SANGAM

Import substitution a must, says govt

SANGAM PRASAIN

KATHMANDU, JUL 03 -

The government will take import substitute measures to protect the domestic industry in the areas of meat, vegetables and fruits, cements and dairy. With the trade deficit as high as 52 percent and Balance of Payment deficit at Rs. 17.36 billion, the government is seeking to reduce imports.

Finance Secretary Rameshwor Khanal on Saturday said the measure would substitute imports worth Rs. 25-30 billion. Nepal imports 55,000 tonnes meat annually while import of other agro products is high and which has triggered BOP deficit to some extent.

“We have low competitive edge products compared to neighboring countries. In this situation, substituting import of these products will be viable as we cannot think of exporting products that reduce the ballooning trade gap immediately,” he said.

He said that the government would also take some tough measures on petroleum products (PoL) and hike electricity tariff in the upcoming budget. “We have to take these measures keeping in mind the increasing demand for PoL products as the government will not be able to subsidize the products that account for the huge BOP trade,” Khanal said at a pre-budget discussion organised by Society for Economic Journalists of Nepal (SEJON).

The government will also be harsh on electricity tariff. If the same tariff remains, the Nepal Electricity Authority (NEA), which is reeling under a huge loss, could go bankrupt. “This will affect people for a short time but will be beneficial and sustainable,” he said.

The upcoming budget has also adopted measures to substitute some import based industrial and agro products by prioritising their production and encouraging them in the home country. Among the industrial products, import of cement and dairy products would be substituted by domestic production. Secretary Khanal said that by mid-January there will be an additional 12,000 tonnes cement production in the country, which will help substitute import of cement.

“If one more big dairy processing industry is established, it will help import substitution,” Khanal said adding that the government was committed to provide all facilities regarding roads and electricity in those industries.

The government is planning to bring the advance budget by the next week. “A full-fledged budget will be announced by the national consensus government,” said Khanal quoting the Prime Minister who resigned recently.

Khanal said the development budget will take a slow growth path due to lack of political commitment. Delay in budget will not hamper the monetary policy and other issues related to it, but it will severely impact the development budget.