NATIONAL 4 - (Spotlight Weekly)

Shock And Recovery

The economic sector is in the doldrums following the unfortunate incident

By SANJAYA DHAKAL

"It was a big blow for the economy," says Pradeep Kumar Shrestha, president of the Federation of Nepalese Chamber of Commerce and Industry (FNCCI), summarizing the effects the June 1 incident had on the countryís economy.

The economy, which was already cornered by innumerable strikes and shut-downs, has been seriously hit by the palace tragedy.

"There is widespread disappointment among businessmen and industrialists at present," said Rajendra Kumar Khetan, a prominent industrialist. "We lost a long-ruling King who was so beloved."

Khetan, however, says the business community and civil society have to look towards the future. "We are happy to have a new King. We must join hands in supporting him and helping the government sail over this period."

Agrees Shrestha. "There is no alternative. We have to bounce back." Shrestha believes that the future of the Nepalese economy depends, to a great extent, on how the government handles the present crisis. "We must frame three- to five-year economic plan and agenda. In a situation of such distress in the nation, everybody has to forget their political differences," he said.

This calamity has come at a time when the country was already facing an uphill task of alleviating poverty through economic development. The current Ninth Plan, whose overriding objective is to reduce the poverty level from 42 percent of the population to 32 percent, has been found wanting in realizing its targets.

According to a mid-term review of the Ninth Plan, as against the target of attaining a six percent growth rate per annum during the plan period, during the first three years (1997-2000) the average growth rate achieved has been only 4.6 percent. "Even if the GDP growth rate is maintained at the current pace of six percent per annum for the next two years, the average growth during the plan period will not be more than five percent -- a full one percent below the target," says the report prepared by the Nepal Rastra Bank. The report is yet to be made public.

Against this background, the recent tragedy is sure to make a long-term dent in the countryís stride towards prosperity. "In the short term, the incident has hit the total gross production and the revenue collection. The long-term impact is still to be calculated," said Khetan.

Garment workers : Will the economy bounce back

One sector of the economy that has been hit the most by this incident is tourism. "Tourism is very very badly affected," said Shrestha. The series of unfortunate incidents like the Indian Airlines Flight 814 hijack of 1999, the Hrithik Roshan episode of last year, the countless bandhs and shutdowns had already battered the tourism industry.

Just a few months ago, Nepal Tourism Board had organized a special promotional campaign in India (Fun Next Door Like Never Before) to lure Indian tourists back to Nepal after they stayed away following the Hrithik Roshan episode and the ensuing negative media publicity.

But Shrestha is hopeful that Nepal will overcome this profound shock. "We at the Federation are preparing a recommendation paper for the government on ways to improve the economy. We have also suggested some points for the upcoming budget."

Khetan, too, says that the time demands all Nepalese to come together. "There are so many problems we are facing today. While on one hand we have the problems of poverty and Maoists, on the other our economy faces the challenge of World Trade Organization regime and its aftermath."

Shrestha believes we have to prepare a "country vision" about the short-term measures for a long-term approach.

As the businessmen are getting over the initial shock of the tragedy, it is of utmost importance that the government introduce new measures in the upcoming budget to accelerate economic growth.