Recent years have not provided any hopeful signs for the economy. Following February 1, it is being widely feared that the economic condition may go from bad to worse. For example, tourist arrivals are reported to be sliding, so are remittances from abroad. The other two principal earners of foreign currency, garment and carpet exports, continue to suffer, the former all the more so because of the abolition of the quotas beginning January 1 this year. The overall exports have fallen. The suspension of some of the foreign aid for political reasons, with threats of further cuts if democracy is not restored, makes the economic scenario grim. At micro level, the effects can be easily felt. For example, more than half the hotels in the country, including five-star ones, have been unable to pay their employees salaries for three months. And this is despite recent marketing campaigns in India and other countries. Almost all industries and sectors face a similar situation.
Therefore, the government is not in a position to realise even its conservative estimates of five to six per cent annual growth in the Gross Domestic Product (GDP) during the current Tenth Plan period, not to speak of the more ambitious six to seven per cent projection under favourable conditions, which assume a big improvement in the security environment. In the last two years, the GDP has grown by an average 3.1 per cent, which comes to half the target and barely covers the population growth. In addition, aid suspension has started
having its impact. This calls for a revision of the current Plan and national budget to make the targets more realistic. If aid stopped flowing in, it would be difficult to maintain even
the recent growth rates. Then, far from reducing poverty from 38 per cent to 30 per cent, it would look like an achievement even to maintain it.
While all agree that insurgency on the present scale affects development and growth considerably, many, however, feel that both government and opposition leaders have all along been overly obsessed with politics, while ignoring the major economic issues. Indeed, some of the other countries hit by insurgency have not neglected the economic sector so much. Some people argue that even in peacetime Nepal did not perform remarkably on the economic front. Indeed, even after half a century of planned development efforts, the country continues to remain one of the poorest in the world. Nepalis should therefore look for the faults in themselves first. For the domestic political forces, gaining an upper hand over their rivals has become the foremost priority. In the process, they have always neglected the need to improve the living standards of the people.