Nepal Economy: We Are Eating Better, Drinking Less

By Prem Khanal

Budget Day

KATHMANDU- Nepalis are consuming more meat and fish, smoking less, and have become more sober – per capita alcohol intake has dropped. According to the Economic Survey for the fiscal year 2005/06 released on Monday (July 10) by the Ministry of Finance, the total meat consumption went up by 2.95 percent to 264.85 thousand tons, which means that the average Nepali consumed 10.24 kg of meat during the period. This is one-fourth the global consumption rate.

However, average consumption of liquor (sealed and bottled) went down to 349.5 ml (11.7 pegs) from last year’s 353.6 ml (11.8 pegs). The latest liquor intake figure is just 8 percent of average global consumption. Likewise, total cigarette production stood at 9,493 million sticks, 0.8 percent higher than last fiscal year but far less than the population growth rate.

Along with this good news there is also some bad news: The total production of cereal food went down to 296.1 kg per head from last year’s 304 kg, mainly thanks to a bad monsoon.

Similarly, the survey revealed that total food crop production was 7,656 thousand tons, which is 1.43 percent less than last year’s production. However, production of principal commercial crops increased by 7.5 percent to 4,598 thousand tons. Likewise, production of milk and milk products also increased, to 1,312.1 thousand tons from 1,274.2 thousand tons last year.

More on the economic front, Gross Domestic Product (GDP) grew by 2.4 percent at constant prices and the size of the total economy touched Rs 557.9 billion (about US$7.54 billion). As a result, the annual average income of Nepalis increased by 6.9 percent to Rs 22,540 (US$ 311).

However, the social sector continued to present a bleak picture, as the number of schools declined by almost 6 percent to 34,543 from last year’s 36,729. The biggest decline of almost 10 percent was in the number of secondary schools.

But the total number of students increased by 6.6 percent to 6.46 million. The biggest increase of almost 12 percent was seen in the number of primary level students. However, the number of students enrolled in lower secondary schools dropped by almost 5 percent.

Interestingly, in the health sector, all the crucial indicators remained the same as last year. The number of health posts and primary health centers remained unchanged at 699 and 180 respectively.

Similarly, on the drinking water and sewerage front, the availability of water per day has increased to 7.2 million liters from last year’s 5.58 million liters.

Khanal is the business bureau chief at the Kathmandu Post. Here is the original article.

Economic growth below target

By Milan Mani Sharma

KATHMANDU, July 12 – As drought dragged down agriculture production, and conflict and political stir squeezed industrial activity, economy grew by a mere 2.4 percent this year, says the Economic Survey 2005/06.

The growth is far less than the annual target set at 4.5 percent.

The expansion of the economic pie was offset by higher population growth rate, which exceeded GDP growth rate. “Real per capita income decreased by 0.25 percent, as against a rise of 0.46 percent last year,” says the Survey, which is based on 8 months data.

Less than expected performances of the agriculture and industrial sectors, sharp rise in inflation (7.6 percent) and increase in unemployment, among others, show that the poverty situation worsened during the year.

The Survey projects agriculture sector to grow by a mere 1.7 percent, as against the growth of 3 percent of 2004/05. The decline is attributed to adverse weather (drought) at the time of plantation of staple food crops, including paddy.

“The performance of the non-agriculture sector also deteriorated, although ceasefire in the last quarter is expected to pull its growth to 2.8 percent,” says the Survey.

Preliminary estimates show the total production of food crops would go down by 1.43 percent (i.e. 111 thousand tons), limiting production to 7.65 million tons.

Production of paddy and wheat – two major food crops – is estimated to go down by 1.88 percent (to 4.20 million tons) and 3.35 percent (to 1.39 million tons) respectively, while production of maize is expected to rise by 1.07 percent to 1.73 million tons.

Total production of pulses is calculated to decline by 1.42 percent to 267 thousand tons along with 1.99 percent decline in production of oilseeds to 139 thousand tons. While fruits production is also projected to decline by 2.4 percent to 535 thousand tons, vegetable production is estimated to increase by 4.86 percent to 2.18 million tons in 2005/06.

Owing to squeezed industrial activities, manufacturing sector grew by a mere 2.1 percent as against the 2.6 percent growth last year. Growth of transportation, communication sector and real sector slowed down to 2.2 percent each as compared to 5.1 percent and 4.6 percent growth of last year respectively.

The Survey shows that trade and hotels, and construction sectors recorded a boom during the year, registering 3.9 percent and 4.2 percent growth as compared to negative growth of the last year. It mentions that the total volume of exports grew by 14.7 percent to Rs 43.31 billion in 8 months, while imports soared by 27.9 percent to Rs 117.48 billion. This has resulted in a whopping 37.1 percent rise in trade deficit to Rs 74.17 billion.

Despite the stir and instability, foreign investment commitment during the nine months of 2005/06 increased to Rs 1.54 million and 81 joint venture industries were issued with operating licenses. The Survey cites 4,556 cottage and small industries with Rs 1.87 billion in investment were added during the first 8 months of 2005/06.

Despite the rise in the number of industries, consumption of electricity in the industrial sector is projected to grow at slower rate of 37.21 percent as compared to 38.89 percent growth rate of the previous fiscal year. National energy consumption for 2005/06 is projected to increase by 3.34 percent to 8,904 tons oil equivalent (TOE).

Despite efforts to develop renewable energy sources, traditional sources continued to contribute 86.71 percent in the total energy consumption. Commercial and renewable energy contributed 12.72 percent and 0.56 percent respectively.

The number of electricity consumers is expected to increase by 10.4 percent, reaching 1.28 million people in the current fiscal year. Consumption of petroleum products, on the other hand, declined by 5.24 percent to 424,033 kiloliters in 8 months, whereas consumption of cooking gas increased by 59.38 percent to 81,025 tons. Consumption of coal is estimated to increase by 58.6 percent to 241 TOE during the year.

Sharma is a business reporter at the Kathmandu Post. Here is the original article.

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32 thoughts on “Nepal Economy: We Are Eating Better, Drinking Less”

  1. People are expecting far more than this budget. They are expecting atleast health, education and very basic living assurances from the government side. Yes it is burden, if we cannot take it, the present situation will also become failure. We are seeing nothing is there to reduce the poverty of 50% in the budget. Our population will be doubled in ten years means almost reach the 45 million, how we are going to cope all of them. We think the parties are not as serious even in this dire situation, otherwise some agreesive force will come in between to disturb them.

    After this janaandolan-2, people have the feelings that SPA leaders will change lots within themselves and address the critical issues like poverty allevation and assurance to basic livings of the people and corruption atleast. Even today the concerned authorities are asking direct bribery of 25 lacs-50 lacs to business people for settling their wrong cases. Police forces are taking Hafta in major part of the cities without fear.We are not seeing differences even after Janaandolan-2 although in the full (100%)power to the parliament. So, we would like to suggest SPA to correct their mistakes in time.

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  2. Unless there is fiscal discipline and strong effort on executing and implementing economic policies that empowers local community- its futile to do number games.

    Economics needs stability & security which builds up confidence but as of now it is not even in horizon.

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  3. GDP growth less than 2.5%
    Population growth higher than 2.55
    =
    More heads to feed at less income increase

    Or, Poverty is rising (not declining).

    End of line.

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  4. I was reading this article in the post this morning and instantly had a question. Where did these statistics, in regards to the alcohol consumption, come from? Were they based upon production and upon sales figures? If so, then my next thought instantly was, how could this truly be an effective way to determine that “Nepalis… have become more sober – per capita alcohol intake has dropped.”, as quoted from the article.

    It seems to me that this is just a spin on the data. If the numbers are based upon sales, wouldn’t tourism, or the lack there of, have a large effect upon the data? Wouldn’t the fact that restaurant and bar sales changing due to the lack of tourism this past year have a rather large effect on these numbers?

    And, would this data actually show in any way what the sobriety rate among Nepalis really is or if it has changed? I agree that the data does show that sales and consumption of alchohol has decreased this year, what I disagree with is the analysis of this data when it comes to Nepalis sobriety.

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  5. Hope this time around we won’t be stealing from starving little children to benefits few rich elites and few corrupt politicians. But then again that will be wishful thinking.

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  6. This is a little off topic, but consider that Kathmandu is going to be a huge problem if everyone keeps going there.

    I think it would be a good idea to relocate the capital to Pokhara. We could entice more people to move there just by that action.

    Its a much prettier city. I wouldn’t mind moving there if enough people did.

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  7. Nah, Pokhara is too small a valley. Having the capital there would destroy it’s beauty. For me it’s Dang- a very big valley and more central physically in Nepal’s map. Shifting there should help the neglected far-west too.

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  8. just checked the map-Dang is a more to the west then central but it would still be good for the western region development. But yeah the political capital should be shifted from kathmandu. Everything is too kathmandu centric and this needs to be changed. the maoists have proposed a federation though there’s is based on ethnic lines which i don’t think is a good idea.

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  9. Its stupid to have a capital in hills. Astronomous amount of investment will be needed to make a proper transporation link. Road is a mess in hills. Big international airport is a dream as there is no flat stretch of land. And water transport, the cheapest means, just forget about it.

    Why not pick a place in Terai? Chitawan /Bhairahawa / Lumbini – all sound good. If its in the East, sea is just close. If its in the West, Delhi/Punjab is close as well. Without transport, there is no development

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  10. close to india mean close to business. chitawan, hairahawa no infrastrucure. nepali people need to understand two things, business and cost of development. big business and less investement on infrastructure mean development.

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  11. what about a summer / winter / autumn / spring capital ?

    summer = kathmandu
    winter = narayanghat
    autumn = any place in solukhumbu
    spring = any place in jomsom

    what do u think guys ???

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  12. I know it’s insane. But guess what? Population in Kathmandu will be reduced by one-half. Development will move in all direction. It’s not necessary to move all the Ministries. Keep the ministries of Foreign, Finance, Home and Defense in Kathmandu. All the other Ministries will be move around different Development Zones.

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  13. Decentralization does not mean moving all the ministries in all different cities of the country. The whole discussion of changing capital is simply dumb stupid from costs viewpoint. Feed the hungry in jumla first and then think about what to do with x or y ministry. Read kantipur to know that there are still hundreds who die of diarrhea every summer. All they want is noon chini pani.

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  14. Capitals have been changed in other countries. Maybe Pokhara wouldn’t be a good idea after all. But maybe Butwal?

    And it shouldn’t just be a cosmetic change. Look at the problems Kathmandu faces today. And its population is bound to surge if nothing is done to the rest of the country. And unless the capital is change, that won’t change, in my view.

    How do you administer Western Nepal? Its fallen behind in every way. Changing the capital further west will I think, have first and foremost a very symbolic value. Then the Maoists or other rebels can’t say that Kathmandunites get all the privileges. It will also be easier to monitor the various groups.

    Opponents might say that Nepal is too poor to undertake such a grand scheme at this point, but I think letting things be the same will only make it worse.

    We need a modern mindset now. For too long, Kathmandu has been associated with elitism and inability to change. The initial cost might be high, but future benefits would be substantial, in my opinion.

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  15. Or, at least, give the provinces more power. And make sure that the elected officials spend more time in their districts. They only go there during election time.

    And more than an airport, what Nepal needs is roads. Maybe we should think of a rail connection to India. And even to China. If trains can be brought to Lhasa, they can be brought to Kathmandu.

    Okay, forget the China railway right now. Lets concentrate on roads and an efficient public bus system. Or private, if you don’t like the government interfering with everything. We still have those rickety old buses plying the Kathmandu-Biratnagar/ Kathmandu-Birgunj routes.

    How far is Birgunj from Kathmandu? 100 kilometers? And it takes hours to get there. A good system of buses, punctual, would do wonders.

    Trade. Trade. Nepal needs, first and foremost, inter-country trade. If the country has good roads, then the guy in Doti or Jumla wouldn’t have to starve every winter. Trucks would bring him what he needs, and he could send across the country what he picked up.

    Good roads, good transport would also mean more tourists. Nepal is a small country. You can pretty much go everywhere by road if the infrastructure is well developed. And the buses don’t have to go to every hill.

    If the Chinese are such good friends of ours, maybe we should ask them to help us out. I’m sure they can share a little expertise. They’ve just finished constructing the world’s highest railway. If that means pissing off a few Tibetans, then so be it. We don’t have to feel sorry every time our ‘friends’ are hurt.

    Time to play India against China. Not like the way those degenerate Shahs did it, worrying only about their fat wallets, but in a constructive way.

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  16. I agree, even from a symbolic stand point moving the capital would be a really great idea. KTM is the past the symbol of opression and misrule – time for a fresh start.

    PS the above stats are the most meaningless junk I have ever read.

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  17. Dear guys, it is really follish to think about changing the capital of Nepal to other places. please, first of all develop your concept.Decentralisation of the development programme is the main thing. changing the capital of the country is not the prime problem. First of all let us bring the peace and prosperious environment in the country and after that the development. Without peace, development cannot florish anywhere in this world.

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  18. Thank you Mr. Karki or should I call you genius. We are just discussing a hypothetical. Don’t you think we know that the first order of business is to bring peace?

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  19. Shyam ji,
    Encourage people to think and not to stick to a dogma.Thats where we failed u know.Our kids are jeered for writing/thinking something new at school,they are made to mug up the age old rotten things.Thats why we are behind.
    And practically its just a discussion.May be something new will comeup from the discussion.Pakistan changes its capital and has done well with it.There may be hundreds of difficulties in doing so and probably is not possible in our context but what’s the harm in thinking about it or for that matter any other progressive thing.
    “BAADE BAADE JAAYETE TATWA BODHAA”

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