Nepal gov't expects 2-pct economic growth this fiscal year

The Nepal government on Tuesday projected an economic growth of just 2 percent this 2015-16 fiscal year as obstruction of supplies has caused a serious contraction in economic activities.

Supply of fuel and essential goods has been severely cut down due to unrest in the southern plains for the past three months and an alleged Indian blockade on Nepal for the last two months.

Releasing a government White Paper on the economic situation, Nepalese Finance Minster Bishnu Poudel said the economic growth could come down further if the ongoing strike organized by Tarai-based parties and the obstruction of supplies prolonged.

Earlier, the Nepal Rastra Bank, the country's central bank, had projected that the economy to contract by 1 percent provided the impact of embargo prolonged until mid-January. Nepal's fiscal year ends in July.

As the ongoing crisis was affecting livelihood of the Nepalese people badly, Minister Poudel warned it could push more people under the poverty line after a deadly earthquake on April 25 was estimated to leave 700,000 in poverty.

"This has posed challenge to Nepal's plan to upgrade the country to a developing country by 2022 and a middle-income country by 2030," said the minister.

The government said the ongoing crisis has hit the agricultural, industrial and service sectors hard.

The growth of agriculture is expected to remain at just 1 percent due to the decline in production of paddy, maize and the shortage of chemical fertilizers. Fertilizers have been stuck at border crossings for two months.

As a result, Poudel said that country's food security would be threatened. "The food need of the country is 5.34 million tones but there is a stock of just 155,000 tones of food at the moment," he said.

According to the White Paper, the country's 2,200 industries have been shut down for the last three months since the unrest began in the main industrial belt in the southern plains.

As a result, about 200,000 workers had been out of jobs, the ministry said, adding industries had difficulty in repaying bank loans and wages of the workers. As per the White Paper, the growth of industrial sector will contract by 2.6 percent this fiscal year.

As thousands of Nepal-bound containers have been stranded in bordering India, traders and industrialist have been forced to pay huge amount in detention, parking and demurrage fees. The country's service sector which accounts for more than 50 percent of the total economic output has been hit hard with slowdown in tourist arrivals, as well as closure of hotels and restaurants in the absence of fuel.

The Nepalese government has estimated the growth of service sector at just 3 percent. Among economic sectors, the service sector had been growing rapidly in recent years. Enditem