State of Nepali economy
Forecasts about the economy should always be taken with a pinch (or two) of salt. Nonetheless, it is hard not to be optimistic when credible international institutions repeatedly increase the country’s growth forecast. According to latest data from the World Bank, the Nepali economy in the current fiscal is expected to grow by 7.5 percent, which, if realized, will be a 23-year high. Only two weeks ago, the government had projected the economy to grow by a decent 6.9 percent. True, the economy was bound to recover after growing by an abysmal 0.4 percent last fiscal. The rock-bottom growth was largely a result of the devastating earthquakes and nearly five months of border blockade. With the lifting of the blockade and partial rebuilding of destroyed homes, the economy was destined for a rebound. Also, as the World Bank notes, the country also benefitted from a bumper harvest last monsoon. Rice production in the current fiscal, notes the bank, hit a record high of 5.2 million tons, up from 4.2 million tons a year ago. All these ‘natural’ factors contributed to the recent revival of the economy. But that is not the whole story.
Another big reason for the World Bank’s optimistic forecast is increased power supply, which has largely removed the perennial problem of load-shedding that Nepali industries and service sector had been crippled with for most of the past decade. As a result of more electricity, the industries that were operating under half their capacity are now running at around 65 percent capacity. Both wholesale and retail trades are up, transport sector has revived and so has tourism, with tourist arrivals this year matching the pre-blockade levels. Significantly, the government’s capital spending has also significantly picked up, as has revenue-generation. There is room for even more optimism as the country has successfully held the first round of local election, and ground is being laid for the second round. If indeed the three sets of elections stipulated in the new constitution take place on time, they are sure to further spur the economy. Separately, Nepal joining China’s OBOR project, thereby opening itself up for billions of dollars worth of Chinese investment—in addition to the import of vital Chinese technical knowhow—offers another promising prospect.
There is so much going for Nepal right now. For far too long the country’s development prospects have been held hostage by its politicians, in the name of mainstreaming Maoists, or institutionalizing changes or preparing a new constitution. No major party in Nepal talked about economic development as all the attention seemingly went to getting the national politics right. Meanwhile, they seem to have forgotten that unless the people are economically empowered, there is little meaning to political empowerment; only when you have enough to eat and to look after your family do you start thinking about your political rights. This is not to discount the importance of political empowerment, especially of marginalized communities. But economic and political empowerment can go hand in hand. In fact, for a country at Nepal’s stage of development, it is vital that they do go together. But it is also about time that our political parties refrained from the kind of beggar-thy-neighbor politics that sows social divisions and bankrupts the economy.
Kanchan Sharma Regmi
