Cracking whip on inflation a key challenge

The government is facing challenges to crack whip on rising inflation, boost exports and substitute the imports, according to the mid-term evaluation of the budget for the current fiscal year 2010-11.
Though the budget has tragetted to contain the inflation at seven per cent, the rising prices of vegetables, sugar, sweets and fruits alongwith the upward revision of petroleum products have fuelled the price hike to 11.3 per cent, said deputy prime minister and finance minister Bharat Mohan Adhikari here today.
However, the price hike is due to non-economic reasons like cost push factors and supply disorder, said finance secretary Rameshwor Prasad Khanal. "The price hike can be brought down only by increasing the prouction," he said, adding that the delayed budget for the fiscal year has hit the economy hard.
"The delayed budget has forced us with no choice than to bring a new budget by mid-April incorporating the new government's visions," Adhikari, said, adding that the budget was prepared by the coalition government of Nepali Congress and CPN-UML but with changed scenario, the present coalition government also has its aspirations that needs to be addressed.
"The new budget could incorporate the new coalition's aspirations," he said, adding, "despite improvement in law and order situation due to less bandh and strikes, the base of exports could not be expanded making it a greatest challenge for the government.
"The core competency of the country has been reducing due to regular power outage," Khanal said, adding that it has pulled the economic growth rate to 4.5 per cent.
"If we can grow by 4.5 per cent in such an adverse condition, we can easily achieve double digit growth in normal condition," he added.
The government has mobilised Rs 110.40 billion revenue and Rs 8.50 domestic borrowing by the first week of Falgun (end February), the finance minister said, adding that the government has received Rs 52.85 billion foreign aid commitment by the six months and Rs 64.07 billion more is in pipeline making it to a total of over Rs 110 billion foreign aid commitment by the end of the fiscal year.
However, the government expenditure is expected to be lesser than target. "The capital expenditure is expected to be around Rs 110 billion, though Rs 129 billion has been allocated," he said, revising the recurrent expenditure also to Rs 179.09 billion from the budget's target of Rs 190.31 billion.
The dealyed budget has reduced the capacity of the government speding, Adhikari added. "The total government expenditure has been revised to be at around Rs 307.23 billion."
The delayed budget has also hurt the overall economic indicators, Khanal said, adding that it could be a lesson for the next fiscal years.