Nepal's apex business body has claimed that over 400,000 Nepalis lost their jobs in the last five months in the wake of the anti-Constitution protest in the Terai plains and the blockade of Nepal-India border entry points.
The southern Terai region is considered the industrial heartland of the Himalayan nation with 70 percent of manufacturing units located there.
Industry contributes 17 percent to the Gross Domestic Product of the Nepali economy. Tourism, carpet manufacture, textiles, cigarette manufacture and cement and brick production form the major part of the country's industry.
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) claimed on Tuesday that around 2,200 manufacturing units stopped operations during the last five months.
For almost five months, the plains of the Nepal Terai have been simmering with protests against the country's new Constitution that was adopted by the Constituent Assembly on September 20.
The Madhesi protestors are demanding, among others, a redrawing of the boundaries of the provinces in the Himalayan nation as proposed in the new Constitution; and restoration of rights granted to Madhesis in the interim constitution of 2007 which, they claim, the new charter has snatched away.
As part of their agitation, the Madhesi protestors have been preventing the entry of Nepal-bound cargo, freight and containers from key Nepal-India entry points, causing scarcity of essentials.
FNCCI claimed that the Madhesi protests have resulted in a huge revenue loss to the country amounting to an estimated Rs.2 billion daily for the last five months.
The protests have badly hurt the country's economy, said Saurav Jyoti, chairperson of FNCCI's tax and revenue committee, at an interaction here.
According to a Nepal Rastra Bank (NRB) report, a single day's industrial closure leads to losses worth Rs.1.8 billion.
As per NRB statistics, the cumulative losses faced by the private sector have crossed Rs.300 billion.
"The country's economy is in a free-fall mode," Jyoti said.
Likewise, the industrial sector is likely to witness a negative growth rate of 2.5 percent since protests erupted in the Terai region, NRB warned adding that inflation had already touched the double-digit figure.
Subodh Gupta, vice president of Birgunj Chamber of Commerce, criticised the government for not being able to provide security for the industrial units in Birgunj.
"The situation is going from bad to worse. We are clueless as to how to pay detention charge of cargo trucks consignments from India," Gupta said.
Finance Minister Bishnu Paudel said the government was cautious about the impact of the ongoing situation and stressed on the need to work together with the private sector.
"Our economy is not in a good shape. This is indeed an outcome of political problems and needs a political solution," he said.
"We are committed to resolving the crisis as soon as possible by bringing the agitating Madhesi parties on board," Paudel said.
The finance minister said the government's decision to establish a Rs.100 billion Economic Rehabilitation Fund to bail out the country's economic sector -- hit by the April 2015 earthquakes, political unrest and the border blockade -- was in line with the government's commitment to work together with the private sector.
India remains the largest trading partner of landlocked Nepal accounting for 55.7 percent of exports -- largely carpets, clothing, leather goods, jute goods, and grain -- and 82.9 percent of imports -- comprising mainly machinery and equipment, petroleum products, and fertilizer.
Nepal's GDP is heavily dependent on remittances of foreign workers. Subsequently, economic development in social services and infrastructure in Nepal has not made dramatic progress.
The export-oriented carpet and garment industries have grown rapidly in recent years and together now account for approximately 70 percent of merchandise exports.
