Economic growth to hover around 2 pc
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KATHMANDU, Nov 25: The government has projected economic growth to hover around 2 percent and inflationary pressures to increase due to supply side constraints.
Issuing a White Paper -- 'Current Economic Scenario of the Country: Government's Immediate Action Plan' -- on Tuesday, Finance Minister Bishnu Prasad Poudel said that economic growth could plunge further if the current obstacles and strikes continue. The government, in the budget for the current fiscal year, had projected 6 percent economic growth.
The government - after 100 days of the Madhes unrest and two months of Indian obstructions - also said that industries, agriculture and the service sector, apart from the social sector, have been badly affected. "The shortage - due to the obstructions - of essential goods and services like drugs and fuel is leading toward a humanitarian crisis," he said.
Without mentioning India, the finance minister also said that the current obstructions have negatively impacted socio-economic conditions. The current crisis has added to the challenge for the incumbent government to graduate Nepal from developing country status by 2022 and to a mid-income status by 2030, he added. "The government also has the challenge of making the economy self-reliant."
Poudel has tried without any concrete plans to assure the people of energy security, food security, maintaining of law and order, and starting reconstruction work without delay to bring respite to earthquake victims.
He also did not forget to mention alternative routes for imports, encouragement of electric vehicles, involvement of the private sector in the petroleum business, continuity for the economic reforms program, industrial security, facilitation of industries, good governance, increment of domestic production, encouragement to foreign investment, tourism promotion, economic diplomacy, and transparency in fuel distribution, apart from an effective monitoring system.
However, the market is riddled with black marketeering in fuel, which has increased the pressure on inflation.
The minister admitted that market prices are going up due to shortages and the black market.
Nepal Rastra Bank in a report last week had painted a bleak economic picture. It projected inflationary pressures due to the Indian blockade that has led to supply disruption and lower economic growth.
As inflation is going to post double-digit growth, the White Paper also projects that it will hit people hard. The central bank has projected cracking down on inflation and keeping it under 8 per cent. However, worsening shortage of essential goods and services, lower domestic production and the rampant black market are going to push inflation to more than 10 percent.
The population out of employment due to the obstructions and strikes is going to be hit hard by rising market prices, and they will be pushed under the poverty line. "The devastating earthquake has pushed some 700,000 Nepalis below the poverty line, and the number is going to increase due to the current crisis," Poudel said.
