Following the presentation of policy and programmes, the government is gearing for the new fiscal year’s (2023/24) budget amidst the growing economic challenges. The new budget is expected to make policy intervention for the economic revival. With recession continuing to bite the economy, the economic growth is projected to be below 2 per cent, which is a big setback to the government’s target of attaining 8 per cent growth for the current fiscal year. The drastic reduction in the growth goal has been largely attributed to the dismal performance of the construction, industry, production and trading sector. The government’s low income but high expenses is really a matter of serious concern. Low capital expenditure, high interest rate, soaring inflation, widening trade deficit, and increasing external debt and internal borrowing have strained the efforts to give impetus to the economy. Of late, Nepal Rastra Bank has reduced bank rate by one percentage point, which has provided some relief to the banking sector reeling from the liquidity crisis.
In its policy and programmes, the government has announced a number of schemes that aim to revive economy, promote good governance and implement fiscal federalism, among others. The policy has sought to muster the support of the private sector that constitutes an important component of national economy. The government has fixed the ceiling of this fiscal year budget at Rs. 1,688 billion. It is indeed a challenge to meet the public expectations from within this budget. The Finance Minister has already announced that the government would not unveil new programmes that need a huge amount of budget. The tendency to scatter budget under different headings is unlikely to increase revenues. The new budget should promote local production, which requires political commitment, investment and appropriate business atmosphere.
The political leadership is often inclined to announce distributive budget to give relief to the commoners. In principle, providing financial relief to the people, especially the marginalised one is not wrong as our constitution has embraced a welfare state. But, when the state coffers have shrunk, it is better for the leadership not to be driven by populist desire. The experts, whom this daily talks about the priorities of new budget, have suggested that the new budget should be realistic to resuscitate sluggish economy, while paying heed to the economic woes facing the people. Ambitious and distributary budget does not resolve the current economic crisis, according to them. Hundreds of thousands of youths are leaving the country in search of better job prospects abroad. This has deprived the country of getting benefit from the population dividend. In order to tap the potential of active and energetic youths, the government needs to introduce employment generation programmes, which also help build a self-reliant economy.
Similarly, it is also equally important to allocate budget for production and productivity to minimise the import and runaway inflation. The country's national savings and fixed capital formation is not strong. Fixed capital formation from both the government and private sector is likely to fall to 25 per cent of the GDP by the current fiscal year. It stood at around 33 per cent last year. The fixed capital includes the assets and capital investments, which are required to startup companies at the early stage. The government needs to adopt effective strategy to increase the spending of development budget so that basic infrastructures are built. The bureaucratic hassles should be overcome to bring in foreign direct investment. The budgetary intervention is necessary to give a new lease of life to the flagging economy.