Government issues White Paper; estimates only 2 % growth rate

Kathmandu / November 24: The government has issued a White Paper, making public the current situation of nation’s economy, problems created after agitation and strikes in the southern plains and unannounced blockade continued for some months, and its (government’s) future course.

The Paper has painted a bleak picture of nation’s economy with government’s estimation of only 2 percent economic growth rate, reasoning the heavy shrinking of economic activities with the obstruction on supply system triggered by the agitation and strike, and the undeclared blockade.

Reading out the White paper, Finance Minister Bishnu Poudel said although the growth rate of the current fiscal year was expected to be 6 percent in the background that new constitution had come with the hope the country would concentrate on economic and social developments, the heavy disruption in the supply system and subsequent severe effects on agro and non-agro products has made the government bound to estimate 2 percent growth rate.

Meagre capital spending, no environment of reconstruction
The activities to generate capital has not taken a pace, Minister Poudel said, adding that in the first four month of the current fiscal year, only 4.1 percent of the capital budget was spent, while the institutional environment for spending Rs 74 billion allocated for reconstruction was yet to be created.

Service sectors marred
Due to the acute shortage of fuel to the service sector as hotel/restaurant, tourism, construction, banking, and transportation which contribute to 50 percent of the gross domestic product and the dearth of essential materials, they have been marred. It has direct impact on the country’s economic growth rate.

State of earthquake affected worsening, serious challenge to graduation to status of developing country
The Minister further said the number of people pushed to poverty due to the earthquake damage is estimated at 700,000. The condition of those suffering from the earthquake damage is likely to be worsened with the effects on drinking water and sanitation, education, health, employment, food security and daily livelihood. It will pose a serious challenge to the government to graduate the country to the status of developing country from the present least developed status, by 2022.

Growing Inflation
The effects of the disruption in supply system has been seen in the overall economic indexes, Minister Poudel said, adding that the inflation in the first month of the current fiscal year was 6.9 percent which grew to 7.2 and 8.3 percents respectively in the second and third months. In this, food sector saw highest inflation.

Heavy decline on export, import
The economy is deteriorating for the disruption of the transportation of materials for construction activities. In the initial three months of the last year, the goods and service of Rs 191 billion were imported, which declined to Rs130 billion in the same period of the current fiscal year. Similarly, in the same period last fiscal year, there was the export of Rs 22.53 billion, which dropped to Rs 16.81 billion. It is a decline by 31 percent compared to the last fiscal year.

Currently, the debt burden to the country is Rs 539 billion. The debt burden ratio to the gross domestic product is 24.5 percent.

The Minister reminds through the White Paper that the people already afflicted by the devastating earthquake have been pushed to worsening condition due to the agitations, strikes and banda (general shutdown) organized in the name of Madhes agitation.

The assistance, cooperation and unity shown by the foreigners for the search of the missing, rescue, relief, and distribution after the earthquake were quite unforgettable. Similar environment of cooperation was expected for the reconstruction too, but Nepali people are bound to go through such unimaginable afflictions, added the Finance Minister.

Agro products to decline by 10 percent
The agro production is estimated to go down by 10 per cent. Wheat production is likely to slide down by 30 per cent if there is no smooth supply of chemical fertilizer. The annual demand for food of the country stands at 5,345,000 metric tonnes and until the starting of the current fiscal year, there was a stock of just 155,000 metric tonnes and such projection in the food production has posed a risk of food insecurity.

Likewise, the production of dairy and meat products is projected to go down by 2 per cent. However, the production of vegetables is estimated to remain the same. Last year, the country recorded around 3.6 million metric tonnes of vegetable production. But the problem in transport is to affect the collection of produces and its marketing.

Future course
The government has pledged to provide agro seeds to farmers at subsidized rate and ensure supply of chemical fertilizer got stuck into transit and border points immediately and distribute it to farmers for winter crops. Through the white paper, the government announced to make arrangements for distributing soft agro loan to farmers.
Likewise, business community will get more time for submitting tax details and for tax payment. Dairy and vegetable farmers and meat producers will get more time for paying loan and some discount on interests too.

The Nepal Rastra Bank’s Recovery Fund will be utlilised for the recovery and rehabilitation of industries.

Health and Education Service
Similarly, in the white paper, the government has announced to normalise the supplies of health-related facilities including oxygen, equipments, raw materials, packing materials and blood collection bags and opt for an air route to import life-saving drugs.
Besides, all academic institutes will be reopened and support and cooperation from teachers, students, guardians, political parties, rights activists and civil society will be garnered for the same.

Bill on Reconstruction Authority soon
The government pledged to go with the post- reconstruction efforts by endorsing the Bill on National Reconstruction Authority from the Legislature-Parliament at the earliest. Likewise, first installment of Rs 200,000 announced by the previous government for the earthquake hit people will be allocated soon. Poor families rendering homeless by the disaster will be provided loan up to Rs 300,000 at subsidized interest rate.

The government declared to provide Rs 10,000 to the most affected quake victims within mid December to purchase winter garments. Moreover, vocational trainings will be imparted to produce skilled workers to construct earthquake-resistant buildings and reconstruction of the earthquake-damaged historic and religious heritages will begin soon.

Governance reform
The task for drafting new laws demanded by the new constitution and those needed to be amended will be taken ahead effectively. Effective measures will be taken to maintain peace and good governance as per the constitution’s supremacy and rule of law and to discourage the black marketing, criminal activities and obstructions on border, highways, industrial corridor, health and education sectors.

The government announced to promote the culture of reward and punishment in bureaucracy and hold the election of official trade unions within the next three months.

Monitoring mechanism
A mechanism will be formed with the participation of representatives of stakeholders concerned, consumers’ rights organisations and private sector to systematize the supplies of fuel and daily essentials and market monitoring.

Impact of banda, strikes and supply system on nation economy will be under regular supervision of the government. A High Level Committee will be constituted with the participation of private sector to monitor task mentioned in this white paper.

Petroleum products import and distribution system

A system shall be put in place to ensure effective and transparent distribution and sales of essential goods, including fuel. A certain criteria will be devised for the efficient fuel distribution which also includes putting online the information mentioning venue, time, quantity and time table for the distribution of the same.

The consumers will be provided coupon to facilitate them in securing fuel without standing on line for long.

Similarly, the government will book the persons and groups involved in irregular distributions and sales of petroleum products.

For the distribution of LPG cylinder, the government is determining priorities on the basis of its daily import and stock. In addition, kerosene and firewood distribution will be further made effective.

Physically challenged persons, ambulances, hearses, tourist vehicles, vehicles ferrying drinking water, milk, medicines and other vital commodities and media persons/media houses will be prioritized when it comes to providing fuel.

In an attempt to explore alternatives to import petroleum products, the government will make various trade agreements with international companies and foreign countries. If private sector is interested in its import, the government will facilitate them.

Government will promote Alternative Energy Promotion Centre and facilitate the private sector promoting equipments and technologies on alternative source of energy so as to increase public access to it.

The vehicles carrying essential goods and clearing customs will be escorted to their respective destinations. Strict monitoring and supervision of the import and sales of petroleum products will be carried out by the government.

The maintenance and up gradation of the alternative Check Points for the import of goods will be undertaken along with constructing and expanding the roads linking to those bordering points.

Use of electronic vehicles both for personal and professional purposes will be encouraged. Public will be encouraged to use electronic stoves for cooking food.

Energy security

Energy crisis will be declared in order to expedite the process of hydropower production and its transmission and distribution.

The construction of under-construction hydropower projects like Upper Tamakoshi, Kulekhani III and Chamelia and other proposed projects like Budhi Gandaki, Nalsingh Gad will be accelerated. Some 25 mega watt of electricity will be imported from the under-construction Grid Solar Project.

The micro hydro projects constructed and operated with the investment of locals will be encouraged.

Similarly, electricity projects generating 200 mega watt of electricity will be accelerated and connected to the national grid. Furthermore, similar projects under-taken by the private sector will be facilitated for their timely completion.

The government has targeted to link additional 155 mega watt electricity in the national transmission grid within a year.

Also, a feasibility study of the hydro electricity power in the country will be conducted at the earliest. Nepal Army will be mobilized in the construction of national transmission lines if needed.

The government-provided subsidy and grant for the production of alternative energy in the villages lacking transmission lines and electricity service will be furthered made effective.

Food Security

The subsidy price for rice will be determined at the earliest and utilizing the stores of public corporations associated with the Nepal Food Corporation; the government will arrange to purchase the farmers’ produces.

The provision that compulsorily incorporates livestock and crops insurance under the micro insurance will be made further effective. The government programmes related to agriculture insurance will be expanded by mobilizing cooperatives.
The programmes helping to be self-reliant in the production of various food items like rice, wheat, maize, fresh vegetables, fruits, lentils, spices, fish, egg and dairy products will be launched as campaign with the timeline of two years.

The landless and poor families will be provided capital grant and subsidized loan.

Finally, the government has thanked all Nepali sisters and brothers for keeping calm, patience and demonstrating tolerance and unity in this adverse situation caused by the devastating earthquake and obstructions in supply system. It also expressed gratitude to all lawmakers, political parties, civil society people, business community, government employees, neighbours, development partners, and media for their support in this situation, expecting positive support and cooperation from all walks of life to cope with this national crisis resulted from this year’s devastating earthquake and ongoing unofficial border blockade and minimise its impact on national economy. RSS