Plan period, it was targeted to provide irrigation facility to additional
293,895 hectares of land through new irrigation projects and the projects under
construction. It was targeted to provide irrigation facilities to 161,132 hectares of land,
144,042 hectares from surface and 17,090 hectares from ground water projects
implemented by the Department of Irrigation. Likewise, out of 119,700 hectares of
land, 49,000 hectares from surface and 70,700 hectares from ground water irrigation
were targeted to provide irrigation facilities from the projects run by the Agriculture
Development Bank. In addition, 13,063 hectares of land was targeted to provide
irrigation facilities through the construction of projects under the non-government
sector.
The progress of the programmes implemented under the Department of Irrigation
during the Eighth Plan was 85.5 percent. Of this, the percentage progress of surface
irrigation was 90.6 percent whereas ground water irrigation had very low progress of
45.4 percent. The programmes implemented under the Agriculture Development Bank
had made 63.6 percentage progress. Of which, 32 percent and 74.2 percent were
achieved from surface and ground water respectively. To compare with the total
target, 72.9 percent progress was made. A total of 22,727 hectares of land was
irrigated through lift pump programme run by the Agriculture Development Bank.
Land Reform and Management
As the provision was made for sharing an equal ownership between landlord and
tenant through the latest amendment of Land Reform Act 1964, programme was
launched to abolish the dual ownership of land.
The Land Reform Act allowed one to keep 25 bighas of land in Terai and inner
Terai and 50 ropanies of land in Kathmandu Valley as maximum limit. One could
keep additional 3 bighas, 16 ropanies and eight ropanies of land in Terai, Mountain and
Kathmandu Valley respectively for household purposes. But there was some
exemption in limit on the land used for industrial enterprises, agro-industries,
educational and health institutions and cooperative purposes. Cadastral survey, which
was initiated as a part of land reform a long ago, had not been completed yet in all 75
districts.
Forestry
Overall progress towards forestry sector development could be termed satisfactory
though some of the target had not been achieved. In the community forestry sector,
5,316 users' groups were formed whereas the target was to form 5,004 such groups
during the Plan period. Likewise, it was targeted to transfer 251,750 hectares of
forestry to 5,000 users' groups. In fact, 300,000 hectares of land was transferred to
users' groups by preparing 7,072 Forestry Action Plans. The Plan had set a target of
afforestation in 67,119 hectares of land, but it was possible in 26,456 hectares only.
It was envisaged to produce 111 million plants, but only 80 million plants were
produced and distributed. The Plan had envisaged distributing leasehold forestry to 25
thousand families, but such forestry was distributed to only 8,000 families. On national
forestry management side, forestry management action plan was prepared in 19
districts, which had the target to manage 628,301 hectares of forest area. Under the
soil and water conservation programme, soil conservation services were targeted to
extend in 60 districts, but such services were extended only in 50 districts during the
Plan period. Two thousand five hundred types of plants were kept in-situ
conservation in Royal Botanical Garden Godavari, under botany developme nt
programme.
Industry, Tourism and Electricity:
Industry
During the Eighth Plan, industrial production at constant prices increased by an annual
average of 5.23 percent against the estimated growth of 12.4 percent. Likewise, it
was expected that the contribution of industry sector to GDP at the end of the Plan
would reach at 8.5 percent on the assumption that it would grow by 4.8 percent
annually. Similarly, annual value added rate of manufacturing industries was expected
to increase by 10.8 percent assuming that total value of manufacturing industries
would reach Rs 12,170 million at the end of the Plan. The average growth rate of
value added during the Plan period reached 6.8 percent and the contribution of
industry and mining sector in GDP reached 9.2 percent.
It was expected that the number of total employment would reach 395,000 with the
creation of additional 128,000 employment opportunities during the Plan period. Of
1,345 medium and large industries registered at the Department of Industry, it was
expected that 1,15,000 employment opportunities were created from the
implementation of 70 percent of them. Likewise, assuming that 30 percent of the
34,439 small and cottage industries registered in the Department of Cottage and Small
Industries would be implemented, it was expected that 120,000 employment
opportunities were generated, thus, reaching a total of 235,000 additional employment
opportunities during the Plan period.
The Office of the Company Registrar registered 5,202 private and 612 public limited
companies during the Eighth Plan period. During the Plan period, 240 investment
projects were promoted to reach the figure of foreign investment to Rs 9732 million
while this figure was expected to be at Rs 2430 million with the promotion of 200
foreign investment proposals.
Cottage and Small Scale Industries
The Eighth plan had set the target of registering 25,000 cottage and 1,000 small-scale
industries. During the Plan period, 43,250 cottage and small-scale industries were
registered. It was expected that alternative employment would be available to about
400,000 persons through the registered industries. Skill development training had been
provided to 25,219 persons from the Department of Cottage and Small-scale Industry
during the Plan period.
Mining and Quarrying
During the Eighth Plan period, it was targeted to undertake research on metallic and
non-metallic minerals in 6000 sq. km. But research had been done in 5,902 sq. km.
The target of detailed survey and research of gas resource of Kathmandu Valley for
commercial use was achieved. As the target of conducting geo-scientific research in
17,450 sq. in different parts of the kingdom, such research had been conducted in
19,500-sq. km. of land. The target of establishing 12 additional seismological centres
achieved and all the centres began operating. Although the mining sector had been
given a big importance in the Eighth Plan, no satisfactory progress was made due to
the lack of investment in this sector.
Tourism and Civil Aviation
During the Eighth Plan, the total number of tourist arrival was projected to be
1,907,745. During this period, the number of tourist arrival was 1,764,739, which was
92% of the target. Likewise, it was expected to earn US $ 375.4 million during the
first four years of the Plan. During this period, US $ 374.6 million was earned, making
nearly 100 percent progress of the target. During the Plan period, a number of
concrete programmes such as Sarangkot road improvement in Pokhara, improvement
of Pokhara conservation area, Ghalegaon Sikles eco-tourism development,
construction of runway and terminal building in Pokhara airport were completed.
Likewise, construction of buildings of Tourism Information Centre and Hotel
Management and Training Centre, and conservation and improvement of Gorakha
Durbar area were completed. Construction work of International Expedition Museum
building at Pokhara started. In pursuance of the objective of making civil aviation
service an important means to bring tourists in the country, the number of airports in
the kingdom reached 44. In consonance with making the airports more capable,
secured, comfortable and standardised, airports were under construction in remote
areas such as Mugu, Kalikot, Achham, Khotang and Dolpa. Various improvement
measures to enhance the standard, services and capacity of Tribhuvan International
Airport were undertaken according to its master plan.
Labour
A total of 22,973 persons were trained through various vocational and skill training
programmes run by 13 skill development training centres and two vocational training
centres. Skill training with residential facilities were provided to 125 women of various
districts engaged in undignified profession, because illiteracy and poverty, and were
provided each with a set of sewing machine.
To assist the abolition of yearlong bonded labour system in Dang, Bardia, Kailali and
Kanchanpur districts, sewing machine was distributed to each woman after providing
skill development training since FY 1995/96. Employment informa tion centres were
established in ten labour offices.
Water Resources and Energy
In comparison to the target of generating 347mw electricity by the end of the Eighth
Plan, the total generation capacity reached 300 mw, of which 253 mw was generated
from hydro-electricity and 47mw thermal energy. Likewise, 1,322.9 million units of
electricity energy were generated while the target was to generate 1,522.0 million
units. The total length of transmission lines from single and double circuits reached
2,902 kilometers and capacity of substation reached 602 MVA. Total number of
customers reached 525,000. Thus, it was expected that 14 percent people of the
country had an access to electricity services. Of the total electricity, 26 percent was
used by household sector, 30 percent by industry sector, five percent by commercial
sector and 13 percent by export and other sectors. Out of the total electricity
generation, 74 percent was properly utilised while a loss of 26 percent was found due
to technical and non-technical problems.
As internal source was insufficient to fulfill the demand for electricity, the power was
supplied by purchasing from private sector and even importing from India. Medium
sized hydro-electricity projects such as Khimti and Bhotekoshi were under
construction whereas process was underway for the construction of Seti
hydroelectricity project.
Negotiations between the officials of Nepal and India were underway for the
implementation of big multipurpose hydroelectricity projects such as Karnali
(Chisapani) and Pancheswor (Mahakali).
Transport and Communication:
Transport
The Eighth Plan had set a target of constructing 1,778 km roads with the construction
of 763 km highway, 915 km feeder road, 100 km urban road, 187 km black-topped
road of different standards, 370 km graveled and 1,212 km earthen road. During the
Plan period, 471 km highway (61,7%), 487 km feeder road (53.2%), 134 km urban
road (134 %), 119 km. black topped road (63.6 %), 231 km graveled road (60.9%)
and 742 km earthen road (61.2%) were constructed. The total length of road
construction reached to 1092 km, which was 61.4 percent of the set target. In
addition, a total of 1,771km road, 372 km black topped, 537 km graveled and 862 km
earthen road were constructed which was not mentioned in the Eighth Plan. Thus, the
total progress of road construction during the Eighth Plan reached a total of 2,863 km
(161.0%) with 491 km black topped (226.6%), 768 km graveled (202.6%) and 1,604
km earthen (132.3%).
During the plan period, 50 motorable bridges (200.0%) were constructed as against
the target of constructing 25 bridges. As against the target of constructing 100 bridges
on highways and 400 suspension bridges on local roads, 114 suspension bridges
(114.0%) from the Suspension Bridge Division and 24 (6.o%) from the Ministry of
Local Development were constructed.
Regarding other transports, a part of 13 km of Kathmandu-Hetaunda rope-way was
repaired and maintained. Damaged part of Jayanagar-Janakpur-Bijalpura railway was
repaired and maintained, 4 diesel locomotive engines and 18 bogy coaches were made
available. Ten additional new trolley buses were operationalised in Kathmandu-
Bhaktapur trolley bus route.
Communication:
Postal Services
By the end of the Eighth Plan, 3660 post offices were established throughout the
kingdom providing services of one post office per 5917 population. Postal lines were
expanded as necessary. Internal express mail services in 33 places of the kingdom
and international express mail services (EMS) with 20 countries were operated.
Money order service in 85 post offices and postal savings bank services in 10 post
offices were started.
Tele -communication Services
Before the implementation of the Eighth Plan, 27 districts of the kingdom lacked
access to telecommunication services. During the Eighth Plan, telecommunication
services were expanded all over the kingdom through the provision of telephone link
from the headquarters to all districts. In this connection, telephone services were
provided to 1200 VDCs as against the target of providing telephone services in various
areas (Ilaka) by establishing 600 terminals.
During the Eighth Plan, total telephone capacity reached to 2,00,000 lines reaching the
density of telephone service 100 persons per line. As against the target to enhance the
capacity through additional 161,000 telephone lines, equipment was installed of about
130,000 telephone lines, thus, achieving 80 percent progress of the target. During this
period, action was initiated to establish rural telephone exchange with the capacity of
150 to 200 lines in 31 urbanising places. Telephone service was made available in 29
places through the establishment of telephone exchanges.
Besides establishing calibration and maintenance centre of Nepal Television, other
programmes were implemented according to the Plan. Under the network expansion
programme, relay stations were established in Dhankuta, Nawalparasi, Palpa and
Pokhara. Rastriya Samachar Samiti (RSS) buildings were constructed in Kakadbhitta
and Birgunj. Under the equipment installation programme, computer system was
installed at the centre. A computer network was established to improve news
collection, procession and distribution system of Rastriya Samachar Samiti. In
pursuance with the privatisation policy of His Majesty's Government of Nepal, Film
Development Company was established through selling 51 percent share of Nepal
Film Corporation to the private sector in 1993/94.
Housing and Physical Planning
During the Eighth Plan, various activities such as, development of comfortable housing
plots, supply of residential buildings, maintenance and improvement of existing
buildings, research regarding building construction, increasing investment in
development and housing sectors, etc., were carried out. Skill-oriented training was
provided for the development of locally available construction materials and local
technology. Likewise, steps were taken for development and expansion of
construction materials, and a central-level research centre was established.
Despite the effort to distribute housing plots to landless farmers nationwide through
Squatter's Problem Resolution Commission, the target group was not very much
benefited due to the inability to provide other necessary services and housing facilities.
No remarkable progress was observed in the development of housing credit, which
was very essential for housing development, and other financial management.
Although Housing Finance Development Company, established with the objective of
providing housing loan to medium and low income groups, had taken policy to channel
housing loan through newly opened financial companies, low income families were not
benefited from this programme.
On the housing development side, revision and updating of physical development
planning of almost all municipalities were completed and integrated action plans of 12
municipalities prepared. Construction works of some ministry buildings and Birendra
International Convention Centre were completed and a master plan for the
construction of residence of parliament members was prepared. Constructions of
7,697 two-room school buildings in earthquake affected 29 districts of Eastern and
Central Development regions were completed and 35 school buildings were
constructed. For selection, implementation and evaluation of development plans and
programmes of municipalities, Rs 134.6 million and Rs 96 million were released as
loan and grant respectively through Urban Development Fund.
Social Services:
Education
On primary education, it was targeted to achieve the net enrollment of 6-10 age group
children to 90 percent, to further increase 2,025 primary schools and 8,000 primary
school teachers. In 1996, the number of schools reached to 22,218, number of
teachers to 89,378, and number of students to 3.45 million. Net enrollment percentage
of children reached to 69.4. During the Plan period, 3,524 schools and 14,883 teachers
were added up. For making the primary education compulsory, programme was
launched in one VDC of each 40 districts from 1996/97 where primary education
project was implemented on the basis of experiences gained from programme
executed on a trial basis in Banepa Municipality of Kabhrepalanchok and Ratna
Nagar VDC of Chitawan.
During the Plan period, target was set to enhance the access of lower secondary and
secondary level education for 45 percent of 11-15 age group children, to establish 900
schools and to make provision of additional 5,404 teachers. According to the
educational statistics of 1996, the number of schools reached 5,506, number of
teachers 19,704, number students 791,502, and student enrollment 50.3 percent at
lower secondary level. Likewise, at secondary level, the number of schools, teachers
and students have reached 2,903, 16,423 and 3,29,833 respectively. Student enrollment
at this level reached to 34.7 percent.
Regarding the higher education, 213 higher secondary schools were established by
1996/97 against the target to establish 125 higher secondary schools. In pursuance
with the target of achieving literacy percentage to 67 by 2000 AD, programme had
been launched as a national campaign to achieve 60 percent literacy rate during the
Plan period. It was expected that literacy percentage of 6 years and above aged
population reached 48 percent with the increment of 1.36 million literates from the
literacy programmes run by government and non-government sectors.
During the Eighth Plan, basic and primary education project was implemented in 40
districts of the Kingdom. Fifteen district education buildings were constructed. As per
the policy of giving priority to female teachers, 4,150 female teachers were appointed
with the objective of appointing at least one female teacher in each primary school.
Primary teachers training centres were established according to the target of
establishing such centres in nine different places of the kingdom, and 17,265 teachers
were trained.
Regarding technical education and vocational training, technical schools were
established in Doti, Banke, Dang and Mustang districts as per the target of
establishing such four schools in different parts of the kingdom. As per the target of
providing regular training to 2,595 persons and short-term training to 2,034 persons, a
total of 2,274 and 6,709 persons received regular and short-term training respectively.
During the Eighth Plan, Kathmandu University and Eastern University were
established and operationalised. Likewise, Pokhara University was announced to
establish. Thus, the number of universities, including Tribhuvan University and
Mahendra Sanskrit University reached five, and 196 campuses, 61 under T.U. and
135 in private sector, were conducted.
Health
With the objectives of realising "Health for all by 2000" by improving health condition
of people, proving healthy manpower necessary for development, controlling
population through effective maternal child health and family services, and making
available of specialist-health services within the country, various programmes had
been implemented. As against the target of providing basic training to 26,337 persons
and refresher training to 137,412 persons under the programme, basic and refresher
training was received by 17,150 persons and 95,314 persons respectively.
National Health Policy 1991 spelt out the target of establishing sub-health posts in
every VDC and primary health centre in every constituency of the country. In
pursuance of this policy, 3,187 sub-health posts were established as against the target
of establishing 3,199 sub-health posts, and 100 primary health centres. According to
Nepal living Standard Measurement Survey 1996, the percentage of rural households
having access to near-by health institution with a walking distance of half an hour
reached 41.41 percent.
Total fertility rate remained at 4.6 as against the target to reduce at 4.5. The target
could not be achieved since total fertility rate was influenced by marriageable age,
time of breast feeding, amonoria, infertility, abortion and social values and norms in
addition to the family planning services.
Targets such as spraying medicines for malaria control in the area inhabited by
600,000 to 800,000 people twice a year in 64 districts of the kingdom, 350,750 sample
blood collection and test, cure of the affected persons and conducting research
programmes were achieved. Nepal, for the first time, launched polio drops services to
3.3 million children of 0-5 age group in 1996/97 by organising immunisation day in
order to support the campaign of eradicating malaria from the world by 2000.
Tuberculosis control programme was expanded in all district of the kingdom. During
the Plan period, the population affected by tuberculosis was estimated to be 5 per
thousand and curative services for them were made effective through DOTS curative
services in 10 districts.
As against the target of reducing the rate of leprosy calamities to less than one per
thousand by the end of the Eighth Plan, it reduced to 0.59 person per thousand, thus,
the progress was observed more than the target. Leprosy control programme was
expanded nationwide while the target was to expand in 71 districts from 56 districts.
As regards to the target of reducing child mortality due to diarrhea by 32 percent, real
situation was not known since no survey was conducted regarding the death caused
by diarrhea.
Regarding the target of establishing district level ayurvedic dispensaries, ayurvedic
health centres were established in 25 districts. Likewise, 20 dispensaries were
established, and new buildings and compound walls of 30 dispensaries were
constructed. Refresher courses for technical staff throughout the kingdom were
conducted. Production of medicine was started from three regional rural pharmacies.
50 beds were added in Ayurvedic Hospital, Naradevi, as against the target of adding
100 beds. In accordance with the policy of commercialise Singh Durbar Baidyakhana
by making it autonomous, its managerial efficiency and medicines production capacity
was enhanced and physical condition was improved by constituting Singh Durbar
Baidyakhana Development Committee.
Drinking Water and Sewerage
For providing drinking water facilities to all people within 10 years, delivering minimum
knowledge and facilities to most of the people regarding sanitation including
environmental sanitation and conservation, the Eighth Plan had set the objective of
providing drinking water facilities to 72 percent and sanitation facilities to 13 percent
people. It was targeted to make access of drinking water facilities to additional 7.2
million people, 6.8 million from rural and 4.4 million from urba n sector, during the Plan
period. Likewise, sanitation facilities were targeted to deliver to additional 1.6 million
people, 1.2 million from rural and 0.4 million from urban areas during the Plan period.
It was estimated that drinking water facility would reach to additional 5.4 million
people, 5.2 million from rural and 0.2 from urban sector during the Plan period. Since
the progress in rural and urban sector was estimated to be 77 percent and 56 percent
respectively, the total progress in proportion of total targets was estimated to be 76
percent only. Access to drinking water facility was reached 61 percent of total
population of the country as of the end of 1996/97. Although progress regarding
sanitation facilities could not be confirmed due to the lack of adequate and reliable
information, a sample survey showed that an estimated 20 percent of the people were
availed of this facility.

Local Development
Women development programmes were conducted in 620 VDCs of 67 districts of the
kingdom up to the Eighth Plan period. A total of approximately Rs 410 million loan
was disbursed from various banks through 12,634 income generating groups formed
during the Eighth Plan. About 40,906 families were benefited from this programme. A
total of 75,000 people were benefited through drinking water projects run in 701 places
under community development programme. Under the same programme,
approximately 17,738 women received population education and family welfare
training and 14,702 women received skill-oriented training.
After the establishment of Local Development Training Academy, a total of 22,644
persons including elected people's representatives from local bodies, civil servants and
women activists involved in women development affairs, were equipped with
knowledge and skills through various training and seminars. To expand socio-
economic services in remote areas of the kingdom, 139 drinking water projects,
irrigation projects in 746 hectares of land, 46 suspension bridges, construction and
maintenance of 185 km trails and tree plantation in 95 hectares of land, were
completed during this period under the Remote Area Development Programme.
Under the same programme, construction works of 81 monasteries, temples, schools
and pilgrim houses were completed.
A fixed amount of financial resource was sent to each VDC of the kingdom directly
for their development purposes. Under this programme, which intended to help the
VDCs for conducting small developmental works by themselves, 1,610 km rural roads
were constructed and maintained during the Plan period. Likewise, 772 km. foot trails
were constructed. A total of 3,549 taps was installed through 81 ponds/tube-wells
installation and 171 km pipe work has been concluded. Irrigation facility has been
provided in 6,600 hectares of land and 808 bridges/culverts and 514 VDC buildings
were constructed.
During the same period, 443 km rural roads and foot trails were constructed through
local people's participation. Likewise, under the local road suspension bridge
programme, 15 suspension bridges were constructed, and 29 were under construction,
126 were in fabrication stage and 77 were in the stage of survey designing and cost
estimation. Rural Infrastructure Development Programme was underway in 20
districts. Under this programme, construction and maintenance by 361 km rural roads,
488 km horse trails, 97 km irrigation, 23 km river control, etc., were completed.
Likewise, construction of 48 fish ponds, cardamom plantation in 1.5 hectares, agro-
forestry in 65 hectares and school ground construction in 0.5 hectare were completed.
A total of 66,228 families were benefited from the above activities. Rural
Infrastructure Development Programme was started in 1996/97.
Under the intensive labour - oriented road programme, construction of 40 km roads
was completed. Likewise 139 km. rural roads, 160 bridges and culverts were
constructed and irrigation facilities were provided in 19,648 hectares of land under the
Flood-affected Reconstruction and Rehabilitation Project. Various works, such as
irrigation in 7,292 hectares of land and construction of 256 km rural roads, 8,361 km
horse/foot trails and 134 public buildings were completed in Dhading, Gorakha,
Lamjung, Gulmi, Arghakhanchi, Kalikot, Humla, Mugu, Dolpa, Ilam, Panchthar and
Taplejung districts under Rural Development Programme.
Others:
Administrative Reform
In the process of executing policy directives initiated by the Eighth Plan, efforts were
made for the phase-wise implementation of the recommendations made by
Administration Reforms Commission 1991. Civil Service Act and By-laws were
formulated in the new context. While defining job, duty and authority of civil servants,
job descriptions of almost all positions were prepared. Job performing ability was
considered main element for the promotion of civil servants, and stress was given for
the objective performance evaluation. Opportunities to enter in higher posts were
increased for competent and intelligent civil servants through open competitions.
A Central Monitoring and Evaluation Division was established in National Planning
Commission Secretariat as a central body for the monitoring and evaluation of
development projects.
Planning and Statistics
During the Plan period, formulation of Agriculture Perspective Plan was completed.
Final results of National Population Census 1991 and National Agriculture Census
1991 were published. Under Nepal Multi-purpose Indicator Survey, reports on Health
and primary education were made public. Likewise, final results on drinking water and
sanitation were prepared. Preparation of indicators on industry and construction was
underway in Central Bureau of Statistics and results of some other Surveys were
published.
4. Challenges of Development
Despite the planned development efforts of more than four decades, high economic
growth rate has not been achieved on one hand, and plans have been unable to make
an expected impact on the living standard of general people, on the other. Today's
main challenge before the country, therefore, is to bring the country forward along
with the developed nations in the 21st century through reviewing the concept and
process of development. In this context, it is necessary to review the past
experiences as follows:
• According to the concept of perspective planning, periodic planning should have
been executed in an integrated manner. However, due to the lack of such long-
term vision, the objectives of each periodic plan vary and consequently lack the
continuity in strategies.
• Lack of clear-cut vision on human resource development.
• Inability to divert foreign aids towards development priorities and to use the aid in a
coordinated way.
• There is no clear-cut vision on decentralisation, and nature and scope of autonomy
of local bodies have not been prepared. In such a situation, there is lack of an
effective institutional system for local development and development of backward
areas and ethnic groups.
• Inability to formulate annual programmes according to the objectives and targets
set by the plan.
• Lack of system to distribute resources on the basis of cost-benefit analysis.
• Lack of legal and institutional infrastructures necessary for competitive market
economy.
• Lack of effectiveness in different plan-related activities, such as studies,
researches, monitoring and evaluation, and premature institutional development for
these activities.
• Weakness in different aspects of good governance, such as the rule of law, public
accountability, transparency, people's participation, etc.
• No necessary infrastructures have been built for the commercialisation of
agriculture.
• Lack of self-mobilisation and strong tendency to be dependent on government
because of the prevalence of development programmes under state direction and
control.
• Prevalence of the state -directed and controlled development process.
• Inability to properly identify the sectors having comparative advantage and
competitive capability due to the lack of strong institutional development related to
planning and studies.
• Lack of various recognised standards and qualities for directing various sectors
involved in economic activities.
It is necessary to modify and strengthen the development and planning process in the
context of the lessons learned from the plan implementation.
 Chapter 2
Concept, Strategies and Targets of Long-term
Development

1. The Concept of Long -term Development

Although some sectoral long-term plans were formulated and implemented in the
past, a clear vision could not be formed for the socio-economic development of the
country because of the lack of formulation of an overall framework for long-term
development. The absence of clearly defined concept of the long-term development
and lack of clear guidelines to that end led to the inconsistency between the sectoral
policies and programmes, adversely affecting the economic growth rate of the
country. Because of this situation, efforts are needed to formulate and implement
strategies for the immediate and long-term development of the country.
2. Objectives and Strategies
The major long-term development objective is to create a society that is cultured,
modern development-oriented and endowed with skills through alleviating the
prevailing wide spread poverty in the country.
For achieving the above-mentioned objective, it is essential to broaden the sources of
high growth in order to achieve a high and sustainable growth rate and trickle down
its effects on the majority of the population by fully utilising and investing available
resources in infrastructure and social sectors. In this context, it is equally essential to
expand investment in the extensive utilisation of water resources and tourism sectors
in active collaboration with the private sector as well. It is required that optimal
utilisation of human resources should be ensured by making the most of the
possibilities derived from such ecological variation as agriculture, forestry, herbs, etc.
The foundation for industrialisation has to be laid by exploring the possibilities of
trade with neighbouring countries, and also by considering both the regional trade and
the aftermath of the membership of the World Trade Organisation. The lowering of
the rate of population growth has become crucial for human resource development for
achieving higher and sustainable growth as well as for poverty alleviation.
In a developing country like Nepal, the concept of long-term development should
give emphasis to higher economic growth rate, pro-poor development process and
equitable distribution of income. Although Nepal has adopted liberal, open and
market-oriented economic policies in line with the changes in the world economy, the
objective of alleviating poverty cannot be achieved unless the government, market
and private sectors complement each other and work together.
In this context, and also in keeping with the past experiences, it is essential that
effective machinery should be mobilised to attain the rapid and sustainable
development, and plans, policies, and programmes should be geared towards poverty
alleviation, employment promotion, and regional balance. At the same time, these
programmes should be oriented to the groups and areas that are left out of the
mainstream of development. To guarantee the equitable distribution of the fruits of
development to the people and to expedite the pace of development by moving the
socio-economic development process in tune with the pace of regional and
international development will be the long-term development framework of Nepal.
For achieving the above-mentioned objectives, various policies will be adopted with
giving a clear direction to the overall economic and social development process,
making the long-term development process dynamic, and ensuring commitment and
continuity to the process.
The liberal, open and market oriented economic policies pursued by the country will
be further strengthened and their implementation will be made more effective, which
will enhance competitiveness and make these policies sustainable by exploiting the
opportunities created by the open policies. The capability to cope with the changes in
the world economy will be increased and reforms in the existing policies and
improvement in the economic management will attract foreign investment.
The Government sector has its own role to play in creating a strong and competent
economy, changing economic structure, and eradicating poverty and unemployment.
Appropriate steps have to be taken to achieve a higher economic growth rate, and
effective implementation of equitable distribution and poverty alleviation
programmes is equally essential. The creation of infrastructure and human resources
along with the welfare of the disadvantaged groups and direct interventions in the
alleviation of poverty are the responsibilities of the government. Government’s
involvement and its role, which is essential for the achievement of the objective of
alleviating poverty, will be made effective.
In view of the inadequacy of investment required for implementing development
projects on the part of Government, the crucial role of the private sector in the
economic and social development of the country is obvious. It is essential that the
State should initiate policy changes especially with regard to strengthening the role of
the private sector in the development of infrastructures as well as other sectors. The
creation of a congenial environment for attracting private sector investment is very
important in this respect. The role of the government sector will not be limited to that
of a motivator and facilitator only; it needs to share the risk to some extent as well.
3. The Goals of Long-term Development
Poverty Alleviation:
It is estimated that 42 percent of the total population have remained below the poverty
line at the end of the Eighth Plan. With the achievement of high economic growth
rate and the implementation of sectoral and other special programmes for poverty
alleviation, it is targeted to reduce the population living below poverty line to 10
percent within next 20 years.
In order to increase the per capita income of the people living below the poverty line,
it is necessary to increase the economic growth rate, on the one hand and the
population growth rate has to be reduced, on the other. In view of this, it has been
targeted to bring down the population growth rate at the level of 1.5 per cent within
next twenty years. For reducing the level of poverty to 10 percent, striking a proper
balance between growth and equity will be the main basis of development. For this,
programmes such as employment generation, production and productivity
enhancement, good governance, human resource development and the empowerment
of people will be initiated.
The Agricultural Perspective Plan (APP) has been taken up as the main basis for
increasing production, providing food security, increasing employment and income
and ultimately contributing to poverty alleviation. The APP has given main emphasis
to the supply of fertilizer, irrigation, rural agricultural road construction and rural
electrification and the use of agro-ecologically appropriate technology. Likewise,
land management system will be pursued for providing security to land ownership in
order to improve the living standard of farmers and increasing agro-products and
productivity to give impetus to the economy as a whole. Thus, it is necessary to
launch all programmes of agricultural development by making the APP and land
reform programme complementary to each other. This will accelerate the growth rate
of the agriculture sector and will enhance the performance of the non-agriculture
sector, contributing towards achieving the macro-economic growth rate of 7.2 percent
within next 20 years.
4. Macro-economic Targets
The target of long-term high economic growth rate is based on the APP. The growth
rate of the agriculture sector in the Ninth Plan is less than the target set in the long-
term plan. However, it is expected that, due to the higher growth rate to be achieved
in the periodic plans following the Ninth Plan, the target of the APP will be achieved.
The economic growth rate of the non-agriculture sector has been set by considering
the changed structure of relative contribution of the agriculture and non-agriculture
sector to GDP due to differential growth rates of agriculture sector and overall GDP.
It is estimated that the GDP at producer’s prices will grow by 6 percent per annum in
the Ninth Plan and by 8.3 percent in the Twelfth Plan, thus making the average
growth rate of 7.2 percent during the 20 year period. This long-term economic
growth rate seems quite realistic in view of the creation of legal and institutional
framework in tune with the open, market-oriented economic policies based on clear,
long-term concepts, active private sector and its increased share in investment. The
estimated growth rate seems quite plausible because of expected improvements in the
agriculture sector under the APP and enhancement in productivity due to
infrastructure development and commercialisation. Similarly, the economic growth
rate of non-agriculture sector seems achievable because of developments in industry,
services, tourism and water resources sectors and their export performance. The
agriculture sector will be a stimulating factor for the development of non-agriculture
sector in that the expected growth in the agriculture sector will widen the domestic
market.
In this way, the contribution of the agriculture and non-agriculture sectors to GDP
will be 25 percent and 75 percent respectively because of different growth rates of
these sectors.
To achieve the targeted economic growth rate, the investment has to be 25 percent of
GDP. In this context, it has to be raised to 34 percent of GDP by the end of the
Twelfth Plan.
Mobilisation of national savings is the first prerequisite for sustaining the increased
investment. It has been targeted that the growth rate of national savings will be raised
to 12 percent of GDP in the coming periodic plans and ultimately to 30 percent by
the end of the Twelfth Plan.
Keeping in view of constantly reducing the role of government in a liberal market
economy, domestic credit will be controlled and deficit financing will be brought
within desirable limits so that more financial resources required for investment are
available to the private sector.
5. Sectoral Concepts and Policies
Agriculture: As agriculture is the main basis for increasing income and employment
in the context of Nepal, the APP has given emphasis to raising agricultural
productivity through resource utilisation, providing irrigation facilities to most of the
agricultural land by using low cost technology, raising the productivity of agricultural
land by increasing the per hectare use of fertilizer, enhancing the utilisation of
available agricultural technology, keeping up the comparative advantage of location-
specific technology, raising livestock productivity by upgrading animal health,
constructing more agricultural roads and increasing the supply of electricity for
facilitating private entrepreneurs and enhancing their competitiveness. Economic
growth in the terai will be achieved by utilising food productive capability based on
geographic specialisation. Rising incomes in the Terai will generate the required
income to purchase high value agriculture products of the hills and raise the economic
viability of these products contributing to achieving overall economic growth and
maintaining stability. Therefore, emphasis will be given to raising productivity by
availing sufficient investment, institutional support at the grass roots level.
Alleviating poverty through the achievement of a high growth rate, enhancing the
investment capability in the sectors with high multiplier effects, strengthening
industrial development with the transformation of agriculture from subsistence to
commercial production, and giving emphasis to the poverty alleviation through
employment promotion are major objectives in this regard. Priority will be given to
agricultural research and extension so as to encourage food production, livestock and
horticulture production in hills and mountains. The agricultural production will be
geared up towards specialisation based on comparative advantage by developing
infrastructure in order to accelerate economic growth by raising overall productivity
of resources that increase income and employment and alleviate poverty and raise
living standard. With all these, the opportunities for macro-economic reform will be
widened. Targets, through agricultural development, are set to provide food security
by developing agriculture sector, to reduce regional imbalance and to alleviate
poverty.
Industry: The present share of the contribution of manufacturing industry to GDP
will be doubled within the next 20 years. The role of the private sector will be
vigorously enhanced through increased competitiveness in the areas having
comparative advantages and the rate of economic growth will be accelerated through
sustainable industrial development. The long-term objectives of the industrial sector
for the next 20 years are to make the industrial sector competitive, self-sustaining and
market-oriented; to increase its share in value added through its linkage with local
manpower and raw materials; to transform local skills and entrepreneurship to small-
scale industry so as to make local resources appropriate to local demand; and to
launch special programmes to involve more disadvantaged groups and women in the
industry and commerce sector. Employment opportunities will be created through the
promotion and extension of cottage and small-scale industries. Cottage and small-
scale industries will be developed with a view to contributing to poverty alleviation.
There will be an emphasis on making contribution to industrial development through
the rural entrepreneurship development programme and mobilisation of the rural
labour force in productive activities.
Commerce: The commerce sec tor will be made fully competitive and market-
oriented and it will be integrated with the globalisation process. The ratio of export
will be raised to 20 percent of GDP, and through the specialisation in goods with
comparative advantage. With a view to be nefiting from the open global market,
programmes related to the export of low-weight-high-value products to international
markets will be launched with high priority. In addition, exports will be strenthened
by identifying and developing exportable goods. Export initiatives will be carried out
by expanding the range of exportable products and by targeting potential markets. It
is targeted that the trade deficit will be reduced and the terms of trade will be brought
to Nepal’s favour in the long-term period. Increasing the level of exports will be
accorded high priority. Following the values and concepts of competitive
international trade, due attention will be given to developing infrastructure. A
Perspective Export Plan will be formulated and a programme will be launched
accordingly to expand export trade, giving priority to goods based on domestic raw
materials and agro-based industries. After the implementation of SAARC Free Trade
Agreement, emphasis will be given to export the products in which Nepal can
compete and which are based on domestic raw materials as well as development of
agro-based industries.
Supplies: It has been the long-term view that there must be regular and adequate
supply of essential goods in specific areas considering Nepal’s geographic constraints
and low purchasing power. An institutional mechanism will be established to
enhance consumers' welfare, and to monitor the supply and pricing situation. In
addition, there must be adequate buffer stocks to provide food security at the regional
level. Emphasis will be given on ensuring the supply from private sectors, and supply
mechanism from private sector will be made more effective. The concept of SAARC
Food Storage System will be implemented so as to ensure sustainable supplies in the
region.
Labour and Employment: The long-term objective in this regard will be to increase
the national income by providing more employment opportunities within the country
and in the foreign countries, utilising unskilled, semi-skilled, skilled and technically
skilled manpower and at the same time ensuring the labourers’ rights, welfare and
social security. The rate of unemployment will be reduced to 3 percent from the
present level of 4.9, percent maintaining a balance between demand and supply of
labour. The rate of under-employment will be reduced to 10 percent from the present
level of 47 percent. Skilled manpower will be prepared through skill-oriented training
and self-employment and employment opportunities will be generated in a way to
contribute to poverty alleviation.
Tourism: The long-term objective of tourism development has been set after taking
into account huge potentiality of the tourism industry in Nepal. Nepal will be
developed as one of the major tourist destinations and the national identity will be
conserved through tourism development. Tourism will be developed as one of the key
sectors enhancing employment and as a key sector for economic development. The
expansion of tourism to villages will contribute more to the economic development.

Table 1
Long-term Projection of Major Macroeconomic Indicators
(in percentage)
S.N. Planning Period FY Ninth Tenth Ele- Twe-
1996/97 Plan Plan venth lfth
Plan Plan
1. Gross Domestic Product 6.0 7.0 7.5 8.3
(at factor cost)
4.0 5.0 5.0 5.0
1.1 Agriculture Sector 7.3 8.2 8.8 9.7
Growth Rate
1.2 Non- A griculture Sector
Growth Rate
2. Contribution to Gross Domestic
Product
Agriculture Sector 38.0 34.0 30.0 25.0
Non-agriculture Sector 62.0 66.0 70.0 75.0
3. Investment (As a percentage of 25.0 27.0 31.0 34.0
GDP)
4. National Saving (As a percentage 17.0 20.0 25.0 30.0
of GDP)
Growth Rate (per year) 8.8 10.0 12.0 12.0
5. Poverty and Unemployment
A. People Living Below Poverty 42 32 23 15 10
Line (%) 4.9 4.0 3.6 3.3 3.0
B. Unemployed Population (%) 47 32 23 15 10
C. Underemployed Population
(%)

Physical Infrastructure:
Electricity Development: Although hydro-electricity has been regarded as the main
source of overall development in Nepal, factors such as cost, technology,
environment and market have posed serious challenges to its development. The long-
term hydropower development has been conceived considering these issues. Both
reservoir and non-reservoir based hydropower projects will be developed to ensure
reliable supply of electricity. Projects designed to meet domestic demand will be
identified and implemented. Public and domestic private investors will be given
priority for designing and implementing projects that meet domestic demand. The
participation of the private sector will be increased in hydropower production,
distribution, management and operation.
Export oriented mega-projects will be implemented to increase the growth of the
national income, as multi-purpose big projects are the key to Nepal’s hydropower
development. The idea of regional co-operation will be initiated for such big projects
as the benefits of these projects occur to the countries lying over lower riverbanks.
Domestic and foreign investors will be given priority in the development and
operation of large multi-purpose projects. In the implementation of these projects, the
involvement of domestic technical management and manpower will be increased. The
load factor capacity of electricity generation centres will be increased through the
gradual increase in the share of industrial and commercial consumption of domestic
electricity supply. Necessary policy reforms will be initiated with a view to attracting
the foreign and domestic private sectors to increase investment in hydropower
development.
About 50 percent of the population of the Kingdom of Nepal will receive electricity
within 20 years in accordance with the long-term electricity development vision.
Within this period total installed capacity of electricity will be 20,000 mw. Out of
total 224 billion cubic meter water flowing in Nepal, 80 percent flows during the four
months of rainy seasons. Therefore, att empt will be made to control the flow of water
by building reservoirs so that the damages caused by flooding are minimised and
benefits of water resources are maximised.
Other Energy: Since Nepal’s economy is mainly based on rural agriculture and the
use of commercial energy is minimal, desired change in the use of energy will be
brought about through encouraging changes in the consumption pattern by
implementing appropriate energy programmes. Modern energy produced using
natural resources will gradually replace traditional sources for developing rural
energy system. Small-scale hydropower, solar energy and alternative energy
programmes will be widely expanded to fulfill the rural energy demand through the
supply of electricity and other alternative energies. Policies that focus on information
flow, training, availability of appropriate financial services, technology development
and extension and its specialisation will be adopted in order to lessen the present
external dependency on the supply of energy.
Irrigation: The irrigation facilities will be expanded on a massive scale in order to
raise agricultural productivity, achieve self-reliance in food deficit areas by increasing
food production, and contribute to poverty alleviation through employment
generation. As it has been realised that irrigation is essential for raising crop
productivity, the operation of irrigation projects will be fully managed by farmers
themselves so as to increase the cultivation of high yielding crops to minimise their
risks and bring about green revolution. Group-based programmes utilising ground
water resource in terai will be implemented in order to make irrigation facility
available throughout the year, and will be integrated with rural roads and
electrification programmes. Land with year round irrigation facility will be expanded
in the potential area. Un-irrigated land area will be gradually reduced through year-
round irrigation facility available in order to develop irrigated land in terai and hills.
High returns from ir rigation will be obtained by increasing the cropped area. Priority
will be given to constitute water users groups, encouraging women in agricultural
development. Moreover, appropriate programmes will be conducted, providing
training to women in the areas of irrigation system, its organisation and management.
Transport Sector: Roads that link districts will be accorded high priority while
constructing roads in the next 20 years since 18 districts have still no links with roads.
People's participation will be mobilised for building agricultural roads on a massive
scale as the roads assist in the marketing of agricultural products. Transportation
costs in the country will be minimised by reconstructing, improving and upgrading
the existing roads, considering the present state of transportation and vehicle
situation. In the coming 20 years, a total of 12,000 km of various types of road will
be constructed at the rate of 600 km each year. This comprises roads connecting
districts with no road links, north-south highways, east-west roads in the mid-hills,
Kathmandu-Hetaunda tunnel ways; inner, outer and super outer ring roads and radial
roads in Kathmandu valley; other district and urban roads. All of them together sum
up to a total of 6000 km; and a total of 6000 km of agricultural roads. The total road
length including existing road will be 24,000 km in the coming 20 years. Moreover,
3200 km local level rural roads, 1600 km ghodeto (horse trail) 200 motorable bridges
and 2000 suspension bridges will be constructed. Ropeway and cable cars will be
installed in remote areas and tourist spots. The construction of electric railway line
along Mechi-Mahakali will be given priority. Electric railway will be constructed
along the outskirts of Kathmandu valley. The use of circular electric railway will be
started and use of trolley buses and electric battery operated vehicles will be
expanded in order to lessen the pollution in Kathmandu valley.
Communication and Information Technology: For the development of
communication and information technology, the coming two decades will bring new
dimension in the sense that there will be a sea change in this regard in terms of
government policies, organisational improvement, adaptation and use of new
services. This period will herald the beginning of an information-oriented society.
Technological services that are necessary for providing basic facilities to the people
of urban as well as rural areas will be expanded by establishing communication
network system. An Information Network Infrastructure Plan will be formulated for
next 20 years, outlining the types of customers and various locations that will be
provided with services, and the time frame within which such services will be
provided. Emphasis will be given to increase the involvement of private sectors to
provide new services, and necessary laws will be enacted for this purpose. Mobile
and other telephone services will be introduced in Kathmandu valley and other urban
areas within the coming 20 years and telephone services will be expanded in a phase-
wise basis. Telephone exchanges will be established at all district headquarters and
telephone services (PCO) will be provided to all village development committees.
Internet and e-mail services will be expanded in urban areas. In the long run, the
multi-media services will be widely expanded to raise the telephone density to 15
percent, of which rural density will be 5 percent and urban density will be 55 percent.
In addition, advanced communication technology, which will be regarded as essential
means for development, will be widely utilised and expanded. Information
technology will be developed with the active participation of private sector as a
medium of export trade.

Table 2
Long-term Projection of Major Physical Infrastructure Indicators

S.N. Sector FY Planning Period

1996/97 Ninth Tenth Eleventh Twelfth
1. Total Road (km) 11,714 13,564 15,114 16,614 18,114
A. Black Topped 3,655 3,955 4,355 4,705 5,055
B. Graveled 3,011 3,611 4,061 4,511 4,961
C. Earthen Road 5,048 5,998 6,698 7,398 8,098
D. Agriculture Road 2,238 5,146 6,200 6,200
E. Number of Districts 56 66 70 73 75
with Road Links
2. Irrigation
A. Area Covered by 1,056 1,198 1,390 1,555 1,686
Irrigation (In thousand
ha) 60 68 79 88 95
B.Irrigable Agricultural
Land (%) 40 45 53 59 64
C. Total Agricultural
Land (%)

3. Communication 10 25 60 110 150

Number of Telephone
Service (Per Thousand)
4. Electricity
A. Installed Electricity 300 606 22,000
Capacity in M.W.
B. Population Covered 14 20 50
by Electricity
(in Percentage)

Social Development and Environment:

With the growth of GDP and improvement in the condition of the people living below
the poverty line, the welfare of majority of the people will be raised. It is imperative
that other indicators, which contribute to the improvement in the living standard of
low-income groups, should also be improved rapidly. The average life expectancy,
which is both an outcome and indicator of overall development of the country, is
targeted to rise from the present level of 56.1 years to 59.7 years by the end of the
Ninth Plan, and to 68.7 years in 20 years. Likewise, the present infant mortality rate
of 74.7 per thousand will be reduced to 34.4 per thousand. Total fertility rate will be
reduced from 4.58 to 3.05. Similarly, the maternal mortality rate will be reduced from
475 to 250 per 100,000 live births. The number of children to be enrolled in primary
education will be raised to a hundred percent from 70 percent of FY 1996/97. In the
same manner, the number of children enrolled in secondary education will be raised
to hundred percent from the present level of 45 percent. The literacy rate for the
population of 15 years age and over will be increased to 70 percent by the end of the
Ninth Plan, and to a hundred percent within the coming 20 years. For the purpose of
increasing women’s participation in the overall development of the country the long-
term vision with regard to women will comprise women’s empowerment for
development, gender equality, and mainstreaming women in national development.
All the population will have access to piped drinking water facility by the end of the
Ninth Plan and its quality will be continuously improved thereafter in the long run.
Education: The education sector is the main instrument of human resource
development. The past attempts made in the education sector have been beneficial.
The long-term objectives of the Ninth Plan are to provide equal opportunity to all
sections of society, to develop education as the mainstream of national development,
to improve its quality, aware the people for democracy, dedicated, competent,
productive, disciplined and socially responsible citizens. In view of the above
objectives, literacy, school education, technical education and higher education will
be upgraded. The existing literacy rate of the country will be raised to hundred
percent in 20 years through compulsory primary education with the active
participation of the private sector. To achieve this target within the stipulated period,
literacy programmes will be launched, focusing on deprived, backward groups and
women, and implemented as a campaign using formal and informal mediums.
Health: Improving public health and related indicators and providing qualitative
health services are the long-term objectives of the health sector. To this end, basic
health services will be made widely available at the local level. Health services will
be provided in an integrated manner through district hospitals, primary health care
centres, health posts, and sub-health post. Basic health care and curative hospital
services will be expanded and made more effective by establishing a procedure for
referral system. Policies will be adopted to make family planning effective;
programmes aimed at reducing maternal mortality rate and infant mortality rate at the
local level, targeting the poorer, backward and deprived communities living in remote
and rural areas. Family planning services will be implemented according to the
aspirations of the people based on the concept of small family.
Drinking Water and Sanitation: During the Ninth Plan, drinking water facilities
will be provided to all the people and pure drinking water facilities will be expanded
within the next 20 years. Sewerage treatment systems will be constructed in all urban
areas within the next 20 years. Appropriate solid waste management and disposal
system will be provided in all the urban areas. The level of sanitation in the rural
areas will be improved by encouraging people to construct appropriate and affordable
latrines that fit to the local condition. Because of availability of pure drinking water
and improved sanitation, people will be healthier and their time wasted in fetching
water will be saved.
 Table 3
Long-term Projection of Major Social Indicators

S.N. Sector FY Planning Period

1996/97 Ninth Tenth Eleventh Twelfth
1 Infant Mortality Rate (per 74.7 61.5 50.7 41.7 34.4
thousand)
2. Maternal Mortality Rate 475 400 350 300 250
(per one hundred
thousand live births)
3. Child Mortality Rate (per 118 102.3 86.8 73.7 62.5
thousand)
4. Total Fertility Rate (per 4.58 4.2 3.81 3.43 3.05
thousand)
5. Average Life Expectancy 56.1 59.7 63.0 66.0 68.7
(years)
6. Users of Contraceptives 30.1 36.6 43.9 51.1 58.2
(%)
7. Maternal Services by 31.5 50 65 80 95
Trained Health Workers
8. Crude Death Rate (per 11.5 9.6 8.1 6.9 6.0
thousand)
9. Crude Birth Rate (per 35.4 33.1 30.4 27.5 26.6
thousand)
10. Availability of Essential - 70 80 85 90
Health Services(%
population)
11. Drinking Water
A. Population Served by 61 100 100 100 100
Drinking Water Facility
(%) 15 25 40 60 85
B. Population Served by
Pure Drinking Water
Facility (%)
12. Primary Education (6-10 70 90 100
years old children in %)
13. Secondary Education 45 60 100
(14-15 years old children
in %)
14. Literacy Rate ( 15 years 40 70 100
and above in %)

Other Developmental Targets:

Population: Taking into account the adverse effect of high population growth on
economic and social development, people will be encouraged to adopt the concept of
small family. Fertility-related programmes will be implemented effectively through
the easier availability of quality family planning services. Consistent with this, the
long-term objective of reducing the total fertility rate of the Kingdom to the
replacement level within the 20 years has been adopted. The availability of
contraceptives will be expanded in a way to meet people’s growing demand. The
policy of distributing good quality contraceptives will be followed with the
cooperation of private and non-governmental agencies in order to encourage each
family to have two children only, which in turn will help create a desirable economic
and social situation.
Human Resources: The long-term concept with regard to human resources
development is to develop and mobilise human resources that are skilled, creative,
adaptive and endowed with enhanced capacities to meet the developmental need of
the country. The population will be developed as human capital. Existing manpower
will be effectively utilised and additional manpower will be developed according to
the demand for and supply of labour. Contributions to the alleviation of poverty will
be made through the increased availability of self-employment and other employment
opportunities, and to the development of skilled manpower through skills oriented
training. Emphasis will be given to make the manpower capable of competing at the
international level. Priority will be accorded to creating skilled manpower that can
adapt to changing technology.
Environment: The conservation of Nepal's natural environment and creation of
programmes for sustainable development are challenging tasks. The long-term view
foresees the integration of environment with development and the inclusion of
environmental concepts in sectoral development programmes. For carrying out this
task, emphasis will be given to encourage joint and collaborative efforts of
government agencies, local bodies, non-governmental agencies, consumers' groups
and private sectors. The idea that, "environmental conservation is everybody's
concern and responsibility" and building up a voluntary and participatory approach to
environmental protection, conservation and management will be emphasised as well.
Forestry Development: Forestry being a major natural resource is vital for Nepal's
development. The long-term concept of this sector is mainly based on the principles,
guidelines and policies that have been formulated under its Master Plan. The forestry
sector will be developed as a foundation for the sustainable development. Herbs and
medicinal plants programmes supported by modern technological skill will be
expanded on a massive scale to the potential areas of high and middle hills in a
systematic way. Forestry, herbs and medicinal development programmes will be
implemented as a basis for rural development so as to contribute to poverty
alleviation and employment promotion. Studies on alternative measures to develop
forestry will be carried out and an integrated and action-oriented approach will be
adapted to this effect. Community forestry programmes will be continued by using
the concept of community ownership and by setting up units at the village and
consumers' level based on the participatory approach.
Good Governance and Development Management: As there is a strong need for a
people-oriented administration, long-term administrative policy will be formulated
and implemented in this respect. A clean, transparent, responsible people-oriented
administrative system will be established. The scope of government sector will be
reviewed to assign a small, clean and efficient role for the government. The
participation of non-governmental and private agencies will also be enhanced.
Together with committed administrative leadership, an administrative system as
competent as the private sector and non-governmental sector will be developed. The
concept of qualitative management will be fostered in the administration. Necessary
arrangements will be made to make the system fully functional in tune with the spirit
of decentralisation. Any inconsistency between objectives set forth in the plan
document and policies, implementation strategies, programmes and budgets will be
identified in time. The monitoring and evaluation system will be geared towards
ascertaining the attainment of long-term targets so that there is no gap between targets
and performance.
 Chapter 3
Objective, Policy and Development Thrust of the Ninth
Plan
3.1 Objective, Policy and Priorities

1. Background
Nepal embarked on periodic planning as early as 1956; however, up to the Fifth Plan,
emphasis was laid mainly on building physical infrastructure and erecting the
foundation of development in the country. It was only after the Fifth Plan that efforts
were made to launch with priority the productive sectors such as agriculture and
forestry and human resource development.
When compared to previous plans, the Eighth Plan featured some fundamental
differences. While all the earlier plans followed controlled economic policies, the
Eighth Plan made a distinct departure with placing emphasis on liberal, market-
oriented economy. The role of the government as well as the private sector was
demarcated clearly at the policy level. Government was assigned the role of
facilitating economic activities, promoting private sector, and building physical
infrastructure to enhance economic activities and sustaining social service sector by
opening this sector for the private sector as well.
2. Objective
It is true that achievements, to some extent, have been made in the development of
physical and social infrastructure through the implementation of preceding plans, and
particularly, the growth rate of non-agriculture sector has increased as a result of
policies adopted in the Eighth Plan. However, it is also true that desirable progress
has not so far been achieved in alleviating the problem of rampant poverty and
unemployment in the country. Therefore, with the aim of accelerating the process of
national development, the Ninth Plan has adopted poverty alleviation as its main
objective so as to lessen poverty confronting the whole nation. In doing so, a
consistency will be maintained with the development concept of the 20-year
perspective planning.
In the Ninth Plan, a clear and concrete implementation strategy will be formulated for
meeting the target of poverty alleviation, and thereby improvement will be brought
about in the living standard of the poor community. For reducing poverty effectively
in the long run, poverty-focused sectoral and targeted programmes will be launched
in a coordinated, integrated and effective way.
3. Strategy
Following strategies will be adopted for achieving the objective of poverty
alleviation:
• Integrated development of agriculture and forestry sectors and high, sustainable
and poverty allev iation-oriented economic growth with a focus on those sectors.
• Acceleration of industrial development process through the advancement of such
sectors as agriculture, water resources, industry, tourism, and transportation on
the basis of comparative advantage and competitive capability.
• Reduction of economic and social inequality existing among various sectors and
communities especially through the means of agriculture and social sector
programmes.
• Lessening the dependence on external aid through extensive mobilisation and
optimal utilisation of natural, human, and economic resources available in the
country.
• Recognising cooperatives as a powerful instrument for the development and
expansion of economic sectors such as agriculture, industry, trade, etc.
• Streamlining the development and expansion of modern sectors through liberal,
market-oriented economic policies while stressing the active role of the
government in developing and building rural sector. Recognising the fact that a
single set of policies cannot resolve basic problems of the organised modern
sector as well as the unorganised, backward rural sector in the dual-structure
Nepalese economy.
• Enabling the local institutions to take leadership in rural development through
decentralisation.
• Placing special priority on the development of backward regions so that the
people in those regions will enjoy the benefits of economic programmes.
• Developing human resources for sustainable and high economic growth through
the extensive expansion of social sectors, especially education and health, and
bringing the backward sections of society into the mainstream of development.
• Expanding education and family planning programmes through gradual reduction
in the population growth rate and promot ion of social awareness.
4. Policy and Implementation Strategy
• Making economic growth rate high and broad-based with further consolidating
the economic reform process.
• Developing agriculture sector through implementing the Agriculture Perspective
Plan (APP), considering the fact that majority of the people rely on agriculture for
livelihood.
• Increasing agricultural productivity with guaranteeing the safety of land-
ownership, accessing landless farmers to the land, extending land-ownership, and
alleviating poverty through the promotion of economic growth and employment
by establishing, developing and expanding agro-based industries.
• Empowering economically and socially the backward and downtrodden castes
2
 and communities through decentralisation, local development and human
resource development. People's participation will be made instrumental in this
process.
• Enabling the growing human resources to become entrepreneurial, self-employed
and employable getting employed through human resource development and
extensive expansion of entrepreneurial and skill-oriented training programmes.
Such programmes will be made a main instrument for poverty alleviation. In this
process, services including technical assistance, consultancy and the credit-flow
will be extensively made available in villages.
• Expanding income-oriented employment opportunities through outreaching the
fruits of programmes effected in agriculture, cottage and small industries and
tourism sectors.
• Reducing inequality of income and poverty by investing more in sectors that will
give greater return within shorter period, that are employment-oriented, and that
will contribute to equitable distribution of development benefits from such
sectors as agriculture, small and cottage industries, tourism, and transportation.
• Implementing in an integrated way the employment promotion programmes run
by the government, private, banking and non-government sectors as well as local
institutions.
• Expanding export trade through diversifying foreign trade on the basis of
comparative advantage and competitive capability. Necessary legal and
institutional infrastructure will be developed in order to set a competitive climate.
• Developing and expanding economic and social infrastructure for increasing
production and the productivity of economy.
5. Priority
In keeping with the limited economic, human, and institutional resources of the
country, all activities cannot be carried forward simultaneously. Therefore, the long-
term objective of development and the geographical priorities set accordingly will be
as follows:
Agriculture and Forestry
As agriculture has remained the backbone of economic development and majority of
the people depend on it to earn their livelihood, as investment will be flowed into the
non-agriculture sector at the initiative of agriculture sector, thus contributing to
poverty alleviation. As there is immense potential of the development of agriculture
sector in the country, this sector will be developed in line with the APP. It is expected
that the successful implementation of the APP will lead the existing agricultural
production to be increased by additional two percentage points. Forestry sector will
be optimally utilised and enhanced in order to integrate it into the country's
development programme. Herbal and livestock development programmes will be
extensively expanded in the high mountain region with a view to developing that
region and making such programmes integral to the poverty alleviation programmes.

3
Water Resources
Energy holds great significance for boosting economic activities and improving the
life standard of the people. Developing huge water resource potentials of the country
will not only meet the country's energy demand but also greatly help to develop
agriculture and industry sectors, facilitate socio-economic development, and
contribute to poverty alleviation. It is in this context that the Ninth Plan, by ensuring
the participation of the private sector as well, intends to tap and utilise water
resources for gaining social benefits. Besides, special emphasis has been laid by the
APP on the development of water energy with a view to meeting the need of
supplying electricity for lift irrigation and agro-production processing schemes.
Shortage in electricity supply, experienced for the last several years, will come to a
total end during the Ninth Plan period.
Human Resource and Social Development
In the Ninth Plan, major portion of investment will be channeled into such
programmes as education, health, drinking water, local development, literacy, and
women's development; holding the notion that human resources development is an
inseparable component of poverty alleviation. In addition, with a view to empowering
the people economically and socially and to increasing opportunities for the skill-
oriented training for self-employment and full employment, various sectoral as well
as targeted programmes related to human resources and social development will be
launched.
Industrialisation, Tourism Development and International Trade
Development of industrial sector is of immense importance for rapid economic
progress of the country. Likewise, as tourism has remained as an enterprise of
comparative advantage and with enormous development potential, the tourism and
industry sectors will be promoted as vital constituents of the all-round economic
development of the nation. In particular, keeping in mind the possibility of regional
and bilateral trade relations including those with the neighbours, industrial
development will be encouraged as the basis of export-oriented trade. In this context,
the government will lessen the restrictions of rules and regulations and stress
infrastructure development along with inspiring the private sector to increase its
investment in the advancement of both the sectors.
Physical Infrastructure
Physical infrastructure such as roads, bridges, and air transport and communication
facilities are essential preconditions for achieving success in reducing poverty,
accelerating the growth rate and uplifting rural communities. Therefore, the Ninth
Plan will put special focus on developing such infrastructure, and in this context, the
role of the private sector will be highlighted. Programmes such as building roads that
interlink district headquarters as well as the farm roads and communication facilities
accessible to the bulk of populace will be advanced with priority.

4
 3.2 Major Sectors of Development Thrust

Development is a multi-dimensional concept and its main objective is to uplift the

living standard of the people. As the country's socio -economic conditions and
interactions among them have a great influence on strengthening the status and
accelerating the speed of development, it is necessary to ascertain the types of
foundations needed for positively contributing to the socio -economic sector of
development.
While formulating the foundation and concepts of development, it is necessary to
seriously keep in mind such factors as historical background, geographical situation,
economic, social and political conditions and institutional arrangement for
implementation. However, even more important while devising the development
strategy are such issues as formulating policies that are capable of confronting
challenges existing in the country, chalking out programmes that ensure the
implementation of those policies, and strengthening effective institutional structure in
order to successfully carry out those programmes. In this process, various internal and
external factors may necessitate some essential adjustment in the development
policies and strategies. However, it is safe to conclude that sustainable and speedy
development always demands clarity, stability and effective implementation of
policies and strategies adopted in this regard.
The first-half period of the Ninth Plan will concentrate on preparing a blueprint for
the foundations to be built and the sectors and policies to be emphasised, keeping in
view poverty, slow pace of development, state of regional disparity and other socio-
economic challenges prevailing in the nation. The Plan believes that such a blueprint
made and followed sincerely will contribute substantively to development efforts. It is
with this intention that the Plan has defined the major sectors of development thrust,
and efforts will be made to advance them as follows:
3.2.1 Macro-economic Stability
Maintaining a situation of macro-economic stability is highly essential to achieve
objectives set forth in the Ninth Plan making market-oriented economy effective. For
this, policies have to be adopted aiming at reducing budget deficit, keeping the size of
domestic borrowing well within desirable limits, keeping price inflation and money
supply under control, and increasing savings and investment. Accordingly, for
bringing about external equilibrium, policies need to be targeted to making exchange
rates balanced and realistic, and smoothening the balance of payment situation both
by raising the foreign currency earnings from export and tourism sectors and by
reducing the current account deficit.
For the realisation of the goal of poverty alleviation and meeting the target of 6
percent annual growth rate, it is necessary to put special emphasis on domestic
resources mobilisation and promote investment both domestic and foreign for
reducing the gap between investment and savings. Therefore, with a view to
excessively mobilising domestic resources, the Ninth Pla n has set a target of

5
increasing the revenue growth rate by 10.2 percent at constant prices. To meet the
target, programmes such as strengthening tax administration, expanding tax net and
reforming tax system through consolidating as well as successfully implementing the
taxes like VAT will be carried out. Unproductive and wasteful expenses will be
controlled and government resources will be channeled into the priority sector in
order to make the government expenditure management competent and strong.
Government involvement will be reduced in those sectors where the private sector has
shown interest for making investment, and emphasis will be laid on mobilising
resources towards other needed sectors. Regular expenses will be kept within a
desirable limit.
During the Eighth Plan period, a trend was seen as to the downturn in domestic
borrowing and budget deficit compared to GDP. This trend will be continued during
the Ninth Plan as well with putting particular emphasis on economic discipline.
Programmes that will increase national savings, encourage savers to save through
banks and financial institutions by making interest rate even more competitive, and
promote foreign investment and private sector remittances will be brought into
operation.
The monetary policy of the country will be carried out with the objective of economic
development through maintaining price stability. During the Ninth Plan, consumer
price index will not be allowed to soar by more than 6.5 percent. For this, the growth
rate of money supply will be kept within a limit of 13 percent. Accordingly, in order
to maintain external balance, the Ninth Plan will adopt a policy that will keep the
growth rate of imports within a limit of 8.5 percent, and increase the exports by 11
percent, thereby bringing down the growth rate of current account deficit to 1.7
percent. The Plan will also embrace a policy of fixing foreign exchange rate in such a
way that it will be guided by the market and, at the same time, will facilitate the
export trade of the country.
3.2.2. Poverty Alleviation
Poverty has stood as a serious challenge to the country. According to Nepal Living
Standard Survey 1996, 42 percent of the total population have remained below the
absolute poverty line. Among them, about 17.1 percent are counted as ultra poor or
the poorest.
The Ninth Plan has set poverty alleviation as its main objective with a determination
of bringing down the number of those below poverty line from 42 percent to 32
percent. The Plan also aims at improving the living standard of the people below
poverty line, placing special emphasis on uplifting the living standard of those
lacking productive assets and income-generating resources and those counted as the
poorest, empowering socially and economically the backward, downtrodden and
weaker sections of society, and lowering the high incidence poverty by developing
physical, social and economic infrastructure in the underdeveloped, remote regions of
the country.
In order to meet the objective of poverty alleviation, a strategy directing the whole
efforts towards meeting that objective has been chosen. In this context, emphasis will

6
be given to achieving high economic growth rate in various sectors and also to
generating extensive employment opportunities. Together with the im plementation of
the APP, agriculture sector will be given a lead role to play in poverty alleviation.
Along with making efforts to gain high growth rate and create extensive employment
opportunities, stress will be put upon uplifting the socio-economic status of those
from backward, remote regions and the neglected and weaker sections of society by
accessing to them primary health, education and drinking water. Likewise,
programmes such as skill development, credit flow, social mobilisation, population
control, women's empowerment, rural electrification, environment protection, and
legal provisions against various exploitation of weaker sections will be emphasised
upon for the purpose of poverty alleviation.
3.2.3 Population Planning and Family Welfare
According to a mid-term population study held in 1997, the estimated average growth
rate of population in Nepal during 1990-1996 has reached 2.38 percent per annum. In
the context of high population growth, it is obviously difficult to provide people with
a sense of achievement from the successful implementation of poverty alleviation and
employment programmes. The Ninth Plan has set a target of bringing down the
population growth rate around 1.5 percent during the period of next 20 years, and
various programmes will be implemented to achieve this target. In this process,
keeping in view the concept of long-term development programmes encompassing
such areas as income generation and employment promotion besides other sectors
such as health, education and family planning will be brought into operation.
3.2.4. Human Resource Development
It is the knowledge, skill and expertise as well as the natural resources inherent in the
country and its citizens that really build up the asset of that country. Human resources
bring dynamism into other resources and make it possible to efficiently utilise such
resources, and this is how the country can be led to the path of development by
properly mobilising human resources. Of all the resources of production, human
resource is the only sector, which can result in relatively higher gains. That is why,
special emphasis is being given to the development of this sector. The process of
human resource development encompasses not only the organised sector but also the
knowledge, skill and expertise of the whole population. Human development means
building up competent, skilled and healthy human resources by making available the
social services such as proper education, training, health services, sanitation, housing,
drinking water, etc. In other words, improving the living conditions of the whole
populace of the country by expanding the social services is called human
development. While measuring the aggregate level of human development,
components such as knowledge, life expectancy, and living standards are taken into
consideration. As these components are determined by factors such as literacy, daily
average level of food calorie, life expectancy, shelter, security, participation, and
environment, attention should be paid to these factors as well. In order to develop
human resources during the Ninth Plan, various sectoral and targeted programmes
will be expanded and strengthened.
With a view to bringing down the population below poverty line from the current 42

7
percent to 10 percent within the year 2017, and promoting positive human values
such as competence, creativity, multi-dimensional skills, and receptiveness through
human resource development and mobilisation, following policies and
implementation strategies will be adopted:
• In order to increase gradually the average literacy and female literacy through
extensive expansion of education programmes, necessary measures will be
devised and implemented. Emphasis will be laid on science, mathematics and
computer education right from the lower secondary level and vocational
education and training programmes will be implemented with the participation of
private sector as well. Private sector will be encouraged to maintain quality
standard in education and to found schools that will provide quality education.
• Health sector programmes will be expanded to village level. Emphasis will be
given to the basic health and family planning programmes. Encouragement will
be given to private sector for developing health-related high and medium level
human resources.
• Formal and informal training programmes will be made widespread in order to
increase the supply of basic and medium level human resources.
• Women's and vocational education will be effectively carried out. In particular,
appropriate skill-oriented training will be provided to rural women for their
upliftment and encouragement will be given to them to become self-reliant and
capable through the provision of employment and self-employment.
• Need has been felt for developing multi-skilled human resources in order to
minimise both the adjustment cost and the effects of the potential changes in
global environment and technology. For this, programmes such as training and
refresher training will be conducted on a regular basis, and through this process,
trainees will be made familiar with the changing technology and know-how.
• Training quality will be improved by generating competitive environment
between government and non-government training institutions. Voucher system
will be gradually initiated in the government training programmes targeted to
special groups, and through this, opportunity will be offered to select training
institution by oneself.
• Training loan will be provided to those who are willing to receive training on
self-finance basis but unable to do so due to poor economic condition.
Encouragement will be given to those private training institutes which conduct
"earn and pay back" programmes offering an opportunity to start paying back the
training loan after getting into employment.
• In order to meet the objective of poverty alleviation, skill-oriented training
programmes will be carried out on a campaign footing, targeting those groups
identified as being below the poverty line.
• As the tourism industry has expanded as one of the latest employment generating
sectors, government and non-government organisations as well as private training

8
 institutes will be given support to produce human resources as per the need of this
sector.
• In keeping with the trends of changing technology and demands and with a view
to improving the subjects, techniques, and modality of training, emphasis will be
given to curriculum improvement and research.
• Skill-oriented training institutes will be equipped with adequate resources in
order to enhance their capacity. Likewise, an arrangement will be made to carry
out the accreditation of training by one single institute so as to ensure the quality
standard of training.
• Measures will be taken to ensure that there will be no shortage of competent
human resources by bringing timely reforms in the training conducted within the
country and in foreign scholarships relating to study and training.
• Necessary steps will be initiated to found an autonomous institution in order to
promote foreign employment as well as to maintain credibility in this sector.
Nepal's diplomatic missions or other government institutions operating in those
countries with maximum foreign employment potential will be mobilised with a
view to expanding the market for foreign employment, enhancing its credibility,
and protecting and defending the rights and interests of Nepali workers abroad.
• For the elimination of child exploitation and child labour, programmes targeting
the welfare and rehabilitation of children will be implemented through
government and non-government organisations.
• Occupational health and safety standard will be set up and public awareness to
this effect will be increased.
• Opportunities will be created for underprivileged and disabled sections of society.
• Participation of non-governmental organisations and local communities in
development activities will be stressed.
• While implementing human resource development programme, arrangement will
be made to execute specific programmes aimed at uplif ting the status of
backward ethnic communities and rural women.
• A human resource inventory system will be developed in order to collect data on
human resource available in the country and integrate it into a systematic pool of
information. Concerned agencies will be made responsible for the task of
coordination, monitoring and evaluation of activities of government, non-
government and private sector organisations involved in human resources
development.
Poverty alleviation programmes require to be oriented toward human resource
development rather than merely being oriented toward economic resource
mobilisation. Human resource development programme will, in addition to enhancing
the capability of those below poverty line and other targeted groups, create a
condition for enabling them to work. For this reason, the policy of advancing poverty

9
alleviation objective through human resource development has received prominence
in other similar programmes. Those living under the shadow of poverty never have an
access to the means of production. Consequently, the poor class has not been able to
take benefits from the distribution of the outputs of production. It is believed,
therefore, that the human resource development programme which has been designed,
targeting the poor and those lacking access to the means of production will increase
such access and, as a result, share of the poor class in the outputs of production will
be gradually enhanced. If the progress goes well as per the set goal, Nepal's human
development level will reach the average level of developing countries.
3.2.5 Domestic Savings Mobilisation
Savings possess great significance in a country's development. While high savings
result in high economic growth rate, rapid development leads in turn to high savings.
Nepal's savings rate is lower compared to other developing countries; however, even
to achieve 5 to 6 percent economic growth rate, more than 25 percent annual
investment of GDP is considered necessary. As the country's current domestic
savings is about 14 percent, the economic resources are by nearly 11 percent short in
proportion of the GDP. The situation is such that huge portion of investment has still
to be made with external resources.
The savings growth rate depends, among others, on the level of country's per capita
income and its growth rate, population growth rate, interest rate on savings on bank
accounts, banking and financial facilities, net factor income, etc.
During the Ninth Plan and other subsequent plans, economic growth rate will be
accelerated through implementing various policies and programmes that will enhance
investment portfolio in agriculture and non-agriculture sectors. Likewise, as it is
estimated that the population will go down by implementing various strategies,
annual per capita income will expectedly rise by 3.6 percent during the Ninth Plan
there-by leaving positive impact on savings. During the Ninth Plan, the real interest
rates of commercial banks and financial corporations will be made positive and
competitive. In this context, commercial banks, development banks and finance
companies will be transferred to the private sector in a way to help maintain financial
development and stability, and the banking sector will be made more competitive by
adopting open-door policy.
Accordingly, by expanding financial institutions and developing savings instrument,
national savings mobilisation will be strengthened. Emphasis will be laid on
developing various such instruments of financial savings as insurance, mutual fund,
provident fund, etc. To discourage a tendency of keeping family savings in the form
of immobile capital (gold, silver, ornaments, etc.), monetisation based on market
economy will be stressed.
In order to increase external capital especially the factor income as a supplement to
the gross domestic savings, foreign employment will be expanded and promoted; and
to increase remittance coming therefrom, various policies and programmes will be
implemented.
Owing to the huge increase in government expenditure and to the absorption of

10
substantive portion of revenue savings by regular expenses such as salary and
allowances, government savings have not succeeded to rise. To reform this scenario,
policies such as keeping regular expenditure within desirable limit, reducing wasteful
expenditure, strengthening public corporations and increasing revenue will be
effectuated
Drawing on the experiences of various countries, keeping in mind Nepal's national
development potential, and considering the successful implementation of policies and
implementation strategies of the Ninth Plan, it is likely that in the next 20 years,
country's national savings could reach up to 30 percent.
3.2.6 Development of Private Sector and Enhancement of Competitive
Ability
Keeping in mind the experiences of developed countries, it will be appropriate that in
the course of accelerating the speed of development, market-oriented economy rather
than the active intervention of the government should be made a major driving force.
Not only has a desirable social change been noticed in the psyche of the people of the
nation through such market-oriented ec onomic development programmes, but it has
been revealed that these programmes have left a very positive impact on other
economic activities as well. Market-oriented economic development basically means
to keep on encouraging private sector with gradually lessening the intervention of the
government sector in development endeavours.
Developing countries moving on the path of rapid economic development have
launched market-oriented economic reform programmes in keeping with the needs
and constraints of those countries. Since the private sector, which plays a major role
in implementing market-oriented economy is not perfect in itself. It is influenced both
by government policies on such areas as macro-economic, sectoral and foreign
investment and by the ability of small scale entrepreneurs as well as legal
instruments, it is necessary that the government put emphasis on developing these
complementary policies and instruments. Likewise, experiences of various countries
show that strategies such as reducing the government intervention in the industry and
commerce sector, deregulating and liberalising government instruments, reducing the
size of government budget, and transferring the public enterprises under state
ownership and control to the private sector can be undertaken to promote the private
sector development and the competitive climate in the economy.
Reforms in entrepreneurship and development of private sector are two basic
measures for strengthening the market-oriented economy. These measures encourage
the private sector to make independent decision on such issues as production,
consumption, savings, and investment. As the advancement and efficacy of the
private sector largely depend on the official policy environment as well as the
country's existing phys ical infrastructure, following arrangements will be made to
enhance the private sector and its competitive ability:
• Private sector will be made actively involved in the area of formulating plans,
policies, and rules.

11
• As reforms in trade and industrialisation policies are necessary to promote the
role of private sector, policies that encourage rather than unnecessarily protect
export-oriented industries and trade will be followed.
• Following Nepal's entry into South Asian Preferential Trading Arrangement
(SAPTA), South Asian Free Trading Arrangement (SAFTA) and World Trade
Organisation (WTO), attempts will be made for enabling Nepalese industrialists
and businesspersons to handle threats and opportunities that will arise from
Nepal's becoming member to those organisations.
• In order to inject even more competition into private sector, measures will be
sought and implemented for making bank interest rate competitive, putting limits
to the extension of bank loans, and doing away with unproductive burden of bank
loans.
• As it is not appropriate to entirely depend on foreign aid for development,
policies advancing foreign direct investment (FDI) will be adopted so as to
further non-loan capital influx into the country. Emphasis will be given to
creating a favourable economic climate, developing infrastructure, producing
competent manpower, and building appropriate legal arrangements.
As the adoption of suitable policies relating to the development of small and medium
industries will help promote industrial employment and capital formation and resolve
the problem of disguised unemployment. Since the private sector plays a major role in
this process, development of small and medium industries will be specially
emphasised.
As the increase in expertise and productivity of the private sector is not possible
without human resource development or investment especially in education, health
and training, special programmes will be launched in cooperation with private sector
with a view to enhancing competitive productivity and entrepreneurship capacity of
the labourers. Likewise, with the formulation and implementation of appropriate
strategies and programmes for transportation and communication, legal structural
arrangements, agriculture and services, and also with the increase in competitive
capacity of the private sector, programmes will be carried out in a coordinated
manner in order to facilitate economic development.
3.2.7. Science and Technology
In Nepal, science and technology have recently been in great use for increasing
production and delivering services especially in such areas as agriculture, industry,
forestry and other economic sectors. However, with a view to improving the living
standard of the low-income people, it has become necessary to face a challenge to
increasing productivity through the proper utilisation of natural and human resources
scarcely available in the country. In this context, it is essential to launch programmes
such as experiment and development of indigenous and advanced technology,
reforms in education, etc. Choosing and using technologies from among those
available in the market in keeping with the country's geographical, socio-economic
and cultural context will immensely help increase productivity.

12
Human Resource Development: During the Ninth Plan period, an environment
conducive to the provision of quality education in areas of science and technology
will be created at all three levels of education, i.e. at school, college and university.
With an objective of integrating science into daily lives of the people, technical
education will be incorporated into and its share will be gradually increased in three
levels of education. For upgrading the level of such education to that of regional and
international standard, appropriate arrangements will be made for providing necessary
material resources, research environment, educational exchange, training, etc.
Students will be attracted more towards technical education than merely imparting
them with the plain theoretical knowledge. In order to utilise the skilled human
resources thus produced, industrialisation and service-oriented technological sector
will be expanded.
Development of Indigenous Technology: In order to offer employment to the
majority of the people by applying raw mater ials scattered throughout the country and
also by utilising local skills, technological sector will be optimally utilised and
updated as per the need of the country. Appropriate programmes will be initiated to
protect and promote such indigenous technologies.
Development of Adaptive Technology: Technologies appropriate to national
requirements will be imported from the international market. After conducting
necessary study and research and also keeping in view the experiments carried out by
other Asian and European nations, a kind of adaptive technology will be developed
and then publicised, popularised and transferred so as to make the technology
accessible to the larger sections of the population.
Development of Advanced Technology: Technological innovations of advanced
level through collaboration among native, regional and international scientists and
technologists will enhance the capability of native scientists as well as increase the
country's access to such innovations. While developing these technolog ies, emphasis
will first be given to adaptive technologies, and then attempts will be made to enter
gradually into the field of advanced technology.
Selection of Technology: Making a selection of appropriate technology is highly
desirable for accelerating the pace of physical development of the nation. While
making such selection, emphasis will particularly be laid on the removal of partial
unemployment and on the implementation of projects in a frugal manner. In this
process, scientific and technical communities as well as the consumers of such
technology will be made active participants. While accomplishing the process of
choosing appropriate technology in such sectors as industry, communication,
electricity, etc. along with ascertaining their priority ord er, it will be ensured that this
process will have a positive impact on economic, social, cultural and environmental
aspects of the country.
Utilisation of Natural Resources: Research will be initiated for the proper utilisation
of all precious natural res ources available in various parts of the country (especially
minerals and herbs). Nation will receive economic benefit in great quantity through
the manufacturing of processed and semi-processed products made up of those
natural resources. Therefore, necessary arrangements will be made towards properly

13
protecting and developing natural resource endowments.
Research and Development, Coordination and Promotion: Research activities
being carried out within the country will be integrated with the development works in
various other sectors. Necessary steps will be taken toward establishing research and
development as mutually inseparable organs particularly for manufacturing quality
products in the industrial sector. Besides, necessary study and research will be
conducted and their outcome will be utilised with regard to the development of
alternative energies such as bio-energy, solar and wind energies. In this context, an
interaction will be arranged among research institutions, industries and stakeholders.
Likewise, coordination will be maintained among various agencies operating in the
field of science and technology while monitoring their activities. Necessary
incentives will be provided to scientific and technical communities in order to attract
them to research activities.
3.2.8. Information Technology
Industrialisation, expansion in the world market and modernisation in agriculture,
communication, education, health, and every other sector at a rapid pace have become
a recent global phenomenon. In this context, unprecedented advancement in the field
of information and communication technology has helped people to embrace a
modern, dynamic lifestyle through establishing an intimate relationship among the
people, technology and development, and all this has contributed to extend the fruits
of technological programme down to the common masses. Communication links have
become easier and less expensive due to the application of communication equipment
such as audio-visual and various micro appliances used in telecommunication sector.
Similarly, upgrading the computer capacity, using digital network, establishing links
between telecommunication, computer and broadcasting etc. have all contributed to
making information and statistics accessible and affordable. In the context of growing
interdependence in the telecommunication and broadcasting sector due to the
development of modern automatic equipment such as fibre optic, satellite, radio
spectrum, compression technology, ADSL, HDSL, ATM, etc., it has become possible
to extend such communication services as multi-media even to the remote rural
region.
Development of information technology in Nepal remains in its elementary state as
compared to developed countries. Use of computers in the government sector is rather
low in spite of the fact that about 20,000 computers are now in use throughout the
Kingdom. For the last few years, government as well as non-government agencies
have been using computers for creating a data bank that keeps relevant details and
facts, for an alysing those data, for carrying out daily tasks smoothly and also for
enhancing the capability of employees. Yet, success has not been achieved so far in
collecting and integrating those data into a national institutional network and utilising
them as a common asset for common benefit.
The increase in the use of computer, the development of qualitative
telecommunication network, the initiation of internet and e-mail services by the
private sector and the growing attraction towards software business have indicated
that Nepal will also be oriented towards creating a society that produces and

14
possesses economically viable information. The expansion of national information
network will contribute to multi-dimensional development of agriculture, health,
education, etc. on the one hand, and the establishment of information technology (IT)
Park and the production and the export of software at lower cost will make
information technology a self -sustainable industry, on the other. In view of this
prospect, policies will be adopted during the Ninth Plan as to ensuring a wide
outreach of computer education in schools, making provision of higher education and
training, establishing quality education schools and IT Park, and providing special
encouragement to computer business.
Information technology will be developed in a way to play a highly contributory role
in the all-round development of the nation. Emphasis will be laid during the Ninth
Plan on the utilisation of computers as regards the formulation and management of
plans and policies in the government offices. Institutional efforts will be made to
bring out coordination for the development of computers and information technology
through involving concerned institutions and individuals in sectors such as education,
health, agriculture, finance, intellectual services, etc. with a view to developing
information technology as a development infrastructure.
Through the initiation of nationwide database in cooperation and collaboration with
the government as well as private sector, programmes will be launched to benefit
common people with integrated information services. Educational and training
opportunities will be expanded in order to build up skilled human resources for the
development of information technology. Concessio ns will be provided to develop
information technology as a service industry, and intellectual property rights will be
ensured for the development of software industry.
In the education sector, modern education and long distance education will be
expanded through Internet, while radio education will be made widely effective in
rural areas. In the health sector, attempt will be made to provide medical check-up
and counseling through computer system as well as counseling by expert doctors
through the means of multi media. In the agriculture sector, technology will be
brought in use as to reaching decisions on the adoption of agro-climatically feasible
agricultural systems and also the land use techniques through geographical
information system (GIS). Banking transactions will be simplified by further
expanding the application of computers, and new communication instruments such as
credit cards and ATM services and facilities will be increasingly brought into practice
to facilitate paying bills, purchasing goods , etc. Furthermore, application of new
information technology will be further emphasised as regards the essential preventive
and protective measures to be adopted at the time of natural disasters such as
earthquake and flood, and also regarding the protection and promotion of
environment and ecology.
In order to carry out economic development activities of the nation in an effective,
reliable and result-oriented manner, following policies will mainly be adopted,
keeping in mind the objective of long-term de velopment of information technology
and information systems:
1. As information sector remains tremendously dynamic sector, a cell will be

15
 formed within the National Planning Commission with a view to formulating a
contemporary information technology system being familiar with advancement in
this field at the global level. This cell will formulate and implement policies and
programmes in coordination with the government agencies using the information
technology and systems such as education, health, agriculture, finance,
communication, commerce, etc.
2. In order to provide information to the common people in a smooth and easily
accessible manner, liberalisation policy will be adopted in the information and
communication sector. In this process, national communication infrastructure will
be developed and expanded through the use of modern communication
technologies such as optical fiber, satellite, ATM, etc.
3. Information systems will be initiated and developed for enhancing working
capability and competence of various related institutions. In order to ensure the
availability of information to the common people, a networking system will be
built to which agencies involved in study, research and development activities
will also be integrated.
4. With a view to developing competent human resources required for an
Information Age, education policy will soon be updated and then effected.
5. As there will be a wider use of computers while developing information systems,
facilities will be provided to manufacture computers and software within the
country and, through this measure, private sector will be encouraged to build such
infrastructure as Virtual Park, IT Park, etc. For the purpose of supplying skilled
human resources for software production and development, a software institute
will be immediately operated in the private sector involving the government
sector as well.
6. Legal recognition will be rendered to the business activities conducted through
such instruments as Intellectual Property Right and Electronic Media which are
considered necessary for the sufficient production, development and export of
software.
3.2.9 Development of Agriculture Sector
Geographical diversity is one of the major characteristics of Nepal, which has offered
a diverse and immense potential in the agricultural sector. Presently in the agricultural
sector, all-season irrigation facility is available only to less than 20 percent of arable
land. Utilisation of production inputs is less than one-fourth of what is required
whereas the productivity of the agriculture sector is less than one-third of what could
otherwise be achieved using scientific means. Against this background, it is only
through the increase in the availability of production inputs such as irrigation
facilities and also through the suitable climatic conditions in the country that
agricultural development can push forward for poverty alleviation and employment
promotion. There is tremendous possibility of increasing agricultural production three
to four-fold by developing animal husbandry of various types, horticulture, and
vegetable and food-crop farming. Nepal's topography possesses all necessary
infrastructures of agricultural development such as abundant availability of under-

16
ground and surface water in the form of ground water as well as rivers and rivulets,
fertile composition of soil, and suitable land. Likewise, there has been significant
progress in the past with regard to developing human resources and institutional
infrastructure appropriate for agricultural development. The only need of the hour,
therefore, is to leap forward with consolidating and utilising the gains achieved so far
in this field. As Nepal's two immediate neighbours are the two greatest countries in
the world, market should not be a problem . Our current challenge is thus to increase
production and productivity and develop the quality of production by making the
most of geo-ecological diversities so richly existent in the country. As the majority of
the population rely on agriculture for livelihood and as there is immense development
potential in the agricultural sector, even the presently considered short-term
alternative for the country's long-term goal of all-round economic development and
poverty alleviation is obviously agriculture itself.
Achievements made in agricultural development in the past have not been much
satisfactory. Analysis suggests that inadequate investment, diffusion of investment
within the agricultural sector in the absence of proper prioritisation, and insufficient
availability of production materials in the market due to weak sectoral policies related
to agriculture have mainly been responsible for the failure to significantly increase
agricultural production and productivity. Since the growth rate of agriculture sector
has slackened and moved forward only in par with the growth rate of population and
the agriculture's share in the GDP has been enormous, it is but natural that country's
economic growth rate has also been significantly low in the past several years.
Internalising the afore-mentioned problems and prospects in the agricultural sector, a
20-year Agriculture Perspective Plan (APP) has been formulated and effected right
with the start of the Ninth Plan. During the Plan period, policies incorporated into the
APP will be pursued continually as the Plan has made the APP the fundamental basis
for agricultural development. The Plan upholds the APP's premise that one percent
growth in agriculture sector will result in 1.5 percent growth in non-agricultural
sector.
.In order to support agriculture as a productive sector, the APP has placed emphasis
on small irrigation schemes, chemical fertilizer, rural roads and electrification,
agricultural technology as production input and high value horticultural products,
intensiv e crop farming, increased livestock productivity with improved animal feed
and animal health, the development of agro-business and the provision of community
and lease-hold forest. Keeping in mind the local specialty of various geographical
regions, the AP P has stressed on farming such fruit varieties as mango and apple,
animal husbandry, sericulture, off-seasonal vegetables and apiculture. Raising cattle
for increased production of meat and milk has been emphasised both in hills and in
the terai region. Likewise, emphasis has also been laid on intensive food-crop
development through the provision of sallow tubewell in the terai region. These
priorities have also been incorporated in the Ninth Plan and the programme has been
formulated accordingly. Furthermore, the Plan also has aimed to enhance the
accessibility of agricultural loan to the rural poor as envisaged in the APP.
The strategies worked out in the APP have been targeted to meet the objectives of

17
securing high economic growth by transferring subsist ence agricultural system into
commercial agricultural system, strengthening the base of industrial development,
and focusing poverty alleviation through employment promotion. In this process,
some specific targets have been set in the APP such as continuously increasing the
growth in the agriculture sector from the existing annual rate of about 3 percent to 5
percent; raising per capita agricultural income from the existing rate of about 0.5
percent to 3 percent; raising per capita availability of food-grain from the current
quantity of 270 kg to 420 kg thereby ensuring food security; reducing regional
imbalance; and curbing the pace of poverty through agricultural development,and
thereby bringing down the number of people below poverty line to 14 percent in 20
years. These efforts will not only contribute to poverty alleviation, employment
promotion and economic growth, but also significantly enhance the status of women
through creating employment opportunities for them from horticulture, livestock and
sericulture development, in which they are found mostly involved.
There is a policy of bringing about additional economic growth and developmental
balance in the hills by following a strategy that will focus on increasing economic
growth in the terai region through the optimum utilisation of food-grain production
potential of the region. The family income generating therefrom will then raise
demand for high-value agricultural commodities produced in the hills resulting, in
turn, in the increased economic potential of such commodities. It is expected that the
effective implementation of this strategy will bring about a balance in the
development of both the hills and the teraiand will have a positive impact on curbing
the present tendency of rapid migration from the hills to the terai.
3.2.10. Electricity Development
As there is adequate water volume and head required for generating electricity in the
country, her total hydroelectricity potential are believed to be 83,000 mw, of which
about 42,000 mw is economically viable. The country has so far generated 253 mw
hydropower which is just 0.3 percent of the total potential, and the volume of hydro-
energy generated so far has been supplying only 1 percent of the total energy
consumption. By the end of the Eighth Pla n, just 14 percent of the country's total
population have benefited from electricity although there are immense possibilities
and opportunities for hydropower development. Keeping in view the fact that
electricity plays crucial role in the balanced development of agriculture, industry,
irrigation, trade and other sectors, it is necessary to generate and distribute it at a
reasonable price and also to utilise it in an effective manner. If hydropower is
generated adequately by utilising immense water resources available in the country
and subsequently exported it abroad at a competitive price, this will ultimately result
in uplifting the nation's economic status.
It is an irony that majority of the country's population reside in rural areas, whereas
lion's share in the electricity supplied in the country is grabbed by urban consumers.
Therefore, keeping in mind the fact that country's all-round equitable development is
possible only if electricity supply is made available to the development of agro-
industries, irrigation and cottage industries in rural areas, it is imperative to put a
special emphasis on rural electrification at a large scale.

18
Sub-regional Cooperation in Water Resource Development: In India, there is
enough landmass but shortage of water during the dry season. In Bangladesh, there is
sufficient possibility for navigation but that has not been duly utilised due to the
scarcity of water; and in Nepal, landmass is less enough but water resources are
abundant. This means that development of water resources in Nepal will result in
development of adequate irrigation facilities in India and navigational facilities in
Bangladesh. Not only that, sufficient generation of hydroelectricity in Nepal will
contribute to meeting the growing demands for electricit y prompted by a surge of
industrialisation in Northern India. It is for these reasons that sub-regional
cooperation is crucial in the development of water resources. Realising this fact,
agreements have been concluded in the past in the area of water resource
development at bilateral rather than regional level, such as Indo-Nepal agreements on
Integrated Development of Mahakali River and on trade of electricity, and Indo-
Bangladesh agreement on sharing of the water of the Ganga River. On the other hand,
because of the imminent reforms in the structure and financial status of the state
electricity boards in India and also of other legal reforms, chances have increased for
the electricity export to India, thereby attracting private investors towards tapping this
opportunity. During the Ninth Plan period, the government will lay emphasis on
developing such multi- purpose micro projects as Pancheswor, Karnali, and West Seti
through the utilisation of opportunities arisen from the above-mentioned treaties and
agreements and also from the growing market potential in the Northern Indian region.
Private Sector Participation in Hydropower Development: It is not possible to
generate, supply and export electricity only from the public sector keeping in view
both the growing demand for electricity supplies within the country and the export
market potential abroad. Therefore, participation in this sector both from domestic
and foreign private investors has become extremely necessary. During the Ninth Plan,
special emphasis w ill thus be given toward generating electricity in sufficient
proportion in collaboration with the private sector, meeting its domestic demands at
an affordable price while exporting it abroad at a competitive price. To strengthen
private sector participation in electricity development, necessary steps will be taken
as to reforming existing laws and regulations, concluding bilateral agreements with
developed countries in order to remove double taxation system and ensure safe
investment, making one-window system even more effective in order to expedite the
facilities and permissions to be rendered to the private sector, reducing the risks
relating to commercial, legal and political factors as well as natural disasters that
appear in the course of implementing hydropower projects, and ascertaining as to
who will bear which risk, etc. With a view to building confidence of the private sector
in implementing hydropower projects and diagnosing administrative and other
problems appearing therein, efforts will be made toward encouraging public -private
joint investment in the hydropower development sector.
Expansion of Electricity Sector: Keeping in view the prevalent status of
electrification in the country, it has become necessary to pay attention to the
expansion of electricity supply besides electricity generation. In spite of the
availability of electricity supply to urban areas, rural areas have mostly been deprived
of electricity where the majority of the people live in. Rural electrification has thus

19
become urgent. While accomplishing this task, a number of factors will be taken into
account such as the need for tubewell irrigation for agricultural development,
feasibility of initiating cottage industries, need for drinking water, and prospects of
other commercial activities. Upon considering all these factors, it will be ascertained
as to how much electricity will be required for what purpose in which areas. Such
rural electrification pro jects are believed to be economically viable if they take into
account the above-mentioned considerations.
Institutional Reform for the Electricity Sector: Bringing about institutional
reforms in the power sector has been felt necessary to make private sec tor
participation further energetic. It has become essential to make the one-window
system effective in order to provide promptly the facilities and permissions in favour
of the private sector. Necessary steps will therefore be initiated toward adopting a
planning model as regards the formulation and selection of projects to be run by
public as well as private sectors; toward supervising and monitoring electricity
projects; and also toward strengthening Electricity Development Centre.
Commensurate with the policy of involving the private sector in the generation and
distribution of electricity, reforms will be made in the institutional structure of Nepal
Electricity Authority (NEA). Provision will be made for a transmission charge in lieu
of using national grid system both by public and private sectors. In order to keep on
reducing the proportion of leakage, necessary steps will be taken toward assigning the
task of operation and maintenance of the existing power supply centres to the private
sector.
Future Strategy: In order to meet the needs for irrigation, cottage industries and
drinking water in keeping with the APP and also taking into account the electricity
demand required for meeting various business purposes, emphasis will be laid on the
expansion of electricity service in the rural sector. In this process, peoples'
participation will be given encouragement. With the aim of reducing the cost of
generating and expanding electricity, arrangement will be made to ensure private
sector participation through competitive process and emphasise domestic power
supply through the mobilisation of local capital. On the basis of sub-regional
cooperation as well, foreign investors will be encouraged to participate in the
hydropower development projects and the electricity generated therefrom will be
exported at a competitive price by taking necessary steps. To make the management
of the NEA branches more responsible by assigning them more authority and also
with the objective of controlling leakage and reducing the operation and maintenance
cost through enforcing reward and punishment system, the NEA along with its all
branches will be developed as a responsible centre. For reducing peak load in the
current power supply system in order to provide electricity at a conces sional rate to
those consumers who consume more electricity of high voltage during off-peak times,
different tariff rates will be introduced through the installment of time-of-day-meter
system.
While generating electricity in collaboration with the private sector, projects which
involve both public and private sectors will be encouraged to overcome expeditiously
project implementation hurdles and also to restore the confidence of private
investment by settling the risks arising in the course of development and expansion of

20
electricity. In order to generate electricity at relatively lower price and also to reduce
the burden of foreign exchange replacement, it has become essential to increase the
involvement of domestic private investors for meeting the domestic demands for
power supply. Such private investors can be encouraged to invest in hydropower
project with a capacity one to ten mw, and the electricity generated therefrom will
possibly be cheaper. Therefore, it is imperative that necessary capital for investment
in these projects should be made available by expanding domestic capital market. In
this context, measures such as issuance of bonds and security papers and the
establishment of Electricity Development Fund will be emphasised. While
introducing institutional reforms in the electricity sector, measures such as making
one-window system effective, making public enterprises even more competent from
the commercial point of view, and controlling electricity leakage will be
implemented. Likewise, while initiating legal reforms, royalty system will be
appropriately enforced, export tax and low riparian benefit arrangements will be
clearly ascertained, double taxation system will be abolished, and thus, public and
private sectors will be made further active in the generation and expansion of
electricity service.
In line with the above-mentioned strategy and through ensuring participation of both
public and private sectors, construction works of 306 mw medium scale hydropower
projects and 3775 kw small-scale projects will be completed and 1718 mw medium
and big-scale hydropower projects will be initiated during the Ninth Plan period. In
order to expand the electricity service, electricity transmission system will be
strengthened by constructing 1024 km long additional high-voltage transmission
lines, and through the construction of 6067 km long transmission lines, electricity
service will be supplied in rural areas,thereby benefiting nearly 1.1 million people
additionally.
3.2.11 Tourism Development
Tourism in Nepal holds great potential to establish itself as a means of significant
economic activity because of the country's inherent characteristics such as
geographical diversity, unparalleled natural beauty, enormous biological resources,
distinct cultural heritage, live culture, religious tolerance, and splendid hospitality,
etc. However, despite its immense economic potential and market prospects for
industry and trade sectors, tourism's share in the country's GDP is confined to 4.4
percent only as estimated on the basis of plans and programmes implemented to date.
As the tourism sector has had no integration with other socio -economic sectors of the
country, tourism activities have not received wide coverage; as a result, its economic
returns have also been confined to a few geographical regions and communities. On
the other hand, problems such as unplanned urbanisation, ecological degradation,
shortage of basic infrastructure, low public awareness towards tourism, incompetent
human resources, fragile institutional arrangement, lack of managerial capability, and
inadequacy of quality products and services have stood as big challenges to tourism
development.
Keeping in view the comparative and competitive advantage as realised by Nepal in
the tourism sector, the Ninth Plan has been formulated with a conceptual guidance of

21
identifying and implementing the practical policy measures and programmes to
overcome the above challenges. In the Plan, policies and programmes related to
tourism development will be implemented in the following manner :
• Since tourism remains relatively new economic sector as compared to other
sectors, it is considered that a long-term vision for its development should be
formed and pushed forward.
• Since tourism is a multi-faceted sector, it can never be developed in isolation and
it rather needs to be integrated with other related sectors. So, the programmes in
this sector will be implemented in an integrated manner.
• As tourism is an important ingredient of economic development, its programmes
will be moved forward with the objective of expanding the tourism -related
incomes and employment benefits to rural areas by developing forward and
backward linkages.
• As competition has grown in the world tourism market, Nepal needs to be
established as a special tourist destination distinct from other destinations. In this
context, resources and expertise available in the government as well as private
sectors will be mobilised and promoted.
• As the limited number of tourist arrivals will not prove economically viable for
making tourism industry sustainable, a vision of expanding the range of tourist
destinations by attracting domestic tourists as well as those from neighbouring
countries.
• As the long-distance tourism in Nepal will be based on direct, reliable,
qualitative, and comfortable international air service, the national flag carrier and
other private airlines at the domestic front and other international airlines at the
external front will both be encouraged to operate their services.
• With the objective of expanding Kathmandu-based tourism outside the valley so
that tourism activities, to some extent, originate there not relying directly on the
resources and opportunities available in the capital city, some domestic airports
will be upgraded to those of the regional level.
• As it is not feasible to make road transportation available to all places in the
country, a nationwide network of air transportation will be established by making
provision for central as well as small airports and then helipads.
• In order to increase the extent of tourist arrivals, special initiative will be taken to
maintain understanding as regards the regular transportation in the surface route
connected with the neighbouring country.
• For achieving sustainable and result-oriented development of tourism, efforts will
be made to mobilise the private sector in the expansion of tourist services and
facilities. For this purpose, the role of central organisations will be emphasised in
creating basic infrastructur e and launching international publicity and the role of
local institutions and communities will be stressed in the preservation,
conservation and management of local tourist attractions.

22
• In order to develop rural tourism as an expanded activity of urban tourism so as to
make both complementary to each other, investment will be made on creating
tourism infrastructure on the conceptual basis of hub and satellite destinations.
• While it becomes necessary to stress almost all types of tourism activities in
urban tourism, rural tourism requires selective approach. Hence, adventure
tourism, eco-tourism, indigenous activities and the interesting aspects
representing local values and customs will be emphasised while promoting rural
tourism through local people's participation in order that these activities will
benefit the local people themselves.
• To monitor the effects of tourism-related activities in environment, an
environmental code of conduct will be adopted, and in this process, government
agencies, local communities and private tourism entrepreneurs will be involved,
thereby bringing about coordination in the task of environmental protection.
3.2.12 Utilisation of Ecological Variations and Bio -diversities
It has become clear that geo-ecological diversities and development feasibility
resulting therefrom could form a basis for Nepal's development process. Nepal's
topography which ranges from 100 ft. to 29000 ft. high locations is a combination of
plain terai region, valleys and mountains, and this has greatly contributed to climatic
and biological diversities as well as diverse possibilities in agriculture. For example,
agricultural production can be highly increased by developing livestock farming,
horticulture, vegetable and food-grain production, etc. Likewise, in the forest sector,
there are adequate prospects for developing forest-based industries and industrial raw
materials due to the availability of fodder, timber, fuel-wood, herbs and fruits.
Therefore, during the Ninth Plan period, emphasis will be laid on the utilisation of
existing bio-diversity for the expansion and development of agro-forest products as
well as the expansion of processing industries.
The ecology and the beauty of the hills and mountains have both expanded the
prospects for tourism industry. There are sufficient prospects for developing
electricity on a commercial basis through the utilisation of river -flown water
resources. These rivers and their tributaries can help to irrigate agricultural lands in
hills as well as the terai region. In view of these facts, emphasis will be given on the
optimal utilisation of these resources. Similarly, keeping in view the fact that
underground water reserves existing in the Chure and Bhabar regio n can irrigate over
70 percent of the Terai lands provided that such reserves are best utilised as a
fountainhead, efforts will be undertaken toward tapping this resource as well. During
the Ninth Plan, emphasis will thus be given to increase agricultural production and
enhance its quality by utilising the geo-ecological diversity prevailing in the country.
In order to move forward the development process on a sustainable basis and also to
establish appropriate relationship between the natural resource utilisation and the
population, a particular long-term policy will be adopted right from the inception of
the Ninth Plan. In keeping with the factors such as topographical diversity, natural
resources, and market feasibility, sectors such as agriculture, forestry and irrigation
will be brought forward in a balanced way through the implementation of the APP.

23
Moreover, the task of preserving bio-diversity in the regions already declared as
protected areas covering 17 percent of the country's landmass will be further
supported. In the course of development of tourism and water resources as well,
programmes contributing to the promotion and utilisation of bio-diversity will be
carried out. It is expected that these steps will result in the increase in rural income,
poverty alleviation, rapid economic development, employment promotion, and
balanced and sustainable development.
3.2.13 Regional Balance
Problems of regional imbalance still loom large despite the fact that significant
physical achiev ements in socio-economic aspects have been made and development
infrastructure has been built at the regional level during the Eighth Plan period. As
regards almost all aspects of economic and physical development as well as human
resources development, most of the mountainous and high altitude regions including
mid-western and far-western development regions are relatively lagging behind.
Considering the basis of social, economic and physical infrastructure built in the
country, the development status of most of the mountainous and hilly districts among
all 75 districts is very low. The proportion of the pressure of population living under
poverty line is also relatively higher in those backward districts.
While population pressure has been on rise in the terai region owing to the high
population growth rate and migration, large rural settlements as well as small cities
are getting increasingly unplanned and unorganised. Because of the lack of planned
physical development, socio-economic facilities, and access to markets and other
economic infrastructures, urban areas have not been able to become catalyst for
development.
No concrete achievements have been made toward gradually reducing regional
disparity and toward bringing about growth in production and income both at regional
and national level through the identification and utilisation of resources scattered in
various sectors and sub-sectors, thereby contributing to balance national
development. In order basically to address these problems, objectives hav e been set
for reducing regional imbalance, alleviating poverty, emphasising employment and
income enhancement, bringing about national coordination by establishing regional
inter-linkages in socio-economic sectors, and putting stress on production system by
mobilising local resources in keeping with the local specialties. Keeping in view these
issues, a concept of balanced regional development has been put into focus, which
will be realised by erecting social, economic, and physical infrastructure for regional
development through the reduction of regional imbalance existing between different
development and geographical regions.
During the Ninth Plan, efforts will be made to make the process of proportional
regional balance effective by removing differences noticed in the region-specific
development status, such as those existing between regions, within the region and at
the district level. Accordingly, regional development will be advanced through the
means of peoples' empowerment and decentralised and participatory development
process by diverting more investment to those areas which are considered backward
through the criteria to of human development index (HDI) or those with higher

24
incidence of poverty. In this context, together with emphasising accelerated
development efforts, investment pattern will be channeled in to those regions, which
are deprived of means and resources. For the development of regions and sub-regions,
a policy of mobilising local resources by judiciously allocating such resources will be
followed. Also, investment pattern will be oriented toward increasing production,
generating employment, and ultimately, alleviating poverty. Role of private sector
will be emphasised to increase production at the regional level through enhancing
investment in production and service-oriented sectors. In order to determine priorities
at the regional and sub-regional levels on the basis of needs and rationality, and also
with a view to developing functional interrelations between various regions and sub-
regions and also between rural and urban sectors, region-specific programmes will be
conducted. To meet this purpose, arrangement will be made for national urban system
at different levels.
Appropriate programmes will be conducted to support market-oriented urban system
in the course of regional development, and in keeping with the requirements of
settlement system, urban settlements will be physically improved in a planned way.
By identifying backward areas in various regions, sub-regions and districts, poverty
alleviation programmes will be implemented in particular areas and existing poverty
alleviation-oriented programmes will be made widespread. Likewise, special welfare-
oriented poverty alleviation programmes will be launched for target groups in the
least developed areas, and such programmes will be expanded to ensure participation
of all sections of society in socio-economic development of the backward areas.
Emphasis will be given to extend human resource development to the lowest level of
institutions in the most backward regions and communities by providing them with
primary education, primary healthcare and clean drinking water facilities. In order to
carry out the task of formulation, implementation and evaluation of local programmes
on the basis of decentralisation, local institutions will be made responsible, and the
role of regional offices will be made effective for bringing out coordination between
local institutions. For carrying out such an institutional coordination and monitoring
of programmes, the National Planning Commission Secretariat will also be made
responsible.
Population management, infrastructure building, and socio -economic development
programmes will be oriented toward balanced regional development.
3.2.14 Development of Backward Regions
A large section of the country's topography remains geographically inaccessible and,
therefore, deprived of basic development infrastructure, thereby leaving these areas
far behind in the race of socio-economic development. In spite of the efforts made in
the past to ensure people's participation of these regions in the process of
development, neither have these regions been developed nor are the people from
these regions able to adequately contribute to national development. This is basically
due to the failure to identify real problems and design policies and programmes to
address these problems. Hence, the Ninth Plan has adopted an objective of launching
Special Area Development Programme, covering some 25 districts in the backward
region.

25
With a view to proportionately developing these districts at par with other districts,
additional efforts will be made to give emphasis to the removal of economic and
social inequality. Locally available resources and means will be identified and
optimally ut ilised to develop these regions. Besides, for availing to the people of
these regions, the services such as education, health, drinking water and rural
electricity, thereby facilitating the development of infrastructure and the increase in
production in the region, necessary programmes will be formulated and implemented.
Efforts will thus be made to uplift as rapidly as possible the living standard of the
people from these backward regions. Accordingly, in order to expand traditional trade
relations existing between the most of the districts of those backward regions and
Tibet, the autonomous region of China, construction of essential roads will be
completed and programmes connecting those districts with road transport will be
implemented with priority. In those districts, herbal production and collection
programmes will be given wide coverage so as to alleviate poverty by enhancing
employment and income. Likewise, production increment programmes will be made
widespread by conducting study and research on food-crops and fruit-crops that can
be produced in the upper hill areas. Besides, emphasis will be laid on the livestock
development programme in those districts. Employment opportunities will be
increased through conducting skill-oriented training programmes in the agriculture
and non-agriculture sector as well. Similarly, in line with the spirit of
decentralisation, local residents at the very grassroots level will be involved and made
responsible in the development process so as to empower the backward and
downtrodden sectors of society. Thus, by channeling the efforts of development in an
expeditious manner, emphasis will be placed on the upliftment of the people residing
in the districts referred to in above paragraphs in a phase-wise manner.
3.2.15 Productivity Enhancement and Quality Management
In a country like Nepal where resources and means are limited, enhancing
productivity by optimally utilising the available resources has remained the only
alternative to national development. In the absence of productivity enhancement, it is
not possible to achieve the objectives of poverty alleviation and sustainable economic
growth through uplifting the living standard of the common mass by making
increasing the national income. In Nepal, there are no adequate data which clearly
explain the current state of productivity and which can be categorised sector-wise and
subject-wise; nevertheless, it is estimated that during the Eighth Plan period, annual
labour productivity at the national level increased by 5.6 percent on average.
However, viewed in the context of economic sectors, a decrease in labour-
productivity of all other sectors except agriculture has been noticed, according to the
preliminary estimates.
As regards productivity enhancement, a number of crucial problems are confronted at
the national level. These problems include the inadequacy of public awareness in the
concerned sectors, the absence of substantive priorities in policies and programmes,
the delay in initiation of development efforts at the institutional level, the lack of an
information system to keep and update the data relating to productivity at national,
regional and institutional levels, the lack of study, research and training services and
the insufficiency of coordinated efforts toward the formulation and implementation of

26
productivity enhancement programmes among all concerned sectors and agencies.
It will be the objective of productivity enhancement and quality management to orient
the productivity enhancement activities at all sectors of national economy towards
meeting the goals of alleviating poverty and achieving highest economic growth rate.
To ensure consistency between sctor-wise productivity policy and planning; to
increase the productivity and quality of socio-economic sector; to emphasise the
development of productivity culture for creating conducive professional environment
in various sectors of the economy; and to strengthen institutions and other necessary
infrastructures for productivity enhancement and quality management, it is necessary
to formulate long-term productivity policy and action plan. In this context, following
policies and implementation strategies will be adopted during the Ninth Plan:
• To increase public awareness toward productivity enhancement, and developing
necessary infrastructure to meet this purpose.
• To introduce reforms in basic factors of productivity.
• To bring an accord between agricultural and non-agricultural sectors by setting
sectoral productivity policies, and making these sectors complimentary to each
other.
• To strengthen institutional arrangements for extending the efforts for productivity
enhancement and productivity culture development at the industrial unit levels.
• To identify sectors for enhancing productivity and implementing in particular the
productivity enhancement programme in these sectors.
• To utilise effectively the media such as seminars, training workshops, model
demonstration, publicity and publication, etc. for increasing public awareness
toward productivity enhancement.
• To emphasise the inclusion of the subject of productivity in educational
programmes and curriculum and availing necessary resource materials for this
purpose.
• To determine various sectoral needs of productivity, and developing standard
guidelines, basic data and information systems relating to productivity.
• To promote the competitive capability of economy by encouraging the study,
development and experiment of appropriate productivity improvement methods.
• To make qualitative human resources development a basic medium of promoting
productivity; and to carry out the programmes that facilitate the smoothening of
labour-management relations.
• To motivate the government, private and non-government institutions to adopt
quality management system in order to improve their organisational quality and
managerial capability.
• To advance gradually the concept of green productivity in order to reduce the
waste by productively utilising means and resources, and to reduce the negative

27
 effects on environment.
• To implement the productivity policy of National Productivity Council through
the programmes of concerned sectoral agencies. By emphasising the institutional
development of National Productivity and Economic Development Centre which
functions as secretariat to the Council, efforts will be launched to establish the
Centre as a competent and fully operational National Productivity Organisation
(NPO). An institutional relationship between the Centre and other productivity-
related concerned organisations working at international, regional and national
levels will be developed.
3.2.16 Development of Agro-Industries
In Nepal, the position of agro-industries and forest-based industries remains atop in
the total contribution of the industrial sector. In an economy of agricultural
predominance it is but natural that industries are agro-and-forest-based at the initial
stage. The analysis of the background of industries established to date reveals that
almost all of them fall in import-substituting categories. The quantity of agro-based
products is high whereas the same of pure industria l products is very low in the list of
exportable Nepalese goods. Most of the agro-and-forest-based industries are small,
and scattered in various parts of the country. Included among agro-industries are cold
storage and agricultural tools besides the processing of goods produced by
agricultural sector. Modern technology and new innovations have diversified the
nature of agro-and-forest-based-industries.
In the geographical and economic context of Nepal, agro-and-forest-based industries
have their own charac teristics. Such industries in particular include: the industries
with less capital and simpler technology being promoted by Nepali entrepreneurs;
that contribute to national income by increasing the value in the production of agro-
forest goods; that generate employment at the local level; that facilitate the launching
of various enterprises; that are able to attract local savings toward production; that
develop interrelationship between industrial and other occupations; that gradually
substitute foreign goods to make the nation self-reliant; that facilitate the distribution
of economic benefits at the local level; and that develop heavy investment potential
based on the experiences and the capital earned eventually through the above
achievements.
The fundamental objective of the agro-and-forest-based industrial promotion policy
of the Ninth Plan is to help poverty alleviation through enhancing opportunities for
income and employment. It is rather necessary to explore and develop the possible
sectors of econom y if the country is to be made prosperous through the means of
industrialisation by strengthening its base. Agriculture is by far the most potential
economic sector against the backdrop of natural resources and means, therefore,
without developing agricult ure, non-agriculture sector also will have no concrete
basis for its development. For this reason, agro-industrial business promotion will be
treated as a focal point; its forward linkages will be facilitated; its backward linkages
(a system of producing raw materials required for the agro-industrial business sector)
will be accorded topmost priority; and an integrated industrial business network will
be established. It will be the viewpoint of the Plan that on the basis of this very

28
network, industrialisation will be advanced in the country.
With a view to achieving maximum benefits from agro-and-forest-based industries in
national economy, emphasis will be given to developing this sector. As envisaged in
the APP, industrial enterprises based on such high value agricultural commodities as
fruits, off-season vegetables and vegetable seeds, milk, meat, silk, honey, herbs, tea,
coffee, scented oil, bouquet, etc. will be developed in the form of import-substituting
as well as export-promoting and employment-orie nted small and medium-scale
industries.
Arrangement will be made for availing necessary lands for commercial agriculture,
and in this process, pocket areas will be selected to make raw materials available for
industrial purpose in sufficient quantity and at an affordable rate. In such selected
pockets, government-owned forest and unoccupied lands will be made available on
lease as per necessity, and solid steps will be taken to carry out programmes in these
pockets for the purpose of physical infrastructure, research, publicity, and other
services.
With the objective of making Nepalese goods competitive in the global market,
thereby maintaining their identity and promoting exports, currently encountered
policy problems will be resolved and necessary reforms will be made in the present
economic, industrial, commercial policies so as to boost up some import-substituting
industries.
In order to develop infrastructure facilities for industrial development such as roads,
electricity, agriculture market, etc., investment in private sector in building
infrastructure will be attracted from the private sector. The capital necessary for
industrial development will be made available at a concessional rate through financial
institutions. Climate will be set up to specially involve women in the initiation and
operation of small, cottage, and agro-and-forest-based industries.
3.2.17 Decentralisation and Strengthening Local Self Governance
In Nepal, special emphasis is being given for the last few years to the participative
development efforts based on the concept of decentralisation for all-round national
development. Development programmes based on enabling self-government and
people's empowerment at the local level have been pushed forward. To accomplish
this mission, resources and means have been made available to the village level
through the government sector as well as non-governmental institutions, and besides,
emphasis has been given to mobilising local resources on the basis of people's
participation through consumer groups. In order to make local development
programmes sustainable and effective, local institutions have been made fully
accountable for the management of resources and means, thereby moving forward the
process of their spontaneous mobilisation and management. In this way, in order to
encourage and promote local development in line with decentralisation process, His
Majesty's Government will frame the Acts and regulation relating to local institutions.
The Ninth Plan has put stress on enlarging people's involvement in the planning
process as much as possible. For ensuring people's participation in the decision-
making process regarding development activities and their management carried out at

29
their own areas in a direct and decisive manner, and also for making people feel a
sense of ownership with regard to local plans, it is necessary to institutionalise the
participative development process.
Decentralisation policy will be focused toward enabling local bodies to perform the
role of total development management and also toward forming such a local self-
government that is capable to fight against the challenges of the 21st century, and is
strong, empowered and responsible to the needs of the people. To help achieve this
objective, emphasis will be given to the delegation of authority and the allocation of
necessary budget, human resources and technical capacity development, and the flow
of necessary information. Local institutions will be made competent, autonomous and
fully accountable to the local people in order to mobilise local resources and
technologies effectively for socio-economic development of the rural sector, to
conduct development process in a spontaneous manner, and also to provide services
for the local people.
3.2.18 Mobilisation of NGOs for Local Development
The role of NGOs has become increasingly important in making various activities of
local development people-oriented and also in extending services and facilities to the
grassroots level. In a liberal administrative environment created after the restoration
of democracy, NGOs have become involved in large numbers in various sectors.
While many NGOs are involved in local development activities as well, it has not
been possible to mobilise most of these NGOs to the village level and remote areas.
Therefore, it has become necessary to orient NGOs to local development work
thereby motivating them to implement programmes aimed especially at uplifting the
living standard of the backward class in backward regions. Although the number of
international non-governmental organisations (INGOs) as well as local NGOs
working around the country either with various particular objectives or aiming at
specifically targeted groups is much larger, there are few NGOs in operation that are
well-organised, have abundent resources and are effective. Even the services and
scope of activities of those NGOs which are actively in operation are limited and
small in terms of coverage. For mobolising such organisations effectively, the lack of
coordination among different activities of these NGOs, the lack of integration of such
activities with local self-governance system, the failure to implement programmes by
the NGOs in conformity with social, economic, and cultural characteristics and
lifestyles of the particular communities, and the lack of proper record-keeping system
to monitor and record the activities and achievements of these NGOs are some of the
main problems.
In this context, NGOs will be mobilised in a way to make their works complementary
to the development activities carried out by the government. The important
contribution made by NGOs in the socio-economic development will be objectively
identified, and the nature, scope, resources and capabilities of such NGOs will be
categorised and made coordinated with the local self-governance system. NGOs will
be encouraged to work in backward communities and especially in underdeveloped,
remote regions and also to expand their activities toward those regions and
communities. They will also be motivated to work as a facilitator vis-à-vis local

30
institutions including District Development Committees (DDCs) and Village
Development Committees (VDCs), educational institutions, and various community
organisations and consumers.
A facilitating environment will thus be created to mobilise NGOs for local
development An appropriate criteria will be developed for positively evaluating,
monitoring and supporting the works, scope and role of NGOs through such agencies
as Ministry of Women and Social Welfare, Social Welfare Council and District
Development Committees.
3.2.19 Women's Development and Empowerment
Although women, who comprise half of the population of the country, have always
been involved in national development, they are still marginalised from the
opportunities such economic resources as property, income and employment as well
as other resources due to illiteracy, unhealthiness, poverty and conservative social
taboos. Until and unless women are not made fully participant in the advancement of
the nation along with their male counterparts, no improvement can ever be brought in
the socio-economic situation of the country. In order to fulfil the commitment made
by HMG to the resolutions passed by the World Women's Conference held in Beijing
in 1995, and to ensure women's equal involvement in the development process in
parellel with their male counterparts, women's empowerment has been emphasised in
the Ninth Plan.
The Ninth Plan aims at integrating women into the development mainstream through
gender equality and women's empowerment; increasing women's participation in
every sector; giving a concrete shape to gender concept in the process of formulation,
implementation and evaluation of sectoral policies and programmes, accelerating the
process of multi-faceted development of women's empowerment by uplifting their
social, economic, political and legal status; protecting and promoting the rights and
interests of women; and gradually eliminating violence, exploitation, injustice and
atrocities being committed against women.
During the Ninth Plan period, emphasis will be accorded to women's empowerment
in the following manner:
• In order to integrate women into the mainstream of development and also to bring
effectiveness in women's development activities, emphasis will be given to the
institutional development and coordination among various sectors. Likewise,
indicators will be developed and adopted as a basis for measuring the women's
participation in national development. The task of monitoring and evaluation of
women's deve lopment programmes will be made effective.
• Through the adoption of positive measures for gender equality such as special
privileges and reservation, a policy will be followed to narrow down socio-
economic discriminations existing between women and men. Besides, necessary
institutional arrangements will be made to make effective the legal system related
to the prevention and control of violence against women.
• With a view to promoting women's empowerment by bringing about

31
 improvement in their health and education level, their access will be increased to
reproductive and other preventive and curative health services as well as formal
and non-formal education. Moreover, in order to make women competent for
employment, policy of extending technical knowledge, entrepreneurship and
management training will be undertaken. In addition, for making women self-
reliant in income generation, their access will be increased to income-oriented
resources, properties, and institutional credit.
• With a view to raising women's access to the administration and the policy
formulation domain of the country, arrangement will be made to reserve certain
percent seats for women in competitive examinations to be held under the Public
Service Commission.
• For strengthening women's role in the agricultural sector, all sectoral programmes
relating to the extension of agricultural credit, production inputs, agro-technical
training, agri-market facilities, etc. run by the government as well as other sectors
will be made gender-sensitive.
• Programmes for providing production credit to women will be expanded through
such mechanism as Micro Credit for Women (MCW), Production Credit for
Rural Women (PCRW), Small Farmer Development Programme (SFDP),
Grameen Bank, Agriculture Development Bank and other banks.
• Provision will be made to expend at least 10 percent of the grant allocated to each
VDC in the education sector for women's education.
• In order to increase public awareness toward women's reproductive health
through the efforts of government, non-government and private sectors, publicity
and promotional activities will be made expeditious.
• Mass awareness campaign will be extensively launched from the local to the
central level through mobilising government and non-government sectors
regarding domestic violence against women and through various measures to
prevent and control it.
• In employment-oriented training programmes, at least 25 percent participants will
be chosen from among women, as long as the women candidates are available,
and as regards employment opportunities, 20 percent women candidates will be
given priority depending on their availability.
• In order to help women engage in self-employment and also conduct various
entrepreneurial activities on their own, institutional loan facilities will be
expanded and the process of providing such loan will be made simple and
accessible.
3.2.20 Administrative Reforms
Administrative machinery should become competent for uplifting the living standard
of the people and for accomplishing all-around development of the country. Necessity
of administrative reforms has been greatly felt in order to promote a feel of safety and
security in society by guaranteeing law and order throughout the country and to orient

32
the whole development process to a definite direction.
Administration has fundamentally two aspects. The first signify the delivery of public
goods whereas the second refers to the expansion of direct and indirect programmes
to create conducive climate for making market mechanism self-operative, to generate
income-oriented and employment opportunities for the most backward communities,
and to deliver necessary goods and services to the people.
During the Ninth Plan period, actions will be carried out through administrative
reforms to make public management clean, lean, transparent, economical,
competitive, work-oriented, competent, productive, service-oriented and responsible;
to make public resources management expedient and effective, and to encourage the
concept of rule of law and civil society.
With an objective of delivering a clean and corruption-free administration during the
Ninth Plan, all the procedures related to contract, leasing, purchase and sale will be
made transparent. In addition, a monitoring system will be enforced so as to set a
quality standard in the execution of the above actions.
During the Ninth Plan period, implementation process will be made effective through
the introduction of institutional coordination mechanism in activities of development
and works carried out by various ministries, and by ensuring its regular supervision,
monitoring and evaluation process, emphasis will be given to achieving progress as
per the targets. In order to remove the delays encountered in project implementation,
a system of special screening of the project will be enforced. Together, necessary
arrangement will be made in order to complete in time the procedures such as signing
contracts, appointing consultants, delivering materials, etc. and monitoring system
will be made more systematic. Local leadership will be made accountable in
development works by strengthening local self-governance system. Civil service will
be made capable and competent enough to confront the growing challenges of the
21st century by devising a perspective vision of the civil service as well as its
personnel policy. For ensuring good administrative and development management
keeping in view the concept of people-oriented administration, administration will be
made transparent, credible, and responsible. On the whole, administration will be
strengthened for good governance and efficient development management.

33
 Chapter 4
Economic Growth Rate, Total Investment
and Sectoral Allocations

1. Background
Attaining high economic growth rate is imperative with respect to achieving the goal
of poverty alleviation enshrined in the Ninth Plan, and it has to be ensured that the
economy can sustain the growth target. In keeping with this fact, the target of an
average 6 percent annual growth of gross domestic product at factor cost has been set
in the Ninth Plan. With the attainment of this target, poverty will be reduced, physical
infrastructure will be developed, and it will be possible to channel more resources to
social services sector due to the broadening of the revenue base.
The Basis for High Economic Growth Rate, Investment Sources and Sectoral
Allocations
• To contribute to the achievement of high economic growth rate by allocating
resources to high priority areas.
• To invest with the purpose of broadening the base for sustainable high economic
growth rate and widen the scope for its distribution.
• To inc rease investment in agriculture sector, which accounts for more than 40
percent of the GDP, and to make it a leading sector by initiating structural
reforms.
• To strengthen the process of open, liberal, and market-oriented economic reforms
in order to create a conducive environment for the flow of investment in
productive sectors and to contribute to the efficient and optimum utilisation of
resources.
• To curtail wasteful and unproductive government expenditure and increase the
proportion of domestic and national savings through monetary and capital
markets.
• To accelerate water resources and tourism development and the process of
industrialisation in a way to contribute to the promotion of employment by
developing infrastructures.
• To ensure the sus tainability of high economic growth rate by according priority to
social sector development.
• To encourage foreign investment in a way to be favourable to the national
economy.
• To accelerate and optimise the utilisation of local resources, materials and skills
by providing autonomy to local bodies through decentralisation.
• To ensure sustainable development and alleviation of poverty by according
priority to the development of backward areas.
• To implement programmes with regard to human resources, employment and
poverty alleviation targeting backward areas and community, disadvantaged and
ignored groups, and to increase income generation and employment opportunities
for these groups so that a base for sustainable development is firmly established.
• To control the leakage of financial resources, increase transparency for eliminating
corruption, increase the effectiveness of development programmes implemented
by both government and non-government sectors through increased public
accountability, and to institulionalise the efficient use of resources.
2. Overall and Sectoral Growth of Gross Domestic Product
The Ninth Plan has set the target to achieve 6 percent annual economic growth rate. It
is estimated that to achieve this target the agriculture and the non-agriculture sectors
have to grow annually by 4 percent and 7.3 percent respectively. The growth rate of
GDP at factor cost in the Ninth Plan is more than 1.1 percentage point greater than
the growth rate of 4.9 percent achieved in the Eighth Plan. The targeted economic
growth rate for the Ninth Plan is higher as compared to the growth rates achieved
during the past plans. However, this growth rate is plausible in view of the factors
such as strengthening of the competitive environment favourable to the private sector
in the supply of fertilizer, implementation of integrated agricultural programmes,
industrial and tourism development, emphasis on foreign investment, and effective
resource mobilisation and investment due to decentralisation. With the achievement
of 6 percent economic growth rate targeted in the Ninth Plan, the per capita income
will grow by 3.6 percent during the Plan period.
The annual growth rates for sectoral value added in GDP are estimated at 4 percent
for agriculture, irrigation and forestry, 9.1 percent for industry and mining, 10.4
percent for electricity, water and gas, 5.9 percent for construction, 7.4 percent for
trade, hotel and restaurant, 8.7 percent for transport and communication, 5.8 percent
for finance and real estate and 7 percent for social services. The targeted agriculture
growth rate in the Ninth Plan is one percentage point higher than the rate achieved in
the Eighth Plan. This target is set in keeping with the increase in investment in the
agriculture sector in the Ninth Plan in accordance with the target of the Agricultural
Perspective Plan and in view of the reforms to be made in the areas having backward
and forward linkages with the agriculture. The targeted growth rate of 9.1 percent in
industry and mining sector is higher than the growth rate attained in the Eighth Plan.
However, this target can be achieved as a result of the policies adopted for industrial
development, the increased investment in industrial sector during the Eighth Plan, the
new trade agreement with India, and the potentiality of trade with Tibet autonomous
region of China. Similarly, the growth rate of value added with respect to electricity is
determined at 10.4 percent considering the investment in this sector in the Eighth Plan
and also considering the expected high increase in the rate of investment in the Ninth
Plan.
The growth rate for the construction sector is estimated at 5.9 percent in the Ninth

2
Plan, considering the fact that high growth rate of agriculture, industry and electricity
will help in expanding this sector as well. Although the growth of construction in the
Eighth Plan was 3.9 percent, it is expected that there will be improvement in this
sector in the Ninth Plan. The average growth rate of trade, hotel and restaurant in the
Ninth Plan is 7.4 percent as compared with the 7.1 percent achieved in the Eighth
Plan. In the light of the priority to be accorded to export and tourism business and
increasing investment in this sector, the growth rate in this sector is estimated to be
higher in the Ninth Plan in comparison with the achievement of the Eighth Plan. The
value added in transport and communication sector is estimated to grow by 8.7
percent in the Ninth Plan as compared with the 8.4 percent growth in the Eighth Plan.
The growth rate in this sector is estimated to be little higher than what was achieved
in the Eighth Plan because of policies such as encouragement to the private sector in
the transport sector, open air policy and enhancement of private sector's participat ion
in the telecommunication sector.
The value added in finance and real estate is expected to rise by 5.8 percent. This
increase will be due to the development of financial institutions and expansion of
their services. In the social sector the value added is estimated to rise by 7 percent.
Although the value added in social services increased by 6.3 percent in the Eighth
Plan, with the rise in investment in social services sector and its resulting expansion,
the sector is expected to grow according to the set target in the Ninth Plan.
The share of agriculture sector in GDP, which was 41.7 percent in the Eighth plan, is
estimated to decrease to 37.9 per cent in the Ninth Plan and, likewise, the share of the
non-agriculture sector, which was 58.3 percent, is estimated to increase to 62.1
percent.
In total, the value-added targets for all sectors of the economy in the Ninth Plan are
higher in the Eighth Plan. These increments are possible due to the expected increase
in investment in the Ninth Plan, flexible economic policy of the government with
regard to the private sector and their positive impacts on increasing foreign
investment. Thus, in the Ninth Plan, the estimated value added growth in the
agricultural and the non-agricultural sectors will be 4.0 and 7.3 percent respectively in
comparison to 3.0 percent and 6.3 percent respectively in the agriculture sector and
non-agriculture sector in the Eighth Plan. (Table 1)

3
 Table 1
Gross Domestic Product and Sectoral Value Added in the Ninth Plan
(At 1996/97 Constant Prices)
(Rs in million)
1996/97 Estimate for 2001/2002 Yearly
Sectors Value Percent Value Percent Growth
Added Added Rate (%)
Agriculture, Irrigation 1,111,63 41.7 1,352,47 37.9 4 .0
and Forestry
Non-agriculture 1,556,61 58.3 2,218,88 62.1 7.3
Industry* 258,70 9.7 399,87 11.2 9.1
Electricity, Gas and 39,68 1.5 65,07 1.8 10.4
Water
Construction 265,86 10.0 354,11 9.9 5.9
Trade, Hotel, and 299,85 11.2 428,47 12.0 7.4
Restaurant
Transport and 180,19 6.8 273,45 7.7 8.7
Communication
Finance and Real 268,67 10.1 356,16 10.0 5.8
State
Social Services 243,66 9.1 341,75 9.6 7.0
Gross Domestic 2,668,24 100.0 3,571,35 100.0 6.0
Product
(at factor cost)
*Including quarrying and mining

3. Total Investment, Development Outlay and Sectoral Allocation

As poverty alleviation is the main objective of the Ninth Plan, the Plan has given
priority to channeling resources to the rural areas where poverty is concentrated, to
the agriculture sector, and to the mitigation of ignorance and diseases. Therefore, the
shares of the agriculture, irrigation, forestry and social sector in the total investment
have been increased in the Ninth Plan in comparison to the Eighth Plan. The shares of
investments in industries and mining, finance and real estate and transport and
communication sectors are slightly reduced. The main reason for the reduction in the

4
share of investment in these sectors is the possible improvement in the incremental
capital-output ratios in these areas during the Ninth Plan period. It is anticipated t hat
there will be improvement in the incremental capital output ratio through systematic
selection of projects, reforms in development administration, control of leakage in
resources, improvement in management and development of labour intensive
industries and enterprises.
The growth rates of investment in some sectors have changed in the Ninth Plan on the
basis that the total incremental capital-output ratio in the Ninth Plan will remain
4.1:1, which is an improvement over the projected ratio of 4.3:1 in the Eighth Plan,
and that incremental capital- output ratios in different sectors may vary. In sectors like
industries, transport and communication, the growth rates of investments are
determined on the basis that more production can be achieved with less am ount of
investment in these areas. In the social sector, the share of the investment is reduced
as compared to the Eighth Plan due to the expected reduction in the incremental
capital-output ratio in this sector.
The gross fixed capital investment during the Ninth Plan is estimated to be Rs
372,711 million (at 1996/97 constant prices) on the basis of the economic growth rate
of 6 percent and the incremental capital output ratio of 4.1:1 in the Ninth Plan. Out of
the total investment, the share of agriculture, irrigation and forest sector will be 16.80
percent and the share of the electricity sector will be 19.09 percent. Similarly, the
share of finance and real estate will be 16.43 percent, social services 17.11 percent,
transport and communication 13.01 percent, industries and mining 9.47 percent,
commerce, hotel and restaurant 6.21 percent and the construction sector 1.89 per cent.
(Table 2)
Table 2
Total and Sectoral Fixed Capital Investment in the Ninth Plan
(At 1996/97 Constant Prices)
Sectors Amount Percent Incremental
(in million Rupees) Capital Output
Ratio
Agriculture, Irrigation 626,18 16.80 2.6
and Forestry
Industry* 352,93 9.47 2.5
Electricity, Gas and Water 710,92 19.07 28.0
Construction 70,60 1.89 0.8
Trade, Hotel, and 231,52 6.21 1.8
Restaurant
Transport and 484,95 13.01 5.2
Communication
Finance and Real Estate 612,42 16.43 7.0
Social Services 637,58 17.11 6.5
Total Fixed Capital 3,727,11 100.00 4.1
Investment
*Including Quarrying and Mining

5
Out of the total fixed capital investment of Rs 372,711 million (at 1996/97 constant
prices), the estimated investment of the government and the private sector will be Rs
125,161 million (33.6 per cent) and Rs 247,550 (66.4 percent) respectively. In the
Ninth Plan, the share of the government investment remains slightly more than one
third of the total investment due to the high investment requirement to implement the
Agricultural Perspective Plan, human resources, social development and poverty
alleviation programmes. To fulfill the investment requirement of the Ninth Plan,
investment needs to be increased by 6.1 per cent annually in relation to the total fixed
capital investment made in the final year of the Eighth Plan. (Table 3)

Table 3
Private and Government Gross Fixed Investment in the Ninth Plan
(At 1996/97 Constant Prices)
(In million Rupees)
Sectors Private Sector** Government Sector Total
Amount Percent Amount Percent Amount Percent

Agriculture, Irrigation 381,97 15.43 244,21 19.51 626,18 16.80

and Forestry
Industry* 342,34 13.83 10,59 0.85 352,93 9.47
Electricity, Gas and 405,22 16.37 305,70 24.42 710,92 19.07
Water
Construction 70,60 2.85 0.00 70,60 1.89
Trade, Hotel, and 217,63 8.79 13,89 1.11 231,52 6.21
Restaurant
Transport and 218,23 8.82 266,72 21.31 484,95 13.01
Communication
Finance and Real Estate 609,98 24.64 2,45 0.20 612,43 16.43
Social Services 229,53 9.27 408,05 32.60 637,58 17.11
Total 2,475,50 100.00 1,251,61 100.00 3,727,11 100.0

* Including Quarrying and Mining

** This includes investment in public enterprises

In the Ninth Plan, to make up a total fixed capital investment of Rs 125,161 million
(at 1996/97 constant prices) by the government sector, the total development outlay
of Rs 189,580 million will have to be made. This is on an average 46.32 per cent
more than the total development expenditure of the Eighth Plan. Out of the total
development outlay, social service receives the largest share i.e. 33.3 per cent,
followed by agriculture, irrigation and forestry 27.05 percent, energy 18.70 percent
and transport and communication 17.59 percent. Similarly, the share of trade and
tourism is 1.54 percent, industries and mining 0.84 percent and others 0.85 percent.
As there is sectoral variation in the ratio of development outlay and fixed capital
investment, the sectoral allocation of development outlay and the sectoral shares of
the investment to be made by the government sector are different (Table 4).

6
The details of the total development expenditure allocation to different sectors are
given in Table 5.

Table 4
Sectoral Allocation of Development Outlay
(at 1996/97 constant prices)
(Rs in million)
Eighth Plan Ninth Plan
Sectors Amount Percentage Amount Percentage
Agriculture, Irrigation 33,977.5 26.22 51,284 27.05
and Forestry
Non -Agriculture 95,587.0 73.78 138,296 72.95
Industry* 3,237.1 2.50 1,588 0.84
Electricity, Gas and 16,293.3 12.58 35,461 18.70
Water
Trade, Hotel, 1,329.0 1.03 2,917 1.54
Restaurant
Transport and 28,234.1 21.79 33,340 17.59
Communication
Finance and Real - - 250 0.13
Estate
Social Services 43,126.7 33.28 63,138 33.30
Miscellaneous ** 3,366.8 2.60 1,602 0.85
Total 129,564.5 100.00 189,580 100.00

*Including Quarrying and Mining

** Including Administrative Reform, Planning, Statistics, Supplies and Contingencies

7
 Table 5
Total Development Expenditure and Detailed Sectoral Allocation
(at 1996/97 constant prices)
(Rs in million)
S.N. Particulars Amount Share in
Percentage
1. Constitutional Bodies 12.0 0.01
2. General Administration 440.0 0.23
A General Administration 70.0 0.04
B Revenue and Financial Administration 120.0 0.06
C Planning and Statistics 250.0 0.13
3. Social Services 63,138.0 33.30
A Education 14,405.0 7.60
B Health 13,800.0 7.28
C Drinking Water 11,902.0 6.28
D Local Development 18,891.0 9.96
E Other Social Services 4,140.0 2.18
i Population and Environment 140.0 0.07
ii Women and Social Welfare 120.0 0.06
iii Youth, Sports and Culture 2,010.0 1.06
iv Housing 1,750.0 0.92
v Others* 120.0 0.06
4. Economic Services 125,990.0 66.46
A Agriculture 21,517.4 11.35
B Irrigation 25,404.5 13.40
C Land Reform and Survey 1,897.6 1.00
i Land Reform 600.0 0.32
ii Survey 1,297.6 0.68
D Forest and Soil Conservation 2,464.5 1.30
E Industry 1,588.0 0.84
F Transport and Communication 33,340.0 17.59
i Transport 25,160.0 13.27
ii Civil Aviation 4,280.0 2.26
iii Communication 3,900.0 2.06
G Electricity and Other Energy 35,060.0 18.49
H Other Economic Services 4,718.0 2.49
i Tourism 1,707.0 0.90
ii Science and Technology (including 401.0 0.21
meteorology)
iii Supplies 1,150.0 0.61
iv Commerce 900.0 0.47
v Labour 310.0 0.16
vi Others** 250.0 0.13
Total Development Expenditure 189,580.0 100.00

* Including Narcotics Drugs Control Project under Ministry of Home

** Including Investment in Financial Sector by Ministry of Finance

8
4 SOURCES OF INVESTMENT AND DEVELOPMENT OUTLAY
Out of the total fixed capital investment of Rs 372,711 million in the Ninth Plan, Rs
261,165 million (70.1 per cent) will be financed through national savings, and the
remaining Rs 111,546 million (29.9 percent) will be financed through foreign
assistance. Of the total foreign assistance, Rs 32,595 million will be financed by
foreign grants and the Rs 78,951 million will be financed by foreign loans (Table 6).
The ratio of foreign loan has been growing since the previous plans, as the share of
foreign assistance in the total development expenditure is very high with the
increasing proportion of loan in foreign assistance. A large portion of the budget has
to be set aside to amortise the loan. In view of this, a policy of reducing the share of
foreign loan in the total gross fixed capital investment will be followed in the Ninth
Plan. Therefore, the Ninth Plan targets the share of foreign assistance in the total
developmental outlay to be 53.1 per cent as compared to the target of 65 per cent in
the Eighth Plan.
Table 6
Gross Fixed Capital Investment and Sources of Development
Outlay in the Ninth Plan
(at 1996/97 constant prices)
(Rs in million)
Amount Percentage
Formation of Total Fixed Capital 372,711 100
Private Sector 247,550
Government Sector 125,161
Total Resources 372,711
(a) National Savings 261,165 70.07
Private Sector Savings 262,454 70.42
Government Sector Savings -1,289 -0.35
(b) Foreign Aid 111,546 29.93
Regular Expenditure 147,710
Development Expenditure 189,580 100.0
Revenue 210,840
Revenue Savings 63,130 33.3
Foreign Assistance 111,546 58.8
Grant 32,595 17.2
Loan 78,951 41.6
Internal Borrowing 14,904 7.9
Banking Sector` 5,962 3.1
Non-Banking Sector 8,942 4.7

Note: Total Fixed Capital Formation of the Government Sector is estimated to be 66 percent
of total development expenditure.

9
Of the total gross fixed capital investment, Rs 262,454 million (70.4 percent) will be
financed through the savings of the private sector, and the government sector will
make a negative saving of Rs 1,289 million (0.35 per cent). The basis for estimated
reduction in the negative saving of the government sector in the Ninth Plan, as
compared to the Eighth Plan, is the control in the rise of consumption expenditure of
Government sector and the expected increase in revenue due to high economic
growth rate. The gap between government investment and the negative saving will be
fulfilled through foreign assistance and internal borrowings. The mobilisation of
internal borrowing will be Rs 14,904 million during the Plan period. As high as 60
percent of the internal borrowing will be mobilised through savings of the private
sector and the remaining 40 percent will be financed through the banking sector. The
government will be able to finance a large portion of the deficit through the
mobilisation of resources in the non-banking sector in that the high economic growth
rate will increase the savings of the private sector.
In the Ninth Plan, Rs 63,130 million (33.3 percent) out of the total development
outlay of Rs 189,580 million will be financed through revenue savings. Of the
remaining, Rs 111,548 million (58.8 percent) will be financed through foreign
assistance and Rs 14,904 million (7.9 percent) will be financed through domestic
borrowing. Of the total foreign assistance, Rs 32,595 million (29.22 percent) will be
in the form of grants and Rs 78,951 million (70.78 per cent) will be in the form of
loans. Thus, in the Ninth Plan dependency on foreign assistance and internal
borrowings is estimated to be lower than that in the Eighth Plan due to the increased
contribution of revenue savings in the development outlay (Table 6).
5. Total Investment and Development Outlay and their Impact on the
Overall Economy
The priority given to the mobilisation of revenue, the utilisation of a larger portion of
resources in efficient and productive sector, the choice of appropriate projects giving
quick return, and the efficient sectoral allocation of investment will contribute to high
economic growth rate. Moreover, the income-oriented and employment opportunities,
savings, and tax-paying capacity of the people will be increased; and thereby gross
domestic savings will rise.
In the final year of the Ninth Plan, the shares of gross domestic savings and the
national savings will reach 14.1 percent and 16.08 percent of the GDP respectively in
comparison to 12.35 percent and 14.39 percent respectively in the fiscal year
1996/97.
The share of imports of goods and services as a percentage of GDP was 38.77 in FY
1996/97which is estimated to rise to 42.65 percent of GDP by the FY 2001/2002.
Likewise, the share of exports of goods and services as a percentage of GDP is
estimated to rise to 32.48 percent from the level of 26.4 percent in the FY 1996/97.
The current account deficit (excluding transfer and grant) will decrease to 8.5 per cent
of the GDP in the FY 2001/02 from 10.7 percent in the FY 1996/97. (Table 7)

10
 Table 7
Major Macroeconomic Indicators
(at 1996/97 constant prices)
(Rs in million)
1996/97 2001/2002 Annual
Growth
Rate (in %)
Total Gross Domestic Product 279,135 382,045 6.5
(at producer’s prices)
Total Gross Domestic Product 266,824 357,135 6.0
(at factor cost)
Total Consumption 244,650 328,195 6.1
Domestic Savings* 34,485 53,850 9.3
National Savings 40,155 61,352 8.8
Total Investments 69,014 92,656 6.1
Fixed Capital Formation 65,623 88,054 6.1
Change in Stock 3,391 4,602 6.3
Import of Goods and Services 108,226 162,954 8.5
Export of Goods and Services 73,697 124,097 11.0
Net Factor Income 4,661 6,402 6.6
Current Account Balance -29,868 -32,455 1.7
(excluding transfer and grants)
Money Supply (M1) 38,460 70,861 13.0
Consumer Price Index 100.0 137.0 6.5
*Savings and investment in national accounts statistics have certain weaknesses which will be
substantially revised in the Ninth Plan. The figures in this table are preliminary estimates and
these may differ to some extent with revised estimates.

As the government will not mobilise any excessive amount of loans from the banking
sector, this will help to control money supply and maintain price stability and attain
surplus in balance of payments. Because of the government fiscal balance, the rate of
growth of the money supply (M1) can be maintained at 13.0 per cent during the Ninth
Plan. This will enable the private sector to move forward with their economic
activities with enough loans, and also to keep the annual inflation rate at 6.5 percent.
The control over inflation will assist the private sector in increasing savings and the
low price rise will make the exchange rate realistic, which will help to increase the
export of goods and services as envisaged by the Plan.
Similarly, high economic growth rate complemented by low inflation rate will create
an environment to promote investment. The low inflation rate will also help to
achieve the objective of poverty alleviation in the Plan by checking further disparity
in income distribution.
, it was estimated that the population of Nepal would be 21.1 million by the end of the
Eighth Plan. Among them, 11.6 million people of 15-64 age group were
economically active, and according to the Nepal Living Standard Survey, 4.9 percent
of them or 6 hundred thousand people were unemployed.

11
Although the percentage of unemployed is low, the number of underemployed has
remained more than 47 percent, and the urban unemployment rate is 12.2 percent.
Considering the underemployment situation in rural and urban areas, special
programmes for creating more employment opportunities will be launched in the
Ninth Plan.
On the basis of economic growth rate of 6 percent in the Ninth Plan, employment
opportunities will be generated at a rate of 2.9 percent per year. The high growth rate
to be achieved in the Ninth Plan will create additional employment for 1.7 million
labour force and special programmes will create employment opportunities for
additional 4 hundred thousand labour force. Thusit is estimated that the
unemployment and the underemployment rate, by the end of the Ninth Plan, will be
reduced to 4 percent and 35 percent respectively.
The problem of underemployment and unemployment in rural areas will be mitigated
through various measures, especially through the implementation of the Agricultural
Perspective Plan. There will be an increase in the employment opportunities in the
rural areas; there will be increased availability of micro credit and expansion of
small-scale cottage industries; skills-oriented training programmes will be
implemented; and government sector programmes in the rural areas will be made
labour intensive. The unemployment problem in urban areas will be reduced through
the expansion of non-agriculture sector activities and the implementation of skills
development programmes. These programmes will lead to increased labour
productivity and increase in income, ultimately contributing to poverty alleviation.
According to the Nepal Living Standard Survey, the number of people living below
the poverty line is estimated at 42 percent of total population in 1996/97. By the end
of the Ninth Plan, it will be reduced to 32 percent through economic growth and the
implementation of special and sectoral programmes aimed at economic growth and
poverty alleviation.

12
 Chapter - 5
Macro Economic Policy
5.1 Mobilisation of Financial Resources
1. Background
Special emphasis has to be given to the mobilisation of the available financial
resources for poverty alleviation, the main objective of the Ninth Plan. To achieve
higher rates of economic growth, investments need to be directed to the priority
sectors viz. agriculture, water resources, electricity, human resources, and social,
industrial, tourism and physical infrastructure development. An appropriate policy
has to be framed to limit the extent of dependency on foreign loan by mobilising
internal resources on a sustainable basis and making optimum use of available
resources to increase domestic savings rate as well as the investment of the private
sector in the national economy. The changes witnessed in the economy through
liberalisation, globalisation and regionalisation have created opportunities as well as
problems. An appropriate mechanism for sustained balance is required to develop the
market economy, providing direct support to targeted groups, reducing government
subsidies. Policies for the establishment of interrelationship between various actors of
the dual economy in order to identify the best opportunities are also indispensable.
Instead of aiming at ambitious economic growth rate, Nepal as a developing country
has to invest 22/23 percent of the GDP annually to achieve the higher and sustainable
rate of economic growth. A review of the sources of investment reveals that the
internal savings alone can not meet the investment requirements. As a result, the
burden of external debt has been gradually increasing.
2. Review of the Eighth Plan
Domestic Savings
The Eighth Plan envisaged that the ratio of domestic and national savings to the total
GDP would be 12.5 percent and 15 percent respectively. It was estimated that the
corresponding ratios were 12.6 percent and 14.8 percent in FY 1996/97. The gross
domestic savings of Nepal are quite low in comparison to India and other South
Asian Countries. The total investment in FY 1996/97 has increased from 21.2 percent
to 25.1 percent of GDP during the Eighth Plan period. The ratio of savings of the
private sector banking to the total GDP in FY 1996/97 has been only 3.3 percent,
whereas it was 3.2 percent in FY 1991/92. The main reason for this is the initiation of
economic liberalisation policy in FY 1992/93, establishment of insurance and
financial institutions under the new Industrial Act and Foreign Investment and
Technology Transfer Act as well as the availability of additional opportunities and
savings and the convertibility of current account. As a result, the increment in the
bank deposit has not been found significant.
There were eleven commercial banks, two development banks and five rural
development banks, forty-one finance companies, nineteen co-operative institutions
and twenty-six non-governmental organisations in operation in the country as of July
1997. Among the various tools of financial savings, bank deposit (current, savings

94
and fixed deposits), deposit for life insurance, savings on Citizens' Investment Fund
and Provident Fund deposits are important. More than 70 percent of the money
currently in circulation is in the private sector, i.e., being circulated without interests.
If this currency in circulation is brought within institutional framework, loan
investment of the banking sector can be made more effective.
Other Savings Tools
Of the other saving tools, although the increase in the annual premium on life
insurance is found to be satisfactory, the increase in its collection has not been
satisfactory. With regard to the provident fund, the percentage of provident fund as
against the total GDP has been declining since FY 1991/92 as the number of
employees, the salary scales, etc, affects it.
The deposit on Citizen Investment Fund, which was mandatory until 1990/91, was
made voluntary later and it has been developed into the Citizen Investment Scheme
1985 in the form of a mutual fund open for civil employees as well as for all citizens.
By mid-April 1996, the total deposit of this fund amounted to Rs 56.2 million. Since
the scheme is still in its primary stage, it is expected that the deposit will be increased
gradually as its scope goes on widening in future.
Revenue Mobilisation
Mobilisation of inter nal resources helps significantly to cover increasing government
expenditure, to increase investment rate as well as to maximise the use of external
assistance. In this context, various policies were adopted in the Eighth Plan to make
necessary changes in the tax structure. The VAT was implemented. Custom tariffs
were lowered down for bringing uniformity. Excise duties were gradually phased out.
The scope of income tax was broadened and simplified and revenue administration
was mademore capable and efficient. Regarding the external assistance, the Plan
aimed to maximise the use of foreign assistance specially by obtaining loan for
productive sector and grant for other development programmes.
During the Plan period, revenue group was formed with the objective of making
necessary change in the tax structure and making revenue administration more
capable and efficient. Import tarrifs were classified into five categories for uniformity
in import tariff rate tax. Regarding the implementation of VAT, various public
interaction and publicity programmes as well as seminars were organised as a part of
preparatory work and the Parliament approved the bill concerning the VAT.
Likewise, provisions were made to include as many as tax payers in the tax net
making income tax procedures more simple and comprehensive, and arrangements
were also made for voluntary tax assessment and the deduction of income tax in
advance. The eighth revision was made in the Income Tax Act, lowering down the
income tax rate on the upper limit and deduction of income tax at the source. Various
types of deductions were cancelled or were in the lower ceiling, while computing the
net income. Efforts were made by the government to improve the structure on
corporate income tax during the period.

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Progress in revenue mobilisation was less than the target despite various
improvements made on revenue management during the Eighth Plan. The proportion
of revenue mobilisation remained 10.9 percent as against the target of 13.4 percent of
GDP in FY 1996/97. The share of tax revenue was 8.8 percent and that of non-tax
revenue 2.1 percent of GDP in FY1996/97. Out of the total revenue of 10.2 percent
(tax revenue 7.7 percent and non-tax revenue 2.5 percent) of the GDP, the ratio of
revenue in total has increased and non-tax revenue decreased in FY 1991/92. The
average increase rate of the total revenue was 17.8 percent in the Eighth Plan due to
the decreasing rate of revenue in later years. As compared to other South Asian and
developing countries, the level of revenue mobilisation of the economy is still very
low.
Recurrent Expenditure
The ratio of recurrent expenditure was 48.3 percent in FY 1996/97 compared to 37.4
percent of FY 1991/92. Likewise, recurrent expenditure was 8.8 percent of GDP
whereas this ratio was 6.6% in FY 1991/92. During the Eighth Plan period, nearly 44
percent of the total resources was spent on recurrent expenditure. The portion of
expenditure increased by 21 percent of GDP between FY 1991/92 to 1996/97.
Recurrent expenditure increased by 55% due to the salary allowances and other
expenses of the teachers included in development budget previously but in the
recurrent budget since FY 1994/95. There was an average increase of 12.6 percent in
the recurrent expenditure if such expenditure was segregated and compared excluding
the expenses of the teachers of FY 1994/95.
Status of Revenue Savings
The ratio of revenue savings to development expenditure, which was 21.8 percent of
the development expenditure at the first year of the Eighth Plan, was estimated to
have remained almost the same at the end of the Eighth Plan. Government could not
achieve the target of contributing additional revenue to development expenditure,
only 25 percent of the development expenditure were met from surplus revenue
instead of 27.5 percent as expected during the Plan period.
Deficit Financing
The ratio of deficit financing went down to 1.8 percent of the GDP in FY 1996/97
whereas this was about 3 percent of GDP in FY 1991/92 including overdraft. In FY
1991/92, 0.6 percent of GDP was borrowed from internal sources, as this situation in
FY 1996/97 went further down to 0.53 percent of GDP. This shows that the
government dependency on banking sector has not come down, and as private sector
has to compete for resources, the status of the private sector has remained unchanged.
The situation has not reached yet at the satisfactory level towards the dependency on
deficit financing as the Plan targets to lower down the ratio of deficit financing to
0.90 percent of GDP in 1996/97 in the Plan period. The ratio of internal borrowings
has remained more than 18 percent including overdraft in comparison to the estimate
of seven percent of the development expenditure. The deficit finance did not come
under the annual budget since 48 percent of the deficit finance was from overdraft. It
will be very difficult to keep the finance mobilisation within the reasonable limit if

96
necessary stages are not taken to control over recurrent expenditure and on mobilising
additional sources of revenue.
Foreign Aid
In spite of an estimate of meeting 6.5 percent of the total development expenditure
through foreign aid (grant 7.4 percent and loan 48.1 percent) during the Eighth Plan
period, only 55.7 percent (grant 17 percent and 38.7 percent) of foreign aid could be
utilised to meet the total development expenditure. During FY 1991/92, 51.1 percent
of the total development expenditure was made by foreign aid whereas the ratio
increased up to 58.8 percent during FY 1996/97. In comparison to the GDP, the
foreign aid ratio remained stable at around 5.6 percent during FY 1991/92 and 5.5
percent during FY 1996/97. During the Eighth Plan period, the ratio of the utilisation
of foreign aid reached around 13.5 percent per annum on an average at the current
price leve l.
Status of Foreign Debt
The portion of foreign debt was 80.5 percent of the total foreign assistance received
in FY 1991/92 whereas this came down to 67 percent in FY 1996/97. During the
Eighth Plan period, 69.5 percent of the total development expendit ure was covered by
foreign assistance. Likewise, foreign debt in FY 1991/92 was 4.5 percent of the total
GDP whereas in FY 1996/97 this proportion went down to 3.7 percent. The actual
ratio of foreign debt during the Eighth Plan period remained only 38.7 percent of the
total development expenditure, which was estimated to be 48 percent. The decreasing
phenomenon on the availability of foreign assistance and its mobilisation was
basically related with non-execution of Arun III hydroelectricity project, Melamchi
Drinking water project and other such mega projects.
3. Existing Challenges:
The objectives set out by the Eighth Plan have not been achieved despite the
emphasis given on the policy of mobilisation of financial resources. Following
circumstances and problems were observed in domestic and national savings, revenue
mobilisation, mobilisation of foreign assistance and deficit finance, etc.:
• Decrease in public trust in tax compliance and taxation system, and also low tax
base and low tax elasticity.
• Low level of transparency in Act, regulation and procedures, misuse of
discretionary power and corruption.
• Increase in tax evasion practice and trade irregularities.
• Revenue was based on very few imported goods such as gold and other such
goods and low level of direct tax.
• Valuation of custom duties was not realistic, resulting in low valuation.
• Lack of essential, computerised, multipurpose and efficient data system for the
efficient administration of tax, custom and VAT.

97
• Non-satisfactory condition of training, efficiency development, skill and
professionalism despite the formation of the Revenue Administration Group.
• Lack of clarity on policy regarding foreign assistance, need identification, project
selection; various aspects of project formulation and implementation on an ad hoc
basis; no optimum use of scarce resources; improper allocation of resources
caused by the lack of prioritisation; and also a big gap between approval and
utilisation of foreign assistance.
• Long-term liabilities further created by unnecessary expansion of organisations,
uncontrolled size of both personnel and operating cost in recurrent expenditure.
Most of the internal resources consumed up by recurrent expenditure.
• High dependency on foreign debt resulted in increasing expenditure on recurrent
expenses and decreased revenue savings for the payment of outstanding debt
(payments of principal and interest) due to increasing gap between investment
and total domestic savings since FY 1991/92.
3. Long -term Concept
With a view to mobilising government finance, various structuctural improvement
targets have been fixed since FY 1997/98 for the next 20 years. Following policies
will be implemented to increase the share of tax on internal revenue, especially direct
tax and tax on internal consumption, by reducing the dependency on revenue from
import and foreign assistance, especially debt:
• Income tax, property tax and tax on internal consumption Value Added Tax
(VAT) will be made transparent, effective and capable and will be integrated with
overall national economy. Import duties will be reduced to make national
economy more competitive, and will be based on market economy. In addition to
making administrative machinery fully professional, efforts will also be made to
honour taxpayers.
• Foreig n investment will be gradually encouraged in the private sector. To give
emphasis on institutional development, revenue policies will be adopted in a way
to limit the role of government. Privatisation of government enterprises will be
accelerated and the revenue received from privatisation will be utilised for debt
relief.
• The share of national savings will be increased up to 30 percent of GDP.
• The level of recurrent expenditure will be bought down to 6 percent of GDP and
the net internal borrowing will be limited to 0.5 percent. A policy will be
undertaken to make government expenditure reach the targeted aspects of social
and economic sector. Market economy will be encouraged through the medium of
public expenditure.
• By devising long-term strategies and concept, foreign assistance will be
channalised in the sectors that are indispensable and give high rate of return based
on cost-benefit analysis. Emphasis will be given to increase the capacity of
utilising foreign assistance by mobilising it in necessary areas in confirmity with
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 the concept of long-term development plan and the various aspects of national
economy.
• Revenue will be increased annually by 0.5 percent of the GDP with the
identification of new sources of additional revenue mobilisation.
Ninth Plan:
4. Objective
Following are the objectives of the financial resource policy in the Ninth Plan:
• To invest the available resources in productive sectors by increasing gross
national saving and investment.
• To fulfill the investment requirements through the mobilisation of internal
resources on sustainable basis and by reducing the burden of foreign debt.
• To increase the capacity of utilisation and mobilisation of foreign assistance as
aimed by the Plan in keeping with sectoral development programmes and
investment requirements.
• To make optimum use of available resources with the prioritisation of
government expenditures.
• To assist private sector and market economy in increasing employment
opportunities for poverty alleviation.
5. Policy and Implementation Strategy
Mobilisation of Internal Resources
• Emphasis will be given to increasing the national savings by discouraging
unproductive and wasteful expenditures. Efforts will be made to change all
sectors of the country's economy into monetisation and market economy. NGOs
will also be mobilised to convert household savings into financial assets for the
development of financial institutions especially in the rural areas. In addition to
mobilising savings, efforts will be made to have efficiency and simplicity in the
activities of the financial institutions, and the access of general public to such
institutions will be assured. An action plan will be implemented to increase
investment of the institutional and micro-credit finance. National savings will be
increased through the expansion of services and quality improvement in
education, health, transportation and insurance so that the tendency of capital
outflow is discouraged.
• Special attention will be given to developing the capital market. Nepal will be
developed as an Offshore Finance Centre. Investment opportunities will be
created through promoting the availability of capital through financial market
development.
• As regards the revenue policies, emphasis will be laid on direct taxes, especially
income tax and other related taxes. Overall improvement will be made in acts,
regulations and processes relating to taxes so that the system of direct tax will be
99
 made transparent, effective, comprehensive, simple and efficient and also to win
the confidence of tax payer s. Feasibility study will be carried out to improve the
present tax system by identifying different sources of taxes and bringing them
within the tax framework. A system will be introduced to discourage the
tendency of tax evasion by developing a data system that will help to identify the
tax payers as well as other areas like agriculture, export, purchase or handing over
of assets, capital gain, gift, donation and other such activities. Minimum
alternative concept of tax based on total assets will be brought into practice.
Arrangement will be made to finalise the cases of tax disputes through special
judicial system. Opportunities for career development of civil servants as well as
for penalty system will be based on specific job performance records. Training
and skill development progress related to accountancy will be carried out so that
the tax administration will become efficient, professional and fair.
• By accelerating people's awareness on the Value Added Tax, the VAT will be
expanded to the entire area of internal consumption and develop as a main basis
for internal revenue. Data on taxpayers will be specially monitored. Tax refund
system will be made more effective. Special programmes will be launched to
make tax administration more efficient, professional and capable. Efforts will be
made to increase tax yield by developing and integrating special computerised
data system with internal import and overseas export, internal production data,
and the data used for income tax purpose, etc. Excise duty will be developed as a
reliable source of revenue and will be applied to the limited sectors of internal
production.
• Customs tarrifs will be gradually simplified and adjusted by providing
appropriate opportunities for domestic industries in line with the practices of
international trade as well as the forums such as the World Trade Organisation
(WTO) and South Asian Free Trade Area (SAFTA). Effective measures will be
taken to control illegal import and export business. Customs valuation rates will
be made more realistic on the basis of actual transactions as well as customs
valuation will be raised, if necessary, by improving its legal procedures
accordingly. Arrangement will be made to process the data on foreign trade for
multipurpose use in short period of time and all customs related information will
be fully computerised. Special programmes will be launched to make customs
administration simple, transparent, fair, skilled and professional. Overall
improvement will be made on patrolling system to control leakage on revenue
and an attempt will be initiated to make the administration well-equipped with
resources as well as to develop it as a cadre- based administration.
• An appropriate pricing mechanism will be established while selling the
government goods and services on the basis of current market price so as to
increase the revenue on non-tax items. An effective monitoring system will be
adopted to increase the income on dividend, principal amount, interest, etc., by
implementing the time-bound recovery system.
• Privatisation policy will be implemented by restructuring the government
enterprises as required, selecting large-scale enterprises for privatisation,

100
 speeding up the momentum of privatisation and identifying the potential area that
can attract the private sector investment. Policy of privatisation will be made
more transparent and competitive. Revenue received from the privatisation of
government enterprises will be utilised to pay back the government debt and will
be invested on prioritised programmes of social and economic sectors.
• The government subsidy policy will be gradually phased out except in those
sectors, which are considered most essential viz. remote areas, disadvantaged
group and sectors prone to high natural calamities.
• Unproductive government expenses will be controlled to reduce the budget
deficit. A policy will be adopted to control unnecessary expenses in recurrent
budget pertaining to position creation, organisation expansion and office
operation as well as check the expenses that need not be spent by the government
sector. Further effort will be made to hand over the activities to private sector if
the private sector itself is capable of dealing with them perfectly and the same
principle will be applied to the NGO sector. Hence, this will help to limit the role
of government only as a regulator and facilitator. Efforts will also be made to
economise government expenditure by improving various aspects of civil service.
• Net internal debt will be tried to be kept at an appropriate level of GDP and
government borrowing from the banking sector will be limited to as minimum as
possible so as to ensure availability of resources to the private sector.
• Capable and efficient tax administration is necessary to increase the contribution
of government public sector in gross domestic savings by widening tax base as
well as by preventing revenue leakage for increasing the amount of collection. In
other words, it is not imperative only to make gradual increment in the ratio of
revenue to GDP but also to control and discourage unproductive and low quality
investment in order to maintain the financial discipline. To improve the
management of government finance and maintain stability, it is necessary to
adopt monitoring system in the periodic target-setting and the implementation of
government finance such as revenue collection, regular expenses and revenue
saving as against GDP. In this context, a system will be developed to adjust in
another variable if any one variable does not achieve the target as planned.
• Price fixation on service sectors of non-tax revenues such as drinking water,
telecommunication, electricity, etc., will be based on the cost of production.
Revenue as dividend from the sale of such services will be gradually increased.
• Structure and mana gement of public enterprises will be improved in a way to get
returns based on investment.
• A policy will be adopted to maintain the inflation rate at the lowest level through
monetary policy in order to increase the mobilisation of savings. The interest rate
index will be fixed by the central bank in a way to maintain saving and deposit
rates higher than the bank rate.
• If the interest rate of commercial banks and other financial institutions is higher,
there is a chance of having negative impact on the production increment
101
 programme and investment activities of the private sector. An environment will
be created to increase the performance efficiency of commercial banks and other
financial institutions to reduce the spread between the rates of deposits and
borrowings.
• To encourage the increase in the domestic savings from the deposit collected by
commercial banks and other financial companies and institutions and to attract
such deposits for productive investment, finance companies and other institutions
will be encouraged to reinvest the savings earned from such investment. Private
sector will be oriented towards the establishment of sister concerns for the
production of durable consumer goods that are not produced in the country
instead of providing loan to purchase such goods on the installment basis. As an
alternative to this, however, emphasis will be given to developing these sister
concerns in the productive sector through diversifying exportable goods and
identifying new exportable goods in keeping with the principle of comparative
advantage and also weighing the prospects of profit from the import of such
goods.
• To increase the deposit in provident fund, an appropriate mechanism will be
developed by making compulsory deposit of some percentage of salary increase
in Provident Fund or Citizen Investment Fund or other life insurance schemes,
and the government will provide matching amount in such accounts. In this
context, measures will be taken to deposit such savings of private sector
institutions in the accounts of Provident Fund.
• In the context of gradual expansion of insurance service in Nepal, license will be
provided for life insurance business. Access to life insurance service will be
extended to rural areas of the country through expanding their different branch
and sub-branch offices.
• An appropriate environment will be created through insurance committee with
the cooperation of domestic insurance companies to adopt re-insurance system
within the country in order to check and control the capital drain problem. This is
necessary since huge amount of capital is now being drained outside the country
resulting from the existing arrangement relating to the group insurance of
imported goods and the re-insurance of those goods by the Nepalese insurance
companies.
• Stock Market system will be extended throughout the country in order to provide
stock exchange services.
• The Security Board will create an environment to maintain up-to-date record of
share investment of different financial, insurance and other companies, monitor
regularly the activities of such companies, and provide information of the
companies having high rate of return so as to develop the share market business
in the country.

102
Mobilisation of External Resources
• Coordination will be maintained with donor agencies to estimate foreign
assistance based on detailed development programmes and to mobilise
investment as per the Plan's projection. The existing system of aid consortium
will be made effective to further mobilise foreign assistance by eliminating
duplication.
• Foreign assistance will be utilised in essential areas based mainly on national
requirement long-term sectoral development plan and the Ninth Plan investment
requirement. A Guideline will be prepared ffor the utilisation of foreign
assistance. A system will be established to hold discussion with donor agencies
only after necessary initial preperation and identification of needs.
• To remarkably increase the absorptive capacity for foreign assistance, drastic and
planned improvement will be made to address various problems witnessed at the
stage of pre-estimation of financial assistance, project formulation, agreement,
approval of assistance and fund release, recording of expenses, audit report,
monitoring and evaluation. Three-year rolling estimation of required resources
will be prepared and revised every year.
• The system of personnel placement with responsibilities for the entire project
period will be made more effective and they will be fully trained on project
administration for improvin g their efficiency.
• Priority will be given to Neplase specialist on consultancy services by keeping
foreign consultancy services at minimum.
• Foreign assistance will be accepted only after pre-confirming the ability of the
government on budgetary contribution necessary for the use of foreign assistance.
HMG will try its best to make available the matching fund for the approved
programmes of foreign assistance.
• Unproductive expenditure will not be made out of foreign grant or loan.
• A proper arrangement will be made to develop computerised data system on
foreign aid, especially the loan, to track down the status of foreign loan receipt,
its use and amortisation.
• No foreign loan will be accepted on government's guarantee. Private sectors will
be encouraged to receive loan on productive sector for long-term trading and
development loans.
• A proper arrangement will be developed for making necessary legal and
procedural arrangement in order to encourage the direct foreign investment in an
institutional way. Proper attention will be given to macroeconomic stability of the
country while accepting short-term loans.
• Necessary steps will be taken to manage and to have proper auditing of the
international assistance received through various non-governmental

103
 organisations. Fund received (direct payment including direct project
implementation) through HMG/Nepal will be made totally transparent.
• Technical support received under foreign assistance will be adjusted to the overall
requirement of the Plan and it will be limited on ly to the area where internal
sources can not be made available and report on such assistance will be made
transparent.

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 5.2 Government Expenditure and Management
1. Introduction
Government expenditure acts as energy to the economy. Government expenditure
makes major contribution to the balanced regional distribution of national income.
But uncontrolled government expenditure brings unwanted inflation, which may
ultimately produce various economic distortions. Therefore, it is necessary that
objectives of government expenditure should be directed towards achieving the
targets set in the development plan and to establish macro-economic stability.
Government expenditure helps to increase economic growth rate by encouraging
private entreprenuership and investment. The important aspects of government
expenditure are to support to intensive economic activities of the private sector rather
than to achieve immediate direct benefit. In other words, while examining the utility
of the government expenditure, it is necessary to see whether such expenditure help
to expand total economic activities of the country.
The next important aspect of government expenditure management is to increase the
productivity of the expenditure. Government's continuous effort is necessary to
achieve more benefit with minimum expenditure or to achieve more from similar
expenditure, changing the pattern of expenditure. The important aspects of
government expenditure control are its usefulness and productivity rather than the
limit of revenue mobilisation. Generally, expenditure tends to increase as time passes,
if firm and solid measures to control are not taken forth. To control the increasing
trend of expenditure it is necessary to adopt various measures and examine each and
every item of expenditure on the basis of its utility and productivity from time to
time.
Most of the government expenditure may appear unreasonable if overall economic
situation improves and involvement trend of voluntary exchange of goods and
services increases . For example, now the government is expending huge sum of
money in education and community development. This expenditure is important with
a view to creating effective demand for education or well-developed community.
Government may gradually minimise expenditure in those areas through the creation
of effective demand or growth of willingness and ability of involvement in voluntary
exchange.
2. Review of the Eighth Plan:
The Eighth Plan had emphasised the rational allocation of resources, the effective
management of government resources and the increase in the mobilisation of internal
resources.
Out of total expenditure in fiscal year 1961/62, the share of development expenditure
was 45.4 percent and recurrent expenditure was 54.6 percent, but out of total
expenditure in fiscal year 1974/75, the share of development expenditure increased to
63.90 percent. During the Seventh Plan period, development expenditure out of total
expenditure remained an average of 66.14 percent. However, during the Eighth Plan
period, this percentage had decreased to 55.73 percent. In the Eighth Plan, recurrent
105
expenditure increased by an annual average of 20 percent whereas development
expenditure rose by 10 percent.
During the Eighth Plan period, structural change appeared in the allocation of
recurrent expenditure. In fiscal year 1992/93, the share of expenditure out of total
recurrent expenditure in general administration, defense, social services, economic
services and amortisation of loans in percentages were 13,15,11,5 and 40
respectively. However, in last year of the Eighth Plan, the share of expenditure of
social service increased to 24.44 percent from 11 percent, and in the economic service
there was an increase by two percent. Noticeable decrease was seen in recurrent
expenditure of other sectors. This could be taken as positive indicator. Likewise, in
the fifth year of the Eighth Plan, recurrent expenditure remained nine percent of the
total gross domestic production. This had remained less than 7 percent from fiscal
year 1974/75 to fiscal year 1991/92. Increase in recurrent expenditure compared to
total gross domestic production could not be taken as a positive sign.
During the Eighth Plan, more emphasis was given to economic service and
transportation in the sectoral allocation of development expenditure. The share of
total expenditure particularly in economic service, transportation and electricity
increased in the fifth year of the Eighth Plan in comparison to the first year of this
plan. Increase in investment in these sectors could be considered proper in view of
supporting the private sector. During the Seventh Plan period, 21.28 percent of
development expenditure was borne through internal revenue. But these percentages
were 22.36 and 33.52 in fiscal years 1990/91 and 1991/92 respectively, whereas
during the first four years of the Eighth Plan, it was on an average 26 percent.
Expenditure trend showed that dependency in foreign aid and internal borrowing
decreased to some extent to meet the necessity of development expenditure.
Development expenditure as compared to gross domestic production was less than 8
percent upto fiscal year 1974/75, whereas it remained between 11 to 15 percent
during fiscal years 1984/85 to 1991/92. During the first four years of the Eighth Plan,
development expenditure remained on an average 10 percent of the total gross
domestic production.
During the Eighth Plan period, government concentrated its effort in proper sectoral
distribution of expenditure for its effective expenditure management. The share of
expenditure in social service, economic service, infrastructure development and
maintenance, etc increased gradually.
During the Eighth Plan period, reimbursement release system was introduced with a
view to controlling unnecessary expenditure and balancing cash flow. This helped to
minimise deficit occurring at the beginning of the fiscal year and made noticeable
decrease in freeze irregularities. Unnecessary control-oriented and ambiguous
provisions related to Financial Rules and Regulations were reformed after the
thorough study and analysis, and this process is still continuing.
To maintain uniformity in expenditure procedure of same nature of work, manuals
were prepared and issued particularly for construction and the service-acquiring
sector, and the process is still continuing.

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3. Existing Challenges
Budget formulation is the first important step for effective management and control
of expenditure. General tendency appears to exhaust anyhow the allocated overhead
budget. There is a chance of budget being spent in unnecessary works or purposes if
appropriateness of proposed expenditure can not be properly judged at the time of
budget formulation. Similarly, at the time of budget discussion there is a tendency to
cut down overhead cost as a lumpsum with a view to keep it within a desirable limit.
This process has encouraged concerned agencies to propose more budgets on those
line items, which can be made easily acceptable to get consent. This has ultimately
encouraged a tendency to transfer excess budgets to line items of their choice.
Scientific system has not yet been adopted to correct these weaknesses existing in
budget formulations.
The Parliament takes three to four months for the approval of the proposed budget.
During that period of financial year, there is system of expenditure on the basis of
Vote on Accounts. Because of this system there is a possibility of incurring
expenditure on those budget heads or programmes not mentioned in Appropriation
Act approved by the Parliament. After the approval of the budget, the concerned
authority, without providing autorisation letter in time, provides the letter only
towards the end of financial year in haste, creating more pressure in cash flow at the
end of financial year. There have been defects in the accounting of expenditure and
lack of conformity to spend according to rules and regulations.
The inability to bring clarity and uniformity in the procedure of expenditure caused
the failure of timely tender approval and created various obstacles particularly in
construction and development works even after the acceptance of tender. Existing
accounting system of expenditure was introduced nearly 40 years ago and this system
is still in practice with some minor reforms. Existing accounting system treats money
taken in advance as expenditure, this has created difficulty in correct reporting of
expenditure. Financial statement as required by donor institutions has not been able to
prepare in time due to lack of sourcewise accounting of expenditure. This has resulted
in the delay in reimbursement of expenses incurred from the government source. In
many cases, reimbursable expenses remain to be reimbursed due to the lack of proper
accounting of expenditure. Present accounting system is even unable to prepare
programme-wise expenditure report of agencies, which implement multi-
programmes.
There is an increasing tendency on the part of donor agencies to provide commodity
aid and to enforce direct payment and direct spending due to the lack of proper
expenditure, accounting and reporting system in the government. The actual
expenditure incurred in this way has created difficulty of including all expenditures in
the central accounts of the government. In addition, this system has encouraged
misuse due to the lack of control in the accounting of goods purchased under the
heading of such expenses.
Absence of appropriate controlling system of durable goods and government-owned
property purchased through government resource has enhanced the tendency in

107
government offices to increase unnecessary maintenance cost or provide new items
leaving old goods unauctioned.
Under the present expenditure system, it is very easy to provide advance from
government fund but the procedures of recovery are very lengthy. For this reason,
outstanding advance is increasing every year.
Though advanced information technology has been adopted by making timely
reforms in financial information system but due to human and physical infrastructure-
related problems, the Ministry of Finance is unable to get timely financial information
as necessary to keep cash flow under its grip. Preparation of integrated central
account of the government takes about seven to ten months after the end of the
financial year. Timely financial statement preparation by the reconciliation of all
transactions has become very intricate tasks because more than 3,500 government
offices receive and expend budget from the government fund, these expenses are
managed from more than 7,500 bank accounts; and government revenue is collected
through about 9,000 bank accounts. Management's attitude towards audit has not been
positive. Internal auditing has not been taken seriously and attentions have not been
paid to reform the drawbacks as suggested in the final audit. This has been made clear
by the recurrence of the same nature of irregularities found in the audit of expenditure
of each financial year.
4. Long -term Concept
Government expenditure management must concentrate itself towards giving positive
contribution to economic growth rate by maintaining macro-economic stability.
Continuity in government expenditure and its basic principles do not allow deviation
in macro-economic stability. Taking all these factors into consideration, policy
framework of government expenditure management in the Ninth Plan has adopted the
following long-term concept:
• Regular expenditure of government will be allocated in maintenance of law and
order, regulatory functions, social security, foreign relations and information
collection and dissemination. Government will be cautious to stop unnecessary
expansion of its organisation and will concentrate its effort to provide high
qualitative service at minimum cost.
• Unnecessary overhead cost will be reduced and recurrent expenditure will be
limited to six percent of total gross domestic product. The development
expenditure of the government will be concentrated towards enhancing private
entrepreneurship and investment. Inventory of projects like infrastructure creation
and maintenance will be prepared and a system of gradual selection of project on
cost benefit basis will be adopted.
• Government will not intervene through price subsidy in independent and self-
operating market mechanism except for the regulation and policing of provisions
of law.

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• Accounting information system will be made prompt and objective-oriented by
standardising audit and managerial monitoring to increase the utility of
expenditure and to ensure financial discipline.
Ninth Plan:
5. Objective
The main objective of government expenditure management is to obtain optimum
return by controlling unproductive and wasteful expenditure and make available
government resources and means to the priority sector of plan at necessary quantity
and in time. Under this objective are the following sub-objectives:
• To establish a system of programme selection on the basis of high cost-benefit
ratio.
• To reduce magnitude of irregular expenditure by increasing effectiveness of
expenditure.
• To include direct expenditure incurred by donor agencies within the framework
of budgetary procedures and make it transparent and auditable in the government
programme.
• To activate financial/accounting system to fulfill multi-sectoral requirement.
• To increase the utility of durable goods and assets owned by the government.
6. Policy and Implementation Strategy
• The offices, which are more in number than are necessary and minimum to fulfil
the government's role as envisaged in the Ninth Plan, will be closed, adjusted or
integrated.
• Expenditure norms will be developed to introduce a system of approving the
budget not less than the set norms needed to run government offices at the
village, district, regional and central level.
• Unitwise expenditure norms will be prepared and gradually implemented to
formulate budget for programme expenditure and to evaluate the expenditure.
• Overdraft loan from the central bank for government expenses will be managed
to keep at a limit of one thousand million rupees all the time.
• Each ministry will be directed to prepare a list of feasible projects under their
jurisdiction and to implement the projects selected under the high benefit-cost
ratio.
• Concept of three year rolling budget will be implemented in the formulation of
development budget in order to prevent the deficiency in the budget recurred
during the period of ongoing projects.

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• National Planning Commisssion will make three-year sectoral allocation of the
available resources to achieve targeted economic growth rate by maintaining
macro-economic stability.
• Price subsidy system will be stopped in the Ninth Plan.
• Additional capital requirement of government-owned enterprises will be fulfilled
through capital market. Those enterprises who fail to generate additional
investment from market will be privatised and government will stop investing
additional capital in such enterprises.
• System of budget approval by the Parliament before the beginning of financial
year will be initiated, and immediately after the beginning of financial year,
budget authorisation letter will be immediately issued to the lowest unit of
government offices.
• Pre-audit payment system for recurrent expenditure will be arranged and the
number of payment and accounting centres will be reduced.
• Physical audit system for procured or obtained assets of more than five million
rupees will be introduced on the basis of cost effectiveness of construction or
purchased activities.
• Simple and clear accounting system will be implemented to fulfill the need of the
multipurpose financial information system by reviewing government accounting
policy, system and procedures. Central financial statement of HMG will be
prepared within five months of completion of fiscal year. Arrangement will be
made to submit this statement in the winter session of the Parliament along with
audit report.
• Life of goods and assets used by government offices will be determined through
the classification of their durability and budget will be arranged on the basis of
annual repair and maintenance norms. Those goods are fully utilised and assets
will be auctioned which need more maintenance cost than determined by norms.
Budget will not be made available to procure or for maintenance until those
goods and assets are auctioned.
• After the transfer of goods by the donor agency, necessary arrangement will be
made to inform concerned District Treasury Office and Office of Auditor General
about goods and assets provided by donor agencies through commodity grant and
by direct payment with a view to updating records of goods and assets.
• All foreign assistance made available to the go vernment will be brought under the
domain of budget by ending the system of non-bearing the accountability of
direct payment for maintaining transparency in financial transactions to check the
possibility of duplication in expenditure and to audit the expenditure and physical
achievements.

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7. Programmes:
Budget Formulation and Approval
• The National Planning Commission will provide three-year budget ceiling to each
ministry to formulate development budget by assessing available resources and
making sectorwise allocation of these resources. Each ministry will then inform
budget ceiling to concerned project, district or unit offices.
• The Ministry of Finance (MOF) will prepare operational expenditure norms
required to run government offices. Such norms will be prepared on the basis of
the number of employees for each district. After the preparation of such norms
the MOF will review them every three years. Unitwise norms of programme
activities will be gradually prepared by the Ministry and will be made
operational.
• Each project, district and unit office will prepare budget by the month of
November on the basis of expenditure norms and budget ceiling, and submit it to
the concerned ministry. Ministries will compile budget proposal received from all
units and prepare integrated budget proposal by the month of December. This
integrated budget proposal will be submitted to the joint committee of the Budget
Division of the Ministry of Finance and the National Planning Commission, and
discussion will be initiated. Discussion will be centred only on such proposed
budget items, which exceed expenditure norms and budget ceiling. Discussion
will be finalised by the middle of March and the Ministry of Finance will prepare
final framework of the next year budget by the end of March.
• Efforts will be made to begin budget session of the Parliament within the third
week of April, budget presentation within last week of April, budget approval by
mid July and sending authorisation of expenditure to all the concerning unit
offices by the third week of July.
• Each ministry will be required to justify its projects, while preparing development
budget, that they are prepared on the basis of benefit-cost analysis and proposed
according to priority based on high benefit-cost ratio. Each min istry has to update
the lists of projects and programmes on a continual basis.
• If any changes in budget ceiling of the second and the third year of the three-year
rolling budget are felt necessary after the implementation and approval of the first
year budget, the NPC will change the ceiling and will inform the concerned
ministry by the second week of October. Ministries will have to submit only
details of changed budget items proposed in three-year budget due to changes
made by NPC or due to other causes, and discussion will be concentrated in this
matter only. Budget for those items, which need no change, will be kept the same
as approved in the three-year rolling budget.
Budget Implementation and Expenditure Management
• Necessary arrangements will be made to issue budget authorisation letter and the
programmes approved by National Planning Commission to the paying units by

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 the end of July. Then, all the unallocated budget of the ministries will be
allocated by the mid December so as to make available the authority of all
approved budget to paying units.
• Procedures of tender invitation, its evaluation, and contractor selection of
construction and procurement works will be completed by mid November.
• Authority will be given to the office in-charge to transfer necessary amount from
one line item to another line item of the main budget head.
• Arrangement will be stopped keeping payment outstanding of any kind and
overdue advances at the end of fiscal year.
• The actions related to the transfer of budget from one head to another or one sub-
head to the other upto ten percent of the main heading or sub-heading can be done
upon the approval of the MOF, but it is to be completed by the second week of
June. Consent of the NPC will be necessary in the case of development budget.
No transfer of budget of any kind will be allowed after the second week of June.
• System of payment for recurrent expenditure by the treasury and financial
controller offices will be gradually implemented after the pre-audit of such
expenditure. On the basis of the experience in the recurrent expenditure with
necessary reform in system and its pre-testing, central payment system will be
adopted for development budget.
• The existing reimbursement system of released budget on the basis of
expenditure will be continued untill the centralised payment system is introduced.
For the prioritised project, additional fund will be released in as operating fund
upon the request of project chief to meet the immediate expenditure if the
reimbursed amount does not meet the present requirement.
• Budget will not be released from central government account after the first week
of July. Unexpended budget will be refunded 3 or 4 days before the close of
financial year to treasury and financial controller offices. Last day of financial
year will be taken as account closing day, and no financial transaction will be
made on that day.
• To bring uniformity in expenditure procedures for each budget line items,
necessary guidelines will be prepared and implemented. Existing guidelines for
the construction and procurement of goods and services will be continuously
reformed.
• Audit objection will be taken as one of the basis of performance evaluation of an
officer who approves the expenditure, and staffs who make payments and
perform ac counting of expenditure.
Accounting, Information System and Auditing of Account:
• The existing accounting system of HMG will be reformed and accounting policy
and standards will be formulated. Such reform will be made to reflect net revenue
and net expenditure in books of account of each financial year. Attention will be

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 given to make internal control effective at the time of formulating accounting
system. Accounting system will be developed in a way to enable to submit
programmewise expenditure report.
• Arrangement will be made to compulsorily provide information about direct
payment and commodity aid to the Financial Comptroller General Office by
donor agencies. Arrangement will be made to keep all expenses of donor agencies
in government programme within the framework of budget system.
• Financial Information system will be made more systematic with a view to
preparing central account statement of HMG within the second week of
December in each year. Arrangement will be made to cancel the present system
of cashing unpaid cheques issued on or before mid July by mid November of the
following fiscal year and a new system will be introduced to cash all unpaid
cheques within one month after the end of the fiscal year. Computer network will
be established among Financial Comptroller General Office, MOF and NPC so as
to get up to date expenditure report immediately. For this purpose, computer
technology will be applied with a view to making accounting information system
regular and reliable.
• Emphasis will be given to concentrate on regularity of expenditure, mathematical
accuracy on the part of internal audit, and selective financial audit and focus
mainly on performance-oriented and physical checking up of achievement by the
final audit.
• System will be developed to clear all irregularities pointed out by internal audit
within the same fiscal year and, if not, the sum equal to irregularity will be
deducted from the budget release of the next fiscal year.
• The provision of technical personnel will be made at the Office of the Auditor
General to enable the Office to conduct performance-oriented and physical audit.
On the part of mega-projects, arrangement will be made to conduct compulsory
physical auditing by the expert group of technical and account personnel of
Auditor General Office on the basis of cost benefit analysis at the time of
execution of project implementation.
• Those contractors, who do not correct weaknesses pointed out by auditor at the
time of physical auditing, will be blacklisted and their names will be made public.
Provision will be made in civil service or concerned Acts to punish government
employees recommended guilty by the Auditor General.
Miscellaneous
• Procurement procedures will be reformed through the scientific classification of
goods to be used by government offices in order to maintain quality and
uniformity. Central Service Department of HMG will be activated for this
purpose. List of suppliers capable of delivering goods at various sites in fixed
prices will be decided by open competitive bidding for one financial year. Such
supplies will include paper, ink, and office materials of acceptable brand with
manufacturing description, and provision will be made in financial rules that

113
 there will be no need to call quotation or tender to procure such goods from these
listed supplier at determined price. This will reduce pre-procurement
administrative cost; decrease irregularities and being uniformity in goods
procured by government offices and minimise maintenance cost of durable
commodity.
• Provision will be made in relevant financial rules about the commodities and
assets lasting more than one year except government land and building. These
commodities and assets will be classified into a period of three, five, eight and ten
years respectively and new commodity will be purchased only after the utility
period of concerned goods is expired. Such goods will be auctioned without
repair or will be discarded by other means. Budget will be approved for overall
maintenance and repair of building in every ten year s.
• Arrangement will be made to store expendable commodities like medicine,
pesticide and insecticide on the basis of expiry date, and these commodities will
be used before the date of expiry. Unused medicines and pesticides will be
returned to supplier as per contract, or if a contract does not exist, such medicine
and pesticides will be destroyed within 15 days of expiry date, without causing
any adverse effect on environment.

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 5.3 Money, Banking, Financial Institution and Price
1. Background
Ever since the late 1980s, Nepal has been pursuing a liberal policy in the financial
sector. By the early 1990s, with the developments such as the autonomy to
commercial banks for interest rate determination and investment management; the
establishment of commercial banks in the private sector in joint venture with foreign
banks; the establishment of new financial companies following the arrangement of
Financial Company Act; the establishment of new development banks following the
arrangement of Development Bank Act; and the authorisation to co-operatives for
banking operations, financial institutions have widely been expanded in the country.
Likewise, the use of indirect instruments in the implementation of monetary policy,
the development of secondary market for debe ntures and the reforms in the field of
foreign exchange have contributed to enhance the financial deepening of the country.
By the end of the Eighth Plan, deposits of more than Rs 8000 million have already
been mobilised from the financial sector. Nevertheless, in the absence of a close
supervision and monitoring of financial transactions in the liberal financial system,
crisis may occur in the financial system and the monetary authority has to be vigilant
constantly for preventing the crisis. Similarly, when HMG utilises excessive overdraft
loan from the Nepal Rastra Bank to finance budget deficit, monetary control can not
be maintained and thereby internal and external stability of the country is affected.
Therefore, the ability to keep budget deficit under control constitutes a pre-condition
for the effective implementation of monetary policy.
2. Progress of the Eight Plan
The Eighth Plan had estimated a 13 percent growth rate of narrow money supply
while the bank credit to private sector was estimated to increase by 27 percent.
During the Plan period, the growth rate of narrow money supply remained at an
average of 14.6 percent, which stood somewhat higher than the target of the Plan. In
the early part of the Plan, the increase in net foreign assets resulted from the huge
balance of payments surplus was the main reason for high monetary expansion. In the
later part, the domestic credit from the banking sector utilised by His Majesty'
Government in a larger amount became a reason for monetary expansion. Credit to
the private sector channelised by the banking sector was increased by an annual
average of 27.8 percent during the Plan period, which grew at a higher rate than the
target of the Plan. However, higher share of that credit was flowed to import trade,
which led to have an adverse impact on the trade and current account deficit of the
country. In the latter part of the Plan, monetary expansion was brought under control;
consequently, some improvement in the price situation could be achieved.
In the Eighth Plan, credit flow to the government sector stood at an annual increase of
9 percent; however, the tendency of government co-operations to take loan from the
banking sector somewhat decreased in the Eighth Plan as compared to previous plans.
During the Plan period, credit flow to government corporations increased annually by
3.8 percent and credit to financial institutions increased by 18.3 percent; however,
credit to non-financial institutions decreased by 4.8 percent. Some corporations paid

115
the loan taken from the banking sector whereas HMG settled the bank loan to
government corporations, which comprised of both loan on government guarantee
and matured loan. For this reason, credit flow to non-government institutions during
the Plan period decreased by an average of 0.5 percent. During the Eighth Plan
period, deposits increased at a rate of 20 percent. Although a competitive
environment in the mobilisation of deposits was created through the establishment of
non-bank, financial institutions in the country, the deposits mobilised by commercial
banks are remarkable.
Due to the high increase of time deposits as compared to that of narrow money
supply, the growth rate of broad money supply during the Plan period remained at an
average of 17.8 percent.
3. Existing Challenges
In the context of liberal economic policy pursued by the country, it is essential that
fiscal and monetary policy should be liberal and sound to create a competitive
environment. One the one hand, economic stability has to be attained along with high
economic growth rate and, on the other, attention has to be paid on income
distribution and poverty alleviation. To fulfill the dual objectives, balanced measures
have to be undertaken through the fiscal and monetary policy. To correct econom ic
instability caused by the balance of payment deficit, decline in foreign exchange
reserves, high inflation and growing government deficit finance, the structural
adjustment programme was adopte. Monetary policies were implemented as a means
to attaining economic stability; as a result, since the inception of the Seventh Plan the
country did not have to face the balance of payments deficit until the early part of the
Eighth Plan.
However, in the later part of the Eighth Plan, signs of instability in the economy
started to reappear. In 1994/95 and 1995/96, the balance of payments became
unfavourable. Nevertheless, a remarkable progress in the balance of payments has
been noticed in 1996/97. Although the existing foreign exchange reserves of the
country by the end of 1996/97 has remained at the level of importing capacity for 6
months, there is no denying the fact that it will decline to a minimum level if the
balance of payments surplus can not be maintained. Thus, the main objective of
monetary policy in the Ninth Plan is to focus towards strengthening the balance of
payments position. Moreover, to reduce unequal distribution of income; assist in
poverty alleviation; promote the mobilisation of savings through positive interest rate
policy; keep interest rate on borrowing at a minimum level; promote exports by
maintaining real exchange rate at a competitive level; and create an environment of
confidence for foreign investment, it is highly essential to keep inflation under
control. There are several reasons for inflation; however, the significant factor is
excessive money supply. Therefore, it is necessary that, keeping money supply within
a desirable limit in order for inflation not to be caused by monetary factors, the
monetary policy in the Ninth Plan will be adopted as a significant instrument for price
stability.
In the context of liberal and open economic policy pursued by Nepal, the fact that
foreign trade evolves as a backbone to economic development is indisputable. Since
116
exports have to play a lead role in this regard, it is absolutely necessary to maintain
export competitiveness by keeping the real exchange rate at a certain level. To
maintain the real exchange rate at a desired level, price level and prevailing foreign
exchange rate have to be influenced. Therefore, in order for foreign exchange not to
be overvalued, monetary policy has to perform functions like open market
intervention and price control. So, the interim objective of monetary policy has to be
conceived of keeping exchange rate at a certain level for maintaining healthy balance
of payments position rather than controlling money supply. Thus, the fact that the
strategy for monetary management in the Ninth Plan is to make exchange rate export-
friendly is indisputable.
On the one hand, fiscal policy has to contribute directly towards the profound and
challenging task like poverty alleviation as envisaged in the Ninth Plan and, on the
other, measures of stringent monetary policy like directed credit programme have to
be phased out in forthcoming years. In this context, without damaging the spirit of
liberal fiscal policy, it is necessary to adopt the credit policy that promotes efficiency
through competitive financial system; makes financial resources available for
increasing production and creating employment; and provides means of production to
the family below the poverty line for incomegeneration. So, in forthcoming days, it is
still mandatory to continue the priority sector credit programme more effectively
while the programmes such as Deprived Class Credit Programme, Productive Credit
Programme for Rural women, Educated Unemployed Credit Programme and Banking
with the Poor need to be given continuity. These programmes can be implemented
through development banks; however, only these institutions with limited resource
base can not meet the demand for credit to the rural and lower class of the country.
Due to the limited scope of financial resource and service, the Agriculture
Development Bank and rural development banks can not meet the demand for credit
to the entire rural and backward areas. And, on the other, with the concentration of
commercial banks having abundance resource and strong capital base to urban and
developed areas, it is certain that financial resources of the country will not be
properly distributed. Therefore, unless these is an alternative institutional
arrangement for providing financial service in the rural areas, it does not appear to be
appropriate for commercial banks to escape from their responsibility of directed
credit programme.
Among the complaints of investors in Nepal, high interest rate is the one. The rate of
interest charged on loan by financial institutions in Nepal is also high as compared to
the level of interest rate in the international market and even in many countries of
South Asia. There are some reasons for this situation. (1) In the context of high rate
of inflation while providing interest to depositors in parallel with even the rate of
price rise, the prevailing interest rate on deposit remains high. (2) Due to the weak
financial management system, high compulsory cash reserve ratio, growing
proportion of bad debts and unnecessary expansion of organisation, operating cost of
banks is high. (3) Due to the prevailing high interest rate on deposits and high
operating cost, interest rate on credit is also high. As a result, industrial ventures
utilising the bank credit have been unable to produce output at low cost. Unless such

117
a situation is improved, Nepal's export competitiveness can not be strengthened and
the pace of industrialisation can not be expedited.
While talking about the improvement in the interest rate structure, two aspects come
to appear: (a) To reduce the level of prevailing interest rate gradually to international
level and (b) To reduce spread between the interest rates on deposits and credit. In
order to attain the first purpose, the rate of inflation has to be reduced and the
exchange rate has to be kept stable. Price and exchange rate stability can be attained
only through macroeconomic stability. In this regard, monetary policy has to play a
supportive role. Although commercial banks can mainly undertake measures such as
organisational reforms of banks, maximum utilisation of resources and increase in
non-cash reserve transactions to reduce the spread between interest rates on deposit
and credit, Nepal Rastra Bank can contribute to this end through reducing the
compulsory cash reserve ratio. Such a spread has remained high as a result of keeping
idle a large chunk of resources of commercial banks in the form of compulsory cash
reserve ratio.
When the balance of payments situation of the country appears to be favourable, it is
essential that the reserve ratio has to be reduced to a low level with an aim to increase
returns on the resources of commercial banks. Over the years, direct and indirect
limits to bank credit were fixed; and the Government used to borrow a major portion
of the resources within these limits to finance budget deficit. As a result, it had shrunk
the possibility of the private sector for utilising credit from the banking sector.
While considering the argument that private sector can be more efficient for
economic activity than government sector, it can be concluded that resources of the
financial sector in the past have been channelised more to the inefficient sector than
to the efficient sector. In addition to the government, public enterprises have also
utilised a large amount of bank credit; as a result, resource flow to the private sector
is crowded out, and the economic activity of the private sector has happened to be
handicapped. In forthcoming years, it seems that monetary policy needs to be vigilant
if such a situation is not allowed to create.
4. Long -term Concept
In order to make economic growth rate sustainable, internal and external stability of
the economy requires to be maintained. Internal stability can be attained by allowing
to create a favourable situation in price and interest rate whereas external stability can
be achieved by keeping foreign exchange rate at a desired level. To meet these ends,
monetary policy has to play a conspicuous role. Particularly, the monetary sector can
contribute to attain macroeconomic stability by not allowing to create excessive
demand while maintaining the expansion of money supply consistent with the level of
economic growth rate, the expected rate of inflation and the requirement of
monetisation of the economy. In addition, there still exists the situation in the country
that the resources mobilised by the monetary sector have to play a substantial role in
economic growth rate and poverty alleviation as well. In this context, the long-term
target of monetary policy will be to attain macro-economic stability and to channelise
savings mobilised in the financial sector towards productive sector and poverty
alleviation programme. In order for monetary policy to reach this target, it is essential
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to develop the central bank as an autonomous institution and to control the tendency
of HMG to take unlimited overdraft loan from Nepal Rastra Bank. Therefore, HMG
must reach in a position that it shall not utilise any overdraft loan from the central
bank for the implementation of independent and effective monetary policy. While
pursuing the fiscal policy of the country, it is necessary to take into account such a
target of monetary policy.
In the liberal financial system, the role of central bank as a guardian of financial
system comes to be more significant. The recent experience of Southeast Asian
countries has shown that in the case of weak monitoring and supervision, financial
crisis is likely to occur immediately. Taking this fact into consideration, it is essential
to make financial system healthy and strong while enhancing the monitoring and
supervising capacity of the central bank in coming days.

5. Ninth Plan:
Monetary Policy
Objective
While the unlimited flow of bank credit creates a hindrance to the attempt to secure
stability in the price and the balance of payments situation, the control of credit flow
from the banking sector to the private sector becomes a hurdle to the endeavor of
achieving high economic growth rate. In this background, the objectives of monetary
policy in the Ninth Plan shall be as follows:
• In order to secure economic stability, the growth rate of money supply will be
maintained in line with the economic growth rate and the target of price and the
balance payments surplus. Naturally, this target can be met through either tight
monetary policy or minimum growth rate of money supply.
• The growth rate of credit flow should be limited to the extent of the limited of
growth in money supply. However, adequate amount of credit flow to the private
sector is needed for attaining high economic growth rate. Keeping money supply
at a desired limit, more and more credit flow can also be channelised to the
private sector. For that matter, it is necessary that HMG should not use overdraft
loan from the banking sector and public enterprises should be oriented towards
self-reliance. Therefore, by pursuing the policy of providing no overdraft loan
facility to the government sector, an attempt will be made towards flowing
resources from the banking sector to the private sector.
• The tendency of Agriculture Development Bank, Nepal Industrial Development
Corporation, Financial Companies, Rural Development Rank and Commercial
Banks to take assistance from Nepal Rastra Bank for avoiding their financial
resource crisis will be gradually reduced. Keeping the monetary expansion at a
desired level, adequate bank credit to the private sector will be provided so as to
contribute to economic development.

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Policy, Implementation Strategy and Programme
Monetary policy is the main instrument for economic stability. Therefore, it is
indisputable that the main objective of monetary policy in coming days should be the
attainment of economic stability. However, formulating the monetary policy for
attaining economic stability without constraining endeavors to economic
development is a challenge for the future. If the government sector does not utilise
bank credit at a large amount, then the limited financial resources will be diverted to
the private sector and thereby a situation is created to attain the economic growth rate.
On the other hand, bank credit can be provided to the backward class, areas and
family only by directing some part of the credit flow to the private sector. For this
purpose, the monetary policy will be focused to flow the major portion of the bank
credit in the Ninth Plan to the private sector and a certain part of that credit flow to
the access of target class, area and family.
Projection of Monetary Situation
During the Ninth Plan period, while estimating GDP growth rate to be increased by
6.0 percent, growth rate of price by 6.5 percent and rate of monetisation by 0.5
percent, it is estimated that the demand for narrow money will be increased by an
average of 13 percent and the demand for broad money by an average of 14.8 percent.
The monetary policy will be focused on maintaining this desired growth rate of
money supply. In order to keep narrow money supply at a rate of 13 percent, it is
estimated that net foreign assets will be increased by an average of 9.1 percent and
total internal borrowings by an average of 16.1 percent. In the case of government
sector borrowings out of total internal borrowings, it is estimated that HMG will not
utilise net borrowings from the banking sector by the end of the Ninth Plan period. It
is estimated that credit flow to public enterprises will be increased by an average of
less than 21.5 percent. However, private sector loan is estimated to increase by 20
percent. The credit flow to the private sector in the Eighth Plan increased by an
average of 27.8 percent. With the expansion of development banks and financial
companies in the Ninth Plan, it is estimated that some of the demand for private
sector credit will be fulfilled by non-banking financial institutions. The growth rate of
credit flow from commercial banks to the private sector is projected to remain only at
20 percent.
Although the current account deficit in the external sector of the country will persist
during the Ninth Plan period, it is estimated that the balance of payments will
generate surplus due to the surplus in the capital account. Particularly, due to huge
amount of crowding-in government and private investment for large hydropower
project, it is estimated that there will be capital account surplus, which will make a
positive impact on the entire balance of payments situation. Thus, as the balance of
payments surplus is projected to be an average rate of Rs 4400 million per annum, the
net foreign assets of the banking sector is estimated to increase by the same amount.
In case the increase in net foreign assets occurs more than the estimated amount and
thereby exerts pressure on the monetary expansion, liquidity thus generated will be
absorbed through open market operation in order to avoid that pressure.

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During the Ninth Plan period government deficit is expected to control for macro-
economic stability. When government budget is controlled in this manner, the
government does not have to utilise net borrowings from the banking sector. Thus, it
is expected that government finance situation will not make an expansionary impact
on the monetary sector and the monetary policy will be effectively implemented.

Table 1
Projection of Monetary Situation in the Ninth Plan
(Rs in million)
Final
Year Ninth Plan
of Eighth
Plan
1996/97* 1997/98 1998/99 1999/00 2000/01 2001/02
1. Net Foreign Assets 40191 43691 47691 52191 57191 62191
2. Total Domestic 100144 116501 135188 156748 1181827 211203
Demand
(a) Government 29230 31230 32730 33730 34230 34230
(b) Public 3383 4233 5213 6323 7563 8933
Enterprises
Financial 1786 2086 2466 2926 3466 4086
Non -financial 1597 2147 2747 3397 4097 4847
(c) Private Sector 67532 81038 97246 116695 140034 168041
3. Demand Deposits 65263 75614 87587 101434 117445 135955
4. Net Other Claims 36613 41118 46183 52011 58864 66579
5. Narrow Money 38460 43460 49110 55494 62709 70861
Supply, M1
6. Broad Money 103723 119074 136697 156928 180153 206816
Supply, M2
* Preliminary
Although monetary expansion will remain at a desired limit, as HMG will not use
additional borrowings from the banking sector, it seems that the private sector credit
will be increased by an annual average rate of 20 percent. This growth rate is
estimated to be able to meet the demand for bank credit required for the targeted
economic growth rate of the Ninth Plan. In the Ninth Plan, credit flow to public
enterprises is estimated to increase by an average rate of 21.5 percent. As public
enterprises will be gradually privatised and corporations remaining in the government
sector will also run in a business-like manner, it is estimated that non-financial
corporations will not utilise excessive credit from the banking sector.
Policy and Programme Relating to Banking, Credit and Other Financial Institutions:
The liberal and market oriented financial policy adopted for promoting competitive
capability of national economy will be further expanded with more activation. It is
believed that this will promote financial deepening, increase private sector
participation in the economic sector through the availability of financial resources and
contribute to the maximum utilisation of available resources. Since it will not be

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adequate to meet the increasing demand for capital for growing private sector
activities only through domestic savings mobilisation, financial institutions will be
encouraged to mobilise external capital as well. In this regard, through the promotion
of efficiency and capability of existing banking and financial institutions, the
establishment of new financial institutions and the arrangement of new financial
instruments and products, financial resources will be mobilised in a way to achieve
high economic growth rate as targeted by the Plan.
In the liberal financial system, financial institutions naturally concentrate in the urban
areas and in modern activities. However, the majority of population in Nepal engages
in traditional activities and lives in the rural areas. 42 percent of the total population
still fall below the poverty line. Out of these poor, majority live in rural areas. Since
the banking sector and other financial institutions established so far have not been
able to provide their services adequately in the agriculture and rural sector,
agricultural and rural sectors have been marginalised from the benefit of liberal
financial system. Moreover, the situation of women in the rural areas is still
miserable. In this context, the role of banking and other financial institutions has to be
extended effectively to the development of agricultural and rural areas and, in
particular, to the socio-economic upliftment of deprived women. Taking this fact into
consideration, policies and programmes of the Ninth Plan relating to credit and
financial institutions have been concentrated to this direction.
Policy
• An open entry policy will be adopted to maintain financial development and
stability and, making banking and other financial institutions competitive, healthy
and strong, national and international credit of these institutions will be enhanced.
• The government ownership that exists in commercial banks, development banks
and other financial institutions will be gradually transferred to the private sector.
• In order to increase additional and new opportunities of productive employment
for growing population, the provision to invest compulsorily in the productive
sector by commercial ban ks will be gradually increased. At the same time,
definition of productive sector will also be refined.
• For the fulfilment of the credit need of the priority sector, specialised institutions
in joint venture with commercial banks will be encouraged to establish and
expand. Until these institutions do not operate effectively, the provision of
compulsory investment in the priority sector by commercial banks will be
maintained.
• The present level of credit flow to the deprived class by commercial banks will be
gradually promoted.
• In order to ensure an effective implementation of Agriculture Perspective Plan,
the managerial efficiency and the flow of financial resources of the Agriculture
Development Bank and other financial institutions investing in agricultural sector
will be enhanced.

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• Increasing the efficiency of Nepal Industrial Development Corporation and
Agriculture Development Bank for long-term industrial and agricultural
development, the establishment of new development banks of various objective
and nature will be given priority.
• Capital mobilisation from international financial market will be encouraged for
the promotion of investment in national priority sector.
• An offshore financial intermediation centre will be developed in Nepal in order to
increase international capital inflows.
• New institutional arrangement will be made to extend widely the number of
financial intermediaries for providing micro-credit at the local level with a view
to increase income and employment opportunities for the majority of low income
people and create condition for equitable economic development.
• The financial institutions will be expanded and instruments for savings will be
diversified in order to enhance domestic savings mobilisation through financial
institutions.
Programme
• To increase the flow of institutional micro-credit for the socio-economic
upliftment of deprived class including women of the rural areas, services of rural
development banks, Small Farmer Development Programme, micro-credit project
for women and non-government organisations established with similar objective
will be extended in a sustainable and effective manner.
• While providing small loans directly from commercial banks and development
banks to farmers, entrepreneurs, businessmen of low income level and the
deprived class increases the operation cost of banks, local financial intermediaries
/ alternatives of organised or unorganised sector capable of flowing credit at low
cost will be identified and the wholesale banking loan will be provided to the
capable intermediary / alternative by commercial and development banks.
• The timely change and amendment of existing Act, rules and regulations relating
to operation and establishment of banking and financial institutions will be
initiated to make them of int ernational standard. A necessary legal arrangement
will be made for non-government organisations / institutions and other agencies
in the organised or unorganised sector to make them capable of doing financial
intermediation.
• In order to strengthen financial position and extend investment capacity of
commercial banks, development banks and financial companies, their core capital
base will be increased continuously.
• In order to develop an offshore financial intermediation centre in Nepal,
necessary institutional development and related Act and laws will be formulated.

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• The legal provisions like Debt Recovery Act will be formulated and enacted with
a view to make the debt recovery system effective and maintain efficiency of
financial position of the banking sec tor.
• An arrangement of necessary legal provisions related to new entry of financial
institutions, merger and take-over of existing banks and financial institutions will
be made and a take-over code will be formulated.
• Since there is a need to increase the project monitoring and evaluation capability
in order to improve the quality of project loan flowed by banks and financial
institutions, programmes for appropriate institutional arrangement in addition to
manpower development will be formulated and implemented. Arrangement of
consortium credit will be strengthened and the increase in such credit flows will
be encouraged through the medium of external resource.
• To evaluate the transactions of commercial banks, prevailing supervision
procedure at an international level will be adopted and arrangement will be made
to keep accounting system on the basis of international standard.
• An institutional arrangement of credit rating for debt instruments will be made.
• An arrangement will be made to disclose publicly the information on the
transactions of banks and financial institutions in a way to be transparent.
• Additional financial resources will be made available through the banking sector
in order to promote the production, processing and exports of prescribed export-
oriented commodities.
• Additional financial resources will be made available for increasing employment
and income level of the families living below the absolute poverty line by
extending rural development banking facilities in the hill areas as well.
• Necessary arrangement will be made to make rural banks operate gradually
through the ownership and participation of targeted group.
• The inspection and supervision system of banks and financial institutions will be
strengthened.
• Necessary legal provision will be made to promote the autonomy of the central
bank, other banks and financial institutions.
• The government ownership that exists in Rastriya Banijya Bank, Nepal Bank
Limited, Nepal Industrial Development Corporation and other financial
institutions will be gradually transferred to the private sector.
• Commercial banks under the present arrangement have to channelise
compulsorily a 40 percent of their total credit to the productive sector. This
proportion will be gradually extended to 55 percent during the Plan period, which
will contribute to increase the flow of financial resources in the areas such as
agriculture, industry and international trade.

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• In order to fulfil the growing credit need of the priority sector, specialised
autonomous institutions will be encouraged to establish. Until such specialised
institutions become effective, the present provision that commercial banks have
to invest compulsorily in the priority areas will be maintained. Credit flow to the
priority areas that include micro-energy and alternative micro-energy production,
electricity for minimising environmental pollution, gas -operating means of
transportation, rural communication service and export-oriented agricultural
production and processing (Orthodox tea, silk, fruits, mushroom, medicinal herbs,
cut-flower, tissue culture, etc.) will be encouraged. The present provision of 3
percent credit flow from commercial banks to the deprived class will be
maintained. For this purpose, the amount of credit flow to the deprived class
through commercial banks themselves and financial intermediaries in the
organised / unorganised sectors authorised by rural development banks and Nepal
Rastra Bank will be all taken into account..
• Credit programmes implemented through organised, government and non-
government institutions for rural sector credit will be conducted in a more
effective and co-ordinated manner. For that matter, Nepal Rastra Bank will play
the role of co-ordinator in co-operation with HMG.
• An institutional arrangement for productive credit programme will be made to
mobilise a large number of youth communities in the mainstream of development
and solve the problem of growing youth unemployment in the country. For this
arrangement, a national level financial institution will be encouraged to establish
under Development Bank Act 1995. Through this institution, business loan based
on skill and education will be provided for helping to create self-employment
opportunities to unemployed youths.
• The rural banking practice adopted at present in the rural area in Nepal has
appeared to be effective. This practice will be refined and extended to all districts
in terai and to potential rural areas in hilly and Himalayan regions. Non-
government organisations and other development banks being operated under this
practice will be mobilised in a co-ordinated manner. Under this system, a total of
Rs 2500 million micro-credits will be channelised to approximately 250 thousand
deprived rural women for enabling them to operate micro enterprises.
• Since there is no financial viability to operate Far Western Rural Development
Bank and Mid Western Rural Development Bank separately, both banks will be
amalgamated.
• An emphasis will be given to the implementation of priorities set out in the
Agriculture Perspective Plan. A minimum of Rs 25000 million credits will be
flow through organised institutional sources under agriculture loan programme
during the Plan period for food and cash crop production, irrigation, livestock,
energy development programme in the agriculture sector and the
commercialisation of the agriculture sector.
• In order to promote credit flow in the industrial sector, financial and managerial
aspects of Nepal Industrial Development Corporation will be strengthened.
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 During the Plan period, permission will be granted to the Corporation to mobilise
capital from internal and external markets in order to work as a lead bank for
operating large scale projects of energy, tourism, transport, communication,
health and the like in the private sector. Similarly, the large part of resources of
commercial banks and financial companies will be encouraged to channelise
towards industrial sector. On the whole, approximately Rs 25000 million credit
will be invested in the industrial sector through the financial system.
• In order to fulfil the growing need of development for the country, private sector
will be encouraged to establish and develop specialised banks with varied
objective and nature, particularly for developing cottage and small industry,
tourism, energy, education, health, employment, rural development, etc. Such
banks will be encouraged to establish at the regional level with a view to
contribute to regional balance.
• Permission will be granted to banks and financial institutions to issue bonds and
debentures from external financial market as well, in order to mobilise capital for
the establishment, development and expansion of infrastructures, such as energy
and communications, and medium and large scale industrial projects.
• Foreign exchange system will be gradually made liberal and Nepalese currency
will be gradually made convertible in the capital account as well.
• In order to accommodate new policy arrangements made in the area of foreign
exchange, necessary amendments and changes in Foreign Exchange Act will be
made.
• In order to provide an access to credit for the growing foreign trade of the
country, an export-import bank (EXIM bank) will be established.
Price:
The first blow of price rise falls on the fixed income and vulnerable group of society,
which, in turn, increases the intensity of poverty. Monetary policy should be
formulated in line with the objective of avoiding the adverse effect of price rise on the
living standards of all Nepalese people while maintaining an equilibrium between the
demand for and the supply of goods and services; protecting the interest of producers,
investors and consumers; and attaining economic stability by keeping the price level
at a desired limit.
The analysis of the past statistics shows that both internal and external factors have
put pressures on the price situation in Nepal. In addition to external factors such as
the effect of international price rise and in particular the direct or indirect impact of
price increase in India and the devaluation of Nepalese rupee, internal factors such as
money supply, government budget deficit and supply situation tend to exert a
pressure on price. Therefore, macroeconomic policy has to be adopted without having
a pressure on price due to such internal factors. It is appropriate to aim at keeping
inflation at a desired limit, particularly through the implementation of government
fiscal balance and tight monetary policy.

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Price Situation in the Eighth Plan
In the Eighth Plan, price policy was formulated for not allowing price at an annual
average rate of more than 9 percent. While studying the national consumer price
index in the urban areas, the rate of price increase during the Eighth Plan seems to
have remained within the targeted limit. During the Plan period, a minimum of 7.6
percent and a maximum of 8.9 percent price increase have been recorded and the rate
of price increase has stood at an average of 9 percent during the Plan period. Out of
this, food and beverages and non-food and service sector have registered the price rise
at an average rate of 7.9 percent and 8.9 percent respectively. It is realised that
following the economic reform measures in line with the liberal economic policy
adopted by the country, a balance in the fiscal and monetary sector has been
maintained and, consequently, a positive impact on the price situation has begun to
appear. In the improvement of the rate of price rise, HMG's open import policy,
reduction in custom duties, tight monetary policy, consolidation of supply
management, improvement of price situation in India, etc. constitutes the main
factors.
Policy
On the one hand, price policy should be able to contribute to the efficient allocation
of factors of production and, on the other, it should be directed towards protecting the
interest of consumers. Factors of production, such as labour, capital and
entreprenuership, can be made active through the use of price policy in order to attain
efficiency in production, exchange and distribution. Similarly, in the context of
poverty alleviation set forth as the main target of the Ninth Plan, it should be able to
reduce the tendency to increase the intensity of poverty through price control. To this
end, price rise in the Ninth Plan has been set a target to maintain an average rate of
6.5 percent. In order to meet this target, price policies in the Plan are as follows:
• Generally, commodity prices are allowed to be determined in accordance with the
market principle. Since the price of a particular commodity is influenced by the
production and supply situation of that commodity in relation to its demand, first
of all, price policies will be directed towards increasing the production of such
essential and consumable commodities.
• Private sector will be highly encouraged to strengthen supply arrangement by
increasing production through price signal.
• In the attempt to increase the supply of essential commodities by increasing the
production and productivity of agricultural outputs, pocket-farming practice will
be promoted only after considering the geographical reality region-wise. The
transportation subsidy granted for transporting food grains to the food deficit
districts will be gradually reduced. A special attempt will be made for the
development of food crops in such districts.
• The timely projection of demand for inadequate or short-supply essential
commodities will be conducted and their import will be encouraged from the
countries exporting quality goods at low price.

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• In order to ensure a smooth supply of essential commodities, a distribution
system of such commodities at fair price through existing corporations and co-
operatives will be commenced.
• A high priority will be given to maintain the level of, and increase the capacity
of, minimum buffer stocks of essential commodities such as food and petroleum
products, in order to control the situation of shortages arising out of natural
disaster or excessive demand for such items in the country.
• In order to create an enabling environment for the price of chemical fertilizer to
be determined in accordance with the demand and supply principle of market, the
system of granting subsidy to farmers for chemical fertilizer will be gradually
reduced.
• In order to protect the interest of consumers and develop awareness among them,
Consumer Protection Act will be enforced and essential information pertaining to
it will be disseminated through the various means of communications.
• Farmers will be encouraged through adopting a policy of minimum support price
of agricultural products, such as paddy, rice, sugarcane, etc., in an appropriate
time.
• It is most essential to study the real cost and selling price of essential
commodities produced in and imported to the country in order to ensure their real
price. Therefore, an arrangement will be made to constitute at unit at the
government level for conducting price subsidy and monitoring of such
commodities.
• A contribution will be made to supply system by establishing and expanding
whole sale markets in various feasible areas of the country.
• Exportation of food will be made open.
• In order to assist in monitoring wholesale price of production and consumption
goods, a wholesale price index will be prepared and gradually published.
• Since monetary expansion does have a negative effect on the price situation,
money supply will be kept within a desired limit by adopting tight monetary
policy. The expansion of money supply will be brought under control whereas
government budget deficit will not be allowed increase beyond a certain limit.
While formulating taxation policy, its likely impact on price will be taken into
account.
• The corporations running under government subsidy will follow the business
principle while setting the selling price of their commodities. However, a policy
of price control through reducing the costs of production and transportation of
corporations will be pursued.

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 5.4 Foreign Exchange and Balance of Payments

1. Background
Since the late 1980s and particularly the early 1990s, the concept of economic
liberalisation and privatisation gained a rapid momentum worldwide and it more or
less made an impact on both the planned and the market economy. Realising the need
to integrate gradually into the wave of globalisation while adjusting and transforming
national economic policies in line with the changed context of global economic
system, economic policies since the Seventh Plan were adjusted and changed
accordingly with a view to taking the maximum benefit from liberalised global
market, which could take a full pace only in the Eighth Plan. In this context, export-
oriented industrial and commercial policies during the Eighth Plan period were
basically formulated while investment and One Window policies supportive of
foreign investment as well as financial and hydropower policies favouring private
investment were formulated and implement ed. In an attempt to gradually make the
economy liberal, integrated and competitive with the external sector, open import,
current account convertibility, and market-based foreign exchange rate system are
some of the far -reaching steps of the Eighth Plan.
With the adjustment and the reform of such policies and arrangements conducive to
the external sector, the volume of foreign trade has tremendously expanded and such
a comparative openness of the economy has helped to integrate into the external
economic world. As a result, a congenial environment has been created for foreign
investment. As the external sector of the economy becomes open in the current
account, it also helps to build necessary infrastructures for capital account
convertibility in future. Similarly, it has become strongly likely that the entire
economy can ultimately benefit from the comparative advantage as limited resources
are highly utilised and channelised towards the sector with a high return.
Over the last few years, the concept of foreign aid has undergone a change in the
world. At present, the concept of 'trade, not aid' is becoming stronger. This will bring
about a transformation in the structure of foreign capital in forthcoming days. This
strongly activates the need for extending further an access to broad international
market for goods and services by attaining comparative advantage through the
maximum utilisation of internal resources caused by the use of foreign capital and
technology. The South-East Asian crisis in recent days has alerted the country
towards balanced and regulated liberalisation., While considering the fact that
external sector instability and fluctuations can have multifarious contagion effects on
the economy as well, a policy-level institutional preparation seems to be continuously
made in order to strengthen the external sector by attaining the balance of payments
surplus, to protect realised achievements and to reap the maximum benefit from the
liberalisation of external sector in forthcoming days.

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2. Review of the Eighth Plan
Foreign Exchange
Although the open and liberal system in the foreign exchange sector was begun in the
final year of the Seventh Plan, the process of exchange rate determination shifted
from the controlled system to a system based on market forces (demand and supply)
only during the Eighth Plan. Earlier, the selling price of convertible foreign
currencies tended to determine by the market. However, due to the arrangement of
selling some prescribed fixed proportion of foreign currencies to Nepal Rastra Bank
at the rate determined by the Bank, such a composite buying rate could not have
completely reflected the interaction of market forces. Such a system of exchange rate
determination was implemented under the policy of partial convertibility of Nepalese
currency.
Ever since the implementation of partial convertibility policy, a commitment had
already been expressed that such a policy would be adopted only for the short term
and, after some time, it would take the form of current account convertibility policy.
Consequently, full convertibility of Nepalese rupee in the current account was made
only after having reformed various policy measures already implemented under the
partial convertibility during the Eighth Plan period. Under such a policy, an
arrangement was made to buy foreign currencies required for business activities of
the private sector as well as for the amortisation of external debt by the Government
and the import of petroleum products and chemical fertilizers at the open market
exchange rate. In this process, Nepal had expressed a commitment to meet the
obligation under section 8 of International Monetary fund.
Once the system with the selling price of the convertible foreign currencies based on
open market implemented, remarkable reform measures were undertaken in trade
(import). As a result, except for a few prescribed goods, all other commodities were
brought under Open General License system and the auction system was
implemented in the very limited sector. Following the inception of a system of
determining not only selling price but also the buying rate of convertible foreign
currencies by market forces (termination of partial convertibility and implementation
of the policy of full convertibility in the current account), such limited commodities
were placed under the OGL system. Moreover, the auction system was eliminated
during the Eighth Plan period. Thus, under this policy, except for a few prescribed
commodities, a policy arrangement was made for providing foreign currenc y for
importing all other goods at any desired quantity.
In addition to foreign currency required for commercial sector (import), remarkable
reforms on the arrangement of foreign currency required in the service sector for
various purposes were made during the Eighth Plan period. Under this policy, the
amount of foreign currency provided for private visit was increased and the exchange
facility of foreign currencies required for varied purposes could be obtained directly
from commercial banks.
During the Eighth Plan period, foreign exchange earners in the export and tourism
sector were provided with a facility to open account in foreign currency and allowed

130
to deposit cent percent of their foreign exchange earnings at any commercial bank
situated in Nepal. An arrangement was also made for depositors to be able to spend
for various purposes from the account thus opened in foreign currency. With this
arrangement, the agencies earning foreign currencies from export and tourism sector
obtained a new alternative to use their earnings. The forced situation of selling excess
foreign currency at a low rate when it is not needed and of buying the foreign
currency at a high selling price in moment of need was, to some extent, abolished.
The balance of trade between Nepal and India has always been unfavourable to
Nepal. Although Nepal/India's overall balance of payments situation tends to remain
in favour of Nepal due to the income earned in Indian currency from service and
other sectors, it has also become deficit for several years. Since the unfavourable
balance of payments had exerted a pressure on the reserves of Indian rupees remained
in the banking sector, such a deficit in the past had been fulfilled by buying Indian
rupees from the sale of convertible foreign currency. For this purpose, US dollar
worth of Rs 220 million were sold for buying Indian rupees during the Seventh Plan
period alone. Considering this reality, a policy was adopted during the Eighth Plan in
order to allow importing some prescribed products pay able in convertible currency.
Due to the prevailing Indian export policy, this arrangement was implemented as
Nepal received additional benefits from such an arrangement. The prevailing Indian
policy stated that if an exporter exported his goods payable in convertible foreign
currency, s/he would receive an exemption from excise duty/sales tax/income tax, etc.
to be paid on such commodities. Such a policy offered Nepali-importers goods at
cheaper price while the economy carried the burden of foreign currency expenditures
only at lesser amount. The policy of importing Indian goods payable in convertible
foreign currency affected the structure of foreign exchange reserve of the country,
brought a deterioration in the proportion of convertible currency and thereby
maintained the possibility of the likely increase in the proportion of non-convertible
currencies. Consequently, a policy was undertaken to include only machinery and raw
materials to be imported by industries in the list of goods to be imported in this way.
Foreign Trade
The policy reforms made in the direction of gradually integrating the Nepalese
economy into the global economic system while encouraging foreign trade and
investment remained promising during the Eighth Plan period. Particularly in this
period, appropriate commercial policies formulated and the policy to make trade
production- and export-oriented adopted. With this arrangement, except for few
commodities that were sensitive from the viewpoint of public security and health, the
import of all other commodities made open and the adjustments in the import tariff
structure made accordingly. In the context of growing foreign trade, while
considering the benefits to be obtained from broad and liberal world market, Nepal
participated as an obs erver in World Trade Conference in Maracas (Morocco) in
1994. The Conference was held with an objective of transforming the decisions of the
Eighth round (Uruguay Round) of General Agreement in Tariffs and Trade
negotiations. It has already been decided that Nepal take the membership of World
Trade Organisation that came into existence since January 1995 and, for that matter,

131
in addition to preparation, a commitment has also been expressed to gradually make
adjustments in necessary aspects.
In accordance with the policy of making import trade more production- and export-
oriented, an arrangement was made in this period in order to be able to import some
industrial machinery and raw materials from India in convertible currency in addition
to Indian currency. In the context of close traditional economic relationship with
India and the need for transforming huge and liberalised Indian market into the great
possibility of export expansion, a new trade and transit treaty with India was
concluded. As a result, the past arrangement of the composite proportion of labour
and commodity content was completely abolished in the export trade with India. With
this arrangement, in addition to primary commodities produced in Nepal, semi-
finished and finished goods can also enter into Indian market without any duties and
quantitative restriction, and the number of commodities remained in the negative list
in the past is limited only to three. Export trade and industries producing export-
oriented goods were made tax-free. Bonded warehouse, back-to-back letter of credit
and exchange facility of export earnings was arranged. An arrangement of using some
part of export earnings for the import of raw materials was made; and up to Rs one
million loan flow to the export sector was taken as the priority sector loan and interest
was charged thereupon accordingly. Thus, an additional supportive policy was
adopted in this direction through such banking and credit policies as well.
In line with the policy of attracting more capital and technology at the global level
and channelising investment towards industrial, trade, financial and basic
infrastructure sectors, foreign investment and One Window policy and accordingly
Foreign Investment and Technology Transfer Act have already been formulated and
enforced during the plan period. In addition to this, preliminary process has already
been started in this period in order to attract foreign capital through capital market.
During this period, appropriate water resource policy has been formulated and
particularly in the hydropower sector an avenue for private sector foreign investment
has been made open. For the purpose of institutionalising foreign employment by
making it rule-driven and systematic Foreign Employment Act has been formulated
and enacted in this period. With the objective of achieving sustainable economic
growth rate by strengthening and adjusting various aspects of the economy, the
Extended Structural Adjustment Programme (ESAP) of the International Monetary
Fund has been started to implement; it has made a favourable impact on the balance
of external sector of the country.
During the Eighth Plan period, total foreign trade of the country at current prices has
been increased by an annual average of 21 percent. However, at the exchange rate of
FY 1991/92 the annual average growth rate of total foreign trade during the Plan
period has remained at 16.5 percent. The share of foreign trade at current prices with
India during the Plan period has increased annually by 19.77 percent and the share of
foreign trade with third countries has gone up annually by 21.7 percent on an average.
While total foreign trade in FY 1991/92 has stood at Rs 45646.5 million, its level at
the exchange rate of FY1991/92 has reached more than doubled or to an equivalent of
Rs 97524.9 million by the final year of the Plan period. In the fiscal year 1991/92, the
composition of total foreign trade with India and third countries has stood at 27.8
132
percent and 72.2 percent respectively. However, the composition at the fixed
exchange rate in the final year of the Plan period has remained at 33.0 percent and
67.0 percent, respectively.
During the Eighth Plan period, the total export at current prices has increased only by
an annual average of 11.4 percent. It has stood at 8.4 percent of gross domestic
product at factor cost in the final year of the Plan period, which is lower than that of
9.5 percent of FY 1991/92. However, at the exchange rate of 1991/92, total export
growth rate on average has remained only at 6.4 percent. Of this, export to India at
current prices has increased by an annual average of 30.31 percent and export to third
countries only by 6.8 percent on average. In the final year of the Plan period, the level
of total export at fixed exchange rate has remained at Rs 18365.5 million, which
becomes approximately 1.3 times higher than the total export (Rs 13706.5) of FY
1991/92. In the fiscal year 1991/92, export to India has tended to be about 10.6
percent of total export. This share in the final year of the Plan period has increased
almost three times, reaching to 30.6 percent of total export during this period, in
addition to traditional primary and semi-finished goods, the process of some finished
goods exporting to India has also begun. Although main exportable commodities such
as woolen carpet suffered from the reasons like quality standards, child labour,
exchange rate and economic recession, the export of ready garments remained
encouraging during the Plan period.
Total import at current prices, which was increased by an annual average of 24.0
percent during the Plan period, has reached to Rs 96005.6 million in the final year of
the Plan, which stood at about 35.8 percent of gross domestic product at factor cost of
that year. In the fiscal year 1991/92, such a ratio was 22 percent. The level of total
import at the exchange rate of 1991/92 was increased by an annual average of about
20 percent during the Plan period. However, it has stood at Rs 79149.4 million at the
final year of the Plan, which becomes 2.5 times as compared to total imports of the
fiscal year 1991/92. During this period, import from India at constant prices has
increased annually by 9.08 percent and import from third countries rose by an
average of 17.91 percent. In the fiscal year 1991/92, the share of import from India in
total import has remained at 35.2 percent whereas, in the final year of the Plan, it has
declined to 33.7 percent, approximately. During the final two years of the Plan
period, import of gold suddenly rose, which also affected the normal pace of total
import.
During the Plan period, total trade deficit at current prices has increased by an annual
average of 32.16 percent whereas its level as a proportion of gross domestic product
has reached to 27.4 percent at the final year of the Plan as compared to 12.6 percent
of 1991/92. Total trade deficit at the fixed exchange rate has increased by an annual
average of 27.8 percent and at the final year of the Plan period, its level as compared
to the fiscal year 1991/92 has gone up 3.3 times and reached to Rs 60739.9 million.
During this period, the trade deficit with India has increased by an annual average of
17.2 percent and the trade deficit with third countries by that of 38.3 percent. India's
share in the total trade deficit in the fiscal year 1991/92 accounts for 53.7 percent
while this share has decreased to 34.6 percent in the final year of the Plan. Similarly,
the ratio between total export and total import at the fixed exchange rate has remained
133
at 23.2 percent at the final year of the Plan. This ratio stood at 42.9 percent in the year
prior to the beginning of the Plan. Thus, the decline of export in sustaining the
importing capacity is a sign of being unable to realise trade performance in line with
the goal of trade liberalisation. During the Plan period, export has not been able to
take the expected pace of growth due to the fact that export was confined only to
limited product and market; abundance of exportables could not be created; and
export-oriented industrialisation could not be adopted.
Balance of Payments Situation
The current account deficit remained at about 7.0 percent of gross domestic product
in the fiscal year 1991/92. However, no improvement could be seen on the current
account deficit during the Plan period, as the growing trade deficit could not be
sustained by the net income earned from services and transfers. In the final year of
the Plan, the current account deficit at current prices has reached to 7.1 percent of
gross domestic product. Since the service income from tourism and investment during
this period, has increased by an annual average of 9.4 and 8.0 percent respectively,
total service income has registered an annual increase of 32.6 percent and net income
has increased annually by 68.1 percent, respectively. Whereas such incomes in FY
1991/92 have covered 21.3 percent of total trade deficit, it has reached to 49.3 percent
at the final year 1996/97 of the Plan. During this period, service payment has
increased by an annual average of 11.94 percent. At the final year of the Plan, service
payment has reached to almost 26.0 percent of total service income. Since private
remittances have increased annually by 19.29 percent and foreign grants by 41.97
percent, total transfer income has recorded a growth of 29.49 percent. While the
annual growth rate of payments under transfer has remained at 44.14 percent (8.1
percent of total transfer income), net transfer income has registered an average
growth of 28.64 percent, which has covered 19.7 percent of the total trade deficit as
compared to 23.5 percent in FY 1991/92. Finally, current account deficit at the fixed
exchange rate has increased annually by 17.8 percent during the Plan period. Under
capital account, the inflow of foreign loans has increased annually by 5.22 percent
only and amortisation of principal by 15.48 percent. But, the inflow of net foreign
capital has increased only by 2.75 percent and this level at the fixed exchange rate in
the final year of the Plan period is lower by 14.3 percent than that of the base year.
However, since net miscellaneous capital including direct foreign investment in this
period has increased by an annual average of 52.6 percent, the balance of payments
surplus at the fixed exchange rate has occurred in all years of the Plan period except
FY1994/95 and FY1995/96. The balance of payments during the Plan period has
stood at a total amount of Rs 15750 million and foreign exchange reserves have been
increased by the same amount.
During the Plan period, Nepalese currency has been devalued with convertible
currency (US dollar) by an average of 33.88 percent and revalued with Indian rupee
by an average of 3.0 percent.
3. Existing Challenges
The policy reforms undertaken in the external sector have not contributed to achieve
more satisfactory progress in the field of foreign trade. Although there is a notable
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increase in the export of the country, trade deficit is continued to rise due to the rapid
increase in imports. The total export has been able to sustain only one-fourth share of
total imports. Trade deficit has reached to about 25 percent of gross domestic product.
Due to the huge trade deficit, the current account deficit in the external account has
also reached to 7 percent of gross domestic product. High current account deficit has
continuously exerted a pressure on the balance of payments position. Over the past
few years, there appears an improvement in the balance of payments surplus;
however, this situation does not tend to be reliable. Though the existing foreign
exchange reserves of the country do not have the importing capacity of more than six
months, there needs a huge amount of foreign exchange reserves for the amortisation
of increasing official foreign loans and the repatriation of foreign investment in
future. Similar ly, in order to attract foreign investment in the hydropower sector as
well, it is essential to maintain foreign exchange reserves at an adequate amount.
However, this is not possible without ensuring diversification in export trade, which
is so far centred on limited product and limited market. The implementation of South
Asian Free Trade Association (SAFTA) and Nepal's entry to World Trade
Organisation offer additional opportunities for export trade; however, the country
confronts the challenge to enhance export competitiveness in order to transform this
opportunity into national benefit. In the context of the world economy being
integrated and the external sector transactions being liberal worldwide, the country
also faces a challenge to initiate a big early preparation for making Nepalese rupee
fully convertible in the external sector transactions.
4. Long -term Concept
In the context where the long-term strategy of external sector has to be geared
towards reducing the imbalance witnessed in foreign trade; increasing foreign
exchange reserves of the country; making the balance of payments favourable
through a trade-off between the current and the capital account and supporting to
foreign trade and the balance of payments through exchange system, the following
long-term concepts have been undertaken in the field of foreign trade, balance of
payments and foreign exchange:
• To make Nepalese rupee fully convertible in the capital account transactions as
well.
• To promote export through the countrywise and productwise export
diversification and reduce the trade deficit gradually.
• To reduce gradually the current account deficit of external sector transactions and
maintain such a deficit at lower than 5 percent of gross domestic product.
• To attain sustainable balance of payments position by keeping trade and current
account deficits at a minimum level and creating capital account surplus through
private capital inflows.
• To keep foreign exchange reserves of the country at the level of at least a four-
month importing capacity.

135
Ninth Plan:
5. Objective
• To reduce gradually the growth rate of trade deficit by bringing a complete
improvement in the gap between export and import growth rates.
• To reduce gradually the present level of current account deficit by increasing
service exports and transfers income.
• To strengthen gradually the balance of payment positions by filling current
account deficit with capital account surplus.
• To keep foreign exchange reserves of the country at the level of sustaining the
importing capacity of goods and services at a minimum of five months.
• To make exchange rate flexible in order to attain competitiveness in the export of
goods and services, and to develop real exchange rate as the main instrument for
the expansion of foreign trade.
• To reduce gradually the dependence on foreign loans of the balance of payments
positions by increasing the inflows of private capital.
6. Policy, Implementation Strategy and Programme
Foreign Exchange
• Nepalese currency will be made gradually convertible even in the capital account.
In this process, first of all, concession will be granted to projects investing in
infrastructure sector and to a totally exporting industry in order to mobilise
external resources for acquiring necessary capital. The exchange rate of
convertible foreign currency will be made open and market-determined, and the
existing exchange system of maintaining fixed rate with non-convertible currency
will be reviewed, and a timely improvement in such a system will be made.
• The flow of foreign loans to the private sector will be made simple and return-
based.
• By creating a favourable environment, the convertible foreign currency earned by
Nepali nationals residing in foreign country will be encouraged to bring into, and
invest in, the country through banking sector.
• Excessive foreign exchange reserves of the country will be invested in a way to
attain higher returns.
• With a view to making a favourable impact on the economy through the loans
received from public and private sectors, a monitoring and an alysis of situation,
trend and impact of foreign loan will be regularly conducted.
• Ever since the policy measures initiated towards making Nepalese rupee fully
convertible in current account transactions, the target to attain full convertibility
eventually in the capital account was already set. Under this policy arrangement,
a liberal system has already been made effective towards several areas of external
136
 transactions of Nepal. Nevertheless, in order to adopt full convertibility in capital
account transactions, it is equally necessary that macroeconomic indicators of the
country such as government budget deficit, inflation, balance of payments
situation, interest rate situation, foreign exchange reserves, etc. should be kept at
an appropriate level. At the same time, financial system should be competitive
and strong and these aspects should be consistent with foreign exchange policies
pursued by neighboring countries. Therefore, in the Ninth Plan, necessary
infrastructures will be built gradually towards attaining full convertibility in the
capital account, and a policy of gradually making capital account transactions
liberal will be adopted in the areas that have adequate infrastructures.
• While it is necessary to open new industries for economic development, it is not
possible to mobilise completely the required capital for industries only by the
present level and structure of resources of commercial banks in Nepal.
Particularly, in the case of projects related to infrastructure development
including water resources, a huge amount of capital has to be mobilised;
however, the supply of such a capital is not possible from the domestic financial
system. Therefore, necessary arrangement will be made to mobilise foreign
capital required for such areas. The opportunity for external capital mobilisation
will contribute to make the interest rate of the financial system of the country
realistic. While considering the reality that interest rate structures between
internal and external sectors should not have much spread in order to make
Nepalese rupee fully convertible, it is expected that these aforesaid measures
related to resource mobilisation will make a positive contribution towards this
sector. Nevertheless, while allowing to mobilise resources from external sectors
in this way, the sector utilising such resources, its productivity and its capacity to
amortise loan in foreign currency will also be considered entirely.
• In recent years, there appears a tendency in the investors of developed countries
to channelise some part of their investment towards the stock exchange of
developing countries. The main reason for this is the expectation of getting
comparatively more benefit from the capital market of developing countries. In
order to capitalise this opportunity, Nepal has already, to a limited extent, given
concession for foreign participation in the stock market. In this context, if the
legal provisions in regard to developing instruments that can attract foreign
investors in our stock market can be made clear and transparent, there is a better
prospect for mobilising foreign capital in the country. Therefore, an appropriate
legal and procedural arrangement will be made in this regard. While making such
legal provisions, shares in important areas will not be allowed to purchase from
the stock market for the time being from the viewpoint of national economic
interest. Similarly, an arrangement will be made to allow investment in the areas
made open only by ensuring a prescribed percentage not to exceed.
• In the process of developing an offshore financial intermediation centre in Nepal,
necessary legal provisions have already been made. For this purpose, adopting all
other necessary procedural arrangements including the amendment of necessary
supplementary rules and regulations and the necessary publicity, the offshore
financial intermediation centre will be commenced to operate.
137
• With a view to attract foreign investors in Nepal, it has already been guaranteed
that such investors can make investment in certain prescribed areas and the
returns, including principal and interest, from the investment thus made can be
repatriated abroad in foreign currency. However, in the context of constant
fluctuations in foreign exchange rate, an additional risk will always persist for
such investors. Therefore, provided that foreign investors are desirous of
minimising their exchange risks, an arrangement will be made to make exchange
rate transactions in advance through Nepalese commercial banks.
• Necessary amendments in all other Acts related to foreign exchange including
Foreign Exchange Regulation Act will be made in a manner to be able to
implement likely policy arrangements in future in addition to the policies adopted
in foreign exchange sector by the Ninth Plan.
• Considering the importance of flexible exchange rate in the economy of the
country, an improvement in the exchange system will be made. While
implementing the exchange rate policy, its likely impact on export promotion,
industrial protection and price stability will also be considered.
• Direct foreign investment will be given priority in the projects that contribute to
higher value-added, export promotion, employment creation and infrastructure
development.
Foreign Trade and Balance of Payments
The global economy in recent years has become even more liberal, broader and more
integrated. It has intensified competition among nations in international arena in the
attempt to secure market for their goods and services and it has also increased the
possibility that the economic phenomenon of one corner of the globe can immediately
have a contiguous effect on the other corner. The flows of increasing capital and
technology in the world have brought about changes in the structure of foreign capital
and thereby enhanced the possibility of external instability of the economy as well. In
this context, the past concept of international cooperation has changed, and the
concept of 'trade, not aid' is taking root in its place. By gradually integrating into, but
not isolating from, this changed economic situation of the world, our present need is
to strengthen the balance of payments for external stability and promote trade while
taking the maximum benefit from the wide market prospect.
The balance of payments situation of the country is directly or indirectly related not
only with the external stability of the economy, but also with other aspects of the
economy, particularly monetary, financial, foreign exchange and investment, internal
production and price. This as a whole reflects the competitive capability of the
economy with the outside world as well as the external purchasing power of currency.
Therefore, monetary policy, exchange rate policy and government fiscal policy as
well have to be geared towards attaining the favourable balance of payments and, for
that matter, production and price situation also requires to be supportive. In addition,
it is necessary for this purpose that sectoral policies related to investment, industry,
trade, labour and tourism should be made equally favourable.

138
In the context of the economy with limited production capacity and the compulsion to
import unlimited goods and services as well as the lack of broad export
competitiveness accordingly Nepal requires to maintain an adequate level of foreign
exchange reserves. The import of necessary capital equipment for economic and
infrastructure development and the obligation of timely amortisation of foreign loans
will continue to increase in forthcoming years. In attracting foreign capital and
technology directly and indirectly, the level of adequate reserves of foreign exchange
constitutes a precondition for investment and, in order to maintain such a level of
reserves, there is not any other alternative available than making the balance of
payments situation of the country favourable.
Commercial policy will be implemented with a commitment and, in order to achieve
this objective, a conducive condition will be created through the adoption of balanced
government fiscal policy and stability-oriented monetary policy. In the changed
global context, although there is not much room for being encouraged towards
foreign grant available to the Government, there is an adequate scope for raising
service income from tourism; thus, an attempt will be made towards the maximum
utilisation of this possibility. Capital account will be made gradually liberal; capital
account surplus will be created through private capital inflows rather than foreign
loans; and, learning a lesson from the South East Asian financial crisis, a conducive
condition for productive and long-term investment of capital inflows will be ensured
as well.
Concept and Projection of Balance of Payments Situation
In order to attain the annual target of economic growth rate of 6.0 percent as set by
the Ninth Plan, foreign trade will have an important role to play. On the one hand,
this economic growth rate will contribute to export and, on the other, import will
remain high due to high investment required for attaining targeted economic growth
rate. Nevertheless, the volume of foreign trade in the Ninth Plan as compared to the
Eighth Plan is estimated to increase only at a minimum level due to various factors as
stated below. Keeping this fact in mind, the projection of foreign trade and balance of
payments situation during the P lan period has been made.
• In the Eighth Plan, as the growth rate of export at constant prices was remained
only at 1.97 percent and imports were increased by 20.35 percent, trade deficit
was almost doubled. In order to improve this situation, the growth rate of export
in the Ninth Plan has to be attained higher than that of imports. Therefore, the
export at constant prices during the Ninth Plan Period will be increased by 12.5
percent. Considering high possibilities of export to India as shown by Nepal-India
Trade Treaty; the expansion of Nepal's export market in the South Asian region
with the implementation of South Asian Free Trade Agreement (SAFTA);
possibility of extensive market by virtue of being a member of World Trade
Organisation, as Nepal has already shown its intention to take its membership;
development of exportable commodities and new exportables for enabling the
Plan to attain the expected economic growth rate; and possibility for expanding
agro- and advanced technology-based (such as software) new productions, it is
expected that such a growth rate of export will be attained.

139
• In order to achieve economic growth rate of 6.0 percent as targeted by the Plan
and obtain export growth rate of 12.5 percent, imports at constant prices have
been estimated to increase annually by 8.8 percent. In the Eighth Plan, imports
except gold was increased by 15 percent whereas economic growth rate remained
at 5.1 percent. This accounts for 1.3 percent import intensity of gross domestic
product. However, it is expected that this situation will be improved by a number
of reasons. First, the growth rate of import has appeared high while shifting from
the controlled regime of the past to a liberal trade system as the import
liberalisation was introduced only at the beginning of the Eighth Plan. Since there
is possibility to decrease imports of several luxurious goods including gold in
forthcoming years, it is expected that such a high growth rate of import will not
take place. Second, it is estimated that the past trend of putting pressures on
import demand, due not only to the internal demand for the import of capital and
consumer goods, but also to the external reason, will be gradually minimised in
forthcoming years. Third, in regard to several import-substituting industries (e.g.
sugar, paper, cement, etc.) being established and operated and their production
being expanded, imports of such commodities are expected to be lower in
forthcoming years. Fourth, in the context of Agriculture Perspective Plan having
already been started to implement, the demand for foodgrains, fruits, fish, meat
and vegetables can be met with more supplies of such goods by domestic
productions and the import of such goods is expected to decrease. Fifth, in the
context of occurring some improvement in the structure of gross domestic
product and attaining the target of high economic growth rate through the
increase in agriculture production, it is expected that the import intensity of gross
domestic product will continue to decline. For these reasons, the import intensity
of gross domestic product during the Ninth Plan period will be gradually reduced
and, in order to attain economic growth rate as expected by the Plan, it is
estimated that the import growth of 8.8 percent will be adequate.
• The 8.8 percent growth rate of total imports is also sufficient to meet the demand
for investment required for attaining the target economic growth rate. As it is
necessary to attain the high growth rate of exports of goods and services in order
to cover such imports and limit current account deficit at an appropriate level, a
target growth rate of 11.4 percent from the export of net service income is set to
attain. It appears that the net income expected from the service sectors is realised
only when tourism, civil aviation and other services (foreign employment) in
particular substantially contribute to foreign exchange earnings. Therefore, in
addition to income earning and employment, these sectors have to be developed
from the point of view of foreign exchange earnings as well.
• Although the growth rate of official grants has appeared to be low in the income
from transfers, it is estimated that grants to non-government organisations will be
further increased. Similarly, transfer income of the private sector is also estimated
to increase only nominally during this period. On the whole, a target to increase
net transfer income by 6.0 percent during the Plan period has been set. On the
basis of the estimate that the growth rate of official grants in the Ninth Plan will

140
 be low as compared to the Eighth Plan, the growth rate of transfer income is also
estimated to be low as compared to the Eighth Plan.
• Although trade deficit will continue to rise with the increase in the income from
services and transfers (net), it is estimated that some improvement will be seen in
the situation of current account deficit during the Ninth Plan. While the current
account deficit (except official grants and India excise refund) in the final year
1996/97 of the Eighth Plan accounts for 10.7 percent of gross domestic product,
such a ratio is targeted to reduce to 8.5 percent in 2001/2002. It is estimated that
this is likely to achieve, as the growth rate of trade deficit will be reduced in
comparison to the increase in the service and transfer income. Therefore, it is
projected that the current account deficit (grants included) will be declined from
Rs 191200 million in 1996/97 to Rs 182800 million in 2001/2002, and the current
account deficit (grants excluded) will increase from Rs 298700 million in
1996/97 to Rs 324500 million in 2001/2002.
• In order to achieve the expected economic growth rate, capital investment needs
to be increased which will put a pressure on imports, increase the trade deficit and
thereby exert a pressure on the current account deficit and finally lead to create an
unfavourable situation for the balance of payments. In such a situation, private
foreign capital investment will be continued to make open and, through
expediting the mobilisation of foreign loans, capital account surplus will be
increased and thereby current account deficit as well will be reduced and, in turn,
the balance of payments will be made favourable. Accordingly, during the Ninth
Plan period, official loans of Rs 79000 million will be mobilised. Capital inflows
(grants included) in the form of foreign direct investment will be increased
substantially in order to make a surplus of Rs 37450 million in the capital account
in the final year of the Plan. As this surplus exceeds the current account deficit of
Rs 32450 million of that year, a balance of payments surplus of Rs 5000 million
is expected to realise by the final year of the Plan.
• While increasing the balance of payments surplus during the Ninth Plan by an
annual rate of about Rs 4000-5000 million, foreign exchange reserves by the final
year of the Plan will remain at Rs 71000 million which can sustain the importing
capacity of goods for 5.8 months of that year. In the context of recent foreign
exchange crisis experienced in Asian countries, such a level of foreign exchange
reserves is estimated to be adequate for maintaining stability in the exchange rate
and providing confidence to foreign investors towards the availability of
exchange facility.
• While projecting the monetary situation, net domestic credit flow has been fixed
in a manner to gradually increase net foreign assets for achieving the balance of
payments surplus. Since monetary policy has been formulated without allowing
domestic credit expansion to put excessive pressures on foreign exchange
reserves, the balance of payments situation is expected to be favourable as
projected. If the real economic growth rate of 6.5 percent at market prices is
achieved, narrow money supply, which is estimated to increase by 13 percent, is
expected to contribute to make the balance of payments situation favourable.

141
• Since the sectoral implementation Strategies of the Ninth Plan aim to make
capital account transactions gradually open and to encourage portfolio investment
in the stock market along with direct private foreign investment, foreign
investment during the Plan period is estimated to increase by an annual average
of 25 percent.
• As the real growth rate of private remittances in the Eighth plan period was 17.2
percent and there is a programme to attract more of such incomes into the
banking system during the Ninth Plan period, such transfers are expected to rise
by an average of 8.0 percent.
• The official grants during the Eighth Plan period were increased by 40.2 percent
on average; nevertheless, there is not so much encouraging situation towards it in
the changed context. Including official grants of Rs 32590 million as shown in
the Approach Paper of the Ninth Plan and additional grants available to non-
government organisations as well, grants will be increased by an average of 4.5
percent and foreign grant of Rs 56000 million is estimated to receive.
• The amortisation of foreign loans was increased annually by 4.3 percent at
constant prices and foreign loans grew by 10.1 percent during the Eighth Plan
period. When the official foreign loan which is estimated as a source of
expenditure by the Plan, is maintained at a level of Rs 78950 million in total of
the plan period, the growth rate of foreign loan will be 11.6 percent. The
amortisation of foreign loan will be increased annually b y 12 percent and the net
foreign loan is estimated to increase by 11.4 percent.
• In order for external sector transactions to be covered completely, an accounting
system will be developed along with the implementation of Balance of Payments
Data Collection Directory (Fifth Amendment). As the amount that has at present
remained at a high level under the heading of miscellaneous capital will be
reclassified into various related headings, the amount under the heading of
miscellaneous capital in the Ninth Plan is estimated to reduce by almost 20.5
percent annually.

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 Table
Projected Balance of Payments Situation During Ninth Plan (1997/98 - 2001/2002)
Period
( At FY 1996/97 Constant Prices)
(Rs in million)
Description FY1996/97 FY2001/02 Annual Average
Growth Rate (%)
Export, F.O.B. 22507.2 40558.7 12.5
Import, C.I.F. 96114.1 146471.9 8.8
Trade Balance - 73606.9 - 105913.2 7.5
Services, Net 39360.7 67387.2 11.4
Receipts 53180.5 86735.5 10.3
Travel 8523.0 17142.8 15.0
Investment Income 1990.3 3205.4 10.0
Others 42667.2 66387.3 9.2
Payments 13819.8 19348.3 7.0
Transfers, Net 15130.1 20242.5 6.0
Receipts 16347.3 22392.4 6.5
Private remittances 5595.0 8220.9 8.0
Official grants 9743.2 12141.8 4.5
Indian Excise 1009.1 2029.7 15.0
Refund
Others - - -
Payments 1217.2 2149.9 12.0
Current Account Deficit - 19116.1 - 18283.5 - 0.9
(Grants Included)1
Current Account Deficit - 29868.4 - 32455.0 1.7
(Grants Excluded)2
Official Capital, Net 8390.2 14413.6 11.4
Foreign Loans 11232.9 19423.4 11.6
Amortisation 2842.7 5009.8 12.0
Direct Foreign Investment 1620.7 4953.5 25.0
Miscellaneous Capital 12319.5 3916.4 - 20.5
Changes in Net Foreign 3214.3 5000.0 -
Assets (- Deficit)
Note:
1. Current Account Deficit / Gross Domestic Product - 6.8 - 4.8
2. Current Account Deficit / Gross Domestic Product - 10.7 - 8.5

143
 5.5 Capital Market

1. Background
Develo pment and expansion of capital market are essential for the rapid economic
growth of the country. Capital market helps economic development by mobilising
long-term capital needed for productive sector. The capital market was initiated in the
country with the establishment of the Security Marketing Centre in 1976 in the
government sector according to the industrial policy of that time. But there was no
such plan or programme for the development of the capital market until the Sixth
Plan. For the first time, the activities and programmes of the Security Marketing
Centre were set out and included the capital market in the Seventh Plan. However, the
planned development of this sector was initiated only after the Eighth Plan.
The main objective of the capital market is to create opportunity for maximum
number of people to get benefit from the return obtained by directing the economy
towards the productive sector by mobilising the long-term capital. The objective can
be fulfilled only by the rational and accountable behavior relating to the three factors
of the capital market such as institution, mediator and investor.
Rational and high moral character and accountable behavior of institutions such as
the government, central bank, stock exchange board, stock exchange; organised
institutions for accumulating capital from the market; mediators in the form of
manager for issuing security; creator of market; manager for investment; security
dealers such as brokers and investors in the form of government bond holders,
ordinary shareholders, preference share holders, debenture holders and ordinary
mutual fund unit holders help to develop healthy capital market.
The Eighth Plan had identified the policies and programmes related to the physical
structures of the above-mentioned aspects and most of the programmes were
implemented. But due to the lack of coordination between the three factors of the
capital market as well as due to several other reasons, the anticipated development of
the capital market could not be realised. In the Ninth Plan, it is essential to formulate
and implement transparent policies and programmes for the development of the
capital market, considering all aspects of the market.
2. Review of the Eighth Plan
In the Eighth Plan, commensurate with the target to develop institutional and legal
basis for the operation and control of the security market, the security board was
established by making amendment in the Security Transaction Act, 1983. The stock
exchange system was initiated in the country by converting the then Security
Marketing Centre into Nepal Stock Exchange. Similarly, in line with the target to
determine the standard of information disclosure and notice for issuing Security for
public information to be issued by the listed company, to publish notice for public
information and to make institutional and legal arrangement for the effective
monitoring, the Security Exchange Board has issued manual for the issue of Security.

144
According to the manual, the organised institution which issues Security has to
publish additional description and information besides those determined by the
Company Act. The Nepal Stock Exchange has made an arrangement for the manager
responsible for the issuance and the sale of Security to include additional description
and information on the company, which are related to the benefit of the public
investors, besides those descriptions mentioned in the Company Act and Issue
Manual of the Security Exchange Board. The status of transparency and the standard
of the prospectus issued by the organised institutions have been improved due to the
necessary arrangement to include additional description and information in the
prospectus made by the Security Exchange Board and the Nepal Stock Exchange as
mentioned above.
In the line with the objective of establishing the then Security Marketing Centre as a
non-profit self- regulatory stock exchange institution and to increase participation of
private sector gradually as well as to expand the physical facilities, the Security
Marketing Centre has been converted into Nepal Stock Exchange. Stockbrokers at
private sector have been involved in the share investment of the Stock Exchange and
their representatives have also been included in the board of directors. In this way, the
Stock Exchange has been in operation.
For encouraging the Employees' Provident Fund, insurance companies and other
financial institutions to invest in shares, debentures and Security and attract the
resources of financial sector towards the security market, no other sig nificant
progress in this sector has been made except the investment by the Fund in share
capital of bank and financial institutions as per the amendment in the Employment
Provident Fund Act, 1963.
For carrying out activities such as primary issuance of shares and debentures,
guarantee provision, brokers, market, etc., through Citizens Investment Fund and
other financial instutions so as to develop and expand investors, institutions and
services of the capital market, security dealears like stock brokers, security issuance
managers, market creaters and portfolio managers are involved in security transaction
activities by becoming member of the Nepal Stock Exchange.
According to the target to train manpower needed to expand the security market,
Nepal Stock Exchange has arranged for one-time training on subjects like stock
brokerage, market creation, management and sales of primary issue, guarantee and
fund management. It has also arranged to send for study, observation tour and
training for the employees of the Nepal Stock Exchange in both national and foreign
institutions.
The target was to conduct various savings programmes through Citizens Investment
Fund or institutions authorised to conduct such schemes in order to encourage smaller
investors to invest their savings in Security and the organised sector for providing
financial services, and to distribute profits among the participants. Even though the
expected achievement could not be gained according to the target, altogether three
savings schemes have be en implemented which include programme for increasing
employees' savings and citizens' unit scheme conducted by Citizens' Investment Fund
as well as N.C.M. Mutual Fund savings scheme conducted by a financial company.
145
No achievement could be made during the Plan period in providing permission for
various trust companies to function by developing relevant Trust Act.
No significant achievement could be made with regard to the targets to utilise security
market for raising medium and long-term capital, to review the policy of providing
grants, loans and share capital to the institutions of HMG, to encourage the practice
of issuing shares at competitive values and to develop further the tradition of issuing
shares for acquiring necessary means of investment in organisations like the Nepal
Industrial Development Corporation and the Agriculture Development Bank.
Companies of the private sector have been active in utilising security market for
raising medium and long-term capital whereas Nepal Industrial Development
Corporation and the Agriculture Development Bank and other government companies
have not been able to achieve the progress for accumulating capital by utilising the
security market. The target to adopt the issuance of shares by local urban units in
their construction and development works on the basis for feasibility study could not
be achieved.
Progress could also not be achieved as regards the target to set up necessary unit to
make legal and administrative provisions related to activities like the liquidation of
business enterprises, take over, mergers, fair trade practices, bankruptcies, property
rights and the transfer of these rights during the Plan period.
No progress could be made to meet the target to promote the practice of raising public
funds by companies and to make effective legal and institutional provisions to carry
out proper monitoring of this activity.
Contrary to the target to encourage the establishment and functioning of companies,
the tax exemption facility for organised institutions having extensive public
participation and whose shares have been enlisted in Nepal Stock Exchange were
enjoying for more than a decade on the income of such organisations, has been cut
off. During the plan period, arrangement has been made to levy equal amount of tax
on both institutions like private limited companies and the enlisted public limited
companies.
An integrated registration unit has been initiated by establishing the office of
company registrar according to the target to reform company administration by
establishing a single registration unit with reform on the existing system of
registering companies separately in the Department of Industry and the Department of
Commerce.
No significant achievement could be made to meet the target to operate stock
exchange by exploring the feasibility of a share depository and registration unit in
order to impart dynamism to share transactions.
During the Eighth Plan period, industrialists are attracted to accumulate capital
needed to run industries by issuing Security to the public through the medium of
capital market. Similarly, an environment has been created to accumulate capital by
issuing shares for those companies which have been providing adequate return on
investment or able to provide it.

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During the Eighth Plan period significant achievement has been made to protect
rights and interests of the investors who invest in Security. Arrangement has been
made with regards to companies who accumulate capital by issuing Security, security
dealers who operate as mediators and serve to accumulate capital, and also the stock
exchange market and other concerned agencies, to make them conduct activities by
becoming sensitive and accountable to the investors. For this purpose, Security
Transaction Act, Security Transac tion Regulation, Security Market Membership and
Transaction By Laws, By Laws to Enlist Security have been made timely. Security
Directives as well as Security Allocation Directive have been implemented to make
the primary market transparent and trust-worthy.
Participation of institutional investors is quite significant for the healthy development
of capital market. During the Eighth Plan period, significant achievements have been
made to create encouraging environment to invest in Security through the
participation of banks and financial institutions in the Security transaction. This has
produced positive impact on public investors. Banks and financial institutions have
participated as security dealers by getting membership of Nepal Stock Exchange and
conducted activities like market creation, and investment management. In addition,
transaction of shares of companies has initiated. It is an encouraging indicator for the
healthy development of the capital market.
3. Long -term Concept
• According to the concept of capital market for development, major portion of
financial resources needed for infrastructure development projects like roads,
electricity, water management, communication and development will be supplied
through capital market.
• Well-organised private sector, capable of operating companies according to
modern management system, will be developed to create opportunity to utilise
return on investment by diversifying ownership of public companies to general
public.
• An environment will be created to fully assure the public to invest in security by
allowing only those projects which are technically feasible, economically and
financially viable and which are also capable of providing competitive return to
enter into the capital market.
• Practice of entering Nepalese companies for competition in international capital
market in order to accumulate capital will be developed. For this purpose,
professional capability of consulting firms, banks, security dealers including
financial institutions involved in project formulation, implementation and
monitoring, banks will be enhanced.
• Physical and institutional capability of Nepal Stock Exchange will be enhanced
and arrangement will be made to conduct transaction from all the seventy-five
districts of the country through the medium of electronic transaction system.

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• On the basis of the estimate that only one percent of the total population are
ordinary share holders, the total number of the shareholders will be increased
significantly to five per cent or more.
• Existing condition of 99 per cent of transaction in share market taking place
between retail investors will be improved. Institutional investors like mutual
fund, pension fund, provident fund, insurance companies will be involved in
transaction and such investors will be made to carry out 50 per cent of total
transaction.
Ninth Plan
4. Objective
• To conduct industry, trade, agriculture and other businesses as through companies
established with share investment including that of the common people.
• To mobilise major portion of investment in the form of medium or long-term
credit to be disbursed by HMG, Government Agencies and municipalities along
with private sector by mobilising capital market through issuing Security.
• To issue different types of security by coordinating needs of industrialists and
interest of depositors.
• To enhance public faith on security market by protecting rights and interests of
investors who invest in Security and also of the promoters of public companies.
• To increase liquidity of Security by making stock exchange market fully
transparent and trustworthy.
5. Policy and Implementation Strategy
• The capital market will be linked to financial system by establishing proper
coordination among higher institutions supervising and controlling the money
market, foreign exchange market, capital market, insurance market and other
financial activities.
• Timely arrangement will be made on the code of conduct, accountability, liability
of promoters and directors as well as managers of the companies which issue
security, security market and its members, lawyers, accountants, auditors,
consultants and so on for the healthy development of the market.
• Security transaction facility will be provided all over the kingdom in order to
create opportunity for scattered investors so as to make them participate in the
process of capital formation by investing small portion of their saving in
securities.
• Liquidity of Security will be increased by floating appropriate portion of financial
resources existing with banks and financial institutions in security market.
• Proper arrangement will be made for accumulation of capital by bank and
financial institutions through issuing debenture against completely safe loans

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 among long-term loans issued by such institutions deposited with financially
successful companies and also through developing the system of securitisation.
• Security of only those companies which can provide adequate return will be made
eligible for public issue by enhancing the skills of sales managers who functions
as mediators, on project evaluation, evaluation of company, and evaluation of
shares, etc. for the issue of security.
• Manager for the issuance and sales of Security will be made effective in order to
accumulate capital through the medium of Security. Security of different
characteristics with and without risk as per the nature will be identified on the
basis of categories of depositors or investors.
• National and foreign financial institutions will be encouraged to operate mutual
fund.
• Transactions based on inside information will be identified. Arrangement will be
made to take legal action against all those involved in such activities.
• The maximum ceiling of shares that can be hoarded by promoter, director, the
person or the group of people responsible for managing the company will be
fixed. Those companies whose shares are enlisted in security market by issuing
shares to public or those companies whose shares have already been enlisted in
the security market will be included to this effect.
• Duplication and forgery of security certificates and other documents related to
security transaction will be minimised and arrangement will be made for the
instant liquidity and immediate transfer of Security.
• Considering the return from secured government bond, as benchmark
arrangement will be made for the transaction of government bonds in the security
market in order to develop a system of issuing debentures by organised
institutions.
• In order to augment credibility of public in companies, accounting system
meeting internat ional standard will be implemented. Financial auditing and cost
auditing of companies working in sectors like industry, agriculture, public works
will be done so as to make their financial activities fully transparent.
• In order to open security market to foreign investors, efforts will be made to
arrange necessary legal as well as administrative management by establishing
coordination among Ministry of Finance, Ministry of Industry, The Nepal Rastra
Bank, Security Board and Nepal Stock Exchange.
• People will be encouraged to invest in Security by arranging compensation for
the loss to be borne by investors due to forgery, betrayal or the like by the
company which issues security or by mediators who are involved in security
transaction or even by customers.

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6. Programme
• A high level financial service and monitoring committee will be constituted under
the coordinatorship of the Vice-chairman of the NPC consisting of Finance
Secretary, Governor of the Nepal Rastra Bank, Chairman of the Security Board
and Chairman of Insurance Committee. The committee will coordinate activities
of money market and foreign exchange market, capital market, and insurance
market, including other activities within the financial market, in order to develop
financial sector in a healt hy manner.
• Programme for the institutional development of private sector will be
implemented in order to enhance people's participation in the ownership of public
limited companies through the medium of shares. Since the economic
development of the country can be made rapid only through institutional
development of private sector, the ownership of the financial companies will be
broadened.
• A system will be developed to run companies according to highly modern
professional management by separating the owner ship and the management of
companies in order to develop private sector in an organised way.
• Security board will be made more effective for fair and healthy development of
capital market. A code of conduct for managers, directors and promoters of the
company which issues Security, officials of the security market, security dealers,
lawyers, auditors, consultants, etc. will be prepared and enforced in order to
oblige them to function in accordance with their professional norms and
standards.
• A manual on accounting system to be adopted by companies will be formulated
for the companies, which enter into capital market, and an accounting system of
the international standard will be implemented.
• Investors' Guarantee Fund will be established for the safety of thos e investors
who invest in Security.
• Capital market will be made fully transparent through making an arrangement for
publishing updated information on status of company, status of market,
transaction of security dealer, etc. by establishing contact among en listed
companies, security dealers and Nepal Stock Exchange through the medium of
computer network.
• 'Investors' Education Programme' will be implemented in order to augment public
trust on security investment. Investment awareness programme will be conducted
through communication media like radio and television by including wide
dissemination of information on status of enlisted companies, description of
security transaction and status of the market in the government communication
policy.
• In order to create opportunity to be involved in the transaction of security by
investors all over the Kingdom, arrangement will be made to provide facility to
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 make transaction of securities from each region by expanding units of Nepal
Stock Exchange on the basis of feasibility.
• Essential financial and physical facilities will be provided to further increase the
efficiency of the Nepal Stock Exchange.
• Legal and institutional arrangement, based on necessary study, will be made for
establishing Central Registration System of Security and Security Deposit
System.
• A system of issuing debentures by organised institutions will be developed by
considering the return from government bonds as benchmark by getting
transactions of government bond made in Nepal Stock Exchange as government
bonds occupy major portion of transaction in the security market.
• Resources of the institutions like Employees' Provident Fund, Rastriya Beema
Sansthan, Credit Guarantee Corporation, Citizens Investment Fund will be
mobilised with a view to flowing appropriate portion of resources existing with
Banks and financial institutions in the security market for the sake of increasing
liquidity.
• Arrangement will be made to issue Security of only those companies, which can
provide returns, on a competitive basis, by enhancing capacity of project
appraisal of security dealers associated with primary market.
• An appropriate institutional arrangement will be made in order to implement
skilled manpower development programme by training government employees,
employees of security market, employees of different companies associated with
capital market as well as lawyers, accountants and security dealers on different
aspects of capital market.
• Appropriate legal and administrative provision will be made for national and
foreign financial institutions to establish and run different types of mutual fund.
• Legal and institutional arrangement of securitisation system will be made to
enable banks and financial institutions to accumulate capital. For this purpose,
debentures will be issued against the collateral of fully secured loan with
financially successful companies out of the total long-term loan disbursed by
banks and other financial institutions in order to increase liquidity of long-term
resources existing with banks and financial institutions.
• Necessary legal arrangement will be made for the use of authorisation in the
marketing of Security as in the case of fixed assets.
• Credit rating system will be developed to determine the level of risk prevailing in
Security issued by companies by assessing such companies.
• Purchase and sale of shares issued under the system of 'right issue' will be
managed at Nepal Stock Exchange by making legal provision for the transfer of
such shares to others instead of buying them by the shareholders themselves who

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 have the right to buy shares of the companies issued under the system of 'right
issue'.
• During the Ninth Plan period, huge amount of money can be accumulated from
capital market if physical, administrative, legal and institutional arrangement
related to the development of capital market during the Eighth Plan period,
additional amount of capital accumulated through the medium of Security during
the same plan period, policies and programmes to be implemented in the
forthcoming days, increase in the number of companies that intend to accumulate
capital through utilising the market, minimum paid-up capital of banks, financial
companies as well as insurance companies are all taken into consideration.
During the Eighth Plan period, additional am ount of Rs 700 million was
accumulated. The target during the Ninth Plan period is to increase this amount to
Rs 5 billion.
• Total value of the enlisted security was Rs 4.72 billion at the end of the Eighth
Plan at Nepal Stock Exchange, it will be increased to Rs 15.00 billion at the end
of the Ninth Plan.
• The number of additional companies, which were enlisted during the Eighth Plan
period stood at 35. It will be increased to 50 during the Ninth Plan period.
A situation that helps to provide competitive return to shareholders will be created.
An improvement in the financial and economic conditions of the enlisted companies
will be made after allowing only viable companies to enter into the capital market to
issue the shares in general, making arrangement for the implementation of accounting
system including cost adjustment according to the international standard. By this type
of arrangement, the number of companies established and the share investment is
expected to increase to a considerable amount due to th e enhancement of faith of
industrialists and the general public on capital market. Thus, the number of enlisted
companies will be increased and there will be considerable improvement in their
economic and financial condition.
Depth and width of the capital market will be increased with the initiation of the
system of accumulating capital by issuing different types of Security according to the
interest and types of the depositors.
During the Ninth Plan period, banks, financial institutions and other industrial and
commercial companies will enter into the capital market with their shares and other
securitised instruments including voting and non-voting, redeemable/irredeemable,
convertible/non-convertible shares, bearer/ registered secured debentures, mutual
fund units, preference shares, participatory/non-participatory in company (board of
directors) management, convertible/non-convertible fund units and depository
receipts. Likewise, the types and characteristics of the government bonds will be
commensurate with the nature of the savers.
In the context of making necessary arrangement for protecting investors' interest and
rights, such interests and rights will be protected and made more secured with the
implementation of granting of permission to issuing shares to standard companies.
Security dealers including promoters involved in establishing companies/directors
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will be made to work according to the professional norms and standards, and to
maintain full transparency by disseminating information on the market.
Nepalese capital market will be comparable to other emerging capital markets of the
world by the end of the Ninth Plan with the development and expansion of mutual
fund, venture capital fund, individual portfolio management, securitisation capital
market support services, etc.
There will be noteworthy increment in qualitative as well as quantitative security in
the security market due to such factors as the entry of only the standard companies in
security market, discipline to be maintained by people and institutions in the market,
full transparency of companies, and transaction of Security with different
characteristics. As a result allocation efficiency and utilisation system will be
developed again resulting from the development of market system based on supply
and demand in the economy.
Security will be developed according to the interests of depositors as there will be
seen the entry of different types of Security of less/medium/higher risk with the
implementation of credit rating system.
System of issuing debentures by institutions at the government as well as private
sector will be developed on the basis of the rate of return on government bonds. This
will be in line with the objective of conducting transaction at stock exchange on
principle of yield to maturity by putting an end to the existing practice of conducting
transaction of government bonds with different maturity period and separate interest
rates at par value or at a single value.

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 5.6 Public Enterprises and Privatisation

1. Background
In Nepal, after the dawn of democracy in 1950, there emerged an environment in
which the needs and aspirations of the people were given primacy in the process of
implementing government activities. Accordingly, apart from its regular government
activities, HMG has initiated a system of establishment and functioning of public
enterprises and made huge investment with an objective of speedy economic
development, in addition to having direct participation in the production and
distribution of goods and servic es. Government initiative was essential at a time when
private sector investment could not be attracted in the provision of basic social and
economic services, and in such situation, the institution of public enterprises was
justified. Consequently, a number of public enterprises, covering different sectors of
the economy, were established during different periodic plans. Many of them were
established with assistance of donor countries. The number of such enterprises in the
fields of industry, business, ser vice, social and public utility reached above 60.
On the basis of analysis and evaluation of the roles and performance of public
enterprises in the national economy, the elected government which assumed power
after the restoration of democracy in 1990, reached the conclusion that the economic
conditions and financial efficiency of government corporations were not satisfactory.
The lack of basic elements contributing to the development of a professional culture
in their inherent structure and operating proc edures was singled out as the main cause
for their poor performance. Public enterprises confronted with various problems and
hindrances such as lack of managerial autonomy, inefficient use of means and
resources; shortsightedness and weakness on the part of political leadership,
production of low quality goods and services, uncontrolled administrative expenses,
lack of competitive ability, lack of motivation in incumbent human resources,
adoption of traditional technology and minimum use of professionalism, which
brought about a progressive decline in their output and made the vast amount of
government investment unproductive.
Statistics also reveal that the overall economic condition of public enterprises,
particularly those involved in industry and trade sectors, is very poor. Likewise, the
performance of the public enterprises involved in social sector is also not satisfactory.
Even though the overall condition of public enterprises involved in service, public
utility and finance sector is found comparatively better, it does not seem to be
satisfactory. For example, the operational loss in industrial enterprises accounts for
9.4 percent and in trading enterprises 55.7 percent in proportion of net capital
investment during the fiscal year 1996/97. While the operational profit of social
sector enterprises is 1.6 percent, it is 4.0 percent for the financial sector enterprises.
The percent of operational profit of the enterprises working in the area of public
utility and service sectors accounts for 5.6 and 5.1 respectively. However, the ratio of
net operational profit and net capital investment accounts for 2.3 percent out of the
total investment of Rs 69 billion as of the fiscal year 1996/97. It becomes clear from
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this low achievement that the public enterprises in operation are suffering from
extreme economic problem.
A number of factors are responsible for deteriorating economic conditions of public
enterprises. The management of the enterprises has tended to be oriented more
towards administrative and political matters than towards business. As the higher
management is appointed on the basis of political loyalty and commitment, decision-
making process apparently lacks capability and efficiency. Moreover, there has been
a marked decline in management accountability and responsibility. Consequently, the
internal operation and control system have not been in conformity with professional
norms, values and principles. Due to the lack of managerial autonomy, the working
style and concerns tend to undermine rather than promote the interests of the
enterprise. For these reasons, the corporations have failed to play pivotal role in the
process of economic development through promoting social services and public
welfare, creating employment opportunities, building economic and social
infrastructures, delivering effective services in the areas of natural monopoly,
providing proper direction to the private sector, stabilising prices, supporting the
government to meet its obligations, contributing to consolidate national revenue,
speeding up the regional development, and mobilising and optimising the use of
national resources.
The corporations have not only failed to achieve their objectives but also have
become a heavy burden on the national economy. While the return on corporate
investment in various sectors is negative, financial liability of the government is
increasing every year. The size of subsidy, particularly the functional and capital, is
expanding beyond the capacity of national budget to support. The losses incurred
from past credit Security, financial losses as well as in the banking sector, to be borne
by the government, are the evidences of economic infirmities of the corporations. The
corporations are suffering from inefficiency and lack of professionalism. Because of
the lack of competitive ability and continued political interference, the higher
management of the corporation together with personnel, economic and financial
management (including inventory, credit and cash management) is all beset with
problems. The future of the corporations has become uncertain due to the defective
practice of rewarding individual decision-makers even when their working style ran
counter to the norms and values and principles of the market economy. Since vested
interests and ad hocism rather than the mission of the enterprise influence the
decision-making process, marked inconsistencies exist in the use of acts, rules and
regulations. The financial corporations, in want of financial discipline, have assumed
the character of political institutions. In the absence of effective financial control,
profligacy is rampant and decision making based on personal benefit criterion and
personal uses of corporate resources have been playing havoc with financial
management. As there is a lack of proper system of book keeping and accounting
reflecting the realities of transactions and their regular and independent audit, the real
situation of the corporations is believed to be worse than what is generally assumed.
Thus, there is a total lack of efficiency in the corporations and the bases on which
corporate reforms could be initiated are virtually non-existent.

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Although initially the corporations enjoyed monopoly in their activities, competition
of private sector in various economic activities is increasing. The policy of executing
the same professional activities by the government and policy of letting the investors
of the private sector enter into such activities has already been established and
accepted. Realising this fact, the government has adopted a policy of liberal economy
with the aim to raise the living standard of the people by bringing about structural
reforms in various sectors of the economy. In this process it has been carrying on the
policy of giving priority to the involvement of private sector in public enterprises. In
line with this, sixteen public enterprises have already been privatised by way of
different processes during the Eighth Plan period (1992-97). Out of the sixteen
enterprises privatised so far, three (Harisiddhi Brick and Tile Factory, Bhrikuti Paper
Factory, and Banshbari Shoe Factory) were handed over to the private sector in the
first phase and remaining 13 in the second phase of privatisation programme.
2. Review of the Eighth Plan
The enterprises privatised during the Eighth Plan and the modalities adopted are
presented below:
S.N. Enterprise Modalities
1. Bhrikuti Paper Factory Sale of assets and business*
2. Harishiddi Brick and Tile Factory Sale of assets and business
3. Banswari Leather and Shoe Factory Sale of assets and business
4. Nepal Film Development Corporation Sale of share **
5. Balaju Textiles Industry Sale of share
6. Unprocessed Leather Collection and
Processing Centre Sale of share
7. Nepal Bitumine and Barrel Industry Sale of share
8. Nepal Lube Oil Sale of share
9. Tobacco Development Company Liquidation***
10. Jute Development Corporation Liquidation
11. Nepal Cast Iron Industry Sale of share
12. Shree Raghupati Jute Mill Sale of share
13. Agricultural Input Factory Sale of share
14. Nepal Bank Ltd. Sale of share
15. Bhaktapur Brick Factory Lease****
16. Biratnagar Jute Mill Management Contract*****
* All assets and ownership of HMG are handed over to the private sector and a
new company is formed when the assets and business are sold.

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** Ownership of HMG is transferred to the private sector and the company
operates as usual when shares are sold.
*** In liquidation, the company ceases to exist and the business comes to an end.
**** The ownership remains with the government and the government receives
some money as rent on an annual basis but the profit and loss is borne by the
leaseholder.
*****The ownership of the corporation remains with HMG. The profit and loss is
borne by the government. The contractor is paid by the cooperation certain
amount for management and operation of the corporation on an annual basis.

Income from Sale and Its Use

A total income of Rs 724.6 million has been received from the sale of the above
enterprises. Out of the total sum Rs 435 million has been spent and remaining Rs
289.6 million has been deposited in security account. The expense was mainly used
to extend loan to privatised enterprises, pay liabilities of the enterprises, provide
salaries and benefits to the employees, gratuity and pension to retired employees, and
to meet miscellaneous and contingency expenses. The Government has been relieved
from direct economic burden after the enterprises were privatised. Since the fund
received from sale of the enterprises was used in matters relating to the corporations,
it has helped much to bring about improvements in their economic conditions.
Achievement of Privatised Enterprises
The analysis of various aspects of the privatised enterprises shows that their overall
condition is improving. The average capital investment, employment and production
of such enterprises have increased by 142.5 percent, 25.4 percent and 70.7 percent
respectively. The adoption of new technology has resulted in higher quality and
diversification of products leading to market extension. The goods and services
produced by them have been able to compete in the market and their financial
situation has been improved. Remarkable improvement has been noted in the capacity
utilisation of most of the privatised enterprises. The number of employees taking
opportunity of golden handshake and coming out for alternative employment has also
been notable.
With a view to involving employees/labourers in enterprise management, five percent
of its share has been made available to them. Accordingly, Bhrikuti Paper Factory,
Harisiddhi Brick and Tile Factory, Nepal Film Development Corporation, Nepal
Bank Limited, Nepal Lube Oil Limited, Balaju Textiles Industry, etc., have sold five
percent of their shares to their staff. This has resulted in a positive impact, directly or
indirectly, in the enterprise management. As an industrial culture has not yet been
evolved, misunderstandings have tended to emerge, at times, between the employees
and the management. The corporations privatised so far have included mostly small-
scale and the sick enterprises. Before privatisation, the condition of these corporations
was not satisfactory. As small scale, economically sick enterprises with an average

157
transaction profile were given priority in the privatisation policy, it was but natural
that they could not produce impressive impact on the economy.
After privatisation, there has been an increase in the revenue contribution of these
enterprises and savings due to the reduction in the size of government expenditure in
the form of loan, grant and investment to these entities. There has been improvement
in employment opportunities in the terms and conditions of the service and the quality
of products. The price has become competitive, the business has been expanded on
account of additional capital investment made, financial status of the enterprises has
been improved, capital market has received impetus to develop and there has been an
increase in public ownership of shares. These are some of the positive achievements
of privatisation. However, some of the enterprises are still in need of improvement of
their business skills and efficiency.
Considering the consensual environment that has emerged in recent years on the issue
of privatisation, a conducive sit uation has been created for pushing ahead
privatisation as an effective economic strategy having direct impact on economy. In
future, privatisation as a strategy can contribute remarkably in terms of employment,
production, productivity and overall economic development if implemented
strategically sequencing it after the restructuring of enterprises and the identification
of areas in which private sector is most interested to invest.
With the exception of one or two, none of the privatised corporations has been able to
award dividends to its investors. In the stock market, the price of their shares is
declining. Some of the corporations have been facing difficulty in paying their
liabilities as required by the schedule. Within a brief period of its privatisation, one
company was compelled to close down and 500 employees were rendered jobless. As
amicable relations could not be developed, problems are emerging in the relationship
between the new management and the employees of the newly privatised companies.
Some of the formalities and actions concerning the privatised enterprises have not yet
been completed. Nevertheless, the investors appear to be optimistic about the future
of their undertakings. On the basis of the experience so far, privatisation may be
construed as a business strategy, which points to the right direction of corporate
reforms.
3. Existing Challenges
Overstaffing, heavy burden of debt, unproductive assets, lack of proper investors,
semi-developed capital market, etc., are seen as the major problems appearing on the
way of transferring public enterprises to the private sector. Steps taken to resolve
these problems included additional package of compensation for those losing jobs,
taking over the liabilities of corporations by the government, alternative uses of
unproductive assets and the like. Although a policy was initiated with an objective to
promote capital market, which made it mandatory to all privatised undertakings to
register their shares in the share market, the prices of share have tended to stagnate at
an unexpectedly low level due to the inherent weakness of the share market. So far,
the shares of Bhrikuti Paper Factory, Harisiddhi Brick and Tile Factory, Nepal Film
Development Corporation, Balaju Cloth Industry and Banswari Leather Factory have
been sold to the public. Thus the public is provided with an additional opportunity,
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albeit limited, to invest in shares, but the expected mobilisation of national resources
in the capital market to increase industrial investment throug h privatised enterprises
has not been realised.
4. Long-term Concept
Privatisation programme is being implemented as an alternative means of improving
effectiveness in the utilisation of resources invested in public corporations and
orienting them towards economic consolidation. The long-term vision, therefore,
aims at making the economy more dynamic and efficient transferring all government-
owned corporations to the private sector. Instead of production and distribution of
goods and services, the role of the government should be concentrated in removing
the weaknesses of the market system by keeping the economy in proper order.
About Seven years have passed since privatisation programme was initiated. During
this period, for various reasons, the programme could not take a pace for fifteen
months. However, sixteen enterprises have been handed over to the private sector,
partially or fully, in a span of about five years. The figure stands at one fourth as
compared to the total of 62 corporations existing in Nepal. In comparison with other
countries of the region, the pace of privatisation of our country can not be considered
slow. It is necessary to make this process more dynamic and effective to develop and
extend entrepreneurship in the future.
Privatisation is not a short or medium -term economic strategy, rather it is a long-term
process. Given the prevailing state of natural monopoly, huge investment
requirements, a bleak prospect for attracting adequate private sector investment and
the problem concerning a large number of employees associated with some
government corporations, it appears that privatisation of most of the enterprises can
be accomplished only in the long-term. For the sustainable implementation of long-
term programme of privatisation, concrete measures should be specified for
addressing such problems as lack of adequate resources and credible investors,
unnecessary politicisation, vast amount of unproductive assets, heavy debt burden,
determination of the price to be obtained from the sale, ignorance, dilemma and low
level of awareness among concerned policy-makers towards the realities, their
control-oriented cultural extremity, financial and other concessions and incentives
required to be provided to the privatised enterprises, overstaffing and changes to be
initiated in staff attitudes towards work, etc.
5. Strategy
In the process of privatisation, various studies must be undertaken and financial
statements updated. Likewise, the assessment of assets and the business can be
undertaken under the service of different professionals and experts. This task is not
only difficult, but also complicated and expensive. Moreover, in the process, many
employees of the overstaffed corporations have to be inspired for retirement even if it
needs an attractive package of compensation. This requires a huge amount of money.
However, it has not been possible to make provision of money to meet these
requirements. That is why, so far, the initiative to privatise big enterprises with large
number of employees is lagging behind. To push the programme ahead, it is

159
necessary to come up with a concrete personnel policy and compensation scheme on
the one hand, and to obtain additional resources needed to run the programme on the
other.
The price of a corporation to be privatised should be determined in the competitive
market environment. The investors may not be inclined to come forward to invest in
these corporations because of the burden of unproductive assets and heavy debt.
Though it is possible to estimate about the value to be received from the sale of the
enterprise through the evaluation of the assets and business of the corporation from
the experts concerned, it is not easy to determine the actual price at which the
corporation can be handed over. This problem will be solved by adopting a policy of
pricing that would accept the business value determined by the competitive market as
the appropriate price, instead of relying on the decision makers’ arbitrary pricing.
In the process of privatisation, the investors of the private sector have to make
additional investment and such investment may not produce attractive profit in the
few years to come. Moreover, the financial and overall conditions of most of the
public corporations being in a very bad shape, the private sector can not improve
them in a short span of time. Accordingly, the government has to give some
additional concessions to attract the private sector and improve the situation of these
corporations. In the present situation, these corporations should be given the status of
new companies and efforts should be made to provide the financial concessions as
required by the law together with other incentives. Therefore, the policy of the
government should be to assume a more positive role in mobilising such financial
resources.
Whenever privatisation of any enterprise involves the reduction of excess employees,
arrangements will be made to compensate them on a reasonable basis and for the
employees to be retained, training will be arranged to provide them addit ional
knowledge and skills on the private sector management.
By seeking national consensus among the main political parties on the issue of
indispensability of privatisation, the privatisation process will be pushed further in the
best economic interests of the country.
Long-term Objective and Programme
It will be in line with privatisation to promote private sector participation in the
production and distribution of goods and services and other economic and social
sector investment and management currently undertaken by HMG for ensuring
efficiency and optimisation of national resource utilistaion. Among these areas, postal
service, civil aviation, highways, bridge, irrigation, canal, hospital, school, campus,
university, media, drinking water, sewerage, transportation system, tax collection at
the local level, traffic control system, sanitation and security of Toles, village and
wards; forest management, river training and embankment, disaster management, fire
control, distribution of medicine, supply of food, fertilizer, energy and petroleum
products; study and research on mining and geology; control of school examinations,
training management for human resources, management of physical resources and
services of HMG, management of printing press of HMG, security, maintenance and

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regular management of temples and other religious sites, management of national
parks, parks and livestock farm, places of archeological importance, national library,
reading room, conference-hall, museum, zoo, management of Hanumandhoka and
other historic palaces, stadium and sports facilities, parade ground, management of
expedition and trekking permits, management of transit facilities, management of
national debt, printing and publication of HMG are important for the private sector. It
is within this context that the long-term objective and possible programmes of
privatisation will be viewed.
Ninth Plan
6. Objective
Though the main objective of privatisation is to enhance productive uses of resources,
in the light of economic, social and political realities of the country there can be
various aims of privatisation. In our context, though privatisation programme
encompasses all political, economic, financial, social aspects and is geared to achieve
a particular objective, yet its direct and indirect effects have tended to disperse across
the sectors. Hence the programme of privatisation has been oriented to attain multiple
objectives. In line with this, the Ninth Plan has set the following objectives of
privatisation:
• To increase the effectiveness and productivity of government resources through
efficient utilisation;
• To make the government gradually assume the role of facilitator by encouraging
and motivating the private sector for participation in economic development;
• To help maintain economic stability by enforcing financial discipline and
relieving the government progressively from the burden of financing corporation
deficits;
• To promote the participation of common people in the economic development by
means of privatisation;
7. Policy and Implementation Strategy
• As the process of privatisation affects different sections of society, it is necessary
that the concerns of those affected be heeded to. Accordingly, a consensual
environment will be created through keeping people wellinformed about the
positive and adverse consequences associated with the process.
• Because the modality of privatisation is directly related to its objective, the
process will be pushed ahead by adopting appropriate modality so as to ensure a
fair opportunit y for all the investors.
• While selecting a corporation for privatisation, it will be assessed properly
applying various criteria such as the nature of the job currently performed by the
enterprise, its future prospects, current economic profile, potential to attract
private sector investors, the size of additional investment required, technological
and managerial requirements, the expected role of government and the needs of

161
 the consumers, etc. Besides, detailed analysis will be carried out to determine the
priority based on the study of timing, sequencing and pace of privatisation.
• The selection of the investor will be made only after the careful assessment of the
business and technical resources, skills, knowledge and experience, the business
plan, financial status and reputation, managerial efficiency, access to national and
international market, competitive ability, etc.
• To ensure that the government gets fair price from privatisation, arrangements
will be made to provide the prospective investor with all relevant information
about the enterprise. To enhance the credibility of the programme and secure a
competitive price for the enterprise, all relevant information about the business
value of the enterprise, the value of its assets, its strengths and prospects will be
widely disseminated in the public.
• In view of many public enterprises operating poorly due to the lack of capital and
technology, foreign investment will be encouraged in some corporations
requiring huge amount of capital and modern technology.
• The terms and conditions in which the transfer of ownership and management of
a corporation is to be negotiated with the investor concerned will be explicitly
laid down. Such terms and conditions will address the issues such as the
continuity of an enter prise, restriction on the sale of assets and reduction in
employees’ compensation, value payment, the rights and duties of the investor,
the right of HMG, the size of share which must be distributed to the employees,
and general public, resolution of disputes and the type of Act applicable to the
process.
• A clear policy and approach will be evolved to protect the interests and rights of
the employees as well as to determine the other necessary compensation to be
given to them while privatising government corporations.
• Keeping in view the differences in the operations of government owned
enterprise and business enterprises in the private sector, programmes will be
launched where possible, to make government corporations which are to be
privatised, operate like commercial enterprises by developing appropriate work
culture, initiating measures to improve their efficiency and even by restructuring
them as required.
• Monitoring of the privatised enterprises will be undertaken in post-privatisation
phase with a view to ensuring that they are observing all terms and conditions,
are providing necessary goods and services as required, and the results will be
made public. Moreover, the public will be informed about various aspects of
corporations such as their efficiency, employment profile, quality and prices of
goods and services, business expansion, revenue increase and economic status,
etc.
• Measures will be taken to promote the private sector by keeping the door open for
investment, enacting appropriate laws and by-laws and executing them. Emphasis
will be given to the development of capital market, banking and financial sectors.
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 Instruments like shares and debentures will be utilised as a means of mobilising
necessary resources.
• As the private and the public monopo lies tend to be similar, to prevent the
monopoly from taking place before privatising public monopolies, necessary laws
and by-laws will be formulated for the appropriate regulation of such monopolies.
• Necessary amendments, based on experience of the past and long-term
perspective, will be made in the existing Privatisation Act to improve its
effectiveness. In line with the Act, a more practical, scientific and transparent set
of rules will be formulated and implemented.
• Transparency of the programme will be enhanced in a way to ensure that the
actions and procedures confirm the dictates of law; all people willing to
participate in the programme get equal opportunity; and anybody with an interest
in the entire business or the decision process of privatisation be given all relevant
information without any barriers.
8. Programme :
Within the conceptual framework mentioned earlier, to achieve the set objectives,
actions will be taken to privatise the following enterprises during the Ninth Plan
based on the findings of studies.
(1) Nepal Tea Development Corporation (2) Pokhara Dairy Development Project (3)
Gorakhapatra Corporation (4) Himal Cement Company (5) Nepal Resin and
Turpentine Ltd. (6) Nepal Bank Ltd. (7) Salt Trading Ltd. (8) Rastriya Beema
Sansthan (9) Rastriya Banijya Bank (10) Butawal Power Company Ltd. (11) Lumbini
Sugar Factory Ltd. (12) Janakpur Cigarette Factory Ltd. (13) Nepal Transport
Corporation (14) Nepal Housing Development Finance Company (15) Industrial
Management Ltd. (16) Agriculture Lim e Industry (17) Agricultural Projects Service
Centre (18) Birgunj Sugar Factory Ltd. (19) Dairy Development Corporation (20)
Cotton Development Committee (21) Herbs Production and Processing Company
(22) Hetauda Cloth Industry Ltd. (23) Morang Sugar Factory Ltd. (24) Nepal
Telecommunication Corporation (25) Royal Nepal Airlines Corporation (26)
Birendra International Conference Centre (27) Nepal Oriend Magnesite (28) Hetauda
Cement Company (29) Udaypur Cement Company (30) Nepal Electricity Authority.
In case of the enterprises remaining in the public sector for the time being, various
improvement programmes should be initiated so as to optimise the utilisation of
available resources and capabilities. Structural reforms will be achieved by improving
goods, services, and overall business efficiency, refining the process of pricing,
controlling financial irregularities and leakage, making political and government
involvement more productive, and orienting the size and capacity of enterprises
towards the market.
9. Conclusion
• Information about various aspects of privatisation such as objectives, policies,
processes of evaluation, selection of investor, provisions made in relation to the

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 employees, scope and criteria of privatisation, etc., will be made public and, in
this way, the privatisation programme will be implemented by ensuring
maximum participation of the people.
• Corporations not feasible to be privatised at the moment and expected to be
privatised after restructuring in the long-term as well as other activities of the
government will be run in a competitive environment on a commercial basis.

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 5.7 Foreign Investment

1. Background
The foreign capital and technology flow is an important means to supply the
increasing demands of capital in the country. Accordingly, the Sixth Plan initiated a
policy to utilise foreign capital and technology as a useful supplement. With an
objective of providing contribution to the economic development of the country
through the foreign investment and technology transfer, foreign investment
promotion was adopted as an important strategy for industrial development and
building legal infrastructure since the very beginning of the Sixth Plan. To introduce
policy and institutional reforms in line with open and liberal policies, Foreign
Investment and One Window Policy, Foreign Investment and Technology Transfer
Act, Industrial Policy and Industrial Enterprises Act were amended and executed in
1992.
Notwithstanding the fact that the inflow of foreign investment and technology has
registered a growth over the years, it has not been sufficient to meet the larger needs
of water resources, tourism and infrastructure development. Given the limited size of
domestic savings mobilisation and the huge amount of investment required for
economic development of the country, the demand for foreign capital and technology
is still immense.
2. Review of the Eighth Plan
During the Eighth Plan, the Foreign Investment and One Window Policy (1992),
Foreign Investment and Technology Transfer Act and Industrial Policy and Industrial
Enterprises Act were enacted. Foreign Investment and One Window Policy has
created friendly environment for investment, and defining more precisely the forms
of investment, the smooth flow of share investment, loan inves tment, technology
transfer and management services has been ensured. To eliminate the barriers coming
on the way of foreign investment, the registration and licensing procedures are
simplified and it has been decided to grant licenses within stipulated time-span i.e. 30
days term the receipt of application. Legal framework and organisational structures
have been erected to enhance the competitiveness of industries providing liberally the
facilities and concessions to be accorded to industries. Industrial Promotion Board,
involving private sector participation, has been constituted with a mandate for
formulating and implementing policies while One Window Committee has been
functioning to accord facilities and concessions. To introduce Nepal as a competitive
country for foreign investment and win the confidence of the investors, the policy
guarantees the protection against nationalisation and all industries except those in the
negative list have been fully opened for foreign investment. Technology transfer is
welcome in the entire range of industries.
To create a conducive environment for foreign investment, the first phase of
macroeconomic reforms has been given due attention in order to implement policy
and programmes favorable to the development of private sector and develop financial
165
institutions. With an objective of attracting foreign investment for the development
and improvement of physical infrastructures, infrastructure development is redefined
as construction industry.
As a part of its endeavors to attract foreign investment, Nepal has made some
provisions, which are considered to be essential conditions by the international
community. Nepal has secured the membership of Multilateral Investment Guarantee
Agency for ensuring guarantee of the investment and repatriation of all investment
and earnings. With a view to enabling the investors to lead a respectable life in Nepal,
arrangements have been made to make business visa easily available to them.
Similarly, Nepal has entered into reciprocal encouragement for the promotion and
protection of investment agreements with Germany, France and United Kingdom and
has signed agreement for avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income with India, Norway and Thailand. To settle
the foreign investment-related disputes, the law of the country has explicitly made the
provision for their arbitration within the framework of United Nations’ Commission
for International Trade Law (UNCTRAL). The disputes concerning large projects i.e.
industries with fixed assets of more than Rs 500 million, may be settled as mentioned
in foreign investment agreement between investors providing their autonomy. As a
measure of the institutional reform, Industrial Promotion Board which is also
involved in the formulation and implementation of industrial policy, and One
Window Committee which provides all facilities and services under one roof, have
been formed. Industries are entitled to the reduction in and exemption from income
tax and duty draw back facility, which constitute the main incentives under the Act.
In addition to these incentives and services, as the investors expect to receive
infrastructure-related and other services through the one window service, there was a
disparity between the investors’ expectations and existing legal provisions, which had
limited the function of the One Window Committee. The amendment of the Act last
year has empowered the committee with authority to make recommendations on
issues pertaining to the provision of infrastructures. To deliver the services and
facilities to the industries more efficiently at the local level, the One Window
Committee has initiated functions through sub-committees in some districts since last
year.
Under the provision of the said Act, no foreign investment was permitted in cottage
industries and industries having up to Rs 20 million fixed assets. However, the 1996
Act amendment eliminated the fixed assets limit and expanded the scope of foreign
investment in all industries except a few included in the negative list. To expedite the
process of granting permission, the Department of Industry is authorised to approve
industries with foreign investment involving a fixed asset of Rs 500 million at the
outset.

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 Table 1
Approval of Foreign Investment

Fiscal Year No. of Total Capital Part/share of No. of

Industrie Investment Foreign Employees
s (Rs in million) Investment
(Rs in
million)
Until 1991/92 150 12236 1861 28690
1992/93 63 17884 3752 13837
1993/94 38 3323 909 4734
1994/95 19 1627 478 2386
1995/96 46 9750 2220 8032
1996/97 74 7604 2373 9213
Total of the 240 40188 9732 38232
Eighth Plan
Period
Total 390 52424 11593 66922

As of FY 1991/92, the total number of foreign collaboration projects registered in the

country stood at 150 and the total capital investment amounted Rs 12 billion 240
million. During the Eighth Plan, 240 new projects have been approved in which the
total amount of capital investment involved was Rs 40 billion 190 million.
Immediately after the initiation of liberal and open policies, in the first year of the
Eighth Plan, 63 industrial projects were sanctioned involving the capital investment
of about Rs 17 billion 880 million. This was a very encouraging start indeed,
however, the momentum could not be sustained. As a result, subsequent two years
experienced a decline in the investment. The situation has improved since FY
1995/96, the situation is not satisfactory.
The table above includes only foreign investment in the industries registered the
Foreign Investment and Technology Transfer Act. The investment in banks and
financial institution made under a different legal mandate is not included therein.
The total number of industries with foreign investment approved up to the FY
1996/97 was 390, out of which 188 were operating while 45 others were under
construction phase and thus apparently 60 percent of the total approved projects may
have been implemented. The remaining 40 percent industries have not been
implemented even after securing the permission. (Table 2).

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 Table 2
Situation of Approved Foreign Investment Projects

Condition of the Industry Number of Total Capital Number of

Industries Investment employees
(Rs in million)
Operating 188 19876 35183
Under construction 45 16599 7760
Licensed 95 12294 16458
Approved 34 1628 5273
Closed and Cancelled 28 2027 2248
Total 390 52424 66922

Under liberalisation and open market policy, foreign investment has been opened in
the banking and financial sectors also. Before the Eighth Plan, the number of joint
venture banks were three and out of their total issued capital of Rs 472.7 million the
share of foreign investment was Rs 20 million (42.75%). During the Eighth Plan,
seven such joint venture banks and three financial companies were established. The
total issued capital of seven banks is Rs 1 billion19o million out of which the share of
foreign investment is Rs 485 million (40.75%). Similarly, the foreign investment in
case of financial company amounted to Rs 44 million out of the total issued capital Rs
180 million.
A look in the foreign investment sectoral distribution pattern reveals that the
investment tended to concentrate in manufacturing industry. (Table 3)

Table 3
Sectoral Distribution of Approved Total Foreign Investment
(from the beginning up to July 1997)

Type of the Number of Total Capital Part of Foreign

Industry Industry Investment (Rs in Investment
million )
Manufacturing 218 22532 4331
Tourism 86 9567 2150
Service 64 7665 2430
Agricultural 10 330 75
Construction 5 294 93
Energy based 4 10883 1808
Farming based 3 1153 46
Total 390 52424 10933

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As illustrated in the above table, 56 percent of the approved projects were in the
manufacturing sector while 22 percent tourism sector and another 22 percent to
services and the other sectors. In terms of capital investment, manufacturing, tourism,
energy and the other sectors received 43%, 18 %, 21% and 18 % respectively. In
addition to this, the banking and financial sector has secured Rs 729 million foreign
investments.
Although the efforts made in the past few years have brought about some success in
attracting foreign inv estment in the country, the achievements have not been up to the
mark. The qualitative and quantitative flow of foreign investment, entry of some
multinational companies in Nepal, transfer of management skills and technology,
increase in industrial assets, creation of new job opportunities and increase in the size
of exports particularly to India can be viewed as positive effects of liberal and open
policies adopted by the country.
3. Existing Challenges
Nepal is endeavouring to be placed in a competitive position in order to attract
foreign investment like other developing countries. Although adequate physical
infrastructure and resources required to attract investment are limited, efforts have
been made to introduce policy reforms, institutional strengthening and new resources
identification and utilisation.
In spite of reviving policy in areas of foreign investment, technology transfer and
services and also despite the incentives made more open and easily accessible
compared to other countries in South Asia, the inflow of investment has remained
below the expected level.
If the climate of investment in Nepal is tested against various parameters such as the
state of infrastructure, policy stability, legal structure, capacity of the banking and
financial sector, human resource profile, responsiveness of bureaucracy, quality of
revenue administration and accessibility to the credit flow, many other areas require
reforms.
In order to ascertain smooth transfer of foreign capital and technology, the absence of
a strong and effective policy implementation mechanism capable of translating the
policy intent into outcomes has remained the main problem before us. It is necessary
that the institutional reforms be geared towards the establishment of legally
competent, strong and efficient institutions at the implementation level so as to ensure
effective delivery of services.
4. Long -term Concept
The attraction of foreign investment has become an increasingly competitive
business. No one would deny the fact that in such a competitive atmosphere, a small
and landlocked country like Nepal has to make some additional efforts to counter
balance the negative impact of the competition. Therefore, special attention should be
given to mobilise domestic and foreign investment to meet the increasing investment
needs of the country through the creation and stablisation of investment-friendly
environment. Following matters should receive priority in order to achieve the goal:

169
• To identify the area and sectors of comparative advantage and decide upon the
priorities for foreign investment;
• To prepare policy and legal framework in line with liberal and open economy and
stabilise them;
• To make the administrative mechanism more efficient, active and smart to
execute the policy and legal prescriptions;
• To give attention to the development of necessary physical infrastructures,
particularly electricity and road transport;
• To make banking and financial sector wider, more efficient and simple;
• To enact environmental and labour laws in a way that provides enough room for
industrial enterprises to develop;
• To ensure the supply of quality human resources to the industry, and give
emphasis in improving productivity.
Ninth Plan
5. Objective
• To ensure the safe entry of foreign capital, technology an d managerial and
technical skills particularly for the development of industry, tourism, water
resources and infrastructure;
• To accelerate the process of industrialisation through the mobilisation of foreign
investment and private sector participation;
• To promote export in the international market by improving production,
productivity and quality;
• To raise the living of the people by expanding the opportunities for gainful
employment and income generation.
6 . Policy and Implementation Strategy
• The inflow and outflow process of foreign investment will be made simple and
transparent;
• Open and competitive market regime, which is conducive to foreign investment,
will be maintained;
• Attention will be given to maintain the environment of security for investment
and dividends;
• National economic management will be made transparent and the process of
economic liberalisation, private sector development and globalisation intensified;
• Special priority will be accorded to the maintenance of economic and,
particularly, financial stability;

170
• Appropriate incentives will be given to ensure efficiency, credibility and
transparency of banking and financial sector management;
• Development of technical and skilled human resources will receive due priority
with a view to helping investment;
• Measures will be taken to attract foreign investment by identifying areas of
comparative advantage and promoting them;
• Efforts will be made to remove the infrastructural barriers confronted on the way
of industrialisation;
• Based on comparative advantage, foreign investment will be given entry even in
the area of service industries;
• Foreign investment as well as private sector will be attracted to the construction,
improvement and operation of physical infrastructure by making appropriate
legal and structural arrangement;
• One Window Committee will be made effective in providing infrastructure and
services. The mandate of One Window Sub-committees will be expanded and
they will be extended to other districts as and when required;
• The government will provide necessary support to the industries in bringing in
new technology and skills as required;
• The situation of intellectual property rights will be improved as per international
standards and treaties and a legal framework will be put in place to ensure a
cleaner and more competitive environment for investment;
• Agreements encouraging investment promotion and protection and avoiding
double taxation will be concluded with more countries;
• Appropriate legal and institutional arrangements will be made to enhance
coordinated action to promote investment in various sectors viz. industrial
enterprises, services, infrastructure building, banking and financial services;
• The flow of data and information pertaining to various economic activities will be
made simple, dependable and more autonomous;
• Measures will be taken to create a more investment-friendly environment in view
of competing promotional programmes in the international market;
• The process through which the repatriation of capital and dividends is carried out
will be made more simple and transparent;
• In view of large market and proximity of neighbouring countries, Nepal will be
developed as a centre for producing and exporting more value-added goods;
• The entry and execution of export-oriented industry will be made easier by
procedural simplification and the concept of unrestricted entry will be adopted.
Arrangements will be made to ensure that the exporters have an easy receipt of
duty drawback.

171
• A high level inter-ministerial coordination committee will be instituted to remove
barriers on the way of timely approval and implementation of big industries and
infrastructure-building projects involving foreign collaboration.

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 Chapter - 6
Poverty Alleviation and Employment Promotion
6.1 Poverty Alleviation

1. Background
The problem of poverty has posed itself as a big challenge to Nepal. The income and
consumption level and overall living standard of the people have remained very low.
To raise the living standard of the people in a sustainable manner by alleviating the
existing poverty has become the biggest challenge ever. The great majority of the
population live in the villages and the big segment of them is poor. In this context,
from the very beginning of the planned economic development process, great stress
has been laid on the development of agriculture and physical infrastructure in order to
improve the living standard of the common people. To this effect, the seventh Plan
had formulated elaborate programme with a view to fulfill the basic needs of the
people. Poverty alleviation was enshrined as one of the main objectives in the Eighth
Plan and, with a view to addressing poverty in a planned way, comprehensive policies
and targeted programmes were hammered out and put in implementation. At the time
of the commencement of the Eighth Plan, 49 percent of the people were estimated
living below the absolute poverty line. The objective of the Plan was to bring down
the same to 42 percent. A living standard survey conducted in 1976 revealed 42
percent of the people still living below the poverty line. From poverty alleviation
angle, the picture is far from encouraging. As such, it has become imperative to
launch comprehensive poverty alleviation programmes as a campaign. Such
programmes have to be guided by a long-term vision embodied in the Ninth Plan. The
task of poverty alleviation seems possible only with multi- disciplinary effort. For this,
all the activities under various sectors have to be pushed forward in a coordinated
manner. On the one hand, extension of economic activities is indispensable for
poverty alleviation, while on the other hand, it is equally essential to create conducive
social condition to enable the ultra-poor to take benefit from opportunities that might
open up in their wake. Similarly, it is necessary to engage the private sector in
economic activities by providing them opportunities and facilities. It is equally
necessary to ensure access of the ultra-poor group to opportunities created in this
sector.
In the context of the country, the depth of poverty varies from region to region. It can
be said that the basic reason of existing poverty is the inconsistency latent in the
social and economic structure. Generally speaking, the level of education and health
care is very low, which is even more pathetic among the backward communities.
Because of unequal distribution of productive resources, which is the source of
income, the condition of the landless and marginal farmers and their family is
worrisome. Unless such problem is not tackled, poverty can not be alleviated soon.
Beside this, poverty can not be alleviated from external efforts or programmes
imposed from above. Participation of the poor themselves is very important in every
programme, which aims at poverty alleviation. As such, the poor need to be made

151
capable, empowered and, then, mobilised. For this, it is very necessary to ensure to
the poor maximum access to social and economic resources and services. It is also
equally essential to create opportunities for the poor and enable them to participate in
the decision making, policy and programme formulation and implementation of
development programmes.
In our context, when we set out to formulate plan and programmes for poverty
alleviation, we should basically think along the line of directing all our development
process toward that objective. A development process to be pushed forward should be
such which is broad-based and high paced; which organises, trains and enables the
poor, reduces resource and income disparity and buttresses equitable distribution. In
order to ensure to the poor, women and backward communities an access to social
and economic resources, facilities and services, it is highly essential to adopt
appropriate policies and programmes, provide the ultra-poor and poor access to
information system and skill development activities and expand physical, social and
institutional infrastructures in the rural areas. It is equally necessary as a matter of
basic principles to seek to enlist active participation of entire population, trying to
reduce the disparity which exists between regions and communities; to mount
appropriate programmes on the basic of geographical diversity and local needs, and to
generate additional employment opportunities in the urban areas.
2. Review of the Eighth Plan
When the Eighth Plan commenced it was estimated that 49 percent of the population
lived below the absolute poverty line. An objective to bring down the same to 42
percent was set in the Plan. Policies were formulated to run self -targeted programmes
for the poor, to increase access of the poor to productive resources, to arrange to
award contracts of technically simple civil works to poor groups, to bring legis lation
to remove social malpractice and create public awareness, to provide legal protection
to the destitute and the helpless against exploitation to open dialogue and come to
agreement with foreign governments for employment to workers who is willing to
work abroad, to create employment in the non-agriculture sector through food
programme and to make institutional arrangement to monitor and coordinate poverty
alleviation activities. Policies incorporated in the Plan relating to implementing self-
targeted programmes, increasing poor's access to productive resources, creating
people's awareness, food security and institutional arrangement for poverty watch is
being implemented. Policies like awarding of contract of simple civil works to the
poor groups, bringing legislation to remove social malpractice and exploitation, and
opening dialogue with foreign governments for employment opportunities abroad did
not materialise.
As the poor communities derive minimum benefit out of the investment on
development of social and physical infrastructure and various economic activities, the
policy of implementing special targeted programmes have been incorporated in the
Plan for the upliftment of those communities. Programs were also formulated to bring
about institutional improvement for implementing programmes bringing efficiency in
the working system, to develop institutional arrangement for effective implementation
of programmes and to mobilise NGOs. During the plan period, efforts were made to

152
execute special targeted programmes, mobilise NGOs and enhance efficiency in the
working system.
During the plan period, contribution has been made, in reducing the intensity of
poverty, by various economic opportunities resulting from economic growth and
launching of sectoral programmes. In this context, agricultural programmes like
development of co-operative societies, agricultural and rural credit, poverty
alleviation credit, female farmer development, small farmer development and projects
have directly supplemented poverty alleviation efforts.
Protection and utilisation of forest by the forest users' group has also helped to
alleviate poverty by fulfilling the demand of energy sources. Forest development
programme implemented by forest users' group, which were activised under
community forest and other rural development projects, have buttressed poverty
alleviation endeavours. Projects like micro and small hydel and alternative energy
development programmes like bio-gas have also been found helpful in poverty
alleviation.
Policies have been adopted to run various programmes to enable the local people to
extend quality tourist services and direct various community based income generating
programmes to the production, at the local level, of goods, especially food items
needed to tourists. Policies have also been adopted to carry out formulation and
implementation of tourism development programmes jointly by private, local people
and the government.
This has greatly benefited the people of Annapurna and Shyabru Besi (Langtang
area). Increasing participation of the local people in adventure tourism has also
helped in poverty alleviation. The development of tourism in various pockets has led
to employment and income generation, ultimately contributing to poverty alleviation.
Other efforts at poverty alleviation is promoting the small and cottage industries,
which have encouraged small vocation and created additional employment
opportunities.
The progress review of some of the targeted programmes implemented during the
Plan to alleviate poverty is in order.
Physical infrastructure:
Programmes is being implemented to build rural and agricultural roads to develop
physical infrastructures in the rural areas for connecting markets of different regions
with each other for poverty alleviation and to pave road up to district headquarters in
order to affiliate regional and local economic activities with the national economy and
to connect production area and the market.
Remote Area Development Programme: Under this programme carried out during the
plan period, schemes like drinking water, irrigation, suspension bridge, construction
of tracks, school repair, herbal farming, milk processing, fruit storage, afforestation,
operation of mechanical mill have been completed in the 22 mountain districts.
Integrated rural development programme: The Gulmi-Arghakhanchi, Dhading,
Gorkha, Lamjung, Seti and Karnali projects is being run along the integrated rural

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development model in order to improve the living standard of the local people
through multi-dimensional development of rural areas and poverty alleviation
programmes.
Increasing access of the poor to productive resources:
Small farmer development project: This programme which has been in operation for
last two decades is based upon group credit and has, along with credit, extended many
other services to about two hundred thousand households in 652 VDCs within the
country.
With the beginning of the Eighth Plan, programme for institutional development of
small farmers has been implemented under GTZ assistanc e in order to speed up
extension of this project and to reduce overhead expenditure.
Production credit for rural women: The principle aim of this programme has been to
improve the socio-economic condition of poor women through institutional credit,
training and community development. This programme has been going on for the last
15 years. At present this programme is being implemented in 652 VDCs in 67
districts Under the programme, against its target of providing various trainings to
134505 women, 96655 women seem to have received training. Likewise, as against
the target of organising 7912 groups, 12409 groups have been organised and Rs. 20
million has been invested. During the plan period, micro-credit to women projects has
been launched in 12 districts under ADB assistance.
Rural Development Bank: In view of the important role credit plays in poverty
alleviation, this bank has been providing credit through simple procedures to the rural
poor for self-employment and income generating activities. It has helped increase
income through establishment of five rural development banks in five development
regions, and from 1400 centre and 8000 groups in 300 VDCs in 26 districts. Thus, it
has provided 40,000 group members with credit and supported them in self-
employment and in increasing their income.
Various NGOs have also helped the poor, especially women to increase their income
by providing them credit following rural development bank model. During the plan
period, the banks in the NGO sectors have extended cred it facility of about Rs. 1.4
billion to 67000 poor people on group guarantee basis in 497 VDCs of 34 districts.
Intensive Banking programme: Under this programme 184 branches of Nepal Bank,
168 of Rastriya Banijya Bank and 2 branches of Nepal Arab Bank, altogether 354
branches of these banks, have extended credit to the poor groups in 75 districts.
Banking for the Poor: This programme designed and run under the Australian
Development Coorperation has been helping 3600 poor in 68 places in 15 districts.
Education and Training:
Various skill development training is being provided under remote area development,
women development and other rural development programmes. Under the training
programmes, skill promotion training to 259 persons, income earning training to 38
persons, herbal training to 62 persons and cottage industrial training to 235 persons

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have been given during the plan period. Similarly, 81 types of various training
programmes on health, nutrition, population education and family welfare have been
conducted. Beside this, carpentry and consumer group training and mobile skill
training programmes for rural women have also been implemented.
Social Extension Programme:
Various programmes like social mobilisation, and cooperative development at the
local level have been launched to enable the poor community to participate in local
development programme and organise themselves in groups to increase their income
and to uplift their community.
Population programme:
As high population growth rate erodes development efforts, the Eighth Plan has
stressed on population control. Although some reduction in fertility rate is noticed,
attaining the target of controlling infant and child mortality rates appears bleak.
Maternal mortality is decreasing but the rate is still high.
Population education programme was run in various sector viz, education, health,
local development, labour, agriculture, forest and industry in order to build awareness
about population, popularise small family norm, and increase the demand for family
planning services. Various extension programmes, which were launched to create
public awareness about the adverse impact of high population growth upon national
economic, social and environmental condition, have been found quite successful. This
has increased the demand for family planning services.
Employment Generation:
Efforts have been made to produce appropriate manpower and increase employment
by means of human resource development through pushing forward education and
health facilities. Various sectoral and targeted programmes have been extended up to
the local level in order to enhance employment opportunities to the poor people.
Efforts have been made to give employment to the poor through intensive banking
programme, extension of civil works, establishment of processing and industrial
plants and miscellaneous activities conducted in the non-agricultural sectors. In order
to give the poor household an access to economic resource, various programme
relating to credit, community forest, distribution of land to the landless have been
carried out. Institutional development in the public and private sector has been sought
to manage the affair of foreign employment in order to fulfill the aspiration of the
labour to work abroad and to solve the unemployment problem within the country.
Food Security:
Food for work: This programme was implemented with a view to giving employment
and food as income to the people by launching physical infrastructure building
activities in various districts. Under this programme, generating employment and
income through activising users' groups has been laid stress upon.
Transportation of food grain and distribution: This programme has been continued to
supply food in 38 hill and mountain districts, which is perpetually food deficit. Under

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this programme, the Nepal Food Corporation transports, sells and distributes food
grains in the remote areas to protect the local people from famine.
Nutrition Programme: This Programme of offering mid-day tiffin being run in
Dhanusha, Parsa, Rupandehi, Doti, Dadeldhura, Accham, Rukum and Dailekh
districts to improve the nutritional condition of the student and to attract school
enrolment.
Programme for the Backward Community:
Programme for the development of Praja and other aboriginal race: This programme
has been implemented in 21 districts of the country to uplift the socio-economic
condition of backward and aboriginal races viz; Chepang, Raute, Mushahar, Jhagad,
Dum, Chamar, Dusad, Shatar.
Programme for upliftment of the deprived, oppressed and the down-trodden
community: This programme has been implemented in 22 districts through the NGOs
and the users' communities to help the families of the deprived communities to earn a
living by giving them skill training and employment.
National Programme for the upliftment of the scheduled caste: This programme has
been launched since FY 2052/53 to uplift the condition of the scheduled caste by
studying and conserving their socio-economic culture, traditions, dialects and culture.
Feasibility study has been completed to this effect for the establishment of a
Scheduled Caste Upliftment Academy.
Vocational development and rehabilitation Programme for Kamaiya: This programme
has been in operation in Banke, Bardiya, Dang, Kailali and Kanchanpur where the
very poor people of Tharu community take credit from the rich to support their family
and for social functions. In return, they work as Kamaiya (bonded labour) in the
household and the farm of the money-lender normally the landlord. This programme
seeks to free them from the yoke of landlords and engage them in income generating
activities through formation of groups, group credit, saving and skill development
training. Also, it seeks to rehabilitate the homeless and the landless Kamaiyas through
arrangement of residence and land for them.
Kamaiya women skill development programme: This programme is being run with
the purpose of improving the socio-economic condition of the Kamaiya women by
helping them to engage themselves in self-employment. Under this programme,
various training on knitting, weaving, literacy, health and education have been given
to Kamaiya women.
3. Existing problems
A look at the situation till date reveals that poverty alleviation efforts have not been
broad, effective and focused on the poor and the ultra poor. The size of the poor
covered by the targeted programmes stands minimal compared to the existing size of
the poor people. The programmes targeted at the poor do not seem to succeed as they
is externally operated and lack active participation of the poor. The targeted groups
have not benefited from such programmes as real poor could not be identified and
those programmes could not reach areas with high poverty ratio. There is a lack of

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information at the local level on many programmes run by the government and
NGOs. And because of lack of public awareness, these programmes is unable to bring
about expected improvement upon the socio-economic condition of the poor. Beside
this, as such programmes is extremely scattered at the field level, their effective
monitoring is very difficult. As a consequence, output is very low as compared to the
investment.
Although government agencies, NGOs and private organisations is active in poverty
alleviation activities, due to the lack of co-ordination and cross-flow of information
among these agencies, duplication in programmes, lack of mutual cooperation and
spatial imbalance in distribution of programmes is in evidence. In totality, causes like
failing to attain spectacular growth in GDP, not assimilating the poor as end and
means in programmes seeking growth in production, the poor not having easy access
to limited opportunity and facility and a say in the decision making have stood as a
challenge.
Present Poverty Situation:
For the first time a study of income distribution, employment and consumption
pattern was carried out by the NPC. in 1976 had estimated that 36 percent of the total
population lived below the poverty line. A household budget survey done by the
Nepal Rastriya Bank in 1984 revealed 41.5 percent of the population living below the
poverty line. A study carried out during the formulation of the Eighth Plan found out
that due to increasing population pressure and unequal economic distribution about,
49 percent people fell below the poverty line.
The Living Standard Survey of Nepal which was launched by the Central Bureau of
Statistics in 1996 has made detailed study of the condition in which the people below
the poverty line lived. Taking into account situation of poverty and the process of
impoverishment based upon the consumption expenditure of the poor the size of the
population falling below the poverty line has been estimated. While working out per
capita consumption expenditure, the total expenditure which included expenses on
food, housing and other items have been taken into account. As revealed during the
study, the average per capita consumption expenditure per annum in the country
stood at Rs. 6178.
In Nepal, while estimating the size of people living below the poverty line, per capita
consumption level has been treated as the criterion. Expenses on consummable goods
reflect one's economic standing. Expenditure on consumption is continuous on daily
basis. As such, determination of poverty based on this criterion is more reliable, and
for the same reason, acceptable than the one based on income. While determining
poverty on the basis of consumption, calorie intake received from food has been
treated as the yardstick for poverty measure. The Living Standard Survey has
determined 2124 calorie as per capita per day necessity. The per capita annual
expense to purchase that calorie equivalent of food worked out to be Rs. 2637. If the
expenditure on non-food items is added to it, the per capita annual expenditure is
estimated to stand at Rs. 4404. Based on this, the size of population living below the
poverty line has been found 42 percent. Of this, 24.9 percent is the poor and 17.1
percent is estimated to be ultra poor.

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Population under the poverty line has been described in the following table according
to their geographical distribution. Geographic region-wise, 41.0 and 42.0 percent of
the population is below the poverty line in hills and Terai, and as much as 56 percent
people live below the poverty line in the mountains. Similarly, 23.0 percent in the
urban and 44.0 percent people in the rural area live below the poverty line revealing
high poverty concentration in the rural than in the urban area.

Population under the Poverty Line

Region-wise Description Population below the P overty Line

(in percent)
Total Poor Ultra-poor
A According to geographic region
Mountain 56 29.3 26.7
Hills 41.0 21.3 19.7
Terai 42.0 28.7 13.3
B Urban and rural areas
Urban area 23.0 13.2 9.8
Rural area 44.0 26.4 17.6
C National average 42.0 24.9 17.1
4. Long-term Concept
Only those objectives, policies and programmes which is based upon broad
perspective can bring about desired output from poverty alleviation efforts. Keeping
in view this fact, a 20-year long-term vision has been embodied in the Plan. The long-
term goal would be sought to achieve in a phase-wise manner. In order to solve the
serious problems of poverty, its root causes would be identified and appropriate
measures would be taken in all sectors. The cardinal factors of poverty is latent in the
socio-economic structures themselves. As such, the incentive and participation of the
poor would be broadened for the cause of poverty alleviation.
Pursuing the long-term vision, the present size of the population below the poverty
line, the 42 percent, would be brought down to 10 percent in next 20 years, i.e. by the
year 2073/74 BS. Attaining high aggregate growth rate and controlling high
population growth would be aimed at in order to improve the social and economic
condition of the poor community. Similarly, in pursuance of the long-term goal,
appropriate programmes would be hammered out for the promote employment,
increase in productivity, good governance, human resource development,
empowerment of the people and also for bu ilding socio-economic and physical
infrastructure.

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Ninth Plan
5. Objectives
• To gradually raise the living standard of the people below the poverty-line by
reducing the pressure of poverty.
• To launch special area and various targeted programmes to uplift the living
standard of ultra-poor household which is without any means of production as
well as income.
• To socially and economically empower the backward, deprived and weak
communities.
• To reduce the concentration of existing poverty in backward and remote areas by
developing physical, social and economic infrastructure.
6. Strategy
The existing size of the population, i.e. 42 percent living below the poverty line,
would be reduced by 10 percent and brought down to 32 percent. In order to achieve
this objective, following strategies would be adopted:
• During the Ninth Plan, all development activities under all the sectors of
economy would be directed towards poverty alleviation. For this, it is highly
essential to achieve high economic growth. The agriculture sector would play the
lead role in poverty alleviation. Besides this, emphasis would be laid on massive
employment generation in industry, tourism, public works, transport and service
sectors. Likewise, in order to mobilise people's participation and create self-
employment, social and economic infrastructure would be built and arrangement
would be made for required productive resource and skill development.
• In addition to attempting to achieve high economic growth, special emphasis
would be given to render primary health, educational and drinking water facilities
to improve the socio-economic condition of the deprived and weak communities
living in the backward and remote areas. Structural changes would be introduced
in on-going, targeted programmes which would be implemented in an effective
manner.
• Experience has belied the notion that the fruit of development automatically
trickles down to the lowest group of the society. As such, special attention would
be paid to equitable distribution of the fruits of development.
• The people falling below the poverty line have been categorised into two groups
viz, the poor and the ultra-poor. Alleviating poverty would be attempted as per
the categorisation. The impact of the overall strategies would be rendered
complementary to each other as well as coordinated and integrated.
• Attempts would be made to generate employment and income and raise the living
standard of the poor group, which constitute 24.9 percent. This would be done
through sectoral programmes and assimilating them into the open market system.

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• To the ultra-poor, who make up 17.1 percent, banking services and institutional
assistance from development programmes would be extended at the local level.
Besides this, backward groups and communities and women would be brought
into the mainstream of socio -economic development by means of social
mobilisation and empowerment. Households, which fall in above category, would
be identified, their access to productive resources would be increased. The
government would extend direct assistance in mobilising those resources.
Sectoral and targeted programmes would also be implemented to this effect.
• In order to alleviate poverty in the rural areas, emphasis would be laid upon
agriculture, agro-based industries, agro-trade, community and rural tourism and
rural infrastructure development programmes.
• Employment and income opportunities would be expanded through expansion of
skill development training and micro-credit.
7. Policy and Implementation Strategy
• To make poverty alleviation efforts sustainable and continuous, aggregate
economic growth will be stepped up and the distribution system would be made
effective through providing employment to people living below the poverty line.
For this, emphasis will be laid upon the successful implementation of
Agricultural Perspective Plan and attempt would be made to achieve high
economic growth rate in the agricultural and non - agricultural sector.
• Stress would be laid on intensive agriculture, agricultural diversification and
commer cialisation, livestock and other agri-business which bring in high return.
Employment and income opportunities would be generated in the agricultural
sector or the poor households through provision of agri-inputs viz-irrigation, high
yielding seeds and saplings, fingerlings, credit, fertilizer, etc. In order to enhance
the poor people's access to productive resources, the tendency to excessive land
would be discouraged by introducing study based progressive tax on land. The
system of contract cultivation would be introduced by discouraging the tendency
of leaving the arid farmland. Emphasis would be given to the construction of
agricultural roads to provide market for the sale of agricultural products. The
supply of fuel-wood and timber for building construction would be stepped up by
emphasising upon community forest development.
• Programs for poverty alleviation and population control effects would be carried
out together by laying emphasis upon study/research in order to ascertain the
interrelationship betw een poverty, fertility rate, mortality rate and migration.
Similarly, emphasis will be laid upon the extension of family planning service
and environmental protection by effectively extending fertility health services to
the people falling below the poverty line.
• Literacy programmes would be launched as a campaign to propagate literacy. In
the education sector, the students of poor households would be encouraged to the
study, up to middle grade, by increasing public investment.

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• In the health sector, public investment would be increased, primary health care,
inoculation and nutrition programme would be expanded, safe drinking water and
sanitation facility would be provided and free basic health care would be
effectively extended to the members of the poor households. Beside this, special
programmes would be implemented for nutrition, education and health of the
poor children.
• Poverty alleviation programmes would be launched on a campaign footing. Under
such programmes, the ultra-poor living in the backward and remote areas would
be kept in mind and priority would be given to see to it that this group has access
to services and support which is intended for it.
• Special measures would be taken by the government to open up employment
opportunities abroad for employment promotion. Skill development programmes
would be conducted to enable workers to seize such opportunities.
• Easy credit facility would be provided to poor communities by extending banking
services to them.
• Through the medium decentralisation, of the people would be empowered and
social mobilisation programmes would be launched to make the people self-
reliant for earning additional income.
• The destitute and down, trodden people would be protected from various forms of
exploitation by introducing appropriate legislation.
• Women empowerment would be pushed forward as a inseparable component of
poverty alleviation programme. To this effect, women's skill development,
education and economic and legal rights would be taken cis of.
• Rural electrification programmes would be pushed forward linking them with
irrigation programmes, and use of alternative energy would be encouraged to
reduce excessive pressure of energy demand upon forest resource.
• Emphasis would be laid upon labour intensive technology and development of
agro-based industries. Tax holidays for a fixed period would be given to such
industries to make small and cottage industries export-oriented for the slake of
promotion of employment and income and to make such industries sustainable.
8. Programmes
For poverty alleviation, employment generative, multi-sectoral, high growth-yielding,
sectoral and targeted programmes which give direct benefit to the poor community
would be implemented.
Sector-wise Programmes:
Employment generation: In the agricultural sector, appropriate irrigation and other
facilities would be expanded to increase productivity and create additional
employment and to especially cater to the needs of small farmers. Generation of non-
agricultural employment opportunities will be increased through building
infrastructure for development of rural and micro cottage industries, easy credit,

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technical assistance, marketing facilities and information flow. Self-employment
opportunities will be created through extensive training, credit and technical
assistance by involving the rural people, especially the women folk, In the rural areas.
Programme like "food for work" would be launched throughout the country for
infrastructural development and employment generation. While supplying food-grain
under this programme, stress would be given to procuring food-grain within the
country. In this regard, priority would be given to purchasing locally available food-
grain. In the course of transporting food-grain, employment generation at the local
level would be encouraged. Illiterate and unskilled workers and labourers would be
given training as per the market demand in order to make them fit for employment.
Highly employment-generative techniques and processes would be adopted in all
kinds of construction and infrastructural development activities. Various other
activities would be carried out for employment generation.
Manpower Development: Various programmes relating to primary and basic
education, adult literacy, primary and basic health service, maternal and child health
care, nutrition and provision drinking water facility to village, etc. would be
implemented all over the country for the development of manpower. Special
programmes would be run to encourage girls' and women's' education in districts
where general literacy level and educational standard of the girls and women is very
low. Local bodies, NGOs and CBOs would be mobilised for manpower development.
Policy would be adopted only to own the programme on the part of the government.
NGOs and CBOs would implement the programme which local bodies would
supervise.
Sectoral programme:
Agriculture and Forest: Use of modern inputs in production would be emphasised to
increase the productivity in agriculture, horticulture, livestock, production of herbs
and their processing. In view of considerable potentiality which the agriculture sector
still holds for the productivity to grow further, the agriculture sector would be made
to play the lead role in achieving high economic growth and alleviating poverty. The
concept of making adequate investment in specific feasible is as in an integrated
manner as incorporated in the Agricultural Perspective Plan would be stressed upon.
Emphasis would be laid upon effective operation of community forest development
programme to enhance employment and income at the village level. The
implementation of environmental and ecological protection and conservation
programmes would be oriented towards employment generation.
Non- agricultural productive Sector programme: Besides stressing on expanding
cottage and small industries, labour-intensive techniques would be adopted for
employment generation. Similarly, emphasis will be given to employment generation
through expansion of agro-based industries and evolution of an inter - relatio nship
between industry and agriculture.
Infrastructure: The development of transport, communication, irrigation and physical
infrastructure would also be linked with poverty reduction. Employment generation
would be sought by adopting labour-intensive techniques in the construction mainly

162
of agriculture and rural roads or rural development. Thus the rural area will be linked
with urban area and market by speedy development of rural infrastructure. Attempt
would be made to develop water resources by wildly mobilising domestic and
external investments. This will lead to electrification in rural areas and also
throughout the country which will lead to creation of a climate for expansion of
industry and commerce. Likewise, this will lead to the flow of domestic and external
investment towards productive sector and create employment opportunities.
Consequently, this will improve the real wage rate for the workers capable of high
productivity. The small and medium irrigation system would be expanded under the
management of the farmers themselves.
Social service: The lives of the common people have been very difficult due to
unavailability of primary education, primary health facility and safe drinking water.
As such, emphasis would be laid on providing these facilities especially to the poor
communities.
Population control: High population pressure caused by high population growth rate
on the economy has been one of the root cause of existing poverty. Its impact upon
the poor community has been even worse. Therefore, family planning programmes
will be extensively implemented in an effective manner to control the high growth of
population.
Targeted Programme:
Existing targeted programmes would be improved and implemented in an effective
manner to uplift the geographical region with high poverty concentration, very
backward and remote pockets, backward ethnic groups and communities. In addition
to this, some new programmes would be initiated. For that, priority areas and groups
would be as follows:
Very backward remote areas without road access: Production level and employment
opportunities have remained very minimal in the remote areas with no read access.
This has been the cause for high concentration of poverty in these areas. As such,
emphasis will be laid on construc ting and expanding roads to connect district
headquarters along with development of rural and agricultural roads. Special
programmes will be implemented for the upliftment of the poor people living in these
areas.
Deprived, ethnic and down-trodden group: To carry out study and research on
tradition, culture, and rites of the ultra poor groups like Musahar, Dusad, Dum,
Chamar, Kewat, Damai, Kami, Sarki, etc., and also in order to implement special
programmes for their socio-economic development, an ethnic academy would be
established.
Social and other oppressed group: Special poverty alleviation programmes would be
implemented for the group of people who is suffering due to social malpractices and,
for other reasons, is unable to participate in production process and employment
opportunities.

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Landless rural family: Various employment and self-employment programmes would
be run for the landless rural families. Credit facility would be provided to such
families for the banking sector bringing them into the market system. Institutional
arrangement would be made for this.
Families with small land holding: Emphasis would be laid upon upliftment of those
families by implementing targeted programmes under the Agricultural Perspective
Plan to provide agri-credit for production growth to the small farmer families. This
would be carried out in addition to making an attempt at their upliftment through
aggregate national development.
Specific Groups: The system of Kamaiya (bonded labourer) is still prevalent in the
country. The families of bonded labourers is very poor. Programmes would be
formulated to identify such families, create exploitation-free employment, rehabilitate
and provide the Kamaiya an access to agricultural land. Similarly, programmes would
be run to ident ify such exploitative labour relations an in other communities and in
other parts of the country and to see the welfare of labour families.
Urban poor and unemployed: For alleviating poverty in the urban areas, programmes
would be implemented to create self-employment opportunities for educated and
unemployed youth in the service and productive sector.
Social mobilisation programme: Drawing upon the experiences gained from
institutional development at the grassroots level, emphasis would be laid upon the
implementation of social mobilisation programmes to extensively replicate at the
local level activities like group organising, skill development, capacity building,
group saving and capital formation. Local bodies and NGOs would be involved in
this task in a coordinated manner. Besides this, special attention would be given to
employing the poor and women by mobilising the social motivators.
Institutional Arrangement:
Poverty Alleviation Commission: In order to carry out research on various
dimensions of poverty and poverty mapping and to carry out programme formulation,
monitoring and evaluation in a coordinated manner, a Poverty Alleviation
Commission would be formulated which should give policy directives, bring about
coordination in the formulation of policies and programmes in the public and private
sector, and effect institutional coordination and mobilisation of economic resources
required.
Poverty Alleviation Fund: A Poverty Alleviation Fund would be created to
supplement endeavors of attaining the poverty alleviation objective. The fund,
functioning as an autonomous body, would direct its activities towards fulfillment of
the needs of the poor communities. The Fund would see to it that various poverty-
related programmes is run through the local bodies, government agencies and NGOs
through mobilising endogenous and exogenous resources.
Poverty Monitoring System: Effective poverty alleviation programme can be
formulated only if studies is done on the intensity, extent and factors of poverty. As
such, studies like the Nepal Living Standard survey would be continued. A poverty

164
monitoring system would be evolved to regularly monitor poverty alleviation
activities. Arrangement would be made to extend this system down to the VDC level.
A poverty monitoring system, based on various social and economic indicators,
would be implemented in each VDC. A system of evaluation of the minute impact of
national, social and economic policies upon the lives of the people at the local level
would be carried out on regular basis .
Geographic Information System (GIS): Based upon the collection of spatial data on
poverty situation, poverty mapping would be done through GIS to study the
concentration of poverty. Such studies would be oriented toward poverty
measurement by collecting realistic and spatial data. An institutional arrangement
would be made to implement and formulate annual programme based on these data.
Besides this, a system of reviewing the impact of aggregate policies on poverty would
be evolved. Policies and programmes on poverty alleviation would be refined in
accordance with findings of the review. A mechanism will be set in place in order to
regularly monitor and evaluate the impact of liberal market economy and structural
adjustment programmes upon the lives of the poor people.

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 6.2 Labour Force and Employment Promotion

1. Background
The main reason behind the existing level of poverty within the country seems to be
the pervasive unemployment and underemployment problems. Of the total labour
force, 4.9 percent is unemployed and 47 percent is underemployed. It was expected
that there would be high economic growth which, in would turn, lead to income,
increased saving and investment expansion in demand and supply. This chain effect
would, it was hoped, generate massive employment opportunities. But that did not
happen. Although the government, adopted liberal and open-market policy on the one
hand, adequate level of investment did not come forth in a manner to inject dynamism
in the economy, on the other hand, the growing pressure of population, entry of
increasing number of women into the labour market and inhibited unfoldment of the
private, etc., have rendered the unemployment problem grave. It is indisputable that
equitable society can not be created withou t mitigation of the problem
It was estimated that at the end of the Eighth Plan, the size of labour force in Nepal
stood at 11.669 million. Of the total economically active labour force, 4.9 percent
remained fully unemployed. Of the total employed labour force, 81 percent is
engaged in agriculture, 5 percent in industry, mines, power and construction and 14
percent is engaged in trade, hotel business, transport, communication, finance, real
estate and social services sector. Of the total labour force in employment, the large
segment, i.e., 47 percent is in a state of underemployment and is mostly engaged in
agriculture.
On the one hand, more of such manpower which is unskilled and minimally educated
is joining the labour market day by day, on the other hand, the kind of manpower
capable of engaging in productive works, equipped with high intellectual caliber,
skilled, capable, healthy and dutiful is conspicuously lacking. A balance between
employment opportunities and the size of manpower produced could not be struck
due to the lack of an analysis of demand and supply of manpower in the various
sectors of economy, viz. agriculture, forest, industry, construction, transport, tourism,
services etc. Basic facilities like quality education, vocational and skill de velopment
training, health service, supply of safe drinking water, sanitary housing and nutrition
have not been provided. Therefore, a close link between employment opportunities
and manpower development has to be established.
Two scenarios appear on analysis of existing unemployment situation:
Unemployment: It is estimated that of the total labour force, 4.9 percent is fully
unemployed which include workers not engaged throughout the year and looking for
jobs in the rural and urban areas. In recent years, the modern sector could not expand
proportionately to provide employment to the educated youth. As a consequence,
unemployment has been found increasing. On the one hand, the unemployed youth
have not been able to fulfill the demand of labour market due to the lack of skill-
oriented education, on the other hand, such labour force has been imported from

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abroad. As such, the problem of educated unemployment is getting aggravated each
year.
Under employment: The problem of underemployment is even more pervasive than
full unemployment. The problem appears more serious among the people who is
dependent on the agricultural sector. The main reason behind this seems to be the
unavailability of full time work or the agri-labour and lack of alternative employment
opportunities to give up dependence on farm. At the end of the Eighth Plan, 47
percent of the labour force seem to have been underemployed in Nepal.
2. Review of the Eighth Plan
During the Eighth Plan, various skill-development training were conducted by
different training institutes/agencies to enable the unemployed and underemployed
individuals to find employment and to engage themselves in self - employment.
Employment opportunities seem to have increased to some extent on account of
growing activities in the agriculture, tourism, transport, industry and service sectors.
Detailed information on manpower development and employment situation is still
lacking or inadequate. No substantial and systematic work has been initiated in this
regard.
3. Strategy
• In view of unemployment and underemployment being main reason behind
existing level of poverty in Nepal, additional employment opportunities would be
created in rural areas through implementation of the APP.
• Poverty alleviation is the prime objective of the Ninth Plan. As such, high priority
would be accorded to employment promotion.
• The Labour-force dependent upon agriculture has to remain idle four to five
months a year due to extremely limited off-farm employment opportunities. A
large number of laborers migrate from rural areas to urban centres within and
outside the country in search of jobs. Therefore, off-farm employment
opportunities would be created in rural areas by developing minimum physical
infrastructure which is basics to development, like transport, power and public
utilities and through promotion of cottage industries. This would give rise to skill
development, capital formation and market leading to the development and
expansion of cottage and small industries which, in turn, would create massive
self- employment opportunities.
• Poverty is en twined with employment opportunity. Therefore, while formulating
programmes for employment promotion in the public sector, targeted
programmes would be set aside for very backward and ultra-poor groups of the
society. Emphasis would be laid upon giving employment to these groups under
various programmes like food for work, upliftment of down-trodden and
backward groups and rural infrastructure building programmes. Credit from
banks and skill development training programmes would also be directed to the
groups to increase their access to productive resources.

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• As the rural development concept was not based upon the study of local
potentialities, no remarkable change could be noticed in the traditional rural
economy and thus employment opportunities did not open up. Beside, this, the
labour force which moved out of rural areas looking for non- agricultural jobs
could not compete in the labour market due to lack of demanded skill and has
therefore remained unemployed. In this context, attempt would be made to study
the demand and supply situation of manpower in various sectors of the economy
and, based upon that, planned efforts would be made for manpower development
to fulfill manpower requirements in the years to come.
• In recent years, the youths among the workers have been very much attracted to
foreign employment. But there has not been any appropriate institutional as well
as administrative mechanism to send Nepalese labourers to the labour market
abroad. Besides this, there has been no training programmes to enhance labour
productivity. As a result, on the one hand, workers have been going abroad for
minimum pay and facility, on the other hand, they is engaged in difficult, risky
and unhealthy works. In addition to this, in the absence of monitoring system on
foreign employment, many incidents have been found occurring whereby the
labourers have been bluffed, stranded and thrown into insecure position.
Therefore, institutional arrangement would be made to produce quality manpower
as per requirement within the country and to dispatch surplus labour abroad.
• With the spread of education, the supply of educated workers is growing fast.
Such educated workers is on the lookout for white collar jobs and is inclined to
work in the modern and organised sector. It has been found very difficult for the
youth manpower, of the 15-25 age group, looking for job to find employment.
Besides this, as the public modern and industrial sectors did not expand as
expected, the unemployment level among the educated youth is excessively
escalating. As such, in order to give equal opportunity to the educated youths of
the rural areas and to all seek job in the public, non-governmental and private
sector and in the competitive labour market, an information system on
employment exchange would be set up.
• Employment promotion is linked with various socio-economic dimensions, So,
coordination among different sectors of the economy could be brought about to
adopt sech process and technology in the public, non-governmental and private
sector which might generate employment opportunities.
• The role of the government would be turned into only that of a facilitator. The
private sector would be given the principal role in employment promotion
through local bodies and NGOs which is engaged in various implementational
activities. Similarly, stress would be given on creating appropriate environment to
strongly push forward the activities of others agencies.
4. Long-term Concept
• There is an inter -dependent relationship between unemployment and poverty. In
order to raised the living standard of the people by providing them with strong
source of income, attempts would be make for successful employment promotion

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 and also for bringing down, in next 20 years, the present level of unemployment
and underemployment from 4.9 and 47 percent down to 3 and 10 percent.
• By means of high economic growth, opportunities creating more employments in
all sectors through employment oriented programmes, enhancing competitive
capability of the labour force, encouraging generation of permanent employment
and self -employment in industrial plants, NGOs and other service sectors and
providing the common people with an increasing access to productive resources
employment and self - employment opportunities would be enhanced.
Arrangement will be made, to the possible extent, to generate and supply skilled,
quality manpower from within the country needed for various sectors of
economy. In this process, the need will be analysed well in advance
Ninth Plan:
5. Objectives
The Ninth Plan has set following objectives for the manpower development and
employment promotion:
• To develop manpower as per national need and to enhance its productivity.
• To reduce unemployment and under employment by generating productive
employment opportunities in various sectors of socio-economic development of
the country.
• To produce and mobilise capable and skilled manpower who is able to adopt
changing technology as per the demand in labour market within the country.
• To emphasis on the development of competitive capability of the manpower for
foreign employment
• To promote self-employment by making the development of skilled manpower
effective and increasing the access of the labour force to capital and productive
resources.
• To launch employment campaign centre for the ultra poor group.
6. Policy and Implementation Strategy
Sectoral
• The agriculture sector, the mainstay of the majority of the people, will be
commercialised and diversified.
• In order to generate additional employment of sustainable nature, the
participation of the private sector will be encouraged for injecting dynamism and
imparting continuity to the development of the agriculture sector and, at the same
time, developing and expanding agro-based indus tries.
• The private sector will be attracted and mobilised for the development of the non-
agricultural sector to resolve the unemployment and underemployment problems.

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• Emphasis will be laid on creating income generative employments through the
development of tourism, trade and promotion of educated employment.
Multi-sectoral
• Emphasis will be laid upon mobilising the manpower in the appropriate sector on
the basis of its education, training and experience for its better use.
• Emphasis will be laid on fulfilling the basic needs like primary education, basic
health facility and safe drinking water for the sake of manpower development.
• Priority would be given to backward groups and women while development of
manpower and their participation would be encouraged in the employment
programmes run under various sectors.
• Policies and programmes for manpower development would be formulated by
bringing about multi-sectoral co-ordination.
• A policy of ''one employment for one family'' will be adopted to give full
employment to at least one individual from each family in the rural and urban
area.
• Necessary assistance will be extended from the public sector in skill development
and capital mobilisation for the development and expansion of labour intensive
cottage industries. Besides this, the private sector and the NGOs will be
mobilised towards the same.
• Construction works relating to rural infrastructural development will be linked
with local plan, and employment promotion will be stressed upon through
adoption of labour-intensive technology.
Training
• Well-trained and skilled manpower, capable of adapting to fast changing
technology, will be developed by rendering the training programmes qualitative.
• In order to expand appropriate training programmes for employment promotion,
various programmes will be run in the rural and urban areas.
Institutional arrangement
• Institutional arrangement will be made in order to make foreign employment
opportunities simple and well-managed for the Nepalese labour force.
• In order to bring about a unity of purpose among employment promotion
programme co-ordination would be worked out among policies and programmes
of various agencies.
7. Programmes
Manpower Development
• Institutional programmes will be run to coordinate, monitor and evaluate the
manpower development activities carries out by the government and non-

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 government agencies and the private sector. Based on that, necessary policy
directives will be issued.
• Participation of women and backward group would be given priority while
conducting manpower development training programmes.
• In order to expand educational, health and drinking water facilities to the
common people for the sake of manpower development, the pattern of investment
in the social sector will be modified and the programmes of these sectors will be
made extensive by enlarging the role of non-government and private sector in
basic social service sectors.
• As high population growth has been a principal cause behind the pressure of
growing labour force and unemployment and underemployment problems,
population control programmes will be made extensive, and public awareness
building through various programme relating to literacy, population, environment
and health education will be run effectively at the village level.
Employment expan sion and promotion
• In order to translate "one employment to one family" concept into reality,
appropriate arrangement will be made to create additional employment
opportunities in development works and construction programmes carried out by
government, non- government and private sector.
• In order to provide employment to one person of each poor family in the rural and
urban area, programmes will be implemented to identify poor households and
give required skill development training.
• Programmes to carry out intensive cropping and raised productivity will be
implemented with priority to commecialise and diversify the agriculture sector to
expand agri-employment opportunities. Such programmes which will enhance
additional employment generation and also help raise productivity in the
agriculture sector will be pushed forward.
• In order to promote employment in the non-agricultural sector by attracting the
private sector, programmes will be implemented to bring about improvement on
policies and rules relating to industry and trade.
• The private sector would be encouraged to establish such labour-intensive agro-
based industries which is based on geographical and spatial advantage, and
spatial uniqueness leading to comparative advantage, and additional programmes
will be run to create sources of sustainable employment in the rural areas.
• Viable programmes to develop and expand cottage industry will be incorporated
in order to increase productive employment opportunities through small and
cottage industries.
• Credit programmes will be effectively expanded to extend required capital to
poor families from finance agencies for self-employment through micro-
enterprises.

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• Employment promotion programmes will be implemented with priority through
developing employment-generative rural tourism.
• An employment promotion fund will be set up and mobilised to run employment
promotion programmes on a phasewise basis at the local level to provide
productive employment opportunities to the unemployed and the underemployed.
• Appropriate fiscal policies for employment promotion will be formulated to
encourage labour intensive techniques in rural infrastructure development and
construction activities.
• In order to increase women's access and participation in employment programmes
run under various sectors, such programmes will be expanded which will enhance
employment to women, extend skill development training to the village level and
provides credit to trained women.
Training and Study/Research
• In order to run in a coordinated manner various skill development and
employment training programmes under various agencies, different programmes
will be implemented by setting up a training council in which the central and
local bodies and non-governmental and private sector will all be represented.
• Detailed studies will be carried out with regard to existing human resources, its
demand and supply situation in various sectors and various problems and issues
which attend human resources development. Based on such studies, appropriate
process will be adopt ed to develop manpower. Participation of the private sector
and NGOs will be enlisted in this process.
• Co-ordination will be brought about among various training institutes operating
within the country, and their training policies and programmes. Arrangement will
be made to import training of different levels and subjects in order to fulfil the
manpower requirement of various sectors of economy. The private sector and
NGOs will be mobilised to the maximum for this purpose.
• New employment areas will be identified and self-employment vocational
training programmes will be conducted in order to engage the existing
unemployed youths in productive and income- generating occupation.
• Keeping in view the changing technology and the demand, trend of timely
modification will be made in subject, course content and techniques of training.
Besides this, in order to make the trained person practically capable, quality
training will be conducted.
Institutional Arrangement
• Unemployed individuals with technical skill will be encouraged for self-
employment by providing them with needed credit and other assistance.
• The role of the government and private sectors will be made effective in order to
make Nepalese workers capable and competitive for foreign employment and to
make them available for foreign employment in smooth and well-managed way.

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• Monitoring and evaluation system will be initiated and reinforced to
appropriately and effectively mobilise manpower existing in the country.
• A system of flow of information on employment at various levels in an
institutionalised manner will be set up. Timely policies will be formulated and the
system of implementation, monitoring and evaluation will be strengthened and
made effective to stimulate implementation activities. The employment
promotion committee will be mobilised to this end,

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 Chapter 7
Population and Human Resources
7.1 Population
1. Background
During the negative impact on national development created as a consequence of
rapid population growth, the population programmes is being included in the periodic
plans with the objective of creating conducive impact on family, society and state by
curbing population growth in line with the extension of social services and economic
development.
Although the growth of population is not a problem in itself, its unsystematic growth
brings about various problems. As the problem of population management is
multidimensional and multi sectoral, its solution has to be sought accordingly. Hence,
according to the concept of population and development, the problems and
programmes of integrating population have been accepted as multidimensional and
multi sectoral. Previously, the population programmes were acknowledged to be the
responsibility of the state considering the growth of population as a problem of
national development. But now, it is obvious that it is also an individual and familial
problem. Commitment has been made to implement population programmes to
safeguard individual freedom and dignity in accordance with the rights provided by
the Constitution of Nepal and guidance and action plan of International Conference
on Population and Development, 1994 (Cairo, Egypt).
Since the last decade, the growth rate of population in Nepal stands still. But the
fertility rate is on the decline. Fall in fertility plays a crucial role in reducing the
growth rate of population. The different factors like extension of education for
female, positive changes in social attitude towards female, slight increase in the age
of marriage for female, growing knowledge of family planning methods and
willingness for its services, extension of economic activities though in a limited way
and initiation of modern communication technology in Nepalese society have been
helpful in bringing about decline in fertility rate. Various studies prove that once the
fertility rate starts to decline it keeps on declining. The declining trend of fertility rate,
at present, is the result of partial success of population programmes carried out during
the past plans.
Considering the achievement and shortcomings of the past plans in population
management, international commitment displayed by HMG in this sector and
problems which will have to be faced by the world in the approaching twenty-first
century, the population management has been accorded priority in the Ninth Plan in
order to achieve success in the programmes like reducing fertility rate, increasing
average life expectancy, reducing high child mortality rate, and reducing infant
mortality rate and maternal mortality rate by the joint efforts of governmental and
non-governmental organisations.

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Present Population Status:
The total population of Nepal is very much on the rise. According to the census of
1991 the population of Nepal was 18.5 million but the number is estimated to have
reached 2,10,81,503 in fiscal year 1996/97. The age structure of population reveals
greater number of children. Although the fertility rate is declining yet the population
will not decrease immediately as a consequence of this tendency. The growth of
urban population is expected to be high due to the process of rapid urbanisation
coupled with extension of urban sectors. Moreover, there has been a rapid growth in
the number of outside immigrants.
2. Review of the Eighth Plan
In the year 1992, the first year of the Eighth Plan, the population of Nepal was
estimated to have reached 18.9 million. The objective set forth in the Eighth Plan was
to help realise the human needs of the people by reducing high growth rate of
population and by maintaining a balance between socio-economic development and
environment. To fulfill these objectives the following targets were set forth:
§ to reduce total fertility rate from 5.8 to 4.5 percent
§ to raise the prevailing life expectancy from 54.4 to 61 years
§ to reduce infant mortality rate from 101 to 80 (per thousand live births)
§ to reduce the mortality rate of the children below 5 from 165 to 130 ( per
thousand live births)
§ to reduce maternal mortality rate from 850 to 720 (per hundred thousand)
§ to manage internal migration
In order to achieve these targets, programmes covering various aspects i.e. women's
empowerment, population information, education and communication (IEC),
integrated population programme, development of skilled manpower, population
management, development and extension of information centres, easy access to
contraceptives, maternal and child health services to target groups, and study
/research and data management were launched. The achievement of the population
sector in the Eighth Plan should be evaluated on the basis of these goals and
programmes.
The Ministry of Population and Environment was established during the fourth year
of the Eighth Plan keeping in view the need of the nation, commitment of the nation
in this sector, the objective of taking ahead the population programmes in an
integrated manner as stipulated in the international conference. In order to provide
guidance to the ministry, the population committee formed under the chairmanship of
Honourable Prime minister, was reconstituted. During the plan period, the
programmes like integration of population and development were pushed forward.
The sectoral programmes of agriculture, local development, women and social
welfare, industry, and the labour education integrating population aspects all fall
under such scheme. Population education has been incorporated into the curriculum

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of school and higher level education under formal education, and it has also been
integrated into the non-formal education as well.
One year prior to the Eighth plan only 92.7 percent of the married women of child
bearing age had knowledge of family planning methods, but this percentage has gone
up to 99 percent at the end of the Plan as a consequence of information, education and
communication (IEC) programmes conducted during the plan period. Likewise,
during this plan period, the use of contraceptive prevalence rate (CPR) has also gone
up. During the period, the use of temporary methods has also increased continuously
in accordance with the long-term policy of gr adually increasing the proportion of
temporary methods in the total use of family planning methods.
During the plan period, necessary support was provided to non-governmental
organisations in line with the government policy of encouraging them in population
programmes. In Nepal, there has been an increase in the number of non-governmental
organisations and international non-governmental organisations in the field of
population. During this plan period, the concept of collaboration between government
and non-government sectors in population programme was advanced.
Various training and workshop programmes were conducted during the plan period in
an effort to develop effective manpower in the field of population. The supply of
qualified manpower has increased by incorporation of population education in the
curriculum of higher studies. The linkage has been strengthened with international
sectors particularly the Asia and Pacific Region in the field of population information
system. Accordingly, Nepal has also become a member of the recently established
South West Asia Sub-Regional Information Centre| to enhance the relationship and
cooperation in the field of population in the sub-region. During the last year of the
Eighth Plan period, the regional population unit has been established in the three
regions as per the policy of establishing the population information system within the
country. These programmes have been proved fruitful to ensure easy dissemination of
population information inside as well as outside the country.
In accordance with the policy of converting into towns the areas which meet urban
facilities, the number of municipalities has increased to 58 at the end of the Plan from
36 prior to the Plan and the percentage of urban population to total population has
reached 12 percent.
The estimated position of population indicators at the end of the Eighth Plan is as
follows:
§ Total fertility rate 4.58 percent
§ Infant mortality rate (per thousand live births) 74.7 percent
§ Child mortality rate (under 5 years, per thousand live births) 118
The data reveals that there has been substantial improvement in reducing infant
mortality rate and child mortality rate during the plan period. The total fertility rate
could not improve as per the goal yet the trend towards decline has continued.

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3. Existing Challenges
During the period of the Eighth Plan, there has been a substantial progress in reducing
total fertility rate, yet no success has been achieved in materialising the concept of
two children and desire for the same into reality. In 1996, the average number of
children desired by couples was about 3.3. The task of transforming the desire of two
children into a reality is still a challenging job.
If the social attitude is conducive to increase marriageable age of female, it will result
in the decline in fertility rate. The task of amendment in law to increase legal age of
marriage and raising public awareness through IEC programmes failed to attain the
estimated success during the Eighth Plan. The task of ensuring easy accessibility and
availability of desired methods of family planning in proportion to dissemination of
information and enlarging the number of users of temporary methods has still
remained as a challenge. Likewise, meeting the prevailing unmet need of family
planning as well as enhancing its demand has remained as additional challenges.
During the period of the Eighth Plan, there has been some achievement in the area of
institutional development but an effective process and mechanism could not flourish
in integrating population with several aspects of development and environment.
During the Eighth Plan, the achievement was not very substantial in the task of
mobilising and encouraging participation of non-government organisations and local
units to providing family planning services and methods in a coordinated and
effective manner in comparison to available opportunities. Since population
programme is multi sectoral and multidimensional in nature the cooperation and co-
ordination of all sectors is equally essential. Hence the Ministry of Population and
Environment needs to play the role of an effective coordinator in ministerial level to
augment population programmes.
As the available resources in the country is inadequate to supply the social services
and facilities to ever -growing population, the available resources should be utilised in
an effective and productive manner. Since it has been evident that the growing
population has caused environmental degradation and also aggravated the problems
of development, development the triangular relationship among population,
environment and development should be integrated and utilised for the progress of the
country. Additional emphasis on population management is essential to achieve the
goal of poverty alleviation through high employment generation. In addition to
bringing improvement and extension of services and supply system, it is essential to
meet the unmet need of family planning and enhance its demand through extension
and effectiveness of about IEC programmes.
4. Long-term Concept
Total fertility rate (TFR) will be reduced to the replacement level to give a concrete
shape to the concept of two children in the coming 20 years.

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Ninth Plan
5. Objective
• To attract the common people to have small family according to the concept of
two children.
• To carry out necessary population programmes to reduce the total fertility rate to
the replacement level in the coming 20 years.
• To ensure availability of qualitative family planning methods as well as maternal
and infant health services in an easy and simple manner.
6. Target
The status of fiscal year 1996/97 has been projected on the basis of findings of family
health survey of 1996 and prior censuses and surveys. While quantifying the annual
goals in the Ninth Plan the achievement made in the past and the proposed
programmes of the Ninth Plan have been taken into consideration

S.N Description Status of Target of the

o 1996/97 Ninth Plan
2001/2002
1 Total fertility rate 4.58 4.20
2. Contraceptive users (in percentage) 30.1 37.0
3. Proportion of married female aged 15 to 19 (in 42.1 36.1
percentage)
4. Infant mortality rate (per 1000 live births) 74.7 61.5
5. Child mortality rate (below 5 years, per thousand live 118 102.3
births)

In order to meet the long-term goal of reducing total fertility rate to 3.05 in the
coming 20 years, the fertility rate needs to be reduced by more than one child per
decade. Hence, the programmes in the sphere of population need to be launched more
effectively and swiftly in the Ninth Plan than in the past years. The desire for small
family has been observed growing in couples as a result of investment and efforts of
many years. In addition to this, the demand for family planning services is increasing
gradually. Fall in fertility rate seems possible if the present and estimated future
demand of family planning can be fulfilled in due time by providing easy and
qualitative services, and implementing effectively the legalised age marriage.
The population is estimated to reach at 2,36,70,000 at the end of the Ninth Plan, the
growth rate of population is estimated to be 2.36 percent per year.
In addition to these demographic goals, the Ninth Plan has also followed the goal of
undertaking qualitative reform in the management of population. The programmes
such as increasing the satisfaction of target groups, intensifying the awareness
regarding the benefits of small family, developing an attitude down the local level

155
that the balance between population and resource management is essential, enlarging
male participation in population management and care of the infant as well as
disseminating information, increasing effectively the participation of local units to
provide quality services, and providing quality services by intensifying public
awareness towards the importance of antenatal and post-natal care for the reduction of
maternal mortality rate as well as infant mortality rate, safe motherhood and breast
feeding, have been incorporated as qualitative goals in the Ninth Plan.
7. Policy and Implementation Strategy
• To develop the concept of limiting the size of family only to two children per
couple by emphasising the economic and social programmes which encourage the
desire for small family.
§ To conduct the programmes of population, development and environment in an
integrated manner.
§ To provide special emphasis on fertility and child health in national health
services.
• To provide the qualitative services and methods of family planning in the places
and time in accordance with the demand of the users.
• To maximise involvement of local units and government organisations working at
the rural level in the programmes of population and reproductive health.
• To provide curative and preventive health services in rural areas to lessen child
and maternal mortality rate.
• To conduct informational and educational programmes in the sphere of various
aspects of population as well as safe motherhood under health services, family
planning, and additional programmes which encourage control in prevention of
AIDS, diseases concerning reproduction and venereal diseases.
• To encourage international non-government organisations (INGOs) interested to
contribute in the provision of services in reproductive health, maternal infant
services and venereal diseases, and work in collaboration with Nepalese non-
government organisations (NGOs).
• To promote female education and employment.
• To mobilise effectively the local units as well as non-government and community
organisations by encouraging them in population programmes.
• To provide necessary assistance to district development committee and village
development committee to advance substantially the programmes in the sphere of
population management and empowerment of women.
• To regulate international migration by formulating policies and programmes on
the basis of facts and conclusions obtained as a result of detailed studies,
interactions and policy discussions.

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• To undertake special programmes for the social security and welfare of elder
citizens taking into consider ation the fact of gradual increase in life expectancy.
• To launch programmes to enhance knowledge concerning population through
formal and non-formal education.
• To conduct the types of programmes which promote male participation in family
planning, reproductive health and caring of children.
• To develop a regular monitoring process, mechanism and institutional set-up and
implement it for appropriate monitoring and evaluation of above-mentioned
programmes related to population and environment with the involvement of
experts from government, non-government and private sectors.
• To encourage academic and professional institutions engaged in studies/ research
in the field of population.
8. Programme
Formulation of Population Perspective: The population of Nepal is estimated to
exceed 32 million on the basis of different studies. Since population is a
multidimensional and multi sectoral subject, it is essential to have a long-term vision
on population management by strengthening and integrating sectors related to it as a
necessity to launch new programmes to achieve the goal of reducing total fertility to
replacement level. To fulfill these objectives, a perspective plan on population will be
formulated and implemented during the period of this plan.
Special Programme for Adolescent and Youths: The number of adolescent and youth
is high in Nepal because of high fertility rate. Therefore, taking into consideration
that the principal actor for the growth of population will be the adolescent and youths
aged below 25 years up to coming 20-25 years, special programmes will be launched
in the Ninth Plan focusing on them.
Marriageable Age: Though the legal age of marriage for female and male is 16 and 18
years respectively with parental consent, and 18 and 21 years respective ly without
parental consent, yet the practice of child marriage is still prevalent in society. So,
special priority will be accorded to the programmes which assist to raise awareness
towards this as well as increase the minimum age for marriage of female and male.
Moreover, priority will also be given to programme which enhances spacing to delay
the conception of first child after marriage in order to lower the speed of population.
Family Planning Services: Family planning services will be provided in convenient
place and time as desired by the public. To ensure easy distribution of temporary
methods focusing on females aged 15-29 years, the methods and services of family
planning will be made available under the programme of primary health services.
Sterilisation services will also be provided in district level health offices as per the
free choice of individual. Priority will also be given to the programme which intends
to meet the unmet need and advance the need as well.
Information, Education and Communic ation (IEC) Strategy: Information, education
and communication (IEC) strategy will be prepared and implemented specially to

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popular the concept of two children, raise the age of marriage and improve the social
status of women.
Vital Registration System: Several programmes will be implemented for the
effectiveness of vital registration (birth, death, marriage, divorce and migration)
system.
Population and Reproductive Health Education in Women Education and
Employment: Since female education and employment play a major role in lowering
fertility rate, the aspects of reproductive health and population information, education
and communication will be included in such programmes.
Strengthening Monitoring and Evaluation Systems: Functional research will be
conducted in the areas of formulation, monitoring and evaluation of population-
related programmes. Moreover, a central monitoring and evaluation unit comprising
experts of related areas will be formed for the regular monitoring and evaluation of
above-mentioned goals.

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 7.2 Human Resources Development

1. Background
Human development are the ultimate objective of any development. Economic
development is only a means to human development. Likewise, human resource is
and important means for the economic development of the country. Human resource
is the knowledge, skill, efficiency as well as physical and mental to perform inherent
in the citizens of the country. Human resource is a means to human development as
well as an aspect of human development too.
One of the main causes of poverty, which has remained as an enormous challenge in
the country, is the inappropriate mobilisation of human and natural resources.
Appropriate human resource is essential for the mobilisation of natural resources as
well. In fact, a number of countries have achieved high human and economic
development on the sole basis of human resources in spite of the deficiency in natural
resources. Therefore, the role of human resource in the development of country is
supreme.
An important aspect associated with the human resource is its mobilisation as well. If
human resource could not be mobilised in spite of its development the problems of
poverty and development of the country can not be solved. So it is very essential to
consider in advance the type of human resource to be developed for its full and
appropriate mobilisation. For this, it is necessary to consider more sensibly the natural
resources of the country concerning the present and the future development of the
economic structure and technologies and also concerning the present as well as future
status of natural resources including present and future development in technologies.
2. Present Status of Human Resources Development
The status of human resource is Nepal in very poor. Because of poor nutrition and
health services, the children at birth fall have high mortality rate and due to
deficiency in nutrition their physical and mental development is very poor in
comparison to their inherent capabilities. Besides, due to lack of education and
training, the majority of Nepalese specially the female have to live without the
knowledge, information and technologies prevalent in the world. Due to illiteracy as
well as lack of education facilities, the level of human resource specially in rural
areas is quite unsatisfactory. Moreover, polluted, unclean water as well as
environment and minimum health facilities, the Nepalese is comparatively more ill
and possess little vigour to work according to their capabilities even in absence of
illness. In addition, the quality of education in Nepal is very low and there is no good
congruence between education and economic structure, whereas there is
unemployment among educated youths on one side and the required capable
manpower in the country is forced to also due to fulfil from the foreign sources on the
other.

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Ninth Plan
3. Objective
The following objectives have been identified to meet the main goal of reducing
poverty and reforming the status of human development by appropriate manpower:
• To increase the fundamental level of human resource in the country.
• To continue reducing the present inequalities on the basis of sex, region, class and
community in the status of human resource.
• To prepare human resource capable of utilising the natural resources of the
country in optimum level.
• To develop human resource of the country in accordance with the national and
international need.
• To enhance the abilities of Nepalese manpower so as to make then capable of
competing in international areas.
• To prepare the manpower capable of continuously enhancing their skill and
efficiency in accordance with the rapidly changing technology and economic
structure.
4. Policy and Implementation Strategy
There will be following policy/ strategies of human resources in the long run as well
as during the Ninth Plan period.
Education and training
• To continue providing free and compulsory education at least to all the children
of primary level.
• To conduct the literacy programmes extensively as per the goal of eradication of
illiteracy by the end of the fiscal year 2073/74 or Twelfth Plan.
• To keep on increasing the opportunities for qualitative vocational trainings.
• To keep on enlarging the opportunities for enhancing the level of education or
efficiency.
• To continue reducing the present inequalities perpetrated on the basis of sex,
region and community in education sector.
• To adopt a policy which encourages to increase the government investment in
providing basic education and vocational trainings, and also to channelise the
investment of private, non-government and community oraganisations towards
the same.
• To encourage indigenous private, non-government and community sectors, to
provide quality education of different levels in the country.

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• To encourage reliable foreign organisations to establish high level quality
educational centres in Nepal.
Health Nutrition and Sanitation
• To make available easily the basic and primary health service to all.
• To improve the nutritional status.
• To provide safe drinking water to all by 2002
• To provide sanitation facilities to 40 percent of the total population.
Others
• To eradicate child labour.
• To adopt the policy of right person at right place.
• To adopt proper technology to raise labour productivity.
• To adopt labour-intensive construction technology to raise employment.
• To increase employment opportunities by encouraging the sectors such as labour
intensive industry and commerce. (e.g. tourism, computer software trade, etc.)
• To encourage industrial and commercial sector to enhance the efficiency and
increased productivity of their workers.
• to make timely refinement in labour laws to increase employment for the native
workers and implement it effectively.
• To lower the higher growth of labour force in the long run by launching effective
multi-dimensional population programme.
• To create an environment to develop harmonious industrial relations.
6. Programme
Education and Training
• To increase government investment to provide basic education and to increase
opportunities in vocational training.
• To increase the investment capability in this sector, the participation of the
guardians, local bodies and the private sectors will be encouraged in the
management of education and training.
• The government sector will create a favourable environment for coordination,
monitoring, evaluation and development. The responsibility of the management
of the school will be gradually transferred to local bodies.
• Special programmes will be launched to eliminate prevailing gender, regional,
class and community discriminations.

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• The cost recovery principle will be adopted in higher level human resource
development. Programmes will be launched provide scholarship and loans to the
able persons not to deprived them of higher education and training opportunities
because of financial crisis.
• The need-based projection of different kinds of human resources for domestic &
international sectors will be made on periodic basis to undertake timely policy
reforms. A separate body will be established if the existing bodies is not able in
making suc h projection.
• Progams will be conducted to discourage the tendency of sending of going abroad
for studies by encouraging private sector for the development of ultra modern
education and for raising the level of education in Nepal.
• A package of terms and facilities to attract domestic and reliable foreign agencies
will be developed and implemented to turn the possibility into reality that the
attractive natural resources of Nepal is not only an asset of tourism but is also
necessary for the establishment of educational centres.
• A programme will be carried out to provide loan facility and other kinds of
assistance to uplift the quality of technical school conducted by the non-
governmental and private sectors. Moreover, the monitoring system of such
schools will be strengthened.
• Emphasis will be given to short-term trainings. Likewise, the existing
opportunities for skill development will be expanded.
Health, Nutrition and Sanitation
• The government investment on health, nutrition and sanitation will be gradually
increased.
• To enhance the investment capability regarding these sectors, the consumer
groups, non-governmental organisations and local bodies will be included in the
programme formulation and implementation process.
• The programme will be launched to provide financial and other assistance to non-
governmental organisations or local bodies if they is delivering or planning to
deliver health services.
• The services will be provided on the basis of the cost recovery principle to
mobilise necessary additional inv estment in this sector.
• The general health insurance and community-based health programme will be
extended to raise the quality reliability of health services.
• The necessary training and awareness programmes for the health workers will be
launched to implement the principle of proper use of medicines.
• Taking into consideration preventive and promotional health programmes on the
possibility of improving the health status of Nepalese citizens in a short period

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 and on small investment, such programmes will be implemented with special
emphasis..
• There is severe shortage of adequate human resources involved in health services
at different levels. The private and non-governmental organisations will be
encouraged to conduct training programmes specially for nurses, health workers,
laboratory technicians and doctors because of the severe shortage of human
resources. The use of foreign human resources in the medical colleges, hospitals
and nursing homes will be gradually reduced and eventually replaced by the
Nepalese human resources.
• There is still doubts on the quality of trainings provided by the number of medical
colleges and training institutes working in the health sector of Nepal. To resolved
these doubts, monitoring process will be devised and strictly implemented by
seeking cooperation of the concerned professional councils (e.g. Nepal Medical
Council).
Others
• Several programmes concerning child welfare and rehabilitation will be carried
out through government and non-government organisations to eliminate child
labour and exploitation.
• Rural roads will be constructed by using labour intensive technology through
consumer groups.
• An environment will be created to provide new professional skills to the farmers
emphasareing on commercial agriculture. Beside necessar y training facilities will
also be provided.
• Arrangement will be made to create a feeling of respect towards labour and skill
in the educational curriculum at all levels. Likewise, a programme will be
developed and implemented to promote the tendency of respecting the workers
and the skilled persons. Financial policy and rules will be formulated and
implemented to encourage the development of skill and efficiency of the workers
of the respective industries and in this respects, a join task force will be set up
consisting of various government as well as non-government agencies such as
Ministries of Industry, Labour and Finance, Employment Promotion Committee,
Technical and Vocational Training, Employers' Council, Federation of Nepal
Chamber of Commerce and Industry and Labour Organisation.

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 Chapter 8
Regional and Local Development
8.1 Regional Development
1. Background
Although the concept of regional balance in the national development process
emerged since the Third Plan period in Nepal, real efforts for systematic planning
through regional development model were initiated only from the beginning of the
Fourth Plan. The primes objective of planning exercises in Nepal has always been
targeted towards increased productivity for which regional policies have been
formulated and implemented during the last decade. Albeit such efforts of planned
approach have resulted in some physical development in the financial and social
sectors, the development results have excessively been concentrated in already
privileged areas and have failed to create a positive impact on the life style of the
disadvantage groups. The regional development model was conceptualised to
overcome such imbalance in the development process. To attain fast equitable
development within the country by minimising regional imbalances through provision
of basic development requisites at the regional level is the main objective of the
regional development model in Nepal.
The regional development model experimented for the past three decades has resulted
in some physical development in the financial and the social aspects and has been
successful in providing some infrastructure facilities within the country, but the
problem of regional imbalance in the development process continues to be strikingly
visible even today regions. Many districts of their parts falling in the mountainous or
hilly geographical territories is relatively highly underdeveloped. High population
growth rate and migratory reasons have led to population pressure build in the terai
region. As a result of high population growth, villages is getting converted into
unplanned large settlements and small towns. Settlements and urban centres lack
planned physical development and social and economic facilities, and in some places
haphazard growth has been observed. Many people live below the poverty line in
many areas. Despite development of appropriate concepts and policies to enact the
regional development model right since the Fourth Plan period, efforts for regional
development have not been effective and adequate policy framework for
implementing district and local level programmes have not been possible due to
deficiencies enforcement of such concepts and policies. Because of these reasons,
expected achievements could not be gained in reducing regional imbalance and in
attaining regional imbalance.
2. Review of the Eighth Plan
The objectives defined in the Eighth Plan period were to attain increased regional and
national productivity by effectively mobilising resources scattered in several areas of
the country, to minimise regional imbalances, and to integrate local development
efforts with the national economy through economic upliftment of marginalised and
underdevelopment regions

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The policies adopted for the realisation of the objectives were optimum development
of resources and means within a region or sub-region, improvement of investment
pattern for reducing regional imbalances, coordination of existing and proposed
infrastructure and facilities with productive economic activities, establishment of
rural urban inter-relationships and development of hierarchical settlements.
The policies also addressed mobilising of national priorities in regional and sub-
regional projects, adoption of decentralised planning, promotion of small townships
to promote internal transport, environment protection and conservation, planned
urbanisation and rural development. Policies were also taken for the establishment of
service centres and service units within appropriate reach, effective land utilisation
planning for environmental conservation, active involvement of the Regional Offices
in planning, and promotion for involvement of NGOs in regional programmes.
These policies were enacted through different regional, sub-regional and district level
programmes. Expansion of the road network, rural electrification, establishment of at
least one health post in each VDC, development and extension of infrastructure and
facilities in schools for basic education, provision of extension of post office for
development in communication at the VDC level, establishment of rural development
banks and promotion of public accesses to lending facilities through non-
governmental rural banks, undertaking of extensive rural infrastructure works for
employment generation, extensive development of small irrigation systems with
emphasis on hill irrigation, natural resources conservation through extensive
community forestry is regarded as the achievements in the Eighth Plan.
Despite these successes equitable regional balance has not been effective. Inter and
intra-regional or district level spatial disparities in the development status have
complicated the development process. Although the development scenario among the
areas of the region is different as indicated by differential poverty situation or
differential human development indices, differential investments based on these have
not become possible. People's empowerment has not been possible in the absence of
effective decentralisation and as a result development has become a sign of
dependency.
3 Existing Challenges
As the development works undertaken with the sole target for increased national
productivity has led to programme focus on areas that is already privileged with
means and resources, specific regions and groups remain to be ignored.
Formulation of policies and programmes is not based on continuous monitoring and
evaluation of regional imbalances.
Mountainous and hilly districts of the mid-western and far -western regions and
mountains districts of the central and eastern regions is relatively underdeveloped.
Largely underdeveloped areas also exist in the sub-regions. Policies and programmes
specific to development needs of such areas is lacking.
Number of families living below the poverty line is relatively high in the
mountainous districts of the mid-western and far-western regions and hilly districts of

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the mid-western region. Focused programmes, aimed at creating direct impact on
such communities, encompass very few communities as compared to the total
population of the poor. As a result such programmes have failed to create an impact.
Attempt to implement non-focused programmes through regional mechanisms have
also failed to create an impact as such programmes have been concentrated in limited
areas for a small population.
NGOs have not been effective as programmes implemented by NGOs for poverty
alleviation is uncontrolled and is not equitably among the regions. In the absence of
skill-oriented training and financing mechanisms employment generation has not
been encouraging in the non-formal sectors.
Migration rate from hills to terai and to urban areas continues to remain high due to
difficult living conditions prevailing in the hills. Mountainous and hilly districts,
especially those in the mid-western and the far -western regions, is found to be most
disadvantaged in terms of social, economic and physical infrastructure. the
disadvantaged districts also suffer relatively high population pressure.
Increase in national income and productivity to support the national development
process through mobilisation of resources scattered in different regions and gradual
reduction in regional imbalances has been minimal.
4. Long-term Concept
Based on above findings and in view of the present situation as regards geo-political,
social and economic conditions of the country, long-term objectives of development
is regarded as regional balance for regional development, poverty alleviation, socio-
economic integration and optimum utilisation of local resources.
It is essential to have a regional concept in planned development to minimise the
imbalance between important geographical regions and in between different classes.
Expansion of development activities to different regions, sub-regions and areas to
enable people from different ar eas to participate in the development process through
optimum utilisation of resources at the local level in integrating the national economy
requires regional concept in planned development.
Appropriate policies and programmes is necessary to decrease the present state of
regional imbalance. This implies that proposed regional and sub-regional programmes
should be implemented only after effective prioritisation and that social benefit
programmes should be carried out in least developed areas. Policies to address local
development aspects of the regional programmes under the regional development
model should be developed and programme implementation should be made
effective.
The second long-term objective of the regional development programme is poverty
alleviation at the regional level. The regional development model should be aimed at
identifying the poor at the local levels and implementing effective and specific
programmes to address the local needs for poverty alleviation a self-sustaining
process through social mobilisation, development of community organisation and
people's empowerment. It is necessary to improve the accessibility of the poor to the

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means of production. In order to do this, it is necessary to the promote and extend the
present limited coverage of families by programmes targeted to the poor like rural
development banks, small farmers development and micro-credit for women.
In reference to the socio-economic integration, minimum requirements of social,
economic and physical infrastructure pertinent to different places will be identified
and, defined upon these requirements programmes will be implemented to provide
such infrastructures. Areas defined as service centres in disadvantage districts will be
developed as small market settlements to provide miscellaneous services through
such centres. Public and private industries will be promoted in order to reinforce the
economic interrelationships lying between the rural and urban areas that could
provide employment and income generation opportunities to the rural poor.
Optimum mobilisation of local resources is the main objective of the regional
development. It is essential to enhance national development and continuously reduce
the regional imbalances by increasing production and income at the national level
with a view to identifying and utilising resources scattered in different regions and
sub-regions. In the context of this objective, formulation and implementation of
regional development programmes should be carried out by accommodating with
available resources at regional level. As a consequence, not only the productivity
increases from the development investment but also the outcomes of the development
is distributed through out the country and the foundation of local empowerment is
built according to the expectations. Formulation and implementation of regional
development plans will be carried out for balanced utilisation of different resources
and for implementation of development programmes according to geographical
endowment of different regions, sub-regions and places.
Ninth Plan
5. Objectives
Based on appropriate long-term perspective, the regional development objectives of
the Ninth Plan is defined as below:
• To minimise the existing regional imbalances,
• To alleviate poverty,
• To achieve national socio-economic integration by expediting the social and
economic development through promotion of activities that contribute to
employment and income generation
• To give emphasis to production enhancement through identification of local
resources specific to the geographical regions
6. Policy and Implementation Strategy
• Balanced distributions of resources will be made for regional and sub-regional
development. Projects that optimally utilise the local resources and labour will be
identified and, based on this regional investment frameworks will be designed.

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• Regional imbalances will be gradually minimised through emphasis on increased
productivity at the regional level on an area-specific basis. For the regional
development, the private sector will be encouraged and attracted to invest on
production-based activities in all possible sectors.
• Programmes for the regional development will be based and implemented on the
basis of defined regional and sub-regional priorities.
• Workable inter-relations between the regions and sub-regions and rural and urban
areas will be developed with the objective of promoting regional development
and national integration. Hierarchical systems of national urban areas will be
developed to this effect.
• Development programmes to be implemented at the regional, sub-regional and
district levels will be based on hierarchical settlements systems and rural-urban
inter-relationships.
• Appropriate programmes will be implemented so that the market-oriented urban
development will support the regional development. Physical urban development
will be planned and carried out according to the requirements of settlements.
• Poverty-stricken areas will be identified at the regional, sub-regional and district
levels and poverty alleviation programmes will be implemented. The on-going
programmes focused on poverty alleviation will be expanded and special poverty
alleviation welfare programmes will be implemented for target groups in highly
under-developed areas.
• Programmes will be expanded to promote peoples participation at all levels for
social and economic development.
• As under-developed areas and disadvantaged communities is suffering mostly
due to the lack of primary education, primary health care and drinking water
facilities, programmes for human resources development will be implemented to
reach the lowest levels by identifying and such disadvantaged areas and
communities.
• Natural resource base specific to regions and sub-regions will be identified and
the mobilisation and utilisation of resources will be linked with developments
based on the principles of comparative benefit.
• Based on the principles of decentralisation, the districts will be empowered in
formulation, implementation and evaluation of district level programmes and the
districts will be developed as key actors in the process of regional development.
• Regional offices will be strengthened to coordinate at the local level.
• A regional planning cell will be established at the National Planning Commission
Secretariat to monitor regional development programmes and Regional Planning
Offices of the Secretariat will be strengthened for the purpose of regional level
programme formulation, monitoring and evaluation.

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7. Programme
• Production at the regional levels will be enhanced to realise the concept of
sustainable development for the regions through optimum mobilisation of
regional resources.
• Distinct potential and capacity will be explored at the regional levels and
development programmes will be promoted accordingly.
• Priority sectors for development will be defined after identification of distinct
potentials of regions and sub-regions. presently, the development of such
potentials include assigning priority for promotion of cash crops like tea and
cardamom plantations in the eastern region, tourism promotion in the western
region, promotion of service industries in the mid-western and far -western
regions.
• Area specific programmes like rural development banks, small farmers
development and micro-credit for women will be expanded by strongly
reorienting them towards poverty alleviation. Low -income people will be
involved in infrastructure development works. Labour-based industries will be
expanded in disadvantaged rural areas.
• Development-related non-government organisations is found to be concentrated
in accessible areas. Attention will be paid towards maintaining the regional
balance while assigning work areas to such organisations.
• Emphasis will be given towards developing sustainable framework for
development through people's participation, local empowerment and institutional
development and optimum utilisation of local resources and skill in formulating
local development projects and programmes.
• Sustainable and production oriented local urban systems will be identified and
developed for expansion and effectiveness of area specific development
programmes.
• Such settlements systems will be developed as apart of the national urban
development system. Locally created regional settlements systems will be utilised
for implementation of development programmes.
• Investments for promoting production and productivity through maximum
utilisation of present infrastructure, services and facilities available at the
different regional and sub-regional levels will receive priority and construction of
new infrastructure will be integrated with production.
• Appropriate standard for classifying the national, regional and district level
projects will be ascertained. In formulating local, regional and central level
programmes, inter -relationship among various agencies will be identified and
coordinated.

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• Expansion and development of various services will be undertaken and integrated
settlements will be promoted to minimise difficulties in the delivery of services to
scattered areas.
• Regional offices will be adequately strengthened and will be powerfully
mobilised to formulate, implement, monitor and evaluate district level
programmes implemented within the region.
• Coordination mechanisms will be established and developed, in accordance with
the concept of regional development, to import impetus to the development
within the region. As development through decentralisation is sustainable process
to institutionalise the overall regional development of the Plan, decentralisation
will be carried out to make these interd ependent.
• Statistical database and skill will be developed and integrated development
concept will be promoted at the district level by institutionalising research,
coordination and information-base at the regional level for the purpose of
developing regional planning as an appropriate process and effectively
implementing the regional development policy at the national level.

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 8.2 Local Development

1 Background
The major objective of local development programme is to mobilise resources and
technology available at the local level for the development of the rural area and for
the delivery of the necessary services and facilities to the local people. Local people
is the foundation of local development. Similarly, promoting participation and
development work and developing a feeling of ownership among the users’ groups of
the local development project is other important aspects of local development
programme. The major aspect of local development programme is to mobilise local
resources, use local skill and technology in implementation of the programme and to
assist local people in identification and research of possible programmes of their
needs. The main philosophy of local development is to involve the local people
directly in the identification, formulation, implementation and maintenance of local
level projects and make the development works sustainable.
If local development programme is promoted by increasing investment in production-
oriented programmes based on employment-oriented technology to create
employment opportunity at local level, this will benefit a majority of the population,
thereby, help in the task of alleviating poverty. The living standards of the local
people can be improved by developing basic infrastructure in rural areas with the
participation of the local people. Local development and people’s participation is the
means of improving socio-economic standards of the people. This will adopt the
policy to extend livelihood opportunities and access of the rural people.
Local development programme has been implemented in Nepal for more than four
decades. Different targeted projects and other rural development activities is included
in this programme. These programmes have important contribution in developing
infrastructure for rural development. Development of infrastructure has helped in
improving living standard of the rural people by increasing employment
opportunities. As some of the programmes of rural development, still, being
implemented from the central level agencies, expected coordination has not been
achieved between development programmes and people's aspiration with clarity and
effectiveness. A need for institutional development in plan formulation and
implementation at local level in strengthening the capacity of local bodies has
emerged. Therefore, Ministry of Local Development (MLD) needs to transfer
gradually the total responsibility of local development at local level along performing
its role of monitoring, evaluation, coordination and motivation,
2 Review of the Eighth Plan
The progress review of the projects and programmes implemented under MLD during
the Eighth Plan period has revealed as follows:
During the Eighth Plan period women development programme has been
implemented in 620 VDCs of 67 districts of the kingdom. A total of 12,634 income
generating groups have been formed and a loan amount of Rs 410 million from the

158
different banks has been disbursed. This has benefited about 40,906 families.
Similarly, 132 child care centres have been established. Five thousand easy toilets
have been constructed. About six thousand appropriate technology-based improved
stoves and bio-gas plants have been constructed. Nine hundred eighty-five
community development groups have been formed. A total of 75,000 people have
been benefited through drinking water projects constructed at 701 places under
community development programme. Under the same programme, health, nutrition,
population education and family welfare training for about 17,738 people and skill-
based training for 14,702 women have been provided. The women's groups have
mobilised Rs 20 million savings and Rs 9.4 million 17 thousand mobilisation fund.
This has increased the participation and access in development and has also helped in
developing women’s leadership.
Local Development Training Academy, since its establishment has provided
knowledge and skills through training and workshop to a total number of 22,644
persons including the women workers, besides the elected people's representatives
and officials of local bodies.
Orientation workshops for DDC chairperson and members have been completed in
the process of intensive mobilisation of population education programme.
Approximately 2500 village level family welfare mobile training camps have been
organised. Similarly, 40 people have been trained for population education-related
trainer's training.
Under the Remote Area Development Programme, skill development training for 259
persons, income generation training for 38 persons, herbal medicine training for 62
persons have been provided. Two hundred thirty-five persons have received skill
development and entrepreneur training and 81 training programmes related to health,
nutrition, population education and family welfare were organised.
During this period under remote area development programme, 139 drinking water
projects, irrigation projects for 746 ha of land, 46 suspension bridges, 185 km of new
trail construction and maintenance, 85 ha tree plantation has been completed to
provide economic and social services in the remote area of the kingdom. Under this
programme 81 monasteries, temple-schools, inns, etc., have been constructed.
From the second year of the Eighth Plan, rural self-reliance programme has been
implemented to provide monetary resources directly to each VDC of the Kingdom for
development and construction. In the Eighth Plan period by the implementation of
small development and construction work to support daily needs of the villages 1610
km of rural road construction and maintenance work has been completed under this
programme. Similarly, 772 km of trail and horse track roads has been constructed. In
drinking water sector, by the installation of 81 wells and tube-wells and laying down
of 171 km of pipelines, 3549 taps were installed. 6600 ha land has been irrigate d and
808 culverts/bridges and 514 VDC buildings have been constructed.
Four hundred seventy-three km rural road and trails have been constructed under
local development construction project, mobilising local participation. Similarly,
under local roads and suspension bridges programme, construction of 15 suspension

159
bridges has been completed. 29 is under construction, 126 is at fabrication level and
77 is in the stage of survey, design and estimation.
In the Eighth Plan period, under monastery development programme 120 monasteries
have been maintained. Country-side tour programme was arranged to 197 Lamas. A
book has been published in Tibetan language. To maintain monastery inventory, 13
district inventories have been prepared.
Rural Community Infrastructure Development Programme (RIDP) are being
implemented in 20 districts with food assistance of the World Food Programme
(WFP) and technical assistance from Germany. Under this programme,
approximately 361 km rural road, 488 km of trails, 97 km of small irrigation canal
construction, 23 km of river control construction and improvement have been
completed. Similarly, construction of 48 fish ponds, 1.5 ha cardamom farming, 65 ha
agro-forestry and 0.5 ha school ground construction has been completed, benefiting
altogether 66,228 families. RIDP has been started since 1996/97 under Asian
Development Bank loan assistance. 40 km road reconstruction has been completed
under pilot labour-based district Road Rehabilitation and Maintenance Project
(RRMP) with loan assistance from World Bank and technical assistance from United
Nations Development Programme. Similarly, with IFAD loan assistance under Flood
Damaged Reconstruction and Rehabilitation Project, 139 km of rural road, 160
culverts and bridges and extension of irrigation facilities in 19,648 ha land has been
completed.
In Dhading, Gorkha, Lamjung, Gulmi, Arghakhanchi, Kalikot, Humla, Mugu, Dopla,
Ilam, Panchthar and Taplejung district, under different foreign resources, and under
rural development programme 7,292 ha irrigation, 256 km rural roads, 8361 km trails
and 134 community building projects have been completed. Similarly, 41,000 people
have received skill-based training along with 53 community project implementation
and approximately Rs 2.6 million in community savings have been collected.
3. Existing Challenges
Although programmes implemented at local level to meet the local needs is
considered as local development programmes, a wrong conception exists that
programmes implemented under MLD is only the local development programme.
Similarly, there is no conceptual clarity between local development programme and
central programme.
Line ministries is found to compete in establishing their own district level offices to
deliver services at the local level. Becaus e of this, local development programmes is
implemented through the involvement of different agencies. Various problems have
emerged as challenges in the course of local development such as lack of
coordination in programme implementation among different ag encies, misuse of
resources, duplication in programmes, and the problem of undermining the concept of
balanced development.
Project implementation has not become effective as the system of monitoring and
evaluation could not become a part of the management. Similarly, resource utilisation
has not been effective due to the lack of improvement in information system.

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Human resource and local technology could play an important role in bringing
effectiveness in local development programmes. The productivity of the local
development programme has not increased as local institutions could not implement
their programmes efficiently in absence of the trained manpower. Therefore, the
aspects of local bodies such as institutional development, development of
management capacity, promotion of economic and technical capacity, increase in the
productivity of the programme, constitute major problems in implementing local
development programmes.
Not only the infrastructure and service facilities developed at the local level, become
unattended and defunct after withdrawal of the support given by districts, centre or
the donor agency but also the trends to expand the services and facilities without the
direct involvement of the local people have created a feeling of dependency among
the people and the local bodies.
4. Long-term Concept
The long-term concept of local development programme is to implement
development works in a self -sustained mechanism, building capacity and developing
self-governance of local bodies and making the local bodies accountable towards
local people for providing necessary services to them from the local level and to
develop necessary and appropriate leadership as well as human resource for the local
development programme through the efficient use of the locally available technology
and resources for the socio-economic development of the rural areas where majority
of the people live.
Ninth Plan
In the process of institutionalisation of the local development programmes, it seems
that the rural people need to continue the optimum utilisation of local technology,
resources and materials through local institutions in their own initiatives. Without
improvement in the technical and economic capacity of the local bodies, fulfillment
of people's daily needs cannot be met efficiently from such institutions. For this,
community development needs to be promoted as an indispensable part of national
building by decentralising participatory development process at lowest level in an
institutionalised way. It has become necessary to improve living standard of the
targeted community by the means of social mobilisation through local institutions. It
equally needs to continue the process of providing appropriate and necessary
management, technology and resources for community development including the
capacity building, strengthening of local bodies. In this context, following objectives,
policy and implementation strategy have been adopted in the Ninth Plan:
5 Objectives
• To make DDC a focal point of overall development of the district.
• To give highest priority to those geographical areas which is backward in respect
to socio-economic development.
• To develop technical manpower and appropriate technology as per local need.

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• To develop basic infrastructure in rural areas by involving local people.
• To make the local people self-reliant by providing the services such as, water
supply and sanitation, basic health, education and environment protection, and
utmost development of agriculture sector including food grain at local level.
6. Strategy
• Ministry of local development will work as a contact point and overall
responsibility of local development will, gradually, be transferred to the local
level.
• In view of the structural change taking place, remote area will be reviewed on the
basis of scientific standard.
• People residing in the remote area will be brought in the mainstream of the
national development by uplifting their living standard and implementing
appropriate development programme.
• Local development programme will give special focus to backward caste, district
and rural area to promote regional balance and proportional development.
• Special socio-economic development programmes will be implemented for the
welfare of economically and socially weak groups, ethnic people and women
community of the society.
• Fixed amount of grant will be provided for local development on the basis of
appropriate standard to promote local skill on the basis of availabile local
resources.
• Necessary skilled manpower will be developed for rapid and sustainable local
development process.
• Special emphasis will be given to collection, analysis and updating of local level
statistics.
7. Policy and Implementation Strategy
• Local development programme will be implemented with the direct involvement
of local bodies.
• Local level community will be mobilised and oriented effectively and in
coordinated manner towards self -employment.
• Access of local community to goods and services will be increased by
implementing those rural infrastructure development programmes which can
create employment at community level.
• Capacity of the local municipality will be strengthened for solid-waste
management and sanitation by providing necessary incentives; and solid-waste
will be mobilised as a resource by involving the of private sector.
• Priority will be given to the promotion of local technology for local development
works and programmes for research and development of appropriate local

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 technology will be implemented that could assist in increasing production and
productivit y as well as employment generation.
• Local bodies will be made responsible for all steps of local development
programme, from identification, selection, formulation, implementation, and
monitoring and evaluation. Centre will provide necessary training, financial and
technical support to improve the capacity of local bodies. Overall management of
local development programme will be conducted by local bodies.
• Production-oriented, income-generating and employment-oriented programme
will be implemented from the available natural resources in remote area.
• The working capacity of LDTA and the its training centres will be strengthened
to develop necessary manpower for local development, and existing training
institutions in governmental, non-government and private sectors will be
mobilised to this end.
• Special programmes will be implemented that would use skill and knowledge of
untouchable, downtrodden, backward and ethnic communities.
8. Programme
The following programmes will be implemented under local development in the
Ninth Plan:
Women Development Programme: WDP has been implemented with an objective
of uplifting socio-economic status of deprived women since 1983. In past, this
programme had been implemented with regard to social upliftment of women by
organising them in groups. During the Ninth Plan period WDP will be implemented
focusing women under poverty line to increase their living standard by improving
socio-economic status, enabling to develop the community and themselves and
mainstreaming these groups in development process. In the Ninth Plan, this
programme will be extended to other families of the already covered districts rather
than to other districts.
In the Ninth Plan, necessary training, under this programme, will be arranged to make
women socio-economically able and to change woman's traditional role. Women will
be involved in income generation and self -employment by providing institutional
credit. The women institutions organised under small women groups will be
integrated as a self-motivated institutions to promote self-employment; and 100 such
institutions will be formed a federation during this Plan period. Reproductive health
programmes will be integrated and implemented under this programme. Environment
will be created to involve women for family and child development and other
activities by saving women's time and labour. By establishing formal relation
between women and governmental, non-governmental and financial institutions, the
programme to increase the capacity of the women in seeking jobs, people's awareness
programmes to remove discrimination against women and concept of equal
development of men and women will be implemented in different levels of the
programme. Likewise, the programmes to promote hygiene, sanitation and
environment will be implemented. Ninety non-governmental organisations will be

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involved in credit flow, people's awareness building and other activities. Twenty-five
of these non-governmental organisations will be developed as a financial
intermediaries.
Steps will be taken towards developing mutual relations between different ministries
and departments who is currently running women development programme to
establish close relations between WDP and the programmes under different
departments.
The target of different activities in the plan period under this programme is as
follows:

S.No. Activities Units Target

1. Household survey and analysis number 286545
2. New group formation number 24003
3. Basic training person 121297
4. Skill oriented training person 24003
5. Implementation of child development point 387
programme
6. Early childhood and gender sensitisation person 16302
programme
7. Population education and family welfare person 87536
training
8. Institutional development training person 83846
9. Credit disbursement Rs in ‘000 1,487,800
Remote Area Development Programme: RADP has been implemented as an area
targeted programme in 22 districts adjoining Northern border and also in very remote
area of the Kingdom of Nepal to develop those areas which is socio-economically
backward in comparison to other districts. In the past, as the programmes were
implemented in an ad hoc manner without having any feasibility and considering
development opportunities by the sectoral agencies including the RADP Committee,
the investment-output ratio has always been very low. As a result, the pace of
development has been found low as the rural infrastructure was not developed, and
the lack of educational and other social services put the majority of the population of
these areas under poverty line. Therefore, special efforts will be made to reduce the
backwardness and poverty in these areas and by reviewing situational changes of
remote areas, to classification will be done by adopting specific standards to develop
these areas.
In the Ninth Plan, the actions under RADP will include the poverty alleviation and
building the social and community infrastructure programme. For poverty alleviation
programme, this will focus on growth in production in food deficit area by the means
of small-scale irrigation. Income generating programmes will be implemented by
mobilising community organisations. Appropriate technology will be developed to
mobilise local resources; and training programmes to help activities like fruits
farming, kitchen gardening, cash crops farming; and cottage industries will be

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organised. Utmost priority will be given to develop pasture in Nepal's territory. To
minimise the adverse effect in the environment of remote areas existing forest
resources will be protected and conserved. Support will be provided in pasture
development in local level by building necessary roads, bridges and culverts and
water supply system for the remote area. The programmes related to construction of
pedestrians roads, suspension bridges, water supply, schools and hostels under social
infrastructure programme will be implemented. Efforts will be made to increase the
participation of non-governmental sectors for rural areas development. A programme
to establish business relations between remote area and other area will also be
undertaken..
The target of different activities in the plan period under this programme is as
follows:
Activities Units Target
S.No.
1 Micro hydro power project number 30
2 Construction of suspension bridge number 50
3 Construction of water supply project number 200
4 Irrigation facility hectare 1650
5 Horse track road construction km 250
6 Income generating programme number 100
7 Technology development and extension number 10
8 Agriculture programme number 45
9 Grassland development number 10
10 Plantation programme number 50
11 Construction of school hostels number 10
12 Income generating and skill oriented training number 350
13 Personnel training number 325
14 Beneficiary training number 250
In implementation, the programme of RADP will be incorporated with DDCs’
programme. Effective coordination will be managed between different programmes
implemented in the remote area. Proportion of the development grant provided to the
remote area will be increased in comparison to other area. Participatory development
process will be institutionalised to comprehend the ownership of the local project
through the people’s participation in making the decision of development projects
implemented in the remote area. Training and technical services will be provided to
the local bodies and absorptive capacity will be increased. With necessary reform in
the structure of the RADP Committee, it will be made more effective and objective-
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oriented. Institutional arrangement will be made for continuous monitoring. Regular
impact evaluation of RADP will be arranged. Implementation of production-oriented,
income and employment generating programmes will be emphasised after assessing
the implemented development programmes in the remote area and preparing the
inventory of required construction programmes and projects.
Local Development Training Programme: The main objective of the local
development training will be to enhance the administrative, managerial and technical
capacity of the local bodies and to develop well-informed, committed and skilled
manpower to implement local development programmes effectively. During the Ninth
Plan, the training programme will be made qualitative by overcoming the weaknesses
seen in reviewing the training programme implemented during the Eighth Plan. The
programmes implemented under Local Development Training Academy will follow
participatory development policy and needs of the elected local level representatives.
The prominent need of the present time is to strengthen the technical capacity of the
VDCs. For this purpose, one centre of the centres of the Academy will be developed
as “technical development training centre.”
In view of the formations of the federations of local bodies and by establishing
relations with these federations, appropriate training programmes will be identified
and developed considering their demand and arranging a cost sharing system between
these federations and the Academy. The target of the Ninth Plan period under local
development training programme is to organise follow up training, training and
seminars to a total of 170,000 officials including 151,000 of VDC level, 9,000
municipality of level and 10,000 of DDC level. In addition, study, research and
consultancy servic es will be continuously provided in the areas of rural development,
local self-governance, local resource mobilisation and people's participation, etc.
Population Education Programme: Population education programme will be
implemented as an integral part of local development training programme. This
programme will be implemented in 900 VDCs of 25 districts. Under this programme,
training will be provided to 22500 officials of local bodies in reproduction, health,
population education and gender equality with a view to increasing population
awareness. Similarly, follow-up training, training on population, trainers’ training and
seminars will be organised for local level officials. Village level family welfare
mobile training camp will also be carried out.
Monastery Development and Management Programme: During the Ninth Plan,
under monastery development and management programme, monasteries located in
different parts of the Kingdom will be protected and conserved. Similarly,
programmes conservation of monastery and promotion of their religion and culture
will be carried out. A policy will also be undertaken to enhance the participation of
Buddhism practicing Lamas in the national development.
The target of different activities to be implemented during the plan period under this
programme is as follows:

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 S.No Activities Unit Target

1 Maintenance of monastery number 225

2 Lama's country visit programme person 200

3 Training on Buddhist religion, culture person 550

and tradition

4 Training on fine art and herbal medicine person 250

Human Resource Development Programme: The programme such as training,

instruction and seminars, etc., for the officials of local bodies and personnels will be
implemented to increase the capacity of the local bodies. Skill and technology
development training for mason, carpenter and plumber will be organised. With a
view to developing local human resources for assisting local development
programmes.
Rural Infrastructure Development Programme: Rural road will be built to reduce
poverty through the provision of road facilities to the rural hill areas and increment in
income generating opportunities. Under this programme, low-cost rural road based on
people's participation strategy will be built with the loan of assistance of the Asian
Development Bank in Banglung, Kavrepalanchok and Tanahu districts, which aim at
increasing agricultural productivity, construction of basic physical infrastructure and
providing employment opportunities in agriculture sector. A total of 250 km of rural
roads and village level 90 multipurpose buildings will be built under this programme.
Rural Community Infrastructure Development Programme: RIDP will be
implemented in phasewise manner in 45 districts with the help of WFP. The main
objectives of the programme is to improve food availability of the rural poor families,
improvement and construction of community infrastructure in food deficit areas,
strengthening the self-help capacity of rural community and to enhance the
management capacity of the local bodies in implementing the programme. To
increase the access of rural community in basic services, the programme such as
linking rural roads with main roads and markets centres, community-based irrigation
projects and river training to protect farm lands and farmers will be implemented. The
programmes such as construction of small canals, pond construction and maintenance
in hill and terai districts, and mule tracks and tractor roads, river bank protection and
small landslide control in mid-hill will be implemented. Programmes to reduce the
malnutrition of the community will be implemented by mobilising food under “food
for work programme” in food deficit area. This will help increase in income
generation by creating employment in rural areas. This programme has the target of
implementing 2,300 community based activities and food deficit 200,000 families
will be benefited by participating in the “food for work programme.”

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Lumbini Rural Water Supply and Sanitation Project: Implementation of Lumbini
rural water supply and sanitation project will be continued to promote community
development, and to implement water supply and sanitation programme in
participation with local bodies in the rural area of Lumbini Zone. This programme
will be implemented in participation with non-government organisations. A total of
180 projects will be implemented benefiting 100,000 people during the plan period.
Western Terai Poverty Alleviation Programme: Western Terai poverty alleviation
programme will be implemented in 8 districts: Dang, Rupandehi, Banke, Kailali,
Kanchanpur, Bardia, Nawalparasi, and Kapilvastu of western Nepal to help poverty
alleviation by increasing income generation and improving welfare of rural women,
landless and small farmers. This programme will provide credit facility to the targeted
groups, public sallow tube-well will be constructed, production and employment
oriented skill development training will be organised and community and institutional
development programme will be implemented. By the implementation of this
programme 28,833 women will be benefited from credit facility, 5,875 families from
public sallow tube-well facility and 84,000 poor people from different training.
Integrated Rural Development Programme: IRDP has been implemented to
improve the living condition of the rural people by providing different goods and
services in a coordinated manner and to develop rural infrastructure. In the Ninth
Plan, poverty alleviation, productivity increment by promoting people's participation,
strengthening institutional capacity of the local bodies, and the projects generating
employment and constructed and maintained by the users’ groups will be given high
priority under the Programme. The projects will focus on backward region and
community and the poor people. The projects will have to be selected under the
priorities determined by DDCs.
During the Ninth Plan, four integrated rural development projects will be
implemented in five districts: Gulmi and Arghakhanchi Rural Development Project,
Gorkha Development Project, Lamjung Development Project, and Dhading
Development Project.
Intensive Labour Oriented Road Rehabilitation Project: Labour-oriented model
road, trail road and standard road will be constructed and improved in different places
of Kapilvastu, Rupandehi, Nawalparasi and Syangja district of western Nepal. Under
this programme, training will be organised on different aspects of road construction
and management to the employees involved in road construction, local contractors,
beneficiaries, communities and labourers. This project will help in generating rural
employment.
Solid Waste Management: In view of the increasing number of municipalities and
quantity of solid waste, non-government organisations and private entrepreneurs will
be involved in the management work. Municipalities will be promoted to adopt norms
and standards determined for solid waste management and to produce compost
fertilizer from the solid waste produced in municipal area.
Programme for Backward Groups and Ethnic Community: In the Ninth Plan,
special programmes will be implemented for social, economic and cultural

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development of backward ethnic communities of society. A National Ethnic
Academy will be formed to develop and promote culture and livelihood of the ethnic
communities based on the studies on their social and economic status. This Academy
will formulate appropriate programmes for the economic uplifting of ethnic
community and these programmes will be managed the concerned government
agencies. NGOs will be involved in ethnic community uplift programmes.
Similarly, Praja Development Programme will be implemented gradually and
appropriate programmes will be formulated and implemented for minority ethnic
communities such as Raute, Praja, Mushar, Dom, Dushad, Satar, and Dhimal living in
different parts of the country. NGOs will be promoted in implementation of such
programmes. Necessary programmes will be implemented to study, protect and
promote the culture and livelihood of these communities. In addition, cultural
heritage of the ethnic community will be preserved and necessary steps will be taken
to establish an ethnic community museum to attract the tourists in the Ninth Plan
period.
People's Participatory Development Programme: Sustainable development is
possible when people's participation can be achieved in rural development. The
project prepared by the users’ groups, VDCs and municipalities in participation with
the local people will be jointly implemented with cash contribution of these
institutions in the Ninth plan. Under this programme, on the basis of the demand of
local people, project such as, water supply, irrigation, road, etc., that help income
generation will be implemented. Such programmes will be implemented in ownership
and control of the local users’ groups and emphasis will be given in mobilisation of
local indigenous technology.
Agricultural Road: As mentioned in the Agricultural Perspective Plan, agricultural
road projects will be implemented to join the production area with nearest motorable
main road to increase the economic activity of the private sector by helping market
mechanism and production in pocket areas which is important in agricultural
production. This programme, which is to be implemented in participation with local
people, will help in increasing agricultural production. In the Ninth Plan 2,238 km
agricultural road will be constructed. Technical aspect of MLD will be strengthened
for the technical assistance in implementation, monitoring and evaluation of the
agricultural road project. For this, Rural Infrastructure and Agricultural Road
Department will be established.
Local Development and Construction Programme: Rural infrastructure is an
important aspect of local development. These infrastructure projects, constructed with
labour intensive technology, will help to develop the local economy and reduce
poverty by creating employment and mobilising local resources and skill.
Transportation facility will be provided to the local people by building suspension
bridges over small and big rivers in the local roads in the hills and by building mule
tracks and local rural road joining villages and district head quarters and which is
important for tourism industry. With the objective of providing additional
infrastructure for rural development this programme will be continued in the Ninth
Plan period. This programme will be implemented with maximum use of labour-

169
oriented technology in direct support and participation with local bodies. In the plan
period, survey, maintenance and improvement of 470 km of local rural road, 700 km
of mule track, 1,530 km of other types of road will be constructed. Likewise, the
target in the Ninth Plan is to build and improve 400 on-going and new suspension
bridges.
Local Development Grant: In the Ninth Plan, grant provided to the local bodies will
be continued to help to mobilise skill and resources of the local bodies. Under this,
DDC grant, VDC grant and municipality grant will be provided. Provision will be
made to promote the programme in investment, which increases production and
productivity, human resource development, social security, poverty alleviation and
employment-oriented programmes.
District Development Committee Grant: In the process of providing resources to
the district level, implementation of programmes effectively in the districts, on the
basis of district's population, geographical remoteness and existing infrastructure of
development will be continued also in the Ninth Plan. DDC will be the focal point of
the overall development of the district. This will help the development work of the
district. Capacity of the DDC will be strengthened to implement the local
development programme and DDC will be provided full autonomy in the local
development process.
Village Development Committee Grant: The programme of fixed amount of grant
provided to every VDC will be continued with objectives of making VDC a
development centre and strengthen its capacity to fulfill minor rural needs with its
own labour, skill and capital. It is believed that this programme will cease the
dependency of the VDCs to make the rural development work more qualitative, to
strengthen their capacity and to fulfill their minor rural needs.
Municipality Grant: The grant provided to the municipalities with low income will
be continued to implement development works in their respective areas. Capacity of
the municipality to mobilise internal resources will be strengthened. Local tax base of
the municipality will be gradually broadened.
Electoral Constituency Development Programme: As per the outlook of the
members of Parliament of House of Representative and National Assembly, electoral
constituency development programmes will be implemented to promote the
participation of the members of parliament in developmental works in their areas as
usual. Institutional and procedural arrangements will be made to achieve coordination
between this programme and the programme implemented by DDCs.

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 8.3 Development of Backward Special Region

1. Background
Geographical feature of Nepal has it's own specialty. North-South expansion is
approximately 80-85 km. with an altitude of 150 to 8,000 meters from the sea level.
The land expands from East to West and altitude increases from South to North. By
the rivers flowing from north to south, Nepal has geographically been divided into
different small areas. Major area of Nepal has been socio-economically backward due
to the very remoteness, difficult terrain hills and the absence of fertile lands. In the
region, settlements of the people is very scattered due to geographical factors. Hence,
it has been very costly to deliver basic services such as, transportation, health,
education and water supply. Although efforts were made in the past to bring the
people, living in the region, in the mainstream of development, it could not be
materialised due to the lack of identification of real problems and lack of
understanding the sensitivity of people from the projects point of view. Consequently,
the region could not fall in the mainstream of national economic development and the
outcomes of development could not reach the region.
In view of the total absence of infrastructure and economic backwardness, 632 VDCs
of 25 districts of the country have been recognised in the Ninth Plan as a special
region. The recognised region is not resource poor. There is a great scope of
production of animal husbandry, herbal plants, vegetable seeds, and Kasturi deer, etc.,
in different places of the region Many places can be developed as tourist spots. In
consideration of these possibilities, the Ninth Plan has visualised to carry out
development programmes in the region by appropriate utilisation of the resources.
2. Existing Problems
Geographical remoteness is the major problem of the specially recognised region. In
some places, it takes one or two days to walk from one ward to another of the same
VDC in the region. All the areas of the region is in Mahabharat range in the South
and Himalayan range in the North. Due to high mountain ranges expanded from East
to West and rivers flowing from North to South, geographical feature of the area is
very remote.
Although, there is a scarcity of arable land due to the location of difficult high hills
and mountain, majority of the area of this region have great scope of forest
development, herbal plantation, animal husbandry and cottage industry. For this,
scattered settlement needs to be concentrated in specific areas.
Lack of transportation, electricity and communication infrastructure has become the
major constraint of overall development of the region. L ivelihood of the people in the
areas is very backward due to the absence of basic social services such as, health and
education.

171
The goods such as fruits, vegetable seeds and herbal production, which is currently
produced in limited quantity and has a great possibility, could not be commercialised
in production due to the absence of infrastructure for the transportation to the market.
The effectiveness of the programmes on social services and local construction works
carried out by the government has not be monitored due to remoteness of the region.
As a consequence, output of the programmes implemented by the government with
maximum available resources could not reach the people living in the region. Even
from political point of view, all the people could not be mobilised.
3. Long-term Concept
In view of the prominent fact that expected development cannot be achieved until the
people living in the backward regions of the country is brought in the mainstream of
the national development, the long-term concept has been visualised to implement the
programme in integrated manner for the development of the region. The region will
be developed in equal status to other accessible regions of the country within 20 years
by mobilising special resources from government as well as from other sectors.
Socio-economic infrastructure development and construction will be gradually
implemented in the districts of the special region. In addition, the people’s
participation in the region will be enhanced in the overall development of the nation
by mobilising their skill and ability and with the utmost utilisation of the available
resources of the region.
Ninth plan
4. Objectives
• To eliminate the social and economic disparity between the people of the special
region and other regions of the country.
• To transform the districts of the region into accessible districts by optimum
utilisation of the available resources in the region.
• To eliminate poverty and backwardness by the use of the available resources and
by developing human resources of the region.
• To strengthen institutional capacity of the community and people of the special
region.
5. Policy and Implementation Strategy
• Production, income generation and employment oriented programme will be
implemented with the available natural resources in the region.
• By the implementation of appropriate development programmes socio-economic
status of the people living in the special region will be uplifted and they will be
brought into the mainstream of national development.
• By the implementation of the programmes in districts of the special region such
as building of infrastructure, developing human resources and increasing people’s
awareness these will be gradually transformed into accessible districts.

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• Output-oriented investment policy will be adopted through the participatory and
integrated development plan in the special region.
• Development plan will be formulated and implemented by identifying
developmental possibilities in the districts of this region.
• Since the goods produced in the market have no access to the market, so by
developing infrastructure for transportation, market will be promoted for the
goods produced in the region.
• The people in the special region will be motivated to identify their needs, and to
formulate and implement the programme. For this, necessary technical assistance
will be provided by the concerned agencies of HMG.
6. Programmes
Infrastructure Development
• In view of infrastructure development, the special region is very backward. The
goods produced in this region is not getting appropriate market due to the lack of
road transportation. During the third to fifth year of the Ninth Plan, road
development programmes will be launched in specific areas with a view to
connecting the strategically located centres of the special area. In addition, special
programmes will be launched in for the construction of mule tracks until
construction of road transportation is not built. Similarly, rural transportation
development programme will be executed in a phase-wise manner for the
development of rural infrastructure.
• The programmes for increasing agricultural production and productivity will be
implemented by undertaking small irrigation schemes for the un-irrigated land of
the region.
• 'Rural entrepreneurship development fund' will be established to produce
industrial goods at the rural level by mobilising available resources in the region.
Special arrangement will be made to promote local production and market
management by entrepreneurship development and micro credit programmes.
• Infrastructure will be developed for industrial and other commercial activities
through the construction of feasible small hydel projects with the participation
with users’ groups and private sector.
• Concerned beneficiary groups will be motivated to implement minor
infrastructure and income generation programmes such as small embankment
construction and plantation; maintenance of school buildings, temples,
monasteries, nursery; vegetables and fruits development; animal and birds
husbandry, etc.
Human Resources Development
• From educational point of view, the people of the special region is very
backward. The density of the population of the region is very low due to the
scattered settlement. Overhead cost of the educational institutions is very high

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 due to low number of students in these institutions. Despite this, the educational
standard is very low. In view of these facts, detailed study will be made as how
the scattered schools can be consolidated. Study will be made to evaluate the
feasibility of mobile teacher and teaching during pasturing of animals.
• Because of low level of educational awareness in the region, formal and informal
educational programme will be implemented as a special programme. Children
will be motivated to join the schools through awareness programme.
• Efforts will be made to solve the problems emerged due to climatic as well as
language barriers.
• Arrangement will be made to organise employment and skill oriented training for
the youth of the region by identifying the labour market. Women in the region
will be participated in awareness building activities by providing primary health
training programmes in the areas of population education, maternal and child
health, hygiene and sanitation.
• The people of the region will be trained and their capacity will be strengthened by
giving them priority in admission in trade schools of the region.
• Special programmes will be implemented to prevent diseases through the supply
of clean water, toilet construction and maintaining healthy environment around
the houses.
Planned Settlement and Local Resource Mobilisation
• Infrastructure development work, and economic and social development
programmes have been very complex and costly due to the scattered settlements
in many districts of the region. To improve this situation, efforts will be made to
build development infrastructure and consolidate the settlements in the feasible
areas. On the basis of this, development programmes will be implemented by
concentrating in specific areas and will be implemented with a vision of planned
utilisation and conservation of local resources.
• From the view of local resources, districts under the special region is not poor.
The situation is that optimum and practical utilisation of resources has not been
made. Therefore, after studying the possibility of economically feasible resources
within the region, different programmes will be implemented which would help
uplift the living standard of the local people by mobilising these resources in
different phases. Professionalisation in the production of animal husbandry,
woods, herbal plants, vegetables seeds and kasturi -deer will be focused and
appropriate market management of these production will be made.
• Emphasis will be given to developing tourist spots after identifying such spots at
the district level in the region. Wildlife reserves and national parks will be
gradually established and will be run in participation with the local people in
feasible areas. Arrangement will be made for conservation and production of
local resources in coordination and joint management between government, non-
government sectors and beneficiary groups in appropriate places.

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Other Programme
• The programmes and projects such as northern area tourism development project,
conservation and promotio n of disappearing forest, botany, herbal plants and
animals, northern area trade development plan, and cultural development project
will be developed and implemented in different phases.
Special Arrangement for Programme Implementation
• People's awareness programmes will be implemented to solve the existing
problems of the special region. People’s awareness will be increased in every
VDC of the special region by implementing National Volunteers Programme. In
this programme, local people will play the role of teacher, motivator and
technician to implement the development programme with their own participation
and identification of needs. This programme will be implemented in 632 VDCs of
the region from the second year of the Ninth Plan.
• Sectoral programmes related to development of the special region will be
implement by concerned agencies and other programmes will be implemented by
RADP in consultation with DDCs. For this, non-government organisations will
be mobilised as needed. HMG's district line agencies will provide necessary
technical supports as well as services of specialists.
• By integrating sectoral programmes implemented from different agencies of
HMG will be made effective.
• District development action committee, to be formed in district level, will review
the programme regularly. Arrangement will be made to monitor and evaluate the
programme regularly from MLD. One separate unit will be formed in the NPC to
monitor and evaluate the programme. For frequent monitoring and evaluation,
information and reporting system will be made reliable, organised and regular.

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 8.4 Human Settlements and Urban Development

1. Background
The process of urbanisation is rapidly growing in Nepal. For some time in the past,
Kathmandu Valley has rapidly been urbanised and many new markets have been
expanded along the main highways. But necessary physical and social infrastructure
have not increased equally in the pace of urban population growth. The environment
of urban areas is becoming polluted and unhealthy because of the lack of sanitation,
amenities and services. Since agriculture alone has been unable to support the
growing rural population, internal migration is taking place and additional pressure
has been put on the inadequate social economic and physical infrastructures of the
urban areas.
In the urban areas, 24 percent families is living in rented houses and 7.3 percent
families in cottages constructed on illegally occupied public land. It is estimated that
there is 3 million residential houses in the Kingdom of Nepal: 2.7 million houses in
villages and 0.3 million in the urban areas. In a country with limited resources like
ours, the government alone cannot build houses and make them available to the
people. Therefore, housing development programme can only be launched with the
mutual participation of the government and private sector.
A huge amount of resources is invested annually on building construction by
government, semi-government, non-government and private sectors. Therefore, it has
become essential to make a study and research on the construction material and
technology available in the country; to make optimum use of local construction
materials; to enhance use of economical, simple, easily available and appropriate
construction materials having no adverse effects on environment, and to develop and
expand safe construction technology. Most of the offices of His Majesty's
Government from the central to the district level is settled in the rented houses. Some
of the government office buildings is old and devoid of physical facilities and
therefore such offices lack appropriate working environment. Considering the
necessity of government office buildings and residential buildings for employees, it is
necessary for His Majesty's Government to prepare a long-term plan on construction
of government buildings to implement it all over the country and to create appropriate
working environment in all office buildings.
2. Review of the Eighth Plan
The fast urbanisation growth in the Kingdom was not only recognised in the Eighth
Plan period as the expansion of physical facilities but also regarded as a major
contributor to the national economy. For this purpose, emphasis was given on
implementation of urban development programme mainly with strong participation of
the private sectors. Impact of national infrastructure and financial policy in
urbanisation process, facilities needed for surrounding village areas through the
development of urban centres, creation of agricultural employment possibilities in
rural areas and opportunities of employment in non-agricultural sectors were the

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concerns of major policies in the Eighth Plan. Emphasis was given to the necessity of
making regular improvement in the existing rural housing conditions from the
perspective of the high living standard, to make improvement in the construction of
urban housing in a planned way, to avail necessary services and facilities and to
maintain a balance between income of the urban dwellers and their minimum housing
cost.
During the Eighth plan period, the process of updating the physical development
plans of almost all the municipalities in connection with urban development had been
completed and the integrated action plan of twelve municipalities had been prepared.
To identify and plan the projects thorough the “support of urban development
management” and to develop the capacity of the municipalities and to eliminate the
environment problems created by the unplanned and fast urbanisation of the
Kathmandu Valley essential improvements have been made in the existing Acts and
By-laws related to the improvements of infrastructures development conservation and
urban development activities.
The pace of migration from rural to the urban areas is growing and the social
economic and environmental problems of the rural area is becoming complicated day
by day. Though some efforts have been made in the last few years to develop the
mutual linkage between rural and urban areas through the development of small
towns and markets, a large number of villages and people have not been covered by
the programmes. In the formulation, implementation and review of urban
development plans and programmes a total of 134.4 million as loan investment and
96 million as grant has been advanced through Town Development Fund.
National housing policy has been formulated and implemented. The role of
government and non-government sectors in the housing sector has been clearly
defined and short term and long-term programmes have been specified. The
construction of some buildings for ministries and Birendra International Convention
Centre have been completed and a master plan for the construction of the residential
building for parliamentarians has been prepared. Building construction policy along
with the necessary prerequisites for its implementation has been prepared. Likewise,
some culturally and religiously important places of the Kathmandu Valley have been
identified and plans have been made for conserving the same.
Under the reconstruction programmes of the schools affected by the earthquakes of
1988, school improvement and reconstruction programmes have been conducted
under the loan assistance of World Bank. Under this programme, the construction of
school buildings consisting of two rooms have been completed in affected twenty-
nine districts of Eastern and Mid-western Development Regions
In the Eighth Plan, activities like the development of fully developed housing plots,
supply of dwelling units, maintenance and improvement of existing houses,
researches related with building construction, and activities of raising investment in
development of residential sector have been carried out. Skill training for the
development of local construction materials and technology have been conducted.
Appropriate construction materials have been developed and expanded. Similarly,

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Building Research Centre has been established at the central level and national work
plan has been formulated.
Although it is accepted in the Eighth Plan that the maintenance of the existing
buildings is more economical than the constructions of the new ones, housing
improvement programme was not implemented in a planned way. No significant steps
seems to be taken for providing necessary housing loan and improving financial
system necessary for housing in unplanned and illegal settlements growing in the
urban area, especially in the capital city. This has put adverse effects on urban
environment. No significant programmes have been formulated for making any
improvement of such situation
The efforts initiated in the Eighth Plan for reducing the increasing pressure of vehicle
congestion; air, sound and water pollution; and illegal occupancy of public land in the
city area have remained inadequate.
3. Existing Problems
• Balanced and planned development of the Kathmandu Valley has been obstructed
because of the absence of integrated policy, the persistence of dual work
procedures and the lack of coordination among several institutions.
• The number of emerging towns, densely populated settlements and market
centres in the country is increasing due to the growing pressure of population. But
the efforts made for providing essential physical facilities with the help of limited
available resources have remained ineffective.
• Adequate facilities is not available in metropolitan, sub-metropolitan cit ies and
other municipalities. Extensive programmes have not been formulated and
implemented to develop municipalities and other markets and towns as the
catalyst of the overall development of rural areas, and to increase the linkages
between urban and rural places.
• The institutional efforts made so far from government and private sectors for
making the supply for the growing need of housing turned to be insufficient.
• The new residential areas of the town is becoming disorganised because of
uncontrolled land sub-division in the municipalities and urban areas.
• Imported construction materials is widely used for building construction, and the
construction technology based on such materials is developing. No attention is
being paid to make use of local resource materials and technology even in the
construction of government buildings. Since there is no significant role of private
sector consultants and construction entrepreneurs in the design, construction and
supervision of government buildings, the inter-relatio nship between the
government and the private sectors has not strengthened.
• Though, according to the policy of decentralisation, the municipalities have to
bear greater responsibility for the preparation of town plans, the development and
management role of municipalities for urban development has been insignificant.
This is because the rights and duties of town development committees and

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 municipalities have not been clearly specified. Consequently, the utilisation of
materials and resources has not been noticed as per the integrated development
efforts of municipalities and towns for urban development because of the lack of
coordinated efforts among various institutions responsible for providing them
assistance from government sector.
• The organised development of urban system of the Kathmandu Valley has not
taken place not only because of the problem of growing pressure of population
but also because of the lack of physical infrastructure, basic principles of urban
system and effective management. Similarly, Kathmandu Development Board
has not become effective in the absence of its institutionalised development.
• The materials and resources of the private sector have not been desirably utilised
and attracted as the roles of government and non-government institutions and the
private sector have not been clearly specified.
• The services of Housing Companies is limited within Kathmandu and Lalitpur.
The housing/land development companies have not been activated effectively to
supply well facilitated sites for housing development.
4. Long-term Concept
A balanced urban system will be developed by making Nepalese towns unpolluted,
clean, well-facilitated, productive and safe. The long-term objectives of urbanisation
include the development of Kathmandu Valley as a cultural and tourist centre,
promotion of planned urbanisation in other important areas, establishment of inter-
relationship between towns and villages, and promotion of employment opportunities
through the development of small towns and market centres.
According to the National Housing Policy, housing sectors will be promoted as an
important medium for economic development, poverty alleviation and upliftment of
the living standard of the people. Similarly, commodious and economical residential
buildings will be built in the urban areas by developing land and physical
infrastructures, facilities and appropriate construction technology supported by
necessary financial management and institutional improvement. In order to strengthen
the existing self -housing system by making the housing sector self-reliant, the
government will make people abide by law, and play the role of a catalyst and
facilitator, and promote the role of the private sector.
Necessary infrastructures will be developed in order to establish dense residential
sites in geographical appropriate locations of remote hilly areas. Big projects like
hydro-electricity projects and construction of highways will be implemented and
integrated rural housing development will be launched in project affected areas.
Government office buildings will be gradually constructed by making optimum use of
local construction materials and skills in such a way that they reveal local
architecture. The building construction activities of the private sector will be
organised on the basis of appropriate construction standards and regulations. The
historical and cultural heritage of the nation will be preserved and promoted.

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Ninth Plan
5. Objective
• Integrated physical and social infrastructures will be developed through physical
planning system in order to develop urbanisation process in an organised way,
and to make urban living commodious, productive and healthy.
• The role of urban area in national production will be made more efficient,
sustainable and employment oriented, and urban development will be taken as the
supportive of rural development and poverty alleviation as per the urban
development policy.
• Emphasis will be given on the development of infrastructure and public utilities
of municipalities and other cities in order to systematise the process of internal
migration.
• Private sector will be encouraged to actively involve in housing facility
development with a view to systematising housing facilities in the rural and urban
areas. Similarly, the standard of housing facilit ies will be increased by developing
less expensive safe, hygienic, well facilitated and environmentally appropriate
technology.
• Appropriate management of government office-buildings and residential
buildings for employment will be made. Similarly, places of cultural and religions
importance will be renovated and preserved.
• In order to make the government, non-government, and semi-government
building construction sectors more cost effective, safe and production-oriented,
research on building construction technology will be extensively carried out and
national building regulations will be brought into practice.
6. Policy and Implementation Strategy
• Emphasis will be given to increase the inter-relationship between increasing
urban centres and rural areas to minimise the imbalance encountered in the
urbanisation process. On the basis of feasibility, some areas will be developed as
small towns connected with big cities. Similarly, dense residential areas will be
developed in geographically appropriate places of the remote hilly regions.
• Kathmandu Valley will be developed as a culturally and touristically important
capital city, and it will be organised with physical development conducive to
environmental balance.
• In order to make the organised development of the infrastructures and services of
market towns including the municipalities the participation of the private sector
will be increased in the field of financial management, appropriate financial
resources will be utilised for private and public land development and urban
environment will be improved through the implementation of rules, regulations
and standards.

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• To associate housing development along with the over all economic development
of the nation, buildings safe from natural catastrophe and appropriate for different
geographical reasons will be constructed by using local construction material and
improved technology and will be exhibited for dissemination. The publicity of
such buildings will be made through public media. Housing system will be
strengthened through the institutional development of integrated housing system.
• For the preservation, promotion, maintenance, and operation of public places in
the urban isa, the participation of private and non-government institutions and
community will be encourag ed. Similarly, permanent management for regular
maintenance and preservation will be carried out for improving the environment
of places of historical, cultural and tourist importance.
• For the appropriate management of urban development and housing, the role of
the government as a facilitator and sustainer will be strengthened and VDCs,
DDCs and municipalities will be made fully responsible.
• A detailed study will be carried out of available resource, physical features,
population and environment and religions and cultural conditions of all big and
small cities of the nation. On the basis of the study, the economic role of the cities
will be decided and support will be given for the extension of facilities.
Necessary financial resources will be provided by the TDF for the improvement
and development of infrastructures of municipalities and towns.
• The mutual participation of government, non-government and private sectors for
urban development will be encouraged. Similarly, in order to encourage the
participation of the private sector for the development of urban infrastructure in
an integrated way, the policy based on the principles of 'build, operate and
transfer' will be encouraged. Necessary rules and regulations will be formulated
to this end.
• A study or a research will be conducted for identifying the opportunities of
economic development based on rural and urban inter-linkages and on various
aspects of the mobilisation of private and public sectors for it with a view to
assisting in the development process on the basis of rural and urban
understanding. By involving the government, local bodies, the private sector and
the community as the development partners, inspirational and model programmes
will be launched development programmes as a campaign.
• A provision will be made to provide squatters and landless farmers serviced
housing plots through Rural Housing Company.
• NPC and concerned ministries will regularly follow up the programmes in order
to make the investment in urban area as per the approval of physical development
programmes, and to establish a system to implement investment programmes
only on the basis of the master plans prepared by municipalities, town
development committees and other concerned institutions by maintaining
coordination among organisations associated with infrastructure development.

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 Similarly, the authorities, duties and responsibilities of the concerned agencies for
urban plan formulation and implementation will be specified.
• Although urban development is mainly the responsibility of municipalities,
institutional support will be provided for giving special support on the partnership
basis from the centre until the municipalities become efficient and resourceful.
• Organisational improvement and human resource development activities will be
strengthened in the areas of housing, building and urban development.
• Additional residential buildings will be constructed through cost effective, safe
and modern technology by providing housing loans. Necessary programmes will
be planned in order to strengthened the role of house wives for the construction,
operations and maintenance of residential houses.
• Building policy will be formulated and authority will be delegated to the
concerned institutions for implementing national regulations through Housing
Act and their implementation will be followed up regularly.
• The government and public building constructions activity will be implemented
in a planned way by using internal and external resources.
• The renovation and rehabilitation of old government buildings with historical
importance will be carried out.
• Model houses appropriate to the environment and safe from natural catastrophe
will be constructed and public awareness will be raised to construct such houses.
• Necessary acts, rules and regulations will be formulated to set the standard of the
capacity and skills of the consultant and construction entrepreneurs involved in
building design and construction.
• Infrastructures development programmes will be conducted in an organised way
on the basis of findings of studies on the effects of the big projects on the
surrounding environments.
• Long-term plan will be implemented from this plan period for constructing
HMG's office buildings and employees’ residential buildings in the centre,
regional headquarters and district headquarters. Furthermore, this programme will
also be used for model exhibition of appropriate technology.
7. Programmes
Policy Formulation and Research
National urban development policy and implementation strategy will be formulated
and implemented for regulating unplanned and disorganised urbanisation taking place
in different parts of the Kingdom. Similarly, parameters will be formulated for the
classification of new municipalities and urban centres.
National building policy and implementation strategy will be formulated and
implemented for making government, semi-government and non-government
building construction cost effective, safe and conducive to environment and for

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systematically mobilising the investment of both the government and the private
sectors.
Cost effective, adequate, safe and environmentally suitable construction technology
will be adopted for raising the production cost of the residential building with
minimum services and facilities in rural and urban areas, and technology will be
handed over through women participation and media by developing building
construction technology resisting natural disasters. Similarly public awareness will be
raised against national disasters.
The professional experiences gained in the government, semi-government and non-
government sectors will be revised and reformed on the basis of set standards and
efficient procedures by enacting national building codes into acts.
Financial and institutional provisions will be made to provide private residence to
employees working in government, non-government and private sectors. Priority will
be given to mobilise the financial resources of Employees' Provident Fund and
commercial banks for this purpose.
Group housing schemes will also be brought into practice as model by encouraging to
construct residential buildings through different institutions
The Formulation of Act, Regulations and Standards
Urban planning and development act, land consolidation act and housing occupation
act will be formulated and implemented.
Building Act and National Building Code will be implemented.
Necessary amendments in the existing Nepal acts related to building, housing and
urban development will be made.
Environmental Impact Assessment guidelines will be prepared for building housing
and urban development.
Institutional and Human Resource Development
All the government, non-government and private sector institutions related with
building, housing and urban development will be identified and their roles and
responsibilities will be specified.
Human resource development policy will be formulated and implemented.
By upgrading the capacity of Urban Development Training Centre, Pokhara for in-
service training related with human settlements sector will be provided to employees
of different levels working in different sectors.
Training's will be organised for masons involved in the occupation in different
districts for transferring the findings of building research centre at the local level.
As a prior preparation for the implementation of national building code, the
technicians of concerned agencies municipalities, District Housing and Urban
Development Office, VDCs and DDCs local masons and carpenters will be trained..

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Sub-regional Development Programme
The functional role and future directions of the main cities of the Kingdom will be
specified and implementation of infrastructure in appropriate places will be developed
with a view to achieving planned development of uncontrolled sub-regional market
centres, and settlement problems increasing along the north-south highways as well as
the problems of escalating urbanisation, migration, large hydro-projects construction
and the construction of high ways and branch roads
Kathmandu Valley Development Programme
By integrating all the metropolitan cities, sub-metropolitan cities, municipalities and
VDCs, a physical planning system will be developed. A detailed land-use policy in
the valley, a land-use policy in the metropolitan areas and a local area plan in VDC
will be prepared and implemented. Similarly, a five year investment plan will be
implemented for every development activity carried out by government, non-
government, local bodies and private sectors.
By giving continuity to the first phase programmes of Kathmandu Urban
Development Project and by raising and improving integrated physical infrastructures
as per Kathmandu Valley Urban Development Strategy, water supply, sewage,
electrification and road maintenance activities will be carried out.
Under the renovation programme of Singh Durbar secretariat, the buildings for
Ministry of Laws and Justice, Defense Women and Social Welfare, Education and
Finance will be constructed and the provision of all infrastructures related with
buildings will be done. Similarly, the construction of the building of the Ministry of
General Administration will be started by completing the renovation of the western
front of Singh Durbar.
Construction of huge complexes with the mutual participation of government and
private sectors will be initiated with a view to increasing the productivity of public
land and bringing together all the scattered government and non-government offices
and business activities.
Appropriate projects will be launched for making a dependable and sustainable
management for the promot ion and improvement of important areas of historical,
cultural, religious and tourist importance.
The preservation and maintenance activities of Changunarayan, Suryabinayak,
Gyaneshwore Mahadev and Neelabarahi, which is underwrote now, will be
completed. A list of public open spaces and ponds will be prepared and their
preservation and construction will be done.
Five unplanned squatters settlements located in urban areas will be organised and
upgraded.
Emphasis will be given for the development of two townships in appropriate places of
Kathmandu Valley. Renovation, extension and preservation will be carried out in the
areas such as Shankhu, Chapagaun, Tokha and Thankot which is identified by
Kathmandu Valley Development Strategy.

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Land integration programme will be conducted in appropriate places of the valley and
developed housing sites will be made available.
Environment improvement programme will be gradually launched in the bank of the
big rivers of the Valley.
District Level Integrated Physical Development Plan
With the view to fulfill the regional and local need, integrated physical planning of 20
districts will be made and implemented though concerned agencies for regulating
urban development process as a supplementary to rural economy.
Building construction activity will be launched in 15 district lying in different
geographical regions according to the aim of fulfilling the necessity of the
government office buildings and employees' residential houses in the district level.
On the basis of available data, government property will be conserved by making
necessary renovation of old government buildings with historical importance whether
or not they is used for the purpose of government offices.
Urban Area Development Programme
Town plan will be prepared for 22 municipalities formed in fiscal year 2053/54 by
preparing the field map of the municipalities and by clearly specifying economic role.
Integrated Action Plan will be prepared for 20 municipalities having no town
development plan and emphasis will be given to the development of physical
infrastructures with the concept of developing secondary cities in the feasible areas.
For upgrading and development of physical infrastructures in different municipalities
of the kingdom, loan investment will be made in the project planned through Town
Development Fund.
Under public open space conservation policy, the list of public open space (open
fields, ponds and forests) of each municipality outside the Kathmandu Valley will be
prepared and conservation and development programme will be launched at a place of
at least 25 municipalities on the basis of priority.
A total of 15000 housing plots will be developed by developing land development
programmes through Town Development Committee.
Nepal Housing Development Fina nce Company will be more activated and housing
loan will be advanced for renovating, expanding or contracting new residential houses
for the households falling under certain income level. The capacity and work area of
that company will be expanded.
Small Towns, Urbanising Village and Market Centre Development Programme
The following programmes will be implemented for strengthening the linkage
between urban and rural areas by making the development initiatives and all other
services and facilities provided by the government reach the village in an integrated
way, for creating more employment opportunities in non-agricultural sector, for
making the management of the market for agricultural products and for making

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gradual improvement in national urban settlement system. Physical development
plans of different market areas will be prepared and implemented through concerned
agencies.
Loans and grants along with technical manpower will be made available through
revolving funds to the Town Development Committee on the basis of approved plan
and priority for project implementation.
In different areas, the management of open areas, market place development, has
park, passengers' waiting room, bank, post office, police post and other institutional
areas will be developed.
Necessary funds will be managed for the maintenance and renovation of residential
buildings and for constructing new ones.
The construction of village roads, their maintenance and the construction of bridges
will be carried out through concerned agencies for enhancing the linkage of the
surrounding rural areas with the emerging market centres.
Six thousand (6000) housing plots will be made available by launching land
development programme.
Programmes for Rural Housing and Compact Settlements
In order to reduce the increasing pressure of population caused by migration on urban
areas from the rural areas of the kingdom and to expand the basic minimum facilities
to the grassroots level, compact settlements programmes will be initiated in some
places of remote hilly areas. While launching such programmes, the use of local
construction materials, female participation and the results of building research will
be brought into practice for publicity.
Land development necessary for 14 thousand housing plots will be launched for
developing planned settlements and market centres in different part of the country
though Rural Housing Company. A model village development programme will be
launched for 750 families in each of the five development regions for supporting
village development by developing a commodious model village for human
habitation. A provision will be made to provide cost effective and cheap housing plots
to 50,000 families of backward minorities of the society, landless farmers and
genuine squatters.
Town Development Fund
For infrastructure development and income generation programme in the different
municipalities of the kingdom of Nepal, loans and financial support will be extended
through Town Development Fund. It is expected that this provision will strengthen
the financial and institutional capacity of the municipalities.
Other Programmes
The construction of United Nations Park will be completed on both the banks of the
Bagmati River from Shankhamula of Kathmandu to Teku to control soil erosion, to
check the illegal occupation of public land along the banks of the Bagmati Rivers, to

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preserve and develop the culturally, religiously and historically important places and
monuments lying on both the banks by making a proper management of sewage
system to improve the environment and to save the cultural and religions importance
of the Bagmati.
The programmes of Greater Janakpur Development Project will be implemented with
priority basis for developing Janakpurdham as religious town by developing the
religious spots lying in the surrounding rural areas.

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 Chapter 9
Environment and Sustainable Resource
9.1 Environment and Natural Resources Management
1. Background
The future of the Nepalese people, which is so much dependent upon the
environment, has bearings on the commitment and interest of the people themselves.
So what Nepalese people is getting or expecting to get from the utilisation of
environmental resources is important. Therefore environment protection programmes
need to be directed towards creating a condition in which Nepalese people can lead a
happy, prosperous and peaceful life. Since Nepal is a country of villages, it is
necessary to pay special attention to the problems of village people, especially flood,
land erosion, loss of forest cover, and fulfillment of daily needs: wood, grass, etc.
Likewise, it is equally necessary to eradicate the problems associated with the process
of urbanisation, especially the problems of solid waste, air and water pollution. In
view of these interests and concerns, it has been an imperative to implement laws and
regulations to ensure sound environmental programmes, and people's participation in
the implementation of development programmes.
The concept of sustainable resource management adopts the theory of carrying
capacity of the natural eco-system. Nature can recreate the resources consumed by
human beings. Especially, this principle is associated with the consumption of
renewable resources. According to the concept of sustainable resources, consumption
of resources should go without affecting natural life cycle so that nature can recreate
the natural resources on a continuous basis.
According to the concept of sustainable economic development, resource
management means to fulfil the demands of the present and the future generation
without depleting the available resource stock. Therefore, resource management
means not only protection but also judicious utilisation, which fulfil the need of
existing generation and guarantees to fulfill the future needs. In the context of Nepal,
sustainable resource management means ensuring sustainability of available resources
by fulfilling the interest and needs of the Nepalese people. Problems like land
erosion, landslide, flood, destruction of forest exist in the village areas whereas
smoke, dust, water pollution and lack of proper management of garbage is urban
problems. These have left adverse effect in natural resources.
Many failures of management efforts in the use of common resources are, caused by
the lack of property rights. The concept of community forest has made the consumer
both the owner and manager of the forest, so it has achieved a remarkable success.
Creating ownership is a successful use of managing resources. The success achieved
in forest management proves it. Likewise, good result can come out if we hand over
skill and knowledge to the community by creating their ownership in the management
of brooks and small rivers, and land and watersheds. Because of increasing number of
vehicles in city areas, pedestrians are compelled to breathe polluted air. As a result,
there is an adverse effect on their health. By using economic and legal policy of

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discouraging to private vehicles and adopting a system of compensation to the public,
social equity can be maintained.
Although various resource management and conservation programmes were prepared
and came into vogue in the past, managing own resources have not been effective in
the development programmes. The development programmes in the past emphasised
on intensive agriculture and mono-culture system which led to decline in the
productivity of land, a major problem being faced today. It has also affected bio-
diversity. The random use of land without land-use planning has added more
problems to it.
Traditional technology, skill and knowledge is disappearing gradually. Some negative
effects of modern technology have also been witnessed. It has been necessary to
revive, and utilise traditional skill, knowledge and technology from the viewpoint of
resource management. Despite a great role in the protection of small resources in the
village like tap, small irrigation cannal, temples, etc. traditional religious and cultural
organisations is being eroded gradually. Therefore, it is necessary to revive and make
such micro organisations effective.
Increased use of science and technology has changed the pattern of consumption and
the society is becoming consumption-oriented. The technology of consuming
resources and their reusing and recycling has to be emphasised. Poverty and
unfulfilled needs of the people is, in fact, the greatest challenge to our resource
protection. Therefore, efforts should be directed to people -based programmes. These
problems have obstructed the management of main resources (soil, water and forest)
of rural areas.
Sustainable development of economy and environment is not possible without proper
co-ordination of economic, social, natural and human resources, particularly in view
of their inter -relationship in environment protection. A system of making less adverse
effect on environment has to be adopted while development programmes are prepared
and implemented. Development and environment have to be accepted as inseparable
parts. There will be no fraction in opinion that environment should be protected in
order to achieve Nepal's sustained economic development and to ensure quality
human life. Traditionally, attention was being paid only to economic development
and quality of life, but now it is necessary to take environmental aspect either main or
secondary objective.
Human beings have been getting service including food, cloth, shelter and medicines
from biological heritage available on earth. It is necessary to get opportunity for
consuming the basic five elements required for life (water, land, air, sky and light)
without any obstruction. Because of the inter -relationship between human and
environment, achieving an environmental balance between various activities and
development efforts is the need of the day. In this context, it is necessary to link
environmental programmes and management with development planning from the
very beginning.
Besides this, environmental education and awareness programmes need to be widely
and intimately associated with development programmes in order to create awareness

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and seek active participation of people in environmental resource conservation and
development.
2. Present Status of Environment
The environmental condition of Nepal is related with the country's economic
condition, social and geographical structure and the process vested with them.
Despite various efforts, the state of environment has degraded due to higher
dependency on natural resources and high population growth. The problems of land
slide, land-erosion, flood, decline in agricultural production and deforest ation is
existing in villages while smoke dust and garbage is increasing in the city day by day.
Because of this, the lack of
Although coordination between development and environment has become an issue
confronting us.there has been some encouraging change in community forest
management by means of people participation, forest resource is being depleted and
the number of people depending on forest is increasing. The gap between demand and
supply of forest products such as wood, fodder is widening. No change has come in
the process of de-forestation and in land-use. Though environmental concern is
increasing, a hard work is needed to protect the ubiquitous natural beauty and bio-
diversity in the process of economic development of Nepal.
The policy and practice of conserving environment and the formulation and
implementation of other programmes that empower people have, indeed, increased
environmental awareness. The process of expanding activities favorable to
environment and the practice of environmental impact assessment (EIA) have been
started. But still, adverse effects are seen on public health and tourism development
due to degradation of environmental quality. The problem has exacerbated due to
establishment of industry without proper management and EIA. City life is being
vexed with uncontrolled rise in the number of vehicles and inadequate and ineffective
implementation of emission standards.
3. Review of the Eighth Plan
The adoption of the process of environmental impact assessment and strategic
environmental assessment is seen a useful means throughout the world in order to
incorporate environmental aspect in development programmes. Remarkable work has
been done in the field of EIA in the last five years. An independent environment
sections have been formed in some concerned ministries related with physical
development, and the planning sections have been directed to work on environmental
issues where there is no environment section. Work related with environment seems
at primary stage from institutional point of view. Environment and planning sections
have been formed in some ministries but environmental guidelines is not being
implemented due to lack of capability of those sections.
Environment Protection Act, 1997 and Environment Protection Regulations, 1998
have been effective. Environmental Impact Assessment Guidelines as a tool to
minimise environmental impact has been enforced in formulation and implementation
of projects. Separate Environment Impact Assessment Guidelines for forest and
industry sector have been formulated and implemented. Though there is various

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provisions to protect environment and control pollution in the Environment Protection
Act, 2053, no effort has been made to institutionalise the process and the system in
the sector age ncies. Likewise, necessary knowledge and skill have not been
disseminated to change working capacity and mentality of the people. The concerned
agencies have not been effective to successfully implement various existing
provisions for the promotion of environment.
Realising the concept of sustainable development, various legal provisions have been
made. But the acts and regulations related with environment have not been effective
due to the lack of integrated environmental policy, lack of co-ordination among
various agencies, and lack of adoption of holistic approach.
The maximum permissible limit of vehicle emission has been determined. However
the implementation is not effective due to failure to enforce it throughout the country.
The tolerance limit for the quality of exhausted air and the standard of drained water
of some industries have been determined, but its implementation has yet to be made
effective.
Governmental and non-governmental agencies are creating awareness among people
about environment protection. Participation of NGOs, local communities and
consumers is in the rise in land-use, plantation, protection of water resources,
improvement of public health, development of small and cottage industries, and
protection and promotion of bio-diversity. In formal environmental education,
achievements made by the Ministry of Education, National Planning Commission,
World Conservation Union and some other NGOs is encouraging. Primary level
course on environmental education has been designed and incorporated and the same
is being incorporated in the course of secondary and higher secondary levels.
Environment subject is also included in the university. Nevertheless, environmental
awareness programmes have not been disseminated at the people and at the village
level. No adequate provision has been made towards encouraging joint participation
of NGOs, community and private sector in environment protection.
Small hydro-electricity projects, community forest, watershed management and
income generation programmes of agriculture sector were successful programmes in
the past. The capacity 21 programme prepared with the spirit of Agenda 21 can be
taken as an example. This programme is now being operated in three districts (Dang,
Surkhet and Kailali) of western Nepal. Under the programme, groups are formed for
economic and social development and environment and resource protection at village
levels. The programme, which mobilises village community, has helped in village
development, resource protection and to uplift of the living standard of villagers.
The Environment Protection Council established in 1994 has been reformed from
time to time. The Council has been preparing environment policy, formulating plan
and working policy and publishing them. The Ministry of Population and
Environment was established in 1996, and the Ministry has been working as a
secretariat of the Council. It has been necessary to make a detailed provision in the
Environment Protection Act about the duties, responsibilities of the Council. In order
to make the Council effective, its capabilities needs to be enhanced in areas of policy

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direction, inter-sectoral coordination, supervision and evaluation, and problem
solving in the field of environmental management. Though HMG has ratified various
international conventions in the Plan period, no homework has been done in regard to
the impact of these conventions on the development agenda and the subsequent role
to be played by the Government.
There is no adequate manpower and training opportunities in the field of environment
management. Adequate formally trained manpower is not available in the labour
market while implementing the HMG programmes. As a result of the scarcity of
trained manpower in environment management, necessary arrangements for
additional manpower and resources have not been made.
By effectively utilising the provisions of the bio-diversity convention, it is necessary
to establish a judicious system that delivers the economic achievements of the
convention to the grass-root level instead of limiting it to protected area. It has also
been necessary to give priority in making participation of people and NGOs.
In the absence of inter-agency coordination, no system of monitoring and evaluation
of sectoral policy and their implementation were established in the Eighth Plan. The
system of monitoring and evaluation of environmental programmes needs to be
institutionalised. The data and information related with environment is collected by
various agencies of HMG and NGOs. "National Data Bank " could not be established
during the Eighth Plan period by incorporating the data collected by those agencies in
the national system.
4. Long-term Concept
Long term target implies achieving sustainability in resource protection and
sustainable use of available natural resources. To integrate development and
environment and render government, non-government, local body and private sector's
active participation in the implementation of participatory programmes is the goal of
long-term policy. Since poverty and unfulfilled needs of the people is the challenge to
resource management, an approach will be taken to involve people directly in
management of resources, thereby fulfilling people's needs and minimising poverty.
To integrate the concept of environm ent in various development sectors and to
achieve sustainable development through the marriage between environment and
development will be the long-term policy. Environment will be protected, promoted
and managed by using voluntary or participatory techniques, with joint collaboration
of government organisations, local bodies, NGOs, user groups and private sector and
by creating awareness of people towards environment protection as their individual
concern and common responsibility.

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Ninth Plan
5. Objective
The Ninth Plan will have the following objectives:
• To consolidate working system and planning and/or environment sections of
various ministries in order to maintain environmental balance and all-round
economic development of the country;
• To develop capability of manpower in the field of environment;
• To coordinate the agencies involved in environment protection;
• To adopt a unified approach to environment and development;
• To formulate regulations and maintain coordination in regard to national resource
protection;
• To widen the concept and area of bio-diversity;
• To adopt scientific techniques in forest management;
• To enforce mandatory and voluntary measures of pollution control by fixing
emission and effluent standards;
• To make legal provisions for mobilisation of non-governmental and private sector
effectively in the field of environmental public health and garbage management;
• To adjust economic and financial policies in tune with environmental policy;
• To protect developmental infrastructure and national heritage and provide
security to life and property of the public by minimising effects of natural
calamities; and
• To promote national capacity in disaster control and management by developing
necessary institutional infrastructure for the management of natural calamities.

6. Policy and Implementation Strategy

• Priority will be given to participatory programmes, particularly involving women
and the under -privileged people while preparing and implementing environmental
programmes.
• Environmental programmes which directly benefit the village people and which
raises their living standards will be implemented with priority.
• Necessary provision will be made for voluntary initiatives of local bodies,
communities, as well as governmental, non-governmental and private sector in
raising public awareness and common participation in the field related with
environment, EIA, etc.

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• The environment of remote areas of the country will be protected and promoted
under special programmes. Priority will be given to the development process with
EIA that preserves bio-diversity.
• Community and user groups' participation will be sought in protection of national
heritage of religious and cultural importance, bio-diversity conservation,
watershed development, and forest management.
• Financial assistance and other appropriate incentives and punishment measures
will be adopted to enhance voluntary leadership in environment protection.
People will be motivated in environment protection by preparing and
implementing income-generating programmes and by providing alternate
opportunity for people relying on the consumption of natural resources.
• The scope of protecting bio-diversity will be made wider; and local bodies,
communities, non- governmental sector and private sector will be given priority
in this field. Necessary legal amendments will be made as required.
• Environmental awareness will be extended to the people's level by giving training
and environmental education in the field of protection and promotion of
environment. Institutional arrangements will be made for research and
development of the environment sector. Participation of governmental, non-
governmental and private sector will be initiated to develop necessary manpower,
environmental research, training, supervision, assessment, development of
management system, and environmental assessment.
• In order to protect environment, joint cooperation will be forged with NGOs by
delineating clear -cut duty and responsibility and ensuring participation in local
environmental protection, prevention of garbage and pollution. The role of HMG
will be to ensure transpisncy in the activities of NGOs.
• Private sector and joint venture investment will be promoted by making active
participation of local bodies in solid waste management.
• Indigenous technology and environment protection process based on traditional
and cultural values will be utilised for sustainable development of the nation.
Proper use of such technology will be promoted in modern society.
• Environment-related NGOs run by women will be promoted.
• Management pattern of Environmental Protection Fund will be reviewed for its
effective utilisation.
• Environmental health programmes will be prepared to apprise people of
preventive health service, minimising the adverse impact of environmental
pollution.
• Environment and resource conservation education will be imparted at school and
university level. Production of manpower will be increased, including various
aspects of environmental education even in informal sector.

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• Small environmental information centres will be set up with providing pictures,
course books and other visual aids related with environment to the primary
schools in villages. Mobile library will also be managed.
• The process of EIA will be made participatory and will be incorporated into
economic plans and developmental activities right from local level.
• Proper environmental management plan will be prepared and implemented by
determining emission and effluent standard of air and water coming out from
industrial plants to ensure environment-friendly industrial development.
Vehicular pollution control will be made effective. Determining tolerable
pollution levels of water, air and land, voluntary or compulsory policy will be
prepared for adoption. Required legal provisions will be made in this regard
• Special attention will be given to identify and protect the environment of
transition zone and settlements.
• Institutional system will be adopted to coordinate, supervise and review the
formulation and implementation of sectoral policy and programmes related with
environment. The environment sections within the ministries will be made
capable to make social and economic development favourable to environment. In
the context of legalised provisions of EIA as an inseparable part of the
development programme, line agencies will be consolidated accordingly.
• Co-ordinative policy will be adopted by reviewing existing legal provisions
related with national resource protection.
• Necessary legal and procedural measures will be adopted to implement
international conventions related with environment ratified by HMG.
• Governmental, non-governmental and international institutions will be motivated
to invest in the project related with environmental protection, management and
education.
• Necessary arrangements will be made to identify and protect forest and wet land
areas and plant and animal genetic diversities
• Efforts will be made to make financial and economic policy favourable to
environment policy, reviewing the tax, custom and investment policy in the
context of environment.
• The environment data centre under the Ministry of Population and Environment
will be updated with the available data and information regularly. Public access to
the data will be increased.
• Programmes related with environment protection and population management
will be coordinated and promoted.
• Recycling will be promoted by motivating people engaged in the recycling
business.

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• A Natural Disaster Management Information System will be developed. National
and international resources will be mobilised for mapping of areas prone to
earthquake, flood, landslide, etc., for integrated disaster mitigation, control and
management.

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 9. 2 Land-use Plan and Land Reform
9.2.1 Land-use
1. Background
Land use is the most important aspect for economic and soc ial development. No
project of national level for land-utilisation has been implemented in successful and
sustainable manner, though there have been many efforts in the past for balanced
utilisation of various natural resources existing in the country. Climatic and soil
characteristics of various geographical regions like Himalayan, hilly and terai areas
are posing hindrance to successful land-use plan. Uncontrolled population growth has
made the condition more serious.
If land-use plan is managed properly , more economic benefit can be derived from the
specialisation and diversification of agriculture production. Thus, on one hand we can
increase productivity of agriculture and on the other hand balance can be maintained
in geo-physical environment. It is indispensable to protect and promote biological
heritage, water, and forest and utilise land by scientific use according to social and
economic structure and quality and capacity of the land.
While preparing land-use policy, attention should be paid to the high pressure on land
engendered by unchecked population growth. Encroachment of land is increasing
even in marginal areas leading to land- erosion and an imbalance between man and
land resources. For example, about 65 percent of agriculture land is dry land where
mainly maize, millet is grown and the remaining 35 percent is marginal land which is
very sensitive from ecological point of view.
The structure of agriculture production of the country is directly and indirectly based
on forest resources. The decline of forest resources at present has an adverse effect on
water resources, productivity of agriculture and livestock. Landslide, flood and land-
erosion produced in hills and Chure range, which is amongst the most sensitive areas
from environmental point of view, have affected the areas on lower slopes of hills,
river banks and fertile land of terai seriously. This has made maximum adverse effect
on irrigation, hydro- electricity project, road construction, and transport and tourism
development.
Therefore implementation of land-use project is very important to protect, promote
and develop bio- diversity, to protect and maintain balance of the environment, to
maintain balance and permanency among residences to specialise and diversify
agricultural production by utilising land according to its geographical feature, quality
and capacity.
2. Review of the Eighth Plan
The following policies were adopted during the Eighth Plan:
• To give priority to increase in employment opportunities by using land-resources;
• To give emphasis on maximum use of local resources on the basis of land
structure and diversity of climate.

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• To link regional and national agriculture research with geo-physical environment;
• To protect environment and control land-erosion and river cuttings.
• To extend industry, urbanisation and commercial farming within the areas
influenced by road;
• To use land-use plan for extension of urban areas;
• To increase coordination and policy formulation to utilise land at the local level;
• To make efforts to prepare pilot project in order to coordinate among land,
agriculture, forest, environment and development sectors;
• To keep information about land-use in the district and centre level and implement
new laws and rules and review and amendment of existing rules and regulations.
In view of long-term nature of land-use effects, these efforts is reflected into
sectoral programmes of the Eighth Plan.
3. Long-term Concept
Sustainable development will be emphasised by judicious utilisation of land and other
natural resources, promoting and protecting environment of various areas in
mountain, hills and terai.
4. Strategy
• Land use will be made effective by making necessary coordination among
various bodies for the economic and social development and maximum use of
sector-wise resources on the basis of climatic variation. In order to make land use
effective in Nepal, its responsibilities will be extended to the local bodies.
• Control of adverse effects on natural environment caused by high population
growth, increased landslides and protection of geographical and environmental
diversity will get emphasis. Institutional arrangements will be made to prepare
comprehensive land-use plan at the national level and make land-use map
available to the district, village and town levels. Priority will be given to
maximum and appropriate use of the resources in order to increase productivity
of land and other natural heritage by preparing land-use plan.
Ninth Plan
5. Objectives
The main objectives of the Ninth plan in land use will be the following.
• Classification of land for agricultural, forest, pasture, residence, urban
development and industrial purposes.
• Classification of agricultural land on the basis of geographical characteristics,
capacity and quality of soil in order to produce much beneficial agricultural
products of comparative advantage.

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• Zoning and identifying land for residence, industrial areas and non-agriculture
purpose in existing municipalities and urban and village areas and maintaining
environment balanced and sustainability by protecting and developing water,
forest and biological heritage.
• Planned development will be made from environmental point of view, after
identifying main residential areas in transition zone.
6. Policy and Implementation Strategy
• Formation and implementation of land-use plan by maintaining relation and
coordination with the related organisations and bodies from the centre to district-
level.
• Making people aware about the role and importance of land-use plan in
agricultural production, environmental protection and in other area-wise
development on the basis of land structure, climate, soil etc.
• Technical and institutional capacity for identifying national problems like
landslides and erosion will be developed.
• Total land of the country will be identified and classified for agriculture, forest,
pasture, residence, urbanisation, industrialisation and other purposes, and will be
gradually utilised after preparing land-use map from national to district level.
• Productivity of land will be increased through discouraging the practice of
keeping land barren.
Programmes:
• Land-use map will be prepared by using necessary regional and district level data,
map, land and weather survey, Geographical Information System, (G.I.S.), and
remote sensing system Land-use will be based on such map. Information system
necessary to prepare district -level plan and land use map and mechanism to
collect and publish data will be consolidated and extended.
• Steep land and marginal areas which is sensitive from environment point of view
and where agricultural practice is ongoing will be identified. These areas will be
converted into tea, coffee, agro-forestry or private forestry zones on the basis of
climate and soil quality of the area concerned on order to generate income from
them.
• Cultivation and processing of herds of high value will be emphasised for hilly
areas. Likewise, off-season vegetable, and vegetables seeds production and their
export promotion will be encouraged.
• Appropriate land-use plan will be prepared, having identif ied the possibility of
remote and backward areas.
• Livestock farming will be emphasised in high hill area by developing pastures.

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• Intensive cropping will be promoted in terai and flat area of mountain where
irrigation facilities can be developed. Intensive cropping in hilly areas will be
linked with land conservation technology.
• Appropriate land will be given priority on the basis of land-use map, while
developing and extending municipality, newly urbanised areas and new
settlement areas. Physical infrastruc ture like road, drainage, drinking water,
electrification, schools, health-centre, communication media will be constructed
by making pilot project in large scale for this.
• In order to control the rapid loss of forest, community forest will be emphasised
by providing optimum public land to the V.D.C. level.
• Pasture rotation system will be promoted by developing community and private
pastures areas in order to protect the areas very sensitive from erosion point of
view.
• Integrated settlement areas will be promoted in appropriate places in Himalayan
and hilly areas by integrating scattered housing.
• In order to control the heavy loss of land by erosion and landslide in hilly areas
and by flood in lower flat land of hills and terai, water -shed will be protected,
after identifying such areas.
• Private sector will be motivated to utilise public land of Himalayan areas for
entertainment and sports and for promotion of tourism.
• Existing laws and regulations in regard to land-use will be amended. New
regulations will be enforced, where necessary.
• A secretariat will be established after formation of Land-use Council with the
coordination of the National Planning Commission. Land-use committees will be
formed in regional and district levels. The relation and coordination of the
agencies like agriculture, forest, survey, industry, housing, and irrigation will be
maintained through such bodies from district to national levels. Emphasis will be
given to increase public awareness regarding land use.

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 9.2.2 Land Reform and Management
1. Background
Nepal's present socio-economic structure shows that land is the main property and
source of income for the Nepalese people. Agriculture has been the main source of
production in the country. Most of the farmers are marginal farmers and hence their
economic condition is very weak. Population is increasing in a rapid manner. Few
years ago, Nepal used to export food grains but now has turned an importer. This
situation shows that unless an effective measure to increase agricultural product and
its productivity is introduced, the economy of the country will not move forward.
As land is the main source of production, the effort to eliminate poverty without land
reformation will remain incomplete. The APP has also suggested that infrastructure
for economic development should be made through reforming the current land
ownership and farming system. Total agricultural land of Nepal is about 2.6 million
hectares. On an average, a farmer holds 0.95 hectare or 18.6 ropanies of land. The
number of farmers who have less than one hectare of land is 70 percent. Among
them, 44 percent farmers have less than 0.5 hectare or 10 ropanies of land. The
farmers who have more land have less farming skill. And the farmers who have more
skill have no enough land. It has affected the growth of national productivity.
Therefore, proper environment should be created so that the land should come in the
hands of the skilled farmers. Effective land reform plan is necessary for land
management reform. Along with it, subsidiary projects for agricultural development
and production growth should be carried out.
2. Review of the Eighth Plan
To eliminate dual-ownership of land, to computerise the records of land ownership
and implement one person one-land certificate system, to complete First Cadestral
Survey, were the main objectives of the Eighth Plan. Existing land reform law has
been reformed to eliminate dual ownership of land. Application from tenants, and
landowners separately and from tenants and landowners jointly have be en coming up
in this regard and they have been finalised during the Eighth Plan period. A report has
been prepared to computerise the records of land-ownership. Under this software
project, the land ownership records of the three districts of the Kathmandu valley and
Kaski district is being computerised. Efforts have been made to emancipate "bonded
labour" system and to develop skill and knowledge of these groups of people.
However, there has been no remarkable reform in the land ownership and in the land
information system.
While formulating programmes in the area of land, there should be more people's
participation in it, and the government intervention should minimum. It can help
investing governmental as well as private resources in productive sectors. Similarly,
the present practice of using fertile land for non-agriculture use should be stopped. It
has also become necessary to control fragmentation of land and implement Land
consolidation (Chaklabandi) programme effectively and, to develop land informat ion
system to get necessary information for land-related projects.

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The latest amendment in Land Reform Act, 1964 in 1997 has envisaged eliminating
dual ownership of land by making provision for dividing land equally to both owners
and tenants. It should be implemented in an effective way to eliminate the prevailing
dual ownership situation soon.
Likewise, the land reform act has also determined the maximum limit of land a family
can hold: in terai and lnner terai 25 bighas, in valleys 50 ropanies and in the hilly
regions 80 ropanies; and for housing use, per-family 3 bighas in terai, 8 ropanies in
Kathmandu valley and 16 ropanies in the hilly regions. But the law has special
provisions to eliminate the limit of landProvisions have been made to of certain
purposes such as industries, educational institutions, medical institutions and
cooperative farming systems. But the system of land limitation has not been so
fruitful as it was expected in the beginning, and hence it has also become necessary to
make it prod uctive.
Cadestral survey, which was started long ago as a part of land reform project, has
almost been completed now. It has made the data of land more factual. But it has to
be made more service-oriented by using it in the context of the change in land-use
and in its economic importance. It should be made more effective by giving special
priority to it.
3. Long-term Concept
The long-term concept of land reform and management sector will be to maintain
sustainability in the use of agriculture land on the basis of land environment by using
land-use system based on geographical feasibility and comparative advantage.
Accordingly, the following will be the main objectives:
• To establish and implement base projects, which will develop a system using land
according to the regional variation and optimum productivity and create their
long-term stability.
• To start measuring land most suitable from economic point of view in terms of
regional variation and optimum productivity by using new technology, to check
the front iers of the nation, and to prepare data of personal, governmental, public
and trust land.
• To make people feel secure of ownership of their houses, crops and land by
starting appropriate land administration.
• To continue the software information system to collect the land -ownership,
measurement of land, etc. related with simplified land administration.
• To bring stability in the system of production through appropriate land-use
system and environmental conservation an atmosphere for voluntary involvement
of people in it the process will be created through market mechanism.

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The Ninth Plan:
4. Objectives
In the process of fulfilling the long-term plan, the Ninth plan will have the following
objectives:
• To eliminate tenancy (Mohiyani ) system by eliminating dual-ownership of land.
• To develop appropriate land-use system.
• To update land information by using scientific technology.
• To computerise and make available data related to land-ownership, plot
measurement and land mapping.
• To simplify land administration and give people a sense of security for their land.
5. Targets
Programmes will be launched to meet the main targets like elimination of dual-
ownership of land, creating appropriate atmosphere for the reformation in prevailing
land ownership structure, develo pment of appropriate land-use system and
arrangements to stop land fragmentation, management of settlements and self-
development for landless farmers, establishment of land data preservation office, and
development of land communication system.
6. Strategy
Keeping in mind the long-term target, strategies of the Ninth plan will be to preserve
ecology, to create market, to encourage people for self-motivated participation, to
introduce appropriate land-use system and bring stability in production system.
7. Policy and Implementation Strategy
• To create appropriate opportunity for the families who are dependent on land; to
increase their agricultural production and means by providing them the land
certificate; and to make prevailing land distribution system balanced and
productive by enforcing reform in it. To eliminate land tenure and the prevailing
dual-ownership of land; to control increasing land fragmentation; and to promote
consolidation of land. To stabilise agricultural and other uses of land by
developing appropriate land-use system; to make land-ownership secure by
making land administration simple and scientific; to collect land data on lands,
which have more possibilities for productivity and development. To prepare
single land certificate for one land-owner and make the data of female land-
owners by knowing the measured agricultural area of the nation. Similarly, to
make land information more useful, to establish a modern land-information
system by computerising the land data; and to maintain the frontier of the nation
properly, will be the main targets of the Ninth Plan. Based on these targets, the
followings will be the implementation strategies.

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• To bring expected progress in agricultural sector and to increase employment and
income of landless and small farmers by increasing their land access to. By
means of progressive tax in land, priority will be given in the actual use of land.
• To increase productivity of land, land occupation beyond specified limit and
keeping barren will be discouraged. To sustematise the size and use of land
ownership, progressive tax system will be used. To limit the use of land,
progressive tax will be implemented on the basis of minimum farming, farming
for living and commercial and industrial farming; the later will pay more than the
farmer. It will be started after proper study and analysis.
• Government has created a situation to eliminate dual-ownership of land by
introducing law in the year 1997. It will be implemented in an effective way. It
will be given more priority in making the use of land scientific to increase its
productivity by providing more chances of investing in land. Foundations will be
created to computerise the data related to all the land of the country and provide a
single land certificate, incorporating all the lands farmers own within the country.
• Arrangement will be made not to allow further fragmentation of land beyond a
specified limit. Necessary legal measures will be adopted to eliminate
fragmentation problem
• Central office for land record will be established for land record and it will be
consolidated to secure land ownership records.
• Consolidation programme will be implemented with the involvement of the
consumer's groups in the tubewell irrigation areas. The consolidation programme
will also be started in other possible areas with priority.
• Land mapping activities in places of economic importance will be carried out
with priority. The works like giving net area of land to the landowners, checking
the frontier regularly, providing necessary information of land for development,
producing manpower for cadestral survey will be made effective.
• A study will be done to provide guidelines for national land-use pattern. The use
of fertile and irrigable land for non-agricultural purpose will be discouraged to
ensure the use and to get maximum benefit. To bring stability in the relationship
between environment and development, an agricultural land-use project will be
prepared and implemented with priority. Keeping in mind the condition of land,
its alternative use will be emphasised.
• The land and property of Guthi will be used for its preservation and development
as well as in other economic development activities. Emphasis will be given on
the preservation of Guthi heritage and its art and culture. For this, the law will be
amended.

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8. Programme
Programme to End Dual Land Ownership
The fourth amendment to the Land Reform Act has a provision to abolish 'land
tenure' system by means of programmes for reasonable division of the land between
the owner and the tenant. Thus the programme to eliminate dual-ownership of land
has been implemented throughout the country. In the Ninth plan, the ownership will
be eliminated through giving priority to satisfy the tenants who are farming in two
hundred and 45 thousand bighas of land. As the tenancy system itself has been
eliminated, an environment not to leave the land barren because of the fear of tenant
has been created. It will help increase employment opportunities to the landless
farmers as they will get chances to ge t land.
Reform in Land-Ownership Pattern
There will be a study to limit the land for survival, land for commercial farming and
land for industry. The study will also include irrigation facility in the land, the price
of the land, transportation and other fundamental facilities, number of landless
farmers, available land and increasing land for social justice. On the basis of the
study, the situation for land-use limitation of will be created through applying
progressive tax in land. On the basis of the same study, the marginal farmers and
small farmers will be given the facility of loan so that they will be able to buy land to
eliminate existing injustice in the land distribution, and to eliminate poverty. For this,
appropriate financial institution will be arranged.
Land-use
It has become necessary to bring stability in the use of land by classifying it
according to the nation's geographical possibilities for different uses. Similarly, it has
also become necessary to employ appropriate land use system, to create foundation
for food security and income, to cities, industries, settlements and services through
using the agricultural land scientifically on the basis of comparative advantage of the
land-use for agriculture and for other purposes. Forest and wildlife conservation
needs to be developed from environmental point of view. Since the agricultural land
already used for other purposes is difficult to bring into multiple uses. Therefore,
there will be a detailed study to prepare and implement a land-use plan, which will
decide the optimality of land-use. The land-use programme will be established and
implemented by enforcing law about it. Initially, it will be implemented in the
selected two districts.
Consolidation and Prevention of Land Fragmentation
Consolidation programme will be started with social involvement by coordinating it
with the tube-well irrigation area, which will be developed under long-term
agricultural plan. To save expenditure and manpower in production and to make use
of advanced technolo gy easy and practical for interested individuals, groups as well
as village development committees (VDC) for Consolidation will be facilitated with
loan and discount in the fee of measurement and registration. To stop the decline in
the production because of land fragmentation, a study will be made to limit the

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division of land-used in different places and for different purposes. A law will be
enacted to stop making the land smaller than a specified size while purchasing or
transferring it.A law will be enacted to give first priority to the frontier while selling
the lowest limit of the land to coordinate with consolidation programme.
After the fulfillment of the requirements, the programme will be started in one district
of terai, one from inner terai and one from hilly region as pilot projects during the
Ninth Plan period.
Settlement of Landless Farmers and Their Self Development
To stop unmanaged use of land and to make managed settlement of the landless
people, a planned programme will be started keeping in mind the environment and by
giving emphasis to preserve public land.
To improve the lot of landless labourers and to help in eliminating poverty by
managing their proper settlement and by developing their skill in gainful
employment, skill development programmes for them will be started in proper places.
Geological Information System Programme
Reliable information and data are necessary for programmes for agriculture and forest
production, land-use, land consolidation, the preparation of local and regional
housing and physical plan, the preparation of environmental programmes to preserve,
develop and use natural resources, and the preparation of poverty alleviation
programme and sustainable development. This also includes the impact and
implementation study of all these programmes. To provide the data on maps, land and
land ownership, a computer based land information system will be developed. Such
an information system will be implemented with a view to coordinate it with
geographical information system. Foundation for one individual and one land
certificate system will be created through computerising the records of land
ownership. Record of the female ownership of land will also be included in it.
Measurement and Map Preparation Programme
Programmes li ke settling the conflicts on land by preparing the records of land in a
systematic way, increasing revenue by winning people's confidence in land-related
transactions classifying land, preparing land-use map, and providing information for
consolidation pro grammes will be conducted under measurement programme.
Keeping in mind the growth in the price of land, cadestral survey will be introduced.
To run land information system, microfilming will be systematised. Central office for
land record will be established to preserve the records of maps and land by getting the
map of plot and the photocopy and ammonia print of field-book. A programme will
be launched to preserve the valuable records.
To help in land policy formulation and implementation, the preparation of the maps
of different size and measurement for different projects in the country and re-survey
will be started by giving priority to the districts with more economic activities. This
will make plot measurements more reliable and net by eliminating first cadestral
survey of the land. Geographical point system will be established for measurement;

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and survey-training programmes will be started to produce manpower for survey.
Topographical map of Western Nepal will be completed.
Following chart shows the main programmes, which will be started under survey
programme.
S.N Programs Unit Target
1. Re-survey Hectare 380,000
2. Left out survey Hectare 5,000
3. Map tracing Sheet 2,500
2. Microfilm District 75
3. Prepare the land-use map Sheet 250
4. Map Design Sheet 336
5. Prepare the maps of municipalities
in large scale (measurement) Municipality 38
6. Update Western hilly area's(sector)1.1 mile
land map Sheet 50
7. Release the new edition of district maps Sheet 75
8. Reprint of map Sheet 75
9. Basic survey training Person 150
10. Junior survey training Person 120
11. Senior survey training Person 20
12. Computer training Person 120
13. Survey diploma training Person 20
14. Production of trig sheet for scale mapping Sheet 21, 000
15. G.P.S. point survey (also for leftout survey) Paint 3,750
16. Elevation point establishment and survey km 1,000
17. point of gravity establishment and survey Point 500
18. Establishment of gravitational base point Point 1
19. Astronomical survey and the re -survey of
first rate point Place 150
20. Consolidation of observatory and survey of
astronomical time Percent 100
21. Prepare the map of Western Nepal through Topographic
Map Project Sheet 344
22. Establishment of the Central Office of Land
Record Time 1

Security of Guthi Property

The land under land trust (Guthi) will be arranged for commercial use. A fund will be
established from the income and it will be used in preserving the Guthies, in running
rituals in the temples and in the maintenance of the temples. For this, legal provisions
will be made through amending existing laws and regulations
Monitoring and Evaluation
The land reform and management programme will be made effective through regular
monitoring and evaluation. For this, prior to the formulation of annual programmes, a
detail study of the possible programmes and policies will be made. In addition,

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regular progress review and problem resolution committee's meeting will be held, and
regular monitoring and evaluation of the projects will be carried out.
Manpower Management
A programme to supply manpower for land reformation and management programme
will be taken place under the policy of development administration.
Implementation Arrangement
Land reformation and survey programme will be implemented by concerned
departments of HMG in a coordinated manner, the Ministry of Land Reform and
Management will start a separate programme for land information and management,
and the Ministry will coordinate programmes run under its departments.

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 9.3 Forest Development
1. Background
The forest sector has made significant contribution to economic and social
development of the country. Nepal is very rich in terms of natural resources and bio-
diversity. Here, a broad range of ecosystems flourishes per unit area of the land. If
proper scientific management and utilisation of renewable resources could be done,
development may be pushed forward in rapid speed. However, necessary calculation
and analysis of the forest sector’s contribution in the gross domestic product of the
country has not been done. The forest sector has been the backbone of the agriculture
sector. This sector has played an important role by providing agricultural inputs as
required for the agriculture system, animal farming and other organic matters required
for compost fertilizer, fodder plants and pasture for cattle as well as fruit and flowers,
vegetables, medicines in the form of herbs etc. In addition to this, the forest sector
gives support to irrigation and electricity projects by conserving watershed and
ground water. While considering the aspects like increased encroachment upon the
forest areas increased pressure on steep land for agriculture and residence and gradual
decline in the productivity of agriculture livestock and horticulture systems, it is
necessary to pay special attention to the forest sector development. Likewise, the
forest sector keeps environmental balance, makes daily supply of timber, firewood,
fodder plants etc. that may be needed to the people and gives important support to the
agriculture sector. This sector has enormous potentialities to be able to play important
role in the industrial development of the country by making supply of raw materials
as required to the industries based on forests. In our context, herbs and plant products
have been used as medicines since ancient time and it has been found that
approximately 700 species of herbs and plants is being used as medicines. This sector
has been providing opportunities for employment and income-generation through
various types of industries based on forests. It has also been supporting tourism
industry through national parks and wild life reserves. It has been found that around
23 percent of the tourists to Nepal in 1996 came to enjoy eco-tourism based on forest
resources
Although the forest sector has a dominant place in the environmental conservation in
Nepal, its condition has been on the decline over the past few decades. The forest
sector used to cover more than 45 percent area of the country according to the
statistics of 1964, 43 percent area around 1979 and 37.4 percent in 1986 and a survey
concluded recently (1998) shows that the forest sector has remained only in 29.0
percent of the territory. The same study has shown that the forest area of Nepal’s terai
is being destroyed by 1.3 percent per year. During the past decades, the adjacent belt
of the forest sector was cut down for residence and re-settlement and, in many places,
the forest areas were encroached in an illegitimate manner. The smuggling of forest
products also increased. The forest sector was used for road construction, academic
institution and for other development and construction works, and the increasing
pressure of population and other so many reasons also caused adverse effects upon
the forest sector. The productivity of the forest sector decreased by the effects of
uncontrolled migration, pasture and grazing practices, fire etc.

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Although the forests located in terai area is extremely productive, scientific forest
management system could not be applied due to the existing adverse factors. If the
forests of terai situated in deep soil, enormous ground water level, appropriate rain,
warm climate and plain land could be managed scientifically, the number of
industries based on forests would have increased and the opportunities for
employment would have expanded by leading the country towards industrialisation.
Moreover, a significant increase in the gross domestic product of the country could be
made as well. However, all these did not happen due to negligence in the forest sector
and the natural resources could not be utilised in a proper manner.
The adverse effects made on the forests located on hilly areas during past decades
also remained as such. The final impact of soil-erosion and landslide caused by the
increase in demand for timber, firewood and fodder plants and by the farming
practices in extremely steep land due to the increasing population fell on the forest
sector. Some animals and birds reached the level of extinction because of the
destruction of forests as well.
The World Conservation Union has declisd that Rhodonessa Caryophylla has already
disappeisd from Nepal and it has also stated that 24 species of mammals, 9 species of
reptiles, 27 species of birds, 2 species of insects and 13 species of vegetable is in
endangered condition. Likew ise, the convention on international trade in endangered
species of flora and fauna, (CITES) has put Nepal's 58 species of animals and 13
species of plants on endangered list and included them in its annexes. Because of a
lack of proper balance between the demand and supply of timber and firewood, illegal
theft and export have flourished. It seems that every person has fulfilled own
requirements, but the royalty has not been realised. On the other hand, more
manpower is to be mobilised to control the smuggling and export and it has increased
unproductive expenditure, and the scientific forest management system to be applied
has also fallen in shadow.
In such situation, a serious responsibility of conserving various types of vegetation
and animals and birds existing in the country and of rescuing them from extinction
has fallen on the forest sector. The challenge of making arrangements to fulfil the
requirements of daily consumer needs like timber and firewood etc. for increasing
population has also been added.
There is no information on identification, cultivation technology etc. of hundreds of
invaluable non-timber forest products. As the system of proper management of them
has not been applied, the collection of them is being made in an unscientific manner
and a question mark is raised in the sustainability of such situation. Neither a study on
which area or district and on how much of these forest products is available and how
much and to what extent its proper utilisation will not cause endangered situatio n has
been carried out, nor an appropriate management system has been started. Many non
timber forest products is extremely valuable, if they could be started from
governmental or non-governmental level in national community and private forest
areas, the nation would have earned a large amount of foreign currencies had there
been proper utilisation of such products. Expansion of agriculture area and crops
intensity has encroached the forest sector in order to maintain harmony between the

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production and demand of food grains. Consequently, soil-erosion has increased
which has diminished the compost cycle. The life of electricity and irrigation projects
has been rendered very shorter than expected because of problems like flood and
landslide. While taking cons ideration of all these facts, the need for wise and prudent
utilisation and management of the resources located at our hilly watersheds has been
apparent. The factors affecting watershed resources is mainly the people living there,
land, water and vegetation. Soil and watershed conservation programme is being
carried out with the recognition that long-term effects would be made on development
and development would be longlasting if a system of managing these resources by
local people could be established.
It is revealed that a total of 352, 326 hectares of forest areas have already been
transferred as community forests to date since the enforcement of community forestry
programme. Although the programme like herb cultivation, apple farming,
sericulture, beekeeping, rosin collection, rubber industries and vegetable ghee
industries is being carried out in small number in community forests, the programme
of these types is not widespread. At present 15 forest areas of Nepal have been
provided conservation status and approximately 16.5 percent of the total land area of
Nepal has been maintained, as conservation area. Likewise, resources conservation
and mobilisation system in buffer zones has began on the basis of people's
participation. Moreover, 84787 tourists visited different national parks in 1995,
having attracted by the natural beauty of Nepal. Similarly, the activities of
identification, conservation and proper utilisation of forests, botanical resources and
bio-diversity have been initiated. In recent years, the possibilities of earning foreign
currencies by wide-spread cultivation of important and extremely invaluable herbs
like taxus baccata, ginseng, withamia, ipecac have been seen. By similar means, the
possibilities of supporting the programme like poverty alleviation, market
development and trade and industrial development may be linked to cultivation of
medicinal, fragrant, elegant and tuberous plants in the forest areas.
The productivity of our forest area has declined extremely. Very old trees have not
been utilised in various places, whereas in many other places, immature trees have
been cut down in an uncontrolled manner. Because of this, qualitative timber could
not be produced. As timber of quality and standard is not produced, there is no market
and the situation is leading to decay of timber. Even the produced timber and
firewood could not be made available to general Nepalese citizens in an easy and
widely available manner because of the geographical diversity.
2. Review of the Eighth Plan
The Eighth Plan had set the main objectives of obtaining sustainable economic
growth, reducing poverty and lessening the regional imbalance. Accordingly,
community forestry, private forestry, lease-hold forestry and pasture development
programme, soil and water conservation programme, national parks and wild-live
reserve programme, vegetation and herbs development programme were carried out
in the forestry sector during the plan period. Various income-generating programmes
for biological conservation and employment generation, which are in the interest of
farmers living below the poverty line were also implemented.
Table 1

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 Targets and progress of the Eighth Plan

Program Target Progress

A) Community forest 5004 Forest user's 5316 User's groups formed
user's groups groups formation
formation
B) Afforestation 67119 Hectares 26456 Hectares
C) Sapling 111 Million 87 Million 4 hundred thousand
Distribution
D) National Forest 628301 Hectares Plans prepared for 14 districts
Management (40 districts)
E) Lease-hold Forest 25000 Families 2432 Families
Management
F) Community soil- 60 Districts 50 Districts
conservation
service
G) Soil-utilisation 5 Unit 5 Unit
development plan
preparation and
implementation
H) Support to the pre- 5 region 5 region
requisites of
development
I) National parks and 12 Unit 15 Unit
wild-life reserves
conservation area
management
J) Forestry and 5 Region Continuity of the conservation and
botanical research research activities by making
available 230 hectares of land in
the 7 conservation areas
In respect of national forests management, the target was the management of forest
area in 628201 hectares. Forest management working plans have already been
prepared for 14 districts during the plan period, but the management could not be
done in all districts due to lack of financial resources. However, silviculture operation
is being carried out in 6 districts in the fiscal year 1996/1997. Likewise, the target of
expanding soil-conservation service in 60 districts was set in the Eighth Plan period
under the soil-conservation programme and the service has been expanded in 55
districts during that period. Watershed conservation and soil conservation programme
is being implemented in sub-watershed areas only on the basis of people’s
participation.
In plant development area, activities of recording publications as well as `some works
towards herbs cultivation, plant and wildlife development and collection, processing,
industrial development and management of herbs and plants have begun in the Eighth
Plan.

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Approximately 2500 species of plants have been conserved ex-situ and in –situ in 290
hectares of area of botanical gardens including the Royal Botanical Garden,
Godavari. Moreover, 13 nurseries is being run at present for publicity and awareness.
Consequently, fragrant oil industry has been established and some land–less families
have been involved in flower cultivation (floriculture) and herbs cultivation.
Likewise, tissue cultivation has been carried out in 75 species of plants. Preliminary
study on saffron farming has been conducted and is being carried out by forming
farmer’s groups.
It is found that organisational improvement has been made during the Eighth Plan
period and continuity has been given in the long-term plans and programmes. It has
been found that partnership and mutual co- operation between governmental and non-
governmental organisations has grown and because of this, a good opportunity of
carrying out development programme with the co- operation of other concerned
institutions has increased. During the Eighth Plan, very positive impacts have been
made in community development, community forestry and people’s participation in
bio-diversity conservation. The partnership of national and international institutions
and organisations may als o be taken as another significant aspect.
Although the progress of the Eighth Plan period was satisfactory, some important
challenges were also felt during this period. A total of 67,000 hectares of forests was
targeted to be made available for lease –holding during the Eighth Plan period, but
only 31,000 hectares could be made available due to some legal and policy level
difficulties. Sale of approximately three million cubic feet of old timbers could not be
made during the plan period. As the timber is going to decay and finish, the situation
indicates that even the royalty would not be realised. It is more important to give
priority to the regeneration and management of natural forests in the coming days
rather than reforestation. A number of problems were seen at the review of the Eighth
Plan. They were: lack of resources to meet the targets, poor institutional mechanism,
lack of inter-ministerial coordination, land resources and forest area enforcement,
lack of adequate and skilled manpower and career development opportunity for them.
A realistic attitude should be taken during the Ninth Plan period in order to solve
these problems.
3. Long-term Concept
The long-term concept of the forest sector development has been taken in accordance
with the 21-year long-term forestry development Master Plan 1989. The Plan aims at
making available timber, firewood, fodder plants and other forest products to meet the
basic requirement of general public, making contribution to food grain production
with an effective co-ordination between forest and agriculture system. The Plan also
set the objective for conserving the land territory of the country from soil erosion,
flood, landslide, desertification and other environmental imbalance, preserving eco-
system and genetic resources, and making effective support to national economy by
forest management and development of industries based on forest products.
Timely adjustment in the guidelines set by the forestry development master plan is
likely to supplement the Ninth Plan objectives. Moreover, the long-term plan of
agriculture has already adopted the forestry sector as a priority production sector in a

176
clear manner. Pasture development is also included in this long-term framework. The
intention of taking sustainable approach to development and scientific utilisation of
forests in accordance with the liberal economic policy has also been reflected in the
approach paper of the Ninth Plan.
The Forestry Development Master Plan has prepared the framework for the
development of forest sector in Nepal. The projection of its impact evaluation has
also been included through examining the alternative scenarios. Six main
programmes and 6 supportive programmes is included in this master plan. The main
feature of this Master Plan is to take an integrated and programme-oriented approach.
4. Objective
On the basis of the current situation of forest resources, natural environment and
development is regarded as a foundation for the overall system. Based on this
assumption, the main objectives of the forestry sector will be the mobilisation,
conservation and management of forest resources to eqilibrate their demand and
supply; the creation of income-oriented and employment opportunities for the poor
and marginal families, the mobilisation of peoples participation for productivity
enhancement, and the adoption of proper land-use plan
5. Target
To adopt the private sector and free market system for the long-term development of
forest sector, to implement the forest management working plan, to make an
institutional arrangement for a revolving fund with a certain percent share of the
revenue obtained from the sale of forestry, to provide lease-hold forest to forest
industries and institutions and develop industrial forest, to prepare an integrated plan
for implementing the forest production and management in the hilly area, to
strengthen the agro-forestry and leasehold forest system in poverty alleviation
programme, to support the management, marketing, industrial development,
processing and export of herbs and forest product, to adopt a coordinated approach to
alternative energy management are the policies and implementation strategies that
will be adopted.
6. Policies and Implementation Strategy
• By encouraging the local users in the efforts of fulfilling the day-today needs of
wood, firewood, fodder plants (Daleghans) and other forest products, for the
general public continued supply will be ensured through community forestry
development.
• Private sector will be encouraged through providing the opp ortunity for the
commercial management of government-owned forests in potential areas.
• For the purpose of making contribution to national economy by proper utilisation
of forest products as well as for regular supply of materials required for the
forest-based industries, the selling procedures of such materials will be
simplified.

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• Support to poverty alleviation will be provided by promoting lease–hold forestry
through the identification of policy –related and legal problems seen in this
sector.
• Policies and working policies such as the development of bases for tourism
promotion by means of preservation of forest and wildlife and their habitats will
be adopted.
• For the purpose of preservation, cultivation, promotion and expansion of the
herbs and plants on the verge of extinction, emphasis will be given on research
relating to appropriate technology and to the collection of data.
• Employment and income generating opportunities for the people living in rural
and remote areas will be increased through training, publicity, expansion,
collection, processing and promotion of commercial farming of herbs and plants.
• Conservation of Siwalik area, which is very fragile, will be carried out in order to
maintain the renewal capacity of ground water reserve by giving priority to the
soil and water conservation programmes.
• Additional increment in the income of farmers will be encouraged through the
afforestation of multiple use of the varieties of plants, while carrying out
afforestation programme. Emphasis will be given on producing other forest
products apart from timber and firewood.
• The institutional capacities of the concerned agencies will be strengthened in
order to make the monitoring and evaluation process effective.
• Necessary initiation will be taken in the management of national parks, wildlife
sanctuaries and other forest sector to be self-reliant in income generation.
Mobilisation of resources of the same sector in a sustainable manner will be
emphasised in this regard.
• For the above mentioned programmes, policies such as making the role and
responsibilities of the private and non-governmental sector clear and transpisnt
with the development of institutional bases will be adopted.
Guidelines based on concept are as follows:
Participatory Management
This planning per iod will be the next phase of users' strengthening and people’s
participation in the implementation of local forest working plans. The basis of
people’s participation in soil and watershed conservation, buffer zone management,
bio-diversity preservation and development of herbs and other non-timber forest
products will be widened and made flexible in approach.
Management Based on Situation
The existing challenges of forestry sector need to be managed in view of the up-to
date scientific technology by taking overall approach on the basis of the situational
system. Such system leads to making the management problem shooting systematic

178
and based on sustainable foundation to increase the productivity of resources. Under
such framework, the programmes of income generation and poverty alleviation will
also be included.
Production Increment, Overall Development and Poverty Alleviation
The programmes for the preservation, enhancement and development of forestry
sector are aimed at sustainable production and supply and resource conservation. The
community forestry will adopt a management system, which makes further more
contributions at local level in production and management of forest. The productivity
of national forest will be increased up to six cubic metre per hectare on an average
through scientific management. Furthermore, while carrying out the management of
the national forest, effective arrangement will be made not to waste the production
capacity of forest sector from problems like fire and grazing, apart from other aspects
of production loss. Afforestation will be carried out by exotic species of plants, which
have been proved successful. During the plan period, management training will be
promoted in accordance with high priority given to the production management of
forest. Moreover, except in the specified programme, forest area will not be used for
any other programme. Likewise, emphasis will be given to the productivity and
mobilisation of resources for the development of herbs, wildlife preservation and
plants development programme. Programs will be carried out in such a way that 50
percent users of community forest and leasehold forest as well as national parks
preservation programmes will be represented from among the backward or poverty
stricken or women users.
Income Oriented, self-reliant and Users Centred Management
Private sector will be encouraged in forest management. Users will be made the focal
point of management in order to support the self-reliance by linking the management
of resource with the rural life style, and an outlook of making such system
widespread in general will be taken.
Establishment of National Forest Fund
Taking into account the fact that the main difficulty in the scientific management of
forests is financial resources, a national forest fund will be established and some
percent of the revenue earned from the forest sector will be deposited in that fund.
Thus, fund will be mobilised by encouraging the participation of private sector in the
generation of additional funds.
Internal and Inter-sub-sectoral Co-ordination
Inter-sub-sectoral co- ordination will be institutionalised and the co-ordination
arrangement within each sub sector will be strengthened. In order to enhance the
inter-sectoral co-ordination at national and local levels in resources conservation,
mobilisation and management committee will be established and the previous
national resources conservation committees will be made active and competent. Legal
base will be prepared in order to make the national resources preservation and
mobilisation committee active and for effective inter- relationship with the sectors

179
like industries, roads, irrigation and drinking water. Departments will be made more
action-oriented and up to date gradually on the basis of working areas and workload.
Moreover, necessary organisational reform will be carried out gradually on step by
step basis keeping in harmony with the forest development master plan and existing
forest policy. The role and responsibilities of regional directorate will be made
effective by requisite policy and rules. For an overall coordinating provision, sectoral
management information system will be developed.
Role of the Private Sector
Provisions will be made to motivate the private sector to take an effective role. Non–
governmental and international non-governmental organisations working in the fields
of forest industries and forest sector will be involved in an effective manner through
policywaree monitoring system. Non-governmental organisations having developed
from among users groups will be given special priority. Private, indigenous and joint
venture investment will be expanded through utilising indigenous capacity for forest
sector management and industrialisation.
Management of Renewable Natural Resources
For the preservation and promotion of non timber forest products as well as the tree
species available in the forests located at various geographical areas which can
provide timber firewood and fodder plants (Daleghans), management working plan
will be implemented in the districts of terai area. Such forest resources will be
encouraged to enhance in quality and quantity by having them managed through
governmental, non-governmental and joint venture practices in hilly and high hill
districts. The forest products of short–rotation will be mobilised as cash- crops with
the management and proper utilisation, in an appropriate manner. The renewable
natural resources, which have remained idle or unused will be managed and utilised
properly.
Career Development of Women
The forest sector will be mobilised as the main source of income generation and
employment for individuals, communities and, especially for the impoverished class
and women living in the rural area. For this purpose, proper arrangement will be
made for career development of women in the private sector and communities
associated with any aspect of development, management and or proper utilisation of
the forest sector. As women is mainly involved in collection of timber, firewood,
fodder plants, animal bedding etc, necessary arrangements will be made to include
them compulsorily in the forest users committees. Women will be given high priority
in the skill-oriented training organised by the forest sectors like management of buffer
zones of national parks and wildlife sanctuaries.
Women will be selected with priority for training, workshops and especially for
opportunities of career development related with the community forest and buffer
zone management. For the accomplishment of these objectives during the Ninth Plan
period, a feasibility study will be carried out to find out, programmes, employment
and income earning opportunities for women to be increased. Clear and specific

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provisions will be made in respect of the role of women and the opportunities that can
be provided to them.
Sub-sector Programmes:
Community and Private Forest Development:
This programme will be pushed forward for producing forest products needed to the
people through scientific management of the forest sector with the direct participation
of people, for making available raw materials as required to industries, and for
increasing gradually employment and income-oriented opportunities for poor and
marginalised families. Under this programme, necessary arrangements will be made
to manage non-timber forest products existing in natural way in forest areas and
which may be available through feasible cultivation, by modifying the working plans
of community forests.
In order to implement working plans for managing the community forests under the
action programme, priority will be given to carry out activities like providing
necessary training and technical support. For this purpose, the preparation of working
plans and transfer of community forest will be completed, and community forest
development works will be made more dynamic and effective through necessary
technical and other fundamental assistance and through the continuous monitoring
and evaluation of community forests.
For the fulfillment of the aforementioned objectives, priority will be given to the
management of natural forests and necessary arrangements will be made to develop
the method, through which the regeneration of such forests may be a achieved. In
addition to this, private forests will be encouraged in order to reduce the depend ency
of general people on community forests and national forests. Entrepreneurship for
forest undertaking will be developed, and the training for appropriate technology
transfer and publicity and extension services will be provided.
For the management of non-timber forest products by means of community forestry, a
feasibility study will be carried out in the subject that can produce the commodities of
increased value, create opportunities of employment and increase income. It will be
implemented in accordance with the recommendation made by the survey. Necessary
training, publicity and extension, seminar and workshops will be organised to support
the less expensive treatment method of traditional Ayurvedic medicine by drawing
the attention of local people towards the methods of curing diseases at local level.
Extensive people’s participation will be sought in the preservation of bio-diversity for
promotion of non-timber forest products. For this purpose, local physicians (vaidya)
and social workers will be mobilised as resource persons. Personnel working in the
community forest development programme and women users at the local level will be
included in such activities.
Technical assistance that may be required to encourage private forestry programme
will be provided, and the transfer of technology as required for the proper
preservation, promotion and management of non –timber forest products of high
value and low volume in the private sector. Training for general public and rural
peasants, feasibility study, reports, technical assistance for this purpose and necessary

181
information in respect of market will also be made available. Moreover, activities like
seed collection, cultivation technology development will be promoted and seed
storage technology will be made available. Encouragement will be given for the
cultivation of non-timber forest products in community forests and marginal land of
the private sector. For the encouragement of these programmes, assistance will be
provided from the government level to flow the information in regard to market
provisions in order to develop the cultivation of non-timber forest products and
fragrant oils. A feasibility study will be carried out on the cultivation of non-timber
forest products in the districts of terai, and programmes will be formulated to
cultivate the varieties of recommended, agro-forestry system and to process such
products in the country.
Table 2
Programme

Sub-sector
A. Community Forest Development
1. Formation of users groups 7510 in number
2. Community forest management
3. Afforestation. 30,000 hectares
4. Post formation support to the forest users groups 16,000 in number
5. Income growth programmes in the feasible areas
6. Trainings and publicity extension as per need
B. National Parks and Wildlife conservation management of
national parks and wildlife sanctuaries 16 in number
2. National parks management 16 in number
3. Buffer Zones management 5 places
B. Soil and Watershed Conservation
1. Soil- Conservation service extension 75 districts
2. Community integrated watershed management 100 sub- watershed areas
3. Productivity conservation, Land utilisation development and 75 sub watershed areas
exhibition and publicity- extension
C. Vegetation and herbal plants Development
1. Plant protection area research management 12 in number
2. Technology development and expansion 5 in types
3. Botanical garden and herbs Centre development 10 in number
D. Bio- diversity Conservation
1. Co-ordination between natural bio-diversity and environment 75 districts
conservation 75 districts
2. Implementation of national bio-diversity working plans
F Forest Industries development
1. Support to forest based industries development As per necessity

G. Support to the Development of Industries based on Non-

timber Product.
H. Supportive Programmes:- As per necessity
1. Project formulation and management information system 1 in number
2 Monitoring and evaluation system development and 1in number
expansion 1 in number
3. Training and publicity extension management expansion As per necessity
4. Manpower and organisational reform 75 districts
5. Research and technology extension

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National and Lease-hold Forests
National and lease-hold forestry programme focuses on activities like scientific
management of forests, production of raw materials for industries, industrial
development, employment enhancement and production increment in the forest
resources. This programme will be initiated in 2 districts in the beginning and
extended to 18 districts of terai isa (Ilam, Jhapa, Sunsari, Morang, Udaypur, Sarlahi,
Rautahat, Bara, Parsa, Makwanpur, Chitwan, Nawalparasi, Rupandehi, Kapilvastu,
Banke, Bardia, Kailali, Kanchanpur) during the plan period.
The management programme of above-mentioned districts aims at producing
approximately one million two hundred thousand cubic metres of timber and 2
hundred 60 thousand cubic metres of firewood. Likewise, this programme will create
four million one hundred thousand opportunities of employment based on labour. A
system of mobilising non-governmental and international non-governmental
organisation will be established in this programme. The management of non-timber
forest products will be carried out side by side while formulating and implementing
the forest management working plans.
The existing sale procedures will be simplified. Three million cu. ft. of old timber
produced from national forests during the Eighth Plan period, which is yet to be sold,
and approximately 40 million cu. ft. of timber, which may be available from scientific
forestry management plans to be implemented in 18 districts of terai and inner
terai,will be sold after indigenous processing and addition of value during the Ninth
Plan period.
National Parks, Wild -life Reserves and Conservation Management
By 1998 the effort of wildlife and plants conservation programme which was started
in 1972 has been able to cover approximately 16.5 percent of the total area of the
nation including 8 national parks, 3 wildlife reserves three conservation areas and one
hunting reserve. These areas have been providing significant contribution in the
preservation, promotion and development of magnificent scenery, wildlife and other
natural resources and have been providing assistance in the community development
in the periphery of these areas as well. During the Ninth Plan period, other areas,
which is considered sensitive for the conservation of bio-diversity, will be developed
and expanded as national parks. The main target of national parks and wildlife
conservation management will be seeking massive people's participation in the
management and implementation of buffer zones by promoting income generating
activities like education, agriculture, forestry and tailoring, hosiery, etc.
Under the programme, activities such as conserving the bio-diversity in harmony with
the situational variables, expanding and making widespread the buffer zo ne
management, enhancing international co- operation and understanding and promoting
eco-tourism will be given high priority.
For the success of this programme, a number of policies and implementation
strategies will be adopted. These include managing the national parks and wildlife
sanctuaries in accordance with scientific working plans, establishing buffer zones to
mobilise effectively people’s participation in preservation activities, carrying out

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improvement, management and expansion of the habitat of rare wildlife and
vegetation and wetland areas for the conservation of wildlife and bio-diversity.
Ploughing back 30 to 50 percent of income from national parks and wild life
sanctuaries for community development works and creating necessary for promoting
eco-tourism are also included.
In view of the fact that about 75 million rupees in revenue is being received each year
from the management of national parks and approximately 330 million is being spent
for the conservation and management of these areas, appropriate steps will be taken to
make these activities self-supporting. Income from utilisation of available natural
resources will be mobilised more effectively and efficiently for this purpose.
Soil and Watershed Conservation Programme
Under soil and watershed conservation programme, services being provided in 55
districts will be expanded to 75 districts by determining priority on the basis of
evaluation of the deteriorating condition of sub- watershed areas. While doing this,
necessary arrangements will be made to expand and make wide spread the
programme being carried out through people’s participation by means of enforcing
requisite regulations. In order to provide support to the prerequisites of development,
to the proper utilisation of role and to production, programme, publicity and
extension, the activities of integrated watershed management will be given high
priority. Moreover, participatory benefit monitoring indicators will be maintained in
setting the objective and targets of each programme and in monitoring. By making
simple the central working plan of sub watershed, income generating, poverty
alleviation and production programme as well as the system of inter unit co-
ordination and mobilisation of savings and resources of rural people will be adopted.
In addition to this, productivity of land will be increased. Formation, operation and
strengthening of users groups will be coordinated and integrated field wise in sub
watershed and other programme of the forest sector from the soil conservation
programme.
There is an inter -dependent relation between flood control in terai and watershed
conservation in the upper riparian area. The river control work may not be sustainable
in isolation if not integrated with the soil and watershed conservation programme
For the success of the programme watershed management programme will be carried
out with priority in order to mitigate the negative impact that may be caused by the
destruction of resources in the watershed areas of big hydro electricity and irrigation
projects. Integrated resource management and mobilisation will be carried out
through people’s participation in the functional watershed areas of 15 to 25 sq km.
Taking into account the negative effect on geological structure of Chure area, soil
conservation will be accorded high priority in the area. To protect the land from the
potential calamities of flood and landslide, policies and implementation strategies
such as affiliating the bases of upper watershed with conservation, establishing
participatory watershed management training centre, conservation and exhibition sites
and watershed laboratories, mobilising massive people’s participation in watershed
management and developing human resources at the local level will be adopted for
conserving river and stream banks.

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High priority will be given to provide support to the development activities to be
carried out in the context of soil conservation works under the programme. Activities
like controlling landslide and carrying out conservation of watershed areas,
developing bio–engineering system by selecting non-timber vegetation, which may
help in income generation, will be taken up as well.
Botanical Garden and Herbal Plants Development
This programme will have the main objective of making contribution to the economic
and social upliftment of the country through income–generating employment and
industrial activities. Participation of non-governmental sectors in the utilisation of
non-timber forest products and resources like botanical garden and herbals plants will
be sought to achieve this objective.
For the programme, priority will be given to identification, conservation, promotion
and enhancement of diverse botanical resources through practical botanical research
and development and processing of herbs at the people’s level by establishing herb
centres and international markets of herbs.
For the success of the programme research, publication and development activities of
botanical resources, ecological system and socio-economic dimensions will be carried
out. Bio-diversity conservation, improvement and consolidation will be achieved
through developing biotechnology. Botanical and herbs research, development and
management programme will be expanded on a gradual basis at the regional and
district level. Implementation strategies such as conducting programme to the
marginalised, poor and backward class in an effective manner, ensuring people’s
participation, developing human resources for research and development activities on
vegetation in co-ordination with academic and other institution and associations,
carrying out study and research on useful plants and seedlings to maintain
environment conservation, and strengthening and making effective the
implementation by means of master plan, feasibility study, working plan and
guidelines will be adopted.
For the development and the proper utilisation of non-timber products, research and
development, technical assistance, market management assistance, training and
publicity and extension programme will be carried out in respect of the herbs located
at various geographical areas and of the vegetation, from which fragrant oil can be
extracted. In the same manner, production programme of herbs and plants of high
value will be promoted with priority from both the governmental and non-
governmental levels. Rural people living in remote northern areas will specially
benefit from this programme. As majority of herbs and plants of high altitude is found
in these areas the people of these areas, may get enormous opportunities of
employment and income. From such situation, significant improvement may also
happen in their economic condition.
With an objective of sustainable development of herbs and fragrant oil and other non-
timber forest products, and promoting the use of these resources in rural areas, a fund
by the name of non-timber forest products conservation and indigenous knowledge

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fund will be established. These types of programme will be carried out through this
fund.
Support to Bio-Diversity Conservation and Tourism Industry
The bio-diversity conservation in Nepal began with the establishment of conservation
areas. Various types of conservation areas system established for the preservation of
scarce wildlife and their habitats have been playing significant role in the preservation
of the main bio-diversity, vegetation and animals of Nepal. Programmes have been
carried out taking into account the conservation of important bio-diversity outside the
purview of conservation areas. International responsibilities for the conservation of
bio-diversity have increased after Nepal became a member of the international
convention on bio-diversity in 1992. Policies and programme have been carried out
accordingly on a gradual basis.
In order to bear responsibilities on long –term basis as per the need of bearing
national and international responsibilities for the conservation of bio-diversity, the
following policies have been included in the Ninth Plan.
For the programme, management based entirely on the ecosystem and the activities of
developing policies and working policies on the basis of people’s participation will be
given high priority.
Carrying out the improvement, management and expansion of rare and precious
vegetation, habitats of wild-life and conservation of wetland areas, ensuring benefit to
human beings by conserving and promoting wild genetic diversity in a scientific
manner, implementing the international commitments regarding bio-diversity
including Ramsar conventions, making joint efforts for the effective conservation of
bio-diversity by complying with and carrying out gradually the national bio-diversity
action plan, carrying out the expansion and establishment of conservation areas on a
gradual basis for the conservation of bio-diversity; making representation of various
ecological zones are the policies and implemetation strategies that will be adopted.
A decision will be reached after reviewing the conservation situation of these plants
and non-timber products, which are being collected from natural habitats despite a
ban on collection. Similarly, to comply with CITES conservation of the species of
plants considered important from bio-diversity point of view and enlisted in the
annexes of the convention will be banned for collection, if necessary, after evaluation
of the situation. While utilising these plants, mitigating measures will be adopted to
minimise negative impacts and a system of periodic monitoring of the uses will be
done.
Moreover, as many types of non-timber forest products in national parks and reserve
area may decay and decompose, provision of making proper utilisation of them by
local landless families and consumers in the buffer zone will be made.
Industries Based On Forest Product
Privatising industries of governmental level, developing forest industry associations,
developing industries of non-timber forest products will be given high priority in

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order to encourage the industries based on forest products in accordance with the
objective of the Forest Sector Master Plan 1989:
• Encouraging foreign investment.
• Expanding industries at regional level.
• Privatising the industries run at governmental level.
• Categorising the industries.
• Controlling the environmental pollution.
• Developing industries as per necessity.
Objective classification of industries based on the forest sector on the basis of priority
order will be carried out. Action plans for sustainable utilisation of non-timber forest
products will be prepared and implemented. Activities in respect of the production
forest organising programmes will be carried out in accordance with the districts
forest action plans to make the private industries self-reliant, creating pre-requisites
for industrial development. Necessary training and extension activities will be
conducted to develop skills in respect of forest-based industries and cultivation of
herbs, preparing database for multiple use and valuable forest products, and adopting
necessary measures. To control environmental pollution, investment will be promoted
in joint venture in the activities of forest conservation, development and management.
Other policies and implementation strategies will be adopted for the development of
the industries based on forest products.
In addition, establishment of shellac industries, silk industries, mushroom farming,
tanning industries, vegetable ghee, dyes, rubber, spices, cosmetic and other industries
based on forest product will be encouraged.
Under the programme, development of industries based on forest products will be
encouraged with the inclusion of appropriate non timber forest products by managing
the vegetation, which may generate income in short rotation, in the working plans and
management plans of community, leasehold and national forest. Proper training and
extension programmes will be organised to transfer technology, as may be required
for this programme to the general public. Special emphasis will be given to the
development of industries based on forest products through utilising properly the non-
timber forest products available at adjacent areas or the inner parts up to a certain
distance from national parks and reserves, and through the processing of such
products at the local level.
Over the past few years, furniture industries run in private sector have started to
import and use the timber of some exot ic species of decorative and long-lasting types.
The demand of such timber has been growing in markets. The afforestation of such
new species is being carried out on experimental basis since the past few years.
Attention will be paid to the expansion of species of such types which is appropriate
for the industries based on forest products. Consumption pattern in the existing
market will be analysed to determine the size of demand for these species of plants.

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Supportive Programme:
Rules, Regulations and Institutional Arrangement
The existing policy of the forest sector has reflected the policy of the Ninth Plan. In
addition to making this policy timely, modifications in the rules and regulations of the
forest sector will be made taking into account the greater objective of the Ninth Plan.
Manpower and Human Resources Development
The Ninth Plan will give contribution to the policy of HRD adopted in the Eighth
Plan. Providing career development opportunities to the existing manpower through
domestic and international training, hire academic exposure and study tours and
making them capable of unchanging duties as per the need of the organisations in the
forestry sector will be continued.
In the context of the fact that skilled manpower is required for the proper
development of the forest sector as foreign currencies may be saved if such
manpower could be produced in country. Since such services may be available
publicly and easily, emphasis will be given to start Master’s level education in
forestry science and to make qualitative and timely improvement in the certificate and
bachelor level programmes.
Forest Research and Resources Information
High priority will be given to survey and research works on the subjects necessary for
the development of the forest sectors. Increasing the development of the forest sector,
increasing productivity by making improvements in forest resources and agro-
forestry system by implementing study results and providing support to poverty
alleviation will be the focus of research activities. In addition to this, fundamental
policies and working policies such as giving high emphasis on the need of the users
by identifying them on priority order and keeping co-ordination with the local and
foreign agencies will be adopted.
A countrywide resource assessment of economically viable non-timber products will
be done and the result of analysis made public so that people know the status of the
bio-resources in forms of availability and depletion. By collecting the research
findings on the forestry of Nepal carried out by different agencies necessary
arrangement will be made to carry out the additional research on the basis of such
research and collect all information through research information source programme
to avoid duplication in research works. Moreover, applied research activities will be
given more priority by carrying out a need assessment in respect of the problems
experienced at field level.
In addition to above, a separate programme will be launched in regard to necessary
research and development on the production, promotion and proper utilisation of
valuable timbers that may be produced in the forest areas for sale.

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Monitoring and Evaluation
The achievements made in the Eighth Plan in monitoring and evaluation will be taken
into consideration to make this system more effective. Apart from periodic progress
review, impact evaluation and target-oriented M & E will be launched. Support
programme in the forestry sector will be made an important part of management
information system by making necessary institutional and capacity enhancement
arrangements. On-the-spot M&E. will be expanded, MIS will be developed, periodic
review and related interactions will be made simple and useful on a priority basis.
Apart from this, emphasis will be laid on capacity enhancement, preparation of sub-
sectoral policy and procedure, evaluating performance standards in accordance with
monitoring guidelines; reward and punishment system. To evaluate the effectiveness
of community forestry programme, on-the-spot study will be carried out on the
contribution of the programme to income generation of consumers. All geographical
areas of the five development regions will be represented to evaluate the community
forestry programme carried out by users groups themselves .
Planning and Management system development
Plan formulation and programme design, policy formulation and implementation
aspects will be developed separately in the Ninth Plan period, while formulating
annual and periodic plan of the forest sector. While setting the targets for resource
management, conservation and mobilisation, special emphasis will be given from the
ministry level to make the forest sector a direction-and scientific management-
oriented taking into account the experiences gained from monitoring and evaluation
activities of the past.
Priority will be given to the activities of formulating integrated situational system
oriented planning of the forest sector. Complying with the objective of the Ninth
Plan, policies and implementation strate gies such as developing the management
information system including the activities of formulating plans, setting programmes
and arranging resources and means, and making co-ordination in foreign aid will be
adopted.
Demand and Supply Situation of Timber and Wood During the Ninth Plan Period:
According to the estimates made by the Forest Sector Master Plan 1988, it seems that
the consumption of timber per person has been 0.11 cu. m. and according to which, it
is estimated that approximately 11 million cu. m. timber will be consumed during the
Ninth Plan period. In this, approximately 5 million 9 hundred 20 thousand cu. m. of
timber will be supplied from the community forests, national forests and from the
private sector as well. In this way, it is estimated that there will be a shortfall of 5
million 80 thousand cu. m. of timber during the period of the Ninth Plan. It is
estimated that 263, 000 cubic meter of sawed timber will be required for urban
population during 2000-2001 only, which will be approximately 45 million cu. m. in
total during the whole period of the Ninth Plan. Consumption of firewood during the
Ninth Plan period is estimated to be 14 million 7 hundred thousand tons per year, of
which, 2 million 9 hundred thousand tons is estimated to be supplied from the
agriculture sector and the dependency on firewood is estimated to be 50.8 percent. It

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is estimated that the need for fodder plants (Daleghans) will be approximately 7
million 9 hundred thousand tons per year and its dependency on the forest sector will
be 30.6 percent. The requirement of plywood in Nepal is approximately one million
sq. m. per year, of which, only 40 to 45 percent is being supplied from the local
plywood industries and the balance are imported from India. In spite of being
expensive, the trend of importing plywood is growing because of the demand for
good quality and better standard. Therefore, the trees of those species, which is
required for plywood are necessary to be managed in commercial forests as well. The
consumption of paper was 18,200 tons per year in the year 1986 and it is estimated
that its consumption will be 21,000 tons per year around 2000.
Projections:
Significant contribution to the national economy is expected through scientific
management of the forest sector with and additional 25 percent gain in revenue
during the Ninth Plan period. It is estimated that approximately 5.5 billion rupees in
revenue will be obtained from the forest sector through the production of 7 million 3
hundred thousand cu. m. of timber and 8 hundred 67 thousand cu m of firewood by
managing only 50 thousand hectares of natural forests. It is pre-estimated that forest
management will be self–reliant by means of national forest fund and will be
developed as an independent sector by the apportion of governmental financial
resources. It is also estimated that about 2.5 million employment opportunities will be
created during this period.

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 Projects Under Foreign Assistance At
the Ministry of Forest and Soil-Conservation
Projects Donor Agency Years of Completion
Ministry of Forests and Soil- Conservation
1. Shivapuri watershed management project (second phase) Norway, FAO 1997

Department of Forests
1. Community forestry develo pment project (third phase) IDA 1998
2 Hill area lease –hold Forest and pasture development Project IFAD 2001
3. Tree Improvement Project DANIDA 1997
4 Nepal –Australian community resources development project Australia 2001
5. Churiya Forestry development project Germany 1997
6. Dolakha – Ramechhap community forestry development project. Swiss 2001
7. Forest enterprises programme USAID 2001
8. Community forestry training project DANNIDA 1998
9. Nepal –UK community forestry project ODA 1998
10. Bhutanese refugees project UNHCR 1998

Soil- Conservation Department

1. Syangja- Andhikhola watershed management project CIS 1998
2. Nepal –Australia Community resources development project Australia 2001
3. Farm project UNDP 1998
4. Churiya forestry development project German 1998
5. Watershed management project JICA 2001
6. Forest enterprises programme USAID 2001
7. Bagmati watershed project EVC 2002
8. Community Forestry and watershed conservation project JICA Current
9. Nepal –Denmark watershed management project DANNIDA 1999
10. Participatory watershed management training program FAO 1998

National Parks and wildlife Conservation Department

1. Forest enterprise programme USAID 2001
2. Parks and people project UNDP 1998
3. Makalu Barun National parks and wild - life preservation project TMI 1997
4. National bio -diversity working – plan programme GEF/UNDP 1998
5. Bardia Integrated conservation project WWF 2000
6. Buffer Zone development project Bardia CIS Nepal 2002
7. Aannapurna Conservation Area Project for Nature Conservation King Mahendra Trust current

Research and Survey Centre

1. Forest resources and information collection project (third phase) FINNIDA 1999

Project being Prepared

1. Land resource management project, terai forestry management soil
conservation, Bio-diversity and trust fund com munity forestry 38 Districts World Bank 1999(5years)
1. Soil-conservation, development of forests, community
training, tree improvement, 26 districts soil-conservation Denmark 1988 (5years)

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 Chapter 10
Agriculture

1. Background
In the background of the natural resources of Nepal, agriculture and forest resources
are the main basis of the Nepalese economy, which contribute to raising living
standard of the majority of the people. As these ar e the foundation for the
development of the non-agricultural sectors, until and unless such sectors are
developed as industries on the basis commercialisation, poverty alleviation is not
possible. Therefore, it is clear that to attain poverty alleviation, which is the main
objective of the Ninth Plan, agriculture and forestry play a major role.
The decision making process of million of farmers, who live in rural areas, influences
the utilisation of natural resources in the development of agriculture and forestry and
their sustainability. As long as resource utilisation process is not reconciled with the
natural regeneration process, the sustainability of such resources can not be ensured.
The utilisation of soil, water and vegetation has become more sensitive due to the
abundance of mountainous topography, steep and fragile terrain. Moreover, different
community and ethnic groups have their own values, norms, attitudes and experiences
of the utilisation of such sensitive resources in different ecological zones. Therefore,
development endeavours should give full attention to profit -oriented commercial
agriculture rather than subsistence one while incorporating these sensitiveness and
experiences.
Though there has been obstacles of diversity, marginalisation, topographical and
topographical fragility due to our geographical situation, presence of small agro-
climatic zones provides comparative advantage for diverse agricultural and forest
based productions. Indications of transformation in agriculture towards
commercialisation and diversification have been noticed in areas with the transport,
electricity and technology. Now, it is a need to transform subsistence agricultural
system towards productivity-oriented, comparatively advantageous and
commercialised agricultural system for sustainable agriculture development by
reducing the pressure of increasing population and generating modern technology
with existing resource utilisation patterns and developing transport and market
mechanism.
Considering the fundamental aspects of agriculture development, the basic features of
plan formulation, implementation and monitoring process for the agriculture and
forest sectors are to make the agriculture system more beneficial and commercialised,
to utilise the transportation and market facilities, to mobilise farmers resource
endowment, to develop interrelationship among various programmes and to sustain
the productivity and production process through co-ordinating such activities. The
Agriculture Perspective Plan (APP), prepared on the basis of such approaches,
incorporates programmes giving priorities to production inputs like roads, irrigation,
electricity, fertiliser and technology; development of high value agriculture products

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like silk, honey, citrus, apple, fresh vegetables and vegetable seeds; animal farming
like cow, buffalo, sheep and goat raising, and poultry farming; community-forestry;
soil conservation, suitable farming system; and land ownership system. It also gives
priorities to accelerate economic growth of agriculture sector for poverty alleviation,
and for employment and income generation of common people. It guarantees food
security as well as improvement in economic situation.
2. Review of the Eighth Plan
The prime objective and priority of the Eighth Plan were formulated in the
background of the need of transforming subsistence agricultural system to an
attractive business-oriented system as agriculture plays a leading role in the national
income and employment. The objectives were set to achieve to meet the growing
domestic food demand in order to contribute to national economy, increase
production and productivity of agriculture-based raw materials, create opportunities
for income generating employment and maintain balance between agricultural
development and environmental protection. In the Eight Plan, it was aimed to
increase annual growth of food crops by 5.4 percent, pulses by 8.4 percent, cash crops
by 9.1 percent, horticulture crops by 5.4 percent, livestock development by 3.8
percent and fisheries by 12 percent in order to attain set objectives.
To accomplish these targets in the plan period, the production programmes like food
crops, cash crops, horticulture, vegetable, animal based production, fish production
were incorporated mainly to emphasising intensive cropping, diversification and
commercialisation of agriculture. Similarly, the programmes on agriculture research,
market, training, loan distribution, improved seeds, improved animal husbandry,
veterinary medicine, vaccination, improved technology, fertiliser, improved seed and
sampling production, other services and support programmes and women farmer
development programmes were also implemented. Most of the policies incorporated
in the Eighth Plan were implemented through these programmes. Though efforts were
made to remove subsidy in chemical fertiliser, the problems in fertiliser supply could
not be solved, as it could not be initiated well in the plan period. The supplies of other
production inputs were not adequate and the distribution of agriculture credit was not
initiated according to the targets. New agriculture market centres have been found
growing slightly. Their implementation process has to be managed. Market for animal
and animal based products has not been managed, and animal slaughterhouse has not
been established in order to produce and process meat and leather.
Few agriculture farms were given on lease to private sector. Most of these farms are
pulled back as they could not be run as desired. Similarly, actual progress has not
been achieved in the area of extension of agriculture technology services and animal
health services through private and co-operative sectors. Jute Development
Corporation was liquidated. It has been decided to privatise the Agriculture Tools
Factory. The decision to privatise Tea Development Corporation, Cotton
Development Committee, Dairy Development Corporation could not be materialised
during this plan period. Similarly the policy to initiate the principle of one umbrella
system to integrate the agricultural extension service was not pursued. Though the of
plan formulation, monitoring, evaluation process have been developed, appropriate

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data dissemination system was not implemented effectively. Proper institutional
framework to provide basis for the agro-business promotion and appropriate policy to
analyse the agriculture price has not yet been implemented. As a consequence,
substantive work has not been carried out in order to identify competitive area
through continuous analysis, in spite of having occasional analyses in cost of
production for recommending steps for its reduction, facilities available to border
farmers and local farmers, and feasibility of export. The recruitment of personnel
under available autonomy has already been undertaken after the improvement of
organisational aspects of the agriculture research. Nepal Agriculture Research
Council (NARC) Act has been enforced after amendment.
Keeping in view the important contribution of women farmers to the agriculture
development, a system has been initiated to formulate programmes by effectively
involving women participation in the agriculture development.
Comprehensive analysis of the state of physical progress on average production
showed that food production, which was aimed to increase 400,000 mt on average per
annum during the plan period, was not achieved. Crop-wise, millet, barley and pulse
production surpassed the set target while cash crops such as tea and sugarcane
production met the target. Besides tobacco, progress in other crops seems to be on the
rising trend. Yet, desired goals were not accomplished. Small crops like coffee and
mushroom were far below the set target. In horticulture, target has been achieved
while potato production is little below the target. In the context of change in baseline
data on horticulture, the growth rate seems quite satisfactory. In the area of animal
based production, meat and fish production attained desired targets while progress in
milk, eggs and wool were a bit below the target. In comparison to the set target of
agriculture productivity, all crops remained below the target in the last year of the
plan period. The productivity of rice, which is the main food crop, reached 2.46 mt
per hectare while the estimated rice production at the end of the plan per iod was 2.85
mt per hectare. But, in comparison to the average situation of the base year, besides
jute, millet and tobacco other food and cash crops showed improvement in
production.
The analysis of export revealed some positive indication in leather, ginger, pulse,
crushed-oil-seed, and jute materials while mustard seed showed some decrease. Some
substitution in the import of animal products was seen while local milk production
contributed to import substitution of powder milk in some respect. As poultry farming
have been commercialised, it has highly contributed to import substitution.
The supply of agricultural inputs based on technological development plays a leading
role in agriculture yield. In terms of uses, chemical fertilisers, improved seeds and
saplings, and improved animal breed are the main agriculture inputs in Nepal. The
supply of chemical fertilisers is not satisfactory. The supply of improved seed and
saplings, and animal breed have not been effective both in terms of quantity and
quality. Though it is said that besides the institutionalised nurseries the supply of fruit
plants, vegetable saplings, seeds by the farmers has increased, supplies from private
sectors have not yet been reviewed by monitoring the progress.

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Agricultural credit has not up to the set target. The disbursement of agriculture loan
from Agricultural Development Bank which was aimed to reach Rs 54,760 million in
the FY 1996/97 at the current prices of FY 1991/92, has not reached up to the same
level even at the current prices. Due to the low supply of agricultural inputs,
investment remained at a low level and due to weak management, the targeted
progress was not achieved.
It is important to prioritise the agricultural research activities, which can contribute to
the present and long-term need and reality. Similarly, viewing the status of market
opportunities and activities which raises commercialisation and diversification in the
areas where transportation facilities are available, the development of farm roads and
the rural electrification need to be emphasised. If necessary, training and extension as
well as service support and production materials based on integrated package can be
mobilised for prioritised production programme, then only the output of the
investment can be guaranteed. In this context, special attention should be given to
ensure the efforts of the private sector as they can play a major role.
The implementation strategy of land management in the Eighth Plan emphasised on
minimum government intervention and more practical programmes based on actual
market oriented mechanism and participation at the public level. Regarding this, legal
base has been prepared to end dual control on land and work is being carried out to
enforce it. In the absence of proper legal base the activities like land consolidation
and control of land fragmentation have not been carried out.
There is no opportunity for increasing land area to increase agricultural production in
Nepal. Regarding this the main basis for increasing agricultural production is to
increase productivity and cropping intensity. But both are much complicated unless
crop management activities like increase in irrigated land, intensive use of available
irrigation, involvement of farmers on irrigation system, developm ent of appropriate
technology and its adequate extension as well as supply of appropriate inputs and
market management are mobilised as a co-ordinated package. The factors to be taken
into considering are of annual climatic change, sustainability and increase in
productivity. As climatic changes have been experienced from time to time during the
plan period, lack of effort in mobilising technological package, service and supports
in a co-ordinated manner has made it difficult to attain the target of productivity in
the Eighth Plan. As the target of productivity has not been achieved apart from
vegetable, the target set for other crops has been affected in attaining the rate of
production growth.
On analysing the situation of progress in production target, supply target of
production inputs and other service and support programmes, it was seen that the
supply of inputs in agriculture development programmes was not enough. Similarly,
the progress in production was not satisfactory in accordance with the target. The
review of other programmes of service and support revealed that the programmes
were not integrated as these were conducted in isolation. The programmes could not
be interlinked in intensive manner. It was also aimed to prepare a perspective plan in
order to streamline agricultural sectors during the Eighth Plan. Regarding this, plan
has been prepared and efforts have already been executed it in this period.

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The indication of changes has been experienced in some places in the production
patterns of agricultural sector. These changes were specially seen in places where
facilities of transportation and feasibility of market existed. Since the food crops are
necessary for national consumption, priority should be given to minimising the
production risks in order to increase productivity. The experiences gained in the
Eighth Plan clarify that there is need to give priority to small irrigation programmes,
which can be completed quickly and managed by farmers. In addition, it is necessary
to give priority to the balanced use and availability of good quality chemical
fertilizers in order to accelerate agricultural production through the intensive use of
plain irrigated areas. In the context of market opportunities, it would be feasible to
increase the production of agricultural crops in the hilly areas where the demand for
high value commodities are increasing, by mobilising incomes gained through
increase in the production through the use of fertilisers. Therefore, it has become
important to implement programmes by giving priority to the production of high
value crops in selected hilly areas.
In order to boost export, there is a need to assess and monitor the availability of
agriculture inputs, prevailing interest rates, subsidy and production cost situation of
the neighbouring countries with a view to competing with them through production
cost and prices. Similarly, for a continuous search for feasible exports to the third
countries by analysing production feasibility of commodities. Besides, the need has
been felt to develop commercialisation and export promotion.

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 Table 1
Major Production Target and Achievement in Agricultural Sector during the Eight Plan

SN Programme Unit Producti Target Achievement

on for
1991/92 1996/97 1992/93 1993/94 1994/95 1995/96 1996/97
1 Cereal crops* '000 5464 7454 5033 5879 5413 6246 6395
mt
Paddy ,, 3223 4452 2712 3493 2928 3579 3699
Maize ,, 1205 1476 1291 1210 1273 1331 1312
Wheat ,, 779 1258 765 873 914 1013 1056
Millet ,, 229 236 237 274 268 282 289
Barley ,, 28 32 28 29 30 41 39
2 Pulse ,, 155 186 191 205 202 215 224
3 Cash crop 1404 1738.5 1476 1416 1621 1701 1760
Oil seed ,, 88 174 94 98 102 116 119
Sugarcane ,, 1291 15.30 1366 1431 1500 1569 1622
Tobacco ,, 6 9.5 6 6 7 6 5
Jute fibre ,, 19 25 10 11 11 15 14
4 Horticulture
Fruits ,, 354 478 366 377 398 367 428
Vegetable ,, 1128 1278 1197 1197 1257 1327 1350
Potato ,, 733 1033 733 780 840 898 961
5. Livestocks
Milk ,, 872 1028 877 885 904 962 1012
Eggs million
pieces 368. 1 479.8 370.9 375.1 412.1 396.4 421.5
Meat mt 148 173 150 154 159 162 174
Wool ,, 620 814 620 621 625 618 624
Fish ,, 16500 22311 15190 15524 17578 21879 23200
6 Miscellaneous
Tea (Corporate ,, 866 970 860 982 1009 1096 925
only)
Cotton ,, 2975 7100 1553 2907 2542 2650 1604
Silk Cocoon ,, 25 400 32 47 49 49 28
Mushroom ,, 56 300 80 80 80 79 81
Cardamom ,, 2734 3540 2200 2240 2290 3000 3700
Coffee ,, 75 153 80 80 45 29 37
Honey ,, 23 23 24 24 60
Spices ,, 45000 47000 48000 49000 50000
7 Vegetable seed mt
Production ,, 181.6 226.0 310.4 261.0 463 419
Government
Sector ,, 17.6 11.0 10.4 11.0 13 19
Private sector ,, 164 215 300 250 450 400
* Projection is based on the old growth rate in respect to the variation in the basic number in
FY 1994/95 as
studied and updated by the Ministry of Agriculture.

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 Table 2

Productivity of Some Major Food Crop

Productivity % increment
Crops Target Base 1992/ 1993/ 1994/ 1995/ 1996/ Com - Com-
for year 93 94 95 96 97 pared pared
96/97 to to base
91/92
target year
Paddy 2.846 2.28 2.05 2.40 2.06 2.39 2.46 -13.56 7.89
Maize 1.939 1.59 1.67 1.60 1.65 1.68 1.66 -14.39 4.40
Wheat 2.045 1.36 1.25 1.41 1.44 1.55 1.59 -22.25 16.91
Millet 1.140 1.15 1.17 1.08 1.07 1.09 1.11 -2.63 -3.48
Barley 1.143 0.93 0.93 0.95 0.96 1.05 1.04 -7.96 11.83
Sugarcan 38.250 34.52 35.95 35.49 35.99 35.0 35.14 -8.13 -1.76
e
Tobacco 0.990 0.92 0.83 0.90 0.91 0.90 0.79 -20.20 -14.14
Jute 1.404 1.27 1.11 1.21 1.21 1.31 1.27 -9.54 0
Potato 10.760 8.59 8.43 8.76 8.62 8.40 8.76 -16.35 4.77
Oil seed 0.906 0.57 0.57 0.59 0.60 0.63 0.66 -0.27 15.79
Pulses 0.823 0.59 0.60 0.61 0.65 0.69 0.71 -13.73 20.33

3. Long-term Concept
Concept:
In spite of high priorities given to agricultural development from the very beginning,
this sector has not kept up with the desired speed. Therefore, the Agricultural
Perspective Plan has been prepared to streamline this sector during the Eighth Plan
period.
In the context of Nepal, the main source of income, employment and production is,
no doubt, the agriculture, but the present investment to increase productivity by
utilising such resource does not seem to be sufficient and even on-going efforts are
not satisfactory. In the past, the efforts were directed towards the expensive
technology instead of giving emphasis on low cost technology for irrigating
agricultural land. Average consumption of fertilisers per hectare was very low in
comparison to the neighbouring countries. The productivity could not be increased

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due to the insufficient utilisation of existing agricultural technology as well as the use
of location specific technology for comparative advantages. As the animal health
development was affected by the inadequacy of nutritious fodder plants, the
productivity has been low. The situation of the agriculture roads and energy supplies,
which support the private entrepreneurship promotion and competitive production,
were also insufficient.
Obviously, the country with a variation of altitude from 100 ft. to 29,000 ft. shows
feasibility of numerous agricultural crops. However, the objective is unclear about as
the priorities. Income from the economic growth gained through food grain
production of the terai can be ploughed back to boost up demand and production of
high value agricultural crops in the hilly areas by developing inter-linkages between
the production of the two regions. Because of the absence of such inter-linkages,
enough attention has not been given to the comprehensive economic growth and its
sustainability. Though institutional mechanism has been extended down to grass roots
level, there has been insufficient investment in the mobilisation of resources. The
Agriculture Perspective Plan has emphasised the need to resolve these problems.
Therefore, the Agriculture Perspective Plan has emphasised the need to alleviate
poverty through appropriate use of geographical feasibility of Hills and terai areas
where multiplier effect of economic growth occurs and to achieve investment
capability as well as to increase opportunity for economic integration. In this context,
the plan does not propose to disperse the means and resources here and there but to
concentrate development efforts within limited areas where economic growth can be
accelerated, simultaneously replacing subsistence agriculture by commercial
agriculture system. It will strengthen the foundation of industrial development and
alleviate poverty through employment promotion. This conception is also based on
the experiences of the Asian countries, which are the pioneers in the development.
The APP has envisaged accelerating economic growth by raising productivity of
resources, alleviating poverty by increasing employment and generating income,
raising living standard, creating opportunity for macroeconomic changes by
developing additional base for commercialisation through the development of
infrastructure and comparative advantage and by providing guidelines for periodic
plans.
Target:
The main objectives of the perspective plan are to accelerate the rate of economic
growth of agriculture sector from the current three percent to five percent, to raise
current per capita agricultural income growth of 0.5 percent to three percent, to
ensure food security by increasing the current per capita food availability from 270 kg
to 426 kg and to contribute to narrowing the gap of regional imbalance and to reduce
the increasing poverty to 14 percent through agricultural development.
Strategies:
This plan has adopted strategies such as making green revolution based on improved
technology as the basis of speedy economic development, channelling the investment
in certain priority areas by utilising and strengthening existing resources, means and

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infrastructure, utilising the efforts of public and private investors in a co-ordinated
manner in order to promote the utilisation of comparative advantage based
agricultural technology in accordance with the geographical diversity. Other
strategies include sustaining the agricultural development by broader public
participation, maintaining regional balance and ensuring women participation. The
following priorities and implementation strategies will be followed for the Plan
Priorities:
Agricultural Inputs: Priority has been given to the availability of chemical fertilisers;
the irrigation system developed and controlled by farmers by prompt utilisation of
small surface irrigation and tube well irrigation potentiality; development and
utilisation of agricultural technology which provides location specific comparative
advantage and minimises the production cost. Likewise priority has been accorded to
the expansion of the network of agriculture roads and rural electrification in
prioritised production pockets and the easy availability of the agricultural credits.
Production and Services : In area of animal health, preferences have been given to the
animal husbandry for milk and meat production; the development of nutritious animal
feed, animal health, poultry and goat farming, orange, apple, honey, fresh vegetable,
off-season vegetable and vegetable seed productions which are prioritised as high
value agricultural produces. Similarly, in agriculture-based business development,
priorities have been given to the comprehensive policy adjustment in agro-industry,
business and market and various market-related development programmes. In the
field of forest development, preference has been given to the community forest and
soil conservation as well as capacity enhancement works. Furthermore, emphasis has
been given to the supportive activities for the continuity of agricultural commodity
production which are being commercialised due to the industry and market situation
of selected places.
Programme Implementation : Emphasis have been given to orient the on-going
programmes and related inputs towards the prioritised areas; increasing the level of
investment; and strengthening of organisational capabilities of respective agencies
such as national support committee at the national level for monitoring, district
agricultural development committee at local level for plan formulation, execution and
monitoring and Agriculture Road Development Office, Department of Agricultural
Development, Department of Livestock services, Nepal Agriculture Research
Council, Agricultural Development Bank and so on monitoring at the local level.
Implementation Arrangement:
There will be a working system in order to identify pocket areas where the
commercial pockets of prioritised agricultural crops can be developed in accordance
with the geographical feasibility. While selecting such pocket areas, first priority
would be given to those areas, where infrastructure like irrigation, agriculture roads,
electricity and market centres are available. Programme will be conducted in order to
integrate production input, technical services and resources. Arrangements would be
made in order to continue agriculture production programmes in the form of
integrated packages by developing infrastructure in the areas.

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To carry out implementation of prioritised package programmes in such areas, the
system for implementation, monitoring and evaluation would be developed by
preparing time bound policies/programmes for selected pocket areas.
Ninth Plan
4. Objective
For achieving the targets set by the Agricultural Perspective Plan in the area of
production, food security, employment and income growth, the objectives of the
Ninth Plan in agricultural sector are as follows:
• To contribute to poverty alleviation by increasing productivity of resources
and inputs and by generating opportunitie s of employment through speeding
up of the economic growth of the agricultural sector.
• To minimise impact on environment by amalgamating the utilisation of
external production inputs and the natural resources in agriculture sector.
• To strengthen the foundation of agro-based industry and industrialisation
through diversification and commercialisation of agriculture.
• To develop leadership of women in the production programmes by involving
them in the agricultural development and by increasing their participation.
• To improve the situation of nutrition of the people by increasing the
production of the food grains and nutritious food in order to promote food
security.
5. Strategy
The strategies identified in the APP like green revolution based on improved
technology, adequate utilisation of available infrastructure, comparative advantage,
large scale public participation and women involvement and programme
implementation based on the selected priority, are the strategies adopted by this plan.
6. Policy and Imp lementation Strategy
The APP has prioritised food security through increased production and income as
well as women participation and has also emphasised maximisation of farmer's
income and employment. It gives more attention in the localised high value
agriculture crops like apple and citrus fruit, milk, honey, fresh vegetables, vegetable
seeds, milk producing cattle, goat, chicken and so on. Discouraging the exploitation
of marginalised land has also been emphasised. Similarly, commitment has been
shown to support soil conservation through the programmes like grass and fodder
development. This has taken the direction of long-term sustainability as desired by
the nation by improving the fragile interrelationship among the agriculture, forest and
environment. Therefore, the comprehensive policy and procedures adopted by the
Ninth Plan are as follows:

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• In the Ninth Plan, the agriculture sector will be taken as a lead sector and will be
moved forward as an economic sector which can contribute to poverty alleviation
and income and employment generation for the common people.
• For speeding up the rate of overall economic development and restructuring the
on-going programmes, additional programme budget and manpower management
aspects will be oriented towards the pr iority of the APP. Irrigation, road,
electricity, industry, and commercial sectors will be mobilised in order to assist in
raising the productivity of the agriculture sector.
• The land reform programme will be implemented for the agriculture and the
overall socio-economic development. While implementing programmes, attention
will be given to the dual ownership of the land, squatters and bonded labour,
extension of the irrigation facilities, agriculture roads, agriculture co-operatives
and agro-industry.
• Emphasis will be given to the foodgrain production growth in order to improve
the nutrition status of common people and to maintain the food security.
• Special attention will be given to livestock raising, a business that tends to
distribute the urban income to the rural areas for the latter's development. In
addition, the security of food and nutrition will be provided to the common
people by increasing the availability of foodgrains; production, opportunity of
employment and income will be increased through crop diversification and
intensive cropping; and high value and nutritious vegetable production and
promotion of fruit farming and other feasible crops will be emphasised to this
effect.
• Appropriate policy and service and support programmes will be initiated to
amalgamate cash crop development to the agro-based industry. The Tea
Development Corporation, which is being run in the public sector, will be
privatised accordingly.
• The main problems at present are inadequate supply of chemical fertilisers,
improved seed, improved breed, agriculture loan etc. To speed up agriculture
production and productivity and to enhance economic growth and to overcome
these, enough opportunity will be given to the private, public and non-
government sectors for the supply of such development inputs by making market
mechanism effective.
• Emphasis will be given to the development of resource centres for the production
and supply of inputs through local farmers and entrepreneurs. By identifying
appropriate service and support programmes, these resource centres will be
mobilised for developing technology transfer and training, which are being
provided by the service centres.
• The agriculture information and extension services will be directed specially
towards comparatively beneficial production, agro-business promotion and
market interaction, which go beyond production. Similarly, emphasis will be

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 given to comprehensive economic policy, which is favourable towards such
aspects.
• The basic level agriculture manpower, which is engaged in agri-extension at the
service centre level, has special responsibility in the area of technology transfer.
Without mobilising them, field level policies of agricultural development will not
be effective. Hence, appropriate management will be made to render them active.
Similarly, agriculture farms will be made more productive through optimum
utilisation of available resources as well as privatisation of feasible agriculture
farms.
• According to the priority given by the APP, agricultural research will be carried
out according to the suitable technological need of the farmers in respect to
particular location. Regarding this technological development of the prioritised
agriculture crops, the reduction of the production cost by economic use of the
irrigation and fertiliser, use of compost fertilisers for the increment of total
production and the promotion of the fertility of the soil will be motivated. In
order to prepare high level manpower for agriculture research and technology
transfer, arrangements will be made to provide opportunities for competent and
dedicated technicians to get higher academic exposure of post-graduate and Ph.
D. By means of affiliation with internal and external universities.
• In order to standardise improved techniques in the agriculture at the farmer and
entrepreneur level, the standard of all the agriculture-related syllabi and training
programmes will be improved.
• For the promotion of the agro-industry, business and market, regular interaction
will be made to solve problem of the entrepreneurs and to extend support through
proper initiatives. The structures of the current agriculture statistics, market
development and economic analysis programmes will be consolidated and
activised in order to develop the capacity of analysing internal and external
market opportunities. In this context, a separate organisation under the Ministry
of Agriculture will be established to support entrepreneurs through interaction
programmes, to promote internal market facilities and to monitor external export
feasibility on a regular basis.
• In the first half of the plan period, subsidy in the fertilisers will be completely
removed in order to facilitate easy distribution of the chemical fertilisers and to
create the atmosphere of adequate supply by removing the burden on the
government, which is one of the causes of insufficient supply. Opportunities will
be opened up for the private sector's participation in this area.
• In order to manufacture fertiliser with appropriate nutrients according to the need
of crops and places, establishment of a chemical fertiliser factory in the private
sector will be encouraged based on feasibility.
• Without agriculture roads linked with highways and forever roads and rural
electrification, the private sector is not attracted to invest in agro-industry in rural
areas. The agro-based industry and business cannot flourish in the absence of

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 such environment; and without the initiation of private sector, employment
cannot be generated. Keeping view of these aspects, integrated and package
programmes will be implemented and continued by identifying the areas which
can be developed as a pocket for prioritised agricultural products.
• To support market development in hilly areas, emphasis will be given on
programmes to develop rope way, pulley and suspension bridge of small scale
and to establish collection centre, market stall and wholesale market with local
initiative and involvement in the feasible sites of the country.
• Keeping in view the inevitability of agriculture roads in the agro-econom ic
growth and rural development, a separate institutional arrangement will be made
to guide such activities technically. As sub-urban centre can be developed
through the increase of the transportation linkages, the vision for reducing
pressure on urban areas and for balanced development will be kept to make rural
areas attractive place to all stockholders involved in education and health
services, industry and commerce.
• Emphasis will be given to develop agro-based industry as a major market source
for the consumption of agricultural products.
• In accordance with the APP, concerned agencies will be mobilised with priority
to exploit feasibility of the tube well under the irrigation development
programmes in order to avail irrigation facilities in the terai round the year. In
hilly areas, permanent supply of water and its sustained availability will be
ascertained through the source promotion of the small scale irrigation like
surface, sprinkler and pond irrigation and the regular maintenance of existing
irrigation canals.
• As agricultural loan investment programmes are inevitable for the agricultural
development, arrangements will be made for loan flow in a co-ordinated manner
by reconciling loan investment programmes with the irrigation programmes along
with the tube wells as well as production and market business activities.
• To ease the access to the agricultural loans, present institutional arrangements
will be strengthened and extended. The animal insurance services will be
strengthened, and the crop insurance service will also be initiated by analysing
the possibility.
• Co-operative programmes will be conducted to mobilise the economically active
age group by orienting towards business promotion such as supply of production
inputs, purchase and sale of products, collection and processing through training
and education. These programmes along with pre-co-operative education will be
provided to the groups who are involved in agriculture-related programmes in
different places for income and employment generation. Even new groups, which
are willing to participate, can be constituted for this purpose.
• In the context of institutional capability of the co-operatives based on the co-
operative principle, appropriate measures will be taken in order to support the
government policies on the role and jurisdiction of the Co-operative Department

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 and the National Co-operative Development Board. As the capital collection and
investment has gradually started, encouragement will be given to developing their
own financial systems, which can mobilise such funds for the business of the co-
operatives.
• High emphasis will be given on the production of nutritious food and their proper
utilisation. Food technology, nutrition and processing programmes will be made
more effective in order to monitor the negative impact on public health caused by
food adulteration and contamination, and overall state of nutrition. Laboratory
facilities will be provided to serve and support as envisaged in the Food Act.
• In order to implement agriculture programmes at the field level, first priority will
be given to utilisation of infrastructure by integrating irrigation, roads, electricity
and market centre facilities while executing programmes of production and
related technical services, support, loans, chemical fertilisers, seeds etc. Where
such infrastructure is not available, priority will be given to the development of
infrastructure through the concerned sectors. The selection will be made for
pocket development of prioritised commodities in such areas as identified in the
Agricultural Perspective Plan with the commitment of all concerned sectors, and
priorities will be given to mobilise integrated package programme in such
pockets. Such programmes will be implemented on the time bound basis with the
conception of pocket area based small projects.
• Programme and their effectiveness of implementation will be monitored in
respect to the priority and implementation arrangements ensured in the APP. In
this context, related organisations will be strengthened and m ade capable
7. Major Physical Targets
On the basis of sectoral programmes as incorporated in the Ninth Plan, major physical
targets are given in the following table. If economic growth is attained according to
this, it is estimated that the poverty level will be checked and lowered by five percent
during this plan period.

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 Table 3
Major Agricultural production
( base year 1996/97 = 100)

Percentage
Produc-
Produc-
tion tion
target Target Annual
Weigh -
Particulars for FY Annual weightage in-
tage for FY
1996/ Total average increment crement
2001/02
97 (ooomt )
(000mt)
Cereals 41.13 52.94 5.18
Paddy 23.10 3699 5000 135.7 6.21 31.42
Maize 9.98 1313 1600 121.95 4.04 12.17
Wheat 5.10 1056 1300 123.11 4.25 6.28
Millet 2.66 289 300 103.81 0.8 2.76
Barley 0.29 39 42 107.69 1.5 0.31
Cash crop 6.62 9.07 6.50
Sugarcane 0.46 1622 2100 129.47 5.30 0.60
Oil seed 2.02 119 155 130.25 5.43 2.63
Tobacco 0.40 5 6.5 130.00 5.39 0.52
Jute 0.62 14 18 128.87 5.15 0.80
Potato 3.12 961 1300 135.27 6.22 4.22
Pulses 2.17 224 300 133.93 6.02 2.91 6.04
Horticultur 13.84 16.47 3.54
e
Fruit 7.04 428 500 116.82 3.16 8.22
Vegetable 4.82 1350 1716 127.11 4.91 6.13
Others 1.98 96 103 107.29 1.42 2.12
Total crops 63.76 81.39 5.00
Total of
Livestock-
Products 35.78 47.56
Milk 22.42 1012 1326 131.03 5.56 29.38
Meat 11.56 174 235 135.21 6.22 15.63
Egg(Millio 18.0 42 595 141.67 7.21 2.55
n)
Fish 0.46 23 35 152.18 8.76 0.70 8.76
Grand 100.00 129.63 5.33
Total

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* Other:
Particulars Unit FY 1996/97 FY 2001/02
Coffee mt 37 110
Cotton mt 1604 4720
Tea mt 2905 4102
Mushroom mt 81 85
Cardamom mt 4456 4700
Silk mt 25 44
Spices mt 87208 89800
* This total annual growth rate does not include forest sector and capital
formation, hence it does not match with growth rate mentioned in economic
sector.
8. Programme
8.1 Prioritised Programmes:
The APP has fixed certain priorities with the vision to contribute to poverty
alleviation by utilising available resources of the coun try effectively and by
expediting of sustainable development agriculture. In the Ninth Plan, the agricultural
development programmes will be carried out on the basis of these priorities. The
prioritised programmes implementation based on the APP will be conducted in
respect to the laying out of the prioritised pocket areas in the form of package of all
services and materials in such pockets in the form of major prioritised programmes.
The major programmes are like follows.
Prioritised Production and Service Programmes:
Cropping Intensity and Productivity Enhancement Programme:
The following programmes will be implemented under intensive production based on
priority package for the growth of production per hectare of command area under
irrigation and road lin ks:
• market oriented commercial production programme along with the delivery of
improved seed, chemical fertiliser, and water distribution, crop protection, loan
facilities for such programmes;
• the programmes on the utilisation of fertiliser to keep fertility of the soil and
intensive crop growth as well as on the extension of soil testing services;
• external research programmes in the programme area;
• necessary market information and management services programmes to the
farmer groups for marketing of surplus production;
• programmes which facilitate interaction among the production group, local
businessmen, industrialists and exporters;
• maintenance programmes of the irrigation canals.

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High Value Agricultural Commodities Production and Development Programme
The following programmes on production promotion of the crops like vegetable, fruit
and silk in a commercial manner giving priority in the areas facilitated by roads and
small irrigation:
• The programmes on pocket identification-based project formulation,
implementation and their monitoring and evaluation in respect to the services
support in the form of package according to the APP.
• The programmes on the sericulture development will be conducted in the district
as identified in the ten-year plan on sericulture,
• The programmes on bee keeping which will be carried out by integrating the
areas of horticulture and seed development programme;
• Commercial programme on fresh vegetable and off-season vegetable
development to be conducted in the adjoining areas of highway, sub-highways
and other roads, keeping in view the demand and export viability of urban areas
and dense settlements.
• Extension programmes of apple farming to be conducted in the mountainous
areas of high possibility;
• The vegetable seed production programmes.
The resource centre establishment and strengthening programmes, which support
aforementioned programmes.
Livestock and Poultry Production Related Extension Service Programme
Livestock and poultry production programme will provide a substantial contribution
to alleviation of poverty through income generation and employment promotion in
rural areas. The main sources of milk are cattle and buffalo. The Major sources of
meat and egg production are buffalo, goat, and poultry in the country. Transfer of
income from urban to sub-urban and rural areas is facilitated by the sale of livestock
and livestock products produced by the farmers. Development of these important
livestock resources will certainly contribute to economic enhancement. Priority
programmes for these livestock development are:
• Activities such as identification of potential pockets for development on priority
basis as envisaged by the APP, formulation, execution, monitoring and evaluation
of project on pocket areas on the basis of support services in the form of package,
• Improved technical inputs such as improved fodder seeds, improved livestock
breeds, forest nursery, Veterinary establishment for development programmes for
entrepreneurs, farmers or farmers group,
• Programmes to support the promotion of dairy cattle and buffalo farming for milk
production,
• Activities to promote buffalo, goat and poultry raising for meat and egg
production,

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• Programmes to improve the nutritional fodder and feeds, expand veterinary
services and develop community forest activities,
• Programmes to strengthen and develop resource centres for the supply of
improved livestock,
• Natural and artificial insemination programmes for breed improvement,
• Programmes to support private veterinary practitioners to strengthen the livestock
services,
• Programmes to inter-link producers, processing industries and entrepreneurs,
• Training programmes to provide improved animal farming in commercial pocket
areas.
Agro-business Promotion Programme
Programmes to introduce commercialisation and diversification of agriculture sector
are possible only through the promotion of agro-based industries. Following are the
activities to help such programmes:
• Overall economic policy adjustment and service-oriented programmes for the
promotion of agriculture and forest related industry.
• Programmes to provide and expand market for agriculture products by analysing
the study on the possibility of national and international market potentials.
• Programmes to conduct research on development of market infrastructure in the
potential pocket areas with the close participation of private, co-operative and
farmers group.
• Extension programmes will be launched after analysing the information and
statistics on production records, price, production expenses and profitability of
demand driven agriculture products
• Education and training programmes to be launched through co-operative
mechanisms in order to promote co-operative-based agriculture industry
• Programmes to enhance women participation in improving agriculture activities
like harvest, grading, packaging and storage of grains in the farms to produce
quality products
• Programmes to support entrepreneurs and business groups after evaluating policy
on local food processing, quality specification, industrial food processing
activities, technology dissemination, use and consumer security.
Programme on Priority-production Input Mobilisation:
Irrigation Facilities Expansion and Utilisation
Following are the programmes to support and develop irrigation facilities since they
are most important components among the priority sectors in the APP:

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• Tube-well irrigation Programmes in which terai farmers can construct ground
water tubewell within a short period and can handle its maintenance by
themselves
• Small scale irrigation projects in terai and mountain region
• Geologic and watershed conservation programmes to be operated from forest and
geo-conservation sector to maintain ground water recharge capabilities in the
Siwalik region.
Fertiliser Supply
• Programmes to bring continuous supply of quality chemical fertiliser in order to
sustain the increasing trend of agriculture production and productivity by
maintaining the balance between needs of various cropping system and use of
nutritional ingredients in soil.
• Supportive programmes to private sector involvement in import, sale and smooth
distribution of chemical fertiliser.
• Programmes for bringing sustainable supply of chemical fertiliser.
• Programmes to keep soil fertility and balanced utilisation of chemical fertiliser.
Agriculture Credit
Among the APP priority sectors, agriculture credit should particularly flow in
marketing of improved seeds and chemical fertiliser and also in installation of
shallow tubewell, livestock and poultry farming, high value crops, establishment of
agricultural entrepreneurship and operation. Programmes to increase the flow of
credit from Agriculture Development Bank and other banks in these activities.
Agriculture Research
Following are the research programmes to increase the productivity by bringing and
promoting the agriculture farming such as cropping intensity, production of livestock
and high value crops:
• Programmes to formulate appropriate technology package which is associated
with judicious water management, intensive and economic use of chemical
fertiliser and development of comparatively advantageous cropping system in
year-round irrigated land
• Research to help increase self-employment opportunities, women participation,
technology for increasing productivity of high value crops such as tangerine,
orange (Junar), lime, apple, silk, bees, off-season vegetable and vegetable seeds.
• Research related to animal nutrition, and fodder development activities to
increase milk production, veterinary, animal breeding, livestock management and
meat production.

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• Research activities to help increase agricultural productivity with maintenance of
soil fertility by reducing the production cost so as to make the products
competitive in the open market.
• Outreach research activities for genetic resources conservation, pure breed
production on farms.
Agriculture Extension
Following are the programmes to help make efficient agriculture extension in the
changed context:
• Programmes to monitor and evaluate the project, which is formulated on the basis
of pocket package strategy by identifying the potential prioritised pocket under
the APP.
• Programmes to set up and develop the resource centres to supply production-
related inputs like improved seeds, fruit and vegetable nursery in the field of
leader farmer or farmers group.
• Programmes to provide services related to industrial agriculture, processing
industry, easy dissemination of government policy and available opportunities,
market development, market price, quality market information, etc.
• Programmes to provide training to resource centre manager, to make available
improved inputs, to give technical services for sustaining quality production and
distribution and monitoring of such activities.
• Programmes of mini-kit distribution to demonstrate improved technology of
recently recommended seeds and breeds from resource centres
Development of Agriculture Roads and Electrification
Following are the infrastructure development programmes to be implemented by
concerned agencies to encourage the private entrepreneurs towards agro-based
industries :
• Agricultural roads construction programmes in the potential production pocket
areas which can be connected to main high-ways, feeder roads, district roads and
marketing centres.
• Rural electrification programmes to support the potential industrial activit ies by
tubewell and pump installation in the rural areas.
• Programmes for electricity generation services in the vicinity of small-scale
hydro-electricity centres in rural areas.
• Bioengineering programmes needed for the promotion and conservation of
agricultural roads.

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Women Farmer Development Programme:
Following are the programmes to develop leadership of women in agriculture
activities by making them participate actively in implementing the agriculture
programmes:
• Thrust programmes to increase women participation in income generating
agriculture profession through mobilisation of inputs and services.
• Programmes to develop women efficiency and leadership in agricultural
activities.
8.2 Other Programme:
Programmes will be executed to improvise the process of implementation of those
activities, which are not on a priority list of APP, but are needed to boost the
agriculture production. These are fisheries, sugarcane, tropical fruits and other related
programmes.
9. Sectoral Programmes
In order to meet the set objective of the Ninth Plan, various agriculture sectoral
programmes with concrete policy and strategy are highlighted below. The priority
programmes as envisaged by the APP and other important activities are listed as
follows:
9.1 Crop Intensification and Productivity Enhancement Programme:
It is less likely to expand the agriculture land to majority of farmers because of geo-
physical complexities. The only way to increase the agriculture productivity is the
judicious use of improved seeds, fertiliser, irrigation facilities and cropping intensity
backed by appropriate technology.
Some main food crops and high value crops contribute about 45 percent of agriculture
GDP. That is why it is necessary to achieve substantial growth in crop sector so as to
achieve make rapid agriculture development. This will fulfil the demand of raw
materials used in agro-industries, food security and self -reliance in food production.
The crop sector contributes 52 percent, 41 percent, and 7 percent in agriculture GDP
in terai, hill and mountain areas respectively. It will be wise to take benefit by
exploiting full production potentiality of terai in food crops, and high value crops
with proper cropping system as this region has more agriculture roads, irrigation and
marketing infrastructure than that of hill and mountain regions. It is necessary to
implement the intensive production programmes in irrigated land with connection of
agriculture roads by conserving and promoting the possible small-scale irrigation
projects in mountain foothills.
According to APP, it is necessary to give special thrust to food crop development
programme on the basis of which other sectoral development is possible. In view of
increasing demand of food and cash crops, it will fulfil an important role in foodgrain
export. The fact is that poverty alleviation, employment generation and national
development are possible only from agriculture development. Therefore, market-

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oriented food and cash crops of comparative advantage are the needs of today to
increase productivity and crop intensity by using appropriate cropping systems. This
will help bring rapid increase in total agriculture GDP by increasing productivity per
unit land.
Although production and productivity increments are the main objectives in the last
eight plans, productivity of rice, wheat, corn, millet, potato, sugarcane, jute, mustard
and pulses is less than expected target at the end of the Eighth Plan except the
productivity of millet and sugarcane. In comparison to FY 1991/92 millet and tobacco
production has been on declining trend though there is slight increase in productivity
of some crops. In similar way, negligible progress was seen in chemical fertiliser but
the progress was encouraging in such location where agriculture credit and year-
round irrigation facilities were available.
In such a background, it is necessary to translate subsistence agriculture system to
commercial agriculture by increasing the cropping intensity from comparatively
advantageous cropping system with proper physical infrastructure. Annual
agricultural income growth rate is expected to achieve 5 percent in the first five years
and then 4.57 percent with a view to achieving poverty alleviation and increasing
agriculture based national income. Participation of women will be increased in
production programme It is necessary to implement programmes to increase
productivity and cropping intensity in the Ninth Plan so as to provide sustainability in
agriculture development by balancing crop development and environment. Annual
per capita food availability has to be increased from 270 kg to 426 kg. Hence, it is
expected to increase production and productivity of each unit land from crop
intensification. This programme has the objective of providing sustainability in
agriculture development from regular participation of women by conserving
environment and commercialised agriculture production system, which eventually
helps poverty alleviation.
Policy-oriented Programmes
These programmes will be implemented by focusing mainly on the following agenda
to substantial increase the food and cash crops production under the crop
intensification and productivity enhancement programmes:
• Prioritise necessary services in order to boost production and productivity of food
and cash crops by intensive use of irrigated land. Improved crop seeds, which
require less water, will be used with proper focus in the plant protection activities.
Intensity of comparatively profitable crops will be increased in the irrigated land
by appropriate cropping pattern.
• Supply of quality seeds and development of seed resource centres for the
production of quality seeds in farmers field will be emphasised. Such certified
seed production programme will be implemented for farmers group in the
irrigated land of five development regions. The price of seed will be decided by
District Seed Production Committee, which includes seed producers. The
produced seeds will be consumed in the production areas.

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• There will be special focus to provide services in package form for the promotion
of commercial agriculture in the appropriate areas based on agricultural diversity
and comparative profitable cropping system in and around marketing centre, and
these areas where irrigation and agriculture roads are available. Intensive
production services programme will be launched in priority sectors by maximum
use of available infrastructure such as agriculture road, irrigation facilities, and
chemical fertiliser and agriculture technology. By such activity green revolution
can be achieved with maximum utilisation of tubewell and surface irrigation in
terai and mountainous plateau.
• According to the concept of APP, farmers group or private entrepreneurs will be
provided practical training, production input, agriculture credit, marketing
services in the potential pockets. The goal will be achieved through co-ordinated
and packaged service system. The programme will be made transparent by giving
responsibility to service centre chief to mobilise the available resources in the
district. Packaged services will be available in pocket areas, which are suitable
for commercial production in view of export promotion or in pocket areas which
are identified for the production of commercially viable agriculture products
based on the demand of marketing centre and the agro-industry.
• Necessary services will be mobilised in order to develop local service centres
through farmer group and private sector's management to meet the demand for
production input. Such resource centres will be the basic venue for training and
extension of agriculture technology.
• In order to make supply of quality fertiliser easily available, appropriate and
efficient monitoring system will be implemented. The private sector will be
encouraged to establish the mixing plant of chemical fertiliser based on its
potentiality.
• Agriculture credit programme will be launched in such a way that farmers would
not have to wait and spend unnecessary time and money to take agriculture credit
from the bank.
• The extension system, training, marketing and promotion programme and other
services will be mobilised to include the needs of commercial farmers and their
groups. Training curriculum and agriculture information will be developed and
amended accordingly.
• Agriculture extension services will be made effective to support the commercial
production. Timely implementation, monitoring and evaluation of projects and
programmes in active participation of farmers through mobilisation of
agricultural technical services will be made effective.
• District Agriculture Development Committees (DADC) for the formulation,
implementation and evaluation, and programme executive committees secretariat
of DADC, will be formed in each district for implementation of agriculture
packaged programmes.

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• Programmes on communication and capacity building will be launched to
increase women participation in the family and community decision-making
process for overall agricultural development.
• Programmes related to integrated pests management and balanced use of
chemical fertilis er will be executed to check environmental degradation caused
by agriculture production programme.
• Agriculture farms, regional and central programmes will be strengthened and
made efficient after evaluating their roles in services and to co-ordinate all
agricultural development activities in the districts.
• Agriculture labour force will be allowed to have leased land for cultivation to
ensure that nobody will keep fallow land. This policy will help alleviate poverty
by generating additional employment opportunity.
• Service centres will be developed as improved technology resource centres and
the farmers group will be upgraded in an institutional manner.
Mobilisation of Service Programme And Prioritised Programme:
Seed Multiplication Programme
Activities on species development and seed production are the basis of crop
intensification and productivity increase, but only 3 to 5 percent seed demand of
farmers is supplied from Agriculture Inputs Corporation in an institutional manner.
Hence, to meet the demand of improved seeds, seed producers and distributors should
be the farmers or farmers groups at local level. To increase self-reliance in improved
seed production in irrigated and non-irrigated areas productivity of land will be
increased by mobilising these farmers group.
• Seed production programme will be launched from the second fiscal year 1998/99
of the Ninth Plan in commercial way by the farmers groups of irrigated pocket
areas. For this purpose, Nepal Agricultural Research Council will make available
found ation crop seeds of 84.73 mt (rice-12 mt, maize-0.73 mt, wheat-72 mt )
from the fiscal year 1998/99 to the District Agriculture Development Office. 25
percent subsidies will be given to the foundation seed price. Seed production
programme will be implemented in irrigated pocket areas of five mountain and
ten terai districts of five development regions. The five mountainous districts will
produce improved seed necessary for the farmers of mountains and high
mountains.
• The first generation of improved seed will be produced, on a regular basis, in
selected irrigated areas of each development region under improved seed area
expansion programme of District Agriculture Development Offices. Such first
generation improved seed will be distributed in the areas to be covered by
improved seeds through producer farmers or groups. Accordingly in every four-
year period, all coverage will have tried new seeds according to rotational system.
From this, seed production programme will be commercialised, group oriented
and regular.

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• District Agriculture Development Office (DADO) will launch a programme to
cover 25 percent of districts cultivated area with improved seeds each year up to
fourth generation seeds produced by farmers from the certified first generation
seed. District level governmental, non-governmental and INGOS will advertise
the use of first generation seed produced by seed resource centres.
• The user group will request to National Seed Board for the supply of fixed
quantity of foundation and first generation seeds required before one year of
cultivation. The district office will submit the demand of improved seeds suitable
for agro-climatic condition as per the interest of local farmers. The available
seeds will be distributed through the farmers group. There will be discussion
between the private seed traders and the farmers group with a view to sustainable
mobilisation and marketing of improved seeds. The assurance of regular change
of seeds will be communicated to farmers from time to time.
• Transportation subsidies of foundation seeds from NARC's production site to the
site of expected seed production will be maintained in DADO's budget.
Revolving fund for seed development will be established with each seed producer
group. From this fund, marketing of seed will be managed credits will be made
available to the group for purchase of necessary equipment and inputs.
• Nepal Agricultural Research Council and Concerned Regional Directorate under
Department of Agriculture Development will co-ordinate and monitor necessary
foundation seed production, distribution and price fixation in all five development
regions. These institutions will make seeds available in growing areas one month
before sowing time.
• Compensation will be provided to the seed producer if the seed production is less
than average due to natural calamities and other technical causes. On this basis,
experience will be accumulated for introducing of crop insurance system.
• A technical team comprising assistant agriculture extension officer, assistant
plant protection officer, assistant seed production officer of regional seed
laboratory and leader farmers of seed producer group will be formed to
implement the programme of district food seed production with the help of
District Agriculture Development Office, crop development section. This team
will provide technical suggestion, training and regular supervision in first
generation seed production area according to schedule. The district agriculture
office will give the approval to market appropriate seeds certifie d by the
laboratory to the farmers group.
• Development of qualitative seed variety by the use of agriculture inputs, easy
technology, short duration, more market price and higher productivity will be the
basis for research. Nepal Agriculture Research Council will co-ordinate regularly
to implement the variety of development activities on the basis of the problems
faced by the farmers, utilising media like mail, seminars, and workshop through
the District Agriculture Development Offices. Besides site visit by the concerned
institutions and the discussion in the quarterly meeting, review Nepal Agriculture
Research Council, seed will be taken into consideration the problems pointed out
by DADO offices in this regard.

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• Training will be provided to farmers and JTs/JTAs about seed production,
storage, packing and marketing by concerned technical division. Necessary
equipment and packages will be provided to farmers of all agriculture service
centres (about 70 service centres per year) in a phasewise manner for producing
seed. Such management will be applied on a priority basis in prioritised pocket
areas.
• Some private traders sometimes import hybrid crop seeds from the neighbouring
country. Such information should be recorded by the Nepal Agriculture Research
Council and be ready to solve the problems of hybrid seed availability. It should
also collect information related to hybrid seeds from the international agency and
disseminate such information to extension workers and farmers.
• Table 4 and 5 depict the production site, coverage area and quantity of different
crop varieties produced, which are needed for the production of foundation seeds
and first generation seeds.

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 Table 4
Regular Supply Management of Foundation Seed and First and Second Generation of Seed in
National Level

Target of NARC from

Crop 1997/98 foundation seed 1998/99 1999/2000
production every year on
regular basis
Area Producti Required First Production Required Second Production
in ha on Quantity generation of first Quantity of generation of second
in mt of seed generation first seeds generation
Foundatio production seed in MT generation production seed in MT
n seed in area in ha seed mt area in ha
mt
Paddy 4.80 12.00 12.00 236.00 472.00 472.00 9440.00 18880.00
Maize 0.35 0.73 0.73 36.00 55.00 55.00 2750.00 4125.00
Wheat 35.25 72.00 72.00 600.00 1200.00 1200.00 10000.00 20000.00
Total 40.40 84.73 84.73 872.00 1727.00 1727.00 22190.00 43005.00

Table 5
Supply Target of Agriculture Inputs during the Ninth Plan

Agriculture Unit Status from 1996/97 Target .1997/98 1998/99 1999/2000 2000/01 2001/02
inputs 92/93 to status for
96/97 2001/02
1 Irrigated area (rainy 000 ha. 1056 155 22.4 26.4 30.4 35.4 40.4
season)
2 Chemical fertilizer 000 mt 64 200 70 120 140 175 200
(Nutrients)-supply
Use Kg/ha. 18 49.57 17.79 30.29 35.13 43.59 49.57
3 Paddy seed - mt 12 12 12 12 12 12
Foundation
- First generation ,, 472 472 472 472 472
3 Maize seed - ,, 0.73 0.73 0.73 0.73 0.73 0.73
Foundation
-First generation ,, 55 55 55 55 55

Wheat seed - ,, 72 72 72 72 72 72
Foundation
- First generation ,, 1200 1200 1200 1200 1200

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Irrigation and Intensive Cropping Programmes :
Besides the crop and seed production programmes, initiation of programmes to
increase the irrigated lands throughout the season are the foundation for the cropping
intensity increment. During the Eighth Plan period, total agricultural land with
irrigation facilities was 1056000 ha. in summer, 3,63,000 ha. in winter and 1,60,000
ha. in spring. In the Ninth Plan period, irrigated area will be increased by additional
1,55,000 ha. To increase production, productivity and cropping intensity in these
irrigated lands, package service programmes with fertiliser, improved seeds and
technologies along comparative high utility of with priority crops will be promoted
and transferred effectively in the needy areas through the agriculture extension
experts. In mid and high hills, extension works will be carried out the technology and
utility of the water collection for high value crops. With these objectives, following
irrigation programmes will be undertaken during the Ninth Plan period.
• In order to increase intensive cropping while preparing locality specific intensive
production pockets on the basis of local feasibility, emphasis will be given to
introduce cropping pattern based on two or more crops system such as spring
maize, spring paddy and fast growing vegetable crop especially in the areas
where irrigation is available in winter and spring. A minimum of ten percent of
land will be encouraged to use all the time for vegetable and spices in such areas.
The farmer groups, co-operatives, private sector and NGOs will be involved in
necessary infrastructure development for the necessary fertiliser, availability of
improved seeds and storage including packaging processing and market.
• In the area feasible for foodgrain production, arrangements will be guaranteed for
irrigation round the year through the development and growth of irrigation
facilities. Co-ordination for irrigation area extension will be maintained by giving
priority to the ground irrigation in the hills and shallow and deep tubewell in the
terai region. In addition, capability of collection and conservation of rainwater
ditches and ponds will be encouraged. The process of handing over of large
irrigation projects to farmer user committee in a gradual manner will be assisted.
To complement the availability of water throughout the year in the command area
of such large irrigation projects, emphasis will be given on construction of tube
well in the terminal part of the irrigation command area where water is scarce
during the winter.
• Shallow tube-well will be constructed, utilised and mobilised by organising small
farmers. Water use practices will be improved by encouraging the linking of
farmer managed irrigation system to the agriculture programme. Wide publicity
will be made to utilise technology for moisture conservation of soil, rainwater
collection and utilisation in the dry areas.
• Proportional and alternate water distribution system on the basis of canal
construction, water leakage control, farmers' land area and their contribution for
proper use of water will be managed. Emphasis will also be given on low cost

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 irrigation technology and its utilisation bearable to the farmers in terms of cost,
and flood control management.
• Intensive cropping and production growth will be carried out through the District
Agriculture Office, which identify the areas where irrigation is available
throughout the year, and prepare map of such areas as well as avail improved
seeds, chemical fertiliser, agriculture and technical service for proper promotion
of species and crop system. The package programme will be conducted
intensively in order to increase yield per unit land by selecting comparatively
beneficial species of crop and crop rotation techniques in each irrigation system
for intensive crop growth. In order to minimise crop damage after production,
emphasis will be given to publicise the opportunity in local and distant markets
for improvement of processing and storage facilities. Use of balanced chemical
and compost fertilisers and adoption of local crop conservation technology will
also get emphasis.
• In the absence of bas eline data and reporting system, concrete and clear
programme could not be initiated in a desired manner in the previous plans.
Therefore, emphasis has been given to baseline data preparation, reporting system
and clear programme for establishing cropping intensity as a major factor of
production growth in the Ninth Plan Period. In this way, intensity of the main
crop will gradually be increased from current 160 percent to 172 percent in the
last year of the plan period.
• Data collection, analysis and regular and surveillance of information on climatic
environmental change at the regional and global level, will be maintaining
through concerned agency. Regular broadcast on monsoon and its end as well as
condition of drought will be transmitted to the farmers by analysing such
information and climatic data of the country.
Balanced and Extensive Utilisation Of Chemical Fertilisers:
Contribution of the chemical fertilisers to the production growth of the agriculture
sector will be 44 percent as estimated in the AP P. For this, large quantity of fertiliser
needs to be utilised. Therefore, sale and availability of the chemical fertilisers will be
increased with the participation of the private sector. In order to make effective the
balanced and wide utilisation of chemical fertilisers in fertiliser supply programme,
emphasis will be given the following areas:
• Emphasis will be given to increase crop yield by wide utilisation of chemical
fertiliser in irrigated areas. Priority will be given to the balanced use of chemical
fertiliser in order to minimise negative impact on the soil due to extensive use.
Widespread awareness raising programmes will be conducted in order to reduce
over reliance on such fertilisers, use of compost and balanced use of chemical
fertilisers.
• Arrangements will be made to collect farmers' demands for fertiliser on seasonal
basis and provide such information to the importers in a regular manner.

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• Information on utilisation pattern, quality and impact of fertilisation on
production growth will be analysed and disseminated.
Service Programmes:
Agriculture Extension Services
In the Ninth Plan period, the agriculture service centres will be strengthened and
developed as a source centre for agriculture technology extension. Based on
feasibility package programme mobilisation by prioritising productive irrigated
pocket areas through the water consumer and farmer groups will be the main role of
agriculture extension. Agriculture extension programme, of governmental, non-
governmental and private sector organis ations will be mobilised at the grassroots
level in accordance with the principle of decentralisation by co-ordinating and
involving for the adoption of improved technology. The agriculture extension service
activities, with the aim of increasing the farmers' participation even in the extension
programme formulation and implementation, will be mobilised as follows.
• Agriculture extension, communication and training programmes will be
implemented with focus on priority programmes formulated by the districts as
encouraged by the APP. While identifying prioritised pocket area for this
purpose, the district will give first priority to the areas where irrigation, road,
electricity and market centres are available throughout the year and work to
facilitate other ar eas to bring them to priority pocket. The programmes will be
conducted by co-ordinating with other sectors.
• Prioritised inputs and outputs of agriculture will be mobilised and implemented
package programme as envisaged by the APP. Accordingly, annual programme
formulation, implementation and monitoring will be conducted on the basis of
area specific small projects in order to produce prioritised agriculture products.
• Group formation activities in the past were taken up as a target in itself not as a
strong medium of agriculture extension, so programme implementation could not
become effective. So for majority of the farmers, programmes will be conducted
by identifying improved agriculture technology extension for various crops, their
comparative benefit and the aspects of market management as an extension
package. In this regard, activities such as group activities and exhibition through
groups will be carried out and farmers involved in the groups will be developed
as technical leaders in various subjects ac cording to location.
• Resource material production centre and agricultural input supply centres will be
developed at the initiation and management of farmers group. Emphasis will be
given to such progressive farmers/farmers' groups to improve their quality by
subject matter specialists and technicians of the service centres. Farmers group
and co-operatives will be activised in the distribution of seeds, plants, fingerlings,
chemical fertilisers and other agriculture inputs at the district level. Such resource
centre will be used as forum for farmer's training. Excellent farmer as a resource
centre manager will also be mobilised as a trainer for farmers' groups training.

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• In the stipulated irrigated area of 15 districts of 5 development regions
comprising of 5 hilly and 10 terai districts, strong seed producing farmers' groups
will be constituted by creating awareness, motivation and interest among them for
first generation seed production every year regularly. Intensive training will be
provided to the working JT, JTA, agriculture officer and farmers' groups in areas
of seed production, crop inspection, processing, certification, sales and
distribution. The programmes will be carried out to strengthen and organise such
producing farmers' groups in order to develop them as a permanent seed
production and distribution agency.
• Active farmer groups or resource centres or managers', will be institutionalised
through reward and recognition. A system will be developed to keep saving fund
of the group. Local resources will be mobilised properly for production and yield
growth.
• Programmes will be carried out for government, non-government and public
sector to assist each other. A minimum of 10 percent farmers' family in each
district will be incorporated into groups, whic h will be raised, to 20 percent in
five years. Among these, viable groups will be involved in local resource
mobilisation by developing them into co-operatives step by step.
• Inputs and services needed for agriculture development will be mobilised in the
prioritised pockets by giving them first priority. Extension programme directed to
link with increase the use of agricultural technology and development inputs will
be agriculture credit flow in the prioritised area.
• To minimise per unit production cost and to continue techniques of productivity
increment from agriculture research, arrangements will be made for interaction at
the farmers level to achieve co-ordination in extension and research and carrying
out programmes in the interest of the farmer, researcher and extension worker to
match each other's need.
• By identifying agro-business extension system such as transforming subsistence
farmer into business oriented farmer, and informing entrepreneurs about the
market situation, export feasibility, local and foreign market opportunities,
programmes will be conducted to make them aware of such agriculture extension.
• By creating uniformity in the policy and priority in the on-going programmes of
the governmental, non-governmental and public sector agencies involved in the
agriculture development, integrated programmes will be implemented.
Memorandum of understanding will be signed for concerted activities and co-
ordination among these different agencies.
• For the conservation of the fertile land, policy will be ad opted for necessary land
use system. Soil management programme will be carried out as mentioned in the
chapter of chemical fertiliser supply management.
• In the social context (group formation, meeting conduction, technical education
etc.) technical service, skill and local capability will be increased for agriculture
production and yield growth by organising and uniting farmer's groups in the

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 mobilisation of local resource centres. Co-ordination with non-governmental
organisations and will be maintained for organisation of farmers group and
mobilisation of resources.
• A system of providing technical service of JTA on the basis of fee will be
launched on an experimental basis in the 15 districts under first generation seed
production programmes. Sale of improved seeds, insecticides, tools, equipment,
audio cassettes, brochures and booklets from service centre and sub-centre will be
started
• In the context of major role to be played by the regional offices in the monitoring,
evaluation and supervision of agriculture development programme, these offices
will be made responsible for timely information flow of the progress of
prioritised programmes of the APP at the district level.
Agriculture Training

• The training programmes which provide skill to the farmers and agriculture
extension workers in cropping techniques, farm management, agro-market, agro-
industry, business management, knowledge of cropping system, will be
conducted. Attention will be paid to impact training designed to promote the
growth of self-employment opportunities by improving agricultural production
qualitatively and quantitatively. For this, improvement of training materials will
also be done.
• Training programme will be carried out in accordance with the APP. priority
programmes for the prioritised area. The training programmes of the Agriculture
Training Centre and the Co-operatives Training Centre will be identified and
carried out to complement each other.
• On-the-spot and mobile training programmes in the prioritised pocket area for
women, small and marginalised farmers will be carried out so as to develop
leadership capability in them in the production activities.
• In the central training centre, trainers training including officer level training will
be organised. Under the convenorship of central training centre, the private sector
will be supported and encouraged to provide training to farmers and agriculture
traders on the basis of training package. These training will specially focus on
farming techniques, comparatively beneficial (low input and high yield and
competitive agro production) cropping system, agro based industry, business
promotion and farm management.
• Women participants' involvement will be ensured in the training programme. The
proportion of the women participants in the plan period will be raised up to one
third.
• Departmental quota will be fixed for outstanding agriculture technical officers
and assistants to create opportunity for higher studies in the Institute of
Agriculture and Animal Science.

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Agriculture Communication Services

• Scientific approaches in sowing, cropping, harvesting, thrashing, marketing,

storage, animal husbandry and fishery will be widely publicised among the
farmers through agriculture extension programme. Agriculture Communication
Division due emphasis on areas of environment and agriculture, agriculture and
forestry, animal husbandry and crops, comparative benefits, agro-based industry,
business promotion and their inter -linkages through radio, video, publications,
etc.
• In accordance with the APP, objectives of attracting and motivating farmers'
improved agriculture systems, various means, media like radio, TV, pamphlet,
poster, etc. will be utilised for promotion of activities like soil fertility growth,
environment friendly crop protection, post harvest damage control techniques,
local resource mobilisation, comparatively beneficial agriculture and animal
products production, active farmer group preparation and production and helpful
techniques for yield growth. In this context, activities and commercialisation of
prioritised pocket area selected by the district.
• Quality of brochures and booklets on agriculture, animal husbandry and fisheries
will be improved and their distribution will be made wider. Emphasis will be
given on regional diversity and publicity of ongoing activities will be carried out
on regional basis also.
• In the publications of Agriculture Communication Division, arrangements will be
made to include various captions for public awareness. Video films on success
stories of farmers and popular technologies of specific areas will be prepared,
processed and telecast to reflect the interests and concerns of farmers.
• Various magazines, pamphlets, folders and posters published by Agriculture
Communication Division will be circulated to the farmers by the District
Livestock Offices (DLSOs) and Agriculture Development Offices.
Audiocassettes on improved technology will be prepared and will be distributed
to mainly field level workers. Improvements will be made by collecting and
analysing information on the effectiveness of such tools. In the plan period,
cassettes on main food grain, soil fertility management by oil seed and pulse
cropping, integrated crop protection and sustainable economic development will
be prepared and distributed through the active farmers groups in every district.
Seed Quality Testing Services

Under the Seed Act, 1989 and Seed Regulations 1998, necessary technical services in
qualitative seed use will be provided in organised manner. Regional seed testing
laboratories established in five development regions will be strengthened in order to
provide better testing services to the farmers. By strengthening central seed testing
laboratory, quality control and regulatory works will be made effective.

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Integrated Plant Nutrient Management Service

• Necessary programmes will be carried out in compost, green manure, legume

production, biogas and bio-fertilisers in the marginal land and plots borders
which is suitable to the agriculture system.
• On the basis of results of experiments agro-zonation will be made more practical
by declaring special crop production area. Such programmes will be implemented
as a pilot project in limited feasible districts looking at singularity of this
programme and present technical manpower and physical facilities. In order to
control the problem of nutrients due to soil degradation in the cultivated land,
necessary demonstrative extension will be carried out.
• Regular monitoring will be carried out on the soil fertility on the basis of the data
obtained from soil analysis. By making soil analysis services compulsory in the
pocket areas where intensive production programmes are being carried out, soil
testing services will be carried out.
• Chemical fertiliser monitoring activities will be activised to monitor the quality of
different chemical fertiliser, which are used in the country. Necessary act will be
prepared for the implementation of fertiliser management. Emphasis will be given
on regular and increased supply of fertiliser by including chemical fertiliser on
the list of the essential goods.
• Emphasis will be given to integrated plant nutrient management in irrigated areas.
Likewise, green manuring and organic manuring will be emphasised for
maintaining soil fertility.
Integrated Plant Protection Services

• Integrated pest control services will be carried out to lower down the adverse
impact of the pesticides on the environment and public health. Technologies
reducing the post harvest loss will be developed and extended and local
mechanics will be provided with practical training for preparing appropriate tools
for crop harvesting, processing and storage. Private sector involvement in the
supply of these tools will be increased.
• Arrangement for necessary insects and pests crop hazardous organisms
equipment will be made for survey surveillance and impact map preparation.
Training and demonstration programmes will be carried out through the medium
of farmer household/ family by giving continuity to annual programmes.
• To control the use of pesticides and its management, programmes such as
pesticide registration, import license distribution and training for the retailers and
pesticide inspectors will be conducted continuously by implementing Pesticide
Act, 1991 Efforts will be made to establish a central laboratory to check and test
the quality of pesticides.

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• For the plant quarantine programme, which is the prerequisite of the import
promotion, external and internal quarantines will be strengthened by managing
necessary laboratories, manpower and physical facilities.
Agriculture Market Management

• Competition among private sectors will be encouraged for supply of production

inputs and development and expansion of local markets, which will ensure
appropriate price for the producer and supply of essential commodities to the
consumer. Necessary information on agriculture market will be provided to the
producers and the consumers. In this regard, agriculture extension programme
will emphasise on the co-ordination through the interaction among professional
farmer and the industr ies.
• In order to strengthen market information system, regular and reliable
information through speedy communication medium will be provided to the
target groups on the demand situation, quantity available in market, stock
situation, cold storage condition, consumers buying capacity and their interest
and capabilities. For this purpose, information collected by the District
Agriculture Offices on the wholesale, retail and farm gate price of the agro-based
goods will be collected and processed on a regular basis.
• By strengthening mobile market (Hat) at the local level and by studying the
feasibility of new markets as per need of various districts, such markets will be
organised at the local initiatives. By forming group for such market, programmes
will be carried out at the local level. Technical supports will be provided to
minimise the loss in grading, packaging and transportation. Locality specific
support package for farmer groups will be identified to establish cottage
industries based on processing, packaging and quality enhancement of local
agricultural products. These activities will be supported and encouraged in order
to increase employment opportunities in rural areas.
• In order to minimise the trend of low price of agro-products during the harvesting
season and high price during the off season, arrangements will be made for
appropriate cold storage and godown facilities. For this, electricity will be
supplied with special preference.
• In order to provide road facilities in production pocket areas, priority will be
given to agriculture road construction in the production areas. In the Ninth Plan
Period, according to the APP's concept of integrated programme, agriculture road
construction will be given high priority in necessary areas, which will link
production pocket area with the market centre and nearby roads.
Women Participation

By developing knowledge and skill of women farmers on food production and

productivity development especially in seed production, their entrepreneurship will be
given high priority. Women involvement will be increased in post-harvest activities
and marketing. In rural market (Hat) and market development and management

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activities, at least 10 percent representative will be ensured from the women group.
At the end of the plan per iod, arrangements will be made to ensure one-third women
in training programme.
Production Programme:
There is high potential for growth in productivity of main food grains in view of the
current national productivity situation and the productivity achieved through special
programme launched through research farms/centres. The situation of cropping
intensity also points to this. This task seems quite complicated looking at the existing
situation of resources, irrigation facility, transport, improved seed availability and use
as well as the availability of technical services. However, this problem needs to be
tackled for improvement of the economic condition of majority of the Nepalese
people. Other programmes like family planning, health and education need to be
launched along with the agriculture programme in a joint package to achieve this end.
The concepts and strategies adopted by the APP for the production growth of food
crops and cash crops simultaneously in order to stimulate other economic sectors will
be taken into consideration in this regard.
Food grain production can be increased if irrigation, fertiliser, improved seeds,
pesticides, management of soil fertility and market management are incorporated into
integrated package while launching productivity enhancement programme. The Ninth
Plan has, therefore, envisaged to prioritise district level food grain and cash crop
production programme in areas with road and cropping intensity will be increased in
available irrigated areas through the use of improved seeds and chemical fertiliser.
Programmes of crop production and productivity enhancement will be launched with
priority under the above concepts
Prioritised Production Programmes:
Rice
Rice, the staple of the Nepalese diet, has covered more than 50 of paddy cultivated
land. 74 percent of total rice production is in terai region. Paddy used to be cultivated
only in 1.24 million hectares of land 25 years ago. At the end of the Eighth Plan, rice
has covered 1.505 million hectares producing about 3.7 million metric ton. About 42
new species of paddy have been recommended at the base year of the Eighth Plan.
Productivity of rice was 2.34 mt per hectare, but at the end of the Plan the
productivity increased to 2.46 mt per hectare. During this plan period, rice production
per hectare was 2.42 mt on an average.
Rice productivity in irrigated area will jump to 3.35 mt per hectare at the end of the
Ninth Plan from 2.7 mt at the base year of the Plan, and in unirrigated land to 1.91 mt
per hectare from 1.87 mt. Total rice production from both irrigated & non-irrigated
areas is targeted to be 5 million mt at the end of the plan period. Productivity of rice
has not increased substantially despite the coverage of approximately 58 percent of
rice area by so-called im proved seed, which is available from farmer to farmer.
Therefore it is targeted to cover about 75 percent rice area by certified first to fourth
generation improved seed at the end of the Ninth Plan. Programmes on productivity,
cropping intensity and seed production in rainy and spring season irrigated land

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launched during the end of the Eighth Plan will be carried on. Productivity in other
non-irrigated land will be increased by applying integrated paste management
technology, improved seed, chemical fertiliser, soil fertility, water conservation
technology and so on.
Maize
Maize is second important crop after rice in terms of production, area coverage and
food habit. The production and productivity of this crop have to be improved as its
production is more than 75 percent in mountain area. It is possible to increase its
productivity by applying plant protection technology with the general use of
improved seed and chemical fertiliser. In order to increase total production, it is
necessary to focus intensive cultivation of winter and spring maize in irrigated land.
Total maize production was 1.312 million mt from 793 thousand hectare at the end of
the Eighth Plan, with the productivity per hectare of 1.65 mt. Summer maize is
targeted to produce 1.521 million mt and the productivity 1.92 mt per hectare from
the 1.63 of the base year at the end of the Ninth Plan by using chemical fertiliser and
the productivity of increment technology and that of winter maize production 79
thousand mt with productivity of 2.25 mt from 1.7 mt. The area covered by first to
fourth generation of improved seed will reach 75 percent at the end of the Ninth Plan
period from the present coverage of 20 percent through seed production programme.
Activities on hybrid seed and baby corn cultivated exclusively from private sector
will be encouraged by providing appropriate technical services. Hybrid seed
production activities will be started within the country. Maize cultivation will be
focussed on non-irrigated area of terai region for the use of animal feed and green
fodder.
Wheat
Special focus will be to increase the productivity of wheat from the very beginning.
This crop occupies third position in food crops. Wheat production was 1056 thousand
mt from 665 thousand hectares of land at the end of the Eighth Plan. But its
productivity remained only 1.59 mt. Experimental studies show that it is possible to
substantially increase its production and productivity.
Wheat farming will be carried out in 160 thousand hectare at the end of the Ninth
Plan in irrigated land from its base year of about 85 thousand hectares. At the same
time, its cultivation in unirrigated land will be reduced to 548 thousand hectares from
580 thousand hectares of the base year. During this period, wheat productivity will be
2.77 and 1.56 mt per hectare from 2.50 and 1.45 of the base year, which produces 443
thousand mt and 857 mt in irrigated and unirrigated land, respectively. Thus, the total
wheat production will reach to 1300 thousand metric ton. At the end of the Ninth Plan
improved seed will cover 75 percent of wheat cultivated area from the present level of
50 percent coverage.
Potato
Potato is important food crop in the hilly districts. At present, potato is considered to
be cash crop in all high mountain Siwalik and terai regions. Production and

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productivity of his crop has to be increased as it is a source of income and
employment generation to farmers. Potato production recorded 733 thousand mt from
85 thousand hectare at the base year of the Eighth Plan. At the end of the Eighth Plan
its production reached 961 thousand mt from 110 hectare. Similarly its productivity
reached 8.76 mt per hectare from 8.59 mt in the base year of the Eighth Plan. In the
Ninth Plan the programmes on potato area expansion, production and productivity
increment will be launched in potential pocket area. It is targeted to produce potato in
140 thousand hectares and to increase its productivity from 8.76 mt in fiscal year
1996/97 to 9.29 mt per hectare. From this coverage and productivity status, total
potato production will reach 1300 thousand mt at the end of the Ninth Plan period.
Priority of potato production programme will be centred especially in the irrigated
area. On the other hand, productivity increment programme will be launched in
unirrigated land by applying improved seed protection technology. The private sector
will be encouraged in potato processing. Healthy potato seed production, tissue
culture and pure bread potato seed production will be expanded through using
improved seed. The problems of potato preservation such as lack of cold storage and
low price will be solved through mutual understanding between government and
private sector.
Other Programmes:
Millet, Barley and Other Secondary Crop
Millet, barley and buckwheat are secondary crops cultivated in unirrigated areas.
Their production and productivity will be increased through managing crops and
qualitative seeds from the selection of local species. Increase in production and
productivity of barley as per the demand of beer and biscuit industry will be focussed
on variety selection and the media communication.
Pulses
Pulses are cheap source of protein for the majority of the Nepalese population and a
useful crop to ameliorate the soil fertility. Because of its great demand in internal and
external market, it has the export potential, if produced in necessary quantity and
quality. Black gram, lentil, gram, soybean and yellow arahar are the main pulses. In
order to increase their productivity selection of improved and local variety, and
integrated plant protection programme will be launched. Lentil farming will be
expanded with an increase in crop production and its intensity, as it is suitable for the
area, which is irrigated in rainy season but unirrigated in winter in ter ai. During the
Ninth Plan the productivity of the pulse will be increased from 0.72 mt per hectare of
fiscal year of 1996/97 to 0.90 mt.
Cash Crops
Traditionally, cash crop has played an important role in providing employment and
income. These crops help to purchase basic needs for daily life and to supply raw
materials required for agro-industry. Sugarcane, mustard, groundnut, jute, cotton and
tobacco are the main demand-driven cash crops and latte, junelo, popcorn and niger
are subsidiary and creation specific cash crops. The programmes of demand driven

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cash crops production will be launched to increase their quality production from the
point of view of export potentiality and the requirement of agro-industry. Production
inputs, agricultural credit and a technical services will be mobilised in close co-
ordination with the agro- industrialist and the exporter.
Oilseed:
It is necessary to launch special programmes for the development of oilseeds in view
of their increased demand in national and international market. This crop will also
help vegetable oil industry as its raw materials within the country. Until 1996/97,
oilseed crops occupied 185 thousand hectares out of total 250 thousand hectares
occupied by cash crops. At the end of the Eighth Plan, 119 thousand mt oilseeds have
been produced in the country. If the internal demand of oilseed were met, about Rs
40-50 million equivalent foreign currency can be saved, which otherwise can be
funnelled to other development activities. Therefore, during this Ninth Plan,
improved quality seed supply programme will be implemented with special
consideration. It is estimated to produce 155 thousand mt of oilseed with its
productivity of 0.83 mt per hectare at the end of the Ninth Plan from its 119 thousand
mt at the bas e year of the Plan.
Sugarcane
Sugarcane is the main cash crop. It is the vital source of raw material for sugar
factory, and sugarcane product producing mills. At the end of the Eighth Plan,
sugarcane production was 1622 thousand mt with its productivity of 35.26 mt per
hectare. In the Ninth Plan, its production will reach 2100 thousand mt and its
productivity 43.75 ton per hectare. Total production will be increased mainly through
increased productivity using chemical fertiliser and improved variety. The sugarcane
will be marketed in a planned way by arranging interactions between the factory
management and sugarcane producers.
Tobacco
The tobacco crop has also significant contribution to the national economy. It has
played a vital role in uplifting the livelihood, especially of low -income group farmers
in Bara, Parsa and Rautahat districts. However, at the present situation, its production
and productivity has been reduced due to the lack of extension package of appropriate
production technology and low market price at the farm gate. Consequently, its total
production has been 5,120 mt at the end of the Eighth Plan and its productivity 833
kg per hectare. Considering all these shortcomings, re-evaluation of tobacco price
will be made; supply of necessary fuel for tobacco processing will be made available;
availability of improved seeds and fertiliser will be ensured to meet the national
requirement of cigarette and bidi industry. The tobacco production is estimated to be
6 thousand 500 mt at the end of the Ninth Plan from the present production level of 5
thousand metric ton. Productivity will be 1.08 metric per hectare at the end of the
plan period.

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Cotton
Cotton Research Programme was initiated in FY 1972/73. At present, cotton
development programme under Cotton Development Committee is being run. Cotton
production and productivity could not be increased even though priority is given to
cotton development since cotton farming is subject to disease and pest and more use
of expensive pesticides has resulted in little comparative advantage. Necessary plant
protection technology has not been disseminated to farmers. During the Eighth Plan
period, about 4 thousand hectares was targeted for the cotton production, only 2
thousand 300 hectares was cultivated at the end of the Plan. Similarly although the
productivity target was 1.479 mt per hectare, only 0.70 mt per hectare was achieved.
Considering this situation productivity improvement is focussed in the Ninth Plan
keeping the usual target of four thousand hectare for cotton production. Its
productivity will improve to 1.18 mt per hectare at the end of Ninth Plan. More focus
will be given in the judicial use of improved seed, balanced chemical fertiliser and the
technology development for low production cost. Research on integrated plant
protection programme will get special focus to develop a suitable cotton variety for
the increase of production and productivity.
Jute
Jute is produced mainly in Morang, Sunsari, Jhapa, Saptari and Udayapur of the
eastern Development Region, Central and Western terai region is also suitable for its
seed production. At present, the jute variety of Nepal has low productivity and hence
its production level could not be increased during the Eighth Plan period due to low
price in comparative market. At the end of the Eighth Plan, FY 1996/97, jute
production was recorded to be 14 thousands mt with its productivity 1.27 mt per
hectare. Hence in the Ninth Plan jute mill commercial association will be encouraged
to establish in jute producer farmer groups and farmer labour for increasing jute
production. And, in order to disseminate new technology of jute production in the
farmers' field, special training will be given to JT/JTAs. At present jute mills are
facing the shortage of raw materials. To meet their demand production programme
will be launched such that these means will be able to export the finished product.
Jute production will be 18 thousands mt and its productivity 1.64 mt per hectare at the
end of the Ninth Plan.
Main Physical Target:
Area, production and productivity of major crops in the Ninth Plan is given in table 6.
Monitoring and Evaluation
District Agricultural Development Committee and Programme Execution Committee
will monitor the activities related to identification of potential pocket areas for the
increase of production and productivity, programme formulation, mobilisation of
package programme and mobilisation of available resources in priority programmes.
Monitoring will be carried out by regional offices and by the department at the central
level. Table 6 depicts the physical target of total production resulting from the
increase of productivity and the intensive farming system of main agriculture
commodities. To meet this target, effective programme will be launched to mobilise

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additional technical personnel, their capacity building and to improve institutional co-
ordination at the district level.
Monitoring and evaluation will be carried out to examine the progress achieved by
different programmes as compared with their set targets and their impacts. In doing
so, emphasis will be given to different aspects such as the priority sector of the APP
on cropping intensity, and the productivity increase programme, programmes of
farmers group, saving fund and group permanency, production and productivity
increment and cropping intensity improvement status. Likewise use of chemical
fertiliser, improved seed, local demand and supply of agriculture credit, installation of
tubewell, condition of irrigation water, development of irrigated land, increase in
women participation in agriculture production, availability of technical services to
small and marginal farmers will be stressed to this effect.
Expected Main Achievements:
Cropping intensity of major crops will reach 172 percent from present level of 160
percent. There will be additional production of 1,847 thousand mt of main food
grains. Its productivity will also have additional 417 kg per hectare. Additional
production of major cash crops will be 523 thousands mt and their productivity will
increase by additional 1.955 mt per hectare. In major food crops, rotational system
management will be developed in order to replace fourth generation improved seed
by the first generation improved seed in every four year.
The use of chemical fertiliser in crop sector will reach 49 kg per hectare at the end of
the Ninth Plan with continuous increase from 18 kg per hectare in FY 1996/97.
Package programme implementation will be initiated in a co-ordinated way on the
basis of MOU among related sectors. Employment opportunity will also be increased
in rural areas through packaging of production and post-harvest marketing with
proper storage and other processing of the agriculture product.

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 Table - 6
Projection of area, production and yield of m ajor agricultural crops in the Ninth Plan
Unit area thousand hectare, production thousand mt, Yield mt /ha

Status of FY 1996/97 Projected

targeted of FY
2001/2002
Crops Area Production Yield Area Production Yield
Major food crops 3262 6395 1.960 3468 8242 2.377
Paddy 1505 3699 2.458 1632 5000 3.064
Monsoon irrigated 945 2588 2.739 1187 3973 3.347
Spring irrigated 80 211 2.637 120 406 3.380
Non irrigated 480 900 1.875 325 621 1.911
Maize 793 1312 1.654 829 1600 1.930
Monsoon 769 1271 1636 794 1521 1.915
Spring/winter 24 41 1.700 35 79 2.250
Wheat 665 1056 1.588 708 1300 1.836
Irrigated 85 213 2.506 160 443 2.769
Non irrigated 580 843 1.450 548 857 1.560
Millet 260 289 1.111 260 300 1.154
Barley 39 39 1.000 39 42 1.077
Potato 110 961 8.760 140 1300 9.286
Pulse 313 224 0.716 334 300 0.898
Lentil 158 116 0.724 179 181 1.011
Terai 149 109 0.732 170 175 1.029
Hill 9 7 0.777 9 9 1.000
Other pulses 155 108 0.697 155 116 0.750
Cash crops 250.3 1761.6 7.038 254 2284.2 8.993
Oilseed 185 119 0.643 185 155 0.838
Sugarcane 46 1622 35.261 48 2100 43.750
Tobacco 6 5 0.833 6 6.5 1.083
Jute 11 14 1.273 11 18 1.636
Cotton 2.3 1.6 0.7 4 4.7 1.180
Vegetables 146 1350 9.246 160 1716 10.725

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 Cropping Intensity
Particulars FY 1996/97 FY 2001/02
Total area covered by the crop 4081 4356
*
Total cultivated land * 2551 2534
Cropping intensity % 160 172

* Total cultivated area has been presented by subtracting area

of permanent crops like fruit, tea, etc. from the total area as
mentioned in agriculture census,1991.
9.2 High Value Crops Production Programme :
There will be enough possibilities to produce comparatively advantageous high value
crops in different ecological zones on the basis of ecological diversity of the country.
High value crops are especially horticulture crops such as citrus based fruits, apple,
seasonal and off-seasonal fresh vegetable, vegetable seed production, bee keeping,
sericulture, floriculture and commercial farming and other crops such as tea, coffee
and spices crops. Such high value crops are mainly export oriented. The farming of
such crops will generate five times more income than that of food crops in
mountainous area with road facilities. Such farming will help improve the
environment by stopping landslide and land degradation, especially through
cultivation of fruit plant and providing food security through the increase of
purchasing capacity from the income generated by high value crops. This will
especially benefit women community. Thus, it is necessary to focus special attention
to the expansion and development of these high value crops.
An analysis of areas under high value crops shows that during the Eighth Plan period,
vegetable, potato, cardamom, and mulberry (silk) areas were slightly more than
targeted but the area coverage by fruit, tea and coffee were less than targeted. In
production side, citrus fruit production has not been achieved according to its target
but the production of other fruits has been more than the target. Production of the
vegetable, cardamom and tea has achieved its target. The production target of coffee,
silk and potato has not been achieved.

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 Table 7
Progress of some major high value agricultural products in the Eighth Plan
(Area in '000 ha; Production in '000 mt ; Yield in mt /ha)

Unit Target of the Eight Plan Level of 1996/97

mt Area Production Yield Area Production Yield

Fruits
Citrus " 17463 105325 9.82 15924 92994 9.97
Others " 47620 275212 10.29 46996 335231 10.17
Total " 65083 380537 9.0 62920 428225 10.13
Vegetables " 14,1000 1278000 9.1 145000 1350000 9.31
Vegetable " - 181.6 - - 261 -
seed
distribution
Potato " 96,000 10,33,000 10.76 109800 961490 8.76
production
Cardamom " 7411 3540 - 9554 4456 -
Tea " 4187 2485 - 3564 2905 -
Coffee " 350 153 0.3 300 37 -
Silk " 533 300 - 1127 24.5 -
production
Honey " - 50 - - 60 -
production

Inadequate supply of technical services and production inputs, inefficient

mobilisation of manpower and budgets are the major problems in production and
development of high value crops. Quality production is also a problem. Processing
capacity has not been adequately developed and producers are not working in an
organised manner to mobilise the scattered production. Appropriate technology was
also not available adequately in such crops due to the lack of co-ordination among
units that rendered resource and the services. Supervision and evaluation of such
activities have not been done in an effective way.
High value crops have great potential in improving environment through planting of
fruit in marginal land, providing food security from income generation, providing
three times employment opportunities to women, helping increase value added,
bringing diversification and commercialisation in agriculture and possibility of
earning income five times more than food crops since this sector is the priority sector
of the APP. The programmes for the development of this sector in the Ninth Plan
need focus obviously.
In this background, the food crop oriented subsistence agriculture system has to be
transformed to diversification and commercialisation in agriculture by adopting the

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production system of high value crops, which are comparatively more profitable than
other crops in specific ecosystem. This will help promote agriculture industry,
increase employment opportunities and improve economic growth rate. The
programme to boost the production of high value crops will be launched to bring
sustainable agricultural development by improving women leadership in decision
making process.
Policy-oriented Programme:
• Programme will be launched to develop pocket area of appropriate agriculture
land in such a way that agriculture product will be produced in commercial way.
Considerations will be given to export and sale in local market on the basis of
possibility of availability of necessary services. Commercialisation of bee
keeping, silk farming, off-seasonal fresh vegetables and vegetable seed, high
value fruit such as orange varieties and apples will be achieved by encouraging
farmers group or private entrepreneurs in areas accessible by road.
• Programmes will be launched to make necessary services available on the basis
of comparatively profitable production programmes such as marketable cut
flowers, special fruit and food crops. Supply of qualitative resource inputs for the
execution of programmes to establish co-ordination among marketing centres,
processing industries and the producers will be ensured.
• Co-ordination will be established among the related sectors in order to manage
rural electrification and to construct agriculture roads linking with potential
production pocket areas. Programme will be executed to provide transportation
facilities to local resource centres until the resources are not fully developed and
available in local area for the production of high value crops. Special attention
will be given to minimise environmental pollution by applying integrated plant
protection technology through the use of pesticide and to facilitate all marketing
services of products, agriculture inputs, technical services and agriculture training
in package form.
• Pay back period of agriculture credit taken for the crops, which take longer time
to produce, will be amended and the process to get credit will be made easy and
cost effective. Monitoring and evaluation of each programme will be carried out
effectively to formulate time bound projects in pocket area with active
participation of farmers of identified pockets so as to mobilise agriculture
technical services, to help promote agriculture profession, extension services by
bringing co-ordination among the programmes of financial institutions. The
members of district agricultural development committee will execute the plans
after selecting pocket area and monitor the development programmes.
• A separate arrangement will be made to look after high value crops as a national
priority programme. An authority responsible for production, research, marketing
and national level co-ordination of the programme will be fixed. Technical staff
relating to hig h value crops will be provided with career development
opportunities in the specific programme area.

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• Horticulture farm resources will be fully utilised by using the concept of
programme operating fund on the basis of cost-effective production and
motivatio n to the employees. Such farms will be the main resource centres of
improved genetic material.
• Programmes will be launched to disseminate the information from pocket area to
central level by removing the pitfalls in the process of data collection, analysis
and publication, especially in pocket area of high value crop production.
• Programme will be launched in order to co-ordinate and disseminate appropriate
technology developed by agriculture research, to provide training for capacity
building of personnel, to increase the role of women in decision making process
of agriculture profession and to provide regular training to technical staff of local
and the central level.
Priority Programme:
Citrus Development
Since citrus fruit like tangerines, oranges and the lemons can help increase the
farmers' income in mid hills, the programme will be launched in potential pocket
areas with priority.
Commercial Citrus Orchard Development Programme
• Commercial orchard establishment programme will be implemented as a
campaign in potential pocket areas of districts where citrus fruit farming
especially in mid hills connected by highways, feeder roads or roads to be
constructed in future. The situation of highway, feeder roads, populated area,
transportation infrastructure or nearby pocket areas or easily accessible in a day
on foot from the road-head will be taken into consideration while developing
commercial orchards.
• Activities will be implemented to set up farmers' groups in order to develop
pocket area under commercial orchard establishment programme. Technology
related to all activities from planting to fruit marketing will be delivered through
farmers groups.
• Co-ordinated research activities will be carried out by establishing co-ordination
with Nepal Agriculture Research Council to carry out research works for solving
the problems faced by farmers especially in citrus type fruit farming.
• Marketing will be facilitated with construction of cold storage and collection
centre with the active participation of farmers' groups or commercial groups in
different places of the country to minimise post harvest loss and to provide proper
price to fruit products. Packaging will be improved. Special subsidies will be
provided in electricity bill and packing equipment used to sell preserved fresh
fruit in cold store and to open industry related to the processing of citrus fruits.
• The private sector will be encouraged to export of citrus fruits by exploring
markets and providing information related to these markets.

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Nursery Establishment and Strengthening Programme
The demand for the fruit plants for establishing citrus orchards will be supplied
through the farms and the private sector nurseries. Focus will be on the private
nursery establishment and strengthening of private nursery in the district so as to
supply citrus fruit plants from the local resource centre. Government farms will
complement the supply of such plants. Private nurseries will be established according
to the needs of district for the sake of expansion of fruit farming. Old nurseries will
be strengthened to increase their capacity to produce qualitative plants in a
competitive way.
There will be a ban to bring or send out citrus plants from disease prone area. Legal
act will be formulated for the sale and distribution of quality fruit plants and certify
high quality scion for the production of fruit plant.
Demonstration Programme
Management Demonstration : The programme for the demonstration of
establishment and management of model citrus orchards will be launched in joint
technical supervision of technical staff in the service centre and horticulturist of
concerned district. Producer farmers from the potential pocket area will be chosen
under this programme. The model orchard will be developed as training site for that
pocket area. At most, 15 model orchards will be developed in each district in such a
way that farmers groups will have model orchards. Established model orchards will
be strengthened through providing continuous technical services.
Promotion of Orchard in O ther Areas: Problem solving demonstration programme
will be executed for solving the problems faced by citrus fruit farmers. Activities for
preventing and controlling citrus orchard disease such as pest control demonstration,
pruning and use of micro nutrients inter-crop and green manure demonstration,
weeding, mulching and irrigation demonstration activities will be launched through
the participation of efficient manpower and farmers' groups. Demonstration
programmes will be launched from time to time by evaluating its effectiveness.
Beehive Demonstration: Since bees help increase pollination and production,
demonstration programmes will be carried out through keeping beehives in the
orchards. The bee-keeping farmers will be the resource persons to provide training on
beehive and bee-keeping to farmers. Such programme will be implemented under bee
development programme.
Other Programme
Kitchen Garden Development: Fruit plants, required by the farmers will be made
available from local resource centre of potential districts. Kitchen gardening
programme will be executed to increase the farmers' income and nutritional status of
common people. Such programme will include regular technical services.
Physical Target: During the Ninth Plan period, commercial gardening of citrus fruit
will cover additional 3,400 hectares and kitchen gardening an additional 1,600

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hectares. From the existing plants, it is projected that citrus fruit production will be
126,000 mt during the Ninth Plan. It is also projected that productivity will be 1,050
mt at the end of the Ninth Plan from 9.97 mt of the base year. Productivity of the
commercial orchards under the priority programme will reach 11.5 mt from the
present 11 mt.
Table- 8
Projected area extension of citrus fruit in the Ninth Plan

Programme Additional area of the Ninth Plan (Ha)

1997/98 1998/99 1999/2000 2000/01 2001/02 Total

Commercial 580 620 680 740 780 3400
Kitchen garden 300 310 320 330 340 1600
Total 880 930 1000 1070 1120 5000

Table 9
Projected production of Citrus fruits in the Ninth Plan
Area: ha, Production: mt, Yield:mt /ha

Progra- Status as of 1996/97( approx)

mme Projection for the Ninth Plan
(FY 2001/02)
Total Producti- Yield Producti- Total Produ- Yield Product
area ve area on joint area ctive ion
area area joint
area
Comme- 9236 5411 11 59525 12636 7200 11.5 82800
rcial
Kitchen 6688 3919 8.55 33469 8288 4800 9 43200
garden
Total 15924 9330 9.97 92994 20924 12000 10.5 126000

• Apple Farming:
Commercial Apple Orchard Development Programme
• Commercial apple gardening programme will be launched in successful pocket
areas of mid hills and high hills of western, mid-western and far -western regions
by focussing on apple production programme, especially in potential pocket area
of high hill districts of Karnali zone. Technology dissemination programme will
be implemented through farmers' groups. Agriculture inputs necessary for the
farmers will be made available at the production site by easy procedure from
Agriculture Inputs Corporation, co-operative society, related institution or private
sector. Special training package will be given to apple producing farmers about
apple orchard establishment and technology that includes fruit packaging time,

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 fruit picking process, fruit storage, packing and fruit transportation activities and
adoption of special precaution.
• Special attention will be given to the use of integrated plant nutrition
management activities for the preservation and management of soil fertility of
apple orchard by thick mulching to increase quantity of compost for maintaining
wetness in the orchard. Appropriate water ponds will be constructed by
mobilising the farmer/farmer groups, wherever possible.
• Priority will be given to construct, gravitational ropeway, short-distance ropeway
and agriculture roads in the potential apple production sites.
• Internal marketing system will be efficiently managed for apple sale. Search for
apple export will be carried out. Farmer groups will be mobilised to build
collection centres and cellar store in the production sites. Agriculture credit will
be made available to construct small cold store near the airport and potential
urban areas. Minimum import tax will be levied on equipment needed for cold
store construction. Operation of cold store will be made cost effective by
subsidising electricity bill.
• Private entrepreneurs will be encouraged to establish apples processing industry
by providing them technical services. Women will be encour aged to set up
cottage industry for apples processing by providing them training on the use of
small-scale technology in the production sites.
• Statistics on apple farming will be maintained up-to-date by conducting survey on
production cost and collection of apple farming data. Co-ordination will be
established with the research component so as to make apple-farming production
oriented according to the needs of farmers and market.
Nursery establishment and Strengthening Programme
Private nursery will be given special priority for the production and supply of apple
plants needed for apple orchards. A minimum of two nurseries will be established in
private farms for the production of apple saplings in the potential districts. Nursery
strengthening programme will be launched to maintain old nurseries.
Nursery establishment and management technology kit will be made available to the
nursery owners. Horticulture centres will be made responsible to supervise and
monitor nursery management and their registration.
Demonstration Programmes
Problem Solving Demonstration: Demonstration programme will be launched for
inter cropping such as soybean in order to increase soil fertility in the orchard until
the beginning of apple production. Demonstration programme such as apple pruning,
integrated plant protection for apple disease and pest, integrated plant nutrition
management for orchard nutrition will be launched to solve the problems faced by
apple producing farmers.
Model Orchard Establishment And Management Demonstration: Model orchard
will be established in the selected private farm of apple production pocket area with

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the objective of supporting commercial orchard management activities to be done by
apple orcharder. Programme will be implemented to impart site training for the
development of resource centre in the pocket area to make it effective through
technical supervision.
Beehive Demonstration: Demonstration programme will be launched by keeping
beehive in the apple orchard since bees help in pollination to increase apple
production. Resource centre will be developed by making farmers and farmers'
groups efficient to impart training in beehives management and bee-keeping.
Commercial entomology development programme and bees development programme
will provide necessary technical services in order to launch beehive demonstration
programme.
Other Programme
Kitchen Garden Programme: Regular technical services will be provided to the
farmers of apple production districts to execute kitchen gardening programme where
few saplings will be grown in their orchards inaccessible by roads.
Physical Target: Additional 2,275 ha will be covered by apple orchards in the Ninth
Plan period. A total of 31,397 mt apple production is projected in this plan by
strengthening old orchards and establishing new orchards.

Table- 10
Projection of the Apple area extension in the Ninth Plan
Area: ha

Programme Additional area in the Ninth Plan

1997/98 1998/99 1999/2000 2000/01 2001/02 Total
Commercial 117 169 264 626 825 2000
Kitchen gardening 72 65 55 45 38 275
Total 189 234 319 671 862 2275

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 Table- 11
Projection of apple production in the Ninth Plan
Area: ha Production: mt, Yield: mt /ha

Estimated Status as of 1996/97Projection for the Ninth Plan (FY

2001/02)
Programme Total Productive Yield Production Total Productive Yield Production
area area area area
Commercial 2352 1520 10.6 16112 4352 1650 10.8 17820
Kitchen 2300 1486 8.4 12483 2575 1614 8.4 13577
gardening
Total 4652 3006 9.5 28595 6927 3264 9.6 31397

• Bee-keeping
It is necessary to give priority to bee-keeping since it is an important activity to
increase the productivity of horticultural crop through pollination from bees. It also
helps create self-employment.
Up to the end of the Eighth Plan some progress was made in improving institutional
capacity and farmers training in this sector. Activities like construction of bee-hives,
bee-keeping management, farmers training and the beehive distribution have been
carried out in some potential districts. In the Ninth Plan period, priority programme of
bee-keeping will be initiated by integrating apple and orange orchard pocket areas
and seed production with pollinating crops. The following will be focused while
implementing such programmes:
• Priority programme will be launched to involve women and low income farmers
of the fruit and vegetable production districts in close co-ordination with related
crops in the pocket areas. Fruit and tree saplings will be distributed to help the
development of bee-keeping. District agricult ure extension and related crop
programme will launch the activities and programmes related to the distribution
of bee hives, equipment and training in bee-keeping to the farmers of developed
pocket areas.
• Resource development centres will be set up at the farmers' level and technical
support to enterprising farmers will be provided by institutionalising them. Such
resource centres will be supported for the transfer of technology to other farmers
through such centres.
• District profile related to honey production will be collected. Technical services
for marketing the honey will also be given. Bee-keeping farmers' groups will be
involved in fixing prices, sale and distribution of honey. Export-oriented honey
will be produced after establishing honey processing plant by producers
themselves.

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• Effective services will be given to the poorest of the poor and women bee-
keeping farmers by forming their groups.
• For the sake of providing necessary services, bee-keeping development offices
and the resource centres wil l be strengthened. Activities related to developing
appropriate technology, programme execution, monitoring, supervision and
evaluation will be effectively implemented. For this, attention will be given to
producing necessary manpower.
Physical Target: During the Ninth Plan, total honey production is estimated to be 85
mt by adding up 25 mt to the present honey production level of approximately 60 mt.
• Vegetable Development
Comparatively vegetable farming is labour intensive. It also helps create employment
opportunity and increase income especially to small farmers. It is the commodity that
can channel urban income to rural area. It helps improve the nutritional level of
Nepalese people. There is a great export potential of vegetable seeds. Hence it is
necessary to promote this high value crop from the point of view of comparative
advantage.
During the Eighth Plan a positive signal was seen in the export of some vegetables to
India produced from the irrigated land of Kavre, Dhading, Bara, Sarlahi, Kaski,
Syanja, Tanahu, Ilam, Palpa and Dhanusha districts. In this plan period 1350
thousand mt of vegetables and about 419 mt of vegetable seeds was estimated to have
been produced from 146 thousand hectares. In order to promote the programmes of
seasonal and off-season vegetable and vegetable seed production by extensive
utilisation of ecological diversity, vegetable development programmes in the Ninth
Plan will be launched as follows.
Commercial Vegetable Production Programme
• Off-season vegetables will be produced using economy of scale in pocket areas in
order to help produce off-season vegetables for export after fulfilling the demand
of local market. Such programme will be launched in Illam, Panchthar, Dhankuta,
Terahthum, Makwanpur and Palpa districts.
• Technical services will be made available to the private sector to construct cold
storage house in terai region and the natural storage house in mountain region
wherever commercial farming is possible. Electricity will be made available in
subsidised rate especially to cold storage house. Necessary credit facilities and
technology will be provided to the private sector to transform cold storage house
into pooper shape. Minimum import tax will be levied on to new equipment.
• Seeds, saplings and agriculture inputs will be made available by easy means
through the private sector to the commercial production sites.
• Special attention will be given to the judicious use of pesticide for protecting the
vegetable crops from indiscriminate use of pesticide. Integrated plant protection
system will be implemented by utilising bio-pesticide technology.

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Off-season Vegetable Production Programme
This programme will be launched for the production of market oriented vegetable in
the pocket areas in and around north-south highway of Taplejung, Ilam, Panchthar,
Dhankuta, Tehrathum, Makwanpur, Palpa, Dhading, Kavre, Tanahu, Kaski, Nuwakot,
Dolkha, Sindhupalchok, Syangja, Baglung, Rolpa, Pyuthan, Dang, Dhadeldhura and
Baitadi districts. The programme will be given continuity in differ ent irrigated pocket
areas. This programme will help produce fresh vegetables according to the demand of
small and the big markets and it will enhance their export potential. This programme
will focus on the following:
• Priority will be given to build infrastructure such as agriculture roads, short
distance ropeway, irrigation and collection centres in the off-season vegetable
areas. Sprinklers will be given to small farmers with a subsidised rate for regular
and proper irrigation in commercialised off-season vegetable farming.
• New technology for off-season vegetable farming from the neighbouring
countries will be tested. Such technology will be experimented in the pocket areas
in close collaboration with agriculture research.
• Potential site for off-season vegetable production will be developed as export
oriented pocket areas in Lam, Panchthar, Dhankuta, Tehrathum, Makwanpur and
Palpa districts. Continuous technical services will be provided to the farmers of
such pocket areas for the increase in off-season vegetables. Horticulture trade
promotion committee will be established in the wholesale market centre by
including the representative of producers' groups, traders, processor and
researchers. Such committee will adjust the production and market potential.
• Technical services will be provided to trained volunteers in order to increase
women's skills in the export-oriented production sites.
Potato Seed Development
Potato is produced in all districts of the kingdom in commercial way. Potato is
cultivated two times a year in the irrigated land. The potato development programme
will help establish foundation seeds in the mountainous districts for the supply of
potato seeds to the demand area. A special programme will be launched so as to
support the potato seed production centres in the high mountain areas. Private
entrepreneurs will be encouraged to produce potato seed. Staple potato production
activities have been mentioned in section 9.1.
Vegetable Seed Production
• Vegetable seeds production programmes will be lau nched giving special priority.
As income earning potentials have been proved both in hills and terai, winter
vegetable seeds are produced in hilly and high mountainous districts and summer
vegetable seeds in terai districts. In order to bring sustainability in seed supply,
seed buffer stock will be maintained at the central level with the active

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 participation of the private sector. Hybrid seeds for off-season vegetable
production will be imported and distributed with the consultation of Nepal
Agriculture Research Council through private sector.
• Vegetable seed production will be focussed in Ilam, Terahthum. Dhankuta,
Sankhuwasabha and Bhojpur of eastern region; Bhaktapur, Lalitpur, Nuwakot,
Makawanpur, Sindhupalchok of central region, Mustang, Kaski, Baglung, Parbat,
Myagdi, Gorkha of western region; Rukum, Rolpa, Salyan, Pyuthan, Dolpa of
mid-western region, and Dadeldhura, Achham and Baitadi of far-western region.
• In general, foundation seeds, hybrid seed and breeder seeds will be produced in
government farm s and centres. Programme will be launched to produce certified
seeds from the farmers. Seed marketing will be carried out by Agriculture Input
Corporation, private seed traders and local farmers. Encouragement will be given
to support seed transaction of producing and distributing agencies.
• Seed Act will be implemented in an effective way and updated as per need.
Table- 12
Farm / centres for foundation seed production

S.N. Department of Agriculture Agricultural others

Vegetable Vegetable Research
Development Development
Division Division
1. VSPC Khumaltar 1. Sarlahi 1. Dhankuta 1. Lumle
2. ,, Rukum 2. Solu 2. Pokhara 2.
Pakhribas
3. ,, Dadeldhura 3. Sindhuli 3. Sindhuli 3. Jumla
4. ,, Fikkal, Ilam 4. Daman 4. Dailekh
5. ,, Nigale 5. Trishuli 5. Tarhara
6. ,, Dolpa 6. Boch 6. Parwanipur
7. Panchkhal 7. Nepalgunj
8. Palpa
9. Marpha
*VSPC: Vegetable Seed Production Centre
Other Programmes
Special Vegetable Production Programme: In the selected dis tricts, onion, green
chilly, asparagus, parbal, and tomato will be produced for import substitution. From
this programme, onion farming is done in Dhanusha, Siraha, Saptari, Sarlahi,
Rupandehi, Banke and Dang; asparagus farming in Kathmandu, Lalitpur and
Bhaktapur; parbal farming in Banke, Mahottari, Sarlahi and Nawalparasi; tomato
farming in Sarlahi, Makawanpur, Kavre, Dhanusha, and Mahottari and green chilli
farming in other potential districts.

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In this programme, spicy crops like cardamom and ginger are also included. Under
this programme, cardamom is produced in Ilam, Panchthar, Taplejung and
Terahthum; ginger in Salyan, Tanahu, Palpa, Pyuthan, Terhathum, and Ilam.
Cardamom Development Centre, Ilam will make resource seeds available to private
nursery owners. One resource centre will be established in each ginger producing
districts, wherever possible.
Kitchen Gardening Programme: Vegetable production will be continued under
kitchen gardening programme in order to improve nutritional status of rural people in
the remote areas where there are no other programmes and marketing facilities.
Physical Target: During the Ninth Plan, vegetable production area will be increased
to 160 thousand hectares from the present 145 thousand hectares and its productivity
to 10.73 mt per hectares from 9.3 mt. Total production is estimated to be 1716
thousand mt. Vegetable seed production will be 700 mt from the present production
level of 419 mt.

Table13
Projection of Vegetables and Potato Production in the Ninth Plan
Area: ha; Production: mt

Crop Eighth Plan Ninth Plan

Area Production Yield Area Production Yield
Vegetables 145000 1350000 9.30 160000 1716000 10.725
(Off Season Only) (10800) (2500)
Potato 109800 961490 8.76 140000 1300000 9.30
Sericulture Development: The climate of the country is suitable for sericulture.
Through this, it is possible to use unproductive time thereby increase income and
employment opportunities for rural women. There is also potential for exporting silk
product. This programme needs to be initiated with priority to increase its coverage.
Although Commercial Entomology Development Programme has been established
with the objective of sericulture development, it has not been able to take momentum.
At present, there is some improvement even though there is lack of technical
knowledge and supply of seed is problematic. Although it seems to be ordinary
commercial farming, its farming technology is very sensitive to microenvironment of
silkworms that is why its expansion is not enough in capacity building for
institutional knowledge and skills.
During the Eighth Plan a 10-year sericulture development plan was prepared to
develop this sector. Production of silkworm eggs was 1030 boxes by developing its
internal production capacity. Sericulture development centres were set up in four
different places. In addition to Khopasi Sericulture Centre for worm rearing, egg
processing training centre has been established at Itahari mulberry plantation here
extended to 988 ha farmers' fields. These have to be strengthened and expanded
further. On this basis, it is necessary to give impetus to sericulture.

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In the Ninth Plan, sericulture development will be launched as follows with the
objectives of balancing the environment by creating green area of mulberry trees,
contributing to food security for rural people by increasing their purchasing power
through increasing high quality silk production which eventually helps alleviate
poverty.
• Eggs supply will be guaranteed by focusing on the development of parent stock
and technology according to climatic condition. Private entrepreneurs will be
encouraged by providing technical services for the development of quality
nurseries for the sake of supply of resources and the production of improved
mulberry.
• Sericulture will be given priority to make it commercialised in Ilam, Sunsari,
Dhankuta, Kavre, Dhading, Tanahu, Kaski, and Syangja districts. The programme
will lead to include all local, national and international NGOs and private sector
since it is not possible to supply basic services, extension services and necessary
inputs only by government sector in the identified pocket areas.
• Silkworm eggs will be sold at the cost price at the end of the Ninth Plan
beginning with low price tag. Appropriate steps will be taken to make
commercial farming in view of its production and distribution except research
and training.
• Collaborative research will be carried out with NARC for generating suitable
technology for commercial silk farming.
• Programme will be launched to develop farmers' own management system by
preparing the cluster of farmers group on the basis of the sectoral priority
according to long-term sericulture development plan. 'Resham Chautari' (centres)
will be developed at such clusters. Incubation arrangement for silkworms under
trained farmers' management in such clusters will be made and hatched worms
will be incubated to support the farmers' cocoon collection and preliminary
processing.
• Sericulture farms/centres will be responsible to impart technical services in the
command areas.
• Skill oriented training on silk worm farming will be given to leader farmers in at
least two seasons in order to make their technical skill efficient and simple. In
such training, interested farmers will be trained by providing them full course to
cover lifecycle of silk worm. There will be mobile training in silk producing site
for women capacity development with their active participation.
• Silkworm eggs will be imported only from the leading countries for sericulture.
Focus will be given to maintain qualitative silkworms.
Priority
On the basis of experience obtained from the past years, silk farming programme will
be as follows:

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Silkworm egg production structure and physical facilities: Silkworm eggs production
is a complicated and challenging job. For this, various steps and cycles have to be
completed which include development, preservation and expansion of parental stocks,
production of egg cocoon and commercial grainage. Emphasis will be given to
develop structure and physical facilities to maintain such production cycles.
Human Resource Development: Every aspect in sericulture has its own specialities.
Basic core manpower as well as mid -level technicians are necessary for the
development of specialised manpower of different objective and nature. That is why,
experienced and trained personnel have to be encouraged by timely promotion and
higher training. Necessary steps will be taken to produce specialised graduates by
providing proper training.
Developmen t of Group System: Programme will not be launched in a haphazard
manner. Pocket approach and package technology concept will be fully implemented
in the high priority districts that will receive technical services on site so as to make
effective silk production programme at the farmers' level.
Women Participation: Women participation has the vital role in sericulture. The
programme will give priority to form women silk farming groups particularly to flow
income to poor women.
Physical Target: During the Ninth Plan, priority will be given not only to increase
the production area but also to the productivity. Sericulture will cover an additional
600 hectares where mulberry will be cultivated. Cocoon production will be 44 mt at
the end of the Plan from the pres ent level of 24.5 mt. Three thousand four hundred
lead farmers will receive practical training. The programme will proceed with the
objective of raising cocoon production level at 4,000 mt in the next 20 years.

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 Table14

Physical Target of Main Activities in Sericulture in the Ninth Plan

S.N Job Unit Status Target of the Ninth Plan

of
Description base 97/98 98/99 99/20 2000/01 01/02 Total
year
1996/97
1 Cocoon
Production mt 24.5 26 30 33 37 44 170

2 Mulberry
farming ha 217 110 130 136 125 100 600
extension
3 Caster
farming ha 24 10 5 5 5 5 30
extension
4 Lead
farmers Perso 250 255 818 783 864 884 3604
training n

Other High Value Crops:

Programmes in high value crops as envisaged by the APP have already been
explained before. Therefore, the following regular programmes on other high value
crops will be implemented with a view to maintaining and improving the present
level of production.
• Tea
Tea farming is successful in eastern hills and terai region according to physio-climatic
condition. It is estimated that only 40 percent of internal demand have been met by
the present level of tea production. It is believed that the orthodox tea produced in
hilly region should be promoted for export, and the terai tea for local consumption.
Since the tea farming is labour intensive, it has an important role in generating
employment especially for women. It supports soil conservation in environmentally
friendly manner because of its shadowy shrubs.
During the Eighth Plan period, target of tea garden coverage was 4187 hectares and
production level 2485 mt but the achievement was 3564 hectares and 2805 mt.
National Tea and Coffee Development Board has been established for institutional
development. But the Board was not able to function in effective manner. Due to
minimum research activities for tea development, lack of quality parental stock,
inadequate efficient technical manpower, minimum transportation and electrical

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facilities, problems in quality and processing improvement and in transportation of
green leaves, tea farming could not be expanded as desired.
Given such background, the following tea development programme will be launched
with the objectives of export promotion, improvement of quality and productivity,
and expanding tea garden coverage in the Ninth Plan.
• Focus will be given to provide basic infrastructure such as agriculture roads, rural
electrification, and other services for the development of tea farming in a
commercial way. Agriculture credit, technical back-stopping, training, short
distance agriculture road and electrification infrastructure as a package
programme will be focused if the private sector submits proposal to establish tea
garden of at least 3000 ropanies with processing plant in any tea priority district
or other potential districts.
• Research activities related to tea will be carried out in close co-ordination with
NARC. NARC will co-ordinate with government to receive the help from proper
country for the development of improved tea.
• Services will be rendered to interested entrepreneurs by providing minimum tax
for the import of machinery equipment, raw material and the production inputs
necessary for processing industry that needs to be operated by purchasing local
green leaves. Royal Nepal Embassies and Trade Promotion Centre will be
mobilised to collect market information, to reach overseas market and advertise
Nepalese tea for its promotion.
• Farmers' and mid-level technicians' skill will be improved by providing practical
training in the private farmer's garden as a training venue. There will be
deputation of trained technicians in tea producing districts. Environment will be
created for the promotion of working technicians in tea estates.
• Tea Development Corporation will be privatised by appropriate process. A
separate working policy will be formulated for the promotion of tea farming and
industry by setting clear cut role of Tea and Coffee Board in providing the import
license of machinery equipment, credit recommendation, industry registration,
manpower development, marketing, import-export of tea product.
Priority: Priority will be given to the production of orthodox tea for export and other
tea for internal consumption especially in eastern region of the country. Programme
will be focused to establish a processing unit to cover at least 3 thousand ropanies in
those areas where orthodox tea has been successfully produced. Priority services will
be provided to small farmers' groups, women's groups and co-operatives.
Physical Target: During the Ninth Plan, tea area is projected to be 4564 hectares
with the addition of 1000 hectares. Total tea production is projected to be 4101 mt
from 3156 hectares.

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 Table- 15
Projection of Tea Production and area in the Ninth Plan

Total
Total Additional Production Total
Area Area Area Production
S.N. FY Ha Ha Ha mt
1 1997/98 3764 200 2407 3129
2 1998/99 3964 200 2571 3341
3 1999/00 4164 200 2709 3521
4 2000/01 4364 200 2908 3780
5 2001/02 4564 200 3156 4102
• Coffee
It is possible to develop coffee farming in different hilly areas of western and central
regions due to geographical diversity. If coffee production is developed in effective
manner, its production and productivity increase and import substitution can be
achieved. At the same time, it can also contribute to improve farmers' income and
employment opportunities.
During the Eighth Plan period, the target of coffee coverage was 350 hectares and the
production target was 153 mt at the end of the Plan. Due to inefficient data collection,
the proposed target of coverage expansion and production fell short. It is estimated
that the production of coffee grain was 37 mt and coverage 300 hectares. Coffee
development programme could not achieve the expected progress due to inadequate
research and marketing facilities.
With the past experience of short fall in progress resulting from production focus
without analysis of the taste of internal and external consumers, a number of factors
need to be taken into consideration such as marketing system, internal processing
capacity and its needs, technical capacity and liberal economic system. Coffee
development programme will be carried out as follows in the Ninth Plan.
• In order to increase internal consumption of processed coffee using local
technology, appr opriate programmes will be identified and launched to develop
the taste of consumers. Technical service will be made available for initial
processing of coffee at farmer's level and for handling processing equipment.
• Nepal Agriculture Research Council (NARC) will co-ordinate for technology
development of producing quality coffee grain, making the production
competitive, increasing productivity and decreasing production cost. On the basis
of coffee grain market and technology, emphasis will be given to conduct
commercial farming by giving priority to the pocket areas of feasible districts.
Arrangements will be made to provide necessary support services in the form of
package to such pockets continuously.

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• With the emphasis on manpower development concerned with coffee,
arrangement will be made for study and training. Emphasis will be given for
infrastructure development in commercial coffee production areas.
Priority: Priority will be given to provide support services in order to promote
commercial coffee production along with the production for home consumption on
the basis of demand. This will be carried out by co-ordinating with coffee processing
industries and exporters.
Physical target: Coffee cultivation will be increased to 444 ha by cultivating
additional 144 ha of land during the plan period. According to this, it has been
projected that about 110 mt. of coffee will be produced from the total productive area
of 252 ha. by the end of the Plan.

Table 16
Projection of Coffee Production in the Ninth Plan

Total Total Total

S.N. FY Total Additional Production Production Production of
Area Area Area of dried Parchment
cherry bean
ha ha ha mt mt
1 1997/98 324 24 130 171 57

2 1998/99 354 30 160 211 70

3 1999/200 484 30 190 250 83

0
4 2000/01 414 30 212 280 93

5 2001/02 444 30 252 332 110

• Other fruit-crops
The prioritised fruit and vegetable programmes as guided by the agriculture
perspective plan have been described above. Programme will be conducted to provide
basic service to promote production programme of high value agricultural
commodities like pear, walnut, peach, plum, persimmon, pomegranate, lemon,
groundnut and grapes, among the temperate fruits; mango, banana, guava, papaya,
jackfruit, lichi, nut, coconut among the tropical fruits; ginger, turmeric, garlic and
chilly among the spices; and mushroom.
Priority: While conducting production programme of these crops, priority will be
given to mobilise facilities like support service, training, credit on the basis of
package in order to develop commercial orchard.

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Physical target: The projection of area and production of fruits and spices crops as
mentioned in the Ninth Plan are shown below. The services to be provided to develop
commercial orchard along with other basic technical informat ion for kitchen
gardening will contribute to achieve these physical targets (Table 17). Fruit
production projection, as a whole, is shown in table 18.

Table- 17
The Production target of other fruit and spices in the Ninth Plan

Estimation of Estimation of FY
Programme FY 1996/97 2001/02
Area (ha) Production Area Production
(mt ) (ha) (mt )
Other Fruit 42344 306636 45469 342603
Spices 11636 87208 12000 89800
Cardamom 9554 4456 10000 4700

Table- 18
The Projection of overall Production of Major fruit in the Ninth Plan
Area: ha; Production:mt ; Yield: mt /ha

Estimated Situation as of 2001/02 Target of the Ninth Plan (2001/02)

Programme Total Productive Yield Produc Total Producti Yield Produc
Area area tion Area veArea tion
Commercial
Citrus Fruit 9236 5441 11 59525 14236 7200 11.50 82800
Apple 2352 1520 10.60 16112 4352 1650 10.80 17820
Others 11856 8385 10.40 87214 13775 10357 10.69 110748
Kitchen
orchard
Citrus Fruit 6688 3919 8.55 33469 7238 8400 9.00 43200
Apple 2300 1486 8.40 12483 2575 1614 8.40 13577
Others 30488 21563 10.17 219422 33724 25358 10.71 271721
Total 62920 42285 10.13 428225 73870 48079 10.40 500000
Citrus fruits 15924 9330 9.97 92994 21474 12000 10.50 126000
Apple 4652 3006 9.50 28595 6927 3264 9.62 31397
Others 42344 29949 10.24 306636 45469 32815 10.44 342603
Training and Manpower Development:
To conduct production programme of prioritised high value agricultural commodities,
necessary additional manpower and training will be arranged in the plan perio d.

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Available manpower will be mobilised in the prioritised areas providing the chances
of career development.
Monitoring and Evaluation:
To implement the programme successfully and effectively, commodity-wise
programmes will continuously monitor the planned programme and implementation
situation, and make the reports available. On the whole, district offices will monitor
service centres, and regional offices will monitor district offices and farm centres. On
the basis of need, the central office will monitor regions, districts and farms. To make
the monitoring effective, responsible personnel will be assigned to monitor and
evaluate whether the high value agricultural commodity programme is conducted as
directed by the central office according to agriculture perspective plan.
Livestock and Fisheries Development Programme:
• Livestock Development
In traditional agriculture production system, livestock raising is an income-generating
enterprise. Livestock products like milk, egg and meat contribute about one-third to
the agricultural gross domestic product. This enterprise has been playing important
role to provide employment and income to the rural women and backward farm
families. The APP has estimated that the growth rate of livestock product would be
signific ant. To achieve this, commercialisation of livestock production is necessary.
As it was targeted to achieve the production of milk 1.03 million mt, meat 173
thousand mt., egg 480 million (numbers) and wool 814 mt at the end of the Eighth
Plan, the achievement up to the final year of the Plan 1996/97 was: milk production
1.01million mt, (98.5 percent), meat 174 thousand mt (100 percent ), egg number
420 million (89 percent ) and wool 633 mt (77 percent ). In the fiscal year 1996/97,
only about 9 percent of milk is collected by the organised sector as DDC has
collected 58.5 thousand mt and private sector has collected 32 thousands. From this,
375 mt. of cheese has been produced. In the year 1996/97, powder milk valued Rs
302.2 million has been imported. Similarly, there is some improvement in import
substitution with little decline in the import of buffaloes, goats and eggs. Export to
Tibet has increased.
There are many reasons for not achieving the expected success in livestock
development in the Eighth Plan period. These are the targets fixed by the Plan failed
to be translated into actual programmes, the flow of service and facilities did not take
place as desired, poor implementation, inappropriate mobilisation of skilled
manpower to conduct the programme, lack of certain work management for regular
study, monitoring and evaluation of programme implementation for solving the
problem at field level, lack of authentic data system, lack of appropriate livestock
products marketing, and so on. So, for the sound development of livestock sector by
solving these problems, it is necessary to launch programme with special priority to
strategic breeding arrangement for breed improvement, animal treatment and disease
identification, pasture and animal feed, market facility and standard skill-oriented
training based on farmers’ need in the Ninth Plan. As guided by the APP, it is

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necessary to promote private sector for the processing and marketing of livestock
products, which is necessary for the industrialisation of livestock production.
Livestock development service programmes will be conducted in the Ninth Plan with
the long-term goal of achieving the annual growth rate of 6.2 percent of the livestock
products production from the present growth rate of 2.3 percent to achieve self-
reliance in milk, meat and egg along with export promotion, achieving 43.2 percent
contribution of livestock sector to agricultural gross domestic product from the
present contribution in the coming 20 years. Besides, it is also envisaged to support
poverty alleviation by increasing productivity of livestock, thereby increasing the
production of milk, meat and egg and eventually increasing farmers' income.
Policy-oriented Programmes:
Programmes will be conducted in the strategic background like increasing
productivity by breed improvement, increasing livestock products: milk, meat, egg,
milk powder, cheese, khuwa (dried milk) and packed meat without affecting
environment and substituting import and promoting export by improving the quality
of produc ts, providing credit facility and training to women farmers to provide them
self- employment and to increase their income; developing national “quality
standard” and implementing it to standardise the quality of livestock products, by-
products and raw materials used in producing livestock and poultry, readymade feed,
seed, vaccine and medicine; giving priority to prevention service among the animal
health services and supporting the development of private veterinary services in the
commercial areas; mobilising the national dairy development board to provide
strategic recommendation to HMG for planning, implementation, monitoring and
evaluation in the area of dairy development thereby increasing the participation of
private sector and making arrangements for livestock products marketing.
Priority will be given to conduct programmes related to the production livestock
products as identified and prioritised by APP such as dairy animal farming, goat,
poultry and related nutritious animal feed and animal health Programmes will be
conducted in the feasible pocket areas in order to develop these areas as the pocket of
massive milk, meat and egg production. In this connection, programmes will be
conducted focusing on the following points:
• In view of the demand of milk and milk products in the city market, commercial
cattle and buffaloes will be raised in the village surrounding those cities where
physical infrastructures have been developed and private sector will be
encouraged to establish dairy industry in such areas . From this, there will be flow
of income from the urban to rural area thereby supporting employment and
income growth.
• Employment opportunities will be created by launching programmes like milk
production, poultry farming, milk collection, improved fodder production
commercially within the four hours walking distance along the highways and sub-
highways.

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• Emphasis will be given to raise goat, sheep, pig, rabbit and poultry in the rural
areas where there is no transportation and electricity in order to increase
employment utilising the local resources.
• Programme will be conducted by organising livestock and poultry raising
farmers' group. Training will be provided to farmers groups, JT and JTAs for
capability enhancement. Breed improvement, animal feed, animal health service,
training, credit facility and market facility will be mobilised in the form of
package through the group. District agricultural development committees and
programme execution committees will be responsible for identifying and
mobilising the pocket packages.
• By studying and monitoring the custom duty prevailing in the neighbouring
countries such as sales tax, subsidy, quality standard, etc., timely improvement as
needed by the country will be made on the duty imposed on raw materials used
for livestock production and livestock products with a view to creating suitable
environment for export and import according to the strategy of World Trade
Organisation (WTO).
• Arrangement will be made to conduct animal health services by selecting feasible
areas.
• National Dairy Development Board will be mobilised actively to formulate
timely and appropriate policies and to advise HMG for their implementation.
Such policies will be based on the aspects like milk production, collection, dairy
industry development, quality development, export feasibility, investment
capability and privatisation to support for achieving the economic growth rate as
targeted by APP.
Priority Programme:
Group Development: To achieve the target of the Ninth Plan, additional 2 thousand
460 cattle- raising groups, 2 thousand 260 buffalo raising-groups, 13 thousand 100
goat raising groups, 820 poultry -raising groups will be formed. Each group will
contain 10 farm -families (table 19). Commercial livestock production technology will
be utilised by mobilising technology package through these groups. Improved
livestock raising will be extended by creating qualitative effect through the successful
management of these groups. To make livestock and poultry development and
extension programme achievement-oriented, service will be provided to the livestock
farmers jointly through 360 livestock service centres and 639 livestock service sub-
centres.

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 Table- 19
Number of farmer groups conducting the package programme

Particulars Farmer 97/98 98/99 99/2000 2000/01 2001/02 Total

groups
Commercial
Programmes
Priority
Cattle raising (Cow) No. 260 300 360 440 600 1960
Cattle raising (buffalo) No. 200 260 280 380 440 1560
Goat raising No. 140 300 600 720 860 2620
Poultry No. 30 40 45 50 55 220
Others
Piggery No. 30 40 50 60 70 250
Rabbit raising No. 10 20 25 30 35 120
Women Development 0 0 0 0 0 0
Programme
Priority
Cattle raising (Cow) No. 70 80 100 120 130 500
Cattle raising (buffalo) No. 80 100 120 200 200 700
Goat raising No. 280 600 1200 1440 1720 5240
Poultry No. 50 55 60 65 70 300
Others
Piggery No. 20 30 40 50 60 200
Rabbit raising No. 10 15 20 25 30 100
Poverty Alleviation 0 0 0 0 0 0
Programme
Priority
Goat raising No. 280 600 1200 1440 1720 5240
Poultry No. 50 55 60 65 70 300
Others
Sheep raising No. 30 40 50 60 70 250
Piggery No. 20 30 40 50 60 200
Grand Total 1560 2565 4250 5195 6190 19760
Milk collection and processing: Dairy Development Corporation will support for
extending milk collection in new dairy pocket areas by ascertaining trade area for the
development of dairy industry. Milk will be used and consumed by encouraging the
establishment of new dairy processing factories and extending the capacity of
established factories. Environment will be created to establish cottage as well as big

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 cheese factory to produce high-quality cheese suitable for export. As 32 thousand mt
of milk is being collected and processed by the private sector in the base year 1996/9,
support will be provided to achieve the target of collecting and processing of 75
thousand mt of milk by the private sector at the end of the Ninth Plan.
Breed improvement: Breed of local cattle, buffalo, goat and sheep will be improved
by both natural and artificial insemination. According to the demand of farmer
groups, improved breed of 2 thousand five hundred buffalo bulls, 2 thousand 120
bulls, 15 thousand 500 bucks, 2 thousand 400 rams and 45 thousand cockerels will be
distributed to the farmer groups. For breeding purpose, livestock and poultry will be
distributed 75 percent of the pocket areas and 25 percent of other areas.
According to the demand of city area having infrastructure, 0.13 million buffaloes
and 0.35 million cows will be artificially inseminated by privatising the artificial
insemination service gradually. To bring sustainability in productivity by developing
breed suitable to the climatic condition, programme will be conducted by following
the breeding strategy of mixing murrah breed in 62.5percent of the hill buffaloes and
62.5 percent jersey breed of terai and hill cows.

Table- 20
Breed Improvement Programme

Particulars Unit 1997/98 1998/99 1999/00 2000/01 2001/02 Total

Artificial
Insemination
In Cows No. 30000 50000 70000 90000 110000 350000
In buffaloes No. 10000 15000 25000 35000 45000 130000
Total No. 40000 65000 95000 125000 155000 480000
Improved breed
distribution for
natural insemination
Bulls No. 350 360 410 480 520 2120
Buffalo bulls No. 370 420 490 580 640 2500
He-goat No. 800 1700 3500 4300 5200 15500
Yak sheep No. 100 300 500 700 800 2400
Cockerel No. 5000 10000 10000 10000 10000 45000
Animal Feed Development: To decrease the production cost of milk and meat,
nutritious fodder based livestock production system will be followed. In the Ninth
Plan period, 932 mt of summer and winter fodder seeds, 416 mt of perennial fodder
seeds, 165 mt of pasture seed and 22.16 million fodder saplings will be produced and
distributed along with the participation of the private sector. Emphasis will be given
to develop agro-forestry in the mid-hills by co-ordinating with the lease-hold forestry
programme. To minimise the production cost of milk, green fodder production in the
terai (plain) region will be emphasised to feed animals in the winter season. A unit

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will be established separately and programme will be conducted to standardise the
quality of raw materials used in the livestock production system, readymade feed,
medicine, feed supplement, fodder seed, milk, meat an d other livestock products in
order to make the livestock products market-oriented.

Table- 21
Pasture and Fodder Programme
Production / Unit 1997/98 1998/99 1999/2000 2000/01 2001/02 Total
Distribution
Summer and mt. 128 149 183 221 251 932
Winter grass
seeds
Perennial mt. 34 53 90 109 130 416
grass seeds
Pasture land mt. 8 20 36 45 56 165
grass seed
Fodder trees 000 pieces 1327 2920 4783 5937 7194 22161
Animal Health: It is necessary to safeguard poultry from diseases as poultry farming
is becoming big enterprise and for achieving 6.2 percent of the annual growth rate of
egg production. As the causative elements of poultry diseases are different from that
of other animal diseases, animal health service programme will be implemented
effectively by establishing Central Avian Diagnostic Laboratory. Similarly, animal
health regulation unit with laboratory facility will be established and conducted to
standardise the quality of medicine and vaccine produced in the country and to
examine the imported medicine. Arrangement will be made to provide additional
health service through both government and private sector to improve the existing
animal health service, which covers 10 percent of farm-families within the distance of
10 km from the livestock service centre and sub-service centre. Sixty-six animal
health practice centres will be established in the private sector and conducted as pilot
projects. The service of veterinarian will be made available through 50 service
centres. During the outbreak of epidemic disease, preventive vaccination and disease-
identification service will be provided free. In other time, vaccination and other
service will be made available charging a fee. Priority will be given to launch these
programmes in prioritised pockets.

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 Table 22
Animal Health Programme

Particulars Unit 1997/98 1998/99 1999/20 2000/01 2001/02 Total

Vaccine For
Cows/buffaloes
Foot and mouth No. of
rot cattle/thousand 102 119 146 177 201 745

Black quarter ,, 51 60 73 88 100 372

Haemorragic ,, 102 120 146 176 200 744
Septicimia
For Sheep and
Goats
Foot and mouth ,, 205 418 842 1020 1220 3705
rot
Haemorragic ,, 205 418 842 1020 1220 3705
Septicimia
Total ,, 665 1135 2049 2481 2941 9271
Vaccination
To provide the quality service to the increasing commercial livestock farming, disease
identification laboratories will be conducted in 54 district livestock services offices,
with 40 in the district level and 14 in the zonal level. Working capacity of all the five
regional animal disease identification laboratories will be increased by strengthening
them.
To fulfil the need of vaccine like swine fever, I.L.T., I.B., Marek's disease and I. B.
D., vaccine production will be increased by strengthening the existing laboratory.
Joint investment of private sector will be encouraged for vaccine production.
Monovalent vaccine of FMD will be produced in the country by strengthening the
existing laboratory.
To control rabies, a very important disease form the public health and export
promotion point of view, sample vaccine will be produced using sheep brain at
present, which is used in human also. To increase the quality of this vaccine,
production of international-standard tissue culture vaccine will be initiated. For this
purpose, the existing laboratory will be strengthened.
Training and Manpower Development: Livestock farmers will be mobilised as
village animal health workers by providing them training on improved livestock and
poultry farming technology, skill development and income generation after
organising them into farmer group. Such programmes will be emphasised in
prioritised pocket areas. Technicians involved in livestock development services will
be provided with training on skill-oriented scientific livestock and poultry farming
system, and health treatment in order to make them capable in their field of work. In

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co-ordination with Institute of Agriculture and Animal Science, arrangement will be
made for graduate and post-graduate studies to produce qualified technicians within
the country in animal breeding, animal health, pasture and dairy technology.
Possibility of higher studies and training will be found out and utilised through
different scholarship programme and projects.
For the standardisation of skill-oriented training to be conducted in all regional
training centres under the central livestock training division, necessary manpower,
experimental equipment facility and hostels will be arranged gradually to strengthen
the centres. Through this programme, 6 thousand 425 farmers will be trained at the
village level; 4 thousand 510 farmers will be trained in health, breeding, pasture and
fodder for one month at regional level; 4 thousand 356 mid - level technicians and 1
thousand 56 officer- level technician will be trained in the related subjects. Mobile
training will be arranged to increase the participation of women in farmer level
training. Priority will be given to conduct training programme so that these meet the
need of prioritised pocket areas. Teaching materials will be made agriculture
occupation oriented rather than production-oriented only. Arrangement will be made
to provide JTA level training to 1000 people from 1000 selected VDCs based on the
demand in order to fulfil the need of increasing animal health service at village level.
Table- 23
Animal Service Training Programme

Training level Unit 1997/98 1998/99 1999/2000 2000/01 2001/02 Total

Officer level person 217 212 179 204 244 1056
JT / JTA level ,, 870 870 870 875 870 4355
Farmer level: ,, 1285 1285 1285 1285 1285 6425
Village level
Farmer level: ,, 902 902 902 902 902 4510
One month
Livestock Development Farm Management: Eleven livestock development farms
under the Department of Livestock Services will be developed as the main resource
centre of improved livestock and poultry breed, and improved seed. In the concept of
“revolving fund” as followed by Pokhara Livestock Development Farm, the working
capacity of other farms will be improved. Jiri-Khimti farm will be developed as the
main resource centre of temperate fodder seeds. Bhuditola goat farm will be
improved to develop as a main goat development centre while Panchsayakhola sheep
farm and Solukhunmbu Yak (Chaunri) farm will be strengthened for the production
of sheep and yak and nak respectively. Gaughat, Ranjitpur and Janakpur farms will be
developed as main resource centres of tropical fodder seeds. Chitlang farm will be
expanded for rabbit and goat production. Livestock and poultry produced in these
farms will be made available for distribution.
Livestock Market Development: National Poultry Production and Marketing Centre
will be established for the management of private sector to support the development
of commercial poultry farming and market promotion. This centre will help
government sector in policy formulation in the field of planning, implementation,

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monitoring, market management and appropriate protection by participating in
poultry and hatchery industry for the development of poultry enterprise. Besides, it
will also promote the enterprise through monitoring and evaluation. Livestock market
management programme will be initiated by establishing slaughtering house and cold
storage in the private sector with the active role of municipalities and village
development committees.
Other Livestock Development P rogramme:
Pasture Development: Five thousand ha of community pasture will be developed in
the districts situated in the northern belt to support sheep, yak, nak and chaunri
farming and cheese and chhurpi industry on the basis of people’s participation.
Technical package service will be provided after the formation of 250 sheep farming
groups in order to conduct sheep farming programme effectively.
Women Focused Livestock Development Programme: Continuity will be given to
poultry and pig development programme by distributing pig and multipurpose fowl
cockerel to increase the income of backward women and farm-family by mobilising
local resources. For this purpose, programme will be conducted involving 7000
families. Technology package service will be provided to pig farming programme
after forming 650 farmer groups. For milk and meat production, young calves
collecting and raising programme will be conducted through women's groups.
Agricultural credit and technical service will be made available for this purpos e.
To increase the participation of women group in goat and poultry farming enterprise,
skill-oriented training will be provided to the groups supporting them in market
management of produced commodities. Women’s capability in income generation
will be improved by commercialising the poultry and goat farming. Ten thousand
families will benefit from this programme.
Marginal-Farmer Focused Livestock Development Programme:
Leasehold forestry and community fodder and pasture development programme will
be conduc ted in areas where there is no infrastructure by co-ordinating with Ministry
of Forest in order to increase the income of backward farmers. During the plan
period, this programme will cover 7,112 families.
Animal quarantine:
Among 24 animal quarantines in the country, 6 quarantines situated at the main entry
points will be strengthened by establishing appropriate laboratory along with
necessary examination kit and animal holding facility.
Rabbit Farming:
Rabbit farming will be commercialised in the pocket area. Under this programme,
2200 farm -families will be covered. Technical service package will be mobilised after
forming 220 rabbit farming groups. Emphasis will be given to promote angora
rabbits.

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Livestock Development Credit And Insurance:
Emphasis will be given to provide necessary credit to farmers for livestock
development programme by co-ordinating with agriculture development bank and
other financial institutions. Credit to be flowed under the programme has been
mentioned under the heading of agricultural credit programme.
Livestock insurance programme will be carried out focusing on the protection of
animals rather protecting the invested credit or loan only. This programme will be
primarily implemented in the identified commercial pockets.
Major Physical Target:
Formulated policies and programmes will help achieve the envisaged targets on an
average annual growth rates of milk (5.56 percent), meat (6.22 percent) and egg (7.22
percent) respectively at the end of the Ninth Plan. Special priority and consideration
will be given to promote buffalo raising programme for meting desire targets of
increasing milk and meat. Similarly, emphasis will be given to increase the
productivity of milk with the introduction of high-yielding cattle breed, and goat
raising, the contributor of 20 percent of the total meat. Appropriate programme to
increase the quality production of exportable products like cheese and ghee will be
implemented during the Ninth Plan.

Table- 24
Projection of the Ninth Plan

Particulars Unit 1997/98 1998/99 1999/2000 2000/01 2001/02 Total

Milk Production mt. 1068 1128 1190 1257 1326 5.56
Meat Production ,, 185 196 208 232 235 6.22
Egg Production 450 480 510 550 590 7.22
(in million)
Monitoring and Evaluation:
Suitable tool for monitoring and evaluation will be applied to monitor the livestock
development activities for ensuring whether they are executed as per the Agriculture
Perspective Plan (APP); and other activities will also be monitored to ensure whether
they are driven towards commercialisation or not. The findings from such monitoring
will be used to make certain changes while formulating another plan.
A district profile will be prepared and updated by collecting and compiling the
relevant information and data regarding livestock activities in each district. With the
technical co-ordination of Central Bureau of Statistics (CBS), a network from the
service centre to the central offices will be maintained to develop and collect those
information regularly. Monitoring and evaluation methodology will be followed by
appropriate indicators developed so far to verify and crosscheck the breeding,
feeding, health and marketing services in order to achieve envisaged targets of milk,
meat and egg by the APP.

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Fisheries Development Programme
Fish farming is developing as an important enterprise today. Fish not only supplies
human nutrition but also provides employment opportunities, which ultimately helps
reducing poverty to some extent. Of the total water resources, 4,20,262 ha in the
country, there are 6,262 ha ponds, 5, 000 ha lakes, 12, 500 ha swampy land, 1, 500 ha
reservoir and 3,95,000 ha rivers. Similarly, 3,98, 000 ha irrigated paddy land is
developed as a natural habitat for fish farming. Of the total water resources, only 2
percent has been utilised for fish farming and 23,207 mt of edible fish has been
produced.
Fisheries has contributed 0.42 percent to the total agricultural gross domestic
products. It is mentioned that 74,000 farm families are involved in fish farming.
Fish production and fingerlings distribution target has been fulfilled in the Eighth
Plan. Its potentiality and interest of the farmers in fish farming have broadened its
scope over the years. However, budgetary constraints, lack of trained manpower, lack
of resource centres and laboratories have slowed down its pace.
It has been envisaged in the Ninth Plan that the present level of edible fish production
will be raised to 75, 000 mt in the coming 20 years from the present level of 23,000
mt. To achieve this target, programmes will be heavily focused on maximum
utilisation of the natural river and the other water sources and construction of
artificial fish ponds, which will help increase the production and productivity.
Policy-oriented Programme
For export promotion by in creasing the production of cold water fish, creation of
more employment opportunities by promoting fish production in most possible water
resources, protection and conservation of economically important fish of river and
water resources, following fisheries development Programmes will be implemented to
promote the fish farming, specially in the ponds, in the Ninth Plan depending on the
market demand and comparative advantages
• To study the potentiality and carrying capacity of different river to expand fish
production programme in the long-term, necessary technical and managerial
services will be carried out in a package concept to encourage the farmers and
promote commercial fish farming.
• The programme will be designed to supply the 75 percent of the total fingerlings
from the private resource centres and rest from the government machinery. Loan
and technical services will be provided to encourage the private fish producers for
enabling them to produce quality fingerlings. Private sector will be encouraged to
duck farming by providing them technical services. Government farms will
implement very few programmes. Farmers will be encouraged to organise for
marketing, and post-harvest training will also be provided as per the need.
• Farmers accustomed to on fishing in river, swampy and communal ponds, will be
supported by providing reservoirs and ponds on lease on a group basis. And they

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 will be trained on fishing technique, technical know -how and other topical issues
in fish production. Unscientific fishing will be discouraged and fingerlings/fish
fries will be released in the potential water areas. To support this activity, Aquatic
Act will be passed and implemented.
• Fisheries Development Farms will be used and mobilised as resource centres for
fingerlings production and distribution programme.
• Trained manpower for fisheries development will be attached with Agriculture
Extension Programme to make extension activity more effective in the district.
• A fisheries laboratory will be established at the central level to diagnose diseases,
find out control measures, test the quality of water and feed simultaneously. The
fee for used water and electricity will be charged equally as that per other
agricultural commodity/industry. Minimum custom duty will be imposed on the
import equipment such as boring, pump, cage, net, medicine and so on.
Physical Target:
• Average productivity of a pond will be increased from 2.28 mt/ha to 2.5 mt/ha. In
the case of intensive fish production, this rate of productivity will be increased
from 3.4 mt /ha to 4.0 mt /ha. The area coverage by old and new fish ponds will
be increased to 6,200 ha, cage culture to 30,000 cubic metres, fish culture in
paddy field to 200 ha, fish culture in swampy land to 1,000 ha and enclosure to
100 ha. At the same time, fingerlings will be released in different potential water
sources to help poor fishermen to uplift their living standard.
• A database for fisheries development plan will be prepared after surveying the
Koshi, Gandaki, Karnali river and their tributaries followed by socio-economic
study of the surrounding community.
• Fish production quantity will be increased from 2300 to 3500 mt by expanding
the fisheries programme followed by improved technology and management
practices. Ponds owned by the community, marshy land, river and rivulets ponds
and lakes will be leased to the private entrepreneurs after passing the bills on
water use law. Twenty five thousand fishermen and women will benefit from this.
Manpower:
The available manpower in this sector will be used at the best possible extent and new
posts will be proposed for further manpower availability.
Monitoring and Evaluation:
In brief, Fisheries Development Division will be given responsibility for planning,
monitoring and evaluation of fisheries programme.

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 T able- 25
Fisheries Programme in the Ninth Plan

Growth %
S.N Particulars Unit Base Ninth Plan in
. Year compariso
n to
96/97 97/98 98/99 99/00 2000/01 2001/02 base year
1 Area
covered by
programme ha 5433 5600 5950 6750 7000 7500 38
(Ponds,
reservoirs,
paddy
field,
enclosure
etc)
2 fingerling 000 55344 60321 67290 71000 75000 80000 44.5
production unit
and
distribution
3 Fish Mt 23207 23458 23730 28230 32500 35000 50.8
Production
a) From ,, 11977 12228 12500 15000 16500 17100 42.7
fisheries
b) From ,, 11230 11230 13230 16700 17900 17900 59.4
natural
source
9.4 Agricultural marketing, Industry and Export Promotion Programme:
The economy of the nation becomes stronger only when the agriculture develops as a
lead sector. Agricultural programmes in the past mainly focused on supplying
production inputs and technology simply to increase the level of production. But the
efforts were very minimum to develop marketing infrastructure where products could
be collected and marketed easily and that could have encouraged farmers to produce
more. When the marketing infrastructure is very poor the farmers will be reluctant to
produce more. If quality products in a large volume/scale are produced, there are
opportunities for securing domestic and international markets. If production do not
get markets and the subsistence structure of production is not reformed, agricultural
productivity will not increase. In spite of the availability of technology, the
agriculture sector has not been able to identify and take benefits from comparative
advantage in the absence of efforts to enter markets. To overcome this situation,
increasing production and establishing and managing a marketing network/system are
the two primary factors to be considered very seriously. That is why the Ninth Plan

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has foreseen an appropriate information system and cost benefit analysis of
agricultural commodities in order to establish a systematic marketing channel and
facilitate export promotion programme.
With regard to the review of the Eighth Plan, infrastructure for agricultural produce
marketing stall and agricultural produce collection centre in some of the very few
places have been made available. A market management committee has been formed
and started in each of those mark eting stalls. In the course of developing vegetables
and fruit collection centres, there is a programme of strengthening Kalimati fruit and
vegetable wholesale market to establish/develop linkage with 19 collection centres
existing in different districts of the central development region. To make producers
well-informed about the selling price of fruit and vegetables, the wholesale price is
broadcast every day on Radio Nepal. Minimum support price has been fixed for
paddy in the case of cereals, and sugarcane and tobacco in the case of cash crop.
However, the procurement as per the support price is not functioning properly.
Milk being a perishable commodity, high attention has been given to provide
reasonable price to the farmers and assist in marketing the milk. Establishment of
milk powder plant in Biratnagar having three metric ton capacity per day is an
example in this regard. Similarly, a new milk processing plant has been established in
Butwal. Construction of a 100,000 litres -capacity cold storage in Kathmandu and
establishment of a cheese factory in Ilam and Panchthar have been completed. Apart
from these, 43 milk chilling centres established in the different parts of the country
have been run. National Dairy Development Board (NDDB) has been formed. Over
the last few years, private sectors have been involving in marketing of milk and milk
products. However, only nine percent of the total milk produced is collected and
processed. It shows that there is still a long way to go further in marketing of milk
and milk products. This has become a challenge for import substitution of milk and
milk products in spite of its high potentiality. A significant progress in clean meat
production and processing has not been achieved yet. Due to lack of slaughtering
house, big hotels are still importing quality meat. Likewise, support to the production
of quality hide and skin is still lacking.
Seventy-six private nurseries and dealers are involved in production and distribution
of 50-60 million fingerlings in the country. Some of them are exported to India. At
present, fish has been exported to neighbouring markets using drier. Standardisation
and packaging of the products was not considered properly in the plan period.
Income generating activities like sericulture, bee-keeping and other high value crops
which can be started with minimum investment have not grown well during the
Eighth Plan. The progress of establishing commodity processing industry by
involving the private sector strongly was not encouraging. There was no encouraging
progress in the formation of farmers' groups, encouragement of private sector in
storage and processing, and construction of marketing stall and its management for
the management of commodity market.
It is necessary to develop self-operating system to enter the agricultural produces into
market after absorbing these by industry for the transformation of subsistence farming
to commercialisation to convert it into modern system.

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Lack of entrepreneurship with majority of producers is a hurdle to commercialise the
production in an economic scale. This situation is caused by passive role of private
and co-operatives, lack of commitment in periodic and long-term plan to
commercialise the production, programme activity confined mainly to technology
dissemination and development, lack of timely flow of reliable information and lack
of co-ordination with the affiliated organisations followed by insufficient
infrastructure like agricultural road, electrification and other inputs are the
challenging issues in this sector.
On the background of prevailing challenges in agri-business and market development
as mentioned, agricultural marketing, industry and export promotion programme will
be conducted in the Ninth Plan for economic growth and employment promotion.
Enterprises that utilise the opportunities of internal and external markets will be
promoted in order to develop agriculture into an enterprising occupation by
commercialisation. Besides, with the vision of sustainable development, this
programme will support poverty-alleviation by developing business-oriented
production system with the active participation of private and government sectors.
Policy-oriented Programmes:
Agriculture development programme will provide new dynamism to agriculture
sector by transforming agriculture into enterprising occupation; and emphasise the
commercial production of crops, horticultural crops, livestock and poultry and fish
and high value agricultural commodities. It will bring necessary improvement in the
present import export trend along with economic and financial policies to promote
economy of scale in production, processing industry and trade business in order to
transform to agri-business. The sectoral policy and programme will emphasise
economy of scale in production for export promotion by identifying appropriate
commodity and pocket area; and participate agricultural commodity-wise associations
in planning, implementation, monitoring and evaluation to make farmers industrious
and entrepreneurs’ participation effective in commercial agricultural development. It
will also focus on the development of agricultural road for the transportation of
products to market; and encourage private sector and commodity associations to play
active role in the development of infrastructure like godowns, cold storage and
market institutions. The policy and programme will also emphasise in the
development of agricultural business and its implementation through its inclusion to
the curriculum of skill development training programmes to be conducted in
university and other agencies for the development of agri-business, education and
trained manpower; and emphasise on the development of agricultural economic
analysis and related statistics. In the above context, following policy-oriented
programmes will be conducted in the Ninth Plan:
• With the emphasis on enterprise development and management, agricultural
extension and implementation of training programme will be included.
Agricultural extension workers will be made agricultural business promotion-
oriented by providing them appropriate training. Agricultural occupation-related
subjects will be included in the curriculum of agriculture educational institutions
to develop future agricultural manpower.

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• Programme will be conducted to increase the involvement of private sector,
agricultural co-operatives, farmers’ groups and non-governmental organisations
in agro-processing, products marketing and distribution of agricultural produces
at local level. Besides, co-operatives, industrious farmers and farmer groups will
be encouraged to use modern technology along with management training and
infrastructure development by mobilising their participation.
• Emphasis will be given to involve private and co-operative organisations in
commercial production of identified commercial crops, livestock and high value
crops by providing necessary help in the form of integrated package. Pocket area
programme will be conducted with the active role of private sector through the
promotion of certain commercial crops and livestock in economy scale and
quality so that these can penetrate the national and international market.
• Agro-based industries to be established in certain areas with the objective of
procuring, semi-processing and processing of commercial agricultural products
will be encouraged by providing technical and credit support.
• Agricultural production and commercial programmes will be conducted to utilise
the opportunity of World Trade Organisation (WTO), South Asian Preferential
Trade Arrangement (SAPTA) and South Asian Free Trade Arrangement
(SAFTA).
• Arrangement will be made to provide degraded forest area, fallow, uncultivated
and uncultivable land available to the private sector on lease for the production of
particular commercial agricultural commodities. For this purpose, forest and land
management strategy will be reviewed, if necessary. If private sector targets to
produce commercial agricultural commodity in large area and to increase
employment opportunities, legislative arrangement will be made to take private
land on lease to support the private sectors.
• Due to the lack of adequate knowledge on alternative use of foodstuffs, various
agricultural commodities are not produced in appropriate amount. Therefore,
alternative use of food produces will be pu blicised through central food
laboratory for increasing production in commercial scale, diversification, value
added and employment promotions.
• Agricultural studies and research will be focused to support agro-industries and
enterprises. Recommendation of the research findings such as economic return,
cost of production and comparative advantages will be made available on the
basis of private sectors' capability to adapt. Conducive environment for
agricultural research and development will be created. To this effect workable
regulatory measures will be developed and made effective through NARC to
provide back-stopping to private sector initiative in such research on their own
expenses. Tea and milk processing plants will be gradually privatised. Policy of
commercial banks on single borrower limit, under which loan is provided to
private sector for procuring agricultural fertiliser, will be reviewed. Similarly,
loan to promote market facilities will be gradually increased. Livestock insurance
will be introduc ed to reduce high risk. Appropriate insurance policy will be

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 initiated in the beginning in seed promotion programme and gradually replicated
in other sectors as well.
• A good co-ordination and conducive working environment among the central
food research laboratory, quality control and measurement department and
quarantine check-posts will be maintained with a view to making effective
monitoring for internal distribution and quality import and export of agricultural
commodities. Private entrepreneurs will be encouraged to establish their own
quality test laboratory to facilitate the import and export of agricultural
commodity.
• Agricultural collection centre and agricultural marketing centre established by the
government will be gradually handed over to the farmers groups, co-operatives
and private sectors. Such centres will be established with the involvement of
private parties, as needed. The proposed centres will be involved from the stage
of project identification along with their defined responsibility. Necessary laws
will be formulated to run those collections and marketing centres by the private
sectors.
• Local tax on internal transportation of agricultural products will be exempted to
maintain competitive price in the market. In the situation where local government
has to take urgent steps for regulating needed services and commodities. Working
procedures will be arranged to take the permission of the Ministry of Agriculture
in the case of agricultural commodities. A market information centre comprising
the representatives from HMG, private sector and agricultural co-operatives will
be established. Support to develop necessary infrastructure will be provided to
establish such centres in the private sector.
• Implementation capacity of the agricultural co-oper atives and concerned
organisations will be improved by providing necessary technical support in
production, processing and marketing management of agricultural products. To
support these activities, the existing organisational structures of the Co-operative
Development Board, National Co-operative Association and Co-operative
Department and their scopes will be redefined and enforced. These agencies will
be empowered to make necessary decisions in planning and implementation.
• Arrangement will be made for maintaining market intelligence and for getting
information on production, prices and market strategies of other countries along
with exploring the opportunity of prevailing local markets and their risk in order
to direct production system, accordingly.
• A policy on customs exemption for the materials that can be used in packaging of
industrial products will be made effective to maintain a competitive price of
agricultural products. Encouragement will be given to import of the unprocessed
raw materials necessary for agricultural industry for processing in the country in
order to add value.
• Diplomatic missions abroad will be mobilised to identify potential markets of
possible domestic products in foreign countries. Concerned domestic institutions

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 will also be mobilised to establish functional linkages with these foreign based
institutions. Necessary facilities will be provided to the private sector in the
search for international market for agricultural products and establishing
relationship with them.
• Scientific methods will be applied to make agricultural statistics reasonable and
reliable. An appropriate methodology will be prepared with the help of technical
co-ordination of CBS and minimum physical infrastructure will be developed, as
needed. Forecasting of agricultural statistics and pre-warning information will be
published by the MOA and the estimation will be finalised by the CBS. An
institutional arrangement will be made for collection, processing and publication
of statistics on export and import of agr icultural commodities on a regular basis.
The programme of making food stock balance sheet will be made active and this
information will be published regularly.
• Economic welfare and empowerment of women will be ensured through making
arrangement for their participation in increasing agricultural production,
developing agricultural inputs and agricultural enterprise by creating suitable
environment for involving women groups and women co-operatives.
• While conducting programme for increasing agricultural production and
promoting agricultural industry, environment conservation measures will be
adopted.
Priority Programmes:
Agricultural Occupation Promotion Service Programme
As there is no possibility of increasing production and productivity and
commercialisation without the promotion of agricultural enterprises, programme will
be conducted to monitor and evaluate agricultural enterprises and strategies to liaise
with the private sector and support in solving their problems, to help in expanding
export market by exploring feasible national and international market for agricultural
commodities. Agricultural enterprises promotion project will be conducted to make
this endeavour effective. This project will provide effective support to the secretariat
of proposed agricultural enterprise promotion committee.
Agricultural Price and Marketing Service Programme
Under this programme, strategic guidelines will be provided to concerned
departments by conducting necessary studies and analysing the selection and
implementation of projects for market infrastructure development in feasible area for
commercially produced agricultural commodities with the participation of private
sector, co-operatives, farmers' groups and other enterprise groups. But the supervision
of market development construction, improvement and mobilisation will be carried
out under the programme of related departments. Market information collection,
analysis and extension projects will be conducted for collecting information and data
on production quantity, price, production cost, profit, investment, hat-bazaar (weekly
local market) and business, and providing these information to both producers and

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consumers on a regular basis along with maintaining the record of these information
and data.
Agricultural Statistics and Agricultural Economic Analysis Programme
Agricultural data collection and publication project will be launched to help Central
Bureau of Statistics in collecting necessary data for formulation of each agricultural
programme, implementation and timely analysis of policies, and to prepare other
production data estimation which is not prepared by the CBS, to prepare report on
agricultural commodity production situation as pre-estimation necessary for CBS to
prepare annual production statistics and to prepare the situation analysis of crops,
improved livestock and poultry and fish farming. Similarly, agricultural economic
analysis project will be launched to prepare statistics necessary for economic analysis
of agricultural sector like per unit production cost of agricultural commodity, per unit
employment generation, cost analysis of agricultural production by studying per unit
production and price situation and analysis of agricultural price, income growth and
employment promotion situation. Under these programmes, information like
estimation of winter and summer crops production statistics, data on livestock,
poultry and fish farming and other production statistics which are not prepared by
central statistics department, per unit cost, employment and benefit, investment, price
of agricultural commodities and domestic production along with various statistics and
information will be prepared.
Implementation Arrangement
The development of agricultural enterprises depends on supply of technology and
capital, development of physical infrastructure and development of advanced
management system. The following policies and programmes will be formulated and
executed in these endeavours:
1. A high level agri-business promotion committee will be formed with the
representation of private sector, co-operative sector, commodity specific
producers' associations and related organisations of HMG. This committee
will perform the following functions:
• Help the MOA to identify commercial agricultural commodities and
crops and help formulate policies for their commercial development,
• Help to make the endeavour of private and government sector as
complementary to each other for agricultural development,
• Manage the facilities to be provided to the private sector by informing the
government in time and include the provision of these in annual
development programmes,
• Prepare implementation plan of the programmes indicated by the Ninth
Plan in the direction of commercialisation of agriculture and manage for
the conduction of the Plan,
• Provide appropriate and solid suggestions by monitoring, reviewing,
evaluating and analysing all aspects of agri-enterprises,

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 • Take necessary steps to solve obstacles and problems in commercialising
agriculture, and
• Establish relationship between producers and agro-industries and conduct
programme for their interaction.
2. An agri-business promotion division will be established in the MOA to
support the promotion of agri-enterprises and establish agro-industries with
great emphasis. A unit directly related to agri-enterprise under the Ministry
and the Department of Agriculture such as market development division,
economic analysis division and statistics division will be affiliated to this
division. Following works will be carried out through this division for the
promotion of agri-enterprises.
• Work as the medium for the implementation of concept and vision of
agri-business through MOA, and its departments, divisions, offices and
the grass-roots-level units.
• Work as a government contact agency for private sector, organisations of
agricultural commodities, non-governmental organisations, farmer
groups, co-operatives that are related to agri-enterprises.
• Work as the secretariat of agri-business promotion committee.
Other Programmes:
9.4.1 Co-operative Development:
It is very appropriate that from the social and economic view point co-operative
sector contributes significantly to the national economy by utilising economically
active manpower and business skill and scattered savings. For this, small
entrepreneurs through co-operative services mobilise resources available to promote
all-round development in agriculture, cottage and other industries. With this concept,
co-operative has been given due importance in social and economic development in
formulating the Ninth Plan.
In the Eighth Plan co-operative education and training, institutional and physical
infrastructure development programmes were incorporated. Under co-operative
education and training programme, 56017 Government. employee co-operative union
members and women were given training. Training material production have been
improved. There has been substantial increase in government investment in training.
There has been the policy to encourage the formation of local, central and national
level voluntary and autonomous co-operatives. Three thousand 771 primary co-
operatives, 77 district co-operative unions, 3 central level associations and one
national co-operative federation have been formed by the Fourth year of the Eighth
Plan. These co-operatives and unions transacted Rs 1870 million within this period
and took loans of Rs 577.4 million investing Rs 454.2 million. The recovery was Rs
491.2 million within that period. The programme to establish co-operative bank was
not fulfilled. This sector could not contribute substantially to milk production, food
processing and saving though there is a great possibility in these aspects.

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Different studies have confirmed that co-operatives can be sustained if they are
formed according to the needs of the people, and if they can encompass participants
from production, processing industry and marketing. Co-operatives were given
autonomy. But it is not clear that merely granting autonomy is no solution to smooth
functioning of co-operatives. On the one hand, directed co-operatives did not function
efficiently resulting in big loss to the organisation, while independent co-operatives
have been facing many problems. During the last decades these organisations were
fully dependent on government subsidy and it is still contin uing. Co-operatives do not
have its own production programme and are involved in non-co-operative business. It
has not developed its marketing channels and has not been able to establish co-
operative banks. This has resulted in lack of co-operation from government sector.
There is tremendous possibility of upliftment in economic prosperity of common
people by involving economically active manpower and providing skills to co-
operatives. It is timely to solve past problems and explore new possibility.
The main objectives of a co-operatives in the Ninth Plan are to contribute to the
socio-economic development; to provide benefits of fair price to the farmers and
consumers; to involve small producers who will help in finding out marketing outlet
for the production produced by co-operative, unions, farmers group; and to enhance
the capability of co-operatives and give satisfaction to the consumers.
Policy-oriented Programme:
To help increase entrepreneurship and competitiveness of co-operative business, to
activat e co-operatives for commercial and enterprising farmers in the establishment of
industries based on food grains, fruits and vegetables, dairy products; processing,
storage and marketing facilities; to help the establishment of integrated, strong and
effective co-operative system specially in scattered rural areas where capital and skill
can be utilised with maximum peoples participation; to activate co-operative
movement by educating people about its importance, to increase economic activity by
collaborating with NGOs, farmers groups and other industrial group, private sector
and government corporations; to prioritise co-operative sector while privatising
public co-operatives related to co-operatives, to conduct women, targeted programme
in women co-operatives, women group in co-operative union and women farmers'
group to increase the efficiency; to review the organisational chart of co-operative
sector from centre to district-under the changing circumstances; to focus on the
development of appropriate manpower, the followings programmes will be launched
to realise these policy objectives.
Priority:
Because of the policy adopted in the past, most of the co-operatives are sick. To
resolve the problems of such co-operatives, mainly the problems associated with
ADB/N will be resolved and a conducive environment will be created for co-
operatives to run in a commercial manner.

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Other Programmes:
Co-operative Education and Training Programme
To make co-operative education and training and management development work
effective, training methodology will be improved and made more professional.
Youth and women participation will be given priority to co-operatives and pre-co-
operative women groups and other members in co-operative training, co-operative
camp, study tour for providing theoretical and practical training on co-operatives.
Workshops and study tours will also be arranged. Technical assistance will be given
to co-operatives by undertaking training programme depending on co-operative
programme such as services, ol ans, agricultural inputs, storage and processing of
agricultural production, industry establishment of cold storage utility and security of
processing equipment. Arrangement will be made to make available consulting
service from co-operative training centres on the request from co-operatives relating
to management.
Trainers' training will be arranged for local trainers to enhance their skills and
efficiency. Also training and educational materials will be developed for the target
group according to their needs.
As co-operative has been recognised as a separate professional body, training quality
will have to be improved. The co-operative training centre will be gradually granted
autonomy. Feasibility study will be carried out to transform this training centre into
agro enterprise promotion centre. Special emphasis will be given to develop physical
infrastructure and efficiency of the trainers in the country.
Co-operative and entrepreneurship training in private and co-operative sector will be
conducted based on memorandum of understanding and affiliation among co-
operative training centres and other training institutions.
Institutional Infrastructure Development and Strengthening Programme
Market-research activities will be carried out to promote co-operatives. Arrangement
will also be made for co-operatives to study market opportunities and flow of
information.
Emphasis will be given to training and field-visit activities to develop industry-
oriented co-operative enterprise.
Arrangement will be made to buy and sell, process and establish cold storage for food
grains, pulses, oilseeds, milk, tea, coffee, cardamom, ginger, fruits and vegetables
through co-operatives. Arrangement will also be made to supply animal feeds,
fertilisers, seeds, insecticides, etc.
Incentives will be given to export-oriented agricultural and non-agricultural items like
cardamom, coffee, ginger, silk, woodcraft, handicraft through co-operative sector.
An action plan will be implemented to encourage co-operatives. For this, operational
areas will be delineated by establishing co-operation among government, co-
operatives and private sector.

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Organisational reform will be made within the co-operatives. For this, the role of Co-
operative Department, Co-operative Development Board and National Co-operative
Federation will be clearly defined and improved. Institutional reforms will be made to
make co-operative movement effective. Efforts will be made to mobilise co-operative
development fund in a more useful way. Studies will be conducted for the
establishment of one co-operative marketing centre in Kathmandu. Keeping in view
the potential market in the capital, scattered producers will be encouraged to form co-
operative groups. Co-operative marketing area will be established depending on the
feasibility and will be replicated in other places.
Intensive Co-operative Development Programme
A detailed project, which will incorporate vision of co-operatives in production,
processing and distribution, will be prepared and implemented. Under this project;
skim milk powder plant will be established. Milk by-products, fruit and vegetables,
food grains, pulses and oilseeds will be marketed through co-operatives.
Efforts will be made to establish co-operative banks by combining savings of saving
and credit co-operatives. Three co-operative consumers' store will be established in
the Kathmandu valley. For this, at least 10 women co-operatives will be involved. To
conduct this programme, commercial relation will be maintained with private sector.
While conducting co-operative development programme, co-operatives will be
encouraged to compete in the market.
Expected Achievement:
From the above intensive co-operative development programme, 161,805 members
from 483 co-operatives assuming 335 members from each wil l directly be benefited
from production and processing activities. They will manage physical and other
resources in order to increase their efficiencies, which will increase their capacity to
involve in non-agricultural sector through income generation activity. Forty-two
thousand co-operative members will be given training in co-operative management
through co-operative education and training programme. Through this training,
production is expected to rise as market is assured for the producers through co-
operatives.
Monitoring and Evaluation:
National Co-operative Federation will monitor the activities of its members. Co-
operative Department and Ministry of Agriculture will regularly monitor and evaluate
the activities of co-operatives. Co-operatives development programme will give
special emphasis on promotion of agri-enterprises as guided by the APP.
9.4.2 Food Technology, Nutrition and Quality Control Programme:
General people will be guaranteed on food security through proper storage, protection
and processing of food, minimising the loss after production, increase in the
consumption of nutritious foods like fruits, vegetables, fish, meat and milk. Food
adulteration will be controlled and high quality food maintained. Quality crops will
be increased to promote export potential. Appropriate technology will be developed
to store and protect food grains. Less expensive nutritious food will be identified and

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developed to improve the nutritional status of people. Quality control in food will be
strictly maintained.
For food technology, nutrition and quality control, Food Act, 1966 has been revised
during the Eighth Plan period. A regular programme on food, beverages, feed quality
control, standardisation of food, processing and preservation and child nutrition
technology has been carried out. Public awareness has been created to minimise the
use of non-edible colour in food. Food processing technology has been transferred to
agri-entrepreneurs through training. However, sufficient attempt has not been made to
identify appropriate technology to be transferred to agro-entrepreneurs regarding food
technology and nutrition programme. As agricultural production has not been
commercialised, enough opportunities have not been created in agro-industries. As
APP has given more importance to commercialisation by implementing this plan,
there will be regular supply of raw materials and promotion of industry. In this
context, food technology and nutrition programme will promote agri- enterprises.
The Ninth Plan will focus on appropriate technology development in food and
processing, food quality control and protection of consumers' interest, increase
income generation and employment opportunity by promoting agro-industrial
enterprises, make agro-enterprises more market-oriented, increase credibility of the
Nepalese products in local and international market by strict quality control in food
production, processing and distribution, and increase the nutritional status of the
people by making available cheap nutritious food.
Policy-oriented Programmes:
Appropriate technology for food industries in the areas of collecting, grading,
processing and marketing of foods will be developed after several trials and findings.
For this purpose, steps such as co-ordination between producers, entrepreneurs and
agricultural researchers will be taken to make quality control system more effective
by amending relevant laws; balancing nutrition, public health and environment,
keeping in view of agro-industrial enterprises, consumers and market. Production of
nutritious foods from local materials will be continued after identifying the
requirement and the nutritional level of the people will be enhanced. Implementation
programme will be made more effective by co-ordinating all the related agencies and
food resource and development work will also be made more useful and fruitful, and
agri-enterprises will be promoted by increasing the use of proven technology through
extension and its feed back.
Other Programmes:
Quality Control and Strengthening Programmes
Quality control programme will be made more effective by establishing and
supervising the equipment in close collaboration with municipality. Programmes will
be launched to make quality control more effective by enacting Food Act in all
districts.

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Food industry and border areas (export-import point) will be supervised regularly,
food samples will be collected and analysed under Food Act and technical services
will also be provided.
The method and process of the entire classification of high value agricultural
produces will be developed and support for price fixation will be provided on the
basis of their quality. A simple method to test and analyse food will be developed and
the test kit will be sold and distributed to consumers. Technical services will be
provided to encourage industries for the production of high quality food of
international standards.
Technical support will be provided to private entrepreneurs to conduct their own
basic quality control work. Directory of private laboratories will also be prepared.
Quality control system will be timely revised and reformed in order to enhance
reliability of quality of locally produced materials and their competitive capability in
the international market. Quality control committee will be formed and the quality
control programme will be made more effective.
Food Technology Research and Development Programme
Appropriate technology will be explored, developed and applied by collaborating
with the Department of Agriculture and the NARC on the proper use and processing
of fish, meat, milk, fruit, vegetables, and cash crops. A collaborative research work
will be carried out with different agriculture-related agencies and industrial
entrepreneurs for appropriate technology in agro business and food industry.
Priority will be given to the area of commercialisation while developing technology
in food storage and preservation. Appropriate technical services will be provided for
commercialisation based on market access. Similarly, promotional activities will be
carried out to improve the existing indigenous technology applied in different
geographical areas and communities.
Technical training will be given to entrepreneurs for the establishment and efficient
functioning of food industry. Such training will be co-ordinated with small business
training centre under the Ministry of Industry. Entrepreneurs who are interested in
establishing food industry after accepting food industry scheme or those who are
running food industry will be selected for training on the basis of scheme.
Physical facilities in laboratory will be upgraded so as to make food resource activity
more effective. Promotional activity in agri-enterprise will be carried out by
increasing the use of proven food technology, motivating people on food quality and
the use of local nutritious food with the participation of private entrepreneurs.
Nutritional Development Programme
Know-how on nutrition will be given to pregnant, rural women and mothers to
motivate in increasing the nutritional status of family mem bers by utilising
proportionately agricultural produces grown by the farmers themselves. By giving
technical training on the use of biotechnology the private sector will be encouraged
for its commercial uses with technological development. Training will be given at

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local level by utilising locally available food. Methods to prepare variety of
micronutrients and technical services will be provided and policies will be formulated
to motivate food entrepreneurs to prepare such food on commercial scale.
Nutritional training will be given to agricultural officers working in the districts and
through them, training will be further extended to village development committees
and municipalities.
Nutritional research laboratory will be well facilitated with scientific equipment to
make research programme more effective. Similarly, food research offices will be
established in potential districts.
Training and Manpower Development
Medium to high level manpower is required for technological development and
extension and quality control. By the end of the Ninth Plan, higher education and
training opportunities will be provided, and additional manpower will be arranged.
Organisational Reform
Organisational structure of present central food research programme will be reviewed
and systematised to make nutrition and quality control programme more effective and
agri-business oriented.
Monitoring and Evaluation
Priority will be given to promote programmes in a business-like manner. Regular
monitoring will be carried out to implement food technology and nutritional
programme effectively for the promotion of agro-business. For this, interaction
programme will be launched between industrialists and consumers for the utilisation
of technology and promotional activities.
Achievement:
Food quality control services will be extended from the consumers of 36 districts at
present to all the consumers of all the districts. The food quality control work will be
made more effective with the enforcement of the Consumer Act. The quality
certification system will be arranged to provide support to the export of food
commodities. By providing skill-oriented training on the establishment and operation
of industries, private entrepreneurs will be encouraged for the promotion of food
industries. The consumption of balanced diet prepared from the locally produced food
items will help to improve the malnutrition situation in the country.
9.5 Agricultural Research Programme:
As the majority of Nepalese people rely on agriculture, there is a need to conduct
research studies for the development of appropriate technology in various aspects of
agriculture in order to raise the living standard of the people through poverty
alleviation. The APP has emphasised the technology development and its utilisation
with the notion that sustainable development and continuity to agricultural economic
growth is possible only through the proper utilisation of agricultural technologies. It

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has become necessary to accord research priorities to the programmes that have been
prioritised by the APP.
In the Eighth Plan, policy measures such as organisational reform for the systematic
conduct of agricultural research works with prioritisation, decentralisation
programme with the participation of farmers and agro-entrepreneurs in plan
formulation process and the implementation of project subsidies have been completed
as per the target. The physical targets under cereal crop research and the
recommended number of varieties for terai, inner terai and hilly regions are: Paddy 3,
Wheat 3, Potato 3, respectively. Similarly, Sugarcane 3, Mustard 2, Groundnut 2,
Pulses 2, and Soybean 1 have also been recommended. Under horticultural research,
28 varieties of vegetables, which are suitable for terai, hills and mountains and that
substitute imports have been recommended.
Agro-forestry preservation work has been started to maintain ecological balance. To
mitigate the effects of animal husbandry on environment, management technique for
stall feeding system has been developed. On nutrition and animal feed, research will
be continued to support entrepreneurs involved in the production of balanced feed out
from locally available agricultural by-products. On animal breeding, identification of
technology for semen collection, freezing and utilisation for artificial insemination
when needed has successfully been carried out. On animal health, to control major
diseases on livestock, the development of technology for identifying causal factors for
brucellosis, tuberculosis, sterility, gumboro, ranikhet, liverfluke, etc. is underway. In
fishery research, biological and limnological studies on some rivers, ponds, natural
lakes and reservoirs have been completed.
There is a need to implement research programme with priority in order to overcome
the lack of location-specific appropriate technology, production loss, suitable
cropping systems of comparative advantage and technology appropriate for farmers.
Continuity will be given to the development of location-specific appropriate
technology on major food crops, horticulture, livestock and fisheries as per national
requirement and the comparative advantage of agro-ecological zone to transform
them into market-oriented agro-industries, and to the production and the supply of
genetic resource materials. Based on the country's geo-climatic potentialities,
development of cost effective, environmentally friendly and comparatively
advantageous agricultural technological development will be emphasised.
In the Ninth Plan, agricultural research activities will be carried out with a view to
conserving genetic resources based on socio-economic and geographical diversities,
continuing production, maintenance and use of such genetic materials, supporting
location-specific technologies with cost effectiveness, environment friendly, high
yielding and comparatively advantageous and achieving the growth rate of the APP.
Policy-oriented Programmes:
Following will be the policy measures for the implementation of agricultural research
programmes:

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• In view of the available infrastructure and capability, agricultural research based
on co-ordinated, supportive, participatory, and contract mechanisms will be
conducted with the co-operation of government, non-government and private
sectors.
• Research programmes will be carried out with priority in those sectors that have
been accorded priority by the APP.
• Arrangement will be made to conduct research from private and non-government
sectors with the approval of the NARC. Evaluation, certification will be carried
out by the NARC for broadening the research base.
• Interrelationships through the co-ordination between agricultural research and
high-level manpower production institution will be strengthened.
• Donor assistance for master and Ph D fellowships to research scientists and
technicians involved in research works will be explored with the joint
involvement of and signing of letter of understanding between Institute of
Agricultural and Animal Sciences and donor agencies.
• Institutions under the NARC will be strengthened and developed for providing
continuity to the conservation of genetic resource materials.
• Necessary arrangements will be made while developing agricultural technologies
that are environmental friendly and are possible to be used by the women.
• Main emphasis will be accorded on high productivity and low cost of production
while developing technology as production from recommended technology of
agricultural research have to be competitive.
• Linkage with international organisations/agencies will be extended to explore and
exchange new technolog ies.
• Indigenous agricultural knowledge, skills and technologies introduced by the
farmers will be investigated, evaluated and recommended with modification.
In the light of the above-mentioned policy measures, agricultural research
programmes will be imple mented as follows:
• Technology will be developed with priority accorded by national as well as sub-
regional location-specific needs and will be based on the farmer's production
management. In this regard, research programme will be implemented to develop
demand-led technologies with comparative advantage, cost effectiveness,
environmentally friendly and specifically prioritised by the APP.
• For increasing the production and productivity of different agricultural
commodities, programme for the identification of genetic resource materials, their
promotion and continuity in the distribution will be implemented.
• Research institutions will be strengthened and supported for manpower
development. In this process, physical facilities and manpower will be developed
in the priority areas of the APP. Research panel will be activated and made

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 responsible for selecting agricultural research programme as time bound project,
evaluating and recommending to the NARC in the light of national agricultural
research policies and priorities.
• Periodic review and updating of research networks under the NARC will be
performed. Mechanism will be developed for the evaluation and recommendation
of the technologies that are in use among farmers and the research investment by
the non-government and the private sector. Similarly, for creating an environment
for private investment in agricultural research, mechanism for evaluation and
certification as per the guidelines and approval of Agri-research Council for
financing the project will be initiated. This will help to utilise tax-free privileges
given to research investment.
• All the technologies as recommended by agricultural research will be identified
and recommended so that woman farmer can easily accept.
• Integrated research system will be initiated to achieve long-term goal of poverty
alleviation rather than unitary approach of agro-ecological zones for sustainable
and reliable research.
• Since terai is the main region for food grain production, research proposals
focused on increasing the production and productivity through high intensity
production system will be given priority. In addition, research project will be
selected for developing technology for commercial production of raw materials
for agro-industry as terai region is suitable for location-specific production of
sugarcane, jute, tobacco, pulses, spices, and oilseed crops.
• In order to have geographical advantage of hilly region, research projects will be
implemented with priority to develop appropriate technology and ensure regular
flow of such technology on potato, maize, citrus fruit, location specific
sericulture, apiculture, animal husbandry, and to support production of export
oriented crops. Similarly, research projects for increasing the productivity and
production of cold water fisheries will receive priority in other programmes.
• Looking into the location specific feasibility in high hill regions, priority will be
given to research projects related to the processing of fruit development of apple-
based horticultural production, pasture development and management, livestock
management and production of livestock products.
• To promote export-oriented commercial livestock production, citrus fruit,
vegetables and decorative flower and export-oriented fishery-based industries,
technology will be developed for increasing the productivity of raw materials and
reducing the cost of production. Besides, studies on socio-economic aspect of
farmer's problems will be conducted.
• Research programmes will be activated on priority areas as identified by the APP
through the co-ordination of multidisciplinary research programme and the
identification of responsible person for taking leadership.

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• Research studies on post harvest technology, processing technology,
conservation, storing technology and agri-equipment development for major
industrial crops, food grains and location-specific crops will be conducted in
collaboration with the programmes of Central Food Research Laboratory. Also,
study programmes will be carried out for technology development ni order to
support agro-industries based on the potentiality of organised market for
agricultural produce, their demand and supply in collaboration with Central Food
Research Laboratory.
• Farm outreach programme will be implemented in close co-operation with
farmers, agriculture and livestock extension personnel and researchers right from
the beginning of the programme. Thus, the recommended technology will be
appropriate for farmer's need. Specific arrangements will be made for ensuring
regular flow of technology for agriculture and livestock extension services.
Research Programmes of Priority:
Following research programmes will be implemented with priority to support
production promotion activities through technological development in the areas as
prioritised by the Agricultural Perspective Plan.
• Development of location-specific technological packages for intensively irrigated
production system to support economic growth rate by increasing the productivity
of crops such as paddy, wheat, maize, potato, etc.
• Development of location-specific technological packages for improving the
productivity of seasonal and off-season vegetable and vegetable seed production
and vegetable crop management, seedlings production and orchard management
technological package development for citrus and apple production, technological
package development for apiculture.
• Technological package development programmes for mulberry farming,
sericulture and high quality silk production and package programmes for export-
oriented as well as high value crops for domestic market such as bouquet
production and ornamental flower packaging.
• Location-specific technological package development on the proper use of
fertiliser in the cropping system, management of water under irrigation system,
soil fertility management for developing integrated nutrient management package
and also development of technology package on integrated pest management for
location-specific priority production of commodities.
• Development of appropriate livestock management technology packages for
increasing productivity of milk from cattle and buffaloes through improved
breeding, nutritious fodder and feed, animal health and programmes for
development of technology packages for increasing productivity of meat and eggs
through commercial poultry management and goat production management.

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• Evaluation of technological packages developed right from the inception of the
programme in terms of reducing cost of production, improving productivity thus
making production competitive in the open market under prioritised programmes.
• Monitoring of environmental impact on technological development and
inconvenience in the application of technologies by women will be conducted
right from the beginning of the research Programmes.
Other Agricultural Research Programmes:
Besides the research programmes on priority areas of the APP, other useful research
programmes to develop technology packages by linking it with market demand will
be implemented. These research programmes will be carried out on pulses, oilseed,
sugarcane, tea, jute, tobacco, spices, fruits such as mango, banana, pineapple, pears,
peach, plum, walnut, vegetables, cold water fisheries in rivers, animal management
technologies on sheep, angora rabbit, pigs, yak, chaunries, development of wool
production technology and pasture development technologies.
Training and Manpower Development:
In order to derive concrete benefits from agricultural research, it is necessary to have
high and medium level trained manpower. Since basic educational background for
researchers will be bachelor's and master's degree in agriculture, existing research
programmes will be reviewed and prioritised to develop high level and medium level
manpower in areas of priority research programmes. In the present context, as there is
a need to upgrade farmer's training level, arrangement will be made for providing
quality training to agriculture/livestock development officers. To develop expertise
and create suitable environment for research, structural and functional co-ordination
for manpower production and technical capability building will be maintained among
Kathmandu University, IAAS under Tribhuvan University, proposed Agricultural
University, Nepal Agricultural Research Council, training institutions under
Department of Agriculture and Livestock Services and the NARC.
Research Incentives:
For obtaining maximum benefits from agriculture research through the creation of
suitable research environment, researchers and research assistants will be provided
with incentives taking into account the resources at disposal. Research scientists and
research associates will be honoured with prizes and letters of appreciation for
creating competitive environment among researchers involved in developing new
technologies. To recognise sincere contributions of research scientists, a system of
patenting technology in researchers' name will be initiated. Efforts will be made to
acquire patent right on typical Nepali technology and identification of such
commodities. Donor assistance will be explored for conferring Master's and Ph D
degree to researchers based on the MOU and affiliation among universities and
research institutions both within and outside the country.

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Environmental Management:
Due importance will be given to the studies that focus on the adverse environmental
effects of agriculture such as residual effects of pesticide use, chemical fertiliser use,
effect on productivity through the cultivation of marginal lands and effects of
unsystematic livestock farming. To find out the solution to such environmental
problems and also to scrutinise the technology, a multidisciplinary team consisting of
experts from government ministries, departments, councils and private organisations
will be formed. A communication link will be established right from the beginning of
programme implementation until its completion.
Institutional Development:
In order to analyse the socio-economic aspects of agricultural technology, to adopt
research policy, to mitigate weaknesses of the existing system and to focus on
problems faced by farmers, a socio-economic research unit will be strengthened and
institutionalised. Agricultural research will be mobilised through the unification of
agricultural research policy focusing towards the attainment of long-term benefits.
In the Ninth Plan, food and agricultural research foundation will be strengthened and
ongoing research programmes will be reviewed in the light of priorities accorded by
the Agriculture Perspective Plan. Improved technology package will be tested at the
farmer's field and will be recommended to farmers and agri-entrepreneurs. Priority
will be given to outreach programme to priority pockets as identified by the district
agriculture development committee.
Role of Government and Non-governmental Sector in Agricultural
Research:
To fulfil the concrete objective from agricultural research, various governmental,
non-governmental organisations and business enterprises have to play vital role.
Therefore, research programmes will be implemented only after a clear and precise
identification of the areas of co-operation.
Formulation, Implementation, Monitoring and Evaluation System for
Research Project:
To meet the stipulated objectives of the Agricultural Perspective Plan, project
formulation, selection of project proposals, implementation, monitoring and
evaluation procedures for agricultural research will be strengthened.
The research project proposals from research groups will be developed based on
national priorities, farmers' resources endowment, farmers' problems and availability
of resources. Similarly, priorities will be given to the research proposals for donor
assistance. Selection process of project proposal of same nature from various
institutions will be improved to avoid duplication.
Research proposal will be implemented as per the suitability of crops for the locality,
identification of need and in accordance with the priority of the project. In this
process, local participatory discussions will be held among farmers. Improvement of
existing system will be made to prepare time bound project proposals that are

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compatible with the national/regional targets/objectives. Research proposals will be
formulated taking into account necessary infrastructures such as laboratory, office
buildings and quarters. To standardise project proposals, software will be developed
and computerised. Agricultural research projects/programmes, which do not
contribute to the APP's objectives/policies, will be discontinued. To ensure the
proposed research project in line with APP, a committee with high level expertise will
be formed for detail analysis and a mechanism for council approval before
implementation will be made.
To make project formulation, monitoring and evaluation effective, an internal
evaluation system will be initiated, and improvement programme for human and
physical resource management will be carried out to ensure research programmes as
per the set priority. In order to resolve the problems of the implemented project in
time, impact study and project review mechanism will be made a part of the annual
programme. Specialists will also be involved in impact assessment of central and
regional projects.
Table- 26

Area Percentage
1. Crops 47
Major food grain (Including fertiliser and 37
irrigation technology) 10
Others
2. Horticulture 17.5
Citrus fruit 6
Apple 3
Vegetables and Vegetable seed 4
Bee keeping 0.5
Others 4
3. Silk 2
4. Livestock Development 27
Dairy development 4
Animal health 5
Animal nutrition 5
Cow/buffalo 4
Goat and sheep 2
Poultry 2
Others 5
5. Fisheries 6
6. Research, exploration contract and promotion 0.5
Total 100
Expected Outcomes:
After the successful implementation of integrated research programmes,
technological packages for production pocket will be made available in time, which
will help to raise productivity. Technologies for various crops and livestock

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production will be developed. Environmental conservation of agriculture and
utilisation of agro-bio-diversity will be improved. Orchard management technologies
will be available for the development of sericulture and livestock farming business
will be promoted through available technologies on balanced animal feed
pasture/fodder and animal health. In totality, agricultural productivity will be
improved, which contributes to the higher economic growth.
9.6 Chemical Fertiliser Supply Arrangement:
Agricultural Perspective Plan has identified chemical fertiliser as major contributing
factor for accelerating agricultural growth. Similarly, irrigation, specifically tube-well
irrigation has been identified as the other important factor. Balanced and intensive use
of irrigation and chemical fertiliser through improved agricultural technology will
increase production and productivity, and agro-enterprise promotion for its stability
has equally been emphasised in the Plan. There is an increased demand for high value
crops such as vegetables, fruit, silk, honey and livestock products due to increased
income from the promotion of crops with comparative advantage. Taking into
account of this, program mes for the supply of chemical fertiliser have to be
implemented and mobilised effectively.
In the Eighth Plan, a programme was set to gradually phase out subsidy in chemical
fertiliser during the plan period. However, subsidy in urea remained unchanged
whereas subsidy in other fertilisers was removed. Transportation subsidy in chemical
fertiliser still remains. The use of chemical fertiliser during the plan period remained
below the targeted level. The supply of fertiliser on the last year of the Plan was
targeted to reach 242 thousand mt, but it remained at 64.16 thousand mt.
The supply of chemical fertiliser was solely made from the government sector but the
supply became restricted because of budgetary constraint and increased level of loss
incurred by the Agricultural Inputs Corporation. Due to managerial problems, farmers
could not get fertiliser both in time and in required amount. Therefore, per hectare
consumption of fertiliser at the national level was found far below as compared to
other countries (24kg/ha.). Low consumption level of fertiliser affected agricultural
production and productivity. If the supply of fertiliser is increased, there is a scope for
increasing production and productivity and there is a possibility to accelerate
economic growth. To resolve this problem, HMG has recently accepted the private
sector's involvement in the import and the distribution of fertiliser. The private sector
is also entitled to get subsidy on the import of urea and they are free to fix selling
price once the subsidy amount is readjusted. As a result, supply and sales of fertiliser
will be increased. In the Ninth Plan, increase in production and productivity by
maintaining a balance between utilisation of soil nutrients and requirements of the
cropping system have been envisaged. The import and sales programme for chemical
fertiliser will be launched with the objective of providing continuity to the supply of
quality chemical fertiliser with the active involvement of the private sector. Proper
use of chemical fertiliser will be encouraged and its regular supply will be ensured
through market mechanism. The private sector will be involved in the import and the
distribution of chemical fertiliser. A competitive environment will be created in the

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long run in order to ensure continuity and effectiveness in the supply of chemical
fertiliser for increasing agricultural production.
Policy-oriented Programmes:
In the Ninth Plan, the chemical fertiliser supply programme will be implemented with
following policy measures and continuity will be given in the supply of chemical
fertiliser through the private sector involvement in import and distribution. As long as
there is price subsidy in chemical fertiliser, the Agriculture Inputs Corporation and
the private sector will be treated on an equal footing. In the first half of the plan
period, price and transportation subsidy will be removed and a mechanism will be
initiated to sell chemical fertiliser at cost price. Soil management measures will be
emphasised along with the increased use of chemical fertiliser.
• Create environment for private sector involvement in chemical fertiliser business
from the first year of the Plan.
• Price subsidy on fertiliser except urea will be abandoned from the first year of the
Plan. Amount of subsidy per ton of urea will be fixed and the Agriculture Input
Corporation and the private party will be given equal treatment regarding subsidy
amount. By the middle of the plan period, subsidy in urea will be phased out.
Supply will be made competitive, mechanism for distribution and sale at cost
price will be initiated, and regular supply will be ensured. To make the private
sector competitive, transportation subsidy will also be removed and measures to
distribute fertiliser on a cost basis will be followed during the plan period.
• Fertiliser demand will be projected in the month of Magh (January) each year
based on fertiliser requirement of various seasonal crops. Fertiliser price in the
international market will be reviewed from time to time in order to support
importers by making such price public. Also, to ensure regular and steady supply
of chemical fertiliser and to have operating stock for the current need, a reliable
mechanism will be worked out.
• Based on the report of soil analysis, import and use of chemical fertiliser will be
encouraged mainly for major nutrients such as nitrogen, phosphorous and potash.
Agricultural research, extension and soil analysis services will be made more
effective for increasing the proportion of fertiliser use for production.
• Chemical fertiliser unit will be established at the Ministry of Agriculture and
gradually strengthened. The unit will help to develop measures for fair deal in
chemical fertiliser trade, forecast demand projection based on seasonal
requirements of fertiliser, monitor the supply arrangement for ensuring
availability, perform quality control measures and chalk out relevant policy
measures.
Import/Supply and Sales Arrangements:
• Since there is no commercial viability for chemical fertiliser production in the
country at present, it is imported from foreign countries. The Agriculture Inputs
Corporation imports chemical fertiliser and sells through various agencies. From

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 the beginning of the Ninth Plan, HMG has adopted a policy to involve the private
sector in import, supply and sale/distribution of chemical fertiliser. Under this
arrangement, there is no need to acquire import license, and foreign currency is
made available easily on the basis of a letter of credit from the bank. Importers
are allowed to fix retail price. From this arrangement, timely availability of
chemical fertiliser at competitive price on a regular basis is ensured for the
farmer. The fertiliser unit under the MOA will be established at the beginning of
the Plan and will be made responsible for the projection of annual fertiliser
demand for various winter and rainy season crops, regularly monitor the supply
system to ensure import/supply and sales arrangements. Similarly, as long as
there is subsidy on fertiliser, a subsidy distribution committee with the
representation of the private sector will be formed at the Nepal Rastra Bank for
the proper distribution of subsidy.
• The Agriculture Inputs Corporation, which remains in the government sector,
possesses considerable experience in import and sales of chemical fertiliser. The
Corporation has also created physical infrastructure throughout the country. Since
the private sector will take some time to gain experience in fertiliser trade,
construct godown and arrange sales system, a mechanism will be made for
sharing such infrastructure for mutual understanding between the AIC and the
private sector.
• Commercial banks will be encouraged to make fund available to the private
sector on the basis of their capacity, transaction status, reliability and ot her
banking provisions so that financial requirements of the private sector will be met
once their involvement in fertiliser supply is initiated. If an individual importer
wants to import huge amount of fertiliser, present bank loan limit may not be
suffic ient. Therefore, the limit will be revised during the plan period. Also the
concept of consortium finance will be implemented in chemical fertiliser trade
through the Nepal Rastra Bank, commercial banks and other financial
institutions.
• Mechanism for providing short-term loan to dealers and agents in fertiliser
distribution/sale will be made through banks and financial institutions in a simple
and easy manner, as fertiliser importers may involve intermediaries such as
dealers and agents in the distribution of fertiliser to the farmers at their doorsteps.
Institutional Arrangement:
It is not possible to increase the consumption of fertiliser from the efforts of a single
institution; therefore, there is a need to have equal participation from government,
semi-government, banking and private sectors. A fertiliser promotion committee will
be formed under the Ministry of Agriculture with the representation of concerned
agencies for resolving the implementation problems related to import and
sale/distribution of f ertiliser. The committee will also monitor the roles and functions
of concerned agencies. Fertiliser monitoring unit will act as secretariat for fertiliser
promotion committee.

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Soil Management:
A system of soil testing at farmers' level for the proper application of chemical
fertiliser has not been in vogue in Nepal. Enough attention has not been given to the
mixed use of organic manure and chemical fertiliser. Therefore, there is considerable
loss in soil fertility. Similarly, proper attention to cope with the depletion of soil
fertility has not been paid. With the implementation of the APP and considering the
increased use of fertiliser, there is a need to have soil management programme to
maintain soil quality and fertility. To establish co-ordination between fertiliser use
and soil management programme, following measures will be taken under
agricultural extension programme
• Soil testing programme will be tied up with agriculture extension activities and
will be expanded on a mass scale. In every district, programmes supportive for
soil fertility will be implemented as necessary programme.
• Intensive package production programmes will be implemented with priority,
mechanism for compulsory soil testing and fertiliser recommendation based on
soil test results will be followed.
• To improve the system of manure and fertiliser use based on the result of soil
testing, the farmers, agriculture technicians and field workers will be trained.
Special emphasis will be given for women participation in such training. Soil
testing laboratories will be strengthened for capacity building as per the needs.
• Since chemical fertiliser is not substitute for organic manure rather a supplement
for depleted nutrients, emphasis will be given on balanced use of manure and
fertiliser through agriculture extension on a mass scale.
• Private sector will be encouraged to establish chemical fertiliser mixing and
blending plant in order to improve and maintain soil quality by promoting the use
of such blended chemical fertiliser.
• Fertiliser Act will be formulated and enacted in order to regulate the quality,
import and distribution system. Chemical fertiliser will be included in the
category of essential commodity.
Physical Target:
The projected figure for the supply of chemical fertiliser based on nutrient content
will be 128,202 mt of nitrogen, 47,186 mt of phosphorous and 2,671 mt of potash.
From this, fertiliser use will be increased from the existing rate of 24 kg per ha. to
that of 68 kg/ ha.( see table 28 and 29)
Monitoring and Evaluation:
The fertiliser unit at the Ministry of Agriculture will be effectively mobilised for the
regular supply of chemical fertiliser, along with the monitoring of supply situation
and the quality of chemical fertiliser.

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 Table- 27
Description of chemical fertiliser sold during the Eighth Plan period
(In nutrients)
F.Y Nitrogen Phosphorus Potash Total
1992/93 60447 21595 1289 83331
1993/94 55385 17149 1278 73812
1994/95 64385 24300 1578 90263
1995/96 46448 21307 2400 70155
1996/97 43242 19283 1635 64160
Grand Total 269907 103634 8180 381721

Table- 28
Projection of Gross Consumption of Total Chemical Fertiliser in the Ninth Plan

FY Urea DAP Murate of Potash Total

1997/98 144142 61978 2690 208810
1998/99 163491 70298 3051 236840
1999/2000 185437 79734 3460 268631
2000/01 210329 90438 3925 304692
2001/02 238562 102577 4451 345590
Grand Total 941961 405025 17577 1364563

Table- 29
Projection of Nutrient Consumption in Total Chemical
Fertiliser in the Ninth Plan
(in mt )
FY Nitrogen Phosphorus Potash Total
1997/98 77461 28510 1614 107585
1998/99 87859 32337 1830 122026
1999/2000 99653 36678 2076 138407
2000/01 113030 41601 2355 156986
2001/02 128202 47186 2671 178059
Grand Total 506205 16312 10546 703063

9.7 Agriculture Credit Disbursement Arrangement:

The agricultural perspective plan has identified chemical fertiliser as prime factor for
accelerating agricultural growth. Similarly, irrigation, specifically tubewell irrigation
has been identified as another factor. The Plan has given similar importance to the
promotion of agro-enterprises for the promotion and stability of the increased
production and productivity arising from improved technology, which utilises

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irrigation and chemical fertiliser in an intensive and balanced manner. The increased
income resulting from the promotion of crops with comparative advantage will lead
to increased the demand for high value crops like fruit, vegetables, silk, honey,
livestock products, thereby creating pressure for the increasing production of these
commodities. In order to create an environment for the diversification and
commercialisation in agriculture, there is a need for massive investment in these
sectors. Considering these needs in the Ninth Plan, agricultural loan disbursement
programmes have to be implemented effectively.
While analysing the progress made in the Eighth Plan, policy arrangements were
made for the additional mobilisation of local resources. In this line, some commercial
banks expanded their branch offices and rural development banks were established in
five development regions in order to incorporate the need of resources for poor
people. Since commercial banks could not fully invest in the priority sector, other
banks and non-governmental organisations were involved in this process. Emphasis
was given on the establishment of co-operative financial institutions, and various such
institutions were established. Financial institutions were made fully free to fix their
interest rate from fiscal year 1996/97; mechanism for providing interest subsidy
through banks was abolished. A system of providing passbook after the approval of
package loan was introduced but found to be ineffective. Although agricultural credit
training centre provided training facilities to other banks as well, but a concrete policy
was lacking.
As far as the financial target is concerned, it was targeted to lend Rs 5476.8 million
and recover Rs 4826.4 million from agricultural development. However, the
achievement in terms of lending and recovery was found to be Rs 3852.7 million and
Rs 2762.8 million, respectively. Similarly, loan disbursement by commercial banks
under priority sector programme was targeted to be Rs 1251.5 million for lending and
Rs 1041 million for recovery but was found to be Rs1002.2 million and Rs 454.5
million in terms of lending and principal amount recovery, respectively.
The rural development banks established during the Eighth Plan period lent a total of
Rs 914.7 million and recovered Rs 665 million in total, which was regarded as good
result.
Performance of agriculture credit investment comes to the level of target at current
prices but this cannot be treated as good performance at constant prices. It is observed
that the farmers are not getting credit in simple and timely manner. The effective use
of such credit is doubtful because of increased auction of collateral. Likewise,
increasing outstanding loans and weak realisation status have aggravated this
situation further. Thus, it has apparently been warranted to improve those
weaknesses.
In the Ninth Plan, income and employment generation programme will be launched
through a simple and easy flow of agricultural and rural credit to subsistence and
commercial farmers, entrepreneurs with the ultimate objective of poverty alleviation.
Credit discipline will be strongly maintained so as to increase the loan recovery rate,
which ensures the sustainability in financial services. Such programme will certainly
benefit women community and rural poor for income generation.

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Policy-oriented Programmes:
Poverty alleviation is the main theme of the APP. Programmes to address this
objective will be launched in such a way to increase in agriculture growth rate rapidly
by substantially increasing production resources and necessary inputs. Priority will be
given to inc rease the credit flow through institutions to the farmer/group, private
entrepreneur and traders in close co-ordination with both government and non-
government agencies for the promotion of credit investment. Internal and external
resources will be mobilised for the investment required for uplifting the income status
of poor farmers and women community. To improve the debt recovery system, and to
strengthen monitoring and evaluation, following will be the programmes.
• Programmes on priority sectors as defin ed by the Agricultural Perspective Plan
such as chemical fertiliser, shallow tubewell, livestock production, and high value
crops like apple, fruit, fresh vegetable and vegetable seed production, apiculture
and sericulture in hills and mountains, will be implemented in the pocket areas
with necessary credit flow as part of the package.
• Principal financial institutions such as the Agricultural Development bank, the
Nepal Bank Ltd, the National Commercial bank, rural banks will provide
agriculture loans. To ensure effectiveness in and wide coverage of credit flow
system, non-government organisations, informal sectors and co-operatives
involved in rural services and loan transaction will also be encouraged.
• In order to bring an improvement in the present working capacity of financial
institutions which are responsible for agriculture credit flow, suitable training
programme will be launched. The training programme will envisage the main
priority and implementation procedure of the APP. The Agricultural Credit
Training Centre of the Agriculture Development Bank will be strengthened so as
to impart training to personnel of different financial institutions.
• Present capacity of the Agriculture Development Bank in shallow tubewell
programme will be made more effective. Considering the interest of other banks
in this sector, additional capacity with proper monitoring will be developed in the
mid-plan period.
• In order to achieve targeted credit investment under the APP, internal resource
mobilisation will be taken as major source for the fund needed by financial
institutions. Proper policies will be formulated to increase potentialities of using
available resources of other financial institutions. Focus will be given on getting
assistance from donor agencies for required resources through different projects
and investment programmes.
• Access of poor farmers and women community to credit programmes will be
enhanced. Regular monitoring will be carried out for ensuring timely credit
payback to banks and providing credit to po or and marginal farmers on the basis
of group as collateral.

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• Activities on shallow tubewell installation, credit flow and rural electrification
especially in terai region will be carried out in a co-ordinated way after
identifying the potential pocket areas.
• There will be a provision of bearing 5 percent amount of total credit flow in the
selected area as an overhead cost by HMG/N since the banks have to do non-
banking activities such as hiring of efficient technicians to install shallow
tubewell, providing training to farmers for the promotion of agricultural and rural
credit flow. Such management will also be applied in rural development banks.
Such banks will also be operated in hilly regions.
• The present policy that gives autonomy to banks to fix interest rate on a
competitive basis will be maintained. There will be a provision of reasonable
interest rate by reducing the pressure on interest rate caused by inefficient
investment and overhead cost as a result of absence of banks in the rural areas.
But publicity will be carried out to inform that the intention of getting credit at
low interest rate for profitable business is also wrong.
• In order to make credit facilities less expensive and simple for farmers and to
approve package credit for agro-business, step by step investment procedure will
be launched on the basis of progress monitoring. From this, both investors and
debtors will be benefited. Due to the lack of proper procedure for monitoring,
credit utilisation by debtors is not satisfactory. As a result, debt recovery rate is
not promising, which is resulted in the increase in collateral auction. Since low
debt recovery may adversely affect the sustainable financial system, debt
recovery will be made effective by adopting regular monitoring system to find
out the status of credit utilisation. There will be a provision of information flow
by adopting the process of receiving regular information about the credit recovery
activities of different financial institutions in the priority sectors of the APP. For
this purpose, monitoring and evaluation process will be strengthened through
concerned financial institutions.
• A programme review will be carried out periodically by preparing a report after
the analysis of implemented programmes in which the financial institutions have
invested in the agriculture sector as prioritised by the APP. For this purpose, a
monitoring committee will be formed, comprising representatives from different
financial institutions. In this case, the Nepal Rastra Bank will play a vital role.
Major Items of Credit Flow Areas and Physical Target:
Physical targets of investment are fixed (Table 30) on the basis of credit flow in the
past and programmes set in the Ninth Plan. The following credit investment
programme will be launched in different commodity areas.
a) Priority
Chemical Fertiliser
In the Ninth Plan, special emphasis will be given to make the institutional credit
available in a simple way for the increased use of chemical fertiliser. In the first year,

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credit investment on chemical fertiliser will be increased at the rate of 20 percent and
subsequently it will reach up to 40 percent at the end of the Plan.
Participating financial institutions should emphasise more on credit recovery since
credit flow in chemical fertiliser is short-term depending on types of crops. District
agriculture extension programme will be made active for the effective use of properly
mixed chemical fertilisers.
A continuos monitoring will be carried out to control the shortage of resources in
financial institutions because demand for credit will subsequently rise after present
subsidies on urea fertiliser comes to an end or is maintained at a minimum level. The
projection of Rs 6630 million credit for chemical fertiliser to be invested by financial
institutions is given in Table 30. Total fertiliser quantity is given in Table 20 and 29.
Shallow Tube-well
In 20 terai districts, 32000 shallow tubewells will be installed within five years. For
this, about Rs 1510 million of credit will be invested. There is a target of irrigation in
80 thousand hectares of land from shallow tubewell. The following issues will be
considered in credit flow in shallow tubewell irrigation.
• During the Ninth Plan period, other financial institutions in addition to the
Agriculture Development Bank will be encouraged to invest in shallow tubewell.
After the involvement of other financial institutions in the investment in tubewell,
the cost borne by the HMG will be made available on the basis of physical
quantity.
• Since shallow tube-well credit flow to individual farmer by 95 percent is very
expensive to install tube-well individually by small farmers, focus will be given
to install shallow tubewell in farmers' group. Use of group tube-well will be
developed through imparting necessary suggestion in water distribution and sale.
Shallow tubewell with smaller capacity will be installed on the basis of technical
feasibility. Since mostly pump set, boring pipe and nets are used in the
installation of shallow tube-well, arrangement will be made to ensure their supply
in the market. The private sector will be encouraged to establish additional plant
for assembling the pump set.
• Shallow tube-well will be installed in the command area of surface irrigation
project where there is a shortage of water in the winter in order to develop the
pocket area of round the year irrigation facilities. Since the medium-term credit is
of 3 to 5 years in shallow tubewell, intensive agriculture programme will be
launched in the tubewell irrigated area and more attention will be given to timely
credit recovery.
Livestock Farming
Priority on credit flow will be given to livestock and poultry farming, especially
cattle, buffalo, goat and poultry. Credit flow will be focused more to small and poor
farmers and also to women who are attracted to this profession. Due attention will be
given to large private commercial livestock farms to flow credit. In order to support
livestock farming and promotion, appropriate marketing facilities, veterinary services

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and animal insurance facilities will be properly managed. In the Ninth Plan, a total of
Rs 5890 million is projected as credit need for livestock development.
High Value Commodities
Special priority will be given to providing credit to high value crops such as apple,
citrus, fruit fresh vegetable and vegetable seeds, sericulture and apiculture by
establishing close co-ordination with high value commodity production and
development programme.
Special focus will be given to provide medium and long-term credit in simple and
easy terms to high value crops, except vegetable farming and vegetable seed
production. Statistics showed that in the Eighth Plan, there was not enough credit
flow to these commodities, which really had great potentialities for development. As
more income can be generated from the production of such commodities, it is targeted
to increase the annual credit flow to these commodities by 20 percent, which will be
equivalent to Rs 384 million during the Ninth Plan period.
Agro-industry and Processing Enterprises Promotion
Agro-industry and Processing Enterprises have grown up steadily. To promote and
develop such industries, which mostly utilise domestic raw materials, the private
sector will be encouraged by providing them Rs 2736 million credit in the Ninth Plan
period (Table 31).
b) Resource Management
The proposed financial investment will be fulfilled through mobilising internal and
external resources.
Agriculture Credit Projection
During the Ninth Plan period, credit flow of Rs 17,152 million is projected in the
APP priority sectors (chemical fertiliser, shallow tubewell, livestock and poultry, high
value commodities, the operation and establishment of agro-business). For this,
Agriculture Development Bank, Commercial Bank and five rural banks will share 75
percent, 15 percent and 10 percent respectively, which amounts to Rs 13,152 million,
Rs 2346 million, and Rs 1564 million respectively. Since, only investment projection
of Agriculture Development Bank in tubewell has been made available projections of
other financial institutions have not been included.
Other Credit Programme
Total investment by the Agriculture Development Bank is projected to be Rs 18,104
million in other agriculture activities including fisheries except priority sectors. Thus,
during the Ninth Plan, the total investment credit is projected to be around Rs 35, 254
million. In proposed projection, credit flow percentage in total sale price of chemical
fertiliser is targeted to be 20 percent, 25 percent, 30 percent, 35 percent and 40
percent respectively. As credit remains in the form of cash in case of fertiliser on an
average, 35 to 40 percent of credit in food crops, cash crops, and special crop will be
utilised in fertiliser purchase.

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c) Monitoring and Evaluation
In the Ninth Plan, regu lar monitoring and evaluation will be carried out to ensure
whether progress has been made according to the set target through systematic
information flow from the financial institutions in order to meet the ultimate objective
of poverty alleviation set by the APP. One monitoring committee representing
financial institutions and non-government organisations responsible for the
investment in agriculture and rural areas will be established in Nepal Rastra Bank.

Table- 30
The estimation of Overhead expenses in Corporate loans

(Rs in million)
Year 1997/98 1998/99 1999/2000 2000/018 2001/02 Total
Loan for shallow 109 200 300 400 500 1509
tubewell
Reimbursement of the
cost to Agri.Dev. Bank at 5 10 15 20 25 75
a rate of 5% on the above
loan
Training:
Shallow tubewell in high 9 9 9 9 9 45
value crops
In high value crop 1 2 2 3 3 11
Local institutions for loan 14 14 14 15 15 72
and saving programme
Total cost 29 35 40 47 52 203

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 Table- 31
Projection of the loan flow in the Ninth Plan
(Rs in million)
Objective 1997/98 98/99 99/2000 2000/01 2001/02 Total Agri. Com- Rural
Dev. mercial Banks
Bank Bank
Chemical 517 860 1300 1721 2231 6629 4972 994 663
fertiliser
Shallow 109 200 300 400 500 1509 - - -
tubewell
Livestock 962 1144 1201 1262 1324 5893 4420 884 589
High value 52 61 75 89 107 384 288 58 38
crops
Agro- 448 493 542 597 657 2736 2052 410 274
industry and
processing
Total 2088 2758 3418 4069 4819 17152 13241 2346 1564

9.8 Irrigation, Agriculture Road and Rural Electrification:

Priority Programme:

In order to achieve the agriculture growth, increase in agriculture production and

productivity is the major need for which irrigation and fertiliser are indispensable
inputs. Driving force of production increase is the proper market ing network, which
links the producers and consumers. It is also well-known fact that production in the
market will not be competitive and investment will not be attracted unless the cost of
production is reduced. Therefore, it is a must to link production site and marketing
place by agriculture roads so that low cost produce will be available in the market.
Similarly, farmers will be able manage tubewell and pump irrigation systems
themselves to get the year-round irrigation. Rural electrification is equally important
for the promotion of employment opportunities through small scale processing
industries in the rural areas. Such infrastructure-based production pockets will be
given priority in the APP. In the Ninth Plan, this programme will be launched with
priority in the area of infrastructure development. During the Ninth Plan period,
following target will be included in the total target under infrastructure building.

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 Prioritised Irrigation Programme
(ha)
programme Terai Hills High Total
Mountains target
1. Renovation of farmer 38000 18000 5000 61000
management system
2. Shallow tubewell 80000 80000
3. Deep tubewell 10000 10000
4. New small irrigation 3000 1000 4000
5. Total 128000 21000 6000 155000

Agriculture Roads
(in Km)
Programme Target
1. Terai (20 districts) 1577
2. Hills (29 districts) 530
3. High Mountain (4 districts) 131
4. Dailekh - Jumla ropeway 45
5. Maintenance --
Total 2283

Rural Electrification
Priority will be given to the regular rural electrification programme in the cluster of
tubewell installation area in terai. The programme will be launched by the concerned
agency to support production pockets of hills and high hills.
10. Women Farmer Development
In reality, women involvement in agriculture development is far more than that of
men. But their involvement in getting agriculture credit, agriculture inputs and
training for improving the skills on improved technology is far below than it should
be. That is why, programme will be focused to increase their participation.
In the Eighth Plan, in order to increase the women involvement in the agriculture
development the set target was to involve 35 women in training programmes, and to
include 30 percent woman members in farmers' groups. But the achievement fell
short of expectation mainly due to low information flow. Programmes were being
initiated by Women Farmers Development Division in few districts by conducting
some studies on the contribution of women in agricultural activities, basic conceptual
plan was formulated for women farmer development; regional workshops to create
awareness among programme implementers were conducted; and the revolving fund
programmes were implemented for the promotion of women's income and
employment opportunities. Directives have been given to include women farmer

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development related activities in regional workshops. Actual achievement in this
respect has not been ascertained due to the inability to fix quantitative target in the
mainstream of information flow related to women development while formulating the
programme. Such information has not been systematised in the main agriculture
programme as well.
Due to lack of inclusion of clear -cut target and activities streamlining women
involvement in the annual programmes, inadequate access to rural women in the
training programme which is itself centre-oriented, women's participation in
agriculture development has not been achieved as expected. Special focus will be
given to resolve these shortcomings in the Ninth Plan.
In the Ninth Plan, women farmer development programme will be launched with a
long-term vision to create an environment for equal participation of man and women
in family decision making process regarding agriculture development. This will help
increase women participation in different agriculture activities for the sake of
enhancing women's income and employment opportunities, which eventually boost
the agriculture production and productivity by enhancing their capabilities to apply
modern technology in agriculture.
Women involvement will be increased in the mainstream of different production and
post-harvest activities implemented in different pocket areas for agriculture
development. Women will be encouraged to get the agriculture training programmes,
improved technology, technical services, agriculture inputs and agriculture credit. In
the formation of farmers' groups, women will be encouraged to be members. And
special women farmers' groups will be formed on priority basis. Special services will
be rendered to marginal women farmers group for income generation. There will be
continuous information flow and data system for indicating the achievements.
Following women farmer development programmes will be launched by establishing
co-ordination among different related sectors.
• Production programme of agriculture crops, horticulture, livestock, fisheries,
apiculture and sericulture and post-harvest activities of grading, storage,
processing, marketing and preparation of food variety will be backed up by
providing agriculture inputs, agriculture credit, technical services through
farmers' groups and innovative farmers in which there will be at least 35 percent
women participation.
• In order to improve women's capacity building, training activities will be
launched at the production site, if possible, by mobile trainer teams. In such
training, women participation will reach up to one-third of total participants. In
such training programme, the number of man participants will also substantially
increase.
• To increase women's involvement in the agricultural activities, women related
targets will be set right from the project formulation stage. Such targets will be
reflected clearly in the annual programme implementation. Women involvement
programme will be focused specially on seed production activities, small rural

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 agricultural processing enterprises, women co-operatives and rural marketing for
generating income and employment opportunities.
• Special attention will be given to increase women partic ipation in the farmers'
groups and, if necessary, a separate women group will be formed. For this
purpose, women awareness programme will also be launched.
• In order to gain momentum in poverty alleviation, marginal women farmers'
groups will be encouraged to formulate and implement site-based income
generating activities in specific locations.
• Information collection and its flow about different programmes/activities right
from its formulation to implementation is necessary for effective monitoring and
evaluation. In this process, women related information will also be collected and
disseminated.
• Women Farmer Development Division will be strengthened to study and analyse
problems arising while implementing the programmes with respect to increasing
the participation of women in agriculture development and to monitor and co-
ordinate the policy and programmes related to women involvement in agriculture.
11. Environment and Agriculture:
The Agriculture Perspective Plan has set the target of achieving high economic
growth in agriculture sector. In order to achieve this target, the Plan has adopted the
long-term vision to bring necessary improvement in policy, programme and
institutional sectors for effective implementation of its certain priorities. Special focus
will be given to programmes which contribute to environment conservation and
preservation. Based on this vision, following will be launched with priority to support
the environment protection while implementing the agriculture development activities
in the Ninth Plan.
• Crop productivity is reduced due to degraded soil fertility caused by the cropping
intensity and of loss of soil nutrients. Consequently, soil structure will be
degraded that adversely affects environment. In this condition, integrated plant
nutrients management, agriculture research and extension activities will be
launched with special priority to improve and maintain soil fertility by the
balanced use of fertiliser.
• Special focus will be given to reverse environmental degradation by the scientific
use of pesticides in the crops. In this process, integrated pest management
programme will be launched extensively.
• Due to the lack of concrete land-use plan, fertile agricultural land is being used
for non-agriculture purpose. The long-term land-use plan will be formulated and
implemented in order to check the environmental problem so that scarce
agricultural land resource is optimally utilised.
• Agriculture Perspective Plan has given special focus on tube-well irrigation.
Special emphasis will be given to the conservation of Siwalik region in order to
improve the environment and conservation of ground water resources.

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• The problem of soil erosion is increasing day-by-day in mid hill areas due to
encroachment on the existing forest area to collect firewood and fodder to fulfil
local people's daily needs. Such activities have adverse effect on environment. In
order to solve this problem, farmer participatory programmes such as community
forest, leasehold forestry and pasture development will be strengthened and
expanded.
• Special focus will be given to bio-engineering sector in and around agriculture
roads as envisaged in the APP for the prevention of landslide and soil erosion.
Extension programme will be launched to publicise and follow appropriate
technology for constructing the environment friendly roads as per directives
prepared with the help of forestry sector.
• According to geographical condition, special focus will be placed on fruit and
perennial high value crops to make them commercial in high and mid-hills of the
kingdom. This will help conserve soil and preserve the environment.
12. Implementation Arrangement
In the Ninth Plan, implementation of agriculture development programme will be
based on the APP concept. Following activities will be launched for the effective
formulation and implementation of programmes.
• District Agriculture Committees will be made responsible for identifying pocket
areas for the development of food-grain, livestock, high value crops like fruit,
vegetable, vegetable seeds, sericulture and apiculture by developing programmes
for implementation and the making arrangements for the availability of services
such as technology dissemination, agriculture credit and marketing services in a
co-ordinated manner. This DDAC will be responsible to monitor and evaluate
such programmes. In addition, programme execution committee will be
responsible to resolve implementation issues at the field level. Monitoring
arrangement will be carried out by the regional level agencies.
• Special attention will be given to strengthening and development of resource
centre in the production site. Because of such resource centre development, there
will be sustainable supply of production inputs to production pocket areas.
• Agriculture and livestock extension services programme will be launched to
make commercialisation of agriculture as per APP concept.
• In order to bring rapid momentum in shallow tubewell installation to support the
irrigation facilities expansion, concerned institutions will be strengthened.
Similarly, there will be certain institutional set up to monitor policy based
programmes for the supply of fertiliser such that farmers will be able to purchase
fertiliser when they need it.
• A separate institution has been established to proceed th e construction activities
of agricultural roads in order to make agricultural produce competitive in open
market by launching programmes which will help reduce the production cost and
marketing expenses. This institution will make site selection in co-ordination with

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 the related organisations and effectively implement the agricultural road
construction programme.
• Agricultural research programme will be launched in such a way that technology
will be generated focusing on sectors identified by the Ninth Plan.
• The plan has a concrete policy about agricultural credit that should be invested in
the priority sectors that is accessible and available in time.
• There is a provision of agro-business promotion committee for timely monitoring
and implementation of the programme and policy for the promotion of agro-
industries and entrepreneurs in order to bridge the agricultural produces with the
marketing network.
• Apart from above mentioned provisions, there is also a provision for institutional
capacity building by restructuring the existing institutions.
• There is also a provision to gather additional resources for arrangement of
necessary manpower and budget in order to gain momentum in programme
implementation by restructuring the available resources and means in priority
sector.
• The concerned ministries and departments will play a vital role with due
responsibility to implement the programmes in effective manner.
• A high level National Supporting Committee will be established in National
Planning Commission to provide guidelines for formulation, implementation and
monitoring of agriculture development plan as envisaged by the APP. Ministerial
Development Action Committee (MDAC) headed by the concerned minister will
further expedite the programme implementation.
13. Plan, Implementation, Monitoring and Evaluation
According to the concept of the APP, the prioritised package programmes will be
formulated and implemented by identifying, co-ordinating and interacting among
related institutions. A regular monitoring and eva luation will be carried out at
ministry, departmental, regional, district and service centre levels.
There is a provision of data collection by simple procedure for the programme
evaluation after the plan formulation and implementation. At the project level, a
system will be developed for data collection as a consolidated programme. There will
be a provision of regular data collection and analysis in close co-ordination with
Central Bureau of Statistics to collect the relevant data in a simple way by using the
existing manpower and organisational structure up to the service centre level. A
special focus will be given to data collection activities in the prioritised pocket areas
of the APP.
The District Agriculture Development Committee and Implementation Sub-
committee will be activated for identification and prioritisation of potential
production pocket areas and for implementation and evaluation of programme in
these pocket areas at the district level. A workgroup consisting of allied agencies will

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be established for programme implementation. Problems that emerge during
programme implementation will be resolved on the spot by this work group while
inspecting and monitoring. Regional Director and Director General of the concerned
departments will be responsible for the effective implementation and monitoring of
the assigned programmes.
The implementation condition of agriculture programme will be reviewed by regular
information and data flow as a result of monitoring. The review report will be sent to
National Planning Commission on a regular basis. For this purpose, a contact person
will be identified at the ministry level. Agriculture Development Officer will be the
contact person at the district level.
Regular supervision, direction, progress and data collection and analysis procedure of
all programmes under the ministry will be strengthened. The APP implementation
will be given momentum by arranging regular MDAC meetings.
14. Expected Achievement
In the Ninth Plan, agriculture development programmes are formulated recognising
the agriculture sector as lead sector. There will be rapid economic growth in
agriculture sector through the increase in agriculture production and productivity
through the successful implementation of programmes. Such programmes will impart
special contribution to alleviate poverty through the increase of income and
employment opportunities for the people. In totality, it is estimated to alleviate
poverty by 5 percent on the basis of the development of agricultural sector. In
addition, the balance between the production inputs and natural resources will be
ensured while implementing the programmes, which will support the environmental
conservation. And commercial activities in agriculture production and agro-business
will have brought a positive impact on women participation. Programmes related to
poverty alleviation, employment promotion, women participation and environment
management will bring following fruitful contributions.

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 Major Expected Achievements through Implementation of the Agriculture Development Programme at the End of the Ninth Plan.

Programme Production Growth Contribution in poverty Employment Promotion Growth in Women Environment
alleviation involvement Conservation
1 2 3 4 5 6
Cropping intensity and Cropping intensity will increase Transforming subsistence crop Additional employment Besides the activities Encouraging
productivity enhancement from 160 percent to 172 percent production system to opportunities will increase of commercial crop perennial crops
programme (Food grain through the improvement of commercial system by through seed production, the instead of growing
and cash crop production) irrigation facilities. The annual maintaining relation with multiplication, seed activities like food crop in
growth rate of food grain and agro-based industries, will supply, irrigation and agriculture extension, marginalised and
cash crop will be 5.18 percent and contribute to increase income extension of cropping agriculture training, sloppy land, will
6.5 percent respectively. of the farm ers. intensity. agriculture assist in
The improved seed will cover 75 communication and environmental
percent of the area covered by seed production will conservation.
the major crops with wide see outstanding
extension of improved seed use. increase in women
In this area, the chemical fertilizer involvement.
use will increase from current 18
kg. to 50 kg.
The yield will increase by 21
percent due to the irrigation,
technically improved seed and the
extension of chemical fertilizer
use. Food grain (including potato
and pulses) production will
increase from 7580000 MT. to
9842000 MT. Per capita food
grain availability will increase
from 354 kg to 450 kg (in gross)

Page.395

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 Major Expected Achievements through the Implementation of Agriculture Development Programme at the End of the Ninth Plan

Programme Production Growth Contribution in Poverty Employment Growth in women Environment conservation
alleviation Generation involvement
1 2 3 4 5 6
Livestock and Fisheries Annual growth rate In the context of livestock As milk, meat and egg In the various aspects of In northern bordering
Development of livesock based business which is also main production will be livestock business, districts pasture will be
products will be basis of living for 80 oriented towards women involvement developed in 5000 ha
5.55 percent in percent people through the commercialization, will increase . Besides through people's
milk, 6.22 percent commercialization of it will additional self these, livestock participation . In addition,
in meat and 7.03 contribute commendably in employment and full development the contribution in
percent in egg. the income growth of the employment programme will environment
common people. Besides, it opportunities will be organize women in improvement will be seen
will contribute to poverty created in this area . 7000 group in order to by the distribution of
alleviation as income level Besides, 26 thousand involve them in about 1513 m.t. grass seed
of women and low income additional families will livestock business . and 22.2 million fodder
families will increase due get direct employment trees .
to the women specific opportunities through
livestock development the targeted programme
programme and for poor community
marginalized farmer and women.
specific livestock
development programme
Fish production will As it supports the Additional employment The opportunity for Through the fisheries in
increase from marginalized merchants opportunity will employment of women natural source and waste
23,000 m.t. to who release fingerlings in increase due in fisheries fisherman community ditches, ponds will not be
35,000 m.t. river and catch fish in business. will increase due to the polluted and germs will
public pools and ponds, it fingerling raising also decrease .
will support poverty programme .
alleviation.

page 396

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 Major Expected Achievements through the Implementation of Agriculture Development Programme the End of the Ninth Plan

Programme Production growth Contribution in poverty Employment Promotion Growth in Women Environment
alleviation involvement conservation
1 2 3 4 5 6
Production of high value
agricultural commodities
In the plan period, Through this, additional By developing Special growth in Through the promotion
1. Citrus fruit additional 5000 ha. of 20,000 employments will be commercial and kitchen women involvement of perennial crops in
the land will be generated at a rate of 4 garden established in will be increased in marginal and sloppy
cultivated and additional person per hectare. This will 5,000 ha, would extension, training, land of mid hills, the
33006 m.t. will be contribute in poverty generate employment nursery production and condition of soil
produced. alleviation with the increase for 20,000 people and garden programme. erosion and landslide
of income generating full employment for will improve.
opportunities. one person per hectare
after fruiting stage.
2. Apple farming Apple farming will be Through this, peasant Through the apple More than 50 percent Apple farming in high
done in additional 2275 families will be benefited as orchards to be women will be directly mountain sloppy and
ha. Additional income will rise from established in 2275 ha, involved in total marginal land will give
production of 2802 m.t. Rs.4400/- per Ropani to 5200 people per year in employment generation positive impact on
will be seen in the plan Rs.8000/- per Ropani. The the initial phase and by this programme. environment
period. available employment in once fruit bears, 1600 conservation.
grove development will people will get full time
enhance poverty alleviation. employment.
3. Vegetable Vegetable farming will As vegetable farming is Additional 28,170 As 57 percent women As the use of pesticide
increase from 145000 ha comparatively more people will be fully will be involved in which affects public
to 160000 ha at the end employment generating and employed by vegetable vegetable farming, health, will be
of the plan. Through income raising, this will farming in 160000 ha at additional 16057 systematised, it will
this, additional 3,66,000 contribute to the income the end of the plan. women will be involved help in the environment
m.t. will be produced. growth of small farmers and under this programme. conservation.
will enhance poverty
alleviation.

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 Expected Achievements through the Implementation of Agriculture Development Programme at the End of the Ninth Plan

4. Bee Keeping From 60 m.t. of base year, Through the proper use of Through this, 2085 In this programme Bee-keeping would
honey production level will marginal farmer and spare labour people will get partial women involvement enhance productivity
rise to 85 m.t. in the last force of women, this business will employment. will be higher. through pollination and
year of the plan. directly contribute to their income maintain greenery
growth. environment.

5. Silk Mulberry farming will be Through this programme, Through this, 2928 In this programme Soil erosion in the hilly
done in 600 ha and castor women's income growth will get people will get direct women will be mostly area will be controlled
farming in 30 ha. Current support as they get profit of employment. Later on involved. by the mulberry
production of cocoon will Rs.150/- per kg. from the cocoon. 3708 people will be plantation.
rise from 25 m.t. to 44 m.t. indirectly employed in
the cocoon industry
business.
6. Tea farming Additional 2,000 ha tea Through additional 2000 ha tea From this programme As women involvement Perennial cropping like
garden will be cultivated at production, average 8000 peasant 4100 person/year will increase in the tea tea in sloppy land will
the end of the Ninth Plan families will get profit if each be employed at the end plucking and domestic control soil-erosion and
and manufactured tea will family cultivate 0.25 ha, this will of the plan. and modern refining ecological balance will
rise to a total of 4101 m.t. enhance poverty alleviation. Employment equal to activities, labour day get big support.
as productive area rises to 89000 labour day will equals to 7128000
3718 ha. be generated from the direct involvement of
plucking of tea in old women will be ensured.
cultivated areas.
7. Coffee farming In the plan period, 444 ha. Through commercial coffee Once production starts Mostly women As coffee is a perennial
will be cultivated by coffee farming per 5 Ropani, annual in additional area, 418 involvement will be crop, it will assist in
and production level will be Rs.10,000/- income will be people will get full raised in this conserving environment
110 m.t. from 252 ha generated at full production employment through programme. in hilly areas.

313
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 productive area. condition and additional 576 this programme.
families income will raise by this
pro gramme which will help in
poverty alleviation.
8. Other high As improvement will be made in other fruit and high value cropping programme which are not specified in the Agriculture Perspective Plan but
value crops carried out by the peasants, will give additional support to income generation for peasants and to generate employment opportunities.

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15. Allocation of Development Expenditure
In the Ninth Plan period, the budget allocation to agricultural sector
development expenditure is estimated as follows:

S.N Programme Amount (Rs in Percentage

10 million)
1. Cropping intensity and productivity enhancement 500 23.23
programme
2. High value agriculture crops development 250 11.62
3. Animal husbandry and fisheries development 400 18.59
4. Agriculture market, industry, commerce and 50 2.32
export promotion
5. Agriculture research 300 13.94
6. Chemical fertiliser supply management 150 6.97
7. Agriculture credit overhead 25 1.16
8. Women farmer development co -ordination 2 0.10
9. Project implementation, monitoring and 75 3.48
evaluation
10. Small infrastructure development support in 400 18.59
pocket areas*
Total 2152 100.00

* The facilitating programmes such as short distance farm roads, culvert, bridges,
community transportation system, study of small tools and refining equipment,
training and consultancy services in respect to the locality specific need in prioritised
goods development pockets as per the Agriculture Perspective Plan.
Note:
1. The total programme and budget, which are related to the agriculture perspective plan
such as the tube well and small irrigation, community forest and soil conservation, land
management improvement, rural electrification (agriculture), farm roads have been
mentioned in the respective chapters, so these are not included here.
2. The organisational arrangements for high value agriculture crops and the organisational
arrangements for training, extension and technical services under the cropping intensity
and productivity growth programme are complementary to each other, therefore,
development expenses are projected accordingly.
3. As it is not practical to separate organisational arrangement and their mobilisation
according to the priority of the APP, projected expenses and the resources will be
mobilised keeping in mind to make 75 percent expenditure in totality will be oriented
towards the priorities of APP at the end of the plan period.

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 Chapter 11
Industry, Commerce and Tourism

11.1 Industry

1. Background
As it is not possible to expand economic activities expeditiously only through the
existing agro-based economic structure, there is a need to enhance the industrial
sector in parallel with other sectors of the economy. Although it was realised three
decades back that the industrial sector should lead the economic development efforts
and accordingly necessary policy amendments were made, the industrial sector could
not still make desir ed impact on the economy. The contribution of productive
industrial sector in gross domestic product remained around ten percent. Owing to the
import substitution policy adopted in the past: (a) local industries itself could not
expand and become competitive by reducing cost/output ratio due to the limited
internal market; (b) there was no need for the domestic industries to be competitive
due to high protection; and (c) there was almost no attraction to make the industrial
sector competitive by adopting modern technology.
The Eighth Plan attempted to correct the policy level problems for the last two and
half decades. In order to make the industrial sector competitive, (a) the policy of
making domestic industries competitive by liberalising import was adopt ed (but the
policy of giving effective protection to the domestic industries was retained). (b) an
emphasis was laid on export (c) the concept of private sector development and the
private sector leadership in the industrial sector was accepted, and the policy of
moving forward the process of privatisation of government corporations was adopted
(d) industrial administration was made liberal and investment friendly and (e) foreign
investment as complementary to domestic investment was accepted as an important
aspect of industrial development. These policy improvements have created some
positive impacts. The volume of domestic and foreign investment increased during
the Eighth Plan period. An attempt was made to take the membership of Multilateral
Investment Guarantee Agency (MIGA), and thereby enhance the confidence for
investment promotion. A Process was initiated for the amendment and refinement of
law relating to the industrial property for the purpose of increasing the export of
goods including software. Attaining the membership of World Intellectual Property
Organisation (WIPO) for providing recognition to domestic industrial property was
one of the notable achievements of the Eighth Plan. For raising export, the efforts to
increase the facilities and promotional activities were made but the export could not
be increased to the desirable extent. Production could not rise keeping in view the
markets (especially Indian market) of the neighbouring countries. In the mean time, a
new trade treaty between Nepal and India was concluded. Since various provisions of
the treaty have provided an encouragement to free, equal and impartial trade, the
provision for Nepalese goods to enter the Indian market without any domestic content
obligations has made the industrial policy more effective and result-oriented.

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Due to the reforms brought about by the Industrial Policy and Foreign Investment and
Technology Transfer Policy in 1992, some positive results appeared during the last
three years. Amendment in the provisions of industry registration, licensing process
and facilities made market entry easier for investors. However, it was not possible to
maintain this pace during the last two years of the Plan period. Factors like unstable
policy, frequent changes in government, high interest rate and lack of easy
availability of capital posed hindrances in maintaining that pace. Some grievances
such as the strengthening of policy matters, the enhancement of capability, capacity
building and transparency in working procedure still existed.
While maintaining the achievements and the policies of the Eighth Plan, the Ninth
Plan is tied to the following context:
• As the process of industrial development is a multidimensional and multi-
institutional phenomenon, the availability of raw materials, accessibility of capital,
risk-taking capacity of entrepreneurs and easy availability of manpower are not the
only factors affecting it. Rather, Industrial development is directly related with
revenue, including tax and strong macroeconomic management. In this
perspective, it is essential to maintain and review industrial development process
within the expected periphery of revenue and monetary policy.
• Industrial sector can play a decisive role in an economy characterised by recession
due to increasing unemployment and rural poverty. Therefore, it is necessary to
create non-agricultural employment by associating agro-enterprises and available
human resources with industrial occupation in order to develop rural-urban
linkages. It is equally necessary to develop micro-enterprises and informal sector
at the grassroots level; produce intermediate goods as their forwarded linkages;
and link them to medium and large-scale industries with comparative advantages.
If such a policy is adopted, it is possible to achieve the defined objective of
poverty alleviation; create multiple effects in the economy by developing areas of
comparative advantage; and accordingly maintain national identity in domestic
trade. Moreover, it is also necessary to develop extensively micro enterprises at
low cost, to transfer appropriate technology based on available raw material, and
to enhance the skill of local manpower in concerned areas. In such areas, priority
should be given to develop women entrepreneurship and the potential
entrepreneurship of vulnerable economic class.
• To prepare an integrated programme for fulfilling local need by creating micro-
enterprises with necessary skill, entrepreneurship, investment and technology, and
by linking them with market.
• To associate skill development programme with industry in order to enhance
competitiveness in areas of comparative advantage and develop local manpower as
main development inputs.
• To promote particularly the comparatively advantageous areas like water
resources, tourism and software.

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• To give special facilities to backward linkages of the industry based on local raw
materials.
• To identify new areas of export and link bilateral and multilateral export trade
with local production.
• To initiate industrial restructuring and make it timely relevant.
2. Review of the Eighth Plan
Policy and institutional infrastructure necessary for making the industrial sector more
competitive in a liberal economy were prepared during the Eighth Plan period.
Basically, the following Acts and policies contributing to industrial development
were formulated:
* Industrial Policy, 1992
* Industrial Enterprise Act, 1992
* Foreign Investment Policy, 1992
* Foreign Investment and Technology Transfer Act, 1992
* Company Act, 1996
Supportive policies for industrial development such as Trade Policy and Privatisation
Act were also brought out during the Eighth Plan period.
With the objective of providing facilities to investors without any hindrance through
legal provisions, the need for some new institutions was felt and, consequently, such
institutions were created. Institutional infrastructures adopted for making industrial
sector more competitive are as follows:
• With the objective of giving facility and assessing duty draw back from one spot,
one-window committee secretariat has been set up. Though this institution is
unable to be fully effective, the availability of physical facilities (water,
electricity, road, telephone/communication) from the same single spot has been
added in the function of this institution as well.
• National productivity council has also been established for raising productivity
awareness and conducting programmes by linking human resources and
technology with productivity.
• This institution has started to perform the function of technology development
and transfer project to provide information of technology necessary for industry
and entrepreneur and offer necessary advice to facilitate technology transfer.
• Industrial Enterprise Development Institute has taken the responsibility of
conducting entrepreneurship development, small business promotion, market
study and trainer's training, and of playing the role of a centre for excellence in
the field of industrial human resource development.
• Company Registrar Office has been established as a centre for providing services
of company registration, monitoring and necessary advice from a single spot

431
 regarding the institutional structure of business, industry registration and the
entire company business.
With such the policy and institutional arrangements, a preliminary work for the
development of private sector has been begun. This has made investors feel that
administrative difficulties have been reduced, and has made the situation of market
entry easier.
Industrial Production
Industrial production in the Eighth Plan was estimated to increase at an annual
average rate of 12.4 percent; however, the increase was 5.23 percent at the constant
price. While the value added of industrial product at constant prices was estimated at
an average rate of 10.8 percent in the Eight Plan, it was increased by 6.8 percent.
Industrial production and its annual growth rate have been shown in the table below:
Table 1
Industrial Production Index in the Eighth Plan
F/Y FY FY FY FY FY FY Av. Annual
1986/87 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 Growth
Rate(%)
Industrial 100 141.7 143.68 150.25 164.07 179.97 182.86 5.23
Index
Growth (1.40) (4.57) (9.20) (9.69) (1.60)
Rate (%)
The contribution of industrial sector in FY 1991/92 in gross domestic product was 8.4
percent. Similarly, the contribution of industrial sector in gross domestic product was
estimated to increase at an annual rate of 4.8 percent and at the end of the Eighth Plan
period, it was estimated to reach at 8.5 percent. Based on the projected estimate, the
value added of manufacturing industry at FY 1991/92 prices was estimated to be Rs
12170 million at the end of the Plan. The contribution of industry and mines sector in
GDP has reached at 9.22 percent. The contribution and annual growth rate of industry
and mines sector during the Eighth Plan period have been given in the following
table:
Table 2
Contribution and Annual Growth Rate of Industry and Mines Sector in the Eighth Plan
(At 1984/85 constant prices)
(Rs in million)
Target of Fiscal Year
S.No Description Annual 91/92 92/93 93/94 94/95 95/96 96/97 Annual
Growth Growth
Rate in Rate
Eighth
Plan
1 Industry and 124 5251 5566 6233 6360 6671 7446 -
Mines Sector
2 Annual Growth 108 - 60.0 119.8 20.4 88.2 56.6 6.8
rate
3 Contribution of 85 84.0 86.2 89.4 88.7 91.0 92.2 9.8
Industry Sector
to Domestic
Production (%)

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In comparison to the base year FY 1991/92 of the Eight Plan, the industrial
production of sugar, flour, noodles, stainless steel utensils, synthetic clothes and
paper (except news print) has increased substantially in the final year of the Eighth
Plan. In the same period, the production of vegetable ghee, edible oil, pasteurised
milk, tea, animal food, soft drink, beer, alcohol (rectified), cigarette, cotton clothes,
jute goods, ready-made garments, timber, tooth paste, powder, matches, soap,
slippers, plastic goods, polyphone pipes, bricks, cement, iron rods, billet, GIHB wire,
zinc footing, electric wire and battery has nominally increased. But the production of
biscuits, bidi, woollen carpet, woollen thread, leather shoes and processed leather has
decreased.
Employment Generation
While it was estimated that the total number of employment in industry and mines
sector would reach 395000 with the additional increase of 128000 employment
opportunities by the final year of the Eight Plan, the number of employment
generation in 1345 medium and large scale industries registered at the Department of
Industry would be 115000 with the assumption that seventy percent of the registered
industries would be operated; industrial schemes registered at the Department of
Cottage and Small Scale Industry would generate 120,000 employment opportunities,
assuming that thirty percent of registered 34439 schemes will come into operation.
Thus, a total of 23 5000 additional employment opportunities were estimated to create
by the fourth year of the Plan.
Investment
During the Eighth Plan period, it was estimated that the investment in the industry
and Mines sector FY 1991/92 at constant and current prices would be made about Rs
15000 million and Rs 22000 million, respectively. It is estimated that medium and
large scale and cottage and small-scale industries registered during the plan period
will make the investment as follows:

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 Table 3
Proposed Investment and Registration of Industries in the Eighth Plan
(Rs in million)
FY FY FY FY FY Total
1992/93 1993/94 1994/95 1995/96 1996/97
Description Numbers Invest- Numbers Invest - Numbers Invest- Numbers Invest- Numbers Invest Numbers Invest
of ment on of ment on of ment on of ment on of ment on of ment on
Registrati Fixed Registrati Fixed Registrati Fixed Registrati Fixed Registrati Fixed Registrati Fixed
on Capital on capital on capital on capital on capital on capital
1.Cottage and
6781 3150 9489 5720 8519 5370 9650 7220 6358 4810 40790 26270
Small Scale
Industry
2.Medium and
614 4470 146 15850 213 10700 372 15720 98 8150 1443 54890
Large Scale
Industries

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The above estimated amount of fixed capital investment constitutes just the proposed
investment made at the time of registration. However, it has not been confirmed yet
as to how many industries have been established and operated and how much
investment has been made in such industries. Similarly, the Office of Company
Registrar has registered 7013 private limited and 665 public limited companies during
the Eighth Plan period.
During the Eighth Plan period, it was estimated that almost 200 enterprises would be
promoted in joint venture or foreign investment and an equivalent of Rs 2430 million
of foreign investment would be made in these projects; however, 238 enterprises had
been promoted and a total foreign investment of Rs 9699 million would be realised
during the Eight Plan period. Investment Forum has already been organ ised in FY
1992/93. Details of the number of foreign investment projects have been shown in
table 4.
Table 4
Number of Foreign Investment Projects Promoted in the Eighth Plan and their
Proposed Investment

Fiscal Year Number of Total cost of Total Fixed Foreign

Projects Project Investment Investment
1992/93 62 17873 16200 3731
1993/94 38 3323 2735 909
1994/95 80 1517 1208 477
1995/96 45 9715 9108 2205
1996/97 75 6114 5819 2377
Total 238 38596 35070 9699
During the Eighth Plan period, the number of approved foreign investment projects
under operation has crossed 300 and the total amount of investment in these projects
has reached to Rs 42000 million. Among these projects, sixty percent are in
manufacturing industry, twenty one percent in tourism thirte en percent in the service
sector. The number of countries investing in these projects has reached to forty-eight.
During the Eighth Plan period, a total of Rs 24703.4 million from commercial banks
have been flowed to the industrial sector while Nepal Indus trial Development
Corporation has made an investment of Rs 1890 million.
Progress of Development Programme
The leather industry co-ordination unit running under the Department of Cottage and
Small Scale Industry has trained sixty-five persons for leather profession. Similarly,
foreign investment information brochure and the directory and industrial statistics
have been published regularly. The Ministry of Industry has created an industrial
pollution control unit and has published a directory on industrial pollution. During the
Eighth Plan period, small business promotion projects have given training to 1240
people on entrepreneurship and management development and have provided
consultancy services to 1121 industries. Similarly, a project has been initiated with

429
the assistance of the World Bank for energy management and the efficient use of
energy management. During that period, an impact study of industrial policy has been
completed and industrial information system has been established. Works for
establishing Information Technology Park have been started and the preliminary
works for setting up Technology Development and Transfer Centre under Industrial
Enterprise Development Institute have also been initiated.
Standard and Metrology Programme
In order to make quality standard activities strong and effective, the set target of
constructing laboratories, implementing metric system in 36 districts and collecting
and analysing 1780 production samples has been completed during the Eighth Plan
period.
Mines and Geology
During the Eighth Plan period, the exploration of metal and non-metal mineral in an
area of 6000 sq. km. was targeted. Out of this area, the exploration in 5902 sq. km.
was completed. The target of extensive survey of gas reserve in Kathmandu valley for
commercial use was completed. Geo-scientific study of 17450 sq. km. in different
regions of the Kingdom was targeted and study works in an area of 19500 sq. km was
completed. The target of establishing 12 seismic stations (seismological centre) was
achieved and all these stations came into operation. The capacity of using remote
sensing and Geographic Information System (GIS), which was essential for preparing
qualitative geological mapping was developed. Geo-scientific study for petroleum
exploration was completed in an area of 31,000 sq. km. and its data package has been
sold. The target of conductive ricknesans seismic survey, drilling and aso magnetic
survey for exploring petroleum with foreign assistance was not achieved due to the
failure in gettin g foreign assistance. The target of preparing and publishing in sheets
in a scale of 1:50,000 the qualitative geological map of 9000 sq. km. area in western
development region could not be achieved. Due to the lack of budget, technical
manpower like cartographer and adequate printing facility, only two sheets could be
published even though drafting of 6 sheets was completed. For the same reason, it
was not possible to publish remaining 12 maps. The attempt is being made to promote
cement industries utilising the quarry deposits in Surkhet, Arghakhanchi and
Dhankuta. Similarly, Mineral Act, 1985 has been amended and Mineral Regulation,
1995 has been drafted.
Cottage and Small Scale Industry
Cottage and small-scale industry development programme (27 districts of terai).
The target of registering 25000 cottage industries and 1000 small scale industries was
mentioned in this programme in the Eighth Plan; however, a total of 43250 cottage
and small scale industries were registered during that period. It was estimated that
almost 400,000 people would obtain alternative employment from those registered
industries.
During the Plan period, the Department of Cottage and Small Scale Industry provided
skill development training to 25219 people. While it was mentioned in the Eight Plan

430
that Training for Rural Gainful activities (TRUGA) project, cottage industry for
women and ceramic promotion project would be kept in operation under foreign
assistance. Instead of TRUGA, Training for Rural Employment (TRE) Project with
the assistance of UNDP and Ceramic Promotion Project with the German assistance
are being operated. During the Plan period, training on pottery decoration, glaze
model design and painting have been provided to 407 people under the ceramic
promotion project. Similarly TRE project has provided skill development training to
4659 people. In the same period, training under the ready-made garment and
handmade paper project has been provided to 1633 people in ready-made garment
and 432 people in hand-made paper production. Thus, a positive progress has been
made in cottage industry registration, training, generation of employment
opportunities and expansion of district office.
Cottage and Small Scale Industry Programme (remaining 48 districts)
Under this programme, target was set to establish 48 district offices and provide skill
development and entrepreneurship training to 14,550 people; to provide technical
support to 3000 industries; and to prepare 4,500 project schemes. However, during
this period, 48 district offices were established and skill development and
entrepreneurship training were provided to 26,521 people.
The contribution of industry and mines sector in gross domestic product has gone up
as expected. In the Eighth Plan, employment creation, investment prom otion and
foreign investment in the industrial sectoral have increased. The industrial policy and
Industrial Enterprise Act can be taken as positive steps. Similarly, new Foreign
Investment and Technology Transfer Act in promoting foreign investment and the
One Window system have also played a positive role. The volume of investment and
the number of new industries being established in the process have improved. The
amendment in Foreign Investment Act and Company Act has already been made in
creating investment friendly environment by ensuring timely improvement in foreign
investment and company laws.
Various institutional efforts for the development of industrial sector, the
establishment of the Industrial Enterprise Development Centre and the constitution of
the National Productivity Council, Skilful training conducted under different projects,
industrial survey study and researches have made a positive contribution in enhancing
the industrial sector. A high level Industrial Development Council has been
constituted for industrial promotion and co-ordination.
With the objective of attracting foreign investors in Nepal, an extensive Investment
Forum was organised in FY 1991/92 and one hundred and fifteen potential industrial
projects were presented in that Forum. Similarly, during the first four years of the
Plan, eight public enterprises were fully privatised; guidelines for environment impact
assessment for pollution control have already been published; study of the sick jute
mills was conducted; Rajbiraj Industrial district was established; and the feasibility
study for establishing industrial estates in six different districts was conducted. The
impact study on mining industries is being studied. During the Plan period, Nepal
Orind Magnesite industry has completed all the necessary works for commercial
production.
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The role of industrial sector in the national economy has increased; however, the
increased in production as targeted by the Plan has not been achieved. The industrial
production index has not been increased at an expected level. Though Nepal India
trade and transit problem has already been resolved at the beginning of the Eighth
Plan, the industrial production has negatively been affected by the interruption of the
supply of electricity. Similarly, since existing industrial enterprises have to be run in a
competitive environment as created by the economic liberalisation adopted by the
country, industries in the new policy environment do not seem to have been able to
increase production, enthusiastically.
Though much emphasis was laid on the mines sector in the Eighth Plan, the progress
was not satisfactory due to the lack of investment. In the context of industrial
development, particularly of regional development, the lack of physical
infrastructures was acutely felt. In particular, the production of exportable items was
limited only in some places of the country as there was lack of infrastructures like
electricity, road, transport and communications in other parts of the country. Since
industrial policy treated all types of industry on an equal footing in terms of industrial
classification, income tax and other tax rebates, it could not make an expected
contribution to the development of export oriented and priority industries that could
have compar ative advantage by utilising indigenous labour and resources.
The increase in the competitive capability of industry could not be achieved due to
the lack of development in productive labour force, industrial discipline in labour
force and linkage between wage and productivity. The development of
entrepreneurship has been affected adversely due to the procedural problems created
by the arrangement of Labour Act and other regulations relating to entry and exit of
labourers in financial enterprises, the tendency of giving priority to foreign labourers
in indigenous enterprises has failed to make an encouraging contribution to the
development of domestic employment. Similarly, labour and business transparency in
the private sector enterprises have not come up ni line with competitive business
environment.
Due to the lack of identification, promotion, production and supply of other raw
materials, including mineral deposits, which can be produced in the country, and the
lack of promotional programmes for local skill, industrial development can not be
geared towards the areas having comparative advantage. Similarly, in order to
enhance the quality of manufactured goods and make an improvement in the product
development and design, technology transfer, research and development, expansion
of laboratories and their accompanying manpower development in the private sector
have not been taken place.
As the capital base of financial institutions could not be increased in the proportion to
the expansion in the demand for industrial capital, financial institutions could neither
fulfil the demand for capital in the industrial sector nor reduce the cost of capital. This
has made a direct impact on the industrialisation process and the investment
expansion of the private sector.
While considering the above-mentioned problems industrialisation process in the
Ninth Plan needs to give a definite direction by developing complementarily physical
432
infrastructure, investment and other economic infrastructure, manpower development,
legal and policy frame work, foreign trade and regional development in a co-
ordinated manner.
Problems confronted in the Eighth Plan
• Effectiveness of the institutions responsible for industrial investment promotion
and guaranteeing of facility was low.
• Revenue policy consistent with the industrial investment was inadequate.
• Fiscal, monetary and economic policy favourable to industrial investment could
not be developed. A long-term policy perspective was not undertaken in the
industrial sector.
• Policy instability and uncertain situation prevailed.
• Inter-linkages among skill development, entrepreneurship, technology, market and
availability of capital were not developed.
• Co-ordination between manpower and industrial investment was absent.
• Labour Act was not investment oriented.
• Mutual trust between the government and the private sector was not created.
• Information between the mineral resource and industrial investment was lacking.
3. Long -term Perspective
The long-term concept would be to utilise long-term policy for sustainable industrial
development in an integrated manner by ensuring policy consistency to mobilise
necessary resources; to establish a greater role of private sector; and to enhance
competitiveness in the areas of comparative advantage; and to double the contribution
of manufacturing sector (form 10 percent to 20 percent) in gross domestic production
by 2015.
4. Target
• To make the industrial sector competitive, self operative, and market oriented by
mobilising the resources in the development of the private sector and making
market, capital and technology as a part of investment.
• To increase the local contribution in the industrial value added by linking local
raw material and manpower to industry.
• To transfer local skill and entrepreneurship into micro-enterprises with a view to
transforming local resources in to market demand.
• To create industrial environment based on the concept of sustainable industrial
development by linking productivity enhancement and environment together.

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5. Strategies
Labour Market Development
HMG will review various aspects of the labour sector for systematic labour market
and easy employment for skilled labourers in order to supply disciplined and skilled
manpower in an open and competitive economy led by the private sector, develop
labour market, and determine the price of labour based on work efficiency. Likewise,
HMF will implement policies in a way to ensure socio-economic justice to labourers
and facilitate the investment of entrepreneurs and the entry of labourers into industrial
enterprises for smooth industrial operation.
Similarly, the policy of establishing technical institutions in the government sector
and the private sector for re-training the displaced manpower will be implemented.
Manpower Development
Skill development training will be conducted according to the demand and need of
the industrial sector. All the manpower training programmes of HMG will be
integrated with employment. Facilities will be provided to the private sector for
investing in skill development and management training.
Necessary Legal Infrastructure
His Majesty's Government will continue the policy of protecting the domestically
important industry, industry expanding production base and product diversification
and industry processing raw material and mineral deposits. Similarly, HMG will
provide appropriate incentive and facilities to industrial enterprises that contribute to
the development of infrastructure and the reduction of regional disparity. Similarly,
anti dumping law and anti trust law will be formulated and enforced to protect
domestic industry, consumers’ welfare, and ensure business competition.
Accordingly, Labour Act, Contract Act, Company Act, Foreign Exchange Act,
Revenue and taxation policy will be made relevant and pragmatic.
Transparency
HMG has adopted open and competitive market system with the lead role of the
private sector. In such a situation, it is necessary for the private sector to bear
responsibility with a minimum transparency in economic activities and the operation
of industrial enterprises; therefore, a legal provision will be made to the company
with limited liability to submit mandatory their report on economic activities,
employment, profit and loss to the HMG. Industrial licensing, registration and ot her
existing arrangements of industrial administration will be made simple and flexible.
Environment and Pollution Control
Standard and assessment procedures will be prepared with the participation of the
private sector in other to maintain and monitor security and cleanliness in industrial
enterprises and control pollution in industrial environment; working policies for
testing and monitoring from impartial laboratories will be implemented. Necessary
programmes will also be implemented to encourage clean production technology. The

434
provision of pollution charge will be enforced and programmes contributing to clean
environment will be initiated.

Cottage and Small Industry Promotion

The integrated programme for economic and technical assistance will be implemented
in the areas where the attraction of private sector in cottage and small industry is
lacking. The policy of tax incentive will be provided to those industries which
promotes cottage and small scale industry by involving in their production process.
Special arrangement will be made for providing management skill, entrepreneurship
development training, and loan facilities to micro-enterprises for generating self-
employment. In order to expand the activities of Cottage and Small Scale Industry
Developm ent Bank, re-investment at a subsidised rate will be arrange.
Mineral Exploration and Development
Foreign investment and advanced technology will be encouraged to carry out the
development works of mineral exploration, geological study and necessary mineral
deposits in a planned and organised manner. For this purpose, HMG will participate
in the process of developing necessary infrastructures. Logistic service and
laboratories required for developing potential industry with the utilisation of mineral
deposits will be systematised gradually. Special policy will be formulated to explore
and utilise underground gas well and petroleum on cost-benefit basis with the
assistance of foreign multinational companies.
Productivity and Technology Transfer
Tax incentive will be provided to the investment made in effective technology
transfer and to the increase in productivity; economic and technical assistance will be
provided to pre-planned study and research on domestic productivity and technology
development. In this regard, joint programme between the government and private
sector will be implemented.
Similarly, for the expansion of research institutes and laboratories, priorities will be
given to joint co-operation between HMG and industrial associations. HMG will
provide economic and technical co-operation to such institutes and laboratories on the
basis of evaluation of their standard and reliability. Particular emphasis will be laid on
their affiliation with foreign institutes.
HMG will establish Technology Park and Technology Transfer and Development
Centre with the collaboration of the private sector for technology transfer and the
development of local technology, particularly the development of computer software
and communication technology.
Quality standard
Legal provisions will be made to implement strictly the international standards of
food item and industrial products related to public health. Proper incentive will be
given to the export of high value and high standard product. Similarly, an

435
arrangement will be made to show compulsorily the essential quality description in
the packages of the goods produced and distributed domestically.
Industries to be promoted
For the development of industry and mines sectors during the long-term plan period,
the followin g industries will be given support and emphasis for their expansion and
promotion:
• Hydropower generation
• Industries based on tourism
• Energy based industry
• Computer Software
• Industry based on domestic non-metal minerals.
• Agro-based Industry
• Commercialisation of forest sector
• Industry based on leather
• Financial service
• Sericulture, Floriculture
Ninth Plan
Ever since the earlier plans, the development of the industrial sector has been given a
high priority for creating employment opportunity, and developing sustainability in
the export sector in a way to contribute to the domestic economy. However, it has not
been able to make the expected contribution to the economy. The industrial sector has
not been able to create the expected multiplier effects in the national economy
through the maximum utilisation of available local resources and the diversification
of production and market. Due to the geo-political situation, geological structure, lack
of productive resources and unskilled manpower, there is no expected development in
the productivity demand the competitive capability of industries in the country.
In order to provide policy level support to open and liberal economic structure,
industrial and foreign investment and technology transfer policies were implemented.
However, the progress was not satisfactory as per the target due to the ineffectiveness
of institutions designated for implementation, lack of co-ordination among the inter-
organisation, lack of consistency between the priority and the investment of the Plan,
and lack of continuity with strong commitment. Even the sound policies were
ineffective due to the inherent weaknesses in the implementation process. Similarly,
other sectors that would make favourable impact on industrial investment were not
able to open. With the lack of effective co-ordination between the industrial policy
and the revenue policy, some difficulties appeared in encouraging the private sector
investment with due guarantee. Since the private sector is instrumental in the
economic development of the nation, it is not possible to enhance the avenues for
investment without involving the private sector. Therefore, focus on the private sector
development while consolidating the past achievements and enhancing the policy
level and institutional capacity and efficiency constitutes the pre-requisite for the
development of the industrial sector in the Ninth Plan. It has already been realised
that the Ministry of Industry has to play a leading role in assisting the private sector in
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industrial development, facility and incentive, and the various aspects of industrial
administration.
In order to make the industrial sector free from administrative complexities, the
simplification of licensing and registration procedures, the facilitation of the import of
industrial raw materials and the transfer of technology were made in line with the
open and liberal economic structure. As a result, the investors felt comfortable and
the volume of domestic and foreign investment increased, which were the notable
achievements of the Eighth Plan. However, the industrial sector failed to increase the
targeted employment; improve the trade balance by increasing the volume of exports
and the investment in export-oriented industries; and enhance its substantial
contribution in the gross domestic product. Therefore, it has become highly essential
that these lacuna and weaknesses of the industrial sector should be removed and
employment opportunities should be increased from the investment to be made in the
industrial sector.
In the Ninth Plan, His Majesty's Government will play the role of strong promoter
and facilitator in enhancing the contribution of industry and mines sector in the
development of domestic economy while promoting domestic and foreign investment
and accepting the private sector as an instrument for economic development.
Similarly, an emphasis will be laid in creating low cost economic structure by
developing necessary infrastructure like transport, electricity, communication, etc.,
for industrial prom otion.
5. Objective
• To increase contribution of industrial sector in domestic production by increasing
the industrial production, and diversifying and expanding the internal and external
market through the medium of necessary encouragement to and co-operation of
the private sector.
• To increase the earnings and reserves of foreign exchanges by identifying
commodities of comparative advantage and other commodities of competitive
capability, and increasing the production of export-oriented and import
substituting commodities.
• To increase the production of processed commodities by arranging necessary
infrastructure and providing essential co-operation for enhancing the processing of
domestic raw materials and mineral deposits.
• To increase the income and purchasing power of rural people by creating non-
agricultural employment in rural areas through cottage and small scale industries.
6. Target
It is necessary to have a sustainable rate of 11 to 15 percent growth of industrial
production in order to achieve an annual economic growth rate of 6 percent. For this
purpose, it is necessary to increase savings rate by 17 percent and investment by 25
percent of gross domestic product. It is estimated that with the annual investment rate
of Rs 7,000 million, which comprises Rs 2,000 million of domestic industrial

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investment and Rs 5,000 million of foreign investment, a total investment of Rs
35,000 million will be made during the Ninth Plan period. It is estimated that this will
create an additional employment opportunities for 350,000 people.
The contribution of industrial sector in gross domestic product is set to achieve a
target of 14 percent at the end of the Ninth Plan with an annual estimated average
industrial growth rate of 13 percent.
7. Policy and Implementation Strategy
• Industrial production will be extended and diversified to commercialise other
economic sectors such as agriculture, forest, mines, etc.; and to expand and
diversify industrial production by linking the industrial sector with these sectors.
• To encourage foreign investment in the areas of comparative advantage.
• To make the existing provisions of industrial administration, Labour Act,
Contract Act, Company Act and Foreign Exchange Act practical and time
relevant in order to enhance the leading role of the private sector in industry; and
to make ambiguous provisions of Industrial Enterprise Act clear and transparent.
• To privatise industries, financial and research institutions in the government
sector through a due process. To strengthen public enterprises supportive of
private sector promotion and expand their scope of work.
• To make One Window system more active and strong, and to direct the service of
this system towards providing infrastructure facilities to the private sector.
• To expand and de velop cottage and small-scale industries through integrated
programme for providing essential assistance and technical support.
• To declare special industrial zone to those areas of the nation, which have already
had an access to physical infrastructure facilities; and to encourage industrial
activities by extending additional infrastructure facilities with the help of private
sector.
• To increase the capital base of domestic financial institutions by allowing capital
inflows from foreign financial institutions in order to facilitate the availability of
capital in industries; and to orient the investment of financial institutions towards
industry.
• To produce high quality export oriented goods through the policy arrangements
of commodity centred industrial village, Technology Park and export processing
zone.
• To provide essential assistance, facilities and incentives to training institutes in
the private sector in order to develop priority manpower by classifying the
manpower based on the demand for technical efficiency and skill.
• To formulate and implement acts and policies like anti-dumping, anti
trust/monopoly and restrictive trade practices, fair trading policy, debt settlement

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 tribunal, etc., in order to protect the interest of domestic industry, small industries
and consumers.
• To encourage clean production technology for minimising the negative impact of
industrialisation on the environment.
8. Programme
Most of the projects being operated under the industrial sector at present will be
continued. The following programmes will be in operation during the Ninth Plan
period to achieve the objective of the Plan.
Industrial Plan Statistics and Monitoring Programme
Industrial feasibility study and market study, production, productivity, quality
standard promotion and project profile preparation will be completed. Sales
promotion strategy will be prepared following the study of the demand of six cities of
neighbouring countries and ten main cities of the country. During the Plan period,
potential industrial area will be identified in 20 districts based on their available
resources. A brochure for the promotion of foreign investment and a profile of 100
projects will be prepared and distributed to domestic and foreign investors. Industrial
statistics will be collected and monitored; and industrial statistics and trademark
directory will be published.
Technology Transfer and Development Project
Providing technical training to entrepreneurs, identifying and transferring appropriate
technology and establishing technology shops in various districts of the country have
been targeted.
Technology Park Project
Infrastructure will be developed following the study of the need for information
technology. The target is set to assist in producing and exporting software by working
jointly with the private sector for the development of information technology. For this
purpose, infrastructures like establishment and distribution of VSAT and drafting of
industrial property rights will be developed.
Cottage and Small Scale Industry Programme
For the promotion and enhancement of micro-enterprises and cottage and small-scale
industry, market-oriented skilled development programme on various income-
generating areas will be implemented for 100,000 people. A market study will be
conducted to make the skill development training programme market-oriented and
entrepreneurship and management subjects will be included in such a programme. An
integrated rural entrepreneurship development programme will be launched in order
to encourage 12,000 people in rural areas for creating and developing industry. An
additional employment opportunity will be provided to 12,000 people; the
contribution of cottage and small scale industry in gross domestic product will be
increased proportionately; and necessary extension services will be arranged in a way
to provide support services to cottage and small scale enterprises.

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Mines and Geological Programme
Under the Department of Mines and Geology, mineral exploration and development,
geo-scientific survey and exploratio n project, domestic seismological centre, and
petroleum exploration project will be launched.
Petroleum Exploration Project
Considering the existing oil crisis in the country, an attempt will be made on
exploring and promoting oil and gas reserves with foreign assistance. Additional
geological and geo-physical activities will be systematically carried out for petroleum
exploration and promotion in various places of the chure and terai region of the
country. In this process of petroleum exploration, geologic al section measurement
and pert-geo-chemical sampling will be continued for source, seal and reservoir
study. Gravity survey for exploring possible reserves of petroleum products and study
on geological structure of underground rocks will be conducted.
Nepal Standard and Metrology Programme
An amendment will be made in prescribed standard and standard determination of
various goods and services. The private sector will be encouraged to maintain quality
standardisation of goods and services produced as per Nepal standard. Monitoring
and supervision in the production, sales and distribution of goods and services will be
made. Physical facilities for meteorological laboratories will be arranged.
Arrangement will be made for pre-inspection of export and import. Necessary
research and development will be conducted to enhance the standard and productivity
level of ten industries. Industrial engineering and chemical meteorological activities
will be carried out; activities on promotion of standard will be carried out; database
on standard will be prepared; lot certification, laboratory expansion and the concept
of establishing joint laboratories will be forwarded and technical assistance will be
provided to small scale entrepreneurs.
Productivity Promotion Project
To encourage productivity development, arrangement of productivity award,
productivity awareness programme, consultancy service, seminar, training, publicity,
publication, and liaisoning functions of Asian Productivity Organisation (APO) and
National Productivity Council Secretariat will be conducted.
Industrial Enterprise Development Institute (Small Business Promotion Project):
Targets have been set for carrying out entrepreneurship development training,
trainer's training, management improvement training, and disseminating technological
information and research on entrepreneurship.
Industrial Pollution Control Project
In order to minimise the negative impact of industrialisation on environment, effluent
standards of pollution discharging industry will be developed at sub-sectoral level.
Arrangement will be made to minimise pollution in newly proposed industries by
adopting environment impact assessment (EIA). Industries currently under operation
and to be established in future will be issued pollution certif icate and directives for

440
pollution control; pollution standards terms will be made binding; and clean
production process will be promoted to minimise negative effect on environment and
increase competitive capacity of industries.
Micro Enterprise Development Programme
Micro enterprise development programme will be initiated in ten districts of the
country (five from terai and five from the hills) and a total of 7,000 new micro
enterprises will be created. This programme will be launched with the assistance of
the UNDP.
Industrial Perspective Plan Formulation Programme:
Industrial perspective plan for next 25 years will be formulated and accordingly
strategies for industrial development will be designed. This programme will be
launched with the assistance of the UNDP.
Energy Efficiency and Management Project
In the context of industrial energy efficiency management, programmes for designing
hotel lighting and retrofit improvement in industrial load management and furnace
and kiln efficiency boiler and steam system efficiency improvement and
establishment of Nepal Energy Conservation Centre will be launched.

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 11.2 Commerce and Foreign Trade

1. Background
The commerce sector has made a significant contribution to the economic
development of Nepal. In order to accelerate the growth of foreign trade, different
policies and programmes were implemented following the inception of planned
economic development. Basically, new trade policy was formulated in 1992 in
accordance with the objective of making the commerce sector liberal, competitive and
market-oriented. The renewal and comprehensive amendments of Nepal-India Trade
Treaty and Agreement on Controlling Unauthorised Trade were carried out in the
initial years of the Eighth Plan. With the objectives of enhancin g the efficiency of
agencies involved in foreign trade, facilitating effective movement of goods, reducing
transportation cost and simplifying foreign trade and transit procedures, an agreement
with the International Development Association (IDA) was made at the final year of
the Eighth Plan in order to implement Nepal Multi-Modal Transit and Trade
Facilitation Project. Despite these efforts, export trade could not be improved much in
particular. Although the volume of total trade has increased during the Eighth Plan
period, export, as a ratio of GDP, has not been improved. Statistics reveal that import
as a ratio of GDP has been increasing and terms of trade has not been in Nepal’s
favour. The export intensity of Nepal is lower than that of South Asian countries
except India.
Lack of diversification in the production of exportable products is one of the
problems faced by the commerce sector during the Eighth Plan period. Ninety percent
of total foreign exchange earnings have been contributed by exporting jus t seven
products such as carpet, garments, handkerchiefs, handicrafts, wool and woollen
products, silver products and paper products. The quality of many of these products
has not been improved, and even the export trend of ready-made garments has not
been robust. Lack of market diversification has posed another major challenge to
Nepalese exports.
Eighty percent of the total foreign exchange earnings of the export sector are received
from exports to the United States of America, Germany and Switzerland. Exports
have not been made sustainable owing to the lack of product-wise and country-wise
diversification. The export of traditionally exported agricultural products has been
declining because of the decrease in the production of exportable agricultural
products, lack of quality inspection, small quantity and inability to produce high value
products. Increasing exports by substituting the import of agricultural products is an
additional challenge to Nepal.
2. Review of the Eighth Plan
New commerce policy was formulated and implemented in 1992 in accordance with
the policy of making the commerce sector liberal, competitive and market-oriented
during the Eighth Plan period. The main objectives of this policy were to increase
domestic and international trade through the creation of open and liberal environment

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in the economy with the growing participation of the private sector; to diversify trade
by identifying, developing and producing new export products; to make export trade
competitive and sustainable by establishing backward linkages; to expand trade on a
sustainable basis by gradually reducing trade deficit; and to establish co-ordination
with other sectors for employment-oriented trade expansion. Policies with regard to
trade export, import, foreign exchange arrangement and domestic trade were
formulated to achieve these objectives. In addition, a commerce council with private
sector majority was established for ensuring co-ordination among different agencies
involved in export trade.
Convertible foreign exchange earned from the export of goods and services under the
monetary and foreign exchange arrangement was made fully convertible in current
account during the Eighth Plan period. The income earned from export was exempted
from tax; and steps were taken to make the duty drawback system effective, under
which duty levied on the import of raw materials necessary for the production of
exportable goods was refunded on the basis of actual exports. Following the
introduction of full convertibility of Nepalese currency in the current account, imports
were made open with the removal of prevailing auction system.
With a view to promoting exports by removing existing trade anomalies, an Export
Promotion Fund was established to formulate, monitor and evaluate export promotion
programmes; an Export Promotion Council having private sector majority was
constituted; and programmes for product development, market diversification, export
encouragement and quality improvement were implemented. In the process of taking
immediate actions for export growth, stalls were provided for participating in trade
fairs organised in the friendly countries. GSP facility was not provided to carpet
producers for using disposed wool called “Jhindoo” (low quality wool) in carpet
production and only 0.5 percent of export income was charged as export service duty.
The trade between Nepal and India, which dates back to the ancient times, has an
important place in the Nepalese economy. Nepal - India Trade Treaty and Agreement
on Controlling Unauthor ised Trade expired in 1991 was renewed during the Plan
period with comprehensive amendments. Under the new arrangement, the trade treaty
is valid up to 5 December 2001 and there is provision for its automatic renewal in
every five year. The condition that Nepalese exports to India should contain 50
percent Nepalese raw material has been replaced by the provision of preferential
access of Nepalese exports to India on the basis of certificate of origin. The previous
restriction on seven goods has been reduced to liquor, perfume, cosmetics, cigarettes
and tobacco products only; and there has been new arrangement for the removal of
extra levy on Nepalese exports to India and Nepalese products exported to India have
the same exemption as that of Indian products.
As per the additional arrangement under the Nepal-India Transit Treaty, Indian
custom official shall allow goods, arriving in Indian ports and imported from
overseas, without any inspection provided that the one-tie lock of the container sealed
by shipper is not broken. This arrangement will remain in effect even after the
construction of Inland Container Depots in Nepal and its provisions can be amended

443
as needed. With this arrangement, it is possible that Nepalese products can be freely
exported and imported from third countries.
The provision that Nepal shall not export Nepalese products that are produced using
more than 50 percent Indian imports to third country and the provision that Nepal
shall not export any goods to India which are produced using more than 50 percent
third country imports have been removed. It is expected that this new treaty between
Nepal and India will not only help in reducing Nepal’s trade deficit with India, but it
will also make favourable impact on Nepal’s trade with third countries.
3. Long -term Concept
Concept
That the commerce sector has highly significant role in achieving high and
sustainable economic growth rate is indisputable. There is no dispute on the fact that
industrialisation policy can be successfully implemented only through the increase in
exports. Following the restoration of democracy, Nepal like other countries has also
adopted the outward-looking industrial strategy. Accordingly, programmes are
envisaged to implement in pursuance of the long-term objective of enhancing the
trade through minimising negative trends in the Nepalese economy and creating a
competitive and market-oriented economy to which the country is firmly committed.
Target
During this period, the commerce sector will be made fully competitive and market-
oriented, and will be linked to the globalisation process. Given Nepal’s very
insignificant share in world trade, it is targeted to raise Nepal’s share to one percent
during this period. Considering the emerging trend of a competitive and market-
oriented economy in the world, Nepal in coming days should make efforts to increase
its exports by expanding the production base and specialising in products that have
comparative advantage. For this purpose, programmes will be formulated and
implemented in co-ordination with the agencies involved in production in
forthcoming years. Export programmes will be implemented with the objective of
taking advantages of open global market by producing low -weight-and-high-value
products and by implementing expedit iously perspective plans on agriculture,
industry and forestry.
It is targeted to make terms of trade in Nepal’s favour by 2015 while reducing
existing trade deficit. Nepal’s trade has to be operated on a competitive basis
following the SAARC countries' implementation of free trade arrangement by 2015
and when Nepal obtains membership of the World Trade Organisation. In the process
of carrying out preparatory works, adequate attention will be given to the construction
and expansion of infrastructures and accordingly programmes will be implemented to
increase export trade.
Trade with neighbouring India occupies a significant share in Nepal’s foreign trade.
Nepal can increase its share in huge Indian market if Nepalese products are capable of
competing with Indian products. Emphasis will be given to establishing and
expanding agro-based industries and industries based on domestic raw materials

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whereas possible and programmes to this effect will be implemented in a co-ordinated
manner.
Strategy
The commerce sector will be made fully liberal, competitive and market oriented
during this period in the light of the increased role of this sector in accelerating and
sustaining the economic development.
In order to promote export and arrange the supply of quality products, linkages
among industry, agriculture and other economic sectors will be established; and
policies will be adopted for the smooth inflow of modern technology and
management in Nepal.
With the objective of raising export trade, exporters will be provided with the
information about international market situation and they will be made competent and
efficient by providing necessary institutional support and improving information
system.
Nepalese currency will be made fully convertible and necessary reform in monetary
and exchange policies will be made.
Construction of necessary infrastructures will be completed for taking maximum
benefits from the developments that Nepal will obtain the membership of the World
Trade Organisation (WTO) in coming days and South Asian countries will implement
South Asia Free Trade Arrangement (SAFTA) by 2001.
Ninth Plan
On the one hand, there is a need for resolving emerging challenges to achieving high
and sustainable economic growth rate and, on the other, it is equally essential to make
efforts at obtaining high returns by identifying areas that have comparative advantage.
With the objective of taking maximum benefits from the world trade, the commerce
sector will be developed and industrialisation process has to be accelerated for the
wide diversification of exportable products and reversing the past trend of depending
on the export of few commodities. Programmes relating to trade will be formulated
with ensuring co-ordination and establishing a close relationship with other
productive sectors such as industry, agriculture, and forestry. The commerce policy
and related programmes will be formulated and implemented with the active
involvement of the private sector so as to accelerate the growth of foreign trade by
making it more open, transparent and simpler and encouraging export-oriented
industries.
4. Objective
• The main objective of the commerce sector will be to make maximum utilisation
of commerce sector for the overall economic development of the country and to
expand the benefits of foreign trade to the rural areas.
• International trade will be diversified and backward linkages will be strengthened
in order to make export trade stable.

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5. Target
• Export trade will be increased through the identification and development of
export products that have comparative advantage. Trade deficit will be gradually
reduced by emphasising production and export based on locally available
resources and materials. Emphasis will be given to the production and export of
products with low weight and high value for earning the foreign exchanges.
• With a view to making the export trade reliable and sustainable, exports will be
diversified product-wise and country-wise; backward and forward linkages of
export trade will be enhanced; and quantitative and qualitative improvement on
the production of exportable products will be increased.
• The domestic supply of goods will be made reliable and qualitative by
systematising rising imports.
• Employment opportunities will be increased and benefits of foreign trade will be
extended to rural areas in a way to make a contribution to poverty alleviation.
• Given the land locked geographical situation of the country, transit facility will be
expanded and it will be made reliable, simple and cost effective by exploring
alternative transit and port facilitation so as to make transport of goods more
accessible and efficient.
7. Strategy
• Necessary arrangement will be made for the full convertibility of Nepalese
currency during the Ninth Plan. All foreign exchange transactions will be
conducted through the market system following the introduction of full
convertibility.
• No tax will be levied on export goods except export service duty. However,
export of essential commodities will be regulated through tax mechanism.
• The import duty on raw materials and auxiliary materials required for producing
export products will be based on the effective implementation of duty drawback
scheme. The existing arrangement of bonded warehouse will be improved and
expanded.
• Tax free export zones will be set up in places where transport and communication
facilities are available and nearer to locations where inland container depots have
been established; all the required facilities will be provided to export-based
industries situated at such places.
8. Policy and Implementation Strategy
• The interrelationship among agriculture, industry and trade will be strengthened
in order to increase the production of exportable products; attain sustainable
export growth; and meet the internal demand.
• The exportable goods that have comparative advantage will be identified and
their production and quality will be improved so as to raise their competitiveness.

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• Production of export products with low weight and high value will be expanded
for earning foreign exchange and for reducing the trade deficit through their
exports.
• In addition to existing exportable products, new products will be identified; and
efforts will be made to increase exports through product-wise and country-wise
diversification of foreign trade.
• In addition to mobilisation of local resources, foreign investment and technology
transfer will be encouraged for increasing investment in export sector and
developing technology.
• A separate foreign trade act will be enacted for making foreign trade systematic
by reviewing and consolidating existing acts and regulations.
• For the purpose of developing export trade sector, domestic marketing system
will be strengthened so as to make the supply of raw materials and distribution of
goods competitive, simple and systematic.
• Given the landlocked position of the country, transit facility will be expanded and
made efficient, reliable and simple. In addition to existing ports, an attempt will
be made to identify and use additional ports.
• In order to provide an additional impetus to the commerce sector, reforms in
insurance and financial services sector will be made in accordance with the open
and market-oriented economic policy.
• In view of continuing the leading role of the private sector and expanding the role
of government as a facilitator, regular flow of business information will be
emphasised and its monitoring and evaluation will be vigorously pursued.
• Trade treaties and agreements signed with different countries and international
and regional agencies will be implemented effectively. Furthermore, new treaties
and agreements will be initiated as needed for enhancing trade.
• The policy of levying no custom duty except some service charge on the export
of goods will be continued and new motivation and additional encouragement
will be provided to exporters.
• Nepalese diplomatic mission abroad will be mobilised for promoting exports, and
commerce units will be established as needed.
Export Policy
• Exports will be made sustainable by identifying new export products other than
the existing ones; and by increasing production through the co-ordination with
institutions of agriculture and industry sectors that are involved in the production
and development of these products.
• Taking into consideration the present trend of importing even fruits, vegetables,
raw wool and other agricultural goods into the country, co-ordinated programme

447
 will be launched for ensuring the production of such goods in adequate quantity
so as to meet the domestic demand and make them available for export as well.
• In the context of rising competitiveness in the international market, high quality
standard of export products needs to be made; therefore, a system of compulsory
quality inspection will be introduced, through which each export product has to
pass.
• In addition to ensuring the market for existing export products, new market for
potential products will be explored. Both the government and the private sector
will make joint initiatives in this direction, paying special attention to the flow of
information.
• Maximum foreign investment and technology will be attracted in export-based
industries and products of such industries will be exported to international
market.
• The duty drawback system, under which import duty on raw materials and
intermediate goods for export-based industries is refunded, will be implemented
effectively.
• Export Promotion Fund will be effectively mobilised for product development
and market promotion activities. A long-term export promotion plan will be
formulated and programmes will be implemented accordingly utilising this fund.
• In order to reduce the production cost of exportable products and integrate goods
produced at small sizes for making them exportable, export processing zones and
export villages will be developed and physical infrastructure development
programmes will be implemented rapidly to facilitate industries and businesses
established in these areas.
• Nepalese diplomatic missions abroad will be mobilised for export promotion
activities and the performance of these missions will be evaluated on the basis of
export growth and foreign investment promotion. A commerce unit will be set up
in these missions, considering their workloads and export potentialities.
• A separate export-import bank will be established with a view to providing
facility for export promotion and channelling business credits.
• All export-related services will be provided in one roof in order to make export
process and document shorter and simpler.
• Monetary, exchange and financial policies will be reviewed and formulated so as
to enhance export promotion. The administrative process will be improved as
needed.
• Export promotion will be emphasised by participating in international trade fairs
and exhibitions; by exchanging business delegations; by arranging interactions
between exporters and importers; and by organising exhibitions of domestic
products.

448
Import Policy
• Imports will be linked with exports; locally available resources will be properly
utilised for the production of exportable goods; imports of direct and indirect raw
materials will be encouraged; and the supply of essential goods will be made
simple.
• The existing open import policy will be continued and the import procedures and
documents will be made simpler and more systematic. An effective monitoring
system will be set up in order to prevent anomalies of imported goods.
• The custom duty on imports will be adjusted as per the requirements and concept
of South Asian Free Trade Association (SAFTA) and the World Trade
Organisation.
• Imports will be made completely open; however, imports against the interest of
common people will be fully prohibited.
Policy Relating to Transit, Warehouse and Transportation
• Considering Nepal’s land-locked situation and her dependence on India for
foreign trade with third countries, necessary procedures for the availability of
additional routes from India will be completed. All the works required for full
utilisation of Kakarbhitta - Phulbari - Banglaband transit route will be completed.
• In order to increase trade with foreign countries, necessary infrastructures will be
developed in ports other than the existing ones that have been agreed upon for
their full utilisation.
• Necessary study for reducing demurrage charge and transit costs will be carried
out and activit ies will be implemented accordingly.
• Warehousing and other essential facilities will be constructed and strengthened in
border customs offices for transit facilitation.
• In order to increase overseas foreign trade, efforts will be made for the immediate
completion of construction of broad gauge railway line between Calcutta port and
Sirsia from the Indian side. Inland container depots will be constructed inside the
Nepalese territory and transit facility will be simplified and made systematic.
• In addition to existing land route, a feasibility study of alternative waterway and
airway routes will be carried out and feasible route will be utilised.
• Clearing, forwarding and undertaking services will be made more reliable and
effective in order to minimise transit cost.
9. Programme
If Nepal does not restructure its economy in tune with the changes in the field of
world trade, it will be marginalised from the benefits of globalisation process.
Considering this fact, it is necessary that the private sector play a leading role in the
commerce sector during the Ninth Plan period. With the objectives of establishing co-
ordination among different agencies for making foreign trade sustainable and for
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assisting private sector to encourage export; creating basic infrastructures in which
the private sector cannot venture; and giving special priority to monitoring and
evaluation, the following programmes will be implemented in the coming years.
Product Development Programme:
Agricultural Products
Considering the investment in agriculture sector as the Nepalese economy is
predominantly agro-based, its achievements have to be used for export trade in future.
The production of agricultural products that have already been established as
exportable goods in foreign markets will be increased both qualitatively and
quantitatively on a massive scale. For this purpose, a programme for exporting three
agricultural products each year on a massive scale will be implemented in co-
ordination with the agriculture sector. As the studies so far have shown that there is a
high potentiality of producing and exporting some agricultural products to foreign
markets, exports of such products will be increased by improving quality,
modernising packaging and providing facilities at production locations and collecting
such goods through co-operatives. Main products in these categories include pulses
(musuro variety), niger seeds, tea and coffee, ginger, dry ginger, large cardamom,
vegetable seeds, flowers and their seedlings, silk and silk products, mushroom,
saffron, fruits, medicinal plants and herbs. Study and research on other exportable
agricultural products will be conducted in preceding year and programmes based on
the findings if such study will be implemented in subsequent year.
Industrial Product
Woollen carpets and ready-made garments have an important place in the export trade
of Nepal. If the production and export of these products are sustained through the
domestic production of raw materials, they can make positive impact on the life style
of people at the lower stratum of society. At least one programme in one district will
be implemented in co-ordination with the agriculture sector in areas where climatic
and soil conditions are suitable for qualitative production of these two products.
These programmes will not only increase the export of ready-made garments and
woollen carpets, but also make favourable impact on the export possibility of leather
and leather products, other cotton products, woollen sweater and woollen mufflers
and scarves. Therefore, the districts and villages which play a leading role in the
production and processing of agriculture-based export products, will be declared
export-oriented districts or villages and required facilities will be provided,
accordingly.

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Traditional Product
Emphasis will be provided for the production of traditional export of Nepali
handicrafts; and a system will be developed to produce these goods in accordance
with international demand and preference. For this purpose, training programmes will
be conducted for developing traditional Nepali-featured products and modern
designed products. Likewise, the cost of production will be reduced and, in order to
produce qualitative products based on international preferences and wants,
programmes will be imple mented for providing required information flow.
Small and Cottage Industry Products
There will be a favourable impact on the economic condition of rural deprived groups
if small and cottage industrial products are produced and exported to international
markets by utilising labour, skills, and raw materials scattered in different
geographical areas. In this context, there is a high potentiality of exporting bamboo
products, different types of artefacts, Nepali canvas shoes and slippers, traditional
cotton clothes with a unique print “dhaka”. As some exports of these products have
already been made, it is likely that export can be increased through implementing
programmes for encouraging production. In order to export these products to targeted
markets, an int egrated package programme will be carried out. The programme will
be implemented with the active participation of institutions concerned with cottage
industries. While implementing this programme, large-scale production of the
products with high export potentiality will be encouraged.
Other Products
Private sector will be encouraged to develop and export computer software
programmes as it can be produced in Nepal and there is better foreign market
prospect. Financial assistance with simple procedure will be made available. In
addition, programme for other products will be initiated following the completion of
their studies.
Market Development and Expansion Programme:
A review of market situation of existing Nepalese export products shows that
Nepalese exports are limited only to one product in one market. At present, Nepalese
exports are mainly concentrated only in the United States of America and Germany.
Due to the limited market of major exportable products, unexpected event in future
may have an adverse effect on export trade; therefore, market diversification
programmes will be implemented by considering the high possibility of expanding
markets to Canada, Japan, newly developed countries and economically prosperous
countries.
Exhibitions and trade fairs will be organised in the markets of commercial importance
such as major markets of European Community, United States of America, Japan,
Canada and Australia. Sample display and sales counters will be set up in the
departmental stores of the major markets in these countries on the basis of export
potentiality. An arrangement of appropriate publicity in these exhibitions and sales

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counters will be made. At least one sample display and sales counter will be set up at
one place each year during the Ninth Plan period.
A separate unit will be established in the Royal Nepalese embassies abroad for the
effective execution of business diplomacy; and officials who are skilled, experienced
and familiar with modus operandi of export promotion techniques will be appointed.
Training facilities will be provided to officials working in such units and exhibition
counters of major Nepalese export products will also be established. Furthermore,
information exchange programme will be implemented for promoting exports. These
programmes will be carried out at least in three places during the Plan period and it
will be expanded in other places on the basis of their impact assessment.
As the exchange of business delegations between major markets plays a vital role in
the promotion, development and expansion of international market, meetings and
interactions between buyers and sellers of the main markets will be arranged from
time to time.
Quality Standardisation and Improvement of Export Product:
In the light of the growing concern of consumers in the international markets for
quality standard and the likely adverse impact of low quality Nepalese export
products on their reliability and the consequent deterioration in the competitiveness,
Quality Standardisation and Improvement Program mes will be undertaken in order to
maintain the quality of export products. A supervision system necessary for strict
implementation of quality standard will be set up with the partnership of the
government and the private sector. Consumers of developed countries seem to be
more concerned with the use of harmful colour or prohibited chemicals in products.
Therefore, the existing standardisation laboratory will be strengthened in the form of
a modern laboratory in a way to enforce strictly the system of exporting goods only
after completing their proper test so that no harmful colour or chemicals have been
used in such goods. Research studies will be conducted for exploring the possibility
of using locally available raw materials, instead of using synthetic raw materials for
packaging export products.
Special Export Promotion Programme:
An arrangement will be made for utilising the revolving fund instead of making it
available to any agency or association as a subsidy. A prize will be awarded each year
for encouraging leading producers and exporters. In addition, the fund will be utilised
in export promotion activities by the private sector if the private sector shows interest
in facilitating basic infrastructures for export promotion.
Import Management and Simplification Programme:
Despite the simplification of import trade in accordance with open market policy, the
share of import in total trade still remains high. Import of raw materials to be used for
producing export products will be encouraged; policy of import without license will
be continued; and study programmes will be carried out for identifying the areas that
need simplification. The programmes will be undertaken to study the import policies
of the neighbouring countries such as India and Tibet Autonomous Region of China,

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SAARC countries, major overseas countries and newly industrialised countries.
Import management programmes will be initiated on the basis of the findings of these
studies.
Infrastructure Building:
In order to make the commerce sector more developed and competitive, programmes
implemented in the past will be continued, and new supportive programmes for
providing more facilities to import and export business will be undertaken during the
Plan period. Taking into account the lack of port facility, inland container depots will
be constructed; transit facility will be made accessible and reliable; and warehousing
will be made more facilitating.
Transit Facilitation and Warehousing Programme
Taking into account the crucial role of transit and warehousing facilities in foreign
trade, a detail study will be conducted with a view to making transit facilitation more
reliable and cost effective. Infrastructure development programmes will be
implemented in the ports that are available at present to Nepal as a landlocked
country. Considering the maximum pressure exerted on Calcutta port of India, which
has been mainly utilised for Nepal’s foreign trade operations at present, construction
works for necessary infrastructure in accordance with the treaty with India and
Bangladesh will be completed for developing and utilising Banglabandh port of
Bangladesh as an alternative to Calcutta port.
A study will be undertaken with the involvement of the private sector to explore the
ways of reducing transit costs and demurrage; and on the basis of the study findings
programme will be formulated and implemented expeditiously.
Additional warehouses will be built and existing warehouses adjacent to border
custom offices will be strengthened and improved for the purpose of making
warehousing service more accessible and facilitating. Fully equipped modern
warehouses with 1000 mt capacity each will be constructed in Siddharthanagar,
Tatopani and Nepalganj in custom areas of these places. Taking into consideration the
growing volume of exported and imported goods using airways through Tribhuvan
International Airport and realising the inadequacy of available warehousing facility at
the Department of Customs, a 2500 mt capacity air cargo complex will be built and
operationalised.
Nepal Multi-Modal Transit and Trade Facilitation Project
With the objectives of enhancing the efficiency of agencies involved in foreign trade,
simplifying and expediting trade and transit procedures, facilitating effective
management and operatio n of foreign trade, and reducing the transportation cost, the
project has been implemented since 1996/1997 with the assistance of the International
Development Association (IDA). Its targets include construction of inland container
depots at Birgunj, Biratnagar and Bhairahwa, installation of necessary equipment in
these depots and providing trade facilitation, installation of automated system for
custom data (ASYCUDA) in consultation with UNCTAD and installation of
advanced cargo installation system (ACIS).

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Cold Storage Construction at Tribhuvan International Airport Programme:
Considering the high possibility of exporting products that are fresh but quickly
spoiling, such as fresh vegetables and fruits, flowers and their seedlings, a cold
storage with 1,000 mt capacity will be constructed at Tribhuvan International Airport,
and it will be operationalised by the private sector with a view to increasing the
export of such products.
Establishment of Tax Free Export Zone
Impetus for increasing export will be provided by establishing tax free export zones
in the localities of commercial importance. While establishing such zones, priorities
will be given to those places where transportation and communication facilities are
available and where inland container depots have been established. All physical
facilities will be provided to these industries in the zone at their production site;
programmes will be launched in a way to provide additional special encouragement.
Private sector institutions relating to the commerce sector will be involved in these
programmes.
Organisational Arrangement:
Existing institutional set up will be encouraged to play a more effective role in the
implementation of proposed policies and programmes in the Ninth Plan. The agencies
and institutions in the commerce sector will be geared towards self -reliance.

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 11.3 Tourism and Civil Aviation

1. Background
Unlimited potentials of tourism development exist in Nepal on account of her natural
beauty, geographical diversity, cultural and artistic heritage. The presence of Mt.
Everest, world-renowned peak, rare animals like one-horned rhino, the Pashupatinath
temple, the birthplace of Lord Buddha and innumerable rivers and lakes lure tourists.
Tourism industry has an important position in the Nepalese economy because of its
comparative advantage. Tourism promotion has contributed to employment
generation, income generation and improvement of the balance of payments in a
meaningful way. The development of tourism is likely to contribute to the
improvement of historic and religious places and environmental conservation.
In view of competitive situation brought about by increasing number of newer tourist
destinations, quality tourism has became extremely important for Nepal. It has been
high time to pay increased attention to the improvement of physical infrastructure and
service quality of tourism products. Policy pertaining to physical infrastructure
improvement, environment conservation, development of newer attractions, raising
service quality and pricing mechanism need to be addressed immediately. Investment
promotion - both domestic and international-need to be emphasised with a view to
exploiting the potentials to the optimum level. On the other hand, tourism
development and its expansion have been challenged by unmanaged urbanisation,
environmental degradation and pollution. The airway services which plays pivotal
role in bringing tourists into Nepal, will be strengthened and standardised.
2. Review of the Eighth Plan
The Eighth plan incorporated the policies of maximising the foreign currency earning
from tourism, diversifying tourism to other parts of the kingdom and using tourism
for poverty alleviation. It has emphasised launching various promotional campaigns
for tourism promotion, enc ouraging international airlines to fly into Nepal and raising
the quality of tourism, among others.
Nepal took part in various tourism fairs and promotional events in East Asia, South
East Asia, Australia, Western Europe and North America for promotion and publicity
of the kingdom in these markets and increasing the number of visitors to Nepal.
Destination promotion was done through various media like broadcasting tourism
programme on Radio Nepal, information on Internet, publication and distribution of
various brochures. Advertisements were given in papers, on radio, television,
particularly in the STAR TV. Lumbini and Pokhara festivals were held to expand
tourism activities. Preparatory works for visit Nepal '98, which aims at qualitative
development of the tourism industry were ongoing.
Under the policy of developing tourism products, a study of the Indian tourist market
was carried out. Improvement of tourist sites in Sunsari and Myagdi were carried out.
Nepal's adventure tourism added two new products in the form of hot air ballooning

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in Kathmandu and a power glider in Pokhara. Under the Tourism Infrastructure
Development Project, Pokhara airport was upgraded and the Gorkha palace area was
improved environmentally.
With a view to specifying the respective roles of the government and the private
sector, Tourism Policy 1995 was brought out by the government.
The Eighth plan sought to encourage the private sector in the tourism industry.
Accordingly the private sector was encouraged to operate air service in the domestic
routes. An open and liberal sky policy was adopted in the international civil aviation.
Under the new policy initiative, 14 air operators including sports and ballooning were
permitted to fly in the domestic sector. Many of them have already started their
operations. Helicopter services have been offering their services in remote areas of
the kingdom.
In the Eighth Plan period under the institutional improvement scheme, statutes
pertaining to Tourism Development Board, 1996 and Civil Aviation Authority of
Nepal, 1996 were brought out. Civil Aviation Act, 1996 took effect during the Plan
period. Necessary amendments in the National Civil Aviation Policy 2050 have been
made, giving due consideration to issues like competitive development and the safety
of domestic airlines.
The Royal Nepal Airlines has been operating to 11 places of 9 countries under its
service expansion policy. Among the international airlines, those of Singapore,
Thailand, Qatar, Pakistan, India, Bangladesh, China, Bhutan, Russian Federation etc.
are operating in Nepal.
The Tribhuvan International Airport (TIA) has been upgraded as a focal point of
national aviation in accordance with the Plan objective. A green channel has been
established at the TIA to facilitate the smooth check-in and check-out of tourists.
Preparatory work for opening the airport round the clock is being implemented.
A policy has been adopted to ensure emergency airlift of people including tourists
during times of natural calamity and other emergency situations. The fleet of RNAC,
private airlines and Royal Nepal Army and police force were massively utilised
during such situations in to save the lives properties of tourists and general public.
Compared with the estimated, number of 1907745 tourists to visits Nepal, a total of
17,64,739 tourists visited Nepal during the 8th plan, which is 92.5 percent of the
target set for the Plan period. Similarly, US $ 374.6 million was realised in terms of
tourism receipts as against the set target of US $ 375.4 million.

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 Table 1
Targets and Achievements of Tourists Arrivals and Foreign Currency Earning
Year Total Tourist Annual Foreign Currency
Arrival Growth Receipts
Rate (US $ in million)
Target Achievement Target Achievement
1992/93 324,109 306,286 -5.56 72.4 67.7
1993/94 350,974 316,972 3.49 85.2 69.3
1994/95 380,448 346,180 9.21 100.5 118.5
1995/95 410,000 380,301 9.86 117.3 119.0
1996.97 442,214 415,000 9.12 137.0 -
Total 19,07,745 17,64,739
The achievements of tourism programmes carried out in the Eighth Plan are like
follows:
Tourism Infrastructure Development Project
The Tourism Infrastructure Development Project (TIDP) launched in the Eighth plan
with the Asian Development Bank funding carried out Pokhara-Sarangkot road
improvement, Pokhara conservation area improvement, Ghalegaon-Sikles eco-
tourism development, Pokhara airport runway improvement and terminal building
and so on. One tourism service centre each in Kathmandu and Pokhara have been
built and improvements made in Gorkha palace conservation area.
Mountain Tourism Development
Activities pertaining to Himalayan Rescue Association, Sagarmatha Pollution Control
Project (SPCC) and Annapurna Conservation Area Project (ACAP) were carried out
under this programme. Work to build an international mountain museum was started
in Pokhara. The SPCC has carried carrying out various activities like environmental
management, cleanup of mountain areas in Khumbu, awareness campaign, running of
an information centre, community development and cultural preservation. Under the
Annapurna conservation, some of the noteworthy achievements have been in natural
resource management, heritage conservation, alternative energy development,
community development and so on.
International Publicity and Marketing: Under this programme, tourism awareness as a
corollary of World Tourism Day was promoted, Royal Nepalese Embassies abroad
were mobilised for tourism promotion and some market studies were carried out.
Hotel Management and Tourism Training Centre (HMTTC)
HMTTC targeted to provide basic and medium level hotel and tourism related
training with a view to making available trained manpower for the travel and tourism
industry and raising the sector's productivity. During the 8th plan, HMTTC provided
a number of hotel and travel training as well as mobile tourism training in outlying

457
destinations. A new building with modern facilities has been built and a year long
high level training have been started.
Tourism Promotion Programme
Under this programme, advertisements on destination Nepal were given in various
international papers and magazines as well as on STAR TV. Familiarisation trips
were organised for tour operators, travel agents and writers from India, South Korea,
Japan, Australia and USA with a view to apprising them of the attractions of
destination Nepal. Nepal participated in travel trade events organised in Mumbai of
India, Lhasa of Tibet, Berlin of Germany, London of UK, Madrid of Spain. Similarly
USA, SAARC region and Asian-Pacific regions were also represented for promotion
of the Nepalese tourism. Festivals were organised in Lumbini and other tourist areas
to heighten their attractions. Publicity materials like posters, booklets, stickers,
batches, Nepali caps, bags, calendars were prepared and distributed. Feature films,
videos and slides were also prepared for distribution.
Air Service
The 8th plan kept the objective of making air service efficient, safe, reliable and
comfortable in view of the importance of this sector for promotion of tourism in
landlocked Nepal. The total number of airports in Nepal is 44. STOL airports are
under construction in remote districts such as Mugu, Kalikot, Achham, Khotang and
Dolpa. Improvement works on Tribhuvan International Airport are going on as per its
Master Plan with a view to improving standard, facilities and capacity. Test landings
of helicopters have been carried out successfully in 125 places of remote areas. A pre-
feasibility study was carried out for the selection of the site for a second international
airport. Nepal Civil Aviation Authority Act, 1996 was brought out with a view to
rendering civil aviation more effective. Necessary legal and other provisions for
setting up of Civil Aviation Authority of Nepal (CAAN) are underway.
Tribhuvan International Airport Improvement Project
A number of activities have been carried out under this project launched with the loan
assistance of Asian Development Bank. Apron expansion in 29,953 sq m area,
construction of domestic apron in 25,500 sq m area, expansion of the breadth of the
runway by 15 m. to make it 60 m. wide, laying 40 mm thick bitumen on the entire
runway, construction of a deep well to ensure water supply at the airport until 2000,
expansion of domestic terminal by 2216 sq m along with improvement in 1200 sqm
and laying of a 2700 m chain -link fence in the newly acquired land of the airport were
the achievements.
Fire Control and Rescue Service Expansion
During the Eighth Plan, a number of activities were carried out for fire control. As per
the standard laid out by International Civil Aviation Organisation(ICAO), a service of
'7 Category' was installed at the Tribhhvan International Airport(TIA). Other hub
airports like Biratnagar, Nepalgunj, Pokhara and Bhairahawa have been equipped
with 5 Category service and fire ve hicle ambulances.

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Technical Manpower
Altogether 601 persons got training in ATC, radio, fire control, aviation security and
so on during the 8th plan under the policy of producing basic and medium level
manpower within the country for the development of civil aviation.
Upgrading of Domestic Airports
A cross fire access road was completed at Biratnagar airport and a parallel taxi way
and fire station at Nepalgunj airport. Improvement of airports at Chandragadhi,
Simara and Phaplu are underway. Terminal buildings, staff quarters, piped water
supply, runway improvement, chain-link fencing, were completed at various airports.
A new terminal building and runway improvements were completed at the existing
Pokhara airport. The proposed Pokhara second airport witnessed some preliminary
works like fencing and land development.
Communication and Navigational Aids
Installation and improvement of communication and navigational aids are necessary
for secure aviation. Airports in Kathmandu, Nepalgunj, Simara, Bhairahawa,
Biratnagar, Rukum Salle and others witnessed either installation or improvement and
repair of communication and navigational aids during the 8th plan.
Aerodrome Flight Information Service Expansion
Among the operating airports, 8 of them including TIA are equipped with trained
personnel to control flights and 241 airports have aerodrome flight information
service.
New satellite based communication system, navigation surveillance, air traffic
management are installed in a phase-wise manner. Under the Australian assistance
VOR/DME have been installed at Kathmandu, Pokhara, Simara and Bhairahawa.
Similar facilities have been installed at Biratnagar under the French co-operation.
3. Existing Challenges
Despite these achievements, the following problems were observed in the tourism
sector during the Eighth plan:
• Limited international seat capacity, which is a crucial link between Nepal and the
outside world.
• Inadequate provision of physical facilities and modern communication and
navigational aids equipment at the domestic airports to make domestic civil
aviation safe and qualitative.
• The effect of seasonality has not been minimised with a view to expanding year-
round attractions.
• Tourism destinations, services and facilities have not come up to the demand of
modern tourists.
• Nepal has not been publicised in the international market on a competitive basis.

459
• Inadequate tourism activities to extend the duration of stay.
• Tourism infrastructure is limited only to a few geographical areas.
• Inadequate retention of tourism receipts.
• Per day tourist expenditure is very low as compared to other destinations.
• The tourism sector has very poor forward and backward linkages with other
economic sectors.
• No effective land use plan and pollution control measures to maintain the
attraction features of the destinations.
• Inadequate and poorly developed institutional mechanism in the government and
the private sector for qualitative improvement of tourism.
4. Long -term Concept
In view of the achievements, problems and the potentialities of the tourism sector
observed during the 8th plan, a long-term perspective in the policy and programme is
essential. The following objectives and strategies are adopted for long-term tourism
development.
Long-term Objective
• To develop tourism sector as an important part of the overall economic
development.
• To establish Nepal as a premium destination on the world tourism map.
• To expand the benefits of tourism down to the village level.
Long-term Strategy
• Strong and efficient civil aviation - both on the domestic and international fronts -
plays a crucial role in tourism development in Nepal. Some of the domestic airports
will be selected on a priority basis for development into regional airports with
capacity of handling short haul international flights. Requisite physical facilities such
as navigational aids, physical construction and management improvement will be
made available to these airports. Shuttle services will be operated to other domestic
airports from these regional hubs. Remote areas will ev entually be connected by
helicopter services, thereby establishing full national network of air routes.
• Necessary understanding and negotiation will be established with neighbouring
countries to achieve growth in overland tourist transport.
• Physical development in tourist cities and rural areas will be carried out on the
basis of zoning.
• Indigenous, value-based and endemic tourism activities will be promoted with a
view to diversifying tourism products and establishing Nepal as a premium
destination.

460
• Local communities will be mobilised in the conservation and management of
tourist resources. Rural tourism will be established as a viable alternative to the
local economy by seeking active participation of the local people.
• Tourist services will be standardised by amalgamating them with traditional
hospitality.
• Natural, cultural and historical resources will be conserved and consolidated
through co-ordinated efforts of local government bodies, tourism entrepreneurs
and bodies responsible for cultural promotion.
Long-term Projection of Tourism Sector
Based on the above policies and programmes, the following targets are projected for a
period of 20 years

Table 2
Twenty Year Projection

S.No. Particulars FY1997 FY2002 FY2015

1 Tourist Arrivals 4,20,000 6,76,414 12,47,830
2 Duration of Stay 11.27 13 15
3 Per Tourist Expenditure US $ 45 60 133.3
per day
4 Foreign Currency Earning US 213.0 527.6 1663.6
$ Million
5 Employment (Direct) 75,000 1,11,329 2,05,227
6 Employment (Partial) 1,07,700 1,62,029 2,98,688
7 Employment Total 2,57,000 ,3,71,598 6,85,013
(Direct/Indirect)
Ninth Plan
The tourism industry can be developed as an important sector of the national
economy on account of its comparative advantage engendered by existing attraction
features and special geographic location of the nation.
Tourism activities based on social, natural, religious and cultural environment of the
nation will be developed and diversified during the 9th plan.
5. Objective
• To establish backward and forward linkages of the tourism sector with the
national economy so as to develop it as an important sector for the overall
economic development.
• To establish Nepal as a premium destination in the world tourism market through
effective publicity and promotion.

461
• To enhance employment opportunities, income generation and foreign currency
earning from the tourism sector and external these benefits down to the village
level.
6. Target
Tourist arrival is expected to increase by an annual rate of 10 per cent and the tourism
receipt by 20 percent during the Ninth Plan period. In the first year of the Ninth Plan,
an estimated 4,20,000 tourists are expected to visit the country. The number is
expected to reach 6,76,414 by the final year of the Plan period. Similarly an estimated
US $ 213 million is expected in terms of receipts in the first year and US $ 527.6 in
the final year.
7. Policy and Implementation Strategy
• The following policies and programmes will be adopted in the 9th plan to achieve
the objectives and targets:
• Additional destinatio ns will be developed and diversified on the basis of
feasibility study.
• Historical, religious and cultural sites, temples and monasteries scattered
throughout the country will be registered in the form of national heritage sites;
they will be conserved and used for tourism purpose.
• An inventory of lakes, caves, waterfalls and historical facts will be prepared so as
to develop them into tourist destinations.
• Indigenous culture, traditional hospitality and tribal traditions will be preserved
and promoted to enhance tourist attractions.
• New trekking routes and climbing peaks will be opened up in a methodical
manner.
• Local bodies in each development region will be encouraged to develop a model
tourist village.
• Quality of the tourism products and services availab le in the central region will be
upgraded. Special interest tourism spots will be expanded in the eastern and mid
and far-western regions.
• A survey will be carried out into Kathmandu valley's cultural heritage, festivals,
cultural and religious traditions. Festival tourism will be promoted in the valley.
• Periodic studies and evaluation will be carried out into the inputs, outputs and
effects of the tourism investments.
• Rafting will be operated on the major river systems wherever it is feasible
Tourism Infrastructure Development
• Local people in tourist areas will be encouraged to develop infrastructure
facilities to the best of their abilities.

462
• Communication system will be modernised and made easily accessible in tourist
areas.
• Minimum standard of infrastructure quality will be set for tourist areas with a
provision of proper guidance and supervision.
• The trails and roads of tourism importance constructed by local people's
participation will be upgraded on a priority basis.
• The private sector, local government bodies and non-governmental organisations
will be mobilised in the development, conservation and operation of physical
infrastructure.
• Air-conditioned transport service will be encouraged in tourist areas.
• Local government bodies will be mobilised for zon ing purpose and land use
planning will be prepared.
• Some of the highways will be developed as sightseeing highways. Separate codes
will be developed for these categories of highways.
Expansion and Diversification of Tourist Attractions
• Emphasis will be given to produce local goods and handicrafts for tourist
consumption.
• Tourism products, goods and services will be categorised and quality standards
specified for each category.
• A number of feasible activities such as hot air ballooning, hot spring, honey
hunting, butterfly/bird watching, anthropological tours, rhododendron tours and,
so on will be encouraged.
• Eco-tourism, medical tourism, conference and convention tourism (MICE
tourism), cultural tourism, festival tourism, scientific tourism, village tourism,
adventure tourism, holiday tourism, endemic tourism, sports tourism and other
value based tourism activities will be promoted.
• Details of various cultural and religious festivals of various ethnic people will be
collected and special package tours develop ed out of them.
• Duty free shopping and casino activities will be allowed to operate with proper
safeguards. Tours will be promoted in cultural, archaeological, historical areas as
well as parks, museums and zoos.
• Camping sites and other facilities on the trekking trails will be maintained and
conserved and the private sector encouraged to get involved in operation. NGOs
and local communities will be mobilised to monitor activities in the newly
opened trekking trails.
• Rivers will be kept free from pollution for rafting purpose.
• Environmental impact assessment will be made a part and parcel for the operation
of tourism activities in conserved areas and their vicinities.
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Tourism Marketing and Promotion
• Market segments in Europe, North America, Asia and Pacific regions will be
identified on the basis of market study. A joint promotion campaign involving the
private sector will be launched for enhanced publicity and promotion of the
kingdom. Indian and domestic tourists will be attracted to render tourism industry
viable all the year round.
• Tourism promotion will be carried out on the basis of market study only.
• Domestic tourism will be promoted to achieve socio -economic balance among
various development regions.
• The private sector will be encouraged to play a lead ing role in market promotion.
In this context, visit Nepal '98 campaign is going to be launched with a view to
enhancing quality in the tourism industry and maximising tourism receipts.
• Nepal will be more effectively promoted in the traditional markets of Western
Europe and North America. The newly emerging markets of Asia-Pacific will be
given special consideration in marketing.
• Target markets and customer needs and demands will be considered on the basis
of market segmentation.
• Royal Nepalese embassies abroad, Honorary Consul Generals, friendship
associations, airlines, travel/tour agents and Nepalese associations abroad will be
activated for market promotion.
• Cyberspace such as interest and e-mail will be extensively used for market
promotion.
• Publication and distribution of publicity materials will be made more effective.
• Special familiarisation tours of Nepal will be arranged for foreign journalists,
travel writers, TV producers.
• Tourist information centres and immigration offices will be opened at all entry
points. These offices will be developed as 'Welcome Gates'.
Air Transport Development
• Tribhuvan International Airport will be expanded and upgraded into a modern
and fully equipped international airport.
• Regional and domestic airports will be upgraded and expanded.
• The private sector will be encouraged to operate domestic and international
flights.
• Rescue and fire control services will be upgraded up to the ICAO standards.
• Technical manpower related to civil aviation will be developed to meet the
challenge of the time.

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• Fair competition will be encouraged in domestic and international flights to
ensure high standard service.
• Domestic and foreign investment including joint ventures will be promoted in
domestic and international airline operation.
• The private sector will be encouraged to operate airports and airport
facilities/services.
• The Nepalese sky will be utilised to a maximum extent for sky routes by
promoting cross Himalayan and east-west international flights.
• Aviation related activities such as flying club, ballooning, gliding will be
encouraged.
• A civilian search and rescue operation service will be developed so as to make it
effective and reliable in times of natural calamities and emergency. Particular
attention will paid to the safety of the tourist.
Environment Protection
• Local government bodies and private entrepreneurs will be mobilised to maintain
environmental quality conducive to tourism. They will co-ordinate with
concerned government agency to monitor tourism activities.
• A multiple co-ordination mechanism involving the central government, local
governments, social organisations and the private sector will be developed for the
conservation of environment in sensitive areas.
• Local government bodies will be activated to keep tourist areas beautiful and free
from pollution.
• Local bodies and the private sector will be encouraged to set up rest houses in
tourist areas. on a fee charging basis.
• An environment code of conduct will be formulated and the private sector will be
required to adopt it.
• Pollution control measures will be developed and specially monitored in eco-
sensitive activities such as trekking and mountaineering.
• The inner parts of the Kathmandu valley which are the sites of historical and
religious importance will be designated as pedestrian only zones, restricting the
entry of vehicles.
Mobilisation of the Private Sector
• Additional facilities will be provided to encourage private investments in the
tourism industry, and expansion of tourism activities.
• Various incentives and concessions will be provided to the private sector
investments in the tourism industry.

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• Incentive holidays and facilities will be tried to promote domestic tourism in co-
operation with the private sector.
• The participation of local government bodies, municipalities, VDCs and NGOs
will be sought to conserve and develop religious, cultural and historical heritage
sites in the Kathmandu valley and outside.
• Guidelines and performance standards will be developed in collaboration with the
private sector to enhance the quality and efficiency of the hotel and tourism
industry.
• Loan facilities will be extended to new areas for the expansion of tourism
activities.
• A fixed percentage of foreign currency earned from the tourism industry will be
allowed for discretionary expenditure by the industry.
• The tourism industry will be recognised as a priority sector and investments will
be mobilised accordingly.
8. Programme
HMG role in tourism during the 9th plan will be focussed on construction and
improvement of physical infrastructure as well as institutional and policy
adjustments. Marketing and promotion of tourism will be the role of Nepal Tourism
Board and the private sector. Emphasis will be given to development of newer
destinations along with provision of infrastructure to relieve the pressure of
traditional destinations. Tourism that promotes rural economy will be encouraged.
Tourism Site Development
New destinations will be developed on the basis of study, survey and other necessary
activities. The Tourism Development Fund will be utilised along with the
mobilisation of the private sector and local bodies develop tourism sites.
Tourism Infrastructure Development
Various programmes that directly contribute to the development of tourist areas will
be launched. These may include roads, airports, foot-trails, sanitation programme,
heritage site conservation, environmental conservation, and so on. Various tourism
infrastructure related activities will be carried out in Pokhara, Lumbini, Gorkha.
Airport improvements in Jumla, Mus tang and Lukla will ensure increased mobility of
tourists.
Model Tourist Village
Rural-based tourism will be promoted so as to expand tourism down to the village
level. Rural tourism destinations will be developed in all appropriate representative
geographical areas of Nepal, targeting domestic and foreign tourists.
Mountain Tourism Development
The high Himalayan areas of Nepal including the famous Mt. Everest area are getting
polluted on account of increased tourism activities. To mitigate this trend, activities
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designed at environmental conservation and employment generation will be launched
in these areas by actively involving the local people. This scheme will mobilise local
NGOs like Sagarmatha Pollution Control Committee, Annapurna Conservation Area
Project and other tourism-related associations and organisations for clean-up of their
respective areas. Information on mountaineering will be broadcast on the radio,
inventory of mountain peaks published including statistics in mountaineering
activities and the mountain museum completed. Modern information system will be
developed on mountain tourism and administrative system of trekking activities will
be strengthened and professionalised.
Tourism Promotion Programme
The Nepal Tourism Board will actively involve the private sector in tourism
promotion and publicity. Information on Nepal will be updated on internet, ads
broadcast on television channels, publicity materials produced and distributed, travel
trade fairs participated, familiarisation tours organised, domestic tourism promoted,
awareness generated and festivals of tourism importance will be organised, among
other activities.
International Contact
Government responsibility in tourism promotion will be carried out under this
programme. World Tourism Day activities will be observed in a co-ordinated way,
SAARC feature films production will be co-ordinated, World Tourism
Organisation(WTO) meetings will be participated, Royal Nepalese embassies abroad
will be mobilised for tourism promotion, foreign direct investment in tourism will be
channelled in proper direction, aids will be mobilised for tourism promotion.
Tourism Human Resources Development
The Hotel Management and Tourism Training Centre (HMTTC) will be made more
capable and effective. It will carry out long and short term training programmes on
hotel and restaurant management as well as travel and tourism. Co-ordination will be
maintained in training programmes of the government and private sector to maintain
uniform standards.
Civil Aviation Programme
Tribhuvan International Airport will be upgraded into safe, reliable and modern
airport. The TIA improvement Project run under the Asian Development Bank loan
finance will carry out international terminal building construction, operational service
expansion, airport and hanger development, airport road construction, airport fire
control and maintenance building construction, air cargo complex and apron
expansion, civil engineering equipment purchase and land acquisition. Necessary
provision will be made to systematise the radar service installed at TIA.
Biratnagar, Bhairahawa and Nepalgunj airports will be upgraded into hub airports for
operation of short haul services to various Indian cities across the border.
The 44 operating airports in the kingdom will be upgraded. Modern equipment will
be installed, rescue and fire control services installed, terminal buildings constructed

467
or updated, chain -link fencing and personnel and security quarters constructed, for
example. During the Plan period, the airports in Kalikot and Kamalbazar (Achcham)
will be completed.
Helipads will be built in remote areas deprived of roads and airports.
Survey of potential sites for 2nd international airport will be carried out during the
Ninth Plan.

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 11.4 Labour and Workers' Welfare

1. Background
It is estimated that the labour force has increased at the rate of three hundred thousand
per annum. It is noted that industrialisation plays a vital role in increasing national
production national production. The three sides, government, management and
labours, as a social partnership, have their own prominent roles in their respective
areas. Therefore, it is essential that the roles of these three sides should be oriented
towards maintaining industrial peace in the country.
Industrial sector occupies an important place after agriculture in the gross national
production. So, it is essential to mobilise skilful and efficient labour force in the
industrial sector. In addition, it is required to focus on the alleviation of poverty by
reducing unemployment. In an effort to maintain industrial peace for industrial
development, it is indispensable to produce skilful, efficient labour force and to create
self-employment opportunities for the sake of reducing the unemployment problem.
2. Review of the Eighth Plan
Various programmes have been implemented during the Eighth Plan in the field of
labour and workers welfare. These are as follows:
• Various vocational and skill-oriented training programmes, conducted by skill
development centres and two vocational training centres, have provided training
to 22,973 person.
• A skill oriented residential training at Women Welfare Home in Kathmandu was
provided to 125 women who hailed from different districts and who would have
engaged in immoral occupations due to illiteracy and poverty. Each of these
women was given a hand operated sewing machine.
• Employment information centres have been established in a few labour offices.
• Skill Development Training Programme for bonded labour women has been
conducted since FY 052/53 for eliminating the bonded labour (Kamaiya) system,
a practice continuing for centuries in Dang, Bardiya, Kailali and Kanchanpur
districts. Under this programme 396 bonded labour (Kamaiya) women were
provided skill oriented training, and each of them was given a hand operated
sewing machine.
• A laboratory with modern equipment and machinery and office building for
occupational safety and health project have been constructed in order to examine
the smoke, dust, light and noise in the work places of industrial enterprises and
for raising awareness about the safety measures to be adopted to prevent
industrial accidents. Posters, pamphlets, calendars and so forth have been
distributed and seminars have been conducted to raise public awareness in this
respect.

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• To facilitate the re-habitation of growing child labour used in woollen carpet
industries, steps have been taken after the regular inspection and follow-up
actions against the carpet factories where child labour have been used.
• Industrial Relation Seminars have been conducted in different 12 places of
industrial areas of the kingdom to maintain harmonious industrial relations
between management and labours.
• Publicity through different communication media has been carried out and
foreign employment seminars have been conducted in five places with the aim
that no one would be cheated by falling in foreign employment lure (temptation).
In addition foreign employment market study teams have been sent to some East
Asia and Middle-East countries to obtained additional foreign employment
market.

The Eighth Plan (1992-97) Progress Table

Programme Target Progress

(in persons) (in persons)
From vocational and skill development 11775 22,973
training centres
Woman labour skill development 750 746
training programme (held in 5 districts of
each 5 development regions)
The districts where the women can be 125 125
involved in dishonourable profession due
to the lack of education and poverty,
women are trained and given residential
facilities at women welfare centre
Kamaiya women skill development 400 396
training programme (Bardia, Dang,
Kanchanpur and Kailali)
3. Existing Problems
• On the one hand, skilled labour force has not been produced in the field of
agriculture, industry, tourism etc. and on the other hand some part of labour force
is underemployed.
• There is a lack of effective implementation of acts, rules and regulations that have
been enacted after the restoration of democracy.
• The training programmes and other labour administration activities have not
succeeded to trend labour force imparting skills required for employment in
accordance with the market demand.
• No improvement has been made in the structure of training as per the labour
market demand.

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• Local level labour administration have not been strengthened.
• Mutual relationship between training and employment has not been maintained so
far. There is no factual information about to what extent the trained and efficient
labours have got the jobs. Training relating to labour has not been integrated with
other sectors like electricity, transportation, agriculture, industry, education and
health.
• The present Labour Act cannot cover the labour force of informal sectors. For
this reason, unemployment pressure is increasing.
• There is no cordial industrial relationship maintained between management and
workers.
• The authorised trade unions have not been aware of the responsibilities they have
to perform.
• Training arrangement for effective skill development has not been made for the
purpose of orienting the child labour towards education and self-employment.
• The attempts of non-government organisation (NGO) for the development of skill
and education of child labour are not transparent. In addition, there has not been
provision for effective inspection and monitoring from the side of the
government.
• The rights mentioned in labour Acts concerning the labour are not even taken
positively from management side.
• The basic necessities of workers that are required for their dignified livin g as
human beings have not been guaranteed.
• Nothing has been done to launch and to follow up education, security, health and
production oriented skill development programmes for the labours working in the
field of carpet, ready-made garments and transportation and so on. Even the
rights provisioned in the Acts have not been implemented.
• The programmes concerning the increase in productivity of labour force have not
been effective.
4. Long -term Concept
There is no doubt that national productivity is minimum due to the lack of modern
technicality and skill in present labour force in the country. On the one hand, the
number of unemployment is increasing day by day and on the other hand domestic
man power is unable to compete with the foreign labours in the labour market in
Nepal. As a result a huge part of employment opportunities has been occupied by the
citizens of other countries. Nepalese labours are displaced by them. The competitive
capacity of the domestic labours in the international labour market is nominal except
in some specific areas. Thus to remove the drawbacks underlying in this field the
government has to take a leading role in order to develop labour force as. In addition
to this, the long-term concept is visualised to develop qualified, competitive man
power in order to face challenges and take opportunities of the present era of
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globalisation and liberalisation and to develop the labour force which will be able to
adapt to the changing technology and take the benefit comparative advantage.
To maintain industrial peace, to improve labours' social status by creating healthy and
safer working environment, to develop the qualified, creative, multi-skilful, adaptive
labour force having the ability to take the challenge of the 21st century and to bear
positive value attitude and to increase national productivity using the above qualities
are the basic elements of the long-term concept with regard to labour sector..
The proper environment will be created to attract the domestic and foreign invest ors
in order to solve the growing unemployment problem of the nation. As per the
perspective agriculture plan, policies will be directed towards implementing
educational and training programmes in order to create self-employment job
opportunities in agriculture. Moreover, policies and strategies will be adopted to end
racial discrimination, to provide job opportunities on be basis of gender and
geographical equality, to emphasise labour-oriented technology in production and to
control the inflow of non-Nepa lese citizens into the labour force. In addition, policies
and strategies will be formed to manage education and training, which will assist in
the balanced development of rural and urban areas.
Strategies will be taken to prepare required manpower in the field of domestic and
cottage and tourism industry as labour-oriented technology is much used in this field.
In addition, the policy will be adopted to give priority to Nepalese labours in various
development and constructive works implemented in the country.
Ninth Plan:
5. Objective
• To increase national production by providing job opportunities to the labour force
in the country and abroad, to preserve justifiable rights and social safety of the
labours, to make their skills technology oriented and to end exploitation over
them are the objectives in this regard.
• The unemployment number will be reduced maintaining balance on the basis of
demand and supply of labour.
• Skilful labour force will be produced by imparting skill-oriented training. Poverty
alleviation will be facilitated creating the opportunities of self-employment.
• Foreign employment will be competitively developed and made reliable creating
the situation for the Nepalese labours to get opportunities in foreign labour
market.
• Education opportunity will be imparted in order to eliminate the child labour and
rehabilitation will also be facilitated.
• Productivity will be increased maintaining industrial peace by raising public
awareness for the development of industrial relation.

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6. Policy and Implementation Strategy
• Steps will be taken for skill development, encouraging to set up organisations,
ensuring the minimum wages in order to improve the living standard of
agricultural labour.
• Essential legal and administrative provision will be made to end exploitable
labour systems and relations like bonded labour ‘Kamaiya’ and household
workers ‘Haligothala’ tradition which are prevailing in agriculture and rural
areas. Welfare programmes will be accordingly conducted targeting such labours.
• The programmes, which increase the productivity of manpower involved in self-
employment, will be implemented.
• Self-employment and self -employment opportunities will be created for such
labours through providing basic and vocational training as per the demand of
labour market in organised and other areas.
• Employment exchange and information collection programmes about labour
market will be made more systematic and they will be strengthened in order to
keep balance between domestic and external demand and supply of labours.
Essential legal provision will be made for this respect.
• Attention will be paid in order to create the favourable situation to develop
economic sectors like industry and tourism in the nation so that the labour force
get more employment opportunities in the country.
• Labour administration and trade union provision will be consolidated in order to
improve harmonious industrial relation. Amendments will be made in the present
Acts and rules according to the need in order to emphasise the bilateral policy.
• Self-employment opportunities will be provided in agricultural and non-
agricultural sector by imparting skill-oriented training for the rural and
underprivileged women labour.
• Special programmes on child welfare will be launched in order to eliminate child
labour.
• The opportunities for using traditional Nepalese skills will be increased by
promoting such skills.
• The employers who enhance the skill of the workers will be given tax free
incentive for encouraging them.
• Necessary steps will be taken to establish an autonomous institution for
promoting foreign employment and making it reliable. Nepalese diplomatic
missions situated in the countries with employment potentials and other
government agencies will be mobilises for expanding the scope of foreign
employment market, foe enhancing its reliability and for protecting the rights,
welfare and the safety of Nepalese workers abroad
• Necessary institutional arrangement for conducting useful research on labour will
be made by preparing required man power. This agency will formulated policies

473
 and programmes in co-operation with national and international agencies for
employment promotion and labour welfare.
• Programmes for increasing participation of labourers in production will be
effectively implement ed.
• Amendments shall be made in Labour Act and trade union act so that they are in
favour of labours and helpful in maintaining cordial relationship between
labourers and management.
• Improvements will be made in the provision of insurance, pension, and social
safety and so on in order to make living of labourers easy and facilitating.
• Self-employment will be expanded as a campaign. For this, the skill for the
labourers will be used in productive tasks through providing loan without
collateral with nomina l rate of interest.
• The policy of displacing foreign labourers will be adopted by preparing domestic
skilful manpower as per demand of the economy. For this purpose improvement
will be made in skill development training centres intending to increase in wage
employment and self-employment opportunities.
• It is possible to end gender discrimination in employment only through legal
provision. Emphasis will be laid to increase access of women in skill
development training by conducting programmes to make them educated.
• Labourers working in non-organised sector will be provided an environment to be
organised. Policies to consolidate legal processes will be adopted as well.
• Programmes will be conducted for increasing their understanding of policy issues
of national importance, for raising their awareness about their rights and duties
and for making them conscious through the massive extension of labourers
education through registered trade union associations.
• Training programmes, which enable to cope the compet ition, will be conducted
improving the labour quality and productivity. Policies will be adopted to conduct
the programmes in order to implement incentive scheme and maintain cordial
relationships with the management.
• Amendments will be made in labour act in order to make labour sector effective
and skill oriented.
7. Programmes
Training
Training in different vocational subjects will be imparted to 37,438 persons through
16 skill development and vocational training centers of the kingdom in order to create
the opportunities of wage employment and self-employment opportunities.
Skill development training to 985 women will be imparted through labour-oriented
women's skill development training programme in 5 places of each development
region i.e. 25 places in the kingdom.
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In view of the fact that poverty alleviation is the main objective of the Ninth Plan, a
mobile training programme for rural poor will be conducted with the purpose of
making the target group employable and self employable after identifying the people
below poverty line and targeting them. Such training will be provided to 20 persons
in each constituency, which sums up to 4100 persons each year and a total of 12,300
persons within 3 years beginning FY 056/57.
The control of the population growth in the nation will be enhanced by imparting
education about population control, family planning, AIDS and sexual diseases,
control of polluted environment, importance and need of education by providing
training a total 10,000 person including 2,500 labourers working in the industrial
institution and 7,500 trainees of skill development training centers and Vocational
Training Centers.
If industrial dispute is resolved at the industry itself it will increase mutual
understanding between management and labour and speed up such resolution. For this
the policy of involving the labour and management will be stressed, which reduces
the involvement of third party or the government. But the involvement of government
of the government will be made mandatory for the resolution of industrial dispute of
serious nature and the effect of which can spread to other areas.
Considering the reality that the establishment of good industrial relation can be made
only through the implementation of law, such situation will be created so as to
involve labourers in the ownership of the industrial enterprises, to share them the
dividend and to encourage them to behave as corporate citizens.
Internal and external training programmes will be launched to make the authorised
representatives who are involved in group barging, skilled in the discussion
negotiation activities.
An environment in which industrial disputes will be prevented and labour laws will
be fully enforced will be created by strengthening labour administration and making it
pro-active.
Timely amendments will be made reviewing the provisions like social safety,
insurance, pension and so on in order to facilitate and make the labourers living easy.
The present on going national level trade unions will be involved in programmes,
preserving the rights of labourers and maintaining industrial peace.

Child Labour
As it has been realised the necessity to initiate programme for eliminating the child
labour. So, a separate national policy, work plan and strategy about child labour will
be launched. By adopting multipurpose strategies like awareness enhancement,
identification of the income growth of the parents, direct interference, rehabilitation
programme, education and vocational training, a substantial improvement in child
labour situation will be made.

475
Child labour will be eliminated in woollen carpet factories tea garden and brick
furnace. Child labour will be rehabilitated in the family and provided non-formal
education through children development and rehabilitation fund.
Foreign Employment
Arrangements to strictly enforce legal provisions. widen the use of foreign labour
market, impart training and to enhance public awareness will be made in order to
promote foreign employment regular and make it systematic.
Communication channels will be used, seminars will be conducted in 15 affected
places if the kingdom and peoples awareness will be raised for the purpose of
informing and advising people not to for foreign employment through the
unauthorised agencies and in dividuals.
Identifying the probable countries for foreign employment, arrangements will be
made to send Nepali labourers through diplomatic channel. For this private sector will
be made systematic and reliable. Institutional arrangements will be made to impart
skill-oriented training for the labourers.
Institutional Arrangement
A high level national labour institution will be formed in order to provide counselling
and carry out research studies on labour force and familiarise personnel, who are
involved in labour administration, members of trade union and workers involved in
industrial enterprises, about changing modern technology.
Information, Follow up and Training Management
Different institutions are involved on the different under different ministries for a
long-time in imparting vocational and skill-oriented training. In such a climate, there
have been overlapping in the objectives and functioning of the different ministries
because different institutions are involved in conducting training which are of the
same nature. To stop such practice a separate policy about training will be
formulated. Under the policy, institutions will be made to impart basic, medium and
high level training required for various service sectors and institutions. Arrangements
for a single institution will be made to determine the standard of the training.
National labour council will be formed involving private sectors. With the
recommendations of the council, research on employment will be improved and
training programmes will be guided by the demand.
Competitive environment will be created between governmental and non-government
institutions to impart training and provisions will be made to choose the training
institutions themselves displacing the training to the target groups provided by the
government through voucher system in order to improve the standard of the training.
In addition, emphasis will be laid on curriculum reform, research and result oriented
evaluation in order to improve the present training systems and training subjects
taking into consideration the changing technology and demand pattern.
Training in different subjects will be conducted in accordance with the
recommendations of National Labour council to be formed with the involvement of

476
private sectors in the Plan period for personnel and workers working in different
institutions and fees will be charged to them.
Information regarding labour related programmes activities and reports will be
collected from the concerned agencies in the Kingdom for smooth flow of such
information.
Seminars on Industrial Relation will be conducted in different 20 places of the
kingdom in order to develop cordial industrial relationship among personnel, workers
and management of industrial institutions.
Steps will be taken in order to prevent from probable industrial accidents likely to
happen in industrial institutions. Necessary inspection of industrial institutions will be
carried out in order to maintain standard with the norm of dust, fog, light and noise
levels in the industrial institutions and test and analysis of collected samples will also
be made after gathering such factors.
Concerned authority will be informed to raise public awareness about to keep
industrial environment healthy and clean through publicity and extension activities to
raise public awareness.
Employment exchange service will be made effective by providing essential
information and counselling to employee and unemployed people through
employment information centres situated in different districts of the kingdom.
Information system about labour force will be established in the labour ministry.
Arrangement will be made to equipped with modern essential equipment and avail
manpower. Follow -up actions will be regularly taken on the interrelationship between
training and employment through this system.

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 11.5 Supply

1. Background
The arrangement needs to be made for the supply of development related construction
materials, production materials and essential consumer goods in an accessible , regular
and fairly priced manner. In this regard the supply of essential consumer goods to the
common people required for sustaining their daily living and raising the living
standard of the is especially important. Even though it is challenging task it is
absolutely essential that the supply arrangement has to be geared towards providing
relief to the community with low income and living in remote and backward areas.
The supply of essential goods necessary for the daily living of the community who
are below the poverty line and living in remote areas and also for the community who
are relatively better off has to be systematised and widened. In view of the fact that
the supply management of the country has yet to be strengthened so as to make it
reliable and systematic with the objective of meeting the immediate and long-term
need of the country after drawing lessons from the past experience, attention should
be given to identifying type and quantity of goods to be included in the supply
arrangement, enhancing the capability of supply system, making it transparent and
efficient, establishing the storage for food and essential consumer goods for
emergency situation, protecting consumers' welfare. In the meantime, the patient and
disciplined participation of private sector in the supply management should be
encouraged. In this context, national supply management and its related programmes
have to be initiated in accordance with the concept, objective and policies of the
Ninth Plan and long-term vision of the country.
2. Review of the Eighth Plan
In the Eighth Plan, programmes on the areas such as food supply, transportation of
food production to food deficit areas, operation of food depots, co-operative based
crop development, purchase of food production, building and conduct of storage
facility were implemented in this regard. Likewise, supply of petroleum products,
timber and fuel wood, construction and production materials and machinery and
equipment were carried out by the respective institutions as their on-going activities.
Transport subsidy, import servicing and market arrangement were provided for the
supply of goods to remote areas by the private sector. In addition, activities like
quality inspection of consumer goods, fixing of minimum support price of food and
cash crops and establishment of institutional framework for protecting consumers'
welfare were completed.
In the Eighth Plan, a total of 238107 mt food was purchased, 35458 mt of food sold,
17 warehouses with 110000 mt capacity constructed and 65189 MY of food supplied
to 38 remote districts. During the Plan period, arrangement was made for the subsidy
of Rs 733.6 million for transporting food to deficit areas and an interest subsidy of Rs
207 million was provided. The target of storing 78000 mt foods as buffer stock by
Nepal Food Corporation could not be achieved compared with the set target. In the
Plan period a total of 2561 kilo litres of petroleum products was imported and out of

478
this 2454 kilo litres was actually supplied to the market. Likewise, National Trading
Limited purchased consumers goods and construction materials worth Rs 3038.3
million. In the Eighth Plan the supply of timber, fuel wood and coal remained far
below the set target due to the various problems related to institutional m anagement.
3. Existing Challenges
• The means of transporting food to remote districts have not been reliable.
• The traditional means of transportation that contribute to poverty alleviation and
employment creation have not been developed from the business point of view.
• The storage facility for petroleum products has not been constructed in keeping
with the need.
• The supply arrangement of fuel wood and timber needed for construction has not
been effective.
• The supply of food items and essential goods to remote and rural areas has not
been adequate and sustainable.
• The organisation structure of the Ministry of Supply has not been strengthened
and consequently the supply system has not been well organised, regular and as
per the people's need.
4. Long-term Conce pt
• To create an environment for the regular, adequate and accessible supply of
essential goods.
• To monitor the quality, availability and price of essential goods for protecting the
consumers' rights.
• To make arrangement for food security through maintaining the buffer stock of
food at the regional level.
• To prevent the black marketing, creation of artificial shortage and profiteering of
consumers goods in general and essential goods in particular.
• To facilitate the expansion of production capacity of agricultural and
manufacturing goods in accordance with the supply need.
• To implement the co-operative sponsored export oriented crop development
programme in the mountain and remote areas.
• To arrange for establishing the SAARC food storage system.
• To minimise the harmful effect on the economy caused by the supply and price
fluctuations.
• To privatise gradually the public enterprises relating to supply sector.

479
The Ninth Plan
5. Objectives
• To ensure the regular, adequate and accessible supply of essential goods.
• To monitor the availability and cost of essential goods for protecting consumers'
welfare.
• To make arrangement for maintaining the buffer stock of food at the regional
level in order to provide food security.
• To play the role of facilitator by the government in order to encourage the private
sector to be involved in the supply management.
• To control the artificial shortage and black marketing of essential goods.
6. Policies and Implementation Strategy
• Attention will be paid to systematise infrastructure facilities for the regular,
adequate and easier availability of essential goods.
• Consumer co-operatives will be mobilised to supply the essential goods and to
control the artificial price increase.
• Private sector will be encouraged to play an active role in making the supply
management effective.
• Market discipline will be maintained by monitoring the availability and price of
goods in order to protect consumers' interest.
• Arrangement will be made for systematising and monitoring the supply situation
by the office of the supply commissioner at the regional level and by the supply
inspection branch office at the district level.
• With the purpose of alleviating poverty and protecting the consumers' rights,
necessary arrangement will be made to determine the minimum support price of
food production.
• The buffer stock of food will be preserved by purchasing paddy from the local
farmers.
• Arrangement for the SAARC Food Store and the food security will be made.
• The storage system of essential goods such as food and petroleum products will
be set up and expanded for ensuring the supply of such goods in a situation of
natural calamity and emergency.
• The policy of exporting food by the private sector will be resumed if there is food
surplus in the country.
• Supply data bank in the Ministry of Supply will be established. For this purpose,
the interaction and co-ordination among Ministry of Agriculture, Ministry of

480
 Industry, Ministry of Commerce and General Association of Nepal Chamber of
Commerce will be achieved by involving these agencies actively in this task.
• Special attention will be paid to supply the food production to food scarce areas
and underprivileged group of the society.
• Studies, research and training will be conducted in order to make the supply of
essential goods effective.
• The policy of purchasing food production through levy system for supplying the
food items to remote areas will be adopted.
• Necessary steps will be taken to arrange the import of goods by the private sector
and the government sector if domestic demand does not meet the demand as
projected and supply monitoring will be undertaken for this purpose.
• National Food Purchasing Committee under Consumers' Protection Council will
be formed with representatives from various sectors in each development region
for purchasing food production.
• With the objective of providing relief and food security to the common people an
arrangement for storing food will be made so as to stabilise the market of
essential goods, achieve food security and establish SAARC food store.
• Co-operatives will be encouraged to conduct effective programme for arranging
the supply of essential goods and food storage in order to stabilise remote area
market and price of essential goods and food.
• Private sector and co-operatives will be encouraged to arrange the supply and
storage of essential goods before the start of rainy season in the remote areas.
• Private sector and co-operatives will be motivated to establish and operationalise
Cold Store and Warehouse for facilitating the storage of essential goods.
• The price determination of goods on the basis of free market operation will be
further continued. In a situation when His Majesty's Government is required to
determine the price, Consumer's Protection Council will do so as per the
recommendation of the Price Determination Advisory Committee. While doing
so the welfare of producers, consumers and sellers will be harmonised and market
survey and research will be conducted. Department of Consumers' Protection will
function as the secretariat of the above mentioned council.
• The system of fixing minimum support price of main crops such as paddy, wheat
and maize will be set up.
• The price of essential goods will be fixed after considering the fact that the price
fluctuation such goods in the neighbouring country's market very much affects
the domestic price.
• Market development programmes in rural and urban areas will be implemented
with the purpose of protecting consumers' interests and making the supply of
essential goods smooth, easier and regular.

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• Co-operatives and private sectors will be encouraged to develop and expand retail
and whole sale market of essential goods.
• Co-operative Food Stores will be established as a whole sale market in major
urban areas.
• Encouragement will be given to strengthening the supply system through the
establishment and expansion of the wholesale markets and their expansion in the
various potential areas of the country.
• In order to protect consumers' welfare and create a disciplined market
environment, the monitoring of supply situation, price, quality, weight and cost of
goods will be undertaken by the Department of Consumers' Protection,
Department of Standard and Measurement, Central Food Laboratory, Office of
the Supply Commissioner and district level supply offices in a co-ordinated
manner.
• A district wise supply monitoring system will be established for making the
supply system effective.
• An inspection and monitoring system will be operationalised to discourage the
practice of misusing, i.e., diverting the goods and raw materials imported from
third country to other location while in transit instead of bringing into the
country. Industries that use imported raw materials will be inspected to ensure
that they are properly using the import facility to produce the essential goods in
the country.
• A system of developing cost monitoring of essential goods will be set up.
• In order to control undesirable practices like monopoly, creation of artificial
shortage and profiteering, which hinder the supply process, appropriate
monitoring and control mechanism will be adopted in this respect.
• Programmes on raising public awareness, soliciting suggestions, and extension
will be carried out for protecting consumers' interests.
• Studies, research and training on consumers' welfare related areas will be
conducted. In addition, studies on supply mechanism, price monitoring policy and
programmes will be initiated.
• The flow of information on the production, import, export and selling price of
essential consumers goods and construction mater ials will be developed to ensure
accessible, smooth and regular supply of these goods.
7. Programmes
Nepal Food Corporation
• Nepal Food Corporation will be developed as an institution responsible for
providing food security and storage facility.

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• Co-operatives will be mobilised as selling and distribution channels for supplying
food production to the people living in the remote areas of the Kingdom in
accessible and fairly priced manner.
• Land routes will be used to transport food to remote areas for contributing to
poverty alleviation and increasing employment, and the use of air transport will
be minimised in this regard.
• Under national food reserve programme a total of 30,000 mt of food will be
stored for providing food security in the country.
• An arrangement for providing necessary food subsidy to transport up to 48, 714
mt of food to highly remote areas will be made.
Nepal Oil Corporation
• The storage capacity of Nepal Oil Corporation will be increased form 30,000 kilo
litres to 100,000 kilo litres.
• The supply of kerosene oil will not be confined to accessible areas only and
instead it will be expanded to remote areas as well.
• Activities like research, studies, training, publicity and awareness raising will be
conducted for economising the energy consumpt ion.
• Monitoring will be conducted for controlling environmental pollution through
Petroleum Product Quality Research and Test Centre.
• Nepal Oil Corporation will pay attention to the feasibility of establishing joint
venture gas industries
Timber Corporatio n
• In order to expand the supply of timber and fuel wood, Nepal Timber Corporation
will arrange their supply. For the smooth supply of these products afforestation,
conservation of forest, forest management activities will be carried out in the
lease forests.
• Nepal Timber Corporation will assist the forest management groups for making
the market arrangement of timber of fuel wood that are grown in community
forests, lease forest, private and national forests.
Institutional Provision
Supply commissioner off ices will be established under the Ministry of Supply in all
the five development regions for co-ordinating accessible, smooth, systematic and
fairly priced supply and distribution of essential consumer goods to the common
people living in rural area arran gement. Under this process, five supply commissioner
offices in Biratnagar, Kathmandu, Siddharthnagar, Nepalganj, Dhangadi and 12
supply inspection offices in Chandragadhi, Malangawa, Rajbiraj, Janakpurdham,
Pokhara, Krishnanagar, Tulsipur, Birendranagar, Musikot (Jumla), Dipayal, and
Mahendranagar will be established. Efforts will be made to develop public
corporations such as National Trading Limited and Salt Trading Limited as

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responsible and result oriented institutions and to make them effective by the
availability of skilled manpower and other resources and equipment.

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 Part 12
Development of Infrastructure

12.1 Electricity Development

1. Background
Electric energy has an important role to play in the economic development of a nation.
On the one hand, the availability of electricity is a basis of overall development, are on
the other, the consumption of electricity is regarded as an indicator of economic
situation in the country. Hence, for the supply of electricity that plays an important role
in the overall development of the nation, it has become necessary to change existing
immense quality of water resource into electricity.
Although, there is an immense quantity of water resources available in the country, in
comparison to its theoretical hydropower potential, only a negligible amount of it has
been generated. Theoretical hydropower potential of Nepal is 83000 MW. However
the total installed capacity of present hydroelectric projects is only 253 MW, which is
only 0.3 percent of the potential capacity. This suggests that there is an ample
opportunity and potentiality for hydropower development in Nepal. Since energy plays
an important role in the balanced development of agriculture, industry, and other
sectors, it is essential to supply energy in affordable price and utilise it effectively.
Undoubtedly, energy development is an impetus for balanced development of the
nation. Since large amount of financial investment is needed for the development of
energy sector, maximum utilisation of available financial resources is essential.
At present, most of the electricity supply is consumed in urban areas. But a majority
of the population lives in rural areas where most of the agro-industries, irrigation
schemes and cottage industries are located. As rural development is the basis for
overall development of the nation, balanced development is only possible when the
equal opportunity of electricity consumption is provided to the rural and urban
populations. National production can be increased and a significant benefit can be
derived from export of electricity by implementing comparatively less expensive
hydropower projects. In addition, non - polluting natural fuel ( hydropower ) can
replace other polluting fuel ( petroleum, gas, coal ) and helps to save foreign
currencies and reduce the level of air pollution.
Considering inade quate government funding for electricity development, in the Eighth
Plan, Plans were initiated to bring the private sector in this field. In the Ninth Plan, the
policy will be continuing, so that government investment can be increased in other
social as well as rural development sectors. All these considerations clearly suggest
that energy sector, that plays an important role in overall development of a nation,
should be accorded high priority in the Ninth Plan.

2. Review of the Eighth Plan

Legal Provision and Institutional Development
In the Eighth Plan energy development was considered as an industry and subsequent
changes were made in strategies to attract the private sector to this sector. For this
purpose, Hydropower Development Policy-1992, Water Resources Act 1992,
Electricity Act 1992, Electricity Rules1993, and Electricity Tariff Control Rules1993
came into existence. In these legal provisions, establishment and operation procedures

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of power industry were made standard, timebond and transparent, and the facilities,
subsidies and cooperation to be provided to the private sector were made legal. A
single door policy has been adopted for those types of procedures and facilities. For
generation, transmission and distribution of electricity that is more than 1000 KW
license is required for both private and public sector.
In 1992, the Electricity Development Centre was established to develop hydropower
and to attract private investors in this sector. Moreover, with a view to making the
procedure of making electricity tariff systematic and transparent by keeping out of
government. control, Electricity Tariff Commission was formed in 1993.
In the area of institutional strengthening of Nepal Electricity authority (NEA),
activities such as timely reforms in management, inservice training to personnel,
improvements in provision of physical facilities, implementation of computerised billing
system, leakage of electricity control, conservation of electricity, publicity for the use
of required machineries were carried out. NEA was granted more autonomy by
reforming NEA Act and A study was initiated to operate the NEA do commercial
line.
Efforts made by public and private sector
In the process of development, construction and study of hydropower projects in the
Eighth Plan period, medium projects such as Arun 3 (402 MW) and Kali Gandaki 'A'
(144MW), and small projects such as Puwa(6MW) Chilime (20 MW) and Modi
(14MW) were initiated. Out of these, Arun-3 could not be implemented because the
donor agencies withdrew from the project while arrangements were in the final stage.
However, in other projects, initiated in the Eighth Plan period, the maximum utilisation
of national technical manpower and increase in the capacity of power generation have
been achieved.
The efforts made by the Govt. sector alone is not sufficient in power development.
Therefore, the Eighth Plan had adopted the policy that enhanced the participation of
private sector. Subsequently, the interest shown by the private sector is encouraging.
In a short period, Khimti (60MW) and Bhotekoshi (36MW) projects were
implemented by the private sector whole Indrawati (5MW) has reached the
implementation stage. Likewise, through the involvement of the private sector, West
Seti (750MW) which is an export-oriented type hydro-electricity project has also been
on implementation stage.
The agreement on 'Mahakali River Integrated Development' between Nepal and India
has paved the way for foreign investment in multipurpose large hydropower projects
such as Pancheshwor. Similarly, the agreement on for trading electricity between
these two countries has cleared the way for private and public sector to export or
import power to each other. It has yielded a new dimension in the field of electricity
development.
Achievements:
Electricity Export
Agreement on power and trade between Nepal and India has been completed with the
purpose of exporting electricity to India. This treaty allows government, semi-govt. or
private party of one countries to make an agreement on power trade with government,
semi-government. or private parties of another country. The terms and conditions, the
quantity and the price will be fixed by the parties involved. In accordance the
prevailing statutory provision of each other country, each other parties will get
facilities for power trade in their countries and respective governments will assist
them. This agreement has opened the door for private parties involved in export-
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oriented West Seti Hydroelectric project and for NEA to directly consult with Indian
parties about export and import of electricity.
Power Generation, Rehabilitation and supply system
In the extension of hydropower generation capacity the target was to complete
medium hydropower projects of 12.5 MW and small hydropower of 5MW,and to
initiate Kali Gandaki A (100MW) and Arun -3 (201MW).Although Arun-3 could not
be implemented, Jhimruck hydropower project of 12.5 MW has been completed and
construction of Kali Gandaki A(144MW) has been initiated.By upgrading and
strengthening of Trishuli Devighat hydropower project it was targeted to add 12.2MW
of power, and after completion of this project 11 MW of power has been added.
Construction, Extension, and Rehabilitation Transmission Lines
In the construction and strengthening of transmission line the targets were to complete
the remaining work of Kohalpur- Mahendranagar 132KV transmission line, to
complete 105KM of Ataria- Dadeldhura-Dipayal 66KV transmission line and to
complete 100 KM of 33 KV transmission line in different parts. Out of these , the
remaining work of Kohalpur- Mahendranagar 132 KV transmission line, Ataria -
Dadeldhura - Dipayal 66 KV transmission line and 54 km of 33 KV transmission line
have been completed. In the power grid inter connection between Nepal and India, the
targets were to complete the works of 42 km of Duhabi - Katariya 132 KV
transmission line and construction of a high - voltage grid substations. Of these,
addition of the second circuit in the 27 km long Duhabi - Kushaha segment of Hetauda
- Biratnagar 132 KV transmission line, construction of a single circuit in 14 km long
Kushaha - Bhantabari segment of the same transmission line, 1.5 km double circuit
transmission line in Kushaha and construction of 56 MVA high voltage sub-stations
have been competed.
Strengthening of Distribution System
The targets were to prepare plans for systematic strengthening of distribution system
of Kathmandu valley, and implement it, to complete the strengthening work of
distribution system of Biratnagar, Janakpur, Pokhara and Nepalgunj and to complete
the strengthening and extension of distribution system of Dharan, Hetauda,
Parwanipur, Birgunj, Butwal and Bhairahawa. However, only the first and second
phases of strengthening of distribution system of Kathmandu valley have been
complete d.
Rural Electrification
Under the Sixth and Seventh Power Project the targets were to complete the
electrification of nearly 1200 villages of 20 districts. In development of small hydro,
the target was to complete Namche ( 600 KW ), Achham (400KW) and Tatopani II
(1000KW) are to initiate Khotang (500KW), Kalikot (600 KW) and Dolpa (160KW)
projects. The Sixth Power Project has been completed and under the Seventh Power
Project, 513 villages and 5 city areas have been electrified. Similarly, under the
seventh power project construction of 12 new substations of 33KV, the capacity
extension of substations of 171 MVA have been achieved by completing
reconstruction of nine substations of 132 KV, 66 KV & 33 KV. Another 1510 km of
11 KV transmission line and 2487 km of 400 volt distribution line have been
completed. Towards small hydro, Namche, Achham and Tatopani II projects have
been completed and Kalikot and Dolpa projects were started. Moreover, construction
work of 33 KV transmission line of Gaighat-Khotang and Sindhuli-Ramechhap has
been initiated.
Survey, Feasibility Study and Engineering Design
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Under this heading the target was to complete the detailed engineering design of Sapta
Gandaki as a multipurpose (including irrigation) project(225MW) and West Seti
(360MW) as a power project detailed engineering study of Upper Karnali (240MW),
Bagmati (140 MW), Kamala and Budhi Gandaki (600 MW), and feasibility study of
Bhotekoshi, Khimti, Naumure and Lower Arun. By considering its export potential
West Seti (750MW) has been put forward as a project to be implemented by private
sector. The feasibility study of upper Karnali (300MW) has been completed and for
feasibility study of Bhotekoshi (36 MW) and Khimti (60MW) has been completed.
Towards small hydro, the target was to prepare a master plan, and carryout additional
studies as needed. The master plan has been prepared, and 57 projects were
identified. Of these, 28 projects can be linked with national grid, and 29 projects would
have to be developed as a isolated projects. Among these projects, detailed
engineering design of 3 projects have been completed and detailed engineering design
of 2 projects are being completed. Designing of other 3 projects is in progress.
Similarly, feasibility study of 7 small hydro projects has been completed and feasibility
study of another small hydro project is being continuing.
Cumulative Achievement:
Compared to the target of hydropower generation of 347 MW by the end of Eighth
Plan, 300 MW have been generated (253 MW of hydro and 47 MW of Thermal).
Similarly, compared to the target of electricity supply of 1,522 Million units, 1335.9
million units have been supplied. Transmission lines of 2902 KM (Single & double
circuit) with different voltage capacities have been completed and the capacity of sub
stations has reached 602 MVA.
By the end of Eighth Plan the number of consumers reached 5,25,000, which is about
14 percent of total population. Of total energy available, 26.5 percent is consumed by
the domestic sector, 30 percent by the industrial sector, 5 percent by the commercial
sector and 13.5 percent is export and other sector. Similarly, 75 percent of the total
power supply is being used and remaining 25 percent goes to technical and non-
technical leakage. Since the government resource alone is not sufficient to meet the
energy demand, power has been purchased from the private sector, and it has also
been imported from India to meet the demand for peak hours.
The comparative details of demand for and supply of energy, installed capacity, length
of transmission lines in the beginning and in the end of the Eighth Plan is presented in
Table1.
In Eighth Plan period it was aimed to spend Rs.79079.6 million in power generation by
public sector, however only Rs. 8412.5 million has been actually spent. This is mainly
because Arun III could not be implemented and implementation of Kaligandaki A was
delayed. In extension of transmission line, it was estimated to spend Rs. 1614 million,
however, the actual spending was only Rs. 462.2 million. In systems strengthening,
compared to the estimate of Rs. 1090 million, Rs. 2500.5 million was actually spent. In
distribution and rural electrification the estimate was to spend Rs. 1800 million, while
actual spending was only Rs. 229.3 million, and in survey and feasibility study, the
estimate was to spend Rs. 2,000 million, while only Rs. 100.5 million was actually
spent. (Table 2)
Cost of Power Supply and Electricity Tariff:
While evaluating the Eighth Plan the changes in cost of power supply and power ta riff
needs to be reviewed. It shows the direction of financial aspect of power sector. A
comparative description of power-supply expenditure and power tariff at the end of
Seventh Plan and at the end of Eighth Plan is shown on Table 3 and 4 respectively. In
this period, 36.2 percent increase in power supply and 35.7 percent increase in power
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sales is recorded, which implies that there is an increase in power leakage by nearly 1
percent ( Table 1 ). In the same period 59 percent increase in the cost of power
supply, and 148 percent increase in power tariff has also been noticed. Excluding the
electricity that was sold to India, the increase in internal power tariff is increased by
166 per cent.
Analysing the comparative chart of power supply expenditure it is clear that
operations and maintenance cost have increased tremendously and it has questioned
the efficiency improvement in power sector. According to the power Act 1991, power
sector has to pay royalty. This will affect the adopting tariff. If we look at the ratio of
depreciation cost to total cost of power supply, it is time to rethink on the system of
annual reevaluation of fixed capital of power sector using existing inflation rate. There
is not much change in the capital structure of power sector because there is no
substantial change in the interest rate. The increase in fuel cost is due to the external
causes, while the increase in the cost of power purchase is mainly due to the increase
in price of electricity that we import from India.
In the Eighth Plan period, a new trend has emerged, that is industrial and commercial
activities have consumed more electricity than the domestic and non-commercial
sector. However, there is a decrease in consumption of energy by the drinking water
and irrigation sector and increase in unproductive street lights. Commercial and non
commercial sector continues to provide cross subsidy in power tariff to other sectors.
Only its quantity has become less. The cross subsidy has become less for domestic,
drinking water and irrigation sector, while the industrial sector is getting some amount
of cross subsidy. Now it can be seen that street light sector has also started getting
cross subsidy. The price of electricity that is being exported to India is less than the
domestic price of electricity. In this plan period, the domestic price of electricity was
reviewed three times that is in 1991, 1993 and 1997 )
From this analysis, it has become clear that financially the power sector was in loss at
the end of the Seventh Plan, while by the end of Eighth Plan it was in profit. The sole
reason behind this is the raise in price of electricity, with no improvement in efficiency
of power sector.
3. Existing Challenges
The development of power sector will be accelerated when we formulate appropriate
policies and strategies and implement programmes properly. To do so, the issues that
are emerged and problems that are being faced in the process of development of
water resources projects needs to be identified. The prominent issues and majo r
problems of hydropower development that were identified in the past are discussed
below.
• Although the existing legal provisions have attracted and encouraged the
participation of the private sector in hydropower development, some inherent
shortcomings in the provisions are also noticed. Revaluation of royalty that has to
be paid to His Majesty Government has become necessary. There is no clear
provision of export tax on power export. While developing multipurpose project by
the private sector, the process and mechanism to provide the down-stream benefit
has not been mentioned. There is no provision of competition among the private
parties for hydropower development. Based on this experience, necessary revision
in the Act is required on these issues.
• Private investors are interested in getting all facilities including licenses, and
fulfilling all requirements from one single government agency. It saves time and
projects can be implemented expeditiously. The government has established the
Power Development Board aiming to provide all facilities from a single door,
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 however, because of difficulty in coordinating with concerned agencies and delay
in internal decision making process the single door system has yet to become
effective. It has adversely affected the private sector.
• Some anomalies have been observed between existing policies and legal
provisions related to power sector, and the policies and legal provision of other
government agencies. It has obstructed the smooth development of power sector.
• Foreign private investors do not favour double tax system. However, Nepal has
made agreements only with few countries for single tax system. Similarly foreign
private investor do not come forward to invest without protection, and they prefer
bilateral agreements that guarantee the protection. However, Nepal has made
such agreements only with India, Norway and Thailand for single tax system and
an agreement with Germany, France and UK for protection of bilateral
investment.
• In order to generate electricity and to sell or export it to a big consumer or a
distributor, private investors need to construct either a separate transmission line
or using existing national grid system. Because wheeling charge has not been
fixed and the coding system of the grid not developed, there is difficulty in using
the grid system.
• There are varieties of risks involved in the implementation of hydropower projects,
such as commercial, legal, political, natural calamities and so on. Since there is no
clear policy on what types of risks to be borne by private sector and what types of
risks to be borne by government sector, it is getting difficult to reach an agreement
with the private investors.
• In existing power system, in comparison to run-off -river hydropower projects, the
capacity of storage- hydropower projects is small, and all of the hydropower
projects that are under construction are run-off- river projects. Therefore, it is
sure that the seasoned imbalance in the demand and supply of electricity will
continuous to grow. In other words, the situation of over supply of electricity in the
wet season will remain for near future.
• On the available amount of loan for the development of power sector run by the
government, the risks of foreign currency exchange has to be borne by the
government sector, while such type of risks goes to consumers if the power
projects are developed by the private sector.
• In the present power system, the leakage is about 25 percent , of which a small
percentage is due to the technical reason, the rest is due to the illegal misuse of
electricity. The effort to minimise the leakage has not produced the expected
result.
• In a situation where there is lack of reliable power supply system, the demand
forecast for electricity that is based on the consumption of electricity in the past,
can not represent the real situation. Therefore it has become difficult to formulate
a plan of power supply and to bring balance between the demand and supply of
electricity.
• Government offices, corporations and municipalities are not paying their dues in
time.
• In the process of developing the existing power system, the emphasis is given to
rural electrification. However, such electrification programmes could not benefit
agriculture and industries in those areas and we are unable to get outcome
compared to the investment. Because of the lack of coordination between the

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 rural electrification and the tubewell irrigation scheme, the contribution of power
sector to the development of the agricultural sector is not sufficient.
• Compared to the investment made by public and private sector in power
generation, the investment in the extension of transmission and distribution line is
insufficient.
• In the process of development of power sector by private sector, even if a some
percentage of capital investment is made available through local resources, capital
less repatriation of foreign currencies. However, a conducive environment for
such an investment from local capital market has not been created.
• Considering the involvement of public and private sectors in hydro power
generation from the Eighth Plan period, while formulating system planing for
hydropower projects for meeting existing demand due consideration has not been
paid to select least cost projects that make available cheaper electricity.
4. Long -term Concept
The main source of energy in Nepal is hydropower. However only about 1 percent of
the total energy consumption comes from the hydropower. In addition, 68 percent
from fuel wood, 15 percent from agricultural residues, 8 percent from cowdung cakes,
and 8 percent from imported petroleum products and coils are being supplied. In this
situation in order to mitigate its adverse impact on environment and to improve the
situation of balance of payment, development of hydropower must be accelerated for
maximising its share in meeting energy demand.
In India there is a lot of land, but in the dry season there is no water. There is a high
potentiality for water transportation in Bangladesh , but due to the lack of sufficient
water that potentiality has not been utilised. In Nepal, there is not much land, but
plenty of water resources is available. Considering these facts, if we develop water
resources properly in Nepal, irrigation facility in India and water transportation facility
in Bangladesh can be made available. Moreover, Keeping in view the rising demand
for electricity in Northern India due to rapid industrialisation there, if we generate
enough hydropower the demand for electricity in this region can be met.
Considering these facts and by adopting appropriate policies and strategies,
implementation will be made effective and private investment ( national and
international ) on hydropower will be made attractive. Moreover by maintaining
cooperation and coordination with neighbouring countries and by providing incentives
for private investment, multipurpose water resources projects will be initiated.
To meet the demand from productive sector ( agriculture and non- agriculture ) and
from consumption sector ( domestic and export ) hydropower de velopment for next 20
years will take the following direction.
• The hydropower will be developed by considering its raising domestic demand and
its export potential. Hence the share of electricity in total energy consumption will
be increased from about 1 percent to 3.5 percent in next 20 years. In addition, by
developing export-oriented large multipurpose projects such as Pancheshwor
Karnali, Saptakoshi, about 22,000MW electricity will be generated. Necessary
steps will be taken to extract economic benefits through the export of power and
the availability of irrigation and navigation facilities to India and Bangladesh.
• To make power supply reliable, a balance between the dam-based projects and
run-off-river hydropower projects will be maintained.
• The policy will be to give emphasis to implement small hydro projects with the
help of peoples participation and through the NGO's in local level.
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• The involvement of private sector will be encouraged in power generation,
distribution and in management. For this NEA will be divided into three segments
that is in power generation, national grid system and in distribution system and
each segment will be privatised gradually.
• Measures will be taken to attract private investment in power development.
Reforms in legal provision and policy reforms will be introduced to create a
favorable environment for private investors.
• Policy reforms and institutional system will be developed to provide facilities to
private sector without any administrative delay or obstacles. The one door system
will be made effective.
• The participation of national investment with foreign investment will be
encouraged. For this, a favorable environment will be created for making
investment in energy sector from domestic market.
• The process of private sector's participation in power development will be made
competitive and transparent.
Ninth Plan
5. Objectives
In the Ninth Plan, the energy sector has the following objectives:
• To develop hydropower in a least effective way so as to meet the energy demand
from agriculture, industry, transportation, domestic, commercial and other sectors.
• To supply electricity at affordable price internally and to export electricity at
competitive price by developing reliable and quality hydropower.
• To tie up rural electrification with the economic activities in order to develop the
rural economy.
• To maintain regional as well as rural-urban balance in power supply.
• To develop hydropower with minimum adverse impact on the environment.
6. Target
In the Ninth Plan, in order to develop hydropower, various programmes such as
generation and supply of electricity, power transmission, system strengthening, rural
electrification, and feasibility study and design will be implemented. In this process
total installed capacity of hydropower projects that are linked with the central grid, will
be raised to 546 MW from the existing 253 MW. Out of this, 4 projects 172 MW will
be implemented from govt. sector and 4 projects (121 MW) will be implemented form
private sector. The total capacity of thermal power stations will be raised to 60 MW
from the existing 47 MW.
Based on the policy of attracting private sector in the field of energy development, to
meet the demand for electricity in years after the Ninth Plan period, 8 hydropower
projects (1718 MW) ranging from 20 MW to 750 MW will be started with the
cooperation of public and private sectors. In addition, total installed capacity of the
small hydro projects will be raised to 14 MW.
As regards the extension of transmission lines, it will be expanded to 3926 km from
existing 2902 km. Similarly, 6067 km of distribution line will also be added. The
number of consumers that was 5,25,000 at the end of the Eighth Plan will increase to
8,28,000 by the end of the Ninth Plan. Two remaining districts will also be electrified
to cover all the 75 districts by the end of Ninth Plan. At the end of the Ninth Plan 20
percent of the total population will get the facility of electricity supply. Of this in urban
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areas the percentage will be 12 from existing 10 and in rural areas it will go up to 8
percent from existing 4 percent. Therefore, in the Ninth Plan, the emphasis will be
given to the expansion on electrification in rural areas.
7. Policy and Strategy
In order to fulfill the objectives stated above the following policies and strategies will
be adopted.
Institutional Reforms
Required institutional reforms will be introduced in the power sector for maximum
utilisation of existing power system, for repayment of investment from power tariff for
maximum utilisation of local resources, materials and indigenous talent, to attract
private investors, to supply electricity internally and to improve the national economy
by exporting electricity. Necessary steps will be taken to minimise power leakage by
privatising distribution centres. Power Development Board will be made more
effective to adopt system planning of projects run by govt. and private sector and to
evaluate and monitor them. By delegating more authority, and by providing rewards
and punishment, the branches of NEA will be developed as a responsible centre and it
will help to control power leakage and to minimise maintenance cost. While selecting
private investment competitive process will be adopted to reduce generation cost of
electricity. By installing time -of-day meter, separate fee for peak and off-peak period
will be charged to reduce peak load and to charge less fee for consumers who use
more electricity in high-voltage off peak period.
Power Export
In order to export electricity at a competitive price as required by the export market,
comparatively profitable large multipurpose projects will be put forward. The
opportunity that comes from the ' Mahakali River Integrated Development 'treaty and
Power Trade Agreement between Nepal and India will be utilised in Nepal's interest.
The export and import situation of electricity between Nepal and India will be
reviewed and it will be made more effective. To reduce the burden of foreign
currency repatriation, export-oriented power projects will be implemented through
private sector and while implementing such projects, power importing country will be
made responsible for foreign currency repatriation guarantee.
Promoting Private Sector
In the context of promoting private investment in power development, to attract
personal saving capital that could not be capitalised due to the lack of new area for
investment, a system will be developed to issue bonds and securities from the private
sector. It will help to promote internal investment in power projects by extending
domestic capital market and also to reduce the load of foreign currency repatriation.
Moreover, a Power Development Fund will be established in government level to
promote investment in power sector.
For introducing appropriate royalty system reforms in existing hydropower
development policy and in Electricity Act and rules will be carried out. The provisions
of export tax and downstream benefit from large scale multipurpose projects will be
introduced. These concrete measures will help to make hydropower more effective
and promote private sector in different aspects of power development. In order to
attract foreign investment in power sector, necessary steps will be taken to make
bilateral agreements with developed countries on guarantees of investment and
avoiding double tax system. Single door policy will be made effective to provide
license, approval and other facilities to private investors through single government
agency. With a view to encouraging private investment in power sector the risks
412
associated with the implementation of hydropower projects such as commercial, legal,
political, and natural calamities will be analysed and the provision will be made what
type of risks will be borne by government sector and what type of risks to be born by
private sector. If a private investor wants to use existing national transmission to
export electricity generated by the Private. sector or to sell it to a big consumer or
distributor transmission charge will be fixed to allow the use of national grid according
to approved grid code. Necessary steps will be taken to run a project jointly ( HMG /
Private sector ) to overcome the administrative and other problems encountered while
implementing the hydropower projects by the private sector. This provision will not
only help to provide financial resources for the project but also to reduce total cost by
speedy implementation of the project. In order to attract private sector, the process of
fixing power tariff must be transparent. Therefore in order to make such process
transparent, necessary steps will be taken by Electricity Tariff Commission.
Rural Electrification
To make rural electrification financially more attractive, projects will be designed and
implemented accordingly to utilise electricity for the cottage industry, ground water
irrigation, drinking water and other commercial purposes. User-groups will be involved
in planning, implementation and maintenance wit a view to making electrification more
effective. Emphasis will be given to implement small and micro-hydro projects in
remote hill areas. Such projects will be implemented with the help of peoples
participation and NGO's in local level and the grant system will be reformed to make
them financially sound. Steps will be taken to establish a local grid and supply
electricity through it in some hilly areas, if found feasible.
Electricity Supply
With a view to achieving balance between demand for and supply of electricity and to
maintaining regional balance in power supply, study, design and implementation of
hydro power projects will be carried out by public and private sectors. It will be tried
to develop and implement dam hydropower projects in order to avoid seasonal
imbalance between the demand for and supply of electricity. The emphasis will be
given to strengthen and extend existing transmission line to make power supply
reliable.
Extension of Power Transmission
Private sector will be involved in developing transmission lines to increase in power
consumption in live the increase in production in view of the progress to be achieved in
power generation as a result of joint effort of public and private sectors.
Watershed Management
Special attention will be paid to preservation and management of watershed, to
maintain power supply generated from hydropower projects reliable. Water resources
development programmes will be implemented with watershed management to
minimise adverse impact on the environment.
Utilisation of Local Resources, Talent and Materials
Steps will be taken to utilise local resources, materials and indigenous talent in the
process of generation, transmission and distribution of electricity to reduce its cost, so
that electricity can be supplied of an affordable price. Emphases will be given to
extend opportunities of employment, human resources development and development
of construction industry while implementing hydropower projects.
Adjustments in Legal Provisions

413
Some adjustments will be made to avoid anomalies that exist between the policies of
power sector and policies of other government agencies related to power sector
development.
Control of Power Leakage
Efforts will be concentrated to reduce power leakage to 20 percent from existing 25
percent to get maximum benefit from investment made in the power sector. To
achieve this, programme such as energy auditing, strengthening of national
transmission system, installation of good quality meters, control of misuse of electricity
and provision of rewards prizes and punishment will be carried out. In addition, on a
pilot basis , private sector be involved in the running of a distribution system.
Control of Power Tariff
Considering the high price of electricity, with the purpose of providing some relief to
consumers, programmes such as making competition among private parties for project
implementation, provision of time-of-day tariff, tax concessions in import of electrical
appliances that consumes less electricity, control in power leakage, minimising
payment over dues, reduction in stored goods of NEA, increase of internal resources
of NEA by utilising local capital market, reduction in administrative and fuel
expenditure will be implemented.
8. Programme
The following programmes will be implemented through HMG, NEA and private
sector to achieve the objectives and polices stated in the Ninth Plan.
Survey, Feasibility Study and Engineering Design
The feasibility study of 7 most attractive medium scale hydropower projects will be
completed in the early years of the Ninth Plan. The feasibility study of other 8
hydropower projects that was started in the Eighth Plan will also be completed, and
the feasibility study of other 12 projects will be started and completed in the Ninth
Plan period. These include the projects that meet the internal demand for electricity
and export-oriented. The Detailed Project Report of Pancheshwor Multipurpose
Project (6,480 MW) will be prepared jointly with India in accordance with the
agreement on Mahakali River Integrated Development. The cost benefit analysis of
Karnali multipurpose project (10,800 MW) will be updated and an economic study of
the project will also be repeated. To prepare a Detailed Project Report of Saptakoshi
Multipurpose Project (3400 MW) that also includes the Sunkoshi Kamala diversion
(1,300 MW) survey will be started jointly with India.
Power Generation and Supply System
A total of 293 MW electricity will be generated from the hydropower projects. These
include Kali Gandaki A (144 MW), Puwa Khola (6 MW) and Modi Khola (14 MW) in
the public sector and in pvt. sector Chilime (20 MW) Khimti (60 MW) Bhote Koshi
(36 MW) and Indrawati (5 MW) and Tanakpur (8MW). Among the total 3775 KW
small hydro projects, Kalikot (500 KW) and Dolpu (160 KW) will be completed and
Dailekh (300 KW) Lomanthang (65 KW) Khotang (2300 KW) Gamgadhi ( 200 KW )
and Heldung ( 250 KW ) will be initiated.
Additional 13 MW of electricity will be generated from thermal power projects.
Taking into consideration the necessity of selecting hydroelectric projects to meet the
projected electricity demand in the years after the Ninth Plan. Construction work of 8
hydropower projects will be initiated in government sector as well as in private sector.
Such projects will be chosen after the completion of feasibility studies.

414
In case of export-oriented projects, West Seti ( 750 MW ) Project will be put forward
for implementation from the private sector. Arun-3 ( 402 MW ) that has already
completed detailed engineering design, will be tried to initiate from the private sector.
Similarly, attention will be paid to initiate other export-oriented projects. To initiate the
construction of Pancheswor Multipurpose Project, necessary arrangements will be
made jointly with India, after completing its DPR. Necessary arrangements for
starting the construction phase Karnali Multipurpose Projects will be made.
Transmission and Extension of Electricity
Considering the existing gap in the availability of electricity in urban and rural areas of
the Kingdom, special attention will be paid to the extension power lines to rural areas.
In addition, strengthening of transmission lines has become necessary to meet the
demand for electricity in urban areas. Extension of electricity in rural areas will be
carried out to support to Agricultural Perspective Plan, tube well irrigation, cottage
industries, drinking water, and other commercial applications.
To meet the above stated objectives a total of 1024 KM of high voltage transmission
line will be constructed. This will involve, 140 KM of 220 KV, 814 KM of 132 KV
and 70 KM of 66 KV. Similarly, construction of 260 MVA high voltage substations
and 350 MVA capacity substations of 33 KV and 11 KV will be completed. Extension
of transmission line and construction of substations will be completed to facilitate
electricity supply from Tanakpur power house in accordance with treaty on Mahakali
River Integrated Development with India.
The strengthening work of Central Load Dispatch Centre will be completed.
Regarding the strengthening of the distribution system, the third phase of
Strengthening of Kathmandu Valley Power Transmission and Distribution Project will
be completed.
The availability of electricity in some parts of almost all districts will be guaranteed in
order to extend electricity in rural areas, by implementing. Power development project,
rural electrification and distribution project, seventh power project, Devighat- Dhading
and Sindhuwa-Khandbari power projects will be implemented. From these projects
about 1.1 million people will get electricity through 6067 KM of distribution line. In the
Ninth Plan Rs. 7833 million will be spent to implement these projects.
Miscellaneous
Under this heading, Kulekhani Conservation project will be completed. Institutional
strengthening of NEA will be continued. Studies will be continued on ways to attract
private sector towards hydropower development. In the Ninth Plan it is estimated Rs.
6729.3 million will be spent these projects.

415
 Table 1.
Achievement in the Eighth Plan
Details FY 1991/923 1996/97 Increment in Figures (%)
1. Total installed capacity (KW)
A. Hydro power stations 238563 252418 13855 (5.8%)
B. Diesel or multi fuel 683 47266 46583 (13.5%)
C. Solar power 130 130 -
Total 239376 299814 60438 (25.2%)
2. Length of transmission line (KM)
132 KV single circuit 1191 1178 13 (1.09%)
132 KV double circuit - 43 43
66 KV single circuit 64 179 115 (179.7%)
66 KV double circuit 158 153 5 (3.20%)
33 KV single circuit 1096 1349 253 (23.1%)
Total 2509 2902 393 (15.7%)
3. Capacity of substations (MVA)
132/11 KV 28 28 -
132/33 KV 145 175 30 (20.76%)
132/66 KV 103 103
132/11 KV 194 274 80 (41.20%)
66/11 KV 12 12 -
132/66/11 KV 10 10 -
Total 492 602 110 (22.4%)
4. Number of consumers
A. Domestic 337715 500070 162355 (48.1%)
B. Industrial 9757 14142 4385 (44.9%)
C. Commercial 1378 2430 1052 (76.3%)
D. Others 7103 8358 1255 (17.7%)
Total 355953 525000 169047 (17.7%)
5. Peak demand (KW) 216000 300110 84110 (38.9%)
6. Electricity supply (Unit in thousand)
A. Hydro power 869980 1085110 215130 (24.7%)
B. Diesel power 31540 39300 7760 (24.60%)
C. Imported from India 54998 129400 74402 (135.30%)
D. Purchased from Butwal Power Company 24647 82050 57403 (232.9%)
Total 981165 1335860 354755 (36.20%)
7. Power less (Unit in thousand) 243735 335290 91555 (37.6%)
(Percentage) 24.84% 25.10% 1.05%
8. Electric energy (Unit in thousand)
A. Domestic 275248 354613 79365 (28.8%)
B. Industrial 275585 397313 121728 (44.2%)
C. Commercial 45200 67180 21980 (48.6%)
D. Others 141319 181454 40135 (28.4%)
Total 737352 1000560 263208 (35.7%)
9. No. of districts with electricity 68 73 5 (7%)
10. Benefited Population (%) 10 14 4 (40%)

416
Table 2.
Comparison of estimated and Actual expenditure of the Eighth Plan
(Public sector)
(Rs. in million)
Physical target Physical progress Estimated Actual
expenditure expenditure
A. Power generation, Rehabilitation and supply system

To complete the construction Jhimruk power station (12.5 MW)

of medium hydro power has been completed by Butwal
projects 12.5 MW and small Power Company.
hydro power projects 5000 Puwa Khola (Ilam) 6.2 MW and
KW. Modi Khola (Parwat) 14 MW in
Public sector and Chilime (20 MW)
in private sector are under
To initiate Arun-3 first phase construction. 16830 4098.4
(201 MW) and Kali Gandaki
'A' (100 MW) Construction of Arun -3 has been
post- poned, because the World
Bank did not approve the project,
To generate additional 12.2 and Kali Gandaki 'A' 144 MW has 60909.6 289.62
MW power by rehabilitation been initiated.
of Trishuli and Devighat
power stations. Rehabilitation of Trishuli and
Devighat power stations completed
and thereby capable to generate 95.3
million units of electricity (Firm
power 11 MW) annually. 1340 1417.9
Construction of Duhabi multi fuel
plant II 13 MW phase has been
started.
B. Construction , extension, and Rehabilitation of transmission lines

To complete the remaining The remaining works of Kohalpur-

work of Kohalpur - Mahendranagar 132 KV
Mahendranagar 132 KV transmission line have been
transmission line, 105 KM of completed, and construction of 105
Attariya-Dadeldhura 66 KV Km of Attariya -Dadeldhura -Dipayal
and 100 KM of 33 KV 66 KV transmission line and 54 KM 1614 462.2
transmission line in different of 33 KV transmission line have also
places. been completed.

To complete 42 KM of 132 KV
transmission line of Nepal - 42 KM of 132 KV transmission line
India interconnection and of Nepal -India interconnection and
construction of high voltage construction of high voltage
substations. substations of 56 MVA have been
completed.

C. Rehabilitation of the distribution system

417
To design and start The I and II phase of Kathmandu
implementing the Kathmandu valley power distribution system.
valley distribution system. rehabilitation
rehabilitation have been completed.

To complete the rehabilitation

and extension work of Under the seventh power project,
distribution system of rehabilitation and extension of 1090 2500.5
Biratnagar, Janakpur, Pokhara, distribution system of Biratnagar,
Nepalgunj, Dharan, Hetaunda, Janakpur, Pokhara, Nepalgunj,
Parwanipur, Birgunj, Butwal, Dharan, Hetaunda, Parwanipur,
Bhairahawa Birgunj, Butwal and Bhairahawa is
always complete.
D. Distribution and rural electrification
To complete electrification in Under the seventh power project,
about 1,200 villages of 20 extension of electrification in 513
districts. villages and 5 urban areas has been
completed.
Under the seventh power
project, to construct 132 kv, Construction of 12 substations with
66 kv, and 33 kv capacity 33KV capacity and reconstruction 1800 229.3
substations, and and extension of 9 substations of
reconstruction and capacity 132 KV, 66 KV and 33 KV substation
extension of existing have been completed.
substations.

Construction of Gaighat-
Khotang 33 KV and Sindhuli- Construction of Gaighat -Khotang
Ramechhap 33 KV 33 KV and Sindhuli-Ramechhap 33
transmission lines. KV transmission line has been
initiated.
To complete the small hydro
projects of Namche 600 KW,
Achham 400 KW, and Construction of Namche 600 KW,
Tatopani II 1,000 KW, and to Achham 400 KW and Tatopani II
start Khotang 500 KW, 1000 KW has been completed, and
Kalikot 600 KW, and Dolpa Kalikot 600 KW and Dolpa 160 KW
160 KW. are under construction.

418
Detailed engineering design By considering its export potential
of Sapta Gandaki (225 MW) West Seti (750 MW) is being
multi purpose project and developed by private sector.
West Seti (360 MW) hydro
power project.
Feasibility study of upper Karnali
The detailed engineering (300 MW) has been completed, and
study of upper Karnali (240 Bhotekoshi (36 MW) and Khimti (60 2000 100.5
MW), Bagmati (140 MW) MW) hydro power projects are
Kamala, and Budhi Gandaki being implemented by private sector.
(600 MW), and to complete
the feasibility study of Bhote
Koshi, Khimti, Noumure, and Master plan of small hydro power
lower Arun hydro power development is prepared, and
projects. detailed engineering design of 3
small hydro projects has also been
To complete a master plan for completed. Moreover, designing of 5
small hydro power projects projects is in progress, feasibility
and additional studies study of 7 small hydro projects is
conduct. completed, and feasibility study of 1
project is under progress.

419
 Table 3.
Comparison description of power supply expenditure
Details Percentage FY 1991/92 FY 1996/97 Increase in
Expenditure Rs/Unit expenditure, (Rs./Unit)
Personnel 33 0.30 0.40
expenditure*
Maintenance cost* 142 0.12 0.29
Fuel** 37 2.69 3.68
Power purchase*** 71 1.40 2.39
Royalty**** 0.21
Depreciation cost* 20 0.97 1.16
Interest* 3 0.64 0.66
Total 59 2.22 3.52
*Per unit power supply (Power supply =Hydro power generation +Thermal power
generation +power purchase).
** Per unit Thermal power generation *** Per unit power purchase**** Per unit
hydro power generation

Table 4.
Comparison Description of Electricity Tariff

F.Y 1991/92 F.Y 1996/97

Types of Electricity Tariff Cross electricity % Tariff Cross Increase
consumers % sales Rs./Unit Subsidy sales Rs./Unit subsidy in Tariff
% % %
Domestic 42.2 1.78 11 39.4 4.99 2 180
Industrial 37.8 1.92 4 40.8 4.89 4 155

Commercial 6.9 3.02 (52) 7.4 6.66 (30) 121

Non- 7.2 3.02 (52) 6.5 6.62 (29) 119
commercial
Drinking 4.2 1.13 43 3.1 3.49 32 209
water and
irrigation
Street lamps 1.2 2.00 0 2.3 3.89 24 94
Others 0.5 2.34 (18) 0.5 5.03 2 115
Internal 100.0 1.99 100 5.11 166
Export to - 1.71 - 2.42 42
India
Total - 1.95 - 4.84 148

Table 5.
Physical Target of Electricity Development in the Ninth Plan
Details Total 1997/98 1998/99 1999/2000 2000/01 2001/02
1. Electricity
generation and supply
system
A. Large and medium 293 - 6 104 183 -
hydro power projects
(MW)

420
B. Small hydro power 660 160 500 - - -
projects (KW)
C. Extension of multi 13 13 - - - -
fuel power house
(MW)
2. Construction and 1024 - - 286 267 471
extension of
transmission line
(KM)
3. Rural electrification 6067 1220 597 1620 1650 980
(KM)
4. Survey feasibility 31 7 5 8 7 4
study and detailed
engineering design
(No.)

Table 6.
Power Development in Ninth Plan
Financial Target of Public Sector
(Rs. in
mllion)
Details Total 1997/98 1998/99 1999/20 2000/01 2001/02
1. Electricity
generation and supply
system
A. Large and medium 38437.2 7613.6 8380.7 7346.8 8214 6882.1
hydro power projects
B. Small hydro power 990.7 35.4 201.8 376.8 282.6 94.1
projects
C. Multi-fuel power 231 231 - - - -
house extension
Total 39658.9 7880 8582.5 7723.6 8496.6 6976.2
2. Construction & 4694.5 459.6 1388.4 991.9 838.2 1016.4
extension of
electricity
transmission lines
3. Rural electrification 7833 695.2 383.8 2674 2735 1345
4.Rehabiation works 1212.5 309.8 601.8 300.9 -
A. Transmission and
distribution lines
B. Load shading 734.2 98.7 104.6 295.8 235.1 -
centre
Total 1946.7 408.5 706.4 596.7 235.1 -
5. Survey, feasibility 660 256.2 143.8 130 130 -
study and detailed
engineering design
6. Miscellaneous
A. Kulekhani 3081.7 1030 1040 1011.7 - -
Conservation project
B. Various studies 54.5 10.5 10.8 10.7 11 11.5
and others
421
C. Promoting private 3593.1 700 710 710 720 753.1
sector in power
development
Total 6729.3 1740.5 1760.8 1732.4 731 764.6
Grand Total 61522.4 11440 12965.7 13848.6 13165.9 10102.2

Table 7.
Ninth Plan Powers Development
Expected Financial Target of of Private Sector
(Rs. in million)
Details Total 1997/98 1998/99 1999/2000 2000/01 2001/02
1. Electricity
generation and
supply system
A. Projects to be 11279.3 2805 4073 4225.7 175.6
completed in 9th plan
B. Projects to be 50800 13200 16950 20650
initiated in 9th plan
and to be continued
Total 62079.3 2805 4073 17425.7 17125.6 20650

422
 Table 8.
Survey and Feasibility Study Programme
Hydro power projects Capacity (MW) Sector
1.Kulekhani III 13 Public
2.Upper Modi 14 Public
3. Lower Modi khola 20 Private
4. Budhi Ganga 22 Public
5. Rahu Ghaat Khola 24 Public
6. Thulo Dhunga 25 Private
7. Khimti II 25 Private
8. Chamelia 30 Public
9. Likhu-IV 34 Public
10. Kaweli- 'A' 35 Public
11. Upper Marsyangdi- 'A' 43 Private
12. Simbuwa Khola 53 Private
13. Kankai 60 -
14. Mid-Marsyangdi 61 Public
15. Tamor 72 Public
16. Sharada 75 Public
17. Bheri-Babai 82 Public
18. Seti-III 107 Private
19. Mid Bhotekoshi 120 Private
20. Upper Marsyangdi-III 121 Private
21. Aandhi Khola 154 Public
22. Tama Koshi-II 287 Public
23. Upper Trishuli-II 300 Private
24. Upper Karnali 300 Public
25. Dudh Koshi 300 Public
26. Budhi Gandaki 600 Private
27. Kali Gandaki-II 660 Private
28. West Seti 750 Private
29. Sapta Koshi 4700 Public
30. Pancheshwar 6480 Public
31. Karnali 10800 -

423
 Table 9
Power Generation Programme
Hydro power projects Capacity Completing Sector
(MW) Year of
completion
Medium projects
To be completed in the Ninth Plan

1. Indrawati III 5 2058 BS Private

2. Puwa Khola 6 2056 BS Public
3. Modi Khola 14 2058 BS ,,
4. Chilime 20 2058 BS Private
5. Upper Bhotekoshi 36 2057 BS Private
6. Khimti-1 60 2056 BS Private
7. Kali Gandaki 'A' 144 2058 BS public
8. Tanakpur 8 2057 BS ,,
Total 293
th
Projects to be initiated in 9 plan
and to be continued (for internal
supply and for export)
1. Kulekhani III 14 To be contd.
2. Khimti-2 27 ,,
3. Likhu-4 44 To be contd.
4. Mid-Marsyangdi 61 "
5. Mid-Bhotekoshi 120 "
6. Upper Karnali 300 "
7. Arun III 402 "
8. West Seti 750 "
Total 1718
Small hydropower projects
1. Kalikot 500 2056 BS Public
2. Dolpa 160 2055 BS ,,
3. Dailekh 300 - ,,
4. Lomanthang 65 - ,,
5. Khotang 2300 - ,,
6. Gamgadhi 200 - ,,
7. Heldung 250 - ,,
Total 3775

Table 10
Electricity Transmission Line projects
S.No. Projects Length Years of Sector
(km) Completion
220 KV Public

424
1. Hetaunda -Dumkibas 220 KV 140 2059 BS ,,
(Public)
132 KV (Govt. Sector) ,,
1. Kusaha- Dhalkewar 120 2056 " ,,
2. Dhalkewar-Hetaunda 137 2058 " ,,
3. Dumkibas-Butwal 43 " " ,,
4. Khimti-Bhaktapur-Balaju 47 2056 " ,,
5. Modi-Pokhara 40- 2057 " ,,
6. Kali Gandaki ‘A’-Pokhara 58 2058 " ,,
7. Kali Gandaki “A’-Butwal 48 " " ,,
8. Pokhara-Marsyangdi 85 " " ,,
9. Bhaktapur-Syuchatar 20 " " ,,
10. Pathlaiya -Parwanipur 15 2056 " ,,
11. Dhalkewwar-Sitamadhi (India) 30 2058 " ,,
12. Butwal-Sunouli (India) 30 " " ,,
13. Mahendranaga r-Tanakpur (India) 11 " " ,,
14. Khimti-Dhalkewaer 80 " " ,,
15. Mid-Marsyangdi-Dumre 25 " " ,,
Private Sector ,,
16. Bhotekoshi-Sunkoshi 25 2057 " Private
Total 814
66 KV
1. Chilime-Trishuli-Devighat 39 2057 Public
2. Indrawati-Panchkhal 31 2058 Private
Total 70
Grand Total 1024

425
 Table 11
Electricity Distribution and Rural Electrification
Details Expenditure Benefite Construction No. of Benefited
(in Rs. d consumer populatio
million) districts s n
1. Power 2957.5 21* 33/11 KV-1000 68,300 412,000
Development km
Project 400 volt-1700 km
2. Rural 3250 21** 33/11 KV- 1150 75,100 452,000
electrification km
rehabilitation project 400 Volt-1800 km
3. Other rural 760 All 33/11 KV- 380 km 17,600 108,000
electrification districts 400 Volt-820 km
project
4. Investment by 120 13*** 33/11 KV- 120 km 2,800 18,000
NEA 400 Volt-360 km
5. seventh power 669.2 25**** 33/11 KV- 1193 15,500 94,000
project km
400 Volt-1311 km
6. Devighat- 37.5 Dhading 33/11 KV- 30 km 800 6,000
Dhading project 400 Volt- 36 km
7. Sindhuwa- 38.8 Bhojpur, 33/11 KV- 32 km 900 7,000
Khandabari project Sankhu 400 Volt-40 km
w-
asabha

*Darchula, Baitadi, Dadeldhura, Doti, Achham, Dailekh, Surkhet, Bardiya, Banke,

Salyan, Rolpa, Dang, Pyutha n, Kailali, Kanchanpur, Baglung, Syangja, Lalitpur,
Bhaktapur, Kabhre.

** Ilam, Panchthar, Terhathum, Sankhuwasabha, Dhankuta, Saptari, Udayapur,

Sindhuli, Khotang, Jhapa, Morang, Sunsari, Ramechhap, Bara, Dhanusha, Mahottari,,
Sarlahi, Rautahat, Parsa, Chitwan, Parbat.

***Kathmandu, Nuwakot, Sindhupalchok, Makawanpur, Gorkha, Tanhu, Parasi,

Syanja, Dhankuta, Surkhet, Parbat, Rasuwa, Ilam.

**** Ilam, Jhapa, Sunsari, Siraha, Sarlahi, Rautahat, Chitwan, Parasi, Gulmi,
Arghakhanchi, Morang, Udayapur, Dhanusha, Mahottari, Bara, Parsa, Dhading,
Nuwakot, Tanahun, Palpa, Kapilwastu, Surkhet, Rupandehi, Banke, Sindhupalchok.

426
 12.2 Irrigation
1. Background
The importance of irrigation for the overall development of farmers and increase in
the national agricultural production was identified from the very start of the periodic
plan. Therefore a huge amount of investment has been made in this sector for the last
forty years. The method of investment shows that most of our past endeavors were
specially centered on the extension of complementary irrigation suitable for the rainy
season. It is justified from the fact that up to now out of total irrigation infrastructure
developed area, only 37 percent get irrigation facility throughout the whole year. The
pressure of growing population and the interest shown by farmers for crop
diversification make it imperative to develop those techniques that can yield irrigation
facility throughout the year. At the same time it is the need of the day to utilise the
existing structures to the maximum extent.
On the one hand, the activities of irrigation development need to be integrated with the
long-term development strategy of hydropower and on the other agricultural
production needs to be increased by implementing those projects which are less
expensive and less time consuming and users themselves are able to operate. For this,
by utilising ground water resource of Terai, tube-well irrigation programme, which are
less expensive and less time consuming and are under the control of farmers
themselves, need to be mobilised with giving due implemented on priority basis.
To get maximum benefit from the irrigation development project, all the agro-related
programmes should be coordinated through water user groups and implemented in an
integrated way. It is necessary to follow the policy of gradually handing over the
responsibility of operation and management of irrigation system to user farmers
themselves by initiating farmers' participation in identifying, feasibility study, selection
and implementation of irrigation systems.
As the data show, out of total 26,41,000 ha. of cultivated land in the country only
17,66,00 ha. is irrigable of the country. Although it is shown that the irrigation
infrastructure was developed to 6,03940 ha. of land at the start of the eight plan, many
projects were damaged due to flood and landslide and were included twice in the data
as they were reconstructed. Moreover the data assume that all the installed shallow
tubewells are providing irrigation. That's why after deducing double counted area of
irrigation development and area under non performing shallow tubewells, the total area
facilitated by the development of the infrastructure of irrigation under government
level through various surface irrigation project and ground water irrigation project, has
reached to 4,6,7,402 ha. of land. The table below shows the land where infrastructure
of irrigation has been developed by the end of the seventh plan.

Table 1
Irrigation Information Developed Area By the End of the Seventh Plan (in ha)
1. Department of irrigation 395857
a. Surface irrigation (346444)
b. Ground irrigation 49413)
2. Agricultural Development Bank 71545
a. Surface irrigation (11860)
b. Ground irrigation 59685)
c. Other programmes of ADB/N* 19289
d. Lift pump of ADB/N * 5777
427
 Total 467402
3. Irrigated land developed by farmers 3,81,814
a. Surface irrigation (357098)
b. Ground irrigation (24,716)
Grand Total 8,49,216
Note: The data of farmers developed irrigation is taken from the district profile
prepared by the Water and Energy Commission in which modified data of surface
irrigation system is deduced and the rest is shown. In the above mentioned data
description of 1(a) the data of irrigation projects made under Local Development
Ministry, Agricultural Ministry is included while in description of 1(b) the irrigation
facility provided by the tube -well under Janakpur Agricultural Development Project is
also included.
2. Review of the Eighth Plan
Physical Target and Achievement
In the Eighth Plan period ,the physical target was set to provide irrigation facility to an
additional 2,93,895 ha. of land through various new and under construction irrigation
projects.
Of that target irrigation facility has been provided as according to the table no. 2 by
developing infrastructures in additional irrigation land.

428
 Table 2
Physical Target and Achievement of the Eighth Plan(in ha.)*
Description Target Achievement Percentage
A. Dept. of irrigation 1,61,132 1,38,245 85.8
1. Surface irrigation (1,44,042) (1,30,484) 90.6
2. Ground irrigation (17,090) (7,761) 63.6
B. ADB/N 1,19,700 76098 63.6
1. Surface irrigation (49,000) (15,694) 74.2
2. Ground irrigation (70,700) (52,462) 74.2
3. Other various programmers** 7,942
4 Lift pump ** 22,727
C. Non government sector 13,063
Grand total 2,93,895 206,401 72.9
Out of 1,30,484 ha. of infrastructure developed in surface irrigated land by the
department of irrigation, farmer systems have been improved in 93,853 ha. While out
of 15,694 ha. of infrastructure developed in surface irrigated land under Agricultural
Development Bank, irrigation facility has been systematically provided by improving
agriculture systems in 11,093 ha. in the Eighth Plan period. Infrastructure for
additional irrigation has been constructed in the remaining area only by implementing
new irrigation project.
Fiscal Target and Achievement
Out of expected expenditure of Rs 11966 million for the implementation of irrigation
projects and other irrigation related developmental activities Rs. 122097 million has
been spent on different programmes under the department of irrigation. Similarly on
different programmes implemented under Agricultural Development Bank Rs. 1004
million has been spent thus making the total expenditure on irrigation development to
be Rs. 13214 million.
Situation up to the Eighth Plan
Existing situation of irrigation development up to the Eighth Plan is shown in Table 3.

429
 Table 3
Situation up to the Eighth Plan (in ha.)*

S.N Programme/project Up to the Achievement Unto the

o. Seventh Plan of the Eighth Eighth Plan
Plan
1. Department of irrigation 3,95,857 1,38,24.5 5,34,102
a. Surface irrigation (3,46,444) (1,30,484) (4,76,928)
b Ground irrigation (49,413) (7,761) (57,174)
2. Agricultural Development 71,545 68,156 1,39,701
Bank.
a. Surface irrigation (11,860) (15,694) (27,554)
b. Ground irrigation (59,685) (52,462) (1,12,147)
c. Other various programmers* 19,289 7,942 27,231
d. Lift pump programme ** 5777 22727 28504
Total 4,67,402 206,401 6,73,803
3 Irrigate d land developed by 3,81,814 3,81,814
farmers
1 Surface 3,57,098 (3,57,098)
2 Ground (24,716) (24,716)
Grand total 8,49,216 206,401 10,55,617.
3. Existing Challenges
Existing problems of irrigation sector are as follows.
• Public participation is poor in the construction, operation and repair maintenance
of the irrigation projects.
• Non reliability of the irrigation service due to inefficiency in the repair
maintenance, operation and management of the established irrigation projects.
• Inaccessibility of irrigation service to the targeted command sector by surface and
ground irrigation projects due to relatively lower efficiency in water utilisation.
• Failure in achieving the expected benefits from the irrigation projects due to
shortcomings in the identification, design and quality of these projects.
• Problems in irrigation management since the land to be irrigated are divided into
smaller parts and are in the ownership of different people.
• Increase in the construction cost of the irrigation projects.
• Inability in getting Nepal's part of water and benefit accruing from irrigation as per
the provision of international treaty / agreement.
• Inability in getting foreign economic aid for irrigation projects to be constructed in
medium and big rivers.
• Adverse impact upon the source of irrigation projects and reserve of ground water
resource due to deforestation in the water shed area of rivers and recharge zone
of water resource.
• Non availability of foreign economic aid for the feasibility study of Trans basin and
big multipurpose projects.
• Lack of execution of adequate number of training programmes for the
development of irrigation institutions.
4. Long -term Concept
430
For the green revolution, the cultivation of those crops, which are less risky and more
productive, is a prerequisite where even irrigation should be under perfect control of
farmers. This mode of irrigation facility can be taken as a necessary infrastructure for
increasing the production. Since there is no possibility of acquiring additional land to
enhance the production what is required is to provide controlled and adequate
irrigation facility throughout the year enabling to cultivate more crops in per unit land
which may be only reliable and easy way to increase agricultural production.
Therefore well-systematised water flow throughout the year becomes a prerequisite
for beneficial cultivation. In the present context of Nepal, farmers will be encouraged
to cultivate cash crop and increase crop intensification so as to enhance agricultural
income by providing irrigation facility throughout the year. Existing systems developed
by farmers will be strengthened and their efficiency will be enhanced.
• According to the long-term agricultural perspective plan, area of such land, which
can be controlled by farme rs and where year round irrigation is available, will be
increased.
• The policy of providing irrigation facility throughout the year utilising the ground
water resource available in the Terai will be adopted to increase agricultural
production and income of the farmers. Tubewells will be developed in cluster and
rural electrification will be integrated with the cluster of tube-well while operating
ground irrigation programme.
• Women farmers will be encouraged and given preference while forming water
user group. Similarly their participation will be encouraged by providing them
training in the management of irrigation and watershed area.
• Efforts will be made to maintain quality of water resource at the satisfactory level
• By the help of incentive mechanism of user group ,water management and water
conservation, as per demand and supply, will be done whenever water for
irrigation becomes inadequate due to weather factor in river
• Scientific system of determining and collecting irrigation duty will be effectively
implemented.
• Programmes will be made for involving local leadership and participation while
developing irrigation.
• According to the target of 20 years long-term plan an additional 17-thousand ha of
land will be irrigated by new projects under surface irrigation while an additional
1,55,000 ha. of land will be irrigated by improving the farmers' field channels thus
making the total to an additional 1,72,000 ha of land to be irrigated round the year
by executing these programmes. Programme is made to provide ir rigation facility
to an additional 4,71,000 ha. of land through ground irrigation round the year.
According to this target, irrigation facility will be provided to a total of an
additional 6,43,000 ha. of land throughout the year by the end of the twelfth plan.
Ninth Plan
5. Objective
• To assist in raising agricultural production by improving the rainfall-based
agricultural system with the help of providing irrigation facility as per the need of
crops.
• To raise water utilisation efficiency of surface and ground projects.
• To reduce the government liability in repair, maintenance and operation of
irrigation projects by encouraging the user farmers participation in those works

431
 and transferring responsibility of the management of irrigation system to user
organisations.
6. Policy and Implementation Strategy
Ground irrigation development
According to the long-term agricultural perspective plan, preference will be given to
mobilise those tube-well irrigation programme, by utilising the existing ground water
resource of Terai, which can be constructed in short period of time with minimum
expenses and are under the control of farmers themselves. Agricultural road and rural
electrification will be integrated with cluster upon which tube well programmes
depend. Since tube well provides controlled water throughout the year, cash crops will
be developed along with paddy crops in these areas.
• Subsidies of HMG/N, in programmers where loans are provided for the operation
of shallow tube well, dug well, sprinkler, drip and tanker pond, will be reduced
gradually. In the site of shallow tube well construction, farmers group will be
formed and other incentives along with loans will be provided to them. For this
both non- governmental and community organisation will be mobilised.
• The department of irrigation will identify the proper drilling technique and it will
also arrange training for drillers and farmers to help in the technical aspect of
aforementioned programmes along with taking initiation in group wise or all other
works about tube-well construction. The departments of Irrigation and Agriculture
and concerned bank will monitor this programme in a coordinated way.
• Tubewells will be constructed in existing and proposed irrigation projects of Terai
where surface irrigation source is inadequate thus utilising surface and ground
water resource as complementary to one another.
Surface Irrigation Development
• Study and construction of small and medium irrigation projects will be carried out
as per the demand of user farmers by encouraging their own participation. User
groups will themselves repair, maintain and operate these projects once they are
completed.
• Irrigation projects that are non-operated due to lack of repair and maintenance will
be improved in accordance with the demand of farmers through their participation
• Special preference will be given to the hills while operating small and medium
irrigation project under Nepal Irrigation sector and Second irrigation sector
programme. These programmes will be executed following established
procedures.
• Emphasis will be given to overall development of water resources as per the
holistic river basin approach. For this, existing large multipurpose water resource
projects and large reservoir-based irrigation projects will be operated to provide
sustainable irrigation facility round the year. Irrigation, electricity, flood-control,
water transport and other utilities will be also included in multipurpose projects
according to their viability. Participation of local users will be mobilised in these
large irrigation projects according to the Irrigation policy 1992 (with amendment
1993)
• The capacity of the irrigation systems under government's management will be
utilised to the maximum extent. For this, these systems will be renewed and
modernised and preference will be given to the construction of small field
channels. User farmers will be given decisive role in bringing regularity in water
distribution system by organising them into user groups as per the Irrigation policy.
432
• Water harvesting technique will be used as a pilot project. It will be applied for
irrigation at those places where surface and ground water resource is unavailable.
In the beginning this programme will be operated in small region.
• Concerned bank will implement the proje cts after required study that provide
irrigation facility using the techniques like sprinkler and drip in the hill and remote
region where cash crops are to be developed.
• Small and medium irrigation systems under government's management will be
gradually transferred to Users' group after renewing and improving. For this
proper training will be given to user groups to enhance their efficiency. Similarly,
user groups will be involved in the management of large irrigation systems so as to
operate them jointly.
• Participation of user farmers will be gradually increased in the identification,
construction, repair and maintenance of irrigation projects. While selecting and
operating irrigation projects preference will be given to those where more public
participation is possible and which is less expensive and more beneficial. Similarly,
women's working efficiency in irrigation management will be enhanced by
providing them training in irrigation projects. Their working efficiency will be used
in geophysical and water management of watershed area and project operation.
• Regular monitoring of related environmental, technical, economical and social
aspect will be made compulsory to maintain sustainability in irrigation project. For
this comprehensive information system will be developed after collecting required
data.
Collection of Irrigation Service Duty
Emphasis will be given to realise duty after making required amendments in the
system of collecting irrigation service duty. Consumers will be informed about the
opportunity cost of per unit water for irrigation and water as economic goods. They
will be encouraged to use water rationally. To make irrigation service sustainable and
reliable consumers will be informed about the importance and need of paying required
yearly repairing, maintenance and operation cost in the form of irrigation service duty.
According to irrigation policy water users groups will be given responsibility to collect
irrigation service charge in the irrigated area facilitated by the projects that are jointly
managed by HMG and user's groups
The decision about the demand of required water for different crops will be made
after mutual discussions between department of irrigation, local unit of department of
agriculture and water user groups. Concerned body of department of irrigation will
provide water at the source of block as per the agreement made with water user
groups. The responsibility of distributing water within the block will be given to water
user group. Water will be measured at the source of irrigation system and block. The
responsibility of collecting irrigation duty within the block will be of user groups. User
groups will get its share of this irrigation duty as per the existing irrigation policy. User
groups will be given responsibility of maintenance and operation of canal system of
which it has taken the charge.
Every user group will do management of equitable distribution of water received in
canal system, taken charge by water user groups, itself. To enhance the working
efficiency of water user group, department of irrigation will provide training to those
recommended by the group in the field of measurement of irrigation and proper
distribution and demand management, preparation of cartogram of irrigated region,
updating data of beneficiary farmers and preparing the data of irrigated land,

433
developing share system etc. Department of irrigation will provide required skilled
manpower to user group until they are capable to do so.
Irrigation user groups will be involved in policy making, decision procedure, planning
operation, management, monitoring and feed back. User groups will be encouraged to
establish unions in district and national level to protect their rights and welfare.
Cost reduction system
After reexamining the design manual prepared by the department of irrigation and
standard approved by HMG, required improvements will be made in the size, type and
other aspects of projects based on experience.
For the development of less expensive techniques suitable to the sensitive
geographical environment of mountainous and hilly region, emphasis will be given to
the development of proper techniques which are local environment friendly and
favorable to the operational efficiency of users. Emphasis will be given to use local
construction materials and local labour in that technique.
Since lack of data also increases the cost of the project, the system of collecting data,
for the identification and designing of irrigation project, will be made more improved.
To collect these data proper in formation system will be developed and it will be made
available to the district and regional bodies in time. In the case of large and
multipurpose project, long-term data of water resource and climate will be collected
and on the basis of this data, along with others, feasibility study will be carried out.
Project Planning, design evaluation and monitoring division of central and regional
offices of department of irrigation will be made more effective. The system of
compulsory participation of the units of departments of agriculture, soil conservation,
climate and Meteorological and user groups in the project preparatory phase will be
gradually established.
To enhance efficiency of local consultancy groups, participation with foreign
consultancy groups and bodies of HMG in planning design of multipurpose and other
large project, will be increased. Similarly more emphasis will be given to involve local
construction companies with the foreign construction companies to gradually increase
their efficiency.
As improving plan preparation, design, research, training and system management can
reduce cost; incentive mechanism for persons will be developed. Emphasis will be
given to establish relationship between national or international educational institution
and research for the research of technological development.
To prevent delay in project competition period due to lack of counter part fund for
foreign aided projects fund will be made available by determining the priority of the
projects.
Incentive will be given to the production of required construction materials to construct
shallow tube -well in the country Nepal and to establish workshop in private sector for
repairing and maintaining them.
Special care will be given to the implementation of small and medium surface irrigation
project by adopting labour-oriented technique.
Mechanisation will be encouraged in large and medium irrigation projects to complete
the repairing and maintenance in the allotted short period of time since canal operation
closure period is short for repairing and maintenance.
Increase in the Utilisation Capacity of Irrigation Water

434
In order to increase irrigation water utilisation efficiency required improvement would
be done for stopping the leakage in canal system. As the sediments deposited in the
main canal deteriorate water carrying capacity of canal, proper step will be taken in
time to take out those sediments so as to stop deterioration in water bearing capacity.
Small canals and field channels will be repaired regularly. Un-authorised use of
attitude of taking water from canal will be discouraged. Leveling and land
consolidation of irrigated land will be encouraged.
System of relating water provided for irrigation with the increase in agricultural
production and group wise agricultural development programme carried out by
department of agriculture through water user union will be developed. For this
irrigation fees according to the quantity will be initiated. Farmers will be given training
to use water according to the need of crops.
For increasing the agricultural production and water utilisation capacity in irrigated
land, research will be carried out by Agriculture Research Centre in coordination with
Nepal Agriculture Research Council (NARC).
7. Target
Physical target:
A Total 2,49,400 ha. of land will receive irrigation in an organised way from under
construction projects included in the Ninth Plan and proposed new projects. This
includes providing systematic irrigation by upgrading farmers' field channels and
additional land irrigated by the construction of new projects. The target is to provide
well managed irrigation through surface, and ground irrigation and import farmers field
channels (table no. 4).

435
 Table 4
Target of the Ninth Plan Period

S.N Unit Additional new Improvement of Grand Total (in

o. land (in ha.) farmers field ha.)
channels (in ha.)
1. Department of irrigation
(a) Surface Irrigation 52400 81500 133900
(b) Ground Irrigation 30000 500 30500
(1) Deep Tube-well (11650) (11650)
(2) Shallow Tube-well (18350) (18350)
Total 82400 82000 164400
(2) Agricultural
Development Bank
(a) Surface 15000 15000
(b) Ground 60000 60000
(3) Irrigation of NGO 10000 10000
Grand total 142400 107000 249400

Apart form this target, management of various 11 irrigation projects (68000ha.) under
department of irrigation will be transferred to user farmer unions while repair
maintenance and operation of about 3,00,000 ha. of now operating irrigation project
will be carried out. Command area development work will be done in 15,000 ha under
third phase of Sunsari-Morang irrigation. Besides, tube-well in 500 ha. constructed
under irrigation line of credit, will be improved and other 5000 ha of land under various
projects will be transferred to user farmers.
Irrigation Development Programme:
On-going Projects
Siddarthanagar Lumbini Ground Water Project (Third Phase): It is expected to provide
irrigation to 1900 ha in the third phase in the Eighth Plan period as against to the target
set to provide irrigation through ground water to 8600 ha of land of Rupandehi district
under this project. An additional 6700 ha of land will get irrigation facility in the Ninth
Plan period by completing remaining works.
Bagmati Irrigation Project: To provide irrigation facility to 37000ha. of land of
Rautahat (23000 ha) and Sarlahi (14000 ha) districts, construction operation is
underway with loan assistance of Saudi Development Fund in this project which was
launched in 1981 by HMG resource. Now it is possible to provide irrigation facility to
about 12000 ha in the Eighth Plan by executing proper rehabilitation work in barrage
destroyed by unexpected flood of 1994. Systematic irrigation facility will be provided
to an additional 25000 ha. of land by completing construction of rema ining canal
system in the Ninth Plan period. Apart from this, command sector development work
will be initiated in 20,000 ha of land.
Eastern Rapti Irrigation Project: Project construction work has been initiated, keeping
it in view, to provide irrigation in 1800 ha of land by building 900 shallow tubewells
along with providing systematic irrigation in 6200 ha of land by strengthening existing
86 farmer systems. out of 72-farmer system strengthening programme under this
project, currently underway, 39 have been completed. Apart from this, along with
Eastern Rapti river control, construction work of various infrastructures in 60 km rural
road is underway. Systematic irrigation has been provided in about 6060 ha of land in
the Eighth Plan period. An additional 15000 ha of land will get systematic irrigation by
strengthening 33 different farmer system in the Ninth Plan period.

436
437
 Table 5
Description of Total Investment in Irrigation Projects
Rs in million
S.N Description of loan planning Total Remarks
o
Expected Irrigated Types of irrigated area
expenditure area (ha)
1. On-going projects
2. Siddarthanagar Lumbini ground 440 670 New
water project (third)
3. Bagmati irrigation project 2,055 2,500 New
4. Eastern Rapti irrigation project 187 150 Improving farmers field
channel
5. Mahakali irrigation project 230 390 New
(second)
6. Marchwar irrigation project 20 Command sector
(second) development
7. Rajapur irrigation project 1,120 1,300 New + improving field
channel
8. Babai irrigation project 800 1,710 New + improving field
channel
9. Chandra Mohana irrigation 180 180 improving field channel
project
10. Second irrigation sector project 2,000 3,870 New + improving field
channel
11. Sunsari Morang head works 120 Head work construc tion
12. Community shallow nalkoop 313 380 New
irrigation project
13. Irrigation management transfer 850 6,800 Transfer
project
14. River control programme 978
15. Banganga river control 20.5
programme (Tilaurakot)
16. Bagmati dam constructio n 200
17. Mechanical workshop 75
18. Bakraha river control project 400
19. Water induced Hazard Control 160
technical centre (first)
20. System management & training 43
programme
21. Management information & 30
monitoring & evaluation
22. Operation & repair maintenance 1,000 30,000
23. Groundwater research programme 87
24. New projects
25. Sunsari Morang irrigation projects 1,600 1,510 Command sector
(third) development
26. Nepal irrigation sector project 2,400 3,950 New + improving field
channels
27. Ground water irrigation sector 815 1,160
28. Mid-western region irrigation 200 180 New
development project

438
29. Feasibility study 193
30. Water induced Hazard Control 340
technical centre (second)
31. Mahakali irrigation (Third) 750
32. Trishuli irrigation 170
33. Praganna kulo 297
34. Birgunj ground water irrigation 540
35. Lal Bakkaiya dam construction 60
project
36. Kamala dam construction project 220
37. Khando dam construction project 50
38. Kankai dam construction project 50
39. Berring dam construction project 40
40. River control long-term planning 167
study
41. Irrigation organisational 400
development
42. Manpower development training Fund to be p rovided by
centre different plans
43. Irrigation development grant 937.5
44. ADB/N (loan flow) 636.6 7,500
45. Administration 196.7
46. Training 196.7
47. Non-governmental organisations 250 1,000 New + improving field
channels
48. Other works
49. Contingency 1,002.4
50. Administrative & managerial 1985
expenses
Grand total 24,805.4 24,940
Note: Since command sector development is repair maintenance & transfer
programme, it is not added in
grand total.

Mahakali Irriga tion Project (Second Phase): Construction work of this project is at the
last phase, which is operated to provide irrigation facility to 6800 ha of land of
Kanchapur district. Irrigation facility to 2900 ha. in the Eighth Plan period and rest
3,900 ha. in the Ninth Plan period will be provided.
Marchuwar Irrigation Project (Second Phase) : Initiated in the sixth plan period as
according to the revised target to provide irrigation to 3,600 ha. of land of Rupandehi
district by pump system from Tinau river this project, operated under the grant
assistance of capital development fund of UNO, provides systematic irrigation facility
to 2,900 ha. of land. Under this project programme for repair and maintenance has
been included in accordance with the agreement reached between His majesty
Government and United Nations capital Development Fund under which the pump
under construction has to be operationalised and repaired within 30 months by the
project.
Rajapur Irrigation Projects: This project is operated to strengthe n the farmers field
channels of Rajapur area of Bardiya district and to safeguard the command sector
from the flood of Karnali river along with controlling the river by the loan assistance of
Asian Development Bank. Systematic irrigation facility will be provided to 12,000 ha.
of land by improved existing farmer field channels under this project during the Ninth
Plan period along with providing an additional irrigation to 1,000 ha. of land.
439
Babai Irrigation Project (First Phase): With the aim of providing ririgation facility to
13,200 ha. of eastern part of Babai river of Bardiya district, construction works of
weir cum bridge along with 23 km main canal have been completed in the first phase
of the project thus providing irrigation facility to 41,00 of land. Along with developing
irrigation system in remaining 9,100 ha. of land, construction of siphon and intakes in
Babai river will be completed in this project period to supply systematically water in
farming system from the constructed dam for irrigation to 9,000 ha. of land west of
Babai river.
Chandra Mohana Irrigation Project: The construction work of this project, aimed at
providing irrigation facility to 1,800 ha. of land of Sunsari district and conducted by the
loan assistance of OPEC, will be competed in this project period.
Second Irrigation Sector Project: Systematic irrigation facility in total 41,000 ha. of
land will be made available under this project [in 32,000 ha. of land by renewed
improvement in different small and medium farm irrigation systems of all the districts
of eastern and central development region and in 9,000 ha. of land by some new
system]. Initiated in the last year of the Eighth Plan, this project will be completed in
the Ninth Plan period. By strengthening farmer's field channels of different region and
completing the construction work of new projects, irrigation facility will be made
available to 38,700 ha. of land under this project. Programmes for strengthening water
user committee and district irrigation office and making available agriculture expansion
service will be included in this project.
Sunsari Morang Headwork: The construction works of this project has been initiated
sine fiscal year 1993|94. Under this project, construction of powerhouse with 3.5 MW
electricity, the construction of 1,000m culvert, desilting basin & operation of Dredger
have been completed. Remaining work will be completed in the first year of the Ninth
Plan.
Community Shallow Nalkoop Irrigation Project: This project has been launched since
fiscal year 1994|1995 with the help of IFAD to provide irrigation facility to about 4,800
ha. of land of Sunsari, Siraha, Saptari, Sarlahi and Rautahat districts through
community shallow Nalkoop. It will provide irrigation facility to about 900 ha. of land
in the Eighth Plan period whereas works of remaining 3,800 ha will be completed in
the Ninth Plan.
Irrigation Management Transfer Project: This project has been launched since fiscal
year 1995|96 with the loan assistance of ADB and technical assistance of American
aid agency in order to form and strengthen efficient, strong and active water user
organisation in various 11 irrigation systems of the kingdom, to reconstruct and
improve very necessary structures in those canal system, to transfer small and
medium projects to the user organisations and mobilise required resources for the
institutional development of these projects. Programmes of the first phase of this
project will be completed in the first year of this project period and thereafter
programmes under second phase will be implemented. From this programme 6,800 ha.
land of Khageri, Panchkanya, Nepal Gandak western canal, Kamala, Banganga,
Pathraiya, Mohana, Chaurjahari and so on will be benefited.
River Control Programme:Through district irrigation offices material assistance like GI
wire are made available so long as the resource allows for river control works
conducted by mobilising the local public participation. Such programmes will be
continued in this project period as well. Similarly, to make such programmes more
effective, emphasis will be given on the application of proper technique along with
making arrangement to provide proper training to the employees. External resources
will be mobilised for the material assistance. Emergency flood control work will be
carried out using the available resource and means.
440
Master Plan will be formulated by studying through internal and external resource of
various rivers of the kingdom which cause maximum loss annually and with the
assistance of friendly nations and internal resource, programmes of river control will
be launched according the prepared projects as.
River control work will be conducted in a planned way with the grant assistance
received in kind from the friendly nations. People's participation and environments
conservation policy will be compulsorily implemented in the river control work.
Banganga River Control, Tilaurakot (Kapilvastu): This river control work has been
launched after preparing a long-term master plan to prevent historical place of
Tilaurakot in the Kapilvastu district from the damage done by Banganga river. The
target set to complete this work is within the fiscal year 1998|99.
Bagmati Embankment Construction Project: Construction of embankments in both
sides of Bagmati river will be done with the Indian assistance according to the project
prepared by the mutual agreement of the technicians of both the countries to minimise
the loss of lives and property by the Bagmati river in Sarlahi and Rautahat districts of
Nepal along with Indian territory every year. Due to delay in getting the Indian
assistance, HMG has gradually conducted the construction of embankments in
Rautahat district according to the report of the technicians of both the countries to
stop the damage done by Bagmati river in Rautahat district as demanded by the local
people. Programme will be conducted by reaching an understanding with India in case
Indian assistance is delayed for long.
Mechanical Workshop: Central Mechanical Workshop is established in Birgunj to bring
in effective operation by systematically repairing and maintaining the heavy equipment
of department of irrigation and offices under it. In the Ninth Plan period, programme
to strengthen it and establish additional mechanical workshops in Biratnagar, and
Siddarthnagar is included.
Bakraha River Control Project: This project has been implemented since fiscal year
1995/96 with the loan assistance of OPEC fund with the objective of conducting
construction works after the preparation of master Plan for the control Bakraha river
in Morang district.
Technical Centre for Water Induced Hazard Control: The centre is established to
provide proper training to enhance efficiency of governmental and non-governmental
institutions involved in the field of developing proper technique for study and research
on controlling and minimising water induced natural hazards like flood, landslide and
soil erosion etc. Centre for Control of Water Induced Hazard, operating until now as
periodic development project will be given permanence and continuity so that more
comprehensive and effective programmes will be conducted as geophysical structure
of our country is water hazard prone and the centre is well equipped with its own
building, technical development laboratory and machines and so forth.
System Management and Training Programme: This programme is conducted to
gradually strengthen the management of operating farmers irrigation field channels
after completing the construction work, large irrigation project under joint management
and small and medium irrigation system already transferred to users or to be
transferred in the future. This programme was undertaken in total 10,000 hector
covered by irrigation system in the Eighth Plan. During this plan period this
programme will be undertaken in additional 90,000 hector of land covered by irrigation
system. Institutional strengthening of manpower development and training branch,
currently under irrigation management division, will be done in the form of Manpower
development and training centre to carry out irrigation-training programmes through

441
one window system for enhancing the efficiency. By the end of this plan, efforts will
be made to develop Irrigation training centre as an autonomous institution.
Management Information System, and Monitoring and Evaluation: Programmes will be
launched with the objective of strengthening management information system related
with irrigation development, expansion, management and management transfer, and
strengthening monitoring and evaluation branch and updating the data base. Apart
from this, regular monitoring of all related aspects like environment technology,
economic and social will be made compulsory to maintain sustainability of irrigation
project. For this proper data collection and comprehensive information system will be
executed.
Operation and Repair Maintenance Projects : To maintain the usefulness of the
completed projects it is necessary to repair maintain and improve them every year. So
maintenance of the structure and management of various proje cts of the kingdom, not
transferred to the farmers group, will be continued.
Ground Water Research Programme : It is necessary to conduct monitoring and
research works regularly to eliminate shortcomings of the available data for the
ground water resource irrigation development of the districts of Terai. For this,
programme will be launched mobilising required resource and means.
New Projects:
Groundwater irrigation programme: Groundwater irrigation development programme
will be conducted in a comprehensive scale according as the target set by the long-
term agricultural planning by building shallow tube -well and deep tube-well in the
Terai. Similarly agricultural road construction and rural electrification programmes will
be affiliated with ground water irrigation programme for conducting it in an integrated
way. Target of the long-term agricultural plan is mentioned in table no 6.

442
 Table 6
Proposed additional irrigated land (in thousand ha.) under 20 year agricultural plan
Land irrigated round the Land irrigated round the year
year through surface water through ground water
resource (additional land) resource
(additional land)
Geographica by new by Total by new by renewed Total Total
l region project renewed project project Area
project
Higher 1 5 6 6
mountain
Mountain 3 18 21 21
Terai 0 38 38 90 90 128
Total 4 61 65 90 0 90 155
Tenth plan
Higher 1 1 2 2
mountain
Mountain 4 18 22 22
Terai 0 29 29 139 139 168
Total 5 48 53 139 139 192
Eleventh
plan
Higher 1 1 2 2
mountain
Mountain 3 19 22 22
Terai 0 5 5 136 136 141
Total 4 25 29 136 136 113
Twelfth plan
Higher 1 1 2 2
mountain
Mountain 3 13 16 16
Terai 3 13 16 16
Total 4 21 25 106 106 131
Grand total 17 155 172 471 471 643
Sunsari Morang Irrigation Project (Third Phase): Systematic irrigation facility is
provided to 27,000 hector only through the development of command sector under first
and second phase programme though the target was to provide irrigation facility to
66,000 ha. land Morang and Sunsari districts. At present, remaining sector gets only
partial irrigation as system is built in only 200 ha. of consolidated land. Systematic
irrigation will be made available to an additional 15,100 ha. by building system for land
consolidation unto 4 ha. under the programme of third phase.
Nepal Irrigation Sector Project: This project will be launched in the very beginning of
this plan period by the loan assistance of the World Bank to provide irrigation facility
in the 40 districts of three development region of the west. Under this, renewal and
improving of farmers field channels covering 31500 hectors of land along with
development of new ground water irrigation system to 7,500 hector of land and
rehabilitation work in 500 hectors will be done. Similarly joint management and
transfer work (about 5,000 ha) of operating projects under HMG will be competed.
Apart form this, strengthening of department of meteorology to collect and manage
data about water resource and climate of small rivers, and providing proper means and
resources to the department of agriculture for the agriculture expansion and promotion
443
in the irrigated land under this project. In the Ninth Plan period irrigation will be made
available to 31500 ha. by strengthening farmer systems and to 4100 ha. by ground
irrigation.
Ground Water Irrigation Sector Project: This project is arranged to provide irrigation
facility to about 60,000 ha. land in Terai districts of eastern and central development
regions through shallow and medium Nalkoop under loan assistance of Asian
Development Bank. The target is set at providing irrigation facility to 11,600 ha.
through shallow tube -well in this plan period.
Mid-western Irrigation Development Project: This project is arranged by the
assistance of European Union to provide irrigation facility to 1,800 ha. of land in
Dailakh, Kalikot, Surkhet and Banke district along with implementing other poverty
alleviation programme. Its construction work will be completed in the Ninth Plan
period itself.
Feasibility Study: Feasibility study of various projects will be carried out to utilise the
optimum level of surface and ground water resource scattered round the kingdom.
Feasibility study of large multi purpose projects e.g. Pancheswor and Sunkoshi,
Kamala diversion and Bheri, Babai diversion etc. will be done under the leadership of
Electricity Development Centre and in co-operation with the department of irrigation.
Technical Centre for Water Induced Hazards Control (Second Phase): Proper training
will be given for required research, development of proper technique and efficiency
enhancing of governmental bodies to control and minimise water induced natural
hazards like flood, landslide, soil erosion etc. Programmes will be launched, by
mobilising foreign resource, to conduct second phase of this project on the bases of
experiences gained from the existing programme.
Mahakali Irrigation Project (Third Phase): Implementation of Mahakali Irrigation
Project (third phase) will be carried out by completing its detailed study. The project is
provide irrigation facility to about 28000 ha. of land at the utmost so as to utilise the
water-received from Tanakpur and Sharada Barrage as per the provision of Mahakali
treaty. Groundwater resource will also be utilised to provide irrigation facility in this
area round the year.
Trishuli Irrigation Project: Although the target to provide irrigation facility by Battar lift
irrigation project is certain ha., only 20 to 30 ha. of land receive irrigation facility due
to high cost in repair and maintenance. Recently feasibility study has been initiated to
provide irrigation facility from the power channel of Trishuli hydro electricity project
without adversely affecting the electricity project in 1000 ha. of land of Bidur and
Battar in order to convert this lift project into surface project. Construction work will
be initiated in this plan period if the study shows the project viable.
Pragana Kulo Strengthening Project: To provide systematic irrigation facility from
Rapti river by constructing permanent source and improving canals along with
establishing structures at various places, 5,000 ha. of irrigated land will receive reliable
irrigation facility. The construction work of the project will be carried out with the
assistance of Kuw ait fund.
Birgunj ground water irrigation Project: 7,500 ha. land of Bara and Parsa district will
receive irrigation facility through shallow and deep Nalkoop from this project. The
project will be implemented in this plan period.
Lal Bakaiya Embankment Construction Project: Since Lal Bakaiya river of Rautahat
district has been inflicting heavy damage every year in the Indo Nepalese border side,
embankment construction work in this river with the grant assistance of Indian
government to sort out this proble m will be completed as per the agreement reached
444
after holding discussion and study in different levels between the governments. of
Nepal and India.
Kamala Dam Construction Project: The Project to build both embankment of Kamala
river has been formulated to minimise the loss of lives and property due to heavy
damage done every year by this river in the Siraha and Dhanusha district of Nepal and
in the Indian border as per the technical agreement between both the countries.
Construction of embankment has been done with the help of local people,
organisation, dept. of irrigation and German cooperation council along with the
involvement of ministry of Local Development according to the Indo-Nepalese
technical study due to delay by the Indian govt. in operating the programme and a
heavy loss carried by Kamala river in Siraha district. Construction work of dam will be
done in accordance with an understanding reached with Indian side if the possibility of
delay in Indian grant occurs.
Khando Dam Construction Project: Khando river is changing its edge frequently in
Saptari district due to the construction of Koshi Barrage by India. The programme to
construct dam with an Indian assistance to train this river flow along determined path,
is included after holding discussion and study in the different levels between the
government of Nepal and India.
Kankai Dam Construction Project: Kankai river has been endangering a great deal in
various village development committees of Jhapa district by eroding the bank.
Therefore cultivated land of thousands of Bigha has been converted into river bed and
densely populated villages are in danger. Embankment construction work will be
continued in the Ninth Plan by formulating a river control master plan.
Beering Dam Construction Project: Dam construction work will be launched by
preparing long-term control plan as the flood of Beering river has been frequently
endangering a large number of village development committees including Sanishchare
of Jhapa district.
River Control Long-term Pla n Study: The need of master plan to use available limited
resource and means in flood control and management in a planned way has been
realised. Some achievement has been made in the process of mobilising foreign
resource due to inadequacy of resources at the end of the Eighth Plan period. In this
planning period some projects will be implemented by selecting river master projects
after completing study of river control long-term plan. Programme will be launched in
a planned way to solve the border issue resulting from the bank erosion in the Mechi
river of eastern border and Mahakali river of western border of Nepal by preparing a
master plan of those rivers.
Irrigation Institutional Development: This programme will be launched with the aim of
strengthenin g the management of the department of Irrigation and the offices under it.
Under this programme works like construction of the buildings of irrigation office of
different districts, making available required materials to those offices and providing
training for manpower development will be conducted.
Manpower Development and Training Programme: Training programme will be
conducted as project until irrigation training college is established to mobilise
technology, resource material and manpower through one window system for
maintaining uniformity, quality, economy and commitments in the training programme
of projects and programme under the department of irrigation.
Irrigation Development Grant (Agricultural Development Bank and Grameen Bank):
Grant assistance will be provided to irrigation projects being implemented from shallow
Nalkoop, small private irrigation project and non-governmental sectors under the

445
 provision of Irrigation policy, 1992 (with first amendment 1996). Required loan to
conduct activities according to the target will be provided from commercial banks as
per the policy of gradually eliminating the amount of grant.
Small Irrigation Projects Supported by Agricultural Development Bank: Irrigation
facility will be provided to 7,500 ha. by ADB in this planning period through Nalkoop,
surface and sprinkler systems, keeping in view the fact that ADB has been efficiently
conducting small irrigation projects.
Irrigation Programmes to be Conducted by NGO and Private Sector: NGO and
private sector involved in providing irrigation facility along with raising income
generation of economically deprived backward communities living in remote areas will
be encouraged. Irrigation facility will be provided through Sprinkler, Drip, Hydraulic
Dam etc. according as the geophysical and geographical condition. About 10,000 ha.
of land will receive irrigation facility through these programmes.
8. Expected Achievements by the End of the Plan
In the Ninth Plan period, irrigation facility will be provided to an additional land by
completing irrigation infrastructure in 52,400 ha. of land under surface irrigation.
Similarly existing irrigation system will receive systematic irrigation by strengthening
1,07,000 ha. of land under farmer systems; command sector in 15,100 ha. and 30,000
ha. of land will receive irrigation through deep tube-well and shallow tube -well under
ground irrigation from the department of irrigation 60,000 ha. from ADB/N thus
providing as well as total irrigation to an additional 90,000 ha. of land. Table no. 7
shows the total possible irrigated land from surface and ground water irrigation by
completing the infrastructure for additional irrigation by the end of the Ninth Plan
period if the programme is completed according to the target.
Table 7
Irrigated land by the end of the Ninth Plan

By the end of Target of the By the end of the

the Eighth Plan Ninth Plan Ninth Plan
1. Department of irrigation 534102 82400 616502
a. Surface Irrigation (476928) (52400) (529328)
b. Ground Irrigation (57174) (30000) (87174)
2. Agricultural Development 139701 60000 199701
Bank
a. Surface Irrigation (27554) (27554)
b. Ground Irrigation (112147) (60000) (172147)
c. Other different 27231 27231
programmes **
d. Lift pump programme ** 28504 28504
3. Irrigated land developed 381814 381814
by the farmers
a. Surface Irrigation (357098) (24716)
b. Ground Irrigation (24716) (24716)
Grand Total 1055617 142400 1198017
Irrigation developed by other various programmes and lift pump is not included in the
grand total.
The target of the Ninth Plan will be to provide additional irrigation facility only to
1,42,400 ha. of land out of 2,64,500 ha. Command sector development work will be
done in 15,100 ha. and systematic irrigation facility will be provided to 1,07,000 ha. by

446
improving the farmer system. Area under other various programmes of ADB/N and
lift pump is not added in the grand total.

447
 12.3 Transport

1. Background
Transport sector, particularly road sub-sector is not only an inseparable component of
physical infrastructure but also plays an important role even in the development of
other sectors. The development of transport sector directly influences the
development of both productive and social sector such as agriculture, industry,
commerce, education and health sectors. Much achievement have been made towards
the development of transport sector due to topmost priority accorded to it from the
very beginning of planned development of Nepal. Yet, 14 districts are still deprived of
roadways. Similarly, 18 district headquarters of the country are not connected with the
road network. Economic development has not been realised even in some of the
remote hilly districts, connected with road network. The problem of raising funds for
repair and maintenance of existing roads is becoming more difficult. Roadways
construction being highly expensive and construction period being very long its benefit
reaches the people very late and even situation of not achieving return as compared to
investment is seen. Due to remote and difficult hill settlements and the problem of soil
erosion and landslides, resource mobilisation, infrastructure development and
upliftment of living standard of people in remote hilly areas have emerged as a great
challenge.
Therefore, it is essential to pay atte ntion to the development of heavy means of
transport easily operable on narrow hill roads and less risky together with the
development of infrastructure that is and road construction technology terrain specific,
long-lasting, less expensive and that can be constructed and maintained locally,.
It is felt necessary to provide relief to the remote hilly regions, ever suffering from
food deficit and deprived of roadways, through air transport. The road transport has to
be developed gradually supporting for tourism activities in these regions there by
assisting in local economic activities.
Since the Ninth Plan has set to expedite the pace of development of the country by
giving priority to agriculture sector as national goal and to alleviate poverty as overall
objective, it is necessary to formulate plan of transport sector by organising these
principal goals. In addition, attention should be paid to obtain maximum return from the
investments made in the past to be made in the future. The implementation has to be
done in the Ninth Plan paying attention to the lessons learnt from past experiences so
as to have clear tuning among objectives, strategies, policies, programmes and
monitoring and evaluation.
Existing Situation of the National Transport system: Roads of different
categories/grades, rope -ways, railways and airways are main organs of the national
transport system which also includes bridges, suspension bridges, twin-way and cable
way. Under national road transport system, classification of roads have been done and
brought into effect. Road transport has lead role among various organs of the national
transport system. It can be observed by analysing statistics of motor vehicle from
Chaitra, 2048 to Asar 2054. In this period, bus increased by 11.5 percent, motor cycle
by 118.5 percent and total number of vehicles increased by 93.4 percent (Appendix -
1). Anal ysing the progress scenario of road transport in Nepal, the length of roads has
increased by 32.3 percent in total black topped by 15.5 percent, graveled by 34.2
percent, earthen roads by 46.6 percent during the Eighth Plan period. (Appendix-2)
Ownership of roads (Length of roads as compared to population) and density of roads
448
have increased by 16.2 percent and 32.3 percent respectively. Situation of region-wise
development of roads in different planned periods has been shown in Appendix-3.
Regarding other means of transport, rope -ways, railways and trolley bus are 42.6 km,
51km and 13km respectively. Air transport has played important role in national
transport system together with road transport. With respect to domestic air transport
movement of 11,811 aeroplanes, 326 tonne cargo and 215,957 passengers took place
in 2046/47 and that of 33,851 airplanes, 11849 tonne cargo and 576,973 passengers
took place in 2052/53. Air transport has no alternative towards transportation of food
and disaster relief at time of natural disaster.
2. Review of the Eighth Plan
Physical Progress
In the Eighth Plan physical target of construction of roads is 1778 km in total which
includes 763km highways, 915km feeder roads, and 100km urban roads according to
classification and 187 km black-topped, 379 km graveled and 1212km earthen
according to different grades. Physical progress is 1092km (61.4 percent) in total
which includes 471km (61.7 percent) highways, 487km (53.2 percent) feeder roads
and 134 km (134 percent) urban roads according to classification and according to
grades, 119km (63.6 percent) black-topped, 231km (60.9 percent) graveled, 742km
(61.2 percent) earthen roads have been constructed (Appendices 4 and 5). Besides, a
total of 1771km roads not mentioned in the Eighth Plan (372km black topped, 537km
graveled and 862 km earthen) has been constructed thereby the total progress of the
Eighth Plan has been 491 km (262.6 percent) black topped, 768km (202.6
percent)graveled, 1604km (132.3 percent) earthen and 2863km (161 percent) in grand
total.
In air transport sector, agreements have been signed with 22 nations in total for the
gradual improvement of Tribhuvan International Airport. Under domestic air transport,
number of airports has totaled 43, 4 airports are under construction and 120 certified
helipads are there in total whereas air service is in operation connecting 30 domestic
airports. It has become urgent to identify and execute firmly the measures to reform
the trend of not providing minimum air service by aeroplane companies of private
sector in airports of remote areas where the tourists do not go. An act for the
establishment of civil aviation authority has been enacted.
Against the construction of 25 motorable bridges targeted in the Eighth Plan 50 (200
percent) bridges have been constructed. Against the construction of a total of 500
suspension bridges, including 100 along main tracks and 400 along local tracks ,
targeted 114 (114 percent) and 24(6 percent) have been constructed respectively by
Suspension Bridge Division and Ministry of Local Development.
Financial Progress
• Against the financial target of Rs 12 billion, 329 million, Rs. 7 billion 872.8 million
from HMGN fund and Rs. 4 billion 4.5 million from donors' fund) for the
construction and maintenance of roads and bridges in the Eighth Plan, Rs 12 billion
179.7 million 67 thousand (98.78 percent) has been spent in various programmes
under Department of Roads
• With regard to other means of transport, 13km stretch of Kathmandu-Hetauda
rope-way has been repaired and strengthened. Damaged portion of Jaynagar-
Janakpur-Bijlapura railway has been repaired and maintained, and 4 new diesel
locomotive engines and 18 bogies (Special type of truck) have been procured. Ten
new trolley buses have been included in Kathmandu-Bhaktapur trolley bus
service. Regarding domestic waterways, work is in progress for the preparation of
profiles and influence areas of the river havin g completed detailed engineering
449
 study in Narayanghat-Bhainsalotan portion of the Narayani river. Regarding
containerised transport, arrangement of multi modal transport, having constructed
domestic container depots at Birgunj, Bhairahawa and Biratnagar, and detailed
engineering study for the extension of broad-gauge railway from Raxaul have
been completed. In connection with traffic pollution control, pollution test of
vehicles and use of pollution free vehicles have been started. Policies have been
formulated for the systematic development of transport sector based on the report
of National transport policy task force constituted in April 1997.
3. Existing Challenges
From the first Plan till the end of the Eighth Plan the length of roads has increased
seven folds as compared to the population whereas the density of roads has increased
about 18 folds. Thus with increase in road transport movement has increased
tremendously whereas on the other hand road accidents and pressure of vehicular
pollution have increased likewise. Lack of attention toward, traffic and transport
management is weakness of implementation.
Arrangement In addition, other main problems seen in transport sector are as
follows:
Lack of maser Plan and programme outlining inter-relationship among different means
of transport including road transport means of transport including road transport,
development of coordinated and integrated transport system so as to achieve
maximum transport facility and economic development from minimum transport
expenditure in 15/20 years long-term plan period.
• Lack of measures that can expand economic activities in a way that provide
immediate relief to remote areas through air transport and tourism activities and
for expansion of environment friendly too.
• Absence of institutional structure, oriented towards the development of transport
system and subsystems so as to have clear tuning among objectives, investments,
returns and monitoring and evaluation.
• Traffic in road transport not increased as expected; terrain specific and
environmentally suitable design not adopted; increase in the burden of repair and
maintenance unbearably and increase in loss of property; institutional development
of repair and maintenance capability at local level not achieved; road rehabilitation
and reconstruction increasing; vehicular pollution and accidents increasing, and
proportional improvement and extension of urban roads not done; encroachment
of road limits increasing, contract claims increasing; life of roads and bridges
shortene d; research and training towards development of appropriate technology
not sufficient.
• Regarding air transport, liability to provide reliable air service in remote areas.
• Lack of attention towards saving in transport expenditure from long-term
perspective and towards transport and other economic progress through increased
tourism movements and activities.
4. Long -term Concept
It is urgent to pay attention to the development of vehicles ad means of transport
easily operable on narrow hill roads and less risky together with the development of
infrastructures and road construction technology that are terrain specific, long-lasting,
less expensive, and that can be constructed and maintained locally. In this context, to
achieve balanced and overall development of nation through sustainable and reliable
transport system.
450
Ninth Plan
5. Objectives
• To develop national transport system through appropriate construction, repair and
maintenance and protection to minimise national transport expenditure.
• To develop agricultural road network as complimentary network necessary to
assist agriculture sector.
• To construct roads of remote areas assisting alleviation of poverty and reducing
regional imbalance.
• To identify transport structures indispensable for hydro electric, tourism and
industry sectors and to develop them in a coordinated manner.
• To make air service reliable in the districts not connected with road network and
not likely to be connected in near future.
• To initiate the concept of multimodal transport network so as to have minimum
national transport expenditures for import and export.
• To carry out suitable classification in order to construct, maintain and operate
transport structures and services in a sustainable and reliable manner and to
implement suitable institutional management/structure by identifying institutional
jurisdiction structure and autonomy.

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6. Policy and Implementation Strategy
Road Transport
• Repair, maintenance and rehabilitation of highways and feeder roads with high
traffic density and of direct assistance to the distribution of agricultural inputs and
in agricultural production to increase the service quality and thereby decrease the
user cost of roads.
• Increase in service quality of high traffic density roads and important roads.
• Completion of remaining portion of East-West Highway.
• Construction of roads excluding those included in separate programmes of
agriculture sector, and which provide major contribution to agriculture sector
based on evaluation and priority of agriculture sector and linking these roads with
agricultural productivity to make arrangement for their repair and maintenance.
• Prepare bases for construction and maintenance of roads having direct link to the
important hydro-electric projects, tourist places and irrigation projects.
• To carryout less expensive, with maximum utilisation of local materials and labour,
construction and maintenance of low traffic density portions of North-South
Highways and link roads connecting district head quarters.
• To carry out labour-oriented, less expensive and maximum local participation-
oriented construction and maintenance, Identifying social roads those assist
poverty alleviation and prioritising on certain bases.
• To protect low traffic density existing roads with minimum maintenance and
repair.
• To develop suitable transport system, less expensive and favorable to
environmental conservation for hilly region and to give continuity to research
work, pilot and demonstration projects and human resource development work
through training.
• Daily traffic volume will be taken as basis while formulating programmes for
upgrading earthen roads to graveled roads and graveled roads to black-topped
road. In general, according to existing standard norms hill roads having 50 daily
traffic and terai roads having 150 daily traffic will be upgraded from earthen road
to graveled road. Similarly, hill roads having 100 daily traffic and terai roads
having 250 daily traffic will be upgraded from graveled road to black topped road.
• After the construction of earthen roads, having used suitable design and gravel-
mixed stiff soil in its maintenance, roads with minimum traffic pressure will be
gradually improved.
• Prioritisation will be done in repair and maintenance works of roads and bridges.
In roads with high traffic pressure minimum service standard for transportation
will be decided and under arrangement of toll tax involvement of road users in
repair and maintenance of roads and bridges will be increased.
• Regular and occasional repair and maintenance of roads will be done based on
fixed cycle. Policy of periodic reseal work, generally after every 5 years in hill
roads and every 6 years in terai roads, will be adopted.
• While constructing roads having low traffic volume in hilly region, construction
standard in accordance with standard norms will be adopted considering the
availability of transportation services with minimum initial investment. The risk to
investment due to various reasons such as soil erosion, flood, landslides, rising
452
 trend of migration/immigration etc, will be minimised and feasibility study, design
and economic analysis will be carried out for an analysis period of 10 years in
general.
• Sectoral responsibility and accountability for preparing 20 years long-term
transport plan so as to develop integrated transport system and institutional
autonomy will be clarified.
• To control loads on highways and other roads and systematise traffic according to
management systems.
• To explore the Possibilities of using vehicles easy to drive and less risky along
narrow hill roads.
• To develop traffic management system so as to control accidents and
environmental pollution on urban roads.
• To systematise construction works of new roads in urban area, construction
works will be directed after preparing manual and making provision in act and
rules.
• To solve the problems of land acquisition and acquisition of additional houses
constructed in different stages of Urban Roads Development Master plan the
works such as land acquisition and track excavation will be started.
• After studying the possible effect on trade and tourism of northern trade and
transport development in neighbouring Tibet region, convenient transport will be
arranged in northern remote region.
Air Transport
• Extension of tourism activities through air transport and creation of awareness
towards environmental protection will be coordinated with development of road
transport.
• Arrangement will to use airships if feasible, in order to provide reliable air service
up to road heads and airports in difficult and remote areas.
• Study will be made for the utilisation of airships to minimise users' cost in domestic
air service and to if it is found useful arrangement for their gradual utilisation will
be made.
Other Means of Transport
• Efforts to link the Nepalese border customs with Indian broad-gauge railway will
be continued.
• Feasibility study of East-West railway will be carried out.
• Development of containerised transport system in order to increase safety and
effectiveness in foreign trade will be continued. After carrying out feasibility study
domestic container depots will be constructed at suitable places.
• Efforts to develop technically feasible waterways along the important rivers will
be continued. Besides, feasibility study of East-west water ways also will be
carried out.
• Private sector will be encouraged in the development of cable car for
development of tourism.
• Efforts will be made to operationalise express and extensive transport systems.
• Trolley bus service will extended on feasible routes.

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Traffic and Transport System
• To consolidate traffic and transport system, twenty years transport management
master plan will be formulated after detailed study and accordingly programmes
will be formulated and implemented.
• Special arrangement will be made for the prevention of road accidents and for
roads and transport safety.
• Suitable programmes will be conducted for the use and development of pollution
free vehicles. Pollution creating vehicles will be gradually discouraged.
Miscellaneous
• As far as possible transport rela ted programmes will be prepared so as to
integrate the development of transport sector with that of agriculture sector.
• Old means of transport will be developed in remote and difficult places, after
studying their importance.
• After studying the conditions of entrances joining Tibetan region, facilities will be
arranged in these entrances.
• A 20 years National Transport Master Plan will be formulated and gradually
implemented so as to include roads of different categories, rope-way, trolley way,
cable way, water ways, railways and airways.
• Special attention will be paid to minimise environmental loss in design,
construction, maintenance and repair, rehabilitation etc. Works related to transport
system and to maximise the use of cheap technology local resources, means and
human resources.
• Improvements will be made in the existing system of construction and
maintenance contracts. Policy will be adopted to award a single contract,
remaining within the limitations of the annual budget, for important and priority
principal projects within five-years programme depending on three to five year's
work volume instead of awarding contracts based on annual budget.
• Arrangement will be made to attract private investments in transport sector.
• Special priority will be given to the construction of link roads joining the agriculture
production centres with market centres. While constructing such roads,
construction works will be carried out developing the concept of coordinated
working system and prioritising based on the involvement of local agencies and
local needs. Preconditions of community participation and raising toll-tax for
construction and maintenance works will also be kept in mind. People's
participation will be encouraged to execute, coordinate and monitor survey, design,
estimates, construction and maintenance works of such agriculture roads. To do
so a central agency will be established to conduct training programmes with
coordination among different agencies.
• Priority will be given to the construction of service tracks in hilly and terai regions
with people's participation in accordance with the concept of rural infrastructure
development.
• Projects of national importance will be kept at central level and that of local
importance will be kept at district level.
Priorit y
• Repair and maintenance of high traffic density highways, North South highways.
• Completion of remaining portion of East-West Highway.
454
• Extension of agriculture roads and rural roads.
• Construction of roads linking important projects.
• Arrangement of domestic container depots.
• Consolidation of traffic management system.
• Institutional strengthening of Department of Transport Management.
• Controlling vehicle induced pollution.
• Improvement in contract system and construction business.
• Arrangement of feasible means of transport as infrastructures for development of
tourism.
7. Programmes
Road Transport:
Rehabilitation of roads: Keeping in view the situation of traffic and transport existing in
the country, priority has been given to rehabilitation programme of highways, feeder
roads and other roads in operation. A total of 758 km roads will be rehabilitated during
the plan period, which includes 418km black-topped of 6 highways, 175 km black
topped of eight feeder roads and other roads and 165km graveled of three feeder
roads and other roads thereby 593 km black topped and 165 km of graveled roads in
total (Table-1)
Upgrading of Roads: In the process of upgrading of highways feeder roads and other
roads in operation, a total of 997 km roads will be upgraded, during the plan period,
which includes 205 km black topped of four highways, 158 km graveled of four
highways, 386km blacktop of 16 feeder roads and other roads, 248 km graveled of
four feeder roads and other roads thereby 591 km black topped and 406 km graveled
roads in total (Table -1).
Periodic Maintenance of Roads: Periodic maintenance of total of 2954 km roads will
be done during the plan period, which includes 1606 km black topped of 11 highways,
202 km graveled of 3 highway 523 km black topped of 21 feeder road, and other roads
and 623 km of 16 feeder roads and other roads there by 2129 km blacktop and 825 km
graveled roads in total.
Construction and Maintenance of Roads: A total of 2983 km roads will be constructed
which includes 1290 km of Link roads connecting district headquarters and other
roads and 1693 km of local village roads (including tractor roads). In addition, a total
of 733 km roads linking district head quarters will be constructed, which includes 516
km earthen of eight highways, 2 km graveled of a feeder road and 215 km earthen
roads of seven feeder roads.
Following district headquarters will be connected to road transport network by the end
of the Ninth Plan:
1. Achham-Mangalsen (Sanfebagar-Mangalsen)
2. Rukum-Musikot (Rapti Highway)
3. Jumla - Jumla (Karnali Highway)
4. Bajura - Martadi (Sanfebagar-Martadi)
5. Darchula - Darchula (Mahakali Highway)
6. Jajarkot - Chhinchu-Jajarkot Highway)
7. Sankhuwasabha - Khandbari (Basantpur-Chainpur-Khandbari)
455
 8. Bhojpur-Bhojpur (Nadarmuni-Thulung marg)
9. Okhaldhunga - Okhaldhunga (Okhaldhunga -Katari)
10. Bajhang - Chainpur (Khodpe -Bajhang)
11. Ramechhap- Manthali (Khimti-Manthali-Ramechhap,, Pushpalal
Marg)
12. Kalikot - Kalikot (Karnali Highway)
Thus by the end of the Ninth Plan, highly remote districts Humla, Mugu, Manang,
Dolpa, Solukhumbu, Khotang and Mustang, all together only 7 districts will remain
unconnected with road transport network.
A total of 557 km roads will be constructed during the plan period. A total of 819 km
roads has been proposed for upgrading (Table 2)
Construction and Protection of Bridge: 87 motor-bridges will be constructed during the
plan period. (Table 3)
Suspension bridge (Main route): Emphasis will be given to the construction of
suspension bridges to consolidate rural transportation during the plan period. High-tech
suspension bridges will be constructed centrally on main routes under national road
transport network.
Construction of Rural Roads: Emphasis will be given to the construction of local roads
(tractor roads) necessary to provide transportation facility to rural people and for the
development of agriculture sector. Survey design, construction and maintenance of a
total of 470 km of such roads under 25 projects will be done during the plan period
(Table 4).
Development of roads being very necessary for the development of rural areas, a total
of 1530 km other rural roads under 157 projects will be constructed during the plan
period.
A total of 700 km horse trail survey, construction and repair under 70 projects and 400
suspension bridges over the local trails will be constructed in the Ninth Plan
period.(Table 5)
Survey, design, construction and maintenance of a total of 700km mule -tracks of 70
projects will be done during the Ninth Plan period. In addition, 400 suspension bridges
will be constructed on local tracks. (Table 5).
Construction of Other New Roads: Additional roads to be constructed new with the
cooperation of World Bank include Baitadi-Darchula (60km), Sanfebagar-Martadi
(41km), Sanfebagar - Mangalsen (27km), Surkhet - Jumla (100 km), and Baglu ng-
Beni-Jomsom (70km). Similarly, with the cooperation of Asian Development Bank
construction of new road projects will be started which include Basantpur-Chainpur-
Khandbari (65km), Hile -Bhojpur (60km) and Okhaldhunga - Diktel (120km) (Table 6
& 7).
Miscellaneous:
• Survey, design and study.
• Mechanical equipment management and maintenance.
• Integrated Transport system and Institutional Improvement Study.
• Study of Kathmandu-Terai High speed road and New International Airport
development.
• Hill road development technology and training.
• Suitable arrangement for encouraging private sector in road transport.
• Arrangement of toll in some additional highways having high traffic density.
456
• Institutional Development (Training, Quality Control, Repair management system
development, computer networking, record centre).
• Research and Development.
• Formulation of policies, rules and regulations related to construction and
maintenance of roads and bridges.
• Protection of roads and bridges from natural disasters and advance preparation
for the same.
• Promotion of domestic construction industry.
• Arrangement of paying special attention to Traffic Engineering.
• Study of Contract system.
• Establishment of Construction Management and Development centre.
• Study of private sector investment in transport sector.
Other Means of Transport:
Rope-way: Work will be started toward improvement and privatisation of 42 km long
Kathmandu-Hetauda rope-way, the only rope -way of Nepal. After identifying hilly
and remote tourist places, lead projects based on feasibility for the development of
rope -way will be implemented to encourage private sector in the development of rope -
way for promotion of tourism.
Railway: After improving an extended 51 km long Jaynagar-Janakpur-Bijulpura
railway, the only railway of Nepal, it will be made more reliable, affordable and
effective. In addition, feasibility study of East-West- railway and Janakpur-Bardibas
railway will be done. After constructing Raxaul-Birgunj broad-gauge railway, highly
significant from transport point of view, it will be connected with dryport to be
constructed in Birgunj.
Trolley Bus Service: 13 km long Kathmandu-Bhaktapur trolley bus service, the only
trolley bus service of Nepal, will be extended to Kathmandu-Ringroad during the Ninth
Plan period. Initiation of its privatisation will be done. Detailed study will be done in
order to extend the trolley bus service to Tripureshwor-Kirtipur, Thapathali-
Patandhoka -Pulchowk and Tripureshwor-Maharajgunj-Ringroad junction in
Kathmandu valley and necessary infrastructure will be constructed gradually to
operate its services. Feasibility study will be done to operate trolley bus service in
Biratnagar-Itahari-Dharan sector in the Eastern region and Bhairahawa-Butwal sector
in Western region and necessary infrastructures will be constructed.
Internal waterways: The river profile preparation work continued during the Eighth
Plan (2049-2054), after the detailed engineering survey in Narayanghat -Bhainsalotan
portion of the river Narayani, will be completed during the Ninth Plan period. After
identifying the factual profile and situation of water ways in the Gandak river stretch
of Bhainsalotan down to the river Ganga, study will be done to begin water way
transport service connecting it to National waterway network of India. In addition,
feasibility study will be done to develop water ways in other major rivers viz. the Kosi,
the Karnali, The Mahakali etc. of Nepal also and to connect them with water ways of
India.
Containerised Transportation: Based on the detailed engin eering survey of multimodal
transportation system completed in the Eighth Plan (2049-54) period, multimodal
containerisation project will be conducted after constructing physical infrastructures
necessary for domestic container depots in Birgunj, Bhairahawa and Biratnagar and
extending the broad-guage railway between Raxaul and Birgunj in the Ninth Plan
period,. In addition, Nepal multipurpose Transport Authority will be established to
formulate necessary policies and rules-regulations, control, and monitoring and
evaluation to control and monitor and to implement programmes in order to upgrade
the standard of transport.
457
Traffic and Transport Management :
Institutional Development of Department of Transport Management: Institutional
development of Department of Transport Management, established to systematise and
consolidate traffic and transport management thereby rendering qualitative increase of
services by making transport services reliable, safer, pollution free and people service
oriented, will be undertaken in order to make its administrative and technical
components capable, resourceful and more effective. For this purpose following
projects will be implemented:
Physical facilities for Department of Transport Management: Office buildings with
required facilities will be constructed for the Department of Trans port Management
and Transport Management offices under it in order to create conducive atmosphere
to work. Necessary means will be provided to undertake the functions such as
inspection, supervision, surprise inspection of these offices in a proper and systematic
manner.
Computerisation Department of Transport Management: Computers will be provided
to Department of Transport Management and Transport Management offices
underneath and networking will be done to execute all the functions to be
accomplished by them such as vehicle registration, vehicle inspection, route license,
and renewal, transfer of ownership, driving license issue, and pollution test etc through
computer methods. It will help the stake holders related to transport to ensure
regularities in providing facilities, to control leakage in revenue collection and to
undertake transparent and clean technical and administrative works. In addition it will
help in systematic record keeping of vehicle registration, route license, vehicle License
issue, and revenue collection, to inspect and control using computers the activities
related to transport management by Department of Transport Management, and in
traffic and transport planning, transportation system planning etc.
Establishment of Traffic Engineering Unit: Traffic Engineering unit will be established
within Department of Transport Management to undertake functions such as finding
remedial measures through regular study- research of existing traffic engineering
problems and traffic norms, regular study of axle load, transverse distribution etc.,
construction and maintenance of road symbols and signals, following the basic
principles of traffic engineering, training drivers, traffic police and road users. It will
function in coordination with traffic engineering and safety unit of Department of
Roads.
Traffic and Transport Study and Implementation: In order to consolidate traffic and
transport management throughout the country including Kathmandu valley and other
urban areas, detailed study will be done and a 20 years transport management master
plan for road transport and accordingly short-term plan will be formulated and
implemented. In addition, a master plan for the construction of infrastructure of urban
transport will be formulated. In such a master plan, role of municipalities in
construction, maintenance and repair of urban roads, construction of roads to be
improved under urban development programme, footpath, bicycle lane, bus -stop,
parking area, subway, fly over and over bridge, and the development of public
transportation system reducing environmental pollution will be included. Remedial
measures for problems of passengers, transport professionals, transport labour and
pedestrians will be found out. For this purpose, following projects will be implemented:
Countrywide detailed traffic and transport study and implementation: In this
programme bus route and passenger movement study, goods transportation study etc
will be included.

458
• Detailed traffic and transport study of Katmandu valley and other urban areas,
and implementation.
• In this programme detailed traffic and transport management study of Kathmandu
valley and other urban areas, research, planning, design and construction work etc
will be included.
Vehicular Accident Prevention and rescue, Safety and Transport Safety: Scientific
research of safety, accident, study of blackspots, execution of measures of vehicular
accident prevention after preparing map of accident spot will be carried out Under
Department of Transport Management, Accident Rescue Centre will be set up at 6
places. For this purpose, arrangement of necessary ambulances will be made under
Department of Transport Management Transport safety centres will be established at
36 places. This centre will take care of safety of transport owners, transport labours
and passengers. For this purpose arrangement of necessary patrolling vehicles will be
made. In addition, these centres will be connected with each other and with
Department of Transport Management through means of telecommunication (walky-
talky). Arrangement will made for road safety audit of different roads .
Vehicular Pollution Control: Regular vehicle emission test and on spot vehicular
pollution monitoring and evaluation will be carried out by Transport Management
offices in Kathmandu Valley and other important places of Nepal. Advertisement,
extension , conduct of training and workshops related to vehicular pollution will be done
by Department of Transport Management and surprise inspection will also be done to
control vehicular pollution. Production, development and service operation of zero
emission vehicles will be encouraged. Regarding pollution control, activities will be
carried out in coordination with Ministry of Population and Environment, Traffic
police and institutions related to users.
Miscellaneous: Publication of transport statistics, publication of Journal of Traffic and
Transportation magazine and time to time interaction among transport owners,
transport labours and users, and conduction of workshops will be done by Department
of Transport Management. After register ing the Department of Transport
Management as member of professional institutions related to traffic and transport,
training will be arranged for human resource development. Department of Transport
Management will be strengthened through maintenance of documentation centre
and library and conducting technology transfer work.

459
 Table -1
Reconstruction, Upgrading and Periodic Maintenance Programmes of Highways and Feeder
Roads during the Ninth Plan (2097-2002)

S.No Name of Road Total Detail of Work (km)

.
Length Reconstructio Upgrading Periodic
(km) n Maintenance

Black Gravelled Black Gravelled Black Gravelled

Topped Topped Topped

1. Highways
Mahendra (East-West)
Highway 48 48
1. Kakarbhitta-Damak 320 320
2. Damak-Pathlaiya 74 74
3. Hetauda-Narayangadh 114 114
4. Narayangarh-Butwal 236 236
5. Butwal-Kohalpur 76 76
6. Kohalpur-Karnali 70 70
7. Karnali-Atariya 25
8. Atariya-Chaudhar 12 12
9. Chaudhar-Gaddachauki
2. Tribhuvan Rajpath
1. Thankot-Naubise 16 16
2. Naubise-Bhainse 97 97
3. Bhainse-Hetauda 10 10
4. Hetauda-Birgunj Sirsiya 57
Border
3 Arniko Highway
1. Kathmandu - Dhulikhel 30 16 30
2. Dhulikhel-Dolalghat 27
3. Dolalghat-Barhbise 30 30
4. Barhbise-Miterisangu 26 13 13
4 Prithvi Highway
1. Naubise-Munling- 99 99
Marsyangdi 44 44
2. Marsyangdi-Kharenitar 31 31
3. Kharenilar-Pokhara
5 Naranyangarh-Mugling Road 36 36
6. Bhittamod-Khalkebar Road 43 43
7 Bardibas -Sindhuli Road 37 37

460
8 Mechi Highway
1. Kechna-Charali 39 39
2. CharAli- Maikhola 65 65
3. Maikhola-Ilam 15 15
4. Ilam-Phidim 67 17 50
5. Phidim - Taplejung 85 25 67
9 Koshi Highway
Rani-Hile 111 111
10 Sugarmatha Highway
Kadmaha-Gaighat 28 28
11 Siddkartha Highway
1. Belahiya-Butwal 24 24
2. Butwal-Tansen 41 41
3. Tansen-Syangja 84 84
4. Syangja-Pokhara 36 36
12 Rapti Highway
1. Ameliya-Tulsipur 27 27
2. Tulsipur-Salyan 56 30 26
13 Ratna Highway
1. Jamuniya-Kohalpur- 35 35
chisapani 78 78
2. Chisapani-Birendranagar
14 Mahakali Highway
1. Dhangadhi-Atariya 23 23
2. Godavari-Sahajpur 45 45
3. Sahajpur-Dadeldhura 70 70
4. Dadeldhura-Patan 50 12 38
5. Patan-Bhatkanda 15 15
15 Seti Highway
Syaule Bazar-Dipayal 64 64
Total Highways 418 205 158 1606 202

461
16 Birtamod-Bhadrapur Road 13 13
17 Damak-Gaurigun Road 22 10 12
18 Bhardah-Rajbiraj Road 18 18
19 Rupani-Rajbiraj-Mauaniya 23 23
20 Choharwa-siraha-Madar Road 26 23 3
21 Nawalpur-Malangwa Road 25 16 9
22 Chandra Nigahpur-Gaur Road 42 8 34
23 Bardghat-Harkpur Border Road 23 8 15
24 Sunwal -Parasi Road 9 9
25 Jeetpur-Taulihawa-Khunwa 33 11 22
26 Gorusinge-Sandhikhark Road 69 57 12
27 Chandrauta-Krishna Nagar 20 20
28 Road 108 50 58
29 Bhalubana -Chakchake-Rolpa 23 47 23
30 Road 47
Chakchoke-pauthan
Lamahi-Ghorahi-Tulsipur Road
31 Bhurigaon-gulariya Road 32 32
32 Jhunga -Rajappur Road 28 28
33 Birgunj-Kalaiya Road 12
34 Bhaise-Bhimphedi Road 12 21
35 Palung-Kulekhani Road 21 21
36 1. Kathmandu-Kakani 17 17
2. Kakani-Trishuli 46 46
3. Trishuli-Dhunche 54 54
37 Balkhu-Dakshinkali 16
38 Satdobato-Tikabhaurav 12 9 13
39 Satdobato-Phulchoki 22 5
40 Maharajgunj-Budhanilkanth 5
41 Gokarn-Sankhu Road 8 8
42 Jorpati-Sundarijal 7 7
43 Bhaktapur-Nagarkot Road 23 23
44 Banepa-Khopasi Road 10
45 Panchkhal -Melamchi Road 26 26
46 Dolalghat-Chautara 25 15 10
47 Lamosangu-Jiri Road 110 110
48 Nayapur-Kirne Road 20 20
49 Malekhu-Dhading Road 20 20
50 Abu Khaireni-Gorkha Road 25
51 Dumre-BesiShahar Road 42 14 18
52 Bharatpur-Byepass Road 5 5
53 Phikkal-Pashupatinagar Road 11 11
54 Biratnagar -Rangeli Road 22 22
55 Hile -Basentpur Road 35 10 25
56 Pokhara-Saranpur Road 5 5

462
57 Pokhara-Baglung Road 73 73
58 Tansen -Tamghas Road 76 65 11
59 Bhariahawa-Lumbini Road 20 20
60 Lumbini -Taulihawa Road 22 22
61 Nepalgunj-Gulariya Road 35 26 9
62 Silgadhi-Sanfebagar Road 67 67
63 Duhabi -Inaruwa Road 15 15
64 Nepalgunj-Baghauda Road 50 50
65 Mirchaiya -Katari Road 27 17 17
66 Bhairahawa-Parasi Road 23 23
67 Hulaki Road 50 50
68 Other Roads 25 50 50 100 100 200
Feeder way Total 175 165 386 248 523 623
Highway and Feeder Way Total 593 165 591 406 2129 825
Grand Total 758 997 2954

463
 Table 2
Construction and Maintenance Programme of Link Roads to District Headquarters and
Other Roads (1997-2002)
S.No. Name of Road Length Length of Construction Target in Ninth Plan Increase in
Construction (km) Length of
to date Road
km km Black Gravelled Earthen km
Topped
Link Road to
District Head
Quarter
1 Gaighat-Diktel 131 15 68 68
2 Salyan-Musikot 106 33 33 73 73
3 Surkhet-Jumla 210 90 69 120 120
4 Katari-Okhaldhunga 96 47 47 49 49
5 Basantpur- 26 26 26
\terhathum
6 Baglung-Beni 16 16 16
7 Beni-Jomsom 70 35 35
8 Okhaldhunga-Salleri 43 60 20
9 Baitadi-Darchula 120 60 60 60 60
10 Basantpur- 96 5 10 91 91
Chainpur-Khadbari
Total 261 516 516
11 Manma-Link Road 20 20 20
12 Hile-Bjojpur 70 7 28 28
13 Khimti-Manthali 14 12 14 2
14 Chhinchu-Jajarkot 107 77 45 30 30
15 Surkhet-Ranimatta- 66 66 30 30
Dailekh
16 Khodpe-Bajhang 110 75 50 35 35
17 Sanfebagar- 32 10 10 22 22
Mangalsen
18 Sanfebagar-Martadi 58 8 50 50
19 Besi Shahar-chama 30 30
Total 179 215 217
Total Headquarter 440 731 733
Roads
Other
roads/Highways
20 Banepa-Sindhuli- 159 37 122 122
Bardibas
21 Ringroad- 26 26
Bhidhunga-Dharke

464
22 Mahendranagar- 15 15
brahmdevmadi
(Mahakali)
Total 41 122 122
Feeder Roads
23 Bardibas- 4216 58 58
Jaleshwor-
Janakpur-
Dhanushadham
24 Bhedetar- 25 25 10 33 33
Dandabazar-Ravi
25 Galchhi-Devighat 18 18 18
26 chhahare-Tokha 17 17 17
27 Saljhundi- 25 10 15 15
Juthapauwa-
Sundardhunga
28 Tulsipur- 50 50 25
Purandhara-Surkhet
29 Sahajpur-Dipayal 112 30 30 30
30 Mahendrapur-Daiji- 68 68 35
Jogbudha-
Budarsatbhaj-
Baitadi-Jhulaghat
31 Chatra- 42 35 20 7 7
Chakarghati-Birpur
32 Ilam-Maipokhari 31 31 31
33 Phikkal-Shree 15 15 15
Antudada
34 Ugratara-Melauli 11 11 11
35 Other roads 48 12 36 36
36 Others 50 75 100 225
Total 108 257 221 435
Total Other Roads 149 379 221 557
Grand Total 149 819 952 1290
Table 3
Bridge Construction Programme
S.No. Name of Rivers for Bridge Construction

465
1 Samari Bridge (Bhainse-Hetauda Road)
2. Seti River Bridge (Kaski)
3 Babai Bridge (Dang)
4 Kohalpur-Mahakali Sector - 22 Bridges
5 Syali river Birdge (Kanchanpur)
6 Manahara Birdge (Bode-Mulpani, Bhaktapur)
7 Sharda River Bridge (Salyan
8 BudhikholaBirdge -Kesaliya (Harinagara-BNiratnagar Road)
9 Kajrar River Birdge (Rupandehi)
10 Bataha River Birdge (Siraha)
11 Manusmara - Sirseriya Bridge (Sarlahi)
12 Bakraha Bridge, Jhapartal Ner (Morang
13 Singyahi Birdge (Morang)
14 Kulariya bridge (Lamki-Titapur-Kailali)
15 Jogiyara Bridge (Dhanusha)
16 Jangha River bridge (Mahottari)
17 Jhim river bridge (Sarlahi)
18 Naurangiya bridge (Parsa)
19 Sikta bridge (Parsa)
20 Takkhola, Dobilla bridge (Parsa)
21 Phusrekhola bridge (Kaski)
22 Dudhuwa Birdge (Banke)
23 Singiya Birdge (Bara)
24 Kalyandehi Bridge (Siraha)
25 Ghinaghat Briedge (Morang)
26 Seti River Bridge (Dulegaunda, Dhorphirdi, Tanahn)
27 Lachhminiya Bridge (Banke)
28 Khajura Bridge (Nawalparasi)
29 Jalad Birdge (Janakpur -Kharihani, Dhanusha)
30 Danda Brifdge (Belahiya-Paklihawa and Bhairahawa- Parasi)
31 Sisai Bridge (Kapilbaatu)
32 Hanumante Khole Bridge (Bhaktapur)
33 Katahi Bridge (Sarlahi)
34 Kerunga Ghol Bridge (Chitwan)
35 Takhkhudol Bridge-Bhaisepati Tikhedeval
36 Telar Bridge (Lumbini-Kakarhawa) Rupandehi)
37 Trijuga River Bridge (Udapur)
38 Badharawa Bridge (Chandranigahpur-Gaur Road)
39 Khimti Bridge
40 Telar Biridge (Lumbini -Bauddhasthal way)
41 Sunsari Khola Bridge (Singhiya -Ramdhumi-Prakashpur Road)
42 Budhikhola Bridge (Sahebgunj-Biratnagar)
43 Sunsari Khola Bridge (Pakali-bharaul Road)
44 Rohini Bridge (Rupandehi)
45 Lakhandehi Bridge (Sarlahi)
46 Gagan Bridge (Siraha)
47 Other 20 Bridges

466
 Table 4
Survey, Construction and Maintenance Programmes of
Local Level
Village Roads during the Ninth Plan
S.No Name of Project District Target Increase in
. (km) Length of Road
(km)
1 Phikkal Gupti Naya Bazar Ilam 35
Road
2 Basantpur-Gufa road Terhthum 22
3 Jayaramghat-Halesi Road Khotang 35 35
4 Kalikasthan Shramthali road Rasuwa 15
5 Bageshwari Urleni Road Nuwakot 12
6 Trishuli-Samari Road Nuwakot 5
7 Chuniya Namtar Kalitar Makwanpur 15
Road
8 Hatiya-Raigaon Road Makwanpur 34
9 Kanti Raj path Lalitpur 20
10 Thankot -Chitlang Road Kathmandu 18 18
11 Sakhu Palubari Nagarkot Kathamndu 12
Road
12 Lagh Dhijure Road uwakot 23
13 Kharidhung - Barhbise Road Sindhupulchok 25 25
14 Chorni Solakhpur Harpatganj Parsa 25
Ghumaune road
15 Damauli Keshavtar Tanahun 25
Gharampani Ghumaune Road
16 Begnas Bhorletar Road Kaki 3
17 Bhorletar Neta Padini School Lamjung 20 20
Satrasay Road
18 Ridi Kharjyang Balkot Road Arghakhanchi 13
19 Gaindakot Kaligandaki Nawalparasi 15
Rampur Road
20 Maldhunga Beni Darbang Myagdi 13
Road
21 B.P. Mrg Dang 20
22 Goltakuri Managulapur Beltar Dang 25 25
Road
23 Cheda Dhungeel Road Jajarkot 20 20

467
24 Chisapani Jangalghat Kailali 15
Mangalsen Road
25 Joljivi Gakuleshwar Topaban Darchula 8
Road
26 Gajri-Dhunggadh Road Darchula 20 20
Total 493 163
Other various Projects 1507 1530
Grand Total 2000 1693

468
 Table 5
Suspension Bridge (Local track) Construction Programmes
S.No Name of Project No. of Project
.
1 Follow up Projects under construction at present , Starte d from FY 27
2050/51
2 Follow up Projects under construction at present , Started from FY 126
2052/53
3 Follow up Projects under construction at present , Started from FY 77
2053/54
4 New Projects Started from FY 2054-55 81
5 New Projects Started from FY 2055-56 29
6 New Projects Started from FY 2056-57 20
7 New Projects Started from FY 2057-58 20
8 New Projects Started from FY 2058-59 20
Total 400

Table 6
Construction, Upgrading, Reconstruction and Maintenance of Roads
Under Road Maintenance and Development Project (RMDP)
with Loan Assistance from the World Bank

S.No Name of Road Length in km

.
A. New Construction
1. Baitadi-Darchula 60
2. Sanfebagar-Martadi 41
3. Sanfebagar-Mangalsen 27
4. Surkhet-Jumla 100
5. Baglung-Beni-Jomsom 70
B. Upgrading
1. Baitadi-Darchula 60
2. Surkhet -Jumla 69
3. Gorusinge-Sandhikhark 60
4. Baglung-Beni-Jomsom 16
C. Reconstruction
1. Tansen-Syangja 42
2. Nepalgunj-Bagauda 46
3. Harthok-Tamghas 62
4. Lumbini-Taulihawa 22
D. Periodic Maintenance (First Phase)
469
1. narayani Bridge -Tiger Mountain 35
2. Tiger Mountain-Aurung Khola 15
3. Pokhara-Sandh Bridge 15
4. Pokhara-Sarangkot 5

470
 Table 7
Construction and Maintenance of Roads Under Fourth Road Improvement
Project with Loan Assistance from Asian Development Bank

A. Link Road to District Head

Quartors
Name of Road Length Remarks
1. Basantpur -Chainpur-Khandbari 65 GTZ/KFW Joint Cooperation
2. Hile-bhojpur 60
3. Okhaldhunga-Diktel 120
4. Lamahi-tulsipur Road Bridges Included in 3rd Road Improvement
Project but not completed due to lack of
budget
B. Kathmandu Valley Access Road
1. Ringroad -Naubise Alternative 26 To include in construction of First Phase
Road
C. Reconstruction/Maintenance
1. Phidim-Taplejung 85
2. Damak-Gaurigunj 22
3. Biratnagar-Rangeli-dayniya 30
4. Kathmandu Ringroad 14
5. Panchkhal-Melamchi 23
6. Dolalghat-Chautara 25
7. Urlabari-bardanga 34
8. Dadeldhura-Patan-Satbanjh 59
9. Bauddha-Budhanilkanth 10
D. Periodic Maintenance
1. Belbari-Choharwa 104
2. Trishuli-Dhunche 64

471
 Appendix - 1
Situation of Vehicles According to Their Categories in Nepal
(up to mid-July1997)

S.No Category of Vehicles upto Chaitra Vehicles upto Asar, Increase in Vehicles
. Vehicle 2048 2054 from Chaitra 2048 to
Asar 2054
Number Percenta Number Percenta Number Percenta
ge ge ge
1. Bus 3283 3.3 7078 3.7 3795 115.6
2 Mini Bus 1888 1.9 2440 1.3 552 29.2
3 Truck, Tanker 9591 9.8 16913 8.9 7322 76.3
4 Ca, Jeep, Van 26547 26.9 42780 22.4 16233 61.1
5 Tempo 4735 4.8 5181 2.7 446 9.4
6 Motorcycle 44854 45.5 98006 51.4 53152 118.5
7 Tractor 7545 7.7 14414 7.6 6869 91.0
8 Others 128 0.1 3860 2.0 3732 2915.5
Total 98571 100.0 190672 100.0 92101 93.4

Source : Department of Transport Management

472
 Appendix - 2
Development of Road Transport in Nepal (1951-1997)

S.No Year Plan from Length of Road (km) Road Road

. Beginning Owners density
hip km km per
per 100
10000p sq.km.
eople
Black Gravelle Earthen Total
Topped d
1 2007 5 83 288 376 0.47 0.26
2 2013 First 137 122 365 624 0.74 0.44
3 2019 Second 1193 1.25 0.84
4 2022 Third 2049 1.95 1.45
5 2027 Fourth 821 435 1474 2730 2.37 1.88
6 2032 Fifth 1549 667 957 3173 2.47 2.22
7 2033 Fifth 1579 310 1555 3444 2.61 2.37
8 2034 Fifth 1751 556 1829 4136 3.06 2.85
9 2035 Fifth 1851 593 2151 4595 3.31 3.16
10 2036 Fifth 1916 685 2090 4691 3.29 3.23
11 2037 Sixth 2044 564 2332 4940 3.38 3.40
12 2038 Sixth 2167 703 2151 5021 3.34 3.46
13 2039 Sixth 2322 719 2229 5270 3.44 3.63
14 2040 Sixth 2484 830 2232 5546 3.54 3.82
15 2041 Sixth 2645 815 2257 5717 3.58 3.93
16 2042 Seventh 2724 918 2283 5925 3.63 4.08
17 2043 Seventh 2757 946 2336 6039 3.62 4.16
18 2044 Seventh 2794 1180 2332 6306 3.71 4.34
19 2045 Seventh 2837 1477 2297 6611 3.81 4.49
20 2046 Seventh 2891 1594 2522 7007 3.95 4.76
21 2047 Seventh 2959 1658 2714 7330 4.05 4.98
22 2048 Seventh 3083 2181 3064 8328 4.50 5.66
23 2049 Eighth 3164 2243 3444 8851 4.65 6.01
24 2050 Eighth 3404 2373 3757 9534 4.88 6.48
25 2051 Eighth 3451 2396 3934 9781 4.87 6.65
26 2052 Eighth 3533 2662 4529 10724 5.21 7.29
27 2053 Eighth 3609 2867 4761 11237 5.32 7.64
28 2054 Ninth 3655 3011 5048 11714 5.41 7.96

Source : 1. A Compendium on the Environmental Statistics of Nepal.

CBS
473
2. Nepal Road Statistics -1995 DOR
3. Department of Roads

474
 Appendix - 3
Regionwise Development of Roads during various Plan Period

S.No Plan Start Length of Roads in Development Regions (km)

. year
Eastern Central Western
Black Gravelled Earthen total Black Gravelled Earthen Total Black Gravelled Earthen Total
topped topped topped
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1. First(2013-18) 2013 48 48 137 116
2 Second(2019- 2019
22)
3 Third(2022-27) 2022
4 Fourth(2027- 2027
32)
5 Fifth(2032-37) 2032
6 Sixth(2037-42) 2037 447 140 465 105 887 291 727 1905 607 39 300 946
2
7 Seventh(2042- 2042 593 310 568 147 1179 386 602 2167 672 78 381 1131
47) 1
8 Finished Year 2047 611 461 717 178 1334 674 707 2715 711 227 493 1431
9
9 Eighth(2049- 2049
54)

404
10 Interim Period 2052 706 728 1089 252 1438 1118 1275 3831 827 300 800 1927
3
11 Ninth(2054-59) 2054

405
 Appendix 3
Region-wise Development of roads during various Plan Period

S.No Plan Mid-western Far-Western Grand Total Increament Increment per

. Total year
Black Gravelled Earthen total Black Gravelled Earthen Total Length Length Percentage Length Percentage
toppe topped (km) (km) (km)
d
16 17 18 19 20 21 22 23 24 25 26 27 28
1. First(2013-18) 624
2 Second(2019- 1193 569 91.2 95 15.2
22)
3 Third(2022-27) 2049 856 71.8 285 23.9
4 Fourth(2027- 2504 455 22.2 91 4.4
32)
5 Fifth(2032-37) 3173 669 26.7 134 5.3
6 Sixth(2037-42) 64 46 569 679 39 48 271 358 4940 1767 55.7 353 11.1
7 Seventh(2042- 211 81 391 683 69 63 341 473 5925 985 19.9 197 4.0
47)
8 Finished Year 231 209 386 826 71 87 411 569 7330 1405 23.7 281 4.7
9 Eighth(2049- 8679 1349 18.4 674 9.2
54)
10 Interim Period 305 382 769 1456 257 134 596 987 10724 2045 23.6 683 7.9

406
11 Ninth(2054-59) 11764 1045 9.7 520 4.8

407
 Appendix 4
Development of Road Transport during the Eighth Plan (1992-97)

Year Length of Road (km) Road Road

Ownership Density km
km per per
10000 100sq.km
people
Black Gravelled Earthen Total
Topped
1992 3164 2243 3444 8851 4.65 6.01
1997 3655 3011 5048 11714 5.41 7.96
Increment 491 768 1604 2863 0.76 1.95
Increment 15.5 34.2 46.6 32.3 16.2 32.3
Percentage
Increment 3.1 6.8 9.3 6.5 3.2 6.5
Percentage
Per Year

Source : Department of Roads

Appendix 5
Physical Target and Progress of Road Construction According to Classification and
Category during the Eighth Plan (1992-97)

Physical Target/Progress according to category (km)

S.N Classification of Road Total
o
Black- Gravelled Earthen Lengt Progres
topped h s%
1. Highway Target 48 149 566 763 61.7
Progress 44 66 361 471
2. Feeder Target Road 89 205 621 915 53.2
Progress 1 106 380 487
2.1 Target Feeder road to 18 336 354
Highway 14 256 270 76.3
Progress
2.2 Important Development 64 155 219
Project, Road assisting
367
 Development of Economic
and tourism sectors target
Progress 20 29 49 22.4
2.3 Other feeder Road target 89 123 130 342 49.1
Progress 1 72 55 168
3 Urban Road target 50 25 25 100 134
Progress 74 59 1 134
4. Total Target 187 379 1212 1778
Progress 119 231 742 1092 61.4
Progress percentage 63.6 60.9 61.2 61.4
5 Progress of Road no 372 537 862 1771
mentioned in Eighth Plan
6 Total Progress of Eight Plan 491 768 1604 2863
km
Percentage 262.6 202.6 132.3 161.0

368
 12.4 Information and Communication

1. Background
Information and communication, which are indispensable infrastructures for
development, possess great importance for the overall development of a nation. The
contribution of the information and communication has played an important role for
creating a healthy, civilized and cultured society based on justice and morality as
envisaged by the Constitution of Kingdom of Nepal 1990. The democratic polity
adopted by the country in political perspective means to govern oneself by uniting one
another, whereas from the economic point of view it means to go hand in hand with
prosperity. The great responsibility for encouraging and motivating people to involve in
overall development of nation through massive people's participation while
disseminating such an underlying implication of democratic polity depends on the
efficiency of the communication sector. The act of maintaining sustainability of and
continuity to development by bringing positive change in people's daily lives through
every development work conducted by the nation depends on the effectiveness the
communication. In a geographically remote and economically and educationally
backward country like ours, it is indisputable that the development, expansion and
proper mobilisation of the communication sector can play an effective role in creating
awareness and consciousness to every citizen and bringing them into the mainstream
of national development.
In a world standing on the gateway of the twenty-first century, it is already understood
that the coming era is the era of communication. The developed nations have already
started to develop advanced communication technology and make their multifarious
use. The communication service equipped with highly advanced electric
communication system has already come into utilisation in our country though at a
limited scale; however, the majority of the population is still marginalised even from
minimum communication services. By doing the refore, it has already been highly
essential that communication facilities in coming days have to be develop and
expanded in a way to contribute to the balanced development of the country. It is
equally necessary that, while keeping the communication sector in line with the open,
liberal and competitive economic environment, this sector should be develop and
mobilise in a business-like manner with a view to attaining economic benefits. In doing
so, the communication sector will become self-reliant and the economic burden of the
nation will be minimised to some extent, on the one hand, and the development of the
communication sector can go a long way in developing the economic and social sector
and their by reducing the wide spread poverty in the country, on the other. In the
context, of the private sector investment being attracted at present, in the
communication sector, it is equally necessary to embrace private initiatives emerged in
this sector and move them forward to build a new communication era through healthy
competition. Therefore, the Ninth Plan has given a high priority to the proper
369
development and expansion of the information and communication sector with the
objectives of extending communication services to the rural areas throughout the
country; expanding required communication system for infrastructure; assisting in
increasing the economic growth rate while mobilised the communication sector;
alleviating poverty which still remain a serious challenge to the nation; and eradicating
social backwardness.
2. Review of the Eighth Plan
While considering the importance of information and communication as a necessary
physical infrastructure for the overall development of the country, constant attempts
have been made and modern technology adopted for the development of the means of
communication; and the information and communication service has gradually been
made simpler and more reliable. The Eighth Plan has adopted the strategy to provide
common type of communication service to the people and ensure balanced
development of various means of communication whereas, on the other hand, it has
pointed out pointed out the steps to attain a sustainable development of communication
through the private sector participation in this sector with a view to making institutional
development and communication means more self-reliant.
Postal Services: Ever since the inception of development plan, the expansion of post
offices, the diversification of services, the construction of post office building, the
improvement and the review of mail line, the postal link to all countries of the world
and the timely restructuring of post offices have made the postal service world wide.
During the Eighth Plan period, 3660 post offices have opened and a post office has
served 5917 people. In the area of postal transportation and quality development,
necessary mailing line has been expanded; and internal express mailing service (EMS)
to 33 places of the country and international express mailing service (EMS) to 20
foreign destinations have already been operated. Some arrangement has been made
for postal transportation.
During the Eighth Plan period, the construction of district post office buildings in
Bhojpur, Chitawan and Ramechhap has been completed, and the construction two
area post offices building in Rangeli of Eastern development region and Tikapur of
Far-western development region has been completed. The construction of post box
building in the Western regional postal directorate has been completed. In the area of
financial services, money order service in 85 post offices and postal bank service in
ten post offices have been operated. In the front of general post office strengthening,
additional 6000 post boxes have been arranged and brought under operation during this
period and working procedure has been made simple with the assistance of
consultancy service from GTZ. In addition, CCTV installation work has been
completed in order to increase the effectiveness of inspection and crime prevention. In
the process of the preparing postal master plan., a framework of physical and training
requirement for the next ten years has been prepared with the expert service received
from the Universal Postal Union (UPU). With the objective of enhancing service

370
standard and directing gradually towards self-reliance, a study report has been
prepared with the assistance of UPU.
Telecommunication Service: Prior to beginning of the Eighth Plan, 27 districts of the
country were deprived of telephone service; however, the telecommunication service
has been made nationwide by connecting all the district headquarters in the telephone
service network during this period. In this connection, the telephone service has been
extended to 1200 VDCs against the target of establishing 600 terminals in various
areas.
While analysing the telephone service situation by the end of the Eighth Plan, density
of telephone service comes to be 100 people per line, which implies the total telephone
line capacity equal to two hundred thousand. During the plan period, around 80
percent progress of the physical target has been achieved by installing 130 thousand
lines as against the target of enhancing additional telephone line capacity by 161,000.
During this period, rural telephone service has been provided with the installation of
telephone exchanges only in 29 places as the installation of rural telephone exchange
of 150 to 200 lines has been begun in 31 places. The expansion of microwave digital
transmission link and the application of optical fiber cable has been initiated in this
Plan.
Press Information Service: Among the programmes under the Department of
Information, no progress has been made in building construction due to the lack of
budget allocation. The achievements of programmes for journalism development and
workshop/seminar, etc., programmes are on the average. The preliminary facilities for
information technology have been provided to the Department of Information with the
objective of enabling the Department for contributing to the institutional development
of journalism.
Printing Service: In the area of printing and publication, little progress has been made
in the main programme - security printing due to the lack of required budget allocation.
The financial progress of this sector is 1.06 percent due to the lack of progress in
other programmes as well. The maintenance and improvement of buildings have been
done in order to prepare minimum physical infrastructure required for security printing.
Frequency Management: Under this programme, a frequency monitoring station has
been established with the release of Rs 14.3 million against the allocation of Rs. 16.4
million under HMG/N and foreign assistance; this progress has been achieved as per
the target.
Radio Broadcasting Service: The main programmes under this agency is the
establishment of the second medium wave channel and the training unit for manpower
development through foreign resource mobilisation; however, no work has been
carried out due to the absence of foreign resource mobilisation.
Television Transmission Service: The rest of the four programmes of Nepal Television
except for calibration and establishment of maintenance centre have made progress as
371
per the Plan. The main hindrance to the establishment of the centre is inability of
arranging donor agency for funding. In other programmes, the relay stations in
Dhankuta, Nawalparashi, Palpa and Pokhara have been installed under the Network
Expansion Programme. The regional programme production centre in Kohalpur has
been established as per the target and the service expansion with the installation of
equipment in Ilam and Pokhara relay station has been made as per the target. The
construction of studio building in Kathmandu has been completed as per the target.
Nepal Television Corporation has achieved the progress in the programmes other than
the establishment of calibration and maintenance centre as per the target.
National News Service: The main programmes under Rastriya Samachar Samiti
(RSS) during the Eighth Plan period are building expansion and equipment installment
in four places. The construction of buildings has been completed in Kakarvitta and
Birgunj as per the programme. Under the programme of equipment installation, the
computer system has been installed at the Centre. Similarly, television servic e has
come in operation in Pokhara. In order to improve the news collection, processing, and
distribution process of RSS, the establishment of computer network has been
completed.
Film Development: The film development laboratory has been installed at the cost of
Rs 5 million, in the first year 1992/93 of the Eighth Plan. In order to privatise Nepal
Film Development Corporation in line with privatisation policy of HMG/N, 51 percent
share of the Corporation has been floated to the private sector and the Corporation
has taken the form of Nepal Film Development Company.
Financial Progress: A total of Rs 5770.0 million has been spent in the information and
communication sector during the Eighth Plan period. Among this expenditure, Rs 44.4
million in the projects operated under the Ministry of Information and Communication,
Rs. 62.6 million in postal service, Rs. 8.9 million in press information service, Rs. 12.1
million in printing service, Rs. 376.6 million in television transmission, Rs. 8.3 million in
RSS, Rs. 5211.0 million in telecommunication service, Rs. 5.0 million in film
development and Rs. 46.7 million in radio broadcasting service have been invested.
(Table 1 and 2)

372
 Table 1
Physical Progress of the Eighth Plan

S.N. Description Target Progress

1 Establishment of Post Office
A Post Office (P.O) 400 Post Offices 270 P.O.
B Additional Post Office 1800 P.O. 830 P.O
2 Extension Express Delivery Service
A Domestic City Area 36 Places 33 Places
B Foreign (Different Nations) To commence 20 Countries
3 Expansion of Financial Service
A Money Order Service 403 P.O. 85 P.O.
B Saving Bank Service 593 P.O. 10 P.O.

4 Building Construction 15 P.O. 5 P.O.

5 Addition in of Post Box Numbers 3000 6000
6 Establishment and Extension of
Telephone
A Establishment and Extension of 1,61,000 lines 1,30,000 lines
Telephone Exchange
B Telephone services to district head 27 districts 27 districts
quarters having no service
7 Capacity Extension
A Establishment of A - type earth station 960 channels 960 channels
B Establishment of Packet switch 90 circuits 90 circuits
C Establishment of VSAT 8 places 4 places
8 Establishment of Digital Transmission 1560 channels 1560 channels
Link
9 Rural Tele communication Project: 600 terminals 466 terminals
(Ilaka Centre / VDC) (Service access
to 1200 VDCs)
10 Establishment of Rural Telephone 32 places 29 places
Exchange
11 Rural Tele-communication Project 11 places 11 places
(District headquarters/commercial
centres)

373
 Table 2
Expenditure During the Eighth Plan
(Rs. in 000)
S.No FY 1992/93 FY FY FY FY Total Remarks
. 1993/94 1994/95 1995/96 1996/97
1 Ministry of 8672 - - 3125 2617 44414
Information
and
Communicatio
n
2 Department of 7128 10908 726 21600 21700 62062
Postal Service
3 Department of 3090 4979 - - 845 8917
Information
4 Department of 1395 5928 - 1700 3031 12054
Printing
5 Nepal 185700 50516 20200 65200 55000 376616
Television
Corporation
6 Rastriya - 800 - 7500 115 8255
Samachar
Samiti
7 Nepal 650551 666703 878973 1543970 1470843 521104
Telecommunic 0
ation
Corporation
8 Royal Nepal 5000 - - 5000 Privatised
Film
Corporation
9 Radio 21300 25400 - - 46700 No Budget
Transmission Allocation
Service since
Development 1994/95
Committee
882826 755034 899899 1673095 1554191 577505
5

374
3. Existing Challenges
The information and communication sector had confronted various problems and
obstacles during the implementation of the Eighth Plan. An attempt has been made to
explain these problems in the following paragraphs:
During the Eighth Plan period, lack of financial resources, lack of own vehicles for
postal transportation, lack of building and physical resources, inadequate national
transportation system, lack of awareness and low level of education among people,
lack of co-ordination with related agencies, no consideration given as priority sector
though considered as necessary service, difficulty in competing with the private sector
because of managerial and legal complexities, lack of efficient and skilled personnel,
and inferiority complex of the personnel, etc., were the inhibiting factors in the
direction of making postal service efficient, reliable and effective. Necessary physical
resources for the effective operation, development and improvement of the service
could not be managed; obstacle to quick postal delivery service was being faced
because continued to appear due to the dependence on private entrepreneurs for
transportation; and the expected progress in providing customer-oriented servic es
while competing with the private sector courier and fast communication means could
not be achieved due to legal complexities and lack of managerial flexibility. Due to the
compulsion of arranging office buildings on rent and the uncontrolled exorbitant rent,
most of the post offices were found in constant difficulty in setting of post offices at
comfortable and appropriate places for customers. With the lack of initiation to name
road, street and building complexes of residential areas due to unplanned urbanisation,
the attempt for scientific delivery could not be expedited. The number of postal goods
could not be increased because of low writing habits of the people and the lack of
literacy. The attempts to operate the popular service like money order for increasing
the number of customers giving them full satisfaction could not become much fruitful
due to the lack of revolving fund for secured financial service whereas the legal
arrangement was limited; and conducive environment for competing with commercial
banks could not be created for the effective operation of postal saving bank. Due to
the instability in organisational structure and the lack of attraction in postal service,
non-gazetted personnel working in postal service could not be classified as postal
service group and, consequently, tendency of transferring trained manpower to other
government offices could not be stopped; and building and facilities of Postal training
Centre became inadequate for providing necessary training. In the field of
telecommunication services, it was difficult to reduce the gap between the growing
demand for and the short supply of telephone. The difficulty in achieving the set target
of developing infrastructure in the appropriate area arose due to the problem in land
acquisition during the implementation of telecommunication programmes. Late
procurement decision, delay in decision implementation, and lack of co-ordination were
the problems experienced on the implementation of telecommunication programme.
The programmes were not designed in an integrated manner; the problem of
coordination occurred in the availability of project materials due to frequent changes in
375
project design, whereas procurement became burdensome due to multi package
nature of project materials and on the other hand, the project took a long time to
complete due to the appropriation of various materials in various times. Complicated
customs clearance procedure due to the lack of transparency, exemption in custom
duty regulations, late approval to dig road, and long time to new electric connection
were also the problems that appeared during the Eighth Plan period.
Lack of financial resource remained the main problem in the implementation of
programme for security printing in the Eighth Plan. Inability to attract foreign aid due
to the lack of required internal resource allocation, lack of necessary land arrangement
for constructing building for improving the physical condition of Department of
Information; and lack of budget release as estimated to spend during the Plan period
were the problems that were confronted with as well. That no progress could be made
in establishing a training unit in Radio Nepal and Nepal Television for producing
required skilled manpower and in setting up a maintenance and calibration centre for
Nepal Television due to the lack of foreign assistance became another major problem.
4. Long-term Concept
• The concept of operating effective information and communication service within
next 20 years while orienting various agencies of the information and
communication sector towards self-reliance has been adopted.
• In line with this concept, postal service will be made self-reliance and fully
competitive by commissioning a board with full authority; providing institutional
autonomy; and increasing private sector participation in this service. The
expansion of postal services will be completed within first-five years by setting up
an area post office in every Ilaka (sub-district) of district and an additional post
office in every VDC and the quality of postal services will be gradually increased
qualitatively rather than quantitatively by setting the postal standard based on cost
and benefit, making every post office whereas possible. In the next twenty years,
full mechanisation of te n post offices, construction of post offices in ten feasible
places with the private sector participation and improvement of income and quality
standard, expansion of express mailing system (EMS) from existing 33 towns in
the country and twenty foreign countries to all the feasible domestic places and all
the feasible nations of the world, money order service to 528 post offices, and
expansion of postal saving banks for 806 post offices, will be carried out. Various
agency services like facsimile, cash on delivery, postal GIRO, e-mail, EDI and
Internet services will be operated with a view to diversify postal services and
make them effective. Accordingly, the concept of physical capacity enhancement
and skilled manpower development will be undertaken.
• In a way to contribute to essential infrastructure for the overall development of
the country, with 300 thousand lines in first five years, 563 thousand lines second
five years, 1,259 thousands lines in third five years, 1,853 thousand in fourth five
years, a total capacity of 3,959 thousand lines will be increased. The telephone

376
 line capacity will thus be increased by 15 lines per hundred people and 210
thousands lines will be expanded as per the target of providing five percent mobile
telephone of the total basic telephone; and various additional telecommunication
services will be provided in appropriate places. While expanding and developing
services in this way an arrangement will be made to channelise investment with
the full participation and involvement of the private sector.
• Appropriate steps will be taken in order to make radio broadcasting and television
transmission and make agencies providing such services financially self -reliant and
independent. In this regard, private sector will be encouraged in radio broadcasting
and television transmission and a conducive environment will be created to
channel private sector investment in the area of transmission. The expansion of
transmission through the application of satellite will be expanded in the first five
years in order to provide quality service by enhancing effectiveness of
transmission and appropriate new technology will be applied gradually. An
arrangement will be made to establish second medium wave channel and
broadcast short-wave by applying appropriate technology. Transmission of Nepal
Television will be expanded nationwide; second channel for educational and
informative programme and other channel to air entertainment programme will be
set up.
• Physical capacity, skilled manpower and necessary infrastructure for the
Department of Printing at present will be gradually developed in order to
transform the Department into a security printing press and enhance its capacity
to perform all the security printing matters in the country. In order to arrange data
exchange and make the flow of information systematic, effective and useful, the
capacity of the Department of Information will be increased; regional
communication centres under this Department will be integrated with all districts
for information collection and flow; expansion of information centres at local
levels will be completed; and a data exchange system between the Department of
Information and the Information Bureau of SAARC countries will be established.
• The information and communication sector will be developed in a way to
constitute infrastructure for the overall socio-economic development by giving
priority to research, application and expansion of information technology.
Ninth Plan
5. Objective
• To involve private sectors for the development, expansion and effective operation
of the information and communication sector.
• To extend communication services to rural areas by adopting modern technology.
• To develop the information and communication sector as an infrastructure for the
overall socio-economic development by emphasising on research, application and
expansion of information technology.
377
• To give priority to utilise means and resources within the country with a focus on
production of skilled manpower, mobilisation of people's participa tion and cost
recovery while developing and expanding information and communication
services.
6. Policy and Implementation Strategy
Postal Service
• To develop postal service as an autonomous administrative entity within the
government sector which can provide business-oriented, competitive and
qualitative services. To regulate private sector participation in the operation of
postal services.
• To extend postal services to the rural areas with their quality improvement for the
development and effectiveness of postal services.
• To make money order and postal bank services effective for achieving economic
self-reliance in postal services and gradually operated other financial and business
services as well.
• To increase physical capacity of postal service by emphasising on gradual
mechanisation and the application of modern technology for its effective operation
and make a timely change and improvement in mailing lines.
Printing Service
• To develop the press of the Department of Printing as a security printing press for
printing the security matters such as post stamps, airograms, bank cheque,
travellers cheques, passports, visas, air tickets and revenue receipts, etc.
Press Information Service
• To provide all the necessary data and information pertaining to Nepal to the
journalism sector while adopting the concept of media village; and develop the
information sector in an integrated manner from the regulation point of view.
• To develop the Department of Information as a control agency for dissemination
the informatio n of HMG.
Telecommunication Services
• To develop the telecommunication sector by expanding existing services,
beginning new services and upgrading the quality of services with the private
sector participation in a competitive environment.
• To provide telephone services 25 lines per 1000 people by establishing new
telephone exchange and increasing the capacity of existing exchanges.
• To develop Nepal as an international telecommunication transit by co-ordinating
with various countries.

378
• To conduct research and development works for diversifying and enhancing the
telecommunication services; reducing imports; gradually developing necessary
means, resources and manpower within the country; encouraging the application
of modern technology; and enhancing the reliability of services.
• To contribute to the development of agriculture, tourism, health, education and
commerce sectors while considering the possibility of quick information flow
through various means of communication in the social and economic sectors of the
country and preparing national information infrastructure.
• To adopt appropriate strategy for mobilising required capital for the development
of the telecommunication sector while considering the development strategy
undertaken by other countries.
Press media
• To involve the private sector in the operation of Gorakhapatra Corporation with
the objective of conducting press media by the private sector in a competitive
manner.
• To develop Gorkhapatra Corporation as a publication house through the
diversification of services the application of new technology.
Transmission Service
• To make private television and radio transmission effective by designing and
integrated structure at the policy level for the development and expansion of
electronic media.
• To establish an independent regulating agency for creating a healthy competitive
environment for the development, expansion and operation of transmission modes.
• To apply satellite mode for making television and radio transmission nationwide.
• To conduct transmission training programmes in a coordinated manner.
Film Services
• To create a conducive environment for the proper development of Nepalese film
industry.
• To preserve old and valuable films produced by the HMG/N.
News Agency
• To involve in the development and expansion of services and the management of
RSS.
7. Programmes
• A long-term twenty-year plan will be prepared for the information and
communication sector.

379
• Study of various technologies and modern information system will be carried out in
various sectors in order to obtain maximum benefit.
• National information and communication coordination programme will be
conducted; policy for the role and the application of information and
communication technology in the overall development of the country will be
formulated; and its coordination will be maintained.
• National Broadcasting Authority (NBA) will be established and an effective
Broadcasting of radio and television will be arranged.
• Visual archives will be established for preserving feature films, documentaries and
news pictorials produced by HMG/N and received from foreign agencies.
• Various feature films owned by HMG/N will be preserved.
Film Development
• Films will be preserved.
• Visual archives will be established for preserving feature films, documentaries and
news pictorials produced by HMG/N and received from foreign agencies.
• The final picture negative, final sound negative, music negative and final release
prints of various feature films owned by HMG will be cleaned and protected; and
arrangement will be made to provide necessary equipment and chemicals to this
effect.
• Necessary projection and screens will be arranged; and physical capacity of the
Ministry of Information and Communication will be developed for conducting film
censor by providing necessary proje ctors and within the Ministry.
• Study will be conducted; policy will be formulated; and coordination will be
ensured on the role and the application of information and communication
technology in the overall development of the nation.
• A perspective plan for the information and communication sector will be
formulated.
• NBA will be established; and an arrangement will be made to boardcast the radio
and television in a coordinated and effective manner.

Frequency Management and Monitoring Strengthening Project:

Objective

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To ensure and effective use of frequency spectrum through frequency management
and monitoring for radio technology-based telecommunication services and radio and
television transmission.
Implementation Strategy
• To review and modernise national frequency project in line with rapid
technological development and changed context.
• To amend the rules and regulation in a way to obtain frequency other security and
other service-oriented activities required for the operation of commercial service.
• To arrange appropriate software/hardware for preparing computerised frequency
management data base.
• To make international coordination effective in order to ensure frequency
utilisation.
Programme
• Mobile monitoring van with necessary equipment will be provided and a feasibility
study on the application of satellite monitoring system will be conducted for
enhancing the capacity of monitoring station.
• Hardware/software will be provided to computerise frequency licensing and
renewal activities and the existing computerised computer network will be linked
with international data base (ITU-TIES).
• Since international co-ordination is mandatory for ensuring and making the
effective use of frequency at national level, a library will be established for
managing the acquired information, documents and books.
• A maintenance workshop with basic equipment will be set up for the repair,
maintenance and operation of installed station.
• A programme for appropriate studies/training will be conducted for the additional
supply of skilled manpower.
Postal Service:
Objective
To gear the postal service gradually towards economic self-reliance and operate in a
business like and competitive manner in order to provide easy reliable and standard
postal services to common people.
Implementation Strategy
• To form a capable postal service board with full authority.
• To make appropriate and relevant change in the existing postal laws.
• To extend postal services to all VDCs and review them as needed.

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• To conduct feasibility study for operating the postal services in the rural areas.
• To extend domestic express mail service to all the places regular transportation
service.
• To make an arrangement for the registration and distribution of foreign parcel
gradually in all district postal offices.
• To extend international express mail service (EMS) to many more countries in the
globalisation process of EMS.
• To establish express mail service centre.
• To expand the registration and distribution of international EMS to other cities than
Kathmandu.
• To start track and trace system for the inspection of the condition or the
international EMS of postal goods.
• To conduct market studies and operate new services.
• To arrange necessary vehicles for mail delivery.
• To review all mail lines; establish necessary new ma il lines; and cut off
unnecessary mail lines.
• To implement postal code number effectively.
• To begin mechanisation process in the main post offices.
• To ensure effectiveness in the delivery system of postal materials.
• To construct, improve, and expand central offices, regional directorates, district
post offices and Ilaka post offices.
• To increase the capacity and physical infrastructure of Postal Training Centre and
its capacity.
• To training diversify money order services and expand them in international field.
• To identify and introduce new financial services.
• To strengthen saving bank services.
• To increase revolving fund for the effective management of the payment of
international and national money order.
• To give priority to publish post stamps reflecting the importance of tourism and
culture of the nation and initiate competition for ticket designing.
• To expand and promote commercial philatelic service.
• To establish a museum.
Printing Service:

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Objective
To make the press of the Department of Printing capable of printing the important and
confidential materials and other security materials by developing as a security printing
press.

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Implementation Strategy
• To develop, expand and strengthen the press of the Department of Printing for
printing the important and confidential materials of HMG.
• To be active for achieving economic self-reliance through the modernisation of
press by replacing letter press with multi colour printing press.
• To conduct training for printing service operation, repair and maintenance and
manpower development.
Programme
• To conduct security printing building complex in the land owned by the
Department of Printing.
• To supply and install the necessary equipment like multicoloured offset press, dry
offset press and perforating machine for the purpose of security printing works.
• To produce skilled and capable manpower by providing training to concerned
personal in order to operate machine used in offset press, offset processing,
machinery repair and maintenance and binding works.
Press Information Service:
Objective
To establish a permanent and systematic communication network constructing own
building complex for the proper development of this sector; adopt the concept of
media village for providing necessary information and assistance to the press
community for the development of healthy, dignified institutional journalism; and
strengthen photo lab.
Implementation Strategy
• To construct a building complex with advanced modern facilities for the
development of institutional journalism.
• To establish modern information network for developing the Department of
Information as a central agencies for disseminating information department of
HMG; and increase the capacity by strengthening photo laboratory and
establishing photo gallery.
• To develop five information centres of the Kingdom as an effective agency for
data exchange and integrating them with central information system.
• To organise study tour for providing information to domestic and foreign journalists
about the on going development projects in various parts of the kingdom of Nepal
and the events of national public importance.
• To enhance the capacity of library in all the six information centres.

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• To distribute and publish various information materials about Nepal.
Programme
Press Information Strengthening: A modern building complex equipped with modem
facilities include photo laboratory, archives, library, information and communication
centre and press conference hall at the Department of Information will be
constructed.
Establishment of Communication Network: A modern communication network linked
with all commissions, ministries, secretariats, departments along with Bureau of
Statistics and all information centres will be established in order to develop the
Department of Information as a central agency for disseminating the information of
HMG/N.
Strengthening of Photo laboratory and Establishment of Photo Archives: Photo
laboratory in the Department of Information will be strengthened by installing photo
scanner with negative rack, computer and printer and arranging dark room, negative
room, photo library, photo transmission room, etc.; and photo archives will be
established.
Communication Centre Strengthening and skilled Manpower Development: The
information centres of five development regions will be strengthened developed as
effective information agencies by equipping them with modern communication
facilities, and necessary domestic and foreign training will be arranged for
administrative and technical manpower in order to achieve the obje ctives of the
Department of Information.
Arrangement of Journalist Study Tour: A study for tour providing information to the
domestic and foreign journalists about the on going development projects in the various
parts of the Kingdom of Nepal and the events of national public importance will be
organised every year.
Strengthening of Study Centres: The five study centres running under the Department
of Information will be strengthened and operated in systematic manner.
Publication and Distribution of Information Materials: Materials providing various
information about Nepal will be published and distributed.
Telecommunication Development:
Objective
• To develop and expand the means of telecommunication in a competitive manner
with the private sector involvement in order to contribute to interlink the various
parts of the nation and to maintain regional balance.
• To extend telecommunication services to the rural areas, expand local telephone
and reliable trunk services to the important areas of the nation while setting the

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 target to provide three telephone lines per hundred people and contribute to
economic development.
Implementation Strategy
• To develop and operate the telecommunication sector with the private sector
participation in a competitive environment through the expansion of existing
services, introduction of new services and upgrading of service facilities.
• To provide three telephone lines per 100 people by expanding and installing
exchange capacity by the end of the Ninth Plan.
• To provide telephone services to VDCs of the Kingdom deprived of services at
present.
• To operate cellular mobile telephone and value added services in addition to the
existing telecommunication services.
• To install another earth satellite station outside the Kathmandu Valley in order to
make international telecommunication more reliable; and establish an additional
gateway exchange.
• To make the national trunk service effective by installing optical fibre as an
alternative to the existing national microwave link.
• To modernise the telecommunication services by gradually applying modern
technology of the world.
• To build the infrastructure for developing the country as an international
telecommunication transit in coordination with various countries.
• To perform research and development (R&D) works for the upgrade quality of
existing system; and encourage the application of modern technology in the
telecommunication sector.
• To prepare national information infrastructure for contributing to the development
of agriculture, health, education, tourism, and commerce sectors with a view to
adopting the concept of Information Technology Park and Information Highway.
• To conduct study and formulate policy on the service tariff rate in order to
enhance effectiveness in the operation of telecommunication services.
• To produce required skilled manpower for the telecommunication sector.
Programme:
The number of total telephone line will be increased to 643,750 with the increase in the
capacity of 400,000 lines during the Ninth Plan period. Among this, 100,000 lines
through the private sector participation and 300,000 lines through Nepal
Telecommunication Corporation will be installed. Programme of expansion of
additional 300,000 telephone lines by Nepal Telecommunication Corporation will be as
follow:
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• As it is necessary to replace existing exchanges with 50,000 lines and arrange
supply of spare parts for and the repair and maintenance of their switching
equipment, a total of 350000 lines including additional 50,000 lines will be installed.
• A total of 38,500 telephone lines will be distributed in various places of the Eastern
Development Region.
• A total of 202,900 telephone lines will be installed in various places of the Central
Development Region.
• Additional 31,300 telephone lines will be expanded in various places of the
Western Development Region.
• A total of 9,600 Telephone lines will be added in various places of the Mid-
western Development Region.
• A total of 8,550 telephone lines will be added in various places of the Far-western
Development Region.
• In addition to above mentioned places, telephone exchanges will be installed in
some new commercial areas of all Development Regions.
Transmission link Expansion Project
The following transmission links will be established and their capacity will be enhanced
in order to inter-link the existing expanded newly established telephone exchange, rural
exchange, MARTS system and mobile system through microwave and optical
transmission link:
• The capacity of microwave links existing in the places to the east of Kathmandu
will be enhanced.
• The capacity of microwave links existing in the places to the west of Kathmandu
will be enhanced.
• A new optical link will be established and the capacity of the existing optical link
will be enhanced in order to inter-link the existing and newly established telephone
exchange in the Kathmandu Valley.
• So far micro wave transmission link has been established for operating nation-
wide through a single trunk route; however, optical links will be installed gradually
from east to the west as an alternative to micro wave links in line with the
objective of adopting a concept of Information Technology Park and Information
Highway; and telephone services will be expanded in small commercial centres in
a way to use such optical links for connecting with Kathmandu.

Establishment and Expansion of Earth Station

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The international telecommunication services have so far been operated through a
single standard A-satellite station; however, one additional satellite earth station and a
gateway exchange outside the Kathmandu Valley will be established.
Rural Telecommunication
• Among the district headquarters and business centres telephone service will be
operated in Chautara of the Central Development Region, ten district
headquarters of the Mid-western and Far-western Development Regions
(Pyuthan, Salyan, Liwang, Musikot, Dailekh, Kalikot, Jumla, Jajarkot, Chainpur
and Martadi) through the establishment of microwave transmission link in place of
existing MARTS system.
• In line with the policy of establishing at least one public telephone office (PCO) in
all VDCs, telephone service for the remaining 2,700 VDCs of the country will be
gradually provided through the medium of MARTS, VHF/UHF, VSAT, WLL,
GMPCS/CDMA and other appropriate technologies. Thus telephone service to all
the VDCs will be completed with the participation of Nepal Telecommunication
Corporation and the private sector as well.
• The telephone services will be provided by establishing rural exchanges of 150 to
300 lines in 61 places of following 41 districts in line with the policy of rural
telephone expanding the service by establishing gradually rural telephone
exchanges in the district headquarters and having demand for telephone service
and in the places of commercial importance.
1 Jhapa Kakarbhitta
2 Ilam Phikkal
3 Morang Urlabari and Letang
4 Sunsari Jhumka
5 Sankhuwashava Chainpur
6 Dhankuta Hile
7 Solukhumbu Namche
8 Saptari Kanchanpur
9 Okhaldhunga Rumjatar
10 Udayapur Katari and Gaighat
11 Sarlahi Barhathawa
12 Dolakha Charikot
13 Bara Nijgadh and Chandranigahpur
14 Parsa Jitpur and Visuwa
15 Chitwan Sauraha, Rampur (Saradanagar) and Parsa
16 Bhaktapur Nagarkot
17 Sindhupalchowk Chautara
18 Syangja Waling and Syangja
19 Tanahun Aanbu Khaireni and Dumre
20 Gorkha Manakamana, Arughat and Gorkha

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 21 Kaski Sisua
22 Lamjung Besishahar
23 Baglung Baglung
24 Nawalparashi Sunwal, Kawasoti and Parasi
25 Rupandehi Bardghat
26 Gulmi Gulmi
27 Pyuthan Pyathan and Bijuwar
28 Rolpa Liwang
29 Rukum Musikot
30 Salyan Salyan
31 Dang Lamahi
32 Jajarkot Jajarkot
33 Dailekh Dailekh
34 Banke Kohalpur, Chhinchu, Khajura, Lalmatia and
Lamaki
35 Bardia Gulria
36 Jumla Jumla
37 Kalikot Manma
38 Kailali Chainpur, Tikapur, Belauri and Ataria
39 Bajura Martadi
40 Dadeldhura Dadeldhura
41 Kanchanpur Jhalari

Establishment and Improvement of New Service Technologies and Manpower

Development :
• A total of 10,000 customers will be served by installing cellular mobile telephone in
Kathmandu Valley, Biratnagar, Birgunj and Pokhara.
• Modern Technology equipment like asynchronous transfer mode for providing high
capacity data communications services will be installed in the main cities of the
country with a view to adopting gradually the concept of Information Highway.
• The value added services of telecommunication like phone, E-mail, and Internet
will be established and operated.
Television Transmission:
Objective
To extend the transmission coverage of the Nepal Television nationwide with the
private sector participation in a competitive manner with a view to providing the
common people educational, informative and entertainment programmes appropriate
for Nepal language, culture and tradition.

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Implementation Strategy
• To extend the transmission of Nepal Television nationwide through the application
of satellite in transmission.
• To establish a separate channel for Nepal Television and operate development-
oriented, educative and informative programmes on agriculture, education, health,
science and technology, family planning, tourism, environmental preservation and
rural development and entertainment programme appropriate for Nepali language,
culture and traditions.
• To establish a studio in Kathmandu for the production of educational programme;
establish one production centre in Eastern Development Region; and produce
programmes from all the three television centres of the country.
• To achieve economic self-reliance in television transmission and programme
production by involving private sector.
Programme
• Transmission through Satellite: Transmission of Nepal Television will be expanded
nationwide through satellite transmission.
• An Earth station will be established in a technically feasible location.
• Transponder will be acquired on hire from a satellite company.
• Transmission will be conduc ted by arranging TVRO at various places of the
nation for receiving television signals and setting up necessary transmetres or any
other equipment for 15 stations.
• One outdoor broadcasting van equipped with satellite transmission facilities will be
provided.
• Establishment of Educational Channel: An educational and informative programme
will be aired by establishing a separate second channel of Nepal Television.
• A transmetre with 2 kw capacity will be established in Phulchowki.
• Arrangement for transmitting another channel in the satellite transponder acquired
on hire will be made.
• Transmission of the second channel will be done by arranging required transmetre
in various places of the country.
• Arrangement for Educational Programme Production Studio: Education and
information programmes will be produced and aired. Programme production studio
will be established for producing educational programme.
• Establishment of Regional Programme Production Centre: A regional programme
production centre will be established in Eastern Development Region.

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• Manpower Development: Appropriate training will be provided for the supply of
skilled manpower in the area of television transmission.
• Establishment of Maintenance and Repair Centre: Maintenance and repairing
centre will be established to maintain the equipment applied in television
transmission and programme production in a systematic way.
• Machinery Strengthening: Additional required machinery and equipment for
television transmission will be arranged and their quality will be upgraded.
Radio Broadcasting:
Objective
• To improve, renew and expand the existing broadcasting system and establish
additional broadcasting centres in order to enhance sentimental unity among
different religions, languages, castes, communities and classes of the nation and
provide reliable radio transmission service nationwide.
• To make the transmission of Radio Nepal countrywide by involving private sector
in the development of radio transmission in a competitive manner in order to
provide common pe ople with educational, informative and entertainment
programmes appropriate for Nepali language, culture and tradition.
Implementation Strategy
• To arrange the regular transmission by providing necessary equipment and spare
parts for various exiting transmission centres and studios.
• To establish medium wave transmission centre (Fill-in Station) at few feasible
places in order to provide reliable radio transmission services throughout the
country; and start radio broadcasting service in outside the Kathmandu Valley
through FM system.
• To produce and broadcast development-oriented, educational and entertainment
programmes on agriculture, education, health, family planning, population, women,
science and technology, rural development, tourism and environmental protection.
• To make short-wave transmission system effective and timely relevant while
adopting advanced technologies available in the international level.
• To improve and manage regional transmission by arranging second channel in
medium wave transmission; and prolong gradually the existing regional
transmission time.
• To enhance the private sector participation in radio transmission.
Programme:
Improvement and Renewal of Existing Transmission Station: With modern equipment
and component parts of appropriate technology, the existing obsolete radio stations of

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five Development Regions of the country and studios and transmission existing in
Radio Nepal will be improved and renewed.
Establishment of Second Channel and Medium-wave Transmission Centre: A second
channel will be established for improving regional radio broadcasting; and medium
wave broadcasting centres (Fill-in-Station) will be gradually set up at feasible places
for providing reliable radio service to remaining 20 percent of the population.
Establishment of Short-wave Station: New short-wave station will be established with
an appropriate technology due to the fact that the existing transmittres used in the
short-wave station have become obsolete; their spare parts are difficult to procure;
and all short-wave stations have to be replaced by a single side band by 2007 as per
the international convention of ITU.
Expansion of Physical Facility of Regional Broadcasting Centre and Arrangement of
Satellite Link: Satellite link will be arranged for regula r and standard Broadcasting and
appropriate studio construction will be made with new equipment in order to enhance
studio facilities of existing five regional broadcasting centres.
Expansion of FM Station: Additional FM station will be established outside the
Kathmandu valley to make Radio Nepal economically self-reliant.
Establishment of Computer and Audio Work Station: Computer networks will be setup
and of programmes standard will be upgraded in order to regulate and manage the
radio broadcasting; and easily handling audio work station by skilled and semi-skilled
personnel will be established for reducing economic burden of Radio Broadcasting
Committee.
Manpower Development: Training for skill development will be provided to the
manpower involved in radio broadcasting sector.
Rastriya Samachar Samiti (RSS):
Objective
Modern technology will be applied in the collection of information, processing and
distribution; RSS service will be strengthened and diversified; and the private sector
will be involvement in the management of RSS.
Implementation Strategy
The physical capacity of RSS will be enhanced; and its service will be strengthened
and diversified.
Programme
• The information exchange will be arranged through computer networking in the
eight main cities of the country.
• Basic infrastructure will be constructed for the development and self -reliance of
RSS.

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• Communication network building complex will be constructed in Kathmandu.
• RSS building complex will be constructed at various eight places based on regional
as well as news importance.
Tele -communication Sector Reform Projects:
Objective
• To create an environment for the establishment, expansion, development and
operation of the telecommunication services in a competitive manner; and attract
the private sector investment in the development of the telecommunication sector.
Implementation Strategy
• To establish and operate Nepal Telecommunication Authority (NTA) as an
independent regulatory agency for the development of various communication
services through a healthy competition among the operators of telecommunication
services.
• To participate all the domestic and foreign investor in a competitive way for the
establishment, expansion, and development of telecommunication service.
• To make all telecommunication networks and services open by 2000 in a way to
operate in a fully competitive manner.
Programme
• NTA will be established and operated.
• An environment will be created in a way to encourage domestic and foreign
investors to invest in the development in communication sector.
• License will be provided to service operators.
• A healthy competitive environment will be created among various operators.
• Physical capacity of NTA will be enhanced.
• Man power training will be provided to develop skilled manpower.

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 12.5 Science and Technology and Alternative Energy

1. Background
The fact that science and technology significantly contributes to the economic
development of a nation is obvious. The attempts to support economic development by
tying up science and technology with the national development policy in a planned
manner have been initiated in Nepal since the Sixth Plan. The agencies institutionally
organised to operate national-level programmes in this sector are National Science and
Technology Council, Royal Nepal Academy for Science and Technology, National
Agriculture Research Council, and Research Centre for Applied Science and
Technology at Tribhuvan University. The Ministry of Science and Technology has
been established in the Eighth Plan in order to co-ordinate related agencies and move
their activities. In addition, various laboratories and service delivery agencies
established in forwarding agriculture, forestry, botany and food sector have been
fulfilling their sectoral responsibilities.
The country needs to use additional energy power to enhance the application and
development of technology. Moreover, an additional use of electricity and other
energy is needed to direct the country towards industrialisation by adopting new and
traditional technology. Almost 90 percent of energy in Nepal is supplied by bio-mass
and alternate energy sources. Since such sources of energy have been used to light
stoves particularly in the rural area, the health status of women and children has
adversely been affected by indoor air pollution caused by the smoke of fuel wood. On
the other side, the supply of fuel wood has created deforestation and soil erosion
problems in many places. A long distance needs to walk to collect fuel wood and
more time needs to spend to fetch drinking water due to the drying up of water
sources. Hence, special consideration will be given to conduct additional study and
develop traditional energy policy in order to address the problems emerging from
energy consumption.
Thus, attention in the Ninth Plan should be focused on increasing the productivity
through the utilisation of science and technology and using the established
infrastructure in the country. The Ninth Plan will pay attention particularly to mobilise
existing, human resources; to strengthen institutional and managerial aspect for
activating research agencies; to attract the private sector in research; to encourage
rural, indigenous appropriate and advanced technology research; and to develop the
capacity of science and technology of the nation.
2. Review of the Eighth Plan
In order to implement policy and objective of science and technology in the Eighth
Plan, researches, teachings and various programmes related to scientific and
technological services had been conducted. The structure of these programmes

394
seemed larger as compared to previous plans. In the Eighth Plan, national level
programmes were conducted by Royal Nepal Academy for Science and Technology
(RONAST) and National Science and Technology Council, whereas sectoral
programmes were carried out by the various departments of HMG/N and other
agencies. The programmes including under RONAST were bio-technology research,
botanical resources (FLORA), environment, research on radio activity, solar
photovoltec water pumping, high altitude science and technology, promotion and
dissemination of rural technology, electronics database and information centre, etc.
Some policy-related studies and research works were carried out under the National
Science and Technology Council. The important works were research and
development plan, study on the investment of the nation in research and development,
evaluation of waste recycling technologies, bio-technical policy, study on bio-fertilizer
and pesticide uses, implementation of Tyson turbine, etc.
Establishment of the Ministry of Science and Technology can be taken as an
important achievement of the Eighth Plan. Following the formation of the Ministry,
formulation of long-term science and technology plans and programmes have been
started. The prevailing chaotic environment of RONAST for a long time has come to
an end following the amendment of RONAST Act. With the initiative of the Ministries
Various activities like study on the status of the National Computer Centre under the
Ministry, data collection of science and technology-related agencies, human resources
and available equipment, research works, etc. have been started.
Activities such as wool dying from natural colour, use of solar energy and study of
various edible things and low -priced house building technique were carried out by the
Research Centre for Applied Science and Technology, TU. In addition, a feasibility
study for producing petrol-and diesel substitute oil from the plants available in various
parts of the country has been begun. Perspective plans on agriculture, forestry and
energy sectors have been formulated. National Agriculture Research Council has
been able to arrange abundant economic resources from international agencies donor
and various donor countries in order to encourage research. Moreover, the Council
has broadened its scope and has tried to direct its management towards autonomy. An
attempt has been made to use outreach research as an effective means to enhance
agriculture extension and participation of agriculture entrepreneurs and farmers.
During the plan period, Lumle Agriculture Centre and Pakhribas Agriculture Centre,
which have playing a leading role in agriculture service and research works in the hilly
areas in Nepal for more than two decades, have been integrated into National
Agriculture Research Council in a phase-wise manner.
Towards the development and expansion of rural and traditional technologies,
handicraft design, training on leather goods production, ceramics promotion and skill
enhancing programmes have been conducted by the Department of Small Scale
Industry. In addition, soil testing, white glaze, mosaic tile, and electric kitkat testing
have been carried out at various places. It is self evident that use of techniques in

395
rural area has possessed great importance; however, due to the low investment in
research and development, the level and the scope of such technologies have not been
broadened.
Regarding mines and geology, important works like rural survey, geological section
measurement, petro-geological sampling, regional stratography and remote sensing,
seismological network establishment, landslide inventory and slope stability mapping
were conducted during the plan period.
The Botanical Department has continued technology development works for making
various medicines from the plants available in various parts of the country. The
Department has quantitatively increased its previous works like herbal and
pharmaceutical study, chemical analysis, research on plants with scented oil, botanical
protection (plant curation, germplasm collection, ecological, anatomical study).
The Water and Energy Commission has completed the study on water utilisation of
some districts, study on ground water utilisation, preparation of energy profile, field
and area study of glacier lake. Likewise, the Department of survey has conducted
detailed study on the crystal dynamics of some places with foreign technical and
economic assistance in addition to its regular works like astrological study,
topographical map preparation, Geodetic survey, GPS (Global positioning system)
survey and Aerial photography. The development of GIS (Geographical Information
System) has been initiated by National Planning Commission and ICIMOD
(International Centre for Integrated Mountain Development).
During the Eighth Plan period, a total of 30,494 bio -gas plants were installed as against
the target of 30,000 establishments in order to produce 3 percent i.e. 72 megawatt
energy of the total capacity of 2400 megawatt bio -gas energy on the basis of the
entire existing livestock in Nepal.
Traditionally, solar energy is used to dry up some agro-product whereas it is at present
started to apply in other activities i.e. heating water, generation of electric energy
through photovoltec system, etc., The electricity generated through photovoltec system
has been utilised to pump water for drinking and irrigation purposes and also for
operating telecommunication equipment. In addition, the private sector and semi-
government agencies have been involved in the development and promotion of solar
power.
During the Eighth Plan period, a total of 1199kw (24 percent) hydropower has been
generated against the target of enhancing the hydropower capacity by 5000 kw from
the implementation of various small hydropower projects.
During the Eighth Plan period, target was set to prepare master plan and conduct
programme for the development of wind power; during this period however, no
programme could be launched. The wing power plant become closed due to technical
problems, although it distributed energy in Mustang area in the past. There is a

396
potentiality of wind power development in Palpa, Ramechhap, Karnali, Chisapani,
Jumla and Namche; nevertheless, nothing could be done to this end.
3. Existing Challenges
The target of the Eighth Plan was to increase rural economic activities by producing
electrical and mechanical energy through micro hydel power; however, due to the lack
of programmes, are faulty subsidy and policy management, even allocated budget
could not be utilised. The development of micro hydel project has negatively been
affected due to the lack of required maintenance, shortage of necessary machinery
parts, lack of evaluation and monitoring of the quality of production equipment and
plan in the running micro hydel projects. Water utilisation issues have appeared in
some micro-hydel projects. In addition, lack of necessary technical and non-technical
training for entrepreneurs of micro hydel projects has been noticed.
Bio-gas development programme has gained more popularity in rural communities;
however, it has not been able to reach the rural poor. Rural people are not getting
partial subsidy offered by HMG/N and foreign assistance. The main reasons for this
are their inability to invest the residual amount and the lack of collateral to get loan
from the banks. The appropriate returns have not been achieved from bio-gas
technology due to the lack of necessary publicity and research of bio-gas technology
development in areas with low temperature, or in cool area, and of the use of residuals
of bio-gas exultant dung.
Although there is an increase in the involvement of government sector, the private
sector and non-government organisations in the development of solar energy, expected
development in its utilisation has not been noticed due to the lack of long-term solar
energy development programme.
It is realised that the programmes for creating public awareness about bio-energy
utilisation are far short of requirement. The improved stove distribution programme for
keeping rural people healthy and reducing deforestation became inadequate, and some
lacking still prevailed even though there was a programme for providing the
information about the use and usefulness of improved stove. Due to the lack of
firewood, the use of dung and residue of bio-mass has increased including the
increment of kerosene and L.G.P. gas utilisation in the urban area.
The sources of hot water which is located at various places of the country has been
used for bathing and limited only for washing and applied for health treatment at some
places. There is a potentiality of fishing pond swimming pool construction, green house
farming, soil heating and drying of agro-residual through mobilising hot water sources;
however, no action has been taken to this end. The inventory preparation and
scientific study of hot water sources have yet to be done.

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4. Long-term Concept
Perspective plans have been formulated for the sectors like agriculture, forestry and
energy; however, macro plan for science and technology has not yet been drafted.
HMG had published a national Science and Technology Policy in 1988. The policy
stated that the development of science and technology aimed at the application of
science and technology for the overall development of the country and enhancing the
capacity for that purpose. Moreover, the application of science and technology for
national development, self-reliance and enhancing intellectual creativity has been
targeted in the policy and the priority has been set for capacity enha ncement.
The overall objective of the Ninth Plan is to bring economic prosperity to the people by
alleviating poverty; through socially and economically empowering people; bringing
them into the mainstream of development. In order to achieve this objective , targets
have been set for developing science and technology; acquiring self-reliance by
enhancing necessary intellectual creativity; ensuring proportional distribution of returns
by incorporating the achievements of the science and technology in relevant activities
of rural and deprived people; developing gradually the research sector by adopting
research as a necessary aspect in higher education; and developing small technologies
and skills prevailing in the rural area. Accordingly, the following long-term concept has
been adopted for the science and technology sector:
• The fundamental goal of the development of rural energy systems is to increase
employment opportunity which develops economic foundation and enhances rural
living standard. Environmental sustainability will be maintained in local area.
• Considering the long-term effect on the utilisation of natural resources, the
application of traditional energy sources will gradually be replaced by modern
energy.
• The necessary arrangement will be made to provide research, information flow,
training and financial services in a way to make market economy and people's
participation strong, capable and meaningful for energy development.
• The commercialisation of technology will be carried out by arranging technology
development and expansion in a planned way; and existing foreign dependence for
energy will be reduced.
Ninth Plan
5. Objective
• Science and technology will be applied in achieving national objective and
maintaining sustainability in economic, socia l, cultural and environmental
perspectives of the country.
• Traditional technology like agriculture, cottage and small industries which can
contribute to rural development will be improved, and appropriate rural technology
will be developed and transferred.
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• Advanced technology which is necessary for reducing foreign trade deficit by
exporting the goods and services having comparative advantage will be developed
and transferred.
• An arrangement will be made to comprehend usefulness of science and
technology in ordinary people, teaching and learning of science and mathematics
among students will be standardised; and research will be conducted along with
teaching and learning in higher institutions.
• A conducive environment will be created to conduct objective research on
production process; and, to this effect necessary encouragement will be provided
to research and development (R&D) agencies established in the government, the
private and the non-governmental sector, and to all scientists and technologists.
• Traditional energy sources will be supplied to fulfill household purposes, economic
and health activities and basic needs and to increase the income of the rural
community.
• Energy use efficiency will be improved by adopting new technology for rural
energy and economic development; and negative environmental effect created by
other activities will be minimised.
• Hydro and meteorological services will be expanded and upgraded.
6. Policy and Implementation Strategy
• A conducive environment for imparting standard science and technology
education at three layers of educational institutions (school, college and university)
will be created. The proportion of technical education will gradually be increased
at three layers of educational institutions with a view to link science with day to
day life. Necessary physical facilities, research environment, educational
exchanges refresher course, etc., will be properly arranged in order to make such
kind of education of regional and international standard. Students will be attracted
to technical education rather than imparting pure theoretical knowledge only. The
industrialisation and service-oriented technology sector will be expanded in order
to utilise skilled manpower thus produced.
• An improvement in endogenous and traditional technology will be made in order to
bring backward people into the mainstream of development and improve the
economic situation of agricultural, cottage and rural sectors. In order to implement
this policy, programmes for subsidy to research and development for the private
and government agencies involved in rural development, and the expansion and
dissemination of science and technology in rural areas will be increased in order to
impact new knowledge of science and technology to the rural people .
• Prior to the application of imported technology, selection process will be
practically conducted in a way to have a positive effect on such sectors as
economic, social, and cultural. While selecting the technology, attention will be

399
 paid particularly on reducing under-employment and implementing projects,
accordingly. In such a selection process, scientific and technical communities and
technology users will be actively involved.
• A policy will be adopted to increase production and productivity of one's agency
by the compulsory adoption of advanced technology in economic and social
sectors. Necessary strategies will be under taken to implement this policy
efficiently.
• Special consideration will be given to commercialise indigenous technologies
developed in various sectors as per the strategy. Regular interaction among
research agencies, higher education institutions, industry, private sector and
practitioners will be conducted in order to strengthen the identification, operation
and application of indigenous research areas; and a national level committee will
be established under the Ministry of Science and Technology with the
representation of all these sectors.
• Science and technology committee will be formed in all government and semi-
governmental agencies; and representatives from the Ministry of Science and
Technology and experts from necessary fields will be incorporated in these
committee; and the Ministry of Science and Technology will provide financial and
technical assistance to these committees.
• R&D unit in all government and semi-government agencies relating to science and
technology will be set up and established units will be strengthened.
• Business institutions will be encouraged to form such committees and to allocate a
certain percent of their profits to invest in research.
• System of developing the science and technology sectors based on R&D will be
initiated in the districts, municipalities, and VDCs.
• Drastic change will be made in the implementation process of projects run under
development budget of ministries and departments, and costing and programming
of such development works will be based on transparency established through
study and research rather than conventional basis of guess estimates.
• A national science and technology management system will be developed to
ensure efficiency and effectiveness of national investment in the area of science
and technology.
• In order to give highest priority to R&D, separate science and technology service
for personnel working in the science and technology sector will be formed; and
lateral entry system will be developed.
• Advanced technologies necessary for the export of goods with comparative
advantage will be imported from developed countries. Such goods and services
will be produced within the country by developing appropriate production
technology for bio-technology, computer software, Ayurvedic and pharmaceutical
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 products, perfumes and essential oils. Production responsibility of such goods will
be assigned to existing R&D agencies as far as possible; co-ordination will be
maintained among various agencies within the country; technology park will be
established and operated; and projects will be jointly implemented with national
and international agencies.
• Special programmes on information and dissemination will be implemented for the
publicity of research findings of science and technology. In order to implement this
policy, science information centre will be set up with the coordination of
concerned agencies; publicity will be carried out through various means; and
permanent mobile exhibitions will be organised. In addition, standard of science
and mathematics courses will be improved in curriculum and teaching method in
collaboration with the Ministry of Education and related agencies; and subsidy will
be arranged for researches in higher education under university.
• Hundred percent additional remuneration of salary will be offered to scientists and
technologists involved in R&D in order to encourage science and technology
personnel, and R&D agencies to conduct and arrange result-oriented and time
bound research independently. In addition, patent rights will be provided;
necessary recognition will be given to such scientists; and custom duties will be
exempted to research for importing research equipment.
• A twenty-year science and technology perspective plan will be formulated during
the Ninth Plan; and the period by incorporating all related aspects of science and
technology, Ninth Plan will be the part of such a perspective plan.
• Necessary institutional framework and system will gradually be developed for the
optimum development and application of science and technology.
• The Ministry of Science and Technology will maintain co-ordination among
various government, semi-government and non-governmental organisation
agencies involved in science and technology sector, and necessary assistance will
be provided to make the Ministry capable.
• Necessary strategy will be designed to control national brain drain, and adequate
working opportunity will be provided to excellent young scientists in the area of
their expertise.
• Bilateral, multi-lateral, regional and international mutual relations and assistance
will be developed in the science and technology sector.
• A guideline will be prepared for various ministries and departments, institutions,
industry and other agencies related to science and technology for the successful
implementation of science and technology policies.
• Supply of traditional sources of energy will be increased and negative
environmental impact from their use will be minimised.

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• Private sector, national and international non-government organisations will be
involved in research and development for utilising and reducing the cost of rural
and alternative energy sources and technologies. Collection of data on solar, wind
and geo-thermal energy will be made up-to-date and institutionalised through
Alternative Energy Promotion Centre. Special consideration will be given to
diversify energy utilisation in order to improve the feasibility of new energy
sources.
• Absorption of energy will be reduced by increasing the existing bio-energy
utilisation efficiency while considering the replacement time for traditional energy,
and special attention will be given to expand and promote improved stove to keep
rural environment smokeless and more healthy. Similarly, special emphasis will be
given to replace kerosene and diesel by generating micro hydel, solar and other
isolated energy generation for light and other purposes.
• Application of hydro, solar and wind energy will be encouraged to replace
imported energy through adaptive study, research and development and
commercialisation of energy technology. Educational research institutes and the
private sector will also be mobilised towards this end.
• Local energy development programme based on geographical region will be
designed for balanced and sustainable development of easily available energy and
will be implemented in some districts; a rural energy accounting system will be
introduced with this programme on an experimental basis; and a rural energy
development fund will be established for making the system sustainable.
• Necessary institutional arrangement at the central level will gradually be made to
integrate rural and alternative energy development with rural development
programme. Alternative energy promotion centre will be developed as a main
agency for the promotion and development of alternative energy sources in Nepal,
and its committees will be reconstituted and made more autonomous.
• Private sector will be attracted and encouraged to conduct study and research;
promote, disseminate, establish, operate and develop the sources and technologies
of energy (including alternative energy); and in order to connect the energy
produced from rural alternative energy with the central grids, such energy will be
purchased at a reasonable price; subsidy will be granted; and legal provisions will
be made.
7. Programmes
• Various programmes will be implemented for the application and monitoring of
science and technology and the main responsibility for conducting such
programmes will be lied on the Ministry of Science and Technology. Necessary
specialists and consultants will be appointed towards this end. An integral unit will
be created under the MOSAT to this end. This unit will carry out review of
research and development and other development-related works.

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• MOSAT will carry out rural technology development and dissemination
programmes. All the related research and development works, and propagation of
its findings will be carried out through governmental, semi-governmental, non-
governmental and international non-governmental organisations involved in this
sector.
• Advanced technology transfer and development programme will be conducted
through the agencies that are interested to produce goods having comparative
advantage, develop and transfer necessary technology for export and trade
promotion, and arrangement of subsidy will be made through MOSAT towards
this end.
• Science and technology dissemination programmes will be launched for imparting
the importance of science and technology to the public; raising the teaching
standard of science and technology in the educational institutions; incorporating
research into higher study in universities; developing information system for
propagation through newspaper, radio and television. Science village will be
established in various development regions as per requirement. Two science
Olympiads and mobile exhibition works will be organised during the Plan period.
Curriculum will be upgraded to enhance teaching standard of science and
technology in schools, and attention will be drawn towards applied science by
preparing science package materials. MOSAT will perform this work through
related agencies.
• In order to encourage institutional development of science and technology and the
scientists, necessary subsidy will be granted to reduce prevailing weakness in the
existing agencies and equipment will be arranged; and research subsidy to the
research project carried out at the personal and institutional level will be provided.
• MOSAT will draft a twenty-year science and technology perspective plan with
the massive participation of scientists and technologists of the county.
• Micro-hydel project equal to around 5,200 kw will be installed during the Ninth
Plan. Subsidy programme and necessary study, training and standarisation
programme to develop micro-hydel power will be conducted to achieve this target.
Training programme will be carried out for entrepreneurs and workers to
strengthen the micro-hydel project economically and technically. Around 93
micro-hydro electricity projects running under the Rural Energy Development
Programme of the UNDP will be operated by 2000 AD. Around 1900 kw
electricity will be generated by these projects. The research, technology
development, human resource development and people mobilisation will be carried
out under the programme.
• The exiting bio-gas support programme will be continued in the Ninth Plan. 90,000
bio-gas plants will be established while taking the Eighth Plan's achievement into
consideration. The existing subsidy for this programme will be maintained. Non-
collateral investment for rural energy development under the Rural Poor
403
 Programme as targeted by the programme will be encouraged. The rural energy
development fund will be mobilised as a revolving fund and used as collateral for
this purpose. Research will be carried out in order to produce bio-gas in the hilly
and the northern regions of the country.
• Improved stove technology will be developed and promoted with the active
participation of the private sector and non-governmental organisations. Improved
stove programme will be launched in 45 districts during the Plan period, and about
150,000 stoves will be installed. Besides, 100,000 additional improved stoves will
also be the installed by non-governmental sector.
Solar Energy
• Around 38,000 household photovoltec systems will be installed during the Plan
period at remote places that are not feasible to link with the central grid system
and to generate micro-hydel electricity. In the near future, based on the
experience, at least photovoltec energy can provide energy in such areas for
lighting purpose.
• It is obvious from the previous experience that solar dryer can be established
under the thermal solar energy programme in order to increase income for rural
communities. Since such programmes can contribute to stop the environmental
degradation, around 300 solar dryers will be installed during the Ninth Plan period.
• Special emphasis will be given to community income-increment training and
priority training necessary for making solar energy programme successful.
Similarly, solar energy data collection programme will be conducted. Based on
these data, long-term solar energy programme will be designed, and solar stove
will be expanded on the basis of study.
• The other alternative energy like wind and geo-thermal energy which seems
technically feasible but has not yet been confirmed their viability will be studied
and identified their feasibility. Some pilot projects will be operated to utilise and
expand hot water springs at some places, following the determination of
technological inventory of hot water springs of existing sources along with data
collection and mapping of wind energy for that purpose.
• Quality standard will be maintained by organising workshops on determination
quality in order to provide appropriate qualitative technology to consumers while
maintaining the quality of commercialised technologies like micro-hydel and solar
photovoltec. Similarly, programmes for cost reduction, quality enhancement and
encouragement to entrepreneurs will be operated.
• Non-collateral loan will be provided for most of the people who are unable to
utilise the subsidy for alternative energy technology in the absence of collateral.
Rural energy development fund will be created, and special consideration will be
given to mobilise local NGOs and to create income generation opportunities while
providing such loans.
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• In the hydrology and meteorology sector, programmes will be conducted to
maintain and develop water, hydrology and meteorology network; to minimise
negative economic and social impact created by natural calamities, landslides,
water and air pollution, and climate changes, etc; and to prepare various types of
data base on watersheds, water resources, meteorology and pollution in order to
make climate and flood forecasting modern, and to improve maps.

405
 Table
Ninth Plan: Alternative energy Development
Physical Target
S.No Description Unit 1997/98 1998/99 1992/20 2000/01 2001/02 Total
1. Micro-hydro
a) Micro-hydro Installation Kw 226 580 930 1530 1950 5216
b)Mini-hydro Installation Kw 0 185 333 742 740 2000
c)Micro-hydro Inventory study District 3 3 3 3 3 15
d) Micro -hydro Feasibility Study Rs in 0 2 2 5 5 14
Grant million 25 65 100 200 200 540
e)Micro-hydro Training Number 425 510 510 1900
2. f) Rural Energy Development Kw
Programme 12000 14500 17500 21000 25000 9000
Bio-mass Number 0 5 10 15 15 45
a) Bio -gas Installation District
3. b)Improved Stove
Training/Demonostration/Supervision/ 1200 4800 8000 12000 12000 38000
Technology R&D Number 30 60 60 60 90 300
Solar Energy: Number 1 4 5 5 5 20
a) PV System Installation (Frdy 36/50 District 4 6 8 10 12 40
4. peak) District
b)Solar Dryer Installation(3 sq.m) 0 0 1 2 2 5
5. c)Solar energy Data Collection and Disatrict 0 1 1 1 0 3
Mapping Number 0 0 0 1 1 2
6. d) Number
Training/Demomonstration/Technoligy 0 2 2 2 2 8
R&D Number 0 2.5 2.5 2.5 2.5 10
Other Alternative Energy: Rs in
a) Wind Energy Data Collection and million
Mapping
b) Geo-thermal Inventory Study
c) Geo-thermal Pilot Project
Quality Determination
Workship/Seminar/ Research
Rural Energy Development Fund

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 Social Service and Social Security
13.1 Education
1. Background
Education plays a prominent role in creating patriotic, disciplined and productive
manpower. Educated manpowers are precious assets as well as agents for advancing
the nation. Multid imensional development and progress of a country depend upon the
education policy adopted by the country. In this context, ever since the establishment
of democracy in 1950, various attempts have been made to move educational
programmes forward and make them comprehensive in a planned way, in line with
democratic norms and values, based on the demand of time and aspirations of people.
Education in the Ninth Plan has remained a main policy for utilising education as an
effective means to poverty alleviation and all-round development. Moreover, special
emphasis will be given towards availability of equal opportunity in education;
improvement in qualitative standard; enhancement in internal and external capability;
and making education development-oriented.
2. Review of the Eighth Plan
The achievement of targeted programmes in the Eighth Plan was satisfactory. The
progress made in the education sector during the Eighth Plan period is presented in
the following table:
Description Target Progress
Net Enrolment Percentage of Children in Primary Level 90 69.4*
Additional Primary Schools. 2025 3524
Additional Primary Teachers 8000 14883
Enrolment Percentage of Children in Lower 45
Secondary and Secondary level.
Lower Secondary. 50.3
Secondary. 34.7
Additional Teachers 5404
Lower Secondary 6699
Secondary 4796
Additional Schools 900
Lower Secondary 1461
Secondary 824
Higher Secondary Schools 125 213
Student Number 40,000 21,048
Literacy Percentage of Informal Education. 60 48.00**
Appointment of Women Teachers 5100 4150
Technical Education :
Regular Training 2595 2274
Short-term Training 2034 6709
Universities - 5
Affiliated and own campuses of Tribhuvan University - 166
∗ Net enrollment percentage in totality
∗∗ Literacy percentage in totality

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On primary education sector during the plan period, net enrolment of children
between 6 to 10 years of age was targeted to make 90 percent with the establishment
of 2025 additional primary schools and the appointment of 8,000 additional teachers.
According to the statistics of 1996, 3524 additional primary schools were established
and 14883 additional teachers were appointed and net enrolment percent stood at
69.4. In lower secondary education sector, the Plan aimed to make education facility
available to 45 percent children of 11 to 15 years of age, and set a target to establish
900 additional schools and appoint 5404 additional teachers. However, at the end of
the Plan, 1461 additional schools were established; additional 6699 teachers were
appointed; and children enrolment percentage on lower secondary was 50.3. In
secondary education, 824 additional schools were established, 4796 additional
teachers were appointed; and net enrolment percentage was 34.7.
In higher secondary education, a total of 213 higher secondary schools were in
operation by FY 1996/97 as against the target of conducting higher secondary
education in 125 high schools of the country during the plan period. In the front of
student enrollment, a total of 21048 students enrolled against the target of 40,000.
Considering the fact that illiteracy constitutes a main barrier to the development of a
country, a target was set to make literacy rate 60 percent and implementation literacy
programme as national campaign. During the Plan period, the government and non-
government literacy programmes increased the number of literate people by
13,06,000 and the literacy of population of 6 years or above in the country was
estimated to have remained 48 percent.
Basic and Primary Education project was implemented with the objective of
improving the quality of primary education. During the Eighth Plan, this project
conducted pre-primary classes in 588 schools of 40 districts of Nepal with the
objective of decreasing class dropout in primary level. This project provided in-
service training to 91,963 teachers; established 661 resource centres; and constructed
395 resource centre buildings under the institution development programme. This
project also constructed 12,192 new classrooms, 15 District Education Office
buildings and renovated 6,019 classrooms. In line with the policy of giving priority to
the appointment of women teachers in primary school and the objective of appointing
compulsorily at least one woman teacher in primary school 4,150 women teachers in
each primary school were appointed.
During the Plan period, primary education development project set a target to
establish 9 primary teacher's training centres in nine parts of the country. The project
achieved this target and the training centres conducted training programmes. It
provided training to 17,265 primary teachers. Secondary Education Development
Project has been implemented with the objective of enhancing the quality of
secondary education. This project, during the Plan period, conducted training
programme to the secondary school teachers on English, Mathematics, Science and
Nepali. It also revised curriculum and textbooks and reformed examination system.
In the area of technical education and vocational training, four new technical schools
were targeted to establish, and technical schools in Doti, Banke, Dang and Mustang
districts of the country were established as per the target.

453
The Technical School and Vocational Training Centre, which works under Technical
Education and Vocational Training council, set target to provide regular training to
2,595 teachers and short-term training to 2,034 teachers. It provided regular training
to 1,274 teachers and short-term training to 6,709 teachers.
During the Plan period, Kathmandu University and Eastern University have been
established and are in operation. Similarly, Pokhara University has been proposed to
establish. During the Eighth Plan period, the number of universities has reached to 5
including Tribhuvan University and Mahendra Sanskrit University and a total of 166
campuses have been functioning under Tribhuvan University; among them, private
campuses are 135 and campuses under Tribhuvan University are 61.
3. Existing Challenges
The education sector faces various problems. Basic education is not still available to
all people. More than half of the population is illiterate. Quality of education from
basic to higher level has not improved as expected. Educational programme lacks
equal gender participation. Internal and external capacity of education system from
basic to higher level is not encouraging. Educational management has not become
strong. Education sector has been unable to get spontaneous and result-oriented
public participation. Syllabus and textbooks have been integrated with development
needs and made mutually inclusive at different levels of education. Cost recovery
concept has not been really implemented in higher education. Specially, in primary
schools in the rural areas, teacher's attendance is low. School has not become a centre
for attraction. Teacher's training has not been made effective. Specially, in remote
areas, education materials like textbooks have not been distributed in time.
The vocational and technical education provided in the secondary to higher level has
not been fully integrated with the process of economic development in the country.
Students coming out from exit point at each level of education have not been
developed to fulfill the manpower requirement for the development needs of the
country.
The achievement of research and development programme in the education sector has
not really been utilised. No step is found to have undertaken for making sustainable
and result-oriented programme in the education sector. Thus, problems of the present
education system can be stated as follows:
Pre-primary Level:
• Lack of resources to provide opportunity of pre-primary education in all over the
country.
• Lack of capability to prepare efficient teachers to provide pre-primary education.
• Lack of capability to arrange education materials to conduct pre-primary
education programme.
• People’s participation has not been made result oriented.

454
• No particular attention has been paid to make programme effective in line with
the achievements of innovative work performed in pre-primary education.
Primary Level :
• About 31 percent of children of primary school age have not enrolled in schools.
• Attendance of children in schools is particular is low.
• Children of weaker section, schedule caste, backward group and people living in
remote areas are deprived of the opportunity for getting primary education.
• Dropouts and repetition in primary level remains still strong.
• External and internal efficiency of primary education is not encouraging.
• Attendance of teachers in primary schools particularly in the rural areas is not
satisfactory.
• Defects still exist in making syllabus career -oriented.
• Achievement of projects implemented in the primary education sector has not
been institutionalised.
• Lack of reform for improving the quality of education as expected.
• Education management has not been decentralised due to the lack of people's
participation in the qualitative improvement of primary education, guardian's
interest in children educational achievement and dynamic role of social service
agent and concerned agencies.
• Lack of effective supervision of primary school, monitoring of school
programmes, and student evaluation.
• Lack of solid promotive measures for making accessible and availability of
primary education.
Secondary Level:
• Syllabus has not been revised in accordance with social, economic, technical and
political context, and lack of effort to make it timely.
• Lack of comprehensiveness in teacher training programme.
• Lack of effectiveness in supervision of secondary schools.
• Lack of qualitativeness in student learning achievement.
• Local people's participation in school management in most places has not been
made active.
• Programmes necessary for making management aspect fruitful, such as
guardian’s involvement in school programmes, concern of local bodies, social
interest, etc have not become spontaneous; and the belief that school management
is only the government responsibility is widespread among people.

455
• Decentralised management aspect has become a secondary matter.
Higher Secondary Level:
• Higher secondary level (10+2) has been set as the last point of school education;
however, the present structure of higher secondary level remains at diverse forms.
• Management of higher secondary education has not been made clear, capable,
effective, decentralised and contribution oriented.
• Mapping and substantive bases needed to promote higher secondary school have
not yet become up to date.
• Most teachers of higher secondary level are under qualified and un-trained.
• Ambiguous policy about teacher's professional security, career development,
permanency, salary and other benefits has created a confused situation between
teachers and management.
• Necessary physical facilities are inadequate to conduct higher secondary level
education.
• Higher secondary level syllabus has failed to produce necessary manpower to
fulfill the development requirements of the country.
• Weakness in textbook preparation and distribution has appeared.
• Weaknesses still exist in making examination system decentralised, systematic,
scientific and effective.
• Though policy was adopted to consider higher secondary education as an
extended form of secondary education, its organisational and management
aspects have not been modified accordingly.
• There is no planning about infrastructure; teacher and financial arrangement
needed to transfer proficiency certificate level to higher secondary level.
Higher Education:
The Ministry of Education has limited control over universities. The existing
inequality between school education and higher education has not helped to develop
interrelation among syllabus, examination, enrolment policy and financial
arrangements. Tribhuvan University has become centralised. Its educational and
administrative management aspect is weak. Problems existed in higher education can
be pointed out as follows:
• Almost all the financial burden of T.U has been borne by the government. No
steps are found to have undertaken towards cost recovery. Effective programmes
have not been conducted for taking economic benefit through the mobilisation of
fixed and current assets of universities.
• Campus and research centres are not financially autonomous; and active steps
have not been undertaken to fulfill this need.

456
• No active effort has been made to produce manpower as per the need of
productive sector through the interaction and cooper ation of the sector for the
formulation and implementation of necessary curriculum.
• Lack of effective involvement of teachers in teaching activities, limited efforts to
increase the quality of higher education.
• Lack of study and research oriented education for students for getting new
knowledge.
• There is the concept of regional university on the one hand and the attitude for
developing major campuses under Tribhuvan University as one university on the
other.
• Lack of awareness in converting existing technic al institutions into Technical
University.
• The reasonable task of providing autonomy to efficient and capable self-sufficient
research centres, campus, institute under T.U. have not been actually
materialised.
• Situation has been created to take the responsibility of conducting 7 years of
higher education by TU until proficiency certificate level is converted into 10+2
level.
• Late publication of results of the examination conducted by T.U. has made the
whole academic year of students a waste.
Technical and Vocational Education. :
• Lack of harmonization in the production of basic, medium and higher level
manpower in accordance with the pace of economic development.
• Technical and vocational education has not been made easily available at the
local level in order to produce needed manpower according to local development
needs.
• Technical and vocational education could not be extended to upgrade the skill of
local artisan and occupational group.
• Lack of coordination between the programme of Technical Education and
Vocational Training Council and the programme for technical and vocational
education conducted by the private sector in the balanced production of
qualitative and competitive manpower.
• Technical education and vocational training programme could not be
implemented in a cost effective manner.
• The process of adjustment in the syllabus of technical and vocational education
could not be performed effectively as per the demand of production sector.
• In order to produce basic and medium level manpower, technical and vocational
education could not be extended to the local level.

457
• Reputed private education institute could not be attracted to conduct technical and
vocational education programmes in different parts of the country.
• Institutional capacity of Technical Education and Vocational Training council
could not be increased.
• Labour Management Information System could not be systematically developed.
Education Administration:
The participation and the role of community and those directly interested in the
education sector have become secondary matter due to the state control in planning,
organisation, management, financial liability and different activities for education
system. There are separate agencies for formulation and implementation of
educational planning and programme, development of syllabus and textbooks;
supervision and monitoring, teacher management, training and school administration.
However, activities of these agencies have not been conducted relatively in a co-
ordinated manner. Regional Education Directorate and District Education Offices
have failed to provide effective educational leadership.
Examination:
Result of SLC examination is not much encouraging. SLC examination is conducted
by SLC Board and higher secondary level examination by Higher Secondary
Education Council. Examination is conducted at the central level; therefore,
examination control office is under heavy pressure for holding examination.
Objective of student is limited more to pass examination by memory than to know the
actual meaning of textbooks. Decentralisation process for conducting SLC
examination has already been initiated; however, Regional Education Directorates
have not been made capable of taking this responsibility effectively.
Educational Project:
Programmes of Higher Education Projects, Secondary Education Projects, Basic and
Primary Education Project and Primary Education Projects for education
development have been implemented in parallel with the programmes of various
agencies within the regular educational institutional structure-Particular strategy has
not been designed for eventually institutionalising the activities of these projects.
Financial Arrangement:
Government is bearing heavy financial burden in the education sector. Co-operation
of concerned persons, participation of people and contribution of community are
necessary to bear the increasing cost in education. However, encouraging
achievement has been made in this direction.
School Mapping:
It is appropriate to establish schools on the basis of school mapping; however, there
has been no analysis of different studies already done in this field, and school
mapping has not been given continuity in an effective way.

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4. Long-term Concept
Emphasis will be given to develop and implement those significant educational
programmes, which make education time relevant as well as research-oriented,
scientific, creative, productive, and technology oriented. Educational institute will be
developed as a centre of excellence; internationally competitive manpower will be
produced. To achieve this objective, modern and scientific technology will be used in
classroom teaching technique. Computer will be used extensively to create the
capacity of adapting new knowledge developed in the international field.
Basic education will be made easily available to backward class, schedule tribes and
people living in remote areas, deprived and socially marginalised communities from
education; these people will be integrated with the main stream of national
development. Syllabus will be reformed according to internal and external conditions;
and syllabus of different education levels will be made mutual reinforcing. In order to
prevent educational unemployment, context focused and development based
education will be developed.
In fiscal year 1996/97, enrollment percentage of children in primary education was
70; at the end of the Twelfth Plan the target is set to make it cent percent. Likewise,
enrolment percentage of children going to lower secondary and higher secondary
education age group will be made 85 and 75, respectively. Percentage of literate
person of 6 years or above age will be made 70 percent at the end of Ninth Plan and
hundred percent at the end of the Twelfth Plan. Educational activities will be
conducted with the objective of making it qualitative, time relevant, and career-
oriented. Unequal gender participation in education sector will be addressed.
Technical and vocational education will be developed and extended effectively; and
special emphasis will be given to produce basic , medium and higher level manpower
in the country. In this context, recognised foreign education institutes will be
encouraged to establish their affiliated institutes in Nepal by providing them various
facilities.
In the international context, a new system has been developed to bear the burden of
educational cost by the production sector by conducting programmes reflecting the
need of the production sector in the operation of higher education. Mutual
relationship between university and industrial institution has also borne significant
economic burden for the formulation and implementation of higher education
curriculum. Taking this reality into consideration, an emphasis will be given to bear
economic cost of higher education by isolating from the system of depending upon
government grants only to ensuring cost recovery system, people's participation,
private sector for long-term resource mobilisation for higher education. Open and
technical universities will be established at the national level in order to achieve the
objectives of making higher education available on the basis of social demand and
development oriented, and developing scientific education technique.
Ninth Plan
Polices will be adopted to develop education as a fundamental means for alleviating
poverty and bringing substantial improvement in the standard of livings through

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socio-economic well-being, and achieve national progress through the proper
development of human resources. The education sector policies will aim to prepare
patriotic citize n conscious and loyal to democratic values, capable, productive,
disciplined, responsible to human right and social values; make primary education
gradually compulsory; conduct literacy programme as a national campaign;
emphasise qualitative development of secondary education; fulfill the short of supply
of basic and medium level skilled manpower through comprehensive extension of
technical education and vocational training facilities; extend higher-level technical
education to supply high level technical manpower; upgrade the quality of education;
increase women participation in education by extending and making accessible
women education; and provide education to disabled, backward and weaker sections
for bringing them into the national mainstream.
The Ninth Plan has been formulated in the light of achievements made in the
education sector; existing problems; provision about education in the constitution of
the kingdom of Nepal 1990; and national long-term objective and target of the
education sector. While focusing on the long-term objective of education to make
primary education easily available to all children of primary schooling age and make
all people literate at the end of the Twelfth Plan period special emphasis will be given
to the development and extension of basic and primary education. The education
sector in the past has made substantial progress; however, the quantity of education
has not been developed as expected. In this context, it is highly essential to give
emphasis on such factors that play an effective role in enhancing the quality of
education, such as teacher's training; reform in physical facilities of schools; timely
revision of syllabus and textbook; regular and effective supervision system; and
regular and effective examination.
5. Objective
• To develop education as an effective means for human resource development
which is indispensable for overall national development and poverty alleviation.
• To prepare citizen conscious of and devoted to democracy, individually capable,
productive, disciplined, responsible to human right, social liability and sensible to
nationality.
• To make primary education easily accessible to people and conduct programme
for making primary education gradually compulsory.
• To expand gradually secondary and high er secondary education in line with the
development need of the country.
• To conduct literacy programme as national campaign by making it skillful,
knowledgeable and information oriented.
• To supply basic and medium level technical manpower by extending
opportunities for technical education and vocational training.
• To extend higher technical education for the supply higher level technical
manpower.

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• To expand opportunities for and accessibility of women education for enhancing
gender equality in education.
• To provide educational opportunity to disabled, backward ethnic tribes and
deprived sections of people living in remote areas and bringing them into the
national main stream.
Educational Level-wise objectives:
Pre-primary Education: To expand the opportunity of this level of education, to
create an interest for education to the children of 4-5 years and make them capable of
enrolling in primary level through the medium of educational and recreational
activities.
Primary Education: To make primary-level students capable of simple reading and
writing, and handling ordinary daily account; develop them to cultivate a habit to be
clean and healthy; and generate a feeling of patriotism in them.
Secondary Education: To prepare students with knowledge and skill neces sary for
the study in higher secondary level; to inculcate a positive feeling about work; to
make them conscious and devoted to nation and democracy, committed to productive
work; to make them aware of environmental conservation; to develop in then a sense
of complying with moral decency and social and cultural values and norms; and to
discharge the duty of self dependent citizens.
Higher Secondary Education: To prepare students capable of contributing as
creative and productive medium level manpower for the overall development of the
country; having faithfulness as possessed by the conscious, self dependent and
patriotic citizen; and acquiring knowledge and skill needed to study at the graduate
level.
Higher Education: To develop academic sharpness at this level of students and the
quality and capacity needed for intellectual development; discharge social
responsibility, performing the role of skilled manpower for the overall development
of the country; and create the quality as possessed by conscious, self dependent,
capable and patriotic citizen.
Technical and Vocational Education: To produce basic, medium and higher level
technical manpower needed for the all-round development of the country.
6. Target

1 Pre-primary education To conduct Pre-primary 10,000

classes
2 Primary Education:
a. Net student enrolment percentage increase to 90
b. Primary School add 3,000
c. Primary Teacher add 15,000
3 Lower Secondary Education:
a. Easily student enrolment percentage increase to 55

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b. Lower secondary school add 1,500
c. Lower secondary school teacher add 6,000
4 Secondary Education
a. Easily observable student enrolment increase to 45
percentage
b. Secondary School add 2,000
c. Secondary school teacher add 8,000
Higher Secondary Education: To establish 758 higher secondary schools and raise
easily observable student enrolment percentage to 60.
Training: To provide in-service training to 5000 primary teachers, 10000 lower
secondary teachers and 5000 secondary teachers; and provide training to 2000 higher
secondary teachers.
Technical Education: To provide regular training to 4995 people and short-term
training to 20000 people from the Technical Education and Vocational Training
Centre.
Higher Education: To ascertain structure of student participation in higher education
in accordance with the pace of development of the country.
Informal Education: To make 70 percent of the illiterate people of 6 years and
above age literate.
7. Policy and Implementation Strategy
• An emphasis will be given to increase equal participation in education by
providing free access of education to deprived people inhabited in the remote
areas and backward communities.
• Pre-primary classes will be conducted by involving local elected bodies and
community.
• Basic and primary education will be made available as per the need of gender
equality, to weaker section, ethnic tribe and community deprived of education
opportunity. A specific emphasis will be given to develop qualitative aspects of
this education.
• In the context of making the existing free primary education programme
compulsory, it will be extended on the basis of the study on the experience of
implemented areas.
• Necessary steps will be taken to provide primary education in national languages.
• Literacy programme will be conducted as national campaign with involvement of
national and international non-governmental organisations, local elected bodies
and local community. Inter-relationship between literacy and basic primary
education will be established; and an access will be provided to literate children
to enter in to formal education.

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• Physical, human and educational infrastructures will be strengthened with the
active participation of community.
• Accessibility of lower secondary and secondary education will be gradually
extended; opportunities for education at these levels will be regionally balanced;
quality of education will be upgraded; and an improvement in internal and
external capability will be made.
• Human right education will be gradually included in syllabus from the lower
secondary level. Materials, which increase social and ethnic harmony, will be
incorporated in textbooks.
• In order to make teaching profession more respectable and responsible, reforms
will be carried out in aspects like appointment, evaluation, promotion and career
development of teachers. Professional aspects of education will be strengthened
through the medium of training; promotional programmes will be conducted to
create motivation, commitment and self-confidence towards their profession.
• Management, monitoring, supervision and evaluation system will be strengthened
at each level of education.
• Syllabus, textbooks and education system will be timely and appropriately
reformed.
• Secondary and higher secondary education will be integrated into a single
management system. Local school management will be made capable of fulfiling
effectively educational and economic responsibility and taking active leadership
in school management through the use of necessary training and action-oriented
strategy.
• Higher secondary education will be accepted as school education, local needs and
regional balance will be taken into account for its extension; and special emphasis
will be given to the mobilisation of national and international resources for its
strengthening an d quality enhancement. Grant will be provided on the basis of
student capability and the need for school operation.
• Policy of conducting career carrier-oriented education programme will be
adopted to increase the participation of weaker section and ethnic tribe in
secondary and higher secondary education; gender equality will be maintained,
Technical/vocational/skill education and training programme will be made
employment and income oriented. Policy will be adopted to formulate and
implement such types of education from secondary to higher education level. For
this purpose, polytechnic schools will be operated under short-term and long-term
programmes in order to produce basic and medium level skilled manpower. To
make programme of private sector technical school useful, Technical Education
and Vocational Training Council will be strengthened for ensuring effectiveness
in syllabus formulation, trainer's training and evaluation system.
• During the Plan period, proficiency certificate level programme currently
conducted at universities will be adjusted in a phase-wise manner in the structure

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 of technical and higher secondary school; and education programme will be
conducted in line with the objective of such institutions and schools.
• Higher education will be made more systematic, competitive and standard.
Universities will be established in all five development regions in accordance
with multiple university concept in order to fulfill national and regional needs.
For this purpose, a University Establishment and Implementation Co-ordination
Committee will be constituted with the representation of NPC, Ministry of
Education, Tribhuvan University and University Grant Commission.
• With a view to supplying high level technical manpower necessary for the
country, Agriculture and Forestry Universities will be established and other
technical universities will also be established on the basis of feasibility study.
• Only the Government cannot bear the financial burden of higher education;
therefore, policy will be adopted to share the cost by students of higher education;
receive community contribution; and get cooperation from those concerned with
higher education. Moreover, arrangement will be made to provide scholarship
and education loan to the poor and talent students.
• Preference will be given to academic, knowledgeable, scientific and basic
technical research in higher education. Necessary mechanism will be developed
to extend and utilise knowledge and skill gained from the study and research to
the concerned sector.
• The policy of providing cooperation to universities based on the capacity of
government will be maintained in order to build physical, human and appropriate
education infrastructures.
• With a view to ensuring the quality of higher education, University Grant
Commission will determine criteria for grant; steps will be taken to determine
grant on the basis of whether universities comply with such criteria or not; His
majesty's Government will adopt the policy of providing amount of grant to
University Grant Commission; and the Commission will undertake the policy of
allocating the amount of grant following the set criteria for grant
• A Policy of conducting open university, open secondary and high secondary
school will be adopted in order to extend the opportunity of secondary, higher
secondary and higher education, and to ensure cost effectiveness in higher
education.
• Special education programme will be strengthened and conducted for providing
opportunity of literacy and higher education to physically and mentally disabled
and intellectually retarded groups. Policy will be adopted to encourage national
and international non-government organisations and local community
participation for the development of special education.
• Education opportunity will be made easily available and scholarship will be
provided to children of backward ethinic tribe and oppressed class.

464
• Training will be provided to teachers through distance education and other
appropriate means. All primary teachers will at least be provided with basic
training opportunity. Short-term and refresher training programme will be
conducted to upgrade teacher's teaching capability.
• Policy of balanced distribution of financial and other resources between school
education and higher education will be adopted in practice by identifying
appropriate balancing technique.
• A clear policy will be adopted about cost bearing at different level of education
by different concerned people without obstructing the private sector to participate
in education.
• Policy of encouraging private sector will be adopted to make meaningful
participation in education management by re-evaluating the role of the private
sector and formulating necessary regulations. Schools conducted by the private
sector will be brought in the policy framework and policy will be adopted to
inform all concerned sectors about the academic, financial and physical
programme of private schools.
• Policy of decentralising education management will be effectively undertaken in
practice in order to increase the active local participation in management and
operation of education institutes, and improve their capability.
• The activities of the projects implemented in the process of developing education
quality will be institutionally integrated will the structure of the Ministry, and the
organisation structure of the Ministry will be improved to increase its capacity.
• Policy of information management system and library development and
strengthening will be formulated and implemented in a phase-wise manner for the
development of educational communication and information.
• Special emphasis will be given to formulation of appropriate education policy,
selection and implementation of appropriate education programme for formal and
informal education.
• Effective policy measures will be adopted to extend accessibility of women in
education in order to increase equal gender participation in education.
• Policy will be implemented to invest certain share of gross domestic product in
the education sector for making the sector durable, sustainab le, continuous and
unobstructed. Amount of investment capital will be determined on the basis of the
identification of education programmes and agencies that should receive priority
within the education system.
• Higher education policy will be formulated on the basis of the necessity of
manpower to agriculture, industry and commerce sectors. Education policy will
be modified on the basis of the recommendations to be received from the High
Level National Education Commission.

465
• The existing anomalies and weaknesses in syllabi of school and higher education
will be addressed; syllabus of one level will be made consistent with another
level; and syllabus will be revised in line with the need of national and
international changed context. Textbook distribution system will made simple
and efficient by resolving existing problems. Extensive study on liberal
promotion policy in primary level classes from level one to three will be made;
and this policy will be tested on pilot basis in some places.
8. Programme
Pre-primary education:
Effective operation and management of pre-primary or nursery classes contribute to
minimise the tendency of class dropout and class repetition in pre-primary level,
which in turn help to minimise the wastage of investment in the education sector and
increases its efficiency. Therefore, the Eighth Plan has adopted a policy to encourage
local elected bodies and people participation for conducting pre-primary and nursery
classes. In the Ninth Plan, 10,000 such pre-primary classes will be conducted. Basic
facilities, such as buildings and teachers needed to conduct classes, will be provided
by local community. Basic and Primary Education Project will provide technical
cooperation such as necessary education materials, teacher's training for school
operation.
Primary Education:
Programme will be conducted to make primary education qualitative and gradually
compulsory. Primary level syllabus will be revised and reformed as necessary.
Continuous evaluation system for students will be gradually implemented. Liberal
promotion policy to upgrade from class 1 to 3 will be experimentally implemented in
some places. In order to fulfil the objective of easy availability of textbooks, free
textbook distribution system will be made simple and efficient. Preliminary works
will be carried out to provide primary level education in various mother tongues.
Examination system reform programme will be conducted by preparing question by
expert and conducting examination on the basis of special working chart at the
primary level. Basic training will be provided to all primary level teachers.
Basic and Primary Education project has been implementing currently in 40 districts
of the country with the objective of increasing the quality of primary education.
During the Ninth Plan period, second phase of the project will be implemented all
over the country. National criteria for primary education will be prepared for
increasing the quality of primary education and bringing gradual change in school
education environment Partic ular operation of school for at least 180 days in a year
will be made mandatory and regular attendance of teachers and students will be
ensured. Considering decentralisation as fundamental principle for effective
management and implementation of primary education, arrangements will be made to
involve guardians, local elected body and people in the programme formulation,
implementation, monitoring and evaluation. In the process of extending physical
facilities to schools during the Ninth Plan, 19000 additional class rooms will be
constructed; 10000 schools will be renovated; 1,000 additional resource centres will

466
be established; 500 resource centre buildings will be constructed; and additional 2000
women teachers will be appointed. Almost all municipalities and 10 percent village
development committees of the country will be given responsibility to conduct and
manage primary schools established in their areas.
Informal Education:
Illiteracy has remained a barrier to the overall development of the country. Ther efore,
with the objective of removing illiteracy as soon as possible long-term national target
has been set to make literacy rate 100 percent at the end of the Twelfth Plan. In order
to achieve this objective literacy programme will be conducted as a national
campaign. During the Ninth Plan period, a target has set to make 32,16,000 illiterate
adults and 7,84,000 children outside the school literate and to make 70 percent of
population of 6 years and above age literate. In the process of achieving these targets,
policies will be adopted to extensively conduct adult and children literacy
programmes; emphasise women education by reducing literacy difference between
men and women from 30 percent to 20 percent; conduct education programme giving
preference to the areas where difference in geographical situations exist and where
literacy rate is low; and conduct post literacy and continuous education programme as
an integral part of informal education. Net literacy progress will be counted on the
basis of evaluation of those participants who are involved whole time in literacy
programme. Emphasis will be given to research and extension aimed at making the
literacy campaign effective.
Literacy campaign will be conducted in the form of a strategy to eradicate illiteracy of
target population of selected areas during a specified period. Such campaign will be
time bound, selected area-focused and result-oriented. In the initial stage, such
campaign will be conducted in small areas (one or some districts) on the basis of
geographical situation and will be gradually extended. While selecting such area,
activeness, commitment and participation of District Development and Village
Development Committees of concerned areas will constitute the main basis.
Training to people involved in informal education programme will be
institutionalised. National Informal Education Council will activate non-government
organisations to conduct literacy campaign in different areas by preparing literacy
mapping at district and village levels and collecting information about the number of
national and international non-government organisations, and club which are involved
in informal education programme. Emphasis will be given on such aspects as
extensive publicity for literacy campaign and action oriented post literacy
programme.
Lower Secondary and Secondary Education:
In order to develop and extend lower secondary education, improve the quality of
education; and increase internal and external capability and this level, professional
commitment of teachers will be strengthened; an emphasis will be given to teachers
training; and improved inspection, monitoring and evaluation system will be adopted.
New syllabus and textbooks will be applied in lower secondary and secondary
education. Arrangements will be made to make the teachers' manual available for all

467
classes; and various education materials will be developed and distributed.
Monitoring and reform programme will be conducted to make student evaluation
process effective. Arrangement will be made to prepare standard question papers for
annual examination by the subject matter specialist based on the specialisation chart.
Secondary education will be gradually expanded; and an emphasis will be given to
increase its quality. For this purpose, Secondar y Education Development Project
being implemented for making education management strong and efficient will also
be continued in the Ninth Plan. Activities of this project will be carried out in line
with the objective, policy and targets set in the Second ary Education Perspective
Plan. During the Ninth Plan period, 15000 teachers of lower and secondary level will
be trained on English. Science, Mathematics subjects, and 25 science education units
will be established in different districts under this project. These programmes will be
gradually monitored for ensuring their effectiveness.
Various promotional activities will be conducted to develop mutual relationship
among school, local community and guardian; create an awareness of community and
guardian towards school; and make the school perform the role of getting community
cooperation for regular and effective management of lower secondary and secondary
schools.
Higher Secondary Education:
The objective of higher secondary education (10+2) is to prepare conscious and self-
dependent citizens in the form of productive and creative manpower to help the
overall development of the country; and also to prepare students ready for graduate
level study. The Long-term goal of this level of education is to develop higher
secondary school as a centre for academic excellence.
In the process of transferring proficiency certificate level gradually to school level
during the Ninth Plan period, necessary arrangement will be made to transfer
technical aspects of the programme to technical institutions under the Technical
Education and Vocational Training Council and other programmes to higher
secondary schools. For this purpose, coordination among Tribhuvan University,
Higher Secondary Education Council and Ministry of Education will be maintained to
move the programme forward. Syllabus and textbooks of higher secondary level will
be revised. Financial resources allocated to teacher's training by the Secondary
Education Project will be mobilised and expended on those programmes as approved
by Higher Secondary Education Council. Arrangements will be made to reform
physical infrastructures of higher secondary schools and provide training to teachers.
In order to arrange necessary infrastructure for the transfer of proficiency cert ificate
level to higher secondary school and to strengthen academic aspects, necessary
resources will be mobilised.
During the Plan period, additional higher secondary schools will be operated, and
easily observable student enrolment will be made nearly 70 percent. Affinity to
higher secondary school will be provided on the basis of school mapping and local
needs. Moreover, programme will be conducted to make syllabus of higher secondary
education timely, contextual and work-oriented; to increase women participation; to

468
carry out regular monitoring for effective management of higher secondary school;
and to make evaluation system effective. Since higher secondary level is an important
part of education system, a policy concept will be made clear for strengthening
academic and technical aspects in its effective operation. Management system of
higher secondary education in particular will be integrated with the secondary and
higher secondary levels. For this purpose concerned Acts will be amended on the
basis of the need of the productive sector and appropriate vocational syllabus will be
implemented for the students of higher secondary level.
Management committee will be activated to mobilise local participation for the
management of higher secondary schools. School will be oriented towards to self-
sufficiency by conducting preference for establishing mutual relation and cooperation
between the school and community in order to increase their mutual contribution to
education.
Technical Education and Vocational Training:
Basic and medium level manpower will be produced for different development
programmes implemented in various parts of the country. Physical, human and
financial resources will be mobilised at the local level in order to establish training
centres for the operation of technical training and vocational education. During the
Plan period, currently running technical institutions will be strengthened in a why to
be appropriately cost effectiveness. For this purpose, Technical Education and
Vocational Training Council will identify similar training programmes provided by
the private sector training institutes; co-ordinate with these institutions; and play an
active role in mobilising and managing resources.
Technical Institutions, currently functioning and to be established during the plan
period, will produce nearly 5000 basic and medium level manpowers. Various
technical and vocational training centres will provide short-term training to nearly
20,000 people.
Basic and medium level technical manpower needed to carry out the Ninth Plan
programmes will be managed to produce as required. Short-term training will be
provided to village and local people to make them capable of implementing basic
development programmes for their areas. Arrangement will be made to establish
effective coordination between government and non-government technical and
vocational training institutions and necessary steps will be taken for their
standardisation and certification. Necessary technical assistance will be provided to
standard technical training centres, which are already in operation or intend to
conduct training in the private sector. Similarly, Technical Education and Vocational
Training Council will be encouraged to establish training institutions in the private
sector and will provide possible technical assistance for their development. Necessary
steps will be taken to establish polytechnic schools with a view to supplying medium
level manpower needed to implement local level development programmes. Internal
and external resources will be mobilised to conduct these schools. Community
development and vocational training centre will be gradually extended. In order to
help for development and extension of technical education, training for technical
trainers and the task of updating their knowledge will be effectively implemented.

469
During the Ninth Plan period, vocational and technical programme currently running
at the certificate level under Tribhuvan University will be gradually transferred to
Technical Education and Vocational Training Council. Policy aspects of Technical
Education and Vocational Training Council will be made transparent for
systematising all these programmes.
Special Education:
The Constitution of the Kingdom of Nepal 1990 states that education, health and
social security policy shall be adopted for the protection and progress of disabled and
handicapped people of the country. In this context, gradual development of special
education programme is an important need of the present situation for mobilising
country’s internal resources and means, and the assistance received from donor
agencies in order to fulfill Nepal's commitment on the protection and progress of such
people at the national and international level.
Disabled People are the target group of special education progarmme; therefore, they
are classified as physically disabled, retarded, deaf and inattentive hearing, blind and
low sight power, learning disability or inability, difficulty in sound, language and
communication ability, and multiple disability. Special education in the Ninth Plan
will be developed as an integral part of education for all. For this purpose special
education will be gradually implemented in those areas or districts where compulsory
primary education programme is currently in operation. Syllabus of special education
from primary level to higher education will be revised as necessary. Brilliant disabled
students will be provided with the opportunity for higher education. Special education
programme will be developed in the form of integrated and inclusive school
education programme by determining and making available syllabus, textbooks, and
other education materials and instruments and their free distribution will be arranged
as necessary. Scholarship will be arranged for brilliant disabled students to provide
them an opportunity for higher education. At present only 1 percent of disabled
children are getting training and education opportunity; therefore during the plan
period, five percent of disabled children will be provided education and training
opportunity by integrating and conducting teachers training and development and
extension of education for all programmes. So far there is no institution to provide
education and training to multiple disabled children; therefore during the plan period,
currently running special schools of five development regions will provide education
and training to multiple disabled children. In every district where special education
programme is intended to implement, manpower will be prepared to examine and
evaluate disablesness of children. Training centre will be established in each
development region. Special informal education will be made work oriented and
gradually extended.
Curriculum and Textbooks:
Efforts will be made to achieve national and level-wise objectives of education
through syllabus, and syllabus will be gradually revised according to the demand of
changing situation and time. During the Ninth Plan period, primary curriculum and
textbooks units under Basic and Primary Education Program will be merged into
curriculum development centre. Process to revise the curriculum of primary education

470
will be initiated; and continuity will be given to revise and standardise textbooks.
System of continuous evaluation of student will be gradually implemented. Free
distribution of textbooks will be made simple and effective. Authority will be
delegated to schools for choosing any one textbook prepared on the basis of revised
curriculum, and this will be experimentally implemented in some districts.
Arrangement will be made to prepare question paper for annual examination of
primary level by the expert of concerned subjects based on specialisation chart.
New curriculum and textbooks up to class ten of secondary level will be gradually
implemented. Teacher's guidebooks for all classes will be gradually prepared, and
arrangement will be made to sell them. All primary works will be done to provide
instruction and consultation service to students. Arrangement will be made to develop
and distribute education materials. Student evaluation procedures will be made
effective by implementing necessary programmes.
Information related to negative outcome of intoxicating drug addiction, its abuse and
control procedure will be included in the content of lower secondary and secondary
school curriculum. To fulfill the changing need of time, science and computer
education will be given special place in school level curriculum. Effort will be made
to relate one level of curriculum with another level by addressing lacuna presently
existed in level-wise school curriculum. Important aspects of human development
such as human right, environment conservation and gender equality will be included
in secondary level curriculum.
Programmes will be conducted to develop human and physical resource and
management aspects of curriculum development centre for scientific and systematic
management of syllabus and textbooks. In this process, research, monitoring and
evaluation section will be established in Curriculum Development Centre.
Women Education:
Various programmes have been implemented with the objective of easy accessibility
of primary education to girl child; increasing enrolment number of girl student;
encouraging maximum number of educated women to adopt teaching profession; and
encouraging maximum number of girl students to complete their secondary level
education. During the Ninth Plan period, these programmes will be made more rapid
and programmes like women teachers training and scholarship distribution will be
conducted.
In order to increase women participation in education, targeted programmes for
women will be conducted during the plan period. Arrangement will be made to
appoint at least one woman teacher in every primary school, and preference will be
given to the appointment of woman teacher in lower secondary and secondary
schools. Subject contents reflecting gender inequality will be removed from
curriculum and training materials of school education. Monitoring and evaluation will
be systematically carried out effective operation of women education programme.
Local elected bodies will be involved in the development, publicity and extension of
women education. Arrangement will be made to provide reward to the schools, which
increase the number of girl enrolment and maintain enrolment sustainability without

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dropouts. Income-oriented skill development programme will be conducted for
women participants under the Informal Education Programme. Training in effective
teaching techniques will be arranged for women teachers at schools.
With the objective of bringing women into the mainstream of development, as they
constitute half of the population in the country, scholarship programme has been
conducted for girl student in each level and area of education in order to increase
girls' participation in education. During the Ninth Plan period, scholarship will be
made available to girl students of 65 districts on quota basis, and to all enrolled girl
students of 10 remote districts as follows.

S.No. Scholarship Programme Girl Students to be Benefited within

5 Years
1 Primary School Scholarship. 162,404
2 Local Scholarship. 58,041
3 Campus Scholarship. 2,376
4 Upgrading Scholarship. 1,804
(Doti, Accham, Bajhang, Bajura, Jajarkot, Dolpa, Jumla, Humla, Kalikot and Mugu
are identified as 10 remote districts of Nepal.)
Lower Caste Student Scholarship Programme:
Children various lower caste group inhabitants in Nepal, such as lower castes and
backward ethnic tribes people like Dom, Chamar, Mushahar, Dushadh, Raute,
Bhagad, Satar, Dhima, Sarki, Damai, Kami and so on will receive Rs. 25 a month up
to 10 months scholarship to encourage their children to admit to and study in the
schools. During the Ninth Plan period, this quota will be increased to nearly 4,40,000
scholarships.
Primary School Nutrition Programme:
Primary school nutrition programme has been running in 8 districts of the country
since the late years of the Eighth Plan. This programme has been implemented with
the objectives of increasing the number of student enrolment in primary education by
arranging lunch to boys and girls student; maintaining and reforming the attendance
of children and minimising their attitude of class dropout; increasing daily attendance
rate, class pass-out rate and reforming nutrition and health of students. The Ninth
Plan has set a target to make nutritive food available to four additional districts, with
low primary school enrollment ratio and food deficit, and to 2,50,000 children of
primary schools of 12 districts in total. Moreover, target has been set to distribute
anti-worm drugs and publication of health related educational materials in order to
increase the knowledge of the local community on health and nutrition.
Nutrition Programme:
Nutrition education is important to upgrade children’s living standard by improving
their nutrition condition. Children’s nutrition status may improve only if necessary
knowledge and skill required for proper food habits are provided with. Most of the

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villages in Nepal, children of school going age have become the only educated
member of the family. Therefore, the message about nutritious food provided to them
may contribute to raise the living standard of whole family.
In the Ninth Plan training on nutrition will be provided to different trainers,
supervisors, teac hers, guardians and students. Likewise, programme will be
conducted to create community consciousness through information flow and
knowledge promotion through posters, chart and audio-visual aid.
Population and Health Education:
Under the projects to be conducted for the purpose of creating awareness among
people about the problems arising out of population growth, health education
curriculum will be included in textbooks of school education, higher education, and
adult education during the Plan period. Teacher's training programme will be
conducted in the area of population education. Besides this, special education
programme for population and health education will be implemented for women
community; and public awareness will be created through the means of information
and communication.
Monitoring, Evaluation, Education Statistics and Reform in Education
Management:
During the Plan period, monitoring and evaluation system of education programme
will be made effective, education information management system in the Ministry of
Education and other educational agencies will be strengthened; and education
information system will be reformed and developed.
Organisation structures of education will be reformed and school inspection and
supervision system will be made effective. Education plan formulation process will
be reformed on the basis of decentralisation policy. Participation of private sector,
local community and local elected bodies will be increased in school management.
Since school management committee is an integral part of school management,
training programme for capacity development will be conducted to make this
committee capable of providing effective leadership to school management.
Higher Education:
During the Ninth Plan period additional education institution and universities will be
established only if their particular needs in the parts of the country are identified as
essential. Emphasis will be given to increase the quality of higher education and
expansion of technical higher education. With a view to supplying high level
technical manpower required for the country. The agriculture and forestry and other
technical universities will be established on the basis of feasibility study. For this
purpose, present structure of education institution will be thoroughly studied and
possibility of developing these institutions as university will be ascertained.
Encouragement will be given to the persons and agencies directly concerned to the
education sector with a view to minimising pressure on governm ent resources and
means and to increasing the participation of the private and non-government
organisations in the process of developing higher education. Policy of opening up an

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Open University will be implemented to extend the opportunity of higher education
on the basis of cost effectiveness.
The role of University Grant Commission will be made more effective in making
higher education qualitative; and maintaining and promoting university and higher
educational institutions in a coordinated manner. Institutional aspect of the
Commission will be strengthened; clear policy to establish universities in future will
be formulated; and appropriate process will be determined. Policy and process will be
clearly determined to provide government grants to universities, and grant will be
distributed on the basis of determined policy. Minimum quality of different levels of
higher education will be activated and determined and monitoring system for
ensuring minimum quality will be maintained to make higher education of
international standard. Priority will be given to well-known and best foreign academic
institutions showing an interest in conducting Nepal chapter for providing an
opportunity of international education in Nepal. Since autonomy does not mean only
exercise of power, the Ninth Plan will therefore, adopt a policy of making universities
and higher educational institutions financially autonomous as well as more
accountable and responsible.
Policy and Programmes of Universities:
Policy:
With a view to making higher education more systematic, standard and competitive,
and fulfilling the needs of higher education in national and regional level, a policy
was adopted to establish one university in each development region. In line with this
policy, Eastern and Pokhara University was established. The Ninth Plan will develop
these two universities as regional university and existing campuses in those areas will
be brought under these respective regional universities.
• With a view to fulfilling the shortage of higher level technical manpower in the
country, Agriculture and Forestry University will be established. On the basis of
viability and necessity, other technical universities will also be established.
• Policy will be implemented to bear the cost of higher education by its
beneficiaries; people participation will be increased; and non-government
cooperation will be sought for cost sharing in higher education with the
government. Provision of loan and scholarship for brilliant and poor students will
be made.
• Policy for providing assistance to universities in creating physical, human and
appropriate educational infrastructures as per the capacity of the government will
be maintained.
• Policy of establishing Open University will be adopted in order to extend higher
education opportunity on a cost effective basis.
• University Grant Commission will be strengthened. Policy will be adopted to
distribute grants received from the government to higher educational institutes on
the basis of criterion set by the Commission. The role of Grant commission will
be made effective in order to maintain the quality of higher education.
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Programme:
University Grant Commission: University Grant Commission was constituted in
1994 under the University Grant Commission Act, 1993 with the objectiv es of
maintaining coordination between universities and higher educational institutes
already established and to be established; appropriately distributing grants provided
by government; and providing qualitative education by setting criteria for maintaining
standard higher education. Process has already been initiated to discuss grant budget
during the Plan period and provide grants based on the approved budget. The
Commission will specially pay attention to conduct programmes for the evaluation
and monitoring of university programme; provide grant on the basis of set criterion in
order to upgrade the quality of higher education; and operate other programmes for
improvement.
Emphasis will be given to institutional development of the Grant Commission in
order to make the role of the Commission more effective and promote and serve
university/ higher education in a coordinated way for qualitative higher education.
Besides, following policies and programmes will be implemented as well:
• To formulate clear policy and determine, an appropriate process for establishing
universities in future.
• To determine clear policy and process and initiate to distribute government grant
to different universities accordingly.
• To strengthen "Quality Reform Programme" of the Commission and make the
programme more effective in order to contribute quality reform of higher
education for providing high quality education of international standard.
• To arrange international cooperation and scholarship/fellowship for the
development of higher education.
• To formulate and implement policy for making university/higher educational
institute autonomous and more accountable and responsible.
• To make the concept of regional universities clear and take necessary steps for
systematic and effective management of higher education from the financial and
educational point of view.
• To strengthen the University Grant Commission Secretariat.
• To perform an active role in arranging physical facilities to universities.
Tribhuvan University:
By the final year of the Eighth Plan or FY 1996/97, a total of 166 campuses have
come in operation under Tribhuvan University, in which 61 technical and general
institutes and 135 affiliated private campuses are included. The five technical
institutes include Engineering, Agriculture and Livestock, Medicine, Forestry, and
Science and Technology whereas the four general institutes encompass Law,
Management, Education and Humanities and Social Sciences. According to1995/96
statistics, it is estimated that total of 133,521 students are currently studying in

475
campus. Among them, 16,045 are getting technical education and 117476 are in
general institutions. There are 30 central departments in Tribhuvan University.
Besides this, its four research centres such as Centre for Economic Development and
Administration, Nepal and Asian Research Centre, Applied Science and Technology
Research Centre and Education Development and Research Centre are currently
under operation. These research centres have been performing research and study
programme on the subject and area of their concern.
With the policy of increasing the capacity of producing medium and high level
manpower on agriculture, medicine, engineering, forestry, and science and
technology within the country, and increasing the quality of teaching and learning,
Bachelor of Veterinary Science and Animal Health programme has already been
started, and infrastructures have been built for conducting master 's programme in
Agriculture Science.
In medical science, Master's degree in Nursing, and, under engineering institute,
Master level programmes have already been conducted. Higher Education Project and
Engineering Education Development Project are under implementation in order to
increase the quality of higher education and strengthen physical infrastructures.
With the objectives of providing standard higher education for producing necessary
skills for the overall development of the country; conducting research in various
educational and academic fields; conserving and developing national cultur e and
tradition and making knowledge and research on Art, Science, Technology and
Commercial extensive, practical and time relevant, Tribhuvan University will adopt
the following policies during the Ninth Plan period:
• Taking national requirement into consideration, quality of teaching and learning
of agriculture, medicine, engineering, forestry and science and technology will be
upgraded, and to prepare high level technical manpower within the country
during the plan period, preference will be given to the promotional work of
national technical capacity.
• Emphasis will be given to include curriculum and research in the programmes of
institute, campus and research centres in a way to increase the quality of higher
education and fulfill the requirement of overall development.
• An emphasis will be given to conduct additional new programme for technical
higher education on the basis of people's participation.
• Teaching and learning in institutes and campuses will be made regular by pre-
determining entrance date, schedule, teaching period, and examination date and
accordingly programme implementation will be made effective. One academic
year will be determined which will include a minimum of 180 working days as
per the international practice.
• Continuity will be given to time-relevant programmes like curriculum revision
and changing the name of education departments; higher education will be made
more standard, competitive and qualitative.

476
• The relationship with national and international universities and educational and
research-oriented institutions will be strengthened; and area for mutual
cooperation will be extended.
• Management of university will be modernised and will be made more effective.
• Self-development and promotion of teacher and employee will be made scientific
and simple. Minimum qualification of teaching in university will be increased.
• Teaching and learning activities for students will be made effective and
personality of students will be made complete through conducting various
programmes for physical, mental and intellectual development.
• National consensus will be developed to strengthen academic environment in
university.
• During the plan period, proficiency certificate level programme will be phased
out from university.
• Fee structure of university will be made timely and reasonable.
• Scholarship programme for poor and brilliant students will be arranged and
student loan will be provided through the mobilisation of own resources of
universities.
• Research centres of university will be made self-dependent during the plan
period. Similarly, campuses under university will be encouraged towards
becoming self-dependent.
• University will adopt a working policy of generating additional income by
mobilising its own resources.
• Autonomy will be provided to campuses and institutes on the basis of their
capacity. Programme for decentralisation will be extended to increase working
efficiency of educational agencies.
• Campuses running under Tribhuvan University will be merged into the
University established as a regional university in the respective regions.
Engineering Institute:
This institute has been producing medium and high level technical manpower in the
engineering sector. In the Ninth Plan, Ph.D. programme, master level programme in
electrical, electronics, mechanical, civil, architectural engineering; programme in
technical, water resources, environment and village infrastructure and graduate level
programme in computer engineering will be started in Pulchowk Campus. Graduate
level curriculum of chemical engineering and geo-structure and Master level
curriculum in village energy will be designed. Preparation will be made to begin
graduate level programme in Eastern, Western and Thapathali Campuses. Regular
course fee will be amended and sponsored course will be commenced while taking
into consideration to cover nearly 4.5 to 20 percent of total cost. In this context,
principle of equality will be adopted. Special emphasis will be given to mobilise

477
internal resources. Preference will be given to promote national technical capacity by
expanding research and development activities. Applied research and development
centre will be strengthened.
Agriculture and Veterinary Science Institute Programme for producing Master level
manpower in the agriculture sector will be implem ented during Ninth Plan period. In
line with national agriculture research policy Agriculture Research Directorate of the
institute will be coordinated with Nepal Agriculture Research Council. Agriculture
Education Extension Directorate will be established to identify agriculture problems
through research, and make solutions available to farmers. During the Plan period,
programme for medium level manpower production such as B Sc Ag, BV Sc and AH
will be strengthened.
Post graduate hostel, veterinary students hostel and laboratory, and veterinary, and
teaching hospital will be constructed in order to conduct aforementioned programmes
effectively. Co-operation will be obtained to purchase necessary scientific and
educational instruments.
Institute of Medicine:
Report of National Education Commission 1992 has suggested to run graduate and
post graduate programmes only at the Institute of Medicine; however, until other
institutes become capable of conducting proficiency certificate level programme in
nursing, radiography, pharmacy, health lab, the institute has set a target to continue
these programmes.
In the Ninth Plan, Teaching Hospital under Tribhuvan University will provide health
services on heart by-pass surgery, cancer radiation therapy, kidney transplant and
nuero-surgery and C.T. Scanning. Ganesh Man E.N.T. and Neck centre will be
established in cooperation with Katmandu Metro Politian Town Committee. Day care
centre will be started for drug-abusers in the building being constructed by the
Ministry of home. Health Learning Material centre, BP Kiorala Opthalmic Center,
and Department of Medical Science, which were operated since the Eighth Plan, will
be strengthened. Programmes of M.N. Nursing and B.N. Nursing courses, which have
been functioning since the Eighth Plan, will be strengthened and steps will be taken to
conduct B.Sc. Nursing programme. Among 21 departments in the central campus of
this institute, 9 departments are already running Master level programme; additional
Master level Programme in Pediatric and Psychiatric will be commenced. Steps will
be taken to gradually conduct Master Level Programme in remaining 10 departments,
considering the availability of technical manpower in concerned subjects.
Necessary physical structures will be created to develop overall aspects of Ayurved
(Herbal medicine) campus. Field Training Center, BP Kiorala Ophthalmic Studies
Center, and Health Learning Material Center will be strengthened. Mental Health,
Medical Education and Cornell Eye Infection projects will be continued.
Infrastructure requirements of Cancer Radiation Therapy Center will be gradually
fulfilled.

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Institute of Forestry Science:
This institute will produce efficient manpower necessary for protecting wildlife for
the promotion of national interest, land conservation, forest conservation, soil and
land utilisation. Besides, certificate and graduate level will be strengthened and
Master's level programme will be conducted in Pokhara campus during the Ninth
Plan period. G.I.S. and arboretum will be established in Pokhara campus. Physical
facilities required for Phokhara campus will be developed. Music cum library and
documentation centre will be conducted in Hetauda campus. Appropriate lab, for
graduate level will be strengthened. Physical infrastructures will be created for dean
office and private quarter.
Science and Technology Institute:
During the Plan period, necessary arrangements will be made to fulfill necessary
skilled scientists and technical manpower by increasing educational capacity of
campus and central education departments. Programme will be conducted to
gradually implement additional programmes and subjects of national need.
Certificate Level Programme:
Certificate level programme will be conducted in higher secondary level during the
Plan period.
Graduate Level Programme:
Graduate level programme will be conducted in Bhaktapur Campus, Padma Kanya
Campus, Surya Narayan Satya Narayan Marvaita Yadav Campus and Hatisar
extension campus in Dhankuta districts of Nepal. Laboratory will be strengthened in
those campuses where a 3-year graduate level programme is running. Training will be
provided to upgrade teacher’s educational standard. Facilities will be extended and
additional subjects will be introduced, on a regional basis and graduate level
programme in Environment Science, Computer Science, BioTechnology,
Biochemistry, Material Science, Analytical chemistry will be conducted if their
curricula have already been prepared.
Post Graduate Level Programme:
New curriculum of post-graduate level will be prepared and introduced for students
who passes a three-year graduation programme. Post graduate level education
programme will be introduced in Mahendra Nagar, Nepalgung and Butwal, and
additional post-graduate level programme in chemistry, physics, geography,
microbiology will be started in Biratnagar, Janakpur, Pokhara and Katmandu. Ph D
Program will be systematised. M.Phil programme will be introduced in mathematics,
chemistry and physics for enhancing university teacher's standard. Post-graduate
programme will be commenced in mountain risk engineering.
Technology Education:

479
Laboratory will be strengthened for making Food Technology programme standard
and graduate level programme in Dairy Technology, and M.Tech in food Science will
be introduced.
Institute of Law:
During the Plan period, programme already running under this institute will be
strengthened and Ph.D. programme will be introduced; and a special emphasis will be
given to promote higher education on the basis of people's participation an d regional
need of the country. Human Right Research Center under the Institute of Law will be
established. Additional subjects in L.L.M. will be introduced and arrangements will
be made to establish International Study Center.
Institute of Management:
The Institute of Management under Tirbhuvan University has already been producing
medium and high level manpower in management and concerned subjects. During the
Plan period, various programmes will be designed such as curriculum of B.B.A.,
M.B.S., M.B.A., M.P.A., and Ph.D. course will be revised. Graduate level curriculum
in Hotel Management and Tourism Management will be developed. Library and
computer facilities will be developed in campuses under this institute. Seminar will
be organised and training classes will be conducted to increase the qualification of
members of this institute. Development programmes for managers of the private
sector will be conducted. Research programme will be conducted to make curriculum
and education materials useful for case study and teachers' teaching guide.
Curriculum for post-graduate level will be prepared and introduced for students
completing a three-year graduation course.
Institute of Education: During the plan period, physical education will be extended as
special subjects to all campuses, where M.Ed. programme is conducted. Under this
programme, population and environment education will be strengthened and
continued as additional specialised subjects, and math, science, English as specialised
subjects in M.Ed. and three-year graduation level. It is necessary to produce high
level experts and teachers to make special education programme timely and
continuous; and physical and educational facilities will be arranged for making
special education programme useful. It is important to give due importance to
teachers training to provide standard, reliable and quality education to children. In
this context, Children Study Center will be established to conduct research in these
aspects and this Centre will be effectively managed. One year B.Ed. programme will
be conducted in Dadeldhura campus. Besides, a study will be conducted to establish
additional campus in Far-western region. Teaching of informal education programme
will be made effective by involving indigenous organisations. Post-graduate
curriculum will be reformed and revised and introduced to those students who have
completed a three-year graduation course.
Institute of Humanities and Social Sciences:
Emphasis will be given to subject matter-oriented research and academic programme
in order to strengthen programme conducted by this institute. Relation with foreign
scholars contributes to academic upliftment. Therefore, an interaction programme

480
with foreign scholars will be conducted during the Ninth Plan period. M Phil
programme will be conducted on subjects already running under this institute.
Research will be conducted on national history, culture, language and different castes
and tribes. Post-graduate programme will be conducted in journalism, philosophy,
strategic studies and library science.
Economic Development and Administration Research Center (CEDA):
The Research centre will give emphasis to continue the programmes for action-and
policy-oriented research and appropriate training programme as conducted in the past
plans. In order to achieve its objectives during the Ninth Plan, the Research Center
will concentrate on research and study in planning and fiscal policy, village
development, population and human aspects, management system and administration,
environment and resource management, women and development and action-oriented
research.
Nepal and Asian Research Center:
This centre, by maintaining coordination with education departments in research, will
conduct programmes intended to get more benefit and promot e manpower. Visiting
foreign scholars will not be limited only in centre, and emphasis will be given to
make them work in the campus outside the valley. Agreement will be made with
additional foreign universities on research in mutually beneficial areas and, resources
received through such agreement will be utilised to increase physical facilities and
publication. In publication sector, excellent and necessary hand-scripts in National
History Project will be re-evaluated and gradually published. In addition, standard
reports on anthropology, sociology and political science will be published both in
Nepali and English language. In this process, policy will be adopted to make Center’s
main publication standard and extensive in the world market. During the Ninth Plan
period, seminar, discussion and interaction programmes will be conducted at least on
current political and social issues. Scholars and publications will be exchanged with
organisations and centres of SAARC countries with similar objectives.
Applied Science and Technology Research Center:
This centre in the past has conducted research on food processing, fiber development,
natural dye, development of low cost construction materials, development of natural
production, development of alternative energy, appropriate income-oriented
technology and modernising local technology. Additional research work on
agriculture and environment development will be conducted. Necessary works will be
carried out to implement research findings, which will be extended to local level.
More and more students will be involved in research works during the plan period for
doing M.Sc. and Ph.D in science and technology and thereby contributing to the
production of required manpower in the field of science and technology.
Education Development and Research Center:
This centre will conduct relevant educational research and promotive activities
focused on poverty alleviation and children’s physical and intellectual development
and appropriate to increase the quality of informal, pre-primary, secondary and higher

481
education. Research publication, educational reports and data will be kept up to date
and the Center will develop reliable education information system to make these data
easily available to concerned people and agencies. Programmes like educational
research, training, seminar, workshop, educational publication with be conducted
during the Ninth Plan period.
While conducting educational research, training, seminar and other promotive
functions during the Ninth Plan period, the Center will take cooperation and service
of experts from different educational institutes, campus, research centre and other
related agencies. The Center will construct office building with its own resources.
Research findings will not be kept inactive. Rather, with extensive discussion, these
findings will be made useful for educational upliftment. By increasing and extending
working scope of various research centres, they will be geared towards resource
generation, and grants from the university to these centres will be gradually reduced.
Higher Education Project: Higher education project has been running with the loan
assistance of the World Bank with the objective of developing higher education. This
project will conduct various programmes such as reform in curriculum and
examination system, management and operation of 'management information system'
and arrangement of physical facilities in order to increase the quality of higher
education.
9. Institutional Development
The work for establishing education management information system (EMIS) will be
completed and education administration will be reformed through this system and
other media.
• Regional cluster development stage I + II + II will be completed during this
Plan period.
• Proficiency certificate level will be phased out during this period.
- Physical Reform:
Construction will be completed in the second phase.
Scientific and educational instruments will be arranged.
Electricity distribution and maintenance work will be completed.
Drinking water distribution work will be completed.
Other maintenance works will be completed.
- Educational Development:
Entrance examination will be introduced in all the departments and
programmes of Tribhuvan University.
Reform in examination will be continued.
Reform in curriculum will be continuing.
- Cooperation in higher secondary education reform.

482
In the Eighth Plan, curriculum has already been developed in 23 subjects of higher
secondary education. During the Ninth Plan period, curriculum for remaining subjects
will be developed and introduced.
Kathmandu University: Considering the contribution made by Katmandu
University in the development of Nepal's higher education, efforts will be made to
obtain cooperation from this University in order to achieve set objectives of higher
education.
Mahendra Sanskrit University: During the Plan period, one campus will be
established in each zone of the country. Sanskrit school will be opened in each
district. Ayurved Teaching Hospital established in Dang district of Rapti zone will be
strengthened. Yoga training centre will be extended. A study centre will be
established to study Budha philosophy, ancient books and ancient economics;
Sanskrit language training centre will be established. Physical aspects of the
University will be strengthened. Higher level karma-kanda class will be conducted
Eastern University: In the Plan period, Eastern University will be converted into
Regional University and it will be strengthened. Its academic programmes will be
extended. Necessary reform s will be made in the management aspect of the
University and emphasis will be given to the development of qualitative higher
education.
Pokhara University: Pokhara University will be extended as Regional University of
the Western Region. During the Ninth Plan, infrastructures for the establishment of
university will be prepared and it will be operationalised.
Agriculture and Forestry University: A feasibility study will be conducted to
develop existing structure of Agriculture and Forestry Institute into an Agriculture
and Forestry University. If it is felt necessary to open a new separate university,
preliminary works will be carried out in this regard. Infrastructures for establishing
the university will be systematised.
Open University: Feasibility study for establishing Open University will be
conducted, and infrastructures will be arranged for its operation.
Education Policy Implementation Arrangement:
• Role of the Ministry of Education will be centred on policy making, plan
formulation, monitoring, supervision and evaluation.
• School education implementation will be made effective by establishing
Departments of Education.
• Role of Regional Education Directorate will be more concentrated on monitoring,
supervision and coordination of examination progarmme.
• School inspection system will be made effective and district resource centre will
be strengthened.
• Local elected bodies will be involved in the formulation and implementation
education programme in accordance with the principle of decentralisation.

483
• Emphas is will be given to mobilise local resources for maintaining the quality of
education.
• Literacy programme will be implemented as a campaign by mobilising
government and non- government agencies.
• Compulsory primary education will be implemented gradually in 22 districts.
• Secondary schools will be increased to a minimum number and emphasis will be
given to strengthen existing schools.
• Programme will be conducted for bringing higher secondary education within the
structure of secondary education.
• Arrangement will be made to provide grants to universities through University
Grant Commission on the basis of set criteria.

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 13.2 Culture

1. Background
All aspects of Nepalese lives such as lifestyles, traditions, languages, costumes and
dresses, arts, customs and mores, religions, philosophy, etc., render vitality to
Nepalese culture. Architecture, painting, sculpture and crafts as well as historical and
archaeological sites constitute the Nepalese cultural heritage. Profuse varieties of life
styles, arts, languages, dresses, festivals, religious fairs, musical instruments, music,
dances, etc., scattered throughout the country are the integral part of our culture. The
memorials and stone records, which are maintained to make such cultural heritage
eternal, reflect the contemporary living standard. Nepalese cultural heritage as such
has presented in the form of human quality and characteristics like high morale,
etiquette, social discipline, good character, artistic efficiency, and internal purity.
2. Review of the Eighth Plan
Archaeology:
The preservation campaign for culture heritage of Katmandu valley under the
auspices of UNESCO has not gained momentum, though periodic evaluation has been
done several times. With the cooperation of H.M.G./Nepal and German Government
and people's participation, preservation of monuments, management of drinking water
and sewerage, afforestation and environment reform programmes in Swayumbhu
areas have registered a satisfactory progress and these programmes are currently in
operation. Preservation work for Patan Palace Square has been completed and Patan
Durbar Museum has already been established and operated.
With the cooperation of Nippon Institute of Technology, Japan and German
Government, Ivawahi and Lampati’s audience hall mad e by Bahadur Shah has been
renovated. Brick pavement work at Patan Durbar square has been completed and
renovation of Jagannath and Hari Shanker Temple in Ikhalakhu has already been
completed. Detailed scientific survey of Sundarichowk yard of Patan Palace,
Mulchowk, Taleju and Degu Taleju Temple has been completed with the cooperation
of UNESCO. With the financial cooperation of Bhaktapur Development Project,
German Government and local people's participation, preservation and renovation
works for monuments renovated by HMG and other monuments have been carried
out.
Survey of bronze and stone water spouts of Katmandu valley has been completed.
Work has been completed to renovate the historical Gorkha palace and the lower
Gorkha palace, improvement of late King Prithivi Narayan Shah statue area,
construction of road and sewerage in the market and palace area and construction of
stairs in accordance with Gorkha Palace Area Preservation master plan. Panauti
Integrated Project has conserved and renovated 55 monuments like Indreswor
Mahadev Temple, rest house, and inns, stone water spouts and schools. Noticeable

485
progress has been made in the construction of Banepa-Panuti road, sewerage and
bridge and so on.
Among the monuments included in the World Heritage sites, master plans have been
prepared for Patan Durbar square and Pashupati area, but those of Bhaktapur Durbar
square, Hanuman Dhoka Durbar square and Boudhnath area have not been
formulated. Strategies could not be designed to survey and record areas of
archaeological, historical, religious, cultural and artistic importance and the classified
preserve monuments at the national and local level.
Culture:
The Royal Nepal Academy has performed its functions in line with the goal of
developing Nepalese literature and culture. Culture Corporation has conducted
training programme in music, dance, performing arts and has also been performing an
important role in the development of folk song and dance by organising national
cultural festival. With the objective of demonstrating life styles, costumes and food
habits of ethnic tribes a concept has been developed to establish ethnic tribe museum
at the public level. For this purpose, land acquisition has already been completed.
3. Existing Challenges
Exploration and research of our cultural heritage have not been performed as needed.
Existing cultural heritages are being degraded or deteriorated due to the lack of
proper care, maintenance and preservation. In a multi-lingual, multi- ethnic, multi-
cultural country like ours, traditional indigenous cultures representing dress, festival,
religious fair, music, dance, language are on the verge of extinction. Western culture
is enormously encroaching upon our culture and its originality is being eroded.
In order to utilise the Nepalese natural and cultural heritage for domestic and
international tourism, pilgrimage, and for the development of employment oriented
industry and trade, the process of making adequate investment for heavy
infrastructure is still at initial stage. Cultural heritage and natural resources have not
been fully utilised for national income generation.
Nepalese stone and metal sculptures are characterised by original features in the
entire South and East Asia. Efforts made so far are not sufficient for the institutional
development of handicraft industries. Although Lumbini is the main pilgrimage place
for Buddhists all over the world, its development works have yet to be completed as
per the master plan.
Lumbini, Pashupatinath, Swayambhu, Muktinath, Halesi, Sworgadwari, Baraha
Chhetra, Pathivara, Janakpurdham, Rishi Keshab, Balmiki Ashram, Dev Ghat,
Tribeni are sites of religious, cultural and historical importance and also holy
pilgrimage places for all religious follows of the world. Infrastructures have not been
developed in a way to preserve develop religious tourism or pilgrimage.
Guthi (land trust) is managed to conduct religious activities; as these land trusts are
not appropriately operated, this has made a negative effect on the worship of
enshrined deities, management of religious ritual. For these reasons, such land trusts
have not been conducted in a traditional manner and Guthi arrangement has been

486
slackened. Towns and markets are established in the land of Dev Guthi, Raj Guthi;
revenue generated by these land trusts is insufficient and this state of affairs has
stopped regular worshiping. Temples and monasteries are gradually collapsing. Some
of these monuments have already been extinct and others are in the process. Money
offered by devotees in temple and monastery at main pilgrimage sites are not properly
utilized. Income generated through these has not been used for the maintenance of
these sacred places.
Precious idols and records of temples, monasteries, religious rest houses are on the
verge of destruction and are being gradually destroyed. Nationwide inventory of such
idiots and records could not be conducted and prepared. Even survey could not be
conducted on these precious heritages.
Slackness in production of traditional the construction materials which are needed for
the preservation of monuments and monument areas have made these materials
expensive and there by the preservations works have become sub-standard; skilled
craftsmen of traditional metal craft and painting are switching over towards others
modern professions. This has made standard cultural preservation difficult and
traditional construction materials have become rare. Likewise, no system of
documenting the design and map of traditional technology has been established yet;
therefore, traditional technology is being almost extinct.
4. Long-term Concept
• To explore, research, preserve and maintain physical and live heritage of Nepal
which is a multiethnic, multilingual and multicultural country; conserve them as
national heritage; and mobilise them as a source for increasing employment and
national income.
• To mobilise Nepalese cultural heritage as a main source of foreign exchange
earning and make local people directly benefit from cultural tourism.
• To ensure a sustainable management and preservation system for maintaining
special characteristics of monuments of world heritage and other sites of national
importance.
• To preserve life style, dress, cultural tradition, dance, music, language, script of
different ethnic tribes, and to establish museums for preserving them.
• To establish an open museum in Katmandu valley in a way to demonstrate entire
cultural traditions of the valley.
• To identify the cultural heritage of the country as a symbol of glory for Nepali
people.
Ninth Plan
5. Objective
• To conserve cultural, religious and historical sites, and develop them for tourist
attraction.

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• To develop arts and crafts as industry for creating additional employment
opportunities and contributing to the economic development of the country.
• To provide national and international recognition to profession also of literature,
arts and culture and protect their intellectual property.
• To earn international fame by maintaining originality of cultural heritage sites
both proposed and included in the w orld heritage list.
• To institutionalise heritage conservation works on the basis of income generation
and to manage them gradually at the community level.
• To preserve and conserve language, literature, arts and culture of various castes
and ethnic tribes.
6. Target

• Archeological study, research and excavation. as necessary

• Infrastructure development of Lumbini Area To complete
• Preservation of historical, archaeological and religious sites as necessary
• Establishment of museum based on genre and site 10

• Community cultural centres 75

• Regional cultural centres 2

• Audio-visual, electrification programme for monuments and 3

preserved area
• Establishment of Academy based on genre 2

7. Policy and Implementation Strategy

• Adequate publicity on cultural heritage in the national and international arena will
be carried out; and archeological survey, exploration, excavation and preservation
of possible sites will be carried out.
• Preservation of monuments of national and international importance will be
carried out on a priority basis.
• Industries will be encouraged to produce traditional construction materials for the
repair, maintenance and preservation of monuments.
• Policy will be adopted to develop literature, art and music in a way to encourage
famous artists, musicians and litterateurs and provide inspiration and training to
new genius.

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• Cultural specialty of different ethnic tribes, language, customs and traditional
mores will be preserved as integral part of the Nepalese culture.
• Approved standard will be enforced with a view to preserving and maintain
originality of the monuments included in the World Heritage list.
• Policy will be adopted to mobilise local and community cooperation, secure
active participation of municipality and village development committees and
utilise fees and donations realised in such places in a systematic way in order to
preserve important heritage, monuments and religious sites.
• Private sector will be mobilised to strengthen the institutional aspect of cultural
heritage conservation.
• Policy will be adopted to co-ordinate with the tourism sector for the effective
utilisation of cultural heritage for tourism purpose.
• Policy will be adopted to preserve originality of Nepalese life styles, arts and
crafts, dance, and music and promote them as tourism attractions.
• Policy will be adopted to develop historical, archeological, cultural, religious
sites, caste, and dress, life styles and cultural tradition as tourism infrastructure;
and conserve environment in protected monument areas.
• Scientific technology and geo-physical survey will be conducted for the survey of
historical, archaeological monument sites in Nepal.
• Monuments areas included in a world heritage list and other monuments of
national importance will be preserved on the bas is of set standards and
appropriate institutional mechanism will be created in a way to secure people
participation for their management.
• Guidelines will be prepared to involve local elected bodies in the preservation of
local monuments and monument sites. Records of local monastery, temple;
religious rest houses, public inn, memorial buildings, ponds, idols, stone water
spouts, historical and cultural monasteries etc., will be prepared on the basis of
extensive study and research. For this purpose, government, non-government and
local organisations will be involved and massive people participation will be
mobilised for monument preservation.
• Historical, cultural and religious books and records scattered in different parts of
the country and in government offices will be collected and preserved.
• Emphasis will be given to the study and research of script, language, dress, folk
literature, folk culture, technology, socio -economic life styles, customs and
traditions ethnic graphs of Rai, Limbu, Sherpa, Gurung, T haru, Maithali,
Bhojpuri, tribal people of the country. Encouragement will be given to
establishing cultural industries in feasible areas, covering those subject matters.
Preservation and promotion of these live cultural heritages will be given due
attention.

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• Emphasis will be given to conservation, promotion, and development of
literature, arts and culture by keeping records of national living legends on the
basis of investigation and monitoring of their performance; these heritages will be
preserved; and training will be provided to selected new genius.
• Cultural festivals, religious fairs organised in archaeological and cultural sites
will be encouraged and thereby emphasis will be given to the development of
tourism industry.
• Fund will be created at local and national levels to preserve historical,
archaeological, literary, cultural and artistic works.
• Local regional and national festivals will be organised on various cultural genres.
• Arrangement of pension will be made to encourage people demonstrating their
genius and scholars conducting the research and study of Nepalese history,
literature, culture, arts, religion, philosophy.
• Necessary reform in Copyright Act will be made to protect copy right in
literature, arts and culture, sector while taking into consideration of international
practice. Protection of arts and crafts will be made effective and its management
aspects will be strengthened and made capable.
• The importance of Nepalese cultural heritage and its preservation process will be
included in the curriculum from school level to higher education level.
• Promotional activities will be conducted for Nepalese folk literature, classical
music, dress by arranging drama festivals, music festivals, and dance festivals.
Emphasis will be given to develop singing, music and dancing as income
generating activities.
• Emphasis will be given to research programme on the application of traditional
technology for the preservation of archaeological monuments; and by study and
analysis of various classical books will be conducted.
• Facilities will be provided to conserve historical, artistic, archaeological
monasteries, temples, religious rest houses, public inns by extending technical
consultation, making available traditional construction material, exempting land
building tax etc. In a situation where the private sector shows no interest in
conserving these monuments, the public sector will enact necessary law to turn
such monuments into public monuments.
• Emphasis will be given to cultural exchange programme with friend ly nations for
the upliftment of Nepalese literature, arts and culture.
• Audio, visual and electricity programme showing cultural, historical and religious
importance will be conducted in monument sites of tourist importance.
• Entry fee will be charged into monument sites and proceeds thus realised will be
used for preservation of those areas. Programmes will be implemented for
economic and social development of those areas.

490
• Local manpower will be mobilised for the preservation, conservation and
development of famous religious and pilgrimage sites, and, money offered by
devotees, income from charity and donation will be used for the maintenance and
conservation of those areas.
• Cultural, historical, archaeological and artistic monuments and monument sites
will be scientifically surveyed, classified and analysed. These monuments and
monument sites will be classified as monuments of international, national and
local importance and responsibility to concerned agency will be assigned for their
preservation and development. The central level together with the cooperation of
local people will carry out preservation of national and international monuments.
• Encouragement will be given to conduct professional training programme in
sculpture, metal crafts, stone craft and painting in order to making skilled
manpower available for monument preservation.
• Genre and site specific museum will be established and regional museums will be
strengthened.
• Government will provide appropriate facility and cooperation to those who
preser ve private monuments according approved criterion located within
protected monuments as included in world heritage list.
• Craft-men will be encouraged to produce souvenir items using local materials for
tourism purpose.
• Employment opportunity will be created to local youths in the monument sites,
which are important from tourism point of view, by providing them guide
training.
• Basic tenets will be decided to develop Bhaktapur municipality into a cultural
town.
8. Programme
Archaeological Exploration, Research and Excavation:
• Extensive archaeological survey will be carried out in the Eastern Region.
Excavation and preservation programme will be conducted in new possible areas
like Rani area of Morang district which is noted as palace area of legendary King
Birat.
• Archaeological excavation programme based on feasibility will be conducted in
possible areas of Pallungtar in Dhading district; Somadi parbat in Chitwan
District, Balmiki Ashram in Chitwon and Nalwal Parasi district; Ramgram in
Nawal Parasi; Devdaha in Rupandehi; Senamaina; various archaeological sites of
Butwal, Kapilbastu; of Kaski and Lamjung; Dang and Gandaki and Karnali
valley.
• Exploration research and preservation programme will be conducted on the
fortress such as Sindhuli Gadhi, Chisapani Gadhi, Makawanpur Gadhi, Armerkot
and so on.
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• Research and excavation programme in on-going areas will be continued and
research in other possible archaeological places will be initiated.
• Testing Laboratory will be strengthened.
Preservation of Physical Cultural Heritage:
• Remaining programmes for preservation of monastery, building and monument
areas of national and international importance and those included in the world
heritage list will be launched at the central level.
• Private monuments under protected area included in world heritage list will be
preserved on the basis of set standard and with the objective of developing
cultural tourism. Technical and other co-operative programme for preservation
work will be conducted as micro project.
• Study, survey, and research of various historical, religious, archaeological
monuments and monument sites will be conducted in a phase-wise manner; their
records will be maintained scientifically and these monuments will be classified
as international and local monuments.
• Programme will be conducted to keep records of precious artistic and
archaeological sculpture and materials under private ownership.
• Programme will be launched to preserve famous 'Ghat' (site for burning dead
body) on Baraha Chetra, Triveni, Ridi, Gokarna, Sankhamul, Pashupati,
Tekudovan, Devghat and so on.
• Environmental conservation programme will be carried out in holy ponds and
pilgrimage sites like Gosaikunda, Ramsagar, Dhanusagar, Matathirtha,
Gokarneswor.
• Natural and cultural heritage will be preserved by protecting religious forests of
Swyambhu, Pashupatinath, Budhanath, Changunarayan, Muktinath, Devghat
Triveni, Panauti, Manakamana, Sworgadwari, Pathivara and Haleshi Mahadev.
Daily rituals at holy places will be conducted on a self -sustainable basis.
• Programme to preserve important monasteries, local monuments and temples will
be conducted by mobilising people's participation.
• Basis facilities like drinking water, sewerage solid waste and management will be
provided in a coordinated manner so as to conserve monument and monuments
areas of international and national importance.
• Excavation, preservation and development of Lumbini area will be continued and
construction works for necessary infrastructures will be completed during the
Plan period.
Preservation of Records:
• Records will be maintained by collecting them from various sources like
monasteries, temples and private collections, government records, historical,
archaeological and religious hand written records. They will be preserved in
492
 microfilms. Progrmme will be conducted to keep these records secure in local
level.
Development of Museums:
• Regional and national museums will be strengthened and well decorated. Area
specific museum will be established in national monuments and protected area.
Study will be conducted to establish open museum in Kathmandu valley.
• Programms will be conducted to provide technical and physical assistance in
establishing ethnographic and other museums in the private sector.
• Dress and musical instrument museum will be established as per the programme
for establishing genre-wise museum.
Conservation and Promotion of Living Culture :
• Programme will be conducted to establish cultural centre at the sectoral level with
the objective of reflecting cultural specialty of various ethnic groups. Two such
centres will be established during the Plan period.
• National, regional and district cultural festivals will be organised and competition
programmes in singing, music, dance performing arts will be held.
• Among various ethnic settlement areas of Rai, Limbu, Sherpa, Gurung, Tharu,
Maithali, Bhojpuri etc, in Nepal two appropriate villages from tourism point of
view will be selected during the Plan period, with a view to developing the entire
village as an open museum and display life styles, custom, arts and crafts and
festivals of the concerned caste tribe.
• Academy of music and drama and academy of fine arts will be established.
• Cultural exchange programme will be conducted among various regions of the
country and with different countries of the world.
• Programme will be conducted to provide honour, reward, pension and
honorarium to national genius who have made a significant contribution to
research and study of various genres such as literature, music, arts, acting,
religion, philosophy, language, culture of Nepal.
• In order to conduct cultural and youth activities, in coordination with youth
programme in the areas dominated by ethnic tribes and backward class, cost-
effective community cultured centre will be established with the utilisation of
local resources.
Preservation of Copy Right:
• Copy right preservation programme will be conducted to stop the pilferage of
intellectual property of litterateurs, musicians, artists, and film producers.
Development of cultural Tourism :
• Arrangement will be made to prepare and display cultural activities and audio,
visual programmes in monuments and protected areas in order to attract tourists.

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• Audio, visual and reading material on cultural tourist areas and live culture of
those areas will be prepared.
• Preservation programmes for physical and living heritage will be carried out
along the trekking, mountaineering and rafting routes.
• Package Programmes will be prepared for the preservation and development
specific areas appropriate for religious and cultural tourism.
Organisational Strengthening:
• Central and regional organisations related to culture will be strengthened for
cultural promotion and preservation.
• In order to conserve, promote and manage local culture and heritage,
organisational arrangement will be made with the main participation of the
private sector at the local level.

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 13.3 Health

1. Background
Health service being the essential service for human life has been accepted as the
most important part of human right. In view of the campaign over the urge "Health
for All by 2000 AD" of World Health Organisation (WHO) and the commitments
made in various international health conventions, Nepal has formulated and
implemented Health Service Policy (1991). During the Eighth Plan period, by
extending health establishments to rural areas, preventive, promotive, curative and
rehabilitation, and family planning programmes have been brought into the village
level.
For the development of health services, attempts made in the past have had some
improvements in the public health status; however, major health indicators of
Nepalese people have shown that their health status is far below as compared to other
developing countries. Malaria, tuberculosis, leprosy and immunisation-oriented
preventive diseases have been controlled, to a great extent; however, due to the lack
of consistency between policy, programme and budget, managerial problems and the
lack of apparatus and equipment at hospitals, people have not obtained expected
health services from the extended health institutions. Therefore, health services
should be made more service-oriented and commitment should be made towards
improving the public health status.
2. Review of the Eighth Plan
In line with the objectives of uplifting the health status of Nepalese people gradually;
providing "Health for all by 2000"; bringing an improvement in public health status;
producing healthy manpower for development; controlling population; making
maternity health and family planning services effective; and making the specialist-
oriented health services available in the country, various programmes had been
implemented.
Basic Primary Health Services:
Female Health Volunteer: Under this programme, basic training to 17,150 people and
refresher training to 95,314 people have been provided against the target of 26337
and 137,412 people, respectively, in the Eighth Plan.
Sub-Health Posts, Health Posts and Primary Health Care Centres: In accordance with
the National Health Policy 1991 of establishing sub-health post and primary health
care centre in each constituency and Village Development Committee respectively, a
total of 3,199 sub-health posts and 100 primary health care centres respectively have
been established. In order to provide an integrated basic health services such as first
aid to ordinary ailments, common curative service, immunisation, health education,
nutrition and curative service for contagious diseases--malaria, tuberculosis and
leprosy, at the village level as per the policy of the Eighth Plan, primary health
services have been provided at wards, VDCs and constituencies. Accordingly, female

495
health volunteers have been posted at sub-health posts and primary health care
centres. According to Nepal Living Standard Survey – 1996, 41.41percent of
household families have an access to nearest health institution within a walking
distance of half an hour.
Family Planning and Maternity Welfare: This programme has been conducted with
the objective of reducing the adverse effect of population growth on the socio-
economic development of the country and thereby uplifting the living standard of the
people gradually. The progress status of set targets for this programme has remained
as follows:

S.N. Description Eight Plan's

Target Achievement
1 Total Fertility Rate 4.5 4.58
2 Family Planning Services to Couples 12,46,800 12,62,523
3 Rate of Contraceptive Users (in percent.) 32 30.1
4 Maternal Mortality ( Per 10000 live births) 75.0 47.5
5 Pregnant and Obstetric Services 17,04, 000 8,33,951
6 Services to Children below 5 years 14,85, 000 16,49, 415
7 Producing Female Health Volunteers 63, 000 46,427
8 Producing Trained Birth Attendant 15,000 12,559
The total fertility rate has been targeted to reduce to 4.5 percent; however, the rate has
remained only at 4.58 percent due to the impact of age for marriage, breast feeding
period, anemia, infertility, abortion and social norms and values in addition to family
planning services.
Malaria, Kala-azar and Encephalitis: Programmes such as pesticides spraying two
times a year throughout the malaria-infected 64 districts of the Kingdom with areas of
6,00,000 to 8,00,000 inhabitants, collecting and examining of 350,750 blood samples,
treatment for infected persons and conducting research and mobilising people's
participation in malaria control activity have been successful as targeted.
Expanded Programme for Immunisation: During the Eighth Plan period,
immunisation against six types of paediatric diseases and TT vaccination service to
women between 15 to 42 years have been provided. The target to provide
immunisation service has been achieved by 2 percent in the first three years,
thereafter by 1 percent in the remaining 2 years and henceforth to 92 percent of the
targeted population by the end of the Plan. In FY 1994/95, a target has been set to
eliminate child tetanus totally; however, only 33 percent of obstetric and pregnant
women have been provided with TT vaccination to date. As vaccination against
measles has been provided only to 56.6 percent of children, the disease still exists as a
complex problem.
As part of the mission to eradicate polio from the world by 2000, a total of 3380,000
children below 5 years have been immunised against poliomyelitis for the first time in
FY 1996/97 by observing a National Immunisation Day.

496
Tuberculosis Control: Tuberculosis control programme has been expanded to all the
districts of the Kingdom during the Eighth Plan period. In this period, against the
target of conducting phlegm examination of 643,976 suspected patients, and giving
treatment to patients as well as providing curative services to old patients, both
resistant and relapse cases, a total of 287,978 tuberculosis patients have been
diagnosed and provided treatment. An estimate shows that five patients per ten
thousand people suffer from the disease during the plan period. Curative services
have been made effective by managing DOTS curative programme in ten districts.
Leprosy Control: The target to reduce the rate of leprosy endemically to one person
per one thousand people by the end of the Eighth Plan has been met with more
achievement than the target, which shows the rate at 0.59 of patients being registered
by the end of the Plan. Against the target of expanding leprosy programme to 71
districts from 56 districts, it has actually be en expanded throughout the Kingdom.
Smear examination of 20,987 has been done out of 40,000 patients; training to 3,810
health workers has been provided against the target of 1,500; and in-door service
targeted to 1,550 patients have been provided to 1,619 patients.
By mobilising health education, information and communication programmes in an
integrated manner, public awareness towards health has been promoted. With the
objective of raising public health awareness through health education by conducting
publicity and seminars, the targets under this programme of producing and
distributing 10.2 million copies in various languages, publishing advertisement 1,440
times and exhibiting advertisement 35,886 times have been achieved.
For the purpose of helping, ext ending and promoting health education programmes in
districts, production and distribution of educational materials, advertisement and
broadcasting in radio and television, publication of articles in news papers and
journals, exhibition and video films show in communities, calendar printing, cinema
slides, health information services (library, internet, e-mail, photocopy, CD ROM
search) have been completed as per the set target.
Nutrition Programme: During the Eighth Plan period, against the targets of providing
treatment of malnutrition to 27,20,964 children by caring their physical growth,
anemia in 12,60,569 pregnant and breast-feeding women and disease caused by
vitamin-A deficiency to 52,714 people; and of distributing iodised salt, the following
progress has been made.

S.No. Description of Projects Unit Target Achievement

1 Growth Monitoring Number of 2,720,964 1,818,750
(Person)
2 Treatment and prevention Number 1,260,568 1,260,560
of Anemia (Person)
3 Treatment & Prevention of Capsule 6,799,424
Vitamin -A Deficiency
4 Iodine Injection Capsule 5,335,000 5,335,000

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 5 Distribution of Iodine District 46 46
capsule
6 Transportation of salt to Quintal 57,500 34,759
Remote Districts
7 Construction of ware- Number 11 1
houses
8 Salt Iodination work Metric Ton 500,000 545,591
Control of Diarrhoeal Disease: In the Eighth Plan, target has been set to reduce child
mortality among children below 5 years by 32 percent; however the actual status has
not been known as there has not been any survey to have conducted. The patient rate
due to diarrhoea as targeted to reduce by 20 percent has been reduced only by 2.9
percent. The target to raise the accessibility rate of Jeevan Jal from 60 to 90 percent
has been met. A target has been set to raise the correct use of Jeevan Jal among
mothers from 2.25 to 2.5 percent; however, the actual progress has not been able to
ascertain due to the lack of survey. The purchase and distribution of 14 million JJ
pockets have been completed against the target of 7.5 million pockets. A total of 1500
ORT Centres have been established against the target of only 200 centres. The target
to provide ORT training to 15000 primary school teachers and 60000 scouts has been
met by providing ORT training to 12000 teachers only.
Control of Acute Respiratory Infection: The target to expand this programme from
50 to 70 districts in the Eighth Plan has been met by expanding the programme
throughout the country. Against the target of providing training to 8881 health
technicians with ARI case management, only 1541 Health workers of different levels
have been provided with ARI strengthening training; and training for controlling ARI
in 10 districts has been provided to female volunteers. Orientation training as targeted
to provide to the politic al and social workers of 70 districts has been provided only to
2051 persons of 6 districts.
Curative Programme: In spite of the target of the Eighth Plan to strengthen referral
mechanism, physical facility and the capacity of beds have been expanded only to a
limited extent due to the lack of policy, procedural system and guidelines. In the
Eighth Plan, a total of 450 beds have been expanded in district, regional and central
hospitals. 100 beds in Kanti Children Hospital, 100 in HRH Indra Rajya Laxmi
Maternity Home, 200 in B. P. Koirala Medical Science Institution and 50 in Janakpur
Hospital have been expanded during the plan period. Building construction has been
started in the process of establishing B. P. Koirala Cancer Hospital. By the end of the
Eighth Plan period, 55 nursing homes and hospitals in the private sector have
provided curative services.
Development of Ayurved and Other Traditional Therapeutic Methods: Ayurved has
been regarded as an important organ of health service. National Ayurvedic Health
Policy 1995 has been brought out for the planned development of this method. In the
Eighth Plan, a target has been set to establish standard district Ayurved hospitals;
however, Aurvedic health centres in 25 districts and 20 dispensaries have been
established and new building and compound walls of 30 dispensaries have been
constructed. Refresher training has been conducted to technical workers from all over

498
the country. Medicine production has been started in 3 regional rural pharmacies. A
total of 50 beds have been added in Ayurved hospital at Nardevi against the target of
100 beds. In line with the policy of commercialising and giving autonomy to Singha
Durbar Baidya Khana, Singha Durbar Baidya Khana development committee has
been formed; its management and production capacity has been enhanced; and
physical improvement has been made.
Management of Medicines: In the Eighth Plan, the target to set up an analytical
medical laboratory for maintaining test and standard of medicines has been fulfilled.
The programme for pharmacy orientation training to 2000 medicine sellers has been
reached only to 291 people; surveillance over 218 pharmaceutical industries has been
completed as against the target of 182; and 3354 drug samples have been examined as
against the target of 1450 samples.
National Public Health Laboratory: With the objectives of detecting and diagnosing
diseases and examining germs in drinking water and foods, laboratory building in 4
districts has been constructed; laboratories in seven districts and 43 primary health
centres have been set up; and bacteriological examination service has also been
provided.
Manpower Development in the Health Sector: In accordance with the need of health
establishments to provide training in the Eighth Plan, a national training centre has
been set up and training to health technicians on recruitment and in service has been
provided in an integrated manner. Accordingly, a total of 365207 employees have
been provided various new recruitment and in-service training.
Moreover, necessary training and study available in the country and overseas have
been provided for fulfilling necessary medium and high level manpower in the
country. In this context, subjects include MPH, neuro and orthopedic surgery,
hospital administration, pathology, dental specialist, radiology, mental health, plastic
surgery and so forth. B. P. Koirala Medical Science Institute has initiated MBBS
course for 40 students whereas two medical colleges in the private sector and 55
training centres have been set up for the production of medium level manpower.
Miscellaneous: A massive publicity has been carried out against the negative impact
of smoking, alcoholism, and drug addiction. Programmes have been formulated and
implemented by the private sector and non-government organisations for
rehabilitation for disabled and handicapped people. In other to assist in AIDS control,
necessary cooperation has been provided to the blood bank operated by Nepal Red
Cross Society.
3. Existing Challenges
• Due to geographical difficulties and higher population pressure, even basic health
facilities have not been able to serve to the target population. HMG has the policy
of providing health service through sub-health posts in each VDC; however, due
to the lack of buildin gs and manpower, such institutions have not been able to
function smoothly. Moreover, the blanket policy of HMG has been made health
services difficult to provide in all the areas in a uniform process.

499
• People have faced with unnecessary economic burden and waste of time due to
unclear policies about the services available in concerned health institutions at
district, regional and central level and the operation of referral system and the
cost to be borne by patients for service delivery from these institutions.
• Annual programme and budget have not been prepared in a way to meet the
targets set in the periodic plans. Instead, due to the lack of resources and means,
required budget allocation and full release of allocated budget in time, these
targets have not been met.
• Health sector being a multidimensional subject needs to be functioned in
coordination with other ministries, organisations and institutions. However, due
to the lack of vertical and horizontal coordination among the institutions
established under the Ministry of Health, lack of communication, the lack of
cooperation and administrative problems, satisfactory achievements have not
been made in programme implementation.
• Owing to geographical difficulties, morbidity pressure, lack of human resources,
lack of health awareness and ineffective health service in remote areas, women
and disabled people have not been provided with basic health services.
• Furthermore, the lack of coordination among NGOs and INGOs, private sector
and local communities in the development of health institutions has affected the
coordination between NGOs and local authorities, consumer groups and
government offices.
• Due to the lack of study and research on Ayurved, Unani, homeopathy,
naturopathy and other traditional health services, the lack of mobilisation of
resources and means and the lack of public participatory management and
research, local resources and means have not been identified and mobilised.
• In the absence of monitoring and evaluation over the positive and negative impact
of standard services managed by private sector and the lack of surveillance, the
proper mobilisation of the private sector has been weakened.
• Human resources have not been developed properly due to the lack of manpower
planning based on demand and supply, the lack of placement of right man in right
place; lack of opportunities for transfer, promotion and career development;
transfer of doctors to remote areas without medicines and equipment affecting
their skill, talent, knowledge and capability.
• The problems of health institutions that still exist are the lack of medicines and
equipment, lack of maintenance of hospital buildings, quarters and equipment.
4. Long-term Concept
• The need of health services for every citizen will be accepted as an important part
of human right; essential health care services will be provided to all the people;
and specialist services in addition to essential health services will be extended
gradually on a cost effective basis.

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• In the health sector, liberal, open and competitive health financial plans will be
implemented. Such policies will be thought of enhancing indigenous competitive
capability and reforming in a way to be able to obtain benefits from new
opportunities created by the worldwide open policy.
• A policy will be adopted to create infrastructure necessary for the health sector
and to encourage the services operated by the private sector and NGOs. Policy
arrangement will be made for strengthening the role of the private sector and the
state will develop necessary infrastructure.
The Ninth Plan
Although health indicators have been improved with the development and expansion
of policy level and institutional programmes for the development of the health sector.
Big effort is still needed for bringing out further improvement in this situation. The
child mortality rate of 79 out of every 1000 live infant birth is the highest one in this
region. On the one hand, the average life expectancy of 54.7 years is far less and on
the other, maternal mortality rate of 53.9 per 10 thousand live births is far more. The
population growth rate has been 2.1 percent. Forty-one percent of the total population
constitutes women group of reproductive age. The statistics of Morbidity Survey of
1996 in Nepal have indicated that maternal he alth condition; childhood deformity,
malnutrition and contagious diseases have appeared as the most fundamental factors
for morbidity and death.
For solving the existing health problems, various policies and plans had been
formulated and implemented in the past. Realising the need for extending manpower
and physical facilities and making fundamental reforms on administrative and
financial management, necessary strategies have been designed; however, these
problems still exist. The constraints in adopting preliminary steps for sustainable
policy, effective implementation mechanism, full utilisation of means and resources
have also occurred. In this context, it is necessary to gear the country’s efforts
towards uplifting the health status of the people through the development of the
health sector; contributing to the growth of healthy manpower for poverty alleviation;
and developing human resources for overall socio-economic development.
For the purpose of promoting physical, mental and social health of the people;
producing health sector manpower to make basic health services available to all the
people; reducing the mortality rate; and uplifting the average life expectancy, a 15-
year long-term health plan (1976-1992) was implemented in 1976. In view of the
investment and priorities, morbidity burden and the proper utilisation of resources, a
second long-term health plan (1997-2017) has been prepared.
The second long-term health plan has focused on the preparation of periodic and
annual plans, guidelines, and formulation of strategy, programmes and plan of actions
based on national health needs and priority and coordination among governmental,
non-governmental and donor agencies. Self -dependence, gender awareness,
decentralisation, effective and efficient organis ation and management, full people’s
participation, partnership among government, NGO and private sectors, are the
policies adopted by this plan. In addition, the Plan has incorporated the detailed

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position analysis, analysis of morbidity load, long-term strategy on basic health
services, other specific services, strengthening health financial mechanism, concern
of government and private sector, strengthening district health system, internal and
inter-agency concern, quality standard, etc. The Second long-term plan which is
supposed to come out in the current plan period will have an institutional review;
necessary amendment thus will be made in the form of rolling source document; and
accordingly programmes will be implemented.
Since the health sector has a special role to play in poverty alleviation from the
country, necessary improvements will be made in public health status by making
existing infrastructure strong, efficient and movable for preventive, promotive,
therapeutic and rehabilitating services. It has been realised that more efforts have to
be made towards achieving targets of woman and child health as committed at the
international level on various occasions by HMG; ensuring health for all by 2000; and
uplifting gradually health of the people.
On the whole, considering the high importance of this sector, three factors will
mainly be focused. In order to create an environment from the family level towards
health awareness, and improve health status, priority will be given to do right works
on basic health services; proper management of public hospitals; efficiency of health
service; and quality standard by the government. The private sector, communities and
NGOs will be encouraged for providing high level and specialist-oriented health
services by promoting diversity and competition of services in this sector. The
government will play the role of a motivator for providing necessary help in the
production of trained manpower and involving in research and development.
5. Objective
• Comprehensive improvement in public health status will be brought about by
accepting public health as an important organ of human right and strengthening
existing infrastructure for preventive, promotive, curative, rehabilitation and
family planning services.
• Public health status will be improved by the development and extension of health
services; the concept of small family will be expanded through providing health
and family planning services; and thereby the population growth rate will be
brought down.
• A contribution to poverty alleviation will be made by increasing income through
the participation of healthy manpower for enhancing the capability of people
going to labour market.

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6. Target

S.N. Health Indicators Status of Target for Target for

1996/97 Ninth Plan 20 years
1 Infant Mortality Rate (per 1000) 74.7 61.5 34.4
2 Child Mortality Rate (per 1000) 118 102.3 62.5
3 Total Fertility Rate(per 4.58 4.2 3.05
woman))
4 Average Life Expectancy 56.1 59.7 68.7
(years)
5 Maternal Mortality Rate 47.5 40.0 25.0
( per 10000 live birth)
6 Contraceptive Users (percent.) 30.1 36.6 58.2
7 Obstetric Service by Trained 31.5 50.0 95.0
Manpower (percent.)
8 Birth of Infant below 2500 gm - 23.0 12
(percent.)
9 Crude Birth Rate (per 1000) 35.4 33.1 26.6
10 Crude Mortality Rate(per 1000) 11.5 9.6 6.0
11 Basic Health Service - 70.0 90.0
Accessibility (percent of
people)
Source: Nepal Family Health Survey, 1996; Population Projection Report, 1998; and
Projections made by the Ministry of Population and Environment, Central
Bureau of Statistics, National Planning Commission and New Era.
7. Policy and Implantation Strategy
• In order to provide health services to all by 2000 and in the long-term context as
well, basic health services will be made accessible at the local level. Under basic
health services, an emphasis will be given to the development of prioritised public
health and curative services such as control of contagious diseases, safe
motherhood and obstetric health, child health and nutrition. For making health
services accessible and sustainable, people’s participation will be mobilised and
extended to the village level.
• At the institutional level, an integrated health service will be made accessible at
the public level through district hospitals, primary health care centres , health posts
and sub-health posts.

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• Curative services of health institutions and hospitals will be made effective by
developing a fixed procedure for effective referral system. Policy will be
undertaken to make emergency services easily available for serious injuries due to
accidents. In order to develop emergency services, necessary facilities will be
arranged gradually in concerned health institutions.
• Reproductive health programme, which has a significant role to play in the
population management, will be made more effective; various programmes for
reducing maternal and infant mortality rate at the local level will be conducted
effectively; family planning services will be based on public will; and thereby the
concept of small family will be made extensive and effective.
• Overall policy and programme will be formulated for making cost-effective
services of health institutions from the local to the national level. Equity principle
will be taken as a basis for adopting cost-effective policy.
• Policy will be adopted for mobilising the government sector, the private sector and
the non-government sector in the development of health sector. The private and
the non-government sector will be directed to provide services based on rural and
geographical region for the development of health services. In order to increase
the private sector involvement particularly in the development of specialist-
oriented health services, the government will play a role of facilitator and carry
out monitoring and evaluation works for maintaining service standard. The private
sector services will be made attractive for groups who visit overseas for specialist
services.
• Specialist-oriented health services will be expanded, and a policy will be adopted
to involve central, regional and zonal hospitals in the study and teaching
programme.
• Ayurved therapeutic method will be developed as an integral part of health
service, and naturopathy, homeopathy, Unani and other traditional health services
will be developed gradually.
• In order to make healt h services standard, legal provisions will be amended and
enforced, and facilities will be made service-oriented.
• Effectiveness will be brought in the planning, management and implementation
capacity of the health sector on the basis of decentralisation policy and procedure.
For this purpose, policymaking works for strengthening the district health system
will be limited only to the central level, and administrative, financial, planning and
procedural authorities and responsibilities of district health offices will be clearly
defined. Regional level office will be involved in playing supportive role for
central policymaking; and entrusted with the responsibility of monitoring and
evaluation of districts in their respective region. People’s participation and
resources will be mobilised at the local level for the development of health
services in line with district, village and municipality Acts.
• A national level policy will be undertaken to produce basic, medium and high
quality manpower in the country. Private sector will be mobilised in this area.

504
 Regular monitoring will be arranged for quality control by actively involving
concerned authority. Policy will be undertaken to involve government-owned
hospitals, the private sector and non-government organisations in a planned
manner in order to produce medium and high level manpower in the health sector
on the basis of national requirement. In order to ensure coordination, regulation
and controlling of quality standard of medium and higher health education, an
agency will be set up.
• Since the development of the health sector requires huge investment and the
investment made in the health sector can generate returns, the health sector will
be provided with more resources, and financial resources for the health sector will
be mobilised through the private sector and people's participation as well.
• Effectiveness will be ensured in the implementation and monitoring of medicine
policy. In order to bring sustainability for medicine supply, the implementation of
community medicine policy will be carried out in a phase-wise manner.
• Sustainability of the health sector, its relationship with other sectors, and drinking
water and nutrition having a direct concern with health have an important place in
the development of health sector; therefore, necessary policy will be formulated
and implemented in coordination with other concerned sectors.
• Plans and programmes of the health sector will be made transparent; people's
participation will be given high importance; and community monitoring will be
taken as an integral function in the implementation of such plans.
• A policy will be adopted to link environmental and occupational health to health
services while taking growing environmental degradation and industrialisation
into account. An arrangement will be made to ensure proper disposal of garbage
produced by health institutions.
• Forensic science and medico-legal subject, which are integrally linked to the
health sector, will be given priority as per the national requirement; and their
related services will be modernised and expanded gradually.
Essential Health Services Provided in the District
High priority will be given to provide essential health services. Under such services,
prioritised public health and essential curative services, such as contagious disease
control, reproductive health, child health, nutrition and so on, will be provided.
Moreover, mental, ocular, oral and dental services will be gradually incorporated in
the integrated health services. These services will be extended to the village level in
an integrated manner through district health institutions, district hospitals, primary
health centres, health posts and sub-health posts.
Strengthening of District Health System
District health system will be strengthened by taking district as a focal point. People’s
participation and resource mobilisation at the local level will be ensured in
accordance with DDC, VDC and municipality Acts for the development of health
services. Local bodies will be operated in an effective manner by providing them

505
more autonomy to formulate, implement and operate plans. District health committee
will be formed and operated; and all the health institutions, government, non-
government and private sector will be involved in the committee in order to maintain
coordination among health programmes within the district.
Medical Service
Easy accessibility and adequacy of essential health services will be arranged; and
medium and higher level medical services will be provided in an integrated manner.
In this regard, the government sector will encourage the private sector for the
development of specialist services; and play a role of facilitator and cooperative
partner. Taking account of the loss of lives and properties caused by growing road
accidents and natural calamities, necessary facilities will be arranged gradually at
central, regional and district health institutions so as to develop emergency health
services. To reduce diseases, such as cardiac disease, cancer, etc., arising out of the
increase in average life expectancy and changing life style, an effective preventive
and promotive implementation strategy will be designed.
Organisation and Management
For the purpose of bringing change in the present organisational structure of the
Ministry of Health, its concerned departments, directorates and centres will be
restructured on the basis of the nature and the level of work for avoiding duplication.
Moreover, units will be formed for playing an effective role in monitoring and
coordination of the Ministry, collecting and analysing information and data, and
maintaining coordination between private, national and international organisations.
Public health branch and hospital branches have been managed separately in 14
districts; however, other remaining districts will follow the same during the plan
period.
• Effectiveness will be ensured in planing, management and implementation
capability on the basis of decentralisation policy and procedure. Long-term health
plan will be implemented as the main source document in the process of
formulating and updating annual and periodic plans at the central and district
level.
• An integrated supervisory system and community monitoring programmes will be
carried out in order to make the programmes and plan formulation procedure more
transparent and participatory.
• Additional information required in integrated information system for decision-
making process such as information on supply, manpower, financing, repair and
maintenance will be included. Epidemiological survey system w ill be developed in
way to diagnose and cure diseases in preliminary stage.
• Medical materials, equipment and medicine supply procedure will be made
simple, effective, need-based and demand oriented (based on morbidity load and
distribution). National drug policy will be implemented effectively and the
government and non-government sector will be mobilised for implementing the

506
 production and management of required quality drugs to be used in curative
services.
• A policy will be adopted for establishing governmental, non- governmental and
private health institutions on basis of not only administrative division but also
population, geographical situation and morbidity load. Prior to the establishment
of such institutions, a detailed feasibility study will be car ried out and programmes
will be conducted in this respect.
• Taking into account the growing environmental degradation and industrialisation,
a policy will be adopted to affiliate environmental and commercial health with
health services. Waste materials produced from health institutions will be properly
managed.
• A policy will be adopted for planning, developing and utilising technical
manpower in the health sector as per the requirement. Priority will be given to
produce qualitative manpower in coordination with non-governmental agencies,
university and educational institutions. Manpower will be mobilised by
considering workload, service target, geographical area and population in
projecting the manpower requirement. A national policy will be undertaken for
producing qualitative medium and higher level health manpower in the country.
Policy will be adopted for mobilising private and non-governmental sector in this
field. In order to produce medium and high level manpower for the health sector,
government central hospitals and government and non-government institutions in
the district will be involved in a planned manner and properly mobilised. An
agency will be set up to determine, control and coordinate the quality standard of
the medium and high level of health education.
• Ayurved therapeutics, homeopathy, Unani, naturopathy, and other traditional
therapeutic methods will be brought into the mainstream of health service and will
be developed gradually.
• Central medicine research laboratory will be timely strengthened for maintaining
quality of medicines. National pharmaceutical industries will be encouraged to
produce essential medicines. Various measures will be undertaken to make the
services provided by government and non-government institutions qualitative.
• Effectiveness will be ensured in planing, management and implementation
capability on the basis of decentralisation policy and procedure.
Health Financial System
In order to increase more capital investment and production in the health sector,
necessary resources will be arranged by mobilising people’s participation. Local
bodies will be involved in sharing the expenditure of health institutions at various
levels. To meet the targets set by the Ninth Plan, various alternative health financing
options (such as re-allocation of internal resources in governmental sector, additional
resource mobilisation from the external sector, health insurance, community medicine
programme, revolving drug scheme, expenditure partnership/recovering, etc.) will be
explored and implemented.

507
Coordination and Inter-agency Cooperation
Institutional arrangement at the central, regional and district level will be made for
creating an environment, achieving long-term targets and implementing the
programmes of the health sector through the integrated efforts of all these sectors
while maintaining the necessary relationship and coordination with non-governmental
sector and donor agencies working in the health sector.
Health Research
The research and priority list for health research will be prepared; and governmental,
NGOs and donor agencies will be encouraged for quality research. Such research will
be focused on the objective of poverty alleviation by solving main health problems of
the majority of the people.
8. Programme
Essential Health Services
Essential health services are defined as prioritised public health and basic,
therapeutic, integrated health services and traditional or other health services. Basic
health services will be provided to the people; it will be gradually expanded; and
more public and therapeutic services will be included. Essential health services will
be based on the principle: of people's accessibility to public health; of community and
individual participation, self dependence, inter-regional coordination, appropriate
technology and cost effectiveness. The following services will be provided under the
essential health services:
Female Health Volunteer: For providing general health education and ordinary
primary health services at the doorsteps of people, female health volunteers will be
mobilised. Selected from the 'Ama Samuha' (Mothers' Group), these workers will be
given training of 24 days in a year, health kit boxes and identity cards for providing
common health services at home. The number of FHVs will be increased to 73,000 in
the Ninth Plan.
Sub-Health Post, Health Post and Primary Health Centre: For providing health
education services on vaccination, malaria, leprosy, tuberculosis, family planning
services, mother-child health at the Ward levels, sub-hea lth posts in every VDC of the
Kingdom will be made effective and their evaluation and supervision will be
performed.
In the Eighth Plan, one primary health centre with three beds was established in each
of the 100 constituencies for casual and obstetric services. In the Ninth Plan, one
additional primary health centre in each of the 105 constituencies will be established,
adding additional 315 beds.
Cure for Common Diseases and Injury: Preventive, promotive and therapeutic
services on common diseases and injury will be provided through sub-health posts,
health posts and primary health centres; therapeutic services include common injury,
diarrhoeal diseases control, stomach diseases and respiratory diseases. Obstetric

508
services and health care education for m other and child will be encouraged to provide
through trained traditional birth attendants.
The arrangement for providing common therapeutic health services to the targeted
population group, referring complicated and chronic patients to upper levels (from
sub-health post to health post, health post to primary health centre, from health centre
to district hospital) for treatment will be implemented effectively. Likewise, other
cases that need specialist services will be arranged to refer to zonal and regional
hospitals.
Reproductive Health: For reducing the increasing population growth rate gradually,
bringing the awareness of "Small Family for Happy Family” to the village people and
reducing the higher infant and maternal mortality rate, safe motherhood under
reproductive health, family planning and female health will be conducted with
priority in the Ninth Plan. A target is set to reduce the present reproductive rate from
4.6 to 4.1 percent and maternal mortality rate from 539 to 400 per 1,00,000,
contraceptive users rate from 28.9 to 37.3 percent.
By extending village clinics to the ward level, a policy will be undertaken to provide
family planning and maternity care services. A fully facilitated maternity health and
safe motherhood service programmes will be carried out in about 25 districts.
Accordingly, treatment and prevention of infertility, prevention of abortion and its
solution, and reproductive health related programmes for adolescence and women
over 44 years will be carried out.
During the plan per iod, family planning services will be provided to 16,91,020
people, trained traditional birth attendants will be increased to 22,000, village clinics
will be conducted 8,99,328 times, and 20,60,000 pregnant mothers will be provided
safe maternity services.
The trained birth attendant programme has played a big role in providing home
service on maternity health and pregnant and obstetric mother health. National birth
attendant programme has reduced the maternity and infant mortality rate and the
morbidity of mother and child; and the programme has supported national safe
motherhood programme.
National Birth Attendant (NBA) Programme. Initiated in the FY 1983/84, this
programme has covered 55 districts by FY 1996/97. According to the policy set by
NBA programme, this programme will be extended to other districts during the Ninth
Plan period as well.
Expanded Immunisation: Expanded Immunisation programme will help to reduce the
present status of infant mortality rate from 79 to 50 per 1000 by 2000 AD. The
presently managed BBG, DPT, polio and measles vaccine will be provided to all
infants below one year and TT vaccine to all reproductive women between 15 and 44
years of age. The present TT vaccine programme will be expanded every year by 5
percent. In addition, DPT and polio booster dose service will be gradually expanded.
Presently on-going National Immunisation Day programme for eliminating
poliomyelitis from Nepal and the world by the year 2000 will be given continuity

509
even after 1998/99 as necessary. Along with vaccination, vitamin 'A' capsules and
medicine against worms will be distributed. For eradicating tetanus in infants by 2000
AD, special TT vaccination programme will be conducted in those places identified
as risky. In order to reduce the mortality and patient numbers caused by measles, a
regular vaccination programme will be carried out and measles vaccination will be
conducted as special campaign.
The surveillance mechanism over disease poliomyelitis, measles and tetanus from
which life can be saved by immunisation will be conducted throughout the Kingdom.
To strengthen the expanded immunisation programme, the ongoing National
Immunisation policy will be timely reformed and all the medium and lower level
health technicians will be provided a short-term refresher training.
The number of hepatitis–B patients is being increased; therefore, the vaccine for
hepatitis B in the expanded immunisation programme will be provided initially as an
experiment in some districts.
Control of Diarrhoeal Diseases: A programme will be conducted to meet the target
for reducing death and diseases caused by diarrhoea in the children below 5 years by
one third. To conduct the disease control programme out reaching the public level,
extensive publicity on causes of diarrhoeal diseases, its preventive measures and its
effective management will be carried out. In this plan period, the target is set to
reduce the mortality rate caused by diarrhoeal diseases in children below 5 years by
30 percent and mortality rate by 20 percent. In all the districts, a total of 20275000
packets of JEEVAN JAL will be purchased and distributed. The programme also
includes 2133 sets of ORT, control of diarrhoeal epidemic, printing of advice cards
for 25,000 mothers and 50000 record forms in two districts.
Control of Acute Respiratory Infection: Control of Acute Respiratory Infection
control programme has been taken as an important part of health services in view of
the fact that more than one third of children's death in Nepal has been caused by
respiratory diseases. This programme aims to reduce the mortality rate caused by
pneumonia in children below 5 years; reduce the mortality rate in children below 5
years; discourage the use of antibiotic medicines; and reduce the complication caused
by respiratory tract. This programme, conducted in 6 districts at present, will be
extended to 35 districts by the end of the Ninth Plan.
Nutrition programme: As about more than 70 percent of people being malnourished
and, without improving the nutrition status of the children in rural areas, much
progress can not be made in public health status. Therefore, in the Ninth Plan, a target
is set to reduce malnutrition status by one third. Nutrition programmes will be
included compulsorily in all levels. To meet the target of reducing blindness caused
by deficiency of vitamin 'A' by ninety percent, vitamin 'A' capsules will be distributed
to all the children from 6 months to 5 years, throughout the Kingdom by 2000 AD. A
target is set to distribute iodine capsules in 15 remote districts of Himalayan and hilly
regions.
The Ministry of Health will carry out monitoring and evaluation for ensuring both the
distribution of iodised salt by Salt Trading Corporation and the iodisation of salt at an

510
appropriate proportion. Likewise, an arrangement will be made to examine quality
standard by the Food Research Laboratory.
Control of Tuberculosis: Though Tuberculosis control programme has been
conducted since FY 1985/86, the germs of this disease have been found in 45 to 50
thousand people and, therefore, this disease has been taken as a serious problem.
Besides, 60 percent of the economically active people have been affected by this
disease and, for that reason, they die early and even if they live, they are unable to do
income-generating job; therefore, the economic status of the people living in rural
areas is low. A target is set to diagnose 70 percent of tuberculosis patients throughout
the country and, out of them, 85 percent will be treated. For the treatment of
tuberculosis patients, DOTS and direct treatment method will be expanded from 20
districts at present to all the districts during the plan period. Tuberculosis patients will
be examined and cured by DOTS method; treatment centres and sub centres in every
100,000 population will be established; activities will be conducted for detecting and
treating pulmonary tuberculosis and phlegm examination centres will be established
in each area of 100000 population. National Tuberculosis centre will be evolved as a
central level institution and DOTS programme will be carried out through district
hospitals and primary health centres. Moreover, monitoring of the regular use of
medicine by the patients and its effects on them will be conducted.
By integrating the tuberculosis control activities in a planned way, an effective
curative service will be provided nation-wide in the Ninth Plan to the patients
diagnosed as positive through examining phlegm of 2909214 suspected cases, and to
the old resistant, relapse and other cases. In the plan period, a programme will be
conducted for treating 180509 patients, for providing training to 85752 health
workers, and for carrying out supervision 14790 times. Likewise, the quality standard
on phlegm examination of suspected patients will be upgraded by establishing a
microscopic centre at the national level.
Control of Leprosy: In order to reduce present 5.9 percent of lepers in 10000
population to below one per 10000 population by the end of the Plan; maintain this
rate by timely diagnosis and treatment; and reduce the deformity and rehabilitating
lepers in the society, this programme will be launched as an essential health service.
Self-confidence will be built by conducting additional programmes such as: removing
negative attitudes in the society, outreaching education, health and communication
technology at the village level, and raising public awareness for making them realise
that lepers are also the civilised people of the society. In the plan period, programme
for this purpose will include contact service to 120000 persons, survey of 1000
schools, rapid inquiry survey in 1500 VDCs, defaulter case monitoring on 4500
persons, health education in 1000 schools, community education in 3300 places,
producing 75000 copies of health education materials, conducting mobile health
education 50 times, supervision and monitoring 14000 times and providing 100
percent anti-reaction medicines.
Kala-azar, Malaria, Japanese Encephalitis and other vector-borne diseases: Full and
partial malaria has been found in 67 districts of the Kingdom; morbidity of vector-
borne diseases such as Kala-azar, encephalitis has been spreading particularly in terai.

511
Programmes have been designed to reduce the problems of public health caused by
vector-borne diseases- malaria, kala-azar and encephalitis; to spray pesticides for
controlling malaria, to collect and examine blood samples; to carry out research and
provide treatment; and to prevent these diseases by providing environmental
education and public participation. Programme will be launched for preventing
malaria to be an epidemic.
Epidemiological Surveillance Mechanism: In the process of gradually reducing the
mortality rate caused by epidemic diseases, regular surveillance will be conducted at
an annual rate of 400000 population. Contr olling measures will be adopted by
providing immediate information to all levels and through special investigation of
contagion and epidemic diseases. A task force will be formed to provide immediate
services by diagnosing and treating such diseases at an early stage. Sentinel
Surveillance Programme will be conducted in five districts for controlling epidemic
diseases.
AIDS and Sexually Transmitted Diseases (STD): This programme aims to
control in time the socio-economic havoc caused by AIDS and STDs; provide
essential training to health workers involved in the treatment of STD patients;
diagnose STD in the early stage; and provide health education about the importance
of treatment and prevention measures against AIDS and STDs. In the Ninth Plan,
programmes will be implemented for providing training to 1000 health workers,
collecting and examining blood samples and 25000 persons, counseling service to
1000, and conducting inspection and monitoring 200 times. The role of NGOs in
AIDS control will be coordinated and made effective.
Oral and Dental Health: Oral and dental diseases being prevalent as a public
health problem have been included in the essential health services for the purpose of
preventing their causes of origin and dangers by raising public awareness through
publicity. Treatment for these diseases will be specially provided by district hospitals
and primary health care centres. Dental health services will be included in the
programmes of health posts, sub-health posts and health institutions at all levels.
Eye Care: Opthalmological diseases such as cataract and trachoma have been
the chief causes of blindness in Nepal. Various studies show that about 0.8 percent
Nepali people are found to have been affected by such diseases. Among these,
cataract causes 72 percent of total blindness cases and trachoma 2.4 percent.
Likewise, factors causing blindness include malnutrition, vitamin-A deficiency and
other diseases such as measles, diarrhoea and respiratory infections. In the old age,
glaucoma and other similar diseases appear as well. For the purpose of eye care and
protection, this service has been included in the essential health services. Publicity
will be carried out for eye care and protection from virus-causing diseases and giving
the message that green vegetables enhance eyesight. Mobile teams will be arranged
for providing treatment to the people in remote and backward areas. Non-government
and private sector will be encouraged to provide higher level special eye care service.
A special facility will be provided to NGOs and INGOs for encouraging them to
implement eye care programme in remote areas.

512
Hearing and Deafness: In order to protect children from becoming deaf in
childhood, this programme will be included as an essential service in the Ninth Plan.
A school health programme will be conducted to educate students about ear relating
problems caused by common cold and pneumonia; ear scratching, danger of lying
posture in breast feeding, negative effect caused to ears by dirty water and other
harmful objects and ear wax. In this plan, programmes for hearing and deafness
treatment will be conducted at district level by mobile teams. The government will
play the role of promoter in expanding the services provided by Low Hearing and
Deafness Centre, private sector and NGOs.
Mental Health: About 10 percent of the total population of Nepal are
estimated to have been suffered from mental diseases. To identify and cure such
patients in the district and village levels, preliminary curative services will be
provided. An effective and timely referral system will be established in the zonal,
regional and central health institutions for specialist services.
Environmental Health: Due to population growth, uncontrolled urbanisation,
migration pressure and so forth, Kathmandu valley and other urban areas have
confronted with water, air and sound pollution and piling up of garbage, which have
made negative impact on public health. Therefore, programme will be implemented
such as environmental education, encouraging for the self disposal of owns garbage,
and encouraging VDCs and municipalities to make fertilizers from the garbage, and
to keep streets clean.
Strengthening the District Health Management System: District Health
Management system will be taken as the central focal point which will formulate the
district health plan, assess the health status of the district, implement, monitor and
evaluate health programmes for raising the health condition of the district with the
help of central and regional health institutions. For this, district governmental offices,
NGOs and international agencies will be made responsible.
District health management system will be based on six basic principles, namely,
equitable distribution, availability of health service, inter-agency coordination, public
participation, decentralised management and integrated health service. For assisting
the district health management, commitment, technical cooperation, necessary health
legal arrangement, finance and necessary manpower will be provided from the
national level.
All the governmental health authorities, local, INGOs, NGOs, health agencies and
health workers involved in traditional therapeutic health services, private pharmacies,
nursing homes, clinics and teaching institutions will be recognised as an integral part
of district health management system and, in this process, an emphasis will be given
to provide health services to the people.
In the Ninth Plan, district health management system will be strengthened for
upgrading the district health status by including all organisations, agencies and
individuals. For the coordination and proper management of health programmes,
health committees in district and health committees at local levels will be formed and
given responsibility of health management. To put the principles and concepts of

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decentralisation into practice, necessary amendments will be made in laws;
information on legal provisions will be disseminated to local agencies; and, for this
purpose, local communities will be motivated.
Therapeutic Service
Since therapeutic services have become more technical and expensive, this service
has to be developed as service-oriented and on cost sharing basis, and the concept of
hospitals in the valley and other specialist hospital groups will be adopted. The
specialisation of their own procedural arrangement of referral system in such
hospitals will be developed and the arrangement of teaching facilities will be made.
Service fee charged by the hospitals will be made transparent and hospital
management will be made 75 percent self-dependent. While designing programmes
on expansion of management and services in government hospitals through the
development boards and the cooperation of Ministry of Health (MOH) including B. P.
Koirala Health Institution and B. P. Koirala Cancer Hospital, main attention will be
paid on the available resources and means in the country. In the process of finding out
alternative sources for making hospital service effective, special steps will be
undertaken for giving the responsibility of hospital management to the District
Development Committees and making an arrangement of special fee charged to the
patients and health card management. An arrangement will be made to undertake the
existing responsibility of appointing necessary manpower extending service and
supplying necessary materials from the budget allocation of HMG and sources raised
by income generating programme.
While developing and extending the health institutions of private and non-
governmental hospitals, nursing homes, clinics, teaching institutions and diagnostic
centres which have been making a direct contribution to the development of medical
services, policy and objectives set forth in the Ninth Plan will be taken into account.
Approval will be granted to such institutions for conducting programmes following
the study of their contribution to strengthening the health system through their present
services, and to the development of necessary manpower and sources. For
maintaining the quality standard of services provided by these institutions and
bringing uniformity on fee charging system, an effective inspection and monitoring
programme will be designed. An encouragement policy will be adopted for promoting
the participation of private sector. For this purpose, policy level and financial
cooperation will be provided to hospitals operated by the private and non-government
sector in the districts (without having any government hospital) in order to conduct
the functions of district hospitals.
District and Zonal Hospital: For making referral service system of district hospitals
effective, physical facilities as well as apparatus, equipment and manpower will be
arranged. A zonal hospital will be established in Rapti Zone; Baglung Hospital will
be transform ed into Dhawalagiri Zonal Hospital; and construction of necessary
buildings and other infrastructures will be completed.
Regional Hospital: In line with the policy of establishing regional hospital in other
development regions except Mid Zonal Developmental Region, constructions of
incomplete buildings for transforming Koshi Zonal Hospital into Eastern Regional

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Hospital, establishment of regional hospital in the Mid-western region will be
continued. Hospitals and quarter buildings will be completed for transforming P.
Chandra Doti District Hospital into Far -western Regional Hospital.
Bir Hospital: In the process of extending and strengthening Bir Hospital Development
Board, the Board will be geared towards full empowerment, and necessary resources
and means for the repair and maintenance and management of hospital will be
generated and explored. In order to develop Bir Hospital as national hospital, an
emergency and trauma centre and 200 beds will be added. Staff quarters will be
constructed. In order to make service delivery of the hospital effective, CT SCAN,
MRI, Broncoscopic and ventilating equipment will be supplied and hospital
management will be strengthened. In addition to the presently ongoing unit of high-
specialists, new highly special units will be additionally opened up.
Post Graduation Education Coordination Committee will be encouraged to carry out
effective works for producing post graduate manpower in the country. For this
purpose, the hospital group situated in the valley will be mobilised as teaching
authorities.
Kanti Children's Hospital: Kanti Children's Hospital will be given the responsibility
of reducing the infant mortality rate and performing curative services at the national
level. In the Ninth Plan, 50 additional beds will be added; paying wards will be
arranged; shopping complex will be constructed; and two doctors' quarters, two
nurses' quarters, one low standard quarter building, one eight-family residential house
and one Matron quarter will be constructed. A feasibility study will be conducted for
making this hospital as a child health study, teaching and research centre.
Shahid Shukra Raj Tropical and Contagious Disease Hospital: Contagious hospital
will be developed as a centre for services, facilities, study and research of tropical
diseases. For upgrading the service standard of this hospital, X ray's machines, ultra
sound machines, ECG plant, Endoscopic machines and ambulance will be provided in
the Ninth Plan.
Mental Hospital: Considering the problem created by the lack of physical
infrastructure, new hospital buildings and staff quarters will be constructed, and
sewerage and water supply will be arranged. Other mental health service programmes
under essential health services will be determined.
Nepal Eye Hospital: During the Ninth Plan period, Nepal Eye Hospital will be
strengthened. Surgical microscopy, vitrectomy machine, perimeter, slit lamp inami,
Argon laser fundus camera, octa-sonography and surgical microscope will be
arranged. For operating these machines and equipment, training on oculoplastic, eye
banking, orthopedics, contact lens vision, vitro-retina, glaucoma and neuro-
ophthalmology will be provided. In addition, short-term refresher training will be
provided. Besides, programme on eye care included in the list of essential health
services will be carried out.
Paropakar HRH Indra Rajya Laxmi Devi Maternity Home: In order to develop
Paropakar HRH Indra Rajya Laxmi Devi Maternity Home as a higher study centre for
gynaecologistic service, obstetrics, and gynaecology and natal health in accordance

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with the maternity service policy will be developed. A total of 352 beds will be
operated by adding 100 beds; service area will be expanded; oxygen plant will be
installed; and logistics of various types of equipment will be arranged.
Sahid (Martyr) Ganga Lal National Centre for Heart Diseases: Shahid Gangalal
National Centre for Heart Diseases, established in 1995, aims to provide OPD service
to 202,000 heart patients and in-patient service to 12,250 with 100 bed hospital;
conduct 50 different programmes to control the heart diseases resulted from average
life expectancy and changing life style; rehabilitate 153,700 heart patients; launch 25
research programmes on heart diseases; and conduct training programme to 80
persons on heart diseases, during the Ninth Plan period. This Centre will be operated
under a separate act.
BP Koirala Memorial Cancer Hospital: This hospital is under construction in
Bharatpur, Chitwan district. With its physical infrastructure, equipment and
manpower, it aims to render expert service in cancer, and conduct health programmes
to save and be saved from the major causes of heart diseases like modern life style,
smoking and drinking.
BP Koirala Institute of Health Sciences: It aims to produce skilled manpower such as
250 doctors from MBBS course, 60 nurses from B.Sc. Nursing, 34 post graduates
doctors, 25 BDS doctors, provide training or seminar for 15 on applied health science
of bachelor level to 250 persons, higher education opportunity to 15 persons. In
addition, it has a target of providing medical services to 500,000 patients.
In line with the policy of increasing the number of beds in the hospitals of different
levels, a target is set to add 100 beds in the hospital for infectious diseases, 50 beds in
mental hospital, 50 beds in Sagarmatha Zonal Hospital, 100 beds in Bhaktapur
hospital, 10 beds in Jumla hospital, 100 beds in Maternity hospital, 50 beds in
Nardevi Ayurvedic Hospital and 68 beds in Kanti Children Hospital. Thus, 478 beds
in total will be added. In addition, more and more beds will be added based on the
service needed for the population and the manpower available in district hospitals.
Mobile Health Service Team: Mobile health services by specialists in surgery,
gynaecological diseases, ENT and dental problems will be continued at least once a
year in remote district hospitals. For this purpose, the Team will provide training at
the local level; an environment will be created to transfer techniques and skills to the
local level.
Ayurved Service
Ayurved service will be rendered to the rural sector in order to make additional
contribution to the self-reliance in the health sector and improve the public health
condition. Notional Ayurved Health Policy 1995 will be implemented in a plann ed
way. Ayurved Pharmacy, District Ayurved Health Centre, Regional and Central
hospitals will be well coordinated as per the service-oriented treatment system.
Hundred Ayurved Pharmacies, 50 District Ayurved Health Centres, three Regional
Ayurved Hospitals and five Regional Ayurved Directorates will be established. One
training centre and five herbariums in five development regions will also be

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established. Manufacturing of Ayurvedic medicines through regional rural
pharmacies will be encouraged and operated smoothly.
Priority will be given to produce health manpower. In this regard, 650 Ayurved
technicians and 40 Ayurved supervisors will be produced and 100 persons will be
sent for BAMS studies. Master’s programme (MD and MS) and condensed course
and refreshment training programmes will be conducted. However, these courses will
be conducted following their feasibility study. Land will be purchased and house
building will be constructed for the Ayurved department. Seventy-four buildings for
Ayurved institutes will be constructed. Infrastructure for Ayurvedic institutes will be
developed and their managerial and technical efficiency will be increased. Necessary
arrangements for the transportation of medicines, and medical equipment will be
made. Preliminary works for establishing an information and research centre will be
initiated.
Nardevi Ayurved Hospital: This hospital as a central hospital for Ayurvedic
treatment will be made one of the best hospitals for rendering special Ayurvedic
treatment service. Emergency services will be operated. Present 100 bedded hospital
will be turned into 150 bedded. Machinery tools, equipment, extension of building,
ambulance service and transportation facility will be arranged, and five function and
alkali formula system will be developed. This hospital will be developed as an
Ayurvedic teaching hospital.
Ayurvedic Hospitals: Specific Ayurvedic service will be made available in districts
with the production of medicine at the regional level and the development of
medicinal herb farms will be facilitated. Treatment for general diseases and special
Panchakarma treatment will be provided through the hospitals located in the districts.
Production of essential Ayurvedic medicines in districts will be encouraged.
Production, collection and preservation of medicinal herb and production of
medicines will be carried out at the local level, and Ayurvedic service will be made
easily available to the rural people. Medicinal herb available in the local community
will be identified, and manufacturing of Ayurvedic medicine will be extended at the
local level.
Singh Durbar Vaidyakhana: In order to enhance the qualitative production of
Ayurvedic medicines, emphasis will be given to improve the physical infrastructure
of Singh Durbar Vaidyakhana with equipment and skilled manpower, necessary
training and research. To increase manufacturing capacity for medicines, this
Vaidyakhana will be developed as an industry of Ayurvedic medicine. By the end of
Ninth Plan period, Vaidyakhana will be capable of producing medicines worth Rs
250 million.
Other Traditional Treatment System
Besides Ayurvedic treatment system, about 800,000 Dhami, Jhankri, Lama, Vaidya
will be encouraged to provide health services. Other traditional treatments like
Homeopathy, Unani, and natural therapy will be developed gradually.
Homeopathy: Pashupati Homeopathy Hospital is only a National Homeopathy
Hospital, which was established 27 years ago. This hospital is providing treatments to

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the patients with chronic respiratory problems, diarrhoeal diseases, skin diseases,
jaundice and so on. In the Ninth Plan, these treatments will be included in the list of
essential health services. The present 6 bedded hospital will be turned into 25 bedded
hospitals, and feasibility study will be conducted to establish homeopathy hospital in
all five-development regions. More and more skilled manpower in Homeopathy will
be prepared.
Unani Hospital: At the government level, Unani treatment is available from the
Unani hospital located within the hom eopathy hospital of Kathmandu. This hospital is
providing the treatment to different diseases through OPD. In the Ninth Plan, the list
of all the necessary Unani treatment services will be prepared in detail and Unani
treatment services will be provided accordingly. This includes the treatment on
diseases related to digestive system, mental disorder, gynaecological problems,
asthma etc.
Naturo-therapeutics: In the Ninth Plan, natural medicine system that cures through
air, water, soil, exercise and dieting will be developed at the institutional level while
bringing the system into the mainstream of health services. The NGOs and private
sector will be encouraged for providing this kind of service.
Laboratory and other Accessory Services
National Public Health Laboratory: National public health laboratory is established
for the effective treatment of the disease and the examination of poisonous substances
in foods and communicable organism in drinking water. It has set the targets to
establish 40 bacteriology laboratories, 54 biochemistry laboratories, 5 immunology
centres, 5 research laboratories for viruses, laboratory training cum seminar for 100
people, 340 laboratory service extensions and 355 maternity workers capable of
providing basic laboratory ideas to the village level.
Haematology, pathology, biochemistry, histopathology and parasitology service will
be provided gradually in the regional and zonal level laboratories. Research
laboratories will be set up for cancer and communicable diseases. Haemato logy,
gastrology, biochemistry and histo-pathology laboratories will be operated gradually
at the district level. Preliminary laboratory services at the village level will be
provided through health posts with well-equipped laboratories by the microscope and
chemicals and medicines. In this type of laboratories, malaria, parasite, organism of
leprosy and polio will be examined and urine test, stool test, and tuberculosis
examinations will be arranged.
Management of Medicine: Policy will be adopted to collect data on the need and the
use of medicine at the national level; identify diseases and the use of medicine; make
medicine available to common people; and assure people on the quality of medicine.
In order to maintain the quality of vaccine, sera and biological products and
medicines, and protect the quality in transportation, an arrangement of inspection and
test will be made. The government, the private sector, and the local community will
be mobilised for maintaining the quality of medicines.
Blood Bank and Blood Transfusion Service: Blood bank and blood transfusion
service will be established at the village, zonal and regional level so as to provide

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effective and long-term health services. Existing anomalies for blood donation and
selling will be removed; and emphasis will be given to include blood donation in
language, literature, music and culture promotion programme in order to develop
spontaneous blood donation system in non-government organisations and local
communities. Emergency services will be made effective in the district hospitals.
Additional programmes will be conducted by Nepal Red Cross Society in
coordination with the Blood Bank.
Information, Education and Communication: Ever since the Eighth Plan, a policy has
been adopted to carry out publicity of health education, through audio-visual cultural
programme and other various means of communication, in an integrated manner.
Accordingly, the production, distribution, publicity of educational materials and the
operation of training/seminar on immunisation, epidemic such as diarrhoea and
dysentery, malaria, leprosy, tuberculosis, etc.; blindness disabled, mental diseases and
maternity health will be continued; and an awareness about health will be raised in
community. During the plan period, programmes for publicising 90,000 copies of
“Our Health” magazine (in Nepali) for health education; printing 80,000 copies
“Family” (half -yearly in Nepali); printing 150,000 copies of “Immunisation” on a
quarterly basis; producing and distributing 5 million educational materials;
broadcasting public health 700 times on radio; broadcasting advertisement 7,000 and
1,100 times on radio and television, respectively; publishing advertisement 1,000
times in news papers and magazines; strengthening and expanding district health
education in all districts; publishing 250,000 copies of calendar; producing 20 video
films and displaying 2,000 times in communities; providing camp information 5,000
times; conducting the impact study of health education 3 times; and provid ing health
education and information in all districts will be conducted on the basis of
decentralisation policy, and more people’s participation will be mobilised in such
works. In the context of low percentage of literacy in the country a survey will be
conducted to measure health awareness.
Organisation and Management
Organisational structure: To make health services effective at the community level, it
is important to improve the organisational structure and management of health
institutions from the VDC to the central level as the efficiency of organisational
structure depends upon its managerial aspect. Therefore, job analysis of the MOH and
its departments will be conducted and necessary changes in their organisational
structure will be made in order to ensure effectiveness in their management.
Central hospitals will be converted into research hospitals and other zonal and
regional hospitals will be developed as referral hospitals. District hospitals will be
made capable of providing basic and emerge ncy services. A liaison centre at the
ministerial level will be developed as an agency for coordinating and managing these
hospitals. As hospitals and public health institutions have different nature of works
and public health offices have been established only in 14 districts, such offices will
be set up in the remaining districts during the plan period and an agency responsible
for public health programme will be arranged at the central level.

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Information Management: To obtain the data required for analysing health project,
its implementation and observation, a health management and information system has
been started since the FY 1991/1992. In addition to the information obtained by the
MOH and its concerning departments, a national health information system will be
developed to collect and integrate information on manpower supply and management
and will be converted into a division at the ministerial level. Training will be
provided from time to time for formulating, implementing, monitoring and evaluat ing
health sector plans at the district level in line with decentralised administrative
system. In addition, a policy will be adopted to conduct timely monitoring and
evaluation of health sector programmes.
Logistic Management: Targets have been set to supply essential medicines and
instruments for treatment on a regular basis; and conduct preventive and curative
programmes in an effective way. In addition, purchasing and storing of medical
instruments and providing immunisation programmes at various places will be
included in the programme as well.
Programmes will be conducted to build ten district-level medical centres and five
regional medical stores. For the emergency situation, purchasing and supplying of
medicines have been schemed in 30 districts. Programmes for buying ambulance and
its supply in hospitals will be conducted as well.
Human Resources: Despite the commitment of the government to health service
delivery at the community level, lack of skilled manpower and acute problem of
population grow th have led to the ineffective community health services; therefore,
the government has the policy of supplying skilled manpower based on requirement
According to this policy, basic training will be provided to various people such as
rural health training for 350, maternity health training for 1500, ANM for 300,
upgrading training for 680 people. Similarly, in maternity training, basic training will
be provided to 1,500 people and refresher training to 2,660 people. Female health
volunteer training will be conducted for 254,132; nursing development training for
2105; logistic training for 5346; obstetric attendance training for 77,527; fertility
health training for 1576, health education training for 90; audio-visual training
material training for 60; medical hospital administration training for 150; supervision
training for 2430; training study fellowship for 20; family planning training for 5718,
teacher’s training for 825; children health training for 5530 and data processing
training for 375 people.
In addition, preparation and printing of 121,052 copies of training materials will be
carried out for publication and distribution, 7,787 kit boxes distribution, educational
syllabus development, 1935 primary health centre training. A total of 100 meeting of
central and regional level teacher review will be conducted.
With the objective of developing human resources, TU Teaching Hospital, BP
Koirala Health Science Institute and private educational centres will be mobilised for
producing necessary manpower. In this process, governmental and non-governmental
health institutions will be allowed to use for conducting teacher’s training and
training required for hospitals and health institutions. For this purpose, necessary

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policy and regulations will be formulated. Some districts will be developed as
teaching district on the basis of types and numbers of health manpower produced.
Continuity will be given to post graduate programmes conducted by Bir Hospital and
other hospitals in the valley. The manpower, which cannot be produced in the
country, will be trained abroad. A study on the manpower produced by medical
colleges will be conducted for increasing their capacity. A medical college training
centre will be started. Training workshops will be organised for ANM and AHW in
the remote areas so as to provide medium standard local manpower. Health assistants
required for 100 health posts in the Ninth Plan will be trained by the technical
education and vocabulary training council. Health workers will be upgraded:
HA/CMA to medical officer, ANM to CMA, and AHW to SAHW for providing an
encouragement to them.
Supervision, Monitoring and Evaluation: Regular supervision, monitoring and
evaluation programme in organisation and management will be conducted in an
effective manner. Development projects will be supervised and monitored from the
perspective of their work progress and management. For this purpose, the National
Planning Commission Secretariat, ministry and its department will be involved in the
supervision, monitoring and evaluation of development projects at the central level.
Regional offices will conduct supervision of programme and managerial aspect of
concerned district level offices and district offices will carry out similar supervision
of institutions under them as per the set timetable. Integrated supervision checklist
will be prepared and brought into use.
Quality Determination: In order to provide qualitative and effective drugs, maintain
their quality standard and ensure the supply of high quality of drugs, the sale and the
distribution of poisonous and counterfeit drugs will be prohibited in the Ninth Plan.
For this purpose, sample test will be conducted from time to time; and medical act
and regulations will be effectively implemented. In order to ensure an access of
quality medicines to consumers and expand the rational use of drug, training will be
provided to drug dealers to upgrade their capacity.
Health manpower produced by teaching institutions and vocational training centres of
private university and council and the quality standard of health institutions will be
evaluated. In order to be self-reliant in the supply of essential medicines, medicine
manufacturers of the private sector will be encouraged.
Role of Private Sector and NGOs: Private sector and NGOs will be encouraged for
making the general and specialist medical service available within the country.
Necessary assistance will be provided to nursing homes, hospitals, clinics, polyclinics
and medical centres as well as drug shops in the private sector. Standard guideline
and treatment protocols will be developed for health institutions at various clinic
levels in order to provide standard service at medical treatment centres and the
centres will be monitored and evaluated on the basis of the protocols. An emphasis
will be given to maintain the quality standard of training provided by private training
centres. The private sector will be encouraged to provide the preventive and
promotive services in the Ninth Plan, which are available in the non-government
sector health services but have received little attention by the private sector. Such

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services will include safe motherhood, family planning, child health programme,
leprosy, TB, deafness and blindness prevention programme, etc. Health institutions in
the private and non-government sector will be encouraged to provide the health
services available at the government level.
Health Financing System: For promoting health service and making investment in
preventive activities and essential medical services, government, NGOs and
communities will be encouraged; and alternative health financing system will be
gradually implemented. Other innovative approaches will be adopted in alternative
health financing system. Revolving fund will be set up and grant will be provided to
carry out such programme as necessary. An attempt will be made to implement the
following alternate health financing systems in the Ninth Plan:
Community Medicine Programme: Under this programme, necessary drugs will be
provided to all the primary health cenres, health posts and sub-health posts of the
MOH. In the Ninth Plan, this programme will be implemented in all the health
institutions of 30 districts of the country in a phase-wise manner. This programme
aims to ensure the supply of medicines required for one year and the proper use of
medicines at the primary health centres, and to conduct medicine programme at the
local level with people’s participation.
Revolving Medical Fund: In order to improve the state of poverty and poor health
conditions, enough internal and external sources in the health sector vis-à-vis the re-
allocation of internal resources in the government sector, and the mobilisation of
additional resources from the external, private and non-government sector are
essential. Henceforth, for the regular provision of medical facilities, the programme
of health medical fund launched in some places as pre test will be extended to other
districts in the Ninth Plan.
Health Insurance programme: Health insurance in alternative health financing plan is
a popular programme. This programme will be implemented as pilot programme in
the areas inspired by local communities.
Cost Sharing and Cost Recovery Programme: In order to improve the quality of local
health services of local health institutions, medicine and health plans such as cost
sharing, cost recovery conducted by local bodies will be implemented. Such plans
will ensure the regular availability of medicines and enhance the standard of health
services.
Health Research: In the Eighth Plan, the establishment of Health Research Council
and the Ministry of Science and Technology has contributed to the development of
health research in Nepal. Basically, Nepal Health Research Council provides
information on new research techniques and coordinates different organisations,
universities, educational institutions and non-government organisations. Programme
to give information on this subject to politicians, planners, programme officers and
common people will be conducted for essential national health research by involving
all the institutions and decision-makers investing in health.
National consensus and commitment is quintessential for essential health research.
Therefore, Nepal Health Research Council will conduct discussions and interactions

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among MOH, TU Teaching Hospital, B. P. Koirala Health Science Institute,
professional health institutes and people’s representatives at various levels; and will
prepare a national list for research. Nepal Health Research Council will be developed
as a central body in the area of research and the Council will give an emphasis to
institutional strengthening, capacity enhancement and demand for health research
programme as well as the development of conscience. The programmes to be
conducted in the Ninth Plan will include provision of grant to 50 health system
research, training on research proposal preparation to 400 health workers, short-term
technical training on health research management to 50 higher level health
technicians, development of national health research library and feasibility study on
the establishment of research and training centres in each development region.
Miscellaneous
Urban health programme: Necessary cooperation will be extended to provide
preventive and curative health services in coordination with various health institutions
under metropolitan and sub-metropolitan cities. The MOH will play a role of
mediator in providing necessary technical assistance for conducting primary health
services at ward level as required whereas integrated programmes will be launched to
mitigate the adverse effects of increasing urbanisation and migration on environment
and health.
Due to the growing migration of people from mountainous and hilly areas to mainly
terai and urban area, the pressure of population has mounted in municipalities.
Unsystematic urbanisation, uncontrolled increase of the means of transportation and
environmental degradation caused by increasing industrialisation have exerted a
negative impact on the health of the people living in urban areas. The MOH will
develop and implement gradually appropriate plans in urban areas including
metropolitan and sub-metropolitan cities and municipalities; and necessary
coordination will be maintained with other agencies. The MOH will provide
necessary technical assistance to metropolitan and sub-metropolitan cities and
municipalities for formulating and implementing urban health perspective plan on the
basis of their health sector situation.
Old Age Health: With the increase in average life expectancy of the people, there has
been an increase in the population of old people. Policy will be adopted to
mainstream the experience and the contribution of senior and old citizens in national
development. For this, geriatric ward will be established in zonal hospitals and
production-oriented programme will be conducted as per their wish and capacity.
Non-government and private institutions will be encouraged to take part in such
activities.
Programmes for Disabled and Handicapped: Provisions will be made to protect rights
of the disabled and to give them proper health services. Free treatment will be
provided to them in health centres; and an emphasis will be given to the programme
for family and community rehabilitation centre for disabled and handicapped.
Cooperation will be extended for the establishment of community rehabilitation
centre. Groups based on community, clubs and other institutions will be encouraged
and mobilised in such activities. For the implementation of these programmes,

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coordinat ion will be maintained with the Ministry of Social Welfare and the Ministry
of Health will play a role of coordinator in the places where this programme has been
initiated by local authorities.
Problems Caused by Smoking, Alcoholism and Drug Addiction: Private and non-
governmental organisations will be mobilised to solve the problems of drug addiction
through establishing rehabilitation centres vis-à-vis providing counseling services for
the families of addicted people. With the cooperation of community leaders and
concerned personnel and through the creation of extensive awareness, necessary
programmes will be conducted to provide basic service for solving the increasing
problems of tobacco chewing, drinking alcohol, drug addiction, AIDS and other
diseases as an epidemic, by means of rehabilitation, diagnosis and treatment of the
diseases.
Job and Occupation-oriented Health: Along with the increasing industrialisation and
urbanisation and the development of new technology, job and occupation related
health problems are also increasing day by day; hence, in such a situation, these
problems need to be resolved. Keeping in mind the health of laborers and professional
employees, provisions will be made for safe environment at work place. For laborers
working in factories, regular check-up facility in government hospitals will be made
as well as health insurance and other alternative compensation schemes will be
implemented. For this, policy, legal and service arrangement will be made with the
participation of in dustrialists, businessmen and laborers.
Legal Provision: Existing problems in the health sector will be minimised by
effectively implementing laws related to the health sector; while keeping in mind the
production of herbal medicine, their use and environmental protection, special act and
regulation will be framed and enforced to ensure the proper use and management of
poisonous drugs. To implement these laws effectively, necessary amendments will be
made in the present health laws. Laws and policies will be made transparent and
informed to the common people. Training will be provided to medical officers and
health institutions will be well equipped with necessary instruments for the post-
mortem of dead bodies taken to the district hospitals. New laws will be framed and
necessary amendments will be made in the existing laws per the requirement.
Councils-medical, Para-medical and Ayurved: To improve the standard of health
services, concerned Medical Council, Nursing Council, Para-medical Council and
Ayurved Council will be provided adequate patronage from the government sector
through the formulation of laws, policies and action plans. Such councils will be
mobilised in accordance with such laws, policies and action plans for the purpose of
upgrading the qua lity of their services to the people and enhancing the expertise of
health personnel.

524
 13.4 Child Development

1. Background
About 52 percent of the total population of the country comprise children below 18
years. Projected number of children in 1997/98 is 1,10,47000 and at the end of Ninth
Plan this number is estimated to be 1,24,31000. For the development of children,
various programmes have been carried out since the Planned development for
education and health sector. Child development policy has been adopted since the
Seventh Plan. In line with the commitment expressed by the government in World
Child Summit 1990, child development action plan 1990 has been formulated with
the determination of targets to be met by 2000AD. In this way, efforts have be en
made for the development of children; however, due to poverty and other social
reasons, Nepalese children are suffering from malnutrition, illiteracy, economic and
social exploitation and diseases. Besides these, the problems of disabled, drug addict,
orphan, sex exploitation, child labouring and street children are equally serious.
2. Review of the Eighth Plan
During this Plan period, in line with the commitment expressed by the government to
the declaration of the World Child Summit for the development of children, policies
based on the child development action plan for the decade of 1990 have been
formulated and various programmes have been conducted. In the Eighth Plan, for the
physical and mental development of children from birth to growth, policies were
undertaken to provide educational opportunities necessary for nutrition and health
facilities; develop good habit right from the childhood; protect child's rights; and raise
the income of parents for making them capable of raising children. In accordance
with this policy, education, health and local development sectors have been
conducting various programmes. Among these, elimination of polio by 2000 AD
programme, vitamin-C programme, school tiffin programme were prominent. In
addition, according to Child Act 1990, national children welfare committee and
children coordination committee have been established in 75 districts whereas welfare
home has been established for orphans and bad habitual children.
There are 182 NGOs working for the development of children. These organisations
conduct programmes especially for orphan beggars and disabled children.
In the end of Eighth Plan, in order to conduct monitoring and evaluation of child and
development mid-term (1996) and periodic (2000) targets, Nepal Multiple Indicator
Surveillance was conducted for the development of children. The survey was carried
out on health, nutrition, primary education, diarrhea, and drinking and cleaning water.
In Nepal, situation of child labouring and street children had been studied. According
to United Nation's Children Welfare Organisation's World Summit on children rights,
a national documentation has been prepared and submitted to the United Nations'
Organisation. For this, there will be reforms in the Acts and some new rules. In this
regard, a regional-level workshop has been organised.

525
3. Existing Challenges
The endeavors made for the overall development of children have helped them to
some extent; tangible achievement has not been realised yet. The fertility rate is 4.58
and infant death rate is 74.7 per thousand live births and child death rate is 188 per
thousand. Fatal diseases, diarrhoea and acute respiratory diseases have been the major
causes of death among children. Thirty one percent children are deprived of the
opportunity for primary education; child labour has become an income source for the
family whereas children are employed for household jobs as well. Addiction,
prostitution, orphans, handicapped and begging are among the children related
problems that are getting deeper and deeper.
4. Long-term Concept
To ensure children's rights and development; to include welfare and development of
handicapped, disabled, street children, child labourers and children in difficult
conditions as an integral part of national development; and increase the qualitative
involvement of non-governmental and social organisation in this effort.
Ninth Plan
5. Objective
To develop children physically, mentally and intellectually; and protect and promote
rights of children as they are the pillars of the country for the future.
6. Policy and Implementation Strategy
Saving Children: Preventive, promotive and curative services influencing child health
from pregnancy until adolescence will be expanded and improved.
Protection: In order to protect children's rights, legal criteria for child labouring will
be effectively enforced. In order to gradually eradicate hard child labouring and
bonded child labouring, and also to make children in difficult condition (especially
disabled, orphan, beggars, mentally retarded, etc.) self-dependent programmes for
education, health, housing, etc., training will be expanded. For this purpose,
government, semi-government, non-government, international non-government
organisations and other organisations will be mobilised. Programmes on child welfare
rights will be conducted on the basis of community-based approach. In order to
provide children below five years living in remote villages with necessary services,
certain child development programmes will be conducted. Appropriate early
childhood development programmes for small children will be conducted as well.
Development: Primary education will be made practically compulsory during the plan
period, and the number of children going pre-primary school will be increased
qualitatively. Specially, the involvement of girl child will be encouraged in this
matter and special arrangement for encouragement will be made for girl child to stop
dropouts.
Participation: The media of communication have their effect on children's personality
and psychology. Hence, in various media like radio, television programmes useful to

526
children will be broadcast and telecast with the involvement of children themselves.
Children's involvement in activities contributing to the upliftment of children's mental
and intellectual capacities will be encouraged.
Co-ordination, Monitoring and Evaluation: Institutional arrangement will be made for
coordination, monitoring and evaluation of the activities carried out by national and
international non-governmental and other organisations for the development of
children rights and development.
7. Programme
• For the development of child health services, programmes for safe motherhood,
extended vaccination, diarrhoeal and respiratory diseases will be extended. Child
treatment services based on referral system will be developed. In this context,
child health research centre will be established.
• In order to make education easily available for children, public involvement will
be encouraged and programmes for pre-primary education will be conducted.
Besides, leaving and repeating classes and irregularities of primary teachers will
be discouraged and school administration will be improved so as to make primary
education easily available and gradually compulsory. The standard of lower
secondary and higher secondary education will be uplifted and emphasis will be
given on teachers' training for English, maths and science. On technical
education, basic and medium technical education will be provided.
• According to the study on condition of child labour 1997, children devoid of
opportunity for education due to household work or employment in household
work or other work for income generation are about 26 percent of the total
population. In such a situation, rights of child labourers will be protected by
giving them formal or informal education; health and training programmes will
be conducted; and children in difficult conditions will be placed in rehabilitation
centres for resettlement.
• In order to help children in difficult conditions, especially blind, handicapped,
orphan, beggars, mentally retarded, street children etc. and lead a decent life,
education, health and community based rehabilitation programmes will be
conducted. For that matter, child improvement homes will be established in all 5
development regions and non-government and social organisations will be
assisted in establishing such rehabilitation centres.
• More than half of the children are suffering from malnutrition; hence, for the
improvement of child nutrition condition, arrangement will be made for
improvement in household and food habit, school lunch and treatment of diseases
due to the lack of iodine and vitamin-A and disease caused by the lack of micro-
nutrition elements, etc. To increase awareness about nutrition, nutrition education
will be included in the curriculum from the primary level.
• Analysis of Children Act 1991 and other laws will be conducted and they will be
implemented according to International Treaty on Children Rights. Juvenile
courts/benches w ill be established in all the five development regions.

527
• Awareness about various aspects of children's rights will be raised and parental
education will be provided for this activity. Non-government and social
organisations will be encouraged for conducting such activities.
• Textbooks will be revised for reducing the existing social disparity between girls
and boys.
• Appropriate laws against sexual exploitation, sale and theft of children and other
inhuman and heart rending activities will be framed and implemented effectively.
• Children park, children magazines, libraries are encouraged and social and the
non-governmental organisations will be encouraged in conducting such activities.
• Monitoring and evaluation of the activities regarding children's rights and welfare
will be carried out by central to local bodies.
• Inter-sectoral programmes on equality of children will be co-ordinated by the
Ministry for Women and Social welfare.

528
 13.5 Nutrition

1. Background
Physically and mentally, health manpower is indispensable for the overall
development of a country, as healthy children are pillars of the country. However,
Nepal Multiple Indicator Surveillance 1997 reveals that about 53 percent of the
children of the country are at present under various stages of malnutr ition. Population
growth, income-generating employment, lack of nutritious food, poverty, lack of
health and basic facility, lack of education and public awareness, etc. have resulted in
deteriorating nutrition condition and people hence are suffering from various types of
malnutrition. Lack of protein -based food is one of the main problems of malnutrition.
In addition, Nepalese children are affected by micro-nutritional elements like
vitamin-A and iodine. Such types of malnutrition have resulted in loss of age -specific
weight, and height, blindness, anemia, thyroid, dumb, mentally-retarded and among
the children.
Anemia among women is the outcome of malnutrition. A majority of Nepalese
women, especially pregnant and obstetrics, are affected by it. In many remote places,
people are even suffered from thyroid caused by the lack of iodine. This has badly
affected their mental health, and the body has been found abnormal.
2. Review of the Eighth Plan
Realising the fact that the level of development is reflected by the level of nutrition of
the people, 'Food and Nutrition Policy' has been set for the first time in the Eighth
Plan in the process of formulating the National Development Policy. The activities to
be taken under this policy are to increase the availa bility of food by enhancing
production with multi-cropping and diversity in farming; to make effective
distribution of food in food deficit and nutrition sensitive regions and group; to create
employment and develop manpower; and to control population grow th. Level of
nutrition has been regarded as an indicator of development and National Nutrition
Co-ordination Committee has been formed to undertake such activities under this
policy.
Accordingly, legal basis for the formation procedure of Nutrition Co-ordination
Committee has already been arranged. From this arrangement, effective coordination
has been maintained among various organisations, which would contribute to
nutritional programme implementation. Iodised salt Act has been formed. In line with
Nepal's commitment expressed in the International Conference on Nutrition in Rome
in 1992, National Plan of Action on Nutrition has been prepared and published.
Similarly, various surveys have been conducted to make nutrition data up-to-date.
3. Existing Challe nges
During the Plan period, programmes on nutrition and other income-generating
activities were conducted in agriculture, health, education and local development
sectors; however, their limited coverage in terms of population and geographical
529
region has not contributed to bringing effectiveness in raising the nutrition level of
the general people.
4. Long -term Concept
Level of nutrition among general people will be enhanced in order to contribute to
poverty alleviation by developing human resources.
Ninth Plan
5. Objective
Living standard of general people will be raised by improving nutrition status; and
healthy living standard will be enhanced by improving the deficiency of micro-
nutritious elements.
6. Policy and Implementation Strategy
• In line with commitment to reducing malnutrition, and in order to increase food
production, for improving the availability of food at the family level, the
production of nutrition-enriched foods will be supported in coordination with the
Ministry of Agriculture.
• To improve the nutrition situation, cold storage will be arranged at rural level and
distribution system will be improved.
• In order to control unfavourable impacts on nutrition level, quality of food will be
improved and the importance of balanced diet will be publicised vis-à-vis the use
of low quality food will be discouraged.
• Immunised vaccines will be provided to keep favourable nutritional level of
children. Children will be measured on their age specific height and weight while
the nutrition status of preg nant and breast-feeding mothers will be checked-up
and arrangement will be made for treatment service.
• National distribution programmes of micro-nutritional elements (protein, vitamin-
A, iodine, iron, etc. will be conducted in highly problematic areas in accordance
with the international commitment made on micro nutritional elements. Legal
arrangement will be made for the sale and distribution of iodised salt.
• To improve nutritional level, children will be provided with nutritional education
from the primar y level and public awareness will be enhanced by seminars and
training. Breakfast feeding programmes in school level will be extended in a
sustainable manner.
• Private and non-governmental sectors will be encouraged to participate in
nutrition programmes.
• In order to expedite income-generating activities for the majority of population,
poverty alleviation and nutrition programmes will be implemented through local
government bodies like Village Development Committee, Municipality, etc.

530
• Importance and availability of nutrition will be publicised through public
communication media and public awareness will be created; study and researches
will be carried out for identifying nutritional food appropriate for low-income
family.
• Nutritional level will be considered as main indicator of life standard and its
periodic monitoring and evaluation will be conducted.
• An autonomous institution will be established for the integration of various
programmes conducted by various bodies and conducting information,
communications, monitoring, and evaluation in a co-ordinated manner.
7. Programme
In order to achieve the objective of improving nutritional level in the Ninth Plan, the
following programmes will be carried out with the involvement and coordination of
various governmental and non-governmental bodies, viz. the Ministries of Health,
Education, Agriculture, Local Development, Supply, etc. and National Nutrition Co-
ordination Committee.
• In the situation of the majority of people of Nepal affected by malnutrition,
production programmes will be carried out in coordination with the Ministry of
Agriculture to increase food production for improving of the level of nutrition.
• To arrange foodstuff and increase its availability for each of the household, less
expensive and frequent supply of food will be made available by increasing the
capacity of cold storage. Necessary initiatives will be taken with the Ministry of
Agriculture to enhance the production and supply of nutrition enriched food, viz.
yellow fruits, green vegetables, food grains, meat, fish, milk, egg, etc.
• In the training programmes especially targeted to the rural women by various
bodies, seeds of nutrition- enriched vegetables will be distributed with the
suggestion of the Ministry of Agriculture in order to implement programmes for
increasing consumption levels of nutritional vegetables.
• Adulteration of various inedible food items will be controlled in order to
eliminate negative impact of contaminated and low quality food items on public
health and nutrition status. Quality control activities will be extended throughout
the country, and quality control system will be made effective with the active
participation of local bodies in order to discourage the consumption of low
quality foodstuff.
• List of less expensive varie ty of food will be prepared and published for
increasing the consumption of balanced diet and improving the nutritional status
of sensitive class, especially children, pregnant women, breast feeding mothers,
and poor peasants. Appropriate technologies will be developed and publicised for
appropriate storage, protection, and processing in order to enhance food
availability.
• Immunised vaccines will be provided under extended vaccination project in order
to reduce the infant mortality rate by protecting them from the disease due to lack

531
 of vaccines. In health posts and sub-health posts, children will be measured for
their age-specific height, and weight to protect their physical health; nutritional
level of pregnant breast-feeding women will be checked up; and treatment will be
provided for anemia, night-blindness, and diseases caused by malnutrition.
• To improve the malnutrition situation due to the lack of micro nutritional
elements, children will be treated for the diseases caused by deficiency of
vitamin-A, iron, protein, etc. Iodised salt will be distributed in the mountainous
and northern districts to reduce thyroid and other iodine caused diseases, and
iodised vaccines will be given for defensive treatment of iodine caused diseases
like mental illness, thyroid, etc. To ensure the distribution of iodised salt, level of
iodine in salt is fixed and legal criteria will be set to eliminate low iodised salt.
• Jeewan Jal will be made easily available in the community level through
hydrotherapy centres established at health posts and through rural health workers
in order to reduce the death rate due to diarrhoea and dysentery. Children will be
treated with medicines to reduce the weakness and mortality rate of due to acute
respiratory problems.
• Children will be provid ed with nutrition education from the primary level by
incorporating appropriate education materials relating to nutrition in their
curriculum. Breakfast feeding programmes in schools will be extended in a
sustainable manner under Nutritional Food Programme in order to improve the
nutrition situation of children. Training, seminars and publicity programmes will
be conducted at the local level to enhance public awareness.
• Henceforth, public awareness will be enhanced through necessary publicity in
order to encourage women to breast-feed their children for two years from the
perspective of newly born child's nutrition and immunity.
• Private and non-governmental organisations will be involved in nutrition
programmes under the policy, direction and supervision of National Co-
ordination Committee in order to improve the nutrition level of people according
to their capacity and talent.
• Local bodies like Village Development Committees and Municipalities will be
involved for mobilising local resources for poverty alleviation and thereby
increasing purchasing power of the people to improve nutrition level.
Development and construction programmes will be conducted for increasing
income-oriented employment opportunities at the local level.
• Nutrition level will be regarded as a main indicator of life standard; for
monitoring and evaluation of nutrition level periodically, indicators will be
prepared with the cooperation of all the governmental and non-governmental
bodies who are involved directly or indirectly in nutrition level improvement
programme
• Priority will be given for effective coordination of programmes and the
development of skilled manpower in nutrition sector. In order to make nutrition

532
 improvement programme effective, National Nutrition Co-ordination Committee
will be activated to work and conduct studies and researches on nutrition.
• To bring an appropriate improvement in food and nutrition level; to conduct
integrated programmes in coordination with government and non-government
bodies of health, education, agriculture and local development sectors, and to
carry out periodic monitoring and evaluation of the progress made in this sector
and disseminate the information, an autonomous secretariat of National Nutrition
Co-ordination Committee will be established at the central level. Following the
establishment of the secretariat, activities on nutrition will be carried out in an
integrated and effective manner.
The above mentioned nutrition programmes have already been included in the
programme budget prepared in coordination with various bodies/ ministries;
therefore, they have not been mentioned for the sake of avoiding duplication.
However, programmes to be conducted by National Nutrition Co-ordination
Committee are essential to mention here, which are as follows:
• To prepare nutrition indicators;
• To carry out monitoring and evaluation of the programmes conducted by various
bodies;
• To conduct necessary research and studies with regard to nutrition;
• To conduct seminars/ meetings with the participation of governmental, non-
governmental and private sectors; and
• To carry out all the activities to be conducted by the National Nutrition Co-
ordination Committee as mentioned in the National Plan of Action on Nutrition.

533
 13.6 Drinking Water and Sanitation

1. Background
Various attempts were made to develop the drinking water and sanitation sector since
the beginning of planned development. Among these attempts, public participation
did not get the main focus until the Seventh Plan. Emphasis was laid on the optimum
mobilisat ion of non-governmental sector, private sector and public participation only
from the Eighth Plan. Thus, although plans were launched in various processes from
the beginning, expected success could not be achieved. As a result, only 61 percent of
the total population have got an access to drinking water facility by the end of the
Eighth Plan. For upgrading the service standard of existing facility, great effort has to
be made even further. Water borne diseases have not been controlled due to the lack
of clean drinking water and sanitation. Sometimes, such diseases break out as
epidemic. Due to the increasing pressure of urbanisation and population growth,
drinking water supply has to be increased and sanitation programmes need to be
launched effectively in the rural and urban area. Similarly, more emphasis has to be
given to the enhancement of the quality of water, proper management of garbage and
the construction of sewerage and drainage with treatment plants.
2. Review of the Eighth Plan
The objective of the Eighth Plan was to deliver drinking water facility to 72 percent
and sanitation facility to 13 percent of the population of the Kingdom during the plan
period. It was expected that more public participation would be forthcoming in the
small and low cos t projects during the plan period. By involving the consumers from
the primary stage of projects for rapid and sustainable development of drinking water
and sanitation sector on the basis of community management, policies were adopted
to give emphasis on the construction of projects, in which users’ group could be
involved in formulation, implementation, operation, repair and maintenance of the
projects; to increase the involvement of non-governmental organisations, local
agencies and private sector in the projects of small piped water distribution system
and source protection, hand pump and well construction; to implement drinking water
and sanitation programmes by integrating these activities and to increase public
awareness on public health and sanitation through the medium of publicity and
expansion of health education.
The Eighth Plan targeted to deliver drinking water facility to a total of 7,199 thousand
people, which comprised of 6,756 thousand people in the rural area and 443 thousand
people in the urban area. In this period, a total of 5,446 thousand people benefited
from the drinking water facility: 5198 thousand people of rural area and 248 thousand
people of urban areas. In terms of physical target, 77 percent was achieved in rural
sector, and 56 percent was achieved in urban sector and thus only 76 percent of total
target have been achieved. With this achievement, it is assumed that a total of 61
percent population has been provided the drinking water facility by the end of the
Eighth Plan in the following manner:

534
Total Beneficiary by the End of the Eighth Plan
S. Development Rural Urban Total
N Region
Population Percent Population Percent Population Percent
1 Eastern 2273.0 49.77 333.2 55.29 2606.2 50.41
2 Central 3287.0 56.49 1014.8 69.16 4301.8 59.05
3 Western 2508.3 64.57 292.1 58.55 2800.4 63.88
4 Mid-western 1836.8 70.36 142.4 66.45 1979.2 70.07
5 Far- western 1433.6 81.86 98.1 43.33 1531.7 77.45
Total 11338.7 60.86 1880.6 62.49 13219.3 61.08
By extending the sanitation facility to 1159 thousand people of rural areas, 414
thousand people of urban areas and a total of 1573 thousand additional people, the
target was set to provide the sanitation facility to an additional 13 percent of the
population. However, it is estimated that a total of 20 percent population has been
provided with the sanitation facility by the end of this Plan.
3. Existing Challenges
• Adequate authority has not been decentralised and sufficient financial authority
has not been delegated to local agencies and users' communities. The capability
of users' groups and local agencies has not been strengthened and effective
coordination has not been maintained among these agencies.
• Conducive environment has not been created for attracting the private sector in
this area and the mobilisation of non-governmental organisations and institutions
has not become comprehensive. Sufficient attention has not been paid to the
development of such institutions and the service motive has not developed in
non-governmental organisations as the tendency still prevails in such institution
to be established as a medium of employment only. Clear legal framework has
not yet been established for the organisation of users' committees and non-
governmental organisations and on their registration process. User communities
are not aware adequately of managerial, technical and financial aspects of project
• The consumers of rural areas have to bear the cost of construction, operation,
repair and maintenance of projects in various ways. The policy that users' group
would bear the cost of construction, operation, repair and maintenance of projects
in the development of drinking water and sanitation facilities in urban areas has
not been put into practice. Similarly, the responsibility, role and coordination of
various agencies involved in the development of drinking water in the urban areas
such as Department of Water Supply and Sewerage, Nepal Water Supply
Corporation, users' committees and municipalities have not been made clear in
the management of drinking water.
• While formulating district development Plans District development committees
and district-level governmental agencies should without being limited to drinking
water and sanitation programmes have prepared the integrated programmes by
taking into account the programmes of non-governmental organisations,
international non-governmental organisations, village development committee

535
 and municipalities. However, programmes have not been formulated fully in such
a manner.
• Technical and administrative capability could not be strengthened to complete the
projects in specified time due to the involvement of costly technicians in donor-
assisted projects, the adoption of costly technology, the delay in the delivery of
service and the increment in the cost of construction caused by delay in
implementation.
• There are many drinking water projects, which are not handed over to users'
committees after completion. There are also many incomplete projects. These
incomplete projects should be completed and handed over immediately to the
consumers. While handing over these projects, a sense of ownership on the part
of consumers needs to be aroused.
• Public participation and investment is inadequate in drinking water and sanitation
sector. Investment need to be increased with priority for the development of
drinking water sector which is minimum basic need of the people. In addition,
additional investment could not be channeled in this sector from the income of
village development committees and municipalities.
4. Long -term Concept
The target of the Eighth Plan was to provide the drinking water facility to all the
people of the Kingdom by the Ninth Plan period. In this context a long-term concept
has been set up for the next 20 years in order to conduct programmes for the proper
development of the drinking water and sanitation facility in a phase-wise manner. The
target of the Ninth Plan has been formulated on the basis of this perspective.
In the context of development of water supply sector, it will be proper to classify the
service standard on the basis of indices of daily amount of water consumption, quality
of supplied water, time period of daily supply and its reliability. During the Ninth
Plan, drinking water facility will be delivered to all the people of the Kingdom and in
the next 20 years, the programmes for developing service standard will be conducted
gradually to improve the quality of drinking water by classifying the service level of
drinking water.
In the sanitation sector, proper sewerage with treatment plants will be constructed in
the densely populated areas of all the urban areas in the next 20 years. In all urban
areas, suitable drainage technology and proper management of garbage and sewerage
will be developed within 20 years. Similarly, environment in rural areas will be
improved by developing accessible domestic toilets with appropriate technology
based on geographical situation.
Development of drinking water and sanitation sector will not only benefit consumers
from water supply facility but also make a favourable impact on good health leading
to the production of healthy manpower and production-oriented works. Consumption
of clean and hygienic drinking water will also help eliminate water borne diseases
and the investment in health will decrease considerably. Similarly, the time spent on
fetching water can be used for productive purposes and hence the income of people

536
will also increase. Because of the time and energy spent on fetching water being
saved, consumers will also have good health. In this way, development of drinking
water and sanitation will save time, and the saved time can be used for productive
works; and thus people will benefit from additional income and the reduction of
expenditure on health, and hence it will indirectly contribute to fulfil the objective of
poverty alleviation in the Ninth Plan.
The Ninth Plan
Although the achievement during the pervious plan period on drinking water and
sanitation sector was satisfactory, one-third population of the Kingdom still has no
access to this facility yet. As a result of increasing urbanisation, industrialisation and
growing pressure of population on the existing sources of piped drinking water, it has
become obligatory to go further to tap additional source of water and, hence, drinking
water projects have become more costly than expected. It is necessary to strengthen
and clear supporting programmes such as standard maintenance of construction
materials, production of efficient manpower, establishment of processing system,
development of management information system and the involvement of national and
international organisations. Similarly, it is urgent to give emphasis on programmes
implemented in previous years for the continuance of the service. Therefore, drinking
water and sanitation sector has to be speeded up with further efficiency.
To make consumers conscious of the existing leakage of water, source conservation,
proper utilisation of water and environmental sanitation, it is essential to ensure their
active participation from formulation of projects up to construction and
implementation works. It is equally necessary to make the drinking water and
sanitation sector more attractive from the investment point of view; involve non-
governmental organisations, institutions and private sector for the development of this
sector; and create proper environment for the continuance of their involvement.
By creating an environment for using assistance from national and international donor
agencies by local non-governmental organisations, consumers’ groups and local
agencies under the periphery of national policy for the development of this sector, and
by conducting the drinking water and sanitation programmes in an integrated and co-
ordinated manner for the optimum mobilisation of existing manpower and internal
and external resources, it has become necessary to deliver the drinking water facility
to all the people of the Kingdom by improving the service level of completed projects
and creating an environment for delivering healthy drinking water by the end of the
Ninth Plan.
For the proper and sustainable development of drinking water and sanitation sector,
the role of local institutions is highly important. In the context of authority and
economic decentralisation for the development of this sector, local institutions should
be made accountable and responsible. Similarly, by identifying the liability of central
organisations, emphasis should be laid on the development of organisational
structure. By identifying resources and the ability of local instit utions and the
administrative and technological capability of central organisation; and by mutual
understanding and coordination on the basis of proper economic management, proper

537
charge and fee collection management and reliable service, strategy will be adopted
to make drinking water and sanitation programmes productive during the Ninth Plan.
5. Objective
• By developing the standard and facility of drinking water in a phase-wise
manner, drinking water facility will be delivered to all the people of the Kingdom
by the end of the Ninth Plan.
• By increasing public awareness and developing proper sanitation facility in rural
and urban areas, sanitation facility will be provided to additional 30 percent of the
population.
• By strengthening decentralised plan system in the planning process, users’
committees, non-governmental organisations and local institutions will be
mobilised at the local level.
• By increasing the quality of drinking water in a phase-wise manner and thus
eliminating water-induced epidemic, healthy life will be encouraged.
• For the proper management of drinking water facility in urban areas, private
sector will be involved and special responsibility will be assigned to
municipalities in order to activate them in developing and extending drinking
water facility.
6. Target
Drinking Water:
According to the objective of delivering drinking water facility to all the people of the
Kingdom by the end of the Ninth Plan, 7850 thousand additional people of rural areas
and 1850 thousand additional people of urban areas will benefit from the drinking
water facility.
Sanitation:
In the Ninth Plan period, special emphasis will be given to conduct public awareness
programmes on domestic and environmental sanitation. Through extensive publicity
and training, consumers will be encouraged to construct surface private toilets and a
total of 80 percent of the population is estimated to be benefited from the sanitation
facility by the end of the Ninth Plan.
The Status of Drinking Water and Sanitation by the End of Ninth Plan
(population in thousand)
S. Particulars Rural Urban Total
No
1 Drinking Water
Population to be benefited by the end of fiscal 11,339 1,880 13,219
1.1 year 1996/97
1.2 Percentage to be benefited by the end of fiscal 61 62 61
year 1996/97

538
1.3 Population to be benefited from the existing 12,724 1,944 14,668
system by the end of the Ninth Plan
1.4 Additional population to be benefited during 7,850 1,850 9,700
the Ninth Plan period
1.5 Percentage to be benefited by the end of the 100 100 100
Ninth Plan
2 Sanitation
2.1 Population to be benefited in the fiscal year 2,900 1,530 4,430
1996/97
2.2 Percentage to be benefited in the fiscal year 16 51 20
1996/97
2.3 Additional Population to be benefited during 6,360 1,320 7,680
the Ninth Plan
2.4 Total Population to be benefited by the end of 9,260 2,850 12,110
the Ninth Plan
2.5 Percentage to be benefited by the end of Ninth 36 60 40
Plan
7. Policy
• By improving gradually the service level of drinking water, all the people of the
Kingdom will be delivered drinking water facility with a minimum specified level
by the end of the Plan.
• By upgrading the standard of health and hygiene, education and awareness on
environmental sanitation of communities, drinking water and sanitation sector
will be developed under their leadership and sanitation programmes will be tied
up with drinking water projects.
• In every district, profile will be prepared with statistics of present condition of
drinking water and sanitation, existing water resource, potentiality of
development etc. and hence district-wise long-term programmes will be prepared
for drinking water and sanitation sector.
• Emphasis will be laid on the development and extension of technologies that can
be maintained by the ability of local consumer s. For sustainable development and
operation of drinking water and sanitation sector, private sector participation will
be encouraged and local institutions; non-governmental organisations and private
sector will be mobilised as co-workers. For the projects in backward areas,
disadvantaged communities and ethnic groups, special priority will be accorded
to launching the drinking water projects on the basis of public participation.
• Emphasis will be laid on the construction of sewerage and drainage and local
toilets in various parts of the Kingdom on the basis of population density,
geographical feature, size and nature of settlement, service level and accessibility
to drinking water, interest and involvement of local agencies and communities.
• By revising the existing jurisdiction and role of organisation for the development
of effective, efficient and dynamic service standard of drinking water and
sanitation sector through the medium of decentralised system of operation,

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 existing service level of drinking water in urban areas will be upgraded and
alternative dynamic organisational structure will be developed for sustainable
development. The charge of drinking water facility in the urban areas will be
determined according to the cost of construction, repair, maintenance and
operation of projects.
• First priority will be accorded to natural sources of water for drinking water
purpose. To prevent the hindrance of project implementation due to the
controversy about water source and source use; and prohibit the pollution of
source; existing laws and administrative system will be improved.
• Drinking water facility will be classified in accordance with service level defined
on the basis of amount of drinking water, its quality standard, its daily service
period and distance, and necessary improvement for the quality standard of
drinking water will be made to control water-induced diseases.
• In the implementation of projects in the rural areas, projects will be formulated
and launched with at least 10 percent of cost, whether in cash donation or labour
participation borne by consumers. To make local agencies or users’ committees
and representatives of consumers responsible for repair and maintenance of the
projects after completion, they will be involved right from the form ulation of
projects. A prior repair and maintenance fund will be established.
• Special attention will be paid to reduce environmental impact from the
programmes of drinking water and sanitation sector. In accordance with the
provision of environment protec tion Acts and laws, initial environmental
examination and environmental impact assessment will be carried out.
• Emphasis will be given to the development of manpower by means of training,
seminar and workshop for consumers, skill development of existing manpower
and production of medium level manpower necessary for the agencies related to
drinking water and sanitation sector.
• The state of construction, maintenance and operation of drinking water and
sanitation projects will be monitored continuously for rais ing the effectiveness of
monitoring and evaluation system.
8. Policy and Implementation Strategy
Plan and Programme: District profile will be prepared in a way to project the existing
situation and the future development needs for the formulation of short-term and
long-term plan for drinking water and sanitation. Proposed projects will be evaluated
on the basis of the level of access to drinking water, needs of community, local public
opinion, public participation and the involvement of community and consumers in
repair and maintenance. A tradition of selecting projects on the basis of decentralised
planning system by assimilating them in the district development plan will be
initiated. Health education and sanitation programmes will be launched by integrating
them as an integral part of drinking water projects in a unified and integrated manner.
In order to operate projects in a sustainable manner and develop this sector properly,
a prior development phase will be incorporated into construction phase of projects to
ensure social mobilisation and management. Projects will be launched only after the

540
study of environmental impact assessment and environmental examination right from
the conception stage. Mutual cooperation will be enhanced by arranging regular
coordination with bilateral and multilateral donor agencies for the implementation of
large urban projects.
Technology: Priority will be accorded to the development of small projects which are
cheap, sustainable and can be maintained by the ability of local consumers. Equal
priority will be given to the conservation, protection and development of traditional
drinking water sources. Appropriate technology will be developed and applied by
improving local technology. The private sector will be encouraged to produce
necessary materials for drinking water and sanitation sector, and necessary structures
that can be prepared at the local level. Cost directive will be prepared to simplify the
implementation of projects.
Quality Standard of Water: By maintaining the biological, physical and chemical
standard of water distributed from various systems, the process of making it clean and
hygienic will be adopted.A national code of conduct will be prepared to maintain the
quality of water; appropriate organisation will be made responsible for regular
monitoring of drinking water; organisational capability will be developed. By
establishing water refinement centres and improving the quality standard of water in
the urban area and district headquarters, existing laboratories will be used at the
central and regional level for testing drinking water, and additional laboratories will
be established in accordance with local necessity.
Institutional Arrangement: By confining the roles of central public agencies in policy
formulation, technical support, monitoring and evaluation, local agencies, non-
governmental organisations and social organisations will be made responsible for the
construction and operational aspects of projects. In this context, the responsibility for
constructing small drinking water projects with the number of beneficiaries up to 500
population will be given to local agency, social organisations and the private sector.
By adopting one of the suitable alternative organisational systems among central
public governmental agency, central public corporation, local municipality and local
users’ committee, various corporations and the private sector of urban areas on the
basis of local condition for upgrading service quality, drinking water facility will be
delivered from the business point of view. To attract private sector in drinking water
and sanitation sector, necessary legal framework will be developed. Non-
governmental and social organisations will be encouraged to participate in
programmes for drinking water and sanitation, and maximum women participation
will be encouraged in various stages of projects right through their formulation. By
formulating the policy of information flow about drinking water and sanitation,
proper organisational system will be developed and information flow will be
maintained.
Legal and Administrative Reform: To give highest priority to use local water sources
for drinking purpose and carry out the construction, maintenance and operation of
project by consumers, water resource committee in districts will be made effective.
To reduce pollution in natural water source, existing Acts and laws will be improved
as per the requirement.

541
Financial Resources: Public participation will be mobilised in a way to secure the
optimum utilisation of local resource and skill. The proportion of mobilisation of
public participation will be the basis for prioritising the selection and implementation
of projects; prior repair and maintenance fund will be established for the purpose of
sustainable development of projects. For big projects and projects with pumping
system which can benefit more than 5000 population, financial subsidy will be given
at a decreasing rate for few years for regular operation after hand-over. External
financial resource obtained from various donor agencies for the construction of
drinking water projects will be optimally mobilised, and internal source will also be
mobilised with the coordination of local agencies. Service will be determined in
urban areas on a scientific basis of cost of production, construction, improvement and
extension. The process of determining different charge for different towns will be
adopted on the basis of local service level. The system of collecting monthly charge
will be started from the community using pub lic taps. To encourage the private sector
in the construction and operation of drinking water projects, a clear-cut policy and
legal system will be developed in connection with public policy and economic
subsidy with legal base.
Repair, Maintenance and Improvement: Full ownership and responsibility of projects
will be transferred to user's committees by developing their knowledge and skill for
operation, repair and maintenance of the projects after completion. The projects
which were completed in the past but not yet transferred to users’ committees will be
transferred to them. Among the completed projects which are big and technologically
complex and which are in the state of repair and maintenance or extension, external
construction materials will be channeled through the agency constructing these
projects. For big drinking water projects, directive of repair and maintenance will be
developed and publicised. To control the leakage of drinking water in the distribution
system, leakage control programme will be launched as a regular programme of
concerned authority.
Manpower Development: The existing manpower development unit in the
Department of Water Supply and Sewerage will be developed as a semi-autonomous
institution for the purpose of skill development, transfer of technology and production
of medium level manpower necessary for all agencies relating to drinking water and
sanitation sector. Training with fee or without fee, seminars and workshops will be
conducted for increasing the skill of employees in the offices related to drinking
water, non-governmental organisations, community development organisations;
users’ committees; and other agencies related to drinking water and sanitation.
Training concerned with awareness on health and sanitation will be conducted in
coordination with the nearest existing agency under Ministry of Health for publicising
and expanding health education.
Coordination: With the active participation of existing central drinking water
coordination committee and national drinking water and sanitation committee, mutual
coordination of agencies related to drinking water and sanitation will be made reliable
and action-oriented. To increase and mobilise foreign aid, coordination with donor
agencies will be made effective. Membership of international organisations will be
taken for exchanging information on proper technology, management system relating

542
to the service of drinking water and sanitation; and an attempt will be made to extend
coordination with such organisations.
Mobilisation of Non-governmental Organisations: Local non-governmental
organisations will be mobilised as supporting organisation to users’ committee for the
selection, implementation and operation of drinking water and sanitation projects, and
skill and ability of such organisations will be developed. The works of non-
governmental organisations, working environment and coordination among various
agencies will be regularly monitored and evaluated.
Monitoring and Evaluation: Supervision system from district, regional and central
levels will be managed and strengthened in order to monitor the standard of
construction work of drinking water projects. Emphasis will be laid on benefit
monitoring for evaluating effectiveness of completed projects. Performance report of
projects will be taken periodically and technicians from regional and central levels
will supervise the projects after completion of construction works.
9. Programme
In accordance with the objective of delivering the drinking water facility to all the
people of the Kingdom by the end of the Ninth Plan with service delivery to
additional 7850 thousand people of rural areas and additional 1850 thousand people
of urban areas, a total of 9700 thousand people will be benefited from drinking water
facility. The public awareness programmes for increasing domestic and
environmental sanitation will be extensively launched. Consumers will be motivated
to construct private surface toilets through the medium of training and extensive
publicity. A total of 50 percent people w ill be benefited from the sanitation facility by
the end of this Plan.
Rural Sector Programme
To deliver the drinking water facility to all the people of rural areas, projects with
various technologies will be launched in accordance with geographical situation and
existing water source. Priority will be accorded to complete those projects, which are
not yet completed. In hilly region, piped water supply projects will be given priority
as far as possible, taking into account the density of population. The drinking water
sources, which are traditionally in use, will be improved and protected in the place
where there is scattered settlement and where projects with pipe supply are not
feasible. Pumping system with solar power and electric power will also be
constructed, taking account of the accessibility of water source and the capability of
consumers in operation, repair and maintenance of projects. Drinking water will be
supplied by collecting rain water in places where there is no other alternative sources.
Since land-water can be used in various parts of Terai region, programmes with hand
pump, deep boring and well construction will be launched. These programmes will be
launched along the side of Mahendra highway for the benefit of passengers. By
making consumers aware of domestic and environmental sanitation, they will be
motivated to construct accessible toilets and launch other sanitation programmes.

543
Rural Water Supply and Sanitation Fund Programme
For the purpose of providing financial, technical and institutional support to local,
national and international non-governmental organisations and private sector
organisation in the sustainable development of drinking water and sanitation sector;
and supporting users' groups in formulation, implementation and op eration of projects
through the medium of these organisations, a Rural Water Supply and Sanitation
Fund has been established since the fiscal year 1996/97 with the loan assistance of
International Development Agency. The facility of drinking water and sanitation will
be provided to the rural community by completing 900 projects in rural area through
this support.
The programmes for piped water supply in the hilly region and the programmes for
deep-set tube-well and well-construction in the Terai region will be launched under
this scheme. These programmes will include community mobilisation, informal
education, health and sanitation education, capability enhancement and optimum
women participation, supporting organisation and capability increase of users' groups
and skillful trainings.
Urban Sector Programme
Due to the increased pressure of growing population on water supply from the
existing water supply system in big urban cities, the problem of water supply is
seriously increasing. In order to manage the drinking water properly by facing this
condition, new projects with proper technology will be launched and implemented in
the Ninth Plan period.
In order to provide the regular and reliable facility of drinking water in the
municipalities of the Kingdom, municipalities will be involved and the present system
will be comprehensively improved and renewed. The projects with new pipe system
will be constructed in the municipalities of hilly region, and traditional sources will
be repaired, improved, protected and brought to use. Priority will be accorded to the
construction of projects with pumping system in the municipalities of Terai region.
To maintain the environmental sanitation and cleanliness of urban area, special
attention will be paid to construct drainage and sewerage. In the place where there is
no facility of sewerage, consumers will be encouraged to construct private toilets with
septic tank. The tendency of polluting the environment by connecting sewerage into
rivers and drain water will be discouraged.
Main Cities Outside the Valley
Total demand for water is increasing by 6 percent to 9 percent annually in the main
cities such as Dharan, Biratnagar, Janakpur, Birgunj, Hetauda, Pokhara, Butwal,
Bhairawa, and Nepalgunj of the Kingdom for domestic, industrial and business
purposes. By increasing the source of drinking water in these cities during the Ninth
Plan period, necessary amount of water will be provided and, by rehabilitating the
existing structures, drinking water system will be strengthened. To enhance the
quality of water provided from surface source, processing centres will be established,
and the system of distributing water from land source will be adopted by processing it

544
in a phase-wise manner. In addition, comprehensive programmes will be launched to
solve the problem of drinking water in urban and semi-urban regions.
Kathmandu Valley Urban Sector Programme
The problem of water supply in Kathmandu Valley is increasing due to the increased
rate of population growth. The demand for drinking water in urban sector of the
valley is estimated to be 145 million litres a day, whereas the supply of drinking
water is only about 115 million litres a day in the rainy season and about 80 million
litres a day in other seasons. Thus, the supply of water is quite low in comparison to
the demand in the urban areas of Kathmandu Valley.
The demand for drinking water will reach 182 million litres a day by the end of the
Ninth Plan. To fulfil this demand, new projects to increase the supply will be
launched and projects to reduce the leakage of water and strengthen the existing
system will be conducted and Shivapuri watershed areas will be properly managed
and developed to continue the water supply.
Existing sewerage and drainage systems will be rehabilitated to make them effective.
The sewerage system limited only to some areas will be extended to cover all areas of
Kathmandu Valley. Existing sewerage treatment centres will be reconstructed and
brought into operation. To prevent the tributaries from being polluted, the practice of
releasing waste into these tributaries will be fully checked; the quality level of
sewerage to be turned into tributaries will be determined; and its implementation will
be continuously monitored and evaluated.
Melamchi Water Supply Project
In order to solve the long-term problem of drinking water in Kathmandu Valley,
Melamchi Water Supply Project has been evaluated technically, economically and
environmentally viable. The objective of the project is to take water from Melamchi
tributary; generate hydro-electricity; and then make necessary improvement in the
existing system of drinking water distribution. 170 million litres of additional water
will be delivered daily through this project, and hence the demand for drinking water
of Kathmandu Valley will be fulfilled for the coming decade.
Miscellaneous
Service Level Enhancement Programme: The service level enhancement programme
will be launched during the Ninth Plan period. In order to deliver the facility of
determined service level from constructed drinking water projects, programme for
improvement, extension, renewal and quality improvement will be launched.
Repair Maintenance and Transfer Programmes: In order to ensure an arrangement for
regular and reliable drinking water supply and make projects sustainable, the repair,
maintenance, and renewal of constructed water supply projects will be made through
the active participation and leadership of users' committee. The rural drinking water
projects, which are completed but not yet transferred to users' committees, will be
repaired, renewed and transferred to the users' committees under the active
participation of consumers. In the drinking water projects of urban sector the concept

545
of alternative organisational arrangement will be put into practice, and a regular
repair, maintenance and renewal system will be arranged.
Supportive Programme
In order to meet the set target of the Ninth Plan, training, seminar and workshop will
be conducted at various levels. Necessary training will be given to all those
organisations involved in drinking water and sanitation sector; and to users'
committees and to the employees involved in operation, repair and maintenance of
projects. Necessary system will be developed to institutionalise information
concerned with drinking water and sanitation sector and collected from district,
regional and national levels, and an information flow system will be made reliable
and strong.
Bagmati Sector Sewerage Construction/ Improvement Project
This project is under way to keep the Bagmati river clean from Shivapuri to Chovar
and control disposal and other waste into the river system. For this purpose, part of
Bagmati river, from Gokarna down to Tilganga where the famous temple of Lord
Pashupatinath is situated, will be made pollution-free in the first phase. In the second
and third phase, the target of the project is to construct the sewerage on both sides of
Bagmati river from Tilganga to Chobhar and on the eastern side of the river from
Gokarna to Tilganga. To make the valley clean and pollution-free, a target has been
set to construct sewerage and road on both sides of the Bagmati river and 7 sewerage
treatment plants at various confluences of various tributaries of Bagmati river.
Moreover, treatment plants will be established at the mid part of Bishnumati and
Manohara rivers. During the Ninth Plan period, sewerage will be constructed from
Gokarna to the confluence of Dhobikhola and Bagmati river, and construction of two
treatment plants will be completed.
Solid Waste Management and Resource Mobilisation Programmes
For the management of solid waste disposal from various sources in the rural areas,
programmes tied up with environmental sanitation programmes will be launched.
Community will be motivated for the self-manag ement of garbage by making them
aware of the impact of mismanaged disposal of garbage on public health through the
medium of public awareness programmes.
The garbage from urban and sub-urban areas will be managed by local agencies with
the involvement of the private sector and non-governmental organisations. Since
garbage can also be used as resource, programmes will be launched with a special
priority for the beneficial use of garbage.
It is believed that due to these policies and strategies to be adopted in the drinking
water and sanitation sector in the Ninth Plan, the existing service level of drinking
water will be sufficiently improved for the sustainable development of this sector. It
is also expected that healthy manpower will be produced through the proper
development of this sector leading to favorable impact on national productivity.

546
 13.7 Social Security
13.7.1 Indigenous People and Ethnic Groups in Development
Programmes.
1. Background
Nepal is the homeland of multi-lingual, multi-religious and multi-ethnic community;
therefore, it is necessary to have a balanced progress of all these communities and
ethnic tribes for the overall development of the nation. It is equally necessary to
mobilise their knowledge, skill and capacity. The corner stone of democracy is to
explore social talent and capability and provide equal opportunities to all, which has
been started in our country with the inception of people's revolution in 1950. In the
subsequent period, some basic infrastructure have been created; however targeted
communities could not feel themselves being involved clearly in the economic and
social development as envisaged by plans. Various programmes in the past were
conducted for target groups. However, no consistency could be ensured between the
development programme carried out by the state and the expectations of endogenous
and ethnic tribes. The main reasons for this are a failure in tapping their peculiar skill
and ability as a valuable asset, unfair implementation procedure, lack of coordination,
incomplete package of programmes and failure in involving beneficiaries by raising
their awareness.
Such failure has obviously brought about a feeling on them that these communities
are marginalised from the mainstream of developmental activities and they are
beyond the reach of development. Keeping in view of this factor, a different approach
is at present sought to be adopted for the fact that indigenous people and different
ethnic groups should participate with self pride as an important partner in
developmental activities so that they can realise that their contribution to nation-
building and balanced development is significant. So, their contribution is expected to
be in the form of special and active participant, which is apparently different from the
traditional role. The policy is designed to create a congenial environment for enabling
indigenous people and ethnic groups to play such a role. Such approach emphasises
on "active role of indigenous people and ethnic groups " rather different from
supposing them passive recipient of benefits. So, future programme will focus on
motivating, helping, and creating environment for getting their active participation by
boosting up morale and inherent talents instead of being confined only in welfare
programmes.
2. Review of the Eighth Plan
In the Eighth Plan, endogenous and ethnic groups were targeted to be benefited from
different welfare programmes vis-à-vis integrated programme. During the plan
period, many programmes were implemented targeting socially and economically
backward people, like integrated community development programme; study,
research and survey programme; social security stipend project; social welfare centre
strengthening and development programme; rehabilitation programme; skill training
project; women welfare centre; women development programme; social survey and

547
study programme; rural self -employment development programme; social awareness
programme; bonded labour rehabilitation programme; educational development;
environment prot ection programmes. Many of such programmes were carried on
prior to the Eighth Plan. These programmes are successful if evaluated in isolation;
however, they have not been able to bridge the gap between different communities.
Besides, there is less possibility of bringing comprehensive change due to the fact that
they are confined only in some targeted programmes. Following the restoration of
democracy, the nation has been making vigorous efforts to represent the desire of
these communities. On the whole, some weaknesses in the formulation and
implementation of targeted programmes can be listed as below:
• The failure in making clear concept in line with the wave of decentralisation,
creating proper organisation and providing autonomy to such organisation have
resulted in ineffective institutionalisation of the system of developing backward
community.
• Failure to attract this community in the formulation and implementation of
programmes targeted to their development due to the imposing nature of
backward community development programme by the centre.
• Feeling of endogenous and backward communities as a subject of mercy rather
than realising them as active participants of development.
• The failure in encompassing all aspects of empowerment of backward
communities by targeted programmes.
• Improper attention towards human resource development and ineffective
monitoring of existing resource development.
• The failure in assessing and utilising properly the knowledge, skill and life style
of endogenous and backward communities.
3. Long-term Concept
A long-term concept has been adopted for eradicating social inequality,
unemployment and poverty from the country by creating a conducive environment for
moving indigenous people and ethnic groups further as an active partner and capable
co-worker of development together with other community of the country.
Ninth Plan
4. Objective
• To eradicate social imbalance by developing indigenous people and ethnic
groups, economically and socially;
• To uplift overall status of cultural development of the nation through exploration
and preservation of cultural heritages of indigenous people and ethnic groups;
• To enhance capability of indigenous people and ethnic groups through their
economic, social and collective aspects;

548
• To involve indigenous people and ethnic groups in nation building by ensuring
their access to necessary resource; imparting knowledge and skill to them; and
modernising their occupations.
5. Policy and Implementation Strategy
• Indigenous people and ethnic groups will be empowered economically and
socially through decentralisation, local development and human resource
development and utilisation. In such a process, people's participation will
constitute a main basis.
• Present targeted programmes for indigenous people and ethnic groups will be
adjusted structurally and institutionally, and implemented effectively. Special
new programmes will be launched as necessary.
• It will be made mandatory to spend a certain proportion of grant provided by the
government to village development committees for employment and income
generating skill development programmes for indigenous people and ethnic
groups
• Non- government organisations specialised in working with targeted groups will
be encouraged to carry out programmes for indigenous people and ethnic groups.
• Targeted programmes with easy access to credit will be conducted through
governmental and other institutions for the proper arrangement of education,
health, drinking water, etc. to the poor among indigenous people and ethnic
groups;
• Students from indigenous and ethnic groups will be granted priority in getting
admission in technical subjects of higher studies. Similarly, scholarship
programmes for children of this community at the school level will be made more
effective;
• Programmes for increasing opportunities for education and health service to
indigenous and ethnic groups will be implemented through various specialised
programmes, and human resource development will be emphasised through
training programme;
• Proper institutional arran gement will be made for making the beneficiaries, i.e.
indigenous and ethnic groups, in a way to be able to carry out project
formulation, implementation, monitoring and evaluation as per their needs. An
arrangement will be made to provide a grant by the government in a way to
mobilise local resources;
• Knowledge and skill of indigenous people and ethnic groups will be explored,
and proper evaluation and application of their professional expertise will be made
in development works; and
• Integrated programmes will be launched by revising the operation procedure of
programmes for indigenous people and ethnic groups.

549
6. Programme
Institutional arrangement and programme implementation procedure:
• It is felt that an appropriate central institution is essential for the identification of
needs of indigenous people and ethnic groups, policy arrangement, programme
formation and coordination. So, an independent and effective central level
council for indigenous people and ethnic groups will be formed and the council
will be responsible for preparing national-level programmes; analysing all
programmes submitted from the local level, coordinating with other government
entities; and managing different functions at central level. The council will be
formed by appointing members from the groups of people who can contribute, are
devoted to and have specialised knowledge in the peculiarities and development
of the indigenous people and ethnic groups. The seventy-five percent of council
members will be elected from the district level. The tenure of the council member
will be a minimum of three years.
• At the district level also, a committee on indigenous people and ethnic groups
will be formed. Such seventy-five committees in all districts will work as active
sections of the centre in policy formation and implementation in close contact
with District Development Committee. Such a committee will try to get
alternative programmes from the VDC level and choose the best programme.
Similarly, at the district level, the money received from government through
central council, grant provided by donor agencies and contribution made by
participating individual or group will be deposited in a separate fund. The money
of this fund will be provided to VDC or consumer groups made up of indigenous
people or ethnic group as per to the decision of such committees. Such district
level committee will take cooperation from District Development Committee,
governmental and non-governmental organisations for programme
implementation or provide technical assistance for this purpose. This committee
will perform the role of special programme coordination committee; will conduct
regular monitoring and evaluation for these programmes; and will submit
periodic reports to the council.
• An arrangement will be made for implementing programme through own group
in the event that local needs have been identified; programme to be implemented
decided, and sent to the district level; and approved by the district level
committee. The framework of programme implementation procedure will be
ascertained by the central council and district level committee. District
Development Committee, VDC and various government agencies in the district
shall extend technical and specialised service as demanded by such committee
(District Level Committee).
• District level committee on indigenous people and ethnic group will mobilise
NGOs as necessary for identifying possibilities of programme implementation in
partnership; and will send regularly the appropriate suggestion and advice to the
centre.

550
Human Resource Development Program:
• For improving the educational status of indigenous people and ethnic groups, the
district level committee and other user groups will be mobilised to create
awareness in target people for sending their children to school. Besides, some
other programmes for formal and informal education will be arranged in a way to
operate in a special manner by themselves if feasible.
• Candidates from such community will be given priority in admission of higher
study in technical subjects, like agriculture, forestry, engineering, medicine and
others, in order to provide more access to such targeted people.
• Special priority will be given to the representation of such groups in technical
schools. For this purpose an arrangement will be made to make decision on the
basis of enrollment capacity of technical school and number of applicants from
such groups.
• In order to avoid problems confronted in getting basic education due to mother
tongue and cultural factor an arrangement will be made to provide primary
education in mother tongue in order to provide basic education for all.
• In order to make a positive impact of family planning and maternal health
programmes on indigenous people and ethnic groups, special programmes of
population education, family planning, and maternal and child care will be
implemented by directly targeting to such groups.
• For providing primary health care and health education at the doorsteps of such
clientele group, women from this group will be mobilised to work as com munity
health volunteers. For this purpose, appropriate training will be arranged.
• Youths from indigenous people and ethnic group are engaged in employment
within the country and abroad. They perform low level of work at low pay due to
the lack of appropriate education and minimum technical training. To ameliorate
such situation, appropriate education and training programmes will be carried out
after identifying the demand of labour market.
• Candidates from indigenous people and ethnic groups will be provided with
priority admission in vocational schools and training institutes.
• NGOs specialised in working with targeted people will be mobilised for
conducting labour intensive as well as employment oriented training
programmes.
• For encouraging such target grou p for training programme, necessary loan will be
made available with the recommendation of district level committee in a way to
pay back after getting employment.
• People will be persuaded through mass social awareness programme about the
significance of activities oriented to the development of indigenous people and
ethnic groups. In addition, skill and knowledge of such groups will be mobilised
for conducting programmes in health, environmental protection, etc.

551
• Special attention will be paid for personality development and empowerment of
indigenous people and ethnic groups while conducting educational and health
programmes.
• Such programmes will be implemented in a phase-wise manner.
• With a view to bringing ethnic groups and indigenous people in the mainstream
of national development, social workers or facilitators of any group, community
and region contributing to eliminating social inequality and discrimination will be
encouraged through definite programmes.
Other Economic and Social Development Programs:
• Income generating activities will be conducted with seed money provided by the
government, and local participation will be ensured for resource mobilisation.
Programs specific to particular sector will be launched, such as programmes for
promoting traditional skill, art and market management in industry sector; crop
diversification, technology transfer and extension programmes on ethnic group
settled area in agriculture sector; and rehabilitation and social development of
ethnic groups in local development sector. Detail of such programmes will be
designed by proposed central council and district level committee. The
government will provide necessary policy level and technical assistance.
• Since cultural features are valuable property of Nepal, programmes like the
establishment of museum related with indigenous people and ethnic groups for
the preservation of their art and culture; informal education in mother tongue and
establishment of ethnic group study centre will be carried out.
• Employment as well as income generating opportunities will be created by
mobilising indigenous and ethnic group development committee where it has
been formed for the implementation of various other poverty alleviation
programmes.
• Indigenous people and ethnic groups will be pro vided with easy loan in order to
arrange necessary capital for carrying out different development programmes.
• Since national development requires preservation of cultural diversity and
exploitation of traditional skill and ability specific to different community and
groups, skill and ability of indigenous and ethnic community and available
technology in the local area will be encouraged to mobilise.
Special Arrangement:
It will be made mandatory to VDCs and DDCs to expend certain proportion of grant
provided by HMG for the development of indigenous people and ethnic groups.
Monitoring and Evaluation:
Monitoring and evaluation of programmes at grassroot level will be performed
primarily by indigenous people and ethnic group themselves. Review and
coordination of such programmes being implemented within the district will be
undertaken by district level committee in coordination with the Ministry of Local

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Development (MLD) and central council. The central council will coordinate and
monitor all the programmes being implemented in the Kingdom and will report to
MLD. The MLD will assess the amount of investment provided by HMG in terms of
effectiveness of coordination, impact of programme and its sustainability. For this
purpose, an appropriate system of regular information flow and reporting will be
developed.

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 13.7.2 Downtrodden and Oppressed Community in
Development

1. Background
Overall development of a country is meaningful only when all communities residing
in it are developed. Such purpose can be achieved only if the knowledge, skill and
ability of each group and community are harnessed properly. Discrimination toward
some castes and groups was declared illegal by Civil Code 1963 though social efforts
against it had been undergoing since the aftermath of Rana regime in 1951.
Nevertheless, social discrimination and its problems are prevailing in Nepali society
and reminiscences of untouchabilty can still be seen. Downtrodden people are still the
subject of neglect by the higher caste groups and thus, they suffer from poverty. Some
programmes were implemented in the past to uplift the socio -economic status of such
community; however, the disparity between downtrodden and higher classes could
not be narrowed as per the expectation. So, the former class feels that the state has not
paid due attention in their protection and development.
It is noteworthy that downtrodden and oppressed people had also a crucial role in
restoring the democracy in the country. However, they are not benefited by the fruits
of democracy and development as per the expectation. Such situation has occurred for
various reasons, like lack of integration in programmes, unsustainable and
dissatisfactory programme implementation, failure to affiliate downtrodden group in
development mainstream and programmes being directed by the centre rather than
being initiated by them. In fact, programmes fail to be participatory. Thus, policies
and programmes in the Ninth Plan, will be implemented, keeping in view the lessons
learnt from the past, so that programmes will be integrated for downtrodden group
and deprived community; such programmes incorporate their participation; and they
become equal partner, like other communities, and groups, in the process of national
development.
2. Review of the Eighth Plan
In the Eighth Plan, some local development policies and programmes were
implemented for the development of backward castes and communities. These
programmes were related with social and economic development of backward area,
social and economic upliftment of poor sects and backward community inhabiting in
rural area and enhancing the base of sustainability through emphasising people's
participation. Besides these, others projects and programmes, like social security,
scholarship, skill training, self employment in rural area, and social awareness, were
implemented. These programmes seemed successful if evaluated individually but
collectively failed to change the socio-economic status of targeted people. Some
shortcomings and problems can be enlisted as below:

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• Neither programme was designed with the concept of decentralisation, nor the
appropriate legal framework for the autonomy of decentralised bodies came out,
which obviously hindered the upliftment of backward area and downtrodden
community. Simply, it was due to the lack of effective institutions.
• Programs targeted to the development of these communities were not formulated
and implemented with the participation of beneficiaries.
• Failure to pay due attention in human resource development of such communities
and occupation as well as skill whatever they had. Their specialty was not given
national recognition, so its modernisation aspect pushed in dark.
• Downtrodden class and deprived community could not feel themselves as an
equal partner like others so that collective effort of all in development could not
be achieved.
• Absence of separate institutions and procedures for implementing such targeted
programmes led to the implementation without proper priority.
3. Long-term Concept
The state will play a primary role in uplifting the socio-economic status of such
community by creating a congenial environment to spur their talent, knowledge and
skill so that they can be involved in national development like others. Programs will
be launched for the purpose of eliminating all social discriminations and disparities
and eradicating unemployment and poverty from this community within next 20
years.
Ninth Plan
4. Objective
• To uplift the socio-economic status of downtrodden and oppressed community
through eliminating social disparity and superstitious tradition;
• To enhance the economic and social capability of such community by
modernising their occupational practices;

• To bring the knowledge, skill and ability of downtrodden and oppressed

community in the mainstream of national development through empowering
them, economically and socially; and to identify as well as encourage their
specialty in a way to contribute to national development;
• To create appropriate social base for just and balanced distribution of national
resources; and
• To enrich the overall national culture through eliminating all kinds of social
discrimination and preserving their cultural heritage.

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5. Policy and Implementation Strategy
• Downtrodden and oppressed community will be made participant by empowering
them economically and socially, through decentralisation, local development and
human resource development
• Current targeted programmes focusing on such community will be reformed
structurally and institutionally to make more effective; and some new special
programmes will be initiated.
• Traditional skill and occupation of such communities will be preserved and
modernised, and they will also be provided with vocational training to enable
them for alternative occupation.
• Institutional credit will be provided to them for forming community capital
through social mobilisation and savings.
• It will be made binding to allocate stipulated amount of grant provided by HMG
for employment oriented and income-generation programmes like educatio n,
health, physical infrastructure and sanitation, for oppressed and downtrodden
community.
• Programmes for social services such as education, health, etc. and for physical
development, such as drinking water and sanitation, etc, will be carried out in
oppressed community settlement area on a priority basis.
• The opportunity for technical education and scholarship for higher study will be
provided to downtrodden and oppressed community in an effective manner.
• Appropriate institutional arrangement will be made to enable downtrodden class
in actively formulating, implementing, monitoring and evaluating programmes
and projects focusing on their well being. The government will provide a grant in
a way to mobilise local resources.
• Procedures for programme implementation concerned with this community will
be improved and conducted in an integrated manner.
6. Programme
The programmes and their implementation procedures related with the upliftment of
down trodden and oppressed community in the Ninth Plan will be as follows:
Institutional Arrangement and Program Implementation Procedure:
• A strong and independent downtrodden and oppressed community council will be
established to coordinate at policy level and to supervise programmes targeted to
this community. The council will also bear the responsibility of finalising the
programmes submitted by district level and establish relationship with different
entities of government in central level on policy and managerial issues. The
council will be comprised of social worker s from different communities, groups
and geographical area, and specialist in downtrodden community. Seventy-five

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 per cent of members of this council will be elected from district level and the
tenure of members will be a minimum of 3 years.
• A district-level committee for downtrodden and oppressed community will be
formed in 75 districts. Such committees will recommend and approve
programmes related with the upliftment of downtrodden community, considering
the technical aspect and feasibility
• A separate fund will be established in district level to collect the money received
from the Central Council, donor agencies and mobilised through people’s
participation at the local level. Village development committee and group of
downtrodden as well as oppressed peop le will receive money from this fund in
accordance with the decision of the District Level Committee. Such committee
will receive technical and specialised services from different government line
agencies and non-government organisations in district level. Besides, the
committee will also have the responsibility to report central council after
reviewing programmes at local level
• The District Level Committee may implement programmes in partnership with
non-government organisations.
Human Resource Development Program and Education:
Education
• Due to lack of awareness of education and low level of family income, the
downtrodden people have fallen behind in utilising the opportunity for education,
within their reach. So, for improving their current status, attempts will be made to
ensure the stipend programme more practical for downtrodden people and to raise
the awareness level through formal and informal education programmes.
• Candidates from downtrodden and oppressed community will be privileged in
getting admission in technical schools. Similarly, the provision of special seats
will be made available to candidates from this community in higher education of
agriculture, forestry, engineering and medicine disciplines.
• Compulsory primary education and informal education will be made effective by
utilising literacy mobiliser, and individual from this community in order to
conduct programmes for raising their awareness level.
• A “Higher Education Scholarship Fund” will be established to award scholarships
to those students selected from the candidates who continue their study in the
discipline like science, management etc. even after passing SLC. The final
decision regarding scholarship will be taken by the Central Council with the
recommendation of District Level Committee.
• A provision will be made to appoint at least one teacher in secondary school from
downtrodden community. The school, which enroll and pass the highest number
of students from this community in each district, will be rewarded.

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Health and Sanitation
• Basic health services will be provided to downtrodden community by conducting
mobile health clinics.
• Special programmes, like population education, family planning and child health,
will be conducted by directly targeting to downtrodden community.
• Downtrodden woman volunteer will be utilised to raise awareness in health
education, first aid and sanitation service. For this purpose, NGOs will be utilised
in training and information dissemination activities.
Training and Capability Enhancement Program
• Traditional occupation of downtrodden people will be modernised through
training. Candidates from such community will be privileged in being trainee for
the training related with their occupation conducted by district office of Small
and Cottage Industry Developm ent Committee. Such committee will also be
provided with resources for managing the market of traditional products produced
by downtrodden people.
• Candidates from downtrodden and oppressed community will be privileged in
admission for technical schools.
• Trained individuals from downtrodden and oppressed community will be
provided with special loan by Rural Development Banks to carry out own
business. By the end of the Ninth Plan, such priority loan services will be
extended to 25 districts.
• Programs to rais e social awareness will be conducted by government agencies.
• Study and research will be undertaken to ascertain minimum wage rate against
service provided by the individual of this community and the standard will be
based on it.
Other Social and Economic Development Programs
• Special employment programmes targeting this community will be conducted to
minimise the chance of being unemployed despite training and ability. Those
private industries will be exempted from tax in certain per cent, which employ
individuals of this group beyond certain number. Similarly, savings and loan
programmes to mobilise local resources and incentives to self-employment
programmes will be launched.
• The problem of drinking water in the settlement area of downtrodden community
in some places is still prevailing due to the feeling of strong disgrace and
domination. So, water supply to those areas will be provided with priority under
District Water Supply Program to resolve such problem.

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Special Provision
It will be made compulsory to expend certain per cent of money provided as grant by
HMG to DDC and VDC for the development of downtrodden and oppressed
community.
Monitoring and Evaluation
A separate system of monitoring and evaluation will be adopted for the upliftment of
downtrodden and oppressed community. Primarily, implementation, monitoring and
evaluation of such programmes will be undertaken by user groups. The District Level
Committee will report to the Central Council and the Ministry of Local Development
(MLD) after performing the regular review of programmes at grassroots. The Central
Council will also report to MLD after undertaking review, monitoring, evaluation and
coordination of programmes. The monitoring and evaluation for effectiveness as well
as sustainability of the grant provided by the government will be done by MLD and
also by National Planning Commission, if necessary. For this purpose, an appropriate
information system will be established.
7. Conclusion
The downtrodden and oppressed community is the asset of the country, and their
occupational ability, knowledge and skill are significant resources for the country.
The nation’s overall development is possible only if their active participation is
ensured. Considering this fact, such community will be mobilised as an active
participant in development programmes, which create a mutual understanding,
equality, social awareness and ultimately contribute to the poverty alleviation that is
the only national goal.

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 13.7. 3 Helpless, Disabled and Senior Citizens

1. Background
Social security and welfare aspect is an integral part of overall national development.
A welfare state is meaningful only when this aspect is taken care along with other
aspects of development. A state has to bear duty and responsibility of social security
to uplift and develop the socio-economic and the overall status of its citizens.
Social security system assures the right of socially, economically, physically and
psychologically vulnerable people for normal and dignified life. The state should feel
the responsibility of guaranteeing social security to weak, poor and helpless citizens.
A state should design appropriate structure and programme of social security within
its own economic and social limitation. Based on traditional welfare concepts, the
disabled and weaker sections of a society are looked upon as subjects of mercy. In
accordance with recent concepts of social rights and security, they deserve not mercy
but feelings of right and opportunity that need to be estabished in the society.
Modern welfare state ought to provide economic and social security in the form of
facilities and respect to senior citizens who have already contributed to their credit.
Some of the nations have been adopting social security policy from the beginning of
this century for the welfare and benefit of their people.
It is imperative to bring helpless, disabled, women, children and old people in the
mainstream of development process through providing them with rehabilitation,
security and employment opportunity.
The government is moving ahead with some new ideas and programmes in social
welfare, though it has been lately started. It is envisaged that the government has to
bear more responsibility toward people and society these days. The concern over the
welfare and protection of women, children, senior citizens and physically or mentally
disabled people has gained momentum due to the inherent intention of people’s
movement and the Constitution of the Kingdom of Nepal 1991 for special provision
toward these people.
Social security seems very significant to the country like Nepal having such social
and economic structure; however, due attention has not been paid on it in previous
plans. In the Eighth Plan, few welfare activities were carried out concentrating on
disabled, children, senior citizens and helpless women. But those activities were
confined only in narrow aspect of social security. So far, social security to senior
citizens have been in the form of pension to ex-employees, elderly homes to helpless
old people and allowance to old people.
Though social security comprises all aspects related with compensating people who
are unable to actively earn own livelihood, this topic deals only with helpless,
disabled and senior citizens and the remaining aspects of social security have been
included in other topics.

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2. Review of the Eighth Plan
Although there is no separate policy and programme for social security heading of the
Eighth Plan document, the annual programme FY 1995/96 had incorporated some
policies like assuring social security to helpless, old and weak citizens for
maintaining dignified human life; accepting social security as social investment; and
institutionalising it. To implement these policies, some programmes like providing
monthly allowance worth Rs 100|- to each individual above 75 and helpless widow
above 60, free medical treatment and help to old people were promised but only
allowance distribution programme could be made effective in practice.
3. Long-term Concept
The state will protect the rights of old, helpless and disabled citizens by providing
essential service and facilities; and their valuable experience, skill, knowledge and
capability will be mobilised for national development. The state will guarantee social
and economic justice to th ese people.
Ninth Plan
4. Objective
Senior citizens are assets of the nation because they carry social values, tradition and
culture. The state will properly honour and protect senior citizens, helpless widow
and disabled citizens together with mainstreaming their capability, experience,
knowledge and peculiarities in national development.
5. Objective
The experience of elders will be capitalised for the sake of national development.
Elderly homes will be established in all five development regions. All senior citizens,
helpless widows and disabled citizens will be ensured with social, and economic
security, and their rights will be guaranteed and preserved.
6. Strategy
Social security will be made complementary to social justice and thus, social security
programme will be based on the economic and social background.
The experience, skill, knowledge and capability of senior citizens, helpless widows
and disabled people will be utilised in policy making, income generating activities
and formulating directives for national development.
Necessary laws will be promulgated for guaranteeing the rights and ensuring
economic, and social security of senior citizens, helpless widows and disabled people.
Elderly homes and rehabilitation centres will be established and operated for securing
the lives of helpless old, widow and disabled people.
7. Policy and Implementation Strategy
As the economic capacity of the state becomes strong, the scope of social security
expands as well. Realising this fact, policy and programme during the Ninth Plan will

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encompass dependent people within the coverage of social security depending on the
economic capability of the state. An arrangement will be made to avoid duality in the
distribution of allowance to senior citizens, helpless widows and disabled people.
Senior Citizens:
• With the objective of enabling senior citizens to lead a life with more dignity,
family-based security system will be developed, in which family caring for elders
will be provided facilities and given priority on public services.
• In the background of growing population, senior citizens, helpless widows and
disabled people will be classified in different categories on the basis of economic
capability. Degree of vulnerability will be the base for encompassing in
allowance recipient group; however, they will be treated equally in other aspects
as well.
• All zonal hospitals will have geriatric ward. Senior citizens will be treated in
subsidised rate in hospital and health centres. Some efforts will be undertaken to
render certain per cent concession in the fee for treatment in private nursing
homes and clinics. An arrangement for their treatment will be made by
conducting various mobile health services.
• Elderly homes will be established in all regions, keeping in view the welfare of
senior citizens. NGOs and private sector will be encouraged for this purpose.
Income generating activities based on the capacity, skill, knowledge and desire of
citizens will be carried on.
• The experience of senior citizens will be utilised in different aspects of nation-
building.
• Senior citizens will be given concession also in entertainment and public
vehicles.
• Senior citizens will be categorised in two classes; people falling between 70 to 75
years age group will be taken for participation, and people above 75 years age
group will be provided security.
Helpless Widow:
• Helpless widows will be involved in income generating activities conducted by
the state or NGOs or other groups, and their economic capability will be used
criteria for prioritising widows of poorer families.
• Shelter for the helpless widow will be established.
Disabled People:
• Legal reforms will be undertaken to ensure welfare and dignified life of disabled
people.
• Programmes like antenatal care, nutritious feeding in childhood and ensuring
effective traffic rules will be undertaken to prevent being disabled in childhood.

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• In order to conduct effective preventive and protective measures for disabled
people, public awareness will be enhanced through various media of
communication.
• Disabled people will be provided free education from pre-primary to bachelor
level, and disability specific vocational education will be developed.
• The data related with different types of disability will be updated.
• Free treatment to handicapped people will be provided in health centres and
hospitals if it is felt essential.
• For physical, intellectual and psychological development of handicapped people,
some programmes of sports, entertainment and other activities will be started.
• Priority will be given to rehabilitation in the family. Community shelter will be
provided if it is felt essential.
• Necessary works will be carried out for disabled people for creating employment
opportunities in government and NGO agencies. Besides, NGOs will be
mobilised for rehabilitation and other activities focusing on disabled people.
Keeping in view the provision stated in the declaration endorsed at various national
and international conferences for the welfare, security and protection of helpless
widows and disabled people, following programmes are approved in the Ninth Plan.
8. Programme
Following programmes will be implemented in this Plan for providing service and
facilities and protecting and preserving rights to senior citizens, helpless widows and
disabled people.
Senior Citizens:
• VDCs and municipalities will maintain records of senior citizens by updating two
times a year.
• Senior citizens will be granted monthly allowance and facilities based on updated
record of citizenship and voter's identity card.
• Geriatric ward will be established in central and regional hospitals in order to
provide regular health check up and treatment at subsidised rate to senior citizens.
• One elderly home will be established in each development region and such home
will have the provision of entertainment, library and religious speeches
deliverance. Similarly, senior citizens club will be established in village and small
locality. Local bodies, NGOs and private sector will be encouraged to perform
above activities.
• Reservations of seats as well as concession in ticket will be provided to senior
citizens in public transport.
• Ability and experience of senior citizens will be utilized for following purposes:

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• local level policy making,
• playing the role of motivator in social and economic activities,
• sharing the experience with school students,
• participating in local level committees.
Helpless Widows:
• Welfare centres for helpless and disabled people will be established.
• By the second year of the Ninth Plan period, the data of all handicapped people in
the country will be collected and classified by the nature of disability. They will
be given the certificate mentioning the type of disability. Authentic data of
helpless widow and disabled people will be maintained in each VDC,
municipality, sub-metropolis, metropolis entities, DDCs and the Ministry for
Social Welfare.
• Allowance for helpless widows and disabled people will be distributed through
simple procedure at the local level. Allowance to disabled people will exclude
regular employee, income earner, people living in rehabilitation centre and
recipient of scholarship and other facilities.
• Arrangement will be made for granting free education up to bachelor level to
retarded, deaf and blind people as well as hostel facility to them will be arranged
in each development region.
• Such group will be provided free vocational training.
• Textbooks will be developed in Braille script and distributed to blinds.
• Special programmes targeting to such people will be broadcast through various
communication media, particularly radio and television.
• Specific treatment centres for disabled people will be established to serve them at
subsidised rate.
• Industries, which produce accessories like artificial limb, wheel chair, crutches,
and hearing aid for disabled people, will be encouraged to establish and an
arrangement will be made to distribute much materials at subsidised rate.
• Income generating activities will be conducted in the community of those
disabled people who are able to work. Such activities will be implemented mainly
by the government, and other sectors will be encouraged as well.
• The employer who employs handicapped people will be provided with special
facilities if it is felt essential.
• Laws and regulations relating to disabled people will be timely amended and
effectively implemented.

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Institutional Arrangement for Program Implementation:
The efficiency of service providing entities conditions goal attainment, to a great
extant; however, due to the use of traditional technology and impractical efforts for
getting successful implementation of above programmes, the participation of
following entities together with the government seems desirable in the manner as
follows:
• Assigning the job of identifying senior citizens, helpless widows and disabled
people to local bodies (VDCs and Municipalities) and then classifying them on
the basis of economic capability.
• Distributing allowance, service and goods to senior citizens, helpless widows and
disabled people through local bodies; entrusting gradually specialised non-
governmental organisations with the distribution of above facilities using of
voucher card; and conducting the monitoring, and evaluating of efficiency and
effectiveness of distribution activity through local body.

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 Chapter 14
Women and Youth Development
14.1 Women and Gender Equality
1. Background
In this competitive age on the eve of the twenty first century Nepalese women are still
found suppressed, exploited, neglected and forced to live insecure life because of
illiteracy, ill health, poverty, orthodox traditions and discriminatory legal system.
Since, women constitute 9.2 million or 50.13 percent of the total population of 18.5
million; multi-dimensional development of Nepalese women contributes to the
overall development of the country. Taking into consideration these facts, women in
development has been accepted since the Sixth Plan as a national policy and several
sectoral women development programmes were implemented and institutional
development efforts were carried out. However, the progress in gender equality is not
to the mark.
2. Review of the Eighth Plan
In the Eighth Plan, several women development policies were adopted to involve
women in the national development mainstream in order to ensure their participation
in every sector of development, improve their social, economic, educational, political
and legal status, increase their capacity by imparting appropriate knowledge and skill
for the employment generation, and create appropriate environment and infrastructure
for more opportunities in decision-making from local to national level. On the basis
of the concept of one woman teacher in each primary school, a total of 4150 women
teachers were hired, and programmes were launched such as free education for
females, scholarship for 158948 primary, 37075 secondary and 1231 campus level
female students and non-formal education for females (daughters and sisters,
Chelibeti) not attending the schools. To improve health condition of women and
reduce maternal mortality rate, safe motherhood programmes were launched in 10
districts. Similarly, Maternal and Child Health Workers, Female Health Volunteers,
and Traditional Birth Attendants training programmes were implemented for
mobilising women in the local health delivery system. Recognising the fact that 42
percent share of decision making and 57 percent share of work were performed by
women in agricultural works, establishment of Women Farmers' Division in the
Ministry of Agriculture, formation of women farmer's group and several training and
study programmes were launched during the plan period.
Women-targeted training and income-generating programmes were also launched in
forestry, industrial and local development programmes. To increase access of rural
women to economic resources, Production Credit for Rural Women Programme were
carried out in 621 VDCs and 10 municipalities of 67 districts. Micro Credit for
Women Programme is launched with the help of NGOs (NGOs) in 10 districts.
Similarly, Small Farmers Women Development programme has also been expanded.
To increase women's participation in politics, provision has been made as to the

538
added inclusion of women candidates in the Ward level elections resulting in the total
strength of women ward members reaching 36,000 in number.
According to the commitment shown at the International Women's Conference held
in Beijing in 1995, a Gender Equality and Women Empowerment National Work
Plan 1997 incorporating several aspects has been formulated. Control and
rehabilitation works as regards girl trafficking and domestic violence against women,
income-generating education, and several health-related programmes were carried out
at the rural level by 572 NGOs involved in women's development. The Ministry of
Women and Social Welfare (MWSW) has been established for the institutional
development of the women's development sector.
3. Existing Challenges
Past efforts in women development resulted in institution building and extension of
sectoral programmes. However, due to the lack of monitoring and evaluation system,
an accurate account of the women beneficiaries could not be made. Taking as a
whole, socio -economic status of Nepalese women is still lagging behind. According
to the statistics of the Central Personnel Record Office, women number at about
5,000 only out of 80,000 total employees. Because of legal and social reasons women
were denied access to property, employment, income and other economic resources.
Because of low educational level and other social reasons, women are still denied
access to political and administrative decision-making. At present, maternal mortality
ratio for 10,000 live birth remains 53.9, fertility rate 4.6, average life expectancy 53.4
years (male 55.9) and, out of the average literacy rate of 48 percent, female literacy is
only 30 percent (against the male literacy of 66 percent).
Because of economic and social inequality between men and women, women's
participation in development activities is not encouraging.Nepal is committed to
international declarations for women's development such as the First World Women's
Conference held in Nairobi in 1975, Long-term Work Plan 1985, Beijing Declaration
1995. The Constitution of the Kingdom of Nepal, 1990 enunciates women's equality
before law and has a provision for special treatment for their socio-economic
development. Considering these facts, long-term women development concepts and
the Ninth Plan’s objectives, policies and programmes are formulated in the following
framework.
4. Long -term Concept
Creation of a developed society on the basis of women’s empowerment and gender
equality through mainstreaming women's participation in each and every aspect of
national development is the long-term concept of women's development.
The Ninth Plan
5 . Objective
The Ninth Plan has made women as the target for achieving its overall aim of poverty
alleviation and human resources development. In this light, following objectives have
been incorporated in the Plan.

539
• To involve women actively in different sectors of development for building
egalitarian democratic society.
• To increase access of women to political, economic and social sectors, and
reforms in legal provisions so as to ensure women's rights for making that access
more effective.
6. Policy and Implementation Strategy
Involvement of Women in the National Development Mainstream
• National and sectoral development policies, goals and programmes will be
ascertained to involve women in the mainstream of national development.
• Contribution of women to household labour will be evaluated scientifically and
substantially by reviewing the national accounting system.
• For the effective coordination and implementation of women development
activities, existing institutional structure will be strengthened, expanded and
developed. Similarly, effective coordination will be established among all
agencies, organisations and local bodies working in the field of women's
development.
• For measuring women's participation in development, appropriate gender
desegregated indicators will be reformulated and modified and monitoring and
evaluation measures will be carried out effectively.
Elimination of Gender Inequality
• Review of laws and regulations which discriminate between men and women and
which are obstructive to ensuring equal rights for women will be carried out to
make egalitarian laws.
• Existing economic, social and other forms of discrimination will be gradually
reduced with the adoption of positive policies and programmes, which give
special priority for women for gender equality and rights.
• In view of the national policies relating to the elimination of gender inequality,
governmental and non-governmental organisations as well as local bodies will be
mobilised with coordination and integration to control all kinds of crimes and
violence against women through preventive, rehabilitative and other kinds of
measures. Subsequently, women's human rights will be protected.
• From policy to implementation level, publicity and promotion education and
training will be institutionalised for generating gender awareness.
Women's Empowerment
• To increase women's share in the decision-making process of national
development policy and programmes from local to national level, policy of
adopting special legal system in accordance with the constitution will be applied
into practice.

540
• Considering the contribution made by women to the agricultural sector, agri-
technical training, market management, land and agricultural income generating
activities in accordance with APP will be implemented to safeguar d women's
rights and, special arrangement will be made to establish women's rights and
mobilise women labour force.
• Women health service based on healthy life cycle will be developed for the
protection of women's living rights. In this context, under the purview of the
preventive and curative services, qualitative expansion will be made of such
services as regards the protection of foetuses and pregnant women, reproductive
health and elderly women's health provisions; and an arrangement will be made
to increase women's access to these services and facilities.
• With a view to increasing women's access to formal and non-formal education for
bringing about improvement in the educational standard of themselves, policies
and programmes such as women scholarship, women teachers special facilities in
technical education, etc., will be given continuity while placing emphasis on
extension, access and encouragement as regards to such programmes.
• In order to enable women to utilize employment opportunities in such sectors as
industries, tourism, forestry, transport and water resources, programme has been
formulated to enhance women's capabilities including training and access to
subsidised credit facility.
• Extension of agriculture and other appropriate technologies for reducing the
workload of women and increasing productivity will be made and women's
access to such technologies will be ascertained.
7. Programme
Considering the Beijing Declaration 1995, a Gender Equity and Women's
Empowerment National Work Plan 1997 has been formulated encompassing 12
sectors that need to be paid serious attention on women and poverty, education,
health, violence, armed insurgency, economy, policy making, institutional structure,
human rights, environment and children. Following programmes will be implemented
for women's development in accordance with the Ninth Plan policies based on the
National Work Plan.
• Programmes related with scholarship, hostel accommodation, female teacher and
other incentives will be extended. Encouragement programme will be launched to
increase female literacy rate from 25 percent to 67 percent, women teachers to 50
percent and women participants in skillful vocational training to 50 percent.
• To enhance women's health status, health service development based on
reproductive health cycle will be emphasised. For this, legal arrangements will be
made for the protection of foetuses and pregnant mothers and for safe
motherhood and elderly women's health programmes will be implemented. With
the help of the trained manpower a household to hospital referral system for
providing pre-natal, natal and post-natal services will be established. Family
planning programme will be expanded significantly to control population. For

541
 securing birth control, special emphasis will be given to increasing the
availability of permanent and temporary means of family planning and also to
large-scale publicity campaign and targeted population education.
• To increase the productivity of women farmers, necessary programmes for
ensuring women's acces s to production technology, materials, production credit
training, market facility, etc., in an easy and simple manner will be implemented.
Recognising the lead role of women in animal husbandry, programmes related to
credit, animal insurance, animal healt h training, animal product-based industries
will be conducted so as to secure women's direct participation in livestock
developing programme. To provide women with equal rights as regards land
ownership and utilisation, protection of land tenancy necessary amendments in
Acts and regulations will be made and publicity and proportional programme will
be carried out.
• To increase women's participation in economic sectors like industry, tourism,
forestry, transportation, etc., programmes relating to entrepreneurship
management training, concessional credits, employment system will be
conducted. Likewise, for the women involved in such system, promotional
incentives and honourary certificate programmes will also be conducted.
• To increase self-employment through increasing women's access to economic
resources and subsequently assist in the overall poverty alleviation programme,
production credit and small farmers development programme will be gradually
expanded and institutionalised on a district-wise basis. Similar ly, micro credit
programmes carried out through mobilising NGOs, rural banks and private banks
will be carried out by incorporating them in to the women credit programmes.
• Egalitarian rules and regulations will be formulated and family court will be
established in this process, list will be made of the rules and regulations regarded
as obstacles for granting equal rights to women; and programme related to the
preparation of review reports, seminars, interactions and legal education will be
launched.
• Programme to reduce economic and social disparities existing between men and
women will be implemented targeting women. In this context, in the development
projects, appropriate legal provisions will be made and programmes will be
implemented in areas such as political and administrative policy decisions and
local level employment opportunities. For this, Public Service Commission,
Ministry of General Administration and other sectoral ministries will be
mobilised.
• To control all types of violence and crimes against women, programmes will be
implemented encompassing such areas as identification of crimes, necessary
punishment system, remedy and rehabilitation system and raising social
consciousness. For this NGOs will be mobilised with the necessary incentives.
• Provision will be made for incorporating the statistical details on women into the
population census and for evaluating women's development programme through

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 developing indicators for the national accounting system concerning the status of
and contribution made by women in nations development programme
• To reduce the burden and time spent in works of women and to utilise the surplus
time thus saved appropriate machines useful for household and agricultural works
will be marketed and publicised.
• To raise consciousness about gender equality at political, administrative and local
levels, training, seminars and publicity and promotional programmes will be
carried out under sectoral programmes in an integrated way.
• To increase effectiveness in formulating and implementing women development
programmes, institutional capacity of concerned agencies will be enhanced
through expansion of their sections and divisions, and provision of gender
training programmes. In this context, Ministry of Women and Social Welfare will
be made capable and effective and developed as the focal point for women
development.
• Several sectoral programmes related with women development will be conducted
through the concerned agencies. Special arrangement will be made at the central
level for the effective participation of women in various socio-economic activities
implemented by the government and the impact of such activities on women.

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 14.2 Youth and Sports
14.2.1 Y`outh Mobilisation

1. Background
Youths play a lead role in nation building. Youth's spirit, diligence, enthusiasm and
creativeness are comparable to none. In the Nepalese context, youths of 15 to 29
years age group occupy about 27 percent of the country's total population.
Qualitatively and quantitatively, this is the most important segment of the nations'
population. But most of the youths lack experience and self-confidence and are not
properly oriented to the national realities. For securing a nation's development,
national priorities, resources and means should all be channelised for the
development, progress and mobilisation of youth. But this huge portion of population
is not being mobilised effectively in social development, community progress, rural
development and, on the whole nation's socio -economic development.
Youths have their own specialties, aspirations, problems and needs. They should be
treated as a most important of the population. But efforts towards resolving their
problems, fulfilling their needs and utilising their potentialities and specialties have
not been satisfactory.
2. Review of the Eighth Plan
In the first three years of the Plan, youth-related programmes were implemented
through the Ministry of Education and Culture. During the plan period October 1995
(on Ashwin 6, 2052 BS) Ministry of Youth, Sports and Culture was established.
Thereafter in the last two years of the Plan, some programmes were implemented
through this Ministry.
3. Existing Challenges
Problems of youth development are mostly related to education, culture, employment,
health, sports, crimes and addiction to undesirable acts such as drug abuse.
• Most of the youths are still denied of educational opportunities. There are several
problems found among the literate and educated youth mass. There are great
numbers of youths who are literate or educated nominally but whose education
has not been of any utility to their life. School dropout rate is also very high. As
the level of education increases enrollment in the higher education decreases.
Educational quality is comparatively low. Besides, ever -growing number of
students who fail in their academic exams has also created another great problem.
• Because of the lack of education and unemployment, criminal attitude and abuse
are on the rise among the youths.
• The effects of external culture developed and expanded through mass media are
also mostly concentrated in the youths. In the course of losing own national
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 culture and values and imitating foreign culture recklessly, youths have fallen
prey to confusion and directionlessness.
• The impact of insufficient basic health facilities has also naturally fallen on the
youths. Though there are some youth related health problems which demand
special and urgent attentions. Youths are vulnerable to such problems as AIDS,
veneral diseases, smoking, alcoholism and drug abuse.
• Taking into consideration the fact that a huge number of young Nepali women are
involved in prostitution and similar number of youths are going abroad each year
for employment, possibility of AIDS epidemic is ever increasing. Considering
these facts, WHO predicted 100,000 HIV positive cases by the year 2000. It is
certain that youths will occupy the greatest share of AIDS-positive cases.
4. Long -term Concept
• To create a situation where Nepali youths could enjoy a life full of self-respect
and dignity as a citizen of an independent country.
• To inculcate a culture of respect for democracy, human rights, discipline and hard
work among youths.
• To provide youths with the opportunities for gaining knowledge and experience
on geographic, social, economic, cultural and traditional realities of the country.
• To check youth brain drain by providing employment-oriented education.
• To provide youths with the opportunities for involving them in socio-economic
change and nation-building exercise by lett ing them earn a direct experience
about nation's situation while obtaining formal education.
• To utilise youths in sports development and cultural conservation by mobilising
them as educated, conscious, disciplined, creative and productive manpower.
• To provide existing and coming generations of youth with education, health,
social development and production opportunities. To provide youths with
opportunities to acquaint themselves with the prospects and obstacles with regard
to national development and too mobilise them in activities that unfold human
creativity and integrate culture with economic opportunities while going full
attention to its preservation.
• To create opportunities in the mainstream of national development and to
mobilise youth manpower through their participation and recognizing them as a
change agents for the socio-economic development of the country.
• To provide opportunities for experiencing rural and community level
development activities. To ensure continuous participation of all the students of
university level by providing them with this process.
• To organise youth camps in rural areas of each electoral constituency with the
involvement of NGOs.

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• To eliminate educational unemployment by creating employment and self-
employment opportunities for the educated youths by providing them skill-
oriented training.
Ninth Plan
5. Objective
Considering the lead role youths play in nation building, the Ninth Plan's objectives
will be to streamline youth to their fullest extent in the national mainstream by means
of mobilising them in the socio-economic development of the nation. Other objectives
will be as follows.
• Youth manpower will be utilised to its fullest extent in the productive sector.
• Youths will be enabled to act as able citizens by inculcating national
responsibility among them.
• Youths will be developed as change agents for the coming 21st century and they
will be made capable of confronting the existing challenges like poverty,
illiteracy, backwardness and superstitions.
6. Target
1. Youth mobilisation in rural / community development 20,000 Youths
2. Rehabilitation members 1,000
3. Participation of youth volunteers numbers 5,000
4. Establishment of rural community development centres numbers 75
5. Youth personality development Youths 20,000
6. Youth self-employment youths 10,000
7. Policy and Implementation Strategy
• Necessary coordination will be established for the involvement of youth in the
youth development programme and sectoral programmes such as population,
environment, tourism, education, health, sports, tribal development, local
development and women development.
• In order to systematise and promote youth employment-related activities,
employment-oriented vocational education and training programmes will be
conducted by coordinating the employment-oriented institutions of the
government.
• Appropriate environment will be created to make youths conscious and active
with regard to democracy, human rights, culture, traditions, society and national
responsibility.
• Policy of utilising youths skill to their fullest extent will be adopted for bringing
in the dynamism into development.

546
• Policy of utilising youth as a change agent in rural and community development
will be adopted.
• Youths of rural and urban areas will be encouraged to involve themselves in
innovative and creative works. Similarly, they will also be involved in local-level
programmes for socio -economic development.
• Cooperation from international governmental and non-governmental
organisations will be mobilised for the development of youth.
• To build personality and enhance capacity of those youths with several skills and
talents in literature, culture, arts, music, acting and sports necessary training
opportunities, reasonable incentives and scholarship programmes will be brought
forth.
• Mass media will be mobilised for the publicity as well as information and
communication for highlighting the positive role of youths for guiding them in
desired right direction.
• Youth exchange programmes with various friendly countries will be arranged for
sharing knowledge and experience on the practical aspects of the development.
• Youth awakening and orientation programme will be conducted to develop good
character and morality among youths thereby preventing them from falling in
criminal acts and abuses.
• National Youth Day will be observed with a view to highlighting the
contributions of youth force. National and regional level youth festivals will also
be organised.
• At the craftsman level, youth exchange programme will be conducted and
exhibitions will be organised to facilitate the practical craft demonstration.
• Several programmes related to youth health will be conducted and advertisement
programmes will be launched to distract youth from crime and abuse.
• National Youth Council will be constituted to develop youth personality in
different sectors.
• To facilitate research and study on and about Nepal to be carried out by the
national and international researchers, Encyclopaedia of Nepal will be published
through Royal Nepal Academy.
• Educated youths will be mobilised to expand programmes such as education,
health, population, environment and community development and to increase
consciousness at the community level. Opportunities will be provided to the
youths to conduct study and research on the socio-economic situation of the
country.
• Youths will be mobilised towards the programme focusing on the elimination of
illiteracy and expansion of education.

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• Youth Employment Information Centre will be established to dissiminate
information among youths about the employment, self-employment and foreign
employment opportunities and also the training necessary as per the needs and
demands of such opportunities. This centre will also serve as a centre for
employment demand-oriented training programmes.
• To conduct self -employment programmes for rural and educated unemployed,
concessional credits and loans will be made available on the basis of project
proposals.
• For the publicity and dissemination of information on environmental protection,
community development, tribal development, literacy, population control, family
planning, safe motherhood, nutrition and basic health services, programmes of
youth mobilisation and orientation will be launched.
• Youth will be involved in the campaign of anti- AIDS, anti-smoking, anti-
alcoholism and anti-drug abuse publicity and communication programme.
• Rehabilitation programme for the drug addicts will be devised and carried out.
• A high level organisation will be established to advise government on the matters
related with national youth policy and programmes to mobilise youth in the
programmes conducted by different agencies and to coordinate their activities for
more youth participation.
• A central network of NGOs concerned with youth-related activities will be set up
to establish coordination and inter-relationship between non-government and
governmental youth organisations.
• Participation of youth in the youth festivals as volunteers will be increased both at
he national and international level.
8. Programme
Youth Personality Development
• Programmes such as training, seminars, workshops, travel, etc.
• Programmes of exchanging practical knowledge and experience.
• Programme providing opportunities for demonstrating one's own talent and
encouraging such talents.
• Programme opportunities providing for research and study.
• Youth talent development programme focussing on several skills, arts, sports and
other creative sectors.
• Special programmes for developing the personality women and youth.
Youth Mobilisation in Rural and Community Development
• Youths who are currently studying at the universities or have already graduated
and post-graduated will be involved in the rural and community development

548
 programmes to provide them with field experience. This involvement will assist
in covering such areas as developmental activities environment, population,
health, sports, culture and tribal, women and youth development.
• Youths will be mobilised as socio-economic change agents among indigenous
tribes and marginalised section of population in the backward regions.
• Youth at the local rural level will be motivated to be involved in the community
and rural development programme around their neighbours and villages.
Youth Awakening and Orientation Programme
• Youth festivals, camps and gatherings will be organised for awakening and
orienting youths about national values and norms, democracy, human rights,
cultures, national problems, existing challenges and the role of youths
themselves.
• Publicity and promotional programme focussing on raising awareness among
youths will be launched
Rehabilitation Programmes
• Coordinated and cooperational programmes for the propagation and control
against AIDS, veneral disease and drug abuse.
• Identification, treatment and rehabilitation programme for AIDS and drug
abusers.
• Coordinated programmes aimed at preventing and controlling women trafficking
and flesh trade involving all concerned agencies fighting against such practices.
Youth Volunteer Development and Exchange
Training and exchange of male and female youth volunteers at the national and local
levels, exchange of volunteers at the international level for rendering cooperation and
contribution to the development works on the basis of demonstrated capabilities and
experiences.
Instit utional strengthening
• Constitution of the National Youth Council
• Constitution the District Youth Mobilisation Committee
• Establishing relations and cooperation with NGOs and clubs concerned with
youth activities, e.g. Jaycees, Rotary, Leo, Lions, Scouts etc.
• Establishment of Rural Community Development Centres.

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 14.2.2 Sports

1. Background
Sports are not only important human activities but also means of building healthy and
active workforce in the nation. In order to build healthy, capable, and disciplined
manpower, sports should be treated as a strong basis for the overall national
development. Sports should also be treated as a means of enhancing national prestige
through the success at international competitions. Institutional efforts for the
development of sports have spanned four decades but the success as desired is far
beyond the reach. Sports sector has not been developed in the context of overall
national developmental perspective, and it is limited only to entertainment for the
ordinary citizens. Hence, there is a need for making sports development efforts
effective, useful and a matter of bringing in national prestige and pride. Likewise
there is a need for expanding the facilities of sports for talents development all over
the country and also for making this sector resourceful.
2. Review of the Eighth Plan
During the Eighth Plan period, various efforts have been made for the development of
sports. In this context, activities including training, competition, international
participation and construction and maintenance of sports infrastructure were
implemented, which contributed to the development of the sports sector. More than
20 national, regional and district level competitions were held, and about 700,000
players were trained during the plan period. As regards international competition,
Nepal participated in the Olympic, Asian and south Asian games and bagged gold,
silver and bronze medals totaling more than 100. Similarly, with regard to
construction sector some new infrastructures were set up and maintained. During the
same period, government established Ministry of Youth, Sports and Culture with the
aim of sustainable institutional development of the sports sector.
3. Existing Challenges
• Because of frustration, lack of high morale and capabilities among the players, no
significant success has been achieved in the international sports.
• Due to the lack of appropriate training, recognition and career development
opportunities for players Nepali sport sector is lagging behind in the international
arena.
• Lack of committed and reliable financial resources resulted in ineffective sports
development programmes.
• There are no appropriate physical facilities for national and international level
sports. From the limited infrastructures available in the kingdom, the sports sector
is not able to achieve significant output.
• Existing institutional arrangement is not effective for sports development.

550
• Sports have not been developed as a means of career development and
professionalism.
• Sports programmes conducted without considering the talent and potentialities
resulted in poor achievement.
4. Long -term Concept
• To establish sports as a part of education in all schools.
• To develop sports not only as a means of entertainment but also as inseparable
activities in life.
• To develop sports as a profession.
• To establish Nepal in the third position within SAARC region and fifteenth
position among Asian countries in the sports sector.
Ninth Plan
5. Objective
• To develop and expand sports as a means of building able, strong and disciplined
manpower.
• To enhance national prestige by the preparation and securing success at the
international sports events by developing qualities sports persons.
• To initiate sports development activities right from the school level.
• Increase in women's participation in sports.
• To enhance skilled sports manpower both qualitatively and quantitatively and
emphasise career development and professionalism in sports.
• To contribute economically to national development by promoting sports tourism.
6. Target
Trained players 1.5 million
Construction of sports complex 6 (numbers)
Sports training academy 1 (number)
As most of the players are youths, great achievement can be achieved in the sports
sector by youths. In the twenty-first century, the sports sector can contribute
significantly in enhancing and increasing national prestige and glory if the sufficient
infrastructures are set up and training opportunities were provided.
7. Policy and Implementation Strategy
• Sports development policy will be adopted along with efforts to develop sports at
national, regional district, and constituency levels and also spread it from village
to village with a slogan of Sports from villages to towns and cities.

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• A policy of identification and classification of popular, potential and talent sports
will be adopted by giving priority to their development and making sports a
professional activity.
• Training, competition, and sports management will be modernised and made
scientific. Policy will be adopted to increase the participation of youths.
• A policy of rewarding, honouring and securing the future of the excellent players,
instructors and those involved in instruction will be adopted to enhance national
prestige.
• A policy of capacity development for organising international level sports will be
taken up.
• A policy of involving organisations, institutions, private and business sectors in
the sports development and extension and providing reasonable incentives for the
sponsors will be adopted.
• A policy of systematic and proportionate strengthening of sports activities at
central, regional and district levels by improving existing institutional structures
will be adopted.
• To develop sports as a means of entertainment and as an inseparable part of life,
sports units in all 75 districts will be made active and effective. Instruction and
competition-related programmes will be launched on a district-wise basis. Sports
activities will be developed and extended from urban to rural areas by supplying
sports goods.
• Talented players who could reach excellence will be identified and sports
activities will be promoted by district and regional sports units.
• Arrangement for sports teacher will be made for all secondary schools in the
Kingdom, together with making schools as a basis for sports development. All
round development of students will be facilitated by involving them in training,
competition and international and national sport events.
• Able and skilled manpower will be produced by increasing the standard and
number of instructors in the sports sector. Qualitative development of sports will
be emphasised to increase efficiency. National and international training, study
and research facilities will be provided. In this context, a Sports Instruction
Academy with full-fledged facilities will be established. Similarly, a high-altitude
training centre will be established which will be developed later into a national
and international training centre by mustering resources from various sources.
• A separate and additional women sports development programme to increase
involvement of women in sports will be launched. Similarly, number of the
women in sports leadership will be increased.
• Insurance, employment and several additional incentives and facilities will be
provided to players, instructors and those involved in the sports. Their future will

552
 be made secured and they will be motivated by providing additional necessary
incentives and facilities.
• Different governmental and non-governmental organisations and business houses
will be encouraged to invest in sports. Necessary policy measures will be adopted
for the career development of players. Efforts will be directed towards making
sports as a means of career development and professionalism.
• Emphasis will be given to the development of sports tourism. Grounds for the
tourism sports like ski, ballooning, golf, rafting, etc., will be developed on the
basis of feasibility. Similarly, cricket will be developed as a south Asian tourism
sport by providing necessar y physical facilities.
• VDCs, DDCs and municipalities will be encouraged to allocate a few percentages
of their resources in the development of sports.
• Sports management will be made timely, efficient and effective by providing
opportunities for training, instruction and higher education.
• Necessary amendments will be made in laws and rules to make National Sports
Council capable and effective and efficient in the present changing context.
• Organisations and associations related with sports and recognised internationally
will be made able by providing assistance and encouragement.
• An appropriate system will be established to gather the sufficient resources and
means for the development and promotion of sports.
• Necessary arrangement of land for sports activities will be made from the public
land at villages and urban areas, district centre, and wards of municipalities.
8. Programme
• Large-scale sports development programmes, instructions and competitions will
be organised as a preparation for the national and in ternational competition by
activating District Sports Development Committees at the district and concerned
associations at the centre.
• Provision of teachers and arrangements for training as well as nationwide school
level competitions will be made for the phase-wise arrangement of sports
education in the secondary schools nationwide.
• In order to produce high level sports instructors, programmes such as training in
internationally recognised sports academy, seminars, workshops, etc. will be
conducted with the participation of players.
• In order to develop physical infrastructure additional sports complex with all the
sports facilities will be constructed in Kathmandu. Likewise, 5 regional sports
complexes at the regional level and 75 sports grounds in all 75 districts will also
be built.
• Women's sports competitions will be increased and additional competitions will
be organised.
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• To encourage players, honors and additional rewards will be established. For the
players' employment, coordination will be established with various, governmental
and non-governmental organisations and business houses. Any national player
who takes sports as a profession will be provided with pension. Non-
governmental sector will also be mobilised in the sports development.
• Sports like Rafting, Golf, Ski, Ballooning, Ski-diving, etc., which attract tourists
will be identified and tasks such as feasibility study and infrastructure building
will be carried out. Similarly, necessary physical facilities will be provided for
the development of cricket.
• Nepali players will be encouraged to participate in the international competition
and regional and international sports competition will be organised within the
country. National and international communication media will be utilised in the
sports, and income generation works will be carried out by involving them in
sponsorship and advertisement.

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 Chapter 15
Good Governance and the Management of Development
15.1 Good Governance and Development Administration
1. Background
Administrative machinery has to take the responsibility for the timely completion of
the nation's development and construction works in addition to manage easy
availability of services and facilities which are to be provided to the people by the
state. To fulfill such a serious responsibility, administrative machinery needs to be
capable, impartial, productive, economical, lean, people-oriented and accountable.
The principle of good governance is also based on this concept. There is not dispute
that for the planned development, the administrative system needs to be enriched with
the qualities of good governance in addition to be more dynamic. Taking into
consideration the above fact, various efforts have been made in Nepal to make
administration people-oriented, service-oriented and committed towards development
by reforming the traditional style of administration. After the introduction of
democracy, with a view to reforming administration, suggestions and
recommendation have been put forward by various committees and commissions in
1952, 1956, 1968, 1975 and 1991; and on behalf of the state, commitments have been
made time and again for their gradual implementation. In accordance with the
principle of the decentralised governance, and in addition to the expansion of
administrative organisations from centre to region, zone and up to the district level,
efforts have been made to make administrative machinery capable and speedy
performing by delegating the authority. However, Nepalese administration, apart
from being burdensome and expensive, has not become transparent, prompt and
people-oriented. Despite the efforts, Nepalese administration, in true sense, has not
become the strong instrument for providing the outcome of development to the
people's level.
2. Review of the Eighth Plan
During the Eighth Plan, efforts have been made for the gradual implementation of the
recommendations of the Administrative Reform Commission, 2048 by adopting the
policy of making administration capable and strengthened in compliance with the
principle of democratic governance. In this regard, formulation of new Civil Service
Act and Rules and specifying functions, duties and rights of the employees,
preparation of job description of most of the positions have been completed.
Arrangement has been made to some extent, to increase career development
opportunities, forming various groups and sub-groups within technical and
administrative service with a view to developing expertise under civil service.
Besides, reformative actions such as to consider performance as a major factor in
promotion system of civil servants, to provide legal protection to the service of
employees have been made. Efforts have been made to tie-up public administration
with the pace of rapid development by delegating fiscal and other aut horities in order
to ease the operation of development projects. Likewise, to make evaluation system

538
effective, Central Monitoring and Evaluation Division (CMED) has been established
as a central agency in the National Planning Commission Secretariat (NPCS) for
undertaking monitoring and evaluation of these projects.
Steps have been taken to gradually privatise the public enterprises that are associated
with developmental activities with a view to providing the benefits of development to
the people in a com petitive, prompt and economical manner by facilitating
development activities. In this course, initiation has been taken to implement the
policy of encouraging private sector and NGOs and reducing government
involvement in development-oriented public enterprises. Private sectors and NGOs
have been gradually encouraged in the development-oriented sectors of public
concern like communication, electricity, irrigation, drinking water and education.
To activate Nepalese public administration as a thinker and facilitator of development
activities, it is because of the necessity to solve its practical problems, it has become
imperative to focus towards identifying and reducing such problems and accordingly
formulate policy of the Ninth Plan. In this context, some m i portant problems that
have been seen as challenges are mentioned below.
• Because of the existence of traditional nature of Nepalese society and practice of
unduly influencing the administration, efforts made from social and political
sectors have not been adequate to make administration neutral and impartial.
• Provision of sufficient salary to maintain at least daily living expenses has not
been made for the employees responsible for the operation of public
administration. Because of the poor condition regarding facilities and means
compared to neighboring countries, our bureaucracy has not been effectively
involved in development activities. Those who are able, capable and honest, have
little attraction towards public administration (in which development
administration is also included).
• By virtue of not yet decreased the centre-oriented tendency of involvement of
government in most of the sectors of development, central administration has
been unnecessarily involved mainly in minor implementation aspects rather than
performing the central role of formulating major policies and supervising and
monitoring of their implementation. It has not yet been possible to make the
structure of the government administrative organisations lean and effective.
• Culture and democratic environment have not been created where the civil
servants who are associated with public administration and development
administration in particular can present themselves as the servants instead of the
ruler of the people.
• Management information system, which is taken as an important aspect of
modern management, has not been incorporated in the administrative machinery
of the country. Arbitrary decision process exists due to absence of systematic and
regular flow of information.

539
• Considering the above mentioned and other challenging problems of the similar
nature, following objectives, policies and strategies related to the development
administration are adopted in the Ninth Plan.
Ninth Plan
3. Objective
• To make the public management clean, lean, transparent, economical,
competitive, job-oriented, capable, productive, service-oriented and accountable.
• To make public resource management proper and effective.
• To encourage the concept of legitimate system of governance and civil society.
4. Policy and Implementation Strategy
• Institutional arrangement will be made to coordinate development works
implemented by various ministries.
• In addition to institutionalise the regular monitoring and evaluation system of
development programmes and projects, the technical management aspect of the
project will be reformed.
• With a view to providing continuity by institutionalising the administrative
reform process and making the process effective, a permanent Administrative
Reform Committee will be formed for regular supervision, monitoring and
evaluation of the administrative reform work.
• A high level committee will be formed under the chairmanship of the Prime
Minister in order to strengthen the local autonomous system in relation to the
concept of decentralisation, and to provide policy guidelines and to regularise
monitoring and evaluation.
• Long-term personnel policy will be formulated to make civil service capable,
strong, of high morale and accountable and enhance career development
opportunities through the clear provision of authority and responsibility.
• Ministry of General Administration will be renamed as Ministry of Public
Management with the expansion of the existing jurisdiction of the Ministry
making responsible for policy matters on public management.
• Public Service Commission will be made more capable by actively involving it in
the functions relating to research and study of examination system.
• Competitive capability of training institutions will be enhanced through the
formulation of long-term administrative training policy by unifying and
specialising their functions.
• A high level Human Resource Coordination Committee, comprising of the
representatives from the Ministry of General Administration, Public Service
Commission, Ministry of Education, National Planning Commission (NPC) and
the Universities will be constituted and made functional.

540
• In accordance with the concept of people-oriented administration, the
administration will be made transparent, reliable and accountable for
management of good governance. Similarly, manpower development and job
simplification will be made effective to make administration capable, people-
oriented and productive.
• The role of government, local bodies and private sector will be balanced through
appropriate combination of the management of good governance and
decentralisation.
• In order to improve project management, system will be developed to determine
the institutional and official accountability; and physical, human and financial
resources will be appropriately utilized to this effect.
• Functions, duties and rights of the officer level employees will be incorporated in
the rules by making timely reforms on the existing rules on administrative
officers' functions, duties and rights.
• By making timely reforms on the existing Administrative Work Clearance Rules
and Government Office Inspection Rules, arrangement will be made for the
effective implementation of these rules in an integrated manner.
• Administrative audit will be effectively implemented by providing legitimacy.
• To conduct study and research on pay scale and other facilities of the civil
servants and provide recommendations to His Majesty's Government on timely
basis, a Pay Unit will be constituted under the Ministry of General
Administration.
• An appropriate structure of civil service will be maintained by evaluating the
existing services, groups and sub-groups in civil service.
• All non-gazetted employees will be combined into a multi-purpose staff system.
• After conducting client survey, system of seeking possible measures regarding
the service standard and their effectiveness that are delivered to the people will be
adopted.
5. Programme
Reform in Record System
Information, statistics and record will be computerised by reforming the record
system of various subjects related to civil service. By computerising the record
related to the civil servants in various ministries, they will be combined with the
central record in the Ministry of General Administration. For this purpose, Record
Improvement Project will be implemented in the Civil Service Record Office under
the Ministry of General Administration.
Administrative Audit
Regular administrative audit programme will be implemented to know whether
administrative activities are being operated in accordance with the law and set
541
procedure or not and to take information about what procedure is needed to follow for
their improvement, and to make administrative machinery rule-driven, prompt, and
clean. The procedure, scope and limitation to be followed while undertaking
administrative audit will be determined by act.
Strengthening of Training
To develop administrative capability in civil service, appropriate arrangement will be
made for pre-service and on-the-job training and manpower will be made proficient
through qualitative improvement. Nepal Administrative Staff College and other
training institutions will be strengthened to enhance their effectiveness. Various
programmes including symposium of office in-charge and training centre in-charge,
training, research, identificatio n of training need and publication of administration
journal will be implemented. A high level National Human Resource Development
Council will be constituted in order to formulate human resource and organisation
development policy and overall plan for all agencies of public service, and to develop
coordination.
Administrative Research and Study
Various research and studies regarding public administration, civil service, group,
career development, reform in services and facilities, simplification of procedures,
and organisation will be conducted. High priority will be given to such practical
research and studies which are conducted aiming at providing timely suggestions and
recommendations about the policies and programmes required to establish change-
oriented administrative system in compliance with the concept of development
administration.
Procedural Simplification
Existing complex administrative procedures, that hinder the work accomplishment
affecting the common people and administrative organisations, will be simplified
through conducting research and study for the purpose of making administration
transparent, dynamic and accountable and for ensuring the easy availability of
services to the people. Agencies, which provide services to the general public, will be
made lean and simple. In order to make administrative procedure achievement
oriented, arrangement will be made to adopt different procedures to each ministry that
are appropriate to their nature of works.
Indicator Development
Various performance indicators will be developed and refined for the estimation of
manpower requirement and performance evaluation.
Organisation Development and Evaluation
Improvement will be made in qualitative status of administrative organisations rather
than increasing their number. Considering overall aspect of the organisation, positions
will be created only if it is very essential. While creating positions and establishing
organisations 'establishment plan' will be prepared every year on the basis of

542
administrative analysis, and system will be developed to combine it with yearly
budget and programme.
Strengthening of Public Service Commission
The capability of the Public Service Commission will be enhanced; position
fulfillment will be made swift; and programmes will be implemented to make
selection process transparent, systematic and effective. Furthermore, necessary
arrangement will be made to improve physical facilities like building construction
and other essential resources of Public Service Commission.

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 15.2 Decentralisation

1. Background
In the democratic governance, the highest level of peoples' participation is expected
in the utilisation of power, resource, and means of the state. The avenues for true
decentralisation have been widened since the promulgation of the Constitution of the
Kingdom of Nepal. In the directive principles of the present constitution,
decentralisation is accepted as a medium of delivering the outcomes of democracy by
involving people to the best possible in the political system of the country. The main
intention of decentralisation in Nepalese context is to make people residing in rural
and urban areas powerful and capable in the management of their development by
involving them in the decision-making process that affect them. It has become
essential to develop the concept of self-governance in order to provide authority to
the local bodies to take decision on the matters of delivering services to the people at
local level.
As a backbone of democratic exercise, the application of decentralisation in Nepal is
solely based on the fundamental principles of people' participation and empowerment.
In order to distribute the benefits of democracy among the people at all level, it is
essential to make especially the taciturn people able to use their own right enabling
them economically and socially. For this, making refinements on local self-
governance concept, it has become necessary to make development programmes
more effective and people-oriented with balanced involvement of governmental, non-
governmental and private sectors. In this process, on the one hand, it is necessary to
limit the role of government as a facilitator, while on the other, it has become
necessary to make local self-governance strong, people-oriented and fully responsible
for the local development by adopting inspiring policy for the development of various
groups of people. Adoption of decentralised planning process is essential to base
developmental activities on local possibilities and potentialities and to make planning
system more realistic and people-oriented. It is hoped that decentralisation process
will help to increase peoples' participation and ownership in planning and to make it
more effective.
Various efforts have been made to push forward decentralisation process and practice
adopting legal provision of giving decision making authority to the popularly elected
local bodies of various levels regarding the services to be provided to the people at
local level. However, local bodies were directed to play the role of lower units that
implement small development activities rather than towards the direction of local
government. As a result, well-managed system of local self-governance could not be
established. In Nepal, mainly to expedite and institutionalise development process
and to increase peoples' participation in local development, it is imperative to increase
peoples' participation in decision making process to find solutions of local problems
at local level, and for this, the application of decentralised working system is quite
indispensable.

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2. Review of the Eighth Plan
Policy Reform
Acts related to Village Development Committees (VDCs), Municipalities and District
Development Committees (DDCs) were enacted in 1991. On the basis of these acts,
elections of various bodies of VDCs, Municipalities and districts were held with
remarkable participation of people. New leaderships have emerged from local bodies.
The system applied at local level can be considered as positive step in the context of
decentralisation. This has been made possible for the creation of institutional bases to
move decentralisation-working process forward. In the Eighth Plan, formulation of
decentralisation policy and implementation of various programmes are considered to
be crucial in this direction. These efforts have been meaningful to create the basis for
decentralisation working process.
Institutional Reform
A high level Decentralisation Coordination Committee was formed during the Eighth
Plan period to provide policy guidelines on the nature, concept, hierarchical system,
working area of decentralisation and regarding timely changes in legal system and
concepts related to local bodies, and a Decentralisation Working Committee to
recommend execution system by analysing and studying functional aspects. The
Committee has submitted the report on decentralisation and local self governance.
This report has been considered as an important achievement of the Eighth Plan.
During the plan period, collective working efforts of local bodies were spontaneously
initiated. As a result, Associations of DDCs, Municipalities and VDCs were
established. These have contributed to the efforts of decentralisation. Similarly,
various projects have been implemented with the aim of supporting decentralisation
by strengthening the capacity of local bodies in the formulation, implementation,
monitoring, operation and management of development projects at the local level.
Participatory District Development Programme and Local Governance Programme
have been implemented in 32 districts of the country in the course of enhancing
planning process and management capacity of the DDCs.
Functional Reform
With a view to supporting decentralisation, various kinds of programmes such as
training, symposium, orientation, etc. have been implemented. Similarly, guidelines
regarding the working procedures of users' groups in various sectors and for users'
group training have been prepared. Priority has been given to enhance direct
involvement of local people at all aspects of developm ent projects. In order to
encourage peoples' participation, various local development programmes have been
implemented through social mobilisation. Besides reform in the process of
community based plan formulation, integrated district development plan formulation
at local level has also been initiated and achievements have been made in this
direction.

545
3. Existing Challenges
Although acts as to provide power and responsibilities to the local bodies have been
enacted, lack of supporting rules for execution process and the contradictory
provisions in the existing rules have still created ambiguity in execution. Due
attention has not been paid to proceed decentralisation process smoothly, to study and
review the existing acts and rules in order to maintain consistency and coherence
among various laws that have effects on local development and to regularise their
application.
Direct involvement of common people at each stage of decision making process has
not received due importance although local organisational structure has extensively
expanded in course of decentralisation. Acts and rules related to local bodies, which
were enacted in 1991, have given responsibility of formulating and implementing
local plans to the elected local bodies. However, due to the inability to develop local
leadership and insufficient authority over financial resources given to the local bodies
to bear their responsibility, the efforts of decentralisation have been limited to
principle only. Local governments do not seem to be able to build up popular
confidence due to the inability to bear accountability over their duties and
responsibilities because of resource constraint.
Since the elected officials of local bodies have been much involved in project
implementation rather than in policy making, monitoring and supervision, the
foundation of decentralisation process has not been strong enough. A clear structure
of coordination, role, accountability and authority of various organisations including
NGOs, users' groups, local bodies and cooperatives in local development activities
have not yet been determined.
Although the formulation of district development plan is the responsibility of local
body, various sectoral programmes to be implemented in district level have not yet
been integrated. In course of giving full autonomy to the local bodies, the budget of
sectoral ministries has not yet been included in the budget of the local bodies.
Although district level plans have to be executed after the approval of District
Development Council, these plans have not been implemented effectively. Various
problems including lack of coordination, lack of information exchange and flow, lack
of dynamism in proper mobilisation of available resources and insufficient
participation of related organisations have been emerging. The role of DDC and
District Council in the identification and selection of development projects have not
been widened.
Although a policy to enhance the participation of users' groups in planning process
and implementation of development activities has been adopted, they have not been
directly involved in project implementation. In practice, construction works of some
of the projects have found to be completed indirectly on contract basis in the name of
users' group. This may deteriorate the quality of project and may have adverse impact
on the sustainability of management.
Civil servants are placed at all levels of the local bodies who are administratively
controlled by the centre. However, regarding their job performance they have to be

546
accountable to the local bodies. Hence, the system of recruiting personnel by the
centre and sending them to the local bodies as its representative has narrowed local
autonomy, and due to double loyalty and responsibility of the personnel it has made
adverse effect on job effectiveness.
4. Long -term Concept
To provide people maximum opportunity to participate in governance in true sense is
to make arrangement where people can be active for the development of their own
areas by decentralising authority according to the geophysical, economic and cultural
diversity of the country. Hence, in addition to the devolution of authority and budget,
long-term perspective of decentralisation will include the establishment of
autonomous local governments that are strong, strengthened, accountable to the
people, capable to cope with the challenges of 21st century through human resource
development, technical capability building and necessary information flow, and that
can undertake the overall development management at the local level.
Ninth Plan
As adoption of decentralised system is imperative to institutionalise and expedite
development process at local level for the development of country and especially of
the rural areas, decentralisation in the Ninth Plan will be proceeded with new vision
and concept. Participatory development process will be gradually institutionalised to
develop leadership of local bodies in all aspects of project including identification,
formulation, implementation, monitoring and evaluation.
To complete local development activities as per people's expectation, local bodies
should be made more responsible, and hence, decentralisation needs to be
institutionalised. Similarly, community development needs to be developed as an
indispensable part of nation building. Hence, local bodies will be established and
made capable, strong, autonomous and accountable through decentralisation. These
bodies will be responsible for local development. Locally available resources, means
and technology will be efficiently mobilised in socio-economic development
activities of rural areas. In addition, on the basis of the concept of assisting local
bodies and communities to sustain development in spontaneous manner, working
procedure will be developed in the Ninth P lan to this concern.
5. Objective
• To enhance people's participation in resource mobilisation, appropriation, and
balanced and equitable distribution of the outcomes of development for local
development.
• To institutionalise local autonomous government, the fundamental part of
democracy, by enabling them to be accountable to the local people.
• To develop a mechanism for carrying out the responsibility of the enhanced role
in developing project formulation and implementation process at the local level.

547
• To increase the participation of local people in local government by enhancing
the accountability and transparency of local government towards local
communities.
• To direct local bodies towards self-reliance identifying the financial resources.
6. Policy and Implementation Strategy
Institutional Development of the Local Autonomous Bodies
It is not possible to involve in the decision process all the people covered by
development programmes. In the democratic system, agencies involving popularly
elected representatives can reflect people's expectations. Therefore, local autonomous
bodies are considered to be the fundamental agencies of decentralised governance.
Hence, institutional development of the local autonomous bodies will be promoted
with due priority to make development activities spontaneous and dynamic at local
level. The Centre will play leading role in providing knowledge and information to
the local bodies. Local bodies will be made strong, capable and empowered for the
overall management of development at local level.
Institutional development is to make capable of the local autonomous bodies. The
major foundation of decentralisation is to enable local leadership in implementing
development activities effectively. To establish the system to carry out increasing
responsibility of development management at local level, remarkable improvement in
administrative and management capability of the local autonomous government is
essential. Therefore, appropriate measures will be adopted to make local autonomous
government capable to operate various sectoral activities. The roles and
responsibilities of local and central bodies will be ascertained and arrangement will
be made for their successful resumption.
Integration and Coordination among Local Development Programmes
Various problems of local people are interrelated with each other. Impact of
development activities becomes qualitative and more fruitful if the activities are
implemented in a coordinated manner. Of the investment made at local level,
coordination is essential in one hand, while in the other hand, it is equally essential to
establish and develop mechanism to keep dynamic inter-relationship between centre
and local level. Therefore, stress will be given to have coordination and integration
among local development programmes. Coordination will be maintained among the
activities of local administration, local bodies and NGOs, and legal provision will be
made clearer to help functions transferred to the lower level.
Building Economic Capacity of the Local Bodies
Arrangement will be made to delegate the authority over resources to the local bodies
through legal provision by making possible to identify and avail means and resources
required for the fulfillment of duties and responsibilities given to the local bodies, and
to utilise and make appropriate allocation of means and resources determining the
priority. The authority and responsibility used by the centre for various sectoral
development will be clearly devolved to the local autonomous bodies, and
arrangement will be made to delegate authority for determining priority,
548
identification, selection, implementation, operation, monitoring and evaluation,
maintenance and management of plan to fulfill basic needs of the people at local
level. Special stress will be given to encourage appropriate conservation, promotion
and balanced utilisation of local resources in spontaneous manner supporting them to
be capable of efficiently allocating the resources of the local bodies which are
considered as people's representative organisations.
Institutional Development of Participatory Development Process
People's participation is the major foundation of decentralised governance. Since
people are the main factors of development works, the major challenge of the day is
to develop the sense of ownership of development projects on local people by making
people's participation effective. Therefore, participatory development process will be
institutionalised to build the sense of ownership towards local projects in addition to
involve people in direct and decisive form through social mobilisation in the decision
making process related to the management of development activities in implementing
their own areas. Training will be provided to local officials, personnel of local bodies
and citizens to develop their knowledge on the concept of people's empowerment and
to impart functional skills.
Mobilisation of Users' Group and NGOs
Since people's participation is an important base for sustainable development, users'
groups will be involved in all activities including identification, selection,
implementation, monitoring, evaluation and maintenance of the Plan. For this, users'
groups will be formed through general assembly of all the users who receive the
benefits from the Plan. Projects, that may have direct effect on the people at local
level, will be implemented through users' groups. In such projects, after defining the
role of users' groups, they will be provided with training on their authorities and
duties before starting the project, and after completion of the project, users' groups
will be provided with necessary authority to manage regular maintenance of the
project. To ensure increasing participation in the management of local level projects,
in addition to the clear -cut management of formulation procedure and area of
authority of users' groups, attention will also be given to strengthen the groups.
It is essential to diversify the existing system of service delivery. Local bodies alone
are not in a position to take part in development works and necessary service
delivery. Therefore, appropriate steps will be taken to mobilise private sector and
non-governmental sector in local development activities. Policy will be adopted to
encourage non-governmental sector to implement activities in the area of their
specialisation. Institutional arrangement will be made to mobilise NGOs also in the
remote areas. In addition, arrangement will be made to encourage the expertise of
non-government sector to support local bodies to build their capacities by establishing
complementary and cooperative relationship between local bodies and non-
governmental agencies.
Transparency in the Work Performance of Local Bodies
Attention will be paid to ensure the exchange of information, transparency,
accountability and information system. Arrangement will be made to establish such

549
system not only between centre and local level but also between local bodies and
organisations of the civil society.
Participation of Women and Backward Ethnic Groups in Decision Process
To bring women in national mainstream and include them in the decision making
process of local development in line with the concept of gender equality in
development, their representation will be made mandatory in the institutions to be
formed at local level. To enhance the capability of the women, appropriate training
programmes will be implemented. Similarly, arrangement will be made to make
mandatory representation of the socially backward ethnic groups in the agencies to be
formed at local level.
Personnel Management Responsible and Accountable towards Local Bodies
Institutional capacity of the local bodies can be strengthened if they could make
arrangement to have their own separate employees accountable to them. Hence, in the
Ninth Plan, planned arrangement will be made to constitute the personnel service of
local bodies in order to make the employees, working under local autonomous
governments, responsible towards people and local institutions.
Implementation and Monitoring System
According to the sentiment and spirit of the Constitution of the country, necessary
authority will be gradually devolved in order to make local bodies fully strong and
autonomous. Authority and responsibility existing in the centre will be devolved to
the local autonomous government for implementing various sectoral works.
Appropriate legal provisions will be made for the devolution of necessary authority
and responsibility. Budgeting, accounting and auditing system of the local
autonomous government will be made transparent and effective in order to make
financial management efficient. Appropriate step will be taken to make local
autonomous government capable to operate their development and administration.
Necessary arrangement will be made for making possible to fulfill the needs of rural
people at local level.
Necessary arrangement will be made towards making plans to be formulated at local
and national level complementary and supportive to each other. Similarly, in order to
enhance the capability of the local bo dies regarding plan formulation,
implementation, evaluation and other decentralised matters at local level, necessary
arrangement will be made towards providing training, extension, resources and
administrative supports on regular basis.
A high level Monit oring Committee will be set up as a capable body to provide policy
guidelines to all government agencies to push forward the decentralisation process
dynamically.

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 15.3 Delivery System of Development Benefits to the Target
Groups

1. Background
Backward, disadvantaged tribe and ethnic groups are deprived from consuming the
benefit of development due to the absence of development structure and
implementation machinery for providing the benefit of the development to the target
groups on the basis of people's participation. Backward areas and the people have not
been the real beneficiaries of the benefit of development owing to the lack of proper
attention paid towards implementing programmes determining the policy, strategy
and appropriate development model based on identification of country's
backwardness and their basic causes. On this background, it is non-debatable that
forthcoming Ninth Plan has to give top priority to deliver the benefit of development
to the target groups by implementing development projects within stipulated period.
2. Objective
To achieve the major goal of the Ninth Plan, the objective will be to deliver benefits
of the development to the target groups in time through effective implementation of
the policies and the programmes.
3. Policy and Implementation Strategy
• Since the aim of efficient and austere use of resources and to provide the benefits
of development as devised by the Plan to the target groups can not be achieved
unless aspects related to good governance like transparency, accountability,
financial discipline and abiding of rules and regulations, appropriate system of
reward and punishment are given due attention. Arrangements will be made for
strict enforcement of these aspects. A separate appropriate body will be set up to
assist in the control of any possible misuse of resources and other unscrupulous
activities at all levels of political, administrative and other fields.
• Any new project which will be proposed during the Ninth Plan will be
incorporated only if it is consistent with the objectives of the Plan. Projects which
are not implemented according to the objectives of the Plan will be discontinued.
• During the Ninth Plan, an arrangement will be made for providing information in
project proposals such as the cost of the project, duration, proposed source of
funding, cost benefit ratio, physical targets, the population to be benefited,
income generation of the target groups and the share in employment and other
services. On the basis of such information, a new system will be initiated to
formulate project by coordinating the overall as well as sectoral objectives,
targets, policies and programmes.
• It has been found that crises have arisen in the austere use of the scarce resources
due to wide differences between the proposed cost, estimated quality, duration,
population to be benefited and the real situation after the completion of the
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 projects. So, during the Ninth Plan technical financial auditing will be started. In
this way, immediate action will be taken against irregularities found in the
financial auditing done by the Auditor General's Office as well as technical
financial auditing.
• Impact assessments will be made an inseparable part of the projects and of annual
programme, since timely improvements on policies and programmes can be made
only if periodic information on impact of economic policies and programmes on
the economy and on the improvement of livelihood of the people is gathered.
• Except for the programmes, which have to be implemented by the centre, the
selection and the implementation of other programmes will be made by the local
level institutions themselves in accordance with the decentralisation policy. For
this, the capabilities of the local bodies will be enhanced.
• The institutional aspects of the programmes run by the centre, local bodies and
NGOs and the investments made on such programmes will be improved and
refined in such a way that the target groups can get the benefits. The private
sector will also be motivated to make their investment in such a way that the
target groups could be benefited.
• The deprived groups and communities will be organised through social
mobilisation so that they can directly participate in the development process.
• To deliver the services provided through the programmes, which are directly
related to human resource development like literacy, accessible health services,
pure drinking water, goods and services of daily necessity and to make these
goods and services accessible especially to the destitute and underprivileged
groups, wage employment will be introduced in appropriate institutional and
community based programmes.
• Priority programmes such as small and cottage industries, micro-forestry, rural
development through small hydro and irrigation projects, short roads will be
implemented through users' groups, NGOs and local bodies instead of through
contracts and other similar methods so that the poor, neglected, backward and the
oppressed groups and communities are able to get direct advantages and benefits.
• The income-generating and employment programmes run by the government
agencies and the banking sector will be directed towards the poor and the
underprivileged and disadvantaged groups. In addition to fixing minimum wage
rate in agriculture, programmes to solve the landless problem will be
implemented which will help in their rehabilitation and in the improvements of
their lives. Similarly, special opportunities for employment will be created with
special focus on the target groups.
• Employment and income-generating programmes with special focus on youth,
educated unemployed and low income groups will be implemented in organised
sectors and towns.

552
• Families who are below poverty line will be given relief through easy and reliable
supply of goods and services of daily nec essity.
• State-run welfare programmes will be implemented to provide relief and social
security to the old, helpless and other underprivileged groups of the society.
• With the objective of making target groups accessible to the increased income
generated due to growth in economy, a policy to allocate additional resources
generated through the mobilisation of tax and revenue will be adopted for the
upliftment of the targeted groups. The revenue, tax, loan and investment policies
will be gradually improved and refined to minimise income disparity and to
strengthen the basis of just and equitable distribution in the society.

553
 15. 4 Non-government Organisation
1. Background
Development is possible only with the cooperative efforts of government, private and
non-government sectors. In order to speed up economic and social development
activities of the country, non-government sectors have already been involved as the
partners. If NGOs be mobilised especially in the area of rural development, poverty
alleviation and in the development of the weaker section of the society who, due to
social, economic and physical reason, are unable to equally participate in and
consume benefits of development, it will be possible to achieve targeted development
outcomes of the Plan. For this, elucidating the role of non-government sectors, their
contribution and achievement should be incorporated while assessing national
outcome.
In Nepal, institutional development of non-government sector for development
activities was initiated around 66 years ago with the establishment of Shree Chandra
Kamdhenu Charkha Pracharak Guthi, whereas following the introduction of
democracy in 1957, organisations like Paropakar Sanstha, Red Cross were established
and the involvement of NGOs in the areas of health, education community
development was increased respectively. With the formation of Social Service
National Co-ordination Council in 1977 and the Ministry of Labour and Social
Welfare in 1981, an institutionalised system of coordination and administrative
system regarding the development of non-government sectors has been initiated
whereas a national policy for the development of non-government sector has been
adopted since the Sixth Plan.
Following the restoration of democracy in 1990, reforms that have been made in the
existing Act and policies for the development of non-government sector have
contributed towards speeding up the institutional development of NGOs and INGOs.
These organisations have covered social and economic activities of regions, specific
classes and community development.
2. Review of the Eighth Plan
Under the policies of non-government sector in the Eighth Plan, policies such as
extension, of organisation, simplification of Acts and Rules, priority to NGOs in
remote and rural areas, involving INGOs through Nepali NGOs in implementing
programmes and development of evaluation system were included. By the end of the
Plan, the number of INGOs affiliated with the Social Welfare Council has reached
5,978 whereas the number of INGOs has reached 81. The classification of these
organisations is as follows: -

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 Organisation Number
1. Child Welfare 122
2. Health 157
3. Blind and Handicapped 106
4. Community Development 3076
5. Women Development 572
6. Youth Activities 1298
7. Moral Development 177
8. Environment Protection 386
9. Education 56
10. AIDS Prevention __28
Total 5978

Since the registration of NGOs is possible under different Act and Rules, the number
of such NGOs that have been renewed time to time has reached 15,000. In order to
mobilise non-governmental organisations effectively, the Social Welfare Council has
bean reorganised with the enforcement of Social Welfare Act 1990. Moreover and the
establishment of the Ministry of Women and Social Welfare, Social Welfare Council
has been affiliated with this Ministry.
During the Eighth Plan period, there has been institutional expansion, formulation of
act and policy for the development of NGOs; however, execution of laws has been
ineffective. As a result, administrative and financial process could not be transparent
and simplified, and monitoring and evaluation regarding project approval, co-
ordination and effectiveness of services have not been done according to the
provision made by Social Welfare Act and by-laws.
3. Long -term Concept
To utilise comparative ability of non-governmental social organisations using a
process of people empowerment and people's organisation empowerment, creating
conducive working environment in order to achieve the goal of sustainable social,
economic, environmental and institutional development, and encouraging them to
actively participate in the development process as able, transparent and positive co-
operative agencies.
To solve the problems of blind, handicapped, elderly people, helpless, child and
women, and to lessen their feeling of humiliation arising from the receipt of donation
and charity of others, encouragements will be given to the efforts to their sustainable
development and to make them capable by their participation.

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Ninth Plan
4. Objective
To develop NGOs as partners of development and to conduct the programmes of
NGOs in a coordinated manner in order to make their activities effective.
5. Policy and Implementation Strategy
• Policy will be adopted to make appropriate legal and administrative arrangements
to review and bring about clarity in various Acts, such as Societies Registration
Act, Social Welfare Act, etc. by removing existing ambiguity and confusion in
the registration form and working procedures of NGOs arising from their
registration under various Acts at the district and central level.
• In the context of overall development of the country, policies and programmes for
poverty-alleviation and socio-economic development will be formulated by
involving NGOs. Programmes, which come under area of specialisation of the
NGOs, will be left to them even though such programmes have been conducted
by government or local bodies.
• Appropriate policy and criteria will be formulated to define and classify the
NGOs according to their area of activity and geographical region as national,
regional and local-level, to make them more efficient in attaining the set
objectives.
• The NGOs will also be involved in mobilisation of internal resources, training,
sharing of experiences to bring about continuity and effectiveness in their
organisations, programmes and resource identification. To this end, timely
reforms in prevailing laws will be initiated.
• The INGOs will be mobilised in building up capability of the NGOs on the basis
of their specialisation. Effective arrangements will be made to implement new
projects and programmes only through the Nepali NGOs.
• One-window system will be adopted to bring about simplicity in administration to
further enhance the effectiveness of resource mobilisation from the INGOs.
• INGOs will be encouraged to mobilise resources from international sources.
Resources allocated for Nepal by various governments and INGOs will be
channelised through NGOs, instead of the INGOs.
• Institutional development of monitoring and evaluation system will be enforced
to appraise the contributions of NGOs to the development works.
• Special steps will be taken to honor the contributions of NGOs to national
development. For this, a programme will be run to monitor the performance of
NGOs.
• With a view to making the contributions of NGOs directly reflected and effective
in local development works, the programmes of such organisations will be

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 coordinated with local bodies and incorporated into local planning process. To
this end, appropriate policy will be adopted.
• Arrangements will be made to involve and encourage the competence of NGOs in
building up capability and efficiency of the local bodies. To this end, efforts will
be made to establish complementary and collaborative relationships between the
local bodies and NGOs in accordance with the decentralisation policy.
• In the context of the tendency of NGOs to work only in the accessible areas,
which might accentuate regional disparity, institutional arrangements will be
made to mobilise NGOs in the remote areas as well.
6. Programme
• In accordance with the goals and objectives of the national development, a
workplan along with programmes, goals and objectives that are to be undertaken
by non-government sectors will be formulated, and the programmes will be
implemented on the basis of their area of activities and specialisation. While
formulating the workplan, non-government sector will be involved on the basis of
the commitment made by His Majesty's Government for the development of
social sectors such as women, children, human rights and physically and mentally
retarded people.
• Following a study on various Acts related to organisation registration,
arrangement of suitable Acts and Rules will be developed in order to strengthen
registration system of NGOs classifying them on the basis of their objectives and
nature of work. Statistics of non-government sector including number, area of
activities and geographical district of NGOs that have been registered annually
will be published.
• Programmes, beneficiaries and financial investment of the NGOs that have been
operated in various districts and Village Development Committees will be studied
and analysed, and on the basis of the study, NGOs will be mobilised specifying
the area of work classifying them into national, regional, district and local level
based on decentralisation policy.
• A coordinated and institutionalised working system will be developed to mobilise
non-governmental sector as a partner agency of development, and to make
formulation, implementation and evaluation of programmes between sectoral
ministries and NGOs effective. To this end, organisational set up will be
maintained in the sectoral ministries to provide technical services, supervision
and evaluation facilities to the sectoral activities.
• In line with the role to be played by the Social Welfare Council for the
development of NGOs, its working area and capacity, organisational position,
manpower and financial resources, etc. will be evaluated. The council will be
developed as a central agency for maintaining the activities, achievement,
updated information, monitoring and evaluation of the NGOs. For this, the role of
Social Welfare Council will be made transparent and strong.

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• A consolidated strategy and plan including various sectors will be formulated and
implemented in order to make one window system effective for the mobilisation
of NGOs, to acquire foreign assistance for the sake of developing non-
government sector, to make procedural and coordination function more effective
and to manage INGOs to mobilise resource from international community. In this
way, Social Welfare Council will be developed as a focal point with a view to
give permission to INGOs, regulate Nepalese NGOs, regarding project operation
and management of visa, conditionalities and other facilities through one-door
system to manage in stipulated time and in simplified manner. Activities such as
training, workshops, district study tours will be carried out by the NGOs
operating under the projects funded by INGOs, and Nepalese technical manpower
will be developed and institutionalised for the gradual enhancement of project
implementing capability of Nepalese NGOs.
• With a view to making the contributions of non-government sector directly
reflected in the local development activities, a system will be developed to
include them as a part of local planning in accordance with the provision of
decentralisation policy, Acts and Rules of District Development Committee and
Village Development Committee. To this end, arrangement will be instituted to
provide facilities by making the DDCs and VDCs as facilitators.
• By evaluating the contribution of NGOs, arrangements will be made to mobilise
them in the remote areas, and economically and socially backward regions, and to
operate specified services by providing them with training and financial
incentives.
• Facilities will be provided to the expatriates working with the INGOs by
classifying them on the basis of their working ar ea, cost and duration of the
project.
• Since the projects implemented by NGOs in rural areas can help alleviate poverty
by increasing local employment opportunities, medium and low level manpower
required for the projects will be encouraged to utilise from the local levels.

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 15.5 Monitoring and Evaluation

1. Background
During the last four decades of planned development effort, eight periodic plans were
implemented setting various objectives. Within the period, huge amount of money
was spent to achieve the targeted objectives of economic and social development, and
to some extent, economic and social infrastructures were also developed. But the
people at large could not obtain realised level of outcome compared to the gradual
increment of investment. Utilisation level of available means and resources could not
increase as expected. Most of the projects could not be completed in pre-determined
cost and time. On the whole, besides the weaknesses in plan implementation,
problems were found in obtaining sustainable outcome from the projects. Among the
various causes of weak implementation of the Plan, absence of practicing effective
monitoring and evaluation system has been found to be the major one. Effective
monitoring and evaluation process is considered to be the major part of project
management, which makes possible to see whether concerned authority is performing
his designated responsibility well or not, and also to determine the quality of
performed task. Similarly, it helps to estimate quantity, cost, quality as well as
implementation period of performed task and also helps to determine performance
standard of designated responsibility of the staff. Hence, to reduce the gap between
predetermined plan objectives and targets and their achievements, and on the whole,
to make project implementation effective, monitoring and evaluation process will be
made result-oriented, dynamic and achievement-oriented in the Ninth Plan.
2. Review of the Eighth Plan
Keeping in mind the necessity of institut ional strengthening of the monitoring and
evaluation system, some efforts were made in the Eighth Plan to complete the
projects making implementation effective, within stipulated time, cost, quantity and
quality eliminating the slackness during the project implementation. Objective was
set to identify and solve the problems faced by the development projects and to
achieve targeted outcome by completing them within predetermined time and cost.
Although the prevailing system was focused mainly to monitor the development
projects on the basis of annual expenditure in the past, annual programme and
progress reporting forms in this period were prepared and brought into practice also
for monitoring the physical progress. During the period, monitoring and evaluation
units were established in various levels including the highest level of government to
identify and solve the facing problems of the projects in time. The procedures were
determined. In these regards, National Development Action Committee (NDAC) in
the highest level, Ministerial Development Action Committee (MDAC) in the
ministries, CMED in the NPCS, and Monitoring and evaluation Divisions or Sections
in the various ministries were established. Similarly to improve the monitoring
process by collecting the information of project status and activities, project's
Problem Reporting Form, Project Status Form and Development Project Inspection

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Form including Programme and Progress Reporting Form were put into practice.
Furthermore, in order to measure the outcomes set by the project, objectives-
achievement indicators and formats for various projects were designed and
implemented.
Some institutional and procedural efforts were made during the Eighth Plan in order
to make monitoring and evaluation system more effective. However, due to the lack
of political commitment and administrative determination, the monitoring and
evaluation system, which should have been adopted and followed as a time-bound
discipline, could neither be geared up effectively nor receive due priority in practice.
Consequently, the institutional structure could not be activated as expected.
Limited use of set formats and indicators for monitoring were made. The
effectiveness of their application was not remarkable since the used formats were not
utilised properly. As a result, the expected positive impact on project implementation
capacity of the system could not be realised. Studies on effectiveness of investment
and impact evaluation of some of the completed projects have been undertaken. The
results of these studies could be used in the formulation and implementation of new
projects.
Analysing on the basis of experiences, following weaknesses have been identified in
the implementation of existing monitoring and evaluation system:
• Although compu lsory screening of the projects is essential before giving them
approval for implementation, it has not been practiced strictly.
• In the absence of the highest level political commitment and administrative
determination, existing structures could not be activated and the information flow
could not be dynamic.
• The area of activities of monitoring and evaluation is limited only up to
implementation aspect. A system of monitoring policy, strategy and programmes
has not been developed. Monitoring and evaluation system has not received due
priority as an integral part of the project management.
• The indicators determined to measure physical progress have not come into
practice and the information is even lacking to strengthen and update them.
• As envisaged by the existing system, subjects like solving problems, identifying
them in time, completing projects within stipulated time and cost, and making
projects' outcome sustainable have not received due importance.
• The positive impact of monitoring and evaluation system towards enhancement
of project implementation capability has not been realised as expected.
• A consolidated system of monitoring and evaluating the activities performed by
the NGOs could not be established.
3. Long -term Concept
The whole monitoring and evaluation system will be mobilised with the long-term
goal of providing feedback to the policy making level by timely identifying whether

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policy, strategy, programme, and budget are formulated or not in line with the
objective specified by the Plan. It will also be mobilised in preventing the gap
between target and achievement of the development projects for their completion
according to pre-determined time, cost, quantity and quality. In order to be in front
line in the emerging global competition for the foreign resource mobilisation, to
increase utilisation level of available resources, and to achieve targeted outcome of
economic and social development in time, along with the vision of making them
sustainable, project implementing agencies will ultimately be made accountable to
complete standard works by providing them full responsibility of monitoring. The
role of NPC will be made limited to policy monitoring only, operation of monitoring
and evaluation system and development of its capacity, and in evaluation, concept
will be taken focusing on all other activities in achieving long-term target of the Plan.
The Ninth Plan
On the basis of the above mentioned long-term goal of monitoring and evaluation,
objectives, policies and strategies of the forth coming Ninth Plan are determined.
4. Objective
• To identify in time and solve the problems that have been raised in the process of
implementation of development projects and complete the projects according to
the predetermined time, cost, quantity and quality.
• To achieve the targeted economic and social benefits from the projects and make
these benefits sustainable.
• To update and make information reliable regarding investment made in the
development projects and their achievements.
• To find out the past weaknesses that have been realised in the process of project
formulation and implementation and make sure that they will not repeat again.
• To identify whether programmes are formulated as per the policy and
implemented or not by developing a system of reviewing po licy and strategies
specified in the Plan.
• To develop a mechanism of monitoring and evaluation of the programme
implemented by the NGOs.
5. Policy and Implementation Strategy
• To make monitoring and evaluation system regular and effective, implementation
arrangement will be made to ensure commitment and active participation from
the highest political level to the project level. Moreover, the system will be
strengthened and extended.
• In order to identify and resolve the problems in time faced during the
implementation of projects and to complete them within the targeted cost,
existing monitoring and evaluation units of various levels (NDAC, MDAC and
Divisions/ Sections) will be activated, and such units will be set up in the
Department levels also.
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• The existing monitoring and evaluation system will be strengthened when needed
and implemented effectively.
• Existing objectives and result-oriented indicators for monitoring and evaluation
will be refined and reinforced, and implemented accordingly. Moreover, progress
indicators, based on project objectives will be determined in the time of project
formulation
• In order to prevent repetition of problems in project formulation and
implementation, completed projects will be evaluated and lessons learnt from the
past experience will be utilised in new projects.
• According to the new concept of decentralisation and considering the volume of
development works in the districts, a monitoring and evaluation section will be
established under District Development Committee, an d arrangement will be
made to form a District Development Action Committee to conduct regular
monitoring and evaluation of district level projects.
• Computerised global network among the central agencies will be gradually
established in order to make easy access of the exchange of information.
• Necessary amendments will be made in relevant acts and by-laws for speedy and
quick execution of development works, and to strengthen implementation aspects
of development projects.
• As majority of development works is related to the construction of physical
infrastructure, arrangement will be made to maintain quality and sustainability.
• Since the implementation becomes ineffective due to weaknesses during the
formulation stage, monitoring of new development projects will be conducted
from the formulation stage, and a system of compulsory screening of the projects
before approval for implementation will be adopted.
• Responsible persons will be appropriately rewarded and punished on the basis of
their performance, and arrangement for career development will be made
accordingly along with initiating a system to review the policies, strategies of the
Plan.
• Arrangement will be made to regularly monitor the activities of NGOs covered in
the wider areas and expanded for the last few years.
• Regional planning offices will be actively mobilised in district level plan
formulation, monitoring and on-going evaluation.
6. Programme
• MDAC formed under the chairmanship of Minister or State Minister concerned
and the NDAC formed under the chairmanship of the Prime Minister both will be
activated and developed as problem shooting vicinities where each and every
problem that arises during project implementation will be solved. Moreover in
order to change the present situation of reporting minor problems of inter-
ministerial coordination to the high level NDAC, a permanent problem shooting
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 group will be formed at the NPC level which will be assigned also to enforce time
bound discipline.
• To institutionalise monitoring and evaluation divisions/sections of the ministries
and CMED of the NPCS, necessary logistics will be provided including budget,
computer, fax, and vehicle in order to mobilise them effectively in monitoring
and evaluation. In addition monitoring and evaluation units will be established
and strengthened in the departments.
• A system of project implementation without a detailed study still exists. As a
result, inappropriate projects are also implemented which are neither completed
nor become result-oriented. Therefore, a system of screening projects on the basis
of set criteria, before they come into action will be implemented, and formulation
of programme budgeting on ad hoc and pressured basis will be discouraged.
Screening will also be done in two levels. In the first place, ministries will screen
the projects and submit selected projects to the NPC. Keeping in view of the
perspective plan, resource availability and its effectiveness, NPC will again
screen the projects refined from the ministries and then will provide approval for
their implementation. For this, manpower working with the NPCS and the
ministries concerned will be trained in order to build their capability.
• Appropriate mechanism will be developed to regularly monitor and evaluate
achievements made by the district level projects vis-a-vis increased investment.
For this purpose, District Development Action Committee under the
chairmanship of the chairman of District Development Committee will be formed
and will meet every two months in order to review progress report and solve
problems that are faced during the implementation of projects. This committee
will be comprised of member of the District Development Committee, Chief
District Officer, Local Development Officer, Chief District Treasury Office and
chiefs of development offices and projects concerned as the members. A
representative from the Regional Offices of the NPCS will participate in the
meeting of the committee. In order to provide secretarial services to the
committee, to maintain status report on district level projects and to manage
regular monitoring and evaluation system, a separate section will be established
under the DDC Secretariat. Information regarding the evaluation done in the
district level will be given to the VDCs concerned. Regional Planning Offices of
the NPCS will have to submit compulsorily a periodic report on district level
monitoring to the CMED of the NPCS.
• As majority of development works is related to the construction of infrastructure,
establishing a 'quality audit bureau', quality audit of the construction works of
some projects will be carried out taking as a sample to maintain the quality of
these infrastructures. Similarly, mechanism will be developed to carry out
performance audit including technical audit of the management and activities vis-
a-vis target set by the projects.
• Keeping in view the importance of statistics in monitoring and evaluation, a
computerised global network connecting with the NPCS will be gradually

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 established in order to facilitate information flow to and from the ministries.
Through establishing a computer network such information will be extended up
to the offices of the Prime Minister, Deputy Prime Minister, NPC officials and
ministries. In order to manage this, foreign technical assistance will be mobilised.
Arrangement will be made to supply in time and regular basis efficient, capable
and professional manpower required for the operation of the network. To serve as
an information bank until the network is set up, a review hall will be established
in the NPCS.
• Necessary amendments will be made if required in the existing acts and by-laws
for speedy and quick execution of development works.
• As some of the projects funded by foreign assistance have been effectively
implemented with the management of steering committee, a policy will be
adopted to manage mega-projects funded by His Majesty's Government through
steering committee. A separate unit for monitoring and evaluation will be
established in the projects, which have wider activities and a mechanism to
coordinate with central agencies, will be developed.
• In order to make monitoring and evaluation effective, and to monitor and evaluate
the objectives of projects from their formulation stage, progress indicators will be
developed in cooperation with the NPC and be utilised in due course. In addition
to this, existing objectives and result-oriented indicators will be refined as and
when required, and formulation and development of such indicators will be
extended to all sectors.
• Since encouragement of beneficiaries' participation in monitoring and evaluation
of project implementation helps to sustain project achievement even after
completion of project, beneficiaries' participation in monitoring and evaluation
will be encouraged.
• Existing process monitoring formats including annual programme format,
progress reporting format, progress status format, development project inspection
format, and problem reporting format will be improved as and when required, and
be made mandatory. Projects will be asked to include expenditure detail in
periodic progress reporting. In addition, each and every ministry will have to
maintain and up date details of project status.
• In order to make project implementation more effective and efficient, a random
visit of the project area by high officials including the Prime Minister will be
arranged to receive exact progress reports of the projects. To speed up
implementation, arrangement will be made to take on the spot decision during the
visit.
• Regional offices under various ministries including regional offices of NPCS will
be strengthened and actively mobilised for monitoring and evaluation.
• Availability and continuation of efficient manpower is essential for the effective
implementation of monitoring and evaluation system. To maintain this, the
personnel working at various levels should be provided with training, made

564
 assure and aware of the justification of monitoring and evaluation. In order to
organise such training, arrangement will be made to provide trainings through
Nepal Administrative Staff College, government training centres and the NPCS in
a regular basis. Since the Economic Planning and Statistics Service which was
separately formed to cover planning, monitoring, evaluation and related
functions, has grouped only statisticians at present, manpower associated with
planning, monitoring and evaluation in NPCS, ministries and departments will be
included within the Service and effectively implemented in order to retain and
develop career opportunities within the Service.
• Based on set criteria, on going projects will be classified into two parts: core and
other projects. Core projects will be monitored intensively with due priority in
resource allocation. Project profile of the core projects will be computerised and
updated, field visit will be arranged and a system of reviewing progress in a
regular basis will be maintained. In NPC level, CMED will collect the progress
report of these projects and review them every month. Organising review
meetings every month under the chairmans hip of Vice Chairman of the NPC, an
effort will be made to solve the problems of the projects that have been identified
as problematic. In order to solve the problems of major problematic projects, a
review meeting will be organised every four months under the chairmanship of
the Prime Minister where ministers and secretaries concerned will be invited.
Monitoring of other projects will be carried out by concerned sectoral divisions of
the NPCS. These divisions will regularly receive the progress report of the
projects, verify the progress reports through field supervision, maintain project
profile in the computer and provide periodic reports to the CMED. A system of
putting and updating integrated project profiles in computer will be maintained.
• Arrangement will be made to regularly monitor sustainability and achievement of
some mega projects that have already been completed. In doing this, beneficiaries
of the projects will be involved. Similarly, post evaluation of some of those
projects will be conducted to study their effects and impacts. In order to make
evaluation impartial, academic and research institutions will be involved as
required, and the personnel working with the NPCS will be involved in building
their capacity as well as making evaluation standard and reliable.
• As the implementation and formulation of budget and programme do not always
follow the policy set by the Plan, a system will be initiated for monitoring and
evaluation of policy and programme. For this purpose, a separate section under
CMED will be established and assigned to look after policy monitoring and
evaluation. Research will be conducted as and when required for policy
monitoring of specified policies. In this process, rational as well as inter-
relationship among perspective plan, budget and programme will be determined,
and will be reported regularly to the higher officials concerned. In addition, while
approving annual programme it will compulsorily be looked upon whether it has
been in line with the perspective plan or not. Since about 60 percent of the total
development expenditure of the Ninth Plan is expected to be allocated through
private sectors and since their performance basically depends on conducive

565
 policy environment created by the government, special efforts will be made to
monitor and follow up the actual implementation of formulated policies.
• Mid-term evaluation of the development projects will be carried out to evaluate
annual programme implementation status and on the basis of the evaluation
approval regarding the amendment of the programme and budget transfer will be
given. Similarly a process of annual evaluation of development projects will be
initiated. Progress evaluation of the core projects and other projects will be
conducted by CMED and sectoral divisions of NPCS, respectively.
• A scheduled work plan for hiring consultants and manpower, and awarding
contracts will be executed in the projects. In cases where activities are not
completed as per schedule, project chiefs will be made accountable. A strict
arrang ement will be made to complete contract award within first trimester.
Similarly, project chiefs will not be transferred within project period unless they
would harm the project because of their inefficiency or ir-responsiveness. This
will be monitored by the NPC.
• For the purpose of evaluating projects, an estimated standard for per unit cost will
be determined. Evaluation will be made standard and effective analysing the
variance between standard unit cost and actual unit cost. Such standard will be
determ ined by the NPC in cooperation with the ministries concerned.
• NPC will maintain a computerised districtwise profile of development projects
that are operated in various districts of the Kingdom.
• Considering that an environment of reward and punishment in project
management will have a positive effect towards job, arrangement will be made to
differentiate good performing and bad performing personnel through monitoring
and evaluation and made it a basis for their performance evaluation. To this end,
a system will be introduced to recommend by the NPC.
• CMED of the NPC will be developed as an information focal point regarding
monitoring and evaluation. This division will be provided with necessary
information regarding core projects directly by the ministries concerned, other
central level project by the sectoral divisions of the NPC and district level
projects by the regional offices regularly. This division will work as a two-way
communication bridge in order to communicate information received to the Prime
Minister and various levels of the NPC, and to communicate and monitor
implementation progress of the decisions made by the NDAC and the NPC.
• The role of non-governmental organisations is also important in national
development. The non-governmental organisat ions will be asked to submit a
detailed annual report to a separate agency established under the Ministry of
Women and Social Welfare. The agency will maintain information of the non-
governmental organisations, established with the objective of participating in
development, whether they deviate from their specified target or not; whether
there is any duplication between programmes implemented by the non-
government organisations and by the government or not; the benefits or outputs

566
 received by the people are of standard or not; and the programmes run by the
non-governmental organisations are sustainable or not. In the process, their
services will be regularised by classifying them and monitoring their involvement
in profit-making services or not. Similarly activities run by some of the big non-
government organisations taking as a sample will be monitored directly by the
NPCS.
• NPCS and the agencies that implement monitoring and evaluation functions will
perform random audit and play a role of supervisor. In add ition, a process of
monitoring and evaluating all sectoral projects of selected districts will also be
initiated by the NPC.
• For last few years, due to the absence of effective coordination mechanism
among the personnel working with different organisation and among the
personnel working within the organisation, appropriate working environment has
not been created. Decreasing trend of work morale on them has also been found
as one of the reasons for slackness in project implementation. In this context it
has become extremely necessary to create an environment to work with a team
spirit, therefore, an effort will be made to identify and solve project and
organisational problems from the ministries and departments concerned in order
to improve this situation.
7. Conclusion
Effective pursuance of the system itself is considered a crucial part in monitoring and
evaluation as the implementation aspects are considered very important in project
management. Since, the justification, utility and success of established national
process infrastructure depends on the view and commitment of the personnel
involved in their implementation, effectiveness of monitoring and evaluation system
depends merely on the responsibility of the implementing agency. Therefore, during
the Plan period, an effort will be made to deliver benefit to the targeted groups within
expected time by speeding up the implementation of projects through the above
mentioned policy, strategy and programmes.

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