Economic Encounters in Nepal
A s the world is facing more and more massacre from the virus COVID-19, to save lives, nations across the globe are doing their best spending trillions of dollars. Moreover, the large nonprofit organi...
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s the world is facing more and more massacre from the virus COVID-19, to save lives, nations across the globe are doing their best spending trillions of dollars. Moreover, the large nonprofit organizations are also into it with all their effort physically and financially BUT worst fear is yet to come.
Lockdown initiated by government and Nonprofit organizations have prevented consumers from spending at their full capacity impacting negatively on the revenue generation of various profit making companies. To recover from such loss, it is obvious for companies to save their revenue as much as possible even if they have to cut lose their production, sales or their own employees. Where overall decrease in production and sales of such massive companies could unable retailers and dealers to fulfill the demand of consumers easily which is likely to inflate the prices of several products. On the other side of the bay, the employees who just lost their jobs will not be able to afford their basic requirements because of the income loss & inflated price. Hence such circumstances directly lead to the economic spiral. Impact of 2020 amid Coronavirus Pandemic may be much worse than that of 1930’s economic depression. Some of the companies have already given us an example, as uber has cut off their 3700 workers, The Air New Zealand has sacked 3500 of their workers which happens to be the one third of their employees and Boeing company removing it’s 10% of the workers. Assuming, the impact of COVID-19 shall decline in the next half of the year IMF (International Monetary Fund) projected the global economy to grow by 5.8 % in FY 2021 if effective policies and the rules are applied by different countries to overcome this recession. Even having the 5.8% economy growth in 2021 it is estimated there will still be Cumulative Output loss of 9 trillion USD which is greater than that of Japan and Germany’s combined. Which means, had pandemic not taken place, there would have been economic growth of additional 9 trillion USD.
It would be unlikely to say, that this ocean of trouble has not touched the territory of the country like NEPAL. The country where the travel and tourism alone contributed to 7.9% of their GDP , now the pandemic have forced the industries like, airlines, travel and tourism, hospitality industry to shut down. Moreover, the IT companies like Jarva has already sacked 50% of their employees and so did many production companies. Hence, the government should start reflecting on upcoming fear. Some of the ways by which government could halt this recession right now is by taking measures like:
Pumping the money back
Spending money on its citizen’s welfare, providing short-term loans, investing in the medical welfare system and direct financial support to affected families will be helping to save the lives and livelihood of people who later will be the foundation to recover in 2021. Doing so, government is helping the country’s economy to maintain the liquidity in the market. Making such expenses helps to circulate the money, circulation of money increases the availability of money in the market which is also known as Liquidity. Hence, later when the Pandemic is over, business market, along with the government, will be able to make faster comeback with lesser economic damage to repair.
Promoting Agriculture
Agriculture is profession possessed by the 70% of the population in Nepal. Despite the increasing commercialization and exporting of high value agricultural commodities, Nepalese agriculture market is still not self-sustaining. Hence, the policies comforting farmers with subsides and incentives could promote agriculture more among farmers. Because of unproper utilizations of product produced within country, they have to be exported and later the same products have to be imported with higher prices. Hence, reducing such intersection between import and export can also help the economy to save as much as possible.
Cutting the Taxes
This is a way to motivate the country’s business to start their production, showing the less chances of loss and low tax fares as an incentive business could reopen with positive hopes. Hence as the goods and services of those business starts getting into market the circle of demand and supply start to flow again which will help to surge the economy of the country.
Handling the private Banks
Banks are taken as backbone of a country and it is same in the context of Nepal also. Banks help to circulate the money, maintain the pressure and liquidity also. But it is likely for the citizens to withdraw their deposits in this pandemic. Specific industries producing daily consumed foods, medicine and vegetables can be monitored to make transactions with specified limits or with bank guarantee only. Doing so, money within the bank and industries will start moving slowly helping to increase the liquidity in these conditions of pandemic. And such operation will help the economy to start repairing itself.
Taking the Loans
After massive hit by pandemic, lots of countries are affected but the worst happens to the developing counties. Hence, to save such counties from hit, large banks and organization provide loans and
contribution, by accepting such handout the country will be able to heal itself over a time period. But that money has to be properly budgeted or utilized.
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