Pre-pandemic Industrial Capacity Utilization Stands at 40%, Worsens with Pandemic!

A recent study done during the period before the coronavirus pandemic revealed that the capacity utilization of the industries in Nepal had dropped drastically from the previous year.

As the findings cover the pre-pandemic period, the market experts fear that industrial capacity utilization worsens in the pandemic period.

According to the Economic Activities Study Report 2019-20 (Half Yearly) by Nepal Rastra Bank, the industries utilized only 40% of the installed capacity in the six months between Mid-July 2019 to mid-January 2020, a 20% slump from 60% utilization in the corresponding period of previous fiscal 2018/19.

Though the overall industrial capacity utilization has dropped significantly, some industries have enjoyed positive growth in capacity utilization.

Among the 154 surveyed industries, the liquor industry had registered the highest capacity utilization at 92.1%.

Industries that witnessed a rise in capacity utilization:

• Mustard oil, soybean oil, chocolates, rice, noodles, flour, liquor, jute goods, synthetic clothes, paint, cement, and medicines

Industries that witnessed a drop in capacity utilization:

• Ghee, processed milk, biscuits, processed tea, animal feed, beer, cigarettes, garments, processed leather, threads, soaps, plastic items, paper, concrete, bricks, steel rods, aluminum, and tires and tubes

However, as per the study, the credit flow to various industries in the review period increased to 17.3% and reached NPR 1.06 trillion. The credit flow had stood at 12.6% in the corresponding period last fiscal.

Industry-wise Credit Flow Details:

• Non-food items production industry- 35.3%
• Construction materials manufacturing industry – 31.4%
• Agriculture, forests, and beverages Industry – 15.9%
• Electricity, gas, and water Industry – 12.9%
• Mining Industry – 0.7%

Moreover, the study has emphasized the need to boost industrial production and increase capacity utilization. It has also recommended training programs for the employees in the industries to enhance their skills.

Likewise, the Nepal Rastra Bank also mentioned the vital role of non-resident Nepalis in developing industries.

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