Finance Minister Ram Sharan Mahat today presented an expansionary budget of Rs 819.47 billion for the next fiscal year to put the economy on a higher growth trajectory, promote well-being of less privileged groups through social security measures and deliver necessary infrastructure for sustained growth of various sectors.
The centrepieces of the Budget 2015-16 are allocation of Rs 91 billion for reconstruction of structures damaged by earthquakes of April and May, 150 per cent hike in value added tax threshold, plans to open 1,942 km of new road tracks, proposal to extend irrigation facility in all arable areas within five years to prop up agriculture sector, two-fold increment in allowance for elderly and introduction of ‘reward and punishment’ system in civil service to ensure timely utilisation of allocated funds.
“The budgetary provisions are expected to promote socio-economic development and encourage the public to take ownership of programmes introduced by the government,” Minister Mahat said presenting the budget, or Appropriation Bill, at Parliament.
This Bill, along with Financial Bill and Bill to Raise Public Debt, will now have to be endorsed by Parliament for implementation.
The Appropriation Bill presented today has earmarked Rs 484.27 billion for recurrent expenditure, such as salary payment of civil servants, grants to local bodies and interest payment. It has also allocated Rs 208.88 billion for capital expenditure, such as spending on civil works and purchase of land, building, furniture, vehicles, plants and machinery.
Also, Rs 126.32 billion has been earmarked for financing provision, such as lending to state-owned enterprises and principal repayment.
The amounts earmarked in next fiscal’s budget are 32.6 per cent higher than this fiscal’s, when Rs 398.95 billion were earmarked for recurrent expenditure, Rs 116.75 billion for capital expenditure, and Rs 102.39 billion for financing provisions.
To fund expenses of the next fiscal, the government is planning to raise Rs 475.01 billion through tax and non-tax revenue. Another Rs 2 billion will come through principal repayment and Rs 110.93 billion through foreign grants.
The resulting deficit will be financed through foreign loans of Rs 94.96 billion, domestic loans of Rs 88 billion and Rs 48.56 billion in carryover from this fiscal’s budget.
“We hope to achieve this growth estimate on the back of investments made by the public and private sectors in reconstruction works,” Minister Mahat said.
The government has decided to transfer Rs 74 billion to the National Reconstruction Fund to rebuild structures damaged by quakes. Of this amount, Rs 50 billion will be used to rebuild various houses, Rs 3 billion will be used to rebuild public buildings, Rs 2 billion will be used to rebuild archaeological structures and Rs 7 billion will be used to rebuild other physical infrastructure. Also, Rs 6 billion each will be used to give a lift to productive and social sectors.
But since the money parked at the Fund cannot be utilised until the National Reconstruction Authority comes into operation, the government has decided to disburse up to Rs 17 billion for reconstruction through government agencies until the Authority starts functioning.
The budget has also allocated Rs 26.68 billion for development of agriculture sector, including Rs 2.08 billion for agricultural research, and Rs 20.22 billion to develop irrigation facilities. These spending are expected to give a boost to the agriculture sector, which makes a contribution of over 30 per cent to the gross domestic product.
To address human poverty and promote well-being of people, the budget has proposed consolidation of social security measures. “In this regard, the Unified Social Security Bill will be tabled in Parliament within this fiscal,” Mahat said.
Also, monthly allowance for the elderly has been doubled to Rs 1,000, including Rs 500 in health allowance, while 1,000 students of disadvantaged groups of far- and mid-western regions will be extended scholarships to pursue technical education.
The budget has raised VAT threshold from Rs 2 million to Rs 5 million. With the new provision, businesses whose annual transaction stands at less than Rs 5 million will be exempt from the system of VAT.
A version of this article appears in print on July 15, 2015 of The Himalayan Times.
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