Economy in the doldrums

Although Finance Minister Dr Prakashsharan Mahat is optimistic about the economic recovery, Prime Minister Pushpakamal Dahal has opined that the economy is passing through a crisis period. Just recently, Minister Mahat remarked that the worst period of the economy has been over due to the recovery measures introduced by the government. In the meantime, Prime Minister Pushpakamal Dahal, addressing a program organized by the Confederation of Nepalese Industries (CNI) on Friday, remarked that there could be a serious economic crisis in the country and that the recovery measures are not enough.

The businessmen complain that the highinterest rates, low circulation of money, the decline in production and postponement of the investment plan by businessmen have been seen in the market. Smuggling trade has created a threat to the local industries, the businessmen have complained. Indeed, the market is facing an economic recession. How serious is the crisis, we can evaluate from the recent interest rates offered by the commercial banks which are close to 12 percent. This has happened due to the domestic as well as international reasons. Domestically, we have adopted an expensive political system, for which, the nation’s domestic revenue is not enough to meet the expenditure for functioning of it. This is the reason that within five years, Nepal’s debt burden has become double. Even after widening the taxation net and increasing the taxation rate, the government, in the first fiscal month, was unable to meet the revenue target. Although we cannot evaluate the entire revenue structure of a year just by viewing one month’s revenue structure, yet, viewing the prolonged economic recession and warnings given by the investors, we cannot say that the economy is in good shape. In the meantime, the prolonged Russia-Ukraine war has caused an economic recession in Europe, which will surely impact the Nepali economy. For the activation of the economy, first of all, the government should cut down its non-productive sector expenditure, i.e. scrapping the present federal structure and also downsizing the structure of the federal parliament, so that the financial load on the economy can be reduced. Moreover, capital expenditure or say government investment in development projects should be increased, whereas, strong mechanisms should be introduced to curb corruption and smuggling. How smuggling and corruption practices have been taking place in the country in an organized way, we can assume from the recent scandals either it is the Lalitaniwas government land grab scam, the fake Bhutanese refugee scam, or the huge quantity of gold scandals. Alarming is that those top-ranking politicians and bureaucrats are found involved in such organized crimes. Timely removal of these anomalies is essential to save the economy, which is related to the independence sovereignty and self-reliance of the economy.