KATHMANDU, Nov 19: The caretaker government is finally unveiling a budget of Rs 337.90 billion on Friday, ending four months of confusion over the country´s fiscal policy.
Although the parties in parliament have asked it not to unveil any new programs, sources said the government will allocate over Rs 127 billion for capital expenditure, which is around 20 percent higher than last year´s allocation.
“We are significantly raising allocations for existing programs and also expanding them to new target groups,” said Finance Minister Surendra Pandey, referring to the rise in development spending.
The recurrent expenditure will stand at over Rs 191 billion and Rs 19 billion has been earmarked for repayment of principal of both domestic and foreign loans. To finance this cost, the government aims to mobilize around Rs 215 billion in revenue while another Rs 88 billion is expected to come from foreign aid and about Rs 35 billion from domestic borrowings.
Sources told Republica that the new budget will offer something for all, but its main emphasis will be on infrastructure and human development. It will also reintroduce cash subsidies after many decades to promote exports.
Budget Focus
* To focus on infrastructure
* To provision for feasibility study of underground train service
* To free secondary education, pledge incentives to check dropouts
* To reintroduce export subsidy
* To pledge soft loans, 50pc insurance subsidy to promote livestock
* To announce lay-off and medical benefits for social security taxpayers
Infrastructure
The new budget will announcement the establishment of a Railway and Metro Department to steer the development of a mass transport system linking different parts of the country.
The department will work to gear up the development of an east-west and Kathmandu-Pokhara railway network, and also initiate exercises to develop underground train services in Kathmandu Valley.
The budget will allocate funds for studying the feasibility of developing a metro system in the Valley. “Under it, we will identify all possibilities of laying down three major metro lines along the Thankot-Dhulikhel and Budhanilkantha-Chobar alignments and the circular alignment of the existing ring road, with a system for traversing at major downtown stations,” said a source.
The government is also announcing expansion of the six-lane Tinkune-Suryabinayak road to Dhulikhel and construction of tunnel roads for direct entrance into the Valley from the tarai and Nuwakot. It will announce construction of three flyovers at Kalanki, Chabahil and Maharajgunj ring road.
It will open the way for village development committees to invest central-government grants and other resources in local power generation projects.
The budget will substantially raise allocations for infrastructure projects such as the Mid-hill Highway, Kathmandu-Tarai fast track road, Upper Tamakoshi hydropower and Sikta irrigation.
“A north-south highway, a second international airport and regional airports in Pokhara and Bhairahawa will also get sufficient funding for commencement,” said Pandey.
Education
The government is declaring education up to secondary level free at all public schools. It is also providing incentives to all enrolled students to deal with the rising number of dropouts.
These programs will come as an expansion of existing programs. Presently, the government is providing special incentives for students from dalit and underprivileged groups.
Under the programs, the government will provide Rs 70 per month per head to all dalit students to encourage them to continue their studies. All girl students will get Rs 60 per month and others, Rs 50 per month.
The programs will directly benefit some 6.5 million students studying up to 10th grade in public schools, but will add a new financial burden of Rs 5 billion on the national coffers.
“As a result, allocations for education this year will jump by more than a quarter from the Rs 46.6 billion earmarked last year,” said Pandey.
Industry and exports
The budget is promising security, tax and duty incentives and also special incentives to workers maintaining good industrial relations, in order to promote investment, industrial production and exports.
For instance, the new budget will promise to set up police beats within the premises of industries employing more than 500 workers to ensure industrial security.
The new budget will also incorporate income tax concessions for small, medium and large industries (employing 100, 300 and 600 persons respectively), as per the new industrial policy.
It will unveil a cash subsidy to exporters to help them overcome eroding competitiveness resulting largely from labor unrest and power crisis -- something the government has consistently failed to address.
“The rate of export subsidy will vary, depending on employment generation and economic contribution,” said the source.
The budget will promise development of tourism roads in major tourist destinations to complement trekking trails. It will also unveil a cash incentive of Rs 500,000 to individual firms that bring in more than 100 tourists via air during Nepal Tourism Year 2011.
Agriculture
The new budget will announce soft loans to farmers to promote livestock. It will promise 50 percent subsidy in crop and livestock insurance to cushion farmers and attain the goal of self-reliance in meat, a lack of which contributed to the balance of payments deficit last year.
The government is also doubling subsidy in fertilizer and shallow tube wells. “Farmers and processors will enjoy 50 percent tax exemption on the import of machinery used in processing ginger, cardamom, tea, coffee and other cash crops,” said Pandey.
Social Security
The new budget will introduce layoff benefits and special social security packages for people who made social security tax contributions introduced last year.
Under the benefits, the government will provide a basic salary to taxpayers if they are out of work, securing them financially during lean job periods. It will also promise to cover their medical bills and provide accident benefits along with maternity benefits.
http://www.myrepublica.com/portal/index.php?action=news_details&news_id=25351
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