Economists Paint a Bleak Picture of Economy As Virus Hits Harder
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WITHOUT F EAR OR FAVOUR Nepal’s largest selling English daily Vol XXVIII No. 191 | 8 pages | Rs.5 O O Printed simultaneously in Kathmandu, Biratnagar, Bharatpur and Nepalgunj 35.0 C 13.0 C Thursday, September 03, 2020 | 18-05-2077 Nepalgunj Jomsom Economists paint a bleak picture of economy as virus hits harder With rising virus caseload, authorities are tightening curbs which could result in a massive economic contraction. PRITHVI MAN SHRESTHA end of the last fiscal year 2019-20, KATHMANDU, SEPT 2 down around Rs17 billion. “This suggests that there has been In normal times, the country’s com- greater recovery of existing loans than mercial banks would be busy issuing new loans,” said Bhuvan Dahal, chief loans right and left at the start of executive officer of Sanima Bank. every new fiscal year. In mid-July, The government on July 21 decided lenders would be bracing for a hectic to lift the lockdown. season. As the country saw a massive spike “That is the time importers seek in the Covid-19 caseload, local admin- loans for importing goods targeting istrators imposed prohibitory orders the Dashain and Tihar festivals,” said in various districts, shutting down Gunakar Bhatta, spokesperson for businesses and factories again. Nepal Rastra Bank. “But the report I Kathmandu, Lalitpur and Bhaktapur, have received shows that banks have the three districts in the Kathmandu been hardly issuing loans since the Valley, too were put under prohibitory fiscal year started.” orders effective August 19 midnight, When the current fiscal year started shattering hopes of an economic on July 16, the entire country was in recovery. the fourth month of the lockdown that “Due to the ongoing restrictions, the government had imposed from the contribution to the economy from March 24 to contain the spread of the the consumption of goods and servic- POST PHOTO: SANJOG MANANDHAR coronavirus. es is set to decrease substantially,” Devotees pull a miniature chariot of Kumari, the living goddess, to mark the Indra Jatra festival in Segal, Kathmandu, on Wednesday. Celebrations of the eight-day long festival, which began on Businesses and factories were shut- said Bhatta. “If the current situation August 30, have been largely muted this year as the main events, which normally drew huge crowds, were cancelled due to the coronavirus pandemic. tered, shops were closed, tourist arriv- continues until the festival season, als were down to zero, and restaurants when consumption skyrockets, the and hotels teetered on the edge. economy will get hit even harder.” According to the Nepal Bankers’ Consumption in the last fiscal year Association, there has been a substan- was 82 percent of the gross domestic tial drop in new lending by commer- product. A significant portion of con- The fertiliser conundrum–governments ponder over cial banks. sumption that takes place during the The association’s data shows out- festival season will be wiped out from standing lending of commercial banks the economy due to the ongoing decreased to Rs2.88 trillion as of restrictions. it every paddy season and forget after harvest August 21 from Rs2.9 trillion at the >> Continued on page 2 An agreement with India to procure fertiliser expired in 2017. Since then farmers have been deprived of timely supply, as authorities have failed to explore other options. Ministry, the annual demand for chemical fertilizer currently stands at more than 700,000 tonnes while imports are just around 350,000 tonnes. The rest is met by informal imports or shipments smuggled through the open border. During the paddy season, urea requirement stands at 120,000 tonnes and 50,000 tonnes of Diammonium phosphate (DAP). Though the government this year has blamed the Covid-19 pandemic for the fertiliser shortage, Gaihre says the problem is a lack of a system to ensure buffer stocks. “There is enough financing to import fertilisers,” Gaihre told the Post. “That the country required buff- er stocks has been an issue that has been in discussion for long.” The budget has allocated Rs 11 bil- lion for fertiliser subsidy for this fiscal year, up from Rs9 billion in the last fiscal year. Nepal imported fertil- POST PHOTO iser worth Rs 19 billion in the last Farmers stand in queue to buy fertiliser in Bharatpur, Chitwan, on Wednesday. fiscal year. Application of urea during the first SANGAM PRASAIN & ANIL GIRI fertilisers, the government has turned top dressing which normally begins KATHMANDU, SEPT 2 to Bangladesh, seeking 50,000 tonnes three-four weeks of transplantation of urea. ensures rapid vegetative growth, pro- Farmers on Wednesday stood in ser- Experts, however, were quick to call motes tillering, and helps strengthen pentine lines in various districts, the government move akin to putting the plants against disease attack. The ignoring the coronavirus threat, to the cart before the horse. second top dressing ensures complete buy urea amid a severe crunch of the “Paddy cultivation has its own rou- grain filling, increasing the size and essential nutrient for their paddy. tine. If chemical fertiliser--urea--is not weight of the grains. It also improves With September already started, for applied within three weeks from now, the quality of the crop by increasing farmers, it’s a race against time. a fall in productivity is imminent,” the protein content. It’s the time for the second “top said Yam Kanta Gaihre, a soil scientist Hari Dahal, former secretary at the dressing” of paddy, and failure to col- at the International Fertilizer Agriculture Ministry, said that the lect urea will mean farmers will not Development Centre, who coordinates shortage appears due to the inability of get high yields by harvest time. field research activities in Asian coun- suppliers to deliver the product on time. Fertiliser shortage is a perennial tries, including Nepal, Bangladesh, “It takes at least six months for a problem in Nepal. and Myanmar. “But it’s too early to supplier to deliver the fertiliser. As Despite tall promises, the Oli admin- say the level of the impact on produc- fertiliser is an international commod- istration has miserably failed in ensur- tion, as there still are chances of some ity, prices keep fluctuating. If prices ing the timely supply of fertilisers. recovery.” rise, the supplier won’t bring them The country has completed its Amid the Covid-19 pandemic, which and they lose the security guarantee,” paddy transplantation on 98 percent has brought all economic sectors he said. “This happens worldwide. But of the available 1.37 million hectares down, agriculture is one sector that many countries have a buffer stock to farmland, the highest transplantation the country is looking up to, but econ- prevent the shortages.” recorded in the last five years, accord- omists say the fertiliser shortages In a bid to address the shortages, ing to the Ministry of Agriculture and could hugely impact the output. Nepal in 2009 signed an agreement Livestock Development. The record Paddy contributes approximately 7 with India, which meant India would transplantation is attributed to timely percent to the gross domestic product sell 100,000 tonnes of chemical fertil- and sufficient rainfall and availability and more than 60 percent of the work- iser (60,000 tonnes of urea and 40,000 of farm hands who returned home ing population is engaged in paddy tonnes of DAP) to Nepal annually at from foreign countries due to the pan- farming which lasts for at least six import parity prices. The agreement demic. It’s time to provide the paddy months of the year. allowed Nepal to directly purchase with the nutrients. Rice in Nepal provides nearly 50 from India without going through the After mounting pressure and grow- percent of the calorie requirements long tendering process which normal- ing criticism for failing to import the supplied by cereals. Hence, drop in ly takes six months. production has a cascading However, this got halted in 2015-16 effect—it affects the country’s due to the protests in Tarai and an economic growth, increases food Indian blockade. The agreement, how- insecurity and affects the income ever, expired by the end of 2017. of farmers. In 2018, Nepal had proposed renew- But factors like limited input al of the agreement to procure chemi- access, dependence on Indian cal fertilisers for at least five years at seaports and Indian transit the import parity price. The proposal routes to access international was made keeping in view the 10-year markets, lack of buffer stocks Prime Minister Agriculture and suppliers not fulfilling time- Modernisation Project introduced in ly delivery commitments makes 2017 that aims to increase agriculture shortage reappear every year. production. According to the Agriculture >> Continued on page 2 C M Y K THURSDAY, SEPTEMBER 03, 2020 | 02 NATIONAL Economists paint a bleak picture of economy as virus ... Two former lawmakers >> Continued from page 1 Satish Kumar More, president of tors all have been badly affected.” entire fiscal year for businesses to get The Covid-19 pandemic has hit the the Confederation of Nepalese A couple of sectors that the country back to pre-lockdown conditions. economies of almost every country Industries, said most factories except was looking up to were construction “Even if the situation normalises stage hunger strike across the world. Neighbouring India those producing essential goods and agriculture amid dismal growth. now, it will take an entire year for said earlier this week that its economy remained closed due to the The country this year saw a good business activities to return to nor- saw a sharp contraction of 24 percent prohibitory orders issued by the local paddy transplantation, but econo- malcy, which will mean the economy in the three months till June-end–the administrations.