Private sector skeptic about budget 2016-17The budget statement for the next fiscal year has not been able to boost investor confidence fully although it has included some measures recommended by the private sector, trade and industry associations said.
The budget statement for the next fiscal year has not been able to boost investor confidence fully although it has included some measures recommended by the private sector, trade and industry associations said.
The Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI) and Nepal Chamber of Commerce (NCC) welcomed the priority given to the infrastructure sector like road and railway. They have also lauded the policy prohibiting bandas in industry and the decision to cancel the electricity demand charge for factories that ran at less than 50 percent of capacity during the Indian blockade.
However, the associations were unhappy that the budget did not contain measures to boost exports. “There aren’t any measures to boost exports and increase the contribution of the manufacturing sector,” the FNCCI said in a statement. “The budget has not provided a basis to boost the morale of private sector investors.”
The FNCCI also expressed disappointment that the budget did not contain programmes to ensure a regular supply of skilled human resources for industry. Nepali factories have been facing a labour crunch in recent years due to increased migration of youths for foreign employment. The CNI has described the budget as being more ‘distributive’ although it has also focused on the development of infrastructure. “Many populist and small-scale programmes have lowered the stature of the budget despite the massive focus on infrastructure,” the CNI said in a statement.
It has also criticized the large allocation under the recurrent heading arguing that it would contribute to a rise in inflation. Likewise, the NCC has welcomed the budget for the increase in the income tax slab, plan to expand insurance and banking services to rural areas and the provision for dedicated feeders to factories. The association has showed concern over the large size of the budget and the ambitious revenue target.
“The government has set a target to spend 47 percent of the GDP which is too high considering the current working style of the government mechanism,” said the NCC.