Analysis

COVID-19 crisis: how crippled is our rural economy?

Milan Chauhan

Milan Chauhan

Soon after the wake of the 2019 coronavirus disease (COVID-19) at Wuhan, the capital and the mostly interconnected city of Hubei Province in China, shockwaves spread all over the world and Nepal didn’t remain unscathed. It will be immature to make a precise rate of downfall on the world economy from now, however, predictions on the unprecedented shrinkage of economic activity are certain. Due to the pandemic, Nepalis are facing the lockdown since March 24 and major economic activities that bring people into proximity are halted.

Economic ravages are already triggered by the shutdown of factories, agriculture farms, tourism, foreign employment, migrant labor sectors along with the threat to health. Our evergreen two pillars of GDP: agriculture and remittance income that share almost 26.98 percent and 52.4 percent, as unveiled by Economic Survey under the Ministry of Finance in May 2019 are already crashing and its backbone, our rural economy, is under attack.

According to the recent reports, around 80% of the Nepali populace remain in rural areas where the main sources of income are agriculture and remittance. This is clearly understood when thousands fled the capital and major cities for villages during the time of crises: the 2015 earthquake, the consequent blockade imposed by India and now the COVID-19. Some days ago, news broke in national news portals when some migrant workers swam across the Mahakali River from India to enter Nepal and many of them are still stranded on the border for several days.

Meanwhile, Facebook was photobombed with another exodus of hundreds of people walking past the hilly district from Solukhumbu to Kailai and even to Karnali provinces as they had no time to return home before the lockdown. Just as lower-middle-income migrant workers, who live by daily wages are hit, farmers are in fragile condition. As the contagion continues to rage on, farmers are not being able to move to the local markets while the supply chain faces interruption.

The poultry industry is already facing a death blow due to the irregularities in feed supply and labor shortages. Although the cases of the pandemic topped over 1.5 million globally, luckily Nepal has just witnessed 82 cases with 0 casualties and 16 recoveries as of May 5, 2020. But this doesn’t let us be complacent. Kathmandu in particular is vulnerable while the porous border with India has further added a set of challenges on the plains area.

The state indeed learned lessons from the series of previous outbreaks seen throughout the world: Ebola (2013), mostly in Guinea, Sierra Leone, and Liberia in the African region, Middle East Respiratory Syndrome (2012), Swine flu (2009), Bird flu (2003), Severe Acute Respiratory Syndrome, shortly SARS (2002) but fortunately Nepal recorded little to no cases at all. When around 8000 people were infected with SARS in 2002-2003, only 800 people died of the disease, while we received none.

Back in 2003, our economy was approximately four times smaller than today’s and we had fewer connections with those affected regions both in terms of commerce and mobility. This speculation might also be taken as a piece of evidence now since the United States and European countries have been the hotspots of the contagion as there is more interconnectivity among the economies and more profound is the mobility of the people. Those epidemics had, of course, little to do with our rural economy of then.

While the government is ramping up task bodies to contain the contagion despite the poorly equipped hospitals and little testing capacity within limited resources, Nepalis are worried somehow. What if the cases escalate? What if the rural populace gets infected? Can we fend off the virus and recoup our economy?

Woman-rice-field-Chitwan-district-Nepal

Image credit: Brittanica

Even before the pandemic broke out, in the fiscal year 2018/19, the share of the agriculture sector on Gross Domestic Product (GDP) shrank by 0.61 percent than the previous which clearly shows the possible hamper in predicted economic growth rate by 7 percent at producer price. Thankfully the favorable weather ensured the good production of bumper crops: rice and many other staples, coupled with the income from the remittance last year. But the situation is worse now as both sectors are at risk.

Not only being concerned with the health of farmers but also with a distraught face, the minister for Agriculture and Livestock Development Ghanshyam Bhusal had foreseen the possible famine due to the deadlock on agricultural activities brought by the coronavirus crisis. He also warned all the 753 local governments of the misfortunes and asked to come up with a firm plan to fight the deadly virus and initiate breakthrough actions on his signature stewardship “protected agriculture-assured savings”. Since the return of many foreign employees, there is a possibility of competition in employment markets and subsequent crisis will not be easy to handle. 

At present, two interventions seem plausible. First, farmers need to remain connected to the market, whether local or national. But they should be mindful of the increased personal protective equipment, safety measures and safe collective farm practices with social distancing. The local government should show high alertness on testing the suspected cases and making farmers safe in the field. This will stabilize the income sources for farmers and prioritize the continuity of food production. In the meantime, this will stabilize the purchasing power of lower-income consumers that would otherwise be impaired with hiking prices provoked due to trade restrictions on agricultural commodities.

Second, there is a need to restore income sources of migrant workers and support cottage industries in rural areas. Identifying the workers and temporary settlement by the federal government should be on high priority. Equally, it is high time that digital interventions are done at a rapid pace. These interventions should be incorporated into rural communities in the form of farmers’ friendly tools, making less contact with the people, getting access to online purchases and technical consultations. Local governments should gear up to manage marketing channels.

Today, about 63 percent of the total population of 29.6 million is between 15-60 yrs., Nepal has the largest proportion of the workforce than ever before in history. The post-pandemic economic landscape hence depends on addressing their positions. This pandemic no surprisingly is exposing the negative outlook of our economy with unfolding challenges over time. Nevertheless, it is an opportunity to rethink the path of economic growth and shape the future of our nation. This has urged us to revive the rural economy.

The writer is an undergraduate intern at Mandarin Superzone, Project Implementation Unit, Prime Minister Agriculture Modernization Project, Syangja district.

Published on 5 May 2020

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