The Economic Survey 2007 released Wednesday portrayed a not so healthy picture of the overall economy of the country. The survey stated that despite some signs of improvement in the social sector, the living standard of the Nepalese people was cramped by slow growth in agriculture and industrial production largely owing to political unrest and sluggish investment.

The Survey shows that the country’s economy grew by a mere 2.29 percent, the lowest in the last five years, and touched Rs 486.84 billion (about US $ 6.90 billion) at constant prices. The survey also pegged the gross domestic product (GDP) growth for the current fiscal year 2006-07 at 2.5 percent, as against last year’s 2.8 percent.

Amid restoration of peace, road construction picked up in 2007. The government added 312 kilometers of roads, including 304 km of black-topped roads, in the existing road network during the first eight months of the fiscal year. The registration of new vehicles also increased by 11 percent during the same period, making 33 vehicles per km of roads.

Similarly, the number of health care units, including hospitals and health posts, has increased to 6,944 as of mid-March 2007 from 6,796 in July last year. The number of trained health workers rose to 91,744 from 90,849 during the period.

In another proof of the improvement in social sector, the total number of schools went up by 7,567 as against a decline of 2,186 recorded last year. The number of students and teachers have also gone up.

On the economic front, the slow growth in agriculture and industrial sector contributed to the dismal performance of the overall economy. The agriculture sector, hit by poor paddy production, is projected to grow by a mere 0.65 percent as against last year’s 1.1 percent, while the industrial sector grew by 2.16 percent as it reeled under labor stir, Terai unrest and sluggish investment. The total foreign trade dropped by 2.6 percent to Rs 154.68 billion. The total foreign debt rose by 6.9 percent to Rs 234.8 billion, while the domestic loan increased by 10.16 percent to Rs 102.3 billion.

The foreign diplomats in Nepal have expressed their willingness to extend any support they can to the Election Commission to hold a successful constituent assembly election on the scheduled date.

During a discussion organised by the commission at its headquarters in Kantipath, Kathmandu , Thursday, most foreign ambassadors and UN agencies’ officials showed their concerns about un-improved security situation in terai.

An EC official said that during the meeting, British and Danish ambassadors even offered financial and other kinds of assistance to the Commission for the purpose of holding election.

Talking to reporters after the meeting, British ambassador Dr Andrew Hall said they were ready to assist election commission in all aspects to ensure that polls are held in fair environment. “We are behind the commission,” he said.

Voters’ education programme, training to election officials and election observation by national and international agencies were some of the other issues discussed during the meeting.

The commission organised the discussion to update the envoys on preparedness for the polls on part of the commission.

Reporters Without Borders (RSF) and Committee to Protect Journalists (CPJ) have expressed concerns over the missing Nepali journalist Prakash Singh Thakuri, whose whereabouts remain unknown since he was abducted on July 5.

RSF has appealed to Nepal’s government to determine the fate of a journalist kidnapped a week ago and rescue him if he is still alive.

A never-heard group called the ‘National Republican Army’ had claimed it killed Thakuri, who was picked up from Mahendranagar. However, his death has not been confirmed as his body has not been found yet. He is accused of being supporter of the monarchy.

“Authorities must do everything possible to rescue Thakuri, if there is still time, or otherwise identify and arrest those responsible for his murder,” the French agency RSF said in a statement.

“If his death is confirmed, he would be the first journalist to be killed since the fall of King Gyanendra’s authoritarian regime in April 2006 and the return to democracy,” the RSF further said.

Similarly, CPJ Executive Director Joel Simon said, “We are concerned about the safety of Thakuri and call on authorities to pursue all leads in their investigation.”

“If this journalist has been targeted for reporting in support of the monarchy, then the attack on him is also an attack on Nepal’s still fragile press freedom,” he further said.

Finance Minister Dr Ram Saran Mahat Thursday presented the interim government’s budget estimate of 168.99 billion rupees for the Fiscal Year 2007/08.

Presenting the budget estimate in the legislature parliament, Dr Mahat said free and fair election to constituent assembly election, peace and security, poverty alleviation and infrastructure development would be given top priority in the new Fiscal Year.

Of the total budget, Rs. 93.74 billion has been earmarked for general expenditure and Rs 75.25 billion for development programmes.

The government aims to manage Rs 99.60 billion from current source of revenue, Rs 27.47 billion from foreign grants, and around Rs 17.37 billion from foreign loan. The estimated budget deficit this year will be around Rs 24.56 billion.

The budget is higher by 17.4 percent as compared to total allocation of Fiscal Year 2006/07 and 28.2 higher than the revised estimate of the same period.

The government has earmarked Rs 3.5 billion for the constituent assembly election, pledging additional support from the Peace Trust Fund. With security being of of the priorities, the government has allocated Rs 9.59 billion for the police and Rs 10.89 billion for the army.

Mahat’s budget speech comes as another setback for the royal palace as it scrapped all the allowances given to King Gyanendra and his family. The budget statement made no mention of any allowance to the palace, but vowed to implement the decision of the government to nationalise the properties of the royal palace and utilise the properties of late King Birendra and his family on a time-bound basis.

The budget announced 27 percent salary hike for government employees including 10 percent allowance provided last year. Retired civil servants above 75 years will get additional 10 percent raise in their pension.

The Rs 1 million annual grant to VDCs has been given continuity in the new Fiscal Year.

The income tax ceiling for the individual has been fixed at Rs 125 thousand from the earlier ceiling of Rs 115 thousand and Rs 1.40 lakhs for couples from Rs 1.25 lakh.

The government has allocated 28.39 billion for the education sector and Rs 12.18 billion for the health sector.

Mahat said the education budget would cover appointment of 12,000 schoolteachers, scholarships for girls and students form backward communities. Mainstreaming of the education provided in Madarsas and Buddhist Gompas and establishment of two agriculture and forestry universities in Chitwan’s Rampur will also be given priority.

The Local Development Ministry has received substantial amount of budget (Rs 13.8 billion) for the Fiscal Year 2007/08.

For the Peace Trust Fund the government has set aside Rs 1 billion, part of which will be spend on management of the Maoist army. Mahat said the government hoped for contribution from the international donors to the Fund.

Similarly, Rs 9.34 billion has been allocated for development of road connectivity across the country while Rs 2.13 billion will be spent on expansion of communication services. Minimum two telephone lines will be installed in each of the 1700 VDCs that remain out of communication network.

The government has allocated Rs 5.82 billion for the agriculture sector (47.3 percent increase from last year’s allocation) and additional Rs 3.99 billion for irrigation projects. Rs 7.65 billion will be spent for hydropower development.

Likewise, Rs 1.71 has been earmarked for Poverty Alleviation Fund, to be spent chiefly on income generation projects in rural areas. Dr Mahat claimed that women would have direct involvement in development and economic projects worth Rs 19.9 billion in the new Fiscal Year.

Stressing on security to the industrial sector, the Finance Minister pledged to introduce laws banning blockage of highways. He also said strict laws would be introduced to end syndicate system in service-oriented businesses. The government will provide sops to small industries, export-oriented ventures and non-resident Nepalis (NRN) investment, he further said.

The budget has also announced relief scheme for internally displaced people. Rs 1.8 billion has been set aside for the reconstruction of infrastructures destroyed during the conflict.

The Finance Minister said that lack of visible improvement in the law and order situation and investment climate, and also due to the adverse weather, the production of major crops has declined resulting in the estimated GDP growth rate of only 2.5 percent at actual producers’ prices. The consumer price rise is expected to stand at 6.6 percent compared to the 8 percent of the Fiscal Year 2006/07.

Finance Minister Dr. Ram Sharan Mahat earned both bouquets and brickbats for the budget he presented at the parliament, Thursday afternoon.

Former finance minister and senior leader of Unified Marxist Leninist (UML) Bharat Mohan Adhikary slammed Dr. Mahat for “neglecting the agriculture and cooperative sector.”

“I think the budget is positively geared towards health, education and even industrial sector. He has come up with some good programmes in these areas. But he just did a flop-show on agriculture,” said Adhikary.

Narayan Man Bijukchhe, president of Nepal Workers and Peasants Party (NWPP), went a step ahead charging the Finance Minister of totally side-stepping the majority of Nepali population, who he said belonged to farming and working community. “He has stressed on privatisation. I see chances of individuals getting richer but the nation getting poorer,” he said.

Dr. Shankar Sharma, former vice chairman of National Planning Commission (NPC), praised the finance minister for giving continuity to economic reforms and many other past programmes. “The size of the budget is indeed too large. But he could not help it given the need to spend on unproductive sectors such as elections, camp management, and pay hike,” he said.

Industrialist Binod Chaudhary also heaved a sigh of relief that despite having to build consensus among eight parties including the Maoists, the budget had “maintained the basic direction (of reforms and liberalisation).”

Finance Minister Dr. Mahat himself defended his budget saying that he had “tried to strike a balance between political limitations and economic aspirations.” He is a finance minister of an interim government of eight parties including Maoists. The eight party alliance consists of liberal democratic as well as radical leftist parties.

“I have tried to bring the economic agenda to the center stage. Because even though we have major political challenges, we cannot give any less priority to economic issues at all,” he said. Dr. Mahat conceded that budget announcements alone do not ‘transform society.’ “What is required is total commitment from all and sincere implementation,” he said.

Dr. Mahat earlier presented Rs 168.99 billion worth budget for the fiscal year 2007/08 at the parliament.

A delegation of the Asian Development Bank (ADB) headquarters in Manila arrived in Kathmandu Wednesday to discuss the extension of the loan period and the restructuring of the long-stalled Malamchi Water Supply Project (MWSP) project.

The ADB delegation will start negotiation with the officials at the Ministry of Physical Planning Ministry from Thursday.

Responding positively to physical planning minister Hisila Yami’s letter, ADB, the main creditor of Melamchi, had decided last month to send a team for negotiation.

Earlier, ADB had said it was impossible to continue with its assistance in the multi-billion rupees Melamchi project after minister Yami’s decision not to award the Valley water management contract to UK’s Severn Trent company citing its bad track record.

As soon as the ominous announcement came, minister Yami wrote a letter to ADB headquarters assuring to hire technical experts, preferably Nepali or non-resident Nepalis (NRN), for about two years ‘interim period’ required to hire a new contractor through fresh bidding.

The letter was clearly aimed at convincing the ADB to reconsider its decision to pull out of Melamchi, which is deemed as the only solution to the deepening water crisis in the Valley.

The bank wants private manager for the Valley’s water distribution and had openly thrown its weight behind Severn Trent when the ministry terminated its contract claiming that it was a ‘tainted’ company.

The Melamchi project is designed to pump 170 million liters a day (MLD) to the Kathmandu valley. The current supply of drinking water stands at 90 MLD while the demand has shot up to 240 MLD.

Journalist Prakash Thakuri who has been missing since one week from his apartment in Bhasi of Mahendranagar could not be traced till Tuesday.

A three-time former vice president of Federation of Nepalese Journalists (FNJ)-Kanchanpur district chapter, Thakuri had been close to royal regime after February 1, 2005, according to Kantipur daily. Thakuri had been staying in the capital and had returned to Mahendranagar only a few days ago.

His wife Janaki Thakuri has informed the police that he was abducted by Maoist cadres. “Maoist worker Pomlal Sharma had come and inquired about Prakash following which YCL cadres took my husband away in motorcycle,” she told reporters.

Based on her allegations, police has taken Pomlal Sharma under their control. Sharma later told reporters that Prakash could have been taken away by YCL cadres. Even as he conceded that Prakash could have been abducted by YCL, in a separate press meet Maoists have denied their hand in the abduction.

Adding to the mystery, a hitherto unknown group calling itself National Republican Army has emailed newspapers claiming Prakash has been killed as he was involved in pro-King activities. The email signed by its spokesperson ‘Krantideep’, however, does not clarify where and how he was killed.

FNJ has issued a statement demanding investigation of the issue and has asked the authorities and all concerned to bring out the truth.

Chief Justice Dilip Kumar Poudel formally appointed four Supreme Court (SC) judges on Monday.

The four judges whose nominations by the Judicial Council were recently confirmed by the Parliamentary Special Hearing Committee (PSHC) are the first in the history of Nepal who had to go through parliamentary hearing.

The four permanent judges of SC include Damodar Prasad Sharma, Ram Kumar Prasad Shah, Kalyan Shrestha and Gauri Dhakal.

The Esther Benjamins Memorial Foundation (EBMF) has rescued 16 trafficked Nepali girls from the Amar Circus, in Haryana state of India.

In a statement on Wednesday, the foundation said that its field workers had liaised with the girls’ families before dispatching a rescue team in the weekend. “But just before the team left, the Circus, which had been tipped off about the forthcoming visit, sent nine girls back to Nepal accompanied by two staff members,” it said.

One of the staff of the circus accompanying the girls to Nepal remains in police custody in Hetauda. Family members were then able to collect another two girls independently.

On Tuesday, the rescue team, led by EBMF director Shailaja CM and Ganesh Shrestha joined new local partner ChildLine India in a visit to the circus that led to the release of a further five girls all aged below twenty. The team will return Nepal by Thursday.

“After their return, they will spend some time with families before joining the EBMF rehabilitation programme in Kathmandu and Hetauda,” the foundation said.

The foundation has already rescued almost 270 girls from Indian circuses since 2004.

The outgoing US ambassador to Nepal James F. Moriarty inaugurated the new embassy building in Maharajgunj, Kathmandu by raising flag on Wednesday.

Inaugurating the new office, Moriarty, who is leaving Nepal this Sunday upon completion of his three-year tenure, said, “This building is not merely a new office space. It is a symbol of home and assistance to all Americans in Nepal.”

He added, “It is the location of friendship, partnership and contact for Nepalis seeking to build ties with the United States. It is a symbolic and physical testament to the long-term American commitment to Nepal.”

The embassy plans to relocate to new building soon.