Kathmandu, July 13:

Finance minister Dr Ram Sharan Mahat today reiterated that the budget 2006-07 is directed towards revival of the economy with a special focus on rural areas and for institutionalising the achievements of Janaandolan-II.

“The national economy, which has been in a crisis for over half a decade, is looking for a new momentum. The policies and programmes envisaged in the budget are meant to kick-start this process,” said Dr Mahat, at a post-budget briefing, organised by the Reporter’s Club Nepal, today. He further said that empowerment of people and the implementation of budgetary policies and programmes with people’s participation are the basic foundation of the budget, and allocations have been made accordingly.

“Of the total increased development budget, over 90 per cent has been allocated for rural areas so that deprived and poor people can benefit from the gains of economic development,” Dr Mahat claimed, adding that doubling of grants to VDCs to a million rupees is an example.

The increased allocation to social sectors such as education, health and water supply is a testament to rendering people empowered and resourceful. Special programmes for women, Dalits, marginalised Janajatis and people from the Terai region are designed in order to lay the foundation for inclusive economy, he added. He further said that increased public investment in infrastructure and reconstruction program-mes would lead to employment creation and revival of rural economy, which will work as dividends for a sustainable peace process in the country.

The state must honestly address challenges faced by the private sector due to security related problems and conflict. “There is no excuse for delay or denial in creating investment-friendly atmosphere by finding durable solution to the problems of security and peace,” he said.

He added that the concept of Industrial Rehabilitation Fund in which the government will provide Rs 500 million is a new initiative to rehabilitate the conflict affected sick industries. “The operation of Special Economic Zone (SEZ) in Bhairahawa will give a boost to exports as well as industrialisation,” Dr Mahat said.

The continuation to public-private partnership approach in many development activities and infrastructure development under BOOT system will increase the private sector’s investment significantly. “The democratic government will strengthen these practices and more work will be done with the participation of the private sector,” he added.

When asked about the CPN-Maoists’ disagreement over the budget making, Dr Mahat said, “Protest and criticism is a regular practice in democracy.” He, however, clarified that the most of the programmes and policies in the budget are designed to address the socio-political issues raised even by the Maoists. Clarifying the misconception over the royal palace budget, Dr Mahat claimed that expenditures have been drastically cut down. Of the total outlay of Rs 219.7 million, Rs 32.7 million is meant for allowances for royal family members including King, Queen, Crown Prince, Crown Princes and Queen Mother. The allowance for the royal family members is subject to income tax, he said.

The major chunk of the budget, Rs 122 million will be spent on general administration and salaries for employees at the royal palace and the remaining Rs 55 million has been allocated for maintenance and reconstruction.

The security budget cannot be decreased significantly unless the number of security personnel, which has been increasing for the last four years, is reduced to a given level, Dr Mahat said. The proposed budget has estimated that the total security budget will be around Rs 18 billion, a slight reduction of about Rs 600 million against last year.

The vacant posts in the Nepal Army will be made automatically redundant and no new recruitment will be made. It will cut down the defence budget in the long run, he added.