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The price of gold has dropped by Rs 300 per tola in the domestic market on Thursday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the yellow bullion is being traded at Rs 109, 700 per tola today. The yellow metal was traded at Rs 110, 000 per tola on Wednesday. Meanwhile, tejabi gold is being traded at Rs 109, 200 per tola. It was traded at Rs 109, 500 per tola. Similarly, the silver is being traded at Rs 1,370 per tola today.

The Nepal Stock Exchange (NEPSE) gained 23.39 points to close at 1,845. 01 points on Wednesday. Similarly, the sensitive index surged by 4.00 points to close at 352. 94 points. A total of 2,577,210-unit shares of 266 companies were traded for Rs 857 billion. Meanwhile, Aatmanirbhar Laghubitta Bittiya Sanstha Limited was the top gainer today, with its price surging by 9. 99 percent. Similarly, Mai Khola Hydropower Limited was the top loser as its price fell by 7.93 percent. At the end of the day, total market capitalization stood at Rs 2. 69 trillion.

The Nepal Insurers’ Association, the umbrella organization of non-life insurance companies in the country, has announced the suspension of agricultural and livestock insurance. Issuing a press statement, the association has said that non-life insurance companies will stop issuing agricultural insurance and paying claims starting from May 21 citing the non-payment of the subsidy amount by the government. The government has been providing an 80 percent subsidy on agricultural insurance premiums. However, the government has failed to make the payments over an extended period. NIA said the government has an outstanding amount of Rs 2.94bn to be paid as subsidies. If the government does not fulfill this payment, the association has decided to halt the sale of agricultural insurance policies and the payment of claims starting from May 21. According to NIA, there is a pending amount for fish insurance subsidies from 2020/2021. Similarly, for crop insurance, a partial payment has been made from June/July to March/April 2021/2022, and the remaining subsidy amount has not been disbursed. NIA also states there is a pending amount for livestock insurance subsidy from June/July of 2021 onwards. According to the association, they have repeatedly written to the Ministry of Agriculture and Livestock Development, Department of Agriculture, and Nepal Insurance Authority for the release of the subsidy, but it has not been received. The withholding of billions of rupees has increased financial risks for the companies involved, the association stated. Sunil Ballav Pant, CEO of NLG Insurance said the decision to suspend the agricultural insurance business is based on the current situation. “Rs 3bn is a huge amount in pending. We have come to a situation where we cannot pay the claims of those who have purchased agri insurance policies,” he said. “If the government does not provide the funds after the claims are made, it will create difficulties for us. The claims must be paid. The amount we have received so far is also limited. However, now we do not have sufficient funds to fulfill this responsibility. So, we decided to halt selling the insurance policies and claims payments for the time being.” According to Raju Raman Paudel, Executive Director of Nepal Insurance Authority, this is a compelling situation. “Though it is challenging, as the regulatory body, we are making efforts to resolve this issue as soon as possible.” “The government cannot always provide subsidies. It is necessary to study the impact of such subsidies as well,” he said. “This is a subject of debate.” Although insurance companies say they have not received subsidies, Finance Ministry officials say the ministry has been releasing the subsidy amount. “Since the demand is higher than the allocated budget, there are problems with the payments. As the government is currently facing a shortage of resources, we have not been able to disburse the amount,” said a finance ministry official. In a bid to cover the damages and losses to agriculture, the government introduced the Agriculture and Livestock Insurance Program in the fiscal year 2013/2014. In the initial phase, the government provided a 50 percent subsidy on the premium of the insurance. The premium was later increased to 75 percent, and currently, it is 80 percent. Now, the farmers have to pay Rs 20 out of Rs 100 premium while insuring crops and livestock. The insurance companies will get the rest Rs 80 from the government. The statistics of the Nepal Insurance Authority (NIA) show the business of agriculture insurance has increased by 417.55 percent in the first half of FY 2022/23. Insurance companies have collected Rs 1.09bn in insurance premiums from agriculture insurance in the first six months of the current fiscal compared to Rs 211.13m during the same period of the last fiscal. The non-life insurance companies have sold 82,746 agricultural insurance policies in the current fiscal year.

The Department of Customs (DoC) had targeted to collect Rs 57bn in revenue for the month of Baisakh (mid-April to mid-May) but ended up raising only Rs 33bn. The story of the Inland Revenue Department (IRD) is not much different. IRD collected revenue of Rs 34.46bn in Baisakh against the target of Rs 51.76bn. DoC and IRD are the two major revenue collectors of the federal government. With both agencies continuously collecting revenue below the targets, there has not been much improvement in the income of the government till mid-May, 2023. The overall revenue collection has only reached 53.9 percent of the target by mid-May amounting to Rs 756.25bn, a sharp drop from Rs 865.76bn during the same period of the last fiscal year. The most worrying part is, revenue collection has not increased as expected even after five months of the lifting of import restrictions and 100 percent cash margin on opening letters of credit (LC). Amid a sharp decline in revenue collection, the government lifted import restrictions as well as the provision of cash margin in Dec 2022 and Jan 2023 respectively. While imports have gradually surged in the last two months, the revenue collection of DoC has not improved. One of the reasons behind the halt in growth in customs revenue has been the reluctance of automobile dealers to clear the vehicles parked at the various customs yards, say customs officials. “Even after the import ban was lifted, automobile dealers have not rushed to import new vehicles. They have not even cleared vehicles parked for months at the customs yards from the customs office,” said a senior official at DoC. “There are around 4,000 four-wheelers parked in different customs yards for months.” These vehicles were brought based on letters of credit issued before the import ban, and have continued to remain parked at customs yards. “If the four-wheelers are cleared, we can get as much as Rs 8bn in revenue,” said the official. Automobiles are one of the largest revenue sources for the government due to higher rates of taxes. In the fiscal year 2021/22, the government collected revenue of Rs 66.30bn from four and two-wheelers, according to the customs department. Nepal imported vehicles and parts worth nearly Rs 100bn in the last fiscal year 2021/22. As of the first three quarters of the current fiscal year, vehicle imports slumped to Rs 34bn, according to Trade and Export Promotion Centre (TEPC). Similarly, both exports and imports of the country have gone down during the first three quarters of the current fiscal year. According to the TEPC, exports slumped by 26.3 percent by three quarters to Rs 118.27bn and imports also plunged by 18.1 percent to Rs 1.2trn. TEPC data shows the import of capital goods including machinery and iron & steel has also declined drastically. “It is because of the lack of the market demand for goods,” the customs official said. “This also reflects sluggishness in the economic activities.” In early May, the National Statistics Office said that Nepal’s economy could grow by as low as 2.16 percent only in the current fiscal year though international agencies like the World Bank and Asian Development Bank had projected a growth of over 4 percent. The impact of sluggish economic activities is clearly visible in the inland revenue of the government. According to IRD, revenue collection is very poor compared to the target. In fact, the government has failed to collect equivalent revenue collected in the last fiscal year. IRD collected Rs 371.15bn in revenue as of mid-May of the current fiscal year which is 98 percent of revenue collected during the same period last fiscal year. IRD data shows revenue from income tax and value-added tax (VAT), the two major components in the inland tax system, have declined in the current fiscal year. The department has collected Rs 159.05 billion in income tax in the first 10 months of this fiscal compared to Rs 173.40bn during the same period of the last fiscal. The income tax collection has decreased by 8.27 percent. Similarly, VAT stood at Rs 88.67bn this year against Rs 90.68bn in the last year. The collection of VAT has declined by 2.21 percent. According to Raju Prasad Pyakurel, Director of IRD, the slowdown in economic activities, the decline in imports, and poor capital expenditure have contributed to the poor state of the revenue collection this year. “The revenue from the construction sector, manufacturing sector have declined this year,” he said.