Wednesday, 24 September 2014

6 ways to decrease the trade deficit of Nepal

    The country needs to have balance between Export and import, The export-Import ratio should not be too low.The contribution of remittance income, Travel income and Foreign grant is significant in controlling increasing trade deficit of the economy , but these are not going help, these are not the sources which will give double digit growth which needed for vision 2020. following are some most important area where Nepal needs to think and act immediately:
1) Hydro Power:
There is huge potentiality of the export of hydro product to our neighbor country and other third country. Hydro sector is one of the important sectors which can reduce the trade deficit dramatically provided if we can utilize its potential.

2) Irrigation : 
Nepal needs to focus on issue of agriculture, Irrigation is one of the major issue of agriculture sector of Nepal. Through irrigation agro product can be increase and be used to fulfill the internal demand of agro product and this will have significant role to decrease the level of import of agro product.
     3) Herbal Product:
Approximately 70% of medicine of Nepal is imported through production of herbal product (ex: Herbal medicine) we can reduce the dependency upon import of medicine. Import of medicine is second cause of huge trade deficit of Nepal.There is huge demand of herbal medicine and herbal product in international market. Nepal has huge potential of production of herbal product, Hence Nepal needs to invest in herbal sector as it reduce the level of import of medicine and it can be exported to other country ultimately TD can be reduced at maximum level.     
     4) Tourism:  Adventure tourism
Nepal rich in natural places, beautiful mountain, spiritual and historical places etc. Tourist love adventure and Nepal has many adventurous places. So adventure tourism is one of the lucrative sectors in Nepal where many job can be created and it can contribute to national income and controlling TD.
     5) Industry Sector:
Industry sector is labour intensive; this is the sector which provides employment on the large scale. Service sector is not labour intensive if we compare it with industry, focus should be on creating an environment and establishment of industry in Nepalese economy.
     6)Remittance: use it wisely-
Remittance is major source of foreign currency for Nepalese economy and no doubt that it has supported the economy, but over dependency upon it may not be wise option for National Income. Lack of employment opportunities inside the country is the main reason for increasing foreign employment of the youths. Data shows that 56% of Nepali households receive remittance but 80% of that income is spent on consumption. So the portion of investment of remittance in productive sector is low.
         Now, Nepal needs focus on those sector at which she is best. No doubt that  Nepal needs high investment in Agriculture, tourism, and Energy. Government has set high priority in investment in all that sector, FDI is essential but Investment from local and NRN is equally important.

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