So far, the COVID data from Nepal suggests a grim reality. On 22 May 2021, as per the Health Ministry, Nepal reported 8,591 new coronavirus cases in the last 24 hours taking the nationwide infection tally to 5,05,643. The countrywide death toll has now reached 6,153. The number of active cases stands at 115,806. According to the Ministry, 373,684 infected people have recovered from the disease so far; 8,848 of them in the last 24 hours. By 25 May 2021, the infection tally was 520,461; active cases 115,447, total deaths 6,531 and the number of recovered people is 3,98,483.. The figures reflect well on the trend; however, ascertaining the actual losses is not possible through them as Nepal’s COVID-testing capacity is far from satisfactory—many of the cases are going undetected. Hence, it can be estimated that these figures are at the lower side. Accordingly, the required measures should be taken by Nepal's central and federal governments.
The abrupt knock of COVID’s second wave caught everyone by surprise in India, and in no time, Nepal too entered into a similar state. Its vaccine procurement was not well-planned, as with SII, its orders were for only three million doses.
The Nepali economy is majorly driven by Small and Medium Enterprises (SMEs), and it started to suffer in no time as the COVID first wave came in 2021 and disrupted the entire operational universe. The government gave a short, two-worded response— ‘no action’. The frontline sectors like tourism, hospitality, aviation, trade, and production linkages, supply, education, healthcare, retail suffered unimaginable losses, and now the situation is worse as the COVID second wave has halted production activities barring a few only. Last year itself, an ambitious campaign “Visit Nepal 2020” had to be scrapped soon after its formal launch, the goal of attracting over two-million high-value visitors remained unfulfilled. Most of the luxury hotels in Kathmandu are shut or facing extremely low occupancy; the allied businesses of tour, travel and hospitality are on verge of collapse already. All these businesses combining together account for over 10 percent of Nepal’s economy. Like the private sector, the public sector too has suffered immensely in Nepal, especially state-run banks have sustained a hard blow, with their heavy investments in the exposed segments of the economy comprising hospitality and aviation. The ancillary manufacturing units and start-ups in services particularly are in extremely poor shape in the absence of demand from outside and China’s inability to supply the critical raw materials. The second largest contributor to Nepal’s economy—the wholesale and retail sector that contributes about 14.37 percent—is also impaired, with drastic downfall in imports from China. Business from India too is a reality of the bygone era.
With no manufacturing capability and sufficient expertise for the services segment, even the healthcare sector in Nepal is faring poorly. There can be a few exceptions of the private hospitals and black marketers, albeit counting on those will be irregular
Nepal’s natural and human resources have been untapped, though the outbound migration for advanced study and foreign employment has helped Nepal positively in the recent years. Remarkably, foreign remittances contributed majorly to Nepal’s economy. In 2019, it contributed 26 percent of the country’s GDP. While the high rate of migration has its own drawback and shows how Nepal’s development agenda has been delinked to augmenting the domestic economy, the falling remittance and government’s revenue collection will have serious destabilising effects on its economy in the foreseeable future. The falling consumption level will have long-term adverse impacts, accompanied by social and psychological repercussions as well. As per a World Trade Organisation (WTO) study, “Looking ahead there is also a high risk of general inflation. In the situation of limited supply from China, Nepal may have to import from third countries, which results in the products becoming more costly. The situation is alarming. Although we are yet to experience the full impact and aftermath of the coronavirus, this worldwide threat has already created economic uncertainty amongst all of us. People are worried as still we don’t know much about this deadly virus and how deep and widespread the economic fallout will be.”
The second largest contributor to Nepal’s economy—the wholesale and retail sector that contributes about 14.37 percent—is also impaired, with drastic downfall in imports from China. Business from India too is a reality of the bygone era
Nepal’s low population base, productive international exposure, and its democracy are in favour of an economic rebound. The policy action will show the way, and majorly the political will will influence it
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Atul K Thakur is a policy professional and columnist.Read More +