How to do Business
Nepal can join the ranks of developing countries through sustained economic growth and an increase in per capita income.
Nepal may be one of the poorest and least developed of countries but the Nepalese are an amazing people. A few years back, they waged a heroic struggle to oust the monarchy and establish a multiparty republic. In the process, Nepal, hitherto having Hinduism as its official religion, also became a secular state. Since then, the republicancum-secular Nepal has been in the throes of political instability and understandably so. Yet, no one can discount the nation's achievements on this account.
The strides in the political sphere need to be matched by those in the economic realm. Is Nepal – a land- scarce, landlocked country situated between two giants, namely China and India, on the course of doing so? Well, the nation has set itself to achieve the status of a developing country by 2022 and chosen economic liberalization to attain that goal. This would require sustained economic growth together with an increase in the per capita income.
Between 2010 and 2013, the economy of Nepal registered a modest average annual growth of 4.2 percent. The per capita income rose from $594 to $694 during this period. The country has a healthy investment-GDP ratio of 37 percent, which is above the average for South Asia. Based on earning – $2 a day – 56 percent of the population lives below the poverty line. With exports of $2 billion and imports of $7 billion, Nepal faced a trade deficit of $5 billion in 2013. The trade deficit is met largely through remittances and foreign aid – in both cases India is the principal source.
Nepal's growth strategy rests on opening up of the economy and creating an investment friendly environment. It was in the mid1980s that the country began to implement a series of structural adjustment programs sponsored by the International Monetary Fund.
Such programs typically provide for neo-liberal policies, such as