High Contribution of Service Sector to Koshi Province's GDP

The service sector holds the highest share in Koshi Province’s Gross Domestic Product (GDP), according to a recent study by Nepal Rastra Bank. The service sector is estimated to contribute 49.85% to the province’s GDP for the fiscal year 2081/82. Agriculture is expected to contribute 34.05%, while the industrial sector will make up 16.09%.

Industry Capacity Utilization & Credit Flow

During the first six months of FY 2081/82, the average capacity utilization of sampled industries in the province stood at 48.6%, up from 41.7% in the same period of the previous year. Among industries, soybean oil factories showed the highest utilization at 107.1%, while domestic metal goods producers had the lowest at 4.3%. Soybean oil production surged by 641.1%, while domestic metal goods output dropped by 79.5%. Total industrial employment declined by 2.0% to 17,362 workers, with 91.6% being domestic workers and 8.4% foreign.

As of Poush-end 2081, total industrial credit rose by 5.6% to NPR 147.47 billion.

Decline in Agricultural Land Coverage

Compared to the same period in FY 2080/81, the area under crop cultivation decreased by 2.8%, mainly due to reductions in millet, buckwheat, barley, tobacco, potatoes, and maize. Among total cultivated land, food and cash crops covered 88.3%, vegetables 4.6%, and other crops 7.1%. Paddy, maize, wheat, and millet together accounted for 82.5% of the crop area.

Agricultural Output Rises Due to Irrigation Expansion

Total agricultural production increased by 2.03%, with food/cash crops up by 2.0%, vegetables by 5.4%, fruits by 2.9%, tea by 0.8%, and coffee by 1.6%. Spice production declined by 9.9%. Irrigation coverage improved slightly from 40.5% to 40.8%.

Dairy output rose by 1.9%, meat by 4.8%, eggs by 7.2%, and fish by 4.8%, while wool production declined by 2.2%. Timber output dropped by 11.9%, while medicinal and other forest products increased by 26.1% and 4.0% respectively.

Agricultural Credit Declines

Compared to Ashad-end 2081, agricultural lending in Koshi Province dropped by 5.02% as of Poush-end 2081. Agriculture accounted for 9.7% of the total credit distributed. The number of financial institution branches reached 1,846, including 762 commercial banks, 195 development banks, 36 finance companies, and 853 microfinance institutions.

Credit Outpaces Deposits, CD Ratio at 119%

As of Poush-end 2081, total deposits in financial institutions rose by 3.1% to NPR 492 billion, while credit increased by 1.2% to NPR 585 billion. The credit-to-deposit ratio stood at 119%, slightly down from 121.1% in Ashad.

Among sampled cooperatives, capital increased by 7.0%, savings by 15.6%, while loans disbursed fell by 21.4%.

Tourist Numbers Rise, But Hotel Occupancy Drops

Hotel occupancy in sampled hotels decreased to 53.3% from 55.4%. However, international tourist arrivals surged by 45.5%, compared to a 1% drop the previous year.

Infrastructure and Transportation

Flight operations declined by 1.2%, though this was a smaller drop than the 7.6% decline in the previous year. Vehicle registrations rose by 62.2%, reversing an 11.4% drop last year.

Hydropower and Foreign Employment

By the end of Poush 2081, 53 hydropower projects with a combined capacity of 662.25 MW had been completed in Koshi Province, with Solukhumbu contributing the largest share (257.4 MW).

Foreign labor permits increased by 11.5%, with a total of 83,948 people going abroad for work during the review period.

Economic Growth and National Contribution

According to the National Statistics Office, Koshi Province’s economic growth for FY 2081/82 is projected at 3.34%, slightly higher than the revised estimate of 3.31% for the previous year. The province is expected to contribute 15.90% to Nepal’s total GDP.