Economy Devastated, Worst in 3 decades

The current fiscal year has been the worst since FY 2036/37. At the time, the economy shrunk by 2.3%. Even during the worst years of the Maoist insurgency (2058/59), the economy had grown by 0.12%. Massive reduction in fuel imports due to the unofficial blockade imposed by India has adversely impacted all sectors of the economy A survey conducted by the Ministry of Finance, National Planning Commission, Nepal Rastra Bank and some donor agencies has predicted a fall in production this year as compared to previous year. Last year, the country’s GDP stood at Rs.2,124 arba. The economy is likely to enter a depression because the GDP will decrease compared to last year. According to an official at the Ministry of Finance, ‘The country faces economic depression as the impact is seen not just on agriculture and production sector but also in the service sector and in every household.’ This means the economy growth of the country will be negative. 22 hundred industries completely shut Altogether 22 hundred small, medium and large industries in Terai have been shut down. Biratnagar, Birgunj and Bhairawa, the cities with highest number of insutries are most affected. Production has been completely closed not just as the impact of the strike but also due to the scarcity of fuel and raw materials. Companies have informed that factories are barely managing to operate even a single shift. According to the Federation of Nepalese Chambers of Commerce and Industry, the country is suffering a loss of Rs.2 arba every day. Around 4 lakh locals have been rendered jobless. Businessmen have started appealing to the government as the salary and other expenses remains constant even though industries are not operating smoothly. Nepal Rastra Bank has increased the loan payment deadlines on their request. But if the situation continues unchanged, it is sure to impact the books of all banks. An official at Nepal Rastra Bank stated that the banking sector that had remained unaffected even during the maoist insurgency, is now being affected. 1.5 crore population at the verge of poverty Natural disaster and the economic blockade have highly affected the people earning less than $2 per day. If the blockade continues, this population is at a high risk of entering poverty. According to ‘Vision for Nepal’, a report by World Bank, around 57.3% of the population of Nepal earns $2 a day. This is equal to 1.5 crore people. According to a study last year, employment, food security, health, climatic change and natural disaster will further push the low income earning population under the poverty line. 7 lakh people have been pushed under the poverty line due to the recent earthquake shows another report. The effect of the blockade has been greater than that of the earthquake according to experts. (Excerpts from ekantipur) Source: ekantipur