Sunday, July 1, 2012

Agriculture, infrastructure key priorities of budget

The government will bring new programmes to modernise and commercialise agriculture, coupled with an emphasis on infrastructure in the budget for fiscal year 2012-13.
"Agriculture and infrastructure will be key priorities in the budget that will also help boost the confidence of the private sector," said caretaker finance minister Barshaman Pun while addressing entrepreneurs here today.
The government is also serious about creating a business-and investment-friendly environment, he said, adding that the government is trying to forge political consensus to bring a full-fledged budget on time.
"A common minimum economic agenda could be key to political consensus," he added.
The political parties must forge a political consensus soon to bring a full-fledged budget through a common minimum economic agenda on time, said acting president of Confederation of Nepalese Industries (CNI) Narendra Basnyat.
Despite the political instability, policy stability could help attract investment in the country, he said, adding that the budget for next fiscal year should address politically motivated labour problems, security of investment, and effective implementation of policies.
The trend of the budget in the last four years seems to be more distributive than productive, said Basnyat.
"The government's inability to spend capital budget and over spending of recurrent budget apart from rising non-budgetary expenses is not good for the economy," he said, adding that the ballooning trade deficit and over dependency on imports that has fuelled revenue is also not a good sign.
The government must ensure smooth supply of diesel — in absence of regular electricity supply — and a separate feeder for an industry with over 50 employees operating outside the industrial zone could help promote domestic industries, the entrepreneurs said, asking the government to come clear on whether to promote domestic industries or trading.
"The current tax structure is promoting trading and destroying domestic industries," they blamed, asking the Finance Ministry to ensure a level playing field for domestic industries, if the government is in support of entrepreneurship and creating employment in the country.
"The budget should reduce corporate tax and cost of production to generate employment in the country and to make domestic products competitive," the entrepreneurs urged, blaming the government for being more focused on revenue and promoting imports, which is not good for the economy in the long run.
However, finance secretary Krishna Hari Baskota defended that the government is not revenue-centric. "The tax to Gross Domestic Product (GDP) ratio is still only around 15 per cent," he said, adding that the government has to either borrow domestically or depend on foreign aid to even meet the recurrent expenditure that are regular administrative expenses and salaries.
Of the total budget of Rs 384.90 billion for the current fiscal year, the revenue target stands at Rs 242 billion. Similarly, it has earmarked Rs 266 billion under recurrent expenditure meaning there is still a shortfall of Rs 24 billion for regular expenses and to pay salaries to government employees.
"The government must be able to meet its recurrent expenditure from its own resources — that is revenue — to make a country sovereign and independent," Baskota explained.

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