Thrust Of Budget

The government is going to unveil the budget for the upcoming fiscal year 2024/25 within less than a week in line with policy and programmes that it had already presented in the House of Representatives (HoR). The Ministry of Finance is busy outlining the incomes and expenditures of the outlay whose effective implementation remains a challenge owing to several factors. There has been a tendency to bring out ambitious budget that apparently undermines fiscal principles and discipline. The inclination to appease various political constituencies meets financial and institutional difficulties on the ground. The ministry is under pressure to allocate greater amount of budget for those who call the tune. When there is a gap between the revenues and spending, it delays in the allocation of budget for the development projects. Moreover, as the country’s economy has not yet gained full recovery, realising all budgetary goals is fraught with unintended obstacles.  

The budget should be result-oriented. For this, its size should be estimated as per resources, implementation capacity and volume of national economy. If it is prepared according to the demands of ministries and other state agencies, it becomes bloated and unrealistic. For many years, there has been low capital. This is a reason why the successive governments have been impelled to reduce the budget size during the mid-term review. For example, the Ministry of Finance brought down the volume of current fiscal year's budget by about Rs. 221 billion to Rs. 1,530.26 billion from Rs. 1,751.31 billion. The National Planning Commission (NPC) has set the budget ceiling at Rs. 1,800 billion for the fiscal year 2024/25. However, some economists with whom this daily talked have suggested that its size should not exceed Rs. 1,700 billion as the big size budget is difficult to implement and likely to increase recurrent expenditure and inflation. 

As Nepal is poised to upgrade to the developing country status, the budget's size can be larger than that fixed by the NPC but this requires that the capital expenditure should match the targets and the international support in form of grants, loans and aid be guaranteed. There is unanimity that the new budget should focus on giving a fillip to the economy, boosting the confidence of the private sector and increasing production. The trust of financial system has been greatly dented with rising cases of abuse and fraud of cooperatives funds. The microfinance sector has also plunged into crisis after depositors failed to get the return of their investment. So this sector's confidence must be restored as it has absorbed billions of rupees. The external sector economy has shown signs of improvement but the domestic one is sluggish. The areas such as agriculture, tourism and hydropower have potentials to transform the economy.

The production-based incentives are essential to increase agro productions. Once the country becomes self-reliant in agriculture, the country will be able to ensure food security and save billions of rupees spent on importing agro items. Meanwhile, Prime Minister Pushpa Kamal Dahal Prachanda has assured that the equalisation grant to the province and local governments would not be cut in the upcoming budget. Talking to the delegations of the Municipality Association of Nepal and National Association of Rural Municipalities of Nepal Tuesday, PM Prachanda said that the equalisation grant is the constitutional right of the province and local governments. However, provinces and local units should prudently utilise the equalisation grant so as to contribute to the national economy through industrial activities and job creation at the local level.