Agriculture, tourism up, industry down in Karnali

Kathmandu, Jan,1: A recent economic analysis of the Nepal Rastra Bank (NRB) has found that the agricultural production in Karnali Province has increased by 6.79 per cent in Fiscal Year 2023/24. Agricultural land is increased by 1.94 per cent in the same year compared to the previous year. 

The production of major agricultural crops, paddy and wheat, increased by 12.04 per cent and 0.43 per cent while millet and barley yield went down by 18.87 and 18.98 per cent respectively, concluded the Economic Status Report of Karnali published by the NRB on Teusday. 

Likewise, maize and buckwheat production decreased by 7.61 per cent and 8.46 per cent.

The central bank’s analysis is based on the field study in Salyan, Kalikot, Dailekh and Surkhet districts and non-field study of Rukum West, Dolpa, Jumla, Mugu, Jajarkot and Jumla districts.

Last year, the area used for the production of vegetables and fruits increased by 36.4 and 5.98 per cent. Banks and Financial Institutions (BFIs) have mobilized 9.12 per cent of their total loan in agriculture in Karnali. 

Meanwhile, the industries in the province are running at 48.51 per cent of their capacity with plastic industries running at their fullest and flour mills running at just 15 per cent of their capacity. 

In 2023/24, industrial loan increased by 3.33 per cent to reach Rs. 4.11 billion. Loan to electricity, gas and water increased by 29 per cent that year. However, more than half of the loan (Rs. 2.60 billion) is mobilized in Surkhet district alone. The size of industrial loan in Dolpa is just Rs. 16.5 million. The largest size of loan (83.93 per cent) has been mobilised in service sector. 

The province has 475 branches of BFIs with 30 branchless banking points. 

Similarly, the number of tourists in Karnali Province increased by 23.40 per cent to cross 1 million in 2023/24. It produces just 17.41 MW electricity – a negligible size of the country’s installed capacity of 3157 MW. 

Provincial economic discrepancies 

There have been discrepancies in the economic status and indicators of Nepal’s seven provinces with Bagmati contributing 36.36 per cent to the country’s Gross Domestic Product (GDP) and Karnali adding only 4.28 per cent in the last Fiscal Year 2023/24. 

In terms of the producers’ price, Bagmati’s GDP is Rs. 2074 billion while Karnali has just Rs. 243 billion, according to the reports of the National Statistics Office (NSO). 

Likewise, per capita income in Bagmati Province is US$2484 while Karnali has less than half of it – US$ 1036. 

Sudurpaschim is the second poorest province in terms of GDP and its contribution to the national economy with 4.04 per cent economic growth in 2023/24 and 7.09 per cent share in the country’s economy. 

Koshi appears to be the second largest contributor to the national economy. It has Rs. 903 billion GDP and has 15.83 per cent contribution to the national economy. 

GDP growth rates up

While the Nepal Rastra Bank (NRB) noted in the provincial status report of Karnali published on Tuesday that the economic growth rate of all provinces will go up in comparison to the previous year 2022/23, Gandaki and Lumbini provinces are likely to see the highest growth rates of 4.55 per cent and 4.05 per cent economic growth rate in 2023/24, well above 

the national average.

Among the provinces Karnali is projected to achieve the lowest GDP growth rate with 3.39 per cent followed by Sudurpaschim at 3.4 per cent, Koshi at 3.52 per cent, Madhes at 3.78 per cent and Bagmati at 3.96 per cent.

By the end of the last fiscal year (mid-July 2024), with 3.54 per cent GDP growth, the size of Nepal’s economy is estimated to reach Rs. 5704 billion.

In 2022/23, Nepal witnessed the GDP growth of 1.95 per cent (at the producer’s price).

In terms of sectoral contribution, all provinces have strong service sector with its contribution as high as 77.42 per cent in Bagmati. Industry sector is better in Gandaki and Koshi while agriculture contributes the highest in Madhes and Sudurpaschim. 

Nepal’s national economy is formed with 62.9 per cent contribution from service sector, 24.09 per cent from agriculture and 13 per cent from industry sector.