FEATURES NEWS THE RISING NEPAL (DAILY)

Sagging Economy
An Exigent Need For Revival

By Uttam Maharjan

THE last fiscal year painted a gloomy picture in the economic sector of the country. That only a growth rate of 0.8 per cent was achieved during that period has come as a fatal blow to development planners and policy-makers. The current budget has set a target of 4 per cent economic growth, but the existing economic indicators reveal, rather on a disappointing tone, that it will be hard to achieve more than 2 per cent economic growth. Considering the population growth rate of 2.44 per annum, which is sufficient to double the population in 30 years, the economic growth rate of less than 2 per cent is every bit bleak.

Since the 9/11 nightmarish attacks on the USA, the world economy has appreciably plummeted to an alarming level. The Nepalese economy, too, has been reeling under that after-effect. The tourism industry, which is considered one of the biggest forex spinners, has been badly hit. This has impacted the hospitality industry so harshly that the economic scenario has changed for the worse. Those working for hotels, travel, trekking and rafting agencies, airlines and other tourism-related organisations have been thrown out of work in large numbers. Although this year is being observed as the International Year of Mountains and the Destination Nepal Year, the enthusiasm generated at the beginning of the year has faded away. Even the hope of wooing Chinese tourists after the historic signing of a Nepal-China agreement to this effect is slowly giving way to disappointment. However, Chinese tourists will definitely visit the country in satisfactory numbers in the future. Nevertheless, the on-going Maoist violence has acted as a great deterrent to attracting Chinese tourists. And, the sporadic attacks on or harassment of tourists visiting the country by Maoist rebels may give a negative message to the world at large.

Likewise, the export sector is not looking up nowadays. Once Nepalese carpets, pashmina products, handicrafts and the like used to find a good berth in the international market. Now, the exports of these products have shrunk drastically, thus adversely affecting the balance of trade of the country.
The private sector that has come to the fore since the adoption of liberalisation policy in the mid-1980s has left a lot to be desired. Although over 250 joint ventures are operating in the country, their contributions to the economy are not appreciably felt. It is even a layman's notion that the operation of development projects should have brought about positive changes in the lives of the people. But it is an irony that remote and under-developed parts of the country like Humla and Jumla are now reeling under the menace of famine. It is sad to note that development projects have not been able to touch such parts. The concentration of such projects in urban centres cannot, under any circumstances, better the development scenario of the country. What is required, therefore, is that development should well up from grass-roots level.

Government-owned enterprises are a burden to the government itself. Their condition is going downhill day by day to the detriment of the economy. So, their contributions to the economy are at their worst. Rampant corruption, financial irregularities, political interference, weak management and such other factors have made a big dent in their performance. That the government has decided to liquidate four public enterprises that were closed down last year is significative of the plight of the public enterprises. Worse still, the privatisation of loss-bearing public enterprises has not been able to pick up momentum.

Talking of the financial sector, the government-owned financial behemoths-Nepal Bank Limited and Rastriya Banijya Bank-are huge loss-bearers. It is, however, gratifying to note that reform measures have already been set in motion to bring these banks on track. The conditions of Agricultural Development Bank, Nepal Industrial Development Corporation and Regional Rural Development Banks are no more satisfactory. Therefore, these entities need to be reformed so as to save them from disintegration.

The law and order situation holds the key to attracting foreign investors. The violence that has been ratcheted up by the Maoist insurgents for the last seven years has militated against creating a good law and order situation. Once proposed to be declared as a zone of peace, the country is unfortunately in the grip of violence and terror. The Maoist attacks on some business installations in recent times have further exacerbated the business sector, which is already going through a bad patch.

So, the economy of the country is now in tatters. Various ramifications of economic development -education, health care, drinking water, sanitation, transportation and communication-are in a dilapidated condition. What is exigently required is, therefore, a strong mechanism to revive the economic sector. It may be hopefully noted that the Chand government has announced certain policy measures such as the Economic Reform Programme, Health Policy and Science and Technology Policy.

The present government is more apolitical and the incumbent ministers are technocrats, business entrepreneurs, health experts and social workers. The ministers used to cut up the government in the past for its inept policies and decisions. So, it can be arguably conjectured that they know about how to formulate pro-public social policies and programmes. As such, strong reform measures are expected of the present government to revive the sagging economy of the country. The recent decision of the government to form a high-level committee on economic diplomacy may be taken as a positive sign.

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