BIJAYA DAMASE 

KATHMANDU

April 11: The government is aiming for a substantial boost in Gross Domestic Product (GDP) by Rs 3 trillion over the next five years. As the National Planning Commission (NPC) finalizes the 16th five-year plan (2024-25 to 2028-29), a crucial blueprint for the nation's socio-economic advancement, the government envisions GDP growth to Rs 8-8.6 trillion, up from the current Rs 5.38 trillion.

With the implementation of the 16th five-year plan scheduled to begin in the upcoming fiscal year 2024/25, the planning body is currently immersed in fine-tuning its details. However, due to a recent change in the government, the initial plans to unveil it by mid-February 2024 could not be realized, as stated by NPC officials.

"We're setting realistic targets based on a thorough assessment of the country's current circumstances to ensure effective implementation of the plan," said NPC member Ram Kumar Phuyal. "It's estimated that by the conclusion of the 16th plan, the economy will reach Rs 8.9 trillion, assuming an average growth rate of 7 percent in consumer prices." However, if there's a growth rate of 7.5 percent at basic prices, it's likely to reach Rs 10 trillion by the end of fiscal year 2028-29.

NPC officials anticipate a significant surge in the country's GDP by the conclusion of the 16th plan. They project the GDP to reach between Rs 8-8.6 trillion by the end of 16th plan. According to NPC sources, sustaining an average economic growth rate of 7 to 8.5 percent throughout the plan's duration is imperative to achieve this objective.

In the recent years, economic growth has remained sluggish due to COVID-19 pandemic and less impressive recovery of economy post-COVID era. In the last fiscal year 2022-23, Nepal's economy is estimated to have grown by 1.9 percent. The Asian Development Bank Thursday projected that the country's economy would grow by 3.6 percent in the current fiscal year 2023-24 followed by a growth of 4.8 percent in the next fiscal 2024-25.

In the process of formulating periodic plans, there's a persistent pattern of setting ambitious goals that often remain unattainable. In the current 15th Plan, exceedingly ambitious targets were established, aiming to elevate the economy from 8.5 to 10.3 percent at basic prices. However, due to the onset of Covid-19 in the first year of the plan, economic growth stagnated, leading to the failure to meet any of the targeted growth milestones throughout the plan's duration.

The NPC has already acknowledged during the plan review that the target will not be met. Five years ago, the country's poverty rate stood at 18.7 percent. One of the targets of the 15th plan was to reduce poverty and maintain it at 9.5 percent. However, according to the latest Living Standard Survey published by the National Statistics Office (NSO), 20.27 percent of the population still lives below the poverty line. The office attributed this increase in poverty to the adjustment of the minimum income necessary to live above the poverty line.

Similarly, the 15th plan aimed to achieve a revenue collection equivalent to 30 percent of the gross domestic product within the next five years, amounting to Rs 18.6 trillion. However, it also proved difficult to attain as the government in the last fiscal year budget initially set revenue collection target of Rs 14.7 trillion but ended up collecting only Rs 10 billion. Moreover, while the 15th plan anticipated a per capita income of around US$1600, it only reached US$1400.

In the 15th Plan, a total of 18 projects, including the Kathmandu-Terai Fast Track and Sunkoshi Marine Diversion, deemed as pivotal for the country's economic prosperity, were announced. However, apart from a few exceptions, the construction progress of these projects has been notably sluggish, prompting concerns about whether the government's ambitious target could be met.

While there hasn't been any discourse on setting a target for double-digit economic growth in the 16th plan, the NPC is gearing up to establish a growth rate that surpasses the current achievements.

According to the initial draft of the 16th plan, the focus will be on boosting domestic production by putting 17 industrial zones into operation and declaring 140 industrial villages. Additionally, the number of special economic zones (SEZs) will increase from two to three, and the installed capacity of electricity generation, currently at around 2,800 MW, will be ramped up to approximately 11,800 MW. Another target is to increase per capita electricity consumption from 380 kilowatt-hours to 700 kilowatt-hours.

The draft sets a target to export electricity amounting to Rs41 billion annually by the end of the 16th plan and aims to reduce the overall trade deficit by increasing the energy sector's contribution to about 4 percent. Currently, irrigation facilities cover 1,555,000 hectares, with the goal of expanding it to 1,722,000 hectares.

Similarly, the draft of the 16th plan says around 1.2 million jobs will be created annually, minimum wage of workers will be increased to Rs 25,000, the number of beneficiaries joining the social security fund will be increased to 2 million and the number of destination countries with labor agreements will be increased to 15.

There is a plan to hold the meeting of National Development Council meeting in May and get 'approach paper' of the plan endorsed by the council. Then, the document goes to the Council of Ministers whose approval will pave the way for the implementation of the plan.

Economist Keshav Acharya pointed out that the absence of coordination between the country's needs and the governmental planning agencies has hindered tangible progress towards economic development goals.

Acharya emphasized the importance of cultivating a culture of aligning actions with long-term goals, citing past governmental shortcomings in adhering to such plans. He stressed, "There is also a critical need for commitment among political parties to prevent this from recurring in the future."

The NPC on Tuesday sat with leaders of the ruling coalition and briefed them about the proposed 16th plan. As the country is being upgraded from the Least Developed Countries (LDC) list to a developing country by 2026, the political leaders suggested that the 16th Plan should be taken into consideration as Nepal is likely to lose many facilities  available for the LDC including export concessions.

The NPC Vice Chairman Dr. Min Bahadur Shrestha said that the suggestions from the political parties and leaders will be incorporated in the 16th plan.