Written by: Niharika Chapagain - 25006, Grade X
Posted on: 07 June, 2022
This year, the price of petroleum products has increased many times, and even after that, the Nepal Oil Corporation had said that it was going to face a loss of Rs. 5 billion monthly. Since the price of fuel was growing on a regular basis, the people were in shock after gaining this information. It has affected several sectors of Nepal also including its economic condition. Due to this, several rumors about Nepal having an economic crisis, and ending up like Sri Lanka were created. Following the price hike of petroleum products, prices of vegetables have also increased affecting the lives of the normal people who are living with minimal salaries. Analyzing the current situation of the country, economists have warned the government to think of alternative ways to save the economic condition of Nepal.
According to the economists, in the last fiscal year, Rs. 1.53 trillion was spent on imports, and out of them, petroleum products cost Rs 158 billion. However, in this current fiscal year, even though we are just halfway through it, we have already spent Rs 153 billion on petroleum products like petrol, diesel, gas, etc. It is predicted that Nepal would spend around $500 million more on petroleum products this year, than in the previous fiscal year. Since Nepal and Nepalese people’s lives are dependent on imports and since Nepal is also a landlocked country, most of the items were imported via road, however, with the fuel price hike going on, the price of the products imported are also increased. Due to this, the economic condition of Nepal, and its citizens have completely imbalanced and it is hard to live in Nepal due to the price hike.
To control the negative balance of payment i.e. more imports than export and lack of foreign reserves, the government did put limitations on the import of various products in our country however it was not enough to solve the issue. To solve this issue, the government also brought the idea of utilizing its electricity source by promoting EVs (Electric Vehicles) instead of petrol cars, induction stoves instead of gas stoves, or similar products that can be used through electricity. However, this plan has also failed since there are no charging stations for the electric vehicles to charge, which is why the people hesitate to buy electric vehicles since even after buying them, they can’t use the vehicles to go far since they have their own charge capacity. Though the government is trying to find other alternative ways to solve this problem which is affecting the country’s economy, they are not thinking about the citizens and their problems. For example last year the government earned Rs. 938 billion in revenue and from that, 11 percent of the revenue was collected through the sale of petroleum products because the Nepal government still charges much more tax in petrol and diesel. After the Indian government had decreased its tax for the welfare of their people after facing the same problem as us, many people requested the Nepal government to decrease it too. However since the government needs to have three elections this year, and it needs funds to conduct polls, the tax was not decreased. According to the economists, politicians do use price hikes as their political tool so probably the price of petroleum products would not increase more after this time. However, not increasing the price of the products can lead Nepal Oil Corporation to bankruptcy.
So, due to all these complications, the government has not been able to help the citizens and the citizens are going on with their lives paying the expensive tax and money for petroleum products. Though due to this, Nepal may not go into an economic crisis because we have our own electricity resources. However, this problem of price hikes can lead our country in the direction of an economic crisis. So these problems must be taken care of as soon as possible.
