Government to focus on creating jobs

The government has claimed that no Nepali youths will be flying abroad for employment in next five years.
Presenting the government’s policy and programmes for next fiscal year today, President Bidhya Devi Bhandari also claimed – in the the joint meeting of both the houses – that by 2023 the average earnings of Nepalis will be doubled.
Nepal needs to create some 240,000 new jobs every year, a recent report from the World Bank read, meaning the government has to create some 658 new jobs everyday to retain the youths within the country.
President Bhandari also announced a new programme, 'the Prime Minister’s Employment Programme', to achieve the employment target. However, Prime Minister’s Employment Programme could meet the same fate as the Youth Employment Fund that was set up during the tenure of the then finance minister Dr Baburam Bhattarai. It has failed due to politicisation.
Though, the almost two-third majority left government's policy seems encouraging it has not presented any programme on how to create employment in the country. The 'highly ambitious' target has also claimed to double the per capita income in the next five years, though the policy and programme is brought for a year. Currently, per capita income of the Nepalis stands at $1,004. Though, current trend shows that it took nine years to double the per capita income to $1004, it is possible to double the income in five years, if the annual growth is recorded in an average of 15 per cent. "If the inflation remains same, the government could double the income in five year with an annual growth of 15 per cent," said economist Bishwo Poudel. "However, the government needs to spend $10 billion to $15 billion to achieve 15 per cent growth every year," he said, asking the government on how to manage such huge budget and how does it tame the inflation at the time when the price of petroleum products has been regularly increasing. The incumbent government has increased the price of petroleum products for the fourth time, since it took to power three months ago.
Likewise, the government has also claimed to make the country prosperous and developed nation within a decade.
However, former finance minister Dr Ram Sharan Mahat said that there are hardly any new programmes and projects to translate those targeted figures into reality. "It is the repetition of past programmes,” he said.

CNI calls for industry-friendly budget, country needs Rs 75,000 billion to achieve $3,000 per capita

The country needs an investment of Rs 75,000 billion to achieve $3,000 per capita income, according to the private sector.
The country must set a target of achieving $3,000 per capita income in a decade, said vice president of Confederation of Nepalese Industries (CNI) Hari Bhakta Sharma, in a pre-budget interaction, organised by CNI, here, today.
“The government should bring a 'Vision-2080' with strategic planning to achieve the goal,” he said, adding that it should also encourage domestic industries to 'produce more' of what they can to substitute imports and promote exports. "The government should immediately bring long due laws related to the industrial sector to facilitate industries and create investment-friendly environment."
The government will bring the laws that are ready through ordinance, assured finance minister Shankar Koirala, addressing the private sector leaders.
The government will also concentrate its development expenditure, in the budget for next fiscal year 2013-14, in capital formation, he said, adding that the government will focus on development, besides prioritising energy, connectivity like roads and railways, tourism, and commercialisation of agriculture as the incumbent government is an apolitical one. "The government will promote liberal market economic policy — with a vital role for the private sector — through the budget."
It will bring a private sector-friendly fiscal policy that can boost investment and create employment, Koirala added.
Similarly, president emeritus of CNI Binod Chaudhary, on the occasion, asked the government to take a bold step to revive the economy. "Since the last six years the economy has taken a back seat," he said, adding that remittance-fuelled import that has boosted revenue has made successive governments complacent, pushing the country towards a remittance trap. "There is no investment as there was no pressure on the government to generate employment."
Revenue mobilisation cannot be a measuring rod for any government's success as was established by then finance minister Dr Baburam Bhattarai in 2008-09, Chaudhary, the first Nepali billionaire listed by Forbes magazine, added.
Delayed budget, failure in development budget spending, weak law and order situation and political parties' apathy towards economy has hit growth, though it has a huge potential in the country, said CNI president Narendra Kumar Basnyat.

'Outlaw donation'
KATHMANDU: The private sector has asked the finance minister to either outlaw donation or let them write it in their books. “It's high time, the government brought a policy on donation,” they said, adding that donation is one of the key factors that has been discouraging the private sector. As the election for the Constituent Assembly (CA) has been declared for November 19, the private sector is terrified of forceful donations by political parties, as in the past.

No change in VAT regime
KATHMANDU: Replying to the private sector’s demand for multiple value added tax (VAT) rates, the Finance Minister Shankar Prasad Koirala on Wednesday said that the government is not changing the current VAT threshold. “The government is not in a position to make changes in the VAT regime,” he added. The existing threshold for VAT registration is Rs 2 million and the business entities having transaction over the ceiling must pay 13 per cent VAT.

Economic growth squeezes to six year low, pegged to grow at 3.56 per cent

Delayed budget and poor agriculture performance coupled with slowdown in construction have squeezed the economic growth to six year low and pegged to grow at 3.56 per cent at basic price for the current fiscal year 2012-13 against the last fiscal year's growth of 4.48 per cent, according to primary estimation.
Apart from poor agriculture production, delayed budget that has curtailed public spending in key areas like health, education and social sector, failed to create demand, reducing the growth rate, according to the Central Bureau of Statistics' (CBS) projection.
The plunge in growth rate of agriculture — the key contributor to the gross domestic production (GDP) — has pulled the overall economic growth rate down to the six year low, the data revealed, adding that the agriculture is expected to grow by a mere 1.21 per cent in the current fiscal year against last fiscal year's 4.94 per cent growth.
The low production of key crops like paddy, maize and wheat due to delayed monsoon and lack of fertiliser on time have hit the agriculture output, according to the director general of CBS Uttam Narayan Malla.
However, the non-agriculture sector is expected to record a marginal growth compared to last fiscal year. "In the current fiscal year, the non-agriculture sector is expected to grow by 4.98 per cent compared to 4.15 per cent in the last fiscal year," he added.
Agriculture and non-agriculture growth both is not satisfactory, said deputy director general of the CBS Suman Aryal. "However, consumption-led imports have pushed the wholesale and retail trade up which is expected to grow by 9.54 per cent, the highest among all the sectors of the GDP," he said, adding that the manufacturing sector has, however, performed poorly as always.
"Manufacturing sector is expected to grow by a meager 1.85 per cent in the current fiscal year compared to 3.63 per cent a fiscal year ago," Aryal added.
Likewise, among the components of the GDP, eight components have performed poorly, while remaining seven including mining and quarrying, construction, wholesale and retail trade, hotels and restaurants, transport, storage and communications, financial intermediation and other community, social and personal services activities are expected to post growth in the current fiscal year compared to last fiscal year.
Similarly, the consumption has eaten up the national savings. "The national savings is expected to be at 9.34 per cent of the total GDP, which is not encouraging," Aryal said, adding that the low savings will create resource gap. "Likewise, the consumption is projected at 90.66 per cent at Rs 1,542.33 billion of the total GDP."
The CBS has also estimated that the country's GDP in monetary terms stands at Rs 1,701.19 billion and the economy could witness Rs 642.91 billion capital formations, whereas a total of Rs 484.05 billion is projected as trade deficit of goods and services in the current fiscal year 2012-13.

Per Capita income up
KATHMANDU: A Nepali earns Rs 62,510 an average per year, according to the CBS estimation for the current fiscal year. "The per capita GDP has increased to Rs 62,510 at current price in the current fiscal year 2012-13," it said, adding that it is a growth of 9.28 per cent from last fiscal year's Rs 57,202. Per capita GDP is an average income per person per year within the internal sources. However, including the external resources like remittance, the income increases to Rs 80,685, which is an increment by 9.78 per cent from last fiscal year's per capita GNDI of Rs 73,497. Gross National Disposable Income (GNDI) is wealth generated by nationals plus net external income sources from out of the country.

 

GDP Growth
2006-07 — 2.75 per cent
2007-08 — 5.80 per cent
2008-09 — 3.90 per cent
2009-10 — 4.26 per cent
2010-11 — 3.85 per cent
2011-12 — 4.48 per cent
2012-13 — 3.56 per cent
(Source: Central Bureau of Statistics)

Structure of GDP
Service sector — 50.33 per cent
Primary sector — 35.32 per cent
Secondary sector — 14.35 per cent
(Source: Central Bureau of Statistics)

Performers
1. Mining and quarrying,
2. Construction,
3. Wholesale and retail trade,
4. Hotels and restaurants,
5. Transport, storage and communications,
6. Financial intermediation,
7. Other community, social and personal services activities,
(Compared to last fiscal year 2011-12)

Non- performers
1. Agriculture and Forestry,
2. Fishing,
3. Manufacturing,
4. Electricity, gas and water,
5. Real estate, renting and business activities,
6. Public administration and defence,
7. Education,
8. Health and social work,
(Compared to last fiscal year 2011-12)

Economy sees highest growth after CA election

The country will witness the highest growth rate in the current fiscal year after the Constituent Assembly (CA) election in 2006.
Due to good harvest, the agriculture sector will grow by 4.93 per cent and the non-agriculture sector will see 4.27 per cent growth pushing the gross domestic product (GDP) growth rate to 4.56 per cent at basic price in the current fiscal year, according to the preliminary estimation of the Central Bureau of Statistics (CBS). But the government had projected a 5.5 per cent growth in its fiscal policy and revised it in the mid-term evaluation to five per cent.
According to the revised estimation of the last fiscal year, the country had witnessed a 3.81 per cent growth from a preliminary estimation of 3.47 per cent, whereas the country had witnessed a growth of 4.26 per cent in the fiscal year 2009-10.
Except for the construction sector that has seen a slump since the last one year, all the other sectors have witnessed growth without much contribution from the government or any positive policy intervention.
The construction sector which witnessed a growth of 4.79 per cent in the last fiscal year, will see a negative growth of 0.07 per cent this fiscal year, according to the estimation that has also revealed the slower growth rate of manufacturing at 1.28 per cent against the 2.29 per cent growth of last fiscal year.
Though the contribution of agriculture and forestry to the GDP is still the highest at 34.78 per cent, it has decreased from last fiscal year's 36.54 per cent. The second largest contributor to the GDP is wholesale and retail trade with 14.24 per cent followed by transport, storage and communications with 8.33 per cent and real estate, renting and business activities with 8.17 per cent.
Similarly, the size of the economy has also increased to Rs 1.55 trillion in the current fiscal year from last fiscal year's Rs 1.36 trillion, according to director general of CBS Uttam Narayan Malla. "The gross national disposal income will touch Rs 1.97 trillion thanks to remittance inflow," he said, adding that the country will have a gross national savings of Rs 571.08 billion.
Thanks to the current account surplus, the gross national savings will stand at 36.65 per cent of the gross domestic product. Similarly, per capita GDP has also increased to $735 from last fiscal year's $731.

GDP growth

2005-06 — 3.73 per cent

2006-07 — 2.75 per cent

2007-08 — 5.80 per cent

2008-09 — 3.90 per cent

2009-10 — 4.26 per cent

2010-11 — 3.81 per cent

2011-12 — 4.56 per cent

(Source : Central Bureau of Statistics)

GDP per capita

2005-06 — $350

2006-07 — $410

2007-08 — $491

2008-09 — $497

2009-10 — $610

2010-11 — $712

2011-12 — $735

(Source : Central Bureau of Statistics)

Structure of Production (2011-12)

Primary sector — 35.68 per cent

Secondary sector — 14.02 per cent

Tertiary sector — 50.31 per cent

(Source : Central Bureau of Statistics)

Composition of GDP

Classification — 2010-11 — 2011-12

Agriculture — 36.54 — 34.78

Wholesale and Retail trade — 14.16 — 14.24

Transport, storage and communication — 7.97 — 8.33

Real estate, renting and business activities — 8.24 — 8.17

Construction — 6.93 — 6.73

Manufacturing — 6.17 — 6.17

Education — 4.86 — 5.50

Financial Intermediation — 4.30 — 4.66

Other community, social and personal service activities — 3.83 — 3.96

Public administration and defence — 1.93 — 2.12

Hotels and restaurents — 1.70 — 1.78

Health and social work — 1.28 — 1.55

Electricity gas and water — 1.19 — 1.13

Mining and quarrying — 0.54 — 0.56

Fishing — 0.35 — 0.34

(Figures in per cent. Source: Central Bureau of Statistics)

PM vows to generate jobs, plans to increase per capita income to atleast $3,000

Prime Minister Dr Baburam Bhattarai claimed that his government is working with an aim to generate huge job opportunity to increase Nepal's per capita income to atleast $3,000.
"The government is planning to invest 45 per cent of the total gross domestic product (GDP) to create 400,000 to 500,000 jobs every year in the country," he said, inaugurating the fifth Non-Nepalese Residents Association (NRNA) global conference here in the Valley today.
Dr Bhattarai also sought the NRNs help in bringing investments to Nepal as the country is observing the year 2012 as Nepal Investment Year. "The government is willing to utilise NRNs global network for the development of Nepal as they have experience, skill and capital, which the country needs," he said, adding that the government has formed Nepal Investment Year 2012 national steering committee that will also include NRNs.
Socio-economic disparity is the mother of all conflicts, he said, adding, "thus our priority is economic revolution after the conclusion of peace process and constitution drafting."Deferring to the public perception that there is no domestic market, the fifth Prime Minister after the country is declared Republic said, Nepal with its 26.6 million population is a huge market compared to other markets. "If we add our southern and northern market too, it will be the 37 per cent of the total global market," he said, urging the NRNs to take advantage of it by investing in hydropower, tourism, infrastructure, and commercial agriculture in Nepal. "NRNs should invest in Nepal themselves and also help bring foreign Direct Investment (FDI) as they are also the ambassadors of Nepal.
"He also committed to create investment-friendly environment. "Government is committed to provide legal and administrative teeth for the NRNs to invest in the country," vowed the Prime Minister, who represents the UCPN-Maoist that has a militant trade union, which time and again, creates industrial unrest.
"The government has already passed Investment Board Act to facilitate the huge investment above Rs 25 billion through single window," informed Finance Minister Barsha Man Pun, chairing the session, 'Mobilising NRN Collective Investment for Development of Nepal'.
Appealing the NRNs to invest in Nepal, he informed that the government will not ask for the source of income, if the investors invest in five priority sectors including huge infrastructure like tunnel highway.
Pun, a former UCPN-Maoist People's Army vice commander, also asked the NRNs to invest in sick public enterprises like Hetauda Textile. "The government is ready to discuss the forms of partnership, if the NRNs are willing to run the sick public enterprises," he said, adding that mere promises from the government and NRNs — both — will take the country to nowhere. He suggest the NRNs to translate their earlier promises into reality and the government will also evaluate its weaknesses.
"It’s high time, we walk the talk," agreed the patron of NRNA Bhim Udas, presenting his paper in the session. He also shared some investment modalities with the NRNs.Since its establishment in 2003, the NRNA has been promising of huge investment but except some projects worth around Rs 450 million in the last eight years, they have no visible and transparent investment in the country.
Every two year, they meet in Kathmandu ritually and hold discussions on how to contribute towards the mother land — in their own words — but except for some individual NRNs, the association's involvement in development of the country is negligible.