The Finance Committee – under the Federal Parliament – today recommended government to bring an expansionary budget of Rs 1.7 trillion, though the government has fall short of resources in the current fiscal year and has no means to meet the target in the next fiscal year too.
Despite calls from economists to not increase the size of budget from the current fiscal year’s figure, the Committee said that the the budget ceiling of around Rs 1.7 trillion – for the next fiscal year – has already been fixed before the pandemic. “It is not possible to reduce the size of the budget as the government has to provide relief to the industries, businesses and workers affected by the coronavirus.”
The budget for the current fiscal year stands at Rs 1.5 trillion, though the finance minister Dr Yuba Raj Khatiwada has revised it downwards – during the mid-term review – to Rs 1.3 trillion due to its inability in spending and also mobilising the revenue. The government is staring at Rs 300 billion shortfall to the revenue mobilisation target, whereas it has also failed to spend due to inefficiency, and lack of focus, despite having the majority and stable government in the history of the country.
The Committee also suggested finance minister Khatiwada set a target of mobilising Rs 1 trillion revenue without increasing the tax rate, which is going to be the tough task.
The committee – which has all the former finance minister as its members – has also suggested mobilising bilateral and multilateral foreign aid worth Rs 1 trillion and domestic borrowing equivalent to 6 per cent of the GDP. “The deficit amount should be mobilised through the foreign loan,” it suggested. But the foreign loan and aid also seems not to be increasing because of coronavirus impact on the bilateral and multilateral development partners, and also due to government’s inability in spending. The government’s institutional capacity has been eroding over the years and it has not been able to spend more than 80 per cent of the development budget in previous years too.
The majority government has neither been able to spend not mobilise revenue according to its own target due to its failed vision, mission and goals, rather is promoting crony capitalism, though the government is led by the communist party that claims to create socialism oriented economy.
The parliamentary committee has also requested the government to bring a financial package worth 5 per cent of the Gross Domestic Product (GDP) – which comes to around Rs 188 billion – through the budget to mitigate the negative impact of the Covid-19.
The government is going to bring budget for the next fiscal year 2020-21 on May 28, Jestha 15 according to the Bikram Sambat calendar, as is directed by the Constitution.
The livelihoods of thousands of people have been badly hit by the pandemic, particularly the poor and migrant workers, many of whom have lost their jobs. The government has enforced lockdown from March 25 to contain the pandemic from spreading in the society. On Sunday, the government extended the lockdown till June 2, continuing to suspend ground and air travel, shutting down most of the industries, except essential ones.
Due to lockdown the economy has been projected to shrink to 2.27 per cent in the current fiscal year, according to the Central Bureau of Statistics (CBS). The government has targeted to meet 8.5 per cent economic growth in the budget for the current fiscal year 2019-20. Though, the Covid-19 pandemic has been blamed for the lower economic growth, the government was not going to meet the target anyway, according to the economists, who are also claiming that Nepal's economy is also headed for a catastrophe with no end in sight to months-long paralysis as the virus lockdown keeps getting extended. “The economy could grow at 1 per cent or it could go into the negative territory also due to prolonged lockdown,” they claimed.
The prolonged lockdown has also cost millions jobs and small and medium enterprises (SMEs) are also feeling the heat. As most of the workers in the industrial and business enterprises have become jobless, the committee has suggested that the government pay one-third of their salaries and one-third by the industries and enterprises.
The Committee has also suggested providing relief and concessions to the most affected hotels, restaurants, tourism businesses and public transport that cannot come into operation immediately.
The parliamentary committee has suggested to give high priority to health and agriculture in the budget. “The three governments – federal, provincial and local – should prepare health infrastructure in a coordinated manner by allocating 10 per cent of their budget for the prevention, control and treatment of coronavirus,” it suggested, asking the government to allocate at least 15 per cent of the total budget for the agriculture sector for its commercialisation and modernisation.
Despite calls from economists to not increase the size of budget from the current fiscal year’s figure, the Committee said that the the budget ceiling of around Rs 1.7 trillion – for the next fiscal year – has already been fixed before the pandemic. “It is not possible to reduce the size of the budget as the government has to provide relief to the industries, businesses and workers affected by the coronavirus.”
The budget for the current fiscal year stands at Rs 1.5 trillion, though the finance minister Dr Yuba Raj Khatiwada has revised it downwards – during the mid-term review – to Rs 1.3 trillion due to its inability in spending and also mobilising the revenue. The government is staring at Rs 300 billion shortfall to the revenue mobilisation target, whereas it has also failed to spend due to inefficiency, and lack of focus, despite having the majority and stable government in the history of the country.
The Committee also suggested finance minister Khatiwada set a target of mobilising Rs 1 trillion revenue without increasing the tax rate, which is going to be the tough task.
The committee – which has all the former finance minister as its members – has also suggested mobilising bilateral and multilateral foreign aid worth Rs 1 trillion and domestic borrowing equivalent to 6 per cent of the GDP. “The deficit amount should be mobilised through the foreign loan,” it suggested. But the foreign loan and aid also seems not to be increasing because of coronavirus impact on the bilateral and multilateral development partners, and also due to government’s inability in spending. The government’s institutional capacity has been eroding over the years and it has not been able to spend more than 80 per cent of the development budget in previous years too.
The majority government has neither been able to spend not mobilise revenue according to its own target due to its failed vision, mission and goals, rather is promoting crony capitalism, though the government is led by the communist party that claims to create socialism oriented economy.
The parliamentary committee has also requested the government to bring a financial package worth 5 per cent of the Gross Domestic Product (GDP) – which comes to around Rs 188 billion – through the budget to mitigate the negative impact of the Covid-19.
The government is going to bring budget for the next fiscal year 2020-21 on May 28, Jestha 15 according to the Bikram Sambat calendar, as is directed by the Constitution.
The livelihoods of thousands of people have been badly hit by the pandemic, particularly the poor and migrant workers, many of whom have lost their jobs. The government has enforced lockdown from March 25 to contain the pandemic from spreading in the society. On Sunday, the government extended the lockdown till June 2, continuing to suspend ground and air travel, shutting down most of the industries, except essential ones.
Due to lockdown the economy has been projected to shrink to 2.27 per cent in the current fiscal year, according to the Central Bureau of Statistics (CBS). The government has targeted to meet 8.5 per cent economic growth in the budget for the current fiscal year 2019-20. Though, the Covid-19 pandemic has been blamed for the lower economic growth, the government was not going to meet the target anyway, according to the economists, who are also claiming that Nepal's economy is also headed for a catastrophe with no end in sight to months-long paralysis as the virus lockdown keeps getting extended. “The economy could grow at 1 per cent or it could go into the negative territory also due to prolonged lockdown,” they claimed.
The prolonged lockdown has also cost millions jobs and small and medium enterprises (SMEs) are also feeling the heat. As most of the workers in the industrial and business enterprises have become jobless, the committee has suggested that the government pay one-third of their salaries and one-third by the industries and enterprises.
The Committee has also suggested providing relief and concessions to the most affected hotels, restaurants, tourism businesses and public transport that cannot come into operation immediately.
The parliamentary committee has suggested to give high priority to health and agriculture in the budget. “The three governments – federal, provincial and local – should prepare health infrastructure in a coordinated manner by allocating 10 per cent of their budget for the prevention, control and treatment of coronavirus,” it suggested, asking the government to allocate at least 15 per cent of the total budget for the agriculture sector for its commercialisation and modernisation.
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