Failed nation syndrome
Believe it or not, Nepal’s major exports are palm oil and soybean oil, which Indian businessmen import from foreign countries by paying US dollars and exporting to India in Indian currency. Exports of such items are recorded in the export data prepared by the customs department.
There are some Indian joint venture industries producing cigarettes, and cosmetic goods established in Nepal. Already refined raw materials are brought from India in big drums, and packaging work is done in Nepal and again exported to India as Nepal’s exports. Unilever, Surya Tobacco, Dabur Nepal, and Patanjali, are the industries involved in such a business. Some Indian businessmen are enjoying the profit. The country and its people get nothing. If Nepal had exported items produced in the country using local raw materials, Nepal would have benefited. Even if 50 per cent of the foreign country-produced raw materials used items were exported, at least, the nation could get some benefit. This is the scenario of Nepali export.
The other much-hyped export is electricity. The reality is that the country is at a loss as the amount that Nepal paid in import of electricity is higher than the amount the country received from the electricity export. We have been saying that Nepal should develop an electricity consumption market within the country rather than exporting electricity at less price than the production cost. Kulman Ghishing, chief of the Nepal Electricity Authority, who has become a celebrity, is also an Indian confidant. He listens to the Indians rather than to us. By recruiting all those Indiaconfident people in key positions, we cannot expect the betterment of the country. We were informed that Ghishing had paid in advance around 15 million rupees as commission for his second appointment in NEA. Why again and again he wanted to become the NEA chief rather than training his junior officer succeeding him, it is interesting.
Nepal’s finance minister, Dr Prakashsharan Mahat, is optimistic that the economy is on the path of improvement. He has urged not to watch through a negative eye but to become optimistic about the economy. He blamed those leaders who became the finance ministers in the past had led the economy on the wrong path and now he is trying to bring the economy on track.
The budget presented by him speaks a lot about the economic health of the country. Out of 17 trillion rupees worth budget for the fiscal year 2023/24, the noted economist has allocated only three trillion rupees for capital expenditure, which is very, very low compared to the general sector expenditure. We understand, hardly 60 per cent of the three trillion rupees allotted for capital expenditure will be spent. It means the government is going to spend less funds on development projects.
In a TV interview, the minister accepted that the general sector expenditure is very high and that the country’s revenue is not sufficient to meet the fund needed for it. He confessed that the federal structure has become a white elephant for the nation. Since the adoption of the present political system, although the minister didn’t speak frankly, said that the unproductive sector expenditure is very high. The minister said that the nation is paying back three trillion 7 billion rupees as installments and interests on previous loans. The fund for loan payback is higher than the amount allocated for the development expenditure.
When the government has failed to collect the revenue needed for the expenditure, the finance minister has widened the tax net in different fields, which is surely going to affect further the already ruined business. Already, we are paying 21 per cent of tax to the government, which is higher than India and China. In the region, Nepal is the country collecting higher taxes from its citizens. One airline operator said that it has become almost impossible to import new aircraft as the government has imposed a tax on the procurement of new aircraft. If one new narrow-body aircraft is bought, the airline operator should pay two billion rupees as tax to the government. Besides, imposing a tax on the air ticket is sure to hit the already sick tourism industry. Perhaps, Nepal is a country which imposes heavy taxes but virtually no facility for the taxpayers.
The construction entrepreneurs are in agitation demanding clearance of billions of rupees worth from the government. The government seems bankrupt and it has no funds to clear the past dues of the construction entrepreneurs.
When we don’t have items to export, when we cannot give relief to the tourism industry, the major source of earning foreign currency has become remittance revenue. Every day, a minimum of 2500 youths are going abroad seeking jobs. On the other hand, there is day-loot loot under political protection. Aren’t these the syndromes of a failed nation?