Finance Minister Surendra Pandey today presented an accommodative budget of Rs 285.93 billion for the fiscal 2009-10. Though the budget has increased its revenue target, it still has Rs 46.34 billion deficit.
"The budget is little oversized," said former finance minister Dr Ram Sharan Mahat, who was cautious in his praise. It has the following broad contours -- Rs 160.63 billion has been set aside for recurrent expenditure, Rs 106.285 billion for capital expenditure and Rs 19.12 billion for principal repayment.
However, denizens, suffering from double digit price hike, will not get respite as the oversized budget could fuel the price hike. It seems that the government has completely surrendered to the rising price as it projects 13 per cent price hike in 2008-09 but has no contengency plan to contain the price rise.
Prof Dr Bishwambher Pyakuryal, a senior economist, too endorsed that overriding perception. The all-important fiscal document has, though, aims to contain the price hike at seven per cent and targets growth at 5.5 per cent.
"It seems that the government wants to give something to the people. But, unfortunately it lacks focus," said Dr Shanker Sharma, ex-vice-chairman, National Planning Commission (NPC). "If there is a good monsoon, the growth target could be achieved since it is primarily powered by agriculture, which is dependant on the vagaries of nature,” he added.
Pandey also has a lot of hard work in store to live up to his promise.
Dr Sharma opined that delivery mechanism needed to be improved at least 10 times to make it a resounding success.
In a bid to be as accommodative as the ground reality allowed him to, the Finance Minister has not only added new programmes but also opted for continuity of his predecessor Dr Baburam Bhattarai.
Pandey said that the budget would focus on job creation, boosting law and order, creating a better investment climate and implementing power projects to end a crippling shortage of electricity that has stunted economic growth but he has totally lost the focus.
Dr Mahat, too, agreed that the budget lacked a sustained focus. The budget is a throwback to Bharat Mohan Adhikari of his own party -- CPN-UML -- and Maoist Dr Bhattarai's budgets.
Entrepreneurs, however, felt that it neglected private sector. But, in theory Pandey worked towards an inclusive budget, where the public-private partnership (PPP) has been bandied as a guiding force.
Binod Chaudhary, CA member and a leading industrialist, agreed that the private sector was overshadowed. "Though, it's also true that the budget is infrastructure-driven,” he added.
"But the budgetary allocation for infrastructure is not enough," said Dr Sharma. He cited the example of a showpiece project National Pride -- a Kathmandu-Tarai Fast Track road. Though the estimated cost of the project is pegged at Rs 60 billion, Pandey has allocated only Rs 250 million in his budget.
The Finance Minister has also let the government employees down since he did not hike their salaries and only hiked their allowance. His projection of foreign assistance -- at Rs 56.95 billion - and foreign grant -- at Rs 21.56 billion -- too is ambitious.
The new Finance Minister clearly seems to be inspired by his predecessor. For instance, despite the pressure from the bureaucracy, he increased the revenue target to Rs 161.73 billion.In reality, even if he could meet the revenue target, his ability to spend -- like Dr Bhattarai -- is very much in doubt in absence of local bodies and political instability.
“Pandey has lost sight of the fact that our economy cannot absorb expansionary fiscal policy at this moment," added Dr Pyakuryal.
Highlight
Total budget outlay -- Rs 285.93 billion
Recurrent expenditure -- Rs 160.63 billion
Capital expenditure -- Rs 106.285 billion
Principal Repayment -- Rs 19.12 billion
Sources
Revenue target -- Rs 161.73 billion + Rs 15 billion = Rs 176.73 billion
Foreign assistance -- Rs 78.51 billion
Foreign grant -- Rs 56.95 billion
Foreign loan -- Rs 21.56 billion
Deficit -- Rs 46.34 billion
Major highlights of annual budget 2009-10
* Inflation rate -- seven per cent
* Gross Domestic Product target -- 5.5 per cent
* Agriculture sector growth target -- 3.3 per cent
* Non-agriculture sector growth taget -- 6.6 per cent
The tax exemption limit has been increased to Rs 1,60,000 for unmarried and Rs 2,00,000 for married.
* The prevailing highest rate of customs duty of 40 per cent has been reduced to 30 per cent.
* Foreign currency declaration limit by foreigners at the arrival point has been fixed at $5000 from earlier limit of $2000.
* Local Development Tax and Kawadi Tax scrapped.
* Tribhuvan International Airport duty free shops can seel goods in Indian Currency.
* Industreis exempted 10 per cent tax on special industries and information technology industry that directly emploes 300 or more Nepalis the year round.
* Industries that directly employes 1,200 or more Nepali nationals round the year round or which provides direct employment to more than 100 Nepali nationals including 33 per cent women, dalits (the downtrodden) or the handicapped will have to pay only 80 per cent tax on their income of that particular year.
* Tax Compliance Year has been declared for developing taxpaying habit.
* All income earners and advance tax payers (TDS payers) will have to get PAN members compulsorily.
* Income earners involved in different employments, occupations or investments without PAN numbers, who have not paid or only partially paid taxes like consultants, doctors, engineers, lawyers, auditors, artists, commission agents will, if they get PAN numbers within the last day of Magh 2066 (mid Feb 2010) and submit the tax returns of the fiscal years 2007-08 and 2008-09 and pay the tax, will be exempt from submitting the tax returns of the previous year and enjoy exemption on payment of tax, charge, interest and penalty on it.
* Projects of National Pride: The government has announced three project -- Kathmandu-Nijgadh fast track road, Upper Seti Hydropower project and the Hulaki Sadak in the eastern Tarai. These are high priority projects that depend on investment from the private sector and donors. However the government wants to use the unspent budget to initiate these projects.
* Rs 1,00,000 grants for intercaste marriage.
* Rs 50,000 grants for widow marriage.
* Generation of 25000 MW of electricity in 20 years.
Top 5 Ministries (in terms of budget allocation)
Ministry of Education Rs 42.24 billion
Ministry of Home Affairs Rs 15.38 billion
Ministry of Defence Rs 14. 62 billion
Ministry of Health and Population Rs 14.13 billion
Ministry of Local Development Rs 13.83 billion
Budget Allocation for Constitutional Bodies
President Rs 160.68 million
Vice President Rs 22.17 million
Constituent Assembly-Legislative Parliament Rs 770.30 million
Court Rs 1.41 billion
CIAA Rs 89.21 million
Office of the Auditor General Rs 142.16 million
Public Service Commission Rs 145.06 million
Election Commission Rs 185.68 million
Office of the Attorney General Rs 217.66 million
Council of Justice Rs 8.97 million
National Human Rights Commission Rs 70.53 million
Prime Minister and Council of Minister's Office Rs 3.49 million
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