Double digit growth: Expectations and reality(THT October 11)

To achieve rapid growth, we need agricultural revolution, openness for foreign investment, investment-friendly industrial environment, facilities for business, corruption control and strict compliance with fiscal discipline
https://thehimalayantimes.com/opinion/double-digit-growth-expectations-and-reality/

The government in its plans and policies, presented on May 21, has announced to achieve a double digit growth in the next five years. The National Planning Commission (NPC) too has projected a growth of nearly 10 per cent in coming three years.

But under the current circumstances, how realistic are these expectations?

Nepal in 2017 cross edits growth ceiling to 7.9 per cent, highest in the decade, which followed one of the lowest growths of 0.6 per cent the previous year. The impact of the 2015 earthquake and five-month-long border blockade were the main reasons for the slow growth. As a result, a normal revive of the economy in 2017 caused high growth. This was largely due to a very low base value in 2016.

It is a must to understand that there were no miraculous achievements in 2017 to produce that high growth; rather it was simply the calculation formula which was based on
low base value of 2016. Looking at the decade’s trend, the country has experienced an average growth of 4.3 per cent.

When it comes to economic growth forecasts, no predictions are perfect, as they are based on assumptions which change with time. However, the International Monetary Fund has predicted a 5 per cent growth for 2018 (Economic Survey 2017).  The Asian Development Bank has estimated a growth of 4.9 per cent for 2018 and 5.5 per cent for 2019 (Asian Development Outlook 2018). Amid this, the NPC recently presented to the federal government a scenario of growth of 9.1 per cent and 9.5 per cent for the next two fiscal years—once again very high expectations.

Currently, the country is in economic crisis as displayed by major indicators. Our trade deficit is widening annually. In the first eight months of this fiscal year, the trade deficit has reached around 37 per cent of the Gross Domestic Product (Economic Survey 2018). This trend is very alarming for the GDP growth as it indicates a strong decline in our production capacity.

By the composition of GDP, the primary sector that consists of agriculture, forestry, fishery and mining holds about 28 per cent of GDP, which is the largest share among others. Unfortunately, this sector is declining year by year. But the incumbent government has no special programmes for agriculture uplifting. The only major agriculture support programme, as seen in the current fiscal budget, is “The Prime Minister Agriculture Modernisation Project” for which Rs 4.77 billion has been allocated.

This programme is a continuation from last year, but last year’s evaluation shows that it was a largely a failure. As a result, the agriculture sector in the current fiscal year has shrunk to 27.6 per cent. These facts indicate the primary sector of GDP is likely to decline in coming years as well.

The other two prominent sectors of GDP are wholesale-retail trade and real estate. Real estate is likely to dwindle due to various policy restrictions imposed by the current government. Trade that has flourished due to import will also be declining due to strengthening US dollar and decreasing earning from remittance that had boosted consumer economy in the country. However, all these downward trends can be changed if country can make some radical policy changes.

Growth rate while gives a handy indicator of economic development, it is not the whole story. Size of the economy matters a lot. The USA, the world’s largest economy, has GDP of $19.39 trillion, but a very low growth rate of about 1.5 per cent. This means, by next year it will add about $290 billion to its GDP. Now if we compare it with our economy, even if we get a 10 per cent growth next year, the total size of our GDP will be around $32 billion.

Further, per capita GDP is another important yardstick where we lag behind even when we compare it to our South Asian neighbours. Nonetheless, we do need a high economic growth to balance it with the rest of the developing nations.

As the incumbent government has been making a pitch for prosperity, it must focus on “prosperity which includes economic development”. We need economic growth to
sustain our increased regular expenses. In the current fiscal year, the total government expenditure has increased by 45.1 per cent. While the federal system, which is one of the most expensive systems, has increased the cost, lack of budgetary disciplines has also contributed to increase in government expenses.

In conclusion, under the current setup, as predicted by many international agencies, it is very likely that we will achieve only a nominal growth of around 5 per cent in the coming years. If so, it will be higher than the decade’s average, but lower than the expected double digit.

To achieve rapid growth, we need agricultural revolution, openness for foreign investment, investment-friendly industrial environment, facilities for business, corruption control and strict compliance with fiscal discipline. There is also an opportunity for Nepal to reap spill-over benefits from our two neighbours India and China—two giant economies.

We need rapid development in our technology, energy and infrastructure. This is possible only from investment in these sectors.

Labour flight problem: Time to address it . The Himalayn Times May 24, 2018

Migration of the youth force, which has the potential to change the society socially, economically and politically, is causing adverse impacts not only on social demography but also on most of the productive sectors 

Youths make up a vigorous and vibrant force for any nation. But we have been seeing a high rate of youth migration – mostly to Gulf countries and Malaysia – for jobs. Are we doing enough to retain our youths and use them in nation building? Are there proper governmental policies to address the issue?

In its policies and programmes presented on Monday, the government has claimed that no one has to go abroad for employment after five years. Such announcements, however, are not new and they are usually part of political propaganda.

Latest Central Bureau of Statistics figures show unemployment rate among youths aged 15-24 is just 2.3 per cent. This means, at present, of around 6 million youths of this age, only 1.4 million are unemployed, and the rest (5.5 million) are employed. In most of the developed countries such youth employment statistics is considered a great achievement when it comes to government’s employment policy.

A Reuters article published early this month said: “US hiring rebounded in April and the unemployment rate dropped below 4 per cent for the first time since 2000.” Some Republican media have described this as an achievement of the Trump government. However, even with such low unemployment rate of ours, which is about half of US, we seem extremely polite to claim our success. Why?

The irony is that two governmental sources always tell contradictory statistics.

If we look at the annual record of the Department of Labour, it shows in 2014-15 about 450,000 youths took labour permits for foreign employment. But most of the labour related researchers think that the government statistics from DoL tells only a partial story of youth flight for foreign employment. Researchers claim that around same number of youths depart to India where labour permit is not required. Thus, in reality, a little less than a million youths are leaving the country annually.

This youth migration has also brought good remittance to the country. The contribution of remittance in the national GDP is around 29 per cent, we are getting about 13 times more money from remittance than from tourism.

But what about the family structure of the country?  Such huge migration of youths from the country has made strong impact on the socio-demographic composition. Child birth is declining, female-headed households are increasing, nuclear families are on rise, and the worst part is trending cases of fraud in marital relationship and divorce among such migrating spouses.  According to recently published police records, 980 divorce cases were filed at Kathmandu District Court last year, mostly by remittance earning spouses, which was 30 per cent more than the cases filed in the previous year.

Migration of the youth force, which has the potential to change the society socially, economically and politically, is causing adverse impacts not only on social demography but also on most of the productive sectors.

The agriculture sector has been worst affected. Around 30 to 40 per cent of arable land in rural areas is now barren. A country which was exporting rice and pulse until a decade ago is now importing food and vegetables worth Rs 63 billion, which is about 14 per cent of the total import.

Labour shortage is felt in every industrial and construction fields. This remittance economy has developed luxury consumerism. We are a good market of luxury goods like automobile, mobile phone, fridge, colour television, among others. We are now importing, food and luxury goods mainly, more than eight times than what we export goods. This has created a huge trade imbalance.

Last year our trade-deficit was 34 per cent of the GDP, 27 per cent higher than in the previous year.

According to the CBS, every year about half a million youths enter the job market, and only 10 per cent (50,000) get job in the country. If the government aims to retain the youths in the country, at least 100,000 new jobs need to be created every year. For this, there should be new industries, construction projects, business activities and service-oriented activities.

If the government indeed initiates it ambitious mega projects such as road, railway and hydroelectricity, more jobs will be created, but that will be sufficient.

The government must invest in the agriculture sector and provide facilities and ensure improved seeds, fertilisers and agriculture equipment. It is high time Nepal’s agriculture is mechanised. Loans should be made easier for farmers while irrigation system should be strengthened. Agriculture contributes around 35 per cent to the GDP. But in recent years, the agriculture sector’s contribution to the GDP has slumped to a little over 20 per cent. Ease in establishing industries, facility of road and electricity and minimum wage certainty could boost industrial expansion. Skill development training is required. NGOs should provide regular skill development trainings at semi-urban centres and government should monitor and financially support these NGOs.

Without effective intervention and drastic changes in the working modality of the government for skill enhancement, wage security and workers insurance, the country in the next decade is very likely to face serious socio-economic catastrophe from the draining of capable youth force.

https://thehimalayantimes.com/opinion/labour-flight-problem-time-to-address-it/

Lesson from Israel (Republica July12)

Agriculture technology
Since throwing its doors to foreigners in 1951, Nepal has been receiving significant financial help for development works. Such aid is in the form of either grant or loan. However, with such easy money, we have also become very dependent on outsiders. Today, foreign aid covers over one-fourth of our budget expenditure, thereby substantially weakening our internal capacities. 

Prominent socio-economists like Devendra Raj Pandey strongly oppose such donor-dependent development mentality, as it muddies our development goals and contributes to corruption and anarchy. In 2011 alone, Nepal received aid from 40 official donors to the tune of Rs 106 billion. Even such crucial bodies like PMO, Finance Ministry and National Planning Commission depend on this foreign aid. 

A serious debate on the need for such aid must start now. Now is the time to assess various impacts of foreign aid, vis-à-vis our achievements and failures. Especially since even the top level ministry officers have expressed reservations with aid utilization. Yes, we have made some progress from foreign supported projects in the last two decades but there are bundles of disappointments as well. 

Nepal undoubtedly needs foreign aid for its mega-projects. But our utter dependence has also made us thoroughly incompetent. Seldom do we initiate even small development works like the extension of ring road, building new bridges, or solid waste management in Kathmandu Valley on our own. 

The problem with foreign aid is that a large portion is spent on allowances, foreign tours and miscellaneous expenditure for the relevant staff. This is the reason we find so many blue-plated luxury vehicles in the roads of Kathmandu. No wonder bureaucrats try so hard to be associated with such projects. These bureaucrats and ministers who are unreachable to general public are always eager to welcome every foreign diplomat in their chamber, even by going against the code of conduct. 
In this context, a refreshing approach of the Israeli Embassy, especially its ambassador to Nepal, Hanan Goder, deserves our appreciation. Last year, the embassy provided agriculture training to 208 Nepali farmers in Israel and this year it is selecting 500 more for similar training. The selected are higher secondary graduates from farmer families. Sana Kishan Bikas Bank selected the candidates through a lottery: 500 from among 1,100 applicants from 21 districts. Those selected will again be trained on modern agriculture practices in Israel and on the ways to implement their skills in Nepal. Israeli monetary aid to Nepal is small, nonetheless such creative help can make a significant contribution to Nepal and is worth more than billions in aid. 



Nepal is principally an agricultural country. Until a decade ago, 95 percent of the population depended on agriculture for livelihood; in 2011, the percentage has come down to 71 percent. This decline is largely because of declining productivity. Every day, around 2,000 youths leave the country for work abroad. This has created a vacuum in agriculture sector. 

The occupational change has overturned the food balance. The country was once self-dependent in food and even exported rice, sugar and oilseed, but now it is at the mercy of imports. In 2013, we imported rice worth Rs 8 billion and green vegetables worth Rs 2 billion. Despite the fact that Nepal is blessed with natural resources, our inefficiency and negligence has made this potentially productive sector languish far behind. Our organic tea, high altitude coffee, rainbow trout, medicinal mushroom, high altitude cumin and saffron are just a few examples of our unmatched agriculture potential. 

But sadly we still depend on rainwater (for irrigation), three-generation old obsolete harvest tools, and old seed. Our farmers are insecure from frequent crop failure. Nepal Agricultural Research Council is inactive. Different cartels have a stranglehold on the market and the government is unable to dismantle them. As a result, farmers are compelled to sell their products at the lowest possible price, whereas consumers have to pay a very high price for the same products. 

Israel is about seven times smaller in area as compared to Nepal. It is mainly a desert. Soil quality is bad with scarce presence of water resources. The summer temperature goes up as high as 54 degree Celsius, making it semi-arid or desert climate. Despite such adverse conditions, Israel has conquered nature and turned challenges into opportunities through sheer hard work and big investment in research and development. Its per capita income of US $ 35,658 compares with the most advantaged nations in the world. It has boosted its agriculture with biotechnology that has made the country self-sufficient in food. Only three percent agriculture-based population produces food for 95 percent. 

In Israel, our students will get valuable lessons in agriculture technology as well as water conservation, solar energy, communication and software technology. The lessons they get there will hopefully be helpful in reviving the moribund agriculture sector here. 

औद्योगिक विकासको भविष्य

प्रा.डा. विकासराज सत्याल
पहिले कृषि र उद्योगलाई भिन्दाभिन्दै कित्तामा राखेर हेर्ने गरिन्थ्यो । कृषिबाट उद्योगमा रूपान्तरण गरेर विकसित मुलुकहरूले आफूलाई औद्योगिक राष्ट्र भनाए । त्यतिखेर कृषिमा औद्योगीकरण, आधुनिकीकरण गर्ने अवधारणाको विकास भइसकेको थिएन । कृषि पनि वित्तबजारको अंश हुन्छ भन्ने परिकल्पना थिएन । तर समय परिवर्तन भइसकेको छ । यिनै परिवेशमा भन्नुपर्दा परम्परागत उद्योगको भविष्य नेपालमा छैन । एक दशकपछिको नेपालमा हाल रुग्ण रूपमा चल्दै गरेका उद्योगहरू पूर्ण रूपले हराउनेछन् । उद्योगका लागि कच्चापदार्थ, श्रमिक र पुँजीको आवश्यकता पर्छ । नेपालमा न त कच्चापदार्थ छ, न सस्ता श्रमशक्ति, न यथेष्ट पुँजी । सरकारको उद्योग प्रवद्र्धन गर्ने नीति र पूर्वाधार विकासले पनि देश–विदेशका पुँजीपतिहरूलाई उद्योग स्थापना गर्न आकर्षित गर्छ । दशकअघि ‘औद्योगिक क्षेत्र’को अवधारणा आएको थियो र उद्योग विकास गर्न बाटो, बिजुली, सुरक्षाजस्ता केही भौतिक पूर्वाधार बनाइएको थियो । त्यसअनुरूप देशभरि १० वटा औद्योगिक क्षेत्र पनि खुलेका थिए । हाल उद्योगपतिहरू सरकारको नीति उत्साहप्रद नभएको तर्क गर्छन् । नेपालको श्रमशक्ति भारत, बंगलादेश र चीनको भन्दा महँगो छ । जहाँ जनघनत्व बढी हुन्छ त्यहाँ श्रमिकको ज्याला कम हुन्छ । नेपालमा कामदार पाउनै गा¥हो हँुदै गयो र ज्याला महँगो भयो । लोकतन्त्रसँगै थपिएको अर्को समस्या बन्द–हड्तालको हो । श्रमजीवीहरूबाट पाइने र परेको बेलामा बन्द–हड्ताल, जुलुस, भाषणमा ‘सस्ता र भरपर्दा’ कार्यकर्ताका रूपमा प्रयोग गर्न सकिने भएकाले राजनीतिक दलहरूको रुचि यिनमा बढ्दै गएको छ । चलिरहेका युनिलिवरजस्ता केही ठूला उद्योगसमेत यिनै कारणले संकटग्रस्त भए । डार्बिनको प्राणीसम्बन्धी विकासवादको सिद्धान्तले भन्छ– ‘त्यो प्राणी मात्र संसारमा टिक्छ जो प्रतिस्पर्धामा अरूलाई जित्दै टिकिरहन सक्छ ।’ खुला बजारमा पनि यो सिद्धान्त हुबहु लागू हुन्छ । खुला बजारमा उच्च गुणस्तर र कम मूल्यका उत्पादन मात्र टिक्न सक्छन् । उत्पादनको पद्धति, श्रमिकको ज्ञान र मेसिन जति उच्च कोटीको हुन्छ त्यो उत्पादन त्यति नै बजारमा टिक्न सक्ने हुन्छ । तर, हाम्रा कलकारखाना, श्रमिक र प्रविधि कमसल छन्, किनकि विज्ञान र प्रविधिको विकासका लागि देशले न्यूनतम ध्यान दिएको छ ।
हाम्रा दुईतिर संसारकै विशालतम जनसंख्या र अर्थतन्त्र भएका शक्तिशाली देशहरू छन् । भारत र चीन दुवै विज्ञान र प्रविधिको प्रचुर विकास भएका देश हुन्, जसलाई हाल विश्वका उदीयमान अर्थतन्त्रका रूपमा पनि चिनिन्छ । यी दुई देशको तुलनामा हाम्रो श्रमशक्ति २–३ प्रतिशतजति मात्र छ र कुल गार्हस्थ्य उत्पादन १ प्रतिशतभन्दा कम । नेपालमा उद्योगले गार्हस्थ्य उत्पादनमा करिब ६ प्रतिशतको योगदान दिएका छन् भने भारतमा २८ प्रतिशत र चीनमा ४७ प्रतिशत योगदान दिएका छन् ।।

तालिका: आर्थिक र श्रम क्षमतका परिसूचक, २०११   

देश	श्रमशक्ति (दस लाखमा )	कूल गारस्थ्यउत्पादन (अर्ब अमेरिकी डलर मा)	गारस्थ्यउत्पादन वृद्धिदर	गारस्थ्यउत्पादनमा उधोगको योगदान(%)
नेपाल	१६	१८.८८	३.५%	६.२
भारत	४७२	१८४७.९८	७.२%	२८
चिन	९३७	७३१८.५०	९.२%	४७

श्रोत: आर्थिक सर्वेक्षण २०१२: अर्थ मन्त्रालय र विश्व बैंक २०११ 
यसरी तुलनात्मक रूमा नेपाल नवजात शिशु र हाम्रा छिमेकीहरू भीमकाय भीमसेनजस्ता देखिन्छन् । नेपालको व्यापारघाटा ‘सुरसाको मुख’ जस्तै हरेक क्षण ठूलो हँुदैछ । व्यापार तथा निकासी प्रवद्र्धन केन्द«को तथ्यांकअनुसार गत आर्थिक वर्षमा १ खर्ब ८० अर्ब रुपैयाँ पुगेको व्यापारघाटा यस आर्थिक वर्षको ९ महिनामा (२०६९ चैत सम्ममा) १ सय १४ प्रतिशतले बढेर ३ खर्ब ८५ अर्ब रुपैयाँ पुगेको छ । यसमध्ये झन्डै ३१ प्रतिशत घाटा भारतसँग नै भएको थियो । भारत र चीनबाट भूपरिवेष्टित रहेको नेपाल, ती दुई देशका कम लागतका उत्पादनको बाढीबाट जोगिन कदापि सक्दैन । तसर्थ यी हाम्रा उद्योगहरू जो विविध आन्तरिक कारणले लडखडाइरहेका छन्, आउँदो १० वर्षभित्र सम्पूर्ण हराउने डर देखिन्छ ।
के हाम्रो उद्योगको भविष्य पूर्ण अन्धकारमय हुने हो त ? यसो होइन । हामीमा कृषिको ज्ञान निकै राम्रो छ । कृषिमा हाम्रो धर्म, सस्ंकृति, दर्शन, साहित्य, भाषा, प्रेम, क्रान्तिलगायत जीवनका हरेक तथ्य मिलेको छ । कृषिबारे केही ज्ञान दिँदा पढलेख नगरेकाले पनि राम्ररी बुझ्न र उपयोग गर्न सक्छन् । भाग्यवश हामी हिमाल र तराईको यस्तो भौगोलिक स्थितिमा छौं जहाँ संसारको दुर्लभ हावापानी र जैविक विविधता प्राप्त छ । केही जोसिला नेपाली युवाले भविष्यको बाटो देखाउँदै गरेका उदाहरण पाइँदैछ । जुनार, च्याउ, रेन्बोट्राउट माछा, टनेलका तरकारी खेतीजस्ता कामबाट देशमै राम्रा कमाइ गरिरहेका युवाहरूले विदेशको दुःखद र अनिश्चित रोजगारीको पछाडि दौडेकाहरूलाई झस्काएका छन् । नवलपरासीका चन्द्र शर्माको अष्ट्रिच पालनको चर्चा धेरै भएको छ, जहाँ २ सय ५० केजी तौलका ८ सय वयस्क अष्ट्रिच हुर्किसकेका छन्, जसबाट उनले सन् २०२० सम्ममा रु. ८७ अर्बको व्यापार गर्ने हिसाब गरेका छन् । यी सबै उदाहरण उत्पादन सोझै बिक्री गर्नेका हुन् या भनौं शुद्ध कृषि गर्नेको । यसमा आम्दानी केही कम नै हुन्छ । यदि यस्ता उत्पादनलाई थोरै मात्र प्रशोधित या परिवर्तित गर्न सके बढी मुनाफा दिने र लामो समय भण्डारण गर्न सकिने हुन्छ । पूर्वोत्तर संखुवासभाको हिन्वा वाइन, मार्फाको ब्रान्डी, जिरीको चीज, इलामको चिया, गुल्मीको उच्च–पर्वतीय कफी र गलैंचा उद्योग केही यस्ता उदाहरण हुन् जसमा देशका कृषि उत्पादनको उपयोग भई सामान्य प्रशोधन पनि गरिएको छ । यी यस्ता उदाहरण पनि हुन् जो नेपालको विशेष जलवायुमा आफ्नै खालको स्वाद दिने उत्पादनका रूपमा विश्वविख्यात भइसकेका छन् । जस्तो नेपालको उच्च पर्वतीय कफी संसारका अरू धेरै देशका कफीभन्दा एकदमै भिन्न छ भनेर पारखीहरू भन्छन् । हाम्रा यस्ता आफ्नैपना भएका कृषि उत्पादनको पहिचान गर्दै जानुपर्छ र यसलाई अर्ध–प्रशोधित गरी कुन रूपमा विश्वबजारमा लान सकिन्छ त्यसको खोजी हुनुपर्छ । हामीले गर्न सक्ने भविष्यका उद्योग यिनै मात्रै हुन् अर्थात मौलिक कृषिजन्य उत्पादनको प्रशोधन उद्योग । यार्सागुम्बा, पाँचऔंले, केशर, जटामसीजस्ता बहुमूल्य जडिबुटी जो प्रायः नेपालमा मात्रै पाइन्छ, हामी कच्चा रूपमा सोझै बेचिदिन्छौ । यसबाट पनि केहीको घरबार त चलेको छ, तर सामान्य प्रशोधन गरी तेलका रूपमा बेच्दा यसबाट दस गुना बढी मूल्य पाइन्छ र केही बढी मान्छेले रोजगारी पनि पाउँछन् । फेरि सामान्य प्रशोधनका लागि ठूलो लगानी र प्रविधिको आवश्यकता पनि पर्दैन । तसर्थ, सरकार र योजना आयोगको ध्यान लड्खडाइरहेका परम्परागत उद्योगलाई विभिन्न सहुलियत र छुट दिएर भ्यान्टिलेटरमा राख्नुको सट्टा राम्रो भविष्य भएका उद्योग पहिचान र प्रवद्र्धनमा जानुपर्छ, जसमा कृषिमा आधारित उद्योग पहिलो पंक्तिमा आउँछन् ।