During the fiscal year just past (2004/05), the manufacturing sector registered a growth rate of just 2.76 per cent, a figure that hardly reflects a satisfactory trend in the direction of the national economy, according to the figures just compiled by the Central Bureau of Statistics. The government has, in the current budget, set a vision of attaining economic stability and higher economic growth rate, as well as the broader goals of reducing the poverty rate to below 10 per cent of the population and of achieving the UN’s Millennium Development Goals (MDGs). How this can be possible has not, however, been explained. The economy’s performance last year, at a mere two per cent GDP growth rate, was lacklustre, but the government has fixed the target of 4.5 per cent for this year (2005/06), without providing any sound basis for this optimism.

The poor progress on the manufacturing front means that it has produced few new jobs and its contribution to the national economy has likewise been low. Garments, once the pride of the Nepali economy in foreign exchange earnings, contribution to the GDP and employment creation, slumped by 19 per cent last year in continuation of its downward spiral, which is likely to persist this year too; however, woollen carpets grew by six per cent. This trend continues across the economic board. The service industry, for example, tourism — the top foreign exchage spinner along with garments and carpets — has been in a poor shape for several years. And the agricultural sector, the largest single contributor to GDP and the mainstay of the vast majority of the Nepalis, did not perform well last year.

In the current year, too, the monsoons — drought, excessive or ill-timed rains in most parts of the country — have made it pretty clear that farm output will be unsatisfactory, too, which will, in turn, pull down the GDP growth rate. The economic outlook for this year is far from encouraging. All this renders the government’s economic growth projection for this year over-ambitious. So, if this trend continues, as is likely unless the Maoist insurgency is resolved, poverty reduction and achievement of MDGs will remain wishful thinking, like so many other plans that have gone awry during the past half century.