Growing pessimism

It has not been long since the government announced a seven per cent economic growth rate would be achieved during the current year taking into account the various strategies that it had in mind to implement. The budget for 2008/2009, too, was ambitious in keeping with the government’s targets. However, the ground reality was on the contrary. The revenue collection has soared up, but the lack of the local level bodies in particular has hampered the utilization of the development budget. This has added to the pace of economic activities dipping. To add to the economic woes, the global recession too is having the undesired effects on Nepal. A litmus test gauging the recession impact is the remittance that the country receives, which has dipped in the past few months, as per Nepal Rastra Bank (NRB) statistics. It all opens up a gloomy period ahead despite the claims of the government that it is doing the needful to steer the economy in the right direction. The industrial activities in the country have slackened as a result of the extended load shedding hours now in force, besides the regular spate of bandhs and other disturbances. These are but a few obstacles on the projected economic growth rate for the country this financial year.

Based on the various economic indicators, NRB has revised its earlier projections regarding inflation and economic growth rate. The projected 7.5 per cent inflation rate has been upped to 11 per cent due to non-monetary factors, according to the NRB governor. This is in spite of the fact that the prices the world over are sliding but in Nepal’s domestic market there is no sign of the price hike stopping. In another area, the target of achieving 7 per cent growth rate too has been revised. The actual projection may be around half the earlier figure. Not all factors working to raise inflation and bring down the growth rate are under the control of the government. It has become a mere spectator in the face of growing disenchantment from the people who expected a better deal. The firm support of the tourism sector and foreign employment were expected but in recent times the picture is not rosy as far as the two are concerned. The negative effect on both the areas can be attributed to the global recession leading to the tightening of budgets by prospective tourists with Nepal in their itinerary and the slowdown of the economic activities in the employment generating markets abroad.

The gloomy revelation comes at a time when the people have already been burdened with the rising cost of living and the growing unemployment. The government has to get its energy plans into action urgently so that the industrial sector could attain its optimum production target which would mean expected revenue for the government and an optimistic employment scenario. Trade and commerce too need a boost as Nepal’s balance of trade with most of the countries is in the red. The coming days, as predicted, will bring in more problems for the people unless the government comes up with immediate

relief measures to check inflation and increase the economic growth rate.