Budget staves off looming crisis
KATHMANDU, NOV 20 - Post political drama and scuffles in the parliament on Friday, the annual budget finally saw the light of day on Saturday. Behind schedule by four months, the country is relieved to have the budget whose major priorities are infrastructure, health, education and the private sector.
More than content, the private sector and common people largely are happy to see the budget. This feeling was echoed on Saturday by economists and private sector leaders who are usually critical of the budget. “The fact that the budget has come is in itself an achievement,” said Binod Chaudhary, president of Confederation of Nepalese Industries.
The budget presented with only eight months of the fiscal year left may not make a big impact on the economy, but it has surely ended the anxiety of civil servants about not getting their salaries. Political compromise among the three major parties has left the budget handicapped with the Finance Ministry compelled to give continuity to major programmes of last year. The main spirit of compromise for the budget was to give continuity to development activities. Thus, the budget has new projects and programmes assisted by donors only.
Hence, there was no major policy announcement in the budget. This also saved the budget from being dubbed ‘populist’.
Budget makers must be lauded for giving emphasis on infrastructure. The focus on expanding highways to six lanes in Kathmandu and major international trade routes joining border Indian towns is expected to ease supply bottlenecks.
The budget has tried to address the looming crisis of the economy through policy intervention and incentives. Criticised for becoming revenue-oriented, the government has focused more on manufacturing sector. Such a measure is expected to boost the ailing export-sector via incentives.
The budget brought at a difficult time has tried to bring policy measures for positive results. To maintain fiscal discipline, it has announced that transfer of budget allocated to Far and Mid-Western region to other regions will be prohibited. Compulsory e-bidding for contracts worth more than Rs 2 billion is expected to make a positive impact.
Allowing Non Resident Nepalis (NRNs) to invest in the domestic capital market, regulating the commodity market and setting up credit rating agencies are some new measures in the budget to boost the capital market.
The budget has disappointed the middle class as it has nothing to offer to it. Unlike the previous budget, this one doesn’t have income tax measures for the salaried class. On the other hand, it seeks to bring the middle class in the tax net by making it have permanent account number.
The biggest drawback of the budget is that its presentation has deepened political polarisation. This will surely affect the implementation aspect. Pro-Maoist economists have criticised the government for bringing the budget through ordinance.
Will Maoists allow the budget to be passed in the parliament and will programmes be implemented at the local level are major concerns. Hence, the situation calls for consensus among the political leadership to take the economy ahead.
