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As crisis deepens, Nepal downgrades growth forecast to 2%

world Updated: Nov 25, 2015 15:07 IST
Nepal crisis

Nepalese activists and hospital patients rally against the block on humanitarian supplies at the Nepal-India border in Kathmandu. Nepal is heavily dependent on India for fuel and other supplies, but little cargo has crossed the border from India since protests against the constitution broke out in late September.(AFP)

Nepal has downgraded its economic growth forecast to two percent in the current fiscal, slicing off four percent from previous estimates amidst a spiraling crisis triggered by a blockade imposed by Indian-origin Madhesis opposed to a controversial new constitution.

Besides the ongoing crisis, a white paper released by finance minister Bishnu Poudel on Tuesday evening also cited another reason for the lower growth estimates -- two earthquakes in April and May which had devastated vast swathes of the Himalayan nation and left hundreds dead.

However, the paper dealt extensively on the Madhesi agitation which have sparked widespread violence in the southern plains and left at least 50 dead since September.

The Madhesis claim that the new constitution leaves them politically marginalised.

In the latest flare-up, four Nepali citizens were injured on Wednesday morning when Indian troops fired on a group of suspected smugglers along the border, officials said.

The incident came a day after the United Nations had also called for an independent probe into the unrest in Nepal.

Reading out from the paper, the finance minister said the figure of two percent could dip even further if the current obstacles, which have led to a severe crisis of essential stuff including fuel, were not removed soon.

The government had earlier estimated a six percent growth rate this fiscal after the GDP grew by 5.58% in 2014-15.

Inflation has increased from 7.2% at the beginning of this fiscal to 8.3% till the middle of last month, the report said, adding that it could touch the double-digit mark.

Smuggling from India has increased dramatically after demonstrators blocked the key border trade point in Birgunj for two months, stifling the flow of fuel and other vital supplies.

Nepal is heavily reliant on India for crucial imports and is facing an acute shortage of medical supplies and fuel.

Kathmandu has accused India, which has criticised the new constitution, of imposing an “unofficial blockade”.

New Delhi has denied the charge and urged dialogue with the protesting Madhesis, who have close cultural, linguistic and family ties to Indians living across the border.

But several rounds of talks between the government and the protesting parties have failed to reach an agreement.

The constitution, the first drawn up by elected representatives, was meant to cement peace and bolster Nepal’s transformation to a democratic republic after decades of political instability and a 10-year Maoist insurgency.