Economists and the private sector leaders have termed the government’s budget for fiscal year 2018-19 as cautious, social sector oriented and not friendly to private sectors. The Kathmandu Post talked with a number of these stakeholders to pick their thoughts on the budget. Excerpts:

Durga Bikram Thapa

President, Nepal Pashmina Industries Association

The budget has failed to address promoting export at the time when the country is reeling under huge gap between export earnings and import expenses. Although it has come up with providing cash incentive of five percent, it is just a peanut while it comes to export promotion. At least 10 percent of the cash incentive is expected to make Nepali products price competitive in the international market. In addition, the incentive should have been provided to products of cottage and small industries. Overall, the budget is not private sector friendly.

Rajesh Kaji Shrestha

President, Nepal Chamber of Commerce

The budget is balanced to a larger extent. The government’s focus on sectors such as agriculture and tourism can be considered positive. In addition, the significant size of budget for physical infrastructure is praiseworthy. Revision in threshold of income tax and subsidy to tea, textile and dairy industries are among the positive aspects. Although the budget has tried to deliver something new this time, the budget is yet to confirm the effectiveness on its implementation side.   

Akhil Chapagain

President, Nepal-Turkey Chamber of Commerce

Although the budget contains more positive features such as providing cash incentive and promoting the specified production sectors, we are yet to observe its outcome. The government is trying to come up with more bureaucratic intervention in many areas, which is likely to discourage the private sector. The budget however has failed to provide insight on issues related to customs procedures and under invoicing.  

Shekhar Golchha

Senior Vice-president, Federation of Nepalese Chambers of Commerce and Industry

The budget posted a bit of an ambitious figure. It is not encouraging for the private sectors. Nominal rise in the export incentive might not increase competitiveness of Nepali products. The new threshold of income tax could harass investors. However, the budget addresses forming a tribunal to settle trade related disputes, providing subsidy to small enterprises and specific sectors, which are some of the positive aspects of the budget.

Hari Bhakta Sharma

President, Confederation of Nepalese Industries

The government seems to be much too cautious in the name of minimising expenses. It is trying to compliment the government policy rather than driving forth economic activities. The government has come up with the budget amount of just Rs10 billion for the Ministry of Industries, which could fail to help promotion of the industrial sector. It contradicts the government’s plan to increase the employment opportunity by a notable number. Providing cash incentive is not up to the mark. Focus on infrastructure development and social sector can be taken as a positive.  

Jagadish Chandra Pokharel

Economist and Former Vice-chairman of National Planning Commission

The budget has posted good initial impression, mainly with the revenue projection and allocated fund size. The budget presented by left wing government has no trade-offs between the election manifesto, policy and programmes and the fiscal plan.  Under the pretext of minimising the government expenses, it is focused more on merging various institutions, which could give rise to more centralised economic activities.

It does not favour the private sectors. Revision of income tax slab could demotivate private businesses. There is no clear framework for ensuring the social security schemes. Fair price shops which have failed in the past are given priority instead. This seems that the government is trying to distribute the state fund again through its cadres. The fund allocated for under privileged community people is not adequate. The budget has not given adequate space for national level projects started in the past. Overall, the question on the budget’s effectiveness lies on how the government will distribute the resources to meet the targeted goals.

Rameshwor Khanal

Economist

In general, the budget for next fiscal year has a satisfactory outlook. Rather than introducing distributive and populist programmes, the budget is more realistic. Subsidy to the specific industries and increase in cash incentive on the industrial export are its positive sides. Progressive structure in income tax is appreciable. As the government has revised threshold on income tax, keeping corporate tax unchanged, it might not worry the private sector.

Chandan Sapkota

Economist

The total size of budget has not increased much, but it will be very challenging for the federal government to increase revenue by 29.8 percent, which include revenue sharing with provincial and local bodies. There isn’t much rationalisation of recurrent spending, capital spending has been slashed compared to last year’s budget estimate, and most of the programmes are continuation of what was in the previous budget. The emphasis on infrastructure spending, control of revenue leakage and commitment to ease regulations that deter investment is welcome. On implementation front, there is not much substance except for assurances.

The GDP growth target of eight percent is overly ambitious from the perspective of size and distribution of spending.

Ram Prasad Gyanwali

Economist and Former Head at Central Department of Economics, Tribhuvan University

The budget embedded a number of popular programmes such as providing employment opportunity to 500,000 people in the next one year, setting up a health post at each local level, subsidised health insurance schemes and providing job opportunity to outbound workers among others. Despite remaining in the framework of the acceptable budget size, GDP growth rate is also an exaggerated figure. It has failed to come up with private sector friendly programmes. Increasing cash incentives, making the country self reliant in 12 specified products and effective monitoring of NGOs and INGOs are welcome though.

Surya Raj Acharya

Infrastructure expert

The budget has remained silent over the measures the government will adopt to spend the fund allocated for the various infrastructural projects. The government failed to introduce concrete programmes to ensure the implementation of large infrastructural projects

Shailendra Guragain

President, Independent Power Producers’ Association, Nepal

The fund allocated for the energy sector is insufficient considering the government’s plan to develop 15000MW of electricity within 10 years. The government ignored our suggestion regarding the capital formation to finance the energy project. We had suggested the government to raise the fund for the projects by levying additional tax on the telecommunication services. But, the budget remained silent over it.