‘Unofficial blockade is more dangerous’
KATHMANDU, Nov 5: Economists have called on the government to issue a white paper immediately to inform the people of the current crisis, the economic impact of the Indian blockade and plans on how to cope with the situation.
“The government has to immediately issue a white paper,” they said during an interaction at Nepal Republic Media here, Wednesday.
People are suffering due to the blockade by India since more than one month now and unrest in the Tarai since almost three months. The deepening crisis has crippled daily life, with acute scarcity of petroleum products and other essential goods.
Speaking at the interaction, senior economist Bishwambher Pyakuryal said people were expecting that the promulgation of the new constitution would herald the phase of economic development. “However, the recent incidents — post-constitution — have been widening the distance between government and people due to government apathy,” he said, adding that the government will face a question of legitimacy if it remains silent for long. It must issue a white paper immediately to build trust among the people,” he further said.
He opined that Nepal is facing a unique combination of economic collapse and slippage toward a failed state. “Hyper-inflation, falling production and trust deficit between government and people will raise the question of government legitimacy,” he said, adding that most industries in the Tarai are closed since almost three months, unemployment is rising, and supply constraints have fuelled the black market and aggravated the scarcity of goods and services. “The government also seems to be unable to protect the border, which is leading Nepal toward a failed nation.”
As usual, the economy takes a back seat and it is bleeding white, with the government and the Tarai and Madhes-centric political parties indifferent about it, the economist said. “Importers have been paying Rs 40 million per day as demurrage at Kolkata port since the last 80 days. The private sector claims that the country is losing Rs 2 billion a day, which means it has already incurred Rs 160 billion in losses.”
Nepal Bankers Association (NBA) President Upendra Poudel also said that the government should immediately issue a white paper on rescuing the economy. “The financial system will collapse if the current crisis prolongs,” he said, adding that it has lost the capacity to lend due to loss of confidence among borrowers and the uncertainty. “It will have a cascading impact on the economy as there has been no pumping of capital into the economy,” Poudel added. “Though the central bank has relaxed some of the rules for borrowers, that can only postpone the problem, not solve it,” the NBA president said, asking the government to chart a roadmap out of the crisis.
Also speaking at the interaction, former member of the National planning Commission (NPC) Chandra Mani Adhikari said that the current blockade by India is different. “In 1990, India had imposed an official blockade, but now it is unofficial,” he said, claiming that an unofficial blockade is more dangerous. “Had it been an official blockade, Nepal could have sought international support as per international transit law.”
This blockade is meant to make Kathmandu suffer so that Nepal will become a failed nation, he claimed.
According to him, some one million workers, including 400,000 industrial workers, are unemployed now due to the Tarai unrest. “This crisis has made people lose their income, unlike the devastating earthquake that only damaged our assets,” he said, adding that the monetary loss for the country – from earthquake and blockade – is equal to the total size of Nepal’s economy. “If the situation continues, there will be huge capital flight, as capital will naturally flow to more secure destinations.”
Former governor of Nepal Rastra Bank, Deependra Bahadur Kshatry, concurred. “The blockade has both physical and psychological impact,” he said, adding that it will have a huge negative impact in the long term. He was also concerned about the worsening black market due to shortages. “Ultimately, consumers are suffering because of weak governance,” he said. This will hurt sovereignty in the long run, he claimed.
Published on: My Republica(November 5, 2015)
