Dr. Ram Sharan Mahat: The Architect of Nepal's Economic Liberalization

Dr. Ram Sharan Mahat remains a memorable figure in the political and economic landscape of modern Nepal, whose contributions to the nation's political economy and development journey are indispensable.

Born in a middle-class family in the hilly district of Nuwakot in 2007 B.S., Mahat's life was a unique blend of struggle and intellect from childhood. His journey from an ordinary student to a world-class Finance Minister is nothing short of cinematic inspiration.

The strongest aspect of his personality is the balance between political integrity and economic expertise, a rarity in Nepali politics. Mahat's political consciousness developed during the struggles for democracy in Nepal. While active in the Nepal Students Union during his student days, he was equally brilliant in his studies.

After completing his Master's degree in Economics with a gold medal from Tribhuvan University, he earned his Ph.D. from the University of Pune, India. He believed from the beginning that politics should not be a mere tool for gaining power, but a robust instrument for the country's economic transformation.

Following the end of the Panchayat system and the 2046 B.S. People's Movement, when the country witnessed the dawn of a multi-party system, Mahat's expertise found a national platform.

Dr. Mahat is credited with laying the foundation for economic liberalization in Nepal. As Vice-Chairman of the National Planning Commission in the 2048 B.S. elected government and during his multiple tenures as Finance Minister, he took bold steps to integrate Nepal's closed economy with globalization and the open market.

While his privatization efforts faced criticism at the time, he remained steadfast in his stance that the state should facilitate rather than engage in business.

His liberal policies opened doors for private investment in Nepal. The expansion of the banking sector, private aviation, the revolution in the communications sector, and changes in health and education seen today were all part of the roadmap drawn during his tenure.

He established the Nepali Congress as a pillar of economic reform and firmly implemented the belief that 'the government should not open industries, but only create a favorable environment.' The privatization and liberalization policies initiated during his time as Finance Minister were not fundamentally altered by subsequent CPN (UML) and Maoist Center governments, earning Mahat credit for steering a weak economy in a specific direction.

Mahat's economic philosophy focused on opposing distribution-oriented budgets. He was conservative regarding populist programs like increasing old-age allowances or allocating funds to lawmakers, arguing that 'distributing money does not improve people's living standards.' His principle was that the state should 'teach how to fish rather than provide the fish,' and he remained firm against spending the state treasury on sectors that did not increase production.

As Finance Minister, he always prioritized policies that encouraged the private sector for capital and technology while controlling public expenditure.

His economic model has been heavily criticized, with claims that it marked the beginning of a period where leaders became rich overnight and the country fell into a quagmire of corruption.

Dr. Mahat's policies were not entirely undisputed. He faced serious allegations that state industries, which flourished during the Panchayat era, were sold for pennies under the guise of privatization and became hubs for corruption and politicization. Critics argue that his economic policy failed to bring concrete pro-people plans, instead institutionalizing political corruption and cronyism in contracts.

The attempt to make Nepal's economy modern and competitive, and the resulting policy deviations, remain two distinct facets of Dr. Mahat's personality and tenure.

He believed that tax rates should be lowered to encourage the private sector and attract investment. He was skeptical about how high investment could come when Nepal was among the countries with the highest tax burdens among developing nations. 'We are already a country that collects 24 percent of GDP in taxes; no one in South Asia does this, we are one of the highest tax-collecting countries in the world,' was his view at the time.

He had stated, 'The federal budget alone aims to collect over 30 percent in taxes. With local and provincial taxes, it reaches 35 percent. Countries collecting such a high percentage of GDP in taxes are usually highly developed. How can investment be attracted in a country where taxes are so high?' This was Dr. Mahat's perspective on investment and taxation at the time.

Another significant achievement of Dr. Mahat's tenure was the introduction and implementation of Value Added Tax (VAT) in Nepal. When he proposed this system, it faced widespread opposition. However, with long-term vision, he ensured its implementation. Today, that same VAT has become the backbone of Nepal's revenue, playing a major role in strengthening the state treasury.

He was not just a talkative leader, but a serious political economist who formulated policies based on data and logic. He always prioritized discipline and fiscal stability in the budget, preventing Nepal's economy from collapsing during difficult times. The true test of his personality came during the devastating earthquake of 2072 B.S. The skill he demonstrated as Finance Minister while the country was submerged in grief and rubble earned him high international respect.

In his political life, Dr. Mahat was always known as a graceful and studious personality. Whether in office or not, he remained concerned about the country's economic situation and provided constructive suggestions.

In a short time, he brought together global donor agencies and friendly nations to organize the 'International Conference on Nepal's Reconstruction' and succeeded in raising billions in aid. Recognizing this capability, the UK's 'The Banker' magazine honored him as the 'Finance Minister of the Year' in 2016. This was not just a personal honor, but an international recognition of Nepal's economic management capacity.

In his political life, Dr. Mahat was always known as a graceful and studious personality. Whether in office or not, he remained concerned about the country's economic situation and provided constructive suggestions. His published articles and books help in understanding the challenges of Nepal's democratic movement and economic development.

Let us quote his thoughts from his own writings: 'There is no alternative to democracy for the overall development of the country. The alternative to democracy is further democratization. Representative governance is a necessary condition, but not sufficient, to provide economic and social justice to long-neglected communities, classes, and castes. Democracy must be made more representative, inclusive, and decentralized. The democratic system is necessary not only in state power but also within political parties. Economic transparency, high moral strength, fixed terms for positions, internal democracy, and inclusion must be reflected in the management of political parties. The main agenda of national politics should not be power struggle, but economic development.'

His views on democracy and economic development remain highly relevant today, reflecting his commitment to democracy. He is a leader who was never afraid to make tough decisions for long-term national interest rather than chasing cheap popularity.

Dr. Ram Sharan Mahat's life is like an open book, from which lessons of diligence, expertise, and nationalism can be learned exemplarily. His journey from the soil of Nuwakot to the global stage has become a great inspiration for today's youth. He is a living example of how one can maintain intellectual standards while being involved in politics and apply them to the country's development.

His contribution to Nepal's economic history and the development roadmap he presented will remain a strong reference material for Nepali politics for a long time to come. At a time when the country is facing a drought of the intellectual leadership it seeks and chooses, Dr. Mahat's personality appears even more relevant.