A national transport system for Nepal : including an investment program for the third plan, 1965-66 / 1969-70 (Vol. 1 of 3) : Planning framework and principal recommendations

A NATIONAL TRANSPORT SYSTEM FOR N7PAT. Including an Investment Program U N N:38 for the Third Plan 1965/66-1969/70 VOL. 1 (In three volumes) VOLUME I PLANNING FRAMEWORK AND PRINCIPAL RECOMMENDATIONS Report of a Mission organized by the INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT at the request of THE GOVERNMENT OF NEPAL Washington, D. C. June 1965  CURRENCY EQUIVALENTS U.S. $1 NRS 7.619 NRs 1 e U. S. $,31Z5  THE MISSION John S. Gallagher, Jr. ....................... Chief of Mission and Transportation Economist Ponnambalam Wignaraja ...... ................. General Economist Georg-Magnus von der Goltz ....................... Agricultural Economist Jean Brechot . ........ Railway Adviser Jean-L. Frejacques ........................ . Highway Adviser Muzzafer M. ErSelcuk ........ ................ Aviation Adviser Miss Maureen H. Page .......o................. Mission Secretary  TABLE OF CONTENTS Volume I. Planning Framework and Principal Recommendations Page No. Preface 1 Chapter 1 Past Performance and the Financial Framework 3 Introduction 3 The Public Development Effort and the Adminis- trative Organization 4 Performance under the Three-Year Plan (1962/63- 1964/65) 7 Third Plan Priorities, Targets and Financial Resources 1965/66-1969/70 9 A. Sectoral Priorities 9 B. Investment Targets and Allocations of Resources 10 C. Sources of Finance 11 Chapter 2 A Master Plan for Transport Development in Nepal 16 Justification of the Master Plan 16 The Existing Transport System 16 A. Highways and Trails 18 B. Road Transport 19 C. Railways 21 D. Ropeway 23 E. Waterways 24 F. Airports 25 G. Air Transport 26 Planning Objectives and Priorities 27 A. An Integrated Approach 28 B. Priorities between Systems 29 C. Limitations on the Preparation of this Plan 31 Highlights of the Master Plan 31 A. The Road Transport Plan 33 (a) Classification of Roads and Distinc- tion between National Highways and Panchayat Roads 33 (b) Strengthening of the Roads Department 36 (c) Mobilization of the Panchayats for Road Construction and Maintenance 37 (d) The Development of a National Highway System 38  Page No. B. The Railway Plan 42 C. Ropeways 44 D. Waterways -45 E. The Air Transport Plan 45 (a) Organization of Civil Aviation 45 (b) Royal Nepal Airlines Corporation 46 (c) Royal Flight 46 (d) Airports 47 Chapter 3 The Transport Sector of the Third Plan 1965/66-1969/70 49 Finance for the Transport Sector 49 Selection of Projects 51 The Third Plan (1965/66-1969/70) 53 A. The Road Plan 54 (a) Strengthening the Roads Department 56 (b) Feasibility Studies 57 (c) New Road Construction Projects 58 (d) Previously Committed Road Projects 62 B. The Railway Plan 64 C. The Ropeway Plan 69 D. The Pipeline Plan 70 E. The Air Transport Plan 70 (a) Airports 71 (b) Civil Aviation Department 72 (c) Improving the Operations of RNAC 73 Financial Implications 75 A. Implications for the Current (Regular) Budget 75 B. Foreign Exchange 76 Some Recommendations Relating to Implementation 77 A. Ministry of Public Works, Transport and Communication 77 B. Nepal Transport Corporation 78 C. Maintenance of Private Motor Vehicles 81  Volume II. Supporting Technical Papers and Discussions Page No. Chapter 4 Background and Trends in the Economy 82 Chapter 5 A Summary of Economic Activity, Transport Needs and Transport Plans by Geographical-Engineering Areas 105 Chapter 6 Technical and Economic Papers in Support of Road Plan 146 Chapter 7 Proposals for Strengthening of the Roads Department 167 Chapter 8 Technical and Economic Papers in Support of the Railway Plan 177 Chapter 9 Technical Papers in Support of the Air Transport Plan 188 Chapter 10 Details for Strengthening of the Organization of Royal Nepal Air Lines 208 Volume III. Statistical Appendix  MAPS Page No. Map 1 Existing Transport Facilities 17 Map 2 Master Plan 34 Map 3 Crude Distribution of Population 39 Map 4 Five-Year Transport Plan 55 Map 5 Proposed Reconstruction of a Rail Line from Raxaul to Birganj 66 Map 6 Proposed Biratnagar Railway 67 Map 7 RNAC Winter Domestic Schedules 74 Map 8 Political and Geographic Divisions 106 Map 9 Site of Proposed Tumlingtar Airport 203  PREFACE This economic survey of transport in Nepal Was organized by the World Bank at the request of the Nepal Government. The terms of refer- ence o.L' the Mlission are fundamentally to produce a Five-Year Transport Sector Plan for inclusion in, and integrated with, the Government of Nepal's Five-Year Economic Development Plan (called the "Third Plan"). The Chlief of the Mission is responsible for the contents of this report. In approaching this assignment the M4ission found it necessary to adopt a procedure somewhat different from that which would normally be expected because there is little by way of an existing transport infra- structure upon which to build. The M5issionj s task was further complicated by the lack of a clear statement of the national goals for the other key sectors of the economy because Nepal is still in the early stages of planning. A serious shortage of basic and statistical information of all kinds hampers the presentation of a quantitative view of the present situ- ation and of possible future trends. In gathering data for this report, the MIission had the benefit of major help from the Nepal Government, the assistance of many of the foreign aid agencies working in Nepal, and the work of the previous World Bank Hission. As a result, more information was gathered than was previously thought to exist. Much of it, however, is still in the form of raw data which could not be thoroughly verified within the limitations of the time available. There are still important gaps. Of fundamental importance to the M.4ission is the lack of information on land use and traffic volumes. Insofar as possible the Mlission has used its own per- sonal observations to check the general accuracy of information used. In the many areas where statistical or factual data are scarce or missing altogether, personal and collective judgments of the i4ission members have been used. For the purpose of this report, all available background informa- tion and data were gathered, assembled and analyzed. From this a long- term Master Plan for Transport Development was drafted for the purpose of establishing specific objectives and a framework for future planning. A specific plan for the five-year period 1965/66-1969/70 was then abstracted from this Master Plan. This report is presented in three volumes: I. Planning Frame- work and Principal Recommendations, II. Supporting Technical Papers and Discussions, and III. Statistical Appendix. The arrangement used was adopted by the Mission to permit systematizing the vast amounts of infor- mation collected, and its ready extraction by the Nepal Government in preparing the Third Plan. Although the chapters are numbered consecu- tively, each chapter represents a stage in the process of reaching a  -2 final plan and each should be treated as a self-contained unit. In other words this report is a compilation of papers building towards a specific plan, as presented in Chapter 3, but not intended to be read as a single flowing document. Volume I contains three chapters, as follows: 1. Past Performance and the Financial Framework; 2. A Master Plan for Transport Development in Nepal; and 3. The Transport Sector of the Third Plan (1965/66-1969/70). The work papers which lie behind the conclusions presented in the Transport Plan are in Volume II. A great deal of data collected is pre- sented in tabular form in the Statistical Appendix which appears as Volume III, and for the most part are not repeated in the text.  -3- Chapter 1 PAST PERFOR11ANCE AND THE FINANOCIAL FRAMEWORK Introduction 1, In a country like Nepal, where there are few long-standing invest- ments in modern transport, the introduction of modern transport facilities in substitution for the traditional means in use for past centuries repre- sents a major technological change. The impact of this change is great and far-reaching. Not only will it reduce the cost of transport for existing production and trade, but it will also affect the growth of national income, the structure and volume of future agricultural and industrial production, and the volume and direction of future internal and external trade. It will also increase administrative efficiency in general. For the first time there has been an opportunity to consider national transportation in Nepal on a coordinated basis. 2. In looking at the existing transport facilities the most signi- ficant fact that emerged was that there is no other independent country in the world with such a low density of road mileage or high number of persons per vehicle. Nepal has 10 million people, 5,000 registered motor vehicles and a permanent road mileage of only 284 miles. The following table provides some basis for comparison: Mileage of Permanent Road per: Population Square 100,000 per Vehicle Kilometer Inhabitants U.S.A. 2.4 1.00 2,021 France 4.7 3.04 1,508 Spain 46.0 0.37 258 Ceylon 69.0 0.38 119 Malaya 46.0 - 110 India 737.0 0.25 82 Nepal (1963) 2,000.0 0.006 3 These figures relate to varying years between 1955 and 1963. 3. The meager road transport facilities in Nepal are supplemented by some few miles of railway and some air transport. 4. Before looking at the transport sector in detail, the Mission undertook to examine the economy as a whole for the purpose of deter- mining the current economic situation; to see whether the economy is growing and, if so, how and wrhere; and to get some feel for the records of past performance. It was also interested in the administrative  -4- capacity of the Government in directing this growth. The public develop- ment effort is appraised in this chapter, and the background and current trends in the economy, as evaluated by the vfssion, are set out in Chapter 4. This examination indicated that the economy is growing and the performance capacity of the Government is improving. It also revealed that the lack of modern transport is a basic limiting factor in Nepal's economic development. Therefore it is the view of the Mission that trans- port should continue to receive a high priority in the Government's plans because it is an essential precondition to development in other sectors of the economy. 5. The Mission then proceeded to look at the transport sector with a view to determining how investment in transport could help to expand the economy and alleviate some of the major economic and administrative prob- lems facing Nepal. However, it was recognized that the cumulative bene- fits of transport improvement on investments, output, employment, and trade, will not occur automatically. It therefore assumed that there will be continued political stability, a sustained and coordinated drive towards development, an increase in the cadre of competent administrators, entre- preneurs, and economic managers; an adequate supply of skilled labor; and a general strengthening of financial institutions and governmental organi- zations. Without these preconditions, the full benefits of the transport plan cannot be secured. The Public Development Effort and the Administrative Organization 6. For a country of 10 million people, Nepal is reasonably well endowed with exploitable natural resources (for a detailed discussion see Chapter 4). The main growth potentials lie in the fields of agri- culture, forestry, hydroelectric power, and tourism, each of which can provide a significant increment to the national product. With electric power available there will be scope for selective industrial development. Mineral potentials are as yet largely unexplored. The country also has a favorable geopolitical location. Thus, even though Nepal is a landlocked country with a difficult terrain, it has advantages which can be system- atically exploited to further improve living standards. The prospects for the development of this potential are enhanced by the existence of a large measure of political stability and a sustained interest in stimulat- ing economic development by its leaders. 7. The present governmental structure in Nepal is very new, having been an effective working body for little more than seven years. As such it is still hampered by the problems of newness and difficulties arising out of continuing elements of the older administrative system from which it emerged. This includes an inability to communicate with all parts of the country, a shortage of trained administrators and technical personnel. In spite of these problems, however, the present Government has achieved a satisfactory record of performance.  8. A start has been made on economic planning. With this Third Plan,the Government is moving from the first faltering steps in learning how to plan towards a proper planning exercise. However, the technical departments and organizations within the Government which must carry out these plans are weak and in need of being strengthened. Because of this, there are many shortcomings in the planning process itself; in project preparation and in the implementation processes which will need to be overcome with time. It is significant that there have been noticeable improvements in the public development effort during the past few years, and the economy is growing in spite of the many difficulties. 9. During the Three-Year Plan period (1962/63-1964/65) just ending there has been a sizeable and progressive increase in public sector invest- ment. As noted elsewhere in this report, the public sector outlays increased nearly four times between the beginning of the first Five-Year Plan in 1956/57 and the end of the Three-Year Plan in 1964/65. The public sector outlay in the Three-Year Plan period doubled between the first and the last years. Nepal is also demonstrating greater ability to live up to plans; that is, there has been increasing actual expenditure as a percentage of planned expenditure. This reflects an increasing awareness by the Govern- ment of the country's development problems and that specific steps are being taken to improve the efficiency of the administrative machinery. This recent performance also indicates an improving capacity for negotiating and carrying through foreign-aided projects. 10. Although the Government accounts were first publicized in 1951 it was only in the last five years that formal budgetary procedures were established by the Ministry of Finance. A serious attempt is being made to maintain financial discipline and to strengthen the machinery for collection of taxes and controlling expenditure. Other governmental agencies which have important supplementary roles in development policy, such as the Mlinistry responsible for Panchayat development work, the Nepal Rastra Bank, and the Nepal Industrial Development Corporation, are being strengthened. New agencies, such as the Nepal Transport Corporation which is to manage the ropeway and railways, are being established to rationalize old functions and are being entrusted to competent persons. With the expansion of foreign education and training opportunities for Nepalese, educated and competent persons are beginning to emerge in increasing num- bers, both in and outside the Government. (In 1963/64 a total of 354 Nepalese were sent abroad for training.) A large cadre of foreign tech- nical personnel is assisting Nepal in its development effort, and will be required at higher levels for some time. There is some question, however, as to whether a slightly smaller number better utilized would be more effective. 11. One major problem which will continue to confront the Government is a shortage of skilled Nepalese technicians, primarily those in the middle grades. This will become more apparent with the extension of the  Panchayat program, land reform, transport expansion, and industrial development. Present government standards for establishing wages and promotion may have to be reviewed to give further recognition to tech- nical skill. Some of the training efforts of donor countries assisting Nepal are being lost due to this lack of suitable remuneration. Likewise, Gurkha soldiers who have had extensive technical training and experience find there is no place for them in the local society or economy when they are released from service. 12. A result of this situation is that Nepal is actually exporting some middle-grade technicians to India even though Nepal itself has an acute shortage. Another is that technically trai.4ned Gurkha soldiers take up farming when leaving service, partly because they can earn more and live better in that way than by plying their trade. Thus even though there is a reservoir of trained manpower in the country, it is not being tapped effectively. 13. The existence of these problems is being recognized by the Govern- ment and some steps are being taken to make better use of available technically trained manpower. A manpower survey,which is currently under way, will help identify the covntry,s needs and supply. Negotiations have already baen initiated with the British Government for mobilizing retiring techricians anorn the Gurkhas, A national educational program and in-service training schemes are also being planned so as to provide some training to fill the gap. However, it will be some time before these new programs can bring results and the first graduates are avail- able. During this necessary interval, the Government must make the fullest possible use of the resources of trained manpower presently available within the country. 14. There are three factors which have helped to supplement the Government's effcrts in imaplemelnting its development program, resulting in a higher volume of irnvestment than the governmental organization it- self could have managed. First, foreign aid agencies have undertaken the implementation of development projects (e.g., roads and airports) and, in some cases, have followed through with maintenance of the works until the Government was ready to take over. In general, the relation- ship with the outside is characterized by a sense of independence and self-confidence, ihich is reinforced by the Nepal Goverliment's estimate of the advantage it enjoys by virtue of its geographical position. Secondly, the Government's encouragement to private investment has borne modest results, particularly in the manufacturing sector, and has added to the industrial expansion of the economy. The institutional arrange- ments for encouraging the private sector and building up a local entre- preneur class are gradually taking shape. Finally, the Panchayat move- ment which is designed to provide a basis for regional administration and generate a national consciousness is also contributing to releasing the energies of the people and gearing them gradually to a greater  -7- development effort. Significant investments, principally from voluntary contributions, have been organized for such activities as feeder road construction, and school building. 15. Despite this record of performance, it is clear that in order to achieve the increased level of investment envisaged in the Third Plan, important further improvements in public administration and policies supporting the development effort will be necessary. With a conscious effort such improvement is possible. Without a determined policy, efforts and aspirations can be dissipated. In pushing a develop- ment effort it is not only the planning organization that needs to be strengthened, but the whole administrative machinery. Throughout its inquiry into the transport sector, the Mission paid special attention to the relationship between administrative organization and transport develop- ment, and has made appropriate recommendations for strengthening key organizations. Performance under the Three-Year Plan (1962/63-1964/65) 16. In the first Five-Year Plan period from 1956/57 to 1961/62, annual budgeted development expenditures were in the order of NRs 43 million. In addition there were a few projects outside the budget that were executed entirely by foreign aid agencies, but these did not involve large expendi- tures. For purposes of the M5ission's assumptions on economic performance, the experiences in this period are considered not entirely relevant. This period was, for the most part, a pre-planning phase in the economic develop- ment of Nepal, though some new projects were initiated. 17. The early planning phase was carried over to the 1962/63-1964/65 Three-Year Plan period with one of the main objectives being to establish the preconditions for betiter planning and an expanded development effort. The Three-Year Plan aimed at an investment target in the public sector of NRs 600 million. Of this, 75 per cent was allocated to economic services such as transport, agriculture, industry, power, public works and Panchayat development projects, with 15 per cent for social services and 10 per cent for improvement in economic administration and data collection. 18. In each of the three years budgetary expenditures were as follows: 1st year 1962/63 NRs 94 million (actual) 2nd year 1963/64 NRs 141 million (actual) 3rd year 1964/65 NRs 180 million (estimate) (These figures are a refinement of the preliminary information contained in Table B-5 of Vol. III.) These figures show that throughout the three years there was a progressive increase in the utilization of budgeted development expenditures. In all  -8- these figures there are some small elements which more appropriately belong in the current budget. Even subject to this qualification the figures show a significant increase in actual investment during the three-year period. 19. In addition to these budgeted expenditures, there were extra- brdgetary investments on public sector development projects by donor coun- tries (India, U.S.S.R., Mainland China and the United States) averaging about NRs 78 million per year. These projects covered, among others, the Trisuli project (India), the Kodari Road (Mainland China), the Birganj sugar factory and the Janakpur cigarette factory (U.S.S.R.) and the Kathmandu Ropeway (U.S.A.). 20. On the basis of the figures above it would appear that the actual investment in the three-year period was approximately NRs 649 million, and exceeded the Plan target. This was made possible by projects being completed on time and additional domestic resources being available. Total development expenditure (budgeted and extra-budgetary) in the public sector in the final year of the Plan 1964/65 is likely to be in the order of NRs 258 million (NRs 180 million + NRs 78 million). Even though the figure for the last year of the Plan is still an estimate, it was calcu- lated on the basis of a reasonable expectation of achievement. 21. The statistical basis is lacking for a proper appraisal of Plan performance in physical terms. However, in looking at the individual sectors there is some evidence of growth in the economy. In the agri- cultural sector several improvements have been initiated though there is still a great deal to be done. In 1963/64 adverse weather conditions resulted in lower agricultural production but in 1964/65, favorable weather conditions resulted in higher output. Higher prices for agri- cultural commodities also appear to have provided some stimulus to increased production in this year. M4odest increases in industrial production have been registered both in the public and private sectors over the three years. The expansion of transport, irrigation, power and education facilities is progressing. Greater benefits of past invest- ment in all these fields will be secured in the Third Plan period for 1965/66-1969/70. What is of significance to this study is the fact that there are several identifiable areas in addition to the Kathmandu Valley where this investment is beginning to mature and to have cumulative effects, e.g. the Chatra-Kosi basin, the Birganj-Hitaura corridor, the Rapti Valley and to a smaller extent places like Pokhara, Bhairawa, Janakpur and Nepalganj. Details of economic activity in each area are discussed further in Chapters 4 and 5.  - 9 - Third Plan Priorities. Targets and Financial Resources 1965/66-1969/70 22. As has been stated earlier Nepal is embarking on the Third Plan, having learned some lessons from its early planning experi- ences. A clear development strategy, wlhich could serve as the basis for the Third Plan has yet to be formulated. Such a strategy would need to talie into consideration an up-to-date appraisal of the present economic situation, a realistic estimate of future potentials, and the immediate problems facing the country. It would appear to the Mission that a more effective plan could be drawn up by focusing more sharply on specific regions and key sectors, rather than on the overall aspects. 23. As a starting point for this planning exercise, however, a very broad framework of proposed investment targets for a five-year period has been drawn up by the Government. There is some question as to whether, given the limitations to .planning in Nepal,a more concentrated plan could not have been drawn up for a shorter period, as was done earlier when a three-year time span was taken. A shorter period plan would of course have to be supported by a much longer-term perspective plan. 24. Though this financial framework purports to cover the whole economy, both private and public, at the present stage in the planning exercise it can be no more than a public sector investment program where nearly two-thirds of the investment is to be provided by foreign assist- ance. The framework is in some respects based on past performance and a very tentative forecast of resources that would be available. When the other sectoral plans are drawn up and a clearer picture of available foreign assistance emerges, this framework will need to be modified accordingly. A. Sectoral Priorities 25. In general the Government has given highest priority in the allo- cation of resources in the framework to the agricultural and transport sectors (see Table B-24). The task of preparing a detailed investment program for transport has been entrusted to this survey Nission. However, within the total Plan there is little evidence that a precise program for increased productivity in the agricultural sector is yet at hand. An agricultural sector plan is most important for Nepal to meet the increasing internal demand for food, to check inflation, to earn foreign exchange through an expansion of exports, and to support agri- culturally based industries. If such a program had been available it would have made the drawing up of a transport plan itself easier. An agricultural program (including irrigation) needs to take into consid- eration recent technical developments, plus the effect of past invest- ments which are just beginning to mature. Details of investment programs  - 10 - for the other key sectors of the economy are also yet to be worked out. Little emphasis appears to have been given to planning for forestry and tourism where the opportunities for early economic return and the gener- ation of foreign exchange are very high. B. Investment Taraets and Allocations of Resources 26. The plan framework envisages a total development expenditure of NRs 2,000 million, divided between public and private sectors as follows: NRs 1,500 million - public sector. NRs 500 million --private sector. 27. The target of private investment appears to have been somewhat arbitrarily determined. It appears high, on the basis of the very tentative information available concerning organized private investment in the recent past. Tentative estimates of private investment indicate that for the Three-Year Plan period as a whole, investment in commercially organized enterprises was approximately NRs 80 million. The investment in transport (principally vehicles and service stations) was about NRs 25 million. It was estimated that in housing and other local activities, excluding Panchayat works, actual investment was of the order of NRs 60 million. Panchayat investment in the three-year period could not have exceeded NRs 10 million. (The Panchayat investment would be of signifi- cance to transport development because in the past a substantial part of these resources have been devoted to local roads as mentioned earlier. There is no estimate of the precise investment, however.) This would give a total of approximately NRs 175 million over the three years or NRs 58 million per year. The new plan target assumes that this would move up to NRs 100 million per year during the five-year period. This target appears to be based on anticipation of a large inflow of private foreign capital plus a repatriation of Nepalese capital which has been invested abroad in years past. 28. The public sector expenditure target of NRs 1,500 million includes all foreign assistance except foreign advisory services and training programs abroad directly provided by aid agencies. This follows from a recent decision of the Government to include most of the items formerly considered as extra-budgetary (that is, direct expenditures by aid- giving countries) in the Government's development budget. 29. As has been stated already, in the first year 1962/63 of the Three-Year Plan, development expenditures in the public sector, both budgeted and extra-budgetary, were of the order of NRs 172 million. In the last year of the Plan 1964/65 they were estimated to be of the order of NRs 258 million. This represents an average annual increase of approximately 25 per cent in the rate of development expenditure during the Three-Year Plan period. The new targets now envisage an  average investment of NRs 300 million each year. This represents a 20 per cent increase over the level of expenditure in the last year of the previous Plan. It is assumed that the Plan will be phased so that the rate of investment will be increased gradually each year with the smallest total investment in the first year of the Five-Year Plan and the largest in the last year. Even with this phasing the achievement of this target will require a further strengthening of the adminis- trative capacity of the Government. It is the Mission's view, however, that with a continuation of the improvements that have been taking place in the administration and a continuation of technical assistance from foreign aid agencies, this objective of a higher level of invest- ment in the public sector is not unrealistic provided the financial resources are available. C. Sources of Finance 30. The sources of finance envisaged for the planned investment of NRs 1,500 million in the public sector are as follows: NRs 525 million - domestic resources. NRs 975 million - foreign resources. 31. Domestic Resources. It is expected that the NRs 525 million to be raised domestically will be secured as follows: NRs 475 million - revenue surplus. NRs 50 million - local borrowing. 32. There is no precise information on the level of savings which can be used to determine even tentatively, the magnitude of domestic capital formation. Thus, the above targets can be discussed only in general terms. 33. As will be discussed in Chapter 4, the economy has additional taxable capacity. As a result of improved administration, further increases in receipts are expected based on the collection of existing income taxes and customs duties. As new power projects are completed and some of the industrial enterprises in the public sector come into production, proceeds from sales, excise duties and customs will increase. On the basis of these assumptions, the Government has estimated that during the next Five-Year Plan period revenue will increase at an average annual rate of 12 to 13 per cent while expenditures will be held at a rate increasing by 8 per cent per year, giving the NRs 475 million sur- plus of revenue to support the development budget. A tentative budgetary forecast has been prepared by the Ministry of Finance on this basis, and is set out in the tables which follow.  - 12 - Third. la - i i7 o R 1964/65 1965/66 1966/7 196768 1968/69 1969/70 Revenue 178.9 199.9 218.0 240.6 268.8 300.1 Expenditure 123.1 129.8 138.6 148.9 161.3 173.3 Surplus 55.8 70.1 79.4 91.7 107.5 126.8 Given the tentative estimate of NRs 3,680 million in gross national income for 1961 (see Chapter 4) and assuming an average 3 per cent rate of growth, the revenues shown above represent less than 5 per cent of the anticipated income in 1964/65 and even by 1969/70 will be less than 6 per cent. If the absolute level of income is higher than this tentative estimate, as suggested in Chapter 4, paragraph 7, the ratio is even lower. 34. The detailed revenue forecast is as follows: _ Thrd PLlan- _DizX L}in- NRs 1964/65 1265/66 1966/67 1967/6 168 79 1969/70 Customs 60.1 67.3 75.3 84.3 94.4 105.7 Excise 19.3 21.4 24.1 27.1 31.5 33.4 Land Revenue 49.0 49.0 49.0 50.0 51.0 52.0 Forest 12.0 12.6 13.2 13.8 14.5 15.2 Income Tax 4.8 7.2 10.8 16.2 24.3 36.4 Other Tax 2.4 2.5 2.6 2.8 3.0 3.2 Interests and Dividends 10,3 16.8 17.6 18.5 19.4 20.4 Mviscellaneous 21.0 23.l 25.4 27.9 30.7 33.8 Total 178.9 199.9 218.0 240.6 268.8 300.l 35. From these figures it can be seen that major increases are expected from income taxes and customs. Improved administration and wider coverage would result in these higher receipts. There is also scope for reviewing the tax rates and moving them upwards. 36. The estimate for increased returns from higher sales of electric power and profits from government enterprises, as new industries come into being, are conservative. land tax revenues could increase further  - 13 - as the cadastral survey is completed, leaving a cushion in this item to cover any shortfall in other sectors. 37. On the expenditure side, the 8 per cent rise appears to be an underestimate and is being reviewed by the Government to insure that all current expenditures consequent to the Plan are included. It is conceivable that the expenditure estimate may be raised following this review. It is the Mission's view, however, that the estimate of surplus of NRs 475 million is not unrealistic and can be achieved in view of the additional taxable capacity in the economy and the cushions indicated above, provided appropriate fiscal measures are adopted. 38. The revenue surplus will be supplemented by an internal borrolwing program which is expected to yield NRs 50 million over the five-year period. The only previous experience with the issue of internal bonds was at the end of January 1964 when the Government issued bonds to the value of NRs 13.1 million. The experience with the earlier issue was encouraging. With the unavailability of other suitable investment opportunities for institutional investors,as well as private individuals, there should be no difficulty in mobilizing this amount through a care- fully phased internal borrowing program. With the growth of income, the evidence of increasing voluntary contributions to Panchayat works, the expansion in savings deposits in commercial banks, and a tendency to hoard wealth, it would be reasonable to assume that there is scope for increasing the resources for development, if suitably diverse instruments are used for mobilizing available savings. Thus, the Paission is of the view that, with the potential for increasing revenue, the use of new instruments for mobilizing internal savings, the continuation of finan- cial discipline and the improvement in fiscal administration, the achieve- ment of a target of NRs 525 million is well within the realm of possi- bility. 39. Foreig Resources. During the Three-Year Plan period 1962/63- 1964/65 the greater part of foreign aid available to Nepal was in grant form. As was mentioned earlier, part of the foreign funds were expended through the development budget and part directly by the aid agencies. Foreign aid actually expended on various projects both within the budget and on extra-budgetary investments in the first two years of the Three- Year Plan were as follows:  - J4 - FOREIGN AID ACTUALLY EXPENDED ON PROJECTS 1962 AND 19 (IMillions of NRs) Countries and Organizations 1962/63 1963/64 Total U.S.A. 68.0 95.6 163.6 India 46.2 50.7 96.9 U.K. 8.1 5.4 13.5 Mainland China 10.7 5.6 16.3 Russia 13.2 2.6 15.8 Ford Foundation 0.3 1.0 1.3 U.N.0. 3.0 0.7 3-7 Total 1L945 161.6 311. Source: iIinistry of Economic Planning. 40. The foreign aid budgeted for the final year of the Three-Year Plan development budget was of the order of MRs 144 million. Of this amount approximately NRs 115 million will be utilized. This is still an estimate, but the expectation is that this level of investment will actually take place. In addition, in 1964/65 foreign aid amounting approximately to NRs 80 million for extra-budgetary operations executed by aid agencies was to be utilized. Thus, in the final year of the Three-Year Plan (1964/65), while the total foreign aid budgeted was of the order of NRs 224 million, the amount utilized will be approximately NRs 195 million. The level of foreign aid committed and expected to be utilized in this last year of the Plan is higher than the average in the recent past. 41. In the Third Plan period a total of NRs 975 million, or NRs 195 million annually, will be required from foreign sources to fulfill the public sector investment target. Of this amount the Government had estimated that NRs 867 million can be counted upon on the basis of existing agreements and understandings with all donor countries and institutions. This leaves a gap of NRs 108 million for the public sector plan.  - 15 - 42. In attempting a forecast of foreign aid, present indications are that: (1) both India and Mainland China will increase their assistance programs to a small extent; (2) the U.S. will reduce the level of its grant assistance but the level of loan assistance may increase, leaving the total at approximately the present level. However, a greater part than previously may be made available to the private sector; (3) the U.S.S.R. may not commit any new funds until those already negotiated are drawn down; (4) other aid agencies (principally the U.K., U.N., and Ford Foundation programs) will also be maintained at approximately the same level as in the recent past. There is, of course, the ever present uncertainty stemming from the fact that many sources of foreign aid do not make five-year colmmitments. 43. On these assumptions there may be a small overall shortfall in foreign resources. This may not be serious, as some under-expenditure is likely. In addition, Nepal's foreign assets have been increasing and can provide a small cushion. These resources can also be supplemented by a small amount of soft loans, though Nepal's capacity for servicing foreign loans, even on easy terms, is limited and should be used spar- ingly and only for projects of highest priority. 44. There are, however, some expenditures which at present appear to be underestimated in the Plan which, when adjusted, will exert a pressure on resources and widen the gap. Should some of these expenditures be met from foreign loan finances outside the aid programs there would be service charges and consequent pressure on the external payments position. The finance required for the extension of the land reform program, though it may not be a foreign exchange commitment, is not yet fully worked out. There are other projects, too, such as the Karnali power project, which, if they mature, will exert further pressure on financial resources and could also mean a diversion of resources from other projects. 45. With the probability of a shortfall in the financial resources, it is essential that there should be a careful screening of projects to insure that only essential and technically feasible projects are included in the Plan. In allocating finance, emphasis should be given to a reason- able number of quick-yielding projects in order that the benefits of the investment can be secured in the shortest possible period. In the final analysis it is not the size of the investment program that is of signi- ficance; it is its soundness and the resulting benefits that reflect the true absorptive capacity of the economy.  - 16 - Chapter 2 A _STER PLAN FOR TRANSPORT DEVELOPENWT IN NEPAL Justification of the Master Plan 1. In preparing an investment program for transportation to be used as a part of the Government's Third Plan (1965/66-1969/70), the Mission recognized that transport developments in Nepal cannot be looked at within the framework of such a short period of time. Transport invest- ment needs to have a long-term goal, some precise idea of the steps by which that goal can be reached, and a detailed plan for each of the time periods in which a particular stage is to be covered. In Nepal so much needs to be done that without such a framework it is difficult to develop a practical and workable five-year plan. 2. The Master Plan for Transport developed in this report is in effect a perspective plan giving a general idea of the goals to be reached in, say, a 30-year period of tiae. It was developed princi- pally in terms of physical targets, and is primarily concerned with an assessment of the country's needs and of technological possibilities. It has a financial base in that it has been tailored to fit a conservative assessment of the financial resources likely to be available. The Five- Year Transport Plan as presented in the next chapter, which is abstracted from the IMaster Plan, goes into greater detail. 3. This Master Plan also seeks to establish a modicum of continuity from one Plan period to another in the very process of change which it seeks to promote. The central idea in the preparation of both a master plan and a five-year plan has been to evolve what may be called a "rolling plan." In other words, the starting points were a 30-year "perspective plan" and a five-year plan, but as the Plan proceeds from one planning year to the next the investment targets get carried over to the corres- ponding year in the following Plan period, and so on. In any event, the Five-Year Plan itself needs to be adjusted to changing circumstances, through annual plans. Obviously no plan can be very rigid in the light of possible changes in the economic situation and technological changes resulting in variations from the original forecasts upon which the Plan is based. The iviaster Plan itself is only a beginning. Starting from this base, transport programs can be evolved for each successive planning period. The Existing Transport System 4. The starting point in this planning process was an inventory of the present transport system and some understanding as to how it works. The map on the following page shows all existing transport facilities in Nepal. It also shows principal issues and junctions with the trans- port system of India.   - 18 - A. Highways and Trails 5. Historically, all transport in Nepal has been by porters, pack animals, and bullock carts. As already stated, Nepal has the lowest mileage of motorable roads in relation either to surface area or to population of any country in the world. This situation has now begun to change. 6. Nepal did not start building motorable roads outside the Kathmandu Valley until 1953-55. The first roads were built in the Terai and inside the Kathmandu Valley. With the help of the Indian Army, the Tribuwan Rajpath from Bhainse to Kathmandu was opened in 1956. About the same time a Road Transport Organization (RTO) was created by means of a tri- partite agreement between Nepal, the United States and India. This organization, financed mainly by the United States and India, aimed at building 900 miles of road, generally north-south, of which 300 miles would be paved. Some significant results were obtained but the program proved to be too ambitious. Sometimes projects were started without sufficient advance engineering studies. Difficulties arose frequently due to differences about the standards to be used, and paralyzed the work. In 1963 it was mutually agreed to terminate the RTO and seek other means for building roads. Two other major roads were also built in this period: one by the British Army from Biratnagar to Dharan, and the other by the U.S. AID in the Rapti Valley from Hitaura to Narayangath. Now Nepal is primarily using bilateral agreements where the donor country directs the road-building work. The assisting governments, however, cooperate closely with the existing road organiza- tion of the Government. A major road from Kodari to Kathmandu is being constructed by ivainland China under this kind of arrangement. A small mileage is currently being built entirely by the Road Department of the Nepal Government. 7. As has been stated, at the present time there are 284 iniles of all-weather roadway (see Tables E-1 and E-2 in Vol. III, and the map on Page 17) of which 155 miles or 54 per cent are black-topped, and 36 miles (or 11 per cent) are unpaved. In addition, there are 339 miles of all- weather road now under construction or definitely committed for the second Five-Year Plan period. In addition to these permanent roads, there are many dry season roads or motorable tracks, particularly in the Terai, but in general they have not involved large investments. Some of them, however, do have permanent culverts. The longest network is the system of footpaths in the Hills. These are often very narrow and are located in mountainous areas. 8. There are numerous connections between the internal Nepalese net- work of tracks and trails and the networks of the neighboring countries. At present, the only connections with motorable roads, however, are with India. With the completion of Kodari Road there will be a motorable con- nection to Tibet (China). The principal connections are summarized in  - 19 - the Table E-14, Vol. III. The best international road connections are those which tie into the National Highway Network in India. This net- work reaches the Nepal border only at Naksalbari on the east, Birganj on the south, and Tanakpur on the west. 9. The Government's organization for formulating policy and plans for roads, and for carrying them out, is still in its infancy and needs to be strengthened. There is a Roads Department in the MLnistry of Public Works, Transport and Communication. This Department is presently organized and operated so that all attention is centered on new road construction. Little or no attention is given to the vital matter of road maintenance (see Table E-3, Vol. III). In Chapter 7 the Mission has analyzed the organizational problem involved and appropriate recom- mendations are made. Highlights of these have been carried into the Master Plan, and those requiring immediate implementation incorporated in the Five-Year Plan. B. Road Transport 10. No scientific traffic survey has ever been made in Nepal, so it is not possible to give traffic volume data for all parts of Nepal. There are, however, bits and pieces of information which can be used to prepare estimates for some sections of road. 11. On the footpaths in the Hills most commodities are transported by porters even along those trails where mules or ponies can be used. All sorts of items are transported in this manner,even entire automobiles, heavy machinery and sick people. This results from the fact that in many areas pack animals are not raised, principally because all available ground is cultivated to feed human beings and there is little land left for animal fodder and grazing. 12. However, in some mountain areas, ilustang for example, pack animals such as mules, yaks, and even sheep are used. They remain in the moun- tains during the wet season, and come down to the foothills in the dry season. 13. Some mountain trails are crowded and the traffic moving on them is impressive. On the Tansen-Butwal path, for example, at present an average of more than 5,000 porters pass per day. This would correspond to a movement of 40,000 tons per year and is a larger volume of freight than is handled on many all-weather motorable roads in other countries. This path will be replaced by the Sunauli-Pokhara road now under con- struction. However, there are other paths where estimates indicate existing traffic of 10,000 to 20,000 tons per year, e.g. Dharan-Dhankuta, Narayanghat-Gurkha and Nepalganj-Dailekh. These examples, however, do not cover all possible routes of high density traffic, as there are many routes for which no data exist. This could only be ascertained by a comprehensive study.  - 20 - 14. In the Terai, bullock and water buffalo are the animals most used for transport. Elephants and camels are also used, to a lesser extent. The bullocks and buffaloes usually draw wooden carts well adapted to this type of ground. Traffic is generally dispersed over a large number of small trails, and is seldom concentrated on one route. This is particularly true of east-west traffic. North-south tracks generally follow high ground and most are passable all year. The east-west routes can only be used in the dry season. 15. On motorable roads the common means of transport is, of course, the car and truck. Experience indicates that these have entireli replaced the porters along these routes. The kind of truck in most common use on the better roads is a five-ton capacity diesel. On the poorer roads, only small trucks with one to three tons'capacity are used. Motorable roads in the Terai are also heavily used by animal-drawn carts. 16. There are 5,093 motor vehicles licensed to operate in Nepal (see Table E-13), which include 1,161 trucks, 290 buses, and 1,089 motorcycles and motor scooters. 'More than 85 per cent of these are registered in Kathmandu. There are no data as to the rate of growth of the motor vehicle fleet in recent years. On-the-ground observation gives the impression there has been a significant increase, say 25 per cent to 50 per cent, in the past two to three years. The present private investment in road transport vehicles is estimated by the i-Ussion at NRs 120.0 million (based on replacement cost). 17. Traffic on existing roads is indicated in Table E-1 (Vol. III). The most intensively used road (that having the highest density of traffic) is the Birganj-Amlekhganj Road, with about 200 vehicles per day. 18. From these data and from tentative estimates of fuel consumption it is assumed that the present annual vehicle-miles in Nepal are more than 20 million (including traffic in and around towns). 19. Observed prices of transport are given in Table E-11 of Vol. III. These are homogenous, so one can accept the following as the average transport cost of moving one ton one mile: Porter NRs 15.0 Pack animal 7.0 Bullock cart 4.0 Truck transport 1.3 Railway 1.0 Airway 11.1 These figures are not alvways exactly comparable for different lengths of journey. However, they are useful in showing some general orders of magnitude.  - 21 - 20. An analysis of the price of transport by truck is given in Table E-12 in Vol. III. This appears high as compared with accepted prices in other countries. That is principally due to the relatively low admissible load capacity per truck, and to a load factor of 0.5 (meaning the vehicle moves under load in one direction only) which reflects the fact tnat traffic is badly unbalanced. The proportion of taxes and duties, including the road-cess (or road toll) is normal when compared with other countries similar to Nepal. 21. Finally, there are no fully-equipped automotive maintenance shops in the entire country, with the possible exception of two or three oper- ated by the larger aid-giving countries for the maintenance of their own equipment. There are some small machine shops but these are generally poorly equipped and not staffed with trained mechanics. The need for automotive maintenance shops is related to the availability of spare parts and trained mechanics. When spare parts are freely available, the adequacy of maintenance shops becomes less important. However, in Nepal obtaining spare parts is a major problem. This contributes to the high cost of truck operation. C. Railways 22. There are three railways in Nepal, all narrow-gauge (21 6") lines: 1) The Nepal Government Railway (NGR) from Raxaul in India to Birganj and Amlekhganj, 29 miles; 2) The Nepal-Janakpur-Jaynagar Railway (NJJR) run- ning 18 miles from Jaynagar in India to Janakpur; 3) The Kosi Railway, a construction railway running from Bathnaha and Birpur in India along the Kosi River to Chatra and Dharan Bazaar, 46 miles. 23. India is both a major source of traffic moving into Nepal and a principal market for exports. Within India, the railways are now the principal transport media, and indications are that they will remain so for many years. For this reason, the Indian Railways and connections to them, are of importance to Nepal. It is significant that the largest traffic across the Nepal-India border is at points close to principal Indian railheads. 24. The first two railways are owned and operated by the Goverment. itdl the last few months their operation was under the control of the Transport Department in the Ministry of Public Works, Transport and Communication. The efficiency of both railways is low, primarily due to the lack of com- petent management. Further, the management has not learned how to reduce and simplify the paper work involved in shipping by rail, thereby making the service difficult and unattractive to the shipper. Recently, however, management was transferred to the new Nepal Transport Corporation which hopefully wdll bring improvements in management and operation.  - 22 - 25. The third railway was constructed for use in bringing stone, machinery and materials to the site of the Kosi barrage. It is operated as a part of the Kosi project and is not available for the movement of public goods. 26. The Nepal Government Railway (NGR), constructed in 1927, was for 30 years a part of the principal avenue of commerce between India, Kathmandu and inner Nepal. During this period it was a profitable under- taking even though the track and equipment were never properly maintained and expenses were high. Following the opening of Tribuwan Rajpath into Kathmandu in 1956 and the paving of the road from Birganj to Amlekhganj in 1962, rail traffic and revenues fell sharply. 27. All NGR traffic must be transshipped at Raxaul to and from the meter-gauge Indian Railways. It is handled again at Birganj where all cars are unloaded for Nepal customs inspection, and then reloaded. Goods destined to Kathmandu and the interior of Nepal must be transshipped again at Amlekhganj to trucks for further movement. No through handling or billing of freight has ever been offered; each shipper must make his own arrangements for local labor, for loading, unloading, for trans- shipment, and with all connecting carriers. At each handling point some portion of the shipment "disappears" and some is damaged or spoiled. The total movement is slow and long delays are commonplace. With the opening of the highway to Kathmandu through truck movements became pos- sible on a single-freight billing document and without the two inter- mediate handlings and with smaller in-transit losses. The savings and advantages were immediately obvious to all shippers. As a result, the railway has drifted into increasing disuse, disrepair, and financial loss (see Table G-6, Vol. III). 28. The NGR is now in such a bad state of physical repair that its continued operation will be both physically difficult and exceedingly costly. The physical life of the line and its equipment is exhausted. Complete rehabilitation of the track and the purchase of necessary rolling stock would cost about NRs 7.5 million (or about U.S. $1.0 million). 29. Effective operation of the line is further complicated by the gap between the terminus of the railway at Amlekhganj and the beginning of the ropeway to Kathmandu at Hitaura, which requires an intermediate handling by truck. 30. The Nepal-Janakpur-Jaynmagar Railway (NJJR) was originally built in the 1930's to move timber from the Terai just above Janakpur to the Indian Railway at Jaynagar. When all timber in the area had been cut, the line was given to the Government for continued operation. Its prin- cipal source of traffic and revenues are the religious pilgrims from India to the Hindu shrine at Janakpur. Freight has not been a dominant factor in its operation since its discontinuance as a lumbering line.  - 23 - Although the line has never been well maintained, it has not fallen into the complete disrepair of the NGR. Two new locomotives were purchased in 1962. The track and rolling stock are in fair-to-poor condition. The 15-mile dry-season line from Janakpur north to Bizalpura has been partially rebuilt into a permanent all-weather line. Wiork on this proj- ect has been stopped because it is not clear what additional traffic can be generated thereby. (See Table G-4, Vol. III.) There also are plans for extending this line about seven miles further north from Bizalpura to Lalbhitti. 31. The NJJR is similar to the NGR in that all freight must be trans- shipped to and from the meter-gauge Indian Railways at Jaynagar. Nepal customs inspection is at the far end of the line in Janakpur. Almost all traffic is destined to Janakpur and has to be off-loaded there, so this customs inspection has posed no additional problems or expense. However, with the opening of the Bizalpura extension it could pose a problem. There is no paralleling road. 32. The present NJJR line can be completely rehabilitated from Jaynagar to Janakpur at a comparatively modest cost -- NRs 3.0 million (about U.S. $0.4 million) including the purchase of some new rolling stock. 33. The Kosi Railway was built in 1957 to move gravel and stone from the quarries near Dharan and Chatra to the site of the new Kosi River barrage and to carry construction materials and machinery from Bathnaha, where it connects with the meter-gauge Jogbani line of the Indian Rail- ways, to Birpur and Bhimnagar (site of the Kosi barrage). (See Table G-8, Vol. III.) Its operation for construction purposes may be continued for another one to three years, at which time the Indian Government plans to offer it as a gift to Nepal. This line handles only construction materials and is not used for the public movement of freight or passengers. D. Ropeway 34. The original ropeway in Nepal was built from Bhimphedi, at the end of a narrow but truckable road leading from the NGR railhead at Axnlekhganj, over the mountains into Kathmandu. For about 20 years it was the only means for transporting freight into or out of the Kathmandu Valley other than by porter. In recent years it suffered from poor management and lack of maintenance. 35. In 1960 a plan was developed for replacing the old and worn-out ropeway with a new line. It was originally planned to have the new rope- way extend from Amlekhganj into Kathmandu. This plan was later reduced in scope due to higher-than-planned costs and a lack of foreign aid funds, and the line was only constructed from Kathmandu to Hitaura. The new line constructed by U.S. AID was opened in April 1964, and the old line was removed. In the first few months following its opening, operations of the new ropeway were erratic for three principal reasons: 1) derailments due  - 24 - to some elements of faulty design in the system (which have now largely been overcome); 2) power failures due to weaknesses in the basic support- ing electrical power system; and 3) lack of competent management and direction. Since November 1964, most of the mechanical problems have been solved, and the line has been operating well. 36. The new ropeway is handling substantially larger volumes than moved on the old line (Table G-2, Vol. III). Its total capacity based on working only 200 eight-hour days per year is 40,000 tons. In November 1964, the most recent month for which data are available, the ropeway worked at gO per cent of this rate (Table G-1, Vol. III). 37. In recent years the Tribuwan Rajpath has carried substantially more freight than has moved over the ropeway. However, the new high- capacity ropeway now has the ability to handle one-third or more of all present traffic between Hitaura and Kathmandu (currently estimated to be about 100,000 tons per year). 38. From the financial reports of the Nepal Transport Corporation (Table G-2, Vol. III) it is apparent that the ropeway is now operating at a profit. Its present rates have been set at a level calculated to meet all expenses when operated at 63 per cent of capacity in a nine-hour day, and at 51 per cent of capacity in a twelve-hour day. If the line is consistently operated over 12 hours per day, lower rates will be possible. One point of danger is that present rates, when added to trucking charges from Raxaul to Hitaura and delivery charges in Kathmandu,will be little different from the through rate now offered by competing trucks. 39. In spite of the favorable outlook, the ropeway management must face some difficult problems in seeking and retaining traffic. First and foremost is the practice of the Government of commandeering all rope- way capacity for days at a time, necessitating long delays in shipments destined to private industry. As a result, the ropeway has lost one of its best customers (NCCN) and other private shippers avoid it. The second is the widespread Nepal practice of purchasing and shipping large amounts at scattered, irregular intervals with the result that at certain seasons the demand for transport service is in excess of capacity, while at other times (often not more than a few weeks away), there is very little freight to be moved. Although some cyclical and seasonal movements of freight are common throughout the world, the fluctuations in Nepal are extreme. Some exercise of judgment and caution in government purchasing and shipping policies would help overcome some of these problems, in addi- tion to saving shipping costs and reducing shipping time and delays. E. Wa_terwas 40. The use of waterways within Nepal is very limited. Existing rivers are used for some movement of rice, paddy and merchandise to  - 25 - and from India during the wet season. The Gandak River in particular has a regular river fleet. The construction of the barrage across the Kosi River has resulted in the recent appearance of some wet season boat com- merce between areas at or near the barrage and points upstream as far as Chatra. There is also some river commTierce from below the barrage into India during the wet season. There are no navigable canals. 41. Rivers are also used for floating logs out of the Hill forests to the Terai in areas where transportation by other means is difficult or impossible. F. Airports 42. There are 30 operating airfields in Nepal (see Table F-l, Vol. III). Of these, 12 are ICAO-approved airports serviced by scheduled flights of Royal Nepal Airlines Corporation (RNAC) and 18 are used solely for special flights and charter planes. Of these 30 airfields, 14 are located in the Terai or Inner Terai, of which nine receive scheduled RNAC service. Six- teen are in the mountains and are mostly short STOL fields which can be used only by small planes. Only three of the mountain airports receive RNAC services (Kathmandu, Gurkha and Pokhara). 43. In terms of traffic handled, the most important commercial airports are Kathmandu, Bhairawa, Pokhara, Biratnagar and Simra. 44. Gaucher Field at Kathmandu is the main gateway to Nepal for inter- national and tourist travel, and is by far the largest and most important airport in Nepal. It is currently in the process of being expanded by the construction of a new 6,600 ft. paved runway which will enable it to accept commercial planes larger and heavier than the DC-3. The work is being financed by U.S. AID. There are no hangars or shelters for planes here, although it is the sole RB1C 0maintenance base. The passenger terminal building is crowded and grossly inadequate for the passenger, mail, and cargo traffic it must handle. It is also very unattractive and offers the international traveler a poor impression of Nepal. 45. The Indian Aid Miission to Nepal is providing major assistance through a program for the improvement of four airports in the Terai: Biratnagar, Janakpur, Simra, and Bhairawa. Janakpur and Bhairawa now have 3,300 ft. paved runways under construction,together with necessary terminal buildings and staff quarters, and should be operational in 1965. Present plans are to move the Biratnagar Airport to a new location and build completely new facilities, including a 3,300 ft. paved runway. Simra airport will be assisted with runway improvements. These new run- ways will handle DC-3 planes, but nothing larger.  - 26 - G. Air Transport 46. Air transport in Nepal began in 1950 with the construction of an airport in Kathmandu by the Indian Aid Mtission, and the inauguration of service between Kathmandu and Patna. From 1953 to 1958', India Airlines (IAC) provided local services within Nepal, in addition to international services to and from India. In July 1958 RNAC was formed and operated initially as a private corporation, 51 per cent owned by the Government. In 1959 the Airline -was incorporated into the Government, provided with more planes, given cabotage rights for Nepal, and began taking over all IAC local services in Nepal. In 1960 operations were expanded to include international services to India in competition with IAG. On April 25, 1963 the Royal Nepal Airline Corporation Act formally organized the Airline as a government corporation with authorized capital of NRs 10 million. 47. Although Nepal's topography favors air transportation relative to other modes of transport, it also provides some major problems and obstacles. The high mountains and deep valleys present problems in air navigation, airport construction, and access to and from the airport. 48. The dominating weather characteristic is the four-month monsoon season extending from early June until early October. IMonsoon rains lasting more than one or two days are rare; there is sunshine for a few hours nearly every day. In the Terai the monsoon clouds have an upper limit of 10,000 ft. and are usually 1,000 ft. above the ground, thus allowing enough room for planes to operate either above or below the cloud base. Over the Midlands, the monsoon clouds gain altitude as they move north, with their upper limit reaching about 15,000 ft. The higher mountains generally remain free of clouds though the deep river valleys, such as the Kali Gandaki and the i4arsyandi, have clouds on their hill flanks but otherwise are generally free of overcast. During most of the rainy season more or less regular VFR air transport opera- tions are possible on all but a few routes. The major factor limiting RNAC operations during the monsoon season is airport runways, many of which are too soft and muddy to be used in wet weather. 49. The Ministry of Public Works, Transport and Communications through its Department of Civil Aviation nominally manages all airports and civil aviation activities in Nepal. Within the Department there has been no clear organization charged with the responsibility for aviation matters -- airports and aviation have been all mixed with the ropeway and the railways. One result is that there has been little airport planning and management, and no overall coordination of all aviation activities. There is, however, a de facto operating entity for aviation in the form of three experts provided by the International Civil Aviation Organiza- tion (ICAO) arm of the United Nations, attached to the Department. There are signs that this situation has been improved by the transfer of the ropeway and the railway to the Nepal Transport Corporation.  - 27 - 50. Royal Nepal Airlines Corporation has flexible operations which encompass both regularly scheduled services and non-scheduled flights between different parts of the country. In the six years since it began operations, it has experienced steady growth in traffic, routes and service. From 1959 through 1963 the number of passengers handled more tnan doubled. (See Table F-8, Vol. III.) 51. The l'ission found that RNACts traffic is highly seasonal, and directionally unbalanced. These are both situations wihich lead to operational and financial difficulties. 52. 1 odern aviation makes exacting demands in aircraft maintenance. In a country like Nepal, off the main traffic routes of world commerce and without technological experience or training, aircraft maintenance presents serious problems. To make matters worse, RNAC has no proper maintenance base or facility, and only limited shop and store space. Repairs to the aircraft are carried on in the open because there is no cover. Engines and parts, very sensitive to corrosion, are left out of doors for lack of covered space. This leads to slow work and high costs, especially during the wet season. 53. An examination of the RNAC's statement of revenues and expenses for 1962/63 shows that the operation was conducted at a loss. The figures for 1963/64 fiscal year were not available to the M1ission but on the basis of fragmentary data it is assumed there have been some operational improvements over the previous year though losses were still incurred. This is discussed in more detail in Chapter 10. If the RNAC is to become an effective transport instrument, positive ways must be found to improve its financial position. Additional finances are also needed to modernize the RNAC fleet. 54. Nepal also has a second air transport operation: The floyal Flight. This comes under the management of the Military Secretary of His Majesty the King. It operates a fleet of four planes (see the footnote in Table F-6, Vol. III) which are not registered with ICAO or maintained to I(AO stand- ards. It soon will have two more. Most of these planes were gifts to His Majesty the King, though some were purchased. Royal Flight exists primarily to provide accommodation for His Majesty and the Royal Fam.ily. In the past it has offered some limited charter and contract services to the general public, at times in direct competition with RNAC though it does not observe ICAO standards and recommended practices, and is not under t'le control of the Department of Civil Aviation. Information concerning Royal Flight's operations and finance were not available to the Mission. Planning Obiectives and Priorities 55. Having taken stock of the existing transport facilities in Nepal, the Mission set about clarifying.the objectives of a transport plan and determnining the broad priorities. In formulating a master plan the Ml- sion has taken a simple approach consistent with the present early stage  - 28 - of the Nepal Government's planning exercise. From its examination of the economy of Nepal the Mission concluded that (1) the absolute level of incomes and economic activity is somewhat higher than the tentative estimate of GNP would imply; (2) the economy is growing; (3) in the light of past investment now maturing and the new investment now con- templated, the economy could reasonably grow at an annual rate of 3 per cent in the next Plan period; (4) there are identifiable areas of economic activity which influence and generate the need for transporta- tion (see Paragraph 21 in Chapter 1, plus the detailed descriptions in Chapters 4 and 5); and (5) there are special high priority problems currently facing the Nepal Government which could be alleviated by the provision of better transportation facilities. 56. In drawing up the Transport Plan it was clear that increased investment was necessary (a) to maintain the capacity and efficiency of existing transport facilities, (b) to provide additional capacity to move a larger volume of goods and people in the coming years, (c) to make possible further development of available resources, and (d) to develop other sectors of the economy for which improvement in trans- portation is an important precondition. 57. The special high priority problems facing Nepal which can be ameliorated by improved transport are: (1) food distribution; (2) food shortages; (3) the rising cost of living, particularly in the Hill areas and in Kathmandu Valley; (4) transport bottlenecks restricting the bene- fits of maturing existing investments from accruing to the country; (5) transport bottlenecks inhibiting the exploitation of tourist poten- tial; (6) concentrations of population in areas which are completely inaccessible except on foot; and (7) concentration of investments and services in Kathmandu which have resulted in heavy pressures on the physical transport facilities supporting the city and valley. 58. Despite its historic independence, Nepal's emergence as a modern nation is recent, and the inability of the Central Government to com- municate with the regions within the country constitutes a serious draw- back to administrative efficiency and can have far-reaching consequences for maintenance of political unity. In developing a transport network the Mission has taken for granted that political stability and adminis- trative efficiency are basic preconditions for sustained economic growth, and therefore are objectives of the Plan. A. An Integrated Approach 59. Because modern transport facilities in Nepal are still in their early infancy, with no long period of historical development, this makes the taking of an integrated approach much easier. There are few histori- cal vested interests which are hostile to the promotion of the most suit- able modes of transport in accordance with Nepal's present-day needs.  - 29 - 60. Provision is made in the Master Plan for the development of Pan- chayat road and airport programs that can be integrated with the national system. In this way local feeder roads and airports can be constructed in places and in time sequence which will bring greatest net benefit. The transport system in Nepal is too recent to require a specialization and division of roles assigned to the different forms. Each form requires maximum flexibility, so that it can serve combined purposes. Coordination also implies the establishment of uniformities to prevent unnecessary transfer of goods from one mode of transport, or kind of vehicle, to another and to permit the free flow of vehicles from one area of juris- diction to another. In Nepal, the costs of transshipment of goods are particularly high, and there are considerable delays, damages and losses involved. 61. The 1Master Plan also attempts to integrate the recommendations for new and expanded transport facilities with existing mechanical trans- port facilities, traditional trails and trade routes within Nepal, and the river system. In view of the fact that Nepal is landlocked, it was also important to insure that the internal system is adequately linked to external transport facilities. E_ Priorities between Systems 62. In preparing this Plan, the IMission examined and weighed the pos- sibilities, advantages and disadvantages of using all forms of mechanical transport. In so doing, it covered roads and road transport, airports and air transport, railways, ropeways, pipelines and waterways. 63. Constructed waterways were not considered because they do not have year-round dependability. The climatic characteristics of Nepal with its very heavy monsoon rains and long dry periods restrict effective use of constructed waterways to only a few months out of the year. While it is possible to build waterways having year-round reliability, the initial investment and the operating costs are both so high as to make this a completely impractical choice for Nepal. This should not bar the use of natural waterways wherever they exist. 64. A pipeline was considered for the possible movement of petroleum products between the Terai and Kathmandu. Normally, pipelines have too large a capacity to be economic or practicable in such a limited economy. However, there may be some possibility of constructing a small-diameter line running through the mountains which would be economic in comparison to the use of small tank trucks on the Tribuwan Rajpath. This is recom- mended as the subject of a separate feasibility study. Its function would be to relieve traffic on the Rajpath. 65. Ropeways were considered for several routes in Nepal. In general, they are expensive to construct per mile of line, though a complete  - 30 - installation may cost less than a road or a railway in rugged terrain because it can "jump" from mountain to mountain. Ropeways are extremely inflexible as to their use; they cannot easily accept liquids or large packages. This presents problems when they are to be used as a general utility freight carrier. However, they are very efficient where a uni- form bulk commodity, such as a mineral ore or coal, is to be moved in constant volume. They may have a future role in forestry and mineral development, but they are considered by the Mission as too inflexible for general developmental use. 66. Railwiays were considered for possible use in all parts of Nepal. However, they are economical only when there are large volume movements --- generally in the order of 200,000 tons or more per year --- or when special circumstances are involved. Generally, there is insufficient present or potential future traffic volume to justify extensive rail operations in Nepal except under the special circumstances surrounding the problem of traffic at principal Indian border crossings. For this reason, an extensive rail network was considered as both impractical and uneconomic. 67. However, at the more important border crossings to India where there is extensive traffic moving to and from the Indian Railways, there are advantages to be gained in the form of reduced costs by combining short terminal railways with the construction of improved rail-to-truck transfer facilities which would also incorporate India-Nepal customs facilities. 68. Airports are both expensive to build and to maintain. Air trans- port is costly to operate. Because of these, aviation is a high-cost form of transport. However, it possesses special advantages in that air transport facilities can be put in place quickly, and are not subject to all the geographic limitations of ground transport. For these reasons, air transport is initially given a high priority in this Transport Plan. As a National Highway System is built and begins to reach more parts of the country, air transport will be used less for development purposes and more on those high-volume routes which can provide the traffic and pay the high rates needed to keep air transport economic and practical. 69. Roads and road transport are selected for development as the prime transport media in Nepal for three principal reasons: (1) they bring the largest amount of economic development in relation to the total expense; (2) over a long span of time they provide the lowest cost total transportation; and (3) they can be used in many ways for many different purposes. Further, roads can operate effectively and economically on a relatively small scale because they do not require large-scale management and service organizations. On the other hand, road construction is costly, ranging from a low of NRs 0.6 million per mile in the Terai to NRs 1.5 million per mile (and up) in the mountains.  - 31 - 70. By way of comparison between air and road, the cost of moving one ton of merchandise from Kathmandu to Pokhara by truck (assuming there is a road) would be about NRs 150 based on present truck running costs and including no allowance for road maintenance. The cost of moving that same ton of merchandise by plane, based on present RNAC tariffs, is NRs 934 plus handling costs at each end of the trip. If road maintenance expenses are considered, the total cost of the truck movement would range between NRS 400 and NRs 700, depending upon the volume of traffic using the road. If all airport and other costs were included in the RNAC figure, the cost of air transport would be substantially over NRs 1,000. On the other hand, substantially larger investments are needed for highways than for air transport. And the highway brings benefits to many local communi- ties which cannot be reached by air. C. Limitations on the Preparation of This Plan 71. In preparing this Plan the Mission was faced with a number of limitations which had to be taken into consideration. First, the gaps in available data relating to the economy and to the volume and pattern of traffic movement presented special problems. Although the ilHission uncovered more information than was previously thought to exist, some vital basic data still do not exist. The limitations of time involved in preparing this Plan did not permit field surveys and the generation of new data to fill these gaps. As a result, the Mlission was forced to collect many bits of information from different sources and attempt to reconcile them by applying economic and transportation judgments. These limitations were sufficiently serious to restrict the means by which the data could be systematically correlated and analyzed. Secondly, the incompleteness of the other sectoral programs in the Plan hindered the establishment of transportation priorities by the Mlission. In deciding the projects recommended here, the Mission did not know the details of investments in other sectors of the economy for this next Five-Year Plan period. Sufficient flexibility, however, has been provided in the Trans- port Plan to permit changes in projects. Highlights of the 1aster Plan 72. The overall Plan presented here calls for the development of a basic transportation network designed to serve the principal needs of the country for the long run. It combines a skeletal system of national high- ways with a program for the development of a commercial air transport network and some small trans-border terminal railways. The Plan calls for new construction plus improved maintenance and operation of existing facilities, including the ropeway and RNAC. The system of national high- ways in the Master Plan is to be supplemented by a system of local roads. The Mission has not dealt with this aspect in the Plan except insofar as it affects the organization of the Roads Department.  - 32 - 73. Some principal recommendations of the Plan are: - a strengthened Roads Department having the skill, competence and equipment to maintain roads and airport runways properly, and to assist the Panchayats in doing supplementary work; - construction of a National Highway System of approximately 2,500 miles reaching all of the more heavily populated regions of the country; - providing the means for creating a system of Panchayat roads --- generally local roads built and maintained by the Panchayats; - establishing a system of ten commercial airports having 5,000 ft. paved runways and designed for year-round service by RNAC; - a reorganized Royal Nepal Airlines Corporation equipped with better planes and designed to operate as a self-supporting comn- mercial airline; - provision of three cross-border meter-gauge terminal railways closely tied to the Indian Railways and designed to simplify customs and reduce handling costs; - rehabilitation of the NJJR narrow-gauge cross-border line from Jaynagar to Janakpur; - improved operation and management of the Kathmandu ropeway; - creation of a system of automobile and truck servicing and maintenance depots. 74. The Plan also contains provision for future adjustments to allow for changes in anticipated rates of growth or availability of funds, discovery of major mineral deposits having commercial value, etc. --- none of which can be accurately predicted at this time. 75. Very roughly it appears that all of the essential elements in this Master Plan can be built in about 30 years at an annual level of effort and with financial resources not substantially greater than are being counted upon for this coming Plan period. With more effort and more resources, it could be built sooner. In other words, it is a plan capable of achievement within a reasonable period of time. 76. In the following pages, the individual components of this overall Plan are presented and discussed briefly. A more detailed discussion of each segment of the Plan and its background appears in Chapters 3 and 5.  - 33 - 77. A map outlining the general Plan appears on the following page. A. The Road Transport Plan 78. The Road Plan presented here is based on the following: - establishing a classification of roads, including a distinction between national highways and Panchayat roads; - strengthening the Roads Department (to be called the Roads Authority) for better handling of maintenance, improvement and construction work; - mobilization of the Panchayats for road construction and main- tenance; - development of a national system of highways. 79. The development of a National Highway System must necessarily be spread over a long period of time due to the high level of investment involved. However, the rationalization of road construction and road maintenance is a timely and critical problem in need of immediate and continued attention. 8O. In making this Plan the Mission has attempted to take a conserva- tive view of what is possible of achievement. There could occur a favor- able combination of circumstances which would make possible larger efforts than are provided for in this Transport Plan. 81. (a) Classification of Roads and Distinction between National Hiahways and Panchavat Roads. The ;5ission advises there be two distinct systems of roads in Nepal. The first would be a system of heavily used all-weather roads, called the National Highway System. This would con- stitute the skeleton on which local systems of dry-season roads and/or trails can be based. The National Highway System must serve all areas with heavy population density but be kept as short as possible. The second would be all roads outside the National Highwtay System and would be mainly local roads. The first is in charge of a centralized, well- equipped and well-staffed organization called the Road Authority. The second is in charge of the Panchayats. 82. There are three reasons behind this recommendation: - The construction and maintenance of all-weather roads in dif- ficult terrain is very expensive. With a limited budget and a limited staff there is danger in trying to extend a national system too far. The RTO experience shows the dangers of trying to do too much too quickly. It also demonstrated the futility of building long mileages of low-standard roads which rapidly become useless.  Page 17 A I ~ ~ ~ ~ ~ MP ExiSting A1-athr Rads N.A gLa "I" EXISTING TRANSPORT FACILITIES EysigAARON ae RAIRdAY 'RO'''ParoROAe2'"TJ _ t Iodian National Highoway __- - ___ Narrw gg nd costratia SHOWING THE STATUS OF niE EXISTING TRANSPORT SYSTEM otal "Id =o-o-o-d Broad gaago 5 "f D 1964 Raado Ugdor Ca.ot.r. oas.. AIRWAYS _____ Mack Nappod U Coa=ersial airpaont A t c=_M==W taflod ,Ychwdoiod asr saroacoo4 1G - - - - - - - BI-k l._p.d- - L * ~ - J-E ...65 TA-. . . ..... A~~~~~~~~~~~~~~~~~~~~~~~<- T- Tl~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' % ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~"hp UN. 1~~~~~~~~~~~~~~~~~~6~~~~~~~ IBRD-1486R~~~~~~~~~~~~~~~~~~~~~~~~~~~~nw  - 35 - - The fLull cost of maintaining all-weather roads is high. If it is intended to have the new Road Authority operate within the general level of receipts from road-cess and other user taxes, care must be taken to include only heavily-trafficked roads in the program requiring constant care. In general, routes having less than 10,000 tons'traffic a year cannot be justified econo- mically and should not be included in the system. Roads with over 50,000 tons should automatically be included. The financial impact of maintaining roads having low density of traffic is explained in Chapter 6, Paragraph 24. - The Panchayats have demonstrated a willingness to build local roads. They have also shown that if they are directly concerned and responsible they will work with stronger energy and will display more interest in maintaining the roads they build. It seems to the ifission that in a country with so many remote areas, this represents an effective way to mobilize Panchayat forces and resources as a means of reducing the burden on the Central Govern- ment. 83. One must accept that in some cases there will be local roads con- structed by the Panchayats which generate sufficient traffic to justify building and maintaining an all-weather road. When this occurs, these roads should be offered to the Road Advisory Commuission for possible classification as a part of the National Highway System. This will happen most often in the case of roads which are built locally and earlier than anticipated in the Master Plan, along with some local sections not included a priori in the Maister Plan. 84. The classification of roads involves both administration and finance. The Mission proposes a very simple classification: National Highwav System. This includes all roads built and entirely maintained by the Road Authority. The roads to be included in this system will be proposed by the Road Advisory Commission. (For a description of the Road Advisory Commission, see Chapter 7, Paragraph 2.) Panchayat Roads. This category includes all roads built and main- tained by the Panchayats. Among these, we propose selecting and separately identifying those roads which have real economic or geographic interest or value. These would be called "Panchayat classified roads," and would be eligible to receive some technical or even financial help for construction or improvement from the new Road Authority. Their maintenance would be the exclusive responsibility of the Panchayat. The "Panchayat classified road system"' should include those Panchayat roads which are in the Master Plan scheme but constructed locally in advance of the Master Plan.  - 36 - Trails. This category includes those tracks and trails maintained by the Panchayats or villages (by definition trails are foot- paths and are not motorable). As in the preceding category, some of these could be officially recognized as "classified tracks and trails" and be eligible for technical and, in limited cases, financial help from the new Road Authority. In this way, assist- ance can be provided for meeting more troublesome problems, such as suspension bridges. 85. The precise classification of specific segments of roads into the National Highway System, Panchayat classified roads, classified tracks and trails, should be proposed to the Government by the Road Advisory Commis- sion after careful examination of all the economic and financial conse- quences of such a classification. 86. (b) Strengthening the Roads Department. Until recently the total mileage of all-weather roads in Nepal was low. All major expansions of the road system have generally come from foreign organizations which have both constructed and maintained the roads. The Roads Department section of the MLnistry of Public Works, Transport and Communication is weak, poorly organized, and generally in no condition to handle the mounting problems of highwJay construction and maintenance. Recognizing that this condition cannot go on indefinitely, the Government has started some re- organization of the Roads Department, and is interested in evolving a practical means for assuming its responsibilities. 87. When the Mission arrived in Nepal the Roads Department was a single entity in name only. It consisted of three basically independent organi- zations, their only tie being to the Joint Secretary of the ;linistry: - the Kodari Road Project Office; - the East-W4est Highway Department; and - the Roads Department itself. 88. The two former were responsible for the construction of the specific roads named; the last was in charge of construction and maintenance of all other roads, and of some suspension bridges along the trails and tracks. 89. The Roads Department has a central office in Kathmandu, seven divi- sions, and eight sub-divisions. Some of these divisions exist only on paper, and most of those which do exist in reality are poorly staffed. 90. In order to cope with this situation, it is recommended that the three present organizations be consolidated into a single organization with a single head and a common supporting staff to be known as the Road Authority. This paper organization must then be staffed with competent people. Its principal activities will be to:  - 37 - - maintain, and in some cases improve, all roads in the National Highway System; - give technical assistance to the Panchayats for the construc- tion of roads, bridges, and improvement of difficult sections of trails; - build new all-weather highways. 91, The basic features of the new organization will be: - a strong central organization, including a reinforced planning and engineering design section; - permanent local divisions, much stronger than at present, and having adequate mechanical equipment. These will be the actual work groups handling road maintenance, road improvement and Panchayat assistance; - temporary agencies for construction of major new road projects; - centralized heavy equipment divisions for ownership, staffing and maintenance of heavy road equipment for use by the local divisions. 92. A specific plan for reorganizing the Roads Department is given in Chapter 7. 93. (c) Mobilization of the Panchayats for Road Construction and Iaintenance. The Panchayats can supply voluntary labor as well as finance for local road projects. However, these by and of themselves are not sufficient to avoid waste of limited resources, so some organiza- tion is necessary. Projects have to be drawn up, some construction has to be engineered, and the work has to be supervised in order to maximize the utilization of available resources. 94. The Mission recommends: - the use of technicians within the district Panchayats. These overseers or engineers should be recruited and paid for by the Panchayat and be a permanent member of the Panchayat organization. Such technicians must be able to organize and manage small works such as construction of culverts and tracks. They also must be able to prepare cost estimates and present projects to the Panchayat Council for allocation of the neces- sary money and labor. The overseer will also be the normal channel of communication between the Panchayat and the local division of the new Road Authority.  - 38 - - The local road division should assist each Panchayat: - in doing raore complicated engineering work. For example, it should assist in the location of a difficult bridge or prepare the drawings for this bridge. While the Road Authority can provide some technical assistance, the Panchayat will be required to reimburse it for all assist- ance given. - with mechanical equipment such as trucks, motor graders, etc., in order to build or maintain Panchayat roads. This help will be given on request and should be paid for by the Panchayat. 95. It may be possible for the Central Government to interest a group of Panchayats in associating themselves in order to construct a section of the National Highway System, using locally generated finances, in addition to planning and building local roads. The responsibility for the whole project, however, should rest with the Road Authority. Such contributions from Panchayats would hasten the pace at which the National Highway System can be constructed. 96. (d) The Development of a National Highway System. As has been explained elsewhere, there is no long-term plan for a road system in Nepal. The only existing firm intent is to build a highway from east to west. There is no clear or consistent policy with respect to north-south roads. Against this background, the need for a long-term plan for roads is quite apparent. It will facilitate building an integrated road system on a coherent basis and without waste. It will let everyone know in advance where and when good, all-weather roads will be laid. 97. General Pattern of the National Highway System. There are two broad population concentrations in Nepal (see the following population distribution map): one along the Terai, and the other in the Hills somewhat back from the Terai. Between the two there is a zone of forest with poor and unstable land, which is lightly populated. The largest volumes of trade and the most important traffic is generally north-south. However, because the country is a long east-west strip there is need to provide some internal linkages between east and west. 98. In the mountains it appears that porters tend to follow a "crow's flight" route, ignoring the ups and downs of the trails. These trails are often so steep and tortuous that it is impossible (or, at the least, inadvisable) to follow their alignment with a motorable all-weather road. Having studied the problem carefully, it seems to the 'i4ssion that the best general strategy to use in preparing a master plan is to follow principal river valleys. In this way, construction, maintenance and transport costs all can be reduced.  3 1 X _ a ~ ~~~~~~~~~~~~~~N E P A L CRUDE DISTRIBUTION O F P O P U L A T I O N * > ) ,> > about 1960 DANDELOHURA 1 \gS ILGAiDOTi r KIA1 LE v p0 20 40 60 s0 MIES60 8 0 20 40 60 80 Nft s _ , _ ,.,