The World Bank expects Nepal's economy to rebound to 3.9 per cent in the current fiscal, which is one percentage point lower than its earlier projection, owing to "lagged impact of the lifting of import restrictions, strong rebound in tourism, and gradual loosening of monetary policy". However, the projection is lower than that of India, Bangladesh and Bhutan.

The WB has projected that Nepal's economy will grow by 5 per cent in the next fiscal. Erratic monsoon, spike in commodity prices or food export bans by India, higher inflation, and increase in domestic debt servicing cost are possible risks on the outlook. Faris Hadad-Zervos, the WB country director for the Maldives, Nepal and Sri Lanka, has said improved external competitiveness is key to driving this recovery and enabling Nepal to compete in export markets in terms of both prices and quality. The WB has said continued expansion of hydroelectric production through the commissioning of new projects is expected to carry stronger growth in the country's industrial sector. However, it has warned that growth of the agriculture sector is expected to slow in the current fiscal due to the impact of lumpy skin disease on livestock and a decline in paddy production.

The bank, in its twice-a-year country update, has said inflation is expected to remain elevated, which has reached a seven-year peak in the current fiscal while average inflation amounted to 7.8 per cent, which is above the Rastra Bank's policy. Prices of food items have gone up due to India's restrictions on the export of rice and wheat. Non-food prices have also surged in the current fiscal as a result of external shocks. The only sector that Nepal can boast of is remittance inflows due to a record number of migrant workers leaving the country.

But it is not going to balance the goods and services as well as trade deficit, as per the WB report. In order to reduce the trade deficit, the WB has recommended strengthening the budgetary process for better support planning, which should be based on a realistic macroeconomic framework.

In order to increase domestic production, the WB has suggested changing the current tax model by shifting taxation away from the border and reducing high import tariffs, improving the implementation of fiscal federalism, which could help attract more foreign direct investment. The government, along with the private sector, must focus its attention on agro-forest and mining-based industries, which can create immense job opportunities within the country.

As Nepal has now become almost self-reliant in the energy sector, we must attract FDI and domestic investments in these sectors by offering lower electricity tariffs. Lower electricity tariff for the industrial sector could help make up for the high cost of transporting goods to-and-from the country. Per capita electricity consumption in South Korea is an average 10,290 kWh, whereas it is just 153 kWh in Nepal on an average. How can we expect economic growth when we use the least amount of energy, that too, only for household purposes? Given the surplus energy we are going to produce in the near future, it is high time the government encouraged domestic investors to set up medium-scale industries in all provinces.

Keep the peace

An indefinite curfew has been imposed in Nepalgunj since Tuesday to prevent possible clashes between Hindus and Muslims. The Chief District Officer of Banke issued the order to bring the deteriorating law and order situation under control. Tensions between the two communities surfaced reportedly over a status made on a social site against the Muslim community. It is good that religious leaders, political parties and civil society have called for calm and maintain peace and harmony in the city.

This is the third time curfew had to be imposed in different parts of the country following religious tensions between Hindus and other communities. In August, the killing of an ox for a feast, which was posted on the social media, drew the ire of Hindus and threatened to escalate into a conflict. In Malangwa, clashes between Hindus and Muslims during a Hindu festival saw a man brutally stabled several times.

Such religious conflicts are likely to increase in the future with forces, both internal and external, trying to disturb the communal harmony for personal and strategic gain. It is necessary that the local administration take strong action against the perpetrators of such violence before things get out of hand.

A version of this article appears in the print on October 5, 2023, of The Himalayan Times