By P.R. Pradhan
It is a universal truth that we cannot build our nation by continually relying on foreign aid and assistance. Friends may offer support once or even twice, but not indefinitely. To strengthen the nation’s sovereignty, independence, and the dignity of its citizens, we must increase and consolidate our domestic sources of income.
Developed countries, particularly Western nations, are often pursuing policies that keep less-developed countries economically dependent so that they remain markets for foreign products. When developing countries borrow funds for development projects, lenders frequently impose numerous conditions, including the procurement of equipment and the hiring of consultants from the lending countries. As a result, a significant portion—often estimated at 60 to 70 percent—of the investment returns to the donor country through contracts, consultancy fees, and procurement arrangements.
The present political system was influenced by external forces, including Indo-Western interests, and has failed to create a prosperous economy. Instead, it has contributed to increasing debt and economic dependency. To achieve lasting prosperity, we believe Nepal should adopt a political system better suited to its economic realities.
A look at the country’s current fiscal situation reveals serious challenges. The government remains heavily dependent on customs revenue generated from imports. Every finance minister presents a deficit budget, while recurrent expenditure exceeds domestic revenue. Consequently, the government has limited resources available for development projects. This represents a serious structural weakness in the economy.
The government has few options other than reducing non-productive expenditure. In doing so, institutions and structures widely criticized as “white elephants” should be eliminated, and a system capable of sustaining itself through domestic revenue should be established.
Our leaders and policymakers should not forget that Nepal is an India-locked country surrounded by complex geopolitical realities. Although road links with China have expanded, Nepal has yet to fully utilize the opportunities provided by its northern neighbor and remains heavily dependent on India for trade and transit.
India is Nepal’s immediate neighbor, yet bilateral relations have often faced challenges. Recently, nearly 100 tea factories in Ilam and Jhapa are compelled to shut-down their factories following changes in India’s tea import procedures. Accordingly, India has also declined to approve additional international air routes through the Bhairahawa–Gorakhpur and Nepalgunj routes, limiting the operational capacity of Nepal’s international airports in Pokhara and Bhairahawa.
At the same time, India is constructing a major international airport in Raxaul, Bihar, which could affect the importance of Nepal’s proposed Nijgadh International Airport. India has also not formally accepted the report prepared by the Eminent Persons Group (EPG), which was intended to address several longstanding bilateral issues. Border disputes continue to exist in several areas despite claims that most issues have already been resolved. Furthermore, Nepal has faced difficulties exporting electricity to Bangladesh due to transit-related obstacles.
There are also reports that India has decided not to import electricity generated by projects involving Chinese investment. These developments offer important lessons for Nepal’s leaders and policymakers. Rather than relying excessively on a single market, Nepal should actively seek alternative markets for its products and diversify its economic partnerships.
China has granted zero-tariff access to numerous products from Nepal. The country should take full advantage of this opportunity and explore the possibility of utilizing Chinese transit routes for exports to third-country markets. Nepal should also reduce dependence on imported agricultural products and strive for greater self-sufficiency in both agriculture and manufacturing sectors.
The country’s revenue base should gradually shift away from customs duties on imports toward taxes generated by domestic industrial production and economic activity. Such a transition would strengthen economic resilience and reduce vulnerability to external shocks.
Finally, Nepal should place greater emphasis on developing its aviation sector. The construction of Nijgadh International Airport, with multiple runways capable of accommodating large cargo and passenger aircraft, could help transform Nepal into a regional aviation hub. By strengthening domestic production, expanding export markets, and investing in strategic infrastructure, Nepal can move toward greater economic prosperity and, in turn, reinforce its national sovereignty.
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