Principally, the budget should focus on introducing measures to promote country’s production sector. The government should first identify problems and rectify them through the budget so that the country can draw notable investment in the sector. The budget should focus on improving the judicial system, especially related to tax issues, stabilise interest rate in the banking system, ease land acquisition and facilitate environmental issues while establishing a factory and promote export by giving special treatment to industries that manufacture products with high value addition. Similarly, the budget should also reduce corporate income tax by five percentage, give 50 per cent waiver on tax levied by local governments on land and housing registration, especially for those meant for industry and hotel business. In a nutshell, the budget should adopt measures to bring down the cost of doing business in the country.
The budget should concentrate on ways to reduce the ballooning trade deficit and introduce measures to raise production base of the country. Promotion of the industrial sector is crucial to achieve desired economic growth and developmental goals. For this, it is crucial that export-oriented businesses receive special treatment from the government, like special tax incentive packages for them. Along with this, the government through the budget should ensure that taxes on imported raw materials are not higher than taxes imposed on imported finished goods. Similarly, the government should introduce measures to cope with the liquidity situation. The budget should also take concrete decisions to ease and simplify customs procedures.
The government is targeting to generate 15,000 megawatts of electricity by fiscal year 2028, but it is going to be more difficult due to the government’s Public Procurement Act. It needs to be amended to make it more contextual. Nowadays, the government has given more facilities and is focusing on bringing huge foreign direct investment, but without much success. I have suggested the government to introduce similar provisions for both domestic and foreign investors to boost private sector investment in power sector. Also, some of the incentives announced by the government are yet to be executed. We need a one-window system for hydropower sector to ensure hassle-free and timely completion of procedures.
The budget should focus on driving the country’s import-based economy towards production-based. This can be done by promoting domestic industries and entrepreneurs. The government should primarily focus on promoting smalland medium-scale industries in the agriculture and handicraft sectors. These small industries make significant contribution to the economy of the country. The budget should also introduce programmes that create ample job opportunities within the country and encourage Nepali youths to use their skills and expertise in the country itself. Likewise, low development expenditure has been a major problem in Nepal. The government should develop a budget expenditure timeline and make it mandatory for ministries to spend a certain chunk of development budget within a specific time period.
The contractors are facing scarcity of technical manpower in the country to execute development works. The government needs to develop sector-wise technical manpower in the country. We also need to bring in skilled manpower through contract agreements, and the Ministry of Labour, Employment and Social Security needs to manage such things for us. Recently, the government amended the Public Procurement Regulations, but we have strong reservations against some of the provisions. The regulation has mentioned that if construction of any project is not completed on time, the contractor will be penalised. But timely completion of any project also depends on coordination and cooperation from government officials and other stakeholders.
The government needs to establish large technical training centre for migrant aspirants that is internationally recognised in every province. The government is only focused on supplying labour force and inking various bilateral agreements. However, much remains to be desired in terms of cross-checking whether the signatories are abiding by those agreements. Consequently, workers have been facing difficulties in the destination countries. The government, through the budget, should try to address such issues plaguing the labour market. Among others, the government should make Nepali embassies in destination countries more responsible towards the issues of migrant workers in those countries.
The next fiscal year’s budget must prioritise promoting sustainable organic farming. As the environment of the country is suitable for organic farming, have to promote and commercialise it. But in doing so, we should consider what we can achieve with available resources rather than blindly following the practices of other countries. Despite the fact that 65 per cent of Nepalis are dependent on agriculture, the sector is yet to be prioritised by the government. Although the election manifesto of two-third majority government had made tall promises, the recently unveiled government’s policies and programmes disappointed the farmers to some extent. So, the budget for next fiscal year should guarantee the classification of farmers and distribution of identity cards based on the farmer category. This will help to identify real farmers who need support from the government. Besides, import of agricultural products is increasing by the day, so the next budget must prioritise increasing the production level of the country. Unless we increase our production level, replacing import is just a dream. Similarly, farmer-oriented programmes must be handed over to the local levels.
Infrastructure is the most important part of tourism development. So, the next budget should focus on planning as well as timely completion of tourism infrastructure. We have to properly manage, upgrade or build airports, roads, hotels, among others, to handle a large number of tourists. We are losing out due to lack of proper tourism infrastructure. So, the next budget must target to complete Gautam Buddha International Airport, Pokhara Regional International Airport and Nijgadh International Airport on time. Meanwhile, our target is high-end tourists. Yet, our major market is China and India. So, for the convenience of Chinese and Indian tourists, we need road connectivity. Besides, lack of skilled human resources is a problem in every sector of the country at present. So, government should address these issues in the next budget. Likewise, before bringing any new programme, the government has to go through the research and development modality. A proper study of the situation can help find the right solution. Also, we need to explore new destinations where we can promote and market our tourism products.
The next budget must create an environment to attract investment in the hotel industry of the country. Expansion of the hotel industry is a base for tourism development, so the next budget has to create an environment of investment in this sector. Having said that, the budget must prioritise construction of tourism infrastructure as well. Despite having immense potential of attracting a large number of tourists, lack of air and land connectivity, worst condition of roads and pollution are discouraging tourists from visiting Nepal. So, to address these issues, the budget should be infrastructure-oriented. Hotel industry is a major source of foreign currency. Moreover this sector has generated direct and indirect employment for many people. The next budget must remove VAT from agricultural and other products procured by the hotels from the local market. Meanwhile, VAT on room decorations, hotel construction materials, air-conditioners, air-coolers, heaters, televisions, phone sets, bathroom products, etcetera should be removed for hotel industry. Although tourism has been considered a backbone of country’s economy, the sector has not been recognised as an industry yet. So, hopefully the next budget will prioritise promoting and developing the tourism sector of Nepal.
Last year’s budget was the first federal budget of the country, so the government could have made some slip-ups then. However, with this one-year experience, the government has to now bring a result-oriented budget. Looking at the consumers’ right, the budget should revise the current VAT system of the country. A standard should be set for VAT implementation. Similarly, currently 80 per cent of our daily consumables are being imported. So, the next budget should prioritise production and commercialisation of local products. Similarly, the budget should promote production-based subsidy for farmers. The country’s economy is currently dependent on remittance, which is not sustainable. So, the next budget must bring programmes that generate employment for youth.
Written by Sandeep Sen
This news first appeared on https://thehimalayantimes.com/business/budget-expectations/ under the title “Budget expectations”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.