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Seven Percent Economic Growth In This Fiscal Year 2016

Issue May 1, 2017

Seven Percent Economic Growth In This Fiscal Year 2016

Siddhi B Ranjitkar


In a news conference held in Kathmandu on April 25, 2017, the Central Bureau of Statistics revealed that the Gross Domestic Product (GDP) would be 6.94 percent. The primary sector contributes 30 percent, the secondary sector 14 percent and the service sector 56 percent. The CBS has attributed the economic growth to the favorable climatic conditions for the agriculture, the smooth supply of power, and the reconstruction after the quakes, the news in “artha bazaar” of gorkhapara’ on April 26, 2017 stated. If a country has a seven percent economic growth then its economy doubles in 10 years.


The CBS has included agriculture, fishery and mines and mining in the primary sector, construction, industry, electricity, gas, water in the secondary sector, and wholesale/retail sales, hotel/restaurants, transport/communication/warehousing, finance, real estate, defense, health, education, and other community, social and individual services in the service sector.


The CBS has stated at the news conference that the agriculture and the forest has contributed 28.89 percent to the GDP, fishery 0.48 percent, mines and mining 0.63 percent, manufacturing industry 5.67 percent, wholesale and retail sale 13.52 percent, hotel and restaurant 1.98 percent, transport, communication and warehousing 8.11 percent, finance mediation, real estate and professional services 9.9 percent, public administration and defense 9.64 percent, education 7.23 percent, health 1.74 percent, other community, social and individual services 5.9 percent. (These figures don’t add up to 100 percent)


The economic growth is projected to almost seven percent for this fiscal year 2016 ending in mid July. The growth has mainly to do with the after-quake reconstruction, economic liberalization, and the smooth supply of power, smart industry minister, health minister and the finance ministry pushing the line ministries to use the capital budget at maximum, no political disruption causing the strikes and shutdowns, and surely, the money spent on the local election.


Even though the CBS has attributed the high economic growth to the favorable climate for the agriculture, power supply and after the quakes reconstruction have been the main contributors to the so high economic growth in this year. Probably, the uninterrupted power supply must have played a significant role in the economic growth, as any economic activity depends on the energy supply. No political disruption causing the strikes and shutdowns also played a remarkable role in the high economic growth in this fiscal year.


The agricultural production has recorded the high growth not only due to the timely rains but also must be due to the smooth supply of power, as farmers could pump up the underground water or from the nearby river as and when they require to irrigate their farmland. So, the increased agricultural production has been.


The manufacturing industry heavily depends on the power supply. The recent news in “gorkhapatra’ has it that the industrial production has been increased by 20 percent due to the uninterrupted power supply in the Sunsari district.


When the power supply had been heavily unreliable and had been only for one-third of a day then most of the energy intensive small industries such as printing press had died. Then the middle-sized and even the large industries also have the problem of not having the regular supply of power. They had either to keep the high cost diesel generators or cut the production to the tune of the power supply in other words most of the industries had to face high cost and low productivity due to the unreliable power supply.


Other service industries such as hotel and restaurants, communication, health, education and even warehousing have to tailor their activities to the tune of the power supply. Many cold storages could not operate. Hotels and hospitals had to keep the high cost diesel generators causing loss to their incomes.


Now, thanks to the smart CEO of Nepal Electricity Authority Kulman Ghising, and his boss Minister for Energy Janardan Sharma, the power supply has been regular. They have properly managed whatever power-production units are available to produce power at the maximum at the time of the peak power demand, and import power from India to mitigate the power shortage.


Certainly, the reconstruction of the quakes-damaged houses, schools, health post and centers, administrative buildings and private houses has increased the construction activities heating up the economy. It has increased the demand for the construction materials, and for the carpenters, bricklayers, electricians, plumbers and so on. The increased job opportunities means high economic growth.


The reconstruction activities would have a number of times higher than the current activities if the National Reconstruction Authority (NRA) has been operational a long time ago, and the government has taken drastic actions to delivery the relief supplies to the quake victims, and the reconstruction of the quake-damaged structures were started off after the relief phase. Then the economic growth would have been even higher.


The then-coalition partner of the NC government in 2015, the CPN-UML did not allow the Prime Minster Sushil Koirala to appoint the CEO to the NRA for nine months. Then Chairman of CPN-UML KP Oli became the prime minister. He appointed his man rather than a capable man to the CEO of the NRA. Then the CEO spent most of his time on the paper work rather than fieldwork.


Then, the change of government occurred in 2016. Prachanda displaced KP Oli as a prime minister. The new government waited for some months the CEO, KP Oli appointed, to perform well for delivering the relief supplies to the quake victims. Prime Minister Prachanda verbally had urged the CEO to efficiently perform his duty but his performances had been much to be desired, as some political analysts stated that the CEO deliberately delayed the relief supplies delivery to discredit the government that had displaced his boss. So, the government fired the CEO, KP Oli had hired, and appointed a new man to the CEO of NRA but he was a man of the Nepali Congress rather than a best man for the job.


Speaking to the anchor of the Radio Nepal morning program called “antar-sambad” on the morning of April 25, 2017: the second anniversary of the quakes, CEO Dr Govinda Raj Pokharel said that the government could not perform as the private companies or individuals could; so, it would take some time to reconstruct the private houses, monuments, and cultural heritages, and the State buildings and so on. He was one hundred percent correct in saying so.


However, another side of the truth is that the Nepalese government could do marvelous things if we take a look at the recent past activities of the government and political parties. They made the Chief Justice of the Supreme Court of Nepal as the chairman of the council of minister to hold the elections to a second Constituent Assembly. Even before that they add up one term after another of the previous Constituent Assembly.


Then, the question is why the same politicians and the same persons one after another taking up the job of prime minister have not been able to do the similar sorts of amazing jobs for reconstructing the quake-damaged structures because they simply did not want. They have no excuse for not doing a wonderful job of delivering relief supplies and the reconstruction.


The State had NPR 200 billion lying idle at the State treasury after the quakes and even now but the government went to the donor community begging for the donations for the reconstruction. The donors dictated certain conditions on using their money. Following those conditions, the NRA took months and months trying to receive the money but the money did not come as committed on time.


If the prime minister and ministers had been responsible for delivering the relief supplies and the reconstruction they were not short of national resources. Instead of going to the donors they could use the idle State money, and then borrow the money from the banks or from the savings of the civil employees, police, and army, and even print some money to meet the needs for relief supplies and reconstruction. They really don’t need to be beggars in the eyes of the international donor community if they were to be the wonderful actors in the State businesses. That would have stimulated the economy even more than what has been so far.


The comparatively high growth of the economy in this fiscal year could be attributed to some active and sincere ministers, and hyperactive prime minister. As already mentioned Minister for Energy Janardan Sharma has made the uninterrupted power supply possible. He also pushed the companies to invest in the hydropower projects, and pushed hard the companies and contractors engaged in construction of new hydropower projects to complete as scheduled fueling the economy.


Another sincere and active minister has been the Minister for Industry Nabindra Raj Joshi. He has revived some State-owned dead industries, and he has continued to work on reviving other similar industries remaining dead for some time due to the former finance minister that followed the economic textbook knowledge rather than the ground realities for the economic development.


Minister Joshi has held the investors’ conference in Nepal for attracting the foreign investment. He has been creating an environment conducive to investment in Nepal. The government, the politicians and the minister Joshi have convinced the foreign investors, that Nepal has been the favorable country for their investment, as they have created stable political situation, the power supply has been regular, the government would follow the rule of law in other words the government would be stable, and no policy change abruptly would be causing uncertainty to the investors. Tax policy and monetary policy would be stable and foreseeable.


Minister for Health Gagan Kumar Thapa is another obviously sincere and active minister that works hard and pushes others to work hard. Credits to his work have been the free treatment of major illness such as cancer, kidney problems, and so on. He has introduced the health insurance as a trial in some districts. His actins have surely contributed to the economic growth.


The economy could grow even up to the 10 percent per annum doubling the economy in seven years if the politicians taking State power are really wiling to do their jobs sincerely and productively. Now, the growth has been projected to seven percent means the economy could double in ten years if this growth rate is maintained for the decade at least.


April 27, 2017

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