Cooperatives in hot water due to excessive investment in land

Lately, the cooperatives, one after another, are into financial crisis, due to their excessive investment in real estate, automobiles and other unproductive businesses, according to a high level official at the Department of Cooperatives, that is responsible for regulation of cooperatives confessed.

According to registrar at the Department of Cooperatives (DoC) Rudra Prasad Pandit, many cooperatives that had invested in unproductive businesses have been struggling to recover their loan.

He, however, neither took any responsibility nor explained, why his department failed to crack whip on those cooperatives, which have bad governance and also irresponsible lending to the real estate, especially on land ballooning the land price.

"Increasing cases of bad debt of the cooperatives is the main reason behind their financial problems,” he said, addressing a programme organised by the Cooperative Journalists Society Nepal (CJN), here today.

Most of the cooperatives have been facing liquidity crunch, and have been unable to return the money deposited by their members, as they have invested on the most unproductive sector, land. Some of the cooperatives have fled as they failed to return the money deposited by their members.

Pandit also attributed the problems faced by the cooperatives to the exorbitant interest rates. Lately, the commercial banks are offering 7 per cent to 8 per cent to depositors and they are most secured for depositors. But the cooperatives have been offering upto 20 per cent interest rate, which is unlikely to be paid back in the current market scenario.

Government to bring new guidelines for market monitoring

The Department of Commerce and Supply Management is planning to enforce a code of conduct for market inspectors due to increasing complaints that market inspection teams are guided by vested interests.
The new code of conduct will set standards while carrying out market monitoring activities, according to the department that is planning to enforce the code of conduct to make the inspection team members follow certain norms while visiting the market for monitoring. “The code of conduct will also maintain the standards for formation of monitoring teams by including media persons and consumer right activists in the teams,” the department informed.
The government teams – most of the time – adopt ad hoc measures to carry out market monitoring.
The Commission for the Investigation of Abuse of Authority (CIAA) had – sometimes ago – grilled an official of the department for taking bribe to let go the unscrupulous trader. Apart from government officials, consumer right activists – who join market inspection team – were also found defrauding traders in a number of cases.
The department is also drafting a separate guideline to streamline the supply chain of essential goods. Realising that a large number of layers in supply chain was one of the reasons behind exorbitant rise in market price, the department has stepped up to set standard for the market channel.
“Price of many products, especially agri products, go up due to presence of many market players including middlemen,” the department said, adding that the middlemen are exploiting both the farmers and general consumers. “On one hand, producers get low price for their products, and on the other consumers are compelled to pay high price while middlemen pocket a lion's share of the profit.”
The department will finalise drafts of both the standards to the Ministry of Industry, Commerce and Supplies for final approval.

India to allow Nepal to use three inland waterways

Nepal is likely to get access to more ports of India for overseas trade as India may allow Nepal to use inland waterways in three routes and movement of bulk cargos via railway from Indian seaports to major Nepal-India border points.
“India has expressed its consent during Nepal-India Transit Treaty Review meeting that kicked off in Kathmandu today,” according to a press note from Ministry of Industry, Commerce and Supplies.
The government teams from both the countries discussed various issues relating to simplifying Nepal’s transit routes via India. The bilateral meeting will conclude on Wednesday.
Nepal has been seeking to use three inland waterways – Kolkata-Kalughat-Raxaul, Kolkata-Sahebgunj-Biratnagar, and Kolkata-Varanasi-Raxaul routes – on Ganges River expanding its transit options to the sea.
During the talks in New Delhi last October, the Indian side had agreed on principle to allow Nepal to use these inland waterways. India has developed a waterway on the Ganges River connecting Varanasi and the seaport of Haldiya in Kolkata. Access to the Indian waterways is expected to facilitate efficient movement of cargo imported from third countries to Nepal.
According to the joint secretary of Ministry of Industry, Commerce and Supplies Nabaraj Dhakal, India is also positive toward facilitating railway-based transportation of bulk cargo from Kolkata and Vishakhapatnam seaports of India to Jogwani and Nautanwa, Sunauli, at the Nepal-India border. “Bulk cargo includes fertilizers, sugar, soybean, salt, animal feed and raw plastic materials among others,” he said, adding that the bulk cargo items currently brought from third countries via Kolkata, Haldiya and Vishakhapatnam ports are imported to Nepal only through Birgunj border point. “Nepal at present has been using West Bengal’s Kolkata and Haldiya ports as well as Visakhapatnam Port of Andhra Pradesh.”
Dhakal is leading the Nepali team whereas joint secretary of the Department of Commerce at the Indian Ministry of Commerce and Industry Bhupinder Singh Bhalla is leading the Indian delegation.
The two countries might ink the deal tomorrow, if everything goes smoothly.
According to former joint secretary at the Ministry of Industry, Commerce and Supplies Ravi Shankar Sainju, the use of additional ports will facilitate Nepal’s overseas trade. “Dhamra Port of Orissa can be an alternative to the infrastructural hurdles at Kolkata Port and the long distance to Visakhapatnam Port,” the government officials opined, adding that Dhamra Port is 1806-km from Nepal’s Krishnanagar. “This new port is 400-km near than Visakhapatnam Port and 300-km near than Kolkata.”
Dhamra Port, which is operated by private sector, provides modern facilities and can accommodate up to 25,000 metric tonnes of goods.
Traders believe this port would be useful for the bulk of Nepal-bound goods from third countries. According to traders, Nepali importers can benefit from Mundra Port of Gujrat as well since it is connected to railway network right up to Krishnanagar.
They have long been demanding to allow diversifying the bulk cargo transport as it often takes more than a month for bulk cargos to reach Birgunj due to various hassles. Citing a lack of railway infrastructure, India had been saying that it was difficult to provide bulk cargo facility at other border points.
In 2012, the Nepal-India Inter-government Committee had agreed to expand the bulk cargo facility to Biratnagar and Bhairahawa border points. The agreement, however, was not implemented as the letter of exchange was not issued.