With employees’ unions pushing for a salary hike in the budget for the new fiscal year 2016-17, government officials holding talks on forming a pay commission to determine pay-hike rates.

Government employees have demanded 10 to 15 percent pay raise.

The government has been increasing either salary or allowances of its employees based on resources availability after allocations for key projects. 

“Usually, salary hike is decided in the last hour by calculating budget availability after allocating funds for development projects,” said Govinda Nepal, chief economic advisor at the Finance Ministry. “In order to determine the scale of salary hike scientifically, discussions are under way on forming a pay commission.”

If formed, the pay commission will study salary structures in neighbouring countries and countries with similar economic development as well as the availability of resources within the country, and recommend appropriate pay-hike rates, according to Nepal.

In the upcoming budget, which while be presented on May 28, the government plans to give special focus to commercial farming as it plans to designate certain pocket areas for commercial farming of certain agriculture products.

As per the Principle and Priorities of Appropriation Bill presented by Finance Minister Bishnu Poudel at the Parliament on Thursday, modernisation and commercialisation of agriculture will be one of the key priority areas of the new budget.

“The government will determine pocket areas for certain products and only those farming there will get incentives, although people can also cultivate the same products elsewhere,” said Nepal, adding the incentives can be in the form of inputs or subsidy or both. The government plans to develop the agriculture sector for import substitution given the country importing a huge quantity of farm products, particularly from India, in the recent years. As per the Principle and Priorities, the government will announce the next 10 years as the “Decade of Economic Growth”.

According to Nepal, agriculture will be key to achieving higher economic growth. “Development of commercial agriculture will be crucial for industrial growth, and industrial growth will lead to the development of the services sector,” he said.

As per the Principle and Priorities, the government will declare the years between 2016-17 to 2018-19 as “kick-starting economic growth phase”. Years between 2019-20 and 2021-22 will be “transformation phase”, followed by “double-digit economic growth phase” in 2022-23 to 2024-25. Fiscal year 2025-26 onwards, the “sustainable economic growth phase” will begin.

The government plans to increase investment in mega projects of hydropower and transmission lines, highways, airports and irrigation canals.