KATHMANDU, MAY 29
The government unveiled a budget of Rs 1.793 trillion for the fiscal year 2022-23 in the joint session of the House of Representatives and National Assembly here today, with primary focus on stability and sustainable economic growth through production-based economy.
The size of the federal budget presented by Finance Minister Janardan Sharma today is seven per cent bigger than the replacement budget of Rs 1.632 trillion announced for the current fiscal year. The budget for the current fiscal was, however, slashed by 5.3 per cent to Rs 1.546 trillion during the half-yearly budget review in February. Compared to the revised budget size, the budget for next fiscal year is 13.33 per cent bigger.
According to Finance Minister Sharma, out of the total allocation, Rs 753.40 billion or 42 per cent has been allocated for current expenditure and Rs 380.38 billion or 21.2 per cent for capital expenditure in the coming fiscal year; Rs 230.22 billion has been allocated for financial management and Rs 429 billion for grant distribution to provincial and local levels.
The grant amount to provinces and local levels for the upcoming fiscal year has been increased. Finance Minister Sharma announced that Rs 61.43 billion has been allocated to provinces and Rs 123 billion to local levels under the equalisation grant. Similarly, Rs 57.17 billion has been allocated to provinces and Rs 183 billion to local levels under conditional grant, while Rs 6.30 billion has been allocated to provinces and Rs 7.27 billion to local levels for matching grant. Under special grant, Rs 4.56 billion has been allocated to the states and Rs 9.14 billion to the local bodies.
The government has set the revenue collection target for the next fiscal at Rs 1.24 trillion.
It plans to seek foreign grants and loans of Rs 55.46 billion and Rs 242.26 billion respectively. Furthermore, the government plans to finance its expenses through domestic loans amounting to Rs 256 billion.
The annual economic growth of the country has been set at an optimistic eight per cent for the next fiscal year in the hopes of gradual revival of economic activities following the drop in COVID-19 cases.
Also, the government has aimed to limit inflation at seven per cent next fiscal year.
The finance minister said the economy is expected to expand by 5.8 per cent in the current financial year ending in mid-July. While the estimate is higher than the 4.3 per cent year-on-year growth in the previous fiscal, it is lower than the earlier projection of seven per cent growth for the current fiscal year.
The government has allocated Rs 55.57 billion for the development and promotion of agriculture and livestock sector, which is Rs 10.48 billion more than the allocation of Rs 45.09 billion for the current fiscal year. Other notable announcements for the agriculture sector included minimum support price for milk and Rs 500 billion refinancing fund to ensure that farmers get affordable loans.
Sharma also announced that the elderly allowance threshold would be reduced by two years to 68 years from the current 70 years. The government has allocated Rs 134.01 billion for social security allowances for the next fiscal year.
The government has allocated Rs 13.59 billion to provide interest subsidy on concessional loans in the coming fiscal year. Minister Sharma said that such loans would be provided to needy people especially from Dalit and backward communities, migrant returnees, small and medium enterprises and women entrepreneurs.
Offering some relief to middle-class income families, the government has increased the income tax ceiling. For the upcoming fiscal year, the unmarried people with annual earning of up to Rs 500,000 will not have to pay income tax if they pay only one per cent social security tax. For married people, the income tax ceiling has been raised to Rs 600,000.
In bid to promote export and import substitution, the government will provide an eight per cent cash subsidy on the export of goods like clinker, cement, steel, footwear and refined water. Moreover, the government is to distribute induction stoves to all households through the local level by launching the 'One house, one electric stove' campaign.
Also, the salary of all civil servants will be hiked by 15 per cent next fiscal year, which begins in mid-July.
Economist Dilliraj Acharya termed the budget as 'populist' that would be limited to paper. "Despite the good intentions, the budget is too ambitious."
Likewise, he also described the sources of budget financing as untenable. "In a nutshell, this budget will only add more burden and debt to the economy."
However, he commended some good measures such as agricultural pension, loan waiver for farmers and incentives for export-based firms, reduction in tariff during import of raw materials and facilitating the COV- ID-battered sectors.
Sector-wise budget allocation
• Health: Rs 69.38 billion
• Agriculture: Rs 55.97 billion
• Education: Rs 70.5 billion
• Tourism: Rs 9.38 billion
• Energy: Rs 75.10 billion
• Industry, Commerce Supply: Rs 10.48 billion
• Aviation Infrastructure Development: Rs 12.24 billion
• Land Management, Cooperatives and Poverty: Rs 7.4 billion
• Forest and Environment: Rs 13 billion
• Labour, Employment, and Social Security: Rs 9.13 billion
• Drinking Water Supply: Rs 37.35 billion • Sports: Rs 2.46 billion
• Women, Children and Social Welfare: Rs 1.77 billion
• Infrastructure: Rs 161 billion
• Water Resources and Irrigation: Rs 33.50 billion
• Information and Technology: Rs 8.59 billion
Salient features
• Imports of basic agricultural products like maize, wheat, vegetables and rice will be reduced to less than 30 percent
• Rs 260 million for startups allocation
• Kidney transplantation free; Rs 5,000 monthly allowance for kidney, cancer and spinal cord patients
• Up to 15 per cent discount for industries consuming electricity up to Rs 100 million per month
• Rs 7.5 billion allocated to the Prime Minister's Employment Programme
• Food security identity card to the poor and low-income workers
• Rs 6.53 billion budget for railways
A version of this article appears in the print on May 30, 2022, of The Himalayan Times.
