Per capita income grows, slowly


In a mix of good news and bad news about the country’s economy this fiscal, the per capita income of a Nepali stands at $742, while the growth rate in the income is the slowest in the last three years.

The Economic Survey 2011-12 released on Saturday shows that after two years of impressive growth, the country’s per capita income increased by only $26, an increment of just 3 percent as compared to last year.

The last two fiscal years (2009-10 & 2010-11) had witnessed a remarkable growth in the per capita income, with each year seeing a growth over to $ 100.  The per capita income in the fiscal year 2009-10 had increased by $113 and by $101 in the year 2010-11.

“The per capita income has been growing due to the growth in remittance and increased agriculture production,” said Dipendra Bahadur Kshetry, the vice-chairman of the National Planning Commission (NPC). “However, a quantum jump seen in the per capita income in the last two fiscal years did not happen this year due to the weak industrial sector.”

Thanks to impressive performance of the agriculture sector, the gross domestic product (GDP) stood at 4.6 percent, a three-year high. The GDP growth was 3.8 percent in 2010-11 and 4.3 percent in 2009-10.

This fiscal, the agriculture sector grew by 4.93 percent—the best in the last four years. According to the survey, the country’s food production rose by 9.9 percent to reach a record high of 9.45 million tonnes this year.The industrial sector has been hit by unfavourable business environment that has resulted in its meagre growth this year, the lowest in three years.

The survey shows that the industrial sector’s growth has remained 1.2 percent on an average in the last five years. The growth of the sector was 2.9 percent last fiscal and 4.1 percent the previous year “This is a clear indication of little investment and whatever has been invested is not in the productive sector,” said Jagadish Chandra Pokharel, the former vice-chairman of the NPC. “Despite the declaration of the FY 2012-13 as investment year, we failed to attract investment.”

The unfavourable investment climate is also reflected in the decreasing private sector investment. According to the survey, private sector investment, as compared to GDP, has been on a three-year low at 15.3 percent this fiscal. It was 16.3 percent last year (2010-11) and 17.7 percent the previous year. “Without necessary infrastructure like electricity, road and harmonious labour relations, there is hardly any possibility of better investment in the country,” said Kshetry.

Despite this, the economic indicators show some good signs. The savings of Nepalis have gone up, balance of payment (BoP) surplus has reached a record high, foreign exchange reserve has touched a record high, while tourism income and remittance inflow have also gone up significantly. The BoP surplus has reached Rs 1.12 billion as of the first 10 months of the fiscal year, according to Nepal Rastra Bank. The savings against GDP has gone up 10 percent from the 8.6 percent last year, according to the survey. “This is a good indication for the economy,” said Pokharel. “However, it cannot be called good altogether if better saving has been achieved at the cost of investment.”

The survey shows that the government needs to buck up when it comes to infrastructure development against the backdrop of dismal performance in road expansion and hydroelectricity generation.



Posted on: 2012-07-15 08:23