Dashain is the largest shopping season of the year in Nepal. People go on a shopping spree to buy almost everything, from food, clothes, and consumer durables to vehicles.
This is the time when people buy new pairs of clothes for themselves and their families. Many make early plans to buy a car or electronic items during Dashain as the companies and distributors launch Dashain and Tihar campaigns where buyers can win a lottery, gift, or discount.
Employees get a bonus of a month's salary, while Nepali migrant workers send money to their families back home so that the festival can be celebrated with good food, better clothes, and complete rituals.
But this year's Dashain has not brought happiness for the traders or consumers so far. Wholesale as well as retail stores at the major shopping destinations in the Kathmandu Valley such as New Road, Durbarmarga, New Baneshwor, Kumaripati, and Kupondole, and provincial centres like Pokhara, Biratnagar, and Butwal are still waiting for customers. Traders are worried that the footfall in their stores has not been encouraging so far.
Niraj Rai, Chairperson of the Nepal Chamber of Commerce (NCC) Commerce and Trade Facilitation Committee, estimates that trade and commercial activities will be down by about 40% compared to pre-pandemic Dashain shopping.
This is the festival that is celebrated by all classes and castes, and those who do not put tika on the 10th day of Dashain – known as Bijaya Dashami – use the occasion to shop, travel, and celebrate the vacation.
"People generally buy clothes and gadgets for the whole year during Dashain. But the stagnant remittance inflow and liquidity shortage in the financial system have greatly affected the shopping of clothes and electronic goods, "said Rai.
Meanwhile, traders are facing hard times due to the cash crunch. Local wholesalers and traders mostly use the money from cooperatives to buy goods in the domestic market since the process of obtaining loans from the banks and financial institutions (BFIs) is tiresome and highly complex, as they think.
They loan the money from the cooperatives at higher interest rates for a short term and repay it immediately after selling the goods. But the recent crisis in cooperatives, basically propelled by the liquidity crisis in the BFIs and the recession in real estate business due to the government moratorium on land division, has left them high and dry. Thus, the means for the traders to conduct their trade have dried up.
One trader in the New Road area committed suicide recently as he couldn't repay his load but the lending institution continued to pressurise him to pay it.
Money now has been stuck at the banks, and traders are not used to taking money from them. So, they haven't collected or imported new goods for this festive season, "so since the traders don't have new clothes, for example, customers have a feeling that if there aren't new items in the market, why shop this time?"
Obstruction At Chinese Border
Dashain in Nepal is heavily reliant on low- to medium-priced goods imported from China.But this year, China shut the borders with Nepal – in Rasuwagadhi in Rasuwa and Tatopani in Sindhupalchok district – in August and September, causing hundreds of trucks and containers to stop at the other side of the border point. This is the time when the goods should have been distributed to the retail markets across the country, but we have been just receiving the goods from China, Abinash Bohra, former President of Morang Merchant's Association (MMA), said.
The Chinese border was opened for full operation only after the visit of Li Zhanshu, Chairman of the Standing Committee of the National People’s Congress of China on September 11–14. Generally, it takes about a month for commercial items to reach the retail shops from the border point.
Another factor influencing consumer purchasing behaviour is the loss of purchasing power as goods prices rise in both the domestic and international markets.Inflation has gone up in an unprecedented way across the country. And the Russian invasion of Ukraine has made the market and exchange rates more uncertain.
A Shopping Time
Dashain as a shopping occasion has been impacted by the COVID-19 pandemic. The festival in 2020 was celebrated amidst the fear of viruses, and minimum celebrations were held as many people couldn't be united with their families as they stuck in the cities or foreign countries due to quarantine policies and lockdown policies, while many were apprehensive that they would take the virus to their family and villages.
That suppression, inculcated by the pandemic, burst out last year as people largely moved
out of cities and houses. As a result, hotels and guest houses were at full occupancy and people had to wait to get tables for dinner in the restaurants.
Meanwhile, the pandemic disturbed the global supply chain, and prices of goods and services shot up.
The prices of petroleum fuel, steel and electronic goods, and food items went up significantly and are expected to remain at the same level or go further up by 5-7 percent, according to market analysts. Exactly at the same time, in Nepal, development projects and private construction as well as industrial setup were expedited in the immediate aftermath of the COVID-19 pandemic.
Remittance inflows increased, land prices rose, the stock market soared, and demand for luxury goods increased at an unprecedented rate.It created an external pressure on the economy as it had to manage the foreign currency equivalent of about Rs. 1 trillion.
To save the domestic economy from derailing due to external pressure and a liquidity crunch, the central bank, Nepal Rastra Bank, and the government used measures to control the imports of luxury goods with a ban on some products and a provision to maintain cash margin on some others while opening a letter of credit (LC).
Slide In Purchasing Power
Bohra of the MMA said that this Dashain is not likely to bring much happiness for the business community or consumers. Most of the activities and entertainment are linked to the purchasing power of people, which has gone down in the wake of massive inflation, "he said.
Stating that the festival has been transformed into entertainment, travel, and shopping from the traditional way of accepting Tika and getting blessings, Bohra said that people have been pressured to cut down on the entertainment and shopping activities due to high inflation and cash crunch.
He also claimed that the tight banking credit line had deterred many traders from obtaining loans to import goods and conduct business."Even after all the complex processes, one doesn't get the money required to complete the transaction," he maintained. According to Bohra, this condition will have a negative impact on domestic production of goods and services, affecting business and revenue collection.
Poor Market Monitoring
While businesspeople blame inflation, import restrictions, and a liquidity crunch for the current crisis and consumers' lack of shopping activity, consumer rights activists say unethical business practises are to blame.
Consumer rights activist, Madhav Timalsina, said that businesses still want to charge a high margin price to consumers even during difficult times. "If they had applied ethical business practices, the prices wouldn't have gone that up," he said.
Rights activists also said that the poor monitoring of the market by the responsible government agencies had also caused this mayhem. The Department of Commerce, Supplies and Consumer Protection, the Department of Food Technology and Quality Control, and local governments have the liability of conducting market monitoring and controlling the price of goods.
According to Timalsina, it is sad that the government did not even care about the demand and supply of basic commodities during the festival season. "The price of meat and rice has already been hiked and consumers are worried. "There should be stronger coordination among the three levels of government to monitor the market," he said.
Published in The Rising Nepal daily on 30 September 2022.
No comments:
Post a Comment