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VOL. 03, NO. 10, Oct. 16 2009 (Ashwin 30 2066) |
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CONSUMERISM
Have Money, Will Spend
The season of festivals is here. And so is the spending spree. As Nepalese consumers opened their wallets for shopping this year, they were breaking all the past records. They demanded more than Rs. 15 billion from Nepal Rastra Bank (NRB). The bank ran short of fresh currency notes it supplied on the eve of every Dashain. Bank officials said this was a sharp increase in demand and they simply could not catch up with it. Hamstrung by the delayed arrival of fresh notes, the central bank was forced to reuse even the old notes set aside for destruction
By SANJAYA DHAKAL
The culture of consumerism has finally arrived. If anyone had any doubt, that must have been cleared by the overwhelming number of people crowding the scores of departmental stores and shopping malls.
From the old-fashioned Ason streets to spanking new shopping malls, the crowds were simply awesome.
Thousands of shoppers besieged the Bhatbhateni Superstore and the City Center just before Dashain – indicating the growing prowess of their purses.
Their spending spree caught even the central bankers off-guard.
Responsible for money management, NRB officials were caught with their pants down when a French company they had hired to print Rs 20 billion worth of fresh currency notes was late in supplying them.
There was an acute currency shortage leading to currency-rationing and long queues in banks.
“We had hoped that they would supply the fresh notes well before Dashain but they could deliver only after Dashain. This led to the shortage,” said deputy governor Krishna Bahadur Manandhar.
Spending Spree
Moreover, the earlier predictions of the central bank regarding the volume of spending also were not correct as it sharply increased this year.
“This year people used up over Rs 15 billion in spending during the festival. This shows the rapid rise of culture of consumerism,” said former governor of NRB, Deependra Bahadur Chhetri.
In the past, the NRB used to predict that Rs 10 to 12 billion would be enough to cover the festival spending.
The huge increase in spending is also shown by statistics of the Ministry of Finance.
According to a report published recently in Republica daily, the Ministry data shows that gross disposable income of Nepalis together (at current price) has soared to a total of Rs 1193.40 billion -- a figure which is almost two-fold of what was recorded five years ago.
This means, people at present hold double disposable income than what they possessed in Dashain of 2004/05, the report added.
The national income data further shows that Nepalis are spending Rs 883 billion of that disposable income for consumption. Of that, general people’s private spending alone stands at Rs 760 billion (86 percent of total consumption). This is up from Rs 459.53 billion figure of 2004/05.
Easy Money
The huge increase in the spending has been fueled by record rise in the supply of money, be it through remittances or otherwise.
NRB governor Bijayanath Bhattarai has said that this year – despite the worries from the global financial crisis – the inward remittances sent by millions of Nepalese overseas workers has increased substantially to reach over Rs 200 billion.
This money has fattened the wallets of ordinary Nepalese. And since this is the first time that they are enjoying the availability of disposable income in such a large volume, they have taken to spending like never before.
Then there are the middle class people who have been enjoying access to easy money in recent years.
The home loans and auto loans by the banks and the financial institutions have suddenly brought their dreams so close to reality. Buying a house or a car is no longer ‘a rich thing.’
The banks have put in around Rs 60 billion in real estate alone. They have also invested around ten billion rupees in various consumer loans.
This huge amount of money meant that businesses of departmental stores, shopping malls, automobiles, housing etc have all boomed.
In recent years, the showy culture has also taken deep roots in Nepal. The consumers – propelled by the easy auto loans and home loans by the banks - have taken to buying homes, cars, LCD televisions and what not.
Other Side Of The Coin
Despite the rosy picture in consumer spending, the overall economic growth of the country has been wallowing in less than four percent for last many years.
This year, too, the budget has set the goal to attain 5.5 percent growth. But with the indications that the agriculture sector is going to take a beating due to erratic monsoon, the overall growth target is less likely to be met.
The importance of agriculture is so much in the economy that it occupies 36 percent of the total GDP.
The budget had estimated that this year the agriculture will grow by 3.3 percent.
But this does not appear possible.
Last year, agriculture had grown handsomely, triggered by the bumper harvest of rice and maize. Rice production had even reached 4.5 million metric tons.
This year, however, the production is going to decrease instead.
The dry winter months had led to prolonged spell of drought in most parts of the country. In July, when the Ministry of Agriculture and Cooperatives did its preliminary estimation, it found that the production of food grains would decrease by 132,000 metric tons.
“This would impact the food security of nearly 700,000 people,” said Dr. Hari Dahal, spokesperson at the Ministry.
And that was before the erratic monsoon.
This year, the monsoon had come full two weeks late. And it stayed till late causing floods and landslides in the far western region in early October.
“The 95 percent of the fields have enjoyed the plantation of rice. But there are some problems due to unusual pattern of rainfall,” said Dr. Dahal.
According to him, in fields that had to wait for weeks to plant rice, the yield will be quite low. In many other places the plants have been washed away due to sudden flooding.
“Definitely, there will be some decrease in rice output. But by how much, we still do not know. We will do a comprehensive estimation sometime around November,” said Dr. Dahal.
The production of other major food grains such as maize, wheat, barley and millet, too, could see some decline owing to unfavorable weather.
The budget has also predicted 6.6 percent growth in non-agriculture sector.
That, however, remains doubtful given the unending bandhs, strikes, labor unrest and prevailing atmosphere of insecurity.
For example, while there was a big rush for spending in capital city and other hilly towns in the run up to the festival season, reports coming from Terai and border towns are not that rosy.
The presence of over 100 armed groups largely in the Terai region has forced many businesses to shut down.
The huge increase in consumer spending in the backdrop of stagnating economic growth present a strange picture of Nepalese economy. But as the economists and experts of every shade and hue are currently fond of saying – this is a country in transition and unusual things have become rules rather than exceptions in these times.
END POVERTY CAMPIAGN
Stand Up Against Poverty
Even as less than seven years are left for Nepal to meet the Millennium Development Goals (MDGs), the country is lagging behind in many sectors. Some achievements have been made in the areas of maternal mortality and literacy.
“ Nepal has made certain progress but it has a long way to go to meet other targets,” said Robert Piper, Resident Representative of the United Nations’ Development Program. Nepal seems to be in a better position in the areas of infant mortality and maternal mortality but it has made negligible progress in some areas.”
Minar Pimple, Deputy Director and Head of Asia, UN Millennium Campaign, said that Nepal needs to do hard work to meet the MDGs. Addressing the press, CA member Rajendra Kumar Khetan declared they will support the campaign.
The fourth annual “Stand Up, Take Action, End Poverty Now!” mobilization will take place from October 16th to 18th this year, when millions of people across the globe call on world leaders to eradicate extreme poverty and achieve the MDGs. Coinciding with the International Day for the Eradication of Poverty, this mobilization recorded participation by 116.9 million people in 2008, the majority from poor countries, breaking the Guinness World Record for the largest mobilization of human beings in recorded history.
With just six years left until the 2015 deadline by which world leaders have pledged to achieve the MDGs, people around the globe are demanding that their leaders deliver on the promises they made in the year 2000 to eradicate extreme poverty and its root causes. The MDGs related to women's empowerment – including the promise to reduce maternal mortality by three ‐ quarters by the year 2015 – have seen the least progress. Women have been especially hard hit by the devastating impacts of the financial, food and climate crises. Women and children constitute more than 70 percent of those living in poverty.
In keeping with this urgency, this year’s mobilization will have a specific thematic focus on women, and will be accompanied by actions in more than 131 countries calling on leaders to eradicate hunger, end maternal mortality and ensure women’s rights. Some event organizers will also use the mobilization to influence global decisions at the UN Conference on Climate Change and the MDGs.
Thousands of legislators – including Parliamentarians, Mayors, Senators, Ministers and Heads of State – are expected to be reached through the mobilization this year. Millions of people will come together across the world to remind their elected leaders to give the highest priority to the MDGs in local and national policies, plans and budgets. Events planned include rallies and concerts, gatherings in school assemblies and town halls, delegations visiting politicians and mass SMS campaigns.
Ten CA members Aviskeh Pratap Shah, Rabindra Adhikari, Karima Begum, Gagan Thapa, Gayatri Shah, Rajendra Kumar Khetan, Barshaman Pun, Sita Gurung, Navodita Chaudhari and Rakaji Maharjan have signed in the campaign.
Robert Piper, Resident and Humanitarian Coordinator of the UN in Nepal, Minar Pimple, Deputy Director and Head of Asia, UN Millennium Campaign and Nepali legislators will answer your questions on events happening in Nepal to commemorate the day.
About the Campaign:
The UN Millennium Campaign was established by the UN Secretary General in 2002. The Campaign supports citizens’ efforts to hold their governments to account for the achievement of the Millennium Development Goals. The Millennium Development Goals were adopted by 189 world leaders from rich and poor countries, as part of the Millennium Declaration which was signed in 2000. These leaders agreed to achieve the Goals by 2015. Our premise is simple: we are the first generation that can end poverty and we refuse to miss this opportunity.
