Parties revert to bandas after failing to find common ground
KATHMANDU, JAN 14 -
The ugly face of bandas is back. Various political parties have announced general shutdowns in different part of the country after failing to find common ground for drafting the new constitution. The deadline for writing the supreme law of the land for Constituent Assembly II falls on January 22. The first Constituent Assembly was wound up after failing to deliver a constitution even after several extensions of the time limit.
Analysts said that the effects of past strikes were still being felt on the country’s economy, while the costs of the new strikes are yet to be assessed. Strikes have multiplier effects on the country’s economy.
They fuel inflation, discourage tourist arrivals, reduce industrial output and affect the daily lives of the people, besides producing other undesirable results.
According to a study entitled Economic Cost of General Strikes in Nepal conducted by Nepal Rastra Bank (NRB) in December 2013, the average direct cost of a general strike stands at Rs 1.8 billion per day and Rs 27 billion per year based on current prices.
The study showed that the lost output per year accounted for 1.4 percent of the annual gross domestic product (GDP). The total accumulated output loss due to general strikes in a five-year period amounted to Rs 117 billion.
With such losses, general strikes decelerated annual GDP growth rates in a range between 0.6 percentage point and 2.2 percentage points during the study period.
The impact of general strikes was quick and significant on inflation and tourist arrival rates. Monthly inflation jumped to over 9 percent as a result of a two-day general strike, while a strike lasting three or more days led to inflation of more than 10 percent.
Similarly, tourist arrivals declined due to strikes. The study that covered the period January 2008 to August 2013 showed that Nepal recorded as many as 1,205 events of general strikes in 2010 alone.
Prolonged political instability in the country has provided a fertile ground for such frequent general strikes in Nepal, the study showed.
Strike that inflict considerable inconvenience upon residents of the country also cost the economy millions and thousands of jobs, said Pradeep Jung Pandey, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).
“More than 1,500 Nepalis go abroad daily in search of jobs, and this scenario has occurred due to political instability that has virtually paralyzed economic growth,” he said, adding that political parties had been fighting with each other to implement their agenda and the general people were being forced to pay the cost. The study showed that in February 2011, major political parties had pledged that they would not call general strikes on the occasion of Nepal Tourism Year 2011 considering their adverse impact on tourism and the national economy as a whole.
Despite their written commitment, the banda culture seemed reluctant to go away. From March 2011 through August 2013, altogether 1,496 events of general strikes have been cumulatively recorded in individual districts of Nepal.
“The political parties have not kept their word. In fact, they have repeated the ‘great mistake’ once again,” said Hari Sarmah, chief executive officer of the Nepal Association of Tour and Travel Agents (Natta). “Strikes are a big setback for the country’s hospitality sector which is on the cusp of a higher growth trajectory.”
Similarly, the Confederation of Nepalese Industries (CNI) said that the political parties that had pledged to draft a new constitution within a year had suddenly broken their promise and were now out on the streets to paralyze the business and economic environment that had started to show some improvement.
The study shows that a general strike significantly affects the annual GDP growth rate of Nepal decelerating the growth rate by 0.59 percentage point up to 2.15 percentage points.
The highest loss in the annual GDP growth rate was observed in the fiscal year 2009-10 and the lowest in 2012-13. In the category of action initiators, general strikes have become the favourite tool for political parties (36 percent) and rebel groups (17 percent) to bargain for partisan demands with the ruling party. Transport unions come in the third position (9 percent) in this category.
In the fourth place are local communities (8 percent) followed by ethnic and alliance groups (5 percent). The ethnic and alliance groups are comprised of Brahmin Samaj Nepal, Khas Chhetri Ekta Samaj Nepal among others.
Source: The Kathmandu Post
