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Let’s review why we failed to diversify trade: FinMin
Finance Minister Bishnu Poudel said on Tuesday that Nepal must examine why it failed to diversify trade and take measures to become self-sustainingFinance Minister Bishnu Poudel said on Tuesday that Nepal must examine why it failed to diversify trade and take measures to become self-sustaining as a consequence of which its economy has been reduced to tatters by the Tarai banda and Indian embargo.
Two-thirds of Nepal’s trade takes place with India, and it depends on the southern neighbour for even food while it used to be a net exporter a few decades ago. Nepal imports food valued at Rs137 billion and it is totally dependent on India for fuel.
According to Nepal Rastra Bank (NRB), Nepal’s trade with India amounted to 34.3 percent of its total trade in 1988-89, which rose to 63.7 percent in the last fiscal year 2014-15. The central bank said in its recent report on the impact of the unofficial Indian embargo that Nepal’s economy has not been able to withstand the shock of the third Indian blockade that is now running in its third month due to the country’s excessive dependence on the southern neighbour. Previous blockades occurred in 1988-89 and 1970. The road to Rasuwagadhi near the China border has not been improved in the last 60 years, and it is as bad now as it was then, said Poudel, speaking at an event organised by the Society of Economic Journalists Nepal. “But just across the border in Tibet, there is a fine double-lane road,” he said.
Nepal has been planning to import fuel from China through Rasuwagadhi after India cut off shipments, but the poor road infrastructure on the Nepal side has been a major concern for the smooth transportation of fuel and other essentials.
“Even after the current crisis comes to an end, we should not stop working to remove the constraints to diversify trade,” said Poudel. Meanwhile, NRB Governor Chiranjeevi Nepal said that inflation had gone out of the hands of the central bank due to the shortage and black marketing. The central bank had targeted keeping inflation to 8.5 percent.
The president of the Federation of Nepalese Chambers of Commerce and Industry said, “I don’t have words to describe the impact of the current situation on the economic sector. It is frightening,” he said.