Govt urged to be more realistic in allocation of fiscal budget
Kathmandu, May 14
The government has been suggested to be more realistic during budget allocation to end the perennial problem of low capital spending.
Speaking at a pre-budget discussion programme organised by Nepal Economic Association (NEA), economist professor Madan Kumar Dahal said the budget must be balanced. “When the government collects revenue, it must mobilise that resource through execution of development projects for effective redistribution of taxpayers' money.”
Dahal highlighted the need for target-based incentives for effective execution of development projects, ensure quality of works, and control red tapes. The budget of next fiscal should primarily address the agriculture sector through irrigation, extension service, cold stores, subsidised credit and the access roads. Meanwhile, export incentive should be given to boost export by lowering the high cost of operating industries and businesses, among others, he said.
Shekhar Golchha, senior vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), stressed on lowering the cost of doing business to attract investment. “There is need of fresh investment to address the major constraint of low productivity.”
He said the government, through fiscal budget, needs to initiate the groundwork to attract investment. Golchha underscored the need of policy consistency; lack of bureaucratic hassles; early endorsement of the Foreign Investment and Technology Transfer Bill; investor-friendly tax policies to lure investment.
Nepal's overdependence on remittance has discouraged industrial investment as the government had not faced balance of payment crisis along with rise in flow of remittances. Without creating enabling environment for industries, Nepal cannot achieve its target of achieving higher and sustained growth, he said.
Golchha also spoke on some laws that are discouraging private investment.
“There are 14 agencies authorised to conduct market monitoring, which has been utilised as a tool to fulfil interest of political leadership and bureaucrats,” said Golccha. “The market must be monitored to establish fair practices, but private businesses should not be intimidated through rights extended by laws.”
Khim Lal Devkota, an expert on fiscal federalism, said that the spending capacity of sub-national governments is also considered as a major challenge in the federal system. He opined that along with the funds, the sub-national governments also need to be equipped with good human resources to deliver the results. Reportedly, the local governments have yet to mobilise Rs 124 billion out of Rs 225 billion grant transferred to them.
Ram Sharan Kharel, advisor to finance minister, said the finance minister will try his best to address the challenges identified by the whitepaper through the fiscal budget 2018-19. “Reflections of the whitepaper are the guiding principles for the budget.”