Everyday cost of bandhs Rs 1.79 bn

KATHMANDU:

Money enough to build over 10 megawatts of hydroelectric project vanishes off the economy per day due to bandh, shows a recent study.

The working paper titled ‘The Economic Cost of General Strikes in Nepal’ prepared by Head of the Research Department at Nepal Rastra Bank Dr Min Bahadur Shrestha and Shashi Kant Chaudhary has put daily cost of bandh at Rs 1.79 billion. Considering investment of around Rs 170 million required to build a megawatt of hydro project, it could be said the country loses money that is enough to build 10.5 megawatts of hydroelectric plant per day of bandh.

But this is not all. Bandhs staved off as much as 2.15 percentage points off the annual gross domestic product growth rate between January 2008 and August 2013 when the study was conducted. It also contributed to higher consumer prices and affected tourist arrivals.

The study shows that Nepal recorded a total of 4,451 general strikes in 75 districts between 2008 and 2013, with Solukhumbu recording the highest number of bandhs — 207 days in the five-and-a-half-year period. But the biggest loss was reported by Kathmandu district, with daily gross output loss at Rs 148.44 million in 2012-13. This was followed by Morang at Rs 87.80 million and Jhapa at Rs 69.67 million.

The total accumulated output loss stood at a whopping Rs 27 billion per year at current prices, which is around 1.5 per cent of the country’s annual GDP.

Also, the bandhs have caused consumer prices to go up over a period, making everything, especially food products, expensive. “The subsequent monthly inflation rates were found to have crossed nine per cent mark whenever two-day general strike was reported the previous month,” adds the report. “Further, three or more days of general strikes led to inflation rate crossing 10 per cent except in 10th and 11th months of 2009-10.”

Along with higher consumer prices, the bandhs seem to have affected inflow of foreign tourists as well. “Although the total annual tourist arrivals by air have increased in the last five years, analysis of the monthly tourist arrival data show a lagged negative effect of strike on flow of tourists,” says the report. “This means impact of strike is observed in later months, with tourists from third countries responding sharply to strikes in comparison to Indians.”

Source: THT