April 26: In each and every periodic plan and annual budget, the government has been setting ambitious economic growth targets but those targets have never been achieved in most of the years.
The final draft of the 16th Plan prepared by the National Planning Commission has set an economic growth target of 7.3 percent for the fiscal year (FY) 2085/86, which is lower than the average target of the current 15th Plan but higher than the forecast made by the World Bank for the current fiscal year.
During the 15th Plan (2076/77-2080/81), the government had set a target of achieving average economic growth of 9.6 percent. The target was to achieve economic growth of 10.3 percent in basic prices in the last year of the plan ie 2080/81.
The government suffered a serious setback in achieving this ambitious goal in the first year of the plan. As the coronavirus pandemic started in the year 2076/77 when the scheme was initiated, it had a severe impact on the economy of Nepal, like the economies of the world. In that year, the economic growth rate was negative by 2.4 percent. In the following years too, there was no significant improvement in the economy. According to the National Statistics Office, economic growth was 4.5 percent, 5.3 percent, and 2.2 percent respectively in the following three years.
While reviewing the 15th Plan, the officials of the National Planning Commission said that the government could not achieve economic growth as per the target due to the Covid-19 pandemic and the Russia-Ukraine war.
The 15th Plan had set a target of 10.3 percent economic growth in the current fiscal year 2080/81. However, the then Finance Minister Dr. Prakash Sharan Mahat, while presenting the budget in the House, announced that the country will achieve economic growth of around 6 percent this year. However, the country is not even likely to meet that target.
Towards the end of March, the National Statistics Office had initially estimated economic growth of only 4 percent in the second quarter of the current fiscal year.
The World Bank said some time ago that Nepal's economic growth rate will be limited to 3.3 percent this year.
Stakeholders do not see the possibility of high economic growth even in the 16th Plan period. They have said that there is no basis for achieving the proposed goals for the new plan.
Former Finance Minister Dr. Prakash Sharan Mahat said that it will not be possible to achieve the proposed economic growth target due to the lack of political stability. Because the government is not stable, it is difficult to achieve economic growth target until stability is achieved.
“The government cannot achieve the target of 7.3 percent economic growth as proposed in the draft of the 16th Plan. The maximum growth that it can achieve is likely 5 percent," he said at a meeting of the National Development Council on Thursday.
Although the prime minister remains the same, three governments have been formed in the past one year. The private sector insists that there is no conducive environment for investment due to political instability.
At the recent annual general meeting of the Federation of Nepalese Chambers of Commerce and Industries, its President Chandra Dhakal accused the government of adopting a control-oriented policy.
He argued that Nepal's economic growth has slowed down compared to many countries in South Asia due to the lack of an environment for the private sector to work.
Former Finance Minister and UML leader Yuba Raj Khatiwada said that the government needs to the political barriers in order to achieve the goals set in the periodic plan.
He was of the view that the government must revise tax policy and economic strategy to attract foreign direct investment.
Vice Chairman of the National Planning Commission Dr. Min Bahadur Shrestha said that the draft of the 16th Plan has been prepared after reviewing the weaknesses in the 15th Plan.
“There are structural problems. Consumption and imports have increased. Domestic employment is pathetic. Education is not linked to production. Expenditure on social security has increased. Therefore, our goals are incomplete,” he said, adding, “Now, a plan has been devised keeping the implementation-oriented goals in mind," he said.
Shrestha added that the e 16th Plan is estimated to cost up to Rs 9196 billion, which is expected to further increase by over 118 billion by the time of its implementation.
The draft of the upcoming periodic plan aims to improve the corruption perception index from 35 in the base year 2079/80 to 43 within the 16th periodic plan period and the rule of law index from 0.52 in the base year to 0.80.
In the draft of the periodic plan submitted by the National Development Council meeting organized by the National Planning Commission on Thursday, the ratio of expenditure to total allocation should be increased from 80 percent to 90 percent, the birth registration percentage of children under 5 years should be increased to 100 percent from the current 74 percent, the rate of forced labor should be reduced to zero, and the ratio of families with high food insecurity should be reduced to 1 percent.
In the meeting of the National Development Council, Prime Minister Pushpa Kamal Dahal said that the 16th Plan will focus on the commercialization of agriculture, the manufacturing industry, employment-oriented education, and increasing the quality of the health sector. He also directed the NPC to bring the plan by incorporating the suggestions of all stakeholders before the announcement of the policies and programs for the upcoming fiscal year.
Labor Minister Dol Prasad Aryal stressed the need of safeguarding the private sector as it is linked with employment generation. If the state fails in the front, the trend of young people going overseas for employment will continue.
He also pointed out the need to put an end to unnecessary hassles for the industrialists.
