Nepal's economy is currently in a critical juncture. From the outside, the market seems to be buoyant, remittances are flowing into banks, new vehicles are being added to the roads, and consumption in cities is increasing. However, data shows that the foundation of the economy is weakening internally.

The annual statistics of the Customs Department for the fiscal year 2081/82 have asked Nepal an uncomfortable question - what does the country produce?

Because in a year, Nepal imported goods worth more than 180.4 billion rupees, while exports were limited to a total of 277 billion rupees. In other words, the country is facing a trade deficit of more than 150.27 billion rupees annually. This deficit is not just an economic indicator, but a direct result of Nepal's weak production capacity, the failure of the agricultural system, the slow pace of industrialization, and an import-oriented lifestyle.

If Nepal's economy is to be sustainably saved, the main focus must now be on production.  Nepal is still called an agricultural country. However, looking at the reality of the market, the country is not self-sufficient in agriculture, but dependent on imports. In the fiscal year 2081/82 alone, Nepal imported 60.78 billion rupees worth of grains, 37.73 billion rupees worth of vegetables, 25.87 billion rupees worth of fruits, and billions of rupees worth of oil-based raw materials. Nepal is dependent on foreign markets for daily necessities like rice, corn, onions, potatoes, and apples.

Only 10.55 billion rupees have been spent on apple imports, while corn imports have exceeded 18 billion rupees. The situation is similar for onions and other vegetables. The fields in the villages are barren, the youth are abroad, but the markets in the cities are full of foreign foodstuffs and consumer goods. This is the real picture of Nepal's agricultural crisis.

Nepal's largest import is petroleum products. In the fiscal year 2081/82, diesel imports alone cost Rs 128 billion, while petrol, LP gas and aviation fuel added to the total expenditure on petroleum products have reached over Rs 326 billion. After that, crude soybean oil, iron, steel, mobile phones, vehicles and electronics are at the top of the import list.

Nepal is currently consuming more than it produces. It is spending more than it earns. And, that expenditure is being met by remittances from abroad. Nepal's trade deficit is currently being met by money sent by workers from abroad. However, this structure is not sustainable in the long term. Millions of young people are going abroad every year. The labor force is decreasing in villages. Agricultural production is decreasing. The money coming from abroad is being spent on buying imported goods again. This is pushing the economy towards consumption, not production.

If Nepal's economy is to be saved sustainably, the main focus should now be on production. A national campaign is needed in areas such as self-sufficiency in rice and maize, expansion of mustard, soybean and sunflower cultivation, increase in potato, onion and vegetable production, dairy industry, animal feed industry, oil industry, herbal processing and ‘branded’ exports of tea, coffee and cardamom.

Nepal is currently importing crude soybean oil from Argentina and Brazil and re-exporting it after normal processing. This is only adding limited value. If this raw material can be produced in Nepal, foreign exchange will be saved, farmers’ income will increase, necessary raw materials will be available to the industry and employment will be created within the country.

Another major weakness of Nepal is the weak relationship between agriculture and industry. Farmers produce, but do not find markets. Industry needs raw materials, but they bring them from abroad. If farmers, cooperatives, collection centers, processing industries and markets can be linked into a single supply chain, Nepal can replace imports to a large extent.