The Development approaches Nepal needs to learn from Neighbours.

By Arun Dahal Khatri

Recently, the International Monetary Fund (IMF) published a report about the World's economic growth. Because of the Russia and Ukraine war, the IMF projected that the world economic growth will be limited to only 3.6%.In 2021 the world economic growth was 6.1%. 

World Economic Outlook Growth projection where the IMF has categorized different economies into various heading according to the GDP of countries. India and China both are on the table by securing 8.9 and 8.1 percent of economic growth in 2021.IMF has given the hading as the Emerging and Developing Asia where IMF projected that India's economic growth will be 8.2 % and 6.9 % in the years 2022 and 2023 Where China's growth will be 4.4% and 5.1 % in the years 2022 and 2023. Both Asian economies are continuously running on the track and competing in the race of growing economies. Because of the continuous increase in the aggregate demand and productive capacity both nations are achieving the economic milestone. The injection of investment in both of the countries is comparatively higher than in other nations. Most of the multi nations companies are getting the permit to establish their business in India and China. 

How India is Getting economic success

India has been playing the safe and sustainable game on the ground of economics and is expected to be the top 3 economic powerhouses by 2030 according to the reports of the department of economic affairs of India. Due to the strong democracy and active and sustainable economic plan, India has successfully achieved its GDP of US $ 3.12 Trillion in the year 2021-2022. To achieve such types of economic success the Indian Government has made enormous initiatives. On February 1, the Minister of Finance and Corporate affairs Ms. Nirmala Sitaraman presented the Union budget including the prosperity plan by giving the 4 important priorities to increase and boost the economy.PM Gatishakti, Inclusive Development, productivity enhancement, and investment and financing are the top priorities given by the Indian government. The Union budget has also expected to increase the capital expenditure by 27%which is about $142.93 billion. The main reason for the upliftment of India's economy is increasing the budget for financing and investment and encouraging Foreign Direct Investment (FDI) in India. The Indian government has also given top priority to the production sector as well and allocated a huge amount of funding to boost agriculture production. The Union budget has allocated about $306.8 million to the horticulture sector. The Balance of Payment of the Indian government is continuously is in positive because of the high trade among the countries like Nepal, Bangladesh, Bhutan, Sri Lanka, China, and other nations. Most economies like Nepal made huge trade in India and depends upon the production of India.

What lessons does Nepal need to learn from India?

Nepal is struggling to achieve economic success and prosperity because of various challenges. The over corrupt political system continuously decreases the overall economic capacity of the nation and slows down development. Even though, is a buffer state Nepal has not made economic milestones and a particular development plan to get economic success. Now, Nepal needs to learn the most important lessons from its neighbor India to make economics successful.

1-Focus on Foreign Direct Investment (FDI):

The greatest tool of development and the turning point for any nation is to encourage FDI in the nation. Every nation faced a situation like Nepal. Even our neighbors India and China had such economic problems but the designed economic plan helped them to achieve economic prosperity. Welcoming foreign direct investment not only helps to stimulate the foreign currency in the country but also helps to gain overall economic success. The greatest turning point for India when it comes to FDI is after 1990 when India welcomed $0.24Billion FDI in 1990 then the government strongly started to encourage the FDI in the country and helps the investors to implement the desired plan. In 1995 India welcomed a huge $2.14 Billion for the first time and continuously increased the size of FDI. Recently, In 2020 India successfully welcomed $64.36 Billion of FDI in the Nation. From this journey of India Nepal needs to learn the lesson to encourage the FDI. Nepal has a great capacity in the Energy and Tourism sector. If Nepal encourages foreign investment groups with a flexible FDI policy then the possibilities are truly high. But still, we are lacking the proper plans. Nepal only welcomed about 19.67Aarab in the fiscal year 2076/77, according to the Nepal Rastra Bank.

2-Boost the production sector :
The manufacturing sector is also called the backbone of the economy and also called the greatest indicator of sustainable economic development. The production sector plays an active role to increase the Gross Domestic Production of a nation and also contributes to the Balance of Payment surplus. Most underdeveloped economies like Nepal could not increase the production sector because of these reasons countries faced various macroeconomic problems. If we see the production sector of India then it might be a relevant example for Nepal. The total contribution of the agriculture sector is 16.38% whereas industry contributes 29.34 % of the GDP of India in 2021. India has been given the highest priority in the federal budget to boost the production sector of the nation and continuously achieve economic milestones. Therefore, Nepal needs to focus on the production sector including agriculture and industry. Giving priority and financially helping the cottage industry make a great difference when it comes to decreasing the international trade deficit. Nepal has been continuously facing trade deficits because of the high level of imports rather than exports. The total volume of the production sector is limited and the.

3-Give priority to the service sector:
Because of the modern science and technology era service sector has been playing a significant role to add value to the national income. Most of the developed economies including the USA, China, Germany, Korea, and Japan have been giving high priority to the services sectors. Because of the voluntary change in the thinking dimension through the internet, most of the world's greatest financial institutions and giant companies bring the change in the service market. Nepal needs to learn a great lesson to boost the economy through the service sector. The greatest service sector for Nepal is hospitality and tourism and if Nepal gives priority to this sector then it can put great addition to the GDP. Indeed, the contribution of the service sector to GDP is comparatively higher than other sectors where the service sector contributes 61.1% of GDP. But, the size needs to be improved because there are huge possibilities in the service sector of Nepal.