It is that time of the year again. The last-minute construction spree is underway to make up for chronic underspending of capital expenditure, right ahead of the new budget to be presented in Parliament on 29 May. The paradox is that while the government faces a severe cash crunch due to falling revenue, it spent only one-third of the development budget in the last 10 months of the fiscal year.&nbsp; The new parties in Parliament like the RSP have been trying to shake things up and urge multi-partisan consultations before the budget, but given the obsolete structure and leadership of the parties, not much is expected to change. But there is a strong argument for tax reform since the government faces a major challenge in balancing revenue with expenditure. The previous government’s ban on luxury items to augment depleting foreign reserves post-pandemic and increased bank interest led to the decline of real estate transactions resulting directly in a drop in revenue. But what makes matters worse is that the government has been profligate in spending beyond its means. Salaries, allowances, administrative expenses, grants and loans have all gone up. The government collected Rs756 billion in revenue in the last 10 months against the target of Rs1.4 trillion whereas its expenditure has exceeded Rs1.04 trillion.&nbsp; Read also: <a href="https://www.nepalitimes.com/editorial/institutionalised-inequality">Institutionalised inequality</a>, Editorial Taxation is the primary source of income for any government. Contrary to what the wealthiest Nepalis think, the government is not run with their tax money but by what ordinary citizens pay in taxes. &nbsp;While tax evasion concentrates the wealth within the already privileged, the tax the poor pay is not proportional to their earnings. &nbsp; Nepal’s liberal economic policy since 1990 was expected to alleviate the income gap with trickle down effect, but the economic disparity in society is more stark than ever. A 2020 report Equality for Prosperity showed that while the wealthiest 20% of Nepalis own 56.2% of wealth, the poor 20% have only 4.1%. This economic gap is likely to have widened with the current crisis.&nbsp; This income gap is not just in Nepal. Worldwide, a skewed tax system is blamed for rising inequality. A new Oxfam report points out that two-thirds of the wealth that has increased globally after the Covid-19 pandemic is in the hands of the richest 1%. It recommends tax reforms based on wealth accumulation. “Because the tax system is not progressive in Nepal, wealth is piling up in the hands of the rich, while the income of the poor is not increasing,” explains economist Dilliraj Khanal. “We don't have a system of taxing the rich because of policy weakness and dominance of middlemen.”&nbsp; Read also: <a href="https://www.nepalitimes.com/opinion/nepals-care-economy">Nepal's care economy</a>, Bina Pradhan  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230526050528_6fe0c49de563e6fb210c25501e835186d93ecd57b2f63f8ff8154dca49daeee7.png" data-media-id="editor_2" data-image-id="20230526050528_6fe0c49de563e6fb210c25501e835186d93ecd57b2f63f8ff8154dca49daeee7" data-rendition-name="original" width="741" height="541" loading="lazy" alt="Rich-poor gap graph"> </figure>  Who pays taxes? Two-thirds of the government's annual revenue is collected not from corporations and industry, but from various taxes and revenue paid by the general public. The share of tax on corporate profit is in fact very small.&nbsp; In fiscal year 2021/22, the government collected a total of Rs989.62 billion in revenue. Of this, the income tax paid by businesses from the profits earned through private companies is only 5%. So while income tax did bring in Rs229 billion which is 24% of total revenue collected, this amount is largely from the income tax paid by ordinary citizens on their personal income. The tax paid from the profits of private companies is only Rs47.5 billion. When adding public limited companies (issued shares to the general public) and other types of companies, corporate income tax comes to only about Rs114 billion,which is just 11% of the government’s annual revenue.&nbsp; The government collected Rs314 billion from VAT last year, and this made up about one-third of total government revenue. Similarly, Rs241 billion was collected as customs duty and Rs155 billion as excise. “Society with unequal income and wealth, but equal taxes, burdens the poor and favours the rich, it is a regressive tax system that makes it difficult for the poor to survive,” says Khanal. For example, VAT is the same 13% for all Nepalis – rich and poor. &nbsp; “In essence, five-star hotels in Kathmandu and the poor are both taxed equally for LPG fuel,” he adds. “From a social justice standpoint, taxes must be based on income.” Read also: <a href="https://www.nepalitimes.com/here-now/ground-reality-of-landlessness-in-nepal/" target="_blank">Ground reality of landlessness in Nepal</a>, Rabi Giri Taxation expert Roop Khadka disagrees, saying it is impractical to have a different VAT rate for rich and poor, and even if it was introduced it would be impossible to enforce. Instead, Khadka favours revoking VAT exemption on goods and services consumed by the upper classes, which are worth nearly Rs100 billion per year. Tax evasion by the rich is another problem that needs to be tightened, and collusion between business and politicians means that the government itself abets tax evasion. Real estate speculation has helped select groups in Nepal to become immensely rich immediately, but the government collects a bare minimum in tax from profits made in land transactions. &nbsp; A real estate sale within five years is required to pay 7% of its profit. If the transition happens within 10 years, only 5% of the profit is taxed. This means most of the astronomical profits made in real estate sales in the past years have gone into the pockets of brokers and large landowners. On the other hand, the 60th report of the Auditor General's Office says many evade tax by showing less than the actual value of the property. The VAT bill scandal 10 years ago also revealed the widespread tax evasion by the commercial sector. The politics of patronage means that businesses are now colluding with politicians and bureaucrats to loot the treasury. The Tax Settlement Commission decided to collect Rs9.54 billion from businesses that have not paid tax for a long time, but the Auditor General's Office later revealed that the decision was made in cahoots with the businesses themselves who actually needed to pay Rs30.52 billion. The most egregious and blatant wrongdoing was by former Finance Minister Janardhan Sharma who was making backroom deals with select business groups importing steel rods and electric vehicles so their products got customised tax breaks in the budget last year. The deal cost Sharma his ministership but the unholy nexus between politicians and business continues with impunity.&nbsp; Read also: <a href="https://www.nepalitimes.com/here-now/state-sponsored-economic-crisis-ikcxxmnp">State-sponsored economic crisis</a>, Ramesh Kumar  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230526050528_60a9385914649170d0496b8864bcb751477820b43554c68bec524f6e2412d39b.jpg" data-media-id="editor_5" data-image-id="20230526050528_60a9385914649170d0496b8864bcb751477820b43554c68bec524f6e2412d39b" data-rendition-name="original" width="6124" height="4082" loading="lazy" alt="Kathmandu labourer NT"> <figcaption>Photo: SUMAN NEPALI</figcaption> </figure>  Alternative to the wealth tax In this state, the only sector keeping Nepal’s economy afloat is the estimated $9 billion Nepalis abroad send home every year. Still, Nepal’s debt has reached 43% of GDP, a sharp rise from 28% a decade ago. This will have a direct impact on the tax system. Sooner or later, the government will raise taxes. But for whom?&nbsp; If the status quo continues, and the poor are subjected to more taxes the income gap will widen further, inviting social unrest. Taxation relative to the size of the economy is about 22% in Nepal, one of the highest in South Asia. But for every Rs100 the government receives as revenue, only Rs23 is collected through income tax. The rest is made up of common citizens paying for the consumption of goods and services.&nbsp; All over the world, different levels of income are distinguished and income tax exemption is given to the lowest which is known as a basic exemption. Welfare states also have a weighted system of taxes of the richest that ensures socio-economic equality. But even though there is a flat tax on salary and allowances, windfall profits including from real estate transactions are not taxed properly, leading to a consolidation of wealth among certain groups. Read also: <a href="https://www.nepalitimes.com/banner/nepals-great-income-divide">Nepal's great income divide</a> Experts have proposed wealth-based taxation to reduce the disparity between rich and poor. Economist Keshab Acharya says that the government should levy an inheritance tax on ancestral property to children as is done in the US, Japan and Europe. This encourages entrepreneurship and inspires the new generation to find creative ways to earn money. But the historical distribution of land in Nepal was largely unfair where families close to the ruling class were granted ownership exempt from tax. These assets have been handed down through generations and ownership of a large part of it is still limited to certain families.&nbsp; Historian Mahesh Chandra Regmi in his book Land Ownership in Nepal states that before 1951, more than one-third of the total arable land had been handed down intergenerationally in that manner. An inheritance tax will also reduce corruption because the mentality that wealth should be passed on to children will be weakened if such a tax is implemented. Meanwhile, land prices in Kathmandu skyrocketed thanks to the government. Since the state has spent on infrastructure that led to the rise in value of property, it should get a share of the profits “The government should get the benefit of increased property valuation in the form of taxes which will increase the spending purse for the welfare of the poor,” explains Khanal. Read also: <a href="https://www.nepalitimes.com/?p=21822&amp;preview=true" target="_blank">Some are more equal than others</a>, Anil Chitrakar

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Nepal’s tax system widens rich-poor gap

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114121112/637222e29c7e80680e0c031ejpeg.jpg" alt="" width="1086" height="724"/><figcaption>Charikot Hospital. Photo: NYAYA HEALTH NEPAL</figcaption></figure>Nepal’s medical industrial complex has modernised healthcare in the country, but it has also pushed treatment out of reach of most citizens.Collusion between politicians and medical magnates has made it so expensive to become a doctor that it has set off a chain reaction to make hospital treatment unaffordable.Meanwhile, government hospitals are <a href="https://www.nepalitimes.com/here-now/at-the-covid-19-frontlines-in-rural-nepal/">under-funded, under-staffed and under-motivated</a>. Most medical personnel in district hospitals and health posts moonlight in private clinics, and patient treatment is substandard.Desperate families have to sell property, jewelry and other assets <a href="https://www.nepalitimes.com/banner/in-a-healthy-state/">to afford private treatment</a>, pushing even some middle-class families below the poverty line.Read more: <a href="https://www.nepalitimes.com/banner/in-a-healthy-state/">In a healthy state</a>, Nepali TimesBut there are notable examples of government hospitals that are running well because of various models of partnership with non-profits, foundations and charities. They prove that affordable high quality healthcare is possible, and those hospitals need not be so expensive to run.There is <a href="https://archive.nepalitimes.com/news.php?id=18362#.YrQjS-xByrc">Dhulikhel Hospital</a> which has a tiny registration fee, treatment is low cost, an insurance scheme pays for most treatment, and patients are charged according to their capacity to pay. Despite being a government hospital, Dhulikhel has upheld a consistently high standard of care and treatment.United Mission to Nepal has run a hospital in Tansen for over 60 years, a community hospital in Okhaldhunga, and was till recently managing Patan Hospital, providing high quality care at low cost to patients.Other public-private partnership institutions that could be models to be replicated across Nepal include:<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114121112/637222e59c7e80680e0c031fjpeg.jpg" alt="" width="1500" height="1000"><figcaption> </figcaption></figure><h3>Bayalpata Hospital</h3>After <a href="https://www.nepalitimes.com/opinion/is-free-health-care-possible-in-nepal/">Bayalpata Hospital</a> was established in Achham 20 years ago, for many years it did not have a single doctor. Treatment was so poor that even emergency cases had to be taken on a grueling 12 hour drive down to Dhangadi.In those days HIV tagged along with the migrant workers returning from India, and there was a full-blown AIDS and TB epidemic in Achham and other district in Far Western Nepal. The mortality rate, already very high among women and children, soared.In 2009, Nepali and American medical students inspired by the community health model of <a href="https://www.nepalitimes.com/latest/paul-farmer-on-my-mind/">Paul Farmer</a> set up Nyaya Health Nepal (formerly Possible) taking over  Bayalpata under a public-private partnership with the government.Since then, Bayalpata Hospital has upgraded its facilities (left) and <a href="https://www.nepalitimes.com/banner/state-of-the-art-rural-hospital/">treated nearly 1.5 million patients for free</a>, some of them for complicated caesarian and orthopedic surgeries.Read also: <a href="https://www.nepalitimes.com/opinion/is-free-health-care-possible-in-nepal/">Is free health care possible in Nepal?</a> S P KalauneeUp to 100,000 patients from Achham and surrounding districts come to Bayalpata because they get free treatment there, and many families have saved themselves from sinking into poverty.Bayalpata also runs a network of community health centres with an Electronic Health Record (EHR) system that digitally keeps track of all patients in the catchment area. The presence of just this one hospital has improved the health parameters of surrounding districts, bringing down the maternal and child mortality rates. Achham once had the highest maternal mortality rate in Nepal, today institutional deliveries make up 90% of total deliveries, and very few women die at childbirth.“We have a simple objective: to show that providing free and high quality treatment to the most underserved area of the country is possible at a very low cost,” explains Srijana Devkota of Nyaya Health Nepal.Once <a href="https://archive.nepalitimes.com/article/nation/Nation-Crowdfund-globally-act-locally,490">fully funded by international foundations</a> to run hospitals in Bayalpata and Charikot, NHN now provides free medical treatment in Achham for just Rs200 million a year, of which half now comes from the Sudurpaschim Province and local municipality.+977 - 4100517<a href="https://www.nyayahealthnepal.org/">https://www.nyayahealthnepal.org/</a><figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114121112/637222e89c7e80680e0c0320jpeg.jpg" alt="" width="750" height="401"><figcaption> </figcaption></figure><h3>Spinal Injury Rehabilitation Centre</h3>The <a href="https://www.facebook.com/SpinalNepal/">Spinal Injury Rehabilitation Centre</a> (SIRC) in Banepa is a public-private partnership  providing treatment and rehabilitation to people with spinal injuries. It was started by journalist and civil rights activist Kanak Mani Dixit after his miraculous survival and recovery in a trekking accident in 2000 along the Annapurna Circuit that damaged his spinal cord.SIRC now <a href="https://www.nepalitimes.com/here-now/injured-use-internet-to-reach-physiotherapists/">helps rehabilitate up to 100 spinally injured patients</a> a year, and the numbers are going up every year due to injuries sustained in highway accidents and falls from trees and cliffs. The facility was located in Banepa because of its proximity to highways and nearby trauma centres. The hospital has also been providing community treatment and tele-rehabilitation services for follow-ups.Read also: <a href="https://www.nepalitimes.com/editorial/poor-health-makes-nepalis-poorer/">POOR HEALTH MAKES NEPALIS POORER</a>, EditorialThe hospital has medical officers, urologists, physiotherapists, occupational therapists, nursing care, prosthetics, orthotics, psychologists and consultants. Those who cannot afford to pay are still treated for free, others are charged the same rate as Bir Hospital.“Because patients often have to stay for more than five months, it may be difficult for them to afford the cost, so we charge them according to their capacity to pay,” says SIRC’s Raju Dhakal.SIRC’s annual running cost is Rs50 million, of which most comes from grants by non-profits and other fund-raising activities. The government also chips in with a budget for the physical construction and equipment as well as occasional allocations to cover budget shortfalls.infosirc@wlink.com.np, spinalnepal@gmail.com<a href="https://www.sirc.org.np/">https://www.sirc.org.np/</a><h3>Charikot Primary Health Centre</h3>The 2015 earthquake damaged <a href="https://www.nepalitimes.com/latest/unique-hospital-handover-in-dolakha/">Charikot Primary Health Centre</a> along with 98% of the medical facilities in Dolakha district. But the disaster was a blessing in disguise for the Charikot centre. It was rebuilt and upgraded to a full-scale 50-bed hospital and managed first by Médecins Sans Frontières and then by the non-profit Nyaya Health Nepal (NHN). Residents of Dolakha did not have to make expensive journeys to Kathmandu because medical treatment was available for free at Charikot.Read also: <a href="https://www.nepalitimes.com/opinion/dangers-of-privatising-health-insurance-in-nepal/">Dangers of privatising health insurance in Nepal</a>, Gaj B Gurung and Sushil KoiralaIn 2020, NHN handed over management of the hospital to Bagmati Province and Bhimeshwor Municipality which now run the facility with low cost treatment for up to 300 patients a day. The Charikot experiment has been hailed as a model for successful transfer by a private non-profit to the local government, and it has been running well despite the presence of two private hospitals in Charikot.“It has been a seamless handover from Nyaya Health to the government, and the level of care and treatment is the same,” says chief physician Binod Dangal. “We perform caesarean sections, orthopedics, telemedicine, free check-ups for the elderly, children and pregnant women, mental health counselling, and chronic illness monitoring.”+977 49 421125<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114121112/637222ea9c7e80680e0c0321jpeg.jpg" alt="" width="1080" height="608"><figcaption> </figcaption></figure><h3>Sagarmatha Chaudhary Eye Hospital</h3>For the past 30 years, the <a href="http://archive.nepalitimes.com/news.php?id=10071#.YrQlROxByrc">Sagarmatha Chaudhary Eye Hospital</a> in Lahan of Siraha district has been providing the cheapest cataract surgery in the world for just Rs1,200 per operation.Thirty years ago when the hospital started, it had only 12 beds. It now treats 470,000 people every year with patients coming in from as far away as southern India and Bangladesh, and they pay the same amount as Nepalis. Just in the last three years, the eye hospital has treated 321,000 foreign nationals.“It is possible to provide the services at an affordable cost because we are a non-profit, and have an economy of scale,” explains Abhishek Roshan of Sagarmatha Chaudhary Eye Hospital.Read also: <a href="https://archive.nepalitimes.com/article/editorial/health-tip-editorial,4032">Health tip</a>, EditorialThe hospital has <a href="http://archive.nepalitimes.com/news.php?id=10071#.YrQlROxByrc">also set up 15 eye care centres throughout the district, and takes treatment directly to the people</a> so they do not have to make the journey to Lahan. It has a separate department for paediatric services, care for newborn babies with vision problems. In 2021 alone, it performed 1,170 eye surgeries on children.Apart from providing treatment of retina, cornea, glaucoma, oculoplasty, the hospital also serves as an international research centre, collaborating with institutions like The London School of Hygiene and Tropical Medicine.The hospital subsidises its eye treatment for patients with revenue from its agribusiness ventures. A part of the hospital’s land is dedicated to fish farming, and an orchard for litchi and mangoes, as well as a bamboo grove.“Income from those ventures help us keep the cost of treatment down,” says Roshan. The hospital is also supported by Christian Blind Mission (CBM), the European Commission and Arvis.+977-33- 560080https://www.erec-p.org/sagarmathaRead more: <a href="https://archive.nepalitimes.com/article/nation/national-health-insurance-not-as-easy,4028">A national health insurance scheme is not as easy as it looks</a>, Sonia Awale

Taking wealth out of health

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101152/636a26e49c7e80680e043a3ejpeg.jpg" alt="" width="800" height="1178"/><figcaption>Diwakar Chettri</figcaption></figure>Whatever the political ambitions of the Maoist leaders, their justification for taking up arms was the inequality historically embedded in Nepali society. The rebels lit the spark on terrain that was tinder dry with disparities. Nepal would have gone up in flames sooner or later, the Maoists just had their timing right.The tragedy, of course, is that in an allegory of Animal Farm 13 years after the war, the Maoist leaders people elected to government forgot what they fought for, and Nepal’s income and wealth gap have grown even wider. As our review of a recent report shows, Nepal’s poor are <a href="https://archive.nepalitimes.com/article/editorial/Nepal-%20Multidimensional-Poverty-Index,4115" target="_blank" rel="noopener">trapped in poverty</a> while the few rich have prospered.The report by HAMI, South Asian Alliance for Poverty Eradication and Oxfam paints an alarming picture of <a href="http://archive.nepalitimes.com/news.php?id=17298" target="_blank" rel="noopener">deprivation</a>  and disparity in Nepal: the average income of the richest 10% of Nepalis is more than three times that of the poorest 40%. Worse, the richest 10% own 26 times the wealth of the poorest 10%.Read also:<a style="background-color: #ffffff; outline: 0px; font-weight: bold; letter-spacing: 0.01em; font-size: 15px;" href="https://www.nepalitimes.com/?p=21837&amp;preview=true" target="_blank" rel="noopener">Nepal's great income divide</a>, Ramesh Kumar<a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=21822&amp;preview=true" target="_blank" rel="noopener">Some are more equal than others</a>, Anil Chitrakar<a href="https://www.nepalitimes.com/opinion/gadfly-opinion/removing-poverty-with-jobs/" target="_blank" rel="noopener">Removing poverty with jobs</a>, David Seddon<a style="background-color: #ffffff; outline: 0px; font-weight: bold; letter-spacing: 0.01em; font-size: 15px;" href="https://www.nepalitimes.com/banner/its-a-rich-mans-world/" target="_blank" rel="noopener">It's a rich man's world</a>, Ramesh KumarEconomic inequality is most evident in agriculture in which 66% of Nepalis still depend. The wealthiest 7% of households own 31% of the agricultural land, and many landless are tenant farmers at the mercy of landowners. Social discrimination multiplies the misery: 81% women are landless, as are 44% of Dalits in the Tarai.Nepal’s <a href="http://archive.nepalitimes.com/news.php?id=15026#.XGzGkOQza70" target="_blank" rel="noopener">wealthiest man</a> has a net worth of $1.6 billion and is the 1,561 richest in the Forbes list. His wealth grew by $200 million last year. A history of feudalism, a rent-seeking state and neoliberal economic policies have concentrated Nepal’s wealth in the hands of a dominant elite which has made policies and laws to perpetuate its hold on it. Rulers and hangers-on have deliberately kept the poor out of reach of new opportunities, depriving them of a chance of a better life.Such disparity also gives the movers and shakers an unfair advantage in a democracy because they can bend the system to keep getting elected, which then deprive the underserved even more. Politicians, bureaucrats and businesses can carry on with <a style="background-color: #ffffff; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/editorial/red-rice/" target="_blank" rel="noopener">business-as-usual</a> with no accountability, full impunity and no fear of retribution from a <a style="background-color: #ffffff; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/editorial/bulldozing-democracy-2/" target="_blank" rel="noopener">rigged system</a>.The government’s failure to deliver on basic services like health and education have driven the private sector to fill the gap. But consequent over-commericalisation and lack of regulation have put quality schooling and medical care out of reach of the poor. The government’s reaction has been to back a populist call for nationalisation to cover up its own delivery failure.Inequality is taking its toll on the physical and mental development of children. <a style="background-color: #ffffff; letter-spacing: 0.01em;" href="http://archive.nepalitimes.com/article/nation/the-face-of-hunger-debt-malnutrition,3604" target="_blank" rel="noopener">Malnutrition</a> begins at a very young age: 36% of Nepali children under five are stunted, 27% are underweight, and 10% suffer from wasting due to lack of adequate food. There is no greater proof of chronic governance dysfunction than this: the apathy and failure of the state to protect its most vulnerable.No society or nation can have totally equal income or wealth distribution. But there must be a certain equilibrium so that all citizens can attain a basic quality of life and earn a standard, minimum income.But inequality is so bad that the 8 million Nepalis who live in poverty have shorter lifespans. A poor Nepali child is three times more likely to die before age 5 than a rich child. The poor and excluded receive unequal care at government hospitals.What is most tragic is that there is minimal recognition or commitment from successive governments to redress this injustice. Nepal ranks 138, which is nearly at the bottom of a list of 157 countries, for its Commitment to Reducing Inequality. Rampant <a href="http://archive.nepalitimes.com/article/from-nepali-press/poor-of-kathmandu,2153" target="_blank" rel="noopener">poverty and extreme inequality</a> build frustration among suffering citizens, increasing the chances of social instability, and possibly renewed conflict. After a revolution to liberate the poor from poverty ended up killing 17,000 of Nepal’s poorest people, the gap between the rich and poor has actually widened.The way countries try to compensate for the inequality inherent in free market capitalism is through progressive land reform and taxation, by spending on a social safety net, and through  government investment in affordable, quality health care and education. There must be minimum wages for even those working in the informal sector, because that is where majority of Nepalis are engaged. All this would lay the foundation for a more equitable society, where the poor may not be immediately guaranteed greater income but all citizens would have a level playing field.We have seen the current government make tentative moves to address some of these issues, but they are too little and too half-hearted. The chasm between the rich and poor is so wide that it will take more than the hollow populism of the government's ‘Prosperous Nepal and Happy Nepalis’ slogan for prosperity and happiness in our lifetime.10 Years ago this weekThis passage from the Editorial in Nepali Times #439 of 19-26 Feburary, 2009 about how the still Royal Nepal Army was trying to reassert itself warns of danger to the civilian chain of command. Excerpt:The Nepal Army's 'recommendations' to the CA Committee on Protection of the National Interest has raised hackles. While it is the fundamental right of every citizen to respond to the CA's call for suggestions, an instrument of state is expected to abide by operational norms of proper procedure. The NA brass has clearly overstepped its limits by bypassing the executive to present its case directly before the legislature. Under normal circumstances, an organ of state has to access parliament through the concerned ministry. But even more alarming is the tone of the content. A civilian chain of command means the army shouldn't have a political position of its own other than that of the government of the day.

Mind the Gap

The monsoon has got bad press because Nepal’s tourism operators actively told visitors to avoid <a href="https://nepalitimes.com/opinion/managing-the-monsoon?%2F">the rainy season</a>. It is time to change that. The reason can be found right here in the vast alpine meadows of Central Nepal where this time of year you can walk on velvet grass of pastures abloom with delicate pink, red and yellow flowers as the mist rolls up the valley. There is no sound except the hum of bumble bees. &nbsp;&nbsp; There are dozens of places across high Nepal called Chaurikharka, which means yak pasture. But this particular Chaurikharka in Rukum East located at an altitude of 4,000m stands out for its serene beauty, rustic charm and bucolic setting. There is just the occasional chime of <a href="https://nepalitimes.com/here-now/when-yaks-go-so-does-culture">yak bells</a> in the distance, and the sharp whistle of herders corralling sheep. &nbsp;&nbsp; The grass shoots are so fragile that one hesitates to step on them, the rounded ridges appear and quickly vanish in waves of mist. With the<a href="https://nepalitimes.com/here-now/before-the-next-monsoon"> arrival of monsoon</a>, these meadows are a soothing shade of green dotted with millions of <a href="https://nepalitimes.com/review/the-anatomy-of-a-flower?%2F=">multi-coloured flowers</a>. Until very recently, it took a week or so to hike up to places like Chaurikharka, but with the expansion of the road network even to these far-flung mountains in the lap of Dhaulagiri, they are much more accessible. It is just a three-hour uphill from the Mid-Hill Highway on the border between Baglung and Rukum East.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16.jpg" data-media-id="editor_4" data-image-id="20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Purists would say that such easy access devalues the sanctity of these remote high meadows, but it also means more people will be moved to treasure the experience, appreciate <a href="https://nepalitimes.com/banner/natures-fragile-gift-to-nepal">the value of nature </a>so they can take steps to protect it.&nbsp; To be sure, the <a href="https://nepalitimes.com/here-now/deadly-monsoon-in-nepal-turns-deadlier">monsoon season can be challenging for road travel</a>. The roads are rough even at the best of times, and in the monsoon they become muddy and treacherous, often blocked by<a href="https://nepalitimes.com/news/monsoon-deluge-in-nepal"> landslides</a>. But that could be precisely the kind of adventure that the more intrepid visitors crave. Improved road connectivity has already made Chaurikharka and places like Badimallika &nbsp;and other sacred lakes in the mountains of western Nepal popular with domestic tourists. What is driving this traffic is the urge to go to exotic new places and share videos and selfies on social media. Several of Nepal’s travel vloggers have visited Chaurikharka and popularised the place, enticing followers on TikTok or YouTube to retrace their footsteps. But even as they become more popular, these fragile and once-remote places should be protected from over-tourism.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446.jpg" data-media-id="editor_8" data-image-id="20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446" data-rendition-name="original" width="1083" height="699" loading="lazy" alt="Visit Nepal in the monsoon NT"> </figure>  <h2>INCREASING FOOTFALL</h2> Chaurikharka is located in Bhume Rural Municipality of East Rukum, near the scenic valley of Dhorpatan in Baglung district. Even in the <a href="https://nepalitimes.com/banner/monsoon-culture">middle of the monsoon</a>, there is a steady stream of Nepali hikers trooping to these high pastures – especially during festival days like Saune Sankranti which this year was on 17 July and actually marks the auspicious beginning of the monsoon here. “This year the rains have not been as heavy and there have been some clear mornings when we could see everything from Dhaulagiri to Machapuchre,” says Khageswar Bhandari, who trekked up here from the road. “The flowers, the greenery and the snowy mountain views make this an incredibly unique place.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9.jpg" data-media-id="editor_10" data-image-id="20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9" data-rendition-name="original" width="2048" height="1152" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Chaurikharka is worthwhile to get to in any season, but it has a different charm during the monsoon. Word has spread and because it is now easy to get to from Baglung or even Pokhara, people have been flocking here.&nbsp; “Holidays and Saturdays see the largest crowds, with up to 500 visitors every day,” says ward chair Mankaji Pun of Bhume.&nbsp; There was a time not too long ago when local herders brought sheep, goats, cows, buffaloes, horses, and mules to graze here during the monsoon. Although there are still livestock around, animals have been replaced by visitors taking selfies. Read also: <a href="https://nepalitimes.com/here-now/the-monsoon-and-nature-s-arithmetic">The monsoon, and nature’s arithmetic</a>, Tom Robertson Ward Chair Pun says infrastructure development is his main priority. A foot trail to Chaurikharka was built last year by the Tourism Division Office in Kohalpur, but access via the Raniwas-Koipa road section still remains challenging.&nbsp; “If we get more budget, we can improve the road and facilities to make Chaurikharka the main tourist attraction of this region,” says Bhume Municipality Chair Hom Prakash Shrestha. “After that, we hope to promote Chaurikharka as a top tourist spot.”&nbsp; Economic activity is also picking up with the arrival of visitors, but there seems to be a need to manage the makeshift sheds made of corrugated sheets that spoil the beauty of the place. Tea shops and lodges are also available but facilities are basic. Kuldeep Neupane took a three-day trip from Ghorahi in Dang to visit Chaurikharka recently, and says: “This is an ideal trip to make a quick getaway and let nature recharge your mind and body. And it is much more fun with a tent, to watch the sunrise over the Himalaya or the mist blowing in.”

Visit Nepal in the monsoon

Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

Nepal’s bubble economy

The final investigation report on the crash of a Saurya Airlines jet on 24 July 2024 at Kathmandu airport has revealed flaws in the carrier’s technical operation procedures, poor monitoring by the Civil Aviation Authority of Nepal (CAAN) and gaps in the airport’s emergency response. Eighteen people including a child were killed, and only the captain survived as the plane plunged seconds after takeoff, crashing within the airport perimeter. This was the latest in a series of aircraft accidents in previous years, and further tarnished Nepal’s already poor aviation safety record and contributed to the country being retained in the EU’s air safety list. &nbsp;&nbsp;&nbsp; The circumstances in the Saurya crash were different from the Yeti Airlines crash in Pokhara in January 2022 that killed all 72 on board, and two Tara Air crashes in February 2016 and May 2022 on approach to Jomsom that together claimed 45 lives. However, all four tragedies were a result of negligence of carriers and crew, failure to follow procedures, regulatory slackness, and overconfidence. The Saurya crash, especially, was a glaring example of how an ailing airline broke its own rules to allow passengers, including non-employees, a joy ride to Pokhara on a maintenance ferry flight. CRASH REPORT The Final Investigation Report prepared by the Aircraft Accident Investigation Commission and released on the first anniversary of the crash last week carried a long list of rules that were ignored or broken, and of regulatory failure. The first mistake was to cram spares, tools and inflammable chemicals needed for the aircraft’s C-Check in Pokhara into the cargo hold flouting its own ground handling procedures.&nbsp; There was no check-in of passengers, some of whom were not even employees – even though regulations say only flight and maintenance crew should be on board a maintenance positioning flight. Many brought their own luggage into the plane and stored it unsecured in the cabin. There was no flight attendant to give a safety briefing to passengers. The load and trim charts given to the flight crew were rough estimates, and the total takeoff weight of the plane was 18,300kg plus or minus 200 kg. That would still have been all right, but there was a glaring mistake in the speedchart Saurya pilots were using to calculate the minimum takeoff speed (known as VR), and it had been wrong ever since the 21-year-old aircraft entered service with the airline in 2017. FAULTY DATA&nbsp; The Commission probed Flight Data Recorder inputs from previous takeoffs of the Canadian-built CRJ200-LR in 2023-2024 and found that the undetected error in the speedchart had caused the plane to pitch up at an abnormal rotation rate at least 18 times on previous takeoffs.&nbsp; Any rotation rate more than 3°/sec is regarded as unusual. But on at least two occasions, this aircraft with tail number 9N-AME had rotation rates of 5.8°/sec and 5.5°/sec, the second one was when the pilot who survived was flying in March 2024.&nbsp; On this particular day, the plane’s rotation rate was 6.5°/sec, causing it to go into a deep stall soon after takeoff, the Commission report said. Essentially, the plane was not flying fast enough down the runway to take off safely.&nbsp; It is not yet clear whether excess weight, unsecured luggage, wrong centre of gravity were also factors, but relying on a faulty speedchart for the given takeoff weight, the captain flying pulled back on the yoke before the plane had reached takeoff speed and at a pitch angle that was too steep. The investigation report says the plane then went into a deep stall and started banking right with the stick shaking. At this point, the flight officer on the right hand seat is heard on the cockpit voice recorder saying: “Whoa, whoa, whoa. Sir, Sir, Sir…” It then banked left before the pilot flying turned the plane sharply to the right again in an evasive action to avoid the parking aprons of the international and domestic terminals. Had he not done so, there would have been a disaster of a much greater magnitude at Kathmandu airport that day. The plane scraped the runway with its right wingtip, collided with a container having helicopter spare parts, and plunged into a gully east of the runway, exploding in a fireball. The investigation also noted that the impact forces seemed to be survivable for some occupants. The fire trucks took unnecessarily long to reach the site even though it was inside the airport perimeter. The absence of an ICAO-standard runway strip, inadequate rescue drills, lack of training, and a blocked emergency service gate leading to the crash site were cited as other factors. &nbsp;&nbsp; <h2>Timestamp of a Disaster</h2>  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725.jpg" data-media-id="editor_0" data-image-id="20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725" data-rendition-name="original" width="778" height="826" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:10:34 - The Saurya Airlines CRJ200 on the takeoff roll from runway 02. It had a takeoff weight of about 18,300kg, but the pilot’s speedcard had a previously undetected mistake about the minimum takeoff speed. 11:10:55 -The plane with tail number 9N-AME goes into deep stall soon after takeoff because it does not have enough speed to lift its weight. The plane also has an abnormally steep nose-up attitude.&nbsp; 11:11:03 - Without enough speed to generate lift, the plane banks right, then left and right again in CCTV photos taken from the domestic apron (below). If it had not banked right, it could have hit the aprons and terminal buildings. Seen parked is Saurya’s other CRJ200 with tail number 9N-ANM.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd.jpg" data-media-id="editor_1" data-image-id="20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd" data-rendition-name="original" width="770" height="555" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:11:08 - The plane scrapes the runway with its right wingtip, and falls into the gully. The captain is thrown off the left side of the cockpit and survives. 11:11:15: Plane explodes in a fireball inside the airport perimeter. Firefighters take time to reach the site because of lack of access road and a blocked gate. Read the full investigation report <a href="https://www.tourism.gov.np/files/9N-AME%20AIC%20Final%20Report.pdf">here</a>.

Flouting rules caused Saurya tragedy

American artist Peter Makela was in Nepal in 2022 on a Fulbright scholarship when he experienced the Matya festival in Patan in which devotees made the rounds of the city’s shrines.&nbsp;
He joined the procession, walking through 2,600 stupa and 140 bahal of the town. That immersion left a lasting impression.
As part of Gallery Mcube’s international residency program in Patan, he put his inspiration to canvas in the exhibition Yala Yatra: Walking, Working, Worshipping. The exhibition also coincides with this month’s Matya festival.&nbsp;
Makela has visited Nepal often in the past 11 years but he mostly stayed in and spent his time around Boudha. “This time I stayed in Patan, put the sites I wanted to visit on my map, and off I went,” he tells us. “Each of my artwork is inspired by the stupas and shrines in Patan that I visited.”
The stupa and Ganesh are recurring motifs in his watercolours, and the elephant gods are located in chaityas — reflecting the interplay and blending of the Hindu and Buddhist faiths in Kathmandu Valley.&nbsp;
The stupas and Ganesh are painted in vivid red, yellow, blue and green against abstract backgrounds meant to represent the sky.
“I use the sky as a backdrop because the sky has no border,” says Makela. “The four colours represent the four elements, the different Buddha families and also lights bouncing off of a rainbow.”
The use of just four colours for all the artwork stands out, and combined with the absence of heavy canvases, frames or stands render Makela’s art striking in its simplicity.&nbsp;
The Ganesh is always holding something and the art also portrays the elephant god’s sacred vehicle, the mouse.
While his vibrant stupas and Ganesh reflect the tangibility of Patan’s tradition and heritage, it is as if the backdrops with their shades of grey and red and yellow capture the soul of the city’s shrines.
“If you look closely, there is a sense of form and formlessness at the same time,” he says.&nbsp;
Makela walked 108 kora around the shrines during his exploration of the town, and in the process developed a spiritual connection with Patan’s heritage and traditions.&nbsp;
The exhibition connects with visitors on a deeper, more spiritual, level as well. And with it, they feel a sense of pride as well as the need to urgently preserve Patan’s heritage for future generations.
“Peter’s inclination and approach towards Nepali art and culture is fascinating, and it reflects in his work,” says Mcube curator Manish Lal Shrestha, whose international artist residency program promotes Nepal’s cultural heritage. &nbsp;&nbsp;
Yala Yatra: Walking, Working, Worshipping
1-5 August&nbsp;
10AM-7PM
Gallery Mcube, Patan