Socio-Econ. Plan. Sci. Vol. 7, pp. 213-282 REGIONAL WORKING (1973). Pergamon ANALYSIS METHOD Press. Printed in Great Britain OF KOSI ZONE/EASTERN FOR REGIONAL PLANNING NEPAL zyxwvutsrqponm IN NEPAL DIETER zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA WEISS, DURCA PRASHAD OJHA,* WOLFGANG HILLEBRAND,~ HANS-DIETER SAuER,f JOCHEN KENNEWEG,: BENITA LANGEN, $ CHRISTIAN WILMSEN II and GERT THOMAS German Development Institute, 1 Berlin (West) 10, Fraunhoferstrasse 33-36, Germany and Centre for Economic Development and Administration, (Received 27 September P.0.B 797, Kathmandu, Nepal zyxwvutsrqponmlkj 1972) Regional planning has become a major issue in Nepal. In its proposals for development through regional promotion measures, the Fourth National Development Plan selected particular growth areas, one of which is Kosi Growth Axis in Eastern Nepal. A joint CEDA/GDI team analysed Kosi Zone from November 1971 to February 1972. The economic structure of the Zone and its intersectoral, intraregional and interregional interdependencies were identified within the formal framework of a 40x41 input-output table. The analysis showed that the Terai Districts have an export surplus as compared to the Hills. Exports of the Hill economy to the Terai are comparatively low. Kosi Zone as a whole is heavily dependent on agricultural and industrial exports to India and on significant inputs of Indian labour both in Terai industry and agriculture. This economic orientation of Kosi Zone towards India is at the moment definitely much stronger than the links with other regions of Nepal. The Gross Regional Income of Kosi Zone totals Rs 453 million, which means an average per capita income of Rs 600. However, per capita income in the Hills is much lower than in the Terai and barely at subsistence level. Biratnagar is the industrial centre of the Zone with 11,000 employees in industry, the majority of whom are Indian. The jute industry is the leading branch, but it operates at very high costs as compared to competing mills in India, and is heavily dependent on the export bonus system. Stainless steel and (synthetic) textile industries have either closed down or are in serious difficulties as a consequence of the Indo-Nepal Trade and Transit Treaty. Biratnagar has not yet reached a stage of ‘self-sustained growth’, and its economic and social spread effects should not be overestimated, particularly with regard to the development of the Hills. Yields in Terai agriculture are limited mainly by the lack of irrigation and the insufficient availability of fertilizer. More than 10 per cent of the harvest is lost due to inadequate storage facilities. The farmers find it difficult to meet their basic needs, i.e. food and clothing. At the same time they have fairly clear ideas about the additional inputs necessary to increase yields and the marketing facilities needed. Sixty-one per cent of the farmers of a sample survey said that they were willing to contribute voluntary labour; this could be channelled into coordinated development efforts if additional management, technical knowhow and equipment could be provided. * c/o Centre for Economic Development and Administration, P.O.B. 797, Kathmandu, i c/o Afrika-Verein, 2 Hamburg 1, Klosterwal14, Germany. $ Federal Ministry of Economic Cooperation, 53 Bonn, KaiserstraBe 185, Germany. 5 4048 Grevenbroich, LindenstraBe 44, Germany. 111 Berlin 37, KaunstraBe 26, Germany. 7 6242 Kronberg/Schiinberg, Auf der Heide 6, Germany. 213 S.E.P.S. 713-A Nepal. 214 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER W EISS et a/. National planning in Nepal has laid emphasis on the development of the Hills. Their main problems are the increase of population and the growing pressure on land, deforestation, erosion, lacking access to the market, acute shortage of food and growing indebtedness. The Hill economy is running into a critical situation as imports now amount to Rs 48 million whereas the figure for exports is only Rs 13 million (mainly medicinal herbs, potatoes and tangerines). The deficit is balanced by income from military service in the Indian and British armies, seasonal Iabour (mainly in India) and loans, which however lead to growing debts and ultimately to loss of land and migration. North of Dharan all goods have to be transported on porter’s back. Without doubt the most urgent felt need is transportation. Farmers would like to make use of fertilizer but cannot carry it uphill. Tremendous difficulties have to be faced in order to transport the Hill products down to the markets, and therefore incentives to increase production are lacking. The second priority is irrigation, followed by schools, medical services, and drinking water. The willingness of the people to contribute voluntary labour is apparent and amazingly effective. TIBET The Study Area-General Orientation About 640,000 people per year move up and down from Dharan (i.e. 320,000 in each direction), most of them carrying their own goods. Less than 20 per cent of the goods are carried by hired porters. The crucial bottleneck of the Hill transportation system is the Dharan-Dhankuta connection where the steep mountain range of the Mahabharat Lekh has to be crossed. Priority should be given to a light truckable road. Extensions from this road could be constructed at a relatively low cost by following the Hill ridges which are already partly jeepable and have actually been used by a jeep which was carried up. With the use of voluntary labour and some additional equipment, large areas could thus be economically linked to the markets in the South. The farmers-many of them well-trained ex-Gurkha soldiers-will eagerly grasp the chance to earn additional cash income. Development programmes after completion of the Dharan-Dhankuta road should concentrate on the promotion of products which are able to compete in the south, i.e. which cannot be produced at lower cost in the Terai or in northern India, and which can exploit the particular conditions of the Hills such as the climate favouring specific products (fruits, medicinal herbs, seed potatoes etc.). This may necessitate a shift in the present cropping patterns of the Hills which at the moment are geared to the production of basic foodstuffs. These are produced at lower cost in the Terai but cannot be carried to the Hills as long as the transportation problem has not been solved and there are no opportunities to earn additional cash income in the Hills. Regional Analysis of Kosi Zone/Eastern Nepal 215 zyxwvutsrqpon 0 \I Kosi Zone 1. INTRODUCTION REGIONAL Planning has become a major issue in Nepal. Dr Harka Gurung, Member of the National Planning Commission, has clearly outlined the reason: “The future economic, administrative, political and social development of the country will be determined by the degree of circulation in men, materials and ideas within the country. At the present level, such communication system between the capital and other parts of the country is poorly articulated. Most of the urban centres in Nepal are either concentrated around metropolitan Kathmandu or tied to the railheads along the Terai border”. (See [l], Foreword.) The Fourth National Development Plan (1970-75) of Nepal has advocated as one of its policies the concentration of investments in selected areas for rapid growth instead of scattering the limited resources thinly throughout the country. Four growth regions have been identified for this purpose. One of them is Kosi Growth Axis in Eastern Nepal. The team limited its analysis to Kosi Zone as an administrative unit.* This Zone is an example for the structural problems of the other Zones of Nepal. It consists of three main geographical belts: the Mountains in the North, the Hills, and the Terai in the South. Biratnagar in the Terai at the Indian border is the most industrialized town of Nepal and is considered to be the growth centre of the region. Dharan, the other important trading centre, lies in the * Kosi Growth Axis is defined as Kosi Zone minus Terhathum District of Kosi Zone plus Bojpur District o fneighbouring Sagarmatha Zone. 216 DIETERWEISSet al. Terai at the foothills. Dhankuta, Terhathum and Chainpur are important trading centres in the Hills. Hedangma is a centre in the Mountains ([l], p. 21). Discussions in Nepal usually refer to the situation that the “Terai is a food surplus area whereas the Hills are a deficit area”. Beyond this somewhat sweeping statement (which is not true for particular Districts), more detailed policy conclusions were hard to identify. The team collected the goals which might be relevant for Regional Planning in Kosi Zone from various plan documents, and arrived at the following list: Increase of regional income, i.e. to diminish the disparity between the Hills and the Terai and bring about a more equal distribution of income. Increase of utilization of local resources: manpower, land and forests. Strengthening the economic linkages between the Terai and the Hills. At the moment the Terai economy is mainly oriented towards India. Increase of regional employment. Unemployment and underemployment are prevalent in the region both in Terai agriculture and in the Hills and yet substantial labour is migrating into the Terai from India. Increase of exports. The Terai is a significant foreign exchange earner primarily through the export of raw and processed jute. Provision of social services such as education, health, family zyxwvutsrqponmlkjihgfedcbaZYXWVUTS planning, transportation, drinking water, etc., particularly in the least developed and remote areas. Control of migration from the Hills to the Terai which has increased partly due to successful malaria eradication in the Terai. Plannedsettlement of migrants in the Terai. There has been haphazard settlement with heavy destruction of the forest. Increased national integration of different ethnic groups with different languages, traditions and cultures, in particular, integration of the Hill population with the Terai people who are oriented towards India. This list of goals gives a general outline of what may be desirable, but it is not yet a solid starting point for the identification of projects, programmes and policies. General goals are in most countries multidimensional, conflicting, inarticulate and subject to change over time; see English summary of [2], pp. 145-146. They are conflicting due to the different political groups participating in the decision-making process. They are inarticulate because politicians avoid precise definitions in order to mobilize maximum political support and to avoid conflicts. They are subject to change due to changing values in society, new power structures, changing environmental conditions and new insights into the repercussions of past measures (or inactivities). Goals have to be transformed into precise, operational objectives which allow for formulating concise decision criteria. This is, however, only possible if the budget constraints are somewhat clear and if realistic courses of action and their probable outcomes have been identified beforehand. A precise objective is useless if there is no feasible programme for attaining it, or if the costs are beyond any reasonable scope. On the other hand, there may be highly interesting low-cost projects and programmes available which were not thought of when formulating the objectives, and which may now become new objectives, i.e. regional planning is a complex process of identifying problems, tentatively formulating objectives, selecting criteria, designing alternative projects and programmes, collecting data, conducting more or less detailed feasibility studies, re-examining the original objectives in the light of new information and insight into the nature of the problem, and possibly re-formulating Regional Analysis of Kosi Zone/Eastern Nepal 217 the real problem. Complex sets of national and regional goals, programmes and constraints in terms of budgets, personnel, administrative and political structures can effectively be structured in an iterative systems approach which moves many times through the above mentioned cycle of checking and re-checking objectives which are really wanted, against programmes which can realistically be implemented (see [2], pp. 148-151). It is evident that this is only partly an analytical and largely a political process. Regions and sub-regions are usually political power bases, and the rise and fall of project ideas are often linked to the career of a local power holder. In this respect Nepal may not be an exception to the rule. The German members of the joint CEDA/GDI team felt that a group of foreigners should not move into this field for political reasons, nor could the CEDA/GDI team do the enormous analytical work necessary to figure out the subtle network of conflicting and inarticulate objectives and constraints. For instance, apart from touchy political aspects, the overall budget volume available for Kosi Zone would be hard to estimate considering the fact that the overall development budget of the Fourth Plan expects more than 50 per cent from foreign donors (see [3], chapter 3). Therefore the team decided from the very beginning of the preparatory phase in Berlin to limit itself to some aspects of regional analysis instead of moving into the complex field of regional planning. Its main emphasis was on testing and demonstrating working method, and it felt that it might be a useful exercise to analyse Kosi Zone within the formal framework of an input-output table and to try to identify priorities and possible priority projects or programmes on the basis of a detailed empirical study of the socio-economic structure of the Zone. Within the context of the above mentioned iterative cycle this meant that the general goals listed were taken as a starting point, and that the team started to move into the first round of analysis by working its way through the intersectoral, intraregional and interregional economic relationships of Kosi Zone within the formal framework of an input-output table. Simultaneously the Zonal goals and objectives were identified via interviews with local decision-makers and institutions, and the social situation and the felt needs of the population were analysed via questionnaires. This led to a much more detailed insight into the priorities both in terms of the felt needs of the people and the general socio-economic development goals of the Central Government. The goals could be operationalized during the field study in many discussions with the Zonal, District and Panchayat administration. As a result of this working process, a particular development project was identified, evaluated-under the constraints of time and particular expert know-how-and again discussed with District, Zonal and finally with Central Government decision-makers. In this process the general national development objectives were operationalized into a detailed programme target in the field. Within this approach of regional analysis there was no need for the team to analyse the general budget constraint for Kosi Zone during the whole plan period, since the priority project suggested is certainly within the realistic budget limits for the Zone. A comprehensive regional planning approach could not have avoided this critical process, nor could it have limited itself to one single programme. A large number of possible alternatives would have had to be analysed with regard to a large number of more or less articulate objectives, and within the total budget volume of a Five Year Plan period which is obviously subject to uncertainty and necessarily subject to political conflicts of rival groups. The approach of the team was a method approach, and as such it may be subject to discussion and to further development within the context of regional planning in Nepal. 218 DIETERWEISSet al. So far no input-output table has been set up either for Nepal as a whole or for particular regions. The CEDA/GDI team chose the formal framework of the input-output table for the economic analysis of Kosi Zone in order to test and to demonstrate the applicability of this method approach for regional analysis and planning in Nepal. The advantages of this approach are the clear logical structure of the information presented in such a table with regard to intersectoral and interregional flows. The table gives a statistical description of the inputs and outputs of the different sectors of the regional economy. It shows how the output of each sector is allocated to other sectors and it shows the structure and sectoral origin of the inputs used in the production process of each sector. The interregional aspect has been covered by introducing the two sub-regions ‘Terai’ and ‘Hills’ within the first quadrant, and by considering the ‘Rest of Nepal’, ‘India’ and the ‘Rest of the World’ in the import rows and export columns of the table. The usual difficulties had to be expected in the painstaking process of collecting the statistical material, mainly through the empirical surveys of the team itself. The team was not sure beforehand how long it might take to collect the information for the table by means of the questionnaires. The time schedule prepared in Berlin hopefully assumed 3 weeks for industry and Terai agriculture, and another three weeks for the survey of the Hill economy. One week was reserved for drafting the outline of the final report, for closing eventual statistical gaps and for various contingencies, and the last five weeks were to be used for writing the final report in Kathmandu. The most amazing experience for the team was that the work did follow this time schedule exactly. After three days of introductory discussions with Mr R. C. Malhotra, Dr F. E. Okada, Dr B. P. Dhital, Mr L. L. Shrestra, Member Secretary National Planning Commission, HMG,” Advisor to the Planning Commission, HMG, Chief, Economic Analysis and Planning Division, Ministry Food and Agriculture, HMG, and Director, Department of Industry and Commerce, HMG, of from 16 to 18 November, the team arrived in Kosi Zone on 19 November. From 20 November to 4 December it analysed 35 major industrial enterprises, six representative villages with and without irrigation in Morang and Sunsari Districts, and the consumption patterns of a sample of labourers in order to identify the demand structure for industrial and agricultural goods. The second part of the survey concentrated on the Hill economy of Kosi Zone, i.e. the Districts of Dhankuta, Terhathum, and Sankhuwasabha. The team (which by then included four well-trained interpreters from Biratnagar and Dharan colleges) split up into three sub-groups analysing the main centres of Dhankuta, Terhathum, Hille, Chainpur, Khandbari and Tumlingtar with their administrative, small-scale industrial, agricultural and trade activities from 5 to 24 December. The team particularly concentrated on traffic flows, the agricultural situation including felt needs and willingness of the villagers to contribute to the solution of their problems, and on the growth centre functions of places such as Dhankuta, Chainpur, etc. under present conditions and with future improvements. The team returned to Kathmandu on 3 January, and presented a Preliminary Report to Mr R. C. Malhotra, Member Secretary, National Planning Commission, HMG on January 7, 1972. The Draft Final Report, including the input-output table, was presented to and discussed * His Majesty’s Government. Regional Analysis of Kosi Zone/Eastern Nepal 219 with Mr R. C. Malhotra on 4 February, 1972. It may be gratefully acknowledged again that this working programme was only made possible by the full support, active interest, competence and patience of our interview partners in Kosi Zone. 2. ANALYSIS OF KOSI ZONE WITHIN OF AN INPUT-OUTPUT THE FRAMEWORK TABLE 2.1, Justification of the input-output approach for the analysis of Kosi Zone It has often been argued that the input-output analysis may be a valuable method approach for the analysis of the economies of advanced countries with complicated economic structures and intensive interindustry relationships, but that this analytic tool is too sophisticated for developing countries. The main arguments are: (4 (b) (4 As intersectoral interactions are quite insignificant, there is no need for an input-output approach which especially aims at the analysis of these intersectoral interrelationships. The stability of the input coefficients derived from the input-output table is not assured even within a short time horizon since significant structural changes are likely to occur in developing countries; consequently the practical use of imput-output tables is considerably reduced as a means of forecasting the reaction of the economic system to variations in final demand etc. As it requires quite a statistical effort, the costs of collecting the necessary data may exceed the possible benefits on an input-output table. In spite of these arguments it was felt that an input-output table as a clear methodological framework for the analysis of Kosi Zone economy would be a valuable and efficient analytic tool, that it could be set up within a reasonable time span, and that it would provide a well-structured starting point for the analysis of the following problems: (a) (b) (c) (d) (e) (f) Analysis Analysis Analysis Analysis Analysis Analysis of of of of of of the structure of Biratnagar industry. the strong orientation of Biratnagar industry towards India. inter-sectoral relationships (agriculture-industry-services). the interregional (North-South) relationships. regional income. some recent and future economic trends of Kosi Zone. The illustration of the process of setting up the table for Kosi Zone and the main difficulties of the collection of the necessary data may help to set up other input-output tables of higher reliability. 2.2. Lack of data us lack of information-the input-output table as a statistical reporting scheme for regional planning The most difficult task was the collection of the tremendous amount of statistical information required.* An input-output table needs specific information on the various economic activities such as production, consumption, capital formation, foreign trade etc., most of which are not always systematically collected by the statistical organization for the country as a whole, let alone for particular regions. This statistical gap had to be closed mainly by empirical surveys of the team itself. * For details of the calculations and estimates see [33]. 220 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER WEISSet al. During these surveys, however, it was verified again that developing countries nowadays do not suffer from lack of data. Usually there is a huge amount of data, but at the same time a lack of information, i.e. data arranged according to the information requirements of decision-makers. Much of the data or the type of data collected by the team during its field surveys had already been reported to various Central Government institutions for ad hoc needs in the past, but apparently they were not documented systematically and therefore were not available for later decisions on different subjects. One of the results of this study may be that the permanent flow of reports sent by industrial enterprises, District administrators, customs officers, etc. to the Central Government is systematically incorporated into a standard classification of CBS according to the information requirements of regional planners. As a result, similar input-output tables could be set up for all other Zones and kept up to date without much additional effort. Facing these difficulties and the time and personnel constraints, the team has chosen relatively rough techniques to collect and compile the empirical data; this also allowed to present the table and some conclusions before leaving the country. Though numerous figures of the table are based on uncertain information, the authors feel that the basic aim of this approach, namely to get a clear picture of the intersectoral and interregional economic structure of Kosi Zone, has been achieved and that the picture presented in the table is a realistic one. 2.3. Formal structure of the input-output table for Kosi Zone Table 1 consists of 41 rows and 40 columns. The first quadrant shows the production transaction matrix, i.e. the production transactions between 32 sectors. The figures in the rows represent the outputs (or sales) of one sector to the other producing sectors, e.g. the output of Rs 0.7 million of raw jute (row 14) is sold to the raw jute sector (column 14) itself. Rs 27.8 million of raw jute is sold to and used as an input by the jute processing industry (column 19). The figures in the columns represent the inputs (or purchases) of each sector from other sectors. The jute processing industry (column 19) for instance buys Rs 27.8 million of raw jute (row 14), Rs 1.6 million of electricity (row 28), Rs 0.5 million of repairing works (row 30), Rs 0.5 million of transport services (row 31), and Rs 2.7 million of trade and other services (row 32). The first quadrant consists of 32 sectors. The particular aspect of the intraregional flows between Hills and Terai within Kosi Zone has been included by dividing Kosi Zone Sectors l-10 present the Hill economy economy into the Hill and the Terai economy. (agriculture, medicinal herbs and small-scale brass utensils industry) without services. Sectors 1 l-27 deal with the Terai economy without services (agriculture 11-18, industry 19-27). The services for the Hills and the Terai have been dealt with in sectors 28-32. The second quadrant shows that portion of the output which does ,not enter the production process but goes into final demand, i.e. household consumption Hills and Terai, investment, government expenditure, and exports to the Rest of Nepal, India, and Rest of the World (columns 33-40). Column 38 represents salaries and wages paid to Nepali nationals working abroad, i.e. mainly in India, and Gurkha pensions paid to Nepali ex-service men who have served in the British and Indian Armies. The third quadrant contains all primary inputs which are defined to be “primary in the sense of not being produced within the system. In a static model, the use of existing capital stock is a primary input, as is the use of the customary primary factors, labour and land . . . . Regional Analysis of Kosi Zone/Eastern 221 Nepal The total payment for primary inputs by each sector therefore corresponds approximately to the value added in production” ([4], p. 17). Primary inputs in the table are salaries and wages; profits, interests, and rents; depreciation; government receipts; and imports from the Rest of Nepal, India, and the Rest of the World (rows 33-40). Row 39 deals with wages paid to Indian nationals working in Biratnagar industry and in Terai agriculture. The table thus indirectly includes the aspects of labour and migration. As the total output (intermediate plus final demand) of each producing sector must be equal to its total inputs (intermediate plus primary inputs), total outputs of all producing sectors must be equal to their total inputs, i.e. Rs 1.251 million in the input-output table for Kosi Zone. The fourth quadrant shows those primary inputs which go into final demand. This quadrant is lacking in quite a number of input-output tables but will be given particular consideration in this study in order to make the input-output table consistent with regional income analysis.* The most important examples for primary inputs going into final demand are (a) Salaries and wages paid by the government (Households/Hills: (b) Imports of households million). (c) Exports of wages (Rs 16.3 million). (Rs 2.9 million). Rs 44 million; Households/Terai: Rs 55 2.4. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Analy sis of selectedproblems of Kosi Zone 2.4.1. Intersectoral interdependence. In this section the intersectoral interdependence of the economy will be discussed with the aid of the 40 x 41 input-output table (Table 1) and its aggregated version (Table la). Firstly, the interdependence of the producing sectors within the Hill economy and within the Terai economy will be analysed. Secondly, the economic interdependence between the Hills and the Terai of Kosi Zone which will clearly illustrate the North-South integration problem will be discussed. Finally a brief comment on the economic orientation of Kosi Zone economy towards India will be given. 2.4.1.1. Intersectoral interdependence within the Hill economy-Ten sectors have been provided for the Hill economy (excluding the joint Hill and Terai rows for transport, trade and other services). Out of these ten sectors, nine are agricultural. This shows the predominance of agricultural production in the Hills. If we look at the intermediate inputs and outputs of sectors l-10 we find most of the rows and columns completely blank. There are some intrasectoral inputs in the case of paddy, maize, millet, potatoes and other agricultural products in the diagonal which are actually the inputs for seed. The remaining intersectoral transactions are the outputs of the livestock sector, i.e. animal labour going as an input to no intersome cereal and cash crop sectors. We can conclude that there is practically dependence between the producing sectors of the Hill economy. Almost all its production goes to final demand and most of its inputs are primary ones. The outputs of trade, transport and other services have not been disaggregated separately for the Hills. Yet when we look at their inputs to the Hill producing sectors, i.e. sectors 31 and 32, we find that they are very low also. 2.4.1.2. Intersectoral interdependence within the Terai economy-Terai agriculture. The intersectoral interdependence within Terai agriculture is similar to that of the Hill economy. In other words, there are a few diagonal transactions signifying the intrasectoral inputs, and * See Section 2.4.3. 222 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER WEISS et al. also the outputs of Livestock (i.e. animal labour) going as inputs into the cereals and cash crops. Terai industry. The transaction matrix of Terai industry is completely void except one transaction for the input for fruit and food processing coming from sugar refineries. This shows again the lack of interlinkages within the industries of the Kosi Zone. Interdependence between Terai industry and Terai agriculture. There is no output of Terai industry going to Terai agriculture. However, quite a significant output of agriculture goes to the industries. In fact this is the only area where any real intersectoral interdependence exists. The total output of Terai agriculture going to industries is Rs 130.8 million. Out of this figure the input of paddy is Rs 90.9 million and the input of raw jute is Rs 27.8 million. The receiving sectors are rice husking/oil extracting industry and jute processing industry. Sugar cane, forestry and other agricultural products (mainly tobacco) provide inputs to some of the other industrial sectors. 2.4.2. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Znterregional interdependence. 2.4.2.1. Interconnections between Hill and Terai economy-First the interconnections between the producing sectors will be considered. The Hill economy supplies Rs 273,000 of inputs for Terai agriculture and Rs 40,000 of inputs for Terai industries. Terai agriculture and industry supply no inputs to the producing sectors of the Hill economy. The inputs of the Hill economy for Terai agriculture are seeds for other agricultural products (potatoes), the inputs for Terai industry are citrus fruits for food processing industry. Apparently the linkages between the producing sectors of the Terai and the Hills are very low when compared with the total output of both regions. The interconnections between the producing sectors and final demand of the two regions are comparatively more significant. The Hill economy supplies Rs 3.1 million of its output to the Households Terai, especially the output of the sectors potatoes, citrus fruits, livestock, brass utensils and other products (which include ginger, spices and other handicrafts). This indicates the export potential of the Hills. On the other hand Terai agriculture does not supply many inputs to the Households Hills. Terai industry supplies Rs 5.3 million of its output to the Households Hills. Services charges (transport, trade and other services) necessary for the distribution of goods from the Hills to the Terai and vice versa would also be part of the outputs consumed by the households. But since the services sectors were dealt with jointly both for the Hills and the Terai, the exact values cannot be extracted from the combined figures for the Terai plus the Hills. These interconnections between both regions show that the Terai is a surplus region with an export surplus flowing to the Hills. The input-output table clearly demonstrates the relatively low integration of both regional economies in terms of total production exchanged. For example, the total production of Terai industries is Rs 206.3 million whereas only Rs 5.3 million of this production is consumed by the Hill Households. The output of the Hill economy going to the Terai Households is also relatively low. Unless the Hill economy is able to increase its ability to pay for its imports, the interconnections between both regions cannot grow. The per capita income of the Hills is just at the subsistence level while that of the Terai is significantly higher. It will be pointed out later that the policy suggestion following from this situation is that investment in the Hills must be geared towards the increase of production of particular goods which have a market potential in the Terai and in India. 2.4.2.2. Orientation towards India-Kosi Zone, and especially the Terai, is heavily Regional Analysis of Kosi Zone/Eastern Nepal 223 dependent on India for its exports. There are very few exports from the Hills to India: mainly citrus fruits, medicinal herbs and livestock products with a total value of Rs 2.7 million. The Terai, being a surplus food grain producing area, exports its surplus production mainly to India: Paddy (Rs 2 million), raw jute (Rs 0.3 million), timber (Rs 1.2 million), and other agriculatural products (Rs 0.8 million), i.e. a total of Rs 4.3 million.* Most of the industrial production of Kosi Zone is also oriented towards the Indian market. Out of the total industrial production of Rs 206.3 million, exports to India amounted to Rs 52.5 million and exports to the Rest of the World to Rs 46.1 million, whereas deliveries to the rest of Nepal were only Rs 9.4 million. The four most important export sectors with regard to the Indian market were rice husking and oil extracting industry (Rs 33.9 million), stainless steel (Rs 8.3 million), jute processing (Rs 5.4 million), and wood and furniture (Rs 3 million).? The dependence of agriculture on imports is insignificant due to its traditional farming techniques. There is heavy dependence on imports in all industries for machinery and special building material, spare parts and various other materials necessary for operation and maintenance of the plants. Furthermore, several industries such as the textile and stainless steel industries even depend on raw material imports from India and sometimes from third countries. Imported labour from India is quite important. Total wages and salaries paid to the Indian labour force working in Kosi Zone industry amounts to Rs 9.8 million. These Indian labour inputs are significant not only in industries but also in agriculture. The total amount paid to Indian labour in paddy, jute and sugar cane production amounts to Rs 14 million (see row 39 of the input-output table). This is mainly due to the shortage of local labour during the harvesting periods of these crops. The heavy dependence on agricultural and industrial exports to India and the significant inputs of Indian labour both in industry and agriculture show how much Kosi Zone and especially the Terai region are economically oriented towards India. These linkages with the southern neighbour are at the moment definitely stronger than the linkages with other parts of Nepal. 2.4.3. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Regional income analysis. 2.4.3.1. Regional income of Kosi Zone-Total gross regional income of Kosi Zone can be defined both from the point of view of expenditure and of demand. Expenditure side : income, Kosi Zone Y = Gross regional C = Total consumption Z = Total investment G = Government E by residents in Kosi Zone expenditure = Total exports M = Total imports. * See Table 1, column 39. t See Table 1. Y = C+I+G+(E- - M ) with: (1) M P TAEILE l(a).AGGREGATED INPU~~UTPUTTABLEOF KOSXZONE 1969/70 1~ Rs 1000 output Intermediate Input Hill economy without services Terai agriture Final demand demand Terai industries Services (Terai -IHills) Total intermediate demand Household consumption Hills Terai Government expenditure -tinvestment Exports Total final demand Total output u ! Intermediate inputs Hill economy without services Terai agriculture Terai industries Services (Terai + Hills) 11,792 .. . 1760 273 12,667 969 40 130,868 92 14,107 . .. 20 540 1140 12,105 203,555 632 17,886 63,067 . .. 5300 9670 3105 99,532 91,698 17,350 ... . .. 670 193 2921 22,410 108,028 20,694 69,099 121,942 81,204 325,497 205,696 41,901 206,328 65,193 Total intermediate inputs 13,552 73,909 145,017 1700 234,178 78,037 211,685 863 154,059 444,644 678,822 Primary inputs 67,333 251,588 43,467 61,941 424,329 2000 3000 2939 21,060 28,999 453,328 ... 17,844 2152 20,315 44,000 55,000 ... . .. 99,000 119,315 Salaries + wages Profit, interest, Rent, depreciation, Govt. receipts Imports 319 Total primary inputs 67,652 251,588 61,311 64,093 444,644 46,000 58,000 2939 21,060 127,999 572,643 Total inputs 81,204 325,497 206,328 45,793 678,822 124,037 269,685 3802 175,119 572,643 1,251,465 ... = flows exist, but data were not available. 2 M 2 k Regional Analysis of Kosi Zone/Eastern Y W P D T = = = = = Gross Total Total Total Total Demand side: Y = W+P+ regional income, Kosi Zone wages and salaries profits, rents, interest depreciation indirect taxes. DfT Nepal 225 with: (2) The definition of total gross regional income as given in (1) corresponds to Terai final demand minus imports shown in Table 1(a) ; the second definition of gross regional income (2) is identical with total primary inputs in Table 1(a) minus imports. The absolute amount of this figure can be taken directly from Table l(a) and totals Rs 453.3 million. If we assume Kosi Zone’s total population to be 752,000,* zyxwvutsrqponmlkjihgfedcbaZYXWVU per capita income will amount to Rs 600 for 1969/70; whether this figure tends to be underestimated or overestimated cannot be judged without critically reviewing the whole process of setting up the table, i.e. commenting on the economic activities which have been included or excluded, and commenting on the methods of valuation. At the first glance, however, the average per capita income figure as derived above, corresponds quite well to other estimations of per capita income at the overall national level which are not based on input-output calculations, such as estimates of the International Bank for Reconstruction and Development or of the Asian Development Bank ranging from 45-70 dollars, or from Rs 450-700 respectively.? Average per capita income figures, however, cannot give more than a very rough idea of the standard of living of a region; they should at least be accompanied by additional information on the price level, the degree of monetarization of the economy and the distribution of income, in order to get a better idea of the population’s real income level. As far as the distribution of income is concerned, it will be viewed especially from the angle of interregional income differences (Hills vs Terai), and not under the aspect of personal income distribution. 2.4.3.2. Regional income of the Hills-As the input-output table for Kosi Zone is not an interregional table in all its aspects, mainly because the services sector (including trade and transport) and the rows for primary inputs have not been separately introduced for the Hill economy, it is not possible to show the total income of the Hills directly in the table. The figures in the table have to be rearranged and additional information is necessary in order to derive the total income of the Hills.: In principle we can follow again both the expenditure and the demand concepts which are normally adopted to compile regional (or national) income and which have been presented in 2.4.3.1.; but as it is easier to derive the total income of the Hills when using the demand side, this approach shall be preferred and presented here. * Population figures districtwise: (a) Sankhuwasabha 125,000 Hills = 350,000 (b) Terhathum 117,000 (c) Dhankuta 108,000 1 (d) Morang 225,000 Terai = 402,000. (e) Sunsari 177,000 > The population figures for the Hills are based on information directly received from local authorities; the population figures for the Terai are taken from [S], p. 40. t Theper zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA capita income of Kosi Zone may be higher than the national average due to three main reasons: Kosi Zone is (a) the most important industrialized region in Nepal, (b) a significant raw jute producer, (c) a surplus producer of paddy. $ Sankhuwasabha, Terhathum and Dhankuta districts. DETER WEISSet al. 226 Total gross regional income of the Hills can be defined as: Y-H= W,+P,+D,+T, (3) with : Y,, W, PH DH TH = = = = = Gross Total Total Total Total regional income, Hills wages and salaries, Hills profits, rents, interest, Hills depreciation, Hills indirect taxes, Hills. YH may be defined to consist of YH,, i.e. total primary inputs going into intermediate demand (minus imports for intermediate demand) and YHz, i.e. total primary inputs going into final demand (minus imports for final demand): YH, can of the Hills to Rs 77.3 The total Y, = yff,+ YH,. (4) be taken directly from Table l(a) showing Rs 67.3 million; the services sector (trade and transport) may be assumed to be Rs 10 million.* Thus YH, is equal million. primary inputs YH2 of the Hill economy which go into final demand are: (a) Rs 2.00 million (indirect taxes paid by Households Hillsf) (b) Rs 16.30 million (income of Hill people from seasonal labour services:) (c) Rs 1.44 million (income of Government Employees in the Hills$). and from military Other primary inputs of the Hills going into final demand such as customs (government receipts) paid by India for Hill products, have not been identified;7 thus Y,, equals Rs 19.74 million. It follows (4) Y, = Rs 77.3 million+Rs 19.74 million = Rs 97.04 million which would mean a zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA per capita income of around Rs 275 for 1969170. It should be noted, however, that economic activities such as the production of vegetables, meat, milk and citrus fruits (except exports to Terai and India), handicrafts (excluding brass utensils), and minor agricultural products such as phapar (buckwheat), have not been included in the input-output calculations as it has not been possible to find out the quantities produced and the values of these activities. But even if the per capita income of the Hill people were to be underestimated by some 10 per cent, it hardly reached Rs 300 in 1969/70 both in cash and in kind. As the per capita expenditure of the Hill people for imported goods (clothes, salt, kerosene and sugar being the most important items) amounts to about Rs 140 per year,\/ it may be assumed that roughly 50 per cent of the per capita income in the Hills is cash income derived from agricultural production, handicraft activities (brass utensils etc.), seasonal labour and transfers (Gurkha remittances and pensions). * This contribution of the services sector of the Hills is part of the total output of services Terai and Hill going into final demand which is Rs 47.9 million in Table l(a). 1_See Table 1, column 33, row 36. 2 See Section 7.5. Income from seasonal labour and from military service has been treated within the input-output table as ‘export of wages’ and is part of the contribution of primary inputs (excluding imports) to exnorts, the total of which is Rs 21.060 million in Table l(a) both for Terai and Hills. 5 See Table 1; 50 per cent of salaries and wages paid by the Government are assumed to be income of employees in the Hills; further details are given in [33]. 7 See comment on the compilation of Hill sectors in [33]. 11Based on empirical surveys of the team; see Section 7.4.1. If we assume a per capita lincome per year of Rs 300, the cash income per capita plus credits may be roughly Rs 150, as Hill people do not only buy imported goods from the Terai or India but also some Hill products. Regional Analysis of Kosi Zone/Eastern Nepal 227 The remaining part of the zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFED per capita income is generated through the non-monetarized agricultural production; so far there is no satisfying method approach available to transform non-monetarized activities into value terms. For the input-output table, estimates of the non-monetarized agricultural productions presented here are mainly based on information provided by the Economic Analysis and Planning Division, Ministry of Food and Agriculture, HMG. On the basis of the information given in the disaggregated Kosi Zone input-output table, we can derive the average food consumption pattern (excluding vegetables etc.), see Table 1(b). TABLE l(b). HILLFOOD CONSUMPTION per Capita AND PER YEAR Product Average per consumption Paddy Millet Maize Potatoes Total 53 19 112 35 219 capita (kg) PA'TTERNS Price (Rs/kg) Total value (Rs) 1.06 0.65 0.78 0.47 56 12 87 16 171 This short and rough calculation indicates that the total quantity of the four most important items consumed is around 219 kg. As 53 kg of paddy only correspond to 30 kg of rice, and other processing losses can be assumed to be 7 kg, we can estimate a per capita consumption of 190 kg of foodgrains and potatoes; this is considered as the minimum to maintain subsistence ([5], p. 43) even if we keep in mind those parts of the agricultural production which have been excluded from our input-output calculations. Irrespective of any more or less sophisticated methods of valuation it should be clear that the actual per capita income of the Hill people is hardly above subsistence level and immediate action is required to improve the critical situation which the Hills face at present. 2.4.3.3. Regional income of the Terai-Total gross regional income of Kosi Zone has been identified to be Rs 453.3 million. As the regional income Hills totals Rs 97 million, the difference between both figures amounting to Rs 356.3 million must necessarily be the regional income Terai. We get a Terai per capita income of Rs 890 which is more than 200 per cent higher than the per capita income of the Hills. Following a similar approach as adopted to derive the components of the regional income Hills, we can split up the regional income Terai as follows: Terai agriculture : Terai industry : Terai services : Primary inputs (excluding imports) going into final demand? (a) Salaries and wages paid by the government 1,440,000 (b) Government receipts 7,819,OOO Total (a)+(b) Rs Total regional Rs 356,255,OOO income Terai Rs 251,588,OOO Rs 43,467,OOO Rs 51,941,000* 9,259,OOO * The figure of Rs 51.941 million has been derived by subtracting Rs 10 million from the total primary inputs of the Services Sector because these Rs 10 million have already been taken into consideration as part of the regional income of the Hills. t Excluding those primary inputs which have already been treated as part of the regional income of the Hills 228 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER WEISS et al. It should be noted that redistribution of income, i.e. subsidies from the Central Government (if there are any) or transfers of government receipts from Kosi Zone to the Central Government have not been considered. 2.5. The use of the inverted matrix of the input-output table as a tool for estimating impacts of jinal demand on production, employment and import requirements possible The following note may show the use of the inverted transaction matrix of the input-output table for an analysis of the effects of a change in final demand, e.g. an increase in exports of processed jute, on production, employment and import requirements of the regional economy. Having in mind the quality of the data compiled in the input-output table, this short exercise is meant only as a demonstration of methodology and not meant to serve as a basis for immediate policy conclusions. The inverse matrix of the input-coefficients (see [4], p. 46, for technical details) is given in Table I(c). The inverted matrix allows for calculating the effects of a change in final demand on production levels within the framework of the model. One may assume an increase in final demand for processed jute via growing exports by some 20 per cent, e.g. final demand would rise from Rs 53,460,OOO to Rs 64,000,OOO. What will be the result on the production of sector 19 (jute processing) and the production of other sectors as a result of growing input requirements of the jute processing sector? The sectors within the transaction matrix affected by a change of the production level of sector 19 are all those showing a non-zero coefficient in Table I(c) : sectors 14,16,19,28,30, 31 and 32. The original outputs (before a change in final demand for processed jute has been assumed) can be identified in the total output column of the input-output table (Table 1). The new output levels can be calculated according to standard rules of matrix algebra.* The results are compiled in Table l(d). TABLE l(d). PRODUCTION VALUES BEFOREAND AFTER AN INCREASE IN FINAL DEMAND FOR PROCESSED JUTE PRODUCTS BY 20% IN Rs 1000 Sector 14 Raw jute 16 Livestock 19 Jute processing 28 Electricity 30 Repairing works 31 Transport 32 Trade and other services Total Before increase* After increase? 47,400 61,958 54,000 3200 732 21,373 39,688 52,904 63,349 64,535 3518 824 21,519 40,209 228,351 246,858 zyxwvutsrqponmlk Increase in % 11 2 20 10 12 1 1 Sources : * See Table 1. t Calculations of the team on the basis of Tables 1 and l(c). * See [4], p. 50. Calculation example for sector 14: Row 14 of Table 1(c) shows non-zero coefficients for columns 9, 14, 19, 20,21,22,23,27, 28,29 and 32. Each of the coefficients is multiplied by the final demand figure of the respective sectors according to Table 1, i.e. Rs 700,000 for sector 9, Rs 18,895,OOOfor sector 14 etc. The final demand figure for sector 19 is changed into Rs 64,000,OOO(instead of Rs 53,460,OOO)according to the assumption, all other final demand figures remain unchanged. The results of the multiplications add up tothetotalgiveninTablel(d),e.g.(O.O002 x700)+(1.0151 x 18,895)+(0.5229x64,000)+(0.0002x 107,000) +. . . +(0.0071 x 32,248) = 52,904. The same procedure is repeated for the other sectors affected. Regional Analysis of Kosi Zone/Eastern Nepal 229 Within the formal framework and under the assumptions of the input-output model,* the increase in final demand for processed jute products by 20 per cent would thus need additional output levels of raw jute, electricity, transport services etc. as compiled in Table l(d). Direct and indirect employment effects could roughly be estimated on the basis of outputIabour coefficients. Row 33 of Table 1 gives the salaries and wages of Nepali nationals, row 39 the wages for Indian labour working in Kosi Zone. Taking the average yearly wages per worker (about Rs 2000), the number of workers actually employed can be calculated. m Maize f?Z,OOO ho1 m zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Ea Jute (iZ,OOO ho) Labolr Days i in 1000) Wheat ( 2,000 ha I - zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJ 2000 r on FIG. 1. Emplo~ent Feb Mar Apr Nay June July Aug Sep Ott t&v ~ec in Terai agriculture. Requi~ments of human labour days for cultivating and processing the four most impo~ant crops in Morang District (in 1000). In addition, Table 2 shows a more accurate figure of people employed in various industries on the basis of the industrial questionnaire of the team, Assuming a constant output-labour ratio, the direct employment effect of a rise in final demand for processed jute products would be 960 new jobst in sector 19; the indirect employment effect under this assumption would, for instance, amount to 15 additional jobs: in sector 28 (electricity) and 25 in sector 30 (repairing works).5 The assumption of a constant output-labour ratio is, however, not valid, and can only be used as a first rough approach. A detailed analysis of the sectors concerned is necessary * Homogeneity, proportionality, and additivity plus the absence of physical production constraints. These assumptions will hardly be met in practice. t Additional 20 per cent of 4790, see Table 2. 2 Additionai 10 per cent on 130, see Table 2. $ Additional 12 per cent on 195, calculated on the basis of Table 1 (salaries and wages Rs 393,000, wage per worker Rs 2000). S.E.P.S. 713-B DIETERWEISSet al. 230 to calculate more realistic employment effects of additional sector outputs, e.g. electricity production can be increased within an existing installed capacity without additional labour. The same may or may not hold true for an industrial plant. Detailed calculations of labour inputs are necessary for estimating the impact on sectors 14 (raw jute) and 16 (livestock) subject to seasonal and disguised unemployment, etc. The inverse matrix does, however, allow for an identification of the various sectors affected by a change in output of a single sector, and for formulating the problem of the impact on employment more clearly within the context of the structural interdependence of the regional economy. Additional direct and indirect import requirements as a consequence of additional outputs in various sectors following a change in final demand for the products of one sector can also be identified in detail by examining the particular situation of the sector concerned. The use of the input-output table also allows to identify bottlenecks which may hamper future development. In Kosi Zone, electricity supply has reached a critical situation due to insufficient capacities installed. The analysis of additional electricity inputs necessary for an increase in output of large electricity consumers such as the jute processing industries, sugar refineries and stainless steel manufactures, may show when a definite gap between power demand and supply will occur and what its magnitude will be. These examples clearly illustrate that the input-output table is an effective framework to arrange data relevant for planners in a way that they can immediately be used as a basis for different analytic purposes, and thus serve as a valuable instrument to formulate feasible and consistent development programmes. It must be kept in mind that all projections based on the input-output table are only valid under a set of restrictive assumptions, of which the assumption of stable input-coefficients is the most critical one. Nevertheless, the application of input-output techniques can be a useful instrument for planners since they help to understand the structural interdependencies in detail, to arrange a bulk of data into a consistent information scheme (possibly set up as a statistical scheme of the Central Bureau of Statistics), and to provide a lot of additional insight into the nature of the development problems. 3. BIRATNAGAR INDUSTRY The industrial survey conducted by the team covered all major industrial enterprises and typical examples of small establishments such as rice mills. A total of 35 enterprises were This was mainly needed for compiling the analysed by means of a written questionnaire. input-output table. Apart from this aspect, it was most interesting to get a picture of Biratnagar industries with their branch structure, production problems and marketing difficulties as such. Since the enterprises were assured that the information given would only be used for compiling the input-output table and would be kept confidential as far as the individual problems were concerned, and since many branches only consist of one major enterprise, the team will not comment either on individual firms or on industrial branches as a whole. The basic information is available in the input-output table. However, some of the major issues may be summarized as a contribution to the actual discussion in process on the industrial policies of HMG. Biratnagar industry may be conceived as consisting of three main groups: (1) jute industry, (2) stainless steel and (synthetic) textiles, and (3) other industries (rice, oil and sugar mills, wood and furniture, food and fruit processing, bricks and tiles, printing presses, repairing works, power). Regional Analysis of Kosi Zone/Eastern 231 Nepal Table 2 shows that the total production of Biratnagar industry is Rs 210 million, with about 11,000 people employed, the majority of whom are Indian. Since 1965 the production figure rose by Rs 30 million, out of which Rs 20 million originated from stainless steel and synthetic fibres. There was a sharp decline of these two branches during recent years; all enterprises in these two branches have either closed down or are in serious difficulties. zyxwvutsrqponm TABLE 2. BIRATNAGARINDUSTRY1969170 output* Branches Jute processing Jute baling 1000 Rs People employed % Number % 4790 430 54,000 800 Salaries and wages 1000 Rs % 10,800 318 54,800 26 5220 47 11,118 50 Rice and oil mills Stainless steel, synthetic textiles Sugar mills Wood, furniture Food and fruit processing Bricks and tiles Power Others 107,000 17,400 7880 5400 1800 1600 3200 51 8 4 3 1 1 1 5 1625 610 320 700 155 280 130 1960 15 6 3 6 1 3 1 18 2680 1580 1200 1461 348 560 615 2554 12 7 5 7 2 3 3 11 Total 210,328 100 11,000 100 22,116 100 11,248 Sources: Empirical surveys of the team. * At producer’s prices according to Table I. The stainless steel and synthetic fibres industries grew very rapidly since 1965. Production increased from 230 metric tons in 1965/66 to 7250 metric tons in 1969/70 (see [6], p. IO). Investments in these industries were encouraged by the trade diversification policy of the Government which introduced an import entitlement scheme (or export bonus system) in 1962/63. Exporters to hard currency countries were entitled to import anything up to 60 per cent of the export value, the percentage depending on the type of export good. This scheme caused industrial investments in Biratnagar to move into stainless steel and nylon yarns industries (see [7], p. 4). These industries were not in the priority list of the Third Plan (1965/66-1969/70 [S]), but the simple production process and the high rate of return encouraged the rapid growth of these enterprises. All these industries were established with regard to the Indian market, the internal demand in Nepal was insignificant. India was alarmed by the rapid growth of these Nepalese export industries and imposed quantitive restrictions in 1968 for the import of these products to India. India argued that the Nepalese industries imported all raw materials from third countries and a high value added in Nepal could be realized due to a very simple production process. As a result of India’s import restrictions these industries had to heavily cut down their production. The new Indo-Nepal Trade and Transit Treaty (August 15, 1971) gave a final blow to these enterprises. Article XIV of the treaty prohibited “re-exports to the territory of the other contracting party of goods imported from third countries and of products which contain imports from third countries exceeding 50 per cent of the exfactory value of such 232 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIEXERWEISSet al. goods”, [9], p. 5. Exports to India of these goods were completely stopped since the end of 1970. For the stainless steel and synthetic fibre products, the import content for raw materials from third countries is much higher than 50 per cent. As a result of the breakdown of these industries, the total industrial production of Biratnagar is now only slightly higher than in 1965. Jute industry is supposed to be the backbone of Biratnagar’s economic activities, representing 26 per cent of the total industrial output and 47 per cent of the industrial labour force. The whole branch is, however, heavily dependent on the export bonus system. The factories sell to local wholesalers, who can easily compensate the heavy losses on the sales of Nepalese jute products by importing industrial goods from overseas and selling them at a high profit in Nepal. (A considerable amount of these imported goods has the final destination of India.) As a consequence, the export bonus system has apparently not encouraged longterm considerations about the future of the industry, since it prevented the permanent challenge of international production cost levels. In addition, it allowed raw material prices to rise up to some Rs 80 per maund (= 37.3 kg) as compared to Rs 4045 in India (and less than Rs 30 in East Pakistan before the Bangla Desh development). The largest jute mill operates with machinery of which 50 per cent is 35 years old, while the other 50 per cent was installed in 1947. It employs about four workers per machine as compared to two in modern mills in Calcutta. Most of the spare parts and other material have to be imported from India leading again to higher costs and, in addition, very often to delay. All these factors result in production costs which are about twice as high as those in India. The Asian Development Bank loan for the modernization of the whole jute sector may hopefully decrease this productivity gap, but it is doubtful if it can close it. The growth rates of the other industries differ from branch to branch, but the overall picture shows the common features of lacking internal demand, export difficulties (if not compensated by the export bonus system which may be subject to serious reconsideration within the overall context of Nepal’s foreign trade policy, and has actually been subject to some modifications during the field survey of the team), and comparatively high production costs due to small production units, low labour productivity and dependence on many imports from India. Biratnagar industry has not yet reached what one may call the stage of self-sustained growth, nor is it a dominant growth centre for the whole Kosi region which by itself might be able to stimulate economic and social development further north and to absorb major amounts of unemployed or underemployed labour from Terai agriculture or from the Hills. Biratnagar is undoubtedly the largest market for agricultural products in the region, but its industrial linkage effects in terms of inputs is limited to the agro- and forest-based industries, i.e. mainly jute, and its industrial outputs are largely sold abroad. This situation is clearly visible in the input-output table. The main policy conclusion to be drawn is that particular efforts are necessary if the Hills are to be developed. If this policy objective is to be attained one cannot rely on some sort of automatically operating economic ‘mechanism’ spreading from Biratnagar up to the North all over the Kosi growth axis. 4. 4.1. Objectives ANALYSIS OF DEMAND FOR FINAL CONSUMPTION of final demand analysis The demand analysis should complement the study from the consumption angle. The team had in mind several purposes to be accomplished by this approach: it wanted to get Regional Analysis of Kosi Zone/Eastern 233 Nepal a general idea about the living conditions in households of farmers and labourers, to collect zyxwvutsrqpo figures as a possible basis for studying the regional economic structure from the demand point of view, to estimate present and future market chances for industrial and handicraft goods, and to have another approach from the final destination point of view for calculating the flow of goods within Kosi Zone. per capita consumption 4.2. M ethod approach The following approaches have been used for studying the consumption patterns : Questionnaire for a sample survey in the Hill districts.* Questionnaire for an agricultural sample survey in the Terai.t Informal interviews with consumers, traders and knowledgeable persons consumption of certain special goods (e.g. salt, kerosene, clothes). and spending regarding the 4.3. Generalfindings As far as the agricultural questionnaires are concerned, no complete consumer budget analysis was undertaken. The questions aimed at getting a rough picture of the consumption of goods other than self-produced foodstuffs, at finding out the most urgently needed products, and at estimating current and future market chances for industrial and handicraft goods. It becomes evident from the findings that at present and in the foreseeable future most of the cash income and, in addition, a considerable amount of borrowed money is and will be spent on daily necessities such as food and clothes. In the Terai a limited demand for agricultural tools such as spades, ploughs, etc. exists, but the farmers rather prefer to invest their money in land and bullocks, if it is not spent on immediate consumption. The same holds true for the market chances of industrial articles such as stainless steel and kitchen utensils. This picture is confirmed for the industrial labour force by a more detailed quantitative consumer budget study which the team conducted by means of a sample survey of factory labourers in Biratnagar. The comparison between the spending patterns of households of workers on two different income levels (below Rs 300 and above Rs 300) does not show striking variations. Expenditure for basic foodstuffs and other goods necessary for daily life always remains more or less the same, spending on commodities other than food being slightly higher in the budgets of higher income labourers. Only for some commodities can one find increases , e.g. for meat and fish, tea, fuel wood, and clothes. The questionnaire is not suited to go into a detailed market analysis, e.g. for industrial products, although it had originally been conceived as a device to identify actual and possible future demand for industrial goods. It can be seen from the findings, however, that, given the limited income and the necessity of caring first for food and clothing, there is not much Actually a large proportion of the households money left for other industrial products. seems to be unable to satisfy even the most urgent needs due to the limited income. Almost 50 per cent of the questioned labourers indicated that they took loans from their factories or borrowed money from neighbours or other people. According to the answers, spending is most often higher than the total income. Although there is certainly a tendency to over* See 1331. 7 Ibid. 234 DIETERWEISSet al. estimate the expenses for the various items when being asked, it does not explain the whole financial gap, The consumption pattern of the higher income bracket does not allow for an optimistic prospect either, as far as the market chances for industrial products are concerned. Additional cash rather seems to be spent for more and better food and more expensive goods like cigarettes, tea and fuel wood. In other cases the workers said that they would like to invest the money in land, own business, housing etc. TABLE3. GOODSMOST NEEDEDINHOUSEHOIBSOFTERAI URGENTLY Question For what goods do you spend most of your money? What goods do you need most urgently? What would you buy first with an additional income of 20%? Land and other expenses for the farm FARMERS(IN NUMBERSOFANSWERS) Food Clothing and bedding 29 24 5 13 3 74 11 19 6 I I 44 9 7 16 12 f 45 Other Don’t know; nothing Total Sources: Empirical survey of the team. Due to the structure of the Agricultural Questionnaire Terai which had to concentrate on the most urgent information requirements, due to the limited time availabie for interviewing a farmer (usually less than 2 hr) and due to the prevailing subsistence character of Hill agriculture, it was not possible to calculate representative consumption patterns on the basis of the empirical survey. But it is possible to compare the per zyxwvutsrqponmlkjihgfedcbaZYXWVU capita consumption figures for TABLET. GOODSMOST URGENTLYNEEDEDINHOUSEHOLDSOFHILLFARMERS(INNUMBERSOFANSWERS) Question If you had 20% more income, what would you like to buy first? For what purpose did you borrow money? Food Clothing and bedding Land and other expenses for the farm Other Don’t know; nothing Total 5 5 12 5 0 27 3 5 3 0 0 11 Sources: Empirical survey of the team. some selected commodities. For all items investigated, the figures in the Iabourers’ budgets were equal to, or more often, considerably higher than those in the budgets of Hill farmers. This again shows the gap between the living conditions in the Terai and in the Hills. The study of consumption and spending patterns provided an important approach for the painstaking exercise of measuring the flow of goods in the region. The team had this task primarily in mind when it formulated the respective questions in the Hill Questionnaire. Regional Analysis of Kosi Zone/Eastern They mainly deal with goods which have to be imported India. Nepal 235 to the Hills from the Terai or from 4.4. Felt needs and priorities The main feature in our findings is the outstanding importance of the expenses on food, clothing and other necessities of life, which is expressed in the answers to almost all questions. This holds true even for the agricultural households as can be seen from Tables 3 and 4. These results have to be seen in the light of the fact that the people questioned were producers of food themselves. Out of 30 farmers who answered the question “was your harvest sufficient for your family 7” 15 replied in the negative. In these cases there seems to be a shortage even of basic foodstuffs like cereals. TABLE 5. CONSUMPTION Commodity PATTERNS OF INDUSTRIAL LABOURER HOUSEHOLDS LEVELSINPERCENTOFTOTALCONSUMPTION Income below Rs 300 per month Income above Rs 300 per month 29.5 7.0 6.1 5.6 7.1 7.9 2.9 4.9 0.2 1.4 3.4 5.6 1.0 3.6 1.7 7.1 2.0 3.0 30.4 2.7 3.1 3.9 9.1 6.8 2.2 6.1 0.3 2.1 0.4 9.4 0.9 2.5 2.4 10.3 0.2 7.2 Total 100.0 100.0 Food Other 75.4 24.6 66.8 33.2 Rice Wheat, maize Potatoes Vegetables Meat, fish Oil, gheef Sugar Tea Salt Fruits Other food Coal, fuel, wood Kerosene Soap Tobacco Cloth Rent, electricity Other expenditure IN BIRATNAGAR Difference between income levels +0.9 -4.3 -3.0 -1.7 +2.0 -1.1 -0.7 +1.2 +0.1 +0.7 -3.0 +3.8 -0.1 -1.1 +0.7 +3.2 -1.8 +4.2 ON Two INCOME Average* 29.7 5.7 5.2 5.2 7.8 7.6 2.7 5.2 0.2 1.6 2.5 6.8 1.0 3.2 1.9 8.0 1.5 4.2 100.0 -8.6 +8.6 73.0 27.0 Sources: Empirical survey of the team. * Unweighted average of all questionnaires. i Local butter. More detailed information is provided by the consumer budget analysis which the team The labourers worked conducted by means of a sample of 17 factory labourers in Biratnagar. in different factories and belonged to different income levels. The results are somewhat distorted by the fact that the sample was too small to be representative in a strict sense. By chance the average size of the higher income households was considerably bigger than that of the lower income households (seven as compared to four). Despite this limitation, which has to be kept in mind, the findings and calculations may allow a comparison between the consumption patterns on different income levels. The figures are presented in Table 5. 236 DIETER WEISS zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPO et al. Again, the expenditure on food is of predominant importance in the budgets of both income groups, absorbing three fourths and two thirds of the groups’ income respectively. There are also some interesting aspects within the expenditure on food. With increasing income there is a slight tendency towards more valuable products like meat, fish, tea, and fruits, whereas a smaller proportion is spent on wheat, maize, potatoes and vegetables. This runs parallel to the increasing expenditure for more expensive consumer goods such as fuel wood, clothes, and tobacco. The conclusions can only be drawn with some caution, as the difference in percentage is relatively small with regard to the size of the sample. We observe at the same time that a smaller proportion of the higher income budgets is utilized for oil, ghee, sugar and soap, a finding which could not be expected, and is perhaps a result of random influences. Likewise unexpected was the smaller percentage found in ‘other expenditure’ which includes-among other things-savings, entertainment, education, travelling, etc. On being asked what they would buy first after a 20 per cent increase in income, consumer goods such as food and clothes were only mentioned twice each in the total of 24 answers. Three wanted to buy land, six said they would save the money (three of them for an own business or workshop), and five said they would spend at least part of the cash for the education of their children. TABLE 6. COMPOSITIONOFLABOURERHOUSEHOLDSINBIRATNAGAR INCLUDEDINTHESAMPLESURVEY Income less than Rs 300 per month Number Number Number Average Average of households of persons of children number of persons per household number of children per household 12 49 17 4.1 1.4 Income more than Rs 300 per month Total 5 35 20 7 4 17 84 37 4.9 2.3 Source: Empirical survey of the team. 4.5. Per capita consumption in industrial workers’ households Even more interesting than the presentation of the consumption patterns is the calculation of absolute consumption figures per household or per capita. Table 6 gives a summary of the structure of the households surveyed. Table 7 gives the figures of per capita consumption for various items. Table 7 confirms the general picture. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJI The per capita figures provide a more concrete idea of the money actually spent for the different items. It can be clearly seen from the table that considerably more money is spent by the higher income bracket for more expensive foodstuffs like meat, tea, and fruits as well as for other more valuable commodities like clothes, tobacco and fuel wood. 4.6. Per capita consumption in the HilI area It is an almost impossible task to compare the consumption patterns of farm households largely relying upon subsistence agriculture, with those of industrial labourer households in Regional Analysis of Kosi Zone/Eastern Nepal 237 TABLE 7. Per zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA ~~~~~~CONSUM P~ON OFLABOURERHOUSEHOLDSINBIRATNAGARINRSPERYEAR Income less than Rs 300 per month Income more than Rs 300 per month Rice Wheat, maize Potatoes Vegetables Meat, fish Oil, ghee Sugar Tea Salt Fruits Coal, fuel wood Kerosene Tobacco, tobacco products Clothes 249.0 44.2 57.0 40.0 53.3 72.5 24.7 32.6 2.3 13.1 58.0 7.4 12.1 62.2 255.0 22.2 27.2 32.5 77.0 62.0 19.2 42.2 2.7 22.1 83.5 8.8 23.0 85.0 Total of food products Other products Total 621.0 223.0 565.0 283.0 848.0 Commodity 844.0 Difference Average* +6.0 -22.0 -29.8 -7.5 $23.7 - 10.5 -5.5 +9.6 +0.4 +9.0 +25.5 +1.4 + 10.9 +22.s -56.0 251.0 35.2 44.5 37.0 63.2 68.0 22.5 36.6 2.5 16.9 68.7 8.0 16.5 72.0 597.0 +60.0 +4.0 249.0 846.0 Sources: Empirical survey of the team. * Unweighted average of all questionnaires. Biratnagar. The Hill Questionnaire only aimed at finding out some selected data relating to the consumption of goods which have to be imported from the Terai or from India. These figures should serve as a basis for estimating and calculating the flow of goods between the Terai and the Hill Region. For some selected commodities a comparison between per capita consumption figures of labourer households in the Terai and of farmer households in the Hills has been possible. We are thus able to get a more concrete idea about the gap between the living standards in the Terai and in the Hills. The figures for per capita consumption of imported goods which are given in Table 8, have been calculated on the basis of the Hill Questionnaire, supplemented and confirmed by numerous informal interviews with knowledgeable persons on the consumption of particular TABLE 8. Percupita AND CONSUMPTIONOFSELECTED INDUSTRIAL Commodity Sugar Tea Salt for human consumption* Tobacco, tobacco products Kerosene Clothes Total LABOURER COMMODITIESIN HILLFARMERHOUSEHOLDS HOUSEHOLDS IN Rs PER YEAR Industrial labourer households Biratnagar Hill farmer households 22.50 36.60 2.50 16.50 8.00 72.00 158.10 9.20 4.40 2.50 10.20 3.50 72.00 101.80 * A large amount of salt is consumed by the cattle. Difference 13.30 32.20 0 6.30 4.50 0 56.30 238 DIETERWEISSet al. goods such as salt and clothes. They have been checked against the tax lists of Dharan Town Panchayat. In addition, zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA per capita consumption of mustard oil (Rs 22.3/yr), shoes (Rs lO.O/yr) and matches (Rs 0.8/yr) have been calculated; these categories were not explicitly listed in the questionnaire or the labourers’ consumer budgets. From Table 8 it can be seen that the consumption level is considerably higher in the labourers’ households. This is another indicator of the lower standard of living in the Hills. It is beyond the reach of our findings, however, to calculate a total consumption figure for the average Hill household. 4.7. M arket chances for industrial products Unfortunately the consumer budget analysis does not allow a quantitative survey on the spending patterns for particular industrial and handicraft goods. Apparently the prevailing low level of income does not allow the consumption of goods other than the necessities of daily life. A detailed market analysis for particular industrial goods is, of course, beyond the reach of the study. We can state, however, that the demand for industrial goods is low. Even in the case of a remarkable increase of the average income (e.g. by 20 per cent) there is no significant change foreseeable, since even then the total income will be needed for buying daily necessities, and moreover, people will wish to invest it in additional sources of income (land, own business) and spend it on the education of their children in order to give them a better chance to earn more income themselves. The answers to the question in the Terai Agricultural Questionnaire (“What handicraft or industrial article did you buy last year?“) indicate that there is a certain demand not only for clothing and bedding (13 out of 50 answers), but also for stainless steel products (five) and agricultural tools (fifteen). But when the farmers were asked about the needs to be satisfied with additional money (“What would you buy first with an additional income of 20 per cent ?“), the results made it clear that the actual demand for modern industrial goods would be much less than the need for food (nine), clothes (seven), and the expenditure for maintaining or improving the conditions of the own farm (sixteen). The findings of the Hill survey were more or less the same. Only two farmers possessed Given 20 per cent addieither a watch or a radio; other modern goods were not mentioned. tional income, the Hill farmers would like to buy: land (seven), cattle (five), food (five), clothes (five), a radio or a watch (two), out of a total of 27 answers. Being aware of the limited reach of our study as far as the market situation is concerned, one may cautiously draw the conclusion that under the present circumstances there is only a limited demand for industrial products in the area. An increase of income up to about 20 per cent would easily be absorbed for food, clothes and investments for improving the income basis. 5. 5.1. Organization TERAI AGRICULTURE of the survey As over 90 per cent of the population in Nepal live on agriculture, the effort to gain some insight into the major problems of Terai agriculture was considered to be indispensable. The team was well aware of the dimension of the problems involved on the one hand as well as of its own limited time and capacity on the other. It also realized that a number of publications did already exist. Under the given constraints the team could not aim at a fully Regional Analysis of Kosi Zone/Eastern Nepal 239 reliable and representative sample survey. Yet the survey was necessary within the defined framework of the study as a whole. The agricultural sample survey was carried out on the basis of a questionnaire containing mainly questions relating to household data and size of holdings, crops and yields, production and marketing, storage facilities, irrigation and use of fertilizer as well as questions regarding the general economic and social situation in terms of spending and consumption patterns. Three major topics were introduced at the particular request of Mr R. C. Malhotra, Member Secretary, National Planning Commission, HMG: What has been done by HMG, Zonal and District Administrations and Panchayats? What are the felt needs and priorities of the people ? What are they willing to contribute themselves to the solution of their problems? The team approached the Morang District Agricultural Development Office with the request to select six different villages in the Kosi Terai region suited for the planned sample survey. The intention was to choose different villages close to and further away from the market centre of Biratnagar, with favourable and less favourable transport facilities, and with and without irrigation. The villages chosen under these aspects were: Muhendranugar/Chakrughati (Sunsari District), 45 min by jeep from Dharan Bazar, to be reached by road and then dustway, partly irrigated (Chatra Canal site). Bakhari (Morang District), very close to Biratnagar, some irrigation facilities provided by a side canal of the Chatra Canal. Siswuni Budahara (Morang District), 18 km from Biratnagar, 90 min by jeep (8 km from the market centre Dubi), connected by road and then dustway, partly irrigated by a side canal of the Chatra Canal. Dadar Beriu (Morang District), 10 km from Biratnagar, 45 min by jeep, lies on the main road, non-irrigated. Jhora Hut (Morang District), 11 km from Biratnagar, 50 min by jeep, some distance from the main road, non-irrigated. Madhumalla (Morang District), 2 hr 30 min by jeep from Biratnagar by East-West Highway and a long distance to be covered by dustway, situated near the Eastern Foothills, a market centre itself, non-irrigated. A total of 32 farmers were interviewed, i.e. about six farmers per village. Each village was covered in one day by several team members plus interpreters. Usually two wealthy, two average-income and two poor farmers were chosen, both owners and tenants. Each interview used to take about one hour. Usually some general information and aggregate figures were additionally asked for in the interviews with the representatives of the Village Panchayats and Junior Technical Assistants. 5.2. Results of the survey 5.2.1. Household data and background information. Within the 32 samples taken the smallest family unit consisted of three persons, the largest one of 22. The average number of persons living in one household amounted to nine, taking into consideration the joint family system and mostly including the servants. The smallest size of holding was 0.6 ha, the biggest one was 16 ha. The calculation of average values would necessarily give a distorted picture as the team wished to interview a certain percentage of wealthy farmers and as the big holdings enlarge the average figure beyond proportion. The team is aware 240 DIETERWEISSet zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONM al. of the fact that in the Eastern Terai about 80 per cent of the holdings are below 4 ha in size (see [IO], p. 10). This was taken into due consideration when selecting the interview partners for the sample. Eleven farmers were owners of their land, ten were tenants, and eleven were partly owners and partly tenants of the land they cultivated. Twenty-six farmers (81 per cent) were illiterate, six could read and write and had learnt this either in primary school (3), from the father (1) or in Sanskrit school (2). Although mostly illiterate, the farmers questioned were by no means ignorant of their problems. The team found almost all farmers to be cooperative and willing to answer to the best of their knowledge. The overwhelming majority was well informed and open minded as far as farm management and possible innovations were concerned. The introduction of innovations-although they meet with many well-known constraints-will certainly never be hampered by the farmers’ ‘ignorance’ and ‘fatalism’ which hardly exist but are often made responsible for lacking development. 5.2.2. Crops, yields and development potential. The three economically most important crops are paddy, wheat and jute. According to the sample taken the average yield for paddy was about 1370 kg/ha. Two farmers with well-irrigated land reached yields of 2240 kg/ha and 2800 kg/ha respectively using no other additional inputs such as improved seeds and fertilizer. The figures on paddy yields in 1969170 given by HMG, Minist~ of Food and Agriculture, for Morang and Sunsari Districts were 1890 and 1700 kg/ha respectively [1I]. The findings of the sample survey are by and large in line with these results. With regard to wheat and jute the average yields obtained by the sample were 900 kg/ha for wheat and 753 kg/ha for jute. It must be kept in mind that the latter had partly suffered through heavy rainfall in 1970/71. These findings again correspond to the figures of HMG, Ministry of Food and Agriculture, for Morang and Sunsari Districts (1969/70) which are given as 875/800 kg/ha for wheat and 9.50/940 kg/ha for jute [I 11. The development potential becomes clear when these figures are compared with the yields of research stations and of well-managed modern farms. Thus the Terahara Research Farm came up with yields of 4440 kg/ha paddy, 3950 kg/ha wheat and 4200 kg/ha jute.* The average results of the Morang Sugar Mill plantation amounted to 6635 kg/ha paddy and 7800 kg/ha wheat.1 The figures mentioned can be compared more easily by looking at the following table. In the two samples given for modern farming (Terahara Research Farm and Morang Sugar Mill plantation), all inputs such as sufficient water, improved seeds, fertilizer, insecticides and modern machinery have of course been available. Terahara Research Farm does not have irrigation facilities, but it gets sufficient rainfall due to its geographical situation near the Eastern Foothills. Obviously these high yields cannot be reached under the prevailing conditions of average Terai agriculture even if modern inputs were to be increasingly introduced. Practically all farmers were found to be perfectly aware of their production problems. Actual changes will necessarily take time due to many well-known difficulties, of which not the least important is the implementation capacity of the development administration. There were complaints * Interview with Mr A. K. Rai, Manager of Terahara Research Farm on the basis of a detailed questionnaire submitted by the team. t Interview with Mr Rajendra Shrestha, Farm Superintendant, Morang Sugar Mill Ltd., on the basis of a detailed questionnaire submitted by the team. Regional Analysis of Kosi Zone/Eastern Nepal 241 TABLE 9. COMPARISON OFYIELDS Source Sample survey of the team (1970/71) Ministry of Food and Agriculture for Morang District (1969/70) Ministry of Food and Agriculture for Sunsari District (1969/70) Terahara Research Farm Morang Sugar Mill Plantation Paddy (kg/ha) Wheat (kg/ha) Jute (kg/ha) 1370 900 753+ 1890 875 950 1700 4440 6635 800 3950 7800 940 4200 - Source: Interviews of the team and unpublished material of HMG, Ministry of Food and Agriculture, Economic Analysis and Planning Division, Kathmandu 1970. * Jute damaged by rainfall in 1970/71. from the farmers that water management of the Chatra canal system was somewhat disappointing considering their actual needs during the planting seasons. Other farmers stated that they were eager to make use of improved seeds, being able and willing to pay for them. Yet the effort to get them was found to be extremely cumbersome, e.g. bureaucratic difficulties such as long questionnaires and formsheets to be filled in as well as journeys to Biratnagar, because there were not enough stocks of seeds close to the villages. One farmer (wealthy, literate and well informed) estimated a time input of about 3 weeks required for this procedure which he was not willing to invest. He said that under these conditions he would rather continue to stick to the seeds used locally. This case may have been an exception yet it contained a hint of some implementation difficulties still prevailing. Predominant reasons for the low yields of the farmers are mainly the lack of irrigation facilities and fertilizer. The sample survey made it clear again that different measures and improvements cannot be introduced separately but always have to be coordinated. Wheat as a second crop during winter time after the paddy harvest requires the availability of irrigation and fertilizer. The farmers were well aware of the existing interdependence of the different inputs. Twenty-seven of 32 farmers (85 per cent) had not bought any fertilizer. Many of them stated that fertilizer for the local seed varieties and without irrigation facilities would be of no use for them. Almost nowhere was irrigation sufficient. This holds true also for the supposedly fully irrigated villages of Mahendranagar and Siswani Badahara, where farmers partly complained about the water management, because the water was often not available when most urgently needed. The same reasons-lack of water and fertilizer-also impede the planting of wheat after paddy harvest and so prevent the cultivation of a second crop. The sample survey insofar had an interesting result. It covered an area of about 190 ha of which 140 ha were paddy land. Only about 10 ha (7 per cent) of this land was used for growing wheat, the other paddy land being left fallow during winter time. Several farmers explained that they were keen to plant wheat but could not see a possibility of doing so under the given conditions. Another aspect-certainly of less importance compared to the foregoing-is the use of modern agricultural tools. None of the farmers interviewed possessed anything other than the traditional ones. The farmers who had acquired tools last year had just bought wooden ploughs, metal points for plough shares, sickles, spades and hoes. To the question “which 242 DIETERWEISSet al. tool would you like to buy first given 20 per cent more income”, the answers were very much in the same line. Some farmers mentioned iron ploughs, tractors, a threshing machine and a diesel pump for irrigation. The low yields are again endangered and diminished by insufficient storage facilities. 20 per cent of the farmers had no storage facilities at all, while 80 per cent had storage huts built of mud with a bamboo frame and thatched roof (bakhari). Yet 83 per cent of the farmers questioned complained about storage losses, 50 per cent of them losing IO-15 per cent of their entire harvest. These losses are mainly due to rats, because storage facilities are inadequate. It should be one of the foremost tasks to save at least this part of the harvest by constructing adequate storage facilities. 5.2.3. Cash crops and income. It is stressed again that emphasis should be given to cultivating cash crops in the Terai.” The team tried to determine the present situation by asking questions referring to quantities sold of different crops. Crops sold were paddy, jute and wheat, some pulses and a negligible amount of oil seeds. Tobacco, grown by six famers (18 per cent) in negligible quantities, was used for own consumption exclusively. None of the farmers questioned had grown sugarcane. TABLE10. Cash crop Paddy Jute Wheat Pulses Oil seeds CASH CROPSAND INCOME RECEIVED FROMTHEQUANTIZESSOLD Harvest (tons) (tons) Quantity sold (%) 195 22.3 9.3 3.5 3.0 56 22.3 3.1 0.6 0.1 29 100 33 18 0.4 (Rs) $264,000 393,000 322,000 89,500 20,000 Source: Sample survey of the team. Table 10 shows the results of the sample survey with regard to cash crops and income received from the quantities sold. The prices have been calculated on the basis of the information given by the farmers on the average amount of cash received per unit.t The average cash income per household was Rs 1910, per capita cash income being Rs 211. Paddy was sold by 16 farmers (50 per cent), jute by 26 (81 per cent), wheat by four (12 per cent), pulses by three (9 per cent) and oil seeds by one (3 per cent) farmer. Paddy proved to be by far the most important cash crop providing 87 per cent of the total Yet this percentage of cash income is only realized by cash income received from agriculture. 50 per cent of the farmers who are able to sell paddy. Half of the farmers said that the harvest was not even sufficient to feed their families during the year. * Cf. Malhotra ([12], p. I), Member Secretary, National Planning Commission. HMG. sneaking at the Fourth National Agriculture Extension Seminar in Kathmandu on 24 January 1972. t These amounts were Rs 35 per maund for paddy. Rs 65 ner maund for iute. Rs 3540 oer maund for wheat, Rs 30 and 80 per maund respectively for c&a& quantities of pulses andks 40 per ma&d for oil seeds. These prices have been cross-checked with the market prices for paddy, jute and wheat in the Eastern Terai as indicated in [13]. The differences were found to be negligible considering also the fact that there were different prices for different qualities. Regional Analysis of Kosi Zone/EasternNepal 243 Eleven farmers (34 per cent) had cash income from other occupations besides farming, These o~~upati~~s were iabour in industry, weaving, tailoring, selling bamboo trees, cows and bullocks, renting bullock carts, working as a clerk in an office, working in a cooperative society, running a tea shop and serving as a priest, The cash income from these activities amounted to an additional yearly average income of Rs 133 per househoid or Rs 15 per person. So the total ye&y cash income from agriculture and from other occupations in the sample adds up to Rs 2043 per household or Rs 226 per person. 5.2.4. Labour ~~~~~~~~n.Another part of the questionnaire covered the labour situation, ix. the peak and slack seasons in order to identify seasonal and disguised unemployment. It was interesting to learn that out of the sample of 32 farmers, 29 (i.e. over 90 per cent} employ hired Iabour at certain peak times, mainly for the planting and harvesting of paddy in June and in November. A large number of the farmers made detaiied statements as to the additional man-days needed. From these indications the following could be calculated: an average of 190 additional man-days is needed on a holding of 7.6 bigha, i.e. 38 man-days per hectar. NeighbourIy help based on reciprocity is seldom possible, as all farmers are occupied themselves at the same peak seasons. At least 50 per cent of the additional labour force consists of fandfess tabourers coming from India, These findings lead to the conclusion that in Terai agriculture there is some seasonal unemployment, but that more than the whole available Iabour force is needed in peak seasons with present techniques applied. In Fig. 1 (see p. 229) an attempt is made to illustrate the total labour ~eqnirements for the cultivation of different crops in Morang District during one agricultural year. The figures included are calculated on the basis of different sources,* mainly on data for East and North India, i.e. for areas where conditions in terms of agricultural methods are more or less comparable with those of the Terai. The diagram shows clearly how great the differences in labour requirements are in the peak and slack seasons. 5.2.5. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Social uqmts. The agricultural questionnaire tried to identify some basic features of the general economic and social situation in terms of spending and consumption patterns. As had already been mentioned, $0 per cent of the farmers said that the harvest was not suf&ient to feed their families during the year. The findings on the basis of the particular questions were as follows: ~l~est~o~~: Xs your harvest sufficient to feed your family during the year? For what goods do you spend most of your money ? What goods do you need most urgently? Suppose you have 20 per cent more income per year, what would you like to buy first ? Answer in percentage of the villagers interviewed 50 % said yes, 50 % no. 42% said on food, salt, mustard oil, spices and kerosene, 33 % said on clothes and shoes. 36 % said clothes, 27 % food. 22% said food, 16% cfothes, whereas 35 % wanted to make productive investments (land, b&Is, bugagoes, iron plough). Asked about ‘modern goods’, 44 per cent of the farmers interviewed owned zt watch and 31 per cent a radio. * The diagram is based on flares from [I, M-16], which have been cafcufated by using among other things the i~~urmat~on 244 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER WEISSet al. These answers clearly indicate that the villagers are far from being able to satisfy their daily basic needs in terms of better food and clothes. The answers to the topics introduced at the particular request of Mr R. C. Malhotra, Member Secretary, National Planning Commission, HMG, were as follows: Question 1: What has been done in the village by HMG, and Panchayat ? Zonal and District administration Answers: They provided roads and bridges They provided seeds and fertilizer They provided credit facilities They provided schools They provided extension service They provided irrigation They did nothing for the villagers No answer 17% 13% 11% 8% 6% 3% 17% 25% 100% Total Question 2: What are the felt needs and priorities of the villagers? Answers: Sixty-eight per cent of people living in villages without irrigation said that their main need was irrigation. In addition, the following needs were expressed by the total of villages with and without irrigation: Roads and bridges Improved seeds and fertilizer Schools Medical and veterinary services Electricity (no village was electrified) Drinking water Credit facilities Training in modern farming Agricultural tools A rice and oil mill No answer 30% 24% 13% 11% 6% 4% 2% 2% 2% 2% 4% 100% Total Question 3: What are you willing to contribute yourself? Answers: Voluntary labour (usually 1 day per week, and up to 15 days per month slack season) No voluntary work for bridge construction A few Rs of financial contribution No answer Total in 61% 6% 10% 23% 100% Regional Analysis of Kosi Zone/Eastern Nepal 245 5.3. Conclusions From these findings and other results of the sample survey it becomes fairly clear that the main concern of the farmers is still the satisfaction of their basic needs, i.e. food and clothing. At the same time they have precise ideas about the necessary inputs they need in order to improve the yields and the marketing chances of their farms, i.e. irrigation, improved seeds, fertilizer, agricultural credit and transportation facilities. There is also a surprisingly high percentage of people who are willing to contribute voluntary labour and small amounts of money, but this available labour potential has to be channelled into coordinated development projects which supply administrative management, engineering personnel, necessary machinery and equipment, plus sufficient funds for current expenditure and contingencies. 6. 6.1. Organization HILL AGRICULTURE of the survey As the larger part of Nepal consists of hills and mountains, economic and social development apparently means a strong emphasis on the promotion of these areas as outlined in the new Five Year Plan. As practically all inhabitants of these areas live on agriculture, the It has to be kept in mind that these group had to study their problems and living conditions. problems in the Hills are less known compared to the agricultural situation in the Terai. This point was strongly stressed by Mr R. C. Malhotra, Member Secretary, National Planning Commission, HMG, who suggested that more emphasis be put on gaining additional insight into the major problems of Hill agriculture. These problems were to be seen with regard to the economic and social structure, traffic flows of goods and persons, felt needs and priorities, and possible impacts of various projects and programmes. The method of approach again was to be agricultural sample surveys on the basis of a questionnaire. The questionaire used in the Hills mainly follows the same line as the one used in the Terai. This holds true also for the topics introduced at the particular request of Mr R. C. Malhotra.* Additional questions regarding the relations between the Hills and the Terai were asked. This information will not be dealt with in this chapter; it will be utilized for the analysis of the problems concerning the flows of goods and persons.7 The groups moved from Dharan to Dhankuta and split up in several subgroups there. One subgroup covered the Dhankuta/Hille area, one went to Terhathum, one to Chainpur and one to the Khandbari area, thus covering all three Hill Districts of the Kosi Zone, i.e. Dhankuta, Terhathum and Sankhuwasabha Districts. Interviews on the basis ofthe questionnaire were conducted in the following villages: Maz Gaun (Dhankuta Panchayat, Dhankuta District) Hille (Nigale Panchayat, Dhankuta District) Phewak (Chainpur Gaun Panchayat, Sankhuwasabha District) Sidhakali (Sidhakali Gaun Panchayat, Sankhuwasabha District) Pangma (Pangma Panchayat, Sankhuwasabha District). Naturally the constraints of time and capacity in the small subgroups had to be taken into consideration. As the problems of the farms were found to be largely of a homogeneous character, the team limited the formal interviews based on the written questionnaires to 13. * See Section 5.1. t See Section 7. S.B.P.S. 7/3--c 246 DIETERWEISSet al. Again wealthy as well as average-income and poor farmers were chosen. In addition, the group concentrated on numerous informal interviews with knowledgeable persons such as DADOs, PDOs, JTAs, Panchayat members, groups of farmers, landowners, school teachers and college professors. Several discussion rounds with the most competent discussion partners were held in order to recheck new findings. Thus most valuable background information was gained in addition to the sample. 6.2. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Crops, y ields and development potential The main crops in the Hills of Kosi Zone are maize, paddy, millet and potatoes. None of the farmers questioned grew wheat as a second crop during winter time. During its field survey in the Hills the group hardly found any wheat being grown. The total amount is negligible [17]. Under the constraints of this survey it was not possible to identify the exact yields for the following reasons: as the Hill terraces cover plots of land in irregular shape, the farmers were neither able nor accustomed to indicate the size of their holdings by surface measures such as ropanis, bighas or hectares. They usually calculate the size of their land by the amount of seed used for cultivating this land. Theoretically it would be possible to recalculate the size of the holding from this information on seed used; but this method presupposes that all farmers use a similar amount of seed. Actually the amounts of seed applied varied considerably according to different conditions and the personal habits of the farmers questioned. Thus the data supplied by the farmers could not be used to determine their yields per ha. This could have been ascertained only by means of a special survey. Discussing the development potential, we shall confine ourselves to one crop only, taking the example of paddy. The DAD0 of Dhankuta indicated the yields of paddy as being 2400 kg/ha in his District. This figure is in accordance with the figures given by the Ministry of Food and Agriculture, HMG [13].* In our sample the figure for the results of one farmer in Sidakali near Chainpur was slightly higher (2440 kg/ha for paddy) while the yields of all other farmers according to their statements remained below the figures of the official statistics. At any rate the average yields in the Hills proved to be higher than in the Terai. This may be explained by the fact that the pressure on land in the Hills is much greater than in the Terait which leads to a comparatively more intensive cultivation of the soil. According to the opinion of knowledgeable interview partners, the present yields are the highest possible yields under the actual conditions of agricultural technology in the Hills. They are by no means sufficient, however, to satisfy the basic needs of the farmers. There are possibilities of increasing the yields considerably by improved seed and fertilizer combined with irrigation. Field trials conducted in Dhankuta District since 1967 (application of fertilizer only) led to a yield of 2780 kg/ha. Trials in other comparable regions gave similar results. For Pokhara Valley a reasonable estimation of future yields, given a gradually increasing utilization of better varieties and fertilizer, came up to 2530 kg/ha for 1973 and 3100 kg/ha for 1978, [IS] p. 62. In the Nepalese-German Gandaki Agricultural Development Project, the use of fertilizer caused an increase of 42 per cent in the yield of * The figures given are 2400 kg/ha for the Districts of Dhankuta and Terhathum and 2350 kg/ha for the District of Sankhuwasabha. t According to [5], p. 40, one person in the Hills lives on 0.103 ha of arable land, while the comparable figure in the Terai is 0.45 ha. Regional Analysis of Kosi Zone/Eastern Nepal 247 local varieties. Average production without fertilizer application is between 3000 and 4000 kg/ha, whereas that with fertilizer amounts to 3800-6000 kg/ha (see [19], p. 20). Modern inputs-especially chemical fertilizer-were not applied by farmers in the Kosi Hills. Unless there are facilities which allow for the transport of new varieties and fertilizer at a low price, there is practically no possibility to improve the agricultural situation on a larger scale. The same holds true for possible changes in the agricultural production structure: unless there are more transport facilities at prices which the farmers can afford, the access to the markets is insufficient and there are as a consequence only limited incentives to extend the production of cash crops such as citrus fruits and potatoes, which might partly replace the cultivation of the other crops. 6.3. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Storage facilities The problems of food shortage are aggravated even more by insufficient storage facilities. All farmers interviewed complained about storage losses, which vary from 5 to 25 per cent of the harvest, the average being 10 per cent approximately. The losses are caused mainly by rats or mice and partly by insects. During its trekking tour through the Hills the team did not come across a single storage facility built on pillars and protected by metal belts for instance. The value of such metal belts against rats does not exceed the value of what an average family suffers through losses in one year alone. 6.4. Limited sales in the market The large majority of the farmers interviewed (about two thirds) did not sell any part of their harvest. Only one quarter of the farmers sold their product regularly, less than 10 per cent of the farmers sold irregularly. Some farmers not selling their crops at all spoke of Knowledgeable persons felt that even if there were a considerable existing food shortages. increase in yields in the Hills, it would still be used for own consumption in order to overcome the actual shortage of food. Those farmers who sell a part of their crop usually do so in their local village or in the next market place, unless they go down to Dharan in order to buy salt, kerosene, etc., and take their products to Dharan Bazar to sell them there. 6.5. Animal husbandry Livestock production was found to be in a poor state as well. Cows and she-buffaloes give only 0.5-3 kg of milk a day.* The feed is insufficient, and the pulling power of the draught animal is very limited. They are said to be able to work only for a few hours a day and it was mentioned that they would not be strong enough for instance to pull an iron plough. A low animal labour capacity makes crop rotation all around the year more difficult. Such a crop rotation requires quick soil preparation right after the preceding harvest. But an average farm in the Hills has only one pair of draught animals. Yet in view of the amount of feed available the number of cattle is still too high. On an average about five head of cattle-cows, oxen and buffaloes-were found in each household covered. Farmers do not grow fodder at all. Apparently due to the pressure on land all the cultivated land is used to grow crops for human consumption. The cattle is left running around freely to find its own feed and is even kept grazing in the woods. There was hardly * In the sample the production of milk only reached 1.9 kg per household or 0.24 kg per household member. The average number of people per household was between seven and eight. 248 DIETERWEISSetzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONM al. a place to be found which was not overgrazed. Farmers are prevented from starting to grow a winter crop, especially wheat, because it would be destroyed by the freely grazing cattle belonging to others. One farmer said, he would be willing to grow wheat if all farmers would do so, because then everybody would take care of his cattle in order to protect the wheat fields. People are generally aware of the dangerous consequences when cattle and small livestock -especially goats-are allowed to graze in the woods. They know that cattle feed on young trees and thereby accelerate deforestation and erosion. But as a well informed Panchayat member put it, people have simply no other way out, because the animals constitute a vital basis of their existence. An increase in yields would enable farmers to use some land for fodder production. But this would mean progress only if more feed does not lead to an even larger number of cattle being kept. 6.6. Labour situation It was a remarkable experience for the group to find signs of a seasonal shortage of labour in the Hills despite the heavy pressure of land. Over 90 per cent of the farmers employ additional labour beyond the manpower potential of their own farm. Additional labour was employed for at least 14 working days a year. Half of the farmers needed 100 and more additional working days a year. Labour from outside the farm is not only needed once a year. Over 75 per cent of the farmers use it at least twice a year, namely for planting and for harvesting. The group is aware of the fact that neighbours and villagers regularly help one another, which is possible mainly due to the different ripening times of crops in different altitudes of the Hill terraces. But apparently more than mere help from neighbours based on reciprocity is needed, as farmers even take up loans to pay hired labour. This state of labour intensity at certain peak seasons in the present state of farming technology would lead to a decisive bottleneck for industries eventually set up in the Hills which depend on permanent labour. On the other hand in the three months of the slack season from December to March a large number of the male population move down to the plains to earn some cash income through seasonal labour. Seasonal unemployment on the one side and labour shortages on the other are mainly caused by the actual state of transportation facilities and farming technology. Animal labour is hardly used for transportation. The group did not come across the use of the wheel at all, even in those places where it might be introduced easily.* Like in Terai agriculture, the poor animal labour capacity in the Hills is reduced by the inappropriate way of yoking the animals. It causes injuries and makes the animals reluctant to pull. No breast or forehead harness was observed in use. These aspects deserve equal consideration in any agricultural extension work. One has to be aware that better soil preparation, procurement and application of fertilizers and pesticides, as well as the harvesting and marketing of any increased production will require additional labour inputs combined with an improvement of the existing basic farm technology. 6.7. Income and indebtedtless As pointed out already, most of the farmers One farmer said he sold his produce sometimes * For instance in the plain of Tumlingtar, one between Hille and Pakribas. asked did not sell any part of their harvest. (in cases of an outstandingly good harvest), or between Chainpur and Karang and on many ridges like the Regional Analysis of Kosi Zone/Eastern Nepal 249 a few others told the team that they sold regularly paddy, millet, fruits or potatoes. Only two of them had an agricultural cash income of a certain importance. One wealthy farmer in Pangma earned Rs 3000 annually for his sales of paddy; another farmer in the Dhankuta region earned Rs 400 for millet and Rs 600 for fruits per annum. A third one from Hille (near Dhankuta) got Rs 90 for part of his potato harvest. In addition there were some cases where cash income was obtained for livestock products, mostly earned by the same rather wealthier people. The Pangma farmer mentioned above indicated that he received between Rs 700 and 1000 for rhadis (blankets) made of wool from his own goats; the farmer from Hille earned about Rs 100 a year for eggs; another farmer Rs 150 for self-produced ghee. A poor man explained that he had sold a pig last year for which he had got Rs 250. But most of the households consumed all the goods which they produced; some of them even had to buy or borrow additional food. The possibilities for most of the farmers to invest out of their own resources are dim. A large number of the Hill population are in debt, three quarters of all people interviewed said that they had borrowed money. The sums varied between Rs 50 and 2000, the average being around Rs 500. Purchase of clothes was mentioned as the main reason, followed by expenditure for hired labour, food and other articles for household consumption. This indicates that many farmers take up loans in order to satisfy their basic needs, which eventually may force them to leave their mortgaged land and migrate to the Terai or to India. 6.8. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Spending patterns Spending was mainly on food and clothes. The number of modern goods possessed was small. Only a quarter of the farmers possessed a watch or a radio. The answers to the question, what would be bought in the case of additional income, showed again that the demand for most basic goods like food and clothes is still unsatisfied. More than half of the farmers wanted to buy land, nearly one quarter gave this as their sole answer. More than one third intended to spend the additional income on food, clothes and cattle. Further answers included industrial products (radio, watch), paying back loans, lending money to others and purchasing kitchen utensils. 6.9. Felt needs and priorities Definitely the most urgent felt need is transportation. It is needed both for transporting inputs such as fertilizer uphill and the agricultural products down to the markets. Here again the most urgent need is the main jeepable road Dharan-Dhankuta-ChainpurKandbari and a road Dhankuta-Terhathum. Since at the moment large parts are already jeepable from Dhankuta to the north, and have actually been driven up by a jeep brought up from Dharan, the first priority is the construction of the Dharan-Dhankuta road. Feeder roads already exist and could be improved once a rapid transportation link all along the North-South axis has been implemented. The second priority is irrigation, followed by schools, medical services, drinking water, and better agricultural tools. But it may be underlined again that no development will be possible without transportation facilities both in terms of supplying the necessary inputs and selling the outputs. The population’s willingness to contribute is apparent and amazingly effective. There are, apart from the usual feeder road construction and maintenance, examples of several Panchayats which organized voluntary work over a period of two years for large roads and 250 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER WEISS et al. for an irrigation canal construction over 15 miles distance. Construction was taking place in difficult terrain and with virtually no modern equipment, e.g. the canal project actually under way in Terhathum District, or the old RTO Dharan-Dhankuta alignment. A UN expert wrote in 1968: “In order to get the construction of this 54 miles (87 km) long road project started, a Road Construction Committee was formed on 1st Paush 2022 (15 December 1965) by local initiative, centred mainly on Dhankuta. . . . I was told that the villagers agreed that each house should provide one man’s free labour for 7 days and that he also should bring his own food with him. . . . Judging by the great amount of the work so far performed on the ground, in the relative short time of less than two years, the impression is gained that men of vision, initiative and drive are forming the backbone of this Committee” [20]. Half-way down to Mulghat bridge over the Tamur river the DharanDhankuta alignment was still jeepable 2 yr ago. In the meantime the project has been given up, and a new alignment is under discussion. Member Secretary R. C. Malhotra’s question as to what has been done by officials may under such impressions not always have received a fair response. Actually 75 per cent of the villagers interviewed said that they felt that nothing had been done for them. After the discussions with many competent Panchayat and District officers in Dhankuta, Terhathum and Sankhuwasabha Districts, one understands that the presently available administrative staff and the limited budgets cannot possibly reach the villages effectively. 6.10. Erosion The economic conditions of the Hill villages will very soon enter a critical stage if substantial improvements cannot be made during the next few years. The World Bank assumes, that “the population, hitherto stable, had doubled in the last 40 yr. Almost the only way of providing nearsubsistence income to more people has been to cultivate more land. Consequently it is not only the valleys which are cultivated but much of the hillsides too. The latter are terraced every few feet in strips often a few yards wide. It may be assumed that extension of cultivation up or down the hills has meant the taking up of continuously less productive land at a high cost in human labour. Pressure on land has been compounded by erosion.” Pressure on land is in fact substantial and erosion is its most dangerous consequence. People generally know that deforestation causes erosion, but they are not aware of its longterm irreversible and disastrous consequences which can be seen for instance in the barren mountains of Southern Europe. Hill residents said that as recently as lo-15 yr back there was a dense jungle between Chainpur and Karang, which now no longer exists. Some farmers complained about the long distance they have to go nowadays to cut their firewood. There is no physical possibility of controlling illegal deforestation with a few officers of the Forest Department posted in places such as Dhankuta and Chainpur. The people will continue to cut their firewood as long as this is feasible for them and no cheaper supply of burning material is available. ‘Days of the Tree’ which have been organized are equally insufficient, if the very trees planted by the school children are destroyed afterwards by grazing cattle. But cattle will continue to graze and to destroy the forests as long as the agricultural productivity is too low to allow part of the fields to be used to grow fodder (because the rest of the land is then insufficient to produce the necessary food grains): i.e. the deforestation problem cannot possibly be tackled successfully without a comprehensive development scheme of which the most urgent element is transportation at the moment. Regional Analysis of Kosi Zone/Eastern Nepal 251 6.11. Migration In many of the interviews the problem of migration played an important role. The Hill population seems to be increasingly aware of a possible future necessity to leave for the South. They also see the reasons: pressure on land due to the growth of the population, stagnant or declining fertility of the soil due to lack of fertilizer and exhaustion of the soils, erosion, and growing debts. The migration figures in some villages were indicated as amounting to 5 per cent. A well-informed member of Morang District Panchayat estimated that 5000-6000 migrant families from the Hills had settled in Sunsari and Morang Districts in the Terai during the last 5 yr, partly causing difficulties with the local residents before Government moved in with resettlement schemes. The only alternative solution to keep migration limited is a considerable rise in agricultural income. Higher yields and a winter crop, however, require modern inputs plus access to the market. Both modern inputs and access to the market can only be provided by transportation. Parallel to the construction of transportation facilities, projects should be promoted which provide other facilities (irrigation, storage facilities, machinery, knowhow, credit) whose timing should be geared to the completion of the transport link. But even then attention will have to be focused on A few remarks may do to identify some major controlled migration or controlling migration. aspects of this problem. Two extremes of several policy objectives may be hypothetically formulated as follows : Preservation of the social structure of the Hills by all means at all costs, preservation of the traditional culture of the Hills with the objective of keeping the migration rate close to zero. (b) Economic textbook solutions prescribing the free flow of people to the ‘most productive’ locations until a ‘natural’ balance has been achieved. (a) The second concept cannot be a feasible one, since the majority of the people of Nepal live in the Hills, the Terai being unable to absorb them at the moment either in agriculture or in industries and services. This certainly holds true for Morang and Sunsari Districts where the settlement of 5000-6000 families in agriculture during the last few years has, apart Again, deforestation in Kosi Zone has resulted from social troubles, increased deforestation. in heavier floods every year, and gains in cultivable land from deforestation may already have been wiped out by losses due to the floods leaving behind heavy layers of rock and gravel deposits on formerly fertile soils. Nor will Biratnagar industry, actually employing 11,000 people, be able to absorb large numbers of migrants in the foreseeable future. A large and uncontrolled migration down from the Hills would sooner or later mean migration to India. This cannot be an acceptable national policy goal for Nepal nor an acceptable consequence of a heterogeneous bundle of policy measures aiming at different objectives under budget, personnel and time constraints. Unfortunately this does not automatically mean that the first concept is a realistic one. Preservation of the Hill social structure at all costs will require financial surplus sources to bear these costs. The difficult development budget situation is clearly outlined in the Fourth Plan (see [3], Chapter 2, p. 3). Within the limited framework of Kosi Zone a transfer of funds from Biratnagar industry to a Hill development programme will meet considerable difficulties as outlined in Section 4, even if the problems of taxation and administration etc. are left aside. This is to say that the objective of preservation of the social structure of the Hills is subject to budget constraints (among others), and cannot be possibly aimed at ‘at any cost’. 252 DIETERWEISSet al. Another important item of information given in the Fourth Plan is the projected increase of population density in the Eastern Hills from 173 per square mile in 1961 and 207 in 1971 to 228 in 1976 and 254 in 1981 (see [3], Chapter 6, p. 4). Taking into consideration the actual pressure on land, one can expect that the increase in population as projected by the Planning Commission will lead to a migration movement, unless substantial improvements in living conditions are brought about. ‘Living conditions’ mean, according to all interviews in the Hills, the increase in cash income as a first priority rather than the additional supply of schools, medical services etc. This hypothesis was explicitly tested by the team, which before moving up to the Hills had assumed that improved government services might be a policy alternative for keeping people in their Hill villages. As a matter of fact, the interviews clearly showed that the villagers-although reluctantly-have become aware that migration may become a future necessity if zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDC per capita subsistence can no longer be maintained. Migration is actually taking place already (apart from seasonal employment in the Terai and in India), and was reported in various Hill villages to be in the magnitude of some 5 per cent as mentioned before. There seems to be a twofold movement within this trend: (1) the richer people begin to buy land in the Terai because the return on investments is higher there; and (2) the poorest people lose their land in the Hills due to growing debts resulting from the continuous gap between their agricultural and non-agricultural income on the one-hand and their daily subsistence needs on the other. A realistic policy objective will have to concentrate development efforts in the Hill area, but will at the same time have to take a certain rate of migration into consideration. 7. TRAFFIC FLOW BETWEEN HILLS AND TERAI 7.1. Flow of goods 7.1.1. M ethod approach. North of Dharan roads to the Hills do not exist. All goods up to and down from the Hills have to be transported on porter’s back, i.e. by means of a basket with a ribbon passing around the forehead. The usual headload is one maund (=37.3 kg). During the survey in the Hills the team followed the main porter tracks to the market centres of the Hill region, and got a vivid impression of the enormous efforts of the Hill population. On the basis of the first hand knowledge obtained during this field trip and the information from the people acquainted with the situation in the Hills, it was possible to establish a map of the main tracks (see Fig. 2). The entire trade between the three Hill Districts of Kosi Zone (Dhankuta, Terhathum, Sankhuwasabha) and the outside world passes through Dharan. But Dharan, being the most important market centre of Eastern Nepal, not only serves as trading centre for Kosi Zone, but also to a certain extent for the neighbouring Sagarmatha and Mechi Zones. The team tried to identify the flow of goods in terms of physical units and values between Dharan and the Hills and within the Hills. It used six sources of information: (a) (b) (c) (d) (e) (f) Traffic surveys. Estimates of the Dharan Merchants Association. Tax lists of Dharan Town Panchayat. Special analyses of different sectors. Consumer budget analyses. Market surveys in the Hill trading centres. Regional Analysis of Kosi Zone/Eastern Nepal 253 FIG. 2. Porter tracks in Kosi Zone. TABLE11. FLOW OF GOODSDHARAN-HILLS Commodity Value in Rs 1000 Quantity in 1000 kg Prices used for conversion in Rs/kg Salt Kerosene Clothes Mustard oil Sugar Tea Shoes Cigarettesmiris Brass raw material 2418 1810 4o,ooo* 9s30t 4050t 1870t 4440t 46OOt 800: 4500* 1574* 710 1090 1350 98 222 657 70: 0.55 1.15 56.25 9.00 3.00 19.00 20.00 7.00 Total 69,878 10,271 Sources: Empirical surveys of the team. * Figures given by Dharan Merchants Association. t Dharan Merchants Association had given aggregated figures for consumer goods (mustard oil, sugar, tea, shoes, etc.), but no breakdown commoditywise. The breakdown was done according to the share of these commodities in the per cupitu consumption of the Hill population. $ Figures were taken from a special analysis of the brass utensils sector. DIETER WEISS zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPO et al. 254 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 7.1.2. Flow of goods Dharan- Hills. The starting point was the figures given by the Dharan Merchants Association. They had estimated either physical units or values. Using the prices of the commodities at Dharan, values were converted into quantities or vice versa. Figures for the most important commodities were 7.1.3. Flow of goods Hills- Dharan. For medicinal herbs, brass utensils and provided by the Dharan Merchants Association. animal exports, figures obtained from analyses of the team could be used. The tax lists of Dharan were taken into consideration as well. The values given in the tax lists are generally understated by probably more than 50 per cent.* In order to arrive at realistic values, the figures derived from the tax lists were compared with figures from other sources. It became evident that on an average the tax list figures have to be multiplied by the factor of three in order to get the real value of the commodity concerned. The results of various cross-checks of the different sources are compiled in Table 12. TABLE 12. FLOW OF GOODSHILLS-DHARAN Commodity Medicinal herbs Potatoes Tangerines and other fruits Ghee Spices and ginger Animal export Wool and wool products Brass utensils Handicrafts Other Total Value in Rs 1000 Quantity in 1000 kg 3500 3000 2520 2420 1050 400 240 1600 180 2700 375 2800 2100 181 550 .. . 24 51 18 277 17,610 6316 Sources: Empirical surveys of the team. From Tables 11 and 12 we get the total flow of goods Dharan-Hills and Hills-Dharan Value in Rs 1000 Quantity in 1000 kg 69,878 17,610 10,271 6376 Inflow Dharan-Hills Outflow Hills-Dharan These figures show clearly that the Hill area is a deficit area. This fact will be examined later in more detail when the imports and exports of the Hill Districts of Kosi Zone are analysed. 7.2. Flow of persons 7.2.1. M ethod approach. For the calculation Terai the team used two combined approaches: * Estimates of Dharan Merchants Association. of the flow of persons between Hills and : Regional Analysis of Kosi Zone/Eastern (a) Traffic surveys. (b) Calculations of the flow of persons Nepal 255 on the basis of the flow of goods. 7.2.2. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Trafic survey . The idea of the traffic survey was developed during the field survey in the course of the learning process of the team in recognizing the problems. Therefore the outline of the traffic survey may look somewhat unsystematic. Another reason for this was the time constraints under which the team was working in the field and the limited availability of Nepali surveyors. Counting posts could only be installed in those places where a person was living and was willing to work for the team. The traffic counts were done by Nepali surveyors and partly by members of the team at four points (see Fig. 3): (a) Phusre, 3.5 km north of Dharan. Survey from 5 to 24 December. The number of The whole traffic Dharan-Hills/Hillspassengers in each direction was registered. Dharan, except the part going via Chatra to Bhojpur has to pass through Phusre. The results of the Phusre traffic survey are shown in Fig. 4. (b) In the three other counting posts the following information was collected: origin, destination, kind of load and weight. In Mulghat cattle were also counted. Survey south of Mulghat bridge: 23 December. Survey Mulghat bridge: 18-23 December. Survey Hille : 11-I 6 December. CHINA --r----------T- Sonkhuwasobho t Khondbori I Taplejung SAGARMATH ZONE_ KOSl L ZONE ___-_______ MEW1 _L ZONE INDIA FIG. 3. Network of main tracks with traffic survey counting posts. DIETERWEISSer 256 al. (c) A fifth traffic survey was undertaken at Phusre from 26 to 29 December. In a sample survey the kind of load and the share of selfcarriers and hired porters was registered. The main results of the traffic surveys are as follows: Average daily traffic: Dharan-Hills Hills-Dharan Dharan-Hills Hills-Dharan Phusre (5-24 December) : Mulghat (18-23 December) : 654 persons/day. 870 persons/day. 720 persons/day. 1190 persons/day. 1600-. 1500 1400 1300 1200 - IlOO- - iooo- - 900 800 - 700. 600 500. LOO300 2ooL Dharan a- ; ) : t ; Dec.5 ’ 1 ; : : : : j -Hi/is t ’ ’ / I , , , ’ ’ / ’ ’ D&4 _ Fig. 4. Traffic survey, Pushre, December 5-24, 1971. Both surveys clearly show that more people are coming down from the Hills than moving up. This indicates the seasonal migration which takes place during this period of the year. The figures of the traffic survey are used later to estimate the amount of seasonal migration from the Hills. Ratio of passengers with/without load : Of all passengers Dharan-Hills Of all passengers Hills-Dharan 75 per cent carry a load. 41 per cent carry a load. 7.2.3. Calculation of the totaljlow of persons. One approach has been to calculate the flow of persons on the basis of the total outflow and inflow of goods and with the ratio of passengers with and without load. Regional Analysis of Kosi Zone/Eastern Inflow of goods: Outflow of goods: Nepal 257 10,271 tons = 275,500 maunds.* 6376 tons = 171,000 maunds. One maund is the average porter load. Therefore about 275,500 persons are necessary to carry the inflow of goods, and about 171,000 to carry the outflow of goods. But as these 275,500 (171,000) persons represent only 75 per cent (41%) of the traffic Dharan-Hills (Hills-Dharan), the total number of travellers moving up and down can be estimated at Dharan-Hills: Hills-Dharan: 367,500 persons/yr. 417,000 persons/yr. Theoretically the two figures should be equal. Apart from some 1000 people leaving for good to the plains every year, the traffic Hills-Dharan and Dharan-Hills is the same, because there is no important through-traffic. In a second calculation of the flow of persons, the following approach was used. From the contractor at Mulghat bridge collecting the bridge toll the team got estimations of the traffic flow of the last 7 months, i.e. from May 1971 to November 1971 (period of his contract so far). Taking these estimations and the figures from the traffic surveys, and extrapolating these figures with due consideration to seasonal variations, Table 13 was calculated. The figures are shown in Fig. 5. They represent only very roughly the seasonal variations.? Several facts, however, can be explained by means of the table: TABLE13. TRAFFICFLOWHILL.+DHARAN Nepali Calendar Baisak Jeystha Ashad Srawan Bhadra Ashwin Kartik Mangsir Paush Magha Falgun Chaitra Total Western Calendar Persons/month April/May May/June June/July July/August August/September September/October October/November November/December December/January January/February February/March March/April 9000* 9000* 22,500* 19,500* 22,500: 45,000* 27,000* 39,960t 40,000:: 30,000:: 20,OOOf 20,000$ 304,460 Sources: Empirical surveys of the team. * Estimations of the bridge contractor. t Extrapolation of the Mulghat bridge traffic survey by 1 month. $ Estimations of the team. The low traffic in May and June is due to the monsoon rains and rice planting in the Hills. The high traffic density in Ashwin is created when a lot of people move down in order to purchase commodities for the celebration of the Durga Puja festival, the national festival of Nepal. * 1 maund = 37.3 kg. t For comparison see [21], p. 55. 258 DIETER WEISS et al. FIG. 5. Yearly traffic variations During December and to India. and January seasonal of traffic Hills-Dharan labourers at Mulghat bridge. move down on their way to the Terai The figures for the traffic flow Dharan-Hills are more or less the same as for the HillsDharan, except that the seasonal labourers come back in March and April causing a peak during this time, while the traffic flow Dharan-Hills in December and January is lower than that for the direction Hills-Dharan. We now have three estimates for the total traffic flow: 367,000, 417,000 and 304,000 persons per year. From numerous discussions with informed persons such as tea shopkeepers beside the tracks, merchants, and officials, the team came to the conclusion that the figure of 417,000 is out of range. Since there was no indication that the estimations of the team were considerably understated, the final figure is not calculated as the arithmetical mean of the two remaining figures (367,000 and 304,000) but is estimated as a figure closer to 304,000. The estimate of the team is 320,000 persons per year in one direction. Thus the total traffic flow is assumed to be 640,000 persons per year. TABLE 14. DISTRIBUTION OFTHE FLOW OFGOODS Commodities BETWEEN PORTERSAND SELFCARRIERS Amount transported by porters (%) Amount transported by selfcarriers (%) 0 100 100 10 15 100 0 0 90 25 All commodities of the flow Hills-Dharan except the following Brass utensils Clothes and various other goods Salt, kerosene, mustard oil Sugar Source: Empirical surveys of the team. Regional Analysis of Kosi Zone/Eastern Nepal 2.59 zyxwvutsrqp 7.3. Ratio of porters and selfcarriers For the calculation of the ratio porters/selfcarriers the figures of Table 14 were used. Applying these figures to the commodities of Table 11 and Table 12 the results of Table 15 are derived. TABLETS. QUANTITIESCARRIEDBYPORTERSANDSELFCARRIERS Direction of flow of goods Quantity carried by porters (tons) Quantity carried by selfcarriers (tons) Dharan-Hills Hills-Dharan 2811 51 7460 6325 Source: Tables 12 and 14. Out of the total amount of goods (=16,647 carriers and 17 per cent by hired porters. tons) 83 per cent are transported by self- 7.4. Flow of goods to andfrom Kosi Hill districts Up to now the total flow of goods Dharan-Hills and Hills-Dharan was taken into account. This is justified by the fact that this flow of goods will mainly move on a future road from Dharan to the Hills and that it is necessary to know the actual flow of goods for the technical outlay of the road and for the analysis of the road impact. For the purpose of regional analysis of Kosi Zone itself it is necessary to estimate the flow of goods to and from the three Kosi Hill Districts, which is only part of the total flow of goods between Dharan and the Hills.* 7.4.1. Flow of goods into Kosi Hill districts. For this calculation the team used two independent approaches. (a) From the traffic surveys the following distributions of the goods moving from Dharan to the north between the Kosi Hill districts and the rest of the Hills supplied via Dharan was derived : Kosi Hill districts Rest of Hills 75.5 % 24.5 % Rs 52.8 million Rs 17.1 million Total flow Dharan-Hills 100% Rs 69.9 million -(b) The per capita consumption of the Hill population of those goods which have to be imported into the Hills is Rs 137 per year.7 Multiplying this figure with the population of Dhankuta, Terhathum and Sankhuwasabha Districts which is 350,000,$ we get a total import of consumer goods of Rs 48.2 million per year, plus another Rs 0.2 million of raw materials for brass utensils which add up to a total import of Rs 48.4 million. * The following figures are not consistent with the figures in the input-output table mainly figures in the input-output table are based on producer’s prices and the estimations in this purchaser’s prices. t This figure is calculated with a sample of consumer budgets derived from the Hill Questionnaire. $, Dhankuta: 108,000 according to [5]. Terhathum: 177,000 according to District Office in Sankhuwasabha: 125,000 according to District Office in Khandbari. because the chapter on Agriculture Terhathum. 260 DIETERWEIRSet al. It is reasonable that the figure from the traffic survey is higher. In the traffic survey the flow of goods from Dharan to Bhojpur (Bhojpur lies in Sagarmatha Zone) via Chatra is excluded. Leaving this amount out of the calculation, the share of Kosi Hills compared Taking this into consideration, the to the rest of the Hills supplied via Dharan increases. lower figure of Rs 48.4 million is taken as total import of the Hills of Kosi Zone. 1.4.2. Flow of goods out of Kosi Hill districts. For the outflow a cross-check by means of the per capita consumption figures is not possible. One has to rely on the estimations of the flow of goods Hills-Dharan. The traffic surveys have shown the percentages of goods coming from the various regional centres both in Kosi Zone and in neighbouring Zones. From these figures the share of Kosi Zone in the total flow of goods Hills-Dharan has been calculated as follows : Kosi Hill districts Rest of Hills Total flow Hills-Dharan 72.5 %* 21.5 % 100% Rs 12.8 million Rs 4.8 million Rs 17.6 million * We assume that the share of the total flow of goods corresponds to the share of the commodities covered by the survey. The trade balance of the Kosi Hill Districts can therefore Inflow outflow Rs 48.4 million Rs 12.8 million Deficit Rs 35.6 million be estimated at: 7.5. Balance of the trade deficit of Kosi Hill districts Three sources of income (a) Income (b) Income (c) Income offset the trade deficit of the Hill areas: from military service (Gurkha service). from seasonal labour in the Terai and in India. from landholding in the Terai. The income from military service is mainly received for Gurkha service in the Indian and British armies. Through intensive investigations in this field-interviews with active soldiers and ex-service men, and with various officials from different offices-it was possible to estimate this source of income. We have to distinguish between remittances of active soldiers and pensions for ex-service men: Remittances Pensions Total Rs 8.75 million* Rs 4.55 milliont Rs 13.30 million *At present 5000 soldiers. After 2 yr they usually go home on leave bringing with them an average of Rs 3500. t7900 ex-service men. The average pension is Rs 500-600 per year. Regional Analysis of Kosi Zone/Eastern Nepal 261 At first sight these amounts seem to be highly overstated. A recent study of the social situation in villages in Ilam District has, however, arrived at similar results: “The most lucrative source of income for Limbus is service in foreign armies”.* The estimations of the income from seasonal labour and from landholding in the Terai are based on very limited data. The calculations for these items (see [34], Annex A VI and A VII) can only indicate the direction in which a more detailed investigation of these problems should be undertaken. The total additional income amounts to: Income from military service Income from seasonal labour Income from landholding in the Terai Total Rs 13.3 million Rs 3.0 million Rs 10.0 million Rs 26.3 million Even with these three additional sources of income the trade deficit of the Hill region of Rs 35.6 million cannot be covered. This leads to the conclusion that the Hills are in a permanent process of growing indebtedness. Actually 90 per cent of the farmers interviewed by the team were indebted. This corresponds to the detailed findings of Caplan [22], p. 92, who states “that almost 2/3 of kipat-owning Limbu households have pledged more than half of their land”. This fact as such does not yet necessarily indicate that the Hills are indebted to the Terai, since it is unusual for the farmers to be indebted to creditors outside the Hills. Normally they are indebted to local landlords, traders and moneylenders. But the latter may get credit from creditors outside the Hills as well, for example from merchants in Dharan. Through this mechanism the Hills may indirectly get indebted to the Terai. The samples of the Hill Agricultural Questionnaire of the team and a large number of discussions with knowledgeable persons such as bankers in the Hill towns, traders, civil servants and Panchayat officials indicate that the total indebtedness of the farmers of the Kosi Hills would be approximately Rs 25 million. The debt burden also seems to be a major reason for the permanent migration from the Hills. This point is always stressed by persons familiar with the social situation in the Hills.7 If the debts of a household have risen to a certain amount, the family has to sell its land in order to pay back debts. Expressed in economic terms, the land so far not monetarized is now monetarized for the first time. As land is the vital economic basis in the Hills, the family deprived of it has to leave for the plains. Annually about 1000 families leave the Hills for good. In order to get an idea about the magnitude of this process, one may assume that most of these people have left because of heavy debts. Furthermore one may assume that a family is compelled to sell its land when the aggregated liabilities add up to two annual family incomes, i.e. approximately Rs 5000. For 1000 families with Rs 5000 debts each, the total amount of monetarized land would thus be in the magnitude of Rs 5 million. * Caplan [22], p. 113. The author also gives an example (p. 122) for the ratio of agricultural income to income from military service: net agricultural income Rs 99,500; Gurkha service Rs 16,600 (= 17 per cent of net agricultural income). The respective figures for the Hills of Kosi Zone are: net agricultural income Rs 70.0 million; income from Gurkha service Rs 13.3 million (=19 per cent of net agricultural income). t In Pangma, a village 10 km north of Khandbari, 60-70 families have left for the Terai in recent years; most of them were poor. Sometimes the reason for their leaving was quoted as “pressure from the moneylenders”. S.E.P.S.1/3-D 262 DIETERWEISSet al. Summarizing the figures of the flow of goods and payments, be estimated as follows: Income in Rs million Expenditure in Rs million Goods Military service Seasonal labour Landholding in Terai Monetarizing land 12.8 13.3 3.0 10.0 5.0 48.4 Total 44.1 48.4 The above balance could not seasonal labour, landholding in shows the precarious situation only a quarter of the necessary export products of the region. 7.6. Market the balance of the Hills can be made consistent due to the uncertainty of the figures for the Terai, and monetarizing land. However the table clearly of the Hill economy which is characterized by the fact that commodities carried up from Dharan can be balanced by surveys In order to get further insight into the structure of the economy of the Kosi Hills, the team conducted surveys of the weekly markets in Dhankuta, Chainpur and Khandbari (Thursday, 9 December in Dhankuta; Friday, 17 December in Chainpur; Saturday, 18 December in Khandbari). These towns are the major trade centres along the Kosi Development axis, see [I], p. 20. A subgroup of the team moved to Terhathum, but due to the time schedule it was not possible to survey the market there. A short survey was done of the Hille market (2 hr north of Dhankuta) on Thursday, 16 December. Some statistical data of the market centres are given in advance. (4 Dhankuta Population: 6500 inhabitants. 600 houses. Government O&es: Dhankuta District Office, Land Reform Office, Divisional Forest Office, Police Station, Military Barracks, District Court, Land Tax Office, Malaria Eradication Centre, Family Planning Office, Post Office, Wireless Station. Infrastructure: Handicraft Training Centre, 4 hospitals (TB clinic, Indian hospital, Nepali hospital, homoeopathic hospital), Post Office and Wireless Station, 1 college, 2 high schools, 3 primary schools, Indian library, hydro power station, horticultural centre (in Patle). Banks: Rashtriya Banijya Bank. Retailers : 40 Industries: 1 Rice and Oil Mill. Dhankuta is the first centre north of Dharan, but it is not a distribution centre for places further north (Chainpur, Khandbari), east (Terhathum, Taplejung/Mechi Zone), or west (Bhojpur/Sagarmatha Zone). All these other centres trade mainly with Dharan Bazar directly. (b) Terhathum Population: 6500 inhabitants, 700 houses. Regional Analysis of Kosi Zone/Eastern 263 zyxwvutsrqp Nepal Terhathum District Office, Police Station, Military Barracks, Family Planning Office, Post Office, Wireless Station. Infrastructure: Primary and secondary schools, high schools, 1 college, health centre, Post Office, Wireless Station. Government Ofices: District Court, Bank. Retailers: 10-15. (c) Chainpur Population: 3000 inhabitants, 150 houses. Court, Land Revenue Office, Forest Department, Malaria Eradication Office, Smallpox Eradication Office, Health Centre, Police Station, Prison, Post Office, Wireless Station. Infrastructure: 1 primary school, 1 high school, 1 medical centre, Post Office, Wireless Station. Bunks: Rashtriya Banijya Bank. Government Ofices: District Retailers: 38 Industries: 22 brass utensil workshops. Chainpur was formerly the District headquarter (which has now been shifted to Khandbari). Knowledgeable persons in Chainpur were under the impression that economic activities had slowed down since this shift. (d) Khandbari Population: 700 inhabitants, 90 houses. Sankhuwasabha District Office, Land Reform Office, Post Office, Malaria Eradication Centre, Gurkha Welfare Centre. Government Ofices: Police Station, Retailers: 16. The market surveys were conducted with the help of a questionnaire. The questions aimed at: Walking distance of people coming to the market. Frequency of visit. Commodities, prices, and turnover. Goods which the sellers would buy with the cash received in the market centre. The team tried to get representative samples of all commodities in the market. The main results are given in Table 17. There is a significant relation between commodity and walking distance of the seller: Farmers selling their own products (food grains, vegetables, fruits, animals and animal products) come only from villages within a half-day’s walk. Sellers of tobacco and handicrafts walk up to three days. Most of the sellers of imported goods such as salt, kerosene and mustard oil walk regularly between Dharan and the respective market centre. The distance varies between 1.5 and 4 days. The breakdown according to these groups is shown in Table 16. With the exception of Khandbari, farm products have the main share of the turnover in the markets. Khandbari Bazar has a considerable turnover in handicrafts which are brought from nearby villages (the main product is woollen blankets, i.e. so-called rhadis) or produced DIETERWEISSet al. 264 TABLE16. COMMODITIES SOLD IN MARKET CENTRESIN PERCENTAGES OF TOTALTURNOVER Commodities Dhankuta Farm products Tobacco and handicraft Imported goods Total Chainpur Khandbari 15 1.5 10 45 17 38 35 42 23 100 100 100 Source: Empirical surveys of the team. Khandbari (brass utensils). One may conclude that the markets in the Hills are local markets which mainly serve the surrounding villages. Most of the sellers come regularly throughout the year. From their receipts they buy daily necessities such as salt, mustard oil, kerosene, soap, biris, etc. The total turnover of the three markets in local products (i.e. agricultural products and handicrafts from the Hills) is Rs 27,800 per market day. * If we assume that Hille and Terhathum markets together have a turnover of Rs 10,000 per market day, the total turnover of all market centres in the Kosi Hills would be approximately Rs 2.0 milliont per year. This figure represents the intraregional flow of goods. Of this amount only two commodities are brought from larger distances within the region, i.e. tobacco from Bhojpur District and handicrafts from Sankhuwasabha District. According to the District Office in Khandbari and information from bankers, Sankhuwasabha District exports about 10,000 maunds of rice annually to Dhankuta and Terhathum Districts and is not a deficit area in food grains as usually quoted in various statistics. in 8. THE TRANSPORTATION BOTTLENECK 8.1. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Priority of a Dharan- Dhankuta transport connection While the main towns of the Terai Districts of Morang and Sunsari are connected by paved roads (Biratnagar-Dharan road, East-West Highway), all transportation within the three Hill Districts of Dhankuta, Terhathum and Sankhuwasabha is undertaken on porters back, i.e. 47 per cent of the population of Kosi Zone are cut off from modern means of transportation. $ In a large number of interviews with farmers, porters, bankers, wholesalers, retailers, and Zonal, District and Panchayat authorities conducted during the trekking tour through the Hills, the main bottleneck of the Hill transportation system in Kosi Zone was identified as being the connection between Dharan and Dhankuta. Along this route the first steep mountain range of the Mahabharat Lekh has to be crossed. From Dhankuta onwards jeepable tracks already exist to Hille-Pakribas and a long way up to Terhathum and have actually * Empirical surveys of the team. t Rs 40,000 per market day x 50 weeks = Rs 2.0 million. As a figure for the yearly turnover of the markets this may be overstated, because in the rainy season the turnover is lower. This may be balanced, however, by the fact that local products are also traded by resident local shops, by tea shops along the tracks, etc. The figure of Rs 2.0 million may therefore be taken as the amount of the turnover of local products in these mark& centres. $ Apart from a STOL flight to Tumlingtar which was not operating at the time when this report was drafted. TABLE 17. SURVEY OF THE WEEKLY MARKETS IN DHANKUTA, Dhankuta* KHANDBARI P B. Khanbariz Chainpurf Number of sellers Turnover in Rs Percentage of total turnover Food grains and vegetables Fruits Animals and animal products Tobacco Handicrafts Imported goods 467 ii: 30 35 43 5820 510 1270 300 1170 1025 58 5 12 3 11 10 Total 653 10,095 100 Commodities zyxwvu CHAINPURAN D Turnover in Rs Percentage of total turnover 1040 221 92 30 21 292 6165 2210 1670 2400 1490 8660 1696 22,595 Number of sellers Percentage of total turnover Number of selfers Turnover in Rs 27 10 7 11 7 38 218 50 2; 1330 150 630 1320 1400 1410 :: 23 23 100 459 6240 100 S E. $ z % Source: Empirical surveys of the team. * Market day: Thursday 9 December, 1971. i Market day: Friday 17 December, 1971. $ Market day: Saturday 18 December, 1971. 2 21 2 F e* P # rp^ a 2: G! c 266 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER WEISSet al. been used by jeep. They could be transformed at relatively low cost into light truckable roads. Two main alternatives are being discussed in Nepal for the solution of the transport problem under the rugged conditions of the Hills: ropeways and roads [23]. The Fourth Plan has stated the general policy outline: “Air transportation has been given second priority after roads. River navigation, as a solution to our transport probIem is unfeasible because of the rugged topography. Ropeway extension in the Hills looks attractive on theoretical ground, but not dependable from a cost benefit consideration. Since roads are the most dependable amongst the means of transport, in the near future emphasis will be given on the construction of roads,” see [3], pp. x-4. The Dharan-Dhankuta road has actually been included in the Fourth Plan, see [3], pp. x-27. The following chapters deal with different aspects of a road and a ropeway solution. 8.2. Road project 8.2.1. Possible road alignments. Road alignment in the Hills can follow two basic concepts : (a) mainly following the Hills ridges; (b) mainly following the river beds. Concept (a) as well as concept (b) are actually used by the existing porter track network (see Fig. 2). But as porter tracks are much more adaptable to the rough conditions of Hill topography and the monsoons, they cannot serve directly as a model for the alignment of light truckable roads. Concept (b) has to face the following difficulties: Heavy floods during the monsoon season. Passing of narrow and steep gorges. Frequency of land slides. Bridge construction over tributaries. The main problem of ridge roads [concept (a)] is the frequent change in altitude. Figure 6 shows both solutions in connection with the distribution of the Hill population. Settlements are more or less concentrated on the ridges. If a road is to connect areas of high population density, concept (a) seems to be the more feasible one for achieving this objective. Both aspects-the enormous engineering difficulties of concept (b) and its smaller service function for the population settlements-suggest a careful consideration of concept (a) for future detailed engineering, cost and effectiveness studies, which were, of course, beyond the objective and the capacity of the CEDAIGDI team. Concept (a) would suggest an alignment starting in Dharan, crossing Mahabharat Lekh and Tamur river, and passing Belhara (near Dhankuta). It could follow the ridges via Siduwa and Basantpur to Mangla Bari. From this place one junction could go to Chainpur after crossing Piluwa river. Another junction could connect Terhathum. Under the existing topographic conditions the most difficult part of a road is the section leading over Mahabharat Lekh from Dharan to Dhankuta. We may introduce, according to a paper by Townsend-Rose [24] (Annex A, p. 1) four grades of difficulties for road construction: Grade 1 = easy, grade 2 = fair, grade 3 = difficult, grade 4 = particular engineering necessary. A split-up of the total length Dharan-Chainpur shows that 80 per cent of the total terrain with grade 4 can be found within the first section between Dharan Regional Analysis of Kosi Zone/Eastern Nepal 267 i i zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Alignments Alignment -- atong hill ridges olon~ river bids FIG. 6. Comparison of two road alignments. and Belhara (near Dhankuta) ship is pointed out in Table It should be stressed again on to the north will be much covering only 30 per cent of the total distance. This relation18. that once Dhankuta is connected, further road construction easier with prevailing terrain grades 1, 2 and 3. TABLE18. ROUTEDEWRAN-CHAINPURBY GRADESAND Section of route Grade 1 Dharan-Belhara ~elhara-Hille Hille-Terhathum junction Terhathum-Chainpur junction Dharan-Chainpur Source: Townsend-Rose 1241. 4 7 3 14 Distance (%) Grade 2 Grade 3 2 I2 22 36 DISTANCES Grade 4 6 20 7 12 25 4 - 1 2s Total distance (%) 30 9 26 35 100 268 DIETERWEISSet al. The Dharan-Dhankuta road connection is not a new project idea. Four years ago the Dharan-Dhankuta Road Construction Committee started to build the so-called ‘RTO alignment.* Road construction was completed up to mile 28 by voluntary labour which was provided by the local Panchayats. But due to shortage of money and lack of expert advice concerning adequate examination of the rugged soil conditions, engineering support for consolidation of road terraces, sufficient road drainage and organization of road maintenance, and lack of funds for Tamur bridge, work had to be given up by the volunteers 2 yr later. It is an open question whether public construction works and particularly road maintenance should be based on voluntary labour. Very good experiences were gained with hired labour even if wages are low. A large scale road feasibility study for Nepal as a whole is being carried out at the moment by UNDP/HMG. A feasibility study on the Dharan-Terhathum-Phiddim road is under way. It mainly uses an alignment along the Tamur river bed. As the problem of integrating Hills and Terai of Kosi Zone has to concentrate on connecting Dharan and Dhankuta, the following considerations will deal with this section of the road. 8.2.2. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Cost and capacity of a Dharan- Dhankuta road. A summary of the calculations on road construction and maintenance cost and transport capacity (see [34], Annex B I) is given below. Construction costs-The terrain through which the road has to pass consists of very steep hill sides. As for the nature of the soil along the track, much of it consists of soft or friable rock. Some other parts consist of rather firm red earth or hard rock. Especially on the northern side of Tamur river soil conditions vary very much. Vulcanic, graphite, slate, granite and other soil structures are to be found. Special attention has to be given to side wall, side drainage and cross drainage construction. According to the empirical data collected during the construction of a gravelled truckable road (connecting the Terai and Ilam in neighbouring Mechi Zone) with a maximum transport capacity of 125 tons/day, average construction costs for a road of this quality may amount to Rs 78,00O/km. Costs for a bridge over Tamur river may be assumed to amount to Rs 2.8 million. The total costs of the 70 km long Dharan-Dhankuta alignment? would amount to Rs 8.6 million out of which Rs 5.0 million would be spent in the region on salaries and wages. Almost all the necessary material (particularly stones for walls and drainage) is available at the construction site. If the project follows the old RTO alignment (which still exists on large sections-partly converted into paddy fields in the meantime) with some improvements on particular sections, the construction and cost advantages become obvious. Maintenance costs-One of the main difficulties of the RTO project was the lack of maintenance and its organization [20], p. 10. Efficient organization needs a reliable institution. From the technical point of view maintenance can be carried out satisfactorily with 88 labourers (two per mile), eight headmen and one overseer working every day along the road. * The RTO (Regional Transport Organization) had presented a plan of a Dharan-Dhankuta road alignment prior to its dissolution in 1963. In order to get the 54 miles (87 km) road project started, a road construction committee was formed on 15 December 1965 by local initiative centred mainly in Dhankuta. Works were executed by voluntary labour. Each house provided the free labour for 7 days of one man, bringing his own food with him. See Sorber 1201, p. 2. t The future alignment can in some parts be slightly shorter than the old RTO alignment. Regional Analysis of Kosi Zone/Eastern 269 Nepal Average annual maintenance costs for labour would amount to Rs 16OO/km, i.e. a total of Rs 110,000 per year. Operating costs and transport charges-operating costs of a l-ton truck in similar areas of Nepal amount to Rs 1.6/tori km (operating in hilly area) and actual transport charges are Rs 2S/ton km. Porter charges at the moment are Rs 13.4/tori km. Maximum transport capacity-The flow of goods along the porter path DharanDhankuta amounts to 16,700 tons/yr in both directions (about 10,300 tons up from Dharan to the Hills, about 6400 tons down from the Hills to Dharan). The flow of persons in both directions is 640,000 people/yr, i.e. about 320,000 in each direction, subject to seasonal fluctuations over the year. Daily figures are 46 tons/day and 1760 persons/day accordingly. In peak seasons up to 2400 persons/day go up and down. During these peak seasons the upper limit of the traffic capacity of the track is almost reached, as porters already have to queue up on steep passages waiting for each other to pass. Considering the traffic volume of 46 tons/day at the moment, a transport capacity of 125 tons/day for a gravelled light truckable road seems to be a feasible project idea both in terms of necessary construction costs and available capacity for actual and future demand, [25], p. 42. P35 TLF’ FIG. 7. Comparison Walking speedof Speed of porters trucks: : 35hours L.6 hours from Dhoran to... of the transportation speed of porters and trucks from Dharan to different market places in the Hills of Kosi Zone. DIETER WEISSet al. 270 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Transportation speed-In the Hill region an average truck speed of 25 km/hr can usually be reached. That is ten times more than the average walking speed of a porter. Figure 7 shows a comparison of the transportation speed from Dharan to different market places in the Hills for porters and trucks. 8.3. Ropeway project The technical aspects of the ropeway solution Dharan-Dhankuta have to be discussed in more detail before starting a road-ropeway comparison. The available basis for cost and capacity estimations is the Hetaura-Kathmandu ropeway constructed ten years ago. The data given below refer to the calculations of [34], Annex B II. Construction costs. The total length of an alignment for a Dharan-Dhankuta ropeway would be about 24 km. It can be laid out for four sections, with one driving and one tension station each, i.e. a total of four driving and four tension stations. Construction is not heavily influenced by the difficult soil conditions although construction material for the towers must be brought to the tower sites. For this purpose a road has to be prepared if a helicopter service is to be avoided. The costs are Rs 0.76 million/km, i.e. total ropeway alignment costs would be Rs 18.1 million. Most of the know-how as well as the construction material will have to be imported. Eighteen per cent of the construction costs will probably be spent in the region. Maintenance costs. Ropeway maintenance is basically a question of top standard organization and control. Technicians must be trained to look after the permanent and careful maintenance service of electrical and mechanical equipment through difficult Hill walking Due to detrition the moving rope has to be replaced terrain along the whole alignment. every 4 yr, whereas the stationary rope has to be replaced every 6 yr. The necessity of this replacement makes ropeway maintenance very costly. One km of ropeway costs Rs 60,400 in maintenance per year, i.e. the total maintenance cost is Rs 1.4 million per year. Due to maintenance problems the Hetaura-Kathmandu Ropeway presently carries only 40 per cent of the ‘ropeway-suitable’ traffic (see [26], p. 3) and runs at small profits. UNDP points out in its study: “The improvement of the ropeway so that it can carry goods at full capacity for some years to come would involve a large investment to replace the main track rope. In the programmes in course no provision is made for such expenditure; therefore it is likely that the efhciency of this system will gradually decline” [27], p. 162. Operating costs and transport charge. Operating costs of the ropeway Hetaura-Kathmandu are Rs 0.7/tori km, the transport charge is Rs 2.5/tori km. Maximum transport capacity. The Hetaura-Kathmandu ropeway had a transport capacity of 200 tons/day when it started. The same capacity has been assumed for the calculations on the Dharan-Dhankuta ropeway. 8.4. Comparison of a road us ropeway project from Dharan to Dhankuta On the basis of data from similar projects in Nepal, a comparison of a road and ropeway solution has been tried. This comparison is summarized on the following tables. Apart from items which can be expressed in technical dimensions and monetary terms (see Table 19), other items must be compared verbally (see Table 20). 8.5. Conclusions Apart solution, from the difference in construction and maintenance costs in favour of the road the main advantage of a road seems to be its accessibility along the whole align- Regional Analysis of Kosi Zone/Eastern Nepal 271 ment. Economic and social spread effects can materialize more easily as there is direct access to a road passing along a number of villages at any point all along the alignment. The possibility of transporting people may be an important factor for getting innovation impulses up to remote areas. TABLE 19. COMPARISON OF A ROAD AND A ROPEWAY FROM DHARAN TECHNICAL AND MONETARY TERMS DHANKUTA Light truckable gravelled road Criteria Total length of alignment Transport capacity Transport speed Construction costs Land acquisition costs Construction costs of Tamur bridge (200 m) Total construction costs Maintenance costs Operating costs Transport charge Wages for project construction TO spent in the Region 70 km 125 tons/day 25 km/hr Rs 78,00O/km Rs 5.5 million Rs 0.28 million Rs 2.8 million Rs 8.6 million Rs 1600 km/yr Rs 0.11 million/yr Rs 1.58 ton/km Rs 2.50 ton/km Rs 5.0 million WITH REGARD TO B&able ropeway 24 km 200 tons/day 10 km/hr Rs 0.76 million/km Rs 18.1 million Rs 3600 Rs 18.1 million Rs 60,400 km/yr Rs 1.45 million/yr Rs 0.7 ton/km Rs 2.50 ton/km Rs 3.3 million Sources: [34], Annex B. As a result of the findings which have been collected, the team has come to the conclusion that priority should be given to a road solution between Dharan and Dhankuta. If Dharan and Dhankuta are once connected by a light truckable road, extensions of the road could be relatively easily constructed at a lower cost following the Hills ridges. Parts of these ridges are already jeepable now and have actually been used by a jeep which had been carried up. With minor voluntary labour and perhaps one bulldozer, long distances could immediately be connected by means of additional light truckable roads to the first road section Dharan-Dhankuta and thus be economically linked with the markets in the South. As has been pointed out earlier, this access to the market will have remarkable effects on the Hills economy. The Dharan-Dhankuta road should be considered mainly under this aspect of creating access to a road system further north which to a large extent already exists. Thus the road solution Dharan-Dhankuta actually means that light trucks could move directly up from Biratnagar to Pakribas, Mungha, Mangla Bari, Hamling and other places. From there, further extensions to Terhathum, Chainpur, Khandbari and Tumlingtar may be constructed in the future. The first section Dharan-Dhankuta is the most difficult one, but it is the precondition for further activities in the North of Kosi Hills. A ropeway solution would only link Dharan and Dhankuta, with the inconvenience of transferring the goods from one mode of transportation to another one, and with no possibility of getting landrovers and light trucks up to the jeepable ridges north of Dhankuta. This summary of considerations which were a permanent subject of discussion among the team does not imply that ropeways have no function within the transport system of the Hills. On the contrary, the experience gained in similar topographic conditions in Switzerland and Austria has clearly shown that ropeways play an important role on shorter distances and very steep slopes. They have a feeder function to the roads and open up areas which are not economically accessible by roads. 272 DIETER WEISS et af. TABLE 20. COMPARMN OF A ROAD AND A ROPEWAY FROM DHARAN QUALITATIVE ASPECTS TO DIIANKUTA WITH REGARD TO Construction For road construction a large amount of local and unskilled manpower can be used. Most of the construction material is available directly at the construction site. Ropeways have the advantage of being less dependent on topography and land slides. Ropeway construction needs the technical know-how of qualified experts. Construction elements mostly have to be imported Maintenance Road maintenance is labour intensive. It needs the efficient organization of a reliable institutional set-up to maintain the vital drainage system and to repair minor damages immediately in order to avoid the destruction of the whole road (particularly due to floods and land slides). Ropeway maintenance needs responsible and reliable technicians. It is very sensitive to deficiencies of permanent and adequate service Operation On roads a door-to-door service is possible. Bulky goods as well as persons can be transported. Roads are accessible along the whole alignment, thus having a larger area service effect. Ropeways only connect two points in line with no access between the stations. They have a lower flexibility in transport volume and speed. They face the inconvenience of transferring goods to another mode of transportation. Due to this necessary transfer, e.g. from truck to ropeway and from ropeway back to another mode, the rate of damage to goods at the existing ropeways in Nepal is high Import requirements For traffic operation on roads vehicles, fuel and spare parts must be imported. Ropeway operation might be carried out with local electricity, subject to physical availability of electricity at the site and cost considerations particularly with regard to the transmission system from the (hydro) power station to the ropeway site. Spare parts must be imported as well; the ropes have to be replaced regularly every 46 yr Regional employment Within the construction and operating phase roads have the advantage of employing a large amount of regional Iabour. A road construction team once having been trained can be used for subsequent feeder road construction as well. The regional employment effect of ropeway construction and operation is much smaller Use of local resources Use of local material is a major advantage of road construction compared to the more sophisticated technical equipment needed for ropeway construction which has to be imported. Ropeway operation may have the advantage of possibly using the local electricity resources, whereas vehicle operation must be provided with imported fuel Social aspects Connection of different areas by road promotes regional integration. Social mobility and the exchange of ideas and civil service personnel is improved as a result of closer and more frequent contact to the outside world. In the context of Kosi Hills, this is particularly important e.g. for teachers who need training refresher courses, and for qualified civil servants who get closer to the ‘promotion lobby’ in Kathmandu and are as a result possibly less reluctant to get posted to far-off places. The whole administrative machinery may get new impulses and ideas, and more efficient delegation and control of administrative field operation is possible. Public services such as central schools and medical facilities become physically accessible for the village population. Ropeways do not have this area service capability and are conceived in Nepal largely as a mode of transportation of goods rather than for people General logistics The objectives of military logistics, i.e. the transport of troops and equipment to remote areas in the Hills, can be achieved much better by roads Sources: Empirical survey of the team. 9. PROBLEMS OF IMPLEMENTATION 9.1. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Administrative organization and management as key factors in development Both the Fourth Plan [3] and its critics [28] have stressed the aspect of implementation within the planning process. This is in line with the general experience that problems of Regional Analysis of Kosi Zone~~stem Nepal 273 administrative organization and management are the crucial bottlenecks of development rather than the lack of capital and natural resources. Considering Nepal’s difficulties to spend the budgeted amounts for the development projects envisaged, it does not seem to be an exception from the rule. This is, according to the Fourth Plan, particularly relevant for agriculture which accounts for two thirds of the Gross Domestic Product and absorbs 93 per cent of the total labour force: “Although a number of development works have been undertaken in different sectors of the economy, there has not been, virtually, any noteworthy change in the basic condition of agriculture” [3]. The Fourth Plan argues that this “is mainly due to the absence of adequate organizational effort and provision of necessary inputs” 131. It continues that “unless the present organizational set-up is basically changed it is evident that the programmes envisaged in the Fourth Plan are unlikely to be implemented in an effective way. At the village level there is no administrative machinery except some J.T.As.* to look after agriculture extension and other development works. As a result, necessary inputs and services are not channelIed effectively from the centre to the village level”.? 9.2. Three basic elements of ~rn~~ernentat~o~: essentials, accelerators, and inst~t~t~o~ Project and programme implementation is easily formulated as a ‘must’, but hard to put into practice in administrative routine, as the experience of many developing countries has clearly shown. It may be useful to identify some of the key elements in this process of transforming budget allocations into material outputs in the field [29]. There are four essentials apart from budget resources and personnel: effective demand for the products and services, supply of technology which has been tested beforehand in pilot studies with regard to its feasibility and applicability under the prevailing conditions in the field, local availability of supplies and equipment at acceptable prices when needed and dependable in quality, and incentives such as a price which makes innovations su~~iently profitable for the farmers to offset risks and uncertainties, a reward system for civil servants who are supposed to be effective in the field far from the ‘promotion lobby’ ([21 J, p. 130) of the Central Government or a mechanism which makes road maintenance attractive for those who are supposed to maintain it. These four essentials must be available for implementing a project or programme. Accelerators$ are useful to get a project or programme into effective operation, but are not an absolute ‘must’ as the essentials above are. These accelerators are education and training of the people involved in the project, participation as a means of getting people committed to development action as acknowledged by the creation of the Panchayat sector in the Fourth Plan ([3], p. 2 and [28], p. 43) and credit if necessary for particular development programmes such as agricuItura1 extension and modernization schemes or small-scale industry and handicraft promotion. Both essentials and accelerators assume that spending and erecting buildings is not suEieient, and that support and group action emanating from the beneficiaries of an envisaged programme are most often the key factor to success in current operation. This impiies innovations both in attitudes and action. The general experience has been that farmers and craftsmen are quick to grasp direct benefits such as the chance of earning additional cash income, under the condition that the outlined essentials exist already or can be provided. * Junior Technical Assistants, usually Peace Corps Volunteers. t Reference [3], pp. 547); see also Chapter 27, ‘Administrative reform’. $ Not to be confused with the accelerators of Keynesian macro-analysis. 274 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETER W EISS et al. The necessity of additional accelerators mainly depends on the novelty and complexity of the programme and the necessary complementary actions to be taken up by the beneficiaries which may require large-scale group action (e.g. for voluntary Panchayat labour in road construction). The necessity of additional accelerators furthermore depends on the additional capital inputs required from the beneficiaries, and last but not least from the profitability of the new activities, particularly in terms of additional cash income. Implementation thirdly needs institutions, both in terms of the administrative machinery responsible for the project in the narrower sense, and the additional institutions involved in extension and current operation such as the banking system, local merchants, cooperatives, transport firms, resettlement authorities, health services, etc. A project in the narrower sense may be the set-up of an industrial production unit in the public sector. The final effect aimed at may be the increase in income and the improvement of the quality of life in rural areas supplying the raw material processed by this industrial plant. It is hard to include the streamlining of this large group of additional institutions into the planning process for the industrial plant. It may be useful, however, to have this institutional aspect clearly in mind and to be prepared to step in with additional measures if such institutional bottlenecks arise. The first institutional problem to be solved is the organization of the administrative machinery responsible for the implementation of the projects and programmes in the narrower sense. 9.3. Zonal administration and its implementation competencies 9.3.1. General outline. Common administrative structures can be divided into centralized and regionalized ones. In the first case the centre is usually organized along departmental lines, each department being responsible for one or several sectors of the economy, i.e. departments of agriculture, industry, public works, etc. In the second case the Central Government is balanced by a regional decision-making structure, and a complicated procedure of balancing sectoral considerations of Central Government development budget allocations versus regional claims for a ‘fair share’ usually has to be developed in a somewhat painful political bargaining process (typically used between the Government and the States of India). The Constitution of Nepal clearly does not organize the decision-making process according to the regional model ([30], p. 8). One of the main aspects in favour of centralization is the goal of national integration versus tribal and regional heritages. There are, however, some elements of regional representation. The administrative structure relevant for plan implementation on Zonal level can be summarized as follows. Nepal is divided into 14 zones. Each zone consists of a number of districts (the five districts of Kosi Zone are Morang and Sunsari in the Terai, and Dhankuta, Terhathum and Sankhuwasabha in the Hills). All zones are delineated explicitly under the political consideration of linking Terai and Hill districts and thus enforcing the political and economic north-south integration of the country. The decision-making structure can be divided into a ‘Civil Service Line’ and an ‘Assembly/Panchayat Line’. 9.3.2. Civil service line. 9.3.2.1. Zonal Commissioner-The Zonal Commissioner is the chief administrative authority of HMG in his zone and is responsible for the general administration of his zone. His appointment and dismissal is pronounced by HM* on the basis of his political career. His functions are to maintain ‘law and order’, to supervise, control and coordinate the work of the zonal level offices of different Ministries or Departments * His Majesty the King. Regional Analysis of Kosi Zone/Eastern Nepal 275 of HMG, to inspect the general working of District, Town and Village Panchayats and issue necessary guidance, and to discharge other functions according to the directives issued by HMG from time to time ([31], p. 25). Every zone has a Zonal Committee to advise the Zonal Commissioner. The Zonal Commissioner is the chairman of the Zonal Committee (see [30], article 86B, and [32], p. 75). A zone being “too big an area for one Zonal Commissioner to effectively manage” [31], the Chief District Officers have been given the authority of maintaining ‘law and order’ in their districts. Kosi Zone is divided into Division I with Sankhuwasabha, Terhathum and Dhankuta districts (headquarters, Dhankuta) and Division II with Morang and Sunsari, i.e. the Terai Districts (headquarters, Biratnagar). 9.3.2.2. District Administration-The District administration is the backbone of the The CD0 (Chief District Officer), a career civil regional development administration. servant under the Ministry of Home and Panchayat, is the chief executive of his District. He has to supervise, control and coordinate all the district level offices of HMG which are to function as sections of the Office of the CDO. The Departmental programme of these offices is coordinated under the guidance of the CDO. This has, however, to be done “within the Departmental policies and prescribed programme” ([31], p. 43). Although the CD0 is formally the administrative head of the district level offices of the Ministries and Departments, the “formulation of the national level policy and technical direction” remain in the Ministries and Departments in Kathmandu ([31], p. 43). The PDO (Panchayat Development Officer) is also a career civil servant under the Ministry of Home and Panchayat and the deputy CDO. His main functions are in the field of development. He is responsible for executing decisions of the District Panchayat. Though administratively under the CDO, he is a full-time official of the District Panchayat. The whole istaff of the district level offices, formally under the CDO, are career civil servants of the specialized Ministries of the Central Government in Kathmandu. 9.3.3. AssemblyjPanchayat line. 9.3.3.1. Village and town level-The ‘Assembly/Panchayat line’ consists of the Village, District and Zonal Assemblies on the one hand and the Village, Town and:District Panchayats on the other. Here elements of democratic participation and regional representation come into the decision-making process. The Village Assembly (Gaun Sabha) consists of all voting members of a village or a group of villages. According to Art. 30 of the Constitution it is supposed to be the base of the partyless Panchayat system. Every Village Assembly elects a Village Panchayat of nine members, and the members elect one chairman. Kosi Zone consists of about 220 Village Panchayats. The Village Assembly also approves the village budget and development project proposals formulated at village level. The Village Panchayat has to collect the necessary data for land records, it is responsible for the establishment of cooperative societies, provision of agricultural extension services, collection of land revenue, development and operation of primary schools, provision of fundamental health services and the construction of minor irrigation projects. The upper limit for a village level project is about Rs 15,000 (as compared to Rs 200,000 at district level). Another important function of the Village Panchayat is the mobilization of voluntary labour and smaller financial contributions for development projects.* All programmes are * An excellent analysis of the internal decision-making Caplan [22], p. 163. process within a Village Panchayat is given by 276 zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA DIETERWEISSet al. conducted under the supervision of the CDO/PDO and the technical personnel of the District Office. The main problem at village level is the long distance to Central Government decisionmaking levels for all projects which need budget allocations and political approval from Ministries in Kathmandu. From the point of view of the villages, this includes difficulties in communication and understanding for priorities and felt needs of the villagers. They also mentioned problems in coordinating local resources such as voluntary labour with Central Government assistance in terms of budgets, technical personnel and equipment which are channelled, controlled and quite often delayed within the multi-level decision-making machinery. There are many examples such as the drinking water scheme in Chainpur and the old RTO road project Dharan-Dhankuta. The Town Panchayat (Nagar Panchayat) is similar to the Village Panchayat and elected from the various town wards. The two Town Panchayats in Kosi Zone are Biratnagar and Dharan. 9.3.3.2. District level-Each of the five districts of the Kosi Zone has a District Assembly (Zila Sabha) consisting of one elected member of each Village Panchayat and one third of the members of the Town Panchayats of the District. Each District Assembly elects an executive committee called the District Panchayat; it also approves the District budget, and discusses and approves the development proposals in the District. The District Panchayat is the executive body of the district. It levies minor taxes and fees (e.g. Rs lO,OOO-15,000 per annum in Sankhuwasabha District for market taxes, transportation taxes (bridges and roads), radio licences, taxes from fishermen). It supervises the activities and budgets of the Village Panchayats. It prepares and executes District development projects (upper limit of a project Rs 200,000). It prepares District development plans on the basis of projects submitted by Village Panchayats, coordinates development projects concerning two or more Village Panchayats, distributes central grants and gives financial contributions to Village Panchayat projects (e.g. 10 projects in Sankhuwasabha in 1970/71 with a total outlay of Rs 171,000). The main problem at District level is the limited financial capacity and, as a consequence, a narrow scope for development activities. Also, in line with international standard budget regulations, there is no possibility of using the funds made available from the Central Government for purposes other than the approved ones in order to cope with contingencies. And there is only limited technical personnel available which is also a major constraint for the preparation and implementation of projects. 9.3.3.3. Zonal level-Each zone has a Zonal Assembly (Anchal Sabha) which includes all members of the District Panchayats of that zone. The Zonal Assembly is an advisory and coordinating body. It coordinates major development projects involving two or more Districts in the zone. It does not have the function of a countervailing power confronting the Central Government in terms of tough bargaining for the ‘fair share’ in the national development budget. The limited weight of the Zonal political representation has apparent advantages in terms of the goal of national integration and curbing of regional and tribal traditions, but it has at the same time consequences for the implementation capacity at Zonal, District and Village levels. 9.3.3.4. National level-The Zonal Assembly elects 90 (of the 125) members of the National Panchayat; 16 members are appointed by HM, four elected by the University Graduates, and the rest elected by the Class Organizations (Peasants Organization four, Regional Analysis of Kosi Zone/Eastern 277 Nepal Youth Organization four, Women’s Organization three, Labour Organization two, ExService Organization two). 9.3.4. Conclusions. The outline of the decision-making machinery relevant for plan implementation is given in Fig. 8. On the basis of the formal administrative structure and the actual power structure in the field at zonal, district, town and village levels in Kosi Zone, the following elements may be identified. (a) In spite of the tremendous steps towards a more decentralized decision-making structure as compared to the past ([31], pp. 25-26), the power structure is basically a centralized and not a regionalized one. The ‘Assembly Line’ of Gaun, Zila and Anchal Sabhas does not represent a strong countervailing power for the Central Government. Funds, personnel and authority for larger projects are with the Ministries of the Central Government. 1 HMG FIG. 8. The decision-making machinery relevant for plan implementation in Kosi Zone. (b) The zonal administrative implementation structure consists of three elements: the Zonal Commissioner as the appointee of HM, the CDOs and PDOs under the Ministry of Home and Panchayat, and the technical personnel in the District Office staffed by andin technical subject matters-responsible to the specialized Departments in Kathmandu. (c) The Zonal Commissioner-apart from his main function of maintaining ‘law and order’-has a coordinating function of the Zonal Level Offices of different Ministries or Departments of HMG ([31], p. 25). For the activities flowing from different Central Government Departments into the Zone, general administrative experience seems to be true that the term ‘coordination’ may signal lack of power, unless informal elements and personality give it concrete meaning within the actual power structure. The function of the Zonal Commissioner does not seem to be designed to exert power on different centre Departments to coordinate their activities in his zone. (d) Nor can the CDOs, let alone the technical officers in the District Office, staffed by the centre Departments assume this task. (e) Considering the dimensions of budgets and personnel available at Central Government level and at zonal level, effective implementation of Central Government programmes, which includes coordination of the activities financed through various specialized Ministries S.E.P.S. 7/3-E zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 278 DIETERWEISSet al. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA within the regional framework of the Zone and its Districts. The Fourth Plan has stressed that this function has not always been fulfilled in the past. (f) According to general administrative experience, effective coordination of Ministries which everywhere carefully watch over their competencies, can only be enforced by either a power base above ministerial level that can be effectively mobilized for this purpose, or by a regional power base. The second alternative is no relevant alternative given by the Constitu~on of Nepal and the predominant objective of national integration versus regional and tribal heritages. The actual situation indicates that the implementation process for the larger share of financial outlays and personnel remains under the power structure of different Departments in the Central Government. (g) Under Ministry level the first effective implementation capacity in Kosi Zone seems to be at District level, rather than at Zonal level. But the influence of subordinate career levels on decisions of the Central Government is necessarily weak. The effective influence of the CDOs with regard to the specialists in the District Office staffed by various specialized Ministries is hard to judge from outside: actual conflicts have often been reported, and personalities play a more important role than the formal administrative structures. (h) Considering the predominant role which has been attributed to the District Administration of Nepal in terms of promoting development in the field, both its formal competenties and its financial and personnel resources appear to be very limited, and actually too limited to allow it to play a major part in plan implementation on its own. (i) Funds, personnel and authority are basically with the Central Government, and so, accordingly, is the responsibility for plan implementation. The difficulties of the Central Government with regard to project identification and analysis, inter-agency coordinated programming at regional level, and the actual implementation performance are, however, well known. Considering the tremendous physical problems of communication between headquarters and far-off Districts and the limited consulting engineering capacity available in the country, both project identification and programming may in many cases be easier on the spot, i.e. in the Districts. The actual structure may be a major reason for the limited implementation capacity of Nepal’s development administration as a whole, as is stated in the Fourth Plan and in IMF and World Bank Reports. (j) Taking this administrative structure as it is, implementation should be regarded as a management problem which poses itself in a different way at different administrative levels and for different types of programmes, i.e. big capital projects must be channelled through the specialized Ministries of the Centre, whereas small- and medium-scale programmes have to be dealt with at Village and District levels. This refers to identi~cation, analysis and programming, execution, and largely also to financing and supplying technical expert advice. Small- and medium-scale projects would also absorb the major share of voluntary labour which can be mobilized at Panchayat level. Village and District levels are equally important when other forms of broad mass participation are needed, e.g. for current operation and extension of works necessary to make full use of a large capital project such as a dam or large canal, where the distribution system has to be organized at lower levels. In the following section some implementation aspects of a Dharan-Dhankuta road project will be discussed. zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA 9.4. Example: organization zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA ofDkaran- Dkankuta road construction The following remarks will concentrate on some technical aspects of road implementation Regional Analysis of Kosi Zone/Eastern TABLE 21. Duration No. min/max in months TIME SCHEDULEFOR ROAD IMPLEMENTATION DHARAN-DHANKUTA .. . . .. A 3-6 B 5 zyxwvutsrqponmlkjihgfedcb zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Activity average 0 219 Nepal zyxwvutsrqponmlkjihgfedcbaZYXW Institutions involved zyxwvutsrqponmlkji Bilateral aid discussions, aid agreement Planning Commission, Foreign Aid Division of Min. of Finance. Min. of Foreign Affairs, Embassies, Donor Aid Institutions 5 Preparation of genera1 outlay of project for budget allocation Planning Commission, Roads Dep. of Min. of Public Works, Transp. +Communications 5 Budget allocation (consrrainr: Ministry of Finance, Planning Commission, Roads Department must be prepared before February for funds available in July = start of Fiscal Year) C 3-6 5 Find suitable consultant, (foreign) consultant arrival of Roads Department, Aid Mission D 6-12 9 Geological, engineering, socioeconomic survey, selection of road alignment in detail Roads Department, Consultant E 12 12 F 1-2 2 Selection of construction Roads Department, Consultant G 1-2 2 Preparation of tenders for machinery and hand tools required, calling for tenders Roads Department, Aid Mission Consultant, H 1-2 2 Placing orders Roads Department, Aid Mission Consultant, I S-10 9 Waiting time for arrival of ordered machinery and tools K 3 3 Bridge survey and engineering Roads Department, Consultant L 1 1 Preparation of tenders for bridge elements, calling for tenders Roads Department, Aid Mission Consultant, M 1 1 Placing orders Roads Department, Aid Mission Consultant, N 12-18 15 Land acquisition, starting 2 months Roads Department, Ministry of Finance, Zonal Commissioner, after survey has started. First section zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQP El and second section E2 lasting CDO, Panchayat 6 months each camp site Waiting time till arrival of ordered bridge elements at construction site 13-15 14 Road construction to bridge site P zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA Consultant/Contractor, Department (about 40 km, 100 m per day) lo-12 11 Road construction from bridge site Consultant/Contractor, Q to final point Department R 6-8 I Construction Roads Roads of abutments impossible in flood season mid-June/mid-September Consultant/Contractor, Department Roads (constraint: S 3 3 months interruption period for bridge construction due to flood Consultant/Contractor, Department Roads T 3 Bridge erection Consultant/Contractor, Department Roads DIETERWEI.S et al. 280 and will not deal with the tricky problems of political and administrative decision-making at various levels as outlined in Section 9.3. The Dharan-Dhankuta road project is taken as a (hypothetical) example of how an implementation process may be organized. The Activities A-T are listed in Table 21 with the time needed (maximum, minimum, average) and the institutions involved. It is assumed that the project is partly financed by an aid donor. A ,. . . Prep. cutloyFl I Budget , . consultant D SUrv;{ c .,. . ... E2 Land acquisition .FCamp G P Rood to bridge site ./ii’ %Jender Eh. ..I... Rood behind bridge I R orders Bridqe ..,... . .. . obutmen ( I Waiting for machinery K we kz-T Bridge survey. kidge erection tender F. Bridge orders zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPON N Waiting . . . . , . ., . . ,. , . . * time for brtdge FIG. 9. Timing of activities for road construction elements Dharan-Dhankuta. Figure 9 shows the timing of the various activities. The straight line means the minimum time required, the dotted line marks the maximum time, and the stroke on the dotted line the average time estimated between the minimum and the maximum, i.e. activity C, the process of finding a consultant and bringing him to the site, cannot begin before budget Latest start nmnth Activity number Ecrliest start m Critical path: start-A-B-C-D-P-R-S-T- end FIG. 10. Example for PERT network to Dharan-Dhankuta road construction. Regional Analysis of Kosi Zone/Eastern Nepal 281 approval has been completed in month 10 (=July). The consultant may arrive between months 13 and 16 and is actually expected in month 15 (December). A simplified PERT network has been set up in Fig. 10, listing the activities and the times needed for completion. The upper figure marks the latest start month necessary, the lower figure the earliest possible start month. The ‘critical path’ is the chain of activities A-B-CD-P-R-S-T. It is ‘critical’ because their on-time completion is absolutely necessary in order to avoid delay of the whole project, whereas activity K for instance (completion of bridge survey) can start in month 18, but need not start until month 33. Any start between month 18 and month 33 is sufficient in order to get the whole project completed and in operation in month 51. REFERENCES 1. F. E. OKADA, Preliminary report on regional development areas in Nepal, National Planning Commission, HMG, Kathmandu (1970). 2. D. WEISS,Infrastrukturplunung. Berlin (1971). 3. HMG, National Planning Commission, The Fourth Plan (1970-1975). Kathmandu (1970). 4. H. B. CHENERY and P. G. CLARK, Inte&zdustry Economics. New Yo& (1959). 5. USAID. Economic Data Paoers 12. Kathmandu (1970). 6. PRAKAS~C. LOHANI,Industrial policy: the problem child of history and planning in Nepal, Kathmandu (1971), (mimeographed paper). I. P. S. J. B. 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