6. Cooperation among Cooperatives: Cooperatives serve their members by working together through lo-
cal, national, regional and international organizations (structures). In this way, the cooperatives effectively
strengthen the co-operative movement.
7. Concern for Community: Cooperatives always work for the sustainable development of their communi-
ties. Cooperatives bring about social, economic and cultural transformation in the society through policies
approved by their members.
Cooperatives in Nepal: Historical Background and Its Contributions
Nepal has seen many traditions, customs and institutions which had the features of a modern coopera-
tive. Since ancient times, the Nepalese society continued to benefit from Guthi, Dharma Bhakari, Dewali,
Parma, Bheja, Dhikuri, Kulayan and others. The formal beginning of a cooperative took place in 2010 BS
(1953 AD) when the Government department for cooperatives was set up in Nepal. The first cooperative
organization called ‘Bakhan Debt (financial loan) Institution’ was established in Bakhanpur of Chitwan
district of Nepal in the year 2013 BS. It was the financial cooperative institution. After that, the Coopera-
tive Organization Act, 2016 BS was enacted in 2016 BS in order to institutionalize the system and trend of
cooperatives in Nepal. This led to the positive results in Nepal and a set of cooperative rules were framed
in 2018 BS and the first cooperative bank was set up in 2020 BS in Nepal. After the cooperative law was
put into force in the year 2048 BS, there has been a wave in Nepal to set up cooperative organizations in
different areas at different levels.
It has been pointed out earlier that cooperatives are guided by a set of objectives and definite purposes.
The membership of a cooperative is always voluntary and the functioning of a cooperative is based on the
democratic principle where a head of the organization is elected for a fixed term to manage and run the
cooperative organization. All the members of a cooperative have equal rights on the profits earned in a
year and the members among themselves decide as to how this profit will further be used.
The system of cooperatives is very useful for a country like Nepal. Cooperatives are formed to fulfill the
aspirations of the common people. This is why no cooperative will succeed in its aims and objectives
without getting public support through people’s participation. The developed countries in the world have
been immensely benefitted by the cooperatives. Therefore, we need to learn lessons from our own past as
well as from the experiences of the other developed countries where cooperatives played a great role in
their social and economic development. There is no doubt and confusion regarding the roles played by
cooperatives in strengthening the economic system of Nepal. It is the cooperative that teaches our farmers
to be cautious in spending money and encourage the efficiency-based farming to increase agricultural
productivity. Cooperatives have been contributing in the alleviation of poverty in the rural areas of Nepal
by building up the skill level through training and education amongst the rural folks. The multi-purpose
cooperatives have been very helpful in the economic sector of agriculture where farmers get loans (debt)
for farming, market for selling the agricultural products, and learn the techniques of efficient and mod-
ern agriculture. This is how cooperatives have been raising the living standard of the average Nepalese
farmers.
All of us know that the rural life of Nepal must improve not just by agricultural activity but by the indus-
trial activity too. In areas of industrial development in villages, the cottage and small scale industries are
very effective and useful in improving the standard of life of the villagers. Cooperatives play crucial roles
here by extending loans to villagers for setting up the cottage and small scale industries in villages. Thus,
poor villagers get their capital and skill training from these cooperatives to open up an enterprise and
work on their own. Cooperatives have been standing in support of planned economic development of the
country. Cooperatives have created the right economic environment in the country for capital investment
through the spirit of cooperation and an act of coordination. These organizations have been identifying
several areas of businesses and trade in the country. Thus, cooperatives, if operated intelligently, can
definitely play crucial roles in ending poverty and unemployment in Nepal and revamping our economy.
Problems of cooperatives in Nepal
The cooperatives in Nepal are facing some serious problems. The management and operators of coopera-
tives are more profit-oriented and less service-oriented. There is a total display of nepotism and favoritism
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in managing the affairs of the cooperatives. The family members and friends are kept in the executive com-
mittee to run the affairs of a cooperative. The loans are preferably given to friends and family members of
the founders of a cooperative. The corrupt elements of a society looking for easy profit have opened up co-
operative organization with the support of opportunist politicians. Such cooperatives are fleecing the com-
mon people for their own gains and prosperity. Such cooperatives collect hard-earned money from the peo-
ple and extend loans to big businessmen who happen to be acquaintances or family members. The members
of cooperatives buy land and houses for their own purposes out of the money collected from the innocent
people. Such corrupt cooperatives even do not maintain their accounts properly and avoid financial audit-
ing. One can find the bunch of corrupt people in Nepal who are running several cooperatives for making
easy money. They make investment of the collected money which is outside the purview of a cooperative.
This is why there is a diminished level of confidence among the general public regarding cooperatives and
people are fed up with the profit-making tendency of the cooperatives. The present challenge exists in areas
of expanding the branches of cooperatives in remote and backward regions of Nepal to transform the life of
people living in the Himalayan, Hilly and Tarai regions.
Measures (steps) for overcoming the problems of cooperatives
The following remedial measures have to be taken up for addressing the above mentioned problems and
challenges:
1. Competent administration and prudent fiscal management of co-operatives will strengthen the regula-
tion and monitoring aspects for providing services to the members and the community.
2. Cooperatives must become a vehicle for inclusion of the deprived communities including women, indige-
nous groups, Adibasi Janajatis, Madhesis, and persons with physical disability. The economic empowerment
of such deprived groups must not be compromised in any pretext.
3. The Government of Nepal must provide necessary concessions and facilities for the promotion and de-
velopment of the cooperative sector. In this connection, result-oriented monitoring and evaluation mech-
anism has to be devised and then implemented effectively.
4. Cooperative federations have to be entrusted with the responsibility of playing the coordinating role be-
tween the government and the cooperative sector by reviewing their structures and scope of work for the
promotion of cooperative business.
5. Cooperatives need to organize and pool the local resources to utilize them for community benefit and
gainfully employ the human resource available in the local community.
6. Women must be encouraged to play leading role in cooperative federations for their empowerment.
Special concessions and facilities need to be given for the promotion of cooperatives managed by women.
Children and students should also be included under the scheme of affiliated membership.
Words and terms you would like to know
Autonomous (adj.): self-governing
Equity (n.): action, treatment of others, or a general condition characterized by justice, fairness, and impartiality
Aspiration (n.): a desire or ambition to achieve something
Fleece (v.): to take too much money from somebody by cheating or overcharging Prudent (adj.): using good judgment
to consider likely consequences and act accordingly; careful in managing resources so as to provide for the future
Activities
1. Hold a discussion in your classroom on the activities and functions of a cooperative set up in your
community at the local level.
2. What kinds of processes and procedures are involved in setting up a cooperative? Have a discussion
with your classmates and write down the final conclusions.
396 Nova Social Studies Grade-10 >>
3. What are the roles played by local level cooperatives in areas of manufacturing and production of
goods? Find out through your research work from various sources and have a discussion with your
teachers and friends. At the end, write them down and share with the entire class.
4. Prepare a news report on the benefits of cooperatives.
Exercise
1. What is meant by cooperative? Mention the principles on which cooperatives operate.
2. What are the essential terms and conditions for establishing a cooperative? Make a list.
3. What are the roles played by cooperatives in Nepal? Mention them in points.
4. Illustrate the roles to be played by the Government of Nepal (State) in order to make the activities of
cooperatives more effective.
5. Briefly explain the historical background of the evolution of cooperatives in Nepal.
6. Specify what kinds of reforms and measures are to be taken to make the Government of Nepal more
positive towards cooperatives.
7. What are the two major problems of cooperatives in Nepal?
8. Illustrate with appropriate examples how co-operatives in Nepal can work as an instrument (or a
vehicle) for inclusion and social justice.
9. Describe how cooperatives help in mobilizing local resources and generating employment in rural
areas.
10. What are the remedial measures to be adopted to streamline the co-operatives in Nepal and transform
them as vehicle of positive change?
Community Work
Look around in your vicinity and find out if any cooperative is functioning. If yes, then note down their
nature of activities, type of organizational structure and their success story. Prepare a report and submit it
to your Social Studies teacher.
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Lesson
6 Financial Education
Finance: An Understanding
We often here the sentences in our everyday life using the word finance. She’s taking a course on Person-
al Finance. Shyam Saran is an expert in Finance, who predicts global economic disaster. The library is
closed due to a lack of Finances. My father couldn’t afford the medical treatment at Norvic Hospital,
Kathmandu as he didn’t have enough source of finance to pay the doctors. From these sentences, the
meaning and nature of the term finance is getting clear. Finance is the management of revenues; the
conduct or transaction of money matters generally in the fields of banking and investment. The word
finance is often used for money supply or capital needed or credit provided for business operations or other
non-economic purposes in the social sector. Therefore, the financing system includes the circulation of
money, the granting of credit, the making of investments, and the provision of banking facilities. An
act of financing is the act of providing funds for business activities, making purchases or investing. Finan-
cial institutions and banks are in the business of financing as they provide capital to businesses, consumers
and investors to help them achieve their goals. Finance aims to assess the price (value) of assets on the basis
of their risk level and their expected rate of return.
Finance is generally divided into three different sub-categories: public finance, corporate finance and per-
sonal finance. Public finance is the study of the role of the government in the economy. It is about the rev-
enue, expenditure and debt operations of the government and the impact of these measures on the society.
Corporate finance is the area of finance dealing with the sources of funding and the capital structure of cor-
porations (business houses). It is the study of the actions that managers take to increase the value of the firm
to the shareholders, and the tools and analysis used to allocate financial resources. Personal finance is the
financial management which an individual or a family unit performs to allocate, save, and spend monetary
resources over time, taking into account various financial risks and future life events. It covers a wide array
of topics such as banking, investing, saving and insurance.
Use of finance and financial education in Nepal
The financial education deals with suggesting or recommending options to take decisions or actions in
accordance with the flow of revenue and constraints of financial challenges at personal, corporate or gov-
ernment level. Most of the people in Nepal live in the rural areas. Generally, their economic activities and
dealings in money or credit take place outside the formal financial and banking institutions. It is always rec-
ommended to have correct understanding of financial system of the country and other financial institutions
such as banks, insurance companies and others to derive maximum financial benefits from them by making
saving, investment and seeking loans whenever needed. It has been found that the Nepalese citizens resid-
ing in villages or towns suffer economically because they do not have enough understanding of financial
system as they are weak in financial education. The financial education helps a person in handling his or
her finance efficiently by assessing the present needs and future risks in one’s own life and the life of other
family members. Financial education underscores the importance of saving by encouraging every family in
Nepal to save a part of monthly income so that after some years that accumulated saving can turn out to be a
good investment in economically productive sector. Nepal has been stressing upon the practical importance
of financial education for long.
The Financial System: The Bank and Banking in Nepal
Financial system is composed of financial institutions, financial markets and financial instruments. Since
Nepal belongs to the lower rung of the category of ‘Developing Countries’, the financial system is still in
growing stage. Banks are the dominant financial institutions in Nepal. Financial services do not reach the
poor and to those who live in remote areas. The banking services mostly benefit the people who live in
towns and cities of Nepal. The Nepali financial system is made up of banking and non-banking sectors.
398 Nova Social Studies Grade-10 >>
The banking sector in Nepal consists of Nepal Rastra Bank (NRB) as the Central Bank of the country and
other Commercial Banks. The non-banking sector includes financial institutions licensed by NRB like
Development Banks, Finance Companies, Microfinance Development Banks, Cooperative Financial Insti-
tutions, NGOs undertaking banking activities and those under different Acts like Insurance Companies
(both life and non-life), Citizens Investment Trust, Employees Provident Fund, Nepal Stock Exchange,
Commodity Markets and Postal Savings Offices. The operations of financial institutions in Nepal have
been divided into categories like A, B, C and D based on their nature, type and the stock of capital. As per
the data available in 2073 BS, there are a total of 31 commercial banks operating under the category ‘A’
and a total of 7 commercial banks functioning under the ‘B’ category. Similarly, as many as 59 financial
institutions are functioning under the ‘C’ category and there are a total of 35 microfinance companies op-
erating under the ‘D’ category. These financial institutions deal with money and finance for helping trade,
business and economic activities.
In Nepal, growth of the formal financial services sector had commenced only in 1937 AD with the es-
tablishment of Nepal Bank Limited. The Central Bank of Nepal called the Nepal Rastra Bank (NRB) was
established in 1956 AD. This paved the way for the growth of other financial institutions in Nepal. After
the period of rapid economic liberalization in 1991 AD, many private banks have been set up in Nepal. All
these banks and financial institutions are regulated and controlled by the ‘Banks and Financial Institution
Act, 2006 AD (2063 BS)’.
What is bank and banking? The secret of banking lies in multiplying the available resources. This happens
when banker’s mind and people’s money are combined to multiply the available resources. It is the great-
est misconception that banking is all about lending money. Money lending no doubt is the main function
of a bank but it does not in itself constitute banking. Therefore, all the money lenders are not bankers or
their businesses are not banks. For a bank, both receiving of money and lending it have to go together. A
bank accepts money from the people in the form of deposits, which are usually repayable on demand or
after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts as a custodian
of funds of its customers. It lends out money in the form of loans to those who require it for different pur-
poses. Based on their specific functions and purposes they have, banks are of various types. The Central
Bank is the apex bank of the country. The Nepal Rastra Bank is the apex bank which regulates the func-
tioning of the commercial banks of the country and provides guidelines by means of the monetary policy
of the country. The commercial banks accept deposits from the people and extend loans for the purpose of
consumption and investment. Saving banks emphasize more on accepting savings from the lower income
groups and help mobilize capital for future capital investment. Development banks accelerate the pace of
development and help in alleviation of poverty. Development banks provide both technological as well
as financial assistance to different kinds of developmental projects in Nepal. Rural development banks
provide credit to rural folks without any collateral (wealth guarantee to pay the loan). Rural banks are suc-
cessfully fighting rural poverty in this way. Agricultural banks exclusively help the farmers by extending
long-term and short-term credit. Industrial banks extend credit and other related support to industries
other than agriculture. These banks are specialized to understand various dimensions and nuances of
industries. The exchange bank deals with foreign currency and promotes international trade. Important
functions of exchange banks are remitting money from one country to another, discounting of foreign
bills, buying and selling gold and silver, and helping import and export trade. Currently, Nepal Rastra
Bank and other private commercial banks provide facilities related to exchange banks.
Importance of Bank and Banking
Modern economic system cannot run without having banking sector in place. Following points highlight the
overall importance of banking and financial system in the economy:
1. Capital formation by mobilizing savings: Banks promote thriftiness and reward the savers by giving them
interest on the deposits. This is how capital is built up for making investment in the manufacturing indus-
tries and other economic projects.
2. Encouraging entrepreneurship and creating employment: Bank encourages new and old companies to
diversify their business interests and start new enterprises or expand the old one. Banks extend credit for
diversifying or expanding the industry or the enterprise.
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3. Poverty alleviation with rapid economic development: Extending loans at easy terms and even without
collaterals helps the rural poor to start their own cottage or small scale enterprise or industry. It gives them a
chance to come out of the vicious cycle of poverty. Agricultural banks, development banks, rural banks, etc
provide such loans along with necessary skill training and technological assistance to borrowers.
4. Promoting exchange at national and international level: Money as a medium of exchange promotes trade
within and outside the country through banks. Presently, almost all the financial transactions at national and
international levels take place through banks. By issuing different kinds of negotiable instruments like credit
cards, traveler’s cheque, bank draft, cheque, etc, banks have helped in monetization of economy.
5. Providing safety of wealth and precious metals: Banks provide surety and insurance to liquid money as
well as tangible assets. Banks help in wealth creation by rewarding interest on deposited money. There is
no fear of theft, robbery and embezzlement of money as well as precious metals like diamond, gold, silver
and any other metals when safely kept with banks. Banks provide lockers to keep these metals and other
important papers like power of attorney, certificate of ownership of land, houses, buildings, factories, etc.
Opening a bank account in a commercial bank
A bank account is a financial account maintained by a financial institution for a customer. It is a relationship
of trust between a customer and a financial institution such as a bank which is regulated by a law of the
land. For every transaction a customer makes with a bank be it a deposit or withdrawal of the money,
a bank keeps the details of all such transactions in form of a ‘bank statement’. Nowadays, the bank
transactions done by a customer who is the account holder with a bank are notified on a mobile phone
through SMS service or an e-mail through internet service.
Opening a bank account is the precondition to benefit from the services offered by a bank.
Opening a new bank account is quick and easy when one knows what papers are to be submitted and
what information needs to be provided in the application form for opening a bank account. Each country
through a set of laws decides the manner in which accounts may be opened and operated. The laws or
rules of a country regarding banking and finance specify who may open an account, how the signatories
can identify themselves, deposit and withdrawal limits and many other matters. The following are the
general requirements to open a bank account:
(a.) Identification: One needs to produce a photocopy of a valid, government-issued photo ID (identifica-
tion), such as a driver’s license or a passport or a voter’s card or citizenship card. A bank official authen-
ticates the photocopy of a person’s ID after verifying with the original one.
(b.) Personal details: After that, other basic information to verify a person applying to open the bank
account are to be disclosed on the application form such as date of birth, nationality, parents’ name, birth-
place, name of close relatives, social security number, phone number, current address and e-mail address.
(c.) Money: The amount of money a person wants to deposit to begin with for opening the bank account
is deposited on the counter. At present, a person can open the online bank account through internet and
transfer funds from an existing account to new one which s/he already has. Traditionally, cash or checks
are acceptable at most branches of a bank.
(d.) The other applicants, if a person is opening a joint account: One has to give information of other per-
sons with whom the person wants to share the bank account. If a person who is opening a bank account
is a minor (below 18) then the details of parents or guardians are required to be filled up. For a minor,
parents or guardians sign legal documents with a bank.
(e.) Receiving a voucher from a bank with the account number (code): Having fulfilled all the legalrequire-
ments and after the money is deposited with a bank, a voucher stating the bank account number along
with the statement of the first deposit of the money is given to the person who is now the customer (a bank
account holder) of a bank.
400 Nova Social Studies Grade-10 >>
Types of Bank Accounts
A bank account can be a deposit account, a credit card account or any other type of account which a
bank has offered to a customer. Bank accounts may belong to a category of loan accounts in which case
the customer owes money to the financial institution. When one goes to a bank to open a new account,
one gets various options in terms of the variety of account types and features to choose from. It is always
helpful to understand the differences between the primary account types before one makes a correct
choice to open a specific type of bank account. The following are the details of specific features of primary
bank accounts:
(a.) Current or demand deposit account: Under current account or demand deposit, depositor can
withdraw the amount deposited through cheque in part or in full at any time without forwarding notice
in advance to the banker. Businesspersons who make unpredictable payments to run their businesses
maintain these accounts. Generally, no interest is paid on current accounts. Rather, the bank slaps some
charges on the current account holders to maintain their account officially in case the current account
deposits fall below the prescribed minimum limits decided by the bank. In America, current account is
known as checking account. Another name for this type of account is the demand liability.
(b.) Saving deposit account: Under this account, a depositor can withdraw money once or twice a week
but can deposit the money in this account as frequently as he/she likes to do. Some banks have started
accepting cheque to withdraw money from this account with a condition to maintain minimum balance.
Those people whose earnings are less and having fixed salaried income in a month usually hold saving
deposit account to promote short-term savings. Bank pays interest on the saving account but the rate of
interest is usually less than the fixed deposit account.
(c.) Fixed or Time deposit account: Deposits made under fixed deposit accounts are not withdrawn before
expiry of the stipulated time-period (say one, two, three and more years) or without giving a due notice
of withdrawal. They are also known as time deposits. A higher rate of interest is given to depositors on
the fixed deposit. The depositor receives receipt for the amount deposited which contains the name of the
depositor, the amount of the deposit, the rate of interest and the period of deposit. The longer the period
of the deposit, the higher will be the rate of interest. It is because bank gets more time to utilize the amount
in extending loans to others. That is why it is known as time liability of the bank.
The other services offered by Commercial Banks
The commercial banks at present are giving their services at customer’s door steps by making the banking
as convenient as possible. One need not visit his or her branch office of a bank to deposit or withdraw the
money because several other easy alternatives are available now. The commercial banks have been giving
services of ATM (Automated Teller Machine), SMS Banking, Internet Banking, Credit and Debit Cards and
so on.
Alternative modes of making payment without handling cash at physical level
401<< Nova Social Studies Grade-10
A time has come where business transactions both at wholesale and retail levels can be made without han-
dling cash in the hands in physical form. ATM and debit cards are a convenient means to make purchases
without carrying cash that help a person keep better track of the money he or she spends. It is up to the cus-
tomers whether to deal in cash or go for cashless mode of making payment on a daily basis in their business
dealings or for household expenditures. The banks and the banking services are always there at the disposal
of the customers.
1. A. T. M. (Automated Teller Machine – ATM): An automated teller machine (ATM) is an electronic bank-
ing outlet where customers complete the basic transactions without the aid (help) of a branch representative
or teller. Usually, a customer (having an account with a bank) can access the ATM with an ATM card or debit
card and complete the transaction. Most ATMs allow customers to withdraw cash and receive reports of
their account balances only. The more complex machines accept deposits, facilitate line of credit payments
and report account information. For using the complex units of ATMs, it is mandatory for the users to be the
account holders with the particular bank. There are millions of ATMs worldwide operating (giving service)
24 hours a day, 7 days a week.
A customer is using an automated teller machine (ATM)
ATM and debit cards allow a customer to use ATMs. A debit card, also known as a “check card,” uses money
from a linked checking account for purchases. It’s a safe and convenient alternative to using cash or checks,
and it works for in-person and online purchases.
An ATM card is a PIN-based card. In addition to using it at ATMs, a holder of ATM card may use it to make
purchases (by entering the PIN – Personal Identification Number) if the merchant is using one of the same
electronic ATM networks that’s listed on the back of the holder’s ATM card. As pointed out earlier, a debit
card looks just like a regular ATM card, and one can use it at ATMs. A debit card has a Visa® or Mastercard®
logo on its face. That means a holder can use a debit card wherever Visa® or Mastercard® debit cards are
accepted, for example, department stores, restaurants, or online.
2. Credit Card: A credit card is a small plastic card issued by a bank (or any other financial or business or-
ganization) allowing the holder to purchase goods or services on credit. What is credit? Credit is the trust
or confidence which allows one party to lend resources to another party to repay or return those resources
(or other materials of equal value) later. Thus, the credit is the deferred payment which is known as “trade
credit” in the commercial trade. The trade credit is the approval for the delayed payment for the purchased
goods. Credit is not granted to a person who has a financial difficulty or instability. Banks offer credit to their
customers to make purchase agreement. In this way, a bank provides the borrowing capacity to an individ-
ual in the form of a credit or loan. This is the bank credit.
402 Nova Social Studies Grade-10 >>
The card issuer (usually a bank) creates a revolving account and grants a line of credit to the cardholder,
from which the cardholder can borrow money for payment to a merchant or for cash transfer to meet essen-
tial deadlines.
A credit card is not a debit card because the money is deducted from user’s bank account while using the
debit card while a user borrows money from a bank to be repaid later when s/he uses a credit card. The
credit card is another example of a common credit instrument. Using a credit card to pay for a purchase cre-
ates a contract between the buyer and the seller. Essentially, the seller is extending credit to the buyer with
the assumption that the bank (financial company) issuing the card will cover the amount of the purchase. In
turn, the issuer of the credit card is anticipating that the cardholder will eventually pay off the amount of the
debt along with applicable interest and finance charges. Therefore, there are three parties directly involved
in case of any transaction using the credit card but it is just the two parties in any transaction which is com-
pleted by using a debit card.
3. SMS Banking Service: SMS Banking is a service that allows customers to access their account information
via mobile phone. SMS banking services are operated using both push and pull messages. Push messages
are those that the bank chooses to send out to a customer’s mobile phone, without the customer initiating a
request for the information. Pull messages are those that are initiated by the customer, using a mobile phone,
for obtaining information or performing a transaction in the bank account.
With the spread of mobile phones, SMS banking has become very popular. It has become easy for banks too
in establishing communication with the customers and sending important messages on their mobile phones
through SMS (Short Message Service). Typical push services sent by a bank to a customer via SMS include
periodic account balance reporting (say at the end of month), reporting of salary and other credits to the
bank account, successful payment of a cheque issued on the account, insufficient funds and an alert regard-
ing some due payment and any other important messages that a bank thinks fit to be sent to a customer.
SMS banking is a form of mobile banking. It is a facility used by some banks or other financial institutions to
send messages (also called notifications or alerts) to customers’ mobile phones using SMS messaging. By
using SMS services on mobile phone, customers can also perform some transactions such as de-activating a
credit or debit card when it is lost or the PIN is known to others; moving money from a savings account to a
current account to fund a cheque; account balance enquiry; mini statement request; electronic bill payment;
giving instruction to stop payment on cheque; making inquiry regarding interest rate on fixed deposit and
foreign currency exchange. These are pull services offered by a bank to the customers in the SMS banking.
Saving: Meaning, Features and Its Benefits
As we all understand, saving is the process of setting aside a portion of current income for future use. Saving
is that income which is not consumed. The surplus income is normally saved in a bank account. But it could
403<< Nova Social Studies Grade-10
be saved outside the bank too. In this way, saving results in the regular flow of resources accumulated over
a given period of time. The accumulated resources, usually money, become the capital ready to be invested
in or used for bigger projects such as starting a business or enterprise or heavy expenditure in constructing
a house, sending someone for higher education and so on. The saving is an important part of the economic
process that gives rise to new investment and economic growth. Investment takes place when we purchase
new capital equipment or other assets that make for future productivity. Regular saving helps in capital
formation which is formally transformed into investment. In context of Nepal, investment is generally done
in buying new land or property or a house, paying back the old debt, or spending the saved money on social
rituals such as marriage, death rituals, education, healthcare and so on.
For an individual to measure his saving for a given accounting period is to estimate his income and subtract
his current expenditures. The difference he gets is his saving. Similarly, the total national saving is measured
as the excess of national income over consumption and taxes. Saving is important to the economic progress
of a country.
The Nepalese people opt for various ways to keep their saved money. Below are the formal and informal
ways which are chosen by the people in Nepal to keep their savings safe:
(A.) Saving in the formal financial sector: Saving is done in the commercial banks and other financial institu-
tions duly recognized and permitted by the Central Bank called the Nepal Rastra Bank.
(B.) Saving in the semi-formal financial sector: Saving is done in the semi-formal institutions such as cooper-
atives, Ama Samuha, Forest Groups (Ban Samuha), Consumer Groups and so on.
(C.) Saving in informal sector: Saving is done with friends, relatives or any other person such as private
money lender. Saving is also converted into investment by purchasing land, house or any other costly
item such as gold, silver or precious stones or metals.
(D.) Saving in cash on personal level: Saving by keeping the money with oneself is generally practiced by
the people living in rural areas or extremely remote places. Such people keep their extra money under
the bed or stashed in some pot buried beneath the surface of the earth in their house or kept somewhere
hidden from the view of others.
For encouraging the people for saving, it is essential to teach and train them in money and finance.
What are the benefits of saving?
Based on the above description, the following points emerge as the benefits of saving:
(a.) Saving helps in capital formation.
(b.) Saving directly gets transformed into investment.
(c.) Saving encourages the people to set up new enterprises and hence promotes entrepreneurship.
(d.) Saving earns interest in the formal and semi-formal financial institutions such as banks, cooperatives, etc.
(e.) Saving brings security and prosperity in the life of the people.
(f.) Saving leads to the alleviation of poverty by providing employment to the poor through intelligent
investment.
This is how saving is not just helpful to improve the living standard of the people at individual level. It
also contributes in economic development of the country as national income of the country goes on in-
creasing every passing year.
Words and terms you would like to know
Capital formation (n.): Transfer of savings from individuals to households to the business sector, directly through in-
vestments or indirectly through bank deposits which are loaned out to businesses, industries or firms
Investment (n.): In an economic sense, an investment is the purchase of goods that are not consumed today but are
used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset
will provide income in the future or will be sold at a higher price for a profit.
Nuance (n.): minute details and subtle differences
Thriftiness (n.): the sensible and cautious management of money and goods in order to waste as little as possible and
obtain maximum value
404 Nova Social Studies Grade-10 >>
Activities
1. Hold a discussion in the classroom regarding the process or procedure to be followed for opening an
account in any financial institution such as bank. Write the process step by step in points.
2. In our country, common people are not much cautious and alert with respect to keeping the paper
currency all clean (Sapha notes). Prepare a structure of program to be conducted at the local level on the
steps or measures to be taken for keeping the paper currency all clean. Rehearse the program first in the
classroom in front of your Social Studies teacher.
3. Explain the procedure to take the ATM card from the bank to your neighbors. Encourage them to go for
banking transactions with the help of ATM card.
4. Prepare a dialogue highlighting the importance of financial education in our life.
5. Hold a discussion on the special and distinctive features of ATM card, debit card and credit card in
the classroom. Finally, write the conclusions in points mentioning their distinctive features and the
purposes for which these cards are used.
Exercise
1. What do you mean by financial education? What is its importance at individual and national level?
2. What is a bank? What are its important features?
3. Explain the difference between the central bank and the commercial bank. Mention the name of the
central (federal) bank of Nepal and point out the names of any five commercial banks operating at
present in the country.
3. Describe the historical background of the evolution of financial institutions (banks) in Nepal.
4. All the banks are financial institutions but all financial institutions are not banks. Explain this with the
help of examples.
5. What is the importance of bank in modern economy? Explain with suitable examples.
6. Describe the features of different types of bank accounts opened with a bank.
7. What are the benefits a customer gets by having a bank account?
8. What is SMS banking? What are its various uses and how does it benefit a customer?
9. A credit card is not a debit card. Bring out the distinctive features of both a credit card as well as a debit
card.
10. Nowadays a bank acts like an agent for a customer. Make a list of various types of agency functions that
the bank performs for the customer/account holder?
11. What is the meaning of the term ‘credit’ in finance and economics? How does a credit card build up a
domestic economy?
12. “As the engine stands in the world of mechanics and the numbers in mathematics, the same importance
credit holds in the world of commerce.” Critically explain the observation with appropriate illustrations.
13. What is the meaning of saving in economics? Point out the benefits of saving. 14. How does saving lead
to capital formation and investment? Explain with the help of suitable examples.
Project Work
Which banks or financial institutions have your parents or guardians chosen to open the account? Make
an inquiry and ask for the reasons he or she has opted for those banks and financial institutions. What are
the precautions and procedures he or she followed while opening an account? Mention all the points in the
report and present it in the classroom.
405<< Nova Social Studies Grade-10
Lesson Financial Instruments
7
Financial instruments are assets with monetary value that can be traded and are legally enforceable. These
assets can be currency, cash or an alternative to cash such as check, bill, bond, share, etc. Financial instru-
ments can also appear in the form of any other mode of a contract that two parties or more agree to the
payment of. After all, financial instruments are monetary contracts between parties with regard to mode of
payment or monetary exchange between a borrower and a lender.
Below are the brief introductions to the commonly used financial instruments:
1. Currency: Currency is a system of money in general use in a particular country.
Currency is a generally accepted form of money, including coins and paper notes, which is issued by a
government and circulated within an economy. Currency is used as a medium of exchange for goods and
services and hence it forms the basis for trade. Paper notes are more popular as currency in the world such as
US dollars, British pounds, Australian dollars, and European Euros. The Federal or Central Bank called the
Nepal Rastra Bank in our country issues and manages the circulation of paper currency within the country.
Nepal’s currency: Paper notes of twenty rupees and ten rupees Coin currency
The Nepal Rastra Bank keeps on issuing paper notes of different denominations as and when need and
priority so compels by looking at the conditions of market and the circulation of money in the market. The
Nepal Rastra Bank maintains a close watch over the circulation and the movement of money in the market
through its monetary policy. The paper currency must not be deformed or altered by tearing it apart or
scratching on its numbers or by putting color on it or erasing (rubbing) it in any manner. Thus, the Nepal
Rastra Bank warrants to keep the paper notes all clean for having smooth circulation of clean currency to
ease the transactions of goods and services. The clean notes policy of the Federal Bank of Nepal forbids a
user (holder) of paper currency to stitch it or write (scribble) on it or wash it or do something to alter its
shape and size. Any deformation or tampering of paper notes decreases its life (durability). The signs and
symbols such as animals, flowers, mountains used on the surface area of the paper notes represent the cul-
ture, nationality and civilization of Nepal. As a citizen of Nepal, it is our duty to keep the paper notes all
clean and keep them safe.
2. Bank Loan: Bank loan is a sum of money borrowed as a debt by a customer or business from a bank,
often for a specific purpose, such as buying a car, house, or funding one’s own education or for others
like son, daughter, etc.; setting up enterprise, business or industry and so on. Bank loan is an amount of
money loaned at interest by a bank to a borrower, usually on collateral security, for a certain period of
time. We know that no work can be accomplished without money or finance. Money is needed for fulfill-
ing personal needs like buying a house, going for repair or reconstruction work or funding the education
as well as business needs such as expanding one’s own business, buying new machines, beginning dairy
and animal husbandry, doing some social work, etc. A huge amount of ready cash or credit is simply not
present all the time. In such a situation, bank comes forward for our help and extends the loan as debt at
406 Nova Social Studies Grade-10 >>
fixed interest to be paid within a specified period of time. A person who receives a bank loan is a borrower
of a debt which belongs to various categories. A borrowed sum of money as a debt may be taken to meet
the current expenditures or to buy some costly items, or to make some productive investment.
It is to be kept in the mind that if a borrower of a bank loan defaults in paying back the borrowed amount
plus the interest charged on it then a borrower is slapped with fine and his or her personal property as
the collateral security gets seized by the bank. In a situation like this, a borrower is blacklisted by a bank
and legal action is taken against a defaulter forcing him or her to pay back the borrowed amount with
interest on it. Such a defaulter even loses his or her social prestige. Therefore, it is always advised to take
loan (debt) from a bank only when a borrower is capable to pay back the loan plus a percentage of interest
charged on it. One should never apply for more amount of money to be borrowed from a bank as a loan
(debt) than what is genuinely required. Banks may also cancel (disapprove) the loan application if an ap-
plicant does not have sufficient asset to support his or her loan application or a bank may simply reduce
the amount of loan to match with the monetary value of asset (as collateral security). When a bank asks
to provide financial projections for the business or monthly income, make sure to be honest and tell the
bank with a written plan to repay a debt (loan). It is also important to tell the bank as to who will pay back
a debt in case the borrower dies.
A customer approaches a bank for sending remitences approval of a loan
3. Remittance: In business, a remittance is the transfer of funds, usually from a buyer to a distant seller
crossing the geographical boundary of a country or continent. At personal level, a remittance is a transfer
of money by a worker employed in a foreign country to an individual in his or her home country. Nepalese
workers employed in foreign country transfer money as remittances to friends and relatives in Nepal. Re-
mittances are sent through official channels such as bank or other financial agency or institution authorized
to transfer such money. Nowadays, remittances are being transferred through (with the assistance of) wire
transfer in a bank, mail having cheque or draft, online transfer or mobile transfer. If such remittances are sent
by any other channel which does not include bank or financial agency in between as medium or pathway
of fund transfer then it is considered as illegal. Thus, sending hard-earned money through Hundi from a
distant land to one’s own friends or relatives has no validity in the eyes of law and is treated as illegal.
Remittances in Nepal contribute to approximately 23% of the total national income. The major part of remit-
tances received in Nepal is spent on daily consumption of goods and services. In fact, Nepal needs to control
the expenditure of remittances on consumption and channel that money towards building up infrastructure
and manufacturing sector. This will strengthen our domestic economy.
4. Foreign Exchange: Foreign exchange is the system by which the type of money used in one country is
exchanged for another country’s money. Foreign exchange is the exchange of one currency for another or
the conversion of one currency into another currency. It also refers to the global market where currencies
are traded virtually around the clock. The term foreign exchange is denoted by abbreviation like “forex”
and occasionally as “FX.” For Nepal, currency of other countries is the foreign exchange. The increase in
the volume of foreign exchange is always beneficial for any country. It is because the reserve of the foreign
exchange in a country facilitates in importing goods and services from other countries and makes pay-
ment in foreign currency. Nepal earns foreign currencies from different sources. Nepalese workers
407<< Nova Social Studies Grade-10
send remittances in foreign currencies from a foreign land to Nepal. Different international institutions
(organizations) and developed countries give grants, aid (assistance) to the Government of Nepal for de-
veloping the country. This is the way Nepal earns foreign currencies.
Foreign currencies like dollar, pound, euro and yen are traded at a specific exchange rate.
International currency exchange rates display how much one unit of a currency can be exchanged for
another currency. Currency exchange rates can either be floating or they can be pegged (or fixed) to an-
other currency. A floating exchange rate keeps on changing continually based on a multitude of factors
while a pegged (or fixed) foreign exchange rate floats (makes a change) in accordance with the currency
to which it is pegged. Nepalese Rupees (NPR) is pegged with INR (Indian Rupees) (at the rate of 100
INR = 160 NPR). Knowing about the foreign exchange rate for different currencies in the world helps the
global investors and businesspersons to make smart decisions in investment and business. For example,
for a U.S. investor, knowing the dollar to INR or NPR exchange rate is valuable when selecting invest-
ments in Nepal. From the perspective of Nepal, a declining U.S. dollar could increase the value of foreign
investments, just as an increasing U.S. dollar value could hurt the value of foreign investments in the
country. As Nepalese Rupee (NPR) – the currency of Nepal - is pegged with the Indian Rupee (INR), the
foreign exchange rate is relatively stable. The government of the country must hold large reserves of the
currency to which its currency is pegged in order to control changes in supply and demand to maintain
stability in the pegged foreign exchange rate. The Nepalese currency has grown weak in the international
(global) market because Nepal imports much more than its total export (to other countries). Nepal makes
payment in the foreign currencies for imported products and this is how the ‘foreign exchange reserves’
get depleted thereby weakening the Nepalese currency in the international market. The foreign exchange
market trades in international (foreign) currencies. It is the largest global market for buying, selling and
exchanging currencies at current or determined prices. All the larger international banks and financial
centers around the world participate in buying and selling of foreign currencies for doing businesses and
making investments.
5. Security: A security is a financial instrument that represents an ownership position in a publicly-traded
corporation (by holding ‘stock’), a creditor relationship with governmental body or a corporation (by hold-
ing ‘bond’), or rights to ownership as represented by holding an ‘option’. A security is a negotiable financial
instrument that represents some type of financial value. The company or entity that issues the security is
known as the issuer. A security is issued in different forms such as a debt document, debenture, bond, shares,
etc. Securities are generally divided into debts and equities. A debt security also known as bond represents
money that is borrowed and must be repaid by a corporation (company) as per the terms and conditions
agreed for the amount borrowed, interest rate and maturity/renewal date. Debt securities include govern-
ment and corporate bonds, certificates of deposit and preferred stock. Equities also known as stock represent
ownership interest held by shareholders in a corporation, such as a stock. Unlike holders of debt securities
who generally receive only interest and the repayment of the principal, holders of equity securities are able
to profit from capital gains of the corporations or companies. Generally, securities represent an investment
and a means by which companies and other commercial enterprises can raise new capital. Companies can
generate capital through investors who purchase securities upon initial issuance. Raising capital through
securities is considered as a preferred alternative to financing through a bank loan. Securities are often listed
on stock exchanges. The business and industrial corporations or companies which issue securities are listed
in the stock exchange and they attract investors to trade in securities either in a liquid or a regulated market.
408 Nova Social Studies Grade-10 >>
Securities are traded in stock exchange either as a bull position or a bear position.
A bull position is a trade or investment in the hope that the share price will rise and hence will make a profit.
The opposite of a bull market is a bear market, which is characterized by falling prices. A holder of stock
is called a shareholder. A shareholder has a claim to a part of the corporation’s assets and earnings. In this
manner, a shareholder is treated as an owner of a company to the extent he or she holds the percentage of
shares in that company. For example, if a company has 1,000 shares of stock outstanding and one person
owns 100 shares, that person would own and have claim to 10% of the company’s assets. Normally, each
share is priced at 100 rupees in a company.
Shares are broadly categorized into two types: Preference shares and ordinary (or common) shares.
(A.) Preference shares: Preference shares are more commonly referred to as preferred stock. Preference
shares are much safer for shareholders and considered to be less volatile than ordinary (or common)
shares. Investors (shareholders) are offered a steadier flow of dividends on preference shares but the
shareholders of preference shares do not have a right to vote in the annual general meeting of a company.
Preference shares as the name indicates are preferred shares and, therefore, have the advantage of a higher
priority claim to the assets of a corporation in case of insolvency and receive a fixed dividend distribu-
tion. If the company goes into bankruptcy, the shareholders with preferred stock are entitled to be paid
from company assets first. This is the reason preference shares are the best choice for those shareholders
(equity investors) who do not want to take risk of suffering a loss.
(B.) Ordinary or common shares: Ordinary shares are known as common shares. These are the basic
voting shares of a corporation. Holders of ordinary shares are entitled to one vote per share, and do
not have any fixed dividend amounts to receive from a corporation. An ordinary share represents eq-
uity ownership in a company proportionally with all other ordinary shareholders, according to their
percentage ownership in the company. It is mandatory to have the stocks of ordinary shares for all the
corporations. It is because no corporation can run without being owned by someone and shareholders of
the ordinary shares are the owners of a company. They take maximum risk. If the company earns profits
they get dividends only when company makes decision to distribute the same amongst them, otherwise
not. And when a company suffers loss, the shareholders of the ordinary shares are the first ones to bear the
brunt of the loss. Those who love to take risk in stock holding prefer to buy ordinary shares. The ordinary
shareholders face greater economic risk than the preferred shareholders of a corporation. Therefore, they
can also reap greater rewards. If a company makes huge profits, the preferred shareholders are not paid
more than the fixed amounts to which they are entitled, while the ordinary shareholders divide the large
profits among themselves.
The following documents and details are required while filling up the application form for buying shares:
(a.) An attested copy of citizenship certificate
(b.) Name and address of the applicant, father’s name, contact number
(c.) A voucher to get the amount returned and the bank account number
(d.) Recently taken passport size photograph of the applicant
Words and terms you would like to know
Shareholder (n.): A shareholder is any person, company or other institution that owns at least one share of a company’s stock.
Dividend (n.): company profits paid to stockholders, either in cash or in more shares
409<< Nova Social Studies Grade-10
Cheque (n.): A cheque is a bill of exchange drawn on a specified bank and not expressed to be payable otherwise than
on demand.
Bank Draft (n.): A bank draft is a bill of exchange drawn either on demand or otherwise by one banker to another in
favor of a third party or by one branch of a bank to another branch of the bank or by the head office of the bank to other
branch of the bank or vice versa.
Hundi (n.): A Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of
money to a person named in the order. Hundis, being a part of the informal system, have no legal status and are not
covered under the negotiable financial instruments.
Insolvency (n.): bankruptcy, unable to pay bank debt
Activities
1. Any one member from your family or your relatives must have been in a foreign employment. What is
the pattern of expenditure of remittances sent by him (or her)? Ask the family members or relatives and
note down the headings under which the remittance money is being spent. Present your findings in the
classroom.
2. What do you mean by share distribution (allocation)? How can a person earn money by trading in
share? Hold a discussion on this topic with your classmates and write down a paragraph on it.
3. Collect the information and report on the foreign exchange rate of major international currencies from
the daily newspapers or TV news bulletin. Prepare a chart on it and present the same in the classroom.
Affix it on the class notice board.
Exercise
1. What is currency? Why is it necessary to have clean currency? Write in points.
2. Differentiate between bond (debt securities) and stock (equities).
3. What is meant by stock exchange? Mention the bull and bear positions in reference to stock exchange.
4. Define security. How is it different from a bank loan?
5. Explain why a business corporation or company prefers to raise money through securities and not by
taking bank loans.
6. What is share and who is a shareholder? Highlight the important features of share.
7. Enumerate any five benefits which a shareholder gets by holding shares.
8. What are the new ways of transferring remittances by using ICT (Information and Communication
Technology)?
9. What is Hundi? Why is it considered illegal in transferring the funds from one place to another?
10. What is foreign exchange? Provide a detailed account on the importance of foreign exchange in the
global market.
11. What is foreign exchange reserve? What role does it play in a nation’s economy? Illustrate with suitable
examples.
12. Specify how Nepal fixes its foreign exchange rate and also explain the reasons behind it.
Project Work
Meet a person who works at executive level rank in a bank and enquire about the procedure of taking bank
loan (debt). Collect all the necessary information such as collateral security required, interest rate on the
loan, time period within which loan along with interest to be paid, purposes for which a bank extends loan
and many other such things. Arrange all the collected information under proper headings and sub-headings
in well-organized paper sheets. Present it in the classroom before your Social Studies teacher.
410 Nova Social Studies Grade-10 >>
8Lesson Insurance
Insurance: Meaning, Nature and Features
Insurance is a financial risk management tool which protects a person from financial loss. Insurance is a tool
in the management of risks – a device by which the risks faced by the individuals are pooled together and
then all the members of a pool share the losses suffered by a few individuals. This is the way the business
and economics of insurance goes. A person who is protected from financial loss by buying insurance is
called an insured or policyholder. An organization (or entity) which provides or sells insurance to cover the
financial loss is known as an insurer (or insurance company).
Mechanism of the contract of insurance: the insurer, the insured, premiums and the lump-sum payment paid
Benefits of insurance and the various types of risks that it covers
An insurance company sells insurance policies which provide various techniques of risk management
against sudden, uncertain and unforeseen loss to human life and property. The loss may or may not be finan-
cial, but it must be assessed in financial or monetary terms. The risk cover for loss to human life is known as
life insurance and the coverage of property loss in home or business is known as non-life insurance. The in-
surance policies are a contract between the policyholder and the insurance company in which the latter un-
dertakes to bear the loss to human life or property or both suffered by the former in event of any unforeseen
or uncertain event. An insurance policy mentions all the essential details such as name, date of birth and
address of the policyholder, name of the nominee (beneficiary), time period of insurance, premium amount,
411<< Nova Social Studies Grade-10
total sum of insurance, the nature of risks covered, and other terms and conditions. In consideration of the
promise made by the insurer to indemnify the loss suffered by the insured (policyholder), a monetary com-
pensation called the premium is deposited regularly till the happening of the unforeseen sudden event (or
the completion of full term of insurance period) by the policyholder (the insured). The premium paid by the
policyholder at regular interval or a onetime lump-sum payment transfers the liability to bear the risk and
its management caused by a disaster on to the insurer (or insurance company). This is how insurance policy
protects the policyholder (the insured) against any loss or risk to his life, property, business and family till
the completion of the full period of insurance. The sudden and uncertain event causing loss to human life or
property or both may be caused by either natural disasters such as flood, drought, landslide or the manmade
disasters such as road accident, plane crash, surgery failure, health disaster and fire and so on.
Historical background and status of insurance in Nepal
The first insurance company in Nepal called “Nepal Mal Chalani Tatha Bima Company Limited” was
established on Asoj 8, 2004. This insurance company with authorized capital of NPR five lakhs was the first
official step towards managing the risks of people’s property in Nepal in order to promote safe business
within the country. The company used to deal with non-life insurance business. The insurance company
was later converted into Nepal Insurance and Transport Company Private Limited in 2016 BS. Once again
the company was renamed as Nepal Insurance Company Ltd in 2048 BS.
A major step was taken to promote and regularize the business of insurance in Nepal when ‘Rastriya
Bima Sansthan’ was set up on Poush 1, 2025 under the provisions of the ‘National Insurance Act 2025 BS’.
‘Rastriya Bima Sansthan’ started both the life insurance as well as non-life insurance in the country. Until
recently, Nepal has a total of 25 insurance companies operating in Nepal. Of these, sixteen deal with the
non-life insurance and nine companies do business in life insurance. After the liberalization of Nepal’s
economy in 2048 BS, the previous acts on insurance were amended and new Insurance Act 2049 BS was
introduced. An insurance committee under the new Insurance Act, 2049 BS has been set up to supervise
and regulate the insurance businesses in Nepal.
The ‘Rastriya Bima Sansthan’ has been playing effective roles in the development, promotion and expan-
sion of the insurance business in the entire country. This organization has covered 25% of the non-life
insurance and covers 50% of the life insurance business in the country. The organization has opened up
branch offices and contact centers in different parts of the country with a view to reach out to people as far
as possible and cover their risks of loss of life and damage to their property.
Types of Insurance:
There are following two types of insurance:
(A.) Life Insurance: Life insurance is the contract according to which the insurer (insurance company) pays
a sum of money to a named beneficiary upon the death of the policyholder (the insured) or to the policy-
holder after completing the time period of insurance when he or she reaches a specified age. We all know
that our life is quite uncertain in terms of meeting with an accident anytime anywhere in life. An accident
may cause a serious injury leading to permanent disability or even death. If the bread earner of a family
meets with such a tragic fate with permanent disability or death, entire family suffers as the family members
particularly dependent ones find it difficult to survive. This is the reason every individual is asked to take
a life insurance policy to mitigate the risk arising out of sudden death or fatal accident. The Insurance Act,
412 Nova Social Studies Grade-10 >>
2049 BS defines the life insurance as follows:
“A life insurance policy is a contract with an insurance company in which a lump-sum of money is paid to a
beneficiary of the insured in exchange for premium payments upon the insured’s death.”
Life insurance policy gives cover to a family from the sudden death of the bread earner.
Typically, life insurance is chosen based on the needs and goals of the owner. The term life insurance gen-
erally provides protection for a set period of time, while permanent insurance, such as whole and universal
life, provides lifetime coverage. An insurance company before entering into a contract with a policyholder
takes consideration of certain factors such as personal and family medical history of the insured (policyhold-
er), height and weight matrix, the nature of job or profession, etc.
A term life insurance remains usually in force for periods from 10 to 40 years. At the end of the agreed upon
term, a policyholder gets the money himself or herself. In case of a death before or during the agreed upon
term, a beneficiary receives a lump-sum payment delivered by the insurer (insurance company). Permanent
life insurance is often called whole life insurance because it provides lifetime coverage – with the added ben-
efit of accumulating cash value over time. This accumulated cash value can be utilized by a policyholder to
borrow funds or in some instances, the owner can withdraw the cash value to help meet future goals, such as
paying for a child’s college education or constructing a house, etc. A person desirous of buying life insurance
should not be less than 16 years of age and should not exceed the age of 65 years.
(B.) Non-Life Insurance: Non-life insurance (also known as general insurance) insures the customer’s risk
of loss or damage to personal property or business asset in exchange of the premiums paid to the insurance
company. The non-life or general insurance policies may include one or more categories such as motor
insurance, health insurance, travel insurance, home insurance, marine insurance, engineering insurance
and so on. It is a matter of common knowledge that all of us have experience of suffering loss or damage to
house, office, shop, factory, machines, farm land, vehicles and so on at one or other points of life. In such a
difficult situation of one’s own life, a non-life or general insurance provides security to a person by indem-
nifying the loss. There can be anything out of a sudden. A house may catch fire. A farmer may lose all his
crops due to natural disasters such as landslides, soil erosion, cyclones, snow fall, glacier outburst, flood,
drought, etc. A motor vehicle can meet with a road accident. A non-life insurance policy covers the risk
such as mentioned above and an insurer (insurance company) pays back the loss or damage to the insured
person after assessing the loss in monetary value. Generally, such non-life insurance lasts for a year after
which there is a provision of renewing the insurance policy. Nepal being an agricultural country puts more
emphasis on crop insurance. The agricultural ministry of Nepal has arranged for the ‘Crop and Cultivation
Insurance, 2069 BS’ under the National Policy on Agriculture, 2061 BS. Under this arrangement, out of all
413<< Nova Social Studies Grade-10
the premiums for the insured sum of money 75% is paid by the Government of Nepal while 25% of the total
premiums are to be paid by the farmer – an insured in the present case. Similarly, the death of cattle is also
compensated by the insurer.
Examples of various items for which non-life insurance policy is purchased
Points to remember while going for insurance policy
(a.) There must not be any doubt or confusion regarding the purpose for which insurance is being done.
(b.) The name of the beneficiary (nominee) and his or her address must be clearly written on the insurance
policy.
(c.) Wrong description and information of any kind regarding personal life, business, profession, proper-
ty or family must not be given.
(d.) One must calculate in advance if all the premiums as agreed upon in the insurance policy can be paid
or not within the time period as mentioned in the insurance policy.
(e.) One must read everything written in the insurance policy carefully and should not sign the insurance
policy without fully understanding the pros and cons of the insurance proposal.
(f.) One must deal with a certified insurance agent who is well trained under the banner of ‘Insurance
Committee’.
(g.) After having paid the fees and first premium, one must not forget to take voucher from an insurance
agent or the insurance company.
(h.) The fact that one has taken one or more insurance policies must be brought into the knowledge of
other family members.
(i.) The date for renewal of insurance policy must not be missed and required fees must be deposited
within the due date.
(j.) All the papers of insurance must be kept safely.
Benefits of taking insurance policy:
(a.) Compulsory saving (b.) Compensation for loss or damage
(c.) Secured life (d.) Share in the profits periodically
(e.) Opportunity to get loan or credit in times of difficulty
(f.) Getting an opportunity for making an investment after receiving the lump-sum payment
Words and terms you would like to know
Lump-sum (n.): single payment of total amount; an amount of money that is given in a single payment, rather than
being divided into smaller periodic payments
Indemnify (v.): to pay compensation to somebody for loss, damage, or liability incurred; to provide somebody with
protection, especially financial protection, against possible loss, damage, or liability
Compensate (v.): to pay somebody for work done or for something lost
Premium (n.): the sum of money paid, usually at regular intervals, for an insurance policy
414 Nova Social Studies Grade-10 >>
Beneficiary (n.): somebody entitled to money or property by a will, trust, or insurance policy
Nominee (n.): a person or group that holds title to a security or piece of real estate but is not the true owner
Pros and cons (n.): advantages and disadvantages
Activities
1. Are you entitled to go for life insurance policy or not? Hold a discussion in the classroom and present
the types and nature of life insurance you would like to buy for yourself in order to cover the risks. Also
consider the time period for which you would like to take the life insurance policy.
2. What kinds of information you would give if anybody in your community enquires about life insurance?
Hold a discussion and prepare the final points regarding life insurance which you would share with
your community members.
3. Your family members must have taken life insurance policy. What amount of premiums do they pay?
What is the total monetary value of that insurance and what is the total period for which it lasts? What
are the other terms and facilities offered by the insurance company in the life insurance policy? Find out
all the facts and present them in the classroom.
4. Why is ‘Non-Life Insurance’ necessary? What roles does the Non-Life Insurance play in the agricultural
country such as Nepal? Make a pair in the classroom and exchange the views on the topic. Write down
your final conclusions in points.
5. All-risk insurance is an insurance that covers a wide range of incidents and perils. Elaborate on the term
‘all-risk insurance’ and discuss ‘a wide range of incidents and perils’ the insurance covers with the help
of appropriate illustrations.
Exercise
1. What is insurance? Explain its essential features. How does it work?
2. Differentiate between the ‘Life Insurance’ and ‘Non-Life Insurance’ with the help of examples.
3. Describe the mechanism, types and purposes of the ‘Non-Life Insurance Policy’.
4. Present a brief account of the evolution of business of insurance in Nepal.
5. Explain how insurance has benefitted the Nepalese society.
6. Mention in points as to what are the aspects one must look into or take care of while going for buying
insurance policy.
7. Explain with the help of real life examples how far ‘Life Insurance Policy’ and ‘Non-Life Insurance
Policy’ have benefitted your family, relatives, and friends.
Community Work
Visit a ‘Department of Agriculture’ office located nearby your place of residence and collect the necessary
information regarding insurance facility being given to farmers to cover the risks in agricultural practices.
Have a discussion with the Government officials in charge there to understand the various aspects and types
of insurance policies being offered or recommended by the Government of Nepal. Prepare a full report on it
to send a copy of it to the Ministry of Agriculture, the Government of Nepal.
415<< Nova Social Studies Grade-10
Lesson Revenue and Tax Collection
9
Government or Public Revenue: Meaning, Nature and Types
The income of the government through all sources is called public revenue (or public income). Since public
revenue is collected by the government from different sources, it is also known as the government revenue.
Government revenue is the incoming money receipts from various sources like tax, fees, special assessment
and prices. Government revenue or public revenue plays a crucial role in bringing about overall develop-
ment in the country through public investment. The more is the collection of public revenue, the better it will
be for the overall development of the country. Government revenue is in fact Government’s income that de-
termines the magnitude and scope of Government’s expenditure (public expenditure) for various develop-
mental purposes. Government revenue is preferred more to several kinds of borrowings by the Government
for undertaking different kinds of socially and economically productive projects. Modern Governments are
dynamic whose role and responsibility is not just to act as ‘policing state’ and to get limited to maintaining
internal law and order and protecting the nation-state against external aggression. Government’s scope has
widened to include both earning the cash (economic activity), doing the charity (welfare activity and social
security programs) along with disciplining the country (police and defense). Government raises revenue
(income) through taxes to spend on armies, roads, schools and hospitals, and on more indirect government
functions like market regulation or legal systems. A second is redistribution. It takes money in the form of tax
from the rich citizens and transfers the same to the poor citizens. Taxes are also levied to discourage harmful
and unhealthy behaviors of citizens. For example, high taxes paid on tobacco and wine discourages the ram-
pant use of such unhealthy products. This is the reason the Government collects revenues from the different
sources. Some are regularly collected whereas some are irregularly collected. Revenues are not repayable.
Some of them are obtained from the sale of public utilities whereas some are obligatory payments to the
government.
Depending upon the source of revenue, the public revenue is of following two types:
1. Tax Revenue: The tax is compulsory payment to the government without quid pro quo. The term without
“quid pro quo” here means that an individual has no right to directly demand social services in return to his
payment of tax nor has he any other choice except to pay the tax when it is levied on him. The government
does not repay it to the payers, nor does it do anything for the personal benefit to the payers. Thus, a tax
is a compulsory payment levied on the persons or companies to meet the public expenditure. It is the most
important and major source of public revenue. Government may require the members of the community to
contribute to the support of governmental functions through the payment of taxes.
416 Nova Social Studies Grade-10 >>
There are mainly two types of tax: Direct Tax and Indirect Tax.
(A.) Direct Tax: Direct taxes are those taxes levied directly on the individual or firms and they are the ones
which bear the tax-burden and pay the same. The burden of paying the direct taxes cannot be shifted in na-
ture and must be paid by the payers (individuals or corporations). Personal income tax, wealth tax, corporate
income tax, gift tax and expenditure tax are some of the examples of direct taxes. Direct taxes can be increased
or decreased as per the need and priority of the situation or circumstance. Direct taxes are equity-based and
progressive in nature. Direct taxes are used to check the inflation in control. The Government of Nepal earns
about 30% of its total revenue from the collection of direct taxes.
(B.) Indirect Tax: Indirect taxes are those taxes which are levied on one party but its burden (effect) falls on
the other party. The indirect tax is levied on goods and services rather than on income or profits of a person. In
this way, the indirect taxes are paid by the producers and traders (who produce the goods and services) but its
burden is taken by the final consumers. It is because the final consumers have to pay the price accordingly.
What we see here is that in case of imposition of an indirect tax the incidence (levy) and impact (burden) of
the taxation does not fall on the same entity. More indirect taxes mean more prices of goods and services.
Therefore, indirect taxes are also called expenditure (or consumption) taxes. Indirect taxes are not directly
levied on individuals and firms, rather these taxes are imposed on production and sale of commodities and
services. Custom duties levied on imports, excise duties on production, sales tax or value added tax (VAT) at
some stage in production-distribution process, are examples of indirect taxes because they are not levied di-
rectly on the income of the consumer or earner. Indirect taxes are convenient to adjust and hence are flexible in
nature. The foundation or a base line of indirect tax is quite wide as a result of which people cannot escape the
burden of this tax. The Government makes it sure to levy less amount of tax on the goods and services used by
the lower income group and impose more tax on the goods and services used by the middle and high income
groups of people. By levying the indirect taxes intelligently and smartly, the Government generates revenue,
discourages consumption of ‘harmful’ products and encourages the consumption of ‘good’ products.
Brief details of some of the well-known taxes
Details of some of the taxes as source of public (Government) revenue are as follows:
(a.) Personal income tax: It is collected on a pay-as-you-earn basis. This tax is charged in accordance with
progressive tax rate, meaning the more you earn, the greater would be the tax.
(b.) Capital gain tax: Capital gain is generally made on sale of capital assets, i.e., those assets not held for
sale in the ordinary course of business.
(c.) Corporate tax: Corporate tax refers to income, capital, net worth, or other taxes imposed on corpora-
tions.
(d.) Taxes on property: Property taxes may be imposed on immovable property (real property) and some
classes of movable property. In addition, recurrent taxes (or property taxes) may be imposed on net wealth
of individuals or corporations. There are three general varieties of property: land, improvements to land
(immovable fabricated things, e.g. buildings) and personal property (movable things). Real estate or real-
ty is the combination of land and improvements to land.
Property taxes are usually charged on a recurrent basis (e.g., yearly). A common type of property tax is an
annual charge on the ownership of real estate, where the tax base is the estimated value of the property.
(e.) Value added tax/Goods and Services Tax: A value added tax (VAT), also known as Goods and Services
Tax (G.S.T), Single Business Tax, or Turnover Tax in some countries, applies as the equivalent of a sales tax
to every operation that creates value.
(f.) Sales taxes: Sales taxes are levied when a commodity is sold to its final consumer.
(g.) Excise tax: Unlike an ‘ad valorem’, an excise is not a function of the value of the product being taxed.
Excise taxes are levied on the quantity, not the value, of product purchased.
(h.) Tariff: An import or export tariff (also called customs duty or impost) is a charge for the movement
of goods through a political border. Tariffs discourage trade, and governments may use them to protect
domestic industries.
417<< Nova Social Studies Grade-10
2. Non-Tax Revenue: Non-tax revenue or non-tax receipts are public or Government revenue not generated
by or from taxes. For example, fees for various services provided by the Government, escheat, grants and
foreign aid, fines and penalties come under the category of non-tax revenues. So, these examples show that
non-tax revenue is the recurring income earned by the government from sources other than taxes. We know
that the Government provides various services to the people in maintaining law and order situation and to
bring development in the state such as police and defense, social and community services such as medical
services, and economic services such as power and transportation. These services yield revenue for the
government.
Brief details of some of the commonly known sources of non-tax revenue
The following are the brief details of some of the non-tax revenues earned by the Government:
(a.) Fee: Fee is paid to the Government for the benefits received from it. Like tax, fee is also a compulsory
payment made by a person who receives a specific benefit or service from the Government. Examples
of paying fee to the Government are fees for the granting or issuance of permits or licenses like vehicle
registration plate permits, vehicle registration fees, building fees, driver’s licenses, hunting and fishing
licenses, fees for professional licensing, fees for visas or passports and so on. Thus, Government under-
takes a service for the common benefit of the citizens and receives the fee from those who get benefits
from such services.
(b.) Special Assessment: Special assessment is a compulsory contribution levied in proportion to the spe-
cial benefit derived to meet the cost of the specific improvement to property undertaken in the public
interest. Let us take an example: if the Government develops a particular region by constructing school,
road, stadium, hospital and so on, then the value of the property in vicinity appreciates. The government
(state) in such a situation has the right to extract a part of this unearned increment. This is how a tax is
imposed based on special assessment of rise in unearned income.
(c.) Prices and factor income: A government like any other entity renders different kinds of services to
the citizens, manufactures goods and sells them in open market for price. Income so earned by the gov-
ernment through prices charged on various kinds of goods and services provided constitute the non-tax
revenue. Government has complete or partial control over essential goods and services like petrol, gas,
electricity, communication, transportation, etc. Government with or without competition on the market
offers such daily essentials for price and hence earns revenue. Government also gives away its expert ser-
vices, buildings and land on hire and lease to various individuals and business organizations and earns
revenue (income).
(d.) Grants and foreign aid: Foreign aid and grants from another country or international financial insti-
tution to the country like Nepal fall under inter-governmental aid and hence form a part of public (gov-
ernment) revenue.
(e.) Fines and penalties: State (Government) is the originator, maintainer and terminator of law. The Gov-
ernment departments and law enforcing agencies impose fines and penalties in case of violation of laws
in different situations of personal and public life of a citizen. For example, not paying the dues of the bill
pertaining to electricity, telephone, water and/or any other services provided by the state invites fines.
Similarly, applying for license, examination form, etc requires strict adherence to time limit failing which
penalties are imposed. Crossing the due fixed date for completing the work too invites penalties.
(f.) Escheat: There are many cases where citizens die without having any legal heir appointed to claim the
property of the deceased. Claiming such property by the Government is known as escheat. This adds to
the Government’s property.
(g.) Profits earned by government enterprises: Like any other business organizations, Government too
undertakes lucrative economic activity normally under monopoly or monopolistic competition market
or both. Government in this manner controls communication, transportation, manufacturing of arms and
ammunitions, education, manufacturing goods, etc according to its convenience and expediency. Profits
so earned by these activities form the part of Government’s revenue or public revenue.
418 Nova Social Studies Grade-10 >>
Popular Taxes in Nepal: Nature and Application
With the gradual improvement in the status of the domestic economy and declining percentage of poverty,
the tax revenue has shown upward growth. The healthy increase in the public revenue has helped the Gov-
ernment of Nepal to sponsor and finance a fair number of development projects touching and transforming
the life of the people living in the rural areas of Nepal.
Below is the brief detail of most popular taxes which collect revenue for the Government of Nepal:
1. VAT – Value Added Tax: A value-added tax (VAT) is a type of consumption tax that is placed on a
product whenever value is added at a stage of production and at final sale. VAT is calculated on the
selling price for domestic sales and on the customs value for imported goods. It is a sales tax calculated
on all links in the sales chain. All links in the production and sales chain have to pay VAT on the sale/
value with a deduction for the VAT they themselves paid on purchasing the goods (as input VAT). It
means that each link in the chain pays tax on the value added by that link. The burden of this tax at the
last link falls on the consumer.
Vat originated in France and Nepal adopted this in 2054 BS. This tax system has a provision of tax re-
laxation too while taxing goods and services at several links as mentioned above. If a trader deals with
a business which exceeds 20 lakh NPR then he or she needs to get registered under VAT in Nepal. ‘The
Department of Inland Revenue’ issues a certificate to this effect to the concerned trader as a proof of his/
her registration for VAT. All of us need to get VAT bill after making a purchase of goods and services.
2. Inland tax: An inland tax is popularly known as an excise or excise tax (sometimes called a special ex-
cise duty). An inland tax or excise is levied on the sale, or production for sale. An excise is the indirect
tax which means that the producer or seller who pays the tax to the government is expected to try to
recover or shift the tax by raising the price paid by the buyer. Inland tax is imposed on all the goods
and services produced within the country. The goods and services produced in one region that move
to another region within the country must do it by paying the excise – the inland tax. An inland tax is
imposed either on the basis of quantity or on the basis of price. Inland tax levied on wine, cigarette, noo-
dles, beetle nuts, molasses, etc on the basis of quantity while it is levied on the basis of price percentage
in case of plastic items, passenger vehicles, printing press, TV and others. Similarly, the goods subjected
to inland tax are lumped together into three categories - beverage and wine group, tobacco and cigarette
group and the third one – self distributed group.
3. Custom duty: Custom duty is a tax imposed on imports and exports of goods. Custom duty may also
be levied to protect the domestic industry from foreign competition. Each country has its own laws and
regulations for the import and export of goods into and out of a country. Further ahead, the import or
export of some goods may be restricted or forbidden. Generally, a country imposes custom duty in ac-
cordance with the agreements reached between the exporting and importing countries and the existing
international laws. Every country sets up one or more custom points at different points of their geo-
graphical boundary. So, custom represents an authority or agency in a country responsible for collecting
tariffs (duty) and thus control the flow (movement) of goods and services in the form of animals, trans-
ports into or out of a country. The Government of Nepal has set up custom offices at major points such
as Kakarbhitta, Biratnagar, Birgunj, Bhairahawa, Nepalgunj, etc. Besides, the Government of Nepal has
also set up some custom offices operating at small scale level at different other border areas connecting
Nepal with both the northern as well as southern neighbors: China and India.
4. Income tax: A tax paid on the money that a person or business receives as income is called an income
tax. So an income tax is levied on the net income of an individual or a business. Both an individual as
well as businesses are taken as financial entities which generate income and the government imposes an
income tax on financial income generated by all entities within its jurisdiction. This is the most ancient
tax which dates back to 12th century England. In those days, an income tax was levied on economic sec-
tors such as animal husbandry, fishery, and agriculture. Now, its range has widened and covers many
more areas in the economic activities like businesses, employment (jobs), investment and any such ac-
tivity which accrues profits or losses. The Government of Nepal levies this tax in all kinds of economic
activities. However, the organizations which do not function for making profit have been exempted
from paying income tax. Examples of such organizations are non-commercial sports organizations, po-
litical parties registered under the Election Commission of Nepal.
419<< Nova Social Studies Grade-10
There are at least eight types of taxes that a local body in Nepal can levy and collect as per the provisions
mentioned in the ‘Local Self-Governance Act of Nepal.
Words and terms you would like to know
Revenue (n.): Revenue is the amount of money that a government or a company actually receives during a specific
period.
Duty (n.): Duty is a tax levied on certain goods, services or transactions. Duties are enforceable by law and are imposed
on commodities or financial transactions, instead of individuals.
Exempt (n.): to free somebody from obligation
Inflation (n.): price-rise
Obligatory (adj.): required by law or by a moral or religious rule
Public Expenditure: Public expenditure is spending made by the government of a country on collective needs and
wants such as pension, provision, infrastructure, maintaining law and order situation, defense and military expendi-
ture, etc.
Activities
1. Search on your own what are taxes which are levied and collected by the autonomous local bodies in
Nepal as per the provisions mentioned in the Governance of the Local Body Act.
2. Your family members must have paid taxes to the Government. What are the areas of developments on
which the Government has spent the revenue collected from your family? Have a discussion with the
representatives of the different political parties to get the idea of the priorities they attach for spending
the public revenues.
3. Excises are inland taxes, whereas customs duties are border taxes. Organize an extensive discussion ses-
sion in your classroom to find out the differences between excise duty and custom duty. Write them
down on the chart paper and display it on the wall of the class or on the display board.
4. In case of imposition of an indirect tax the incidence (levy) and impact (burden) of the taxation does not
fall on the same entity. Analyze it with the help of examples along with your classmates. Write down the
illustrations you used while analyzing the statement.
Exercise
1. What is revenue? Differentiate between the tax revenue and non-tax revenue.
2. Describe in detail the popular taxes levied in Nepal.
3. Illustrate the characteristic features of the tax revenue.
4. Present the advantages and disadvantages of the direct taxes in a table.
5. Make a list of advantages and disadvantages of indirect taxes.
6. Inland tax is the main source of the Government revenue. Justify the statement.
7. What is meant by custom duty? Explain its significance in the context of Nepal.
8. Define income tax. What are its different types?
9. Outline the major characteristic features of the income tax.
10. What is VAT? Explain the process how VAT is levied and assessed.
11. Briefly explain the five major sources of non-tax revenues.
12. Choose any three taxes each from the categories of direct tax and indirect tax to highlight their essential
features.
Community Work
Visit your village council (Gaunpalika) or municipality to collect relevant information on types of taxes the
concerned local body levies and collects. Make a list of them with full description and display the same on
the notice board of your school.
420 Nova Social Studies Grade-10 >>
Lesson Consumer Rights
10
Consumer: Definition and Meaning
A consumer is a person or organization that uses (consumes) goods and services. A consumer is defined as
someone who acquires goods or services for direct use or ownership rather than for resale or use in produc-
tion and manufacturing. The Consumer Protection Act, 2054 (1998) under section 2 (a) defines consumer as
an individual or institution consuming or using any consumer good or service. All of us are consumers as
we cannot survive and progress in our life without using goods and services as per our need, preference
and priority. We buy a lot of things which include both goods and services to fulfill our needs. The “goods”
which we buy generally satisfy our needs of food, clothing, fuel, vehicles, stationery, books, telephone,
mobile, T.V., radio, other electronic items, etc. “Services” are the facilities offered to us by various agencies
with or without payment such as water, electricity, health and sanitation, education, transport, communi-
cation, etc. Thus, we are all consumers irrespective of our age, social and economic background and level
of education. As we consume goods and services as an individual or organization, there are producers or
manufacturers of different types of goods and services. These producers or manufacturers sell us goods
and services to earn profits, at the same time they are also the consumers of goods and services which they
require for their survival and growth. Therefore, all the producers (or manufacturers) are consumers but all
the consumers are not producers.
A consumer is a person that buys goods and services. A consumer must not be exploited.
An insight into why to have consumer rights
All of us use (consume) a variety of products every day. Not all the products which we use can be made at
home and therefore, we need to go to the market for buying them from shops. Even for those products which
we make at home we require the raw materials and these need to be purchased (bought) from the market.
We all have the experience of going to the market and buying products. What has been your experience
in the market while buying goods from different shops? Have you found goods meeting with a standard
of quality? Do the products you purchase always fit in your requirement? Have you ever experienced the
feeling of dissatisfaction with the quality or quantity of the products you purchased? Do you buy products
on the basis of advertisements? Do your purchases match with the information shared in the advertisements
and the statements of the salesperson?
Nepal is one country where a number of people are ignorant about their consumer rights and the people
are ill informed. The information and guidance they get regarding the quality and use of products comes
only from the manufacturers and shopkeepers. Most of the times, the manufacturers and shopkeepers want
to make quick and easy money by misleading the customers (consumers) even if it causes harm and dam-
age to the health and safety of innocent people. With no good governance in the country and without the
knowledge of consumer rights, innocent people get cheated by the manufacturers (producers), sellers and
421<< Nova Social Studies Grade-10
traders who sell the sub-standard goods and services and charge high price. The law enforcing agency is
also found to get under the influence of the powerful lobby of manufacturers and traders leaving the con-
sumers unprotected and completely exploited in the hands of the dishonest manufacturers (producers) and
traders. In a circumstance like this how can we make a satisfactory purchase without being cheated? How
do we get the best return for our money? It is under this background, the Constitution of Nepal, 2072 BS
has given protection to consumers by declaring the consumer rights to be the fundamental right of citizens.
Article 44 mentions the right of consumers and declares that every consumer shall have the right to standard
(quality) products (goods and services) for consumption. In case a person suffers pain, agony or harm from
the use or consumption of the sub-standard goods or services, s/he has the right to be duly compensated in
accordance with the existing laws. This is how the needs and reasons for protection of consumers’ rights at
every level have become not only the priority but absolute necessity.
Consumer Rights: Definition, Nature and Types
Consumer rights are a series of protections and safeguards for the healthy living and wellbeing of every
individual and organization against the use or consumption of the sub-standard products (goods and ser-
vices). Consumer rights get the strength and protection from the declaration made in the constitution of a
country, an international treaty, a declaration on human rights in UNO (United Nations Organization), and
other specific laws to specifically protect the consumer rights.
The United Nations Guidelines for Consumer Protection (UNGCP) act as an international reference point
of the consumer movement. The guidelines were adopted by the UN in 1985 AD after the 10-year long
campaign initiated by the CI (Consumers International). These guidelines gave legitimacy to the principles
of consumer rights and practical support and guidance for developing national consumer protection leg-
islation by member states of United Nations. Consumers International (CI) is the world confederation of
consumer groups. It was founded on April 1, 1960 and its head office is located in London, England with
regional offices spread across the continents. The guidelines given by the UNO were ‘translated’ into clear
consumer rights by the CI (Consumers Internationals). These consumer rights are the right to the satisfaction
of basic needs, the right to safety, the right to be informed, the right to choose, the right to be heard, the right
to redress, the right to consumer education and the right to a healthy environment. Thus, the UNO (United
Nations Organization) has recognized a total of eight rights as the consumer rights.
Consumer rights are protected by both the national agencies as well as the international agencies.
Consumer rights are a series of rights which every consumer must know.
422 Nova Social Studies Grade-10 >>
Consumer Protection Act, 2054 B.S.
The Government of Nepal adopted the Consumer Protection Act, 2054 (1998) on Baishakh 1, 2055 with a
view to protect and safeguard the consumer rights. Section 6 of the above Act provides the list of several
rights of consumers. These consumer rights are as follows:
(a) Right to be protected from the sale and supply of consumer goods and services which are harmful
(injurious) to life, body, health and property of consumers
(b) Right to be informed about the prices, attributes, quantity, purity, quality, etc. of consumer goods and
services in order to be safe and secured from unfair trade practices
(c) Right to have enough opportunity to choose consumer goods and services at competitive prices as far
as possible
(d) Right to have consumer-related grievances (complaints) lodged and then redressed by an appropriate
agency to protect and safeguard the rights and interests of consumers
(e) Right to be heard and compensated against exploitation or any hardships undergone by a consumer
owing to unfair trade practices
(f) Right to consumer education
Instructions for producers to be followed
The section 9 of the Consumer Protection Act, 2054 (1998) has highlighted a set of instructions for pro-
ducers to be followed with a view to protect the well-being of the consumers. A producer is required to
compulsorily mention the following particulars on the labels of consumer goods:
(a) Name and address of the producer, and registration number of the industry
(b) Description of the ingredients along with their quantity and weight on the packet of consumer goods
such as food and medicines
(c) Symbol of standardization referring to the quality of the consumer goods, if any
(d) Instructions regarding how to use the consumer goods and the possible impact of such consumption
(e) Price, batch number, production date and expiry date of the consumer goods
(f) Date of guarantee and other necessary information such as date of manufacturing and expiry on
consumer goods such as medicine, foodstuffs, beverages, electronic goods, hardware and machinery,
etc.
(g) In case of consumer goods which are inflammable, dangerous or fragile, precautions for their safety
(h) Other particulars as prescribed and suggested under different laws and by the executive orders of the
Government
The section 10 of the Consumer Protection Act, 2054 (1998) has banned some of the actions concerning
with consumer goods or services. These actions are prohibited. Below is the list of such prohibited
actions:
(a) To produce, sell, supply, export or import sub-standard consumer goods
(b) To imitate any of the consumer goods in such a manner as to mislead the consumers
(c) To engage in unfair trade practices by making false or misleading publicity or advertisements
regarding use and efficiency of any of the consumer goods or services
(d) To produce, sell or supply any of the consumer goods or services which may cause harm to the health
of the consumers
(e) To take such other actions as prescribed under the law
World Consumer Rights Day
World Consumer Rights Day (WCRD) was inspired by an address given by the US President John F. Ken-
nedy to the US Congress on 15 March 1962, in which he highlighted the issue of consumer rights. He was
the first world leader to do so. The consumer movement now marks that date every year as a means of
raising global awareness about consumer rights. The first WCRD was observed on 15 March 1983 and has
since become an important occasion for mobilizing citizen action. Since then World Consumer Rights Day
is celebrated on 15 March every year.
423<< Nova Social Studies Grade-10
Procedure for lodging consumer’s complaints and Government’s Vigilance
A consumer has the right to lodge complaint if s/he is cheated in any manner regarding the goods or
services s/he purchased. A consumer deserves the best possible quality of products and the sub-standard
product definitely entitles a consumer to lodge a complaint against the seller or manufacturer. A consumer
can lodge a complaint either personally or through other representatives on his or her behalf. A consumer
is compensated financially for a harm or damage caused to his or her health and property owing to the use
of the sub-standard products. As per the Consumer Protection Act, a complaint regarding the violation or
infringement of one or more consumer rights can be lodged with the Commerce Department, District Ad-
ministrative Office, the nearest police station, the concerned department or ministry. The Government of
Nepal may conduct or cause to conduct necessary inquiry and inspection if any person is engaged in any
unfair trading activity thereby affecting the price of the consumer goods or services by imposing monopoly
or selling sub-standard goods. The ‘Inspection Officer’ deputed or appointed by the Government of Nepal
may inspect, conduct inquiry or search to ascertain (examine) whether or not goods or services being sold
in the market are safe and suitable for consumption. The Inspection Officer takes a sample of such goods (or
service) in the prescribed manner and imposes a ban on the production and sale or supply of such goods or
services for a prescribed period if they fall short of prescribed standard. Government of Nepal shall publish
a notice of the determination of the standard of any of the goods and services in the Nepal Gazette. Every
vendor shall keep at a conspicuous place of shop a price-list of all consumer goods sold and supplied by
him/her, explicitly mentioning the wholesale and retail prices. Government of Nepal issues necessary direc-
tives to create an atmosphere favorable for the protection and promotion of the rights of consumers through
consumer education at different platforms like schools, colleges and in general life through news, views,
notices, pamphlets and advertisements.
Consumer Education: Nature and Benefits
Consumer education means to educate the consumers as to what, where, when, how and how much to
buy and how to use what they have bought. Consumer education is all about teaching people the skills, at-
titudes and knowledge required for living in a consumer society. It is a basic component of general educa-
tion, which helps the consumers in their attempts to organize their daily lives in a sustainable way. Many
people simply do not know how and to what extent their consumer behavior can influence the economy,
the environment and the society. This is where consumer education steps in and helps the people achieve
maximum satisfaction and utilization of his resources.
Consumer education makes the consumers more responsible and hence protects them.
424 Nova Social Studies Grade-10 >>
Consumer education protects a consumer from the malpractices of the seller and assists them in making
judicious purchases. The following are the benefits (advantages) of consumer education:
(a.) Consumer education helps a person in making right purchase through right selection.
(b.) Consumer education helps the consumer understand the nature of problems which he or she faces
while making purchases and further helps a consumer to work out on the required solutions.
(c.) Consumer education gives the consumer full information of marketing conditions like various places
or sources from where a commodity or product can be purchased, sources from where to get the best
goods at affordable and reasonable prices. In this way, a consumer makes a right decision regarding
shopping.
(d.) Consumer education trains a consumer to read and understand different signs and symbols which
denote various levels of standardization.
(e.) Consumer education keeps a consumer alert with regard to taking due notice of all the decisions made
by the Government with regard to consumer welfare.
(f.) Consumer education suggests a consumer to obtain bills, receipts and guarantee cards for all purchas-
es made and keep them safely to make a claim later in case a product purchased does not meet the
required standard and expected purpose.
(g.) Consumer education helps the consumer in getting maximum satisfaction by proper utilization of his
money and leads a better living standard.
Thus, consumer education empowers the consumers and develops sense of responsibilities in them. It is
because no right is enjoyed without fulfilling responsibilities. While asserting one’s own rights, a consum-
er must not forget to maintain discipline in a market and be cautious at the time of making a purchase.
A consumer should not misuse the customer services offered by manufactures and shopkeepers like free
home delivery, exchange within a specified period, credit, etc. After reporting the cases of cheating, a
consumer is expected to cooperate with law enforcement agencies in getting the guilty traders punished.
Words and terms you would like to know
Right to safety: The products that consumers buy for their intended purpose must be reasonably safe when used as
directed. Defective safety equipment in cars, excessively flammable home products, and dangerous toys are a few
examples of products that are unsafe.
Right to choose: This means having competing goods and services that offer alternatives in terms of price, quality, and
service for consumers in order to choose one amongst many.
Right to be heard: This means an assurance that government will take heed of the concerns of consumers and will
protect their interests by wisely enacted statutes and administrative regulations.
Unfair trade practices: It means the sale or supply of consumer goods or services by making false or misleading claims
about their actual quality, quantity, price, measurement, design, make, etc., or the sale or supply of consumer goods
produced by others by affecting their quality, quantity, price, measurement, design, make, etc.
Label (n.): It means a tag, symbol, picture or other descriptive objects written, printed, lithographed, symbolized, em-
bossed, affixed or otherwise shown in consumer goods or their containers.
Vendor (n.): A vendor is an individual or a governmental or non-governmental organization or cooperative society
selling and supplying consumer goods or services on a wholesale or retail basis.
Adulteration (n.): Adulteration means addition of certain things or their removal from a product resulting in its poor
quality. Adulteration can also occur because of the use of poor quality raw materials or poor method of production or
inappropriate storage of finished products. Adulteration is intentional in most cases. Adulterated products are harmful
for the health and safety of consumers.
Activities
1. Many times, when the manufacturers want to raise prices, they temporarily withhold the supply of
their products from the market, thus causing artificial scarcity. Even in normal periods, when the sellers
425<< Nova Social Studies Grade-10
expect a rise in prices, they hoard products. For example, you may find such a situation for petrol,
butter, cooking oil, cooking gas, etc. quite often. This is how needy consumers are exploited by forcing
them to pay unreasonably high prices for products all due to hoarding or hiding of certain products and
their sale in a black market.
How does a black market compromise and hamper the consumer rights? Form several groups in the
classroom and hold a discussion on the question. Write down the conclusions of the discussions held in
the classroom.
2. What kind of constitutional and legal remedies are available for consumers in the event of violation
(infringement) of their consumer rights? Have a discussion with your Social Studies teacher and write
down the conclusions.
3. Invite a consumer rights activist or someone who spreads awareness on consumer rights to your school.
Also invite the representatives from different political parties and women rights activists. Organize
an interaction program and let the students ask questions on various issues that we as consumer face
and invoke them to bring out the interconnectedness amongst the Government, consumer rights and
women empowerment. Prepare a news report on this interaction program and get it published in a
national daily.
4. Write a song or a poem for raising consciousness among the people regarding consumer rights. Also
compose a lyric of it.
5. Have you or your family members ever been cheated by the shopkeepers or vendors using defective
weights and measures? Shopkeepers use several malpractices while measuring or weighing what we
buy. These may be one way or the other to deceive the customers:
Use of irregular weights like bricks or stones or hollow bottom of iron weights which weigh less
than the actual weight
Use the weighing balance with a wooden beam that does not remain horizontal when the pans are
empty
Pointers of weighing scale that do no rest at zero even when no weight is put on the pans
Placement of a piece of magnet or cardboard under the pans of a weighing scale
Meters at petrol pumps and in auto-rickshaws and taxis not showing zero readings, use of a mea-
sure that may be dented or with a false bottom to give less measurements of liquids like milk or oil
Use of a short or dented measuring rod, or by stretching the fabric or measuring the fabric on
marked table tops to measure less fabric, etc.
The shopkeepers’ intention in all the above cases is to give you less than the promised quantity without
your knowledge and earn much higher profits at the expense of consumer’s harm and exploitation.
Hold a discussion on the above and share your experience in writing and get it published in a daily
newspaper under the heading, “Consumers – Rise, Awake and Fight for Your Rights”.
6. You may have heard of people suffering from diarrhea and vomiting after eating food and sweets from
shops or roadside hawkers. This may be due to adulteration of the food with harmful colors, stale
ingredients, poor quality cooking oil, etc. These food items may also have been polluted with dust
and germs as they are kept in open. Cases of people getting electric shocks from poorly assembled and
designed electric appliances such as irons, heaters, immersion rod may also not be new to you. Many
fabrics shrink or the color fades after the very first wash. Readymade garments that are stitched badly
or have loose buttons are the other examples of poor quality products.
Write your own experiences on the line of above description of adulteration and poor quality of products
you or your family members have purchased, consumed and then suffered. Hold a discussion in the
classroom on it and suggest measures or steps to avoid such a bad and harmful purchase of products.
What will you do to teach lessons to the sellers or vendors who are selling the adulterated or poor
quality products?
426 Nova Social Studies Grade-10 >>
7. Collect the advertisement from a newspaper/magazine for all types of electrical and electronic items.
Also collect a handbill advertisement on discount sales of garments/food items, shoes and baby products.
List the information given on these advertisements. Check whether they give all the information you
need to make a purchase. Find out how many of them give correct information.
8. Some salespersons do not pay attention to consumers. They behave rudely and do not show all the
items. Neither do they give a proper demonstration of usage of electrical and electronic products or
home appliances. In such a situation the consumers get very little help from these salespersons while
making choices. Also there are no standardized consumer booklets available that one can refer to. What
would you do in such a situation as a consumer in order to protect your personal consumer interests
and rights and for others? Hold a discussion in the classroom and write down the outcomes.
Exercise
1. Explain the meaning of consumer rights. Make a list of all the consumer rights.
2. Mention all the mandatory instructions and information which must be included on a product by a
manufacturer as per the provisions of the Consumer Protection Act.
3. Prepare an editorial referring to all the efforts made and steps taken in areas of protection of consumer
interest and rights.
4. Evaluate with the help of appropriate illustrations whether or not the efforts made towards protecting
and preserving consumer rights are heading in the right direction.
5. Pick up any one institution or organization which looks after the interests of consumers and prepare a
specimen of news report illustrating its activities.
6. Consumers are cheated in the market because they do not get proper “consumer education”. What is
consumer education? Highlight the benefits of consumer education in school at secondary level.
7. What is adulteration? How does it affect the health and safety of consumers? Illustrate with the examples
which you have seen or experienced.
9. List any six items of information that should be mentioned on a label of a product.
10. What is standardization? List the standardization marks available in the Nepalese market and describe
them.
11. What do you understand by wise (smart) buying habits? Explain in detail in relation to the purchase of
the garments and daily use consumer items.
Community Work
Prepare a report based on the information you have collected from the consumer rights activists or the offi-
cials working in the consumer protection offices and departments.
427<< Nova Social Studies Grade-10
UNIT
9
Our International Relations And
Its Effects
Learning Objectives:
After the completion of this Unit, students will be able to......
State the functioning of different organs of the United Nations Organization (UNO)
Appreciate the objectives of UNO and the principles according to which it works
Describe the works done by UNO and its specialized agencies in Nepal
Present the concept of regionalism and globalization along with their significance in our
individual as well as collective life
Assess the impact of contemporary events on our life and livelihood
Lesson United Nations Organization
(UNO) and Its Organs
1
Creation of the United Nations Organization
The United Nations is the outcome of a long history of efforts to promote international cooperation begin-
ning from the late 18th century when German philosopher Immanuel Kant (1724-1804) proposed a federa-
tion or “league” of the world’s nations. Kant believed that such a federation would help countries to unite
in pursuit of international peace and punish those nations that committed an act of aggression. The experi-
ence of two world Wars – First World War (1914-1918) and Second World War (1939- 1945) - convinced the
world leaders to have one international organization that must have universal acceptance in maintaining
and enforcing international peace in the world. The failure of earlier experiment of establishing interna-
tional organization “League of Nations” (1919) – considered as predecessor of United Nations after the
First World War was a bitter experience for advocates of international peace and cooperation because the
League could not stop the Second World War. Despite the failure of the first experiment of the League of
Nations in arbitrating conflict and ensuring international peace and security prior to World War II, the
hope for creating another more potent international organization did not die. The major Allied powers
agreed during the World War II to establish a new global organization to help manage international affairs
and avoid war to solve international disputes.
In this series of efforts, the allied countries organized a conference on June 12, 1941 in London with a view
428 Nova Social Studies Grade-10 >>
to cooperate with each other in establishing international peace. This London conference issued a joint
declaration emphasizing on establishment of international peace and security. After that, United States
president Franklin D. Roosevelt and British Prime Minister Winston Churchill signed the Atlantic Charter
on August 12, 1941 while sailing in the warship in the Atlantic Ocean and pledged to work toward creating a
more effective system to keep world peace and promote international cooperation. On January 1, 1942, repre-
sentatives of the Allies –the World War II coalition of 26 nations fighting against Germany and Japan – signed
a “Declaration by United Nations” accepting the principles of the Atlantic Charter. This declaration had the
first formal use of the term United Nations – a name originally coined by President Roosevelt. On April 25,
1945, the United Nations Conference on International Organization (UNCIO) was convened in San Francis-
co attended by representatives of 50 countries of the world from all geographical areas of the world. This
San Francisco conference produced the final charter for United Nations seeking all the world’s nations to a
common set of basic rules governing their relations. Finally, the UN officially came into existence on October
24, 1945, with 51 member countries as their original members and began to function in accordance with the
provisions of the UN charter.
United Nations Organization: An Introduction
The UN day is celebrated on October 24 every year all over the world. Up to now, a total of 193 countries
have joined UNO as its members. The UN Charter has 19 chapters and a total of 111 Articles. Headquartered
in New York, United Nations has six official languages: English, French, Russian, Spanish, Chinese and
Arabic. In fact, the Arabic was included as official language in UNO in 1973 AD. The Secretariat uses two
working languages, English and French.
Preamble of the United Nations begins with the phrase “We the peoples of the United Nations” to indicate
towards the collective responsibility of humankind to save the succeeding generations from the scourge of
war with a view to promote social progress and better standards of life in larger freedom. United Nations
focuses on individual – a human person - and strives towards achieving not only the equal rights for men
and women but also for nations large and small. It upholds the dignity and worth of the human person to
reaffirm faith in fundamental human rights. Since United Nations is fully committed towards minimizing
(if not fully ending) the armed conflicts in the world, it practices tolerance and exhorts the nations to live
together in peace with one another as good neighbours. This helps in uniting our strength to maintain
international peace and security thereby facilitating this international machinery (institution) to promote
economic and social advancement of all peoples.
Chapter 1 of UN Charter deals with purposes and principles of the United Nations. Article 1 of Chapter 1
of UN Charter underlies the purposes of United Nations as follows:
The Purposes of the United Nations are:
1. To maintain international peace and security,
2. To develop friendly relations among nations to strengthen universal peace based on respect for the
principle of equal rights of the people,
3. To achieve international co-operation in solving international problems of an economic, social, cultur-
al or humanitarian character,
4. To promote and encourage respect for human rights and for fundamental freedoms for all without
distinction as to race, sex, language, or religion; and
5. To be a centre for harmonizing the actions of nations in attainment of above ends (purposes).
Article 2 of Chapter 1 of UN Charter highlights the following principles of United Nations in pursuit
of achieving the stated purposes of this organization:
The Principles of the United Nations are:
1. Sovereign Equality of all the Nations: The Organization is based on the principle of the sovereign equal-
ity of all its Members.
2. Fulfilling the Obligations under the Present Charter in Good Faith: All Members shall fulfil in good faith
the obligations assumed by them in accordance with the present Charter.
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3. Peaceful Settlement of all the International Disputes: All Members shall settle their international dis-
putes by peaceful means in a manner that does not endanger international peace and security, and
justice.
4. Respect for Sovereignty and Territorial Integrity of Other Nations: All Members shall honour the terri-
torial integrity or political independence of any state.
5. Cooperation and Assistance from the Member-states to take Actions under the Charter: All Members
shall extend full cooperation to United Nations as per the present Charter and shall refrain from giving
assistance to any state against which the United Nations is taking preventive or enforcement action.
6. Non-interference with the Domestic Jurisdiction: United Nations shall respect the domestic jurisdiction
of all the states and will not interfere with it unless threats to international peace exist.
Structure of the United Nations Organization: Organs of the UNO
The United Nations works through five principal organs [formerly six – the Trusteeship Council suspended
operations in 1994, upon the independence of Palau (Country in the Western Pacific Ocean: the last remain-
ing UN trustee territory)], the General Assembly, the Security Council, the Economic and Social Council
(ECOSOC), the Secretariat, and the International Court of Justice. These organs serve different functions
to meet the aims of United Nations in political, socio-cultural and economic spheres of global community.
Five Principal organs of UNO
1. General Assembly: Article 9 to 22 of the UN Charter deals with the ‘General Assembly’. The General
Assembly consists of all UN member states and is the main deliberative assembly of the United Nations.
General Assembly, being the deliberative body of the United Nations, earns the nickname as “Parliament of
United Nations” or simply a “World Parliament”. Each member state sends five representatives in the Gen-
eral Assembly. It provides a unique forum for multilateral discussion of the full spectrum of international
issues covered by the UN Charter. The Assembly meets in one regular session each year – from the third
Tuesday of September up to Christmas (December 25) but General Assembly may meet in special sessions
at the request of the Security Council or a majority of Assembly members. For every session of the ‘General
Assembly’ one chairperson and 17 vice chairpersons are elected. In order for ‘General Assembly’ to function
smoothly different kinds of committees - five in number - are constituted. The Assembly may also meet in
emergency session within 24 hours.
The General Assembly may discuss any question or matter brought before it and may make recommendations
to member nations and to the UN Security Council – the action-taking organ. Resolutions and recommenda-
tions passed by the General Assembly pertaining to maintenance of international peace and security represent
the worldwide public opinion. Such a resolution and recommendation passed by the General Assembly is
almost impossible to ignore by any country in the world. The General Assembly has exclusive authority to set
the UN budget which is funded by all the member-countries according to a set quota. General Assembly has a
430 Nova Social Studies Grade-10 >>
power to appoint the UN Secretary General on the recommendation of the Security Council. It also elects the
members of the Economic and Social Council (ECOSOC) and the judges of the International Court of Justice.
The General Assembly endorses the membership of a country by approving a country as a member of this
world body.
2. Security Council: Articles 23 to 50 of the UN Charter deal with the ‘Security Council’. The Security
Council has 15 members, of which five are permanent. These five permanent members are the United
States, Russia, the United Kingdom, France, and China. The other ten members are elected by the General
Assembly to serve for non-consecutive two-year terms. The members of the Security Council represent
the geographical regions of the entire world. For example, six members from Africa, two members from
Latin America, one member from Europe and two members from other countries are appointed for two
years as the non-permanent members of the Security Council. Nepal was elected as the non-permanent
member of the Security Council two times in the past.
Nine affirmative votes (Yes-Votes) are required to pass a resolution or to take decision on any substantive
matter (important issue directly linked with maintaining world peace and security). A negative vote from
any of the five permanent members prevents the adoption of any resolution and impedes the execution of
the decision on substantive matter even if it has received the required number of nine affirmative votes.
This negative vote is known as the VETO right of the great powers (five permanent members). Thus,
VETO is a negative vote cast by any of the five permanent members of Security Council to halt the ‘en-
forcement action’ or to block the UNSC resolution.
The United Nations Security Council (UNSC) is the only action-taking organ for the maintenance of in-
ternational peace and security. Its power includes the establishment of peacekeeping operations, the im-
positions of international sanctions, and the authorization of military action. All these powers are “en-
forcement actions” of Security Council ranging from economic sanctions (blockade) to military measures.
Security Council exercises its powers through UNSC resolutions (United Nations Security Council resolu-
tions). Any UN member may bring a dispute that is likely to breach international peace before the Security
Council for enforcement action. Besides, the Security Council exercises its powers in the matters related
with entry of a new country as a member of the UNO, regulating or operating the functioning of IPKF
(International Peace Keeping Force) around the world, making recommendation for the appointment of
the UN Secretary General to the General Assembly, investigating the issues of events likely to endanger
the international peace and security and suggesting remedies or solutions to them.
3. Economic and Social Council (ECOSOC): Articles 61 to 72 of the UN Charter deal with the ‘Economic
and Social Council’. UN General Assembly elects the representative-countries (member-states) of Economic
and Social Council (ECOSOC). There are a total of 54 representative-countries or member-states in ECOSOC
– 18 members are elected each year for 3-year term. Each representative country is elected for the time period
of 6 years. All the geographical regions are represented in the ECOSOC like 11 members from Asia, 14 from
Africa, 10 from Latin America, 6 from Eastern Europe, 2 from Western Europe and 13 members from the rest
of the countries of the world. The ECOSOC has a total of 9 commissions to look after the issues concerning
social and economic affairs of the world.
ECOSOC holds a four-week session each year in July. The decisions are taken in the meetings of Economic
and Social Council through a simple majority where each member has one vote. After that the decisions are
sent as recommendations to the General Assembly. The problems of developing nations are its major con-
cerns which are the subject-matter of the decisions.
The ECOSOC (United Nations Economic and Social Council) is responsible for coordinating the economic,
social, educational, cultural and related works around the world and make valuable recommendations on
them. The “specialized agencies” such as WHO (World Health Organization), ILO (International Labour Or-
ganization), UNICEF (United Nations International Children’s Emergency Fund) etc working in the above
fields are affiliated with the ECOSOC. All such specialized agencies work under the overall guidance given
by the ECOSOC. The council carries out studies on international economic, social, humanitarian, cultural,
educational, and related matters. It coordinates the activities of the UN’s specialized agencies in these areas.
The ECOSOC works in areas of promotion and preservation of fundamental rights of the people in different
431<< Nova Social Studies Grade-10
parts of the world and makes recommendations in this regard. It carries out all other responsibilities entrust-
ed by the General Assembly.
4. The Trusteeship Council: Articles 86 to 92 of the UN Charter deal with the ‘Trusteeship Council’.
The United Nations Trusteeship Council was established to help ensure that trust territories were adminis-
tered for the welfare of the residents who lived there. The trust territories were those countries which were
freed after the Second World War and had gained independence from the European colonizers. Owing to
the poor human resource and lack of education, science and technology the trust territories were unable to
create a good administrative mechanism. Thus, all the five permanent members of the Security Council took
upon themselves to administer these territories and decided to train and educate the manpower there so that
they could manage their own affairs at political, social and economic levels. With the independence of Pa-
lau in 1994, the Trusteeship Council has suspended its operations. Palau, officially the Republic of Palau, is
an island country located in the western Pacific Ocean.
5. International Court of Justice: Articles 92 to 96 of the UN Charter deal with the ‘International Court of
Justice’. The International Court of Justice, located in the Peace Palace in Hague, Netherlands is famous
as the World Court or ICJ and acts as the primary judicial organ of the United Nations. There are total
of 15 judges in ICJ elected for nine years. No two Judges may be nationals of the same state. Judges in ICJ
(International Court of Justice) are elected by majority votes in the UN General Assembly and the Security
Council. The judges, one-third of whom are elected every three years, are eligible for re-election. The judges
elect their own president and vice-president, each of whom serves a three-year term, and can appoint ad-
ministrative personnel as necessary. Although the seat of the ICJ is at The Hague, sessions may be held at
the place wherever the court desires it. French and English are the official languages of the court. The ICJ is
permanently in session and is an autonomous body. The judges deliberate in secret to arrive at the verdicts
(decisions) but deliver their verdicts – in both English and French – in open court. Any judge who does
not agree with the court’s decision may file a separate opinion. The court’s judgment is final and without
appeal.
ICJ settles disputes submitted to it by sovereign-states and provides advisory opinions on legal questions
submitted to it by duly authorized international organs, agencies, and the UN General Assembly. The
International Court of Justice not only decides upon the international disputes but also provides legal
counselling on international matters like clarifying the provisions of international treaty and conventions
to the specialized agencies and the member countries. It also expounds the legal terms while giving the
legal advice in international affairs.
New York City, United States The Hague, Netherlands
UN Secretariat Building at UN HQ Peace Palace, Seat of ICJ
432 Nova Social Studies Grade-10 >>
6. Secretariat: Articles 97 to 101 of the UN Charter deal with the ‘Secretariat’. Secretariat is the administrative
organ that administers and coordinates the activities of the United Nations. The Secretariat’s staffs are com-
posed of permanent expert officials recruited on a merit basis, rather than political appointees of member
nations. It provides studies, information, and facilities needed by United Nations bodies for their meetings
and carries out tasks as directed by the UN Security Council, the UN General Assembly, the UN Economic
and Social Council, and other UN bodies.
The ‘Secretary General’ is the head of the secretariat and acts as the Chief Administrative Officer of United
Nations. Secretary General plays an instrumental role in appointing the staff from different parts of the
world honouring the geographical diversity of the planet. The Secretary General is elected by the General
Assembly, on the recommendation of the Security Council, for a renewable five-year term. All the five per-
manent members must concur in appointing the Secretary General.
(Feb. 1946 – Nov. 1952) (Jan. 2007 – 31st Dec. 2016) (Jan. 1st 2017 till present)
Trygve Lie, Norwegian Ban Ki-Moon, South Korea Antonio Guterras, Portugal
1st General Secretary 8th General Secretary 9th General Secretary
The Secretary General bears great responsibility in helping resolve international disputes, administering
peacekeeping operations, organizing international conferences, gathering information on the implementa-
tion of Security Council decisions, and consulting with member governments regarding various initiatives.
The Secretary General mediates in the international disputes by timely intervention. He may bring to the
Security Council’s attention any matter that he deems (thinks) a threat to international peace and security.
Secretary General submits an annual report to the General Assembly on the work of the UN. He is the chief
spokesperson for the UN and informs the world regarding the activities of the UNO in different areas. He
is the most visible face of the UNO and calls international conferences and meetings on the topics of inter-
national significance.
Words and terms you would like to know
Preamble (n.): introductory section of the UN charter
Exhort (v.): to urge somebody strongly and earnestly to do something
Resolution (n.): a formal expression of the consensus at a meeting, arrived at after discussion and usually as the result
of a vote
Deliberate (v.): to consider something carefully and in detail
Activities
1. Collect all the information on the annual session held by the General Assembly and hold a discussion
on its nature and pattern in the classroom.
2. Enact a play on the annual conference of the General Assembly and the meeting held by the Security
Council in the classroom.
433<< Nova Social Studies Grade-10
3. UNO was just helpless to defuse the problems like the *Cuban Missile Crisis (1962), *Vietnam War (1959
– 1975), etc. It has been unable to stop North Korea to nuclear missile testing. It failed to end international
terrorism. Similarly, UNO could not prevent Civil Year in Syria in 2012 and the war continued even in
2017 killing more than 200,000 people and making thousands of Syrians refugees.
What are the major weaknesses of UNO which have resulted in failures like the ones mentioned
above? What are the ways to remove the weaknesses from the structure and functions of UNO? Hold
a discussion with your classmates in the presence of the Social Studies teacher. Write down the final
points.
4. Prepare a news report on the functioning of the International Court of Justice and the Economic and
Social Council.
Exercise:
1. Briefly describe the series of events as the historical background of the establishment of the United
Nations Organization (UNO).
2. Do you believe that the UN roles have grown to be more relevant today than what they were before?
Present your viewpoints in detail with the help of suitable examples.
3. Critically analyze the activities of UNO by giving examples.
4. Do you think the United Nations Organization has achieved its objectives? Express your views with
relevant illustrations.
5. Can the UNO protect and preserve the interests of the small and poor countries in the world? Comment
critically.
6. Briefly explain the roles played by the UNO (United Nations Organization) in maintenance of
international peace and security.
7. Both the General Assembly and the Security Council are functionally related. Briefly outline the
interrelationship.
8. What is VETO? What is its consequence? Why has Veto-power become the point of controversy?
9. If you are asked to be the member of any one organ of the United Nations, which UN organ will you
choose and why? Explain.
10. Write a letter to the Secretary General of the UNO highlighting the present political, social and economic
conditions of Nepal which require specific actions from the United Nations Organization in order to
save this country.
11. Explain the procedure involved to appoint the judges in the International Court of Justice, members in
the Economic and Social Council, and the election of the UN Secretary General.
12. Prepare a list of four important questions which you would like to ask to the five permanent members
of the Security Council.
13. Outline the main activities and functions of the United Nations Organization.
Project Work
The use of the VETO by China and Russia, on July 19, 2012 blocked the Security Council to enforce interna-
tional peace on Syria to prevent genocide, which has already claimed more than 200,000 human lives from
both the sides in Syrian Civil War and has rendered thousands of civilians refugees in bordering countries.
Vetoes by China and Russia have halted international intervention and exposed international power politics
in the 21st century. Do you think UN deserves reforms in its functioning? Discuss this issue with political
leaders from various political parties of Nepal in charge of “foreign cell” of the party. Share the findings in a
project work and submit the same to the Principal of your school.
434 Nova Social Studies Grade-10 >>
Lesson
2 Specialized Agencies of the UNO
Specialized Agencies of UNO: An Introduction
The specialized agencies are independent bodies having their own work-agenda that match with the
goals (and objectives) of United Nations and hence are affiliated with the Economic and Social Council
(ECOSOC) – one of the organs of the UNO. Specialized agencies are not the organs of the UNO. They report
annually to ECOSOC and often cooperate with UNO to achieve various economic and social goals under
the UN Charter. The United Nations, with its specialized agencies, is often referred to collectively as the
United Nations system. These agencies may or may not have been originally created by the United Nations
Organization, but they are the part of the UN System affiliated with United Nations Economic and Social
Council (ECOSOC).
Specialized Agencies of UNO: A Brief Description
1. International Monetary Fund (IMF): The IMF – International Monetary Fund - was established on
December 27, 1945 and its headquarters is located in Washington D.C. (the capital city of U.S.A.).
International Monetary Fund (IMF) is an international economic organization the purpose of which
is to promote international monetary cooperation to facilitate the expansion of international trade.
Membership is open to all independent nations. IMF works to foster global monetary cooperation,
secure financial stability, facilitate international trade, promote high employment and sustainable economic
growth, and reduce poverty around the world. It oversees the economic policies of member states, provides
economic and financial advice, and gives short and medium term financial assistance to countries facing
‘Balance of Payments’ (BOP) problems and other difficulties. Nepal joined IMF in 1961 AD.
2. World Bank (IBRD): Established in July 1944 and headquartered in Washington D.C. (U.S.A.), the
World Bank (also known as IBRD – International Bank for Reconstruction and Development) is the
largest source of financial assistance to developing countries. It also provides technical assistance
and policy advice and supervises – on behalf of international creditors – the implementation of free-
market reforms. The World Bank plays a pivotal role in reducing poverty worldwide by assisting in
the reconstruction and development of territories of member-states and by facilitating the investment
of capital for productive purposes as well as promoting private foreign investment. Nepal joined the
World Bank in 1961 AD.
3. World Health Organization (WHO): Established on April 7, 1948 and headquartered in Geneva,
Switzerland, the World Health Organization (WHO) promotes public health at international level. World
Health Organization defines health as a state of complete physical, mental and social well-being and
not as merely the absence of disease (or infirmity). World Health Organization works towards reducing
morbidity and mortality by improving health during key stages of life, including pregnancy, childbirth,
the neo-natal period, childhood and adolescence and so on. It creates consciousness on several aspects
of health and stresses on preventive measures with regard to “drug-abuse and addictions of tobacco,
alcohol and other psychoactive substances. Nepal joined the WHO in 1954.
4. Food and Agriculture Organization (FAO): The Food and Agricultural Organization was established
on October 16, 1945 and is headquartered at Rome, Italy. It became the specialized agency of UNO
435<< Nova Social Studies Grade-10
in 1946. The FAO works for sustainable rural development and agriculture in order to achieve food
security for all and to fight world hunger. To deal with agricultural and food crises worldwide, FAO
is active on a number of fronts like land and water development, crop and animal production, forests,
fisheries, economic and social policy, investment, nutrition, food standards, commodities, and trade.
Overall, the FAO works for improving the distribution pattern of food grains, achieving the status of
food security for all, making suggestions and advice to the Governments around the world regarding
sustainable food policy and agricultural practices and so on. Every year World Food Day is observed on
October 16.
5. United Nations Industrial Development Organization UNIDO): Established in 1966 as UN program,
UNIDO became a specialized agency of the United Nations in 1985. Primary objective of UNIDO is
to promote and accelerate industrial development in developing countries. Vienna, Austria is the
UNIDO’s headquarters. The UNIDO mainly works in the area of poverty reduction through promoting
productive activities, building trade capacities and safeguarding energy and environment. It firmly
believes that competitive and environmentally sustainable industry leads towards economic growth,
reduces poverty and thus is able to achieve the Millennium Development Goals. To achieve the aims,
UNIDO collaborates with governments, business associations and individual companies of developing
countries.
6. World Intellectual Property Organization (WIPO): Created on April 26, 1970 and headquartered in
Geneva (Switzerland), the WIPO promotes creative intellectual activity and facilitates the transfer
of technology related to industrial property and copyrights to the developing countries in order to
accelerate economic, social and cultural development. The industrial property includes disapproval
(rejection), trademark, industrial design and right of origin. The copyright is applicable to literature,
music, art, photography, and audio-materials, etc.
7. World Meteorological Organization (WMO): Established on March 23, 1950 and headquartered in
Geneva (Switzerland), the WMO conducts special study on the state and behaviour of the Earth’s
atmosphere, its interaction with the oceans, the climate it creates and distribution of water resources
around the planet. The main function of WMO is to coordinate, standardize, and improve world
meteorological information. Nepal became the member of ‘World Meteorological Organization’ in 1966
AD.
8. International Civil Aviation Organization (ICAO): Established on April 4, 1947 and headquartered in
Montreal (Canada), the ICAO – International Civil Aviation Organization - codifies the principles and
techniques of international air navigation and fosters the planning and development of international
air transport to ensure safe and orderly growth of aeroplane routes in the sky. The ICAO sets the rules
and devises the standards for promoting the safe and orderly development of civil aviation throughout
the world. The ICAO also serves as a medium for cooperation in all fields of civil aviation among
436 Nova Social Studies Grade-10 >>
its member nations by providing technical assistance to countries that need help in maintaining civil
aviation facilities or meeting the global standards set by the ICAO.
9. International Telecommunication Union (ITU): Originally formed in Paris in 1865 as the International
Telegraph Union, International Telecommunication Union (ITU) became the specialized agency of
UNO in 1947. Headquartered in Geneva (Switzerland), the ITU maintains and extends international
cooperation for the improvement and rational use of telecommunications of all kinds. It also promotes
the development and efficient operation of technical facilities in order to improve telecommunication
services, increase their usefulness, and make them generally available to the public. Nepal joined this
organization in 1957 AD.
10. United Nations Educational, Scientific and Cultural Organization (UNESCO): Established on
November 14, 1946 and headquartered in Paris (France), UNESCO encourages collaboration among
nations in the areas of education, science, culture, and communication. It became the specialized
agency of UNO on December 14, 1947. The UNESCO encourages universal respect for justice, laws,
human rights, and fundamental freedoms. The slogan of this organization spells out its objective and
motto, “Peace must therefore be founded, if it is not to fail, upon the intellectual and moral solidarity
of mankind.” UNESCO sponsors several projects that include international science programs; literacy,
technical, and teacher training programs; regional and cultural history projects; and international
cooperation agreements to secure the world’s cultural and natural heritage and to preserve human
rights. Nepal joined UNESCO in 1966.
11. United Nations International Children’s Emergency Fund (UNICEF): Created on December 1, 1946
and headquartered in New York City (U.S.A.), the UNICEF – United Nations International Children’s
Emergency Fund - works with a mission to ensure basic nutrition, health, and education to all the
children, especially those who struggle for these basic needs. The UNICEF devises an international
ethical standard of behaviour towards the children and trains educators to develop effective school
programs; the agency has enabled children around the world to benefit from a primary school education.
12. International Atomic Energy Agency (IAEA): Created on July 29, 1957 and headquartered in Vienna
(Austria), the International Atomic Energy Agency (IAEA) is an international organization that seeks to
promote the peaceful use of nuclear energy. It forbids its use for any military purpose, including nuclear
weapons. The IAEA encourages scientific and technical cooperation in the peaceful use of nuclear
technology and nuclear power worldwide. It provides international safeguards against misuse of
nuclear technology and nuclear materials and promotes nuclear safety (including radiation protection)
and nuclear security standards and their implementation. The IAEA is the international centre for
cooperation in the nuclear field. The Agency works with its Member States and multiple partners
worldwide to promote the safe, secure and peaceful use of nuclear technologies.
13. United Nations Development Program (UNDP): The UNDP was founded on 22 November 1965 and
is headquartered in New York City (U.S.A.). The UNDP advocates for change and connects countries
to knowledge, experience and resources to help people build a better life. It provides expert advice,
training and grants to developing countries, with increasing emphasis on assistance to the least
developed countries. The UNDP is funded entirely by voluntary contributions from member nations
and operates in 177 countries in order to overcome the development challenges and to enhance the local
capacity for development. It extends its help and cooperation in areas of introducing the application of
ICT (Information and Communication Technology) in the development work, the fight against HIV/
AIDS, measures and solutions to impacts of natural and manmade disasters and so on.
437<< Nova Social Studies Grade-10
14. World Trade Organization (WTO): The WTO officially commenced on 1 January 1995 and its
headquarters is located in Geneva (Switzerland). The World Trade Organization (WTO) is the only
global international organization dealing with the rules of trade between nations. Its goal is to help
producers of goods and services, exporters, and importers conduct their business all through the world
in a transparent manner. Until recently, a total of 153 countries have joined the WTO. Nepal joined this
organization in April 2004. It also provides a forum for negotiations and for settling disputes between
the countries in matters related with trade and free flow of goods and services. It also serves as a centre
of economic research and analysis.
15. International Organization Development Association (IODA): International Organization
Development Association (IODA) was established on September 24, 1960. It provides loans (debts) to
extremely poor countries at low interest rate. This organization promotes sustainable economic growth
and development. Nepal joined this organization in 1963 AD. Its headquarters is located in Washington
D.C. (U.S.A.).
Words and terms you would like to know
BOP: The BOP (balance of payments) of a country is the record of all economic transactions between the residents of
the country and the rest of the world in a particular period (over a quarter of a year or more commonly over a year).
The balance of payments (BOP) is the method countries use to monitor all international monetary transactions at a
specific period of time. Usually, the BOP is calculated every quarter and every calendar year. The BOP is a statement
that summarizes an economy’s transactions with the rest of the world for a specified time period.
Foster (v.): to provide a child with care and upbringing; to encourage the development of something
Pivotal (adj.): vitally important, especially in determining the outcome, progress, or success of something
Solidarity (n.): harmony of interests and responsibilities among individuals in a group, especially as manifested in
unanimous support and collective action for something
Activities
1. Make a list of the specialized agencies of the UNO and mention their dates of establishment and main
functions. Hold a discussion on the contributions made by such specialized agencies making our world
a better place to live.
2. Conduct research on your own using internet and other sources to find out details of UNESCO, UNHCR,
ILO and UN Environment Organization. Share your work with the classmates.
3. Prepare a news report mentioning the roles played by UNICEF concerning the affairs of children.
Exercise
1. Make a list of any four specialized agencies currently working in Nepal. Also mention their contributions
in Nepal.
2. Suggest what more has to be done in order to make the functioning of the specialized agencies more
effective.
3. Choose any three UN specialized agencies which you consider are the most important and more
impactful. Give reasons for your choice.
4. Highlight the main differences between the organs of the United Nations and the Specialized Agencies.
5. Draw out the differences between the followings: (a.) UNDP and IAEA (b.) IMF and the Word Bank
(c.) WTO and WMO (d.) UNICEF and UNESCO (e.) WIPO and ICAO (f.) WHO and FAO
Community Work
There must be a UN-sponsored development work continuing in your local area (community). Find out the
programs and projects which are going on at local level and prepare a report on it.
438 Nova Social Studies Grade-10 >>
Lesson Nepal’s Roles in the UNO
3
The UNO (United Nations Organization) is worldwide organization. There are a total of 193 member
countries in the UNO. After the World War II, Nepal too began to expand its political and diplomatic rela-
tions with other countries in the world. In this connection, Nepal initiated its move to become the member
of the UNO in 1947 AD through its own embassy in Britain. Nepal formally applied for becoming the
member of United Nations Organization in 1948 and finally, Nepal was granted the membership of United
Nations Organization (UNO) on December 14, 1955. After getting the membership of United Nations
Organization, Nepal has continued to play very important roles in fulfilling the objectives of the UNO and
has been actively participating in the UN efforts of maintaining international peace and security. Nepal
has been sending the peace keeping forces to the UN peacekeeping operations since 1958. A small troop of
five army personnel was sent as observers in the United Nations Military Observation Group in Lebanon
(UNMOGIL) in 1958. Besides the Nepalese Army, the Nepal Police and the Armed Police Force (APF) too
have been contributing to UN peace-keeping efforts at the global level.
Nepal Army troops deployed as UN peacekeepers
Nepal has also been the non-permanent member of the Security Council for two years twice namely 1969 –70
and 1988 – 89 AD. Besides, the representative from Nepal has also served as the Assistant to the Secretary
General of the UNO.
Nepal had a privilege to serve as the ‘Vice-Chairman’ of the UN sessions held in 1958, 1968, 1970, 1974, 1975,
1983, 1984, 1988 and 2001. At different times and occasions, Nepal has served as the responsible member in
social and economic committees formed by the UNO and has contributed to UNESCO as its member. Nepal
raised the voice of opposition and criticism against the Russian raids by the Soviet army on Hungary. Nepal
had disapproved the policy of racial discrimination (infamously known as apartheid) perpetuated by the
British in South Africa by forcefully converting it as a colony until 1994 when the first democratic elections
catapulted the Black leader Nelson Mandela into the political power as its President. Nepal did not hesitate
to condemn Israel’s invasion on Egypt in 1956 and on Arabian countries in 1967. The south Lebanon conflict
broke out in 1978 when the worst terrorist attack in Israel’s history was conducted by anti-Israel group
operating in Lebanon. In response to that attack which had killed 38 Israeli civilians, including 13 children
and left 71 people wounded, Israel invaded Lebanon leading to an international crisis. The UN peace
keeping forces were sent to Lebanon to tackle the situation and the Nepalese soldiers also joined the peace
439<< Nova Social Studies Grade-10
keepers. Similarly, the Nepalese soldiers served in the UN peace keeping operations launched in Cambodia
and Yugoslavia in 1992–93. Nepal army contributed its services as UN peacekeepers in Haiti in 1994. Nepal
has earned respect from international community for its peacekeeping contributions. On the Golden Jubilee
Year of Nepal’s contribution to the UN in 2008, the then UN Secretary General Ban Ki-moon hailed Nepal’s
contribution as a ‘shining example’ in peacekeeping. Thus, Nepal has earned goodwill and respect from the
international community for its consistent contribution to peacekeeping operations which proves that Nepal
fully agrees with the purposes and principles of United Nations Organization.
Nepalese soldiers in the UN Mission in Haiti
Nepal has been very active in voicing its concerns for a peaceful world without nuclear weapons. Nepal
supports all or any efforts taken by the big and powerful countries in directions of disarmament. Being a
landlocked country, Nepal has also been raising the problems and challenges being faced by the landlocked
countries around the world. It has been constantly demanding concessions and cooperation from the
countries bordering the landlocked countries around the world. Nepal being the follower of oriental
religious and cultural tradition extended its support when United Nations Organization decided to declare
Yoga Day and Buddha Jayanti (Buddha’s Birth Day) as the occasions of the worldwide celebrations. Nepal
at present has been supporting the democratic values and principles not just at the political level but at
economic and social levels too. This is why Nepal has stood against any kind of monopolistic imposition in
the global market and obstruction of free flow of goods and services across the borders.
Words and terms you would like to know
Monopolistic (adj.): relating to a person or business that has exclusive possession or control of the supply
of or trade in a commodity or service
Perpetuate (v.): to make (something) continue indefinitely
Tackle (v.): to make determined efforts to deal with (a problem or difficult task)
Disarmament (n.): the reduction or withdrawal of military forces and weapons
Activities
1. Meet a Nepalese soldier who has returned from a UN peacekeeping mission. Ask him about the
problems and challenges the peacekeepers face while performing their duty (responsibility). Arrange
his reply under proper headings and sub-headings. Share it with the class.
440 Nova Social Studies Grade-10 >>
2. What kinds of help and assistance had the UNO extended to Nepal during the peace process? Conduct a
research on the topic and collect relevant details from different sources including a discussion with your
teacher, guardians and senior members in your community. Prepare a detailed account on the topic and
share the same in your class.
3. Read a complete presentation given below on the topic, “Functions and Responsibilities of UN
Peacekeeping Missions’.
UN peacekeeping missions operate in the most dangerous and difficult environments in the world,
dealing with conflicts which demand greater caution and responsible roles to play to avoid failures like
those of Somalia, Rwanda and the former Yugoslavia in the early 1990s. Thanks to the roles played by
UN peacekeepers since 1948, many of the countries around the world have come out of conflict. Some
of the examples are Cambodia, El Salvador, Guatemala, Mozambique, Namibia, Tajikistan, and Timor-
Leste. Recent successes of UN peacekeeping missions include Sierra Leone, Burundi, Côte d’Ivoire,
Timor-Leste, Liberia, Haiti and Kosovo.
UN peacekeeping forces perform following functions (roles or expectations) while on peacekeeping missions:
(A.) The UN peacekeeping personnel adhere to the highest standards of behaviour and conduct themselves
in a professional and disciplined manner at all times.
• They respect local laws, customs and practices.
• They treat inhabitants of host country with respect, courtesy and consideration.
• They act with wisdom, integrity, honesty and without any bias.
• They are not supposed to have any undue emotional exploitative relationship with the beneficiary of
assistance (those who are receiving assistance like food, housing, aid, etc... because of a conflict, natural
disaster or other humanitarian crisis). The UN has a zero tolerance policy with respect to sexual ex-
ploitation and any kind of emotional abuse.
(B.) UN peacekeeping personnel must protect civilians from physical violence. Thousands of UN
peacekeepers put themselves in grave danger every day in order to protect civilians from the effects of
physical violence. Most importantly, the host government has the primary responsibility for protecting
its citizens.
(C.) UN peacekeeping operations and their personnel (peacekeepers) must take care of local resources and
the surrounding environment. Peacekeepers’ camps and their operations have an adverse impact on the
environment and on the local economy of the host country. In the region like Darfur or Chad, water is a
scarce commodity and local community feels threatened by UN mission, as they have to share the water
with the peacekeepers.
(D.) UN peacekeepers protect children in conflict-zone by taking them out of violence and lay the foundations
for durable peace. Conflicts disproportionately affect children because many of them are subjected to
abductions, rape, military recruitment, killing, maiming, and numerous forms of exploitation.
(E.) All the staff in peace missions have the responsibility to ensure the protection and promotion of human
rights through their work.
In recognition to the roles played by the UN peacekeeping missions and sacrifices made by the
peacekeepers while performing their roles (duties), 29 May is celebrated as the International Day of
United Nations Peacekeepers. By providing basic security guarantees and responding to crises, these
UN operations have supported political transitions and helped peace and order prevail in the troubled
country.
Have a discussion on each and every point mentioned above with your classmates and seek a clarification
with your teacher in case you face any confusion.
Activities
1. Write a commentary on Nepal’s contributions to the United Nations Organization.
441<< Nova Social Studies Grade-10
2. Time and again a question has been raised regarding Nepal’s participation in the UN peacekeeping
operations (missions) due to criticism of the contexts and purposes it fulfills for Nepal. How do you
look at the entire situation? Present your viewpoints in details.
3. Are you satisfied with the roles played by Nepal in the United Nations Organization so far? Express
your views in points.
4. Outline the efforts which Nepal undertook to become the member of United Nations Organization.
5. Mention the roles which United Nations Organization has played for protecting the interests of the
landlocked countries around the world. How does Nepal help the UNO in this regard?
6. UN peacekeeping is a unique global partnership. Analyze the statement critically.
7. List out the benefits that Nepal gets by contributing to UN peacekeeping missions in different parts of
the world.
Community Work
The first deployment of the Nepalese contingent “Purano-Gorakh Battalion” was made in Egypt
in 1974 as UN peacekeeping force. Nepal takes pride in sending its troops taken from Army, Police and
Armed Police Force for the maintenance of international peace and security serving as IPKF (International
Peacekeeping Forces) under the blue flag while wearing the blue helmet of the United Nations Organization.
The participation of Nepal Police in the UN peacekeeping missions started on March 12, 1992, following the
request by the UN Security Council. The Armed Police Force (APF) has been contributing since October 2002
by sending contingents along with advisors, instructors, and monitors in various missions like Iraq, Kosovo,
Liberia, Sierra Leone, Haiti, Sudan, Darfur, East Timor and Cyprus.
Visit the regional office or the headquarters of Nepal Army, Nepal Police and Armed Police Force (APF) with
a view to collect details about their contributions and feats of achievements from their archives, bulletins and
museums and also from the interviews with their officers. Prepare a report on the topic “Nepal as a part of UN
peacekeeping” and submit it to your Principal.
442 Nova Social Studies Grade-10 >>
Lesson UN Activities in Nepal
4
The UNO (United Nations Organization) has been contributing towards the development of Nepal. The
UNO continues to play its roles in social, economic, political (Good Governance) and infrastructural
development of Nepal.
The following are the specific details of the roles played by the UNO in Nepal’s development:
1. International Fund for Agricultural Development (IFAD): The International Fund for Agricultural
Development (IFAD) is a specialized agency of the United Nations devoted to end rural poverty in
developing countries. The IFAD enables the villagers to overcome poverty. Nepal joined the ‘International
Fund for Agricultural Development (IFAD)’ in 1978. Nepal has been benefitted from IFAD loans and 16
projects have already been financed to date resulting in mobilization of significant resources at local level
in rural communities. The IFAD has been conducting development projects in the rural areas and the Hilly
regions of Nepal. It has specifically focused on the deprived and the marginalized sections of the society
such as poor, landless indigenous people and women in several development projects. IFAD’s investments
in all these projects running in Nepal are aimed at addressing the issues of poverty, inequality and social
marginalization that have been at the heart of conflict and backwardness in the country. IFAD recognizes
that building sustainable livelihoods is not possible without empowering both men and women in the rural
areas. An enhancement of monthly earned income and ensuring food security to all are the main objectives
of this organization.
2. International Labour Organization (ILO): The International Labour Organization (ILO) deals with
labour issues and sets standards for social protection and safe work environment for laborers (workers). The
ILO – a UN specialized agency - works for improving labour conditions and raising the living standards of
workers throughout the world. Nepal became the member of this organization in 1966. The ILO has been
working for long in Nepal in the areas of poverty elimination, improving the relationship between the labor
unions and management in the Nepalese industries, implementing the labour laws in all the occupational
and professional fields, freeing the bonded labours from slavery (servitude), ending child labour, improving
the sanitation and working environment at work place. The ILO which is headquartered in Geneva
(Switzerland) was given Nobel Peace Prize in 1969 for its contributions.
3. United Nations International Children’s Emergency Fund (UNICEF): The UNICEF advocates for
children’s rights based on the United Nations Convention on the Rights of the Child. This organization has
been working in Nepal since 1964. Nepal falls under its one of the topmost priorities as far as development
work for children is concerned. The UNICEF cooperates with other NGOs (Non-Governmental Organizations)
and the local community to work for the welfare of children. It works for better health and wellbeing of the
women as mother of the children and trains the women to look after the needs of nutrition and healthcare of
infants. As the children grow, they need education and open space for physical activities such as sports and
playing athletics, etc. The UNICEF makes it sure to create and protect the right environment for children’s
education and physical activities. It also works for keeping children especially the adolescents away from
drugs, alcohol and other forms of addiction. It sensitizes the children and adolescents to grow up with
healthy behaviors in order to prevent and cure the contagious diseases such as HIV-AIDS.
443<< Nova Social Studies Grade-10
4. United Nations Programme for HIV/AIDS (UNAIDS): The United Nations Programme on HIV and
AIDS (UNAIDS) calls for global action to prevent, cure and mitigate the HIV/AIDS epidemic. The mission
of UNAIDS aims at preventing transmission of HIV, providing care and support to those already living with
the virus, reducing the vulnerability of individuals and communities to HIV and reducing the impact of
the epidemic. The UNAIDS works in Nepal in collaboration with the National AIDS Coordination Council
which functions under the Government of Nepal. The first case of HIV/AIDS was reported in 1988 in Nepal.
The disease is still found in Nepal. The UNAIDS with the assistance of the Government of Nepal works
in spreading AIDS related information and suggests measures to adopt preventive measures and observe
precautions in case one is already caught with this disease.
5. World Food Programme (WFP): The World Food Programme (WFP) is the largest humanitarian
organization functioning as a UN specialized agency. The WFP aims at promoting food security at the
global level by addressing the problem of hunger anywhere anytime in the world. The WFP strives to
eradicate hunger and malnutrition from the face of the earth. It helps in formulating strategies for achieving
long-term food security and effective nutritional availability. Nepal is one of the world’s poorest countries
with very high malnutrition rate. Frequent natural disasters further aggravate food insecurity, taking their
toll on livelihoods. Food prices are high in the mountain areas. The World Food Programme (WFP) has
been working in Nepal since 1963. It has been supporting the Government of Nepal to develop greater food
security among vulnerable communities and build resilience to disasters. Most recently, WFP delivered
emergency food assistance and organized logistics in response to the devastating earthquakes that shook
the country in April and May 2015. The WFP has been already active in 32 districts of Nepal and has set up
its regional offices in Damak, Nepalgunj and Dadeldhura.
Assistance and help being offered by the WFP as UN Humanitarian Service
6. United Nations Capital Development Fund (UNCDF): The United Nations Capital Development
(UNCDF) helps by giving grants and loans to the poorest countries in the world particularly those facing
political instability or violent conflicts. This organization also provides the technical support to help
microfinance institutions reach more poor households and small businesses at local level. In this way, UNCDF
builds up local public finance capacities and promotes financial inclusions by giving financial assistance to
poor women, Dalits, ethnically marginalized groups and so on. The contributions made by UNCDF helps
the essential goods and services reach the rural areas of Nepal. The UNCDF creates new opportunities for
poor people and their communities by increasing access to microfinance and investment facilities.
444 Nova Social Studies Grade-10 >>
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