The Covid-19 pandemic is causing widespread economic hardship and anxiety. Balancing social, economic and health security concerns during this time are also proving to be a complex governance challenge. For the past several weeks, the government has restricted travel and the movement of people except for emergencies and to access essential services. Given the nature of the disease and the poor state of Nepal’s healthcare infrastructure and service delivery, this is perhaps the best way of containing the spread of the virus at the moment. Nepal has reported very few cases. Yet, the caveat is that this is probably due to low testing rates and the number of new cases could increase in the days to come.

The effects of a complete lockdown are multidimensional. Most economic activities have been disrupted, affecting the lives and livelihoods of millions, particularly those engaged in the informal sector who need to venture out to earn their living and meet critical needs in the absence of safety nets or regular earnings. The disruption and dislocation are expected to widen the economic and social divisions and amplify existing vulnerabilities in a post-pandemic world.

In Nepal, about one in five households is poor, one in ten is extremely poor, and one in two is food insecure. The pandemic will aggravate this food insecurity further. The poverty rate is expected to climb in the coming months as those just above the poverty line are likely to slide back into poverty in the absence of safety nets and support mechanisms. In several parts of the country, people are desperately trying to go back to their villages from cities, due to the lack of earnings and support from employers after the closure of factories and construction sites. The exodus has drawn attention to the scale of disruption in economic activity and the lack of support systems for the neediest.

Any lockdown extension will not only affect economic activity within the country but also disrupt the inflow of remittances on which over one-third of households (left-behind families) in Nepal are dependent. The disruption to international migration and inflow of remittances will be particularly costly for Nepal as the remittance-GDP ratio has been close to 30 percent for the past few years.

Besides controlling the spread of the virus, the critical issue is to sustain its agriculture sector through the crisis since the service sector (the largest contributor to the GDP) will not be revived immediately, due to restrictions on travel and mobility. It is also likely that our trading partners may limit the export of essential goods including but not limited to agricultural products in the coming months, since farming activities have also been disrupted by the pandemic.

In such a scenario, the problem of food insecurity will be acute as supply disruption raises food prices, affecting the nutrition and health of the vulnerable groups. Higher prices not only result from disruptions to production systems but also from disruptions to supply chains as farmers are unable to sell their agricultural produce in the markets due to the absence of proper mechanisms. In addition to strengthening healthcare system and food support to the needy people, fixing the supply chain quickly and creating the mechanisms required for smooth flow of agricultural produce from farms to markets will not only help farmers but also assure consumers that food supply will not be an issue during or after the crisis.

Labour markets have been completely disrupted by the pandemic, leading to mass unemployment and labour shortages in the seasonal agriculture sector. Since agricultural mechanisation in Nepal is very low (only 25 percent of farm households reported the use of machinery in 2017), the availability of sufficient farm labour is critical for keeping seasonal agricultural activities on track. Even the slightest delay in planting or harvesting crops in weather-dependent agriculture can lead to lower productivity and huge losses for farming households, ultimately resulting in food shortages. Given this situation, encouraging people who lack social safety nets and regular earnings to engage in agricultural activities with proper safety measures and economic incentives, will not only create livelihood opportunities but also keep the agricultural sector going during the crisis.

This is the time for local governments to address the issue of food and livelihood security as a priority. Speaking on a spike in the success the then newly independent India had in tackling famines, Amartya Sen noted that ‘democracy gives very strong incentives to the government to work hard to prevent famines since it has to respond promptly to people’s needs because of a combination of public discussion and elections’. This is the time for all three levels of government to collaborate and work hard to keep Nepal’s agricultural sector afloat so that it not only provides employment and a safety net for people during the crisis but also reduces the impending risk of food shortages in the country.

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