KATHMANDU, July 13: The transaction volume of major industries of the country plunged heavily in the past two months due to excessive surge in market prices, taking down the purchasing power of people, shows a study report unveiled by the Confederation of Nepalese Industries (CNI).
According to the umbrella organization of the private sector, during the two months of May and June this year, the revenue collection of brick factories fell 80 percent due to a plunge in demand triggered by the economic slowdown. Similarly, the sales of cement and vegetable oils and refineries declined 60 percent.
What is missing in budget for agriculture?
Similarly, the sales of agricultural goods, engineering equipment, edibles, livestock products, rice and steel rods and wires went down by more than 30 percent. The CNI conducted a study of 38 manufacturing and agricultural products during the review period.
The confederation has asked Nepal Rastra Bank (NRB) to introduce the monetary policy to tackle the problems of stagflation that the economy is likely to face in the near future. Shortage of loanable funds, worsening balance of payment, world geo-politics and soaring prices of consumer goods have led the economy to a massive fall in aggregate demand, which is the major challenge of the Nepali economy at present, reads the report.
In its wishlist to NRB, the CNI has urged the central bank to reduce risk-weightage from the existing 150 percent for industries that use Bonded Warehouse facilities. The umbrella organization also demanded the central bank reschedule and restructure loans for affected industries, without enforcing additional provisioning amid geopolitical and supply-chain disruptions.
Industries should be allowed to invest abroad at least 10 percent of their net profit after tax, according to the CNI. Establishing a Rs 10 billion fund for the promotion of production and service sectors, the provision of government guarantee and collateral-free loans for small and medium industries and increasing maximum limit of subsidized loan to agriculture from the existing Rs 50 million to Rs 150 million are among the demands of CNI to address the current slowdown in the economy.
The CNI has also requested the central bank to make it mandatory for each branch of commercial banks to provide loans to at least five agro and agro-processing businesses. The implementation of the provision of subsidized loans for migrant returnees could also help utilize the money earned through remittance, according to the CNI.
