The Central Bureau of Statistics (CBS) in late April forecasted the country’s economic growth rate at 6.81 percent for the current fiscal year. Though the growth rate falls short of the government’s ambitious target of eight percent, Nepal will achieve for the third consecutive year an economic growth rate of over six percent which is indeed encouraging. CBS has stated strong agricultural output as the major contributor to propel this growth. This year, the agriculture sector is expected to grow by 5.1 percent compared to 2.72 percent in the last fiscal year. Major crops including paddy, maize, wheat, potato and vegetables are set for record outputs.
Soon after CBS forecasted the data, some people in the government claimed the growth a result of the government’s agriculture policy undertakings. However, the government hasn’t done much on its part to take the credit. The rise in paddy output has been the major factor in increasing the agricultural GDP. It is estimated that a 10 percent increase in paddy output boosts Nepal’s economic growth by one percent. And, adequate and timely rain has played a major role in this regard. Had the improvement in agricultural output been a result of the government’s efforts, the country’s manufacturing GDP also would have increased significantly. Given the current positive business climate in the country, the improvement seen in the manufacturing GDP is not up to the mark. Industries are receiving a continuous supply of power and the relationship between industrialists and workers has also improved as there have not been strikes and disturbances in factories for sometime now. The current relatively stable political scenario has offered enough space for manufacturing activities to jump ahead significantly. Against this backdrop, the present growth of the sector is only marginal. Similarly, the contribution of the tourism sector to the GDP hasn’t improved much despite the government touting last year’s tourist arrival of over one million as a major achievement.
The government allocates about six percent of the budget for the agriculture sector every year and development agencies spend a similar amount for the sector. But these expenditures have so far failed to yield noticeable results. In fact, the government has remained indifferent to the problems in the agriculture sector which contributes 26.5 percent to the country’s GDP. The sector is mentioned as a priority area in every national budget and periodic plan. But it faces several challenges. It is an irony that of the total agricultural land area of 2.7 million hectares in Nepal, only 1.3 million hectares have access to irrigation. Commercialisation of the sector is among the major issues. There is no clear policy about commercial farming although business houses, agribusiness entrepreneurs, and lately some startups are engaged in such activities. The absence of any policy related to the development of a modern commodity market to trade agricultural produce is another problem resulting in disputes related to the pricing of the products. Also, the government hasn’t been able to play an effective role in resolving issues related to the short supply of fertilizers and seeds.
Prioritising the agriculture sector will be meaningful only if the government acts purposefully. In a country like Nepal where agricultural activities have remained a means of subsistence for farmers, effective policy initiatives are required to bring positive changes in agribusiness. If the government acts with honest considerations, only then will it deserve the credit for the growth of the sector.
Madan Lamsal
