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CHAPTER 2


Policy Setting, Goals, and General Economic Outcomes in the Agricultural and Rural Sector during 1997–2002


T


he period for which we review policymaking in the rural and agricul- tural sector, 1997–2002, fell within Nepal’s Ninth Five-Year Plan. To that extent, annual budgetary allocations were, at least in principle, required to maintain some kind of alignment with the basic objectives and strategy of the Ninth Plan. In practice, Maoist insurgency, which escalated sharply, especially after the year 2000, derailed much of the planning process, result- ing in sharply increased claims for security-related activities against the national treasury. It is nevertheless instructive to provide some background information on the Ninth Plan and the long-term Agricultural Perspective Plan to which it was anchored. This is because the ultimate impact of rural public investment during 1997–2002 must, sensibly, be evaluated against the goals set in the Ninth Plan and the longer-term Agricultural Perspective Plan. A general description of the broad outcomes over the period covered by the plan is included because it provides the context in which impact estimates can be verified and evaluated.


Policy Setting and Goals


The key objective of the Ninth Plan was to reduce the national poverty head- count from 42 percent (as measured in 1996) to 32 percent by the end of the period covered by the plan. The development of the agricultural sector was perceived to be the most important means of achieving this objective, and the plan document indicated that “the agricultural sector will be given a lead role to play in poverty alleviation,” recognizing that this sector was the “backbone of the economic development” and that the “majority of the people depend on it to earn their livelihood” (Nepal, NPC 1995). The strategy explicitly adopted in the plan to develop the agricultural sector was the long- term Agricultural Perspective Plan (APP), which had a strong regional focus.


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