Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari today presented an expansionary budget of Rs 384.90 billion promising to contain the price hike at seven per cent.
However, economists believe that the focus less and populist budget is going to fuel inflation more. "The expansionary budget could not contain the rising inflation," said Prof Dr Bishwambher Pyakurel.
Though the budget -- that was presented amid high drama -- has pumped more money into social sector, subsidies and grant, the please-all budget could also not achieve its growth target that according to Adhikari will be five per cent. "The distributive budget could not achieve its growth target, "said former finance Minister Dr Prakash Chandra Lohani.
But the good thing is that the budget has raised salaries of civil servants between 30.39 per cent and 42.86 per cent considering the current inflation rate to boost the morale of government employees including civil servants, army, police, and teachers. Existing dearness allowance has been adjusted to the new pay scale.
The government has also promised to start Health Insurance Programme for the civil servants. The socialist budget has however, ignored the private sector and promoted cooperatives. "The private sector -- the largest employment providers -- could not support the government," Federation of Nepalese Chambers of Commerce and Industry senior vice president Bhaskarraj Raj Karnikar said, adding that the focus on energy -- engine of growth -- and commercial agriculture is however, welcome steps.
Similarly, Confederation of Nepalese Industries (CNI) president Binod Chaudhary hailed the government for bringing the budget in time. "But it has no encouraging news for the export sector," he said, adding that the government should not have dropped outer ringroad project.
Another entrepreneur Rajendra Khetan also agreed that the budget could not boost manufacturing and the balloning trade deficit could not bridge. The budget is a cocktail of Dr Babu Ram Bhattarai, Surendra Pandey and Dr Ram Saran Mahat, said former finance minister Madhukar Rana.
The government has brought the budget in a new format, to make it compatible with the international accounting systems and presented according to the accrual accounting system and has changes in the headings.
The budget has three major headings -- income, expenditure and financing -- contrary to earlier division in the budgetary headings. Financing is a new heading that has been included in the budget.
According to the new classification of Finance Statistics, the total appropriation for recurrent expenditure -- for salaries and other expenses -- is proposed to be Rs 266.61 billion which is 69.27 per cent of the total outlay.
Similarly, Adhikari has allocated Rs 72.61 billion for capital expenditure which is 18.86 per cent of the total budget.
Under the Financing head, Rs 25.38 billion (6.6 per cent) has been allocated for loan and share investment, and Rs 20.3 billion (5.27 per cent) for repayment of principals. The total allocation is 25.67 per cent higher compared to revised estimate of the current fiscal year. "Under the existing arrangement, recurrent and capital expenditure will amount to 56.08 per cent and 38.64 per cent, respectively, whereas the repayment of principal amount will be 5.28 per cent of the total expenditure," he said, projecting that he could mobilise Rs 241.77 billion from revenue, Rs 5.93 billion from repayment of principal amount and Rs 70.13 billion from foreign grants.
The budget will have a deficit of Rs 67.06 billion that he planned to meet through Rs 29.65 billion foreign loan and Rs 37.41 billion domestic borrowing.
The ambitious budget that has been already leaked to the businessmen, however, is suspected to be able to mobilise the revenue target as the government failed to meet current fiscal year's target.
Likewise, the budget that balance of payments will be positive, liquidity of the financial sector will come to normalcy, capital market will pick up and the investment climate will improve remarkably.
"The finance minister has tried to save VAT evaders," former finance minister Dr Ram Sharan Mahat said, adding that the budget has come after series of economic scams and it will invite more scams in the future.
Total Outlay: Rs 384.90 billion
Recurrent Expenditure : Rs 266.61 billion
Capital Expenditure : Rs 72.61 billion
Loan and share investment: Rs 25.38 billion
Principal Repayment: Rs 20.3 billion
Resources
Revenue: Rs 241.77 billion
Repayment of Principal: Rs 5.93 billion
Foreign grant: Rs 70.13 billion
Foreign loan: Rs 29.65 billion
Internal borrowing: Rs 37.41 billion
Major Highlights
* Growth rate target at five per cent.
*Inflation at seven per cent
* Pay scale of Civil Servants up from 30.39 per cent to 42.86 per cent.
* Income tax will be fully exempted for the first ten years for the hydro-power projects commencing their construction within August 24, 2014 and starting commercial production by mid-April 2018.
* Property Tax Act in offing for voluntary disclosure of all the fixed and movable properties including the land, ornaments, cash, deposits in banks/financial institutions, lending, investment in share/debentures and vehicles.
* Permanent Account Number (PAN) necessary for registration of land and house transactions
* A policy of disinvesting the share of the public enterprises to the public will be implemented.
* A High Level Public Enterprises Management Board will be formed
* Legal arrangements will be made and implemented to penalize those found to be indulged in cartelling, and intimidation. They will also be fined and licenses of their business entity will be
Dearer
Liquor including alcohol and beer -- up to 14 per cent
Tobacco products and cigarettes -- up by 8 per cent
Fruits Juice -- Increased to Rs 3.50 on a litre
Playing card -- 20 per cent per bundle
Clinker and Cement -- Rs 400 per metric
Cheaper
Sewing machine -- reduced to one per cent from five per cent
Tomato Ketchup industries' equipments -- reduced to one per cent from five per cent
Sanitary towel and baby dry pad -- reduced to 10 per cent from 15 per cent
Plastic Gas Cylinder -- reduced to 15 per cent from 30 per cent
LCD, Plasma or LED brought by Nepali passengers returning from foreign employment -- tax reduced
Plastic bag -- tax free from earlier five per cent
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