Heavy rains cause an estimated Rs17 billion loss on Nepal

An estimated Rs17 billion in losses to Nepal's economy resulted from floods and landslides caused by high to extremely heavy rainfall that persisted for 48 hours last week, according to the government's preliminary study released on Tuesday.

The real losses, according to economists, might exceed three times the initial projection.

With considerable losses, the agriculture industry was most severely damaged.

Large areas of crops were flooded and submerged by the late monsoon rains; the government has projected an immediate loss of Rs6 billion. This is just an approximation. A Department of Agriculture agro-economist stated, "Losses in the agriculture sector could be staggering."

"The economy will be greatly impacted by the crop losses. It will cause food imports to soar, food prices to rise, farmers' income to decline, and the rate of economic growth to slow down," he claimed. "Low-income households bear the brunt of rising food prices, as they already allocate a significant portion of their income towards food."

Natural disasters have become more common and intense over the past few decades, posing serious threats to economic activity.

Although it was initially anticipated that the monsoon rainfall would help the nation's struggling agriculture sector, Nepal's rain-fed economy has suffered the most.

But then it became nasty.

At a press conference in Singha Durbar on Tuesday, Chief Secretary Eknarayan Aryal stated that the agriculture sector, which is the backbone of Nepal's economy, had sustained the worst losses, totaling Rs6 billion.

The energy sector experienced a loss of Rs 4 billion, followed by the road, irrigation, and water supply sectors, which each suffered losses of Rs 2.52 billion, Rs 3.55 billion, and Rs 1 billion.

According to Aryal, there were 21 districts impacted, with the Kathmandu Valley, Dhading, Sindhuli, Kavrepalanchok, and Sindhupalchok suffering the most.

According to him, the landslides and floods caused damage to sixteen hydropower plants with a combined capacity of 664 MW, 37 roadways, 312 telecom sites, five main transmission lines, and more.

"There was a great deal of destruction. However, it's too soon to estimate the precise losses," economist Keshav Acharya stated.

According to our imprecise estimation, the September accident might have reduced the country's GDP by 1%, the speaker stated. Losses of Rs. 57 billion result from this.

Acharya stated that "important sectors like agriculture and services, drivers of Nepal's economic growth, have been hit hard."

One-fourth of Nepal's GDP is generated in the Kathmandu Valley, which is the region's economic center.

Experts advise the government to evaluate the state of its finances before making bold pledges to start the reconstruction effort right away, even if it would take several months to arrive at the final loss estimates.

Nara Bahadur Thapa, a former executive director of Nepal Rastra Bank's research division, declared, "The government is bankrupt."

Already facing a budget deficit, the government still owes almost Rs13 billion in interest subsidies to state-owned commercial banks, approximately Rs40 billion to contractors, and nearly Rs13 billion to the insurance and health sectors.

Thapa claims that if the accident is not handled carefully, it might lead to an economic crisis.

Agriculture and energy output may plummet substantially. Nepal must now purchase electricity from India instead of exporting it. Tourism would also be impacted by the tragedy. Travel will be discouraged, which will hurt the transportation industry. Furthermore, consumption will suffer during the holiday season when fewer people travel.

Prior to the heavy rains on September 28 and 29, the Asian Development Bank predicted that Nepal will develop by 4.9 percent as a result of improved tourist arrivals, a healthy harvest brought on by a consistent and powerful monsoon, and the possibility of energy commerce.

The catastrophe is now giving the administration headaches. The government is experiencing a budget deficit, and in order to finance relief efforts and reconstruction, a substantial amount of money is needed, which is not available to it, Thapa stated.

The chief secretary, Aryal, announced during the news conference that relief and reconstruction will be the government's top priorities. He did not, however, elaborate on how to pay for them.

Authorities reported that 30,731 security guards had been called up for search and rescue operations.

The number of fatalities from the accident has increased to 238 according to the Armed Police Force, while 29 individuals are still unaccounted for. According to the assessment, 1,769 dwellings and 55 bridges were damaged in the disaster.

The most affected country by climate change is Nepal.

A recent study research indicated that Nepal's economy is significantly impacted by climate change, especially in the areas of agriculture, water resources, and biodiversity.

The National Statistics Office (previously the Central Bureau of Statistics) released the National Climate Change Survey 2022, which presents a dire picture of Nepal's climate change predicament and calls for immediate action for the resource-starved Himalayan country.

The poll indicates that, barring major infrastructure damage, households reported economic losses of Rs415.44 billion in the last five years, both on and off farm.

Just a few days before the disaster in Nepal occurred, Nepal's Prime Minister KP Sharma Oli asked world leaders to take action at the UN General Assembly in New York. He called for the creation of a loss and damage fund for vulnerable countries like Nepal as well as enough money for climate adaptation.

"Aliens have not imposed any of the worldwide difficulties we face today. These are things we created," he remarked. "We can overcome them with cooperation, understanding, and trust."

Back home in Nepal, Oli said to the news conference on Tuesday that the government would reimburse farmers for their losses. "To assess losses, we will dispatch teams to various disaster-affected locations. We will also offer assistance to those without insurance whose homes have been damaged.

"To address the issues, the government will implement short-, medium-, and long-term solutions. Yes, we did have some errors during the rescue efforts, but they will be fixed.

In a few days, the government hopes to finish the search and rescue efforts and provide aid via a single, centralized mechanism.

The government has chosen a location where the homeless are permitted to construct temporary dwellings, according to Chief Secretary Aryal.

At the onset of the monsoon season this year, meteorologists in South Asia predicted that the majority of the region—including Nepal—would have above-average monsoon rainfall, which is beneficial for the country's rain-fed agriculture system.

Experts have noted that it was also a warning indication, though. Drastic rainfall can have a negative impact on the economy and cause disasters. The prime minister remarked, "We were not prepared for this kind of situation... for a disaster of this scale."