Development Planning
Development planning is the deliberate attempt by the government to implement, monitor and coordinate economic decisions to achieve chosen national goals. Hugh Dalton defined it as "deliberate direction by persons in charge of large resources of economic activities towards chosen ends." Nepal began planning with the First Plan (1956) and is now implementing the Fifteenth Plan (2019/20–2023/24) with the vision "Prosperous Nepal, Happy Nepali." Plans are formulated by the National Planning Commission (NPC), forwarded to ministries, approved by the Council of Ministers, and passed by Parliament.
In this chapter
Development Planning — Meaning & Definition
Development planning is the deliberate attempt by the government to implement, monitor and coordinate economic decisions so that the country's scarce resources are used to achieve chosen national goals such as higher income, full employment, social justice and self-reliance. According to Prof. Hugh Dalton, "Development planning is the deliberate direction by persons in charge of large resources of economic activities towards chosen ends." In simple words, a plan is a set of activities arranged in a systematic order to achieve definite targets within a fixed period of time. For example, Nepal's First Plan (1956–1961) targeted building the Tribhuvan Highway and a few industries; the Fifteenth Plan (2019/20–2023/24) targets making Nepal a middle-income country by 2030.
History of Development Planning in Nepal
Nepal started formal planning in 1956 with the First Five-Year Plan (1956–1961) under the advice of Indian and American experts. The National Planning Commission (NPC) was set up in 1957 (2013 BS) as the apex body to draft, monitor and evaluate plans. Nepal has so far completed fourteen plans and is now running the Fifteenth Plan (2019/20–2023/24). Some early plans were 3-year or 5-year; since the Sixth Plan (1980–85) almost all have been 5-year, except the Three-Year Interim Plan (2010–2013) that bridged the political transition from monarchy to republic. Plans have shifted focus from infrastructure (First–Third) to agriculture (Fourth), basic needs (Sixth), poverty alleviation (Eighth–Tenth), inclusive growth (Eleventh–Fourteenth) and now "Prosperous Nepal, Happy Nepali" (Fifteenth).
Nepal's development plans — First to Fifteenth (with period and main focus)
| Plan | Period | Duration | Main Focus |
|---|---|---|---|
| First | 1956–1961 | 5 years | Infrastructure, Tribhuvan Highway |
| Second | 1962–1965 | 3 years | Transport, communications |
| Third | 1965–1970 | 5 years | Agriculture, industry, forestry |
| Fourth | 1970–1975 | 5 years | Agriculture, irrigation |
| Fifth | 1975–1980 | 5 years | Forestry, mining, export |
| Sixth | 1980–1985 | 5 years | Basic needs (food, clothing, shelter) |
| Seventh | 1985–1990 | 5 years | Poverty alleviation |
| Eighth | 1992–1997 | 5 years | Liberalisation, SAPTA |
| Ninth | 1997–2002 | 5 years | Poverty, governance |
| Tenth | 2002–2007 | 5 years | Poverty, decentralisation |
| Three-Year Interim | 2010–2013 | 3 years | Transition to republic, peace |
| Eleventh | 2007/08–2009/10 | 3 years | Inclusive growth |
| Twelfth | 2010/11–2012/13 | 3 years | Inclusive, broad-based growth |
| Thirteenth | 2013/14–2015/16 | 3 years | Inclusive, sustainable growth |
| Fourteenth | 2016/17–2018/19 | 3 years | Prosperity with social justice |
| Fifteenth | 2019/20–2023/24 | 5 years | Prosperous Nepal, Happy Nepali |
Fifteenth Plan (2019/20–2023/24) — Vision & National Goals
- The Fifteenth Plan carries the vision "समृद्ध नेपाल, सुखी नेपाली" (Prosperous Nepal, Happy Nepali). It targets making Nepal a middle-income country by 2030 and a high-income country by 2043. The plan identifies three national goals: (1) Create the bases of prosperity — by raising investment, productivity and infrastructure
- (2) Build a civilized and just society by maintaining qualitative health and education — universal access to quality health and education, gender equality
- (3) Consolidate democracy, good governance and rule of law — by strengthening federalism, transparency and accountability. The plan also lays out ten-year (2030) and twenty-five-year (2043) visions to give long-term direction beyond the five-year plan horizon.
Objectives of the Fifteenth Plan
- High and sustainable economic growth — GDP growth target 8.5% by the final year; per capita income to reach USD 1,235 by 2023/24.
- Productive employment — create 1.5 million jobs over the plan period; reduce youth unemployment.
- Poverty alleviation & inequality reduction — bring poverty rate down from 18.7% (2018/19) to 11% by 2023/24.
- Universal access to quality health and education — free basic education; basic health services to all citizens.
- Industrialisation & infrastructure — expand electricity (15,000 MW potential by 2030), roads, irrigation, rail networks.
- Good governance, federalism & rule of law — strengthen provincial and local governments, anti-corruption.
- Environmental sustainability & climate resilience — 15% forest area, reduce disaster risk, clean energy.
Fifteenth Plan — objectives, indicators and targets
| Objective | Indicator | Baseline (2018/19) | Target (2023/24) |
|---|---|---|---|
| Economic growth | GDP growth rate | 6.8% | 8.5% |
| Income | Per-capita income (USD) | 1,034 | 1,235 |
| Poverty | Poverty rate | 18.7% | 11% |
| Employment | Unemployment rate | 11.4% | 7.0% |
| Education | Mean schooling years | 5.1 | 7.5 |
| Health | Life expectancy | 70.5 yrs | 73.0 yrs |
| Energy | Electricity access | 86% | 100% |
| Forestry | Forest area | 44.7% | 45.0% |
Priorities and Policies of the Fifteenth Plan
- rapid and sustainable economic growth
- production and productivity enhancement
- infrastructure development (Mid-Hill Highway, North-South Corridor, Kathmandu-Terai Fast Track, Budhi Gandaki hydro, international airport at Bhairahawa/Pokhara)
- social development (health, education, drinking water)
- good governance and federalism
- environmental sustainability and climate adaptation
- regional balance — Karnali and Far-West get extra attention
- international relations and economic diplomacy. Major policies include promoting private-public partnership (PPP), attracting foreign direct investment (FDI), modernising agriculture (mechanisation, cardamom/tea/coffee zones), expanding digital economy (broadband to all local bodies), and strengthening social security (senior citizen allowance raised to Rs 4,000/month)
Process of Plan Formulation in Nepal
- National Planning Commission (NPC) — the apex body, chaired by the Prime Minister, prepares the draft plan after consulting ministries, provincial governments, experts and stakeholders; the NPC Vice-Chairman is the chief executive.
- Ministries — each line ministry (Finance, Agriculture, Education, Energy etc.) prepares sectoral programmes and cost estimates within the framework set by NPC; the Ministry of Finance ensures resources match.
- Council of Ministers — the Cabinet reviews and approves the draft, after which the plan becomes government policy.
- Parliament** — the plan is tabled in the House of Representatives; after discussion and amendment it is passed, giving it legal sanction. Once passed, the plan is implemented through annual budgets and monitored by NPC
Plan formulation process in Nepal — stages and key actors
| Stage | Body / Actor | Main Function |
|---|---|---|
| 1. Drafting | National Planning Commission (NPC) | Prepare draft plan; consult ministries, provinces, experts; set targets |
| 2. Sectoral detailing | Line Ministries + Ministry of Finance | Prepare sector programmes; cost estimates; resource matching |
| 3. Approval | Council of Ministers (Cabinet) | Review and approve the draft; make it government policy |
| 4. Legislative sanction | Parliament (House of Representatives) | Discuss, amend, and pass the plan; give legal force |
| 5. Implementation & monitoring | NPC + Ministries + Annual Budget | Implement through budget; monitor progress; mid-term review |
Ratio used to evaluate how much of a plan target was actually achieved
Why Nepal's plans often fall short
Most Nepali plans achieve only 60–80% of their targets. Common reasons: (1) weak implementation capacity — delayed procurement, low spending capacity of local bodies; (2) political instability — frequent changes of government disrupt medium-term plans; (3) resource gap — revenue falls short, donor commitments delayed; (4) poor monitoring — NPC tracks targets but lacks enforcement power; (5) external shocks — 2015 earthquake, 2020 COVID-19 derailed the Fourteenth and Fifteenth Plans. The lesson: a plan is only as good as its execution — strong institutions, stable politics, and realistic targets matter more than ambitious documents.
Practice Problem
The Fifteenth Plan (2019/20–2023/24) of Nepal set the following targets and achieved the following actuals: (a) GDP growth target = 8.5%; actual = 5.8% (2022/23 average) (b) Per-capita income target = USD 1,235; actual = USD 1,336 (2022/23) (c) Poverty rate target = 11%; actual = 15.0% (preliminary) (d) Electricity access target = 100%; actual = 92% Calculate the plan achievement ratio (%) for each indicator and comment on which target was overachieved, which fell short, and which is close to target.