A second budget by the second government after the constituent assembly polls is in the pipeline.

Investors are awaiting a handsome package for the development of the capital market.

The secondary market is also waiting for the budget deliver.

In the last budget, the Maoist-led coalition government imposed 50 per cent more capital gain tax and blamed the market for being a casino.

It pulled down the market almost by 50 per cent and created such a crisis of confidence among investors that few were willing to invest.

In the coming budget, the government should prioritise the development of capital market by boosting the morale of investors.

A series of development packages should be included in the budget to make the capital market more vibrant which could lead to industrialisation of the country.

• The valley-based centralised capital market should be decentralised and made accessible all over the country.

• Nepal is an agricultural country and more than 70 per cent people are dependent on agriculture but not a single agro-based company has listed in the secondary market till date. So, the budget should encourage agro-based companies with tax exemption in order to get them interested in enlisting in Nepse.

• The capital market is the main source of capital formation for the country’s economic development. The government should realize this factor and encourage the businessmen and industrialists for maximum utilisation of the market to accumulate as much capital as possible.

• To encourage investors, either the government should reduce the capital gain tax to the previous rate or it should charge transaction tax which will be more transparent.

• At present, the Nepali capital market is dominated by banks and financial institutions. Recent developments in this sector has hit the confidence of Nepali investors. So, the hydropower companies should be given more tax benefits for more power generation and encouraged to get listed in the secondary market for the development of capital market.

• More attractive private companies like Surya Nepal, Manakamana Cable Car, Dabur Nepal should be motivated to get listed in the Nepse through more attractive benefit like tax leave.

• The budget should tie the capital market with poverty alleviation programmes.

• Securities Board of Nepal (Sebon) should be made more resourceful, professional, technically sound, non-political with a group of professional experts as regulators.

• A separate capital market development cell should be established in the ministry of finance.

• During a year, the derivative market is mushrooming. Yet, there is no separate regulatory authority to regulate this market. The budget should specify a regulatory authority to legalize the market and protect investors’ rights.

Bhattarai is a share market analyst.