Unofficial Translation Economic Survey Fiscal Year 2015/16 Government of Nepal Ministry of Finance 2016 Foreword The prime objective of the government has been to bring social and economic transformation through rapid economic growth by executing the Constitution subsequent to its promulgation by the historic Constituent Assembly. Country’s economic policy should be guided towards attaining sustainable economic development by achieving rapid economic growth through maximum utilization of available means and resources, and making national economy self-reliant, independent, and prosperous by ending disparity through judicious distribution of benefits. Socialism-oriented, self reliant and competent economy needs to be developed through extensive investment mobilization by putting the revival of economy on the top priority with removal of negative impacts rendered by the devastating earthquake and inconvenient supply situation as a result of border obstructions. This Economic Survey for fiscal year 2015/16 has been prepared with analytical review of achievements made through implementation of key economic policies. Impact and trend analyses of programs have been carried out by incorporating those programs considered vital from economic and social perspectives. I am confident that this Economic Survey would serve as an useful source of reference for those who are interested and have concerned over the country’s economic activities including sector line agencies, intellectuals, researchers, employees, teachers, students, industrialists, businessmen, NGOs, people in general and Nepal's development partners, as well as foreign investors. Last but not the least, I would like to extend my thanks to the Ministry of Finance , Chief of Economic Policy Analysis Division including all personnel, various Ministries, departments and other concerned entities who have extended their supports to this work by providing data, information and other details. Bishnu Prasad Poudel Finance Minister i Contents Foreword i List of Tables iii List of Charts viii Abbreviations x Executive Summary xii Major Challenges of Economy xviii Macro-Economic Indicators xx 1. Overall Economic Situation 1 2. Public Finance 17 3. Price and Supply 47 4. Money and Banking 58 5. Capital Market and Insurance 81 6. External Sector 95 7. Poverty Alleviation and Employment 107 8. Agriculture, Forestry and Land Reform 120 9. Industry, Commerce and Tourism 146 10. Housing and Urban Development, Environment and Energy 165 11. Transport and Communication 176 12. Good Governance, General Adminstration, Peace and Reconstruction 188 13. Social Sector 200 14. Public Enterprises 263 15. Post Earthquake Reconstruction and New Building 274 ii List of Tables Table 1(a): Global Economic Growth Rate 2 Table 1 (b) Economic Growth Rate of Neighboring Countries 3 Table 1 (c): CPI Based Global Inflation Rate 4 Table 1 (d): CPI-based inflationary Trend of Neighboring Countries 4 Table 1 (e) Net Aggregate Domestic Demand 5 Table 1 (f): World Trade Situation 5 Table 1 (g): Economic Growth in last Decade (Percent) 6 Table 1 (h): Contribution in Gross Domestic Product (in Percent) 12 Table 2 (a): Public Finance and GDP to their Ratios (In Percent) 18 Table 2 (b): Details of Government Expenditure 19 Table 2(c) : Detail of Government Expenditure (Status of Spending in the first 21 eight months of fiscal year) Table 2 (d): Service and Function-Wise details of Recurring Expenditure 23 Table 2(e) : Service and Function-Wise details of Current 24 Expenditure(Expenditure Status for the first eight months of Fiscal Year) Table 2 (f): Service and Function-Wise details of Capital Expenditure 26 Table 2 (g) : Service and Function-Wise details of Capital Expenditure 27 including Financial Provision Table 2 (h): Details of Government Income 29 Table 2 (i) : Contribution of Government Income, Foreign Grant, Domestic 31 Debt and Foreign Debt to Total Government Expenditure Table 2 (j) : Detail of Revenue Income 33 Table 2(k) : Revenue Detail(Revenue Detail of first eight months of fiscal year) 34 Table 2 (l) : Detail of Fiscal Deficit and Deficit Financial 36 Table 2(m) : Outstanding Stock of Public Debt and Principle Repayment and 38 Interest Expenditure Table 2 (n): Income and Expenditure Details of Local Bodies 41 Table 2 (o) : Government Grant to Local Bodies 45 Table 3(a): Consumer Price Index based Annual Point to Point Inflation Rate 49 Table 3 (b): Point to Point Changes in National CPI 50 Table 3 (c): Annual Point to Point Changes of National Wholesale Price Index 52 Table 3 (d): Annual Point to Point Change of National Salary and Wage Rate Index 53 Table 3 (e): Average Retail Price of Some Major Commodities 54 Table 3(f): Prices of oil and gold in International market 54 Table 3 (g): Supply of Petroleum Products 56 Table 4 (a): Bank Rate, Refinance Rate and Cash Reserve Ratio 61 iii Table 4(b): Factors affecting Money Supply 62 Table 4 (c): Reserve Money and Money Multiplier 64 Table 4 (d): Status of Open Market Operation 65 Table 4(e): Interest Rate 67 Table 4 (f) : Deposit Mobilization and Credit Flow 67 Table 4 (g) : Number of Banks and Financial Institutions (By the end of Mid-July) 68 Table 4 (h): Some Major Indicators of Bank and Financial Institutions (By the end of Mid-July) 69 Table 4 (i) : Branches of Banks and Financial Institutions 70 Table 4(j): Some Indicators of Financial Expansion and Deepening 71 Table 4 (k): Non-Performing Loan of BFIs 72 Table 4 (l): Sources and Utilization of fund of microfinance Institutions 73 Table 4(m) : Postal Saving Bank 75 Table 4 (n) : Status of Credit and Deposit Guarantee 75 Table 4 (o): Status of Rural Self-Reliance Fund 76 Table 4(p) : Non-Performing Loan and Capital Fund 78 Table 5(a): Primary Market Trend 81 Table 5(b): Secondary Market Trend 84 Table 5 (c ): Ownership Structure of Insurance Companies 87 Table 5 (d): Source and Utilization of life and non-life Insurance Companies 88 Table 5(e): Total Life and Non-Life Insurance Premiums 89 Table 5 (f): Contribution of Insurance Premiums to GDP 90 Table 5 (g) : Investment made in Life and Non-Life Insurance Business 90 Table 5 (h) : Revenue Collected from Insurance Business 91 Table 5 (i) : Insurance Claim and Insurance Claim Payment 93 Table 5 (j) : Insurance Claim Amount Released by Life Insurance Business 93 Table 6 (a): Foreign Trade Situation (First Eight Months) 99 Table 6 (b): Remittance Inflows 101 Table 6 (c): Total Foreign Exchange Reserve (In Rs. 10 Million) 102 Table 6 (d): Status of Foreign Asset and Liability 104 Table 6 (e) : Foreign Exchange 105 Table 7 (a) : National Household and Population Survey 108 Table 7 (b) : Graduation Threshold and Nepal Position in 2016 110 Table 7(c): Status of Recipient of Skill Development Training 114 Table 7 (d): Country-wise detail of Foreign Employment 115 Table 7 (e) : Amount Collected in Social Security Fund 116 Table 8 (a): Area of Food Crops and their Production Details 122 Table 8 (b): The Preliminary Status of Cash Crop Production 123 Table 8 (c): Preliminary Status of Industrial Crop Production 124 iv Table 8 (d): Preliminary Status of Spices Production 125 Table 8 (e) : Number of Animals/Fowls 126 Table 8 (f): Status of Animal’s/ Fowl’s Production 127 Table 8 (g): Supply Status of Inputs for Agriculture Production 128 Table 8 (h): Natural Disaster affected Land Area (Ha) 129 Table 8 (i) : Sales and distribution status of Chemical Fertilizers 130 Table 8 (j): Additional Irrigation Extension 131 Table 8 (k): Status of Credit Flow of Banks and Financial Institutions 131 Table 8 (l): Description of Foundation Seed Production and Introduction of Crop Varieties 132 Table 8 (m): Small Farmer Cooperative and Status of Wholesale Credit Investment 133 Table 8 (n): Status of Meat-Oriented Livestock Credit Program 134 Table 8(o) : Status of Cooperative Institutions 135 Table 8 (p) : Primary Cooperative Institutions 136 Table 8 (q) : Forest Resource Statistics of Nepal 138 Table 8(r) : Conservation Area Details 139 Table 8 (s) : No. of Tourists Visiting Conservation Area and Revenue 140 Table 8 (t) : Domestic and External Tourist Visiting National Botanical Garden 141 Table 8 (u): Soil Conservation and Watershed Management Status 142 Table 8 (v): Revenue from Forest Sector 142 Table 9 (a): Industries Registered at the Department of Industries 146 Table 9 (b) : Licensed Industries for Operation 147 Table 9(c): Licensed Industries for Operation by Types 148 Table 9(d): Foreign Investment in Industry 149 Table 9 (e): Country-wise Foreign Investment 149 Table 9 (f) : Countries with BIPPA Agreement 150 Table 9(g): Details on Industrial Intellectual Property 150 Table 9 (h): Company Registration Status 152 Table 9 (i) : Major Indicator related with Tourism 158 Table 10(a): Energy Consumption Status 169 Table 10 (b): Electricity Demand, Consumption, Production and Physical Structures 171 Table 10 (c) : Alternative Energy Usage Status 173 Table 10 (d) : Detail of Average Daily and Monthly Import of Petroleum Products 173 Table 10 (e): Consumption details of POL Products 174 Table 11 (a): Status of Road Facility Expansion 176 Table 11 (b) : Road Facility extended by Department of Road 176 Table 11 (c) : Extension of Road Network by Local Bodies 177 Table 11(d) : Number of Registered Transport Vehicles 178 Table 11(e): Civil Aviation Indicators 179 v Table 11(f) : Number of License for Audio Visual 180 Table 11 (g) : Numerical Detail of Postal Service 181 Table 11 (h) : Situation of Telecommunication Service 181 Table 11(i) : Number of Telephone lines distributed