Saturday, October 17, 2020

Corona bleeds festive economy red

 Due to shrinking income and decline in business – because of coronavirus spread – this Dashain is witnessing little or no economic activities.

The shops are open, but there are no buyers, as most of the people have either lost their jobs, or their income has been decreased, only to hit the festive expenses.  

The 10-day Dashain festival officially began from Saturday but with many businesses shattered as a result of months-long lockdown and prohibitory orders, income of a majority of the population has been decreased pressurising people psychologically and financially before the festivals. 

Once used to be vibrant with the beginning of the festival, the manufacturing, construction, hotel and restaurants, transportation, wholesale and retail sectors are hit hard due to Covid-19 pandemic.

According to the Central Bureau of Statistics (CBS), the nominal GDP of last fiscal year stands at Rs 3.8 trillion, of which 82 per cent was made in consumption that accounts for Rs 3 trillion. The monthly consumption of Nepalis stands at Rs 250 billion. The consumption rate increases from mid-July till mid-October with the beginning of the major festivals. Though the consumption has suppressed this year in those months, the wholesale and retail trade saw less demand bleeding the Dashain economy red. 

During the first four months of the fiscal year the consumption used to account for an amount equal to Rs 1,000 billion with the start of festivity which got declined this year. Some 40 per cent of annual consumption used to take place in these four months of festivals.

Due to falling income – people’s purchasing power – and also increasing inflation due to supply chain disruption because of pandemic affecting transportation, workers and labour rate, the aggregate demand has fallen down. The government has – through the budget for the current fiscal year – and also the central bank – through Monetary Policy for the current fiscal year – failed to create aggregate demand.

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