Excessive Public Holidays Taking Toll on Economic Activities

The government’s decision to declare extended public holidays for the upcoming House of Representatives election has drawn concern from business leaders and economists, who say excessive holidays are taking toll on economic activities.

In 2022, when the elections to the House of Representatives and Provincial Assemblies were held simultaneously, the government had declared a two-day public holiday. However, for the upcoming election scheduled for March 5, the government has announced a three-day public holiday.

With Holi (Fagu Purnima) and International Women’s Day falling within the span of a week, the country will observe seven consecutive days of public holidays starting March 2, including the weekly Saturday break. Stakeholders have long argued that frequent holidays for festivals and other occasions disrupt economic activities.

Industrialists and traders say files related to businesses often remain pending at government offices during holidays, while imports and exports face delays. However, some studies suggest that holidays can positively impact the tourism and service sectors as people travel during such periods.

Nikhil Chachan, director of Narayani Oil Refinery, said the long election break immediately after Holi has affected oil dispatches. “Due to the extended holidays, delivery orders have declined,” he said. “Delayed payments and the inability to clear raw materials and finished goods from customs on time have affected the entire supply chain, from import of raw materials to exports.”

Export-oriented industries, in particular, must ensure timely delivery to foreign buyers. Industry representatives say prolonged holidays make it difficult to ship goods on schedule.

“Government offices remain closed during public holidays. When we cannot clear goods from customs on time, we fail to meet export deadlines,” said Pashupati Dev Pandey, president of the Garment Association of Nepal. “In other countries, import and export activities continue even during holidays, but here we are unable to operate.”

Pandey said the export sector has suffered financial losses due to disruptions in government services during holidays. Although exporters try to factor holidays into their order schedules, delays from Nepal could prompt foreign buyers to source similar goods from other countries, affecting the country’s export performance.

Economists argue that reducing working days is not suitable for a developing country like Nepal. They note that countries such as Japan and China, which have made rapid economic progress, maintain strong work cultures with longer working hours.

In 2023, Infosys co-founder Narayana Murthy urged Indian youth to work 70 hours a week to boost productivity and enhance global competitiveness. He also referred to China’s “9 am to 9 pm, six days a week” work culture.

Former chairman of the Securities Board of Nepal, Dr Rewat Bahadur Karki, said Nepal has relatively more public holidays compared to many other countries, which has burdened the private sector.

“Even when investors propose opening new industries, approvals cannot be processed immediately due to public holidays,” he said. “Delays in services slow down investment and directly affect job creation.”

Karki also said that sudden and prolonged holidays cause inconvenience to the public seeking services such as passports and citizenship certificates at district headquarters and service centers. He added that reduced economic activities during holidays also affect government revenue.

“Granting holidays indiscriminately for short-term popularity has caused significant social, economic and service-sector losses,” he said.

Prabhav Rungta, senior vice president of the Nepal Pharmaceutical Manufacturers’ Association, expressed concern that the extended holiday from March 2 could adversely affect supply and production.

He said delays in customs clearance increase penalties and disrupt transportation. “Supply of raw materials for pharmaceutical industries is affected. However, we have already urged stakeholders to ensure adequate stock to prevent shortages in the domestic market,” he said.

Madhav Rajpal, director of Monalisa International and senior vice president of the Birgunj Chamber of Commerce and Industry, said imports of coal used by brick and cement industries could face disruptions.

“When customs offices remain closed during holidays, transporters face penalties and industrial supply chains become disorganized,” he said. Rajpal added that the Birgunj Chamber has urged the government to reconsider the extended holidays in view of their impact on trade and industry.

Various studies show that government holidays, strikes and shutdowns in Nepal have negatively affected industrial production and productivity. Reports indicate that the Maoist insurgency and subsequent frequent nationwide shutdowns had significantly constrained economic growth.

A study conducted by Nepal Rastra Bank on strikes between 2008 and 2013 found that a single day of nationwide shutdown caused an average loss of Rs 1.8 billion to the economy. The report estimated a 1.4 percent decline in gross domestic product during that five-year period, with total losses amounting to Rs 116 billion.

A separate study by the Federation of Nepalese Chambers of Commerce and Industry had earlier estimated daily losses of Rs 3 billion due to shutdowns. Although no recent study has assessed the economic impact of holidays, economists believe the losses remain substantial.

Economist Keshav Acharya said the government previously granted leave only to civil servants belonging to specific communities during certain festivals. “Now, declaring nationwide holidays for such festivals has led to misuse of public holidays,” he said. “In addition to federal holidays, provinces and local governments can also declare additional holidays, which has created disorder. The government should reduce public holidays to boost production and productivity.”

The construction sector has also been affected. Ravi Singh, president of the Federation of Contractors’ Associations of Nepal, said public holidays delay the awarding of contracts, extend project timelines due to delayed raw material supply and increase project costs.

“We are frustrated by excessive public holidays. They must be reduced,” he said. “Delays in advance payments and procurement processes during holidays create serious difficulties.”

He said the government should streamline service delivery and create a conducive environment for development by reducing public holidays. According to economic experts, prolonged disruptions in government services delay approvals for new industries and reduce production and productivity in existing enterprises, affecting sectors ranging from construction to exports that are crucial for economic growth.