On January 31, 2020 the participants gathered for the first Liberty Discussion of the year, to discuss and debate on the article ‘Rajnitiko Buinma Mahangi’ written by Yam Bam.Although inflation is considered important in the economy of any country, the context of inflation in Nepal is quite different. With rising cost of goods and services has eroded the quality of life in the country. The author has pointed out some reasons leading to inflation is Nepal, including taxation system, cartel and syndicates, black marketing of good, reduction in agricultural productivity, import bans, poor distribution infrastructure, over profiteering in the market. Inflation in Nepal is also affected by external factors such as India’s trade policies, prices in the global market.
The discussion then progressed toward whether the monetary policy of Nepal could be used as an instrument to contain inflation in the country. A participant opined that Nepal Rastra Bank was not allowed to function in an independent manner, which prevented it from making use of monetary policy for inflation control.
On the other hand, some, echoing the author, said that black marketeering, desire for unreasonable rates of profit are responsible for inflation in Nepal. Thus, they opined that the government should use methods, such as price fixing, to bring inflation of essential goods and services under control. On the contrary, other participants pointed out that price fixing could instead lead to repercussion in the market. They argued that the government should focus on infrastructure development to easy supply of goods to reduce the cost of goods.
Although many participants wanted to continue discussing causes and consequences of inflation and find policy measures that aid in inflation control, we had to end the Liberty Discussion due to limited time. However, they can carry on the conversation on our Facebook group as always.