Inflation remains low at 2.2 percent

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KATHMANDU, Dec 13 - With the inflation rate of 2.2 per cent, Nepalese economy continues to enjoy low price rise - thanks mainly to dwindling food prices and housing that helped to drag down the whole price index.

According to the statistics of Nepal Rastra bank, during the first quarter of the current fiscal year, the National Urban Price Index (NUPI) with 1995/96 as the base year, registered a low increment of just 2.2 per cent as compared to 2.9 per cent recorded in the corresponding period last year.

During the period, food and beverages items, which commands 53.20 per cent weight in the NUPI, registered a surge of 3.8 per cent against the deflation of 4.6 per cent witnessed in the same period last year. Among the major components of the group, grains and cereals products registered a marginal deflation of 1.6 per cent as opposed to a double-digit deflation of almost 14.5 per cent. Since grains and beverages alone holds 18 per cent weight in the overall index, any decline in its index largely helps to pull down the whole index by suppressing price increments of goods with low weight.

The low price of paddy due to combined effects of bumper domestic production and huge flow of cheap Indian rice played the crucial role for deflationary pressure on the grains and cereals group hurting poor peasants, whose economic activities heavily depends upon the income of monsoon crops.

The plunging income of majority farmers due to the prolonging paddy price slump has one of the prime causes for the lowering demand of goods and services in recent months. Reports of record-low sells, particularly in the district level business centers, have already started emerging creating a serious threat for the much-needed development of non-agriculture sector to observe ballooning unemployment.

Similarly, the prices of sugar and sugar related products recorded the highest rise of 13.5 per cent against a surge of 8.3 per cent during same period last year. The heavy scarcity of the sugar during Dashain, the greatest festival of Nepali people, helped the price go up.

In the like manner, the price of vegetables and fruits also recorded a relatively higher price rise of 9.7 per cent while the price of oil and ghee also went up by 9.2 per cent against a decline of 14 per cent last year. Similar increments were also recorded for restaurant meals, pulses and milk and milk products.

Similarly, the non-food and services group, which bear 46.80 per cent weight in the national price index, registered a nominal increment of 0.4 per cent mainly due to the double-digit deflation in the prices of fuel, light and water - largest weight holder of the group. During the period, the price of the sub-group plunged by over 13 per cent mainly due to the slump in the prices of housing.

Prices of medical and personal care also rose by 4.4 per cent, which is less than the increment witnessed during the same period last year. Similarly, clothes, clothing and sewing services, education and reading materials also registered marginal increments of 3.2 per cent and 1.2 per cent against 1.3 and 14 percent seen last year.

ADB approves US$ 76m loan $30m for governance reform

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KATHMANDU, Dec 13 – A loan agreement of US $30 million was signed here today between the Ministry of Finance (MoF) and the Asian Development Bank (ADB), Manila on the Governance Reform Programme to improve service delivery in Nepal.

The agreement was signed by Bimal Koirala, Secretary at the Ministry of Finance for the Government of Nepal and Dr Richard Vokes, Resident Representative, Nepal Resident Mission, for the ADB.

According to a statement by Dr Vokes, the Programme has been conceived and designed in line with the Ninth Plan objective of making public management clean, lean, transparent, efficient and accountable.

The programme, which would be implemented over a period of four years, aims to establish a civil service that is more result-and people-oriented and gender-responsive, and that will contribute towards higher economic growth and reducing poverty. The reform program will help to remove administrative and financial weaknesses, strengthen institutional capabilities and redress the gender imbalance in the bureaucracy through affirmative action amendments to the Civil Service Act.

The program is expected to be completed by the end of 2005. ADB’s concessional loan, from the Bank’s Special Funds resources, will have a maturity of 24 years, including a grace period of eight years. It will bear an interest rate of 1 percent per annum during the grace period and 1.5 percent thereafter.

$46m loan for transportation

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KATHMANDU, Dec 13 – Asian Development Bank Manila has approved a loan of US $ 46 million for improving access to Nepal’s Rural areas.

According to a press release issued by the ADB Central Office, Manila, Nepal’s East-West Highway, feeder and district roads will be upgraded and maintained, thus improving access to impoverished rural areas, with the help of the approved loan.

The project would include maintaining 140 km of the East-West Highway between Belbari and Chuharwa, 165 km of roads to an all-weather paved surface, 100 km at district headquarters of Khandbari and upgrade 10 km of a cross-border access road at Kakarbhitta.

The United Kingdom’s Department of International Development (DFID) will provide co-financing of 7 million pounds sterling. The total cost of the project is US $ 69.5 million, out of which Nepal Government would fund the remaining balance of US $ 13.9 million.

The loan has come from the concessional Asian Development Fund and is repayable in 32 years, including a grace period of 8 years. The interest charge would be one per cent per year during the grace period and 1.5 per cent per year thereafter. The project is due for completion in 2007.

Syndicate system to be dismissed

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KATHMANDU, Dec 13 – The sixth meeting of the Consumers’ Protection Council, headed by the Minister for Industry, Commerce and Supplies Purna Bahadur Khadka, today took a decision on ending the decade-long syndicate system in transportation sector.

The meeting has also directed all the related-government bodies to issue similar notice.

Minister for Industry, Commerce and Supplies Purna Bahadur Khadka has underlined the need to implement all the provisions relating to consumers’ interests ensured by the Consumers’ Protection Act and other regulations.

He asked all the concerned departments of the government to formulate time-specific work plans and implement them without any delay in order to protect consumers’ interests, according to a press release.

Minister Khadka urged all the concerned government bodies to carry out the activities at the sixth meeting of Consumers’ Protection Council at the ministry.

The meeting also decided to hold discussions with the representatives of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Nepal Chamber of Commerce (NCC) and other commodity associations to make compulsory labeling, which include quality, quantity, date of manufacture, expiry date, guarantee etc.

Similarly, the meeting has decided to review the taxes that businessmen have to pay and to take a decision to provide a facility of collecting such taxes through one window system within two weeks.

The meeting also decided to form a central coordination and monitoring committee under the convenorship of Industry, Commerce and Supplies secretary, regional coordination and monitoring committee under regional administrator and district coordination, and monitoring committee under the convenorship of chief district officers.

Likewise, the meeting also constituted a committee under the chairmanship of Industry, Commerce and Supplies secretary to take a decision on introducing consumers education in the school curriculum and a decision will be taken within two weeks after making consultation with the Ministry of Education.

The meeting of the council has also decided to form yet another committee under the chairmanship of director general of Department of Commerce within two weeks with a view to providing goods at fair prices. And it has also decided to hold discussions with the representatives of various commodity associations regarding ensuring quality standard on basic commodities within three weeks.

Today’s meeting of the council also constituted a sub-committee under the chairmanship of director general of Department of Commerce to formulate short-term and long-term plans.

Parliamentarian Tanka Prasad Rai, chairman of development committee of the parliament, Assistant Minister for Industry, Commerce and Supplies, Prakash Bahadur Gurung, secretaries at the Ministry of Industry, Commerce and Supplies, and Home were also present at the meeting.

W’shop takes up the cause of rural labour

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KATHMANDU, Dec 13 - Trade Unions, experts and government officials gathered at a programme here on Thursday have laid emphasis on the need for bringing a change in the lives of thousands of rural agricultural workers who are unorganised and deprived of many facilities.

They also urged the government and concerned organisations to help the rural agricultural workers in getting basic education and healthcare, and enlisting them in official documents. It was also felt that the system of minimum wages ought to be strictly enforced.

Speaking on the two-day "Workshop on Rural-Agricultural Workers", DPA Naidu, Senior Workers Specialist at International Labour Organisation (ILO)-SATT, New Delhi, said that until a solid implementation plan comes into practice, the problems of bonded and child labourers, among others, could not be solved. He also said the entire South Asian region is suffering from problems of illiteracy, malnutrition, and low wages for labourers.

Lalit Bahadur Thapa, Director General at the government’s Department of Labour, pointed out the need for a strong monitoring mechanism for the effective implementation of the minimum wage fixed by the government. He also said the government is always ready to extend the necessary cooperation in promoting the rights of agricultural and rural labourers.

Dr Saiyad Jahir Sarik, chief technical advisor at ILO, Kathmandu, stressed that Nepal should update its policy, rules and regulations according to the international standard on the matter of uplifting rural agricultural workers’ living conditions.

According to a research carried out by ILO in 1998 and 1999, 2 million out of 6 million agricultural labourers are daily wage earners. Similarly, more than 1 million agricultural labourers have no land.

Rabindra Shrestha, Vice President of Employers’ Council at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Mukunda Neupane, President of Nepal Trade Union Federation also spoke on the day. The workshop is being organised by the ILO and the Nepal Trade Union Federation.