November 9: Province 1 is likely to become the second-largest alternative source of foreign exchange earnings. A study of Nepal Rastra Bank (NRB) shows that remittances are the key source of foreign exchange earnings, and Province 1 has the potential to become the second-largest source of forex. The finding is based on a research conducted by NRB last year on the economic activities of Province 1.

The report states that the tourism sector of Province 1 can be developed as a sustainable alternative source of earning foreign exchange after remittances.

The study suggests that the state needs to invest in tourism infrastructure to benefit from its geographical and climatic diversity, biodiversity, social, religious, and cultural diversity, recreational potential, and proximity to two neighboring countries, India and China. The NRB report states that the tourism sector can be made a source of foreign exchange if investment in infrastructure is increased.

The study further states that Province 1 will also make a great contribution to the commercialization of agriculture. The state has the highest share of the country's agricultural production at 21.5 percent.

Due to this fact, the state can contribute to import substitution of agricultural products by commercializing the agricultural sector through the use of modern technology, expansion of investment, and development of infrastructure.

Irrigation, hydropower, and water transport development also have high potential. It is mentioned in the report that there is potential for the development of irrigation, hydropower, and water transport due to the rivers like Arun, Tamor, Dudhkoshi, Mechi, Kankai, and Triyuga, and the high Himalayas and the Mahabharata range.

The report states that if electricity generation and irrigation can be properly developed by mobilizing domestic and foreign investment, seasonal dependence on agriculture will be reduced and productivity of arable land and agricultural production can be increased and industrialization will be supported.

Establishing industries and factories in Province 1 will make it easier to export manufactured goods and services. The state shares borders with both India and China, and the Koshi and Mechi highways facilitate access to both neighboring countries. Therefore, the establishment of foreign-invested industries and factories would be relatively easy to export manufactured goods and services, the report states.

As the internal and external markets for rural products are being ensured, the internal and export trade of agricultural and industrial products is also likely to expand, according to the report.

The report states that this is possible due to the rapid construction and expansion of Mid-Hill Highway and access roads to the highway.

According to the report, if the industries in the Sunsari-Morang corridor of Province 1 can be operated at full capacity, it will significantly contribute to the promotion of export trade.  The contribution of the industrial sector of Province 1 to the GDP of the country is in second place. In this context, it is mentioned in the report that industrial production will help in promotion of export trade and import substitution.

Among the possibilities, there are some challenges in the province. There is a challenge to allocate a sufficient amount in the annual budget in line with the strategic goals of economic development specified by the Periodic Plan. Achieving the goals of such schemes by providing continuity to regional priorities is also seen as a challenge.

As the data, information, and details related to agriculture, industry, services, and infrastructure are not completely reliable, there is a challenge to formulate a sustainable policy based on facts. The report states that such a problem has arisen due to a lack of systematic storage of information and data in data providers, establishments, and organizations related to agriculture, industry, services, and infrastructure.

It is also seen that there will be a challenge to effectively distribute and mobilize resources by identifying the goals and priorities of the federal, state, and local governments. The province will likely face a challenge to protect the domestic industries from being replaced due to increasing imports. 

The report also states that it will be challenging to create an environment that can benefit from the market of two big neighboring countries by promoting the production and business of goods and services within the state.

Due to the difficult geographical location, expanding financial access and increasing financial inclusion through financial awareness will also be a challenge to increase the use of available financial products and instruments, the report said. The NRB says that there is a challenge to attract domestic and foreign investment for the prosperity and development of the state as the internal investment capacity is limited.