Licenceraj hurts economy, accepts NPC vice chair

Licenceraj is hurting the economy, accepts the National Planning Commission (NPC) vice chair.

Speaking at a programme organised to mark 24th Annual General Meeting of the Society of Economic Journalists Nepal (SEJON) today, NPC vice chair Dr Bishwo Nath Poudel said that the Licenceraj has promoted syndicate. “The practice of licence being sold has distorted the economy,” he said, adding that licenceraj has also promoted monopoly. “There should not be monopoly in any sector including banking.”

Every sector including banking and insurance is suffering from the syndicate, the vice chair said, adding that there is no possibility of opening or closing bank or insurance companies due licenceraj, which has promoted syndicate.

In last few years, the government, backtracking from the liberal market policy, has started distributing licence, he added. “The licence distribution is the mother of corruption.

Poudel represents the Nepal Congress that has in the 90s started the liberal economic policy propelling the economy but the incumbent government, led by the Nepali Congress president Sher Bahadur Deuba, is also backtracking the liberal economic policy and promoting the licenceraj.

He even asked the central bank governor Maha Prasad Adhikari, who was sharing the dias with him, to abolish the licence and liberal, again, the banking sector. However, central bank governor did not say anything on the issue. Lately, the Insurance Board is under scrutiny for distributing, licence for the reinsurance company and also micro-insurance company, though it has directed insurance companies to go for merger claiming that the number of insurers have increased compared to the market size. The inconsistent licence policy by the regulator has been promoted by the political parties and the government, as they have been blamed for taking bribes for licence.

The Nepal Rastra Bank (NRB) governor Maha Prasad Adhikari, on the occasion, said nothing about the licencing policy and claimed that the lonable fund crisis can be corrected only with an improvement in the country’s balance of payments (BoP) position. “The government’s increased expenses on a periodic basis will help BoP position to be positive,” he said, adding that the lonable fund crisis will continue to persist in the banking system. “The bank deposit has increased by Rs 167 billion during a month between mid-June and mid-July, due to increased government expenditure and inflow of remittance and tourist arrivals.”

Without blaming the central bank governor, as he used to do earlier, finance minister Janardan Sharma also claimed that the economy is gradually returning to normalcy due to the timely caution maintained by the government. “The increased remittance inflow due to nearing festival season, is also helping the economy to remain afloat.”

He also argued that the increase in remittance would help foreign currency reserves go up. “The finance ministry has already instructed all the concerned ministries to make this fiscal year's budget expenditure effective,” he claimed but failing to understand that the Finance Ministry only helps mobilise the revenue, its on the five ministries, related to the development works, to spend the budget. In the last fiscal year also, Sharma claimed to spend 10 per cent budget every month, but at the end of the fiscal year, the government failed to expedite the capital expenditure. His Finance Ministry, also failed to meet the revenue target for the fiscal year.