In mid-April, Nepal witnessed a 16.99 percent increase in vegetable inflation compared to the previous year, a situation attributed to several factors including alterations in India's vegetable export policies, the imposition of new taxes by the Nepalese government, inadequate rainfall impacting production, and a surge in agricultural input costs. Despite an overall moderation in the country's inflation rate to 4.61 percent from 7.76 percent a year earlier, vegetable prices on a consumer price index (CPI)-weighted basis saw a notable rise of 16.99 percent in mid-April, following a 14.07 percent increase in mid-March, as reported by the Nepal Rastra Bank's latest macroeconomic update.
Binay Shrestha, an information officer at the Kalimati Fruits and Vegetables Market Development Board, highlighted Nepal's reliance on India for essential vegetables such as onions, potatoes, and lemons, along with other green vegetables. He noted that changes in India's export policy significantly influence local prices. For instance, India's restrictions on onion exports, including the imposition of export duty and a minimum export price, led to a sharp increase in onion prices in Nepal.
Additionally, the Nepalese government's decision to impose taxes on potatoes, onions, and other vegetables, as well as fruits and food items, has also contributed to the current inflation in vegetable prices. The Financial Bill 2023 amended the Value Added Tax Act of 1996, removing 170 goods from the tax-exempt list and introducing a total tax of 23.5 percent on these items, comprising a 9 percent agriculture service charge, a 1.5 percent advance tax, and a 13 percent VAT.
Source: kathmandupost.com