Govt flops at price hike control
KATHMANDU: The government has completely failed to control the price hike in food commodities and the overall price hike that still hovers close to 13 per cent.
“The year-on-year (y-o-y) consumer price index rose to 12.9 per cent in mid-May 2009 compared to 9.2 per cent in the same period last year,” according to the current macroeconomic situation based on the first 10 months’ data of current fiscal year published by Nepal Rastra bank (NRB).
The inflation, in the review period, was driven mainly by 16.5 per cent price rise in food and beverages group. However, the price index of non-food and service group also increased by 8.8 per cent.
“In food and beverage group, sugar and sugar-related products played a key role in pushing the price hike up so that it increased by a whopping 66.9 per cent, the report said. This is in sharp contrast to last year’s decline of 0.5 per cent. Similarly, the price indices of vegetables and fruits as well as meat, fish and eggs sub-groups increased by 33.5 per cent and 27.5 per cent respectively in the review period compared to an increase of 1.8 per cent and 10.2 per cent respectively in the same period last year.
The wholesale price inflation increased to 15.5 per cent compared to 10.1 per cent a year ago. Indian price hike plays a key role in the Nepali market. Though India’s wholesale price index has posted a negative growth by the end of May, the Indian month-on-month price hike in May is also at 10.3 per cent.
The central bank’s report reveals that the government budget on cash basis remained at a surplus of Rs 6 billion in contrast to a deficit of Rs 6 billion in the same period last year. “The government has significant cash surplus of Rs 21.6 billion — including Rs 3.9 billion of previous year — with Nepal Rastra Bank,” according to the report, thought the total government expenditure on cash flow basis, increased by 25.7 per cent to Rs 127.6 billion compared to an increase of 28.2 per cent in the corresponding period of the previous year. Low growth rate of capital expenditure accounted for such a deceleration of total government expenditure.
Revenue mobilisation also grew by 39.9 per cent to Rs 110.5 billion compared to an increase of 24 per cent in the corresponding period the previous year. “The government’s firm commitment to revenue leakage control, revenue administration reforms, Voluntary Disclosure of Income Scheme and significant growth of non-tax revenue contributed to such an impressive growth of revenue mobilisation in the review period,” said NRB.
However, exports shot up by 19.8 per cent in the first ten months of the current fiscal year in contrast to a decline by 2.4 per cent in the same period last year. The rise in exports is contributed to readymade garments, textiles, GI pipe, catechu, toothpaste, pulses followed by pashmina, woollen carpets, readymade garments and handicraft.
Total imports also went up by 25.4 per cent compared to an increase of 16.8 per cent in the same period last year. Imports from India rose by 11.5 per cent and imports from other nations surged by 50.4 per cent compared to last year’s nominal import.
Overall Balance of Payment (BoP) posted a significant surplus of Rs 43.1 billion compared to a surplus of Rs 19.9 billion last year.