Govt presents Rs 618 billion budget
- But allocates Rs 10 million to each lawmaker under controversial CDF
Jul 14, 2014-
Finance Minister Ram Sharan Mahat on Sunday presented the annual budget of Rs 618 billion focusing on economic reforms, energy, infrastructure and agriculture. But under pressure from lawmakers he also included allocations for some controversial and populist programmes, mainly the Constituency Development Fund (CDF).
The budget is private sector-friendly as it has sought to address such demands as policy and economic reforms, measures against syndicate system, tax and other incentives to the industrial sector.
Under the CDF, each lawmaker will be given Rs 10 million, instead of Rs 50 million that had been demanded. Mahat has, however, assured the lawmakers that each constituency will get projects worth Rs 50 million.
Despite reports of massive embezzlement of Parliamentary Development Fund, under which each lawmaker was getting Rs 1 million, the government increased its size to Rs 1.5 million.
The Finance Minister, who has been promising to kick start second-generation economic reforms for increasing domestic and foreign investments, said he would introduce new legislations and policies in the industry, energy, commerce and banking and financial sectors.
The budget has promised amending the existing Company Act, Competition Act and Market Protection Act and Insolvency Act to ease set up, renew and liquidate companies. Industrial Enterprise Act, Foreign Investment and Technology Transfer Act, Foreign Investment Policy, Industrial Intellectual Property, Special Economic Zone Act, Electricity Act, New Labour Act and Public Procurement Act are among legal and policy documents to be either amended or new Acts will be introduced, according to the budget.
Through the reform measures, the government on one hand aims to promote investment while aiming to control anomalies of the market on the other.
Despite Supreme Court's ruling against syndicate system, the government has so far failed to implement the court's verdict. The budget has vowed to scrap the registration of those involved in such practice and blacklist them.
Likewise, given the development projects getting damaged shortly after the construction, the budget has promised that the contractors will be made responsible to ensure quality at least for five years of construction.
However, former National Planning Commission (NPC) vice-chairman Jagadish Chandra Pokharel said that announced reform measures must be implemented as early as possible to discourage attacks on such measures from various interest groups later. "It is very challenging to implement measures announced against syndicate without full cooperation from stakeholders," he added.
To encourage the entrepreneurship, Minister Mahat announced that the government would establish a 'start up fund' with Rs 500 million to help entrepreneurs having new knowledge but facing lack of capital.
Besides announcing the reform measures, the government has also talked about providing a full tax exemption for five years to production-related industries having investment over Rs 1 billion and tourism industry having investment over Rs 2 billion, and half the following three years.
Announcement of providing Rs 5 million per megawatt to hydropower developers for the hydropower projects connecting power to the national grid by the fiscal year 2022-23 and promise to make it mandatory to purchase domestic goods even if they are 15 percent dearer are other private sector-friendly policies.
The private sector has welcomed the budget for its private sector-friendly tone. "We are pleased with the budget as it has addressed many of the private sector's demands," said Pradeep Jung Pandey, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI). "We want its implementation."
With the country facing longer load-shedding, the budget has talked about eradicating power problem within the next three years when the government expects additional 1,188MW of power from the projects developed under the government and private sector initiative.
Solar energy has been prioritised in the budget with the government promising to produce 25MW from solar energy next fiscal year while promising to buy such power even from households.
In order to check the surging number of youths leaving for foreign employment, the government has announced low-interest loans at not more than 6 percent. The government has allocated Rs 1 billion for this purpose.
The announcement of introducing Act, interest subsidy for farm mechanisation and exemption in customs duty for tea industry are other initiatives in the agriculture sector. In infrastructure, the government has promised starting construction of Kathmandu-Tarai Fast Track this year while keeping the door open for domestic and foreign investors to enter into project.
With the Nepal Oil Corporation (NOC) failing to adjust oil prices in line with the international market price, the government has announced to establish the price stabilisation fund. Although the NOC's loss is too high, the government has just allocated Rs 500 million for the purpose.
The government has targeted to attain an economic growth of 6 percent in the next fiscal year while the inflation target has been kept at 8 percent. However, former NPC Vice-chairman Pokharel said the growth target is lower against the reform measures announced. "The nation's economy should grow more than 8 percent to achieve target of graduating the country to developing country by 2022 from current least developed country status," said Mahat during the budget presentation.
Published: 14-07-2014 02:55