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Problem and diagnosis of current economy of Nepal

To save democracy, it is imperative to improve the economy. It is said that democracy works only in good conditions. If the current situation is improved, the way can be paved for the construction of a socialist-oriented national independent and self-sufficient economy while protecting the nation from the distortions of neo-liberal capitalism.
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The responsibility of starting a socialist-oriented self-reliant national economy by facilitating the development and expansion of the economy, which has been obstructed by the complications that have been stagnating since the past, has only been shifted to the shoulders of one government after another.

Problem and diagnosis of current economy of Nepal


along with wrong unstable and ineffective policy; Impractical and ambitious plans; Appeasement programs, corrupt, inefficient, inefficient and selfish administration; It is becoming more and more difficult to deal with the front line challenges of the collapsed development such as the short-sighted, will-less leadership and the complex geopolitical environment. On the other hand, the Nepalese economy, which is plagued by earthquakes, embargoes, covid and the Russia-Ukraine war, must be protected from the global economic crisis considered as permacrisis and polycrisis to solve the current problems of the economy. An obligation to perform primary work is additionally created.

The current economic problem has been described by some as going through a 'critical state'. In fact, not all indicators seem to confirm that the current economy is in crisis. Although the economic growth of Nepal could not go beyond the Hindu economic growth rate, positive economic growth has been maintained in other financial years except the year 2076/077 (0.1%) in the last decade . Even in recent years, two consecutive quarters of economic growth, which would technically indicate a recession, have been positive rather than negative.

The fact that foreign exchange reserves (14.14% billion dollars) can sustain imports for more than five months (12 months) is a positive situation. As a memorable example, the financial crisis of India in 1991 can be taken. In that case, India's reserves could sustain two weeks of imports. Inflation reached about 13%. Nepal's inflation reached a maximum of 7.5% in the last five years (2069/080) and is currently 4.825%. These important aspects confirm that Nepal's economy is not in crisis does .

However, the level of fiscal deficit (around 6%) of gross domestic product (3%) is always higher than the acceptable level (2%) and the domestic economy It is clear that the possibility of crisis does not disappear. On the other hand, the economy is based on the sensitive and volatile nature of the export sector (10.3%). Rejoicing that the nation's economy is strong on the basis of this, ignoring the internal 'paralysis' that the economy is facing, is considered to be playing havoc with the Nepali economy .

As a result of 7 lakh hard-working young people leaving for foreign jobs every year, huge amount of non-cultivated and cultivated land remains barren, but a huge amount of money (2070/080) is spent on food imports and construction works are often stopped due to lack of workers. . When the nation's debt reaches 41.5% of gross domestic product, it is clear that the internal economy of the nation is 'paralysed' due to spending in waste and unproductive sectors, national industries becoming sick due to lack of capital and markets, the spread of foreign brokers in the market, production and supply chain. It is equally important to free the entire economic system from the distortions of neoliberal capitalism. This long-term work has its own importance, but it is imperative to give priority to the current work.

The problem with the economy

The immediate problem with the economy is not just hyperinflation . If this is the case then according to the Philip curve (i.e. the negative relationship between inflation and unemployment) inflation should decrease (although there are limits) as unemployment increases. On the other hand, the National Bank has tried to reduce inflation by using money supply contraction tools and increasing interest rates. Technically, although the quarterly economic growth has been positive one after the other, the demand growth in the market has not been significant. Accumulation of deposits in the banking sector is increasing and interest is decreasing. But the demand for loans is very low. In short, the Nepalese economy is not only inflation, economic recession or decline, stagnation, stagflation. Also, theory and reality do not seem to match . It cannot be fully expected. Because economics is an "inexact" science. When all these environments are seen together, it is no exaggeration that today's problem is Varnashankar (hybrid) economic problem. That is, it is a stagflation recession with sufficient foreign reserves . Therefore, it seems imperative that the utilization of foreign reserves and the problem solving process of stagflation should be done simultaneously. If these problems are not solved in time, there is a possibility of economic and non-economic damage to the nation. To save democracy, it is imperative to improve the economy. It is said that democracy works only in good conditions. If the current situation is improved, the way can be paved for the construction of a socialist-oriented national independent and self-sufficient economy while protecting the nation from the distortions of neo-liberal capitalism.

solution

a. Stavilization and structural reform

While solving the problems of the national economy, the question of which to do stabilization and structural reform first comes up . Although it is often considered appropriate to take the step of stavization first, neighboring India did achieve structural reforms and achievements before achieving short-term stavization in the 1991 crisis . It is said, he took the right step at the right time but immediately in Nepal It seems that the stabilization process should be increased effectively by taking a small-scale approach . If it cannot be done rapidly, then something can be done on the basis of gradualism, but the method system must be followed.

b. Inflation control

According to the European Central Bank, economies work best when prices are stable. Therefore maintaining price stability should be the primary objective of the economy . According to the famous economist AH Hanson, inflation cannot be controlled only by the nation's monetary policy. Trying to do so is dangerous. On the other hand, India's 1% inflation increase adds 0.45 The study has shown that it has increased. Due to this, it is not easy to keep inflation in Nepal at an acceptable level (minimum 2%). It can be improved. An agile and easy supply system without influence from middlemen and essentials including food Production of commodities and goods should be at war level. In this environment, it seems that the Nepali economy should focus more on the supply side.

c. Job growth

To increase employment, a multi-faceted approach should be taken and strategies should be adopted accordingly. In this regard, the steps taken by Korea during the Asian financial crisis in 1997, Germany during the 2008 financial crisis, Singapore during the Covid 2019 and currently Rwanda and Bangladesh can be inspiring.

Nepal also invests in structural reforms, research and development, education and technology, credit support to small and medium industries, providing skills, abilities and business training to the youth, developing a system of job placement, increasing access to credit so as to increase employment for industrialists, Attracting internal and external investment to be of animal spirit level, to be achieved in one year in agriculture (the attraction is more if there is a possibility of quick production) to build and modernize infrastructure, to increase the level of export-oriented industries and construction professionals, to increase production and employment (of rentseekers) not of form) encouraging start-ups, providing material and financial support to entrepreneurs and youth Even if a joint strategy is implemented, the economy can gain momentum within a short period of time .

Since the increasing pressure of unemployment cannot be overcome, it can be considered reasonable to support foreign employment for a temporary period . But from a long-term perspective, the flow of young people abroad To keep drifting is to cause trouble in the future . Famous economist Nobel laureate Joseph Stiglas said that youth are the drivers of entrepreneurship and productivity. For them, investing in education, skills and opportunities is critical to long-term success.

The remittance received by the nation (12 billion 20 billion rupees in 2079/80 and 9 trillion 61 billion rupees in the last 8 months of July-February) should be considered as priceless wealth earned by the tears and sweat of Nepali people and should be utilized to the maximum extent for the benefit of the nation . Especially production and employment-oriented and projects that ensure profit to contributors should be carried out immediately and such a project is also possible from various perspectives .

The youth should be assured that they have a bright future in the nation. For example, good education and health should be guaranteed for the future children of the youth. When this happened, those who had to go abroad for the future of their future children would have stopped . On the other hand, the remittance received should be poured into investment for the prosperity of the nation, not the consumer. These steps must be taken together .

d. Production increase

Although various efforts have been made, the qualitative and quantitative production growth of the nation's industry and agriculture sector is extremely low than the requirement. For the all-round development of the country, it seems that a new strategy for the rapid development of these two sectors must be adopted . It is considered appropriate that the overall economy should move forward like two legs of one body. It seems appropriate to help both these sectors physically and financially on the basis of production and employment growth, import substitution, self-reliance and basic needs fulfillment . Measures such as significant relief in product input, elimination of brokerage, inclusive and easy access to universal credit, fast track permit process, assured and honest administration, and ease of credit for small farmers and small businessmen can be effective immediately. The longer it is delayed, the more the dependency will grow and is sure to be fatal .

However, in a short period of time, major development and expansion of industry and agriculture may be impossible. But a comprehensive and thorough accounting of needs and production (for example, analysis of input and output), utilization policy of wasted and unused resources, appropriate policy formulation and regulation, infrastructure construction, development of human resources and technology, and market access and investment attractiveness of products (especially If there is rapid development of factors such as free from hassles and disputes, easy access to land and energy, conservation and creation of conditions with abundant potential for profit, production can also increase rapidly . For this, relief should be given to production materials and raw materials. In addition to this, even if general incentives can be provided, the production of some organic products in Nepal may increase rapidly in one year and import substitution may increase . It may be possible immediately in the agricultural sector. By encouraging cooperatives, the production of paddy in fertile areas, vegetables in mufsal, potatoes, parsley, and local shrimps, chickens, and eggs can be accelerated . Which does not need to import fertilizers etc . Community forests and pastures can also supply them. Food inflation may also come down . In addition, beautification and increasing tourist facilities in some target areas and objects of the tourism sector together with the government and the private sector can increase the number and length of stay of foreign and domestic tourists.

e. Demand increase

In the current situation of Nepal, it seems appropriate to focus on physical infrastructure and job creation strategies such as financial stimulus due to the increase in inflation to increase demand . Under the monetary policy, it is appropriate to reduce the interest rate at a slow pace and under the financial policy to temporarily cut taxes for individuals and businessmen and to select appropriate sectors other than public essential goods services and employment and to reduce public expenditure in those sectors . It seems reasonable to increase spending in the areas of agricultural production, technology development, industrial goods production and productivity growth. Injecting money into areas like health, education, social security can also increase the demand in the economy . Basically, monetary and financial policy should be private sector and public friendly so that both are national interest .

conclusion

As was experienced a few years ago, credit should be encouraged more in the productive sector by discouraging credit investment in non-productive sectors and activities that increase the habit of credit. The statement of Raghuram Rajan, the Pre-Indian Bank of India, said that the loan was held and in the world, ", be optimistic;. The private sector must provide facilities and encouragement in the area where national products and productive growth is increased. The two weapons of the Kingdom should be used for two weapons financial and monetary policies of the state to save the economy and save when he is upright and redemption. In this process, there may be a bump between these two policies and nbsp;.

'Makes the tension between informed' and nbsp;. Can make that stress furious and nbsp;. Saveing ​​the economy and consolidation should be monk and consolidation must be reduced to the financial loss, current deficit deficit and debt. The ratio of a total of valuation of the loss reflects the capacity and possible risk of the government and nbsp;. That ratio should not move towards danger and saving with it and nbsp. Treatment of stagfallson resensions and the same time on the other hand, the current economy may solve the problem of the current economy. This is also easy to break capital and break the vicious facts of poverty and NBSP;. As a result, the way to the socialist oriented nation and self-reliant economy may be early, and Nbsp ;..


प्रकाशित : वैशाख ३१, २०८१ १५:०६
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