Economic Survey
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Unofficial Translation Economic Survey Fiscal Year 2012/13 Government of Nepal Ministry of Finance 2013 Foreword The effect of uncertain scenario that emerged in the country after dissolution of the Constituent Assembly persisted even in the fiscal year 2012/13. A comprehensive annual budget could not be brought in the beginning of the fiscal year due to lack of political understanding. Political parties could reach to consensus only by the end of the second trimester and the government was formed, which submitted the full budget on 9th April 2013. The government always remained alert on mitigating the effect of the absence of full budget on development activities and flow of services it is responsible for. At this time of political instability, it has become imperative to move ahead by maintaining the understanding among all political parties so that campaign of economic development and the subject matters that are directly related to the people’s livelihood do not get sidelined. Arriving at such understanding will make it possible to achieve economic prosperity, and fulfill necessities and aspirations of the people as well by using long term plans and policies as a basis. The forthcoming constituent assembly election is expected to get rid of political instability (and bring political stability), speed up economic development through optimum utilization of available means and resources thereby improving living standard of the people. This Economic Survey for the fiscal year 2012/13 is prepared with analytical review of policies the State has adopted in important sectors of the economy since past years, and achievements made through implementation of such policy-based programs. To the extent possible, effort is made to bring sector programs in one fold implemented through different entities. Data of the previous years has been updated, and recorded in digital compact disks. I firmly believe that this Economic Survey should serve as an useful reference source for those intellectuals, researchers, teachers, students, entrepreneurs and business persons, professionals, and general public who are interested in the economic activities of the country. Last but not the least, I would like to extend my thanks to all personnels engaged in preparation of the Economic Survey especially of Economic Policy Analysis Division and also to Ministries, Departments, and other entities, who have supported in this work by availing data, information and other details. July 2013 Shanker Prasad Koirala Minister Contents Foreword List of Boxes i List of Tables ii List of Charts vii Abbreviations viii Executive Summary x Macro-Economic Indicators xix Major Challenges of Economy xxx 1. Overall Economic Situation 1 2. Public Finance 25 3. Price and Supply 50 4. Money and Banking 64 5. Capital Market and Insurance 96 6. External Sector 108 7. Poverty Alleviation and Employment 117 8. Agriculture and Forestry 131 9. Industrial Sector 163 10. Physical Infrastructure 185 11. Transport and Communication 215 12. Good Governance, Peace and Reconstruction 234 13. Social Sector 245 14. Public Enterprises and Privatization 331 List of Boxes Box 4 (a) : Major Indicators of Monetary Policy and Their Status 66 Box 9 (a) : Major Initiatives taken for Trade Expansion 177 Box 9 (b) : Major Achievements of the Tourism Sector 180 i List of Tables Table 1 (a): Economic Growth of the Past Decade 3 Table 1 (b) : Global Economic Growth Rate 5 Table 1 (c) : Economic Growth of Neighboring Countries 6 Table 1(d) : Consumer Price based Global Inflation Rate 7 Table 1 (e): CPI based Inflationary Trend of Neighboring Countries 8 Table 1 (f) : Net Aggregate Domestic Demand 9 Table 1 (g) : World Trade Situation 11 Table 2 (a) : Public Finance and their Ratios to GDP (In Percent) 26 Table 2 (b) : Details of Government Expenditure 29 Table 2 (c) : Service and Function-Wise details of Capital Expenditure 31 Table 2 (d) : Service and Function wise Details of Recurrent Expenditure 32 Table 2 (e) : Details of Government Income 34 Table 2 (f) : Sources of Revenue Income 36 Table 2 (g) : Fiscal Deficit and Sources of Deficit Financing 39 Table 2 (h) : Income and Expenditure of Local Bodies 44 Table 2 (i) : Grants for Capital and Recurrent Expenditure 47 Table 3 (a) : Consumer Price Index based Annual Point-to-Point Inflation Rate 51 Table 3 (b) : Point to Point Change in National CPI 53 Table 3 (c) : Annual Point-to Point Change of National Wholesale Price Index 56 Table 3 (d) : Annual point-on-point changes of National Wage Rate Index 57 Table 3 (e) : Retail Price of some Major Commodities 58 Table 3 (f) : Price of Oil and Gold at International Market 59 Table 3 (g) : Supply Situation of Some Major Petroleum Products 60 Table 4 (a): Bank Rate, Refinance Rate and Cash Reserve Ratio 69 Table 4(b) : Factors affecting Money Supply 70 Table 4 (c) : Change in Reserve Money 73 Table 4 (d) : Open Market Operation 75 Table 4 (e) : 91-day Treasury Bills and Inter-Bank Interest Rates 76 Table 4 (f) : Number of Banks and Financial Institutions 77 Table 4 (g) : Some Major Indicators of Bank and Financial Institutions 78 Table 4 (h) : Branches of Banks and Financial Institutions 79 Table 4 (i) : Access to Finance 80 Table 4 (j) : Some Indicators of Financial Expansion and Deepening 81 ii Table 4 (k) : Deposit Mobilization and Flow of Credit 83 Table 4 (l) : Non-Performing Loan Status of Commercial Banks 84 Table 4 (m) : Sources and Uses of fund of microfinance institutions 85 Table 4 (n) : Progress Details of Rural Self-Reliance Fund 89 Table 4 (o) : A Glimpse on Activities of Saving and Credit Cooperatives 90 Table 4 (p) : Non-Performing Loan and Capital Fund 92 Table 5 (a): Primary Market Trend 96 Table 5 (b) : Secondary Market Trend 99 Table 5 (c) : Source and Utilization of life and non-life Insurance Companies 106 Table 5 (d) : Life and Non-Life Insurance Company’s Fees and Investment Details 107 Table 6 (a) : Foreign Trade Situation (First Eight Months) 110 Table 6 (b) : Remittance Income 113 Table 6 (c) : Total Foreign Exchange Reserve 114 Table 6 (d) : Foreign Exchange Trend 115 Table 7 (a) : Quantitative Poverty Indicator 118 Table 7 (b) : Description of Poverty Alleviation Fund Grants Disbursements 120 Table 7 (c) : Country-wise Foreign Employment Situation in FY 2012/13 124 Table No. 8 (a) : Area of Food Crops and their Production Details 132 Table 8 (b) : The preliminary status of cash crop production of FY 2012/13 134 Table No. 8 (c) : Preliminary Status of Industrial Crop Production in FY 2012/13 136 Table 8 (d) : Preliminary Status of Spices Production in FY 2012/13 139 Table No. 8 (e) : Description of number of Animals/ Fowls 140 Table No. 8 (f) : Status of Animal’s/ Fowl’s Production 142 Table 8 (g) : Supply Status of agricultural inputs for production 143 Table 8 (h) : Natural Disaster affected Land Area (Ha) 144 Table 8 (i) : The status of sales and distribution of Chemical Fertilizers 145 Table 8 (j) : Additional Irrigation Extension 147 Table no. 8 (k) : Status of Credit Flow of Commercial Banks 147 Table 8 (l) : Credit and Investment Status of Small Farmer Development Bank Limited150 Table 8 (m): Description of Foundation Seed Production and Introduction of Crop Varieties of last 10 years 153 Table No. 8 (n) : Cooperatives and their membership number, capital, investment, saving trend 155 Table 8 (o) : Description of Active Cooperatives 156 Table 8 (p) : Forest Resource Statistics 159 iii Table 8 (q) : Forest Related Comparative Achievements 161 Table 9 (a) : Licensed Industries for Operation 164 Table 9 (b) : Industries Licensed for Operation on Project Cost Basis 165 Table 9 (c) : Licensed Industries for Foreign Investments 166 Table 9 (d) : Industries Licensed for Foreign Investments(In the first eight months of FY 2012/13) 167 Table 9(e) : Licensed Industries for foreign investments on project cost basis 168 Table 9 (f) : Achievements of Ministry of Culture, Tourism and Civil Aviation 182 Table 10 (a): Status of Infrastructures Built Under the Program and Project 201 Table 10 (b): Energy Consumption Status 203 Table 10 (c) : Electricity demand, Consumption, Generation and Physical Infrastructures 206 Table 10 (d) : Consumption of Petroleum Products 207 Table 10 (e): Status of Alternative Energy in Nepal 211 Table 11 (a) : Last three year’s annul progress 215 Table 11 (b) : Road Facility extended by Department of Road 216 Table 11 (c) : Extension of Road Network by Local Bodies 216 Table 11 (d) : Number of Transport Vehicles 218 Table 11 (e) : Civil Aviation 221 Table 11 (f) : Comparative situation of statistics of last three fiscal years 224 Table 11 (g) : Number of Offices under Postal Service Department 227 Table 11 (h) : Comparative statistics of last three fiscal years 228 Table 11(i) : Total Number of Telephone lines distributed as per service providers 229 Table 11 (j) : Comparative Statistics Status of Information Department’s Completed Tasks 229 Table 11 (k) : Newspapers registered in various districts 231 Table 11 (l) : Newspapers registered by Languages 232 Table 12 (a) : Highlights on Relief, Financial Assistance, Reconstruction, Rehabilitation and Army Reintegration 241 Table 13 (a) : Indicators of Education Based Achievements (Percent) 246 Table 13 (b) : Detail of School Management Handed Over to Communities 248 Table 13 (c) : Pre-Primary Education 3-4 Years Age Group Enrollment and Achievement 250 Table 13 (d) : Progress Detail of Community-based Child Development Centers 250 Table 13 (e) : Progress Detail of Scholarships Provided to School Students 251 iv