The increase in the cost of doing business due to rising interest rates, the hike in cost of raw materials along with the decline in market demand have badly affected the operational efficiency of industries in the Sudurpaschim Province. As industries grapple with economic issues, their capacity utilization has declined in the first half of the current fiscal year. According to the latest report of the Nepal Rastra Bank (NRB), the average capacity utilization of industries in Sudurpaschim Province stood at 36.24 percent in the first half of FY 2022/23 compared to 40.3 percent during the same period of the last fiscal. The report titled ‘Provincial Economic Activities Report-Sudurpaschim Province’, states capacity utilization of the sugar industries was the highest while the rosin industries had the lowest at 3.91 percent. Industries such as wheat flour, bricks, mustard oil, and concrete had higher capacity utilization in the first half of the current fiscal year. However, the capacity utilization of industries producing items such as rosin, processed milk, soap, and rice remained sluggish during this period.

“The capacity utilization of industries producing rosin remained poor due to the lack of workers and delay in the collection of raw materials,” states the NRB report.

According to the report, the production of wheat flour, rosin, and bricks has decreased significantly in the first half of the current fiscal. Of the total workforce in the industries of the Sudurpaschim Province, 88.02 percent are male while 11.98 percent are female. The industries in the province have employed 20.99 percent of Indian citizens in their total workforce. Meanwhile, the disbursement of loans by banks and financial institutions (BFIs) to the industrial sector increased marginally in the first half of FY 2022/23. The BFIs’ loan disbursement to industries increased by 6.85 percent to Rs 29.14bn in the first half of the current fiscal year compared to a growth of 19.74 percent during the corresponding period of FY 2021/22. Of the total loans disbursed by the BFIs in the province, the share of the industrial loans is 18.17 percent. According to NRB, of the total loans, Kailali district has the highest share of 72.12 percent while Bajhang district has the lowest share of 0.33 percent. In the review period, the BFIs’ loans to electricity surged by 304.47 percent while lending to the agriculture sector declined by 11.03 percent. Of the total industrial loans, the share of the agriculture industry stands the highest at 34.31 percent, followed by the non-food industry (31.67 percent), the construction industry (20.76 percent), the metal industry (7.75 percent), and the electricity industry (4.75 percent). Disbursement of industrial loans (District wise)

District	Disbursed loan (in Rs, in bn)	Share
Kailali	21.016	72.12
Kanchanpur	5.303	18.20
Achham	0.998	3.42
Dadeldhura	0.921	3.15
Doti	0.394	1.35
Baitadi	0.171	0.59
Darchula	0.142	0.49
Bajura	0.102	0.35
Bajhang	0.096	0.33