Economic Growth Rate
Optimism Prevails

-By Mohan K.C.

OPTIMISM seems to prevail over the attainment of the six per cent economic growth rate that had been envisaged in the Ninth Plan. This is particularly based on a few major elements like a majority government leading to political stability, favourable weather conditions and increase in export earnings. This is what has come to light from the Nepal Rastra Bank sources.

Dismal
At present the growth rate is still around three per cent only which is rather dismal. Despite the commitments made to give a stimulus to the economy which is based basically on agriculture and then exports and tourism, industries have just begun to pick up pace. It will take some time before the industrial sector will be a sector to reckon with as far as its contribution as a whole to the national economy is concerned.

Agricultural sector still remains the major player in the economy. Moreover, the number of people participants in agricultural activities far outnumber those in other fields. But, the sad part is that the productivity of the agriculture sector has not been commensurate with the increase in the population growth rate. With most of the farmers being of the subsistence type, there is hardly any surplus that can go to meet other various needs.

It is not surprising then that a country which was once an exporter of foodgrains has now to import to meet the demands of the people. The turnabout is quite unfortunate. The reason is not difficult to understand: low productivity and growing mouths to feed. If the other sectors of the economy too had grown, there could have been a switch of agricultural workers to the industrial sector but that has happened only to some extent. Therefore unemployment and under-employment rate is growing.

Tourism too has remained a major source of earnings and employment generation. The only trouble with this sector is that innovations and promotion and publicity to the desired extent has not come about. Without being able to promote Nepal in the tourist originating countries the country cannot hope for an influx of visitors defying all imaginations.

For tourism is a source, if tapped probably, to deliver much to boost the economy of the country. But for this the policies and plans together with the active participation of the private sector is essential.

If we look at the industrial sector, it has not been very encouraging so far. But the joint ventures and foreign direct investment if it reaches the level projected then there is every reason to be optimistic over the end result. In the past, only the cottage and small scale industries could be termed as real industries while others were just repackaging or remoulding types. Such industries did not need sophisticated technology and the need for manpower was limited. So neither did the country’s economy benefit much nor was there a spurt of employment opportunities.

In this respect, the increase in the number of joint venture banks has not been very forthcoming when it comes to financing big scale industrial projects including those to tap the enormous water resources. There has been a shift in recent times with foreign investors being interested to operate here because of the liberalisation policies adopted by the government and the environment has become more suitable because of political stability in the country.

For this congenial atmosphere, the May 1999 elections must be taken as the base line because it saw the formation of a majority government which boosted the confidence of the foreign investors for operating in Nepal. The tempo that has been created for the industrial sector has to be maintained if the six per cent economic growth rate is to be achieved. Projections as such does not amount to much unless action takes place in a similar manner.

As agriculture is the main preoccupation of the majority of the people, advantage can be got from it by setting up agro-industries and in this effort some foreign investors have shown their interest. If agriculture and industry can develop, there can be no doubt that the growth rate may well exceed the expectations. But for the moment, the six per cent growth rate forecast can be worthwhile.

In this context, the government must come forward for increasing the productivity of the land so that not only sufficiency in food could be fulfilled but could fuel the expansion of agriculture related industries. This would provide the farmers with an enhanced earnings and lead to raising their living standard.

The political stability that has come about must be utilised for economic growth in real terms. The people expect a change for the better as a significant proportion of the people live below the poverty line. A number of programmes for the underprivileged have been added to the list directed towards the underprivileged lot. If sincere efforts are made then in a few years time socio-economic changes will be visible.

There are many challenges that confronts the government as concerns the economic development. Among others corruption and Maoist insurgency are top on the list. This calls for concerted efforts to root them out. But there has to be a plan of action according to which they can be checked.

Programmes
The foremost task before the government, therefore, lies in bringing about economic programmes that best suits the needs of the local people. The empowerment of the local bodies in this respect with the Act and the regulations in force paves the way for them to do the needful. The private sector too must come out boldly by investing in industrial ventures rather than mostly concentrating on the banking sector alone.

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