Here's what economists and private sector leaders have to say about budget 2020-21The Post spoke with economists and private sector leaders about the budget presented by the government.
Finance Minister Yubaraj Khatiwada on Thursday announced a Rs1.47 trillion budget estimate for the fiscal year 2020-21. The budget plans to bet on achieving the higher economic growth target of 7 percent despite economic uncertainty driven by the Covid-19 pandemic that has pushed many companies to the edge of bankruptcy this fiscal year and likely to continue in the next fiscal year as well. The Kathmandu Post spoke with economists and private sector leaders about the budget presented by the government. Excerpts:
Umesh Prasad Singh, acting president, Federation of Nepal Cottage and Small Industries
The budget presented by the government seems to be encouraging for the cottage and small industries sector and it has addressed most of our suggestions. It must be appreciated that the government has prioritised the sector by giving different headings which generally used to get ignored in the past. The relief and other facilities that the government has announced for the sector is welcome. The implementation part as per the announcement is yet to be seen. The facilities that have been provided to micro and cottage industries and women entrepreneurs, and the announcement to issue loans at 5 percent interest, refinancing facility at 5 percent interest and loans at 2 percent interest to emerging entrepreneurs and youth entrepreneurs are laudable. I think the government has felt the importance of cottage and small industries that contribute 22.5 percent to the gross domestic product.
Shankar Sharma, economist
It seems that the foreign loan component of the budget has increased. Achieving 7 percent economic growth seems to be challenging and spectacular due to the situation created by Covid-19 and the same regular programmes contained in the budget statement. The implementation part has not been satisfactory in the past, and this year it will be even harder because of the obstacles created by Covid-19. As there is a possibility of hunger occurring this year, a food package programme could have been inserted in the budget statement because the government has focused overly on the employment programme. The institutional mechanism for the employment programme is weak and needs to be strengthened. The budget is good for the health and employment sectors.
Achieving 7 percent economic growth with the usual programmes would be spectacular. Revenue estimation and priority to health and employment are the strong aspects of the budget. Risk minimisation in the economy after Covid-19 has not come out clearly, and the expenditure reduction part has also been only touched. Donors and multilateral agencies have projected a smaller economic growth rate for Nepal and South Asia, and I think the government is being optimistic with this budget. Hunger problems and a deepening poverty line have been forecast, and the government should have addressed that.
Bhawani Rana, president, Federation of Nepalese Chambers of Commerce and Industries
The budget has not come out as expected to revive the economic sector. Some of the suggestions have been addressed, and they need to be implemented as soon as possible. There are some encouraging announcements for cottage and small industries, tourism and agriculture, such as loans at 5 percent interest. I think it will not be easy to revive the economy affected by Covid-19 with the package the government has announced today. A budget to rejuvenate the economy ravaged by Covid-19 has not come.
Shreejana Rana, president, Hotel Association Nepal
The country's hotels were expecting to get support from the government to keep from going under as the ongoing lockdown has brought them to their knees. But the budget for the fiscal year 2020-21 has not addressed a single issue in the hospitality sector. It has not taken into consideration the current situation and the possibility of saving the tourism industry and the jobs it provides.
Development of domestic tourism, construction of conference halls, and development of infrastructure and other things like historical, cultural and artistic assets contributes to enhancing tourism. The implementation part will be challenging. Saving tourism, institutions and employees has been challenging for us, and the government failed to address all these three aspects. We will be able to prevent employee layoffs only with support from the government, investors and staff. But this did not happen, and the government did not show a sense of responsibility to look after the employees which is a very worrying matter for us.
The interest rate for big hotels was not reduced. The government has provided a 5 percent loan facility, but only for operating capital. It has addressed the issue of electricity charges, but social security is minimal. Around 3,500 hotels across Nepal which are members of the association have sought appropriate government policy to save them from bankruptcy. The association was disappointed by the government policies and programme released earlier as it did not address its grievances. The hospitality industry received a savage blow from the Covid-19 outbreak and the subsequent containment measures just as it was preparing to begin another year in an upbeat mood following a strong performance in 2019.