EDITORIAL
The economy is passing through a recession. The government had claimed economic growth of 8 per cent, in reality, it is only 2.16 per cent, according to the National Statistics Bureau. A decline in local production and exports, an incline in imports, a recession in the construction sector, etc. are the reasons for a landslide decline in economic growth. Our exports are based on artificial products such as export of vegetable oil, palm oil, etc. These are the products imported from third countries and exported to India. Maybe, there is the impact of the global recession and also the impact of the Russia-Ukraine war, nevertheless, the wrong policy obtained by the governments formed since 1990 is solely responsible for a deterioration in the economy. Increasing expenditure on the non-productive sector, being incapable of spending the targeted amount in the infrastructural sector, introducing wrong monetary policy and also discouraging industrial policy are responsible for the destruction of the economic structure.
A nation identified as an agricultural country is found importing foods and vegetables worth billions of rupees from foreign countries. Local agricultural products are unable to get market, meanwhile, foreign products are dominating the market. The government relied on the customs revenue from imports of luxury products and discouraged local products. When investors started to face verities of problems including political parties’ donation derive, different unions’ unmanageable demands and policy-level discourage to the local industries, including other hurdles, the investors, instead of running their industries, started to import goods and enjoying profit margin. Just last year, the government, neglecting local industrialists, raised the customs duty on the raw materials for industries producing wire and steel utensils through the budget causing shut down of local industries. The government is unstable and the economic policy is based on the whim of the finance minister, otherwise, the minister serves certain business groups under the financial influence. For an economic transformation, the government policy should be stable and encourage the investors by providing incentives for the export. The Nepali industrialists cannot imagine such type of stable long-term policy from the Nepali government.
The finance ministry is busy writing the budget for the new fiscal year 2023/24. The central bank is issuing bond paper worth billions of rupees just to manage salaries and allowances for the civil servicemen. The construction companies have been complaining that they are unable to get payment for the works done by them years ago. They are yet to receive billions of rupees from different government-run projects. The government is managing general sector expenditure by diverting funds allotted for different development projects.
The monetary policy of the government has encouraged the black market from which trillions of rupees have disappeared from the formal channel. It is clear, smuggling traffic as well as Hundi business has flourished and thus the banks are facing liquidity crunch time and again. There is a problem with the foreign currency exchange rates as well. For more than three decades, Nepal has not reviewed the fixed exchange rate with the Indian currency.
If the government fails to introduce an appropriate economic policy, we cannot hope betterment of the economic sector. Moreover, the government needed to reduce non-productive sector expenditure and increase capital expenditure, which is a challengeable task for the finance ministry.
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