Private sector complains of sharp contraction in demand for goods and services in market

Published On: March 29, 2023 09:30 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, March 29: Representatives of various business organizations have said that the demand for goods and services in the country has seen significant contraction over the past several months.

Addressing an interaction organized by the Foundation for Parliamentary Studies and Development in the capital on Tuesday, they also urged the government and the Nepal Rastra Bank to take necessary measures to help improve the demands of goods and services in the market.

President of the Confederation of Nepalese Industries (CNI) Vishnu Kumar Agarwal said the revenue of the government cannot be increased unless the issue of private sector is effectively addressed. “There is a contraction of demand in the market. Automobile sector has seen contraction up to 80 percent, while beverage and restaurants sectors have witnessed decline in demand by at least 30 percent,” said Agrawal.

Agrawal further said that reduction of interest rate on loan is important to facilitate the economy to recover. He also said that the number of blacklisted businesspersons and organizations will increase further if the government fails to take any concrete measures.

Chairman of Nabil Bank Upendra Poudyal said that bureaucratic and policy stability is a key to increase capital expenditure. While stating that public asset monetization could also be a source of government revenue, he also suggested working toward reducing the informal sector economy in the country.

CPN (Unified Socialist) leader Dr Bijay Poudel said the government needs to formulate short-term, medium-term and long-term plans to bail the country out of the economic crisis. “Regardless of what we plan to do, the agriculture sector should be our main focus. We also need to make an arrangement to pay tax on installment basis,” he said.

Business entrepreneur Pawan Golyan suggested reducing the interest rate on loans, classifying the loan into productive and unproductive sectors. While stating that the market is in need of at least Rs 2 billion to ease the liquidity situation, Golyan said the government must seriously think about increasing domestic production.

Addressing the program, former Vice Chairman of the National Planning Commission (NCP) Dr Govinda Raj Pokharel said that almost all industries, particularly those belonging to iron, steel and cement are facing the heat of the economic crisis. While stating that people are still not getting loans, Dr Pokharel argued that there is a need to bring massive policy reforms to help build a resilient economy.

Economist Prof Dr Achyut Wagle said there is a need to bring policy reforms to bail the country out of the economic crisis. While referring to the problems seen in the microfinance sector, Dr Wagle also questioned the rationale of giving permission to run microfinance as all local levels now have branches of at least one branch of commercial banks.

Governor of NRB Maha Prasad Adhikari said that the overall economic situation in the country is in a good shape even as the government is facing a budgetary deficit due to low revenue collection. While stating that the country’s external sector is in a good shape due to increased volume of remittance, he also said that there is no need to panic over the country’s economic situation.

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