A thriving informal economy

A study conducted by Tribhuvan University claims that 43 percent of business is informal

Baishak 30, 2082

Raju Chaudhary

A thriving informal economy

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On Chait 24, 2076, the government imposed a complete ban on the import of Chokada. On Chait 9, 2077, a quantitative limit of 5,000 tons was imposed for the financial year 2077/78. From the next fiscal year onwards, small import ban is taking place. But in the meantime, Chokada is entering through the customs point without interruption. Since the complete ban in 2078/79, around 80 million rupees worth of money has been brought in. In the first 9 months of the current financial year, about 300,000 kg of chokada worth 37.4 million have been received, according to the data of the customs department.

According to Kumar Dahal, Director General of Commercial Supplies and Consumer Protection Department, the illegal trade of Indian Gutkha has flourished due to the open border between Nepal and India. Rajnigandha illegally enters the valley by defrauding the revenue. Rajnigandha, which has an annual market of about 10 billion, only about 3 billion rupees is brought in through the legal route. Dahal claims that illegal imports equal to the remaining 7 billion rupees filled the market. 

Although the production of betel nuts in the country is sufficient, the government has allowed 12 industries to import about 11,500 tons to encourage illegal exports. The government, which canceled the import quota since last February, has allowed the import of betel nuts worth 1.66 billion rupees in 6 months. According to government data, 14,500 tons of betel nuts are produced annually in the country. Stakeholders say that it can meet the demands of industrialists. But in the interest of industrialists, the Ministry of Industry, Commerce and Supply has canceled the import quota and allowed the import of betel nuts. Most of the gutkha industries are in border areas. He keeps some amount of imported betel nuts in the country and sends the rest to India.

2077 In the second week of Chait, the then Prime Minister KP Sharma Oli and the then Agriculture and Livestock Development Minister Padma Aryal announced that the country has become self-sufficient in dairy products (powdered milk and butter). However, after four years of the announcement, the import of dairy products has not stopped. Due to open borders, a lot of dairy products are being imported illegally. Banned dairy products are found everywhere. The Ministry of Agriculture sent a letter to the Department of Food Technology and Quality Control on February 3, 2080 and asked them not to issue import permits. Despite claims that the food industry has not issued an import permit, dairy products worth crores of rupees have been legally imported. According to the customs department, dairy products worth 505 million 7000 were imported in the financial year 2080/81. Illegal imports have not been stopped either.

According to the customs department's import data for the past 5 years, garlic worth 1.15 billion rupees is being imported on an annual average. But from last July to March, 6 billion 40 million were imported from China and 50 million from India. Businessmen say that illegally imported garlic is smuggled to China through Nepal. The customs department claims that it is conducting a detailed study on the reason for the increase in imports. 

The examples mentioned are only representative events. The thing that the government has banned is being brought in openly. Due to the open border, various goods are being imported illegally as well. There is no accounting of what items have been imported and how much. The government official says, "Illegal trade has increased from 40 percent to 43 percent."

But the government does not seem to pay attention to control. On the one hand, the government has banned some items. But despite the notification being issued by the government agency, imports have continued," said Kumar Dahal, director general of the Department of Commerce, Supply and Consumer Protection. "Even with open borders, the informal market has increased a lot. 40 percent of business has been through informal means.' 

An example of illegal trade is Rajnigandha. Due to the open border area, the illegal trade of Indian Gutkha has flourished. The annual turnover of Rajnigandha in Nepal is 10 billion. But only about 3 billion has come legally," Dahal said, "There are many such items." Economist Keshav Acharya said that 40 percent of the entire economy is being informally traded due to the weakness of the administration's monitoring. He believes that the informal market accounts for about 20 percent of the gross domestic product (GDP) excluding agricultural products. The government has banned the import of 10 luxury goods because of the decrease in foreign exchange reserves due to Covid. But there was never a shortage of those items in the market. Because the illegal import was keeping rice,' said economist Acharya, 'the government only lost revenue by banning it.' 

A thriving informal economy

The government had decided not to import Kurkure, Kuramure, lage and similar products, all types of prepared liquor, cigarettes and tobacco products (except raw materials). Imports of diamonds (except industrial raw materials), mobile sets, color televisions (above 32 inches), jeeps, cars and vans, motorcycles with a capacity of more than 250 cc, all kinds of toys and toys were banned. He claims that the items other than vehicles were brought in unofficially. 

Trade expert Ravi Sainju said that illegal trade between Nepal and India is increasing due to the open border. In 2010, the Indian side pointed out that there was about 40 percent of informal trade, but now it has increased, he said. "Even though some paper procedures are complicated, the illegal economy has flourished," he said. To control the illegal market, it is necessary to facilitate trade by adjusting customs rates.' 

Sainju believes that in some cases, the government has opened the way for smuggling. He claims that the government has made a way to smuggle betel nuts and garlic. He said that the import of betel nut was opened for smuggling, even though it is produced in the country. "Recently, Nepal has become a 'transit' for garlic smuggling," he said.  Experts say that the

economy has not led to fair competition in the market. This has harmed the government as well as the common people. But there has been no effort to stop it. Although the government issued the Competition Promotion and Market Protection Act in 2063 to clean the market, it has not been fully implemented. After the law was made, the government also issued the Competition Promotion and Market Protection Regulations in 2066. But the purpose for which the Acts and Regulations were issued has not been implemented. Mahesh Bhattarai, director general of the customs department, said that the informal market has hit the revenue collection. In a study conducted by Tribhuvan University, it is mentioned that 43 percent of business is informal.

Raju

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