4.5 Development Planning and Current Period Plan

Planned Development and Current Periodic Plan in Nepal

Concept of Planned Development

A plan is a systematic framework of activities designed to mobilize available resources to achieve predetermined outcomes within a specific timeframe. It integrates vision, objectives, goals, strategies, policies, timelines, resources, and activities. Planning prioritizes limited resources to meet unlimited needs.

Perspectives on Planned Development

• Socialist Perspective: The government holds sole authority over resource mobilization, social justice, and economic development, necessitating development plans.
• Capitalist Perspective: Plans are needed only during economic downturns or slow business cycles. Otherwise, planning is seen as government interference in the economy.
• Mixed Economy Perspective: Development plans are essential for maximizing resource mobilization through public, private, and non-governmental participation, with the state playing an active role to achieve economic prosperity.

While coordinated activities have existed since ancient times, modern planned development began in Russia in 1928. In Nepal, a 20-year plan was announced in 1992 BS (1935 CE) under Juddha Shamsher, but institutional planned development started in 2013 BS (1956 CE).

Rationale for Development Planning

Development planning is a process for economic and social prosperity and transformation. It efficiently mobilizes state resources to achieve economic growth, social change, and equitable distribution of development benefits. Its significance includes:

• Ensuring balanced development and reducing disparities.
• Guiding the national economy for a specific period.
• Mobilizing foreign aid.
• Creating employment opportunities.
• Reducing poverty.
• Prioritizing essential services and projects.
• Coordinating development activities among federal, provincial, and local levels.
• Achieving rapid and sustainable economic growth.
• Ensuring optimal and equitable resource distribution.
• Facilitating coordinated development through public, private, cooperative, and non-state actors.
• Promoting social justice and equality.
• Strengthening democratic values and good governance.

Basis for Plan Formulation

Development plans are formulated based on the country’s needs, socio-economic conditions, constitutional rights, guiding principles, government priorities, political commitments, and international obligations. Key bases include:

• State’s guiding principles and policies.
• Prioritized national issues.
• Citizens’ demands and needs.
• Political party manifestos.
• Achievements of past plans.
• Contemporary development challenges.
• Existing socio-economic conditions.
• Foreign resources and investments.
• National production and income status.
• Federal governance, intergovernmental coordination.
• International commitments and obligations.

Periodic Plan Formulation Process in Nepal

Development planning is a systematic process to mobilize the economy toward a defined goal. The process includes:

1. Concept Development: Mid-term formulation of the current plan by the National Planning Commission (NPC).
2. Draft Approach Paper: Discussions with stakeholders to prepare a draft approach paper.
3. Approval of Approach Paper: NPC approves the draft, followed by discussions in the National Development Council (NDC) and approval by the Council of Ministers.
4. Detailed Plan Document: NPC prepares a detailed plan, approved by the Council of Ministers.
5. Implementation: Plans are executed through annual development programs, specifying activities, targets, and expected outcomes.
6. Review:
• Mid-term review during the final year of the current plan.
• Discussions at ministerial and secretariat levels to set objectives, strategies, and priorities for the next plan.
• NPC prepares a concept paper based on past plan achievements.

Development Plans in Nepal

• First to Seventh Plans: Focused on welfare and state-controlled development.
• Eighth Plan Onwards: Adopted open and liberal economic policies, emphasizing private sector roles, non-governmental contributions, decentralization, and local participation.
• Ninth and Tenth Plans: Aimed at poverty reduction (Poverty Reduction Strategy Papers), but political instability and conflict limited achievements.
• Three-Year Plans (11th–13th): Focused on peace processes, state restructuring, and transitional management.
• Fourteenth Plan: Aimed at leveraging political stability post-transition for significant development progress.
• Fifteenth Plan: Focused on implementing the new constitution and institutionalizing federal democratic governance, but faced administrative challenges.

Overview of Periodic Plans

1. First Five-Year Plan (2013–2018 BS):

• Increase production and employment.
• Improve living standards.
• Conduct economic surveys for future planning.

2. Second Three-Year Plan (2019–2022 BS):

• Promote economic development and stability.
• Create employment opportunities.
• Establish a just social system.

3. Third Five-Year Plan (2022–2027 BS):

• Double national production in 15 years.
• Achieve 19% national income growth, 9% per capita income growth, 15% food production growth.
• Develop basic sectors, industries, reduce social inequalities, and diversify foreign trade.

4. Fourth Five-Year Plan (2027–2032 BS):

• Maximize production.
• Meet basic development needs.
• Expand and diversify international trade.
• Effectively utilize labor and control population growth.
• Create foundations for an exploitation-free society.

5. Fifth Five-Year Plan (2032–2037 BS):

• Increase public utility production.
• Maximize labor utilization.
• Promote regional balance and integration.

6. Sixth Five-Year Plan (2037–2042 BS):

• Achieve higher production growth rates.
• Increase productive employment opportunities.
• Meet minimum basic needs.

7. Seventh Five-Year Plan (2042–2047 BS):

• Continue Sixth Plan objectives.
• Initiate Environmental Impact Assessments (EIA).

8. Eighth Five-Year Plan (2049–2054 BS):

• Objectives: Sustainable economic growth, poverty reduction, regional imbalance reduction.
• Priorities: Agriculture, energy, rural development, employment, population control, administrative reforms, economic stability.

9. Ninth Five-Year Plan (2054–2059 BS):

• Objective: Poverty reduction.
• Priorities: Agriculture, water resources, energy, human resource development, industry, tourism, infrastructure.

10. Tenth Five-Year Plan (2059–2064 BS):

• Objective: Reduce poverty from 42% to 32%.
• Strategies: High, sustainable, and inclusive growth; social sector and infrastructure development; targeted programs; good governance.
• Priorities: Health, education, women’s empowerment, drinking water, Millennium Development Goals (MDGs).

11. Three-Year Interim Plan (2064–2067 BS):

• Objectives: Establish a prosperous, modern, and just Nepal; achieve socio-economic transformation.
• Priorities: Infrastructure, rehabilitation, social integration, peace, agriculture, tourism, industry, inclusive development.

12. Three-Year Plan (2067–2070 BS):

• Vision: Inclusive, just, and prosperous Nepal.
• Goal: Improve living standards.
• Objectives: Poverty reduction, sustainable peace, tangible change.
• Strategies: Broad economic growth, federal infrastructure, sustainable peace, good governance, economic stability, socio-economic transformation.
• Priorities: Infrastructure, industry, tourism, agriculture, human infrastructure, environmental protection, direct relief programs.

13. Thirteenth Three-Year Plan (2070–2073 BS):

• Vision: Graduate Nepal from Least Developed Country status by 2022.
• Objective: Reduce economic and human poverty, improve living standards.
• Goal: Reduce poverty to 18%.
• Strategies: Enhance public, private, and cooperative contributions; develop infrastructure; improve social services; promote good governance; empower targeted groups; adapt to climate change.
• Priorities: Hydropower, agriculture, tourism, industry, trade, education, health, drinking water, sanitation, good governance, infrastructure, environmental protection.

14. Fourteenth Plan (2073–2076 BS):

• Vision: Sovereign, prosperous, socialist-oriented economy; prosperous Nepalis.
• Goal: Achieve middle-income country status with social justice.
• Objective: Rapid poverty reduction through high, equitable economic growth and socio-economic transformation.
• Strategies:

• Transform agriculture, tourism, industry, and small businesses for production growth.
• Develop energy, transport, ICT, and rural-urban connectivity infrastructure.
• Enhance social development, security, and human development.
• Promote economic, social, and governance reforms, transparent public services, and human rights.
• Foster gender equality, inclusiveness, environmental protection, and institutional capacity.

Review of the Fourteenth Plan

The Fourteenth Plan was the first after the 2015 Constitution, aiming for a sovereign, prosperous, socialist-oriented economy. Key points include:

• First plan to mainstream Sustainable Development Goals (SDGs).
• Addressed federalism implementation, earthquake recovery, and economic losses from blockades.
• Promoted a socialist-oriented, self-reliant, and progressive economy.
• Completed elections, establishing active governments at all levels.
• Ended political transition, ensuring stability and enabling legal and structural reforms.
• Created an investment-friendly environment and implemented fiscal federalism.
• Strengthened plan-budget alignment through a medium-term expenditure framework.
• Achieved an average GDP growth of 6.9% (target: 7.2%), with agriculture at 4.2% and non-agriculture at 8%.
• GDP reached NPR 3.46 trillion in 2075/76 BS.
• Investment-friendly policies, improved power supply, labor relations, and political stability boosted the economy.
• 1.14 million tourists visited in 2018, supported by demographic dividends, infrastructure, and post-earthquake reconstruction.
• Low inflation due to expansionary fiscal and effective monetary policies.

Key Achievements and Targets

Indicator	Target	Progress
Annual Average Economic Growth	7.3%	6.9% (Agriculture: 4.2%, Non-Agriculture: 8%)
Human Development Index (HDI)	0.57	0.568
Life Expectancy	72 years	69.7 years
Access to Drinking Water	80%	88%
Secondary Net Enrollment	45%	46.9%
Literacy (15–24 years)	92%	85%
Electricity Installed Capacity	2301 MW	1325 MW
Households with Electricity Access	87%	30.6%
Irrigation	1.52 million hectares	1.47 million hectares
Internet Access	65%	55.4%
Poverty	17%	18.7%

Challenges of the Fourteenth Plan

• Inter-agency coordination issues.
• Resource scarcity and ineffective mobilization.
• Poor project selection.
• Delays in procurement processes.
• Contractors absconding with advance payments.
• Frequent staff transfers.
• Ineffective monitoring and evaluation.
• Inadequate project administration.

Overall Review of Periodic Plans

Over six decades, Nepal implemented 10 five-year plans and 5 three-year plans. Despite political transformations, socio-economic infrastructure development lagged. Key observations:

• Increased awareness, modernization, and progress in reducing ethnic, gender, and class disparities.
• Significant development in education, health, drinking water, social security, roads, transport, ICT, and urban infrastructure, but quality remains a concern.
• Need for further efforts in hydropower, aviation, and other infrastructure.
• Requirement for short-, medium-, and long-term plans to address rising public expectations.
• Significant reduction in absolute and multidimensional poverty, yet a large population remains below the poverty line.
• Increasing youth migration due to lack of domestic employment.
• Declining industrial contribution and growing trade deficits.
• Remittances boosted economic size and foreign reserves.
• Notable achievements in social security, inclusiveness, and environmental protection, but challenges remain in economic growth, productivity, industrialization, quality education, health, and governance.

Long-Term Vision 2100 BS

The long-term vision focuses on sustainable economic development through high growth, regional balance, good governance, inclusiveness, resource protection, social justice, and equality, establishing a socialist-oriented welfare state. The vision, “Prosperous Nepal, Happy Nepali,” sets targets for the next 25 years, divided into three phases:

1. First Phase (Fifteenth Plan): Build foundations for prosperity and happiness through economic, social, and physical infrastructure.
2. Second Phase (Sixteenth and Seventeenth Plans): Achieve rapid progress in prosperity and happiness indicators.
3. Third Phase (Eighteenth and Nineteenth Plans): Ensure balanced and sustainable prosperity and happiness.

Long-Term National Goals

Prosperity:

• Accessible modern infrastructure and connectivity.
• Human capital development and full potential utilization.
• High and sustainable production and productivity.
• High and equitable national income.

Happiness:

• Refined and dignified life.
• Safe, civilized, and just society.
• Healthy and balanced environment.
• Good governance.
• Strong democracy.
• National unity, security, and dignity.

Long-Term National Strategies

• Achieve rapid, sustainable, and employment-oriented economic growth.
• Ensure accessible and quality health and education services.
• Develop internal and cross-border connectivity and sustainable urban development.
• Enhance production and productivity.
• Provide comprehensive, sustainable, and productive social security.
• Reduce poverty and promote equitable socio-economic justice.
• Protect and mobilize natural resources, enhancing resilience.
• Strengthen public services, regional balance, and national unity.

Key Drivers of Transformation

• Quality integrated transport, ICT infrastructure, and extensive networking.
• Quality human capital, entrepreneurial culture, and full potential utilization.
• Increased hydropower production and green economy promotion.
• Enhanced production, productivity, and competitiveness.
• Quality tourism services expansion.
• Modern, sustainable, and organized urbanization.
• Guaranteed social protection and security.
• Governance reforms and enhanced good governance.

Supporting Factors

• Political commitment to the constitution, democracy, and development.
• Demographic dividend and citizen awareness.
• Geographical position, natural diversity, and resources.
• Socio-cultural diversity and unique identity.
• Social capital and global Nepali diaspora.
• Clean and renewable energy.
• Support from friendly nations and the international community.
• Federal governance and fiscal federalism.

National Objectives

• Build modern infrastructure, increase productive employment, achieve inclusive economic growth, and reduce poverty.
• Ensure quality health, education, environment, social justice, and accountable public services, strengthening federal governance.
• Achieve socio-economic transformation and a sovereign economy, protecting national pride, independence, and interests.

Challenges in Nepal’s Planned Development

Plan Formulation

• Unclear legal provisions and standards for shared responsibilities across federal, provincial, and local levels.
• Inability to make plans evidence-based and result-oriented.
• Lack of disaggregated data for federal systems.
• Supply-driven rather than demand-driven plans.
• Lack of alignment between plans and budgets.
• Policy instability and lack of plan continuity.
• Overly ambitious plans.
• Unrealistic resource estimates and distribution-focused plans.

Plan Implementation

• Insufficient budgets and poor alignment with objectives.
• Frequent staff transfers.
• Limited stakeholder participation, reducing ownership.
• Unscientific project selection and analysis.
• Political instability.
• Institutionalized financial indiscipline and corruption.
• Low stakeholder engagement in development.
• Weak institutional capacity of implementing agencies.

Monitoring and Evaluation

• Weak monitoring, evaluation, and supervision systems.
• Prevalence of fragmented projects.
• Duplication in resource allocation.
• Insufficient focus on human resource capacity building.
• Lack of priority for monitoring and evaluation in project management.
• Inactive national and ministerial development solution committees.
• Inability to utilize monitoring and evaluation feedback.

Solutions to Address Challenges

Plan Formulation

• Enhance participation in plan formulation and implementation.
• Adopt a bottom-up approach.
• Align objectives, strategies, priorities, and programs.
• Prioritize implementable plans.
• Reduce reliance on foreign resources and emphasize local resource mobilization.

Implementation

• Establish appropriate organizational structures and skilled staff.
• Ensure continuity of prioritized plans.
• Utilize natural resources effectively.
• Promote financial and administrative good governance.
• End frequent staff transfers.
• Align performance with plan objectives and progress.

Monitoring and Evaluation

• Provide improvement suggestions based on timely progress reviews.
• Conduct outcome/output analysis and provide feedback.
• Make monitoring and evaluation objective.
• Utilize skilled manpower for monitoring and evaluation.

Long-Term Vision 2100 and Fifteenth Plan Targets

Indicator	Long-Term Target (2100 BS)	Fifteenth Plan Target	Base Year (2075/76 BS)
Economic Growth	10.5%	10.3%	6.8%
Per Capita GNI (USD)	12,100	1,595	1,047
Absolute Poverty	0%	9.5%	18.7%
Multidimensional Poverty	3%	11.5%	28.6%
Palma Ratio	1.1	1.25	1.3
Gini Coefficient (Asset-Based)	0.25	0.25	0.31
Labor Force Participation Rate (15+ years)	72%	49%	38.5%
Formal Sector Employment Share	70%	50%	36.5%
Literacy Rate (15+ years)	99%	15%	58%
Secondary Net Enrollment (Grades 9–12)	95%	65%	46%
Population with High-Level Drinking Water	95%	40%	21%
Population Covered by Basic Social Security	100%	60%	17%
Gender Development Index	0.99	0.963	0.897
Human Development Index	0.760	0.624	0.579
Life Expectancy	80 years	72 years	69.7 years
Maternal Mortality Rate (per 100,000 live births)	20	99	239
Under-5 Mortality Rate (per 100,000 live births)	8	24	39
Hydropower and Renewable Energy Capacity	40,000 MW	5,820 MW	1,250 MW
Internet Users (% of population)	100%	80%	65.9%

Conclusion

Periodic planning and planned development outline the current state, future goals, and roadmap for Nepal’s economic development and prosperity. Under the federal system, the central government formulates plans to guide the national economy, while provincial and local governments align their plans with national policies, goals, and targets. The Long-Term Vision 2100 and the Fifteenth Plan aim to address rising development expectations through sustainable growth, social justice, and good governance.