GDP forecast lowered
While two immediate neighbors India and China are surging ahead with around double-digit growth estimates, Nepal is languishing in abysmal stagnation despite the restoration of peace.
When Finance Minister Dr. Ram Sharan Mahat presented a mid-term evaluation of this fiscal year's budget at the interim parliament on Thursday, he announced that the government was forced to lower its GDP growth estimates by 1 percent.
In its evaluation report, the Finance Minister has estimated that the GDP will grow by only 3.8 percent – down from 5 percent projection he made when he unveiled the budget for the fiscal year 2006/07 six months ago.
The Finance Minister has pointed out to the decrease in agricultural growth rate as the major reason for the lowered estimation. The budget had estimated the non-agriculture sector to grow by 6 percent, and agriculture sector by 3.5 percent. However, the mid-term evaluation points out that the agricultural sector would grow merely by 0.7 percent while the non-agricultural sector would grow by 5.7 percent.
The revenue growth, on the other hand, is said to have increased handsomely. It has grown by 19.7 percent in the first six months of the current fiscal year to reach Rs 37.8 billion. The volume of foreign assistance, however, has been received lesser than expectation. Till now, the government has received Rs 10.54 billion as grants and Rs 3.18 billion as foreign loan.
Likewise, the revised estimates have put the recurrent expenditure at Rs 88.14 billion – up from Rs 83.76 billion that was mentioned in the budget. The capital expenditure, on the other hand, has been revised at Rs 38.22billion – down from Rs
44.97 billion.
At a press meet organized on Thursday to reveal the mid-term evaluation report, Dr. Mahat said, "We have seen weak progress in some areas of budget implementation. But these things are due to non-economic reasons."
In his budget, Dr. Mahat had increased the direct cash support to the Village Development Committees (VDCs) from Rs 500,000 to Rs One million a year. But six months after the budget was announced, the local bodies are yet to be in place. The recurrent expenditures were increased due to added liabilities in non-productive sectors like the cost of distributing
citizenship, management of Maoist camps, election activities and so on.
As the non-productive expenses are bound to increase in the coming months, the government is mulling introducing a supplementary budget towards the end of the fiscal year.
The economy has not been able to reap the peace dividends despite the signing of peace pact and cessation of armed conflict. Just recently, the Federation of Nepalese Chamber of Commerce and Industry (FNCCI) issued a white paper stating that over Rs 29 billion were lost during the three-week long Terai unrest in terms of lost manufacturing, destruction of properties,
transport paralysis and so on. nepalnews.com sd Feb 16 07
