July 6: With the deceleration in the country’s economic growth due to the Covid-19 pandemic, the National Planning Commission (NPC) is preparing to reassess the targets set in the 15th Five Year Plan as the target seem unachievable.
The government had planned to implement the 15th Plan from the current fiscal year. However, in the first year of implementation of the periodic plan, the country has been forced to experience a severe economic shock due to the pandemic. This situation has led NPC to launch a study to reassess the targets.
According to Dr Puspa Kandel, vice president of NPC, a study is being conducted to review the existing indices considering the impact of Covid-19 pandemic and lockdown on the country’s economy from March. “Though Nepal has achieved progress in the per capita income (PCI) and human development index (HDI) in the recent years, it will be difficult for the country to increase its PCI and HDI due to the adverse economic scenario,” he said.
As the targets set in areas such as PCI, HDI, poverty alleviation, government expenditure, private and foreign investment are unlikely to be met, NPC is preparing to make new adjustments in the 15th Plan. .
“We will soon reach the conclusion by studying which areas have been affected by the pandemic and the how much it could affect the goals of the 15th plan,” said Kandel.
According to NPC, the impact of pandemic will be seen in the first and second year of implementation of the 15th Plan. Kandel says that there is a need to improve the trend and priorities in government expenditure to cope with the current crisis. The commission had estimated that this year the country would have reached the target set for the list of developing nations if the Covid-19 crisis had not occurred.
In the 15th Plan, the government had aimed to reduce poverty below 10 percent and achieve an average growth rate of 9.6 percent in the next five years. According to NPC officials, the target to reduce unemployment rate from 11.4 percent to 4 percent is unlikely to be met under current circumstances. Other objectives including increasing life expectancy from 69.7 to 72 years, literacy rate to 90 percent and PCI to USD 1,595 will not be met, according to NPC officials.
Economist Keshav Acharya said that the ambitious target of economic growth will not be achieved, and government does not have the capacity to face the current crisis. “The 15th Plan has targeted to achieve around 10% economic growth on average yearly. But the big question is how will such an ambitious objective will be met?” he said.
Former vice president of NPC, Jagadish Chandra Pokharel thinks that availing foreign loans will challenging due to the global economic recession. He believes that the country might face economic crisis if the government’s revenue shrinks but its social responsibility increases.
“Even though the internal revenue is affected, the current expenditure has not decreased. The pandemic has increased expenditure towards social responsibility, creating imbalance in expenditure system which will exacerbate economic problems in the country,” Pokharel said. According to his analysis, the decline in remittances would further aggravate the economic crisis. “As the number of Nepalis returning from abroad is less now, remittance inflow has not decreased now. The inflow of remittance will decline significantly after two to four months,” he warned.