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Inflation stands high at 10.4 %

Several news media have recently reported on Nepal Rastra Bank‘s latest macroeconomic update warning of a stagflation. Released on 16 Dec 2015,  the report states that the four month long protest and blockade of the trade routes in the Terai-Madhesh region as the underlying factors that have resulted in soaring inflation rate, which stands highest at 10.4% in past three years.

The consumer prices have increased drastically and remains highest in Kathmandu valley at 11.8% (past four months-FY 2072/73) from 7.1% last year for the same period.

The government has already said that the economic growth would stand at 2 per cent this year due to the devastating earthquake and prolonged strikes in the southern belt. The central bank had made a forecast on 20 Nov 2015 of negative economic growth in the country.

 

 

 

 

Deekshya Nakarmi

About Deekshya Nakarmi

Deekshya Nakarmi is Communications and Outreach Assistant at Samriddhi, The Prosperity Foundation. She is a student of Development Studies.

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Banda and its Impacts

“Nepal Banda” is not new to Nepal. The frequency of strikes and blockades increased with the establishment of multi-party democracy in Nepal in 1990. The CPN (UML), which was the major opposition force back then, started the culture of Nepal Banda in order to express their dissatisfaction with the ruling parties. Ever since, whenever the opposition parties disagree over a certain policy, Act or treaty, it has become fashionable among the political elites to call nationwide or regional strike thereby blocking roads, closing down educational institutions, enterprises, and other economic activities. This sort of practice has often been organized for “bringing change in the government or existing regime.” Less than a decade ago, there was a nation-wide strike called the seven major political parties against the direct rule of King Gyanendra which successfully overthrew the monarchy from Nepal relatively peacefully.

The effect of strikes is most severe on those low-income groups of people who depend on their daily wages to earn a livelihood. Forceful shutdown of enterprises affects entrepreneurs and owners of all levels equally because they need to pay salary and other benefits to their workforce, in addition to having to pay rents on land and building, and interest on loans, all acquired from one financial institution or the other, whether or not there is any production at all. During Bandas, students are also deprived of their right to education in a peaceful environment. Schools and colleges fail to follow the academic calendar due to frequent protest programs. The problem becomes even worse when strikes target educational institutions by bringing issues such as banning private education, high fees in private organizations, rights of teachers, and the likes.

Health sector cannot remain untouched as people who want to receive healthcare are severely affected due to unavailibility of vehicles, which is a must for carrying sick patients. It is absolutely unfortunate that it is no more news when pregnant women, injured, disabled, old and weak people die on the way to hospital. The acts of forceful strike are as severe crimes which cannot be justified at all.

In Nepal, even the health workers, who are responsible for providing health service have been organizing strikes by closing hospital, health posts and clinics for several days in order to bring public attention to their demands. It is totally understandable if this fact comes as a surprise to a non Nepali. It speaks volumes about governance of our country – which is failing to deliver basic rights. Not a single section of a society is immune from the negative impacts of strikes.

When strikes are elongated for several days, the entire economy of a country is completely paralyzed as it shrinks almost all economic activities, from small mom-and-pop stores to stock markets. In addition to this, such disruptions discourage investors by creating uncertainty and unpredictability. Consequently, production of goods and services are reduced and eventually distance the people from job opportunities in Nepal itself. Underproduction also causes deficit balance of payment (BoP) as the country starts to depend more on foreign products and export less and less. Moreover, it hampers revenue collection which is the backbone for overall development of the nation.

Furthermore, a lot of public as well as private properties are destroyed during strikes. We have had situations where they have even cost human lives. In a nutshell, Bandas are not a civilized way of achieving any kind of demand as they hampers all activities and compel us to remain in a vicious circle of poverty.

Pramod Rijal

About Pramod Rijal

Pramod Rijal is a Research Associate at Samriddhi, The Prosperity Foundation. He is also a lecturer of Economics at Mega National and Unique College of Management and has contributed a number of articles in various national dailies.

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