Festivals Give A Fillip To Economy

Nepal, known for its rich cultural heritage, celebrates a diverse range of festivals including Dashain, Tihar, Chhath, Nepal Sambat, and Eid. These festivals, beyond their cultural significance, greatly impact the nation’s economy by boosting consumer spending and supporting various sectors. However, the festival economy also faces several challenges, from youth migration to international travel trends and climate disruptions. This article explores how festivals contribute to Nepal’s economy, why they are essential, and the obstacles they face today.

In Nepal, festivals like Dashain and Tihar aren’t just cultural events; they’re pivotal periods for economic activity. Bada Dashain, the biggest festival, sees people purchasing new clothes, electronics, and household items, leading to a surge in spending across various sectors. Stores report doubled or tripled sales during these times, benefiting not only large businesses but also small shops in rural areas.

According to the Nepal Retailers Association, sales in clothes, electronics, and jewellery spike dramatically during Dashain and Tihar. Small and medium businesses see their busiest times, with rural markets also thriving. Similarly, festivals like Chhath in the Terai focus on agricultural products, stimulating demand for fruits, flowers, and ritual items. Eid generates a surge in clothing and food purchases, and Nepal Sambat encourages spending on cultural goods, further fueling the local economy.

Festival bonus

One key driver of festival-related spending is the government-mandated festival bonus, where employees receive an extra month’s salary. This additional income allows families to make festival preparations more lavishly, purchasing clothes, home goods, and food. For example, an employee earning Rs. 30,000 per month receives an additional Rs. 30,000 as a festival bonus, multiplying across thousands of workers to inject significant cash flow into the economy. Banks see increased withdrawals, and markets witness more substantial transactions as people shop in greater quantities, thus invigorating the economy.

A substantial portion of Nepal’s GDP—around 30 per cent—comes from remittances, according to Nepal Rastra Bank, and a significant portion of these funds arrives during festival seasons. Families of migrant workers use remittances to cover festival expenses like food, clothing, and decorations. However, this reliance on remittances also highlights a downside: many young Nepalis migrate abroad after completing secondary education, often missing local celebrations. While their financial support boosts spending, their absence reduces the domestic energy and participation that festivals bring, impacting businesses reliant on local holiday shoppers.

Recently, many Nepalis have chosen to celebrate holidays like Dashain and Tihar abroad, leading to a trend of international travel. Travel agencies report increased bookings for destinations such as Thailand, Dubai, and Malaysia, with attractive packages that draw families away from local celebrations. While this trend supports the travel industry, it shifts spending abroad rather than within the country, affecting local markets. When families choose foreign vacations over local festivities, spending on domestic goods, services, and hotels declines, posing a challenge to businesses that depend heavily on festival seasons.

Nepal’s festival economy is also vulnerable to weather disruptions, as monsoon season often coincides with festivals. Heavy rains and flooding complicate travel and affect celebrations, as seen in recent years when severe weather impeded Dashain preparations. Floods damage infrastructure, delay transportation, and disrupt agricultural supply chains, impacting the availability and prices of essential items like vegetables and fruits. This affects both consumers and farmers who rely on festival sales for income.

Despite these challenges, Nepal’s festival economy remains a vital economic force. Addressing these issues could further strengthen its impact. One approach could be to create more job opportunities within Nepal, reducing youth migration and ensuring that more young people are present to engage in local festivals, benefiting the economy and preserving traditions. Another solution lies in encouraging domestic tourism. By promoting local destinations like Pokhara, Chitwan, or Lumbini during festival times, families may be inspired to travel within Nepal, supporting local businesses instead of spending abroad. This shift could reinvigorate the economy by keeping funds within the country, boosting various sectors from hotels to local handicrafts.

Online shopping could also play a significant role in Nepal’s festival economy. As e-commerce gains popularity, businesses could reach customers even when weather conditions or other barriers prevent in-person shopping. Expanding online marketplaces could allow vendors to capitalise on festival spending despite challenges like heavy rain, enabling consumers to access goods from home. Lastly, improving infrastructure is essential to minimise disruptions caused by severe weather. Strengthening roads, drainage systems, and buildings can reduce damage from floods, ensuring smoother festival logistics and uninterrupted trade. Investments in better infrastructure would enable people to travel and shop more easily, even during challenging weather, benefiting businesses and consumers alike.

Economic stability

Festivals are more than cultural celebrations in Nepal; they are crucial drivers of the country’s economy. From the spending surge during Dashain and Tihar to remittances fuelling festive purchases, festivals bring vitality and economic stability to Nepal. However, challenges like youth migration, overseas travel trends, and climate impacts threaten the sustainability of the festival economy. By encouraging local job creation, promoting domestic tourism, expanding e-commerce, and investing in resilient infrastructure, Nepal can address these challenges and ensure that its festivals continue to support a strong, thriving economy. Festivals go beyond tradition—they are a force of economic resilience and growth that sustains communities across the country.

(The author is a professor of economics at Tribhuvan University)