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In what can be seen as an indicator of the country's economic downturn, the import of 24 items out of the 27 major items that Nepal imports, has declined in the nine months of the current fiscal year. The Trade and Export Promotion Center (TEPC) has listed 27 items as the major importable items of the country. Of them, there has been a sharp decline in the imports of capital goods which include machinery, equipment, steel & iron, and vehicles. Only the imports of petroleum products, fertilizers and gold increased marginally in the current fiscal year. The latest economic growth data of the government also points to the decline in demand for such goods in the domestic market. The National Statistics Office on Tuesday projected that Nepal’s economy is expected to grow by 2.16 percent in FY 2022/23, a four-year low since the negative growth of 2.4 percent in the fiscal year 2019/20. Nepal is a heavily import-dependent country with the share of imports compared to export has been growing over the years. Nepal has been importing consumer, capital, and intermediary goods from abroad. The import of capital goods such as machinery, vehicles, iron, and steel among others are considered vital to the economy as such goods are used to increase production. But declining imports of capital goods means there will be little capital formation in the current fiscal year. According to the TEPC, the import of machinery slumped by 33 percent; iron and steel by 17 percent, and transport vehicles by 63.4 percent. While import restrictions imposed till December last year greatly contributed to a decrease in overall imports, there has not been a recovery in imports even after the import restriction measures were lifted. In December last year, the government lifted the ban on the import of vehicles, alcohol, and expensive mobile sets, and subsequently, Nepal Rastra Bank also removed the provisions that the importers need to deposit a cash margin of up to 100 percent to open a letter of credit. As of the first nine months of the current fiscal year, Nepal’s overall imports declined by 18.1 percent, according to the TEPC. Though the decrease in imports helped to increase the foreign exchange reserves, it also badly affected the government’s revenue. The federal government’s half of the total revenue depends on imports. Amid reduced revenue collection, the government has been forced to cut spending on development projects and has also been struggling to distribute salaries and pensions to government employees and retired employees on a timely basis. Economists say Nepal's economy is currently in dire need of structural reforms. "Nepal could turn the current crisis into an opportunity for becoming a self-reliant economy with the right policies and actions in place," said Keshav Acharya. According to him, there are lessons to be learned from past mistakes in this regard. "In 2049 BS, the government introduced policies for the country's economic liberalization. The move aimed at creating an export-oriented economy. Ironically, imports began to replace domestic products in the years that followed," he said, adding, "It is because foreign goods became cheaper than domestic products." Acharya observes that the government is losing an opportunity for structural reform of the economy as its focus is on raising revenue by increasing imports. "Over the past year, the restrictive measures of the central bank have helped to boost our foreign exchange reserve and maintain a good balance of payment. In this situation, the government should launch a campaign to increase production. Ironically, the political leadership lacks such a vision," he said. He cited the example of the government scrapping the land use policy. "The strict implementation of the policy could have resulted in increased agriculture and industrial productivity as the land prices would have come down after the categorization," he mentioned. Acharya thinks that provincial and local governments should be given more authority and encouraged to increase production.  Major Imports Items

The mandatory opening of branches of insurance companies in rural areas, expansion of the National Health Insurance Program across 77 districts, and mandatory life insurance for people going to foreign employment alongside third-party liability vehicle insurance have played a role in the growth in insurance penetration and usage in the past decade. The new report titled "Nepal Financial Inclusion Report 2023" published jointly by International Finance Corporation (IFC) and United Nations Capital Development Fund (UNCDF) shows the uptake of insurance has seen a notable growth from 11 percent in 2014 to 29 percent in 2022. "With banks starting cross-selling insurance products post-2014, 7 percent of adults have accessed insurance services via banks in 2022, and 22 percent of adults accessed insurance through other formal sources which are primarily insurance companies," reads the report. The usage of formal insurance has increased in both rural and urban areas, while rural areas have seen a significant increment from 8 percent in 2014 to 26 percent in 2022. The report has attributed various government-driven social security/insurance schemes as the primary reason driving insurance usage in rural areas. There has been a significant rise in access to insurance among female adults, from 7 percent in 2014 to 28 percent in 2022. Among the target groups, salaried workers have the highest access to formal insurance services at 44 percent which was 29 percent in 2014, followed by remittance receivers, up to 34 percent from 9 percent in 2014. The contribution-based social security scheme that includes insurance introduced by the government mandates salaried workers to enroll in the scheme. The implementation of the Agricultural and Cattle Insurance Directive 2020 has been a catalyst in the growth of agri-insurance. "The access to insurance by farmers increased to 23 percent in 2022 from 8 percent in 2014, which can be attributed to the increase in uptake of agriculture insurance driven by the implementation of the Agricultural and Cattle Insurance Directive 2020, which requires non-life insurance companies to allocate 5 percent of their insurance portfolio to agriculture and cattle insurance products, says the report. The government has increased the subsidy on agriculture insurance premiums from 50 percent in 2014 to 75 percent in 2019. According to the report, the overall increased access to insurance is primarily driven by the expansion of life insurance services. In the last four years, the number of life insurance policies sold has increased by a whopping 413.4 percent, from 2.73 million in FY 2016/17 to 13.09 million in FY 2021/22. The life insurance sector is primarily driven by endowment products which are with-profit policies where the net surplus received by the insurers determines the amount of bonus payable to the insured. At the same time, the non-life insurance sector is mainly driven by mandatory motor insurance followed by property insurance. "The bundling of insurance products with banking products has also resulted in increased insurance uptake," says the report. CEOs of insurance companies attribute the growth to increased awareness about insurance among the common public. The Nepal Insurance Authority has been conducting insurance awareness programs at the local level. Union Life Insurance CEO Manoj Kumar Lal Karn said that insurance access has increased as people have now started to understand that insurance is a basic need. "Insurance companies have also emphasized business expansion, which has helped to increase the access," he said.

The price of gold has increased by Rs 1, 200 per tola in the domestic market on Thursday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 111, 800 per tola today. The gold was traded at Rs 110, 600 per tola on Wednesday. Meanwhile, tejabi gold is being traded at Rs 111, 250 per tola. It was traded at Rs 110, 050. Similarly, the price of silver has increased by Rs 10 and is being traded at Rs 1,445 per tola today.

The Nepal Stock Exchange (NEPSE) plunged by 9. 18 points to close at 1,857.23 points on Wednesday. Similarly, the sensitive index dropped by 1. 19 points to close at 355. 83 points. A total of 2,155,586-unit shares of 265 companies were traded for Rs 620 billion. Meanwhile, Atmanirbhar Laghubitta Bittiya Sanstha Limited was the top gainer today with its price surging by 6. 09 percent. Likewise, NIBL Growth Fund was the top loser with its price dropping by 5. 35 percent. At the end of the day, the total market capitalization stood at Rs 2. 70 trillion.