The Balendra Shah (Balen) government was formed on March 27 with a promise. The promise was that there would be action and not just declarations by this government. And this promise applied to the agriculture and tourism sectors as well. However, as we now know three months down the road, that promise faces a stubborn gap between what has been drafted and what has actually reached a farmer’s field or a trekking trail.
Agriculture and tourism are certainly not trivial topics for Nepal. Agriculture should be the first thing to discuss, considering the extent of its role in the Nepali economy. According to the National Statistics Office (NSO), agriculture, forestry and fishing continued to remain the largest economic sector in fiscal year 2025/26, making a contribution of slightly above 24 percent to the country’s GDP, with the total gross value added being estimated at Rs 1,393 billion, an increase compared to Rs 1,337 billion in fiscal year 2024/25.
This share continues to diminish since fiscal year 2014/15, when it was as much as 29.39 percent. However, despite the decreasing share in GDP, there is an even more important issue here: agriculture continues to be the sector on which the largest section of Nepali population depends for survival. Almost 62 percent of Nepali households are involved in agriculture, whether it is small-scale or large-scale farming. Agriculture accounts for direct and indirect employment of 57 percent of the economically active population.
This is precisely the dilemma faced by policymakers in Kathmandu: an industry accounting for about 25 percent of the economy's gross output but employing more than half of the country's labor force is, by definition, an industry with low productivity. Anyone seriously studying the history of Nepal's development story will say the same thing: the quickest way to raise incomes for all is not to desert the sector, but to modernize it. When agriculture falters, the impact is not first reflected in GDP figures but in the lives of the poorest families living in the mountains and plains.
And agriculture is faltering. As per NSO's own projections, the growth rate of the agriculture sector is estimated to stand at only 1.58 percent in fiscal year 2025/26, a significant decline compared to 3.05 percent and 3.10 percent in the previous two years. The single largest cause of the fall is paddy, the staple food item in Nepal and the country's economic barometer, whose production growth is expected to be negative by more than 4 percent in the current fiscal year due to the vagaries of weather.
Trekking trails exploration, maintenance in TAAN priority
The same applies to tourism, on a smaller but just as strategically vital scale. Depending on whether you consider the direct or the direct plus indirect impact, the figures will differ but will consistently hover between 6.7 percent of GDP according to the World Travel and Tourism Council, and 7 to 8 percent of GDP according to Nepal Rastra Bank estimations which include the indirect effects as well. What makes the multiplier factor of employment so strategically necessary and not just something to aim for is the figure which shows how, as of 2022, tourism provided a living to around 1.05 million people in Nepal, and according to UNWTO, one tourist creates twelve jobs when both direct and indirect employment is considered.
For Nepal and Nepalis, agriculture and tourism are two of the only domestic engines capable of creating jobs at home instead of abroad. And, if one looks at the paper alone, the Balen Shah government cannot be accused of lack of activity. There are provisions in the budget of FY2026/27 for irrigation development, the use of fallow land, agribusiness, agricultural insurance, concessional loans, and chain development. Furthermore, the government has also recognized agriculture as one of the growth sectors with priority, signaling a move, at least on paper, from vague slogans to tangible reform programs.
In the case of tourism, the strategy has been formulated quite clearly: moving from the pursuit of visitor numbers to increased spending per visit, development of homestay, religious circuits, aviation reform separating the regulation and service-providing functions currently being overseen by the same entity, and selling Nepal as a year-round destination.
The trouble is that virtually none of this has yet translated into something a farmer or a hotel owner can point to and say: this changed because of the new government! Hardly anything has been done toward a nationwide rollout of farmer ID cards, pension disbursement for farmers, and measurable expansion of insurance coverage. Similarly there hasn’t been any significant new irrigation project breaking ground and any land consolidation drive visible on the ground. The National Wellness Year 2027 remains, as of this writing, an announcement rather than a program. Religious tourism circuits remain proposals on a ministry desk. Aviation reform - particularly the long-promised push to route more international traffic through Pokhara and Bhairahawa - has produced no visible result in three months.
There is nothing wrong with the Balen government using its fresh-mandate energy in the first days on governance reforms such as administrative reform, digital government, anti-corruption, and civil service reform. But making consolidated efforts toward the delivery of sector-specific programs, especially in the agriculture and tourism sectors, is equally important. The programs that are meant for agriculture and tourism also require the development of regulations and coordination from three levels of government.
All this cannot take place within three months no matter how committed the ministers may be. But there should have been clear early signs from day one that the government is doing what it said it would, at least in agriculture and tourism. Presumably, several key programs will start with FY 2026/27.
But this alone cannot become a pretext for the government to use the first three months as a license to do nothing apart from plan presentation. The history of Nepal is replete with regimes which, having done nothing else during their first three months but indulge in institution-building exercises, found that by month twelve, all political capital needed for implementing difficult sector-level reforms had been depleted. The Balen Shah government has come into power because of a youth movement that brought down the previous regime on grounds of unemployment and corruption. Agriculture and tourism - the two sectors closest to the rural poor and young people looking for work - do not even have their promised policy measures drafted yet.
Tourism is one of the sectors that have managed to claw their way back to almost pre-pandemic levels based on their inherent strengths. What would happen if the state provided the kind of strategic support it requires, like quick visa issuance processes, actual aviation liberalization, and actual marketing in poorly penetrated markets? This sector is full of potential waiting to be tapped by the state through policy measures. Every month lost on committee making and plan preparing is a month lost in tourism season revenues.
There is one figure that should seriously bother our finance minister: Rs 360 billion. This is what it costs Nepal to bring in food imports, with cereals second only to edible oils, while the importation of paddy and rice alone costs Nepal Rs 43.42 billion in a fiscal year - broken up between ordinary paddy, basmati, and other types of rice. The imports of rice and paddy have reached Rs 33.6 billion within 11 months of the current fiscal year. It is simply indefensible that a country which continues to see agriculture as its single largest contributor to GDP and has more than half of its population engaged in agriculture should have such expenditure to make annually on its staple food.
Availability of chemical fertilizer on time is another issue. In the last fiscal year alone, Nepal imported fertilizer worth Rs 32.28 billion; if one adds to this the government subsidy amounting to Rs 27.95 billion, then the country is practically spending Rs 40 billion just to ensure a steady supply of urea that theoretically could have been produced in Nepal itself. And even that expenditure will not help alleviate the fundamental shortage problem. Every paddy planting season, there is a shortage of urea. This is no issue of scarcity of resources.
This is a political will issue. The government of Nepal has conducted various feasibility studies on a fertilizer plant within the country since the time of Japan International Cooperation Agency’s study done in 1984 and subsequent studies done in 1995, 2015, and 2017. Recently, in 2023, a German company, DIAG Industries, even put forward an offer for a build-own-operate-transfer project where the project cost would be largely funded by foreign investments. It has all been stuck in papers and no concrete actions have been taken yet.
The Balen Shah administration needs to break Nepal's dependence on other countries for the two things that every farmer requires every time: seed quality grain and fertilizer. This is where the political capital of a "reformist" government must be invested, not in another feasibility study but in a final investment decision. For a government that took office to rectify the mistakes made by four decades of its predecessors, a chemical fertilizer factory and food grain self-sufficiency provide the clearest possible test case for proving their sincerity.
In his budget for fiscal year 2026/27, Finance Minister Dr Swarnim Wagle has indeed announced the establishment of a chemical fertilizer plant. However, this is not a first-of-its-kind announcement. Budgets introduced by previous governments too have referenced a domestic fertilizer factory on and off over a decade. But none of those commitments survived past the feasibility-study stage. The Balen government is expected to walk the talk.
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