Economic survey revises growth downwards, price hike upwards

Public Enterprises’ profits increase by Rs 8.3 million in a year

The government has revised Gross Domestic Product (GDP) growth downwards to 3.5 per cent contrary to its projection of 4.5 per cent in the budget for the current fiscal year. Similarly, it has also revised price hike upwards to nine per cent due to regular double digit inflation from its projection of seven per cent due to 10 major agriculture produces.
The Economic Survey released today has contributed the slower economic activities to non-agriculture sector coupled with troubled labour relations, power shortage, contraction in private sector lending, slower growth rate of remittance and delayed budget.
However, it has projected the agriculture sector to grow as expected at 4.1 per cent compared to last fiscal year. “Good Paddy harvest has contributed to the agriculture output,” it said, adding that maize – another key agro-produce – has also recorded a good harvest.
In a major shift in the economic structure, agriculture and industries sectors are losing their grip and service sector is contributing more. In the last one decade the contribution of agriculture has come down to 35.5 per cent contrary to 37 per cent in 2000-01.
However, Nepalis seem not to be saving as the consumption has increased by five percentage points to 93.3 per cent from 88.3 per cent in a decade, according to the Survey that is traditionally presented a day earlier in the House.
This year the Economic Survey 2010-11 has been presented today evening by the finance minister Bharat Mohan Adhikari a week before the budget that is being presented on July 14.
The ratio of imports of goods and services to the GDP has recorded 32.5 per cent compared to 37.4 per cent last fiscal year, whereas the exports of goods and services to the GDP ratio has plunged to the lowest of 8.7 per cent, according to the Survey.
The exports dropped due to low industrial production that is projected to grow by 1.5 per cent against last fiscal year’s 1.2 per cent growth.
Similarly, hotel and restaurant; transportation, communication and storage; financial intermediary are expected to record some growth compared to last fiscal year.
However, the non-agriculture sector could post a growth of 3.1 per cent against last fiscal year growth of 5.4 per cent. The real estate, rent and professional services; and education are going to post lower growth.
The Survey also paints gloomy picture of external trade as the trade deficit with India as it has increased to Rs 142.60 billion in the first eight months of the current fiscal year.
Similarly, the government has miserably failed in operating the Public Enterprises (PEs). The government's total spending on three dozen corporations has also gone up by 21.63 per cent to Rs 130.98 billion in 2008-09. However, their growth rate stood at only 4.20 per cent.
Of the 36 PEs, only 22 are in profits while the remaining 14 are in the red. The profit has however, gone up by only 8.3 million in the fiscal year 2008-09 from a fiscal year ago.