Kathmandu, July 31

The country’s economy is projected to grow by 3.54 per cent in current fiscal and 3.79 per cent in the next fiscal under the current baseline scenario.

The Institute for Integrated Development Studies (IIDS) — research wing of the Kathmandu University — has forecast that the growth rate will moderate in the current fiscal and next fiscal as compared to 6.9 per cent growth of the previous fiscal.

Unveiling Nepal Economic Outlook 2016-17, IIDS has said that the country needs to bridge yawning infrastructure gap, attract more investment in the production sector and ensure the credible and qualitative service delivery from the government to move towards higher growth trajectory.

The country had achieved high growth after 23 years in the previous fiscal due to low base, favourable monsoons, regular electricity supply, and normalisation of trade.

Speaking during the outlook launching ceremony, Swarnim Wagle, member of National Planning Commission, said that the government should focus on timely implementation of large-scale infrastructure projects to unleash the economic potential. He stressed on capitalising the market proximity with India and China by improving the competitive edge in production sector and attracting investment and technology from foreign investors as well as from Nepali diaspora. “We have to nurture the five Ds — distance (proximity with India and China), demographic dividend (high number of working-age population), democracy, digitisation and diasporas — to form our tailwind for progress.”

The IIDS outlook stated that Nepal requires some policy interventions to move forward from the current status quo. “It is hard to achieve the high and sustained economic growth as envisioned by the government without any policy interventions and development of robust infrastructure,” said Bishnu Dev Pant, executive director of the IIDS.

The report also identified the underutilisation of the budget as one of the major causes for low and lopsided economic growth.

The government has targeted to achieve economic growth of 7.2 per cent in this fiscal through accelerated post-earthquake reconstruction, execution of national pride and top priority projects, agriculture modernisation, regular supply of power to the industries, among others.

Pant of IIDS, however, said that the perennial problem of under-spending of development budget would reappear in this fiscal again as the government has allocated budget for the mega projects, without considering their implementation preparedness. On other hand, unfavourable monsoon in this fiscal may also hit the production of rice in this fiscal.