News Digest: Economy & Development (July 22 – 28, 2021)

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Proposals to lower power tariff rate-

Energy Minister Pampha Bhusal has decided to prioritize domestic consumption of electricity by offering power at lower prices. The decision was proposed after analyzing Nepal’s peak demand for power during fiscal year (FY) 2020/21 which was recorded at 1,400 MW. With additional power of 456 MW from Upper Tamakoshi Hydropower Projects, the authority is anticipated to have surplus energy. In this light, the energy minister is considering providing electricity free of cost to those people who fall below the poverty line and reducing power tariffs for industries, factories and businesses to lower their cost of production and make their products more competitive in the domestic and international markets. The decision is also being considered to increase the national consumer base and consumption of electricity.

Minister for Energy, Water Resources and Irrigation, Pampha Bhusal addressing a meeting of the National Assembly. Photo: RSS

Increasing informal sector-

An analytical study on the informal sector by Central Bureau of Statistics (CBS) has revealed that out of total 923,027 business establishments across the country, 49.9 percent of establishments or 460,422 firms are not registered and are counted as informal enterprises. In terms of employment, out of 3.22 million individuals (in the active labor force) 25.8 percent or 832,187 individuals are employed in the informal sector. Economists have raised alarm over the expanding informal sector in the country as the sector remains largely untaxed and unmonitored, with individuals involved having low living standard and lack of social security and credit; adversely affecting the growth potential of the economy.

Digital payments reduce-

Nepal Rastra Bank (NRB) reported a 12 percent decrease in digital payments in the 11th month of the fiscal year (FY) which ended on mid-July as stay-at-home orders and restrictions on economic activities were lifted, allowing people with greater flexibility to shop physically. Digital transactions had recorded an all-time monthly high of NPR 368.66 billion during mid-March to mid-April 2021. However, after the easement of second prohibitory orders, people have resorted back to physical transactions. 

Increasing paddy transplantation-

Department of Agriculture has revealed that farmers across the country have completed transplantation on 88.75 percent of the 1.37 million hectares of land available for paddy cultivation. Statistics show that paddy transplantation has been completed on 87.16 percent, 85.35 percent and 90.03 percent of land available in the mountain, hills and Tarai region. Experts have credit the ‘above normal rainfall’ that Nepal received this monsoon season for the increased pace in transplantation. Similarly, the second nation-wide lockdown and large number of migrant workers working at agricultural land was also attributed for this feat.

NRB brings new provisions-

Nepal Rastra Bank (NRB) has increased the risk provision by 1.3 percent for banks and microfinance institutions to keep good loans. The provision has been introduced to promote overall financial stability in view of the impact of COVID-19 on the quality of banking assets. Similarly, another provision has also been made where microfinance companies have to keep 25 percent of the proposed dividend above 20 percent in the Consumer Protection Fund.

Mechi Customs Office-

The Mechi Customs Office has collected 8 percent more revenue than its target in the last fiscal year. The office has collected NPR 13.03 billion in the last fiscal as against the target of NPR 12.09 billion, which is 7.77 percent more than the estimated target. Petroleum product has been identified as the most traded item at Kakarbhitta; with its share in total revenue registered around 48 percent during the same review period.

Stock Market-

The Nepal Stock Exchange (NEPSE) index has been in an increasing trend for the past one week with the equity closing above the 3,000 mark. The index was recorded at 3,004.31 on 22 July, 3,058.63 points on 25 July and 3079.67 points on 27 July. A total of 55.56 million shares of 222 companies, 43.39 million shares of 223 companies and 32.35 million shares of 225 companies were traded during these days resulting in a turnover of NPR 11.11 billion, NPR 14.23 billion and NPR 15.17 billion respectively.

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