Thursday, November 30, 2017

Does Q2 FY2018 6.1% GVA growth mean Indian economy is rebounding?

Preliminary estimates by MOSPI show that the Indian economy grew (y-o-y) by 6.1% in Q2 (July to September, when consumption is traditionally high due to festival season) FY2018 (2017/18) following five consecutive quarters of gross value added (GVA) slump reaching 5.7% in Q1 FY2018. Compared to GVA growth of 6.8% in Q2 FY2017, 6.1% GVA growth in Q2 FY2018 is still low but compared to the last quarter it is slightly higher. It shows that the lingering effects of demonetization is tapering off (but hasn’t gone off completely) and the uncertainty before the roll out of GST is gradually fading away, leading to marginal recovery of industrial activities (but again still not at the rate achieved in Q2 FY2017). Services activities have cooled off compared to last quarter as well as the consecutive quarter in FY2017.

On the supply-side, agriculture, industry and services contributed 0.2, 1.8 and 4.1 percentage points to the GVA growth (at basic prices) of 6.1%. On the expenditure side, while consumption and gross capital formation contributed 4 and 2.9 percentage points, respectively, net exports and statistical discrepancy contributed -3.4 and 1.2 percentage points, respectively, to overall GDP growth (at market prices) of 6.3%.


Specifically, agricultural output grew by 1.7%, which is higher than 2.3% in Q1 FY2018 but lower than 4.1% in Q2 FY2017. Production of Kharif crops (monsoon crops such as rice, millet, maize, sugarcane, soyabean, etc) was lower than expected as deficient and uneven pattern of south-west monsoon dented its growth to 2.8% compared to 10.7% growth in Q2 FY2017. Similarly, output related to livestock products, forestry and fisheries grew by a modest 3.8%.

Industrial output rebounded with 5.8% growth, significantly up from 1.6% in Q1 FY2018 but marginally lower than 5.9% in Q2 FY2017. Mining and quarrying activities accelerated by 5.5%, up from a decline of 1.3% in the corresponding period in FY2017, thanks to increase in production of coal, crude oil and mining. Meanwhile, manufacturing activities grew by 7% compared to a 7.7% growth in Q2 FY2017. Output growth of electricity, gas and water supply was 7.6%, up from 5.1% in the corresponding quarter in FY2017. Electricity output rebounded significantly. Construction activities grew by 2.6% compared to 4.3% growth in Q2 FY2017 as production of steel cement and consumption of finished steel slowed down when compared to the growth rate in Q2 FY2017. This shows that while the industrial sector is rebounding following the dent created by demonetization and uncertainty surrounding the roll out of GST, it still has not fully recovered to pre-shock rates

Services output growth moderated to 7.1% compared to 7.8% in Q2 FY2017 and 8.7% in Q1 FY2018. Activities comprising of trade, hotels, transport and communication grew by 9.9% compared to 7.7% in Q2 FY2017 as trading activities are recovering after the uncertainty caused before the rollout of GST in July. Financial, insurance and real estate activities declined to 5.7% compared to 7% growth in Q2 FY2017. Real estate activities are slowing down but bank transactions are increasing. Similarly, activities related to public administration and defense slowed down to 6% from 9.5% in the corresponding period in FY2017.  

Overall, it’s a story related to industrial rebound— particularly mining and quarrying and electricity and utilities. However, overall industrial output growth is still lower than in Q2 FY2017 as manufacturing and construction activities have not rebounded to pre-shock rates. Investment seems to be on an upward trajectory. 



If you look at the QGDP figures from expenditure side, then you will see a strong rebound in fixed capital formation. Consumption grew by 6%, lower than Q1 FY2018 as well as Q2 FY2017, as both government and private consumption slowed down. Gross capital formation grew by 8.6%, higher than in Q2 FY2017 and in the last quarter. GFCF, change in stocks and valuables accumulation increased at a rate higher than in previous quarter and the corresponding quarter in FY2017. Net exports improved. Overall, GDP at market prices grew by 6.3% compared to 7.5% in Q2 FY2017 and 5.7% in Q1 FY2018.

Wednesday, November 29, 2017

लगानी नै गर्न नपाइ वितरण गर्न तिर लाग्दा त भएको स्रोत रित्तिएपछि कहाँबाट ल्याएर बाँड्नु?

This interview was published on Bizmandu on 27 November 2017.


सार्बजनिक वित्त र विकास अर्थतन्त्रमा चासो राख्ने युवा अर्थशास्त्री चन्दन सापकोटा एसियाली विकास बैंक (एडीबी) नेपाल कार्यालयमा अर्थशास्त्रीको रुपमा काम गरिसेका छन्। साउथ एसिया वाच एण्ड ट्रेड इकोनोमिक्स एण्ड इन्भायोरेमेन्ट (साउती) मा अनुसन्धानकर्ताको रुपमा काम गरिसकेका उनले विभिन्न विदेशी संस्थासहित वाणिज्य तथा आपूर्ति मन्त्रालयको कन्सल्ट्यान्टको रुपमा समेत काम गरिसकेका छन्। नेपाल र दक्षिण एसियाको अर्थतन्त्रका बारेमा अनुसन्धानमा रुची राख्ने सापकोटा खुला र उदार अर्थतन्त्रका हिमायती हुन्। युवा अवस्थामै अन्तर्राष्ट्रिय एक्सपोजर पाएका सापकोटासँग मुलुकमा भइरहेको प्रतिनिधी र प्रदेशसभा निर्वाचन र दलले लिएका आर्थिक एजेण्डाका बारेमा बिजमाण्डूका प्रभात भट्टरार्इले सोधे- कांग्रेस आयो भने धनी र गरिबबीचको खाड्ल बढ्छ?

मुलुकले २०४७ सालपछि जुन आर्थिक नीति लियो त्यो गलत वा सही भन्नेमा बहस जारी छ। ज-जसले उदारीकरणलाई अहिले गलत भन्दैछन् उनीहरु आफु सत्ता रहँदा पनि त्यही नीतिलाई निरन्तरता दिए। अब निर्वाचनपछि पनि यही नीतिले निरन्तरता पाउला?

हामीले सन् १९९२ मा उदारीकरणको नीति अवलम्बन गर्नुका पछाडि हाम्रो आन्तरिक कारणले मात्र काम गरेको थिएन। छिमेकी भारत ठूलो शोधनान्तर घाटामा परेपछि लण्डनसम्म जहाजमा सुन पुर्याएर बिदेशी मुद्रा भित्र्यायो। भारत समस्यामा परेसँगै हाम्रो पनि शोधनान्तर अवस्था घाटामा गयो। यसले हामी पनि निजी एवं विदेशी लगानी प्रवर्द्धन गर्ने गरि उदारीकरणको नीति अवलम्बन गर्न एक किसिमले बाध्य नै भयौँ। त्यसबेला संयोगले नेपाली कांग्रेस सत्तामा थियो। कांग्रेसमा रहेका व्यक्तिहरुले त्यो अवस्थालाई बुझे र त्यही अनुरुपको नीति लिए। किनभने कांग्रेसमा जेएनयु स्कुलिङका व्यक्तिहरु खासै थिएनन्। युरोप अमेरिकामा पढेका र त्यहाँको मोडल बुझेकै व्यक्तिहरु थिए। त्यसैले उनीहरुलाई उदारीकरणका सिद्धान्त अवलम्बन गर्न कठिन पनि भएन।  तर, त्यसबेला लिइएको आर्थिक नीति विशुद्ध नेपाली चाहना र योजना अनुसार थियो भन्ने चाहिँ होइन।

सैद्धान्तिक रुपले यो नीति विल्कुल गलत होइन। तर, यसको व्यवस्थापन पाटोमा कमजोरी भयो। त्यसबेला सरकारको राजश्व अत्यन्त न्यून थियो। आवश्यकता धेरै थिए। सामाजिक सुरक्षाका बिभिन्न स्किमको दबाव त्यसबेला पनि थियो। त्यसैले आफ्ना संस्थानहरु जति सक्दो चाँडो बेचेर खर्च जुटाउनु पर्ने अवस्थामा सरकार थियो। हतारमा बिक्री गर्दा व्यवस्थापन फितलो हुन पुग्यो। कसैले पनि व्यवस्थापनमा समस्या आउला भनेर सोचेनन् पनि। अहिलेको जस्तो बोलकवोल गरेर दिने चलन पनि थिएन। यसले गर्न सक्छ होला भन्ने आँकलनका आधारमा उद्योग जिम्मा लगाइयो। हाम्रा लागि यो नीति नौलो थियो। त्यसैले यसलाई सही ढंगले 'ह्यान्डल' गर्ने व्युरोक्रेटिक क्षमता पनि थिएन।

समग्रमा निजीकरण गलत थिएन। तात्कालिन समयलाई हेर्दा त झन् हाम्रो लागि यो एक बाध्यकारी नीति नै थियो। तर, यसको विरोध गर्नु कतिपयका लागि त रोजिरोटी नै बन्यो। कतिसम्म भयो भने उदारीकरण सम्बद्ध काममा कन्सल्टेन्सी खोज्दै जाने र नपाएको खण्डमा त्यही नीतिको विरोध गर्दै हिँडेको समेत देखियो।

अहिले जुन जुन संस्थान सरकारसँग छन् तीनले पनि नतिजा त दिन सक्या छैनन्?

त्यहीकारणले निजीकरण सैद्धान्तिक रुपले गलत होइन। जुत्ता, इँटा बनाएर बस्ने राज्यको काम पनि होइन। यसमा नीजि क्षेत्रलाई पनि प्रतिश्पर्धाको वातावरण निर्माण गरिदिनु पर्छ। अझै पनि सरकारसँग ३६/३७ वटा संस्थान छन्। नेपाल टेलिकमका कारण समग्रमा संस्थानहरु नाफा देखिन्छन्। तर, वास्तवमै नाफा कमाउने २/४ बढि छैनन्। सरकारका लागि सेतो हात्ती भइसकेको आयल निगम अहिले अन्तर्राष्ट्रिय बजारमा तेलको मूल्य घटेको कारण नाफामा छ। तर यसको नाफामा पनि कुनै निश्चिन्तता छैन। कुनै प्रतिफल नदिने र खर्च मात्र गराउने संस्थान पालेर बस्नुको तुक छैन।

त्यो कुरा बामपन्थी दलले पनि राम्रोसँग बुझेका छन्। त्यसैले उनीहरुले सार्वजनिक खपतका लागि निजीकरणको विरोध गरे पनि आफु सरकारमा हुँदा कुनै फरक गरेनन्। कुनै पनि देश सामाजिक दृष्टिकोणबाट मात्र त सफल हुँदैन। त्यसैले यो राजनीति गर्ने एजेण्डा मात्र हो। भेनेजुएला हेरौँ, ल्याटिन अमेरिकाको अत्यधिक संभावना भएको देश हो तर जनतालाई ब्रेड किन्नसमेत बोलिभियाको सीमा पार गरेर जानु पर्ने अवस्था छ। जिम्बाबेले पनि राष्ट्रियकरण नै गरेको हो। तर, देशको आर्थिक अवस्था जर्जर भयो। त्यसैले निजीकरण गलत होइन तर यसको व्यवस्थापन मात्र बलियो हुन नसकेको हो। जुन अधिकृतहरुले १९९२ मा निजीकरणको टिप्पणी उठाउँथे अहिले उनीहरुनै सचिव, सह-सचिव भएर मन्त्रालयहरुमा काम गरिरहेका छन्। निजीकरणमा पनि उनीहरुनै, माओबादी द्वन्द्वताका बजेट योजनामा पनि उनीहरु नै र अहिले पनि उनीहरु नै। के नयाँ भयो र? त्यसैले हाम्रो मूल समस्या भनेकै व्यवस्थापन हो।

निजीकरण त्यस बेलाको बाध्यता थियो भन्ने त भइहाल्यो। तर, अहिले पनि एउटा नारा लगाइन्छ, यदि हरिसिद्धि बाँचिरहेको भए हामीले त्यसकै इँटाले घर बनाउन पाउँथ्यौँ या बाँसबारीकै जुत्ता लगाउन पाउँथ्यौँ भन्ने गरिन्छ, त्यो कति यथार्थपरक छ त?

त्यसलाई हामी एउटा 'काउन्टर फ्याक्चुअल' भन्छौँ। हामी त्यो बेला ग्याटमा थियौँ, राज्यका उद्योग कल कारखानाले संरक्षण पाएका थिए। त्यसैले त्यसबेला यी उद्योगको अवस्था यस्तो थियो भनेर मात्र हुँदैन। जब हामी डब्लुटिओको सदस्य भयौँ, हामीले सबै क्षेत्रमा उदारीकरण भित्र्यायौँ। त्यस्तो बेला बाहिरका उत्पादनसँग हाम्रो जस्तो प्रविधिका उद्योगले कसरी प्रतिश्पर्धा गर्ने थिए होलान् भन्ने त आफैँ आँकलन गर्न सकि हालिन्छ नि। अहिलेकै सन्दर्भमा हेर्दा खादाको उदाहरण हेरौँ। चीनबाट आउने खादा नेपाली ढाकाको भन्दा आधा नै सस्तो छ। त्यसैले चाइनिज खादा नै धेरै बिक्छ। कुनै समय स्टिलको उद्योग पनि हाम्रो राम्रो थियो। त्यो विस्तारै कोल्याप्स हुँदै थियो। पछि फेरि हामीले स्टिल आयात गर्ने र त्यसलाई प्रशोधनपछि भारतलाई नै बिक्री गर्ने रणनीति बनायौँ। त्यसैले आज स्टिल आयात र निर्यात दुबै थोक धेरै हुने उत्पादनमा पर्छ। अझ यी त सरकारी नभइ निजी क्षेत्रका उद्योग भए। सरकारी उद्योग थिए भने हालत झन् कमजोर हुन्थ्यो। त्यसैले सरकारले निजीकरण गरेर गलत गरेको थिएन। फेरि इँटा, जुत्ता बनाएर बस्ने सरकारको काम पनि होइन।

आज बाँचेका संस्थानहरु जस्तो नेशनल ट्रेडिङले जग्गा बेचेर कर्मचारीलाई बिदा गर्यो। साथै नेपाल टेलिकम लगायतका केहीले नाफा पनि दिएका छन्। हामीले हिजो निजीकरण गरेका उद्योग चाहिँ राखि राखेको भए अहिले कुन अवस्थामा हुन्थे होला?

ठ्याक्कै यहि भन्न त गार्ह्रो छ। तर, नेपाल टेलिकमकै उदाहरण हेरौँ न। अहिले टेलिकमकले नाफा दियो भन्छौँ हामी, तर यसको मोनोपोली बजार थियो। त्यही बेला यो क्षेत्रलाई 'लिबरलाइज' गरिदिएको भए हामी सूचना प्रविधिमा आज भारतकै अवस्थामा पनि पुग्थ्यौँ होला। यो कम्पनीले आज पनि किन यति धेरै नाफा गरिरहेको छ त भन्दा मोनोपोली हुँदा नै धेरै संख्यामा ग्राहक तयार गर्यो साथै मान्छेहरुले 'स्विच' गर्न पनि चाहेनन्। त्यसैले आज पनि यसको ब्यापार उत्साहजनक छ। तर, त्यस्तै कुनै समय मोनोपोली बजार जनकपुर चुरोट आफैँ सकियो। त्यसैले हरिसिद्धि र बाँसबारीलाई पनि यही बिन्दुमा राखेर हेर्नु पर्छ। फलानो उद्योग बाँचेको भए यस्तो हुन्थ्यो, त्यो बाँचेको भए उस्तो हुन्थ्यो भनेर कल्पना गर्नु क्षणिक बौद्धिक आनन्द मात्र हो।

सरकारले निजीकरणताका संस्थानहरुकको मूल्यांकन चाहिँ तुलनात्मक सस्तो गर्यो भन्ने भनाइ पनि छ। भनेपछि निजीकरण सैद्धान्तिक रुपले गलत होइन, यसको कार्यान्वयन पक्ष फितलो भयो?

व्यवस्थापकीय र सञ्चालन कमजोरी नै हो। किनभने सरकारले यी उद्योग निजी क्षेत्रलाई जिम्मा लगाउनुको तात्पर्य यिनीहरुको सञ्चालन अझ राम्रो बनोस् भन्ने थियो। तर, त्यसरी दिने र किन्ने क्रममा बेइमानी भयो। जसले किन्छु भनेर लियो उसले आफुले चलाएन। एजेन्ट जस्तो बीचमा बसेर फेरि अर्कोलाई बिक्री गर्ने काम गर्यो। त्यही चाहिँ राम्रो भएन।

तर, यसले निजी क्षेत्रलाई ओद्योगीकरणको जग हाल्ने काम पनि त गर्यो नि?

सरकारले संस्थानहरु बेचेकै कारण मात्र औद्योगिकरणको जग बस्यो भन्न त अलि मिल्दैन। त्यस बेला उद्योग व्यवसाय ऐन, श्रम ऐन लगायत २१ वटा निजी क्षेत्र प्रवर्द्धन गर्ने ऐन आएका थिए। कतिपय वस्तु भारतबाटै आयात गर्दा समेत डलरमा किन्न दिइयो ताकि मूल्य धेरै नबढोस्। त्यसैले औद्योगिक वातावरणको जग बसाउन एउटा मात्र नीति या निर्णयले काम गरेको छैन। सरकारले आफु बिजनेशबाट पर बसेर संस्थानहरु निजीकरण गर्नुले पनि अवश्य निजी क्षेत्रको हौसला बढाउने काम भने गरेको छ।

साथै समग्र निजीकरण र उदारीकरणलाई नै गाली गर्ने जुन राजनीति छ, त्यो चाहिँ बिल्कुल गलत हो। आफ्नै उदाहरण हेरौँ न, हामीले सुरुमा मोवाइलको सिमकार्ड लिन लाइन बस्नु पर्थ्यो। जब एनसेल आयो नेपाल टेलिकमले ठाउँ ठाउँमा स्टल राखेर सिमकार्ड बिक्री गर्न थाल्यो। त्यसैले उदारीकरणको बिरोध त बिशुद्ध राजनीति मात्र हो। बिशेषगरि कम्युनिष्टहरु सरकारमा आउँदा आफ्नो 'आइडिया ए, सेल गर्न आइडिया बी' लाई गाली गर्छन्। सामाजिक भत्ताहरु बढाउन उदारीकरणले देश बिगार्यो, जनतामा आउने पैसा मिलाएर खाइदिए जस्ता भाषण गर्छन्। त्यसैले निजी क्षेत्रलाई कर बढाउनु पर्छ भन्ने तर्क उनीहरुको हुने गर्छ। तर, साँच्चिकै कर बढाउन पनि सक्दैनन्। आयातमा केही चार्ज थप्ने बाहेक अरु गरेको देखिँदैन।

हिजो जो सत्तामा पुगे पनि उनीहरुले त मुखले गाली गरे पनि उदारीकरणबाट पछाडि फर्कन सकेनन्। अहिले चाहिँ बाम गठबन्धनले घोषणापत्रमै 'राज्य पूँजीबाद' को लाइन लिएको छ। अबको परिदृश्य कस्तो होला त ?

मलाई खास गरि कम्युनिष्ट नेतृत्वको सरकार बन्दा डर लाग्ने भनेको बजेट व्यवस्थापन प्रति हो। पछिल्लो एक दशकमा पाँच पटक चालु खर्चको बृद्धि राजश्वको बृद्धिदरभन्दा धेरै भएको छ। ती पाँच पटकमध्ये चार पटक कम्युनिष्ट अर्थमन्त्री थिए। राजश्वले चालु खर्च धान्नु पर्छ भन्ने सिद्धान्त नै हो। भारतको बजेटमा 'प्लान र ननप्लान एक्सपेन्डिचर' भन्ने हुन्छ। त्यो प्लान एक्सपेन्डिचर साधारण खर्च हो र राजश्वबाट धानिने हो। पूँजीगत खर्च ऋण लिएर गर्दा पनि हुन्छ। किनभने त्यसले निश्चित बर्षमा प्रतिफल दिन थाल्छ। हाम्रो घरमा पनि यही सिद्धान्त लागु हुने हो। खाना कपडा किन्न नियमित आयले धान्नु पर्छ तर फ्रिज ऋण लिएर किन्न मिल्छ भनिन्छ। हामीले चालु खर्च नै ऋणबाट गर्न थाल्यौँ, विदेशीलाई मागेर कर्मचारीलाई तलव खुवाउनु पर्यो भने त्यसले ध्वस्त गर्छ। त्यही कारणले हामीले उदारीकरण भित्र्याउनु परेको हो। राज्यले आफ्नो आयले धान्न नसक्ने अवस्था भएपछि संस्थान बेचेर भए पनि खर्च चलाउने निर्णय लिएको थियो। त्यही सन्दर्भमा भ्याट लागु भयो।

कम्युनिष्टहरु सत्तामा आउँदा म किन डराएको हो भने उनीहरुले आउँदा चालु खर्चमा धावा बोल्न नडराउने देखिएको छ। साथै पूँजीगत बजेट पनि खुत्रुके परियोजनामा हालेर नियमित दोहनको बाटो बनाएको समेत देखिन्छ। साथै लोकप्रियताका लागि बढाइने सामाजिक सुरक्षा कहाँबाट धान्ने? त्यसैले वित्तीय अनुशासनको वातावरणप्रति चाहिँ मेरो डर हो।

विकास निर्माणको कुरा पनि त गरेका छन् नि त उनीहरुले?

विकास निर्माणको कुरा त सबैले गरेका छन्। त्यस्ता मिठा कुरा सुनाउन त कांग्रेस, कम्युनिष्ट दुबै दल कहाँ कम छन् र? रेलकै कुरा पनि कांग्रेस एमाले दुबैले ३० बर्ष अघि नै उठाएका थिए। खोइ सञ्चालन? अहिले ३० बर्षमा यो गर्छु र १५ बर्षमा त्यो गर्छु भनिएको छ। तर पाँच बर्षमा के गर्छु भन्ने चाहिँ छैन। अस्ति भर्खरै ल्याइएको स्थानीय तह निर्वाचन घोषणापत्र र अहिलेको घोषणापत्र कसैको मेल खाँदैन।

लोकप्रियताका लागि दुबैको समान प्रतिश्पर्धा छ भने कांग्रेसबाट भन्दा कम्युनिष्टको सरकारप्रति बजेट सन्तुलनमा यहाँ किन डराउनु भयो?

अहिलेसम्मको उदाहरण हेर्दा कांग्रेसले धान्न नसक्ने गरि खर्च बढाउन चाहिँ जोड गरेको देखिँदैन। उनीहरुले बढाए पनि राजश्वसँग तालमेल मिलाएका छन्। तर, यसपालीको घोषणापत्रमा कांग्रेस पनि राम्रैसँग बहकिएको चाहिँ हो। सामाजिक सुरक्षालगायत भत्ता बढाउने लोभ देखाएर भोट तान्न खोजेको छ। तर, जब सरकार संचालन गरेर बजेट निर्माणमा यिनीहरु जान्छन् त्यो बेला चाहिँ अहिलेसम्मको उदाहरणमा कम्युनिष्टभन्दा कांग्रेस नै अनुशासित देखिएका छन्।
तर, संसदबाट पास भएको बजेट बाहिरबाट खर्च माग गर्ने र दिने दुबै प्रवृत्तिमा कांग्रेस पनि अगाडि छ ?

हो यस्तामा दुबै पक्षको कमजोरी छ। तर, मैले चाहिँ कहाँ फरक देखेको छु। स्रोत नभइकन कांग्रेसको सरकार हुँदा जबरजस्ती कार्यक्रम हालेको चाहिँ छैन। स्रोत छ भने त गर्दा भइहाल्यो नि। कम्युनिष्टहरुले चाहिँ स्रोत बिना पनि कार्यक्रम हालिदिने र बजेट व्यवस्थापनमै दूरगामी असर पर्ने अवस्थालाई पनि मतलव नगरेको देखिन्छ। कम्युनिष्टहरुको राजनीति नै 'ग्रज' बाट सुरु हुने हो। उनीहरुमा यो दबिएको छ यसलाई पैसा बाँड्नु पर्छ भन्ने मान्यता हुन्छ तर स्रोत कताबाट आउला भन्ने मतलव हुँदैन। तर, 'प्रोग्रेसिभ' हरुको भने पहिला लगानी गरौँ, स्रोत तयार गरौँ त्यसपछि मात्र वितरण गरौँ भन्ने मान्यता हुन्छ। यसको अर्थ मैले कांग्रेसको निरपेक्ष समर्थन गरेको होइन। अहिलेसम्मको व्यवहार विश्लेषण गरेको हो। कम्युनिष्ट अर्थमन्त्रीलाई स्रोतको सुनिश्चितता बिना खर्च नबढाउनुहोस् भनेर सुझाव दियो भने उहाँहरु मान्न तयार हुनु हुन्न। ३० बर्षदेखि यो दबिएको छ त्यसैले वाँड्नै पर्छ भन्ने तर्क गर्नु हुन्छ। उहाँहरुको आँखा 'प्रोडक्टिभ भन्दा पपुलिष्ट' कार्यक्रममै बढि परेका देखिन्छ। फेरि पनि भन्छु यसको मतलव कांग्रेस सबैमा ठिक छ भन्ने होइन। विगतका यस्ता व्यवहार छोडेर यो चुनावको घोषणापत्रका आधारमा दुई दललाई विश्लेषरण गर्ने हो भने चाहिँ खास फरक देखिएको छैन।

कांग्रेस आए धनी र गरिबबीचको खाडल झन् बढ्ने जोखिम भयो नि?

त्यो कसरी? हाम्रो अर्थतन्त्र अमेरिकी शैलीमा त चलेको होइन। त्यहाँ जस्तो कर्पोरेटलाई धेरै कर छुट दिने र मध्यमवर्गबाट बढि असुल्ने प्रवृत्ति त हुँदै होइन हाम्रो। हाम्रो असमानताको सीमा नै धेरै सानो छ। नेपालमा बैंकिङ र अर्को कुनै औपचारिक क्षेत्रमा काम गर्नेको तलव बीच खास फरक छैन। हाम्रो असमानताको कारक भनेको त वर्तमान अर्थतन्त्र होइन पुर्ख्यौली सम्पत्ति हो। जसले धेरै जग्गा जमिन अंशमा पाएको छ समाजमा उही धनी कहलिन्छ। त्यसैले नेपालको सन्दर्भमा राज्यले असमानता बढायो भन्ने होइन। केही कुरामा सरकारको नजिक भएका 'सुडो प्राविधिक एवं टेक्नोक्र्याट्स' अतिरिक्त फाइदा लिएका हुन्। तर, समग्रमा राज्यको नीतिकै कारणले कसैलाई धनी र कसैलाई गरिब बनाउने अवस्था छैन।

कांग्रेसको सरकारले उदारीकरण, पूँजीगत लगानी, उत्पादकत्व अभिबृद्धि लगायतका काममा जोड दिएर हुने खाने वर्गलाई नै फाइदा पुर्याउँछ। कम्युनिष्टहरु त वितरणमुखी हुन्छन्, उनीहरुले त तल्लो वर्गका जनतालाई प्रत्यक्ष फाइदा पुर्याउँछन् नि?

यो सैद्धान्तिक कुरा मात्र हो। निजीकरण या पूँजीगत लगानीले माथि माथिलाई फाइदा हुने तल्लो बर्गलाई छुँदै नछुने भन्ने हाम्रो देशमा कहाँ देखिन्छ? यो चाहिँ अमेरिका, युरोपमा हुने हो। हामीले त्यही पढ्यौँ र त्यहिँ भन्यौँ। तर, हामीकहाँ त्यस्तो सिष्टम नै छैन। जस्तो अहिले हाम्रो सन्दर्भमा हेरौँ त आय र उपभोगमा सबैभन्दा ठूलो बृद्धिदर सबैभन्दा न्यून वर्गमा छ। जबकी युरोप र अमेरिकामा चाहिँ यो ठीक उल्टो हुन्छ। त्यही कारणले हाम्रो असमानता घटेको हो। निजी क्षेत्रले जब लगानी गर्छ त्यो बेलामा त रोजगारी पाउने त तल्लो बर्गले नै हो। त्यसैले हामीकहाँ एउटा बर्ग कमाएको कमायै गर्ने र अर्को चाहिँ गरिबको गरिब रहने वातावरण छँदै छैन। जब लगानी हुन्छ, प्रतिफल आउँछ त्यसको वितरण चाहिँ समान होस् भन्नेमा राज्य चनाखो हुनै पर्छ। लगानी नै गर्न नपाइ वितरण गर्न तिर लाग्दा त भएको स्रोत रित्तिएपछि कहाँबाट ल्याएर बाँड्नु?

हाम्रो सन्दर्भमा मालिक र मजदुर मिलेर काम गर्ने हो। प्रतिफल मालिकलाई मात्र नजाओस् भनेर श्रम ऐन ल्याएका छौँ। सामाजिक सुरक्षामा मजदुर र मालिक दुबैको योगदान सुनिश्चित गरिएको छ। त्यसैले यहाँ लोकप्रियताका लागि भाषण गरेजस्तो असमानता बढेको म चाहिँ देख्दिन्। 

Sunday, November 5, 2017

Doing Business 2018: Nepal ranked 105 and India 100

Doing Business 2018 report ranks Nepal 105 out of 190 economies in terms of ease of doing business. In South Asia, Nepal ranked third, after Bhutan (75) and India (100). Nepal’s distance to frontier, which is the relative distance between Nepal’s score and the best preforming economy in a given indicator, score (59.95) is higher than the average for South Asia (53.64).

Due to change in methodology the rankings are not comparable by year, but the distance to frontier (DTF) score can be compared. DTF ranges from 0 to 100 and a score close to 100 is better. Bhutan improved its DTF score in 2014 and has continued to maintain it at the highest level in South Asia. Similarly, the recent push to ease business regulations in India (GST and construction reforms are not reflected in DB2018) paid off as well.

In South Asia, Bhutan has the best overall environment for doing business. India got a big boost in rankings as its distance to frontier score increased from 56.05 to 60.76. All the countries’, except for Afghanistan, had an improvement of DTF score in DB2018.

The DTF score for India in starting a business is the lowest in South Asia. Starting a business requires 11.5 documents, 29.8 men days and 14.8% of income per capita. In Nepal’s case, it is 7 documents, 16.5 men days and 24.9% of income per capita.

In dealing with construction permits, India ranked 181 out of 190 economies (with a DTF score of 38.8). This indicator tracks the procedures, time and cost to build a warehouse, including obtaining necessary licenses and permits. In Nepal, to open a standardized warehouse, it requires 12 procedures, 117 days and 16.6% of warehouse value. Nepal’s DTF score is 55.74 and rank 157. In India, to open a standardized warehouse, it requires 30.1 procedures, 143.9 days and 23.2% of warehouse value.

In getting electricity, India has made a remarkable progress. This indicator measures the procedures, time and cost required to obtain a permanent electricity connection for a newly constructed warehouse. In India, it requires 5 procedures, 45.9 days and 96.7% of income per capita. Reliability of electricity supply and transparency of tariff are also considered, in which Nepal’s performance is miserable. In Nepal it requires 5 procedures, 70 days and 993.7% of income per capita to obtain an electricity connection. This places Nepal in 133 rank among 190 economies.  

To register property, an entrepreneur in Nepal is required to fulfill 4 procedures, takes 6 days and costs 4.8% of value of the property. It places Nepal 84th among 190 economies (with DTF score of 64.82). In India, it takes 8 procedures, 53 days and 8.4% of value of the property. With a DTF score of 47.08, India is ranked 154. 

In the ease of getting credit (measures the strength of credit reporting system and the effectiveness of collateral and bankruptcy laws in facilitating lending), Nepal scored a DTF score of 50 (rank 90) and India 75 with rank 29. India has improved a lot since 2014 and currently it has the most favorable conditions for getting credit.

In protecting minority investors (measures the strength of minority shareholder protections against misuse of corporate assets by directors, governance standards and corporate transparency), Npeal ranked 62nd with a DTF score of 58.33. Meanwhile, India ranked 4th with a DTF score of  80. Again, India has the best system for protecting minority investors in the region.

In South Asia, paying taxes is easiest in Bhutan. Paying taxes indicator measures taxes and mandatory contributions that a company must pay or withhold in a given year and the administrative burden complying with the regulations. In Nepal, there are 34 payments per year, takes 339 hours per year and companies pay about 29.6% of profit for tax and contributions. It places Nepal at 146th position out of 190 economies (with a DTF score of 58.01). India is ranked 119th with a DTF score of 66.06. In India there are 13 payments per year, takes 214 hours per year, and tax and contribution rate stands at 55.3% of profit. India’s rank is improving in this category as well.

In trading across borders, which records time and cost associated with the logistical process of exporting and importing goods, Nepal ranks 76th with a DTF score of 77.17. India is ranked 146th with a STF score of 58.56. In Nepal, it takes 56 hours to comply with export regulations at the border, costs $288 and takes 43 hours to comply with documentary requirements (at a cost of $110). For import, these numbers are 61, $190, and 48 ($80), respectively. In India, it takes 106.1 hours to comply with export regulations, costs $382.4 and takes 38.4 hours to comply with documentary requirements (at a cost of $91.9). For import, these numbers are 264.5, $543.2, and 61.3 ($134.8), respectively.

The other two indicators are enforcing contracts and resolving insolvency. Nepal has fairly better standing than India on these but India is catching up. 

The data for DB2018 are as of 01 June 2017. The ranking includes ten indicators: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The data also includes labor market regulations but it is not included in the ranking. 

This a transit post (waiting in Delhi airport transit after 9 hours long flight). So, please ignore the typos! :-)

Friday, November 3, 2017

Communists and fiscal imprudence in Nepal

It was published in The Kathmandu Post, 01 November 2017.



There is a danger of fiscal mismanagement by the Left alliance in case they secure a majority to form govt

The decision to forge a Left alliance for the upcoming provincial and federal elections by two major communist parties on October 3 baffled all the other political parties. The commitment to merge the Communist Party of Nepal (Unified Marxist-Leninist) (UML) and Communist Party of Nepal (Maoist Centre) immediately after the elections has rattled ‘democratic’ parties and international powers that hobnob with Nepali politicians and try to influence their decisions.

While some hailed the leftist alliance as a harbinger of political stability given the fickle coalition politics, others have raised concern over the intention of the alliance, seeing it as a means to hold on to power and tilt politics and the economy towards socialism characterised by flamboyant jingoism and redistributive experiments. Beyond these partisan arguments lies a real danger of fiscal mismanagement by the communist alliance in case they secure a majority to form a government in the upcoming elections.

Extractive politics

At the core of it, the alliance smacks of a desire to hold on to power and protect political and commercial interests—the antithesis of economic prosperity and political stability in the current political ecosystem. UML and Maoist Centre will try to reconstruct political and economic institutions such as private property, labour regulations, competitive practices, the judiciary, the bureaucracy, security of returns to investment and sound macroeconomic management to serve party interests and politicians. As seen in the past, communist governments have proactively supported unruly labour unions and strikes; debt-ridden public enterprises; cartels in sectors ranging from agriculture and construction to education, energy and healthcare; uneconomical redistributive pet programs; and land capture. These have resulted in the inefficient use of taxpayers’ money, substandard delivery of public services, and low growth potential.

For instance, UML and Maoist Centre jointly opposed licensing restrictions for new medical colleges and progressive reforms in the healthcare industry that are supported by a large section of the population and healthcare professionals. These two political parties are set against meeting any demands of Dr Govinda KC, a noted orthopaedic surgeon and philanthropic activist who just recently completed his 13th hunger strike protesting against the political parties’ attempt to pass a regressive medical education bill which prioritises politicians’ commercial interests but does little to ensure quality healthcare and access for common Nepali citizens. Similarly, bankers-cum-politicians from these parties lobbied to amend the Bank and Financial Institution Act to protect their commercial interests at the cost of sound corporate governance and banking practices.

Another example is the frequent transfer of professional staff that have been appointed for fixed terms in specialised offices. When UML came to power in the past, it did not waste time in placing yes-men in key positions. Three of these important specialised agencies are the Investment Board of Nepal, the National Reconstruction Authority and the Millennium Challenge Corporation Nepal. Appointing henchmen to key posts and awarding public contracts to quasi-political organisations faithful to these political parties have been hallmarks of their tenure in government.

These practices will not lead to political stability and economic prosperity. Instead, they will further erode effectiveness of progressive political and economic institutions. Note that this does not mean that the other political parties are clean of these malpractices. The difference is that some parties are less tainted than others.

Budgetary concerns

Leftist parties have traditionally favoured big increases to the fiscal budget, primarily due to their penchant for redistributive programs and pet projects irrespective of fiscal and macroeconomic soundness. Finance ministers from communist parties have lobbied for inconsequential hand-outs in the form of social allowance and the inclusion of multiple, small and incoherent pet projects to benefit their voter base and local contractors. Furthermore, they have discontinued or neglected previous reform initiatives, fostered moral hazards through blanket debt relief and self-employment programs, and have tried to bring in a supplementary budget despite recommendations from senior bureaucrats advising them against such a budget. Their budgets were bloated, wastefully redistributed and fiscally irresponsible. Recurrent spending growth outstripped revenue growth in five of the last 10 fiscal years—four times of which occurred when communists were leading the finance ministry.

As the then finance minister, Baburam Bhattarai increased the budget by almost 47 percent in 2008/09 and waived off farmers’ loans with a hope of lowering their debt burden and eventually encouraging more farmers to produce more goods. Instead of increasing agricultural productivity, the blanket loan waiver (a good move if well targeted and implemented efficiently) fostered a moral hazard, as these farmers are now just as indebted as before. The emphasis on cooperatives and attempts to tame the private sector also backfired. The mushrooming of cooperatives—of which over 50 percent were saving and credit cooperatives that directly competed with commercial banks in the absence of a strong cooperatives regulator—and their reckless conduct aggravated the financial sector crisis in 2011. Recently, lawmakers from these communist parties also actively lobbied to ensure that the amended cooperatives bill had less governance standards and regulatory oversight than suggested by experts.

The first fiscal budget by the Maoist government set the stage for an ever-increasing budget envelope as it was hard to discontinue populist recurrent programs in subsequent budgets. Additionally, championing unionism in public service was another detrimental policy that resulted in factionalism within the government service, encouraged frequent staff transfers, and eroded the effectiveness of public service delivery.

When UML’s Bharat Mohan Adhikari was finance minister in 2011, he tried to bring a supplementary budget barely three months before the end of fiscal year, completely ignoring the full year budget presented by former finance minister Surendra Pandey from his own party. Adhikari’s conduct was so irrational that the then finance secretary Rameshore Prasad Khanal resigned citing differences over the supplementary budget, handling of the fake value added tax bills scam, and the transfer of officials in the ministry. Furthermore, the budget for 2011/12 was leaked before Adhikari presented it to Parliament.

UML’s Bishnu Prasad Poudel introduced another fiscally irresponsible, bloated budget when he was finance minister in 2016. He increased the budget outlay by 74.5 percent by modestly increasing spending allocation for post-earthquake reconstruction and by aggressively diverting resources to multiple small pet programs and projects that had budgetary and macroeconomic consequences in the following year as well. Furthermore, during his tenure, key leadership in specialised agencies were unceremoniously replaced. 

Overall, communist governments have a history of being fiscally imprudent and protective of their political and commercial interests at the cost of sound economic and social reforms. In terms of progressive economic policies and inclusive institutions, we should not expect too much from the latest communist alliance.

Wednesday, October 25, 2017

Indian economy gets an implicit stimulus

After much criticism of the government over the deceleration of economic activities following demonetization and the rollout of GST (FY2018 Q1 growth slumped to 5.7%), the government has announced two major plans:

1. Recapitalization of state-owned banks: IRs2.11 trillion (IRs2 lakh 11 thousand crores) recapitalization package consisting of IRs1.35 trillion from sale of ‘recapitalization bonds’ and IRs76,000 crore from budgetary support and ‘market-raising’. Initially, the government had planned IRs20,000 crore bank recapitalization strategy for FY2018 and FY2019. This is a major step to ‘unfreeze’ the credit market where by banks are saddled with high non-performing assets (around IRs7.7 trillion) and major corporates high on debt already are not able to borrow with restructuring their loans. One question that looms large is that how is this not going to add to the fiscal deficit target of 3.2% of GDP for FY2018 (except for IRs18,000 already committed under Indradanush Recapitalization Scheme over the next two years)? Isn't recapitalization a form of net lending by the government (okay, you don't pay interest on it immediately after issuance but in subsequent years both interest and principal payments will need to be factored in)? CEA Arvind Subramanian says that recapitalization bonds do not impact fiscal deficit as per IMF accounting rules but will increase government liability/debt.


2. Approval of IRs6.92 trillion worth of highway projects: The plan is to construct 80,677 km of highways over the next five years. It aims to crate 14.2 crore man-days of jobs and would ensure substantial delegation of authority to enable accelerated implementation. This includes BharatMala projects (34,500 km of roads with an investment of IRs5.35 trillion) consisting of economic corridors, inter-corridor and feeder route, border roads and international connectivity, and coastal roads and port connectivity, among others.

One unanswered question is that will these implicit stimulus measures turn around the slumping economic activities, especially in FY2018? Both the reforms outlined above are medium-term measures and their effectiveness would depend on how fast and effectively they are implemented (coupled with administrative and operational reforms at PSBs and execution of capital projects).

Tuesday, October 10, 2017

Growth from above: Impact of trade disruptions was larger than impact of earthquakes

It is adapted from South Asia Economic Focus, Fall 2017. An earlier blog post on the same issue here (update figures here). 


With two major earthquakes in April and May, and a severe disruption of trade with India from August onwards, the year 2015 was no doubt Nepal’s most turbulent since the end of its armed conflict. The two earthquakes killed about 9,000 people, injured at least twice as many, and destroyed uncountable houses and buildings. Later in the year, dissatisfaction among the Madhesi minority about their representation under the new federal arrangements triggered protests that culminated in the complete shutdown of international trade with India. Official statistics put GDP growth for FY2015 (which starts in October 2014) at 1.6 percent, and for FY2016 at 0.8 percent. This represents a drop of roughly 4 percentage points relative to previous years.

Based on monthly nightlight data, the economic impact of the 2015 shocks was smaller than official statistics suggest. The earthquakes affected most severely rural areas that were characterized by low nightlight intensity even in good times. The fact that these areas were mostly in the dark suggests that even if local impacts were large in relative terms, they may not have made a major difference at the aggregate level. The impact of the trade disruption, on the other hand, was massive. Based on the elasticity approach, from June to October 2015 the GDP growth rate of Nepal declined by 4 percentage points. But economic activity bounced back strongly in November, and over the full year the GDP growth rate might have declined by less than 2 percentage points.


The shocks had a more substantial impact at the local level. This can be seen by using the spatial approach to estimate GDP by district, and then comparing the performance of districts directly affected by the shocks to that of unaffected districts. However, instead of spatially distributing the official annual GDP, the methodology is applied to the monthly GDP estimated using the elasticity approach. This way of proceeding allows to assess local economic activity on a monthly basis.

In comparing growth rates at the district level, it is important to keep in mind that the locations most affected by the earthquakes, or most affected by the trade disruptions, could be systematically different from other locations. As a result, they could grow at a different pace even in normal times. To address this possible bias, a “differences-in-differences” approach can be used.


The first difference is between the annual growth rate of local GDP in the two months following the shock and the annual growth rate in the same two months of the previous year. The two months considered are April and May in the case of the earthquakes, and September and October for the trade disruptions. Growth rates are computed relative to the same two months one year earlier. This first difference can be called a growth shock, for brevity. The second difference is between the growth shocks experienced by affected and unaffected districts. The median growth shock across districts in each group is used for the comparison.

Based on this exercise, in April and May 2015 districts affected by the earthquakes experienced a decline in their local GDP by 1.8 percentage points, while unaffected districts grew slightly faster than before. And in September and October 2015, districts in the Terai region closer to India contracted by 9.0 percentage points, whereas the rest of the country saw GDP growth decline by a more modest 1.4 percentage points. These results confirm, once again, that the impact of the trade disruption was much more severe than that of the earthquakes.

Wednesday, October 4, 2017

Communist alliance in Nepal; RBI lowers growth forecast in India

Communist parties form alliance for upcoming polls


Two major leftist forces-CPN-UML and CPN (Maoist Centre), along with the Babu Ram Bhattarai-led Naya Shakti Party-Nepalformed a broad electoral alliance ahead of the upcoming provincial and federal elections. They also agreed to form an eight-member panel that would work for a formal merger of the three parties at the earliest.

Meanwhile, Nepali Congress, which was taken by surprise by the latest political development, is considering a democratic alliance including Terai-based parties.


RBI keeps policy rate unchanged but lowers growth forecast


Anticipating upside risks to retail inflation, Reserve Bank of India (RBI)  kept interest rates unchanged at 6% on October 4. It sees upside risks to inflation coming from farm loan waivers, tates’ implementation of pay commission allowances, and price revisions following GST and rising international crude prices. The RBI expects inflation to rise from its current level and range between 4.2-4.6 per cent in the second half of FY2018 (ends March 2018). In August, the RBI slashed the repo rate by 25 basis points (bps). The central bank's medium-term target for CPI inflation is 4% (+/- 2%).

Gross value added (GVA) growth forecast is lowered to 6.7% from 7.3% owing to the adverse impact of GST implementation particularly on manufacturing activity; investment squeeze due to stressed balance sheets of banks and corporates; lower than expected kharif foodgrains output (deficient and uneven pattern of south-west monsoon);