May 2, 2011, 5:45 p.m. Published in Magazine Issue: Vol. : 04 No.-21 April 29-2011 (Baisakh 16,2068)

 Facts are disconcerting. A decade ago, Nepal could foot the entire petro bill by using one-third of the foreign exchange it earned through its exports.

Today, the total foreign exchange earned through entire export is just enough to pay for petroleum.

There couldn’t be clearer case of unsustainable journey.
The serpentine queues that one witnesses in front of petrol pumps in the capital city are a product of decades-long policies that have been misguided, at best.

The problem is that of the total indifference toward building manufacturing base and promoting exports.
For the last one decade or so, Nepal has dangerously become over-dependent on the remittance income it earns owing to hundreds of thousands of its workers overseas.
The hard-earned money they have sent home has resulted in availability of disposable income and, consequently, pushed consumption, and thereby, imports.
The total imports are already around five times total exports.

The rise in revenue from imports has made the government rest easy.

Worse, even when the oil price increases in the international market, the government is unable to correspondingly raise the domestic price.

Despite repeated calls from the experts, the government has not been able to put in place the automatic price mechanism that could have averted the problem.

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