Institutionalised inequality

The rich-poor gap in Nepal is state-sponsored violence, and is detrimental to stability and prosperity

Himal Khabar monthly, Jestha issue (May/June) 2023

Ranadevi Harijan, 45, had no choice but to borrow money from a village loan shark. He drew up papers for Rs60,000 but gave her only Rs13,000. Later, he demanded Rs100,000 with interest from her.

Seeing no other way out, Harijan and others who had fallen victim to similar extortion walked for weeks from Nawalparasi to the seat of power in Kathmandu for justice. It has been a month since they have been camped out in various locations in the capital. 

Prime Mininster Pushpa Kamal Dahal’s coalition is basking in self-glorification for having cracked the fake refugee scam that has led to the arrest of high-profile former ministers and implicated other top political leadership. For the Maoists who preside over the home ministry that is in charge of police investigating the case, the scandal has been a convenient way to distract from their own past wrong-doing, and to put the Nepali Congress and the UML in the firing line.

Otherwise one cannot help but notice a culture of silence among politicians when it comes to corruption cases between them. A Nepali omertà of sorts, if you will.

The financial monopoly of local usurers and the fake refugee scandal may not seem related, but reveal two characteristics of Nepal’s contemporary political-economy: the remnants of feudalism are deep-rooted and powerful, and cronyism has flourished in the neoliberal economy. 

In 250 years that Nepal has existed as a nation state, one thing as remained constant no matter whether it is the Shah or Rana regime, the Panchayat or a federal democratic republic, the privileged and new-rich remain in power, while the poor are as neglected as always. The gap has got wider because the political-economy is rigged in favour of an entrenched ruling class.

Economists argue that inequality is an inherent characteristic in a capitalist economy. But it is the long-standing wealth differential that is a root cause of economic inequality. Capitalist countries with a welfare state redistribute wealth and opportunity through a weighted tax system.

Most of Nepal’s wealthiest are from families who have long profited from their ancestors having received favours, influence, and wealth from the rulers of the past. And then there are the neo-rich who are trying to play catch-up.

While Nepal’s affluent class might attribute its circumstance to inter-generational privileges, this accumulation of wealth also has to do with luck and opportunity. These advantages have been enhanced by modernisation, which has meant that the economy is no longer controlled just by real estate tycoons, industrialists, and old money, but also those who have access to information technology.

Not much has changed since the Rana-era licensing policies that enabled individuals to financially monopolise the import trade. Banks, insurance companies, the stock market, and other big businesses still make a profit through dubious license manipulation.

Policies grant tax and other concessions to business lobbyists. Budgets are drafted in clandestine nocturnal meetings with favoured family businesses behind locked doors. Laws are changed to protect wealth amassed by the rich through illegal and criminal means and to facilitate money laundering. Parliament’s committees are infiltrated by political cronies, and it is now difficult to tell the difference between MPs and CEOs in this rent-seeking economy. All of which has concentrated much of Nepal’s wealth within a select few. 

Nepal’s new breed of elected representatives have their work cut out to end the centralisation of privilege by the politically connected. They need to be single-minded in the creation of equal opportunities, just access to resources, entrepreneurial development, and redistribution of benefits to the grassroots.

The state needs to intervene and invest in education, health and human resources. The new budget must introduce comprehensive tax reforms to ensure the wealthiest pay more. Economic expansion must go hand in hand with equitable. An inheritance tax should be introduced to prevent inter-generational bonded corruption. 

This year’s budget will be presented to Parliament on 29 May. It comes at a time of deep economic crisis, and the government faces a challenge in balancing Nepal’s declining revenue even the import bill and government expenditure grows. Ironically, underspending of the development budget remains a chronic problem that is linked to corruption. 

Structural inequality and state-sponsored economic disparity is a form of political violence. It is detrimental to Nepal’s stability and prosperity. If Nepalis decided they have had enough, those at the top of the economic and political food chain will be blamed.  

If such a situation were to arise, it would not take long for political or other extremists to weaponise grievances and channel it to a despotic, bigoted and depraved quest for absolute power.

Rabin Giri