Kathmandu, May 24:

A senior government official today disclosed that the budget for fiscal year 2007-08 would focus on infrastructure development with a view to revive the overall economic activities.

Rameshor Prasad Khanal, acting revenue secretary at the ministry of finance (MoF) said that preparations for the budget is going on at war footing. He also informed that the major thrust of the budget would be on infrastructure development in order to kick start the stalled economic activities.

“The next budget will be different, as we are trying to prioritise economic agenda to prevail over all other agendas,” Khanal said, adding that the fiscal policy measures would be taken accordingly to improve the governance and public delivery system.

While the primary goal of the budget will be achieving sustainable economic growth through expediting trade, commerce and development activities, public investment in mega infrastructure projects like hydropower, roads and irrigation will be on top priority, he added.

Khanal was speaking at a pre-budget interaction organised jointly by the Confederation of Nepalese Industries (CNI) and Revenue Advisory Board (RAB). On the occasion, Narendra Kumar Basnyat, acting president of CNI, handed over a booklet of recommendations that has a special focus on manufacturing and infrastructure.

Presenting a paper, Jagadish Prasad Agrawal, head of revenue committee at CNI said that the industrial climate in the country has been negative over the past five years, while more and more industries are facing various problems. The growth of manufacturing sector has drastically slowed down with imports continuously surging over the period.

“Cost of doing business is relatively high, which has eroded the competitiveness and backward integration is lacking,” said Agrawal, adding that many agricultural goods are thus cheaper to import rather than producing in Nepal.

High freight cost and syndication by transport entrepreneurs have also eroded our competitiveness, he said giving an example of a freight cost to transport goods - from Birgunj to Kathmandu and from Kolkata to Birgunj - as equal.

Other important factor that has been constantly making Nepali products less competitive is duty structure, which has not only marred the manufacturing sector but also fuelling the unauthorised trade, especially along the open borders, Agrawal said.

CNI has urged the government to make a provision of allowing the manufacturing

unit to export as well as sell in the domestic markets. Industry should also be encouraged to set up captive power plants for a short term of five years by purchasing the generated electricity by Nepal Electricity Authority (NEA) at the generation cost.

An overhauling in taxation as well as duty structure is an essential in order to enhance Nepal’s competitiveness, CNI stated, adding that valued added tax (VAT) should be

at three levels of four, eight and 12 per cent depending upon the nature of the products.

VAT on agro-produce and basic consumable goods should be exempted.

CNI also proposed a new idea of commercialisation of investment in infrastructure development, which is a must to achieve higher economic growth.

“Strengthening the public-private partnership (PPP) approach, the new avenues of investment could be opened,” CNI said.