KATHMANDU: The incidence of bandhs, which seemed to have slightly simmered down, is back to lead a powerful blow to the economy. Frequent recent bandhs, which have been characterised by violence and extremism, have cast a shadow over the country that was struggling to lead its economy forward. Thriving under polluted political atmosphere and rampant impunity, the ugly bandhs will push financial security further southwards.

Economic evil

The country, which was bracing for a leap forward after a decade-long insurgency and ongoing national instability, has been pushed backward by the ominous strikes, often announced for no reason whatsoever. As per rough estimates by Federation of Nepalese Chambers of Commerce and Industry (FNCCI), a day of nationwide bandh incurs a loss of around Rs two billion in non-agricultural sector alone. The actual loss in figures must be significantly high, when value added tax (VAT) amounts — which would otherwise accumulate in the state coffer — are taken into consideration.

The indirect impact of bandh has even more far-reaching consequences. Hardest hit are small business holders such as retail shopkeepers. Ultimately, those at the receiving end are consumers and daily wage earners, who are forced to purchase commodities at far above normal rates, thanks to the scarcity created by the break in supply chain as well as black marketeering. As evidenced, a bandh virtually cripples business and economic activities and affects the entire sector — either service or non-service. “Bandhs put entrepreneurs into dire straits, since they are unable to pay wages to their employees, whereas the bank interest keeps on mounting. Raw materials often get wasted and cost of business shoots up,” says Pradeep Jung Pandey, vice president at FNCCI.

Production perils

Meanwhile, Gautam Man Shrestha, general manager of Industrial District Management Limited, informs, “A day’s bandh results in a loss of around Rs 500 million in 10 industrial estates across the country. A bandh in the industrial estates also means around 15,000 workers are rendered jobless.” Though bandhs may not impact small-scale industries as severely, they suffer a telling loss too. Some fact-ories, unable to bear the loss caused by frequent strikes, have already closed down. “Big multinational industries, including Colgate and Nepali industries that produced vegetable ghee and flour, have stopped production as they are unable to bear losses incurred by strikes,” says Shrestha, adding that manufacturing sector is no more an attraction in Nepal. “I admit that entrepreneurs in Nepal must have great courage to keep industries running,” he shares.

The recent spate of bandhs has added a series of shocks to the manufacturing sector. Elaborating on this scenario, Meghnath Neupane, director general of Confederation of Nepalese Industries, says, “If the trend of bandhs continue, industrialists will abandon manufacturing sector to embrace import business and Nepal Investment Year will be limited to a mere slogan.” According to him, the loss caused to industries in monetary terms is not the only concern. The issue is whether any industry will be able to exist, given the unfolding bandhs. He demands, “The government, political parties and concerned bodies staging protests must express commitment not to impose bandhs and imp-lement this commitment in practice, so as to create a conducive environment.”

Investment ills

Along with educational institutions, series of violent bandhs has also disastrously affected banks and financial institutions (BFIs). Sashin Joshi, a member of Nepal Bankers’ Association, says, “Banking institutions are only able to conduct 10 to 12 per cent of their normal transactions during bandhs.” According to him, it is difficult to maintain regular service as staffs are threatened should they decide to operate transactions. Joshi adds in a concerned tone, “Once, bandh enforcers even damaged ATM machines, warning banks to put an end to the ATM service.”

Expressing his opinion on the unfortunate cons-equences of bandhs, Dr Posh Raj Pandey, chairman of South Asia Watch on Trade, Economics and Environment (SAWTEE), says, “Bandhs paint a bleak image of Nepal’s investment climate. Though bandhs occur in other South Asian countries as well, their occurrence in Nepal is unpredictable and adds to the volatile political situation, sending negative message to the investors.” Thanks to bandhs, Nepali exporters face a huge challenge to deliver products on time, which further decreases their capacity to compete in the international market.

Tourism entrepreneurs also oppose bandhs vociferously, as their excitement and hope at the government’s declaration of Visit Lumbini Year and Nepal Investment Year 2012-13, has been dampened by series of strikes.

“Adverse impact of bandhs is already visible in the tourism sector. June and July is considered the season of Indian tourists, but they have been rapidly cancelling their bookings at present,” says Madhav Om Shrestha, executive director of Hotel Association of Nepal (HAN). He adds, “Regular strikes send out negative message to the world, and will surely impact Visit Lumbini Year and investment into the country.”

Wobbly way out

Experts blame decline of moral value among political leaders and unaccountability on part of the government for the ugly twist in bandhs. Since government does not heed to demands put forth without agitation, concerned bodies resort to bandhs, thus reinforcing the belief that it is the only way out.

Charan Prasai, president of Human Rights Joint Forum (HRJF), observes, “Impunity and lack of rules and laws are entwined with bandhs.” He illustrates this with an example, “A victim’s demise in a road accident is compensated only if his or her family and kin are strong enough to impose a bandh. If not, they are left uncared for.”

Those concerned about vicious bandh culture suggest that the provision against them should be included in the constitution itself. However, Prasai opines, “Where impunity rules, inclusion of regulations against bandhs in the constitution is useless.” To this, Joshi adds, “An appropriate option is collective pressurisation against bandhs by the media, human rights activists and the civil society. Though everyone has the right to freedom of expression, they can debate on issues through media or mass meetings or in the parliament without imposing bandhs. Strikes and forceful closures in any form can’t be tolerated.” According to those in the know, a responsible and responsive government that addresses problems at several spheres of the society and a society that abides by law and order can ultimately root out the bandh culture.