Sunday, 24 October, 2021

Economic Recovery Need Of Hour

Uttam Maharjan

The government has unveiled the policy and programme for the upcoming fiscal year 2020/2021 on May 15. Coincidentally, the policy and programme, which will also help in formulating the budget for the upcoming fiscal year, were announced at a time when the whole world was reeling from the COVID-19 pandemic. The budget is scheduled to be announced on May 28.
Like the rest of the world, the economy of the country has also taken a hit due to the pandemic. Industries, businesses, tourism and other sectors have been adversely affected by it. Hotels and restaurants are projected to suffer a growth of negative 16 per cent. In the tourism sector, as many as 1.1 million labourers have reportedly lost their jobs. Manufacturing and other businesses have remained shuttered, putting the livelihoods of their staff at stake. And the lives of the general people have been thrown out of gear. In fact, we are at a critical juncture in the history of humankind.

Economic zones
It is stated in the recently announced policy and programme that the promotion of industrial, business, agricultural, mineral and other sectors will be emphasised. Accordingly, steps will be taken to enhance productivity and production in the industrial sector by using resources, capital, skills and technology. The initiative will be taken in making investments in industrial villages and zones, especially special economic zones, with an aim of setting up industrial villages in 45 local bodies. Inter-country economic zones will be established with support from India and China. In order to revive government-owned sick industries, a special programme will be launched to bring them into operation with new management, methods and processes in collaboration with the private sector.
The policy and programme aim at boosting agricultural and allied sectors. For this, industries relating to food, forest products, medicines, health materials and other essential commodities that use domestic resources will be promoted, and agriculture, the mainstay of the economy of the country, will be expanded. In fact, the agrarian sector needs to be boosted in the country where over 65 per cent of the people are engaged in agricultural and allied activities. The development of the agricultural sector will lead to development in other sectors as well. As many Nepali migrant workers have lost jobs in foreign countries, they may be engaged in agricultural and allied sectors.
It is mentioned in the policy and programme that prominence will be accorded to the need for developing and expanding microenterprises, cottage industries and small and medium enterprises by using local resources, which will contribute to employment generation and prosperity. As per the policy and programme, phosphoresce, a source of phosphate minerals, will be explored in Baited and Bajhang, and petroleum in Dailekh. Steps will also be taken to promote the processing and export of precious and semi-precious stones. This will increase the income of the country to some extent.
As mentioned in the policy and programme, favoured trade agreements will be made with Bangladesh and Bhutan to expand trade with them. Further, effective measures will be taken to expand trade with third countries through some Chinese ports. It may be noted that China allowed Nepal to use these ports for trade purposes last year. The government will also launch a business rehabilitation programme to strengthen the production system. Moreover, efforts will be made to attract additional foreign investments in large infrastructure and other productive sectors.
However, no specific plans for economic recovery are included in the policy and programme. The government intends to notch up 8.5 per cent economic growth this fiscal year. But this target has turned out to be a hard nut to crack due to the corona crisis. The Central Bureau of Statistics has projected the economic growth at 2.27 per cent. For the last three years, economic growth was over 6 per cent. Encouraged by this trend, the government set the goal of achieving 9.6 per cent economic growth on an average during the 15th periodic plan under the assumption that there would be accelerated development in the infrastructure development sector.
At a time when the country needs stimulus packages to revive all the sectors of the economy, the policy and programme are silent on this. The government says that it is studying the impacts of the COVID-19 pandemic on the economy. On the basis of the recommendations of the study, the government will improve the supply system, develop health, education, agriculture and industry, and embark upon development activities. And an economic rehabilitation plan will also be formulated for the revival of the tourism sector.
In fact, economic recovery is the need of the hour. For this, the government needs to announce stimulus packages for various sectors. Various countries have announced stimulus packages to revive their economies. India has announced an INR 20 trillion (20 lakh crore) stimulus package, whereas the USA has announced a USD 2.2 trillion stimulus package. In a similar vein, the Great Britain has come up with a GBP 350 billion stimulus package.

Adverse circumstances
For economic recovery, industries, businesses, banks and financial institutions and other sectors need to be kept back on track. There is an acute need for reviving existing projects like the Melamchi Drinking Water Project. It is mentioned in the policy and programme that even new projects will be launched. But given the adverse circumstances and the possible resource crunch, it will be better to prioritise the existing projects by utilising available resources. As the COVID-19 is raging across the world, the first priority of the government should be bringing the disease under control. For this, effective measures should be taken to curb the disease as soon as possible. As long as the virus is with us, it will be difficult to embark upon development works as encapsulated in the policy and programme.

(Former banker, Maharjan has been regularly writing on contemporary issues for this daily since 2000.