The most challenging task for the govt is to spend the budget for the capital expenditure
Finance Minister Janardan Sharma on Sunday presented a budget of Rs 1.793 trillion for fiscal 2022/23 at the joint session of the federal parliament, focussing on the upcoming parliamentary and provincial elections to be held by November-end. While an average Nepali's life expectancy has increased to 71 years, the government has proposed providing a Rs 4,000-monthly old-age allowance at 68 from the current 70 years of age. The Finance Minister has also increased the salary of all government employees by 15 per cent on their basic salaries at a time when the country is passing through an economic crisis due largely to COVID-19 and the war in Ukraine. In order to appease the voters, the government has offered a number of concessions on taxes to the business community without ensuring solid bases for generating revenue in the national coffers. The size of the budget is 13.33 per cent bigger than that of the revised budget of Rs 1.546 trillion of this fiscal, which was introduced through a replacement bill. Out of the total budget allocation, Rs 753.40 billion, or 42 per cent has been allocated for recurrent expenditure, Rs 380.38, or 21.2 per cent, for capital expenditure, Rs 230.22, or 12.83 per cent, for debt financing, while Rs 429 billion has been allocated for the provinces and local levels under the equalisation grant, conditional grant, matching grant and special grant.
In order to meet the overall expenditure, the government has targeted to collect Rs 1.24 trillion from revenue, Rs 297.72 billion from foreign grants and loans, and Rs 256 billion through domestic borrowing. However, former finance ministers and economists have expressed doubts over the possibility of collecting the required funds from revenue, foreign grants and loans given the global economic crisis.
While the government expects the national economy to grow by 8 per cent, independent economists say the target was unrealistic. For the next fiscal, the government has allocated Rs 55.57 billion for the promotion and development of the agriculture and livestock sector, and has also offered a minimum support price for milk and Rs 500 billion as refinancing fund to ensure that farmers get affordable loans.
Other measures such as agricultural pension, loan waiver for farmers and incentives for export-based firms and reduction in tariff for the import of raw materials are positive aspects of the budget. However, despite the good intention, the budget is highly ambitious as the sources of budget financing are untenable.
The provision of providing "one house, one electric stove" though the local levels is one such example, which is not going to attract households unless the price of per unit of electricity is slashed, and electricity supply is reliable. The most challenging task for the government is to spend the capital expenditure, which is just half the recurrent expenditure.
A number of incentive measures taken by the government for the agricultural and industrial growth will not be implemented as the tenure of this government expires in the next six months. This budget will become redundant following the general elections, scheduled to be held in November. Rather than proposing lofty ideas, the government should have come up with plans to better utilise the capital expenditure in approved areas.
Tara Air crash
It has been a traumatic period for the near and dear ones of the 22 people who were aboard the Tara Air aircraft that went missing Sunday morning, hoping against hope as they waited for news. Sadly, Monday morning dawned with the news that the plane had slammed into the mountains at a height of 14,500 feet in Thasang of Mustang district. The Twin Otter aircraft, carrying 19 passengers and three crew members on its way to Jomsom from Pokhara, had lost contact with the air traffic control at 10:11, six minutes before it was due to land. Bad weather had hampered the search and rescue operation. Precious lives have been lost in the crash, including those of three pilots and an air hostess. Among those on board also included four Indians and two Germans, and seven Nepalis of a single family.
We will know what triggered the crash once information from the flight data recorder is deciphered.
Yet given that it was raining on Sunday morning, one could blame the bad weather and poor visibility for the crash. The crash takes place six years after a Twin Otter aircraft, also of Tara Air, killed 23 people in that very region. Sunday's crash is likely to ignite fresh discussion about air safety in Nepal.
A version of this article appears in the print on May 31, 2022, of The Himalayan Times.