The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has expressed serious concern over the swelling informal economy.

The Indian embargo has lasted three months and the Tarai agitation has gone on for four months, giving rise to a flourishing black market with smugglers supplying varied products at sky-high prices, according to the apex body of the private sector.

The agitation launched by Samyukta Loktantrik Madhesi Morcha in the Tarai region has kept major customs points out of service for the past three months.

Though some of the border crossings have been functioning, Birgunj Customs, which is Nepal’s busiest trade route, has remained completely closed.

According to the FNCCI, around 2,000 small and big factories in the Tarai have shut down completely due to the unrest and border closure, shipments worth billions are rotting at the transit points, detention charges have been accumulating beyond the capability of industrialists, and goods are in short supply in the market.

“Gasoline stations are closed, but there are traffic jams on the roads. Gas bullets have entered the country, but the general public cannot buy cooking gas to light their kitchen fires. Incidences of extortion have been increasing in the border regions. The informal economy has shattered formal channels,” said FNCCI President Pashupati Murarka. “The situation is becoming dreadful. The agitating parties and the government should be serious about what is happening.”

The country has incurred economic losses amounting to more than Rs200 billion, said the FNCCI. The detention charge for vehicles stranded at the border is estimated to have exceeded Rs7 billion and counting. “Goods worth billions are piling up. The impact of the ongoing crisis is beyond calculation,” Murarka said.

Likewise, FNCCI Vice-President Shekhar Golchha said that the private sector was finding it

difficult to ensure the jobs and salaries of the workers as industries have been closed for a long time.

The few factories that are open are facing difficulties getting raw materials and shipping their products to market. “Many factories have said that they will not be able to pay the salaries of their employees much longer. Some have cut wages by half,” Golchha said.

A white paper issued recently by the Ministry of Finance has painted a bleak picture of the country’s economy. It has revised the estimated economic growth rate for the current fiscal year downward to 2 percent from the initial projection of 6 percent. The impact of the ongoing crisis has been more severe than that of the April 25 earthquake which killed around 9,000 people, the ministry said.

Likewise, a report prepared by Nepal Rastra Bank has stated that the country is likely to see a negative economic growth rate for the first time in 33 years if the present pattern continues for a few more months.