‘Supplementary budget should be reformative’

Kathmandu, December 5

As the government is preparing to bring a supplementary budget, private sector players have stressed on the need for it to be reformative to iron out existing policy hurdles.

While the private sector does not have much expectation from the supplementary budget, which the government brings to bridge the gap of allocation and actual spending under particular headings, they have urged the concerned stakeholders to ensure that distributive approach is not adopted. Private sector players are hoping for a development-oriented budget, which will also be supportive in accelerating the current snail-paced progress of development projects.

The Ministry of Finance (MoF) has said that the supplementary budget would be needed if the government makes good on its promise and distributes Rs 150,000 as the second tranche to the earthquake-affected beneficiary households to rebuild houses. Similarly, Prime Minister Pushpa Kamal Dahal has proposed Rs 100,000 for the quake-hit victims of severely affected 14 districts, including Kathmandu Valley, for maintenance of houses by adopting earthquake-resilient technology, including retrofitting and other methods.

The fiscal budget 2016-17 has allocated only Rs 80,000 as the second tranche for the quake-hit households for reconstruction and proposed Rs 50,000 for the maintenance of the houses partly damaged by last year’s temblors.

But before the government is able to begin distribution of the second instalment of the housing grant, it would need the parliament’s nod.

The government’s expenditure could also go up as Prime Minister Dahal has also announced some special packages of relief and compensation to the migrant workers, who lost lives during work, suffered disabilities or were cheated by the foreign employment agencies or employer in the destination country, according to MoF officials.

However, it is not sure whether the government would be able to forge consensus among political parties to bring the supplementary budget. The fact that the government’s capital expenditure stood at merely 6.14 per cent of the total allocation of Rs 311.95 billion as of December 3 also raises questions about the need for a supplementary budget.

In this regard, The Himalayan Times talked with private sector representatives on what they wish to see in the supplementary budget.

Expectations from private sector

The government has neither clarified on the objective of bringing a supplementary budget nor consulted the private sector in this regard yet. As we have been advocating since long, country’s budget should accelerate development works and the supplementary budget should aim to do the same. The government should ensure that the supplementary budget is not distributive, as a budget of distributive nature affects country’s economy negatively. The supplementary budget should prioritise development projects. Similarly, the budget should focus on development of infrastructure, which is key to other development activities in the country. Above all, the government should consult with the private sector before bringing the budget.

  • Hari Bhakta Sharma, president, Confederation of Nepalese Industry (CNI)

The supplementary budget should focus on reforming the existing government policies which are not business-friendly. For example, there is a provision that requires industrialists to deposit 50 per cent of the dispute amount at the tax office before they can seek reassessment of any tax dispute. Such an impractical provision of the government not only discourages the private sector but also promotes corruption among government offices as industrialists hesitate to go to the court to seek a way out. The budget should try to reform such issues which are burdensome for the private sector. Similarly, tax rates imposed on the industrial sector are quite high and need to be brought down. In a nutshell, the supplementary budget that the government plans to bring should be private-sector-friendly and development-oriented.

  • Pashupati Murarka, president, Federation of Nepalese Chambers of Commerce and Industry (FNCCI)

The government’s supplementary budget should be business- friendly. It should encourage traders and entrepreneurs to do business. As domestic jewellery industry is generating up to Rs eight billion in revenue for the government every year, programmes and policies of the government should aim to uplift, systematise and promote country’s jewellery industry. Along with ensuring uninterrupted supply of gold in the market and promoting domestic jewellery in the foreign market, the budget should give tax subsidy to traders on import of equipment and machinery required to test quality of gold and silver jewellery.

  • Mohan Kumar Sunar, president, Federation of Nepal Gold and Silver Dealers Association

We have been lobbying since long for the government to put tourism under priority industry and provide facilities to this sector in line with other industries. Most importantly, the government should ensure availability of electricity at nominal rate. Though hotel industry has high electricity consumption rate and a five-star hotel is paying up to Rs 700,000 electricity tariff to the government, the state imposes the same rate for hotels and general consumers. The electricity tariff rates for industrial sector is, however, comparatively lower. Similarly, the government should give up to five per cent VAT refund facilities for hotels in agro-products through the budget, since hotel industry consumes a large number of agriculture products. Likewise, the budget should introduce policies and programmes to develop infrastructure across the country so that hotels that are currently focused on Kathmandu, Pokhara and Chitwan, are encouraged to expand to other tourist destinations of the country as well.

  • Amar Man Shakya, president, Hotel Association of Nepal (HAN)