Citv Diagnostic Report K a t h m a n d u M e t r o p o l i t a n C i t y K a t h m a n d u Metropolitan City / World Bank JANUARY 2001 & le'llw Kathmandu mdam:- 2ndFebruary, 2001 Kathmandu is a modernizing city with a glorious history and heritage to be proud of. During the past three years of my tenure, the Metropolis Government has welcomed the challenge of striking a balance between modernization while preserving and nurturing our city's historical characters. In those years, the most I have come to appreciate about Kathmandu is its vitality, its willingness and perseverance to go on against all odds, whatever they may be. It is against this backdrop that I have tried to bring before you our City Diagnostic Report and City Development Strategy. My interactions with the CDS team and their capable counterparts from KMC, during their continuous seven-month effort in the preparation ofthese documents, has given me full confidence in vouching for the ~lsefulnessof both the documents. I also take the opportunity to guarantee my administration'sunfailing support in following the strategicguidelines that CDS has recommended. I am confident that the City Diagnostic Report will provide necessary insight information on Kathmandu and the City Development Strategy will have paved the way for essential rebuilding and revitalizing activities that our city needs. The documents would have done their job if they find ways to give more impetus to the vitality of our city, because, that is what will keep our city moving and ever vibrant. / Mayor 2ndFebruary, 2001 The city of Kathmandu is undergoing great changes as we try to meet the demands of rapidly growing population and at the same time establish ourselves as an efficient and effective local government. In this time of transition. the greatest challenges for us is to manage this change. The City Development Strategy is an exercise to guide this change towards a direction we all want to go. In this process, the Diagnostic study has compiled all the scattered but relevant information on the current state of Kathmandu into one report. I hope that this report will help us develop clear understanding regarding where we are and the direction in which we are headed. It also points out major issues that are of concern to us as Kathmandu lnoves into the new millennium. 'The City Development Strategy itself will point out the direction we want to go based on the tindings ot'this Diagnostic Report and our common vision for the future of Kathmandu. I call on all citizens of Kathmandu and relevant authorities to study this report in detail and assist the Kathmandu Metropolitan City in creating a Strategy which will guide us in creating a Kathmandu we are all proud of. Thank you. liBidur Mainali Deputy Mayor ACKNOWLEDGEMENT ACKNOWLEDGEMENTS Project Co-ordinator (KMC) Mr. Ganesh Dhoj G.C. Mr. Padma Sunder Joshi HOD, Law and Litigation Team Leader (ConsultantshVorldBank) ProjectConsultants (World Bank) Mr. Surya Man Shakya Mr. Surya Man Shakya Environment Deputy Team Leader (ConsultantshVorldBank) Mr. Vijay Burathoki Mr. Vijay Burathoki Urban Planning Counterpart Team (KMC) Mr. Hari Prasad Rimal Dr. Bhuvan Bajracl~arya Past CEO Urban Economics Mr. Surya P. Silwal Dr. Sudarshan Raj Tiwari Acting CEO Heritage Conservation Mr. Naresh Regmi Dr. Dev Raj Adhikari Assistant CEO Institutional Development Ms. Haridevi Ranjitkar Mr. Naresh Shrestha HOD. Social Welfare Municipal Finance Mr. Devendr? Dangol Mr. Sanjeev Bajracharya HOD, Urban Development Municipal Infrastructure Services Mr. Gambhir Lal Shrestha Mr. Shambllu Rai HOD, Finance Conimunity Development Mr. Shantaram Pokharel Ms. Jun Hada HOD. Environment Housing and Squatter Settlements Dr. Baburam Gautam Mr. Harihar Man Amatya HOD. Health Urban Transport Mr. Jyoti Bhushan Pradhan HOD. Public Works World Bank Support Kenichi Ohashi Mr. Rishnu Singh Basnet World Bank Country Director for Nepal HOD, Security Cities Alliance1 CDS Stt~dy Mr. Indra Man Singh Suwal HOD, Heritage Mark Hildebrand Manager, Cities Alliance Mr. Ram Sharan Humagain HOD,Revenue Hiroichi Kawashima Sr. Urban Specialist, CDS Mr. Shankar Raj Kandel HOD, Information and Communication Frannie Leautire Former Sector Director SASIN Mr. Dev Kumar Rai HOD, Administration Kevin Milroy and Cities Alliance Secretariat ACKNOWLEDGEMENT Hiroaki Suzuki Municipal Infrastructure Principal Operations Oficer and CDS South Asia Coordinator Mr. Tashi Tenzing (WB) Mr. Rabindra Lal Shrestha (T.U.) Balakrishna Menon. P Urban Specialist and Task Leader of Kathmandu CDS Institution Mr. Khem Raj Nepal (CIAA) Asif Faiz Mr. Purna Man Shakya (Lawyer) Operations Advisor Mr. Mangal I<. Shrestha (MHPP) Mr. Amrit Man Shrestha (CPCIKMC) Tashi Tenzing Sr. Sanitary Engineer Transportation Mr. Shiv B. Pradhananga (Independent) Ofelia Valladolid Mr. Anand Khanal (DOR) Administrative and Technical Support. Mr. Triveni M.S. Pradhan (KMC) Rajesh Singh CREATIVE SUGGESTIONS Administrative and Technical Support. (Stakeholders Meetings) Amod Pokharel (LEADERS) Arjun Dhaka1 (NEFEJ) EXPERT REVIEWERS Akshay Sharma (Spotlight) Anup Mangal Joshi (KMC) Urban Economics Achyut Pd. Koirala (MLD) Mr. Amrit Man Shrestha (CPCIKMC) Mr. Ram Chettri (UDLE) Bidur Bikram Shah (W.Ch. 34) Badri Prasad Kharel (W.Ch. 10) Urban Planning Radri Bahadur Thapa (W.Ch. 14) Dr. Pitaniber Sharma (ICIMOD) Barsha Ram Bhandari (W.Ch. 29) Mr. Surya Bhakta Sangaclie (KVTDC) Bhanu Sharma (W.Ch. 33) Mr. Padam B. Chettri (UDLE) Bharat Sharrna (DUDBC) Mr. Kishore Thapa (KVMP) Basanta Kai (KVTDC) Bal Sundar Malla (CEMAT) Heritage Conservation Bislinu Sital (NSP) Mr. Karna Shakya (NHS) Bhini Dhoj Shrestha (PACITU) Mr. Anil Chatrakar (CPC) Binod I-lari Joshi (FNCCI) Bhoj Raj (Pro. Public) Environment Bhim Nepal (DOA) Dr. Roslian Shrestha (ENPHO) Bal K. Pandey (NBBSS) Mr. Bliuslian Tuladhar (CPCIKMC) B.R. Manandhar (MOPE) Bijaya Kristina Shrestha (W.Ch. 20) Community Development Bikas Bhakta Shrestha (W.Ch. 25) Dr. Santa B. Gurung (T.U .) Babu Raja Maliarjan (W.Ch. 27) Dr. S.R. Thakur (Independent) Chandra Prasad Bhattarai (MLD) Housing & Squatter Settlements Chandrananda Shrestha (W.Ch. 18) Dr. Sumitra Manandhar (LUMANTI) Chiniyanian Bajracharya (W.Ch. 30) Ms. L,ajana Manandliar (LUMANTI) Mr. Kishore Thapa (KVMP) Dipak Rai (NBBSS) Mr. Lar~nanRajbhandari (UDLE) Deva Sharnia Poudel (NEA) Dilli Maya Upreti (KMC) Municipal Finance Devi Nath Subedi (SWMRMC) Mr. Sundar Man Shrestha (C.A.) Devendra N. Gongal (STIDP) Mr. Amrit Man Shrestha (CPCIKMC) Dinesh Bajracharya (NEWAH) Mr. Ram Chettri (UDLE) Dr. Durga Lal Shrestha (CEDA) Mr. Harka Chettri (TDF) D.N. Subedi (MLD) ACKNOWLEDGEMENT Dipak K.C. (W.Ch. 3) Pavitra Bajracharya (W.Ch. 23) Dhruva Narayan Manandhar (W.Ch. 13) Purna Prasad Gautam (KMC) Purna Prasad Kadariya (DUDBC) Franz W. Ziegler (KVMP) Pushpa Ratna Shakya (MOPE) Panna Ratna (JMG) Gopal Joshi (KMC) Pratap P. Pradhan (UEIP) Gyani B. Niraula (A.N.) Girija P. Gorkhali (UEIP) Ratnn Prasad Joshi (W.Ch. 4) Gyanendra Shrestha (Metro F.M.) Rinchen Yonjan (KMC) Giri R. Gautam (W.K.) Rajendra Giri (ADBITA) Gopal Pandit (W.Ch. 7) Ranian Shrestha (DTM) Ganesh Bahadur Khadgi (W.Ch. 3 1 ) Dr. Kup Khadka (VAT- Project) Rameshwor Lamichane (MOE & S) Harka Bdr. Lama (NBBSS) Dr. Renu Rajbhandari (WOREC) Hirnal S. "Lekali" (SOCODEP) Renuka Rai (NEWAH) Hari K. Shrestha (Metro F.M.) Ramesh R. Shrestha (NASC) Hukum B. Lama (NBBSS) Rupendra Maharjan (KTM 2020) Hari Krishna Dangol (W.Ch. 22) Rabin La1 Shrestha (SEECON) Ramcsh Lanlsal (TRN) Indra Bahadur Gurung (NBBSS) Ramesh Chalise (R.S.) lshori Wagle (P.D.) Rabindra M. Maskey (Photographer) Ishwor Man Dangol (W.Ch. 15) Rajendra Manandhar (TKP) Itajan Shakya (HAN) Juddha Bajracharya (W.Ch. 24) Rajesh Manandliar (KMC) Jibgar Joshi (MPPW) Rabin Man Shrestha Jay Prakash (Media) Rosllan Shakya (KMC) Jay Singh (Research) R. Babbar Jeevan Kansakar (FNCCI) Raju Shrestha (KMC) Ramesh Man Dangol (W.Ch. 2) Kishor Manandhar (KVMP) (late) Rajesh Shrestha (W.Ch. I I) Kamal Murimal (KMC) Ram Bir Manalidtiar (W.Ch. 16) Kushum Shakya (FPAN) Kayeshwor Man Shakya (SEECON) Sanu Kumar Shrestha (Ch. DDC, KTM) Kazi Ratna Shakya (Thapahiti Handicrafts) Dr. Surendra B.B. Shrestha (Mayor, Banepa) Kiran Bhandari (Kantipur) Suklla Ram Maharjan (W.Ch.5) Kedar Khadka (Pro. Public) Suvan K. Shrestha (W.Ch. 28) Kiran P. Arnatya Shrijan Pradhan (KMC) Kishor P. Pokharel (DOR) Shree Gopal Maharjan (LSMC) Suresh P. Acharya (KVTDC) Lhakpa Lama (NBBSS) Sunil Poudel (DOR) Lila Mahat (Researcher) Sugat R. Kansaker (NTC) Lajali Bajracharya (TUGI) Saroj Thapalia (G.S.) Surendra B. Malakar (FNCCI) Mahendra Subba (KVTDC) Surendra Pathak (MAN) Mohan Singh Lama (H.T.) Sama Vajra (LUMANTI) Mangal Man Shakya (NEFEJ) Sunita Lama (MES) Madhav Pradhan (CWIN) Su~nanK. Shrestha (D.C) Mukti Nath Ghirnire (G.S.) Si~ryaShrestha (NASC) Dr. Madan K. Dahal Shiva Br. Nepali Pradhan (RCP- South) Mahendra B. Joshi (W.Ch. 17) S.M. Pradhan (NHDFC) Sanju Shrestha (NH & MF) Narottan~Vaidya (W.Ch. 8) Shishir Sapkota (NSD) Niranjan K. Shrestha (W.Ch. 12) Saras Man Pradhan (NHDFC) Naresh Man Shakya (NHS) Suman Karna (Researcher) Nur N. Neupane (KMC) Suneil Adhikari (KVMP) Nepal Jit Lama (former W.Ch. 6) Sunil D. Joshi (NWSC) Sashi Lal Shrestha (W.Ch. 19) Cartography Shyam Chitrakar (W.Ch. 26) Asha Kazi Thaku Shree R. Adhikari (RSS) Sukra B. Thapa (NBBSS) Cover Design Shyam Krishna K.C. (W.Ch. 9) Wordscape Tej Kumar Karki (UEIP) Design & Layout Hari Prasad Marasini Udhav Acharya Uttam Silwal (RSS) Computer Type setting Unam Pradhan Arjun Neupane Umesh Malla (Sr. Urban Planner) Ra.jan Bahadur Shivakoti Vidya Sundar Shakya (W.Ch. 21) Photographs Vinod C. Baral (ADBITA) Naresh P. Shrestha V. Rajgqpalan (ACID) bgendra K. Shrestha (W.Ch. 1) Logistics Y. Badal (KMC) Khuju Shakya Sudeep Pandey Editing Dr. Sunam G. Tenzin Ms. Rajani Rizal r > The contents qf'/hispuhIicutior? rqflects the SPECIAL THANKS - con~bineciviews oJ'KMC, /he consz~Itantsand the * ~ * " " * m e " " " - - a .s/akehoIder.s~ * hcontrihlrterlbypar-tiripating in o Dr. Harka Gurung .seriesc>J'di.~cussionsand n2eefing.s.Any or aII pat./ Senior Advisor, New Era qf' /his ptibIicatiorz n~nyhe u.ved. repr.oduced, stored in cln inforrrr~itionretrieval system or- Dr. Mohan Man Sainju frnnsn7itted in 0n.y nzunner ~vhcitsoever:plrn-ided Executive Director, llDS ~icknowIecfge~?ler~rof the sozrrce is made. KMC n,olrfd appreciate r-eceiving af cup-v qf any Hans H. Rothenbuller pzrbIicatiun u~hichu.re.s /his publication as a Past Country Director, The World Bank. source. \ J f \ Acknowledgement are also due to many contributors, well-wishers and stakeholders, whose names could not be accommodated despite their direct or indirect support in preparing this document. This Document has been produced under the overall supervision and guidance of Mr. KeshavSthapit,Hon. Mayor and Mr. Bidur Mainali, Hon. Dep. Mayor of KMC. \ 1 AKOIJT THIS DOCUMENT ... ( 1 rrofofiorrt flrr liAl(' corrrtferpcrr.fcrrrtl II'n('orttrrlftrrrf7ivrrrr) I lie*'( ' i t I )i;~grio.;[ic I(cpo~.l'( 'I)I I . ~ ( ~ ?I!OO- l;l!!ll:ll~\200 I 'I'lic, ( 'I )I I)!,;I ic;1111o l ' ~ i : ~ l i o ~c i~;o~~l i . ; ~ ~ l\\l : ill1 ~ ~ i ~ . ; I lie>c ~ l i : ~ p ~pc~ .~\e ~ \ c ~arc c \ t ~tlic,l li~i;~l o111~01iic1' 0 \ ;1111:1l)le~ ili1)11t\1'1,0111 lrred to as Yambi bvhile the inadequate infrastructure services. southern settlement was known as Yangala. During the r ~ ~ol"eKing Gunukarnadcv in tlie I l I"'century AD the city of ICathmandi~was apparently restri~cti~redto fit the 1.1.2 A Brief History of KathmanduCity Sliakti c ~ ~doctrine. By the early 12th century Yangala l t \\as commonly referred to as ICnsthan-~andapa,a name The earl) Nepali chronicles, the Varnsavali's, claim that dcrived from a large public rest h o ~ ~near the city center, s e Katliniandu Valley was ruled in tile early times by the which is still existent today. The Mallas also referred to pastoral dbnasties of tile Gopalas and Maliisapalas who the city as ICa lay within Kathmandu Valley old settlements such as Sankllu, Tokha. 'Tha~~kot. of ~ v l ~ i c65 h VDCs werc in I1OOOO pop 1 4 15 34 - Sc,tcrcc Z:II~CIII:~~~ L n h c ~ \ I O i l . I O R I . 1'101, I)l:lic l i i ~ ~ l ~ ~ ~ ~ iI~) Ci,~Cl Ii ~ ,\I~I~~~I20211.!~1\\1-111: .11,1\ 20110 ~ ~ :' : ~I~~ C I I ~ ~ ~ S o t uS,c~l,i>c:~nru ~ l i ~ i t t (11~t ~i l ie ~ l r ~ ~ q i c <-cl ociii t l t r c r.11~~ ~ i\ .iI IlI c,~ ~I I : ~111111$ , 1 1 1 ~1" \ I IIIV1111).111l11.1~01IIIL I : t i ~ > > / > , , ~ ? .~) I> lt li\.X i l > c ~ l l t l rII\LLI l I - l n~ ~ I ) I ~ I I . # I I I . I >I,I.I,ICCIIIIII URBAN PLANNING Panchayats (1988) and Snowy Moilnk~inEngineering in the census, migration coi~ldaccount for almost 3 1.1 Corp (1990) have also tended to remain on the lower pcrccnt of the ul-ban popi~lation. side. The average liousehold size of the urban population of 1.3.1.4 Populrtion Density in Kathmandu Kathmandu Valley in 1995-96 was 5.1 pel-sons which Metropolitan City was marginally less than the national average. In the same year, sex distribution of the valley's urban The Draft Structure Plan for Greater Kathmandu had population was 5 1.5% male and 48.5",6 female while estimated tlie overall gross population density in 1987 the literacy rate stoud at 77.996. The higher percentage to be about 60-65 persons per Iiectare. Overall net of males in the Valley's urban population is probably denbities were estimated to be 104 ppha for clue to the greater number of males who come to tlie Kntlimandu and 1 16 ppha for Lalitl~ur.III the same valley in sca~.cliof employment and education. year, the InS~.astructureAssessnicnt Report for Kathmandu and Lalitpur Nagar Panchayats prepared by the same sti~dyteam found 6 out of 33 wards of 1.3.1.3 Migration in Rathmantlu IiP ~ T O CITY DIAGNOSTIC REPORT URBAN PLANNING corl.esponded to low-rise low-density development. Table 4: Area, Households, Population and Population 'There has been a gradual process of densification in Density hy Wards of Kathmandu many of'tlie wards. generally in decreasing order frorn Metropolitan City in 1991 the city center to the periphery, but the true extent and Ward Area in No. of Population Population the intensi~yof this process can only be properly No. ha. Housenolds Density ppha -- determined after the actual eni~meratio~~of the ward 1 138.4 1555 8731 63.09 populations in s u b s e q ~ ~ e nstudies or census. A t 2 01 .3 1804 9163 1 1 2.71 popi~latioliilpdate is not expected before the forthcoming 3 329.7 2756 14347 43.52 200 1 natinn:il census. Currently llle city's inli'ast~.ticturehas l'allen 1-:lr short of pop~~lationgrowth, limiting to some extent the natural process of densification. tlowcver, if these could be si~('ticientlyupgraded and extended togethel. with a concomitant impro~ementin the transportation systeni, densities within thc city wards could litillbe increased sl~hstantiallyto acconimodate a signilicant proportion of the Si~turepopulation growtll. Halcrow Fox et al in its Kathmandu Valley Urban Developnient I'lans and I'rogr-alns (Irl~~175 km hn11c;ntr 2nd llrhnn nnpn cngro \Alhorp~c the rn~rront CITY DIAGNOSTIC REPORT estimate of the squatters does not appear large in Development Plan was prepared in 1973. This plan comparison to other neighboring cities of tlie SAAKC consisted of a coloured rnap but without backing data region, this is a growing pheno~nenonwhich necds to and documents. l'lie 1973 plan was further elaborated be addressed timely before it reaches alarming in the form ofdetailed land use plans and accompanying proportions. For further details refer chapter on housing regulatory measures to prepare tlie Katl~~l~anduValley and squatter settlements. 'Town Development Plan 1976ivliicli was tlie first legally adopted planningdocu~nentfor Kathmandu and Lalitpur. 'The 1976 Illan comprised of a series oipolicy doculnents 1.3.3 The City Development Plans approved at different tinics by the Cabinet. Although the scries 01' documents appeared as an i~icoliererlt 1.3.3.1 The Physical Developn~entPlrrnfor nietliod of reprcscnting integrated urban plans and the Katl~manduVillry policies for the city, they were attempts to fill in the shortcomings ill tlie pla~isduring later periods. As the The Physical Development Plan for the Kathmandu city was still at an early stage of development. the 1976 Valley was prepared by tlie Department of Flousing. Plan ericoriipassed ~il;~illlytlie Greater Iiatlilnandu area Building and Physical Planning in 1969 with technical Ijjing \ \ i t l l i ntllc ring road. The Plan's regulatory assistance froin the UN. It was the first study to introduce functions ivere, Iio\vevcr, lirnited to building bulk thc concept of' regional development and undertake a control. It had demarcated ilrban areas into val.ious zones comprehensive study of the Valley. l'he Valley was but these had not becn tt.anslatt.d into cadastral survey considered as a single planning unit and a land use plari maps, \vliicli were tl~t: legal documents [or land was proposed for Kathmandu-Lalitpur for the next 20- transaction and sub-division. This led to confusion 30 years. One of the alternative regiolial approaches was regarding zone boundaries. Without specific zoning the development of Bhaktapur as a secondary urban [lode o~.dinanccsto precisely specify the nature, type alid and revitalization through dispersal of serviccs and intensity of activities, land uses oiten tended to be facilities oi'the outlying settlements of the Valley. colillicti~~g inco~iipaiible.Urban development often ancl occurrcd \rilllout tlie attellding infiastruct~~rcscrvices At the time of the study the city was confi~icclto tlie silicc plans or standards for infrastruct~~l-eservices did highlands between the Vislinurnati River and the Dliobi not exist. Despite its 111aliyslio~~tco~i~ings.tlie 1976 Plan Khola. As tht: plan proposed to preserve valuable still re~iiai~~stlie statutory plan for Kathmandu and agricultural land of the Valley, priority was give11towards Lalitpur. absorbing much of the popillation growth throilgh densification within tlie existing peripheral urban areas and acconimodating future growth in tlie i~rbanespa~isioli 1.3.3.3 Kntirnztinrlrr Ville-yPir-ysictrl areas identified on the highlands to tlie wcst of the Development Concept, 1984 Vishnumati River. No new residential developments were proposed east of the Dhobi Khola 01. beyond Bansbari to After I98 I, ~~rbanizatiol~spread fi~rthcrLo tlie tar lands the north. Zoning and infrastructure devclopl~lent~vcre at ihe city periphcrics along the arterial roads such as recommended to be used to direct and encourage yowth Bansbari, Bouddha. Kotcshwore and Knlanlti-Tliankot towards the designated areas. Tlie historic city core was in Iiatlimandu. Saibhu-Bliainsepati and Sunakothi in designated as special preservation zone. Despite the Lalitpur a~ldalong the Kath~iiandu-Bhaktap~~rtransport opportune moment to operationalize the Plan and regulate cor~.idor.Probably, recognizing the need to accom~nodate urban growth in a planncd nianrier while tlie city was still tlie growiiig 111-balipopulation in compact planned in its early stage of development, tlie Governmcnt did not sertleliients instead of allo\ving ~lnplannedurban sprawl formally adopt the Plan. beyond the city limits and to overconie sonie of the shortconlings ol'thc earlier Plan, tlie Kathmandu Valley Physical Develop~ncntConcept, 1954, attempted to 1.3.3.2 The Kathmtrtzdu Vnlky Town I-eviscthe 1976 Plan and iutroduce zoning regulations. Development Plan Its main goal was to develop Kathmandu into an important center of administration, trade and touris~n.It Drawing heavily from the 1969 Plan and after revising proposeti urban expansion to be confined to tlie it to incorporate the proposed ring road around physically feasible areas within Greater-Kathmandu and Kathmandu-Lalitpurcity,the Kathmandu Valley Physical aimed to develop new planned settlenlents at Tliankot- URBAN PLANNING Mahadev, Chaulakhel, Saibhu-Bhainsepati. Champi, land developments to be restricted, the study proposed Idolmatatitar (on the way to L,t~bhu),Dibyeshwori compensation at fair market price to the landowners for (Lokanthali and areas west of Thimi) etc. l'he zoning their land or for the loss of development rights. [t proposal still remained vague and difficult to implement. advocated tlexible land use zoning which could easily The Plan was not officially endorsed and therefore could accornntodate developments dictated by ~narketforces not be i~nplemented. and economic trends but which ,would preclude developments harmful to tlie society or environment. It also recommended densification for more efficient infrastructure servicing. As it had accepted the dcvclopmcnts already occurring in the flood plains. it During the period of hectic growth during tlie 70s and proposed restriction only on areas actually prone to 80s. two plans were prepared for tlie Greater Kathmandu flooding and to release all other areas for development. Area, the I,70s. One of the m i o r concerns of all the prcvio~rsplans 11as been the continuous conversion of agricultural land for 1.4.2 Town Development Plan urban use. This, hov;ever, is an inevitable part ol' the Implementation Act 2029 urbanization process and cannot be avoided if the city is to grow both physically and economically. F'roni the Thc -1 own Developmcnt Plan Implementation Act 2029 planning context, rather than restrict any further ( 1 973) was enacted with the PI inia~!aim ofestablishing conversion of agricultural land, it would be more reg~onalcentres in each ot'thc development regions of appropriate to identify agricultural land which would the count!>. The physical development plans were be most suitable for conversion to urban use and direct prepared by [)I 1RPPn1ldTown Planning Implementation future espansion only to such areas. Currently, urban Cornniittezs (TPIC) were formed to implement the growth has encroached on agricul~ureland on rhe fringes plans The Kathmandu Valley Developmcnt Plan 1976 URBAN PLANNING was prepared and the Kathmandu Valley Town and to the District Development Committees, earlier Development Committee (KVTDC) and TPICs for the known as District Panchayatsthrough the Decentralization three towns of the Valley were established as per this Act. Act 2039 (1 983). WhereTown Developlnent Committees I'he I963 and 1973 Acts were later repealed by the Town already existed, the new Acts created overlapping Development Act 2045 ((988)but the TDCs and TPICs authorities and duplication of functions among the were pennitted to fi~nctionuntil new committees could agencies. In reality, none of the towns or DDCs were be formed as per the new Act. The Kathmandu Valley capable of preparing comprehensive urban development Developnlent Authority proposed by the 2045 Act to plan5 on their own and therefore most of their development replace KVTDC and the 'TPlCs could not be realized and efforts had been limited to implementing local projects as a result the KVTDC and the three TPICs continue to and infrastructure on a piecemeal basis. The function imder the 1973Act as per this special provision. Decentral~zationAct has been annulled by the Local Self This less than satisfactory situation has hampered the role Governance Act 1999, which authorizcs the DDCs to and authority of KVTDC and the TPICs. It has been develop settlements and markets in rural areas. infor-med that a new Act is under consideration which proposes to merge KVTDC with the Kathmandu Valley Town Developnient Council and upgrade its role to that 1.4.5 Town Development Act 2045 of an organization which will prepare valley-wide planning and development guidelines and monitor The Town Developnlent Act 2045 (1 988) empowered the compliance by the individual local governments. It is also reorganizedTDCsto prepare and implementland use plans. learnt that the new Act proposes to abolish the 'TPICs The Act also provided a legal basis for the TDCs to and transfer the responsibility of preparing land use plans intervene in the land development process through guided and regulations and monitoring their implementation to land development, land pooling and sites and services the respective municipalities. programs. In the case of Kathmandu, the KVTDC and the TPlCs continued to function under a special provision of the previousAct and was responsibleforphysical planning 1.4.3 Land Acquisition Act 2034 of the city. In the absence of adequate manpower and resourcesmost ofthe municipalities,includingKMC, were The Land Acquisition Act 2034 (1977) permitted the unable to fully exercise the authority invested by the Act. government to acquire private land for development It was only in 1994 that building pemiit functions were pilrposes by Eminent Domain. However, there was transferred from Kathmandu TPIC to KMC. Monitoring considerable public resistance to land acquisition under ofadhesence to building by-laws is thejoint responsibility this Act because of the lengthy process involved and of KMC and TPlC but this arrangement has not been vety the unrealistically low compensation provided by the effective as each agency tends to assume the other agency government. Although municipalities had the right to will take up the responsibility. KMC has not as yet taken acquire, own and dispose of land, they did not have the on the larger planning fi~nctionsas provided for in the Act. right to acquire land by Eminent Domain (Culpin et al The Town Development Act has been repealedby the Local 1991). They had to negotiate for the land required for Self Governance Act 1999, however, K\ITDC and TPlC development purposes. Only after they had failed could will continue to function until KMC fi~llyassumes their they request the Government to acquire the designated responsibilities nnder the new Act. land thsough Eminent Domain. Land acquisition was then carried out by the CDO on their behalf. The Local Self Governance Act 1998 also makes provision for 1.4.6 Kathmandu Valley Development municipalities to acquire land through negotiations and Authority (KVDA) Act 2045 payment of fair compensation but does not give them the right to acquire land by Eminent Domain. The KVDA Act 2045 proposed the establishment of a development authority, similar to those of the large n~etropolitancities of India, which had jurisdiction over 1.4.4 Acts for Local Government Units all development functions within the entire Kathmandu Valley. KVDA to be headed by a development co~nrnissionerwas unique in that it had authority over The authol.ity to prepare and implement comprehensive more than one district. It was responsible for preparing local development plans was given to the municipalities physical development plans and iniple~nentingthem after through an amendment to the Town Panchavat Act (1982) annrnval from H M C 2c \up11 a< nrnvidino the nennle n f CITY DlAGNOSTlC REPORT the Valley with basic services. Unfortunately the Act Act appears to have adequately empowered the was never brought in:o effect. municipalities to raise taxes and implement urban development programs. However, the Act does not specifically address the role or transgression of the 1.4.7 Municipality Act 2048 responsibilities and jurisdiction of other agencies that currently own and continue to operate and maintain The Municipality Act 2048 (1991) had given urban services which fall within the purview of KMC individual municipalities the authority to adopt and as per the Act. The Act is vague about the necessity, implement plans, implying that it could formulate and time frariie or modality of transfer of urban services to implement urban development plans on its own. KMC which tends to create corl fusion regarding KMC's Previous Acts had bestowed these functions to authority to coordinate and regulate development KVTDC in Kathmandu and to TDCs in other activities within its area. The larger municipalities such municipalities. The Municipality Act was not clear as Kathmandu and the four sub-metropolises which on how to coordinate or apportion responsibilities possess greater financial and human resources have among the agencies with overlapping authorities. This re!atively better capabilities to incrementally assume confusion in the Act did not have face legal scrutiny such responsibilities but smaller municipalities and as none of the municipalities were capable of VDC's will Ilave to continue to rely on the Government independently undertaking urban planning and for technical and financial support in the foreseeable infrastrilctilre developlnent functions. One of the future. Currently, without technical and organizational negative impacts of this Act had heen the erection of strengthening of the various departments, even KMC, building structures in valuable public land and open the foremost city of the country, lacks the capability to spaces by the municipalities for comrnercial purposes. independently prepare and implement city development disregardful of plans or planning norms (IUCN, plans as envisioned in the 1.SG Act. 1995). This Act has been annulled by the l,ocal Self Governance Act which gives municipalities si~nilal. rights to prepare their own town development plans. 1.4.10 Prospects and Limitations of the Legislat~onsfor Urban Development of KMC 1.4.8 DDC and VDC Act 2048 Currentlq: urban planning of KMC is governed by The DDC and VDC Acts 2048 empowered these local several Acts, which empower different agencies to bodies to prepare physical development plans for sub- undertake similar planning activities. This duplication urban areas and individual villages respectively. of work and overlapping responsibilities has tended to Resource constraints and technical limitations had lead to confusion and shifting of responsibilities and virtually incapacitated these local bodies from eventually to inaction. KV'TDC is the agency directly undertaking any planning works. Nevertheless, as the involved in the planning of Kathmandu but since 1988 DDC'sjurisdiction extended to the municipalities in the it exists and functions not on the basis of a strong and district, conflicts sometimes arose between the DDC and sepal-ate Act but on a special provision that continues the municipalities, especially in the use of natural to revive an Act that had already been repealed earlier. resources and public lands. These Acts have been The recent moves to create a new Act to upgrade repealed by the Local Self Governance Act. KVTDC and increase its planningjurisdiction to cover the entirc. valley and concul.rently abolish the TPlCs appears to be an attempt to assign separate roles for 1.4.9 Local Self-Governance Act 2055 KVT'DC and the municipalities of the valley. As per the proposed new arrangement KVTDC will prepare The Local Self-Governance Act 2055 (1999) has strategic plans to guide develop~nentsin the valley specified that the preparation and implementation of while the task of preparing detailed land-use plans, area physical development plans is a mandatory function of plans, zoning regulations etc. will be the responsibility the municipalities. In addition, the niunicipalities have of the individual municipalities. This arrangement, if to implement housjrlg programs, install and maintain realized. will allow KMC to be directly involved and infrastructure services, issue and nionitor building be primarily responsible for the planning activities of permits and develop open and recreational spaces. The the city. URBAN PLANNING In the past, land acquisition for development purposes under the Ministry of Works and Transport. As low through eminent domain had been very unpopular priority was given by the Ministry to housing and urban because o f the unrealistically low compensation planning, a separate Ministry of Housing and Physical provided. In the future, as provided for by the Local Planning was established in 1987 and the department Self Governance Act, it would appear appropriate to was split into the Department of Housing and Urban negotiate for additional land requirements rather than Development (DHUD) and the Depariment of Buildings resort to land acquisition through Eminent Domain with DHI-ID primarily responsible for implementing the except in very critical situations and even then policies and programs ofthe ministry related to the urban compensation at fair market value would have to be sector. DHUD is supported at the regional level by provided. Where restrictions are expected to be offices of the Regional Directorates and at the district imposed on developments, which unfairly affect the level by District Offices. As none of the municipalities livelihood of the landowners, compensation for loss were technically capable of preparing and implementing of de\elopmerit rights would have to be provided. urban development plans on their own, DHUD and the Intervention in the land development process through Regional Directorates were and continue to be involved Isnd pooling and guided land development, a s in assisting the municipalities in this task. Kathmandu provided for by the Act, appears to be the suitable Valley Town Development Committee is currently and acceptable for111 o f developing pockets o f responsible for the physical development planning of undeveloped land within the city which needs to be Kathmandu and Lalitpur Cities. Very recently the continued in the fi~ture. Ministry has been reorganized as the Minist~yof Physical Planning and Works and the two departments under it I'he Local Self Governance Act has given KMC have been amalgamated into the Uepattment of Urban ample scope to develop detailed land use plans and Development and Building Construction. Ttic subsidiary planning regulations for the city. The Act does not, units under the Department continue to function as however, repeal the provisions of earlier Acts that befhre under tlie unified Department. cnusc duplication o f w o r k s and overlapping responsibilities with other agencies. Therefore. a system needs to be developed whereby coordination 1.5.2 Ministry of Local Development is ensured in the works of all tlie agencies that operate \r.itliin the municipality and tlieir work is 'fhe Ministry of Local De~elopmentis responsible for carried out as per KMC's plans and programs. Close tlie management of local governments at the district, coordination also needs to be maintained with tii~~nicipaland village level. The Ministry designates KVT[)C so that tlie city's plans and programs are the chief esccutive officers and other key officials consistent with the overall plans of the Valley. Land who are responsible for tlie overall executive to be developed as urban land necds to be categorized functions of the municipalities, inclusive of all as such and not in tlie agrarian context of land development programs. Although the designated productivity and registration and sub-division ol' ol'l'icials are accountable to the respective mayors, urban land needs to conform to planning norms of since the Ministry is their parent organization where the city. Issuance of industrial permits also needs to they eventually hope to further their careers, often be coordinated with KMC's plans. Before proceeding their actions tend to favor the Ministl-y rather than to exercise the rights given bq tlie LSG Act, liowever. tlie ~nunicipalitiesthey a r e worlcing for. This K M C nceds to strengthen and upgrade tlie units sometimes tends to create administrative bottlenecks responsible for tlie planning of the city. and works against the interests of the municipalities. T h e frequent changes of the key officials also adversely affect the continuity and cffectiveness of 1.5. ORGANIZATIONS INVOLVED various municipal programs. The arrangement of IN CITY DEVELOPMENT seconding staff to the municipalities may have been justified earlier when the municipalities were weak 1.5.1 Ministry of Physical Planning in funds and Inanpower. With the changing scenario and Works o f municipalities assuming greater authority and responsibilities, there is a need for the creation of a Earlier urban planning was undertaken by the separate cadre of management staff to look after the Depal-tnient ofHousing, Building and Physical Planning affairs of the niunicipalities. CITY DIAGNOSTIC REPORT 1.5.3 KathmanduValley Town the new organizational set-up will be given the reluctance Development Committee and Town of the central govelnrnent agencies in the past to cede Planning lmplementation Committees authority as well as revenue sources to tlie local governments. The Kathmandu Valley Town Development Committee (KVTDC) along with Town Planning Implementation Committees (TPIC) for Kathmandu, Lalitpur and 1.5.4 District Administration Office Bhaktapur were established under tlie Ministry of Works and Transport and the Department of fiousing. Building Thc District Administration Office under tlie Ministry and Physical Planning to implement the Kathmandu of Home is tlie agency responsible for law and security Valley Developmerlt Plan 1976. U~lfortunatcly,the Plan in the district. Together with the municipalities, the office did not cover the entire Valley as suggested by the name is responsible for the protection of public open spaces of the organization, but was liniitcd mainly to the area and public properties. Because the police is directly enclosed by the ring road. At the time of establishment controlled by the office, it provides the last resort action of KVTDC and the TPlCs the niunicipalities of the in developmental control. Valley had very little technical and ~iianagerial capabilities and had little involvenient in either plan preparation or implementation and monitoring of tlie 1.5.5 Kathmandu Metropolitan City plan. The Town Developnient Act 2045 repcalcd the Town Development Plan Iniplenientatio~lAct under 'The Mayor along with the Deputy Mayor, the Chief which KVTDC and TPICs were formed, lio\vevcr, since Executive Officer and tlie different departments undet- the Act to create the Kathmandu V:~lley L)evelopment the I l ; ~ ~ ~process n i l i g developnie~itactivities Committees -- 14 Inadecluate cost recovery ihr 3 I)eficienl scr\:iccs KMC. related agcncies inli.astruct~~reservices 0 I'oor maintenance ot'serviccs 0 Inadriplate resources for expanding services -- I5 I,:IcI\ of open sp:lces 0 Public deprived of U Absence ol'safety ;rre;ls during tinies of seismic activities 16.l,;tch ol'clcarly delined river domain U Encroaclinient on rivcr domain KMC. DLA, DOS CITY DIAGNOSTIC REPORT Archer, R. W.; Planning and Guiding Urban L.and Devclopmcnt irithe Kathmandu Valley, 1988. Center for Economic Development and Administration; Kathmandu Vallcy Town Planning and Its Impact; 1979. ClTlES Data Book; KMC, 2000. Chhetri, P. B.; Urban Planning Practices in Nepal-an Overview; unpublished article. Culpin Planning Ltd. (Londo~i),Institute Ibr I lousing Studies (Rotterda~ii),Center for Economic Development and Administration (Kirtipur); Needs Assessment and Policy Review, Preparation of National Shelter Strategy; Shelter Institutions and 1,egal I'ramework; 1991. Department of Housing and Pliysical Planning: I'he Physical Development Plan for the Kathmandu Valley; 1969. Department of Housing and Urban Developmerit1Ministry of Housing and Physical Planning: National Urban Forum: Concl~lsionsof the First Regional Workshop for the Knthniandu Valley; 1995. DHUDi MHPP; Recomniended Policies and Strategies for Urban Developnient, 1991. DHUDI MHPP; Review of Kathmandu Valley Llrban Development Plans and Programs 199 1; 1996. DHUDIADB; Nepal Urban Sector Strategy. Inception Report and Draft Report; 2000. Halcrow Fox and Associates et al; Kathmandu Valley Urban Development Plans and Programs; 1991. HMGi Kathmalidu Valley Town I'lanni~~gTeam; Kathmandu Valley Physical Development Concept; 1984. HMGI Kathmandu Valley Tocrii Development Committee; By-laws for I/ FIII:IIICC URBAN ECONOMICS I Table 2: Annual Percentage Change in GDP and its Components (in percent) I Originating SectorIPeriod I. Agriculture, Fisheries& Forestry 4.1 1.5 3.5 2. Mining& Quarrying 5.5 5.8 5.9 3. Manufacturing 5.2 14.0 7.4 4. Electricity,Gas & Water 13.9 10.1 8.0 --- 5. Construction 6.5 6.5 -- 4.4 6. Trade, Restaurants,& Hotels 4.4 7.5 4.4 7. Transport,Communication&Storages 5.3 9.8 6.9 .- 8. Financial & Real Estate 5.2 6.4 5.7 -- 9. Community & SocialServices 6.7 6.8 5.7 AgriculturalGDP at factor cost 4.1 1.5 -- 3.5 8.2 5.7 Total GDP at factor cost 4.8 5.0 4.8 advantage due to a big development gap between it and option. First, heavy investment is needed to develop an other cities, towns and settlements, and is not threatened alternative capital city and such investment will not be due to its preeminent position, it also means that forthcoming in view of the fact that many other priority Kathmandu needs to be more competitive in the future. programs of the government have still not been met. Second, press~lre~lponnatural resources is bound to Liberalization policy, SAFTA, and the Nepal's efforts come everywhere, and on that basis only it is not tojoin the World Trade Organization (WTO)will require practicable to keep shifting the capital. It has to be a Kathmandu to be more competitive at the regional and strategic decision. So, there is little likelihood of shifting international setting. The role of the central government the capital away from Kathmandu. is gradually getting concentrated upon regulating and monitoring. Different reform measures in financial, real The growth of Kathmandu with all these activities has and external sectors are already in implementation. been made possible by the facilities available in the city Under these policy measures, custom walls have to be and the investment made on these facilities. Moreover, gradually brought down, subsidy and quota to be such investment from private, government, and non- eliminated or brought down to non-existence level, government sectors have taken place in an evolving public enterprises need to be privatized, PEs need to manner over the years. Therefore, investnient of such compete with private sector by opening all sectors for scale from various sectors is unlikely to take place in private sector participation. Now, there are no more other nletropolitan cities in Nepal. In other cities also, regulated interest rates. Exchange rates are determined investment will increase in a gradual and evolving by the market. All these policy measures invites the manner rather than in an abrupt and autononlous way. private sector to participate more competitively in the The tinie taken for the rehabilitation of the central market. Though the absence of stability in the policy secretariat after the devastating fire in the Singha Durbar measures, and other uncertainties have yet to energize amply speaks of the difficulty in making a huge the private sector to a desired level, future perspectives investment for creating different infrastructures for a have to be framed along this direction. capital city. So, from an economic consideration, the vast amount of investment needed, in shiFtingthe capital city, will keep Kathmandu as a capital city in a 2.3 SETTING THE STRENGTHS foreseeable future. 2.3.1 Capital City Being a capital city, it is a center for executive as well as for legislative andjudiciary branches. Likewise, many Kathmandu has been a capital city and it still is. Though constitutional bodies have their offices in Kathmandu occasionally suggestions are made to shift the capital only. So,with all the government and other paraphernalia city elsewhere particularly due to the pressure that has being centered in Kathmandu, it has attracted one and h ~ n~l ~ tllnnn itc n a t ~ ~ r arpcnllrrpc it is nnt an pacv n l all and it hac rnntrih~~tprlcirrnifirantl~,in itc nrn~rith CITY DIAGNOSTIC REPORT Capital City means it has some disadvantages, primarily components of GDP. From the expenditure side, GDP in defining the roles of the central level government consists of consumption, investment and government departments and local level government bodies. In the expenses. With an estimated city population of about capital city, central government departments also have 600,000 and annual per capita expenses of about Rs. important roles to play in developing and maintaining 27,250 (HBS, 1999),the total consumption expenditures infrastructures at theccceptable standard in intetnational at the household level can be somewhere around Rs. comparison. At the same time, higher allocation of 16,350 million i.e. US $ 224 million. Assuming this central budget to the capital region invites criticisms. consumption expenditure to be 70 percent of GDP, Such a situation demands a greater role for Kathmandu Kathmandu's gross domestic products can be roughly Metropolitan City. It has got implications with both assessed at Rs. 23,357 million i.e. US $320 million (at responsibilities and authorities for resource mobilisation one US $ = Rs. 73). It is just an indicative figure and for KMC. should be used with caution. The other measure of Kathmandu's economy is the 2.3.2 Human Development Index custom revenue fiom Tribhuban International Airport. The custom revenue from this point constitutes a Kathmandu district has the highest human development significant portion in the total custom revenue though index of 0.603 for 1996 as against the national value of showing a large annual variation - from 26 percent in 0.325. Such high human development indicator is a result 1996197to 1 I percent 199912000.In view of the alleged of high life expectancy at birth (67 years), high literacy leakage, such shares can be fairly assumed around 20 rate (70.6 percent), and high income (per capita annual percent. income of NRs. 24,CgO). The status of women is also high with the Gender sensitive Development Index It is to be noted that despite bringing down the custom (GDI) estimated at 0.460 for 1998. The female literacy rates, custom revenue from TIA showsan annual average rate stands at 57 percent. These figures can be expected percentage increase of 16.1 percent in the 1990's. In the to be even higher for Kathmandu Metropolitan City. later years of the decade, it has shown a negative growth primarily because of the weakened tax administration at the airport. The peak collection is reported for 19961 2.3.3 Kathmandu's Economy 97 when Rs. 2,146 million was collected in custom revenue. It was more than three times the amount Official statistics do not provide GDP estimates at the collected in 1990191. The custom revenue collection regional and sub-regional level due to which the Gross indicates both its own consumption strength and its Domestic Product of the city is not known. 'Though it is importance as the trading center. Since air transport is not feasible to estimate Kathmandu's GDP, some ideas preferred for exports and imports, the existence of an on it can be obtained from the trend ofsome ofthe major Table: 3 Custom Revenue from Tribhubari International Airport (Rs.in million) Three years TIA's Share in Percentage Average of Total Custom Percentage Revenue URBAN ECONOMICS international airport is an important factor for this make it difficult to make a comparison between these phenomenon. two figures. The NLFS has broadened the definition of employment by including such activities like collection of wood for fuel and fetching water in the economic 2.3.4 International Linkage activities. Whichever- definition we take, it is evident that unemploynlent rate hovering around 10 percent is Kathmandu's importance lies also, in being the only city high and not unusual for an urban center. The NLSS with strong international connections particularly has reported that the urban centers of the Kathmandu through air services. International linkages through air Valley obtain just about 3 percent of total income from services have increased both in terms of different agriculture sector. The Household Budget Survey by the international destinations, and number of airliners Nepal Rastra Bank for the year 1995196reported an even operating. The intemational airport at Kathmandu is one lower share of agriculture sector in Ihe total incorne. prominent factor contributing to this. When 97 pcrccnt of total income is derived from non- agricultural sources, and when population growth is high The proposal of an alternate intemational airport outside at around 6 percent per annum due to migration, Kathmandu can have mixed effects upon the city. demographic and frictional unemploytnent are likely to Production units like readymade garments and carpets be high. This is visible in Kathmandu too. can get located outside Kathmandu. Likewise, the number of the tourists may also show some decline. The Household Budget Survey ( 1995196) reports that However, there may not be a significant decline in the about 58 percent of the e~nployedpeople are employees number of tourists since only limited accommodation - almost 43 percent in the private sector. Little more than facilities are available elsewhere outside Kathmandu, 23 percent of the economically active population is self- and hence tourists have to betransferred to Kathmandu. employed. For the female population almost 50 percent At the same time, there are mixed opinions on further are employees, and their employnlent statits as unpaid expanding the capzcity of Tribhuban International family is also high at 32 percent. Airport. Ofthis econonlically active people, only about 15 percent The other international linkage is provided by the are engaged in agriculture as against 80 percent at the presence of different intemational agencies. Apart from national level. About 22 percent in manufacturing and the embassies of different countries and the country processing followed by tradelcommerce and related offices of different international organizations, several sectors (21 percent). General laborers constitllte little regional offices of these organizations are also located more than 4 percent. . here in Kathmandu. The location of SAARCheadquarter in Kathmandu indicates not just Kathmandu's capability Women's participation is also high, with more than 34 to house such institutions but also politically the more percent of the economically active population being amiable status of Nepal in the South Asian perspective. female. Leaving few sectors like transport and ?he location of these international agencies indicates communication, construction, and legislative1 the availability of transport and communication infrastructures and other facilities from both public and Table 4 :Distribution of Household Members by private sectors. Employment Status (in percent) Employment Status Kathmandu Valley ' 2.3.5 Employment Male Female Total Employer 1.2 0.8 4 Self-employed 25.7 18.5 23.2 The recently concluded Nepal Labor Force Survey Employee 62.0 49.5 (1998/99) points to some interesting features of an (Government) (8.5) (6.9) (7.9) 1 advanced urban center in the Kathmandu Valley. The (Semi-government) (8.2) (5.1) (7.1) (Private) (45.3) (37.5) (42.7) average family size is reported at 4.6, and the current Unpaid familyworkers 11.1 32.0 18.3 unemployment rate is estimated at 9.6 percent - second TOTAL 100 100 100 highest after the eastern terai region. It is somewhat less than the estimate by the Nepal Living Standards Survey in 1995196.There are some definitional changes, which CITY ... PAGNOSTIC REPORT managementJadministrative jobs, their involvement in 2.3.7 lncome Level other occupations is quite significant (HBS,NRB, 19951 96: 37). Both NLSS and HBS report a per capita income of urban areas of Kathmandu Valley at more than Rs. 24,000 per annurn. It is interesting to note that near about 25 percent 2.3.6 Employment Sources of the average annual per capita income is derived in kind and of this more than 17 percentage points are the Kathmandu offers a wide range of non-farm employment imputed rental value of the owned house. opportunities. The NLSS has shown that 85 percent of sampled households belonged to the uppermost quintile income group, which helps in creating demand for Table: 6 Annual Average Per Capita lncome by Source (1995196) diverse goods and services. The other non-farm employment opportunities arc provided by the ever- Sources of Income Income in Rs in % booming tourism industry. Total Monthly Income 24,561 100 Current cash income 18,632 75.9 A host of other business activities have come up in the wages and salaries 8,667 35.3 enterprise income 5,183 21.1 Kathmandu Valley indicating new business prospects (agricultural) (317) (1.3) and employment opportunities.The consultingactivities. (non-agricultural) (4,866) (19.8) private airlines, banking and financial institutions, Pro~ertvrental income 2.828 11.5 delivery of social services by the private sector, Pensionand assistance 1.586 6.5 specialized services like audit and accounting, joint Other cash income 367 1.5 ventures and foreign direct investment etc. are some of Income in kind 5.929 24.1 the business promoted by the liberal economic policies Home produced 71 0.3 Free of cost 689 2.8 pursued vigorously after the restoration ofthe multi-party Receivedas part of paylwages 5 political set-up in the country. It is reported that seventeen enterprise income 940 3.8 domestic, including private, airlines provide direct (agricultural) (911) employment to about 5,000 people. (non-agricultural) (28) (0.1) RentalValue of a self-owned home 4,225 17.2 The diverse employment sources can be discerned from the distribution of the employed population by occupation groups. The highest per capita income estimated for administrative and managerial persons is Rs. 47,534 Table: 5 Percentage Distribution of Employed while that ofgeneral laborers is the lowest at Rs. 10,121 Population by Occupation Group only - a difference of more than three times. L Occupational Croup % of Employed People All Households 100 Professionaland Technical 11.5 Table 7: Annual Average Per Capita lncome by Administrative and Managerial 4.5 Occupation (1995196) Clerical 7.7 Agriculture 15.3 Occupational Group Income in Rs Sales and Service 11.8 All ~o;seholds 24,561 Production 15.0 Professionaland Technical 31,981 Construction 20.7 Administrative and Managerial 47,543 Transport and Communication 4.5 Clerical 18,698 General Laborers 4.5 Axculture 20,651 Others 4.5 Sales and Service 25,725 Production 22.156 Sonrcc: Ilc,~~sel~oldIludfict Surrey (lfi'l5/'1(,. Sep;tl H:lr~r:l Il:l~llr Construction 14,504 TransportandCommunication 16,334 General Laborers 10,121 From this Table, it is evident that there is no, one, Others 25,927 overwhelming occupation in which the employed people are engaged. URBAN ECONOMICS Per capita income in a way reflects the productivity, and Population Census of 1991 clearly indicates that 35 from this perspective, agriculture has also shown a percent of the total people have an education level of respectable per capita income and productivity. It clearly S.L.C. and above. As the human resource is a prime shows that commercialisation of agriculture yields good factor propelling the development process, such hunian returns in agriculture. force is bound to take the city much ahead particularly in the atmosphere of liberal economic policies which The highest per capita income indicates the opportunities promote the efficient use of resources. The KMC still that the urban areas of the Kathmandu Valley provide. It is also the reason that competitive and successful people from around the country migrate and stay here. Table 9: Distribution of Population (6years of Age and more) by the Attainment of Education Level The Household Budget Survey does not indicate a big (Kathmandu) - 1991 2 gap in the per capita income between different decile Education attainment level Kathmandu city groups. The difference between the lowest decile and No schooling 34,454 (12) the top decile isjust a5out three times. klowever, in terms Primary (1-5) 66,047 (23) of income distribution it can be seen that the top 10 Secondary (6-10) 74,469 (26) percent of households control about 26 percent of the S.L.C. and equivalent 36,682 (13) total income. People at the bottom 40 percent have just Intermediateandequivalent 28,805 (1 0) about 2 1 percent of the total income. The inequality and Graduateand equivalent 24,884 (9) Post Graduateand equivalent 8,377 (3) skewed income distribution in the face of a not very Others 31 (-) large gap in the per capita income level suggests a high Level Not Stated 11,654 (4) degree of competition is needed to reach to that level. TOTAL 285,403 (100) Table 8: Annual Per Capita lncome by Decile Groups and lncome Distribution Pattern (1995/96) Decile Group Annual Percent Percent of has the potentiality for attracting such highly educated Per Capita of lncome Population people for various reasons. lncome 1 16,565 3.74 12.42 2 16,806 5.44 12.44 2.3.9 Educational Institutions 3 14,869 5.53 10.42 4 17,006 6.20 10.02 5 24,200 8.63 11.74 Kathmandu has a number of good educational 6 18.342 8.05 9.29 institutions at different levels. There were 599 public schools in 1998 with a total o f 14 1,903students. With the teachers' strength at 6873, the student teacher ratio comes to 21:l. In All Households the Kathmandu Valley, another 15 1,212 students 24,561 study in private schools. A Study on Cost Sharing Options for Quality Secondary Education indicated that in 1996197, out of the seven best performing The per capita income level of the urban areas of public schools in SLC examination from among 76 Kathmandu Valley thus shows the competitiveness of sampled public secondary schools in Tiepal, three Kathmandu as compared to the other parts of the happened to be from Kathmandu, one happened to country. be from Lalitpur district - so altogether 4 from the Kathmandu Valley itself. Though Kathmandu has only one university, a host of colleges affiliated 2.3.8 Human Resources with four universities are operating in the city. Apart from the humanities and management stream, If we are to observe a breakdown of the literate people, many engineering colleges have recently started. there is a strong concentration ofhighly educated people Now, the country can produce 4 to 5 thousand in the Valley, more so in the metropolitan area. The engineers in a year, and more than 50 percent of CITY DIAGNOSTIC REPORT them will be rrotn Kathmandu Valley alone. The the peak of 12,000MT in 1993 and recently gone down private initiatives in establishing these institutions to about 8,000 MT in 1998. The incoming air cargo is indicate the demand for these subjects. around 6,000 M'r. '['he presence of the international airport in Kathmandu has prompted some of the export8 oriented production units in the Valley. Carpet and 2.3.1 0 Infrastructure readyniade garment production units were established in different parts of the city. However, for different Kathmandu's growth is facilitated by the presence ofwell reasons, their production has gone down considerably, established if not well maintained infrastructures. It has a and many such units were closed down. Mostly these good road network with other parts of the country.Arniko two export oriented industries are established in the Rajmargconnects Kathmandu with Tibet the autonomous Kathmandu Valley, the other industries polluting the region of China. Of late, its economic importance has environment and existing in the Valley are brewery and significantly improved with the emergence of Khasa in distillery, cement, feed, soap and chemicals, solvent oil Tibet as a prime business center. Besides, tourists are and vegetable ghee, marble, quarrying, textiles etc. But moving to Lhasa via this highway. Kathniandu has tht existence of the international airport and the easy communication facilities of international standards, and availability of skilled and semi-skilled manpower in the for that matter a proposal was earlier developed and Valley has made them stay in the Valley. Some of these discussed to develop Nepal as an international financial industries were in existence long before, when center.The satellite connections in the telecommunication Kathmandu was still a little town. sector have made modern facilities available in Kathmandu. 'The extensive infrastructures at the retail For reasons of environmental problen~,Kathniandu can distribution level have made these facilities accessible to sustain only high value and the low volunie products every nook and comer of the city. As of July 2000, there for production within the city. Of recent. the export of will be more than 100,000 telephone connections in handicrafts and silver ornaments has increased from Kathmandu. It is about 160,000 in the Kathmandu Valley. Kathmandu. In the meantime, there are efforts to relocate the environmentally polluting industries from the Valley. Electricity is provided by a national grid system, and so As the industries are yet to pay for any environmental farthe demand outstrips thesupply,invitingload shedding cost, there is less incentive for them to relocate. Though particularly during winter. This situation will be reversed water supply has emerged as a critical problem, once the power from Kaligandaki 'A' will be supplied. harnessing and use of ground water without having to Kaligandaki 'A' is likely to commence in early 2002. The pay for it has kept these industries moving elsewhere. assured power supplywill encourage somenew ventures. Therefore the introduction of payment for environmental cost and for the use of natural resources will make them Kathmandu is gradu~llyexperiencing a transformation re-evaluate their continuation in the Valley. in providing utility services. Delivery of utility services is gradually being made comniercial and institutional. Kathniandu is an important business center, though it is Nevertheless, there is still a great leap forward required not possible to estimate the business establishments to meet the demand of a modern day metropolitan - both currently working in the city. it can be guessed that it for providing utility services and making payments goes well into the thousands. Near about 20,000 firms through banking institutions. are registered under the Conlpany Act. However, it is not quite clear how many of them are actually working. The construction of buildings of different qualities at the One rough estimate suggests the survival rate to be about private sector,thoughcriticizedasunproductiveinvestment, 25 percent, and accordingly, about 5,000 firms can be has alsogreatly reducedthe publichousingproblems which expected to be operating throughout the country under would otherwise be a headache for the government.At the the Company Act. More than 50 percent of this is sanie time, it has facilitated the stay of foreign nationals. expected to be in the Kathmandu Valley. Besides, there are business units registered under other different acts such as Partnership and Agency acts. So, anywhere 2.3.1 1 Business and Cargo between 8,000 to 10,000 units can be expected to be operating from the Kathmandu Valley.It can be assessed The other business oriented activities have their also from the fact that almost all the banking and non- reflection in the outgoing air cargo, which has reached banking financial institutions have their principal URBAN ECONOMICS business center in Kathmandu. One important Kirtipur has several world heritage sites known for their development in the business sector is the institutional grandeur, rich art works, and culti~ralactivities. Besides, change towards a more organized and better-managed the surrounding areas of the Kathmandu Valley attract institutional set-up. However, the pace is not enough. people for the Himalayan range and natural splendor. The private sector in Nepal is fragmented and many of Apart from these scenic attractions, Kathmandu as a'city' the organizations come together to secure a monopoly has also started attracting visitors for different purposes hold. Corporate culture and good corporate governance such as business, conferences, sports, a small 'hop' for need to be vigorously promoted for making the privatc Tibet bound visitors etc. sector of Kathmandu competitive not only within Nepal but also in the regional and international context. This is absolutely necessary to enhance the management 2.3.13 New Prospects strength. As we have seen earlier, the strong human resource of the city coupled with equally good communication 2.3.12 Tourism infrastructure can promote the prospects of information technology in the country. Though the government has Number of tourists is growing at an annual rate of 8 a policy of promoting software development in the percent. Apart from the number of tourists reaching the country, it is not quite sure about its location. Earlier. 500,000 mark. the number of hotels and hotel rooms some initial works were taken to develop an IT park are also showing a steady rise. The number of hotels outside Kathmandu. The private initiatives towards the has riscn from less t'lan I00 in 1988 to 325 in 1997 in software development industry have made some the Kathmandu Valley. There are four 5-star hotels in significant strides ahead and could work as a foi~ndation Kathmandu. The total number of beds has gone up from for a more organized effort. 6,125to 16.681 in the same period. Tourism and business activities have attracted various international airliners The other advantage for Kathmandu lies in it being an into the country, and at present more than a dozen important capital city of one of the South Asian international airliners are operating their services in countries. The SAARC Secretariat is in Kathmandu, and Kathmandu. Concerning tourism, Kathmandu is it also symbolizes the acceptance of Kathmandu as an gradually emerging as a regional destination. In view of advantageous location for undertaking regional opening of Tibet for tourism, Kathmandu is in an even activities. Such regional activities relate to business, more advantageous position. sports and culture, politics and administration.Of recent, Kathmandu has shown its potentiality for hosting In 1998,Nepal received about 464,000 tourists. Of this, international level sports activities with the successful almost 400,000 tourists entered Nepal through conclusion of the 8th. SAF Games, and the first ever Kathmandu. That means, 86 percent of tourist entering international cricket event in the country. The tourism Nepal by air come to Kathmandu. Assuming about 3 growth in the Valley has increased accommodation days of average stay in Kathmandu, it has an estimated facilities considerably. So, sports facilities for 1.22million days of tourist stay. It amounts to about US professional games could be an attractive proposal for $ 35 million of tourist spending in Kathmandu on the Kathmandu. Weather, political acceptability, security, assumption of spending of lJS $ 30 per day i.e. NRs. accommodation facilities are some recluirements with 2,562 million (at the current rate of US $ = NRs. 73). which Kathmandu is already endowed. The tourisn~activities of this scale are evident from the tourism services and other tourism infi.astructures in the Valley.The toiirism spending in the Valley could be even 2.4 CONSTRAINTSAND higher as the trekking arrangements and bulk purchases LIMITATIONS for them are all made here. At the same time, Kathmandu is a small valley These tourists come to Kathmandu for various purposes surrounded by mountains. Despite good road networks - from sight seeing to business to conferences. and air routes, the entry and access to the Valley is always Kathmandu has good tourism prospects - cultural found to be technically challenging. So, there is a tourism, business visits, conferences, and small treks in proposal for an alternate international airport outside the and around the Valley. The city of Kathmandu including Kathmandu Valley. This will not only help in lowering CITY DIAGNOSTIC REPORT the pressure upon Kathmandu but also require it to be 2.5 LOOKING AHEAD competitive. Future prospects for the city have to be thought of both The other constraint is posed by the limited water supply. in t e n s of sectors and programs, and the implementation Demand for water is increasing due to the increase in capability. While doing so, we should not be guided by population and the change in lifestyles. The growth of the past only, and hence some unconventional thinking industries requiring huge volume of water is simply not should also be encouraged. Besides, Kathmandu has to possible, and there is pressure to shift the existing be evolved not just in the context of Nepal, but also in industries out of Kathmandu due to the scarcity of water. the regional and international contexts. Though Melamchi water can be expected in the foreseeable future, its industrial use is less likely to be From the past tourism has shown a great prospect in feasible due to the fast growing consumption need and Kathmandu. The tourist attractions together with the the cost of supplying water. development of the tourism infrastructures can provide a still greater impetus to its growth. Since Kathmandu Of recent, Kathmandu has experienced a rapid is the most convenient gateway to Lhasa, Tibet, which expansion, and it is mainly horizontal expansion is emerging as a tourism destination, Lhasa bound extending to the near-by Village Development tourists are likely to increase in the years to come. This Committees. Such growth has put pressure upon the growth in tourism can be further promoted by physical infrastructures particularly upon the water promoting sports activities. Some of the professional supply and sewage facilities. Despite the increase in the sports such as cricket and golf can be promoted in number of vehicles the length of urban roads have Kathmandu by greater coverage through satellite virtually remained the same. So, even at this early stage television. of development, a necessity is felt to restrict the number of vehicles. Information technology and computer software development are two promising economic activities that Besides these physical limitations, there are are coming up throughout the world. Their demand is institutional limitations in the form of inadequate ever increasing. As it does not put much pressure upon authorities within the Kathmandu Metropolitan City, natural resources, these activities are even more ideal. unclear relationship between the Center and local Similar other industries having minimal impacts upon government agency, and KMC's own organization. the natural resource are the assembling industries. Though there are classification of municipalities, its reflection in the responsibility and authority is not Trade and business are the two major activities taking defined. Therefore the provisions that may be required place in Kathmandu Valley from time immemorial and for a small VDC and municipality could be very they still have more prospects. However, its nature restrictive for KMC. As is indicated earlier, the central will not remain the same, and moreover, Kathmandu level government ministries and departments play their needs to be visualised as a regional trade center. Now, roles in the development of a capital city thus the the business needs to be more organized, and also responsibilities are often overlapping. It becomes conform to the international nonns. The private sector particularly critical when resources do not get to the also needs to come out from the traditional and hands of the KMC, and individual ministries and conservative cocoon of doing business at the departments express their difficulty in allocating more 'individual level'. More organized efforts at the resources to the city in their own programs. 'industry' level have to be made for keeping the quality at a competitive level, taking the benefit of economies It could be a critical constraint in a broader context as of scale, understanding and disseminating the well. The central government is finding it increasingly international norms. Understanding and moving along difficult to manage and enhance the quality of education the macro perspective of the business environment and health facilities provided by the public institutions. and preparing for it is absolutely essential for the The role of the local government is not yet clear, and private sector to grow into an internationally the central government has not been able to devise any competitive sector. Now, with the technological modus operandi to pass on some o f these advancement in transport and communication responsibilities and resources to the local government bringing all the countries closer, no country can institutions. camouflage itself from international competition. URBAN ECONOMICS I Table 10: Urban Economics Issues and Implications ISSUES IMPLICATIONS ACTORS Need for idc~itifyingthe role, and make Keep up and promote competitive edge based on I~IMG,KMC, CBOs. Kathmandu and the country competitive in the states of technology and economic Donors particularly the internatio~~alcontext. relationships multi-lateral. Inadequate investment and inefficient Inefficiency in production process and increase HMG. KMC, private physical infrastructures in cost of production sector includingjoint I I 1ventures, Donors particularly multi-lateral. Resource crunch with KMC IPoor infrastructure, environmental problems. HMG, KMC and private and poor service delivery sector Weak implementation capacity ot'KMC Poor service delivcry, poor revcnue collectior~, ilMG, KMC and donors unruly city development Limited role of KMC in development Sterile image as local government bodies HMG, KbIC activities CITY DIAGNOSTIC REPORT BIBLIOGRAPHY CBS (1996),Nepal Living Standards Survey Report - 1996,Vol. I: Main Findings, Central Bureau of Statistics, Kathmandu. CBS (l997), Nepal Living Standards Survey Report - 1996, Vol. 11: Main Findings, Central Bureau of Statistics, Kathmandu. CBS (1999), Nepal Labour Force Survey - 1998199, Central Bureau of Statistics, Kathmandu. DOE (2000), School Level Educational Statistics of Nepal - 1998, Department of Educatior, Ministry of Education and Sports, Bhaktapur. ICIMOD (1993), Economic and Environmental Development Planning for Bagmati Zone, Vol. 111: Kathmandu Valley Urban Region, A: Assessment of Current Conditions, B: Plan and Programmes, ICIMOD, Kathmandu. METCON (1999). Cost Sharing Options for Quality Secondary Education in Nepal, a report prepared for Secondary Education Developn~entProject, Kathmandu. Ministry of Tourism and Civil Aviation (1998), Summary of Tourism Statistics. NESAC (1998), Nepal Human Development Report - 1998, Nepal South Asia Centre, Kathmandu. NRB (1999). Report on Household Budget Survey - Urban Nepal, Nepal Rastra Bank. World B a ~ k(2000), World Development Report - 2000/200 1:Attacking Poverty, World Bank. INSTITUTIONAL DEVELOPMENT Dr. Dev Raj Adhikari INSTITUTIONAL DEVELOPMENT SPECIALIST ITY DIPiGNOSTIC REPORT LIST OF ABBREVIATIONS ARC Administrative Reforn~Committee CDS City Development Strategy CEO Chief Executive Officer CPC City Planning Commission DCSl Department of Small Scale Industries DDC District Development Committee Dl Department of Irrigation DO1 Department of Industry FNCCI Federation of Nepalese Chamber of Comnlerce and Industry GWRDB Ground Water Resource Development Board HDM Department of Hydrology and Meteorology KMC Kathmandu Metropolitan City LSGA LocaI Self-Government Act I999 MC Metropolis Council MLD Ministry of Local Development MLJPA Ministry of Law, Justice and Parliamentary Affairs MLRM Ministry of Land Reform and Management MLT Ministry of Labour and Transport MOF Ministry of Finance MOH Ministry of Health MOH Ministry of Home MOI Ministry of Industry MOPE Ministry of Population and Environment MPPW Ministry of Physical Planning and Works MTCCA Ministry of Tourism, Culture and Civil Aviation MWR Ministry of Water Resources NEA Nepal Electricity Authority VDC Village Development Committee WC Ward Committee WEC Water and Energy Commission INSTITUTIONAL DEVELOPMENT TABLE OF CONTENTS List of Abbreiiations Table of Contents List of Tables - 3. INSTITU1'lONAL DEVELOPMENT 3.1 lntroduction 3.1.1 Background 3.1.2 Historical Perspective of KMC and Decentralisation in Nepal 3.1.3 A Brief lntroduction of the CDS in a Broader Perspective 3.1.4 Activities 3.2 The Context 3.2.1 Background 3.2.2 The mandate 3.3.3 CDS Objectives and its Interrelation to Institutional Development 3.2.4 Stakeholders 3.3 Existing Institutions Responsible for City Development Activities 3.3.1 Background 3.3.2 Institutions Involved in the City Development Activities 3.4 Review of Existing Policies, Acts and Regulationsin the City Development Perspectiveand CDC in Particular 3.4.1 Background 3.4.2 Policies, Acts and Regulations 3.4.3 Facilit~tingImplementation of CDS 3.5 KMC as an Institution 3.5.1 Background 3.5.2 Organisation and Management of the KMC 3.5.3 KMC: Foundation, Capacity and Performance 3.6 Arrangement of lnstitution in the Context of CDS 3.6.1 Introduction 3.6.2 Foundation: lssues 3.6.3 Capacity: Issues 3.6.4 Performance: lssues 3.6.5 Issue-Action Matrix: the Gate Way to Vision 3.7 CDS Management and Institutional Strengthening Costs 3.7.1 lntroduction 3.7.2 CDS Steering Committee 3.7.3 Financ,al and Human Resource Needs 3.7.4 Accounting and Audit 3.7.5 Risk Factors in Implementing CDS 3.7.6 CDS Can be Implemented 3.7.7 Monitoring and Evaluation of CDS 3.7.8 Training for Electoral and Staff 3.8 Conclusions Bibliography OSTlC REPORT LIST OF TABLES Table 1: Financial and Human Resource Needs Table 2: Institutional Development - Issues and Implications Thepolicy of decentralisation implies theprocessfor transferring authori