KATHMANDU, Aug 9: Nepal has been achieving low economic growth rate at just around four percent on an average mainly due to lack of investment expansion and absence of policy reforms.
National Planning Commission (NPC) Vice Chairman Gunakar Bhatta said that policy interventions and investment expansion should be taken together to achieve high economic growth in Nepal. “In the past, the country achieved economic growth of up to seven percent in some years when policy interventions and investment expansion were observed, said Bhatta, speaking at a program organized in Lalitpur on Sunday.
According to the NPC, Nepal's total factor productivity is only around 0.2 percent, while the main basis of current economic growth is capital and labor force. Due to this reason, the production level of the country has not been increased as desired.
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Bhatta underlined the need for capital increase, skilled labor force creation and investment in technology to expand the basis of economic growth. “In the present context, it is necessary to make maximum use of the opportunities available from digitalization and artificial intelligence,” he added.
Acknowledging that there are a number of challenges in human capital formation, Bhatta mentioned that there are problems in the segment that have appeared also due to increasing foreign migration and low population growth rate.
As per the government record, Nepal's fixed capital formation has reached about 26 percent of the gross domestic product (GDP). According to Bhatta, this ratio was limited to about 24 percent for the past three consecutive years.
Bhatta informed that Nepal achieved about seven percent economic growth for three consecutive years when investment in post-earthquake reconstruction increased and during that time, capital formation reached to about 30 percent of the GDP.
