 Dr. Prakash Kumar Shrestha

Nepal is now a federal country with seven states. State 5, which is situated in the middle of the country, is one of them. This state borders with Gandaki State to the east and north, Karnali State to north and west, Sudurpaschim State to the west and India to the south. State 5 is the first state preparing its development plan to start systematic development process in the state by identifying the problems, potentialities and paths to follow in the next five years.
The state has three ecological regions - Terai, Hills and Mountains - like whole Nepal, from the geographical perspectives and consists of 12 districts and 109 local bodies. Total area of this state is 22,288 square kilometers with a population of about 5 million. The plain part occupies 27.6 per cent land of this state, while mountain area covers just 3.1 per cent with five snow-capped peaks above 5,000 meters high. The remaining almost 70 per cent land is in the hilly regions. Because of its geography, this state enjoys features of all three ecological regions.
Moreover, Lumbini, the birth place of Lord Buddha, lies here, as a centre of attraction not only for followers of Buddhism, but also for those who wish peace to prevail in the world. Around Lumbini, there are many ancient religious and holy places related to Buddha and his ancestors. It seems that there was a well developed civilization in the Kingdom, where Gautam Buddha was born 2,600 years ago. In addition to Lumbini, this is the state which has many other religious sites like Sworgadhwari, Resunga, Ridi, Supa Deurali and natural attractions like Banke and Bardia National Park, the major part of Dhorpatan Hunting Reserve and several caves and lakes. Many places in the hilly region of this state could be developed as hill stations to view the natural beauty and enjoy the cold climate, especially during hot season. More importantly, this state is rich as it has the largest valley of Dang. All of these features support the potentiality of development of tourism in this state.
Given its geography, location and land mass available, this state has the potentialities in three major sectors - agriculture, industry and tourism. Not only in Terai area of this state, but also hilly and mountain region can be brought into commercial farming. Different climates in different ecological regions provide congenial environment for producing many different types of agricultural products. Hence, main staple foods such as rice, maize, wheat, millet and buckwheat, and cash crops like sugarcane, cotton as well as vegetables and fruits can be produced.
This state is very rich in limestone ore, stretching from east to west in the hilly part. In recent years, many cement factories have been opened, and still there is scope for more. Given the location of the state and having the two major custom points - Bhairahawa and Nepalgunj, special economic zone, two industrial estates with three more under
construction, many different types of industries are now in operation and more can be opened. Road connectivity within the state and with other neighbouring states provides with market access necessary for the industrialization process.
Five major national pride projects are under construction in this state. These include Gautam Buddha International Airport in Bhiarahawa, Bheri-Babai Diversion Multipurpose Project, Postal Highway, Babai and Sikta Irrigation Project. The completion of these projects will be game changer for this state, especially for tourism and agriculture.
Looking at the potentialities and available opportunities, the first plan of this state sets the strategies of (i) increasing economic growth through rising production and productivity in agriculture, industry and tourism, (ii) constructing and expanding necessary infrastructure, (iii) producing human capital through rising quality of education and health, (iv) promoting gender equality and social inclusion, (v) developing resilience against climate change with effective disaster management, and (vi) ensuring good governance through following the rule of law.
The plan has set the objective of poverty alleviation, employment generation, higher production, and opportunity creation based on social justice. Inclusiveness, regional balance and sustainable development with socialism-oriented economic development are other features of the plan. Regarding the quantitative target, the plan aims to maintain economic growth of 9.5 per cent, reduce the proportion of people below absolute poverty line to 10 per cent and multidimensional poverty headcount ratio to 15 per cent, and increase the per capita income to 1600 US$ in five-year period. Other major quantitative goals are to reduce unemployment from current 11.4 per cent to 6.0 per cent, increase life expectancy to 75 years, and provide electricity and drinking water to all households during the plan period. On sectoral basis, the agriculture and industrial sector are estimated to grow by 6.3 and 14.7 per cent respectively and the service sector by 9.7 per cent on average during the plan period.
To achieve the above-mentioned ambitious targets, the plan estimates the necessary budget of Rs. 1200 billion for five-year period. Of that amount, it is estimated that the government sector will contribute 33 per cent, and 62.1 per cent of the total investment is expected from the private sector. The plan envisages investment of about Rs. 41.44 billion (3.4 per cent) from cooperative sector and Rs. 18.18 billion (1.5 per cent) from the community and non-governmental sector. The necessary investment of the government sector should come from three layers of government - federal, state and local. In this way, the plan expects heavy contribution from the private sector, and supportive role from cooperatives, community organizations and I/NGOs.
The development of the state depends not only on the role of the state government, but also on the role of federal and local governments of this state. The plan prepared by the state government is hence useful for federal as well as all local governments. The plan has adopted many innovative and private sector-friendly policies for attracting investment in the state.
Since there are tremendous potentialities in agriculture, industry and tourism in this state, domestic private sector and international investors should utilize the opportunities available here. This state is also a good place for investment for non-resident Nepalis. The state government has limited budget because of narrow revenue scope and heavy dependence on federal government. Still, the state’s plan has focused on improving physical infrastructure and attempts to connect the availability of infrastructure with production in three main sectors mentioned above. The plan expects investment from community and I/NGOs in social sector mainly in improving quality of education and health, and women's empowerment.
To conclude, if all stakeholders play effective and constructive roles as envisaged in the plan with sincere implementation of policies and programmes, this state will be a developed one and a leading state among seven in the medium term. In the last fiscal year, economic growth of this state was the highest among seven states, indicating its prospect for the coming years. More socio-economic data are, however, needed to measure the performance of the state further from different perspectives.

Ex-vice Chair of State Planning Commission, State 5, the author is currently an Executive Director at Nepal Rastra Bank