Govt has adopted agro-friendly tax policies: FM Pun

By A Staff Reporter,Kathmandu, July 6: Finance Minister Barsha Man Pun has said that the government has adopted agriculture-friendly tax policies so that agriculture could contribute more to the country’s economy. 

Speaking at a conference on “Transforming Nepal’s Agriculture" organised by the Nepal-China Friendship Forum on Friday, Minister Pun said that without the development of the primary sector, the country's economic condition could not be improved solely through the service sector.

He said that the upcoming year's budget aims to protect agricultural production through policy measures and tax policies.

He said, “Agriculture contributes only around 24 per cent to the country's Gross Domestic Product (GDP), yet over 60 per cent of the population is engaged in agriculture. The contribution of the service sector to the economy has increased. Instead of moving from agriculture to industrialisation, our labour force has directly moved to the service sector. The economic structure should be developed in such a way that it transitions from agriculture to industrialisation.”

Minister Pun further said that Nepal has the potential to benefit by expanding access to the markets of two large neighbouring countries, making it necessary to increase internal production. 

“Given that we are landlocked and geographically challenging, investment in food security and workforce production is essential. The fact that we are currently importing agricultural products worth around Rs. 300 billion indicates the potential for increasing production in this sector and finding markets. We can also benefit from the markets of our two large neighbouring countries,” he said.

If investments are focused on competitive products like tea, coffee, cardamom, and ginger, production could be increased and Nepal could compete in the global market, he said.

Highlighting the government's declaration of the Agricultural Investment Decade through the budget for the upcoming fiscal year 2024/25, Minister Pun said, "Not just the current government, but previous and future governments must prioritise increasing agricultural production. Despite changes in government, we aim to achieve results through policy stability.”

Former Secretary of Agriculture, Ganesh Joshi, said that although the government claims to prioritise the agricultural sector, only a minimal portion of the budget is allocated to it. 

“Only about 3 to 4 per cent of the total annual budget allocated by the government is earmarked for the agricultural sector. Of the total budget allocated for agriculture, 90 per cent goes to current expenses and only 10 per cent to capital expenditures. Even local governments do not prioritise agriculture when allocating budgets,” Joshi said.

Agricultural economist Pradyumna Raj Pandey pointed out that apart from the subsidy allocated for chemical fertilisers, very little of the budget goes to the Ministry of Agriculture. 

“If the subsidy for chemical fertilisers is sent directly from the Ministry of Finance to the Agricultural Inputs Company Limited and Salt Trading Corporation, the actual size of the Ministry of Agriculture's budget becomes evident,” he added.

Dr. Kalyanraj Sharma, chairman of the Nepal-China Friendship Forum, said that low investment in the agricultural sector has hindered production growth. He stressed the need for the government to address the declining interest in agriculture among the youth and the challenges in marketing the produced goods.