Rs 384.90 bn budget in offing

KATHAMNDU July 15: For the second time in a year, the country’s annual budget presentation became a victim of political bickering. Had it been presented in parliament on Thursday, the country would have got a budget of Rs 384.90 billion that focuses on infrastructure, peace process and constitution drafting and expanding the role of cooperatives in the economy.

The government’s policies and programmes has already given enough indication that the budget will have pro-socialist policies. Finance Ministry sources said the budget has given utmost priority to the cooperative sector and tries to establish it as one of the major pillars of the economy.

“The role of the cooperative sector has been expanded virtually in every sector,” said a high-level official at the ministry. “The budget talks of providing grant to establish cooperative funds for income-generating activities for backward groups, conflict victims and martyrs’ families and subsidies for cooperatives run by women and dalits.” The Youth Self Employment Programme, introduced by the former Maoist-led government has been revived and expanded this time around. Giving civil servants a reason to cheer, the budget has proposed a salary hike for them in the range of 30.39 percent to 42.86 percent. Initially, Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari and his team had planned to raise the salary by 20 percent, but was forced to increase it by double amid strong pressure from employee organisations.

The new budget, which is larger by Rs 48 billion than the current one, has earmarked more resources on infrastructure sectors—energy, roads and irrigation. Sources said the budget for energy has gone up by Rs 10 billion. “More has been earmarked for energy, keeping in view the energy crisis,” a source said. In the new budget, the government has proposed recurrent expenditure of Rs 266.61 billion and capital expenditure of Rs 72.61 billion. With the budget being introduced in a new format, capital expenditure looks small in size than in the previous budget. “Of the total allocation, Rs 202.56 billion is for development programmes and Rs 182.34 billion for general administration,” the source said.

The budget, according to a Finance Ministry official, sets an ambitious target when it comes to economic growth and inflation. “It has targeted an economic growth of five percent and inflation at seven percent,” the official said. However, with the hike in the civil servants’ salary, the target of keeping inflation at seven percent looks impossible.

The budget will please the realty sector, capital market and financial institutions.

Now, disclosing the income source will not be required while purchasing a vehicle worth Rs 5 million and a house worth Rs 10 million. It has also allowed purchase of flats by foreigners. Also proposed is reduction in the capital gain tax on stock market, commercial housing and realty business.

In a bold move that could draw flak from international financial institutions, the budget has replaced income source disclosure in depositing money above Rs 1 million in financial institutions with negative declaration. The private sector and bankers had lobbied hard for removal of the income source disclosure provision.

In a bid to build depositors’ faith in the banking sector, the budget has proposed an increase in the deposit insurance ceiling to Rs 5,00,000.

Even though Madhes-based parties forced the government to postpone the budget presentation schedule, one of their demands—Postal Highway—has got almost Rs 5 billion, the highest given to any single project.

Source:Thekathmandupost

1Ropani