For a country like Nepal to fully return to the pre-pandemic level, the govt needs to vaccinate its total eligible population
Despite the government's claim that the country's economy will grow by at least 6 per cent during the current fiscal, the World Bank's latest Global Economic Prospects report has forecast that Nepal's economy will grow only 3.9 per cent. The World Bank has made its forecast based on two major criteria: 'better agriculture outcome and rebounding services activity on improving vaccine coverage'. The forecast is unchanged from its projection last year. The latest report prepared by the government suggests that agriculture output, especially paddy production, has decreased by 8 per cent due to unseasonal rainfalls and floods in the western and far-western Tarai region.
Paddy production contributes 7 per cent to the GDP, and it is the main staple food of millions of people who largely depend on agriculture. According to an initial estimate made by the Ministry of Agriculture and Livestock Development, paddy production worth Rs 12 billion was damaged due to the post-monsoon rains in the third week of October, when the farmers were busy harvesting the crop. Nepal will have to import more rice to meet the shortfall.
However, the vaccination coverage – around 50 per cent people have received single dose while 37 per cent have received double dose so far – gives hope that the economy will rebound next fiscal.
The World Bank has revised down the growth estimate for fiscal year 2020-21 and forecast for 2022-23.
The World Bank has estimated that Nepal's GDP growth was 1.8 per cent in 2020-21, 0.9 percentage point lower than its earlier projection. It has made a growth forecast of 4.7 per cent for fiscal year 2022-23, which is 0.4 percentage point lower than the earlier projection. But for the entire South Asia region, the growth prospects have improved since June 2021, largely because of better prospects in Bangladesh, India and Pakistan. Even Bhutan's economic growth seems to be better than Nepal, as per the World Bank. The bank has forecast that monetary and fiscal policy in the region is expected to remain broadly accommodative in 2022, but gradually shift to a focus on fiscal sustainability and anchoring inflation expectations.
As far as Nepal is concerned, we cannot expect robust economic growth of at least 7 per cent unless the government is able to spend the capital expenditure, tourism industry returns to normalcy to the pre-pandemic level and manufacturing industries operate in full capacity. Thousands of workers have been laidoff or they are forced to work at half the salary they used to get before the pandemic. For a country like Nepal to fully return to the pre-pandemic level, the government needs to vaccinate its total eligible population within the deadline it has set. The new Omicron virus, whose infection has jumped nine times in just 10 days, will determine whether Nepal will be able to achieve the targeted economic growth during the current fiscal. As the government is the engine of economic growth, it should expedite the capital spending in a timely manner so that a large number of working class people can find employment opportunities in the construction sector. Curbing inflation and prices of daily goods is another challenge for the government to ensure economic growth.
Beginning Saturday, Panauti will be hosting the Makar Mela, or religious fair, that is held every 12 years for a month. The fair draws tens of thousands of devotees from around the country, but given the fast spread of the Omicron virus, the authorities are taking precautionary measures to keep the crowd small. The religious fair takes place at Trivenighat, or at the confluence of three rivers, namely, Punyawati, Roshi and Lilawati, which is considered holy. It is thus customary to take a ritual dip at the confluence during such fairs.
The local level authorities have been asked to strictly adhere to the health safety protocols while organising the mela. Accordingly, any programme or fair with the participation of more than 25 persons is strictly prohibited. As a fair that comes once every 12 years, it could be difficult to keep devotees from thronging Trivenighat. Also from next week, the month-long Swasthani brata festival will start, when devotees reside on the bank of the Salinadi River in Sankhu, where they take a ritual dip every day. If the authorities and the security personnel are resolute in maintaining the prescribed health protocol, it should not be difficult to have the people comply with it.
A version of this article appears in the print on January 14, 2022, of The Himalayan Times.