Highest economic growth in six years

KATHMANDU, July 10 :

The government said on Thursday that a favorable monsoon, an investment-friendly environment and a timely budget were the major reasons behind economic growth reaching close to the targeted 5.5 percent in the current fiscal year.

The government´s economic survey, which is prepared on the basis of data for eight months, says that economic growth will be 5.2 percent, which is the highest in the past six years.

Unveiling the economic survey in parliament, Finance Minister Ram Sharan Mahat said that though growth has improved over the six years, bulging imports and the mobilization of deposits that have piled up in the banks and financial institutions for lack of investment outlets are major challenges facing the government.Trade deficit for the first eight months is Rs 459 billion, and is likely to reach Rs 600 billion by the end of the fiscal year.

The increment in the agricultural yield, including mainly paddy, is said to be a major factor in the growth rate.

Experts, however, said that growth dependent on an unreliable monsoon is no reason to get excited as the projected growth rate can plummet next year.

Economist Bishwambher Pyakurel said that the government should focus on making the economy sustainable and dynamic by concentrating on manufacturing and priority sectors like hydropower and tourism, and on increasing capital expenditure. Had there been sustained growth in priority sectors we would have seen employment generation by now.

Former vice-chairman of the National Planning Commission, Dipendra Bahadur Chhetri, is skeptical over the agricultural production figures as there is a shortage of the active labor force in the villages and the cost of production has increased.

Moreover, a timely budget and an investment-friendly environment are not the reasons behind the growth, and the government´s capital expenditure shows a gloomy picture, he said.

Though the statistics say that paddy production increased by 12 percent, the rice imports are continuing, said Chhetri. According to the figures, Rs 1 billion worth of rice is imported every month.

Nawaraj Bhandari, joint-secretary at the Ministry of Finance, has a different view. “The growth is also the outcome of the doubling of the agricultural budget by the government in the current year and the drive among youths toward the commercialization of agriculture,” added Bhandari.

The manufacturing sector saw a growth of 2.7 percent in the first eight months. This was 2.5 percent in the corresponding period of last year. Likewise, the service sector posted a growth of 6.1 percent as against only 5.2 percent the previous year.

The country´s export has increased by 19.4 percent to Rs 60.90 billion. It had increased by only 5 percent in the corresponding period the previous year. The import figure is up by 27 percent, which was only 22.1 percent the previous year.

Likewise, due to the increment in remittances and grants and loans from development partners, the foreign exchange reserve has improved. It is up by 22.5 percent to Rs 653 billion as against an increment of only 3.2 percent in the corresponding period last year. Finance Minister Ram Sharan Mahat will table the budget in parliament on Sunday, at 4 pm.

Source: Republica