Every penny should be saved for importing the barest essential goods only
There has been no let up to the price increase of petroleum products in Nepal, a fallout of the war in Ukraine, and the poor consumer is having to bear the brunt every time the price is revised. Since Russia invaded Ukraine on February 24, Nepal has revised the price of petroleum products multiple times, with a litre of petrol costing Rs 180 from Monday, an upward revision by Rs 20. International oil prices have doubled since the war, and Nepal Oil Corporation (NOC), the sole importer and distributor of petroleum products in the country, claims it is only a matter of time before it reaches Rs 200 a litre of petrol, as it is incurring heavy losses due to the subsidies it provides to different types of fuel and liquefied petroleum gas (LPG). Any increase in fuel prices automatically leads to higher transportation costs, meaning everything from food to goods and services becomes dearer. Aggravating the problem further, the Russia-Ukraine war has sent food prices soaring.
With little to export and rising import bills, everyone is worried that Nepal might run out of cash to buy fuel and food, just like Sri Lanka, although those in the government and economists rule out such a situation here.
Against this backdrop, the private sector is calling for an action plan that will spur local production and substitute imports of food and fuel. The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), an umbrella body of the private sector, at an interaction programme the other day, proposed promoting electric vehicles in the country in a bid to cut down on our dependency on imported oil. It also demanded a reduction of additional tariffs on electrical kitchen equipment and electronic devices to promote their usage. Its other recommendations included reducing the excise duty on petroleum products as in India so as to bring down the costs. While the recommendations seem plausible, the government seems reluctant to implement them. Any reduction in taxes on petroleum products, for example, means a big cut on government revenue. Because of the huge subsidies it provides on POL products, NOC is already having to bear heavy losses to the tune of Rs 23 billion, pushing it on the verge of bankruptcy.
The FNCCI's recommendations might have been more palatable to the government and the general public if they were less inclined to benefit the business community at this time of crisis. This is no time for importing luxury goods like electric vehicles or fancy kitchen equipment. With dwindling foreign exchange reserves, every penny should be saved for the import of the barest essentials only. With the Russia-Ukraine war expected to drag on for at least some years, Nepal, like all other countries, will be paying more for everything, and this might even be the new normal over time. Fuel imports alone cost Rs 218 billion in the first nine months, while they were Rs 175 billion in 2020-21. The focus of everyone should be on producing the food and goods we need in the country itself through an appropriate policy. The FNCCI might want to question its members, how Nepal can achieve food sufficiency when industrialists don't pay the farmers for their produce or turn leased tea gardens into housing colonies?
Fortify health centres
The Ministry of Women, Children and Senior Citizens said a total of 146 pregnant and post-partum women were provided free air rescue service in the past 10 months. These women were airlifted to the nearest health facilities for medical treatment from remote parts of the country. The emergency rescue operation is carried out under the President's Women Upliftment Programme. Most of the pregnant and post-partum women were rescued from 30 remote hilly and mountain districts, where health care services are still a luxury.
Most of the health centres are now run by the local levels. But they have not been able to provide the needed health care services due to lack of required human resources and equipment. The government spends millions of rupees from its coffers every year to airlift the pregnant and postpartum women. If the same amount of money is channelised into strengthening the local health facilities, the needy women would not have to be rescued for emergency medical treatment. The local levels should also come up with a health insurance policy for each of the families living in the rural areas. Strengthening the local health facilities should be the top priority of the newly-elected local level officials.
A version of this article appears in the print on May 24, 2022, of The Himalayan Times.