14th Plan 2016/17-2018/19

The government is targeting 6.3 percent economic growth in the budget for the next fiscal year.

According to the plan agriculture sector will grow by 4.5 percent in the next fiscal year, followed by 7.3
percent growth of non-agriculture sector. Likewise, the industry sector is estimated to grow by 8.7
percent, and service sector is estimated to grow by 6.9 percent in 2016/17.

14th periodic plan has targeted average economic growth of 7.1 percent in the next three fiscal years.
The 14th periodic plan, which starts from the Fiscal Year 2016/17 and last till 2018/19, will be the fourth
interim three-year periodic plan instead of the traditional five-year periodic.

It has envisaged economic growth of 6.3 percent for 2016/17, 7.2 percent for 2017/18 and 7.9 percent
for 2018/19. During the 14th periodic plan the country will see an average economic growth of 7.1
percent.

More than 7 percent growth rate is needed to uplift from Least Developed Country (LDC) status by 2022
and to upgrade to the middle income country by 2030 from the low income country. LDC graduation is
the major goal of 13th plan ended current fiscal year.

Country's economy estimated to grow by mere 0.77 percent in the fiscal year 2015/16, according to the
Central Bureau of Statistics (CBS). The government had targeted economy growth of 6 percent for the
fiscal year 2015/16.

Country's average annual economic growth was 2.92 percent in the 13th periodic plan which had
targeted average economic growth of 6 percent in the past three fiscal years, including the current fiscal
year which was hit by subpar monsoon, five months of Indian economic blockade since September 20,
and the devastating earthquakes of April and May.

The first periodic plan after the promulgation of constitution envisages preparing a base for the welfare
state and socialism-oriented economy, though the government has also reiterated to give enough room
for the private sector for economic growth. The total expenses -- for next three years -- to achieve an
average growth of 7.1 percent has been estimated at Rs 2.39 trillion.

The government plans to significantly raise public spending against private sector investment in the
plan.

As per the approach paper of new three-year plan, public sector investment will be 40.6 percent, a rise
from 31 percent in the ongoing plan.

Total investment planned in the new plan stands at Rs2.39 trillion, to which the private sector
contribute 53.5 percent and the cooperative sector will put in 5.9 percent, according to the approach
paper.
Nepal has adopted a three-pillar economic model with involvement of the state, private sector and
cooperatives, but the private sector considers cooperative as its part and resents any attempt to
categorise them as a separate sector.

In the 13th plan, public sector investment was planned at Rs464 billion of the total investment of Rs1.47
trillion. The private sector investment has remained over 70 percent in recent years.

As per the approach paper, the government plans to boost investment particularly in electricity, gas and
water sectors, followed by transport and communication.

The investment in the first three sectors will be boosted by 201.9 percent, while the fourth and fifth
sectors will see 116.5 percent rise in boost in investment. The investment in agriculture and education
will be hiked by 72.6 percent and 31.8 percent, respectively.

Although the governments investment priority has remained infrastructure projects in recent years, the
states low spending capacity has emerged as a big concern.