Rudra Khadka

February 26: US President Joe Biden arrived in Kyiv four days before the first anniversary of the start of tensions between Russia and Ukraine on February 24.

Since the tension between the two countries is ongoing, the president and the soldiers of Ukraine are excited with the arrival of Biden in Kyiv. Since the beginning of tensions with Russia, the United States has provided more than USD 30 billion in aid to Ukraine.

Russia has expressed its displeasure about Biden's arrival in Kyiv. After Biden visited Ukraine, Russia announced the suspension of the Strategic Arms Limitation Agreement (SALT) with the United States. Soon after (last Tuesday), US President Biden, who reached Poland, opposed Russia's move. Due to this, the Russia-Ukraine tension does not seem to resolve immediately.

After the tension started between the two countries, the world economy went into recession. Inflation has increased in most of the countries. The problem of unemployment is getting serious. Tech giants like Amazon and Twitter have laid off employees hugely.

How is the war affecting Nepal?

The effect of the Russia-Ukraine tension, which started post Covid-19 pandemic, has also affected Nepal. Especially the increase in fuel prices has increased inflation in the country. The average inflation for the last six months is above 8 per cent, which is higher than expected. The 'supply chain' of food imports is disrupted and is causing the general public to suffer.

As there are no signs of immediate resolution to the tension in those countries, it is not yet possible to say how long the problem will last. World Bank, International Monetary Fund, Asian Development Bank and other agencies have predicted that the economic recession will continue throughout 2023. Nepal's economy has been import-oriented for years. All the necessary goods, including food, are imported, and revenue collected from imports has been the main source of revenue for the government.

Nepal used to export rice until the 1980s, but in recent times it has stopped exporting and is only importing the staple food. Due to this, as soon as there is a disruption in the 'supply chain', Nepal gets impacted. The reason why the Ukraine-Russia tension has reached Nepal is because of the disruption in the supply chain. All over the world, Russia and Ukraine are known as the major source of wheat, mustard, lentils and petroleum products. Many countries, including Nepal and India, import the products of Russia and Ukraine. 

Former Executive Director of Nepal Rastra Bank Nar Bahadur Thapa shared that there is no other option but to emphasize production growth as there is no possibility of an immediate resolution to the Russia-Ukraine tension.

"Since it is seen that there will be problems in the coming days, the first thing to do to sustain the economy is to increase production," he said. 

Even though experts have been suggesting the government to increase production, the government does not seem to be paying much attention to it.

For example, now is the time to plant paddy. However, the government has not yet been able to bring any incentive program for the farmers to plant paddy. The lack of chemical fertilizers is another major problem. Experts argue that if farmers are to be encouraged to plant paddy and increase production, it is necessary to fix the support price now.

However, the farmers do not believe in the support price set by the government, because the government does not buy the food crops if they are not sold according to the support price. This year too, the government announced the support price for annual paddy cultivation, but the government did not buy all of the farmers' produce.

Some farmers had already sold their paddy before the support price was fixed. Because of this, there is no point in setting or not setting the support price.

The ex-executive director of Nepal Rashtra Bank suggested that large warehouses should be built all over the country and enough food should be stored in such houses to avert the possible threat of food crisis. Experts shared that now is the time for the government to act. However, such an opportunity also came during the time of Covid-19. However, the government wasted time by not introducing programs that would encourage production growth. Due to the fear of the pandemic, the people who lived in the city at that time returned to their villages.

If the government had been able to adopt an incentive policy, the returnees could have been engaged in agricultural work. There was such an opportunity last year as well, but it was also wasted without working. Experts shared that since the crisis has not been resolved, there is still room for work to increase production. For that, first of all, the government should win the trust of the farmers, and to win the trust, it should adopt a farmer-friendly policy and implement it accordingly.

The farmers will be assured that the government is committed to support them only if it sets a support price for paddy and shows it by purchasing paddy accordingly. Even if there is an immediate ceasefire between Russia and Ukraine, it will take at least six months for the 'supply chain' to return to normalcy. During that period, only agriculture can earn income. So the government should not waste time. A policy of increasing agricultural production should be adopted without any delay.