Sudurpashchim Economy Projected to Reach Rs. 463.89 Billion, With Growth Estimated at 3.28%

Nepal Rastra Bank's Dhangadhi Office has released its annual report on the economic activities of Sudurpashchim Province for Fiscal Year 2025/26, highlighting the province's economic performance across agriculture, industry, tourism, banking, infrastructure, employment, and public spending. According to the preliminary estimates presented in the report, Sudurpashchim Province's Gross Domestic Product (GDP) at current prices is expected to reach Rs. 463.89 billion, representing approximately 7.03% of Nepal's national economy. The province's economic growth rate is projected at 3.28% at consumer prices and 2.71% at basic prices, compared to the estimated national growth rate of 3.85% at consumer prices. The service sector is expected to remain the largest contributor to the provincial economy, accounting for 52.66% of GDP. Agriculture, forestry, and fisheries are projected to contribute 33.65%, while the industrial sector is expected to account for 13.69%. Agriculture Shows Modest Growth Despite Declining Cultivated Land Agricultural production recorded a slight improvement during the review period, although the total area under major crops declined by 2.11% to 418,579 hectares. Overall agricultural production increased by 0.82%. Among major crops, production of pulses increased by 11.86%, oilseeds and soybeans by 9.52% each, potatoes by 7.01%, while sugarcane production also recorded growth. However, buckwheat production declined significantly by 63.24%, followed by a 32.01% decrease in barley production. Livestock and animal-based production also experienced positive growth. Milk production increased by 11.30%, meat by 6.91%, wool by 5.80%, eggs by 2.24%, hides by 0.80%, and fish production by 0.76%. Despite these improvements, irrigation remains a challenge, with only 41.37% of cultivated land receiving irrigation facilities. Agricultural lending also declined by 2.13% compared to the previous year. By the end of Ashadh 2083, the agricultural sector had received Rs. 15.62 billion, accounting for 9.56% of total loans extended in the province. Kailali alone accounted for 67.75% of agricultural lending. Industrial Capacity Utilization Remains at 51.29% The industrial sector continues to face challenges in fully utilizing its production capacity. A survey of 14 selected industries found that average capacity utilization stood at 51.29%. GI wire, brick, and edible oil industries recorded relatively higher capacity utilization rates of between 60% and 70%. In contrast, soap manufacturing operated at just 26.52% capacity, while the rosin industry recorded 36.04%. Industrial lending increased by 3.72% to Rs. 27.71 billion, with Kailali receiving 78.87% of the total industrial loans. By Chaitra of FY 2025/26, a total of 1,599 industries had been registered in the province, creating employment opportunities for 5,452 people. One encouraging development highlighted in the report is the success of The Organic Valley Pvt. Ltd., operating in Chure Rural Municipality. The company processes locally produced ginger and exports dried ginger worth approximately Rs. 50 million annually to Germany, demonstrating the potential of local agricultural processing and export-oriented businesses. Tourism and Real Estate Show Positive Developments Tourism activity showed signs of improvement, although hotel occupancy remained relatively low. Eleven selected tourist hotels recorded an average occupancy rate of 34.69%. During the review period, 18,822 foreign tourists visited Sudurpashchim Province. These included 17,997 Indian tourists, 94 Chinese tourists, and 731 visitors from other countries. Indian tourist arrivals increased by 17%, indicating growing cross-border tourism activity. The real estate sector also recorded positive growth. Property registration transactions increased by 11.41%, while revenue generated from land and property registration rose by 17.29% to Rs. 1.44 billion. Similarly, the number of permanent building map approvals increased by 9.25%. Kailali recorded the highest number, with 1,611 building plan approvals. Banking Sector Records Strong Deposit Growth Sudurpashchim's banking and financial services network continued to expand. By the end of Ashadh 2083, the province had 844 branches of banks and financial institutions, including 333 commercial bank branches, 51 development bank branches, six finance company branches, and 454 microfinance branches. Total deposits increased by 18.56% to Rs. 206.10 billion, while total lending grew by 3.82% to Rs. 163.41 billion. Kailali remained the dominant financial center of the province, accounting for 48.50% of total deposits and 68.37% of total credit disbursement. Infrastructure and Major Development Projects Continue Infrastructure development remains an important part of Sudurpashchim's economic outlook. Electricity access has reached 87.3% of the provincial population, while hydropower projects across the province have generated a combined 169 megawatts of electricity. By the end of Chaitra, the provincial government had constructed 56 kilometers of roads, including 11 kilometers of blacktopped roads, 26 kilometers of gravel roads, and 19 kilometers of earthen roads. Among major national pride projects, the Mahakali Irrigation Project recorded 30% physical progress and 30.06% financial progress. Meanwhile, the Rani Jamara Kulariya Irrigation Project, with a revised estimated cost of Rs. 51.34 billion, achieved 75.5% physical progress and 72.17% financial progress. Construction of the four-lane bridge over the Mahakali River has reached 95% completion. Similarly, the Jalpa Devi Cable Car project connecting Chisapani and Rajkanda in Kailali has completed approximately 90% of its construction work. Foreign Employment Rises by More Than 53% Foreign employment continued to play a significant role in the province's labor market. During the review year, 62,736 individuals from Sudurpashchim obtained labor permits for overseas employment. This included 56,961 men and 5,775 women, representing a substantial 53.79% increase compared to the previous year. Within the country, the Prime Minister Employment Programme provided jobs to approximately 7,000 people through 1,446 projects across 87 local governments. Workers received an average of 78.5 days of employment under the programme. Provincial Budget Utilization Stands at 61.94% Despite progress in several economic sectors, budget implementation remains an important concern. For FY 2025/26, the Sudurpashchim Provincial Government allocated a total budget of Rs. 33.47 billion but managed to spend only 61.94%, equivalent to Rs. 20.73 billion. Of the allocated budget, 67.08% of recurrent expenditure and 58.40% of capital expenditure were utilized. A separate assessment of five major municipalities in the province also revealed similar spending challenges. Out of their combined allocated budget of Rs. 7.24 billion, only 61.78%, or approximately Rs. 4.47 billion, was spent. Overall, the Nepal Rastra Bank report presents a mixed picture of Sudurpashchim's economic development. Growing deposits, expanding tourism, increased livestock production, infrastructure development, and rising industrial lending offer positive signals. However, low industrial capacity utilization, declining agricultural credit, limited irrigation coverage, increasing dependence on foreign employment, and incomplete budget execution highlight structural challenges that require greater policy attention and investment.