Stimulating economic activity

KATHMANDU, OCT 11 -

Dashain is not just a cultural event now. It has turned out to be an event that makes the economy vibrant.

Major cities across the country are packed with festive shoppers. Consumer schemes are already out, motivating the frenzied shoppers to spend even more.

Dashain has always been an important event for the Nepali economy. According to an estimate, more than Rs 15 billion enters the economy during the season in the form of salaries and allowances. Also, a large amount (10 percent of the total inflow) of remittance enters the country during this period as migrant workers send back money to their families for the festival.

The Nepal Rastra Bank’s (NRB) statistics show the country received remittance worth Rs 28 billion last Dashain (mid-September to mid-October, 2011).

This year, the figure is expected cross Rs 30 billion. “Increased consumption during Dashain , of course, makes the economy more active,” said economist Keshav Acharya.

However, a majority of goods consumed during Dashain — ranging from garment, consumer durables and automobiles to liquor — are imported. “Therefore, the country will not gain much as most of the goods consumed during the festival are imported,” said Acharya, estimating that 40 percent of the annual consumption takes place during the period from Dashain to Chhat. “That’s why this festive season is important for traders.”

According to Nepal Chamber of Commerce President Suresh Kumar Basnet, the market witnesses daily transaction of Rs 13 billion during Dashain . “Sales of items such as readymade garment and foodstuffs surge by 50 percent,” said Basnet.

Past statistics suggest that imports of readymade garments, electronic appliances increases significantly during Dashain . According to the Department of Customs (DoC), import of consumer items almost double during this time of the year. Thanks to rising imports, revenue collection too goes up. “Revenue collection in the month before Dashain accounts for around 11 percent of the total annual collection,” said Madhusudan Pokharel, deputy director general at DOC.

According to Pokharel, consumer durables are heavily imported during the period, which results in reduced imports of such goods later.

The Nepal-China Chamber of Commerce and Industry Chairman Rajesh Kaji Shrestha said the imports from China have surged ahead of Dashain compared to previous months, but the figure is still low compared to last Dashain due to increase in prices as a result of stronger US dollar. Garment and electronics goods are basically imported from China for Dashain .

For traders, Dashain is the perfect time of the year to boost their sales and launch new products and services. Dealers of two- and four-wheelers and consumer electronics have taken the lead. They generate more than 20 percent of their annual sales during the September-October period.

Each Dashain , the scale of these schemes has got larger. Prisma Advertising Chief Executive Officer Ranjeet Acharya says the trend of launching festive schemes has been rising for the past few years due to intense competition in the market. “Companies are spending millions for Dashain schemes,” said Acharya.

With banks and financial institutions (BFIs) also bringing Dashain -focused schemes in auto and home loans, this festive season is expected to boost the sales of automobiles and housing sectors.

Currently, almost all the major commercial banks and financial institutions are offering auto loans at of 10-12 percent interest rate. The rate was around 16-18 percent six months ago.

Source: The Kathmandu Post