Asian Development Bank6 ADB Avenue, Mandaluyong City1550 Metro Manila, Philippineswww.adb.org© 2012 by Asian Development Bank April 2012Publication Stock No. WPS124618The views expressed in this paper are those of the author/s and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for anyconsequence of their use.By making any designation of or reference to a particular territory or geographic area, or by using the term “country”in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.Note: In this publication, “$” refers to US dollars.The ADB South Asia Working Paper Series is a forum for ongoing and recently completed research and policystudies undertaken in ADB or on its behalf. The series is a new knowledge product and replaces the South AsiaEconomic Report and South Asia Occasional Paper Series. It is meant to enhance greater understanding of currentimportant economic and development issues in South Asia, promote policy dialogue among stakeholders, andfacilitate reforms and development management.The ADB South Asia Working Paper Series is a quick-disseminating, informal publication whose titles couldsubsequently be revised for publication as articles in professional journals or chapters in books. The series ismaintained by the South Asia Department. The series will be made available on the ADB website and on hard copy.
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We would like to thank participants at the South AsiaRegional Department Economists’ Conference 2010,participants at the 70th South Asia Seminar Series of ADB, Mayumi Ozaki, Paolo Spantigati, Raju Tuladhar,Neelina Nakarmi, Tadateru Hayashi, and theanonymous reviewer for comments on the earlier draftof the paper. We obtained useful information fromKrishna Gewali (Ministry of Local Development),Bimal Wagle (Office of the Prime Minister and Councilof Ministers), Janardan Acharya (Rastriya BanijyaBank), Manohar Shrestha, and Ghuran Thakur (Agriculture Development Bank), and employees atthe Agriculture Development Bank during the courseof the study. All errors are our own.