book1

half a century, the Maoist insurgency began and Nepal has now become
the most unstable like never before poli� cally as well as economically. The
impact of foreign aid in Nepal is found having a paradoxical result.
First, the role of foreign aid is very important for crea� on of present day
socio-economic infrastructure of the country and raising awareness among
people. But at the same � me, foreign aid has failed to eliminate rampant
poverty and depriva� on of the people. The credit for the present day physical
infrastructure of the country goes en� rely to the foreign aid. In 1951, a single
airport existed in the country, there was only one bank, only 276 kilometres
of roads, a capacity to produce a mere 1.1 megawa� s of electricity, just
25 telephone lines and 6,200 hectares of irrigated lines 10 . But today, the
present achievements in road and civil avia� on, means of communica� ons
(newspapers, radio and TV channels) and banking ins� tu� ons are really
impressive. Likewise, the impressive progress in literacy rates and declining
infant mortality rates to the emphasis on human rights and democracy,
good governance including the concept of social inclusion are all direct or
indirect outcomes of foreign aid. But, at present, Nepal is one of the poorest
countries of the world with very low per capita income.
Second, the en� re development process of the past, where foreign aid
had a vital role, has enhanced the wealth and prosperity of the country
but the inequality among people is widening and the dependency of the
country is increasing. Nepal Living Standard Survey 2003/04 ha shown that
the inequality between rich and poor has increased, as the value of Gini
Coeffi cient 11 has increased to 41.4 in 2003/04 from 34.2 in 1995/96 12 . It
is assumed that the value of Gini has further increased to 47.2 in 2008 13 .
According to NLSS 2003/04, the average per capita income of richest 20
percent popula� on is 10 � mes higher than that of poorest 20 percent
popula� on. In addi� on to this, From individuals to the whole na� on itself,
an aid-dependency syndrome has increased unmistakably. Today, Nepal is
the largest recipient of foreign aid as a percentage of GNP in South Asia
and the share of aid in GNP was 8 percent in 2003 14 . There is hardly any
government’s development programs that do not consist some part of
foreign aid. Development ac� vi� es without foreign aid have now become
totally unimaginable in the country. Nepal has taken foreign aid even to make
a systema� c record of foreign aid infl ow in the country. Nepal’s historical
economic dependency on foreign aid has now transcended into the social
and poli� cal aspects. Evalua� ng the worth of every successive government
10. CPWF (1998), A review of foreign aid in Nepal, Ci� zen’s Poverty Watch Forum, Kathmandu
11. The Gini coeffi cient is a measure of the inequality of a distribu� on. The Gini coeffi cient can
range from 0 to 1; it is some� mes mul� plied by 100 to range between 0 and 100. A low Gini
coeffi cient indicates a more equal distribu� on, with 0 corresponding to complete equality,
while higher Gini coeffi cients indicate more unequal distribu� on, with 1 corresponding to
complete inequality.
12. Poverty trends in Nepal (1995/96 to 2003/04), (September 2005), CBS, NPC, HMGN Nepal
13. h� p://www.theodora.com/w� current/nepal/nepal_economy.html down load on Nov 18,
2010
14. World Development Indicators, 2005
Changing paradigms of aid eff ec� veness in Nepal 127