Quest for development: An examination of more than a half-century of national planning and foreign aid practice in Nepal

This paper examines the national planning process and the effectiveness of foreign aid for the development of Nepal from 1956 to 2019 using archived planning documents, international publications, and facts gleaned from conversations with planning officials. The existence of the National Planning Commission predates the establishment of the Ministry of Finance in Nepal. However, the lack of coordination between the two agencies has turned the former into a weak organization by preventing it from executing its budget. In each of the national plans, there is recognition of failures, underachievement, and low capacity in administering foreign aid-funded projects. The stated targets of the plans are rarely met while areas without strategic objectives sometimes surpass expectations. Plans have been neither visionary nor realistic and are not implemented effectively. While 90% of peasants were engaged in agriculture contributing 59% of the national economy, they did not receive significant attention for a long time. Foreign aid has increased greatly in Nepal since the 1950s and the country continues to be very dependent on it. But there have been questions about donors’ tardiness in releasing committed funds as well as the country's ability to execute aid-funded projects. There is a lack of capacity and accountability in both the government and the donors. Consequently, aid cannot fulfill its economic mission and meet the conditions tied to its continuance until the country can be administratively strong enough to conduct development projects alone. Recommendations are offered for changes and innovations within the structure of Nepal's government which would modify the role of the National Planning Commission, rationalize the planning process, harness the technical capability of the country, and move responsibility for plan implementation to the ministries most able to perform effectively.