On October 29, 1929, the US stock market plunged sharply. Wall Street nearly crashed. The impact fell on the entire American economy, including the financial system. Between 1929 and 1933, more than nine thousand American banks closed.

The country fell into a deep financial crisis. In the labor market, almost a quarter of workers became unemployed. Wages have dropped significantly. Production and trade declined by about 50 percent. In this harsh situation, in 1930, the US government implemented the 'Smoot Have Tariff Act' and increased the tariffs on an average of 40 to 60 percent on the import of about 900 items. But the situation worsened, the American Great Depression became more severe. 

At this time of the Great Depression, Franklin D. as the 32nd president. When Roosevelt came to power in America, he faced many such challenges. The program announced by Roosevelt during the first 100 days of his appointment to overcome the challenges seen in the economy is the 'First New Deal'. The New Deal program sought to provide immediate financial relief to the poor and unemployed, restore the economy to normalcy, and reform the financial system to prevent future recessions of this type.

 The first 'R' of this campaign named '3 R' had immediate relief (Relief), the second 'R' was economic reform (Reform) and the third 'R' had objectives such as restoration (Recovery). This plan proved to be so effective that finally its effect was to restore economic stability in the United States, reduce poverty by creating jobs, build public confidence in the ability to carry out large-scale projects by spending capital to solve the economic crisis, and lay the foundations of a modern social security system. Therefore, whoever is interested in directing the economy stuck in a deadlock situation, it is necessary to study Roosevelt's "New Deal" in depth. 

Also, the 'New Deal' is not without criticism and opposition. However, the criticism did not undermine the effectiveness and historical significance of the 'New Deal'. On the contrary, the New Deal has given a message that even if there are some disputes, it must be implemented when trying to implement economic reform programs with government intervention in the economy stuck in recession. 

As discussed above, under the relief program of the 'New Deal', unemployed youth were engaged in conservation of natural resources to create jobs for the unemployed and the poor. It is said that more than 3 million youths got employment under this program.

Similarly, large public works projects were decided and implemented to create jobs. Lakhs of people got employment in this program. The Hoover Dam was an ambitious New Deal-supported power generation and irrigation project that was completed in 1935, even though it began before the New Deal.

'Norris Dam' is a project to aid in power generation, flood control and irrigation. Enticing structures like 'Triboro Bridge, Red Rocks Amphitheater' are projects built from the dreams of the 'New Deal'. Similarly, emphasis was placed on rehabilitation of agriculture and industry under the recovery program.

A minimum wage rate is set to motivate workers, while a maximum wage limit is set. And, under the reform program, strict policy arrangements were implemented to improve the financial system and improve the social system. The 'Glass Steagall Act', which is still remembered by the financial system, was implemented in 1933.

After the implementation of this act, the bank's operations were divided into two parts, traditional commercial banking and investment banking. Commercial banking banks were prohibited from using customer deposits for risky investments. The Federal Deposit Insurance Corporation was established to insure customer deposits, which are of the highest importance in the financial system. Social Security Act was introduced to ensure the safety of senior citizens. Aging, unemployed and 

A social insurance program for the disabled was implemented. Ultimately, these programs brought stability to the banking and financial sector. This restored public confidence in the financial sector. Social security system started.

Nepal's current situation is not like the Great Depression of America. Technically, such a situation cannot even be called an economic recession. But if this situation continues, there is no doubt that the economy will go into economic recession. Generally, in an economic recession, the country's gross domestic product is negative for two consecutive months, significant unemployment increases, consumer spending and business investment decrease, and industrial production decreases simultaneously.

Therefore, the current situation in Nepal can be called 'economic slowdown' in technical terms. The main features of the economic slowdown are low but positive GDP growth (around 3-4 percent), some increase in unemployment, decline in consumer and business confidence, and weak overall demand. Various parties may be responsible for this.

As the economy of any nation is directly or indirectly connected with the outside world, factors such as shocks from the outside world, national or international policy changes or cyclical economic conditions of the economy remain responsible. But the good thing about us is that the external indicators of our economy are strong and good.

Since the beginning of the current financial year, the current account has been positive at a high rate, foreign exchange reserves have reached an all-time high, increasing remittance inflows and imports are at normal levels, so the current account balance is at a good level. 

If we talk about inflation, another important indicator of the economy, there is no need to panic. In the financial year 2080/081, the annual average inflation was 5.44 percent, while the annual point consumer inflation in the fourth month of the current financial year is around the same. Which is slightly higher than India's inflation rate for the same period. While these indicators are satisfactory, most of the internal indicators are not positive. More investable funds are accumulated in the bank.

The National Bank has to spend a lot of money to keep the interest rate of deposits of the financial system at a limit. While the base rate of banks and financial institutions remained around seven and a half percent, the interest rate of bank loans fell to single digits on average, but investment did not increase. Those starting new industries, businesses and investors have not been able to go to the bank with an effective plan.

Sometimes the private sector has lost confidence. As industries have to operate at one-third of their capacity, overall production has fallen and costs have risen, resulting in job losses. Finally, all these factors have had a negative impact on the government's revenue collection. Therefore, the current situation of Nepal can be called 'unbalanced economic structure'. Looking at this situation, it does not seem that there will be a way out by just 'retrofitting' the economy without making some structural changes in matters such as capital expenditure in the economy. 

Perhaps thinking about this issue, the Nepal government has formed a commission to submit a report with opinions for the improvement of the overall sector of the country's economy under the coordination of the former finance secretary and Rameshwar Khanal, with the participation of the private sector as well. Hopefully, the Khanal Commission will identify the bottlenecks of Nepal's economy and submit ruthless suggestions to overcome them, and those suggestions will prove to be the 'First New Deal' of the then American Roosevelt government.

A solution to the slow economy 

Capital expenditure is indispensable to break the slack in the economy. But the capital expenditure, which is done under the guise of good governance and transparency, makes the economy even worse. Therefore, the government must become ruthless in favor of good governance and transparency. Digitization should be promoted instead of manual system in government functioning to embody transparency. 

Investment in digital infrastructure (digital public infrastructure) is mandatory for building a digital economy. Studies have shown that there is a strong correlation between the use of digital technology and GDP. It is said that every 10 percent increase in digital infrastructure including the Internet brings economic growth of 1.3 percent. 

Our private sector accounts for more than two-thirds of the economy. Government spending needs to encourage the private sector. Although we do not have specific studies in this regard, in most developing countries the effect of government spending appears to be up to threefold. Government spending, particularly in the infrastructure sector, reinforces the cycle of private investment in construction, connectivity (including transport) and energy.

The private sector, whether domestic or foreign, must win the confidence of investors to attract investment. For that investors should have faith that the government will loosen the knot and do what it says when there is a problem. To keep this climate of trust alive, long-overdue government obligations must be settled.