Nepal's political, social, and economic landscape has entered a new phase after the Gen-G movement. This movement brought youth awareness, dissatisfaction with political leadership, and demands for transparency and accountability to the center of the national debate. While this movement has shown some signs of change in the political system, its impact is emerging as a serious challenge to the economy, entrepreneurship, investment, and market stability.

Entrepreneurs are terrified by the attacks not only on their businesses but also on their homes. Economic slowdown, decline in revenue collection, uncertainty of foreign investment and liquidity problems in the banking sector have further weakened the morale of entrepreneurs.

The Gen-G movement intensified public dissatisfaction with the then government and gave rise to a new wave of political instability. Even after a long time since the formation of the current government, Gen-G has started expressing dissatisfaction saying that none of their demands have been met. That dissatisfaction has now reached the streets through social media.

A. Economic slowdown and uncertainty in the market

During political change, policy making slows down, budget implementation is delayed and the private sector cannot make long-term plans. These same problems recurred for some time after the Gen-G movement. Time had to be spent on government reorganization, reshuffling of officials and setting priorities, which added to uncertainty in the economic sector. Everyone remained in a state of panic, wait and see. There is no sale in the market, money is not being collected for goods sold on credit, shutters are not being rented and the rent of shutters is not being paid. Everyone from general consumers to small businessmen have been affected.

b. Decrease in investment climate

Both foreign and domestic investors consider political stability as the primary criterion. Similarly, businessmen, who have been harassed by the country's unstable tax policy and the policy that hurts businessmen after each change of government, are in a wait-and-see mode, especially after the situation after the movement. There are signs of a decrease in investment in the registration of new industries, construction, agriculture, tourism, and technology sectors. Investment institutions double their risk assessment after political changes and protests in any country, and the Nepalese economy has also suffered and is suffering a similar effect. The lack of improvement in Nepal's risk assessment has become the main reason for this. No miracle is going to happen immediately, and there is no possibility of investment inflows in this situation.

c. Decline in revenue collection

When economic activity decreases, business decreases, imports and exports weaken, and the government's revenue collection decreases. This situation has been seen in Nepal for a few months after the movement. The government's taxes have been raised less than the target. Since the government has not been able to make sufficient capital expenditure, it has also affected revenue. In the first four months of the current fiscal year, the federal government's capital expenditure is around 6 percent. The situation in the provinces is even more critical. Government spending and development projects have been further delayed as businesses that have to pay taxes on time have been affected. But in the fifth month of the fiscal year, imports and exports seem to have regained some momentum, which is positive.

d. Pressure and liquidity problems in the banking sector

Due to the excessive liquidity and strict credit expansion that has been ongoing since last year, medium and small entrepreneurs have been affected the most. As economic activity decreased further after the movement, banks tightened risk management, which had a negative impact on business expansion and job creation. Banks reduced interest rates, causing themselves to incur losses. Nepal Rastra Bank took some of the burden. But the inability to manage excessive liquidity does not seem to be a happy day for banks in the coming days. On the one hand, the increasing bad loan score and on the other hand, the lack of new investment areas have hit the banks hard.

Impact on the morale of entrepreneurs

Although the Gen-G movement is an important part of the national consciousness, it has brought some challenging situations for entrepreneurs. Businesses have been hit hard by the vandalism of homes and businesses of a select few, the cutting of electricity lines, and reduced government spending. Despite repeated requests from entrepreneurs to the government to take action against those involved in provocative activities in the name of the Gen-G movement, the government's indifference has angered businesses. Moreover, the behavior of the Securities and Exchange Board of Nepal (SEBON) has made it impossible to work, say businesspeople.

a. Uncertainty and fear of the future

Entrepreneurs look at business from a long-term perspective. Political chaos or possible policy changes after the movement affect their cost, risk, and return assessment. The fear of this is now visible to everyone. On the one hand, the risk of policy changes and on the other hand, the threat of vandalism, and in such a situation of fear, even the government is not on their side, so businesspeople have not even found a place to vent their grievances. There is no one to encourage them, and those who do encourage them can do nothing but watch the activities of the government and those involved in provocative activities.

b. Decline in business

Tourism, hotels, small businesses and retail businesses were the most affected due to shutdowns, protests and weak consumer psychology in the market. Moreover, due to repeated announcements of agitations and provocative statements by the leaders of major political parties, business is decreasing day by day. As the intensity and heat of the agitation have not subsided, there is no plan to increase business. Amidst the uncertainty of whether or not there will be elections, no one is daring to do new work. Since it is an electoral government, it also has no plan to spend enough in the season.

c. Difficulty in accessing finance

Increasing domestic expenditure and banks being forced to adopt stricter lending policies have reduced the confidence of entrepreneurs. Especially startups and new entrepreneurs started abandoning their plans due to lack of capital. They no longer have the option of going abroad. The more hardworking hands go abroad, the more economic activities shrink.

d. Decline in entrepreneurial spirit

Due to uncertainty within the country, many youth started giving priority to foreign employment or studies. Declining entrepreneurial enthusiasm is another major challenge to the country's long-term economic goals. It has started creating problems not only today but also for tomorrow. Now, except in limited places, there is no buying and selling of land in Nepal, because those who need real estate would go abroad in large numbers.

The path to boosting Nepal's economy

The Gen-G movement has forced the political leadership to understand the public sentiment of the youth. Now, the energy and consciousness of this movement need to be converted into positive economic reforms. There are some practical solutions for that. 

A. Immediate measures (0–6 months): If some decisions can be taken immediately, it will help boost everyone's morale. To reduce instability in this, it is necessary for the current government to commit to the continuation of yesterday's main policies. The economy cannot return to normal if an incident like revenge is repeated. A commitment not to make radical changes in tax, trade, investment, and banking policies for at least two years helps create an investment environment. It is necessary to take concrete steps to gradually make bank interest rates stable and predictable. Only by creating a separate procedure for managing non-performing loans can the balance sheets of banks and financial institutions be cleaned up. Steps should be taken to ensure ongoing credit for innovation and small and medium enterprises. 

In addition, the employment problem should be solved to some extent by providing immediate budget to the local level through micro-infrastructure projects and implementing the 'Youth Training-Employment Express Program'. This will help prevent youth who want to emigrate from the country. 

B. Medium-term reform measures (6-24 months): The concept of a production-based economy that we have discussed a lot but could not implement in practice now has to be implemented. The more we delay doing these things, the more we fall behind. 

1. Let us not delay in formulating development policies for modernization of agriculture, irrigation, storage, price protection, agri-processing industry, tax incentives for agro-based commodity production, textiles, footwear, medicines, fruit/vegetable processing, etc. 

2. Let us take necessary steps to revive the tourism industry that has been hit by the protests. Let us facilitate the creation of special packages in religious, adventure and medical tourism. 

3. The opportunities related to energy and hydro will remain for a few more years. For this, let us make arrangements to complete the under-construction hydropower projects on a 'fast track'. Let us make long-term agreements with neighboring countries to generate, buy and sell electricity. 

4. Let us make arrangements to reduce the cost of production by providing cheap energy to the domestic industry. Let us provide tax exemptions and cheap loans to fintech, e-payments, and startups for the development of the digital economy.

c. Long-term structural reform measures (2-10 years): Let us start some of the work today that we cannot do tomorrow but must do in the long term.

1. Let's encourage tech institutes to run classes in artificial intelligence (AI), robotics, and data science to transform education skills. Let's run technical education as a campaign. Let's run international-level educational programs to stop Nepali students from having to go abroad to study every year. Let's stop all kinds of politics in all educational institutions, including universities, and let everyone make a commitment to conduct studies and exams on time.