Economic Survey paints bleak picture

Contrary to the projection of 5.5 per cent Gross Domestic Product (GDP) growth, the Economic Survey -- likely to be presented on July 8 -- puts forth a grim reality.
The Survey expects the GDP to expand by almost the half – by only 3.5 per cent – from the government’s projection due to low yield in the agriculture -- especially the major crops like maize and paddy -- and non-agriculture sector's low output than expected.
Similarly, the inflation also stands at 10.7 per cent against the projection of seven per cent, according to the Economic Survey.
The Survey also maintains that double digit price hike and slower growth have had an adverse effect on the consumers' purchasing power, posing a serious threat to the financial management.
Tradition has it that the Survey is presented a day ahead of the budget for the fiscal year but this year as the possibility of forming a new government seems still far, the caretaker government of Madhav Kumar Nepal is preparing to present the Finance Bill on July 9 a day after it is presenting the Economic Survey.
“We are planning to present Economic Survey on July 8,” said Keshav Acharya, senior economic advisor at the Finance Ministry.
Finance minister of the caretaker government Surendra Pandey is likely to present Financial Bill on July 9 that can give the government right to spend a quarter of this fiscal year’s expenditure. Though, delay in presenting budget will not hit the revenue collection as the Income Tax Act 2012 BS has given the government right to collect revenue not exceeding this fiscal year’s rates, it will definitely hit the development activities.
Since last three years, the successive governments have failed to spend on development activities as they failed to present the full-fledged budget on time due to political instability. In 2008, the then finance minister Dr Ram Sharan Mahat presented special budget only for four months and the next year in 2009, it took four months to pass the budget though the budget was presented on time. Such political instability has taken toll on the Nepal’s ranking in the economic freedom.
According to the 2010 Index published by Heritage Foundation and Wall Street Journal Nepal ranked 130th scoring 0.5 point lower than last year, reflecting declines in five of the 10 economic freedoms due to political instability.
It has hampered the development activities as the successive governments have not been able to spend properly on development activities. Due to balloning trade deficit and slowdown in growth rate of remittance -- that is hovering around 10 per cent -- the Balance of Payment (BoP) has also registered deficit. The whopping imports that is over six times the exports has also hurt the forex reserve that has been depleting.