Friday, January 11, 2013

Export-led, private-sector open economic model a must

Economists have asked the government to devise an export-led, private sector open and competitive economic model with due social security and welfare of the people for the economic growth of the country.
"It should be based on 'Savings-Investment Interaction Model' ensuring a high growth trajectory with substantial poverty reduction strategy to attract foreign direct investment on a greater quantum and more investment in infrastructure," said chairman of Mega Bank Prof Dr Madan Kumar Dahal during a seminar organised by Nepal Nagarik Manch here in the capital.
The government must ensure it will not nationalise private property comprising factories, industries, and banks including education and health organisations, he said, adding that improving industrial relations and middle level manpower aspiring for foreign employment should be emphasised on.
Since the tax burden is relatively higher in Nepal as compared to other South Asian nations employing GNI per capita criterion, it must be simplified, and made transparent to make the country competitive for foreign direct investment as well as indigenous investments, he added.
Dahal also called for induction of 'red pill economics' to ensure a great leap forward due to the growing danger of 'fiscal cliff' in a developing economy like Nepal.
The government must effectively utilise the nation's wealth including subterranean resources, by declaring Plan Holiday, formulating emergency annual plan-cum-budget, reordering priorities, improving government capacity to spend capital expenditure, and initiating stern action against corrupt practices as a road map for economic growth, he said.
Dahal added that with medium and long term goals the government must work to weed out the constraints — rampant corruption, high cost economy, subsistence agriculture, alarmingly increasing dependency, poor investment on priority sectors, limited exportable items, lack of employment opportunity, extremely inadequate infrastructure coupled with weak economic diplomacy — of growth, he added.
"Investment in agriculture, the biggest and also a priority sector, has been minimal and was confined to 3.2 per cent of the total resources allocation in fiscal year 2011-12, and the share of manufacturing has also dropped to below six per cent of the GDP."
The country is passing through a critical phase of low equilibrium trap with downsizing phase circumscribed by poverty and stagnation, the economist said, adding that macroeconomic indicators reflect that Nepal suffers from a sluggish economic growth rate.
The economy has a structural problem, which needs to be addressed to propel growth, said, Prof Dr Bishwambher Pyakuryal.
Economists also called for policy and political stability for growth as the country has been witnessing a prolonged political transition with no clear economic vision.

No comments: