Nepal's Economic Leaders Call for Urgent Reforms to Revive Struggling Economy

Auto Industry Faces 72% Degrowth, Urgent Reforms Needed to Prevent Collapse
Nepal's Economic Leaders Call for Urgent Reforms to Revive Struggling Economy

Bhawani Rana, ex-president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and Karan Chaudhary, head of the Automobile Association of Nepal (NADA), stressed the immediate requirement for consistent economic policies and targeted reforms in various sectors from the authorities to rejuvenate Nepal's struggling economy.

Speaking at a conference in Kathmandu on Thursday, Rana stated that the country's economy is in a challenging situation, with industrial businesses currently operating at only 30 percent capacity. She blamed unstable government policies for demoralizing the private sector and hindering growth.

Rana called for stability in bank interest rates and consistent economic policies from the government. She insisted that policy reforms in the upcoming budget are crucial to boosting private sector morale and improving the economy.

The former FNCCI president pointed out that businessmen have been unable to repay loans or borrow further from banks and markets due to the economic slump. She cautioned against overinvestment in certain sectors like hotels, cement, pharmaceuticals and sugarcane without proper demand analysis, leading to oversupply issues.

Rana endorsed the concept of diversifying investments across various sectors through a thorough assessment of deficiencies and assessing demand, rather than solely depending on asset collateral. Furthermore, she underscored the significance for smaller nations such as Nepal to focus on the opportunity to export excess production.

Turning to the auto sector, Chaudhary claimed it is facing a 72 percent degrowth due to strict government policies. He warned that if the next budget fails to address the auto industry's problems, the sector could collapse, becoming a cautionary tale.

Interestingly, Chaudhary stated that the auto business was thriving during the COVID-19 pandemic when other sectors struggled. However, he cited the theft of spare parts as an additional factor contributing to the current decline.

Both industry leaders emphasized the need for the government to prioritize administrative reforms and policy stability to revive the economy. Rana observed that currently, administrative expenses exceed development expenditures in Nepal, calling for a rebalancing of priorities.

As the country gears up for the next budget, these leaders are urging the government to heed their calls for reforms, stable policies, and targeted measures to boost specific sectors and restore confidence in the private sector, seen as crucial for economic revival.

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