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Economy
National Economy
Overview
FY 2001/02 turned out to be a year of exception from the standpoint of development performance and law and order situation.
In the past, the government had been able to implement organizational, policy and regulatory measures to alleviate poverty
with a broad-based economic growth and to create congenial environment for development. In the current year, however, the
economy could not build on this environment due to several hurdles to on going development activities. Amidst arson,
killings, terror and violence, government remained effortful to continue development activities. As a result, the basic
tenet of the state to protect life and property of its citizen on the part of the government overshadowed the priority to
development works. Under the situation, the government was forced to declare the state of emergency in the country.
Development performance of FY 2001/02 needs to be reviewed in this perspective.
In FY 2000/01, Gross Domestic Product (GDP) on agriculture sector registered at factor cost (constant price of 1984/85) a
growth rate of 4.2 percent and non-agriculture sector 4.4 percent resulting in 4.9 percent growth of the GDP. For the
current year, the GDP is estimated to increase by 0.8 percent with agriculture and non-agriculture sector registering of
1.7 percent and 0.2 percent growth rates respectively. The government has been able to minimize if not totally shield, the
adverse effects of the internal and external disturbances to the economy. As a result, the growth rate has remained positive due to recourse to pragmatic measures of structural importance taken by the government. This remains as the most important
development features of FY 2001/02.
Analysis of the GDP growth by industrial origin reveals that the growth rate has decreased to 1.7 percent in the agriculture sector compared to a growth rate of 4.3 percent in the last year. The main reason behind this decline was attributed to the
decrease in the production of rice by 1.2 percent due to drought in the Eastern Development Region in the beginning and
excess rainfall after paddy plantation causing soil erosion in the paddy fields. During the current year, growth rate of
electricity, gas and water is expected to witness a notable growth rate of 14.9 percent as compared to 7.9 percent last
year. Completion of Kaligandaki A (144 Megawatt) and Bhotekoshi (36 Megawatt) has contributed high growth rate in this
sector. Due to terrorist activities of Maoists, inward migration of people to the Kathmandu Valley has increased
significantly. And as a result, construction activities are expected to increase significantly by 4.9 percent compared to
0.9 percent last year contributing to a favorable impact on macro economic front. Industry and Trade on the one hand and
Restaurant and Hotels on the other, were the hard hit sub sectors and their growth declined by 5.9 percent and 6.4 percent
compared to the corresponding growth rates of 3.6 percent and 2.8 percent last year. Reasons behind this decline in GDP
are: insecure situation faced by industries, pending the renewal of the Nepal-India Trade and Transit Treaties, decrease in
the tourist arrival by 21.2 percent, drop in the production of carpet and garments by 23.1 percent and 28.8 percent
respectively and a sharp drop in export of Pashmina Shawl by 78.5 percent explain the estimated decline in GDP. Community
and Social services sector is expected to increase only by 3.2 percent as compared to 15.0 percent last year. Finance,
leasing and real estate are also expected to grow at lower rate of 2.7 percent this year as compared to 3.8 percent last
year.
GDP at the current price had increased by 8.6 percent amounting to Rs. 426 billion in FY 2000/01. Rate of increase, this
year, is expected to be 4.7 percent amounting to Rs. 446 billion.
In the FY 2000/01, the contribution of agriculture sector to GDP at the factor cost on constant price was 37.9 percent and
that of non- agriculture sector was 62.1 percent. Contributions of these sectors are expected to correspond to 38.1 percent
and 61 percent in the current year.
Gross Domestic Product #
| Rs. in million |
| |
1994/95 |
1995/96 |
1996/97 |
1997/98 |
1998/99 |
1999/2000 |
2000/01 * |
2001/02 ** |
| Nominal GDP (Current Price) |
209976 |
239388 |
269570 |
289798 |
330018 |
366284 |
393473 |
410493 |
| Agriculture |
85569 |
96896 |
108785 |
112495 |
132373 |
144644 |
149040 |
156384 |
| Non-Agriculture |
124407 |
142492 |
160785 |
177303 |
197645 |
221640 |
244433 |
254109 |
| Real GDP (at 1994/95 price) |
209976 |
221930 |
233040 |
240816 |
251790 |
267473 |
280339 |
282574 |
| Agriculture |
85569 |
88830 |
92706 |
93496 |
96183 |
100856 |
105227 |
107037 |
| Non-Agriculture |
124407 |
133100 |
140334 |
147320 |
155607 |
166617 |
175112 |
175537 |
| GDP Deflator |
100.0 |
107.9 |
115.7 |
120.3 |
131.1 |
136.9 |
140.4 |
145.3 |
| Agriculture |
100.0 |
109.1 |
117.3 |
120.3 |
137.6 |
143.4 |
141.6 |
146.1 |
| Non-Agriculture |
100.0 |
107.6 |
114.6 |
120.4 |
127.0 |
133.0 |
139.6 |
144.8 |
Percentage change over previous year
| |
1994/95 |
1995/96 |
1996/97 |
1997/98 |
1998/99 |
1999/2000 |
2000/01 * |
2001/02 ** |
| Nominal GDP (Current Price) |
9.6 |
14.0 |
12.6 |
7.5 |
13.9 |
11.0 |
7.4 |
4.3 |
| Agriculture
| 6.2 |
13.2 |
12.3 |
3.4 |
17.7 |
9.3 |
3.0 |
4.9 |
| Non-Agriculture |
12.1 |
14.5 |
12.8 |
10.3 |
11.5 |
12.1 |
10.3 |
4.0 |
| Real GDP (at 1994/95 price) |
2.7 |
5.4 |
4.8 |
3.2 |
4.4 |
5.9 |
4.6 |
0.8 |
| Agriculture |
-0.9 |
3.7 |
4.2 |
0.8 |
2.8 |
4.6 |
4.2 |
1.7 |
| Non-Agriculture |
5.1 |
6.5 |
5.2 |
4.7 |
5.3 |
6.6 |
4.9 |
0.2 |
# The figure are presented at Factor Cost (Before deduction of Bank Service Charge)
* Revised Estimates
** Preliminary Estimates
Source: Central Bureau of Statistics
In the current year, increase in per capita income expected to be positive. Compared to the GDP of Rs. 17,718 (equal to US
$ 240) last year, it is estimated to increase by 2.1 percent to Rs. 18,083 (equal to US $ 236). It is evident that there
was a marginal rise in the per capita income in terms of Nepalese currency where as in terms of US Dollar it decreased
marginally due to change in the exchange rate.
The Ninth Plan has envisaged an annual growth rate of 6 percent with the contribution of growth rates of 4 percent by the
agriculture and 7.3 percent by the non-agriculture sectors. However, annual growth rate of the economy is estimated to be
3.9 percent with the annual growth rate of 2.9 percent in the agriculture and 4.6 percent in the non-agriculture sectors
In the current year, the GDP growth rate (at the current price of factor cost) is estimated to be 4.3 percent with the
growth rate of 4.9 percent and 3.9 percent of agriculture and non-agriculture sectors respectively. Corresponding to 3.0
percent and 10.3 percent of agriculture and non-agriculture sectors and GDP growth of 7.4 percent last year, the total
value of GDP is expected to reach Rs 410 billion this year as compared to Rs. 393 billion last year.
National Product
The GDP growth rate at current price is estimated to be 4.6 percent this year as against 8.6 percent last year.
Due to this low growth, the per capita GDP growth has been limited to 2.4 percent. In FY 2000/01 the per capita GDP was
Rs. 18416 equal to US $ 250. In FY 2001/02, it is estimated to grow by 2.4 percent amounting Rs. 18,852 or equivalent to
US $ 246 due to the devaluation of Nepalese currency vis-a-vis US dollar during this year.
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