The Tarai banda and Indian embargo have shown no signs of ending even though the agitation in the country’s southern plains have crossed 100 days, and the private sector is concerned by the slow progress towards ending the crisis. The protests have actually turned violent in the last few days instead of heading towards a solution.

A recent report published by Nepal Rastra Bank (NRB) on the impact of the embargo and the Tarai unrest on Nepal’s economy has portrayed a bleak picture, cautioning that the economy could see a contraction for the first time in 33 years.

According to the central bank report, the ongoing crisis has had a worse effect than the April 25 earthquake, as the natural disaster had hit only 14 out of the country’s 75 districts, but now the entire Tarai region, which holds 50 percent of the population, has been affected. “The NRB report presents the real picture of the situation that we have been warning about for months. Our economy has been hurt massively, and it is almost certain that we will be witnessing a negative growth,” said Pashupati Murarka, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

According to him, the unrest in the Tarai has hit all the sectors, and no headway is being made in efforts to achieve a resolution, which poses a greater risk to the country’s economy.

“We have been pressing t™he political leadership to resolve the matter at the earliest possible. However, there seems to be no concrete results,” said Murarka, adding that the socio-economic cost of the ongoing blockade

was beyond imagination.

Murarka said that it was sad that the the government had decided to make positive moves to resolve the crisis only after it had continued for 100 days. “The crisis should have been resolved by now. But we are talking about taking positive action only now. This is distressing,” said Murarka, urging all the political parties to sit at a table and resolve the issues through talks.

According to the private sector, around 80 percent of the country’s manufacturing industries are concentrated in the Tarai region, which is why the banda there has posed a great threat to the overall economy.  

Almost all the factories in the Tarai have been closed, and others located in places not affected by the banda are operating at less than 20 percent of their capacity, according to the NRB Report. The central bank said the production of paddy in the Tarai region had dropped 5 percent from last year.

Likewise, Senior Vice-President Hari Bhakta Sharma of the Confederation of Nepalese Industries (CNI) said the prolonged unrest had led to a chaotic situation and the economy had been badly hurt. “There has been a huge production loss. Unemployment is likely to rise,” said Sharma.

Around 3 percent of the Nepali population, or more than 800,000 people, might suffer from extreme poverty due to unemployment, the NRB report said.

According to Sharma, even sectors like agriculture have been hit due to the unavailability of adequate fertilizer, and the situation will have a long-term impact.

Even if the current issues

are resolved, it will take at least three to four months to clear the backlog and move forward, the CNI said.