At a time when the economic growth rate has been sluggish, a report prepared by the National Planning Commission (NPC) shows that the per capita income of Nepali people will skyrocket by 40.11 percent to reach 1,935 US dollars in the next four years.
KATHMANDU, Feb 27: In the first three months of the current fiscal year, the economy seemed to be very sluggish. According to the quarterly gross domestic product growth rate forecast published by the National Statistics Office (NSO), the growth rate has been measured at less than 1 percent.
In the first quarter of the current fiscal year, Nepal's economy grew by 0.8 percent compared to the first quarter of last year when the growth rate was 3 percent.
At a time when the economic growth rate has been sluggish, a report prepared by the National Planning Commission (NPC) shows that the per capita income of Nepali people will skyrocket by 40.11 percent to reach 1,935 US dollars in the next four years.
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While the data of service sector growth published by NSO showcases that almost all sectors of the market have been affected since the beginning of the current fiscal year, it is ironic to see that the government has projected the per capita income of Nepalis to reach 1,572 US dollars in the upcoming fiscal year.
The government’s report contradicts with its own reports while it also seems over ambitious compared to the study carried out by a number of international organizations. Nepal’s economy has been projected to be pretty slow even in the next few years, citing the global economic slowdown. The World Bank (WB) has projected the economic growth rate of Nepal to stand at just 5.1 percent in this fiscal year, while it is projected to remain at a mere 4.9 percent in 2023/24.
Likewise, a number of macroeconomic indicators do not pose a healthy picture till date. There was pressure on the economy since last year. The impact is still visible this year. The banking sector has been discouraged in credit expansion, while the demand is falling, and businesses are also experiencing problems. Meanwhile, despite the political instability and slowdown in economic activities, the government estimates that the annual income of Nepalis is increasing.
There are signs of recession in all other sectors except for the banking and financial institutions. Its impact has been seen in the government’s revenue collection. However, NPC has projected that when the annual income gets close to US$ 2,000, the economic growth will be eight percent.
The commission has estimated that the annual income will increase by 3.83 percent to reach US$ 1,434 in the current fiscal year (FY 2022/23). It is estimated that the annual income will reach US$ 1,572 in FY 2023/24, US$ 1,740 in FY 2024/25 and US$ 1, 935 in FY 2025/26.
According to the NSO, the mining sector has been the most affected in the first three months of this year. Compared to last year, the production of the mineral sector has decreased by 29 percent this year. Similarly, the construction sector has been negative by 24 percent. Similarly, the growth rate of the agricultural sector has been maintained at 1.6 percent, while the output of other service sectors has also been positive.
On the contrary, there is a possibility that the government's plan to upgrade Nepal to a middle-income country by the year 2030 will be fulfilled with the increase in per capita income, says the NPC.
Meanwhile, the commission estimates that revenue collection in the next fiscal year (FY 2023/24) will reach Rs 1.403 trillion, Rs 1.66 trillion in FY 2024/25, and Rs 1.831 trillion in FY 2025/26. However, this year, the government has already revised the budget estimate and downsized it by Rs 244 billion as the revenue collection is negative while the financial administration is finding it difficult to avoid negative revenue till the end of the year.
