The latest economic update of the Asian Development Bank (ADB) churned out after nearly eight to nine years of survey states that the continuing conflict-related disruptions have hit hard the tourism and industry sectors in recent years. Whereas during 1993-94 period, the GDP growth rate was almost about seven per cent, that has now declined to less than two per cent (2004-05). The report adds that inflationary pressures picked up following the increase in the VAT and hikes in the prices of the petroleum products . On the other hand, tourism sector’s contribution to the GDP declined to 1.8 per cent in 2003-04 from 3.6 per cent in 1998-99 and its contribution to total foreign exchange kitty dropped to 13 per cent (2003-04) from 16 per cent (1998-99).

Experts have blamed political disruptions such as frequent bandhs, forced closure of businesses and restrictions on the movement of people and goods for the dismal performance. This is a fair argument since it is believed that approximately one billion rupees is lost every time a bandh is carried out. This is as unfortunate as it is tragic for a poor country like Nepal. Since industry is a major target of the Maoists, thousands of people have already been rendered jobless. It would be better if both the rebels and the agitating parties understood the adverse impact that industrial closures and bandhs have on the economy of the country and took care to leave the industry and tourism sectors out of their political activities.

Experience testifies that no country can progress economically if it is torn by political conflict. However, reforms and other socio-economic activities can very well be encouraged and implemented even during the time of conflict to boost the economy. Nepal can draw a powerful lesson from Sri Lanka in this regard because even with a longer history of civil war, Sri Lanka has been able to maintain a high growth rate and in the SAARC region it is the only country which spends a huge percentage of its national budget on the social sector. There is no reason why Nepalis cannot take up the challenge and write the same success story at home too.