--By TC Correspondent

 

 The failure of the government to meet targeted economic growth rate paved a way for its setback. The Economic Survey 2012 made public by Finance Ministry this week shows that the government’s target of achieving 5.5 per cent economic growth in 2012-13 slipped by nearly 2 percent age points limiting at 3.6 per cent.

 

In the first 11 months of current fiscal year, the national economy suffered from near double-digit inflation and ballooning trade deficit along with the low economic growth, the survey said. National economy has expanded to Rs 1,701 billion and per capita income of Nepalis edged up to Rs 62,797 from the Rs 58,274 recorded last year.

 

However, per capita income in dollar terms reduced to US $721 from US$742 of last year. The government also failed to contain inflation at 7.5 per cent as predicted. Imbalance in supplies due to an almost double-digit decline in key farm products jacked up inflation to 8.2 per cent by mid-June this year, according to the survey.

 

Skyrocketing trade deficit, which touched Rs 438.67 billion during the first 11 months of the current fiscal year, according to Nepal Rastra Bank data, has been identified as another challenge in the economy. Revenue mobilization however reached Rs 280 billion as of July 10 this year, which is close to the target of Rs 289 billion.

 

The government also failed to expedite capital expenditure in the fiscal year 2012-13. Though the government announced a budget of Rs 404.82 billion for the current fiscal year, only Rs 317 billion was spent by July 10, according to the survey. The amount excludes expenditure in 15 districts where the Treasury Single Account (TSA) system has not been implemented so far.

 

However, the balance of payments surplus of Rs 52.69 billion, a 21.3 percent rise in remittance inflow to touch Rs 388.46 billion and record high foreign exchange reserves worth Rs 511.69 billion at the end of the current fiscal year have brought cheer among officials.

The Economic Survey also shows that the share of consumption in the Gross Domestic Product (GDP) increased to 90.7 percent this year from 87.3 percent recorded last year.

 

During the first eight months of the current fiscal year, the government added 1,987 km transmission lines, 128 km black-topped roads, 169 km gravel roads and 194 km earth roads despite the low spending capacity of the government due to late announcement of a full budget.

 

 Whopping Trade Deficit

 

Nepal racked up more than Rs 441.33 billion in trade deficits in the first 11 months of current fiscal year, according to the Current Macroeconomic Situation of Nepal (Based on Eleven Months’ Data of 2012-13) released by Nepal Rastra Bank (NRB).

 

In the first 11 months of fiscal year 2012-13, merchandise imports surged by 21.2 percent to Rs 508.60 billion. Such imports had risen by 16.8 percent to Rs. 419.57 billion during the corresponding period of the previous year. Total imports surged in the review period due mainly to the rapid increase in imports from India.

However, exports had increased by only 6.3 percent to Rs 67.21 billion during the same period of the previous year. The growth of total export remained low in the review period due to the slowdown in exports to both India and other countries, according to the report of NRB.