By Shanker Man Singh

Why does the Finance Minister say ‘I’ instead of ‘we’ in the budget speech? The budget is considered the brainchild of the Finance Minister. Earlier, sometimes (but not always) it was ‘we’. Don’t think of it as a plural or collective noun. It was a “royal” we. Now the Finance Minister is considered to be a common man. Since that happened, it was expected that he would say “we” in the budget speech, but it did not happen.   Presenting the budget for the financial year 2082/83, Finance Minister Bishnu Poudel said that there are dozens of challenges in the economy. He said that due to the lack of adequate legal arrangements and investigation and prosecution in time, money laundering has been included in the “grey” list.

The main priorities and sources of allocation of the upcoming budget for the financial year 2082/83 have been mentioned in detail.

The objectives of the budget include poverty alleviation by achieving high, sustainable and broad-based economic growth, creating employment by developing entrepreneurship and expanding public and private investment, increasing economic efficiency by increasing the use of modern technology, maintaining social justice through social protection and development, and promoting quality public services and good governance, which is also the demand of the time and is also relevant considering the upcoming 2084 elections.

It has been felt that the low productivity of the agricultural sector and the attraction of farming among the youth have not increased due to the failure to improve the traditional farming system.

It is a big mistake to feel that the contribution of the manufacturing sector to the total national import has not been expected due to the lack of innovation and use of technology, low productivity, and high production costs.

It has also been accepted that the industry has not been able to operate at full capacity due to the decrease in overall demand. It has been accepted that the trend of skilled and semi-skilled manpower migrating abroad due to the failure to create adequate employment opportunities in the country is worrying and an attempt has been made to formulate appropriate programs.

The Finance Minister typically addresses these questions by providing a detailed explanation of the government's fiscal policies, budget allocations, and economic strategies. They may present statistics, forecasts, and evidence to support their decisions and convince the opposition and the public of their soundness.

In addition, the Minister may engage in debate, defend their choices, and outline the likely benefits and consequences of the budget proposals.

Estimated size of the economy

The budget for the upcoming fiscal year is Rs. 1964.11 billion. The Finance Minister has announced a budget of Rs. 104 billion larger than the previous fiscal year. This is not to be seen as a time-consuming and costly exercise, but rather a time-consuming one.

Of the allocated budget, Rs. 1180.98 billion (60.1%) is expected to be spent on current, Rs. 4789 billion (20.8%) on capital expenditure, and Rs. 375.24 billion (19.1%) on fiscal management. This is also a reason to find ways to reduce current expenditures.

The government has set a target of 6 percent economic growth for the current fiscal year. Similarly, the budget statement mentions that the inflation rate will be limited to 5.5 percent.

According to the Constitution of Nepal, 2072, the government is required to present the fiscal budget on Jestha 15. Barring a few bright spots, the Nepali economy is going through a challenging period marked by declining demand and sluggish growth.

Demand for credit has decreased in banks with a lending capacity of over Rs 600 billion due to the lack of new investment by the private sector. The central bank's efforts to stimulate the economy through monetary easing have not been able to achieve the expected success.

Factors such as youth migration abroad and the sluggish impact of previous interest rate hikes are reducing the purchasing power of consumers.

In other words, the central budget of Nepal sets the government's financial accounts for the upcoming fiscal year. It serves as the government's roadmap for fund collection and allocation during this period.

Importance of the Federal Budget Nepal is a democratic country and is governed according to the Constitution of Nepal. The Constitution defines the role of the central government so that it can work effectively in the interest of its citizens. The government has many responsibilities, including administering the country, maintaining peace and order, ensuring national security, promoting social welfare, and improving economic stability. However, to accomplish these tasks, the government needs adequate resources and planning. It collects revenue by levying taxes on its citizens and can borrow from foreign countries and the Nepal Rastra Bank.

The overall objective of the federal budget is to maintain a balance between economic growth and the overall development of society. It aims to reduce economic inequality among citizens and ensure fair distribution of government resources.

A brief review of the Budget Speech 2082/83 recently presented by the Finance Minister reveals the following key themes and important facts:

Nepal's Budget Speech 2082/83 presents various policies and programs to make the country's economic situation dynamic and to meet challenges.

The budget covers various sectors including agriculture, industry, tourism, physical infrastructure, information technology, education, health, and social security. It emphasizes employment creation, poverty alleviation, good governance, and economic growth.

The budget covers various sectors including agriculture, industry, tourism, physical infrastructure, information technology, education, health and social security.

It has emphasized on employment creation, poverty alleviation, good governance and economic growth.

Key challenges:

Nepal appears to be on the intensive monitoring list for asset laundering due to the lack of timely and adequate legal arrangements and ineffective investigation and prosecution.

Agricultural sector productivity is low due to the lack of expected improvements in traditional farming systems, while the attractiveness of farming among the youth has not increased.

The contribution of the productive sector is not as expected and the industrial sector has not been able to operate at full capacity due to the decrease in overall demand. Significant decrease in investment:         The contribution of the private sector to total fixed capital formation has not increased to the expected extent and the flow of financial resources to the productive sector is not sufficient.

High trade deficit:

Due to the lack of export expansion and diversification, the high trade deficit persists and the import of consumer goods is high.

Revenue and expenditure management:

Revenue expenditure for development is decreasing and sources of income are shrinking. Budgetary efficiency has not been maintained and it is becoming challenging to raise capital expenditure while current expenditure remains high.

The increasing amount of public debt has added to the challenge of maintaining sustainability.

Public Administration:

Due to the failure to commercialize public administration, the expected improvement in the quality of service delivery has not been achieved and it is felt that there is a challenge to maintaining good governance.

Labor Market and Skills:

The country's labor market and the skills of the produced manpower have not been matched. Due to the lack of sufficient employment opportunities, the trend of skilled and semi-skilled manpower migrating abroad is worrying.

Key policies and programs: Agricultural Modernization:

It is stated that production and productivity will be increased by commercializing and mechanizing the agricultural sector. It is stated that food sovereignty will be guaranteed and the additional labor force dependent on the agricultural sector will be converted into productive sectors.

Employment Creation:

It is stated that emphasis will be placed on trade balance through increasing exports of competitive goods and services and promoting domestic production of consumer goods.

It is necessary to effectively implement the policy that has been given high priority to attract experts and skilled Nepalis in foreign employment to become entrepreneurs and self-employed in the country and to create youth-targeted employment by promoting innovation and entrepreneurship.

It is encouraging that a concessional loan at an interest rate of 3 percent will be provided to educated youth to make them entrepreneurs and self-employed based on educational qualifications, business registration, skill test certificates and project proposals. Tourism Promotion:

It has been said that tourist-targeted services will be expanded to major destinations of eco-tourism, mountain and adventure tourism, religious and cultural tourism.

Physical Infrastructure Development:   It is good to mention that the projects under the alternative auxiliary highway and constituency strategic road program under construction will be completed within the next fiscal year and the created liabilities will be settled. Roads will be classified based on geographical location, population, traffic volume and lane and length.

        To make public transport environmentally friendly, 100 additional electric buses will be provided to Sajha Yatayat, if implemented.

Energy Development:

        Although it is encouraging that domestic energy consumption will be increased and the remaining rural electrification work will be completed within the next two years, it does not seem likely due to procedural hassles.         Diplomatic initiatives with neighboring and other potential countries to ensure electricity exports based on increased energy production are a continuation of what has been done in the past.

        It was said that the green hydrogen production industry would be exempted from all types of taxes and duties on machinery and equipment imports and would be given income tax exemption for 5 years, and something was said in the past as well.

        It is encouraging that an arrangement has been made to levy 1 percent customs duty on the import of batteries and other equipment required to store electricity from solar and wind energy and not to levy other taxes and duties. Information Technology and Communication:

        The emphasis on the discovery, research, development and innovation of the latest technologies developed in the information technology sector, the formulation of the second version of the Digital Nepal Framework is a continuation of the previous program, it does not seem to be effective and it is felt that these suggestions given by the Rameshwor Khanal Commission should be adopted more.

Education and Health:

        Although it is good to hear that a digital learning portal will be developed to improve the quality of school education, the health insurance program will be restructured and its scope will be expanded, the practical aspect of this is becoming more and more complicated.

Social Security and Justice:

        Good Governance and Corruption Control: The emphasis on making public administration professional improving the quality of service delivery, and the adoption of zero tolerance against corruption are not new.

        It remains to be seen how the national strategy and action plan will be implemented to remove money laundering from the intensive monitoring list ahead of time. It is believed that the budget will make a significant contribution to improving Nepal's economic situation, attracting investment, developing entrepreneurship and creating employment. It is expected to maintain good governance and accelerate development.

        The government has announced that the institutional capacity of the Securities and Exchange Board of Nepal will be strengthened to protect the investment and interests of citizens in the capital market.

        In addition, the laws related to Nepal Rastra Bank and Nepal Insurance Authority must be implemented in practice.

        The government has announced the establishment of a bad bank. It has been announced to establish an asset management company, which has been said for decades but has not been done.

        Similarly, it has been said that a new bank will be established in the coming fiscal year.

        The main priorities of the budget to achieve the objectives of the budget are: Entrepreneurship, employment, production and productivity enhancement, under which production and productivity will be increased by commercializing and mechanizing the agricultural sector, which is a continuation of the past. High priority in youth-targeted employment creation, and the operation of the Entrepreneurship Development Program" to create employment and income-generating opportunities by preserving the traditional skills, arts and professions of the Dalit community are important. In addition, due to the failure to professionalize public administration in citizen-friendly services, corruption control and governance reform, the expected improvement in the quality of service delivery has not been achieved.

        There is a challenge to maintaining good governance due to delays in public services, lack of sense of responsibility, traditional decision-making processes and weak inter-agency coordination. It is encouraging that the Office of the Prime Minister and the Council of Ministers will be developed as a “Center of Excellence “ to increase the effectiveness of public services and make development result-oriented.

        It is said that an asset management company will be established by restructuring the NEPSE, so be it. The age of senior citizens to receive allowances has increased.

        The Finance Minister has announced that they will receive old-age allowance only at the age of 70. This announcement will be implemented from the next fiscal year. Earlier, there was a provision for old-age allowance at the age of 68. This does not match the socialist-oriented economy.

        The budget is going to provide concessional loans to the Gen-G generation. A budget of Rs. 730 million has been allocated. It has been said that concessional loans will be provided to make youth entrepreneurs in the budget of the next fiscal year.

        It is good that the grant will be provided to the youth at 3 percent interest for startups and entrepreneurship, but let's hope that this will be implemented effectively in practice.

        The recent budget has maintained the tax on alcohol and beer, adopting a policy of saving the industry and increasing revenue. After the annual tax increase led to the closure of industries and the impact on revenue, Finance Minister Bishnu Poudel has maintained the tax on alcohol and beer.

        He has increased the tax on cigarettes by 5 percent. The tax on filtered cigarettes has increased by 5 percent and on non-filtered cigarettes by 3.5 percent.

        Although the salary of employees will not increase and it is not possible to increase it, the dearness allowance has been increased to 5 thousand. The government will use the national identity card in all types of public and financial transactions, including banking, insurance, telecommunications and securities, in the coming fiscal year.

        He said that arrangements will be made for the distribution of driving licenses at the provincial level from the budget for the upcoming fiscal year 2082/83.

        In addition, there has been an arrangement to not charge a fee for using the national identity card management service.

        Was it charged earlier? The existing arrangements regarding rates under various headings have been changed.  According to the new arrangement, information technology-based industries and hotels and resorts will be exempted from income tax and electricity tariffs like special industries.

        Similarly, a 75 percent tax exemption has been introduced on income from the export of information technology services. The government has also introduced a provision that only five percent income tax will be levied on the income of those who reside in Nepal and export information technology services abroad, and this tax will be final.

        It has been announced that Nepali citizens will be allowed to take a 'sweat share' in foreign companies in the coming fiscal year.

        It has been said that Nepali citizens will be allowed to take a sweat share for providing technology or specialized knowledge or services to foreign companies.

        One can imagine how complicated the process will be. According to the budget statement, a provision has been introduced that startup businesses with an annual turnover of up to Rs 100 million will not be subject to income tax for five years. Similarly, it has been said that only one percent customs duty will be levied on the import of mill machinery required by the wood seasoning industry to increase the quality production and consumption of wood and wood-based materials.

        Similarly, the customs duty levied on the import of mill machinery and equipment for the production of organic and natural fertilizers has been removed, and all other types of taxes and duties levied on it have been abolished.

        It is worthwhile to impose one percent customs duty on the import of machinery, equipment and sports equipment required for the construction of infrastructure for football, cricket and multi-purpose stadiums and abolish other taxes and duties.

The system of not levying all types of taxes and duties on machinery and equipment imported for the green hydrogen production industry is excellent.

It has been said that a system will be made to provide income tax exemption for green hydrogen producers for five years.

        It remains to be seen how it will be implemented. The government has kept all types of taxes and duties imposed on such vehicles unchanged in order to encourage the use of electric vehicles and reduce environmental pollution and increase domestic electricity consumption.