Nepalese Experts Up in Arms Against Increasing Power Trade with India to Cut Export Deficit

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Researched by Industrial Info Resources India (Delhi, India)--Scrapping India's proposals to reduce export deficit between India and Nepal through electricity trade, economists and experts in Nepal have argued that electricity export is unlikely to meet the country's trade-deficit with its southern neighboring nation.

Referring to various Indian leaders' statement that Nepal can export electricity to reduce trade deficit, Former energy secretary of Nepal, Dwarika Nath Dhungel alleged that India wants to develop mega projects in the name of generating energy, but actually the country will use the water resources for its own benefits. "Therefore, Nepal should harness hydropower on its own and bring foreign investment in sectors like tourism and manufacturing where it has comparative advantage," Dhungel said, adding that Nepal should not look only to hydropower to reduce trade deficit.

Nepal imported goods and services amounting to $4.51 billion from India in the first 11 months of 2013-14, while the country could export goods and services worth only $0.56 billion during the same review period. Industry Experts have reportedly warned the government against export of hydropower to reduce its increasing trade deficit with India. They have urged the government to prioritize electricity consumption through industrialization and replacement of petroleum products used to generate electricity.

"Export of electricity might reduce trade deficit but won't create jobs. Therefore the priority should be on promotion of industrial sector to consume power generated in the country for creating jobs and reaping other economic benefit", said former commerce secretary Purushottam Ojha. He demanded that priority should be given to industries that produce export commodity.

Nepal recorded a trade deficit of $591.06 in March of 2014. Balance of Trade in Nepal averaged $ -196.42 million from 2001 until 2014, reaching an all time high of $ -40.5 million in October of 2001 and a record low of $-591.52 million in February of 2014. Nepal's lack of infrastructure and geographic constraints has led to chronic trade deficits. Nepal mainly exports iron and steel, knotted carpets, textiles, plastics, hollow tubes, beverages and vegetables. Nepal mainly imports oil, gold, iron and steel, clothes, pharmaceutical products, cement, electronic appliances, food and vehicles.
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