Service Sector Contributing 61 Percent In National Economy, Bagmati Province With Highest Contribution

November 15, 2021 | Lila Dhimal

The Gross Domestic Product (GDP) of Nepal (at market prices) stood at Rs 42.66 Kharba in the fiscal year 2077/78, as per the Central Bureau of Statistics. Despite the ongoing pandemic, Nepal achieved economic growth of 4 percent.

The contribution made by the agricultural sector in the Gross Domestic Product is 25.8 percent. Likewise, 17.5 percent contribution is made by the industrial sector, whereas the service sector has the highest contribution of 61.1 percent in the national GDP. The service sector has broken the traditional view which regards the agricultural sector as the primary sector and most engaged sector, contributing the highest in the GDP. The share of the service sector in the national economy has increased as tourism, banking, insurance, and other service-related businesses have flourished in the past few years.

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Province-Wise GDP, Share & Economic Growth Rate

Province\Economic Indicators GDP at the Market price (Rs ‘In Arba’ Share In National GDP (In %) Economic growth rate (In %)
Province 1 664 15.6 3.5
Province 2 562 13.2 3.5
Bagmati Province 1,608 37.7 4.6
Gandaki Province 372 8.7 3.6
Lumbini Province 596 14 3.8
Karnali Province 172 4 3.8
Sudurpaschim Province 294 6.9 3.6
National GDP 4,266 100 4

(Source: Central Bureau of Statistics)

Looking at the province-wise contribution of the share in national GDP, Bagmati province has the highest contribution with  37.70 percent, followed by Province 1 with 15.6 percent, Lumbini Province with 14 percent, Province 2 with 13.2 percent, Gandaki Province with 8.7 percent, Sudurpaschim Province with 6.9 percent and the least contribution of 4 percent is made by Karnali province.

Based on the table presented above, Bagmati province has the highest contribution in the GDP at market price with Rs. 1,608 Arba, followed by Province 1 with Rs. 664 Arba and Lumbini Province with Rs. 596 Arba. Similarly, Province 2 has contributed Rs. 562 Arba in National GDP, Gandaki Province Rs. 372 Arba, Sudurpaschim province Rs. 294 Arba and Karnali Province with Rs. 172 Arba.

Similarly, in the fiscal year 2077/78, Bagmati Province achieved the highest economic growth rate of 4.6 percent. Likewise, Lumbini and Karnali Province have the second-highest growth rate with 3.8 percent. Gandaki and Sudurpaschim Province attained a 3.6% growth rate, and Province 1 and 2 have the least economic growth rate of 3.5 percent.

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Nepal, being a federal nation, has moved ahead with decentralization. However, looking into the data published by CBS, we can see that, there is a huge disparity in the development of the economy of various provinces. Bagmati Province has generated Rs 1,608 Arba as GDP contributing about 37.7 percent to the national economy. On the other hand, Karnali Province has a GDP of Rs 172 Arba only, contributing about 4 percent. This is mainly due to the gap in the infrastructural development between the provinces and the still-prevalent centralized business activities conducted in the Kathmandu Valley. In order to reduce the economic gap among the provinces, the government should come up with proper policies and actions oriented to develop the less-developed province. With the reduction of economic disparity, Nepal can achieve the targeted growth when all the states equally move the nation towards a prosperous future.

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