Wednesday, June 2, 2021

Size of economy Rs. 4.27 trillion, per capita GDP $1191

Kathmandu, May 28

The government has said that it is challenging to achieve the economic growth rate of 4.01 per cent in the current fiscal year 2020/21 as projected earlier due to the impact of the COVID-19 pandemic on the economy.

 However, it said the growth rate of around 4 per cent would be a significant achievement compared to the contraction of 2.12 per cent in the last fiscal 2019/20.

The country had witnessed the negative growth after about two decades. The damage inflicted to the economy by the pandemic was greater than the 2015 earthquake.

Although the major economic indicators are satisfactory this year, the massive reduction of economic activities in the last quarter of the fiscal is likely to have severe repercussion on the economy, said Finance Minister Bishnu Prasad Paudel while presenting the Economic Survey of FY 2020/21 at the Ministry of Finance on Friday.

He said that the hopeful growth scenario is presented expecting that the health crisis would be managed at the earliest and economic activities would resume but if the problem sustained, it would be challenging to achieve the target.

The Gross Domestic Product (GDP) is projected to reach Rs. 4.27 trillion on the basis of producer's price this year. According to the Survey, growth rate of all provinces would be higher than 3.5 per cent although slight contraction is expected due to the obstruction in the economic activities during the lockdown announced to control the expansion of the pandemic. Last year, except Sururpaschim all provinces had negative growth.

The culture to mobilise the development budget in the last quarter of the fiscal year had affected the growth last year while the lockdown this year was announced about five weeks later than that of the previous year.

The per capita GDP in current price is increased by 5.8 per cent to reach 1191 US Dollars while the net national disposable income has reached USD 1486 with 4.5 per cent increment.

 

Contribution of agriculture shrinks

According to the Survey, the contribution of agriculture sector is decreasing while the non-agriculture sector is increasing gradually. This year, agriculture contributed 25.8 per cent in economic value addition down from 26.2 per cent last year while non-agriculture sectors contributed 74.2 per cent up from 73.8 per cent in the last fiscal.

The growth rate of agriculture, manufacturing and service sector is projected to remain at 2.75 per cent, 4.93 per cent and 4.43 per cent respectively this year. Last year, agriculture was increased by 2.13 per cent while the manufacturing and service sectors were contracted by 3.76 and 3.97 per cent.

In FY 2020/21, contribution of agriculture, manufacturing and service sector to the growth rate is expected to be 20.2 per cent, 19.6 per cent and 60.2 per cent. Last year, the contribution was 30.7 per cent, 27.4 per cent and -103.2 per cent respectively.

Wholesale and retail trade and vehicle repair have surpassed agriculture and forestry in terms of contribution to the economic growth rate as the former has 20.17 per cent and the latter 20.15 per cent respectively. Likewise, construction contributed 9.81 per cent, transportation and storage 8.36 per cent and 8.24 per cent respectively.

 

COVID-19 continues to ravage economy

The Economic Survey has mentioned that the COVID-19 has affected all economic and social sectors. It has pointed towards the possibility of further contraction of the industrial and business activities.

It has noted that many development ministries and agencies couldn't mobilise their budget due to the pandemic which has affected employment generation. Likewise, obstruction in the transportation of construction materials has delayed the development projects like roads, bridges and canals. It affected the value addition in the respective sectors.

The pandemic has also disturbed the price chain of agricultural produces like food, vegetables and fruit, read the Survey.

 

Road infrastructure

By the end of the first eight months of the current fiscal year, the length of black topped road has reached 15,974 kilometre, graveled road 8,582 km and earthen road 8,972 km. In eight months period, the country has added about 286 km national road to the existing network. About 504 km road is upgraded to gravel. The country now has a road network of 63,577 km of which 24.7 per cent is in Bagmati Province and 5.1 per cent in Karnali.

Likewise, about 129 bridges were constructed in this fiscal against 210 last year.

According to the Survey, about 970 km of the Mid-Hill Highway is blacktopped and 84 bridges were completed out of 129. Postal Highway's progress is 658 km of the total 1,792 km. Similarly, Kaligandaki and Karnali corridors added 15 km blacktopped and 5.3 km track respectively.

Published in The Rising Nepal daily on 29 May 2021. 

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