Print Edition - 2015-07-07 | Main News
NPC sees huge growth prospect in rebuilding
- Asks govt to set ambitious 6pc economic growth target for next fiscal
Jul 6, 2015-The Economic Policy Recommendation Committee headed by National Planning Commission Vice-chairman Govinda Raj Pokharel has recommended that the upcoming budget set an ambitious economic growth target of 6 percent.
The committee suggests keeping growth of agriculture sector at 2.5 percent and 7.5 percent for non-agriculture sector. The government projects growth to fall to an eight-year low of 3.04 percent this fiscal so the output should be increased massively to attain a 6 percent growth. Inflation has been recommended to be tamed at 8 percent.
The committee submitted its recommendations to Prime Minister Sushil Koirala on Monday. Swarnim Wagle, a member of the committee, said that achieving the growth target is possible due to the low base for growth and huge expenditures due to be made in reconstruction.
“There will also be growth in private sector investment resulting from the ongoing economic reforms measures. We expect a huge rise in capital expenditure next fiscal year, which will help put the economy on a higher growth trajectory,” said Wagle.
As per the recommendations, domestic and foreign investments should be increased by having reconstruction and rebuilding as core priorities to minimise the impact of damage caused by the earthquake on physical infrastructure.
NPC member Chandramani Adhikari said the set government expenditure of Rs841 billion would be the key to attaining the desired growth.
“Due to an expected speedy reconstruction, demand for construction materials will grow, giving a boost to industrial activities. Rebuilding works will create jobs and help increase jobholders’ spending, creating a chain of more economic activities,” said Adhikari.
According to committee members, three main suggestions for the next budget are boosting economic growth through reconstruction and new capital formation such as energy, continuing second generation economic reforms carried out in the current fiscal, and social security measures taken to ensure that vulnerable groups do not fall back to poverty again.
“Measures such as accidental insurance, life insurance and pension for workers in non-formal sectors have been recommended,” said Wagle. The earthquake has pushed around 700,000 people under the poverty line, according to the Post Disaster Needs Assessment (PDNA).
According to the report, the government needs to take legal measures to address problems in the areas of power purchase agreement (PPA), land acquisition, locals’ obstruction and labour unions. For hydel sector, it has advised to simplify the PPA process, ease land acquisition, address environmental issues on time and provide subsidies for distribution. Other recommendations include more facilities for solar, bio- and micro-hydro measures of rural electrification.
Stating that investments should concentrate on areas identified by the PDNA, the committee has suggested establishing 14 training centres to produce human resource for reconstruction.
In view of huge amounts of remittance not utilised in productive sectors, the committee recommends ‘Infrastructure Development Bonds’ to tap resources from migrant workers for use in hydropower, roads and irrigation.
In order to make public private partnership effective, the Pokharel-led body has suggested introducing PPP policies, Act and working procedure, besides establishing a PPP Centre at the NPC to implement projects.
It has also recommended operating a Special Economic Zone in Bhairahawa and set up two SEZs elsewhere.
The committee has suggested creating an Agriculture Promotion Fund to subsidise interest on lending by banks and financial institutions in the sector.
- Inflation to be tamed at 8 percent
- Investment in areas identified by PDNA
- Issue Infrastructure Development Bonds
- Set up Agriculture Promotional Fund
- Training centres in 14 zones to create skilled reconstruction workforce
Published: 07-07-2015 07:54