- The new government must focus its attention on energy and infrastructure development to give a boost to national economy

Nepal needs to take drastic measures to reduce a yawning trade gap between import and export with the countries it has been doing business over the years. The trade deficit has been widening every year as Nepal is importing more goods than it is exporting to the neighbouring and other countries. The trade deficit further widened to Rs 398.76 billion in the first five months of the fiscal which is 13 per cent more than that of the previous fiscal. At the same time, according to the Department of Customs, the country exported goods worth Rs 33.72 billion in the same period of the fiscal, which is slightly better than the previous year during which the country exported goods worth Rs 30.61 billion. The country spent the largest amount of money to purchase petroleum products worth Rs 61.20 billion followed by iron and steel worth Rs 43.09 billion, vehicles worth Rs 35.56 billion and electric equipment worth Rs 29.66 billion. The major goods Nepal exported included tea and coffee, products made of staple fibers, carpets, readymade garments and iron and steel worth Rs 15 billion in the first five months of the fiscal. Carpet and readymade garments used to play a major role to earn foreign currency until a few years ago.

More than 65 per cent of imports and exports take place with India. And, the rest of the trade is conducted with China, the USA, Germany, Thailand, Turkey and Argentina. Besides, the fossil fuels and construction materials Nepal has also been buying electricity from India. Currently, the country has been importing 372-MW of energy worth Rs 15 billion per annum. Economists have said that over dependency on fossil fuels and inadequate supply of electricity are the major constraints for boosting economy in the country. Others also blame the fixed exchange rate of the Nepali currency with that of the Indian one which has not been revised since 1993. The economists believe that the fixed exchange rate of Nepali currency with that of the Indian currency has hampered the industrial base in Nepal due to imports of cheaper goods from India.

In order to boost economic growth and increase export, the country needs to make huge investments in the energy sector, which will ultimately help minimise over dependency on fossil fuels and import of electricity from outside. These are two major areas which have contributed to increased trade deficit with India. Apart from this, the country should also take advantage of the US policy of giving duty-free access to 66 items including certain carpets, headgears, shawls, scarves, leather products and travel goods from Nepal till 2025. The US government decided to provide the duty-free access to the above-mentioned items from Nepal to help revive the shattered economy following the devastating earthquake in 2015. Nepal should also reap benefits from the US grant of Rs 51 billion which will be utilised on repairing roads and building transmission lines. The new government to be formed soon must focus its attention on energy and infrastructure development to give a boost to the national economy to reduce trade deficit with the neighbouring countries and others.

[Jan 11,2018 / thehimalayantimes.com]