Views Expressed

The views expressed in this blog are mine,it does not reflect the view of the institution where I work.

Sunday, April 30, 2023

Where the money for poverty reduction is flowing?

 Simple Question for Economists?


Nepal Budget 2022/23: 


1. Budget allocation according to SDG Categories:

            No Poverty = Rs. 170.66 Billion

            Zero Hunger = Rs. 80.26 Billion

            Which Equals to Rs. 250.92 Billion

 

2. UNDP report Multidimensionally poor: 17.5 %  ( 52 Lakh) people

 

3. If Rs. 250.92 Billion budget is allocated equally to 52 lakh people then it equals to Rs. 48,000 for each. If four people per family then a family receives Rs. 1,92,000 per family per year. No more hunger and poverty for the year. But ?

 

How much of this amount go to the Household or People below poverty line?

 

Data Source: 

1. Budget Speech of Fiscal Year 2022/23  Annex 13 from:  www.mof.gov.np

2. UNDP Report, Multidimensional Poverty Index 2022 https://hdr.undp.org/sites/default/files/Country-Profiles/MPI/NPL.pdf

 



Friday, April 14, 2023

The Big Question for Banking Industry in Nepal

There have been many media news of Nepal Bankers Association meeting announcement about decision on interest rates

After the end of Covid-19 pandemic, each decision  on interest rate is reflected in the margin or mark-up of banks earning. The margin can be observed by the lending rate minus base rate and spread rate as shown in Fig 1 and Fig 2. Banks excess earning gradually increased (as in Fig, red arrow Þ). It is noted that each 1 percentage point is more than Rs. 50 billion annual burdens to public or earning of banks (as total Private Sector Credit is Rs. 5758 billion in mid-March 2023).

The banking market is confined with the deposits of public. The innocent depositors are only the price-takersSupply of deposit is highly interest inelastic, if all banks change their rate simultaneously in same direction. Deposits cannot immediately go out from the system, if all banks reduce the deposit rate at same point of time. On the other hand, the creditors are also bounded by the agreement, it is very hard for them to change the banks. Thus, any noncompetitive and industry level decisions (cartels) always harm the societySuch activities are neither economic, nor legal and even not ethical decisions in the society. This should not even be the objective of the such elite association of the society. The association should believe on fair competition. The price control activities of association are immoral too. In most countries, this is illegal and controlled by Antitrust Law also charges heavy fines if violated, the law facilitates competition. 

The good part of regulation is that the data, information and activities of banks are transparent. Even rules are violated, our future generation will evaluate and judge our activities, they may tag us as Cartels.  These experiences were in many countries as an example- the Britain's bank Cartels during (1914-late 1960s). This is our choice how we position ourself in the history. This is our moral responsibility too, not to encourage cartels anymore. Best wishes for all.  


The views are my personal.

In the Support of Free and Fair Economics!!!  :)


Data Sources: Table No. 50 Structure of Interest Rates, CMES, NRB

https://www.nrb.org.np/category/current-macroeconomic-situation/?department=red&fy=2079-80



Monday, January 16, 2023

Government Expenditure Pattern in Nepal

The structure of the government expenditure shows that the pattern of expenditure has been altered since 1998/99. Since the period, the share of recurrent expenditure gradually increasing and exceeds share of capital expenditure in total government expenditure. The patten shows that the expenditure has increased the cost of operation of government rather than raising productive capacity of the economy.  


The picture shows the pattern of government expenditure of Nepal since 1975 to 2022, the expenditure are categorized as recurrent, capital and financial expenses. The recurrent expenditure is the expenses for government employees and other daily services, capital expenditure is the expenses for physical capital assets and financial includes repayment of loan and interest accrued for government debt of Nepal.


Friday, June 12, 2020

Types of Businesses in Nepal


The findings of the Economic Census 2018 reveal that household based economic activities have significant share in Nepal. There are 42 percent businesses are own house businesses, followed by the businesses in buildings 35 percent while are in the businesses buildings. The shopping mall only covers 2 percent of total business and 4 percent business are as types of businesses.   

Types of Businesses in Nepal
(Registered and Non-Registered)
Types
Number
% Share
Street Business
34,101
4
Home Business
386,323
42
Business in Building
323,621
35
Traditional Market
67,441
7
Modern Shopping Mall
20,809
2
Exclusive Block or Building
58,344
6
Others  1)
32,717
4
Total
923,356
100
Data Source: www.cbs.gov.np
sumanneupane.blogspot.com




Tenure of Business Place
(Registered and Non-Registered)

Number
% Share
Owned
400,848
43
Rented
426,380
46
Lease/Contract
7,859
1
Others
22,912
2
NA1
65,357
7
Total
923,356
100
Source: www.cbs.gov.np

There are 46 percent of businesses are operated in rented house, while 43 percent are using own places for businesses and 1 percent businesses are operating with lease contracts.






Wednesday, June 10, 2020

Economic Entities and Employment Distribution in Nepal: Where to Focus for Post-Pandemic Recovery?

Distribution of Economic Units by Broad Industrial Classification Table I presents that there were 9,23,356 business units (establishments) in 2018 by division of economic sector.  There are equal numbers of registered, 50.1 percent, and non-registered, 49.9 percent, establishments in Nepal. 
In Nepal, the main activities of the economic units are Wholesale and retail trade including repair of motor vehicles and motorcycles (53.9 percent); followed by accommodation and food (14.1 percent); manufacturing (11.3 percent) and ather  activities (20.7 percent).
In Nepal, ‘wholesale and retail trade’ is main establishment is followed by ‘accommodation and food’ while 'manufacturing' is in the third position in terms of number of establishments in Nepal. However,  if we observe in terms of employment (engagement) ‘wholesale and retail trade’ is followed by ‘education’ and ‘manufacturing’ in the third and ‘accommodation and food’ is in the fourth position in terms of number of establishments in Nepal. This reflects, service sector is the main sector in terms of  employment of people in Nepal.
Table 1
Main Economic Activities in Nepal
Types
Share (%)
Total Businesses

Employment or Engagement of Persons

1-10
11-50
51-100
101 &over

100
923,356

96.0
3.6
0.2
0.2
Wholesale, retail trade
53.9
498,069

53.6
0.3
0.0
0.0
Accommodation, food
14.1
130,540

13.9
0.2
0.0
0.0
Manufacturing
11.3
104,058

10.8
0.4
0.1
0.1
Others Remaining
20.7
190,689

17.6
2.7
0.2
0.1
Source: Economic Census, 2018 available at www.cbs.gov.np
www.sumanneupane.blogspot.com
In 9,23,356 economic units, most are small and medium size industries. Where 96 percent of economic units have engaged (employed) 1-10 people, while there are 3.6 percent businesses which have engaged (employed) within 11 to 50 employees.

Table II: Employment (Persons Engaged) in Number
(based on Economic Census, 2018)
Sectors
% Share
Total
All Industries
3,228,457
Wholesale, retail trade
30.6
988,346
Education
15.9
513,336
Manufacturing
15.8
510,523
Accommodation, food
10.7
346,273
Financial, insurance
6.4
206,979
Others All
20.5
663,000
Source: Economic Census, 2018 available at www.cbs.gov.np
www.sumanneupane.blogspot.com
The economic census shows that out 9,23,356 business units provide employment to 32,28,457 people in Nepal. It includes only registered businesses in agriculture and both registered and non registered business in all other sectors. Thus, to cushion the loss in employment, the government should focus to revive small and medium size business that employs 1-50 people per businesses and it is 98 percent of the total businesses in Nepal. 

to be continued .....