Girija Prasad Koirala paved the way and opened the gates for Nepal’s private sector to play a greater role in the liberal economy.

The benefits of liberal economic policies were reaped by many new business ventures and sectors like the media, finance, aviation, education emerged strongly.

He ushered in economic liberalization through many acts and rules during his first term as prime minister after the restoration of democracy in 1990 including the Industrial Business Act, Foreign Investment and Technology Transfer Act.

After the introduction of the Foreign Investment and Technology Transfer Act, Nepalese industry took huge industrial strides. The country also achieved remarkable economic growth before the beginning of insurgency in 1996.

Koirala ended the license regime and provided new opportunities for the private sector to flourish.  That was a time when there was the need to obtain license for every economic activity ranging from opening a factory to importing and exporting goods.

Democratic Government had experiences of three Five Year Plans (Eight, Ninth and Tenth) and Three Years Interim Plan as well.

GP Koirala lead eight, ninth and Three Years Interim Plan. During his leadership, he emphasized the effective implementation of these programs to get the desired output

Eight Plan:

The first meeting of the NDC, after it was constituted under the chairmanship of Prime Minister Mr. Girija Prasad Koirala, was held during April 8 and 9, 1992. The meeting approved, in principle, the approach paper of the Eighth Plan (1992-97) prepared and tabled by the Government that assumed office after the general election, following the democratic movement in the country. Besides, the Meeting also deliberated upon the progress review of the Seventh Plan and the preliminary report on the impact of its implementation upon the lives of the people.

In the course of his address, the Prime Minister and Chairman of the NDC, Mr. Girija Prasad Koirala observed that as Nepal consists of villages and that most people live below the absolute poverty line. It is imperative that the fruit of economic development has to be percolated down to village level and reach the rural people. In order to attain this, the Government looked forward to adopt the planning process for the formulation and implementation of the rural development programs at the local level itself by enlisting participation of local people, within the framework of decentralization policy.

The Ninth Plan :

The Ninth Plan was one of the important plans during the premier ship of Girija Prashad Koirala.  For the first time the plan stated a goal to reduce poverty by 10 percent. The Ninth Plan’s stated goal was to reduce poverty from 42 percent to 32 percent of the population by the end of the Plan period, and to 10 percent by 2016/17. The Plan also sought to bring down the unemployment rate to 4% and underemployment to 35% by the end of the Plan period. The Ninth Plan accorded high priority to the neglected agricultural sector; and its centerpiece—the Agriculture Perspective Plan (APP), formulated in 1995 with a long-term vision—sought to raise agricultural growth rate to 4.0 percent for the Plan period and to 4.9% over the next 15 years.

Policy Reforms in 9th Plan

Governance,decentralization, civil service reform,  as well as reforms in tax, hydropower policy, financial sector,agriculture and irrigation reform program were also initiated.

Governance, Decentralization and Civil Service Reforms :

Decentralization was a major thrust of the Ninth Plan. In terms of creating a legal and institutional framework, considerable progress has been made: For example, the Local Self Governance Act (LSGA) was enacted in 1999. This was followed up with more specific recommendations by PERC. A high level Decentralization Implementation Monitoring Committee (DIMC) was set up to oversee its implementation; and it has approved the fiscal decentralization framework. Capacity building programs were undertaken with donor assistance in selected districts to strengthen local bodies; and 45 districts have already prepared periodic district development plans. However, progress in implementing decentralization during the Ninth Plan has been limited by : (i) The overall resource constraint at the national level; (ii) Delays in transferring functions and responsibilities to local governments, and lack of agreement on operational modalities; and (iii) Institutional capacity and accountability considerations, among others.

Civil service reform:

The civil service reform program aimed at: (i) right-sizing the civil service by reducing staff, decentralizing functions and responsibilities, contracting out some peripheral activities to private sector and streamlining government departments and offices; (ii) improving incentive structure through wage reforms and merit-based performance and promotion system; and (iii) improving efficiency and accountability of civil servants. There has been some progress in implementing the reforms. These include restriction of frequent transfer of civil servants, computerized data base in the civil service records department, freezing of more than 12,000 vacant positions, initiation of voluntary retirement scheme and streamlining of government’s central organization and establishment of civil service rewards and development of evaluation center. A civil service census has been under preparation and public sector salaries were increased substantially in 2001. In the meantime, the Government has also initiated a long-term and comprehensive Governance Reform Program (GRP) with the objective of making the civil service more results and people oriented. Lack of political commitment and resources, and political changes have hampered effective implementation so far; but renewed commitment to implementation is necessary to improve public sector efficiency.

Governance :

has continued to be a persisting problem resulting to inefficiency in utilization and leakage of public resources. Although Nepal has good public accountability mechanisms including an active Public Accounts Committee (PAC), an independent Auditor General’s Office (AGO), a Financial Comptroller General’s Office (FCGO) and an independent Commission for Investigation of Abuse of Authority (CIAA), follow up actions to enforce their effectiveness have been limited. Towards the end of the Ninth Plan Period, four anti-corruption legislation were passed by the parliament, which was a significant step towards addressing corrupt practices. In addition, a Judicial Property Probe Commission was also established to address the problem of corruption. Some of the recommendations made by the Public Expenditure Review Commission (PERC) were adopted and the recommendations made by a recent Country Financial Accountability Assessment are being implemented.

Tax Reform :

To improve revenue collection, a major tax reform program was introduced. Its main elements included: (i) The introduction of a Value Added Tax (VAT) and extending its coverage to include many small and medium enterprises; (ii) Improving the import valuation system for customs and requiring payments to be made through banks; (iii) Revising the Income Tax Act in order to consolidate tax laws and simplify payments procedures; (iv) Strengthening the tax administration by amalgamating the Departments of Taxation and VAT into one; and (v) Strengthening anti corruption measures. These measures, however, had little impact in the short term in improving the Ninth Plan’s revenue performance. But, they should help improve the elasticity and transparency of the tax system over the medium term.

Public Expenditure Reform :

Several important steps to strengthen public expenditure management, in the last two years. A Public Expenditure Review Commission (PERC) was set up in 2000/01; and its key recommendations have been subsequently implemented. These included, among others: (i) Streamlining and rationalizing the role of the government, ministries and departments with a view to improving service delivery; transferring functions and responsibilities to local governments, and reducing administrative costs; (ii) Prioritizing the public expenditure program and reducing the number of projects and programs; (iii) Civil service/governance reforms to improve accountability and right-sizing key government ministries and departments; (iv) Strengthening cost control, financial management and internal auditing systems; and (v) Accelerating the decentralization program, especially in education , health and agricultural extension services. PERC also recommended the formulation of Medium Term Expenditure Framework, which was subsequently adopted as the basis of the 2002/03 Budget. The MTEF introduced important reforms, including a more realistic budget framework, a serious prioritization involving a major reduction in the number of projects/ programs, greater focus on implementation and monitoring of expenditures, and linking fund releases to performance. The MTEF is expected to be a regular part of the budgeting and planning process, and now provides an extremely useful mechanism for adjusting the Tenth Plan and the budget to the changing resource situation.

Financial Sector :

Reforms in this sector have been deemed essential for ensuring solvency of the banking system and for providing adequate and predictable credit flows to sustain a vibrant private sector. However, for a variety of reasons, the implementation of the reforms has been slower than expected. A Financial Sector Strategy Statement was prepared in 2001 and its key recommendations are now being implemented. These include: (i) Strengthening the autonomy and authority of the Nepal Rastra Bank; (ii) Enhancing its capacity for supervision and regulation of commercial banks; (iii) Concurrently, the two major banks (which own nearly 60% of the banking assets) have been pla ced under external management in order to address their deep-rooted management and financial problems and possible restructuring needs. However, much remains to be done to complete the reform program.

Infrastructure Reforms:

During the Ninth Plan, important reforms were initiated to encourage private sector participation in infrastructure, particularly in power, telecommunications, education, health and rural infrastructure. These hold considerable promise for the future, even though their impact during the Ninth Plan Period has been uneven among sectors. The more important initiatives include the following:


policy was revised to allow the private sector entry into a full range of power sector activities i.e. generation, transmission and distribution. Considerable private investments have already taken place under the previous policy in a number of power generation projects. But progress has been constrained by the insecurity caused by the civil disorder.


progress has been made in opening up the sector for private investment. A new Telecommunications Act was enacted to introduce competition in basic, cellular and value added services and the private sector is now involved in their provision. A private operator was also selected to provide basic telecommunications services to 534 rural communities i.e. roughly one-fourth of the rural communities which are under-served. Thus the monopoly which the public sector agency—Nepal Telecommunication Corporation (NTC)—enjoyed has been broken; and a Telecommunications Authority has been set up to oversee the sector.

In Education and Health :

Private sector participation in providing alternative educational and health care services increased significantly over the plan period. However, the qualit y of education services provided particularly through the public sector needs to be enhanced. But the coverage in health sector has significantly increased. To improve service delivery through community participation and management, handover of village level schools and health facilities to communities is being implemented in a phased manner from 2002/03 in selected districts; and as experience is gained, it is expected to be replicated in other areas. In education, the

government has also announced new programs to: (i) provide free education upto tenth  grade for all girls and for those boys of oppressed, backward and below poverty line; (ii) providing education in mother languages (of communities) upto the primary level: (iii) regulating fees in private schools; (iv) providing scholarship in private/boarding schools to students from “oppressed and backward communities” and (v) the setting up Rural Education Development Fund (finance by a levy of 1.5 percent of the income of private/boarding schools) which would be utilized for funding the education of marginalized communities.

Transport :

New policies initiated to meet the Ninth Plan’s goals included the creation of a separate institutional mechanism (DOLIDAR) for the construction of agriculture roads, dele gation of responsibility and resources to local authorities to construct local roads; and the formulation of a Public Infrastructure Construction and Transfer Policy to promote private sector participation. These initiatives so far are yet to produce the desired results. While there has been considerable progress in terms of road construction by local bodies, considerable technical support and supervision are necessary to ensure appropriate planning and road quality in order to avoid environmental problems.

Agriculture and Irrigation:

as noted earlier, important policy changes have been introduced to promote private sector participation in input supply and investment, with mixed results. Private sector participation in fertilizer and seed distribution has increased significantly with the removal of subsidies (and the monopoly) given earlier to the Agricultural Inputs Corporation. However, there are a number of problems to be overcome, (for example, ensuring better quality of private supplies), in order to effectively implement this policy and increase fertilizer usage.

Three Year Interim Plan:

The NDC meeting was held on 24 and 25, June, 2007 under the Chairmanship of Prime Minister, Mr. Girija Prasad Koirala to finalize the Approach Paper of three year Interim Plan prepared by NPC. Addressing the inaugural session of the Council, he stressed that for selection of development programs according to the need of Ecology (Mountain, Hill and Terai) regions. Moreover, he emphasized the effective implementation of these programs to get the desired output.

Development Initiative programs:

The GPK Foundation’s Development Movement has initiated development initiative program. In this program the center will support, also join, different development partners to work on different development activities in the rural parts of Nepal.

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