The expansionary nature of the budget for the next fiscal year is going to push more Nepalis into poverty, although the government has promised to reduce the percentage of people under the poverty line.
Currently, some 21.6 per cent of Nepalis are under the national poverty line, whereas the government aims to bring it down to 18 per cent, according to the budget for fiscal year 2016-17.
However, the government's distributive and expansionary budget is going to push more Nepalis under the poverty line, thanks to increasing inflationary pressure, said economist Prf Dr Bishwhambher Pyakuryal.
Finance Minister Bishnu Poudel yesterday presented a budget of Rs 1,048.9 billion for fiscal year 2016-17 in Parliament, with an aim of reducing poverty, increasing economic growth and preparing the base for a prosperous Nepal, apart from implementation of new Constitution.
But the hike in the salary of government employees by 25 per cent and grade – making it to around 40 per cent salary hike in total including increased grade – and various distributive programmes in the budget will push market prices up, he said, adding that while the salary hike could be justified as the cost of living is increasing, the impact of the hike on the market will hit non-government employees and daily wage workers hard. "People who earn their living from day to day wage are most at risk of falling back into poverty will be dragged below the poverty line."
The 13th periodic plan that had aimed to bring the poverty rate down to 18 per cent failed mainly because of the failure of successive governments to create employment in the country and also rising inflation over the last three years. "Likewise, inflation fuelled by expansionary fiscal policy will again thwart the government's poverty reduction target," he added.
The 'socialist-oriented budget' has doubled the social security blanket and placed an extra burden on state coffers. This may have been necessary, but the distribution of the budget across all the 'dream projects' would not contribute to capital formation and increased productivity, according to former finance secretary Rameshwor Khanal."This could be disastrous for the economy," he added.
Likewise, the budget – that claims to strive for a self-reliant economy but has been overly dependent on foreign grants and loans, and also revenue from imports – has also failed to enhance market monitoring capabilities and crack the whip on price inflation.
The deficit budget, which aims to mobilise Rs 565.9 billion from revenue – mostly from the imports like customs, excise and VAT – has failed to introduce any radical reform in the revenue administration. Citing the examples of economic crisis in Greece and Venezuala, Khanal claimed that the estimation of large revenue without any sustainable base could lead to disaster.
Similarly, the budget has estimated Rs 10 billion to come through principal repayment and Rs 106.9 billion through foreign grants. The resulting deficit will be financed through foreign loans of Rs 195.7 billion, domestic loans of Rs 111 billion and Rs 59.4 billion from savings of the current fiscal year.
Currently, some 21.6 per cent of Nepalis are under the national poverty line, whereas the government aims to bring it down to 18 per cent, according to the budget for fiscal year 2016-17.
However, the government's distributive and expansionary budget is going to push more Nepalis under the poverty line, thanks to increasing inflationary pressure, said economist Prf Dr Bishwhambher Pyakuryal.
Finance Minister Bishnu Poudel yesterday presented a budget of Rs 1,048.9 billion for fiscal year 2016-17 in Parliament, with an aim of reducing poverty, increasing economic growth and preparing the base for a prosperous Nepal, apart from implementation of new Constitution.
But the hike in the salary of government employees by 25 per cent and grade – making it to around 40 per cent salary hike in total including increased grade – and various distributive programmes in the budget will push market prices up, he said, adding that while the salary hike could be justified as the cost of living is increasing, the impact of the hike on the market will hit non-government employees and daily wage workers hard. "People who earn their living from day to day wage are most at risk of falling back into poverty will be dragged below the poverty line."
The 13th periodic plan that had aimed to bring the poverty rate down to 18 per cent failed mainly because of the failure of successive governments to create employment in the country and also rising inflation over the last three years. "Likewise, inflation fuelled by expansionary fiscal policy will again thwart the government's poverty reduction target," he added.
The 'socialist-oriented budget' has doubled the social security blanket and placed an extra burden on state coffers. This may have been necessary, but the distribution of the budget across all the 'dream projects' would not contribute to capital formation and increased productivity, according to former finance secretary Rameshwor Khanal."This could be disastrous for the economy," he added.
Likewise, the budget – that claims to strive for a self-reliant economy but has been overly dependent on foreign grants and loans, and also revenue from imports – has also failed to enhance market monitoring capabilities and crack the whip on price inflation.
The deficit budget, which aims to mobilise Rs 565.9 billion from revenue – mostly from the imports like customs, excise and VAT – has failed to introduce any radical reform in the revenue administration. Citing the examples of economic crisis in Greece and Venezuala, Khanal claimed that the estimation of large revenue without any sustainable base could lead to disaster.
Similarly, the budget has estimated Rs 10 billion to come through principal repayment and Rs 106.9 billion through foreign grants. The resulting deficit will be financed through foreign loans of Rs 195.7 billion, domestic loans of Rs 111 billion and Rs 59.4 billion from savings of the current fiscal year.
No comments:
Post a Comment