Despite the government’s assertion that the country’s economy will grow by at least 6% in the current fiscal year, the World Bank’s latest Global Economic Prospects report predicts that Nepal’s economy will only grow than 3.9%. The World Bank established its forecasts on the basis of two major criteria: “better agricultural results and a rebounding service activity thanks to the improvement in vaccination coverage”. The forecast is unchanged from its projection last year. The latest report prepared by the government suggests that agricultural production, especially paddy production, has declined by 8% due to unseasonal rains and floods in the western and far western region of Tarai. .
Paddy production contributes 7% to GDP and is the main staple food for millions of people who are largely dependent on agriculture. According to an initial estimate made by the Ministry of Agriculture and Livestock Development, paddy production worth Rs 12 billion was damaged due to post-monsoon rains in the third week of October, when the farmers were busy harvesting the crop. Nepal will have to import more rice to make up the shortfall.
However, vaccination coverage – around 50% of people have received a single dose while 37% have received a double dose so far – gives hope that the economy will rebound in the next financial year.
The World Bank has revised down the growth estimate for the fiscal year 2020-21 and the forecast for 2022-23.
The World Bank estimated Nepal’s GDP growth to be 1.8% in 2020-21, 0.9 percentage points lower than its previous projection. It made a growth forecast of 4.7% for the 2022-23 financial year, 0.4 percentage points lower than the previous projection. But for the South Asia region as a whole, growth prospects have improved since June 2021, thanks in large part to better prospects in Bangladesh, India and Pakistan. Even Bhutan’s economic growth appears to be better than Nepal’s, according to the World Bank. The bank forecast that monetary and fiscal policy in the region should remain broadly accommodative in 2022, but gradually focus on fiscal sustainability and anchoring inflation expectations.
As far as Nepal is concerned, we cannot expect robust economic growth of at least 7% unless the government is able to spend the capital expenditures, the tourism industry returns to normal to pre-pandemic levels and that manufacturing industries are operating at full capacity. Thousands of workers have been laid off or forced to work at half the wages they received before the pandemic. For a country like Nepal to fully return to pre-pandemic levels, the government must vaccinate its entire eligible population within the timeframe it has set. The new Omicron virus, the infection of which jumped nine times in just 10 days, will determine whether Nepal will be able to achieve the targeted economic growth in the current fiscal year. As the government is the engine of economic growth, it should accelerate capital expenditure in a timely manner so that a large number of working class people can find job opportunities in the construction industry. Controlling inflation and the prices of everyday consumer goods is another challenge for the government to ensure economic growth.
From Saturday, Panauti will host the Makar Mela, or religious fair, which is held every 12 years for a month. The fair draws tens of thousands of worshipers from across the country, but with the Omicron virus spreading rapidly, authorities are taking precautionary measures to limit crowds. The religious fair takes place in Trivenighat, or at the confluence of three rivers, namely Punyawati, Roshi and Lilawati, which is considered holy. It is thus customary to ritually bathe at the confluence during such fairs.
Local authorities have been asked to strictly adhere to health security protocols when organizing the mela. Consequently, any program or fair with the participation of more than 25 people is strictly prohibited. As a fair that takes place once every 12 years, it can be hard to keep devotees from thronging to Trivenighat. Also from next week, the month-long Swasthani brata festival will begin, when devotees will reside on the bank of the Salinadi River in Sankhu, where they will take a ritual bath every day. If the authorities and security personnel are determined to maintain the prescribed health protocol, it should not be difficult to make people respect it.
A version of this article appears in the January 14, 2022 printing of The Himalayan Times.