Kathmandu, January 25:

Economists have warned that with inflation rising to 8.5 per cent and deteriorating performance of all economic sectors in 2004-05, as per the latest data of Central Bureau of Statistics (CBS), an ‘alarming economic situation’ seems inevitable.

Dr Dandapani Poudel, former economic advisor to the Nepal Rastra Bank (NRB), while talking to The Himalayan Times on the economic situation said that indicators from various sectors of the economy are not encouraging and there are ‘gloomy economic prospects’. He was worried to see the increase in price index of all major economic sectors, including the agriculture and non-agriculture sectors in the fiscal year 2004-05.

The central bank’s latest consumer price index (CPI) of 8.5 per cent is virtually a deflator which seems to rise further as well in view of dismal performance of various sectors and rise in price index of all sectors, said Dr Poudel. To arrest the alarming situation, the government has to work with the central bank in time, he suggested.

Even the GDP growth in 2004-05 recently brought out by CBS seems discouraging which stands at 2.33 per cent compared to 3.54 per cent in the previous fiscal. As per the revised CBS estimates of price index on the basis of deflators, the agricultural sector and non-agriculture sectors have gone up by 3.08 and 5.54 per cent in fiscal year 2004-05, respectively.

Sectors like agriculture, fisheries and forestry, mining and quarrying, manufacturing, electricity gas and water, construction, trade restaurant and hotel, transport communication and storage, finance and real estate and community and social services have registered a price hike.

Dr Rudra Suwal, economist at the CBS commented that in the fiscal year 2004-05, out of a total gross capital formation, the value of construction at the current prices has increased by 7.6 per cent but the value of equipment has declined by 11.67 per cent.

He said that the price rise is found highest in construction sector in the year 2004-05 in comparison to the year 2003-04. Dr Suwal commented that during the review period, the level of deflator is found to be the highest in the transport, communication and storage sector (198.62) which is almost 100 per cent price rise compared to the fiscal year 1994-95.

According to CBS, the value of total resources available in the economy is estimated to be Rs 689,081 billion for the year 2004-05 comprising of Rs 533.58 billion of gross domestic product (GDP) and Rs 155.5 billion of import of goods and services.