Nepali Budget Mania!

A lot of things have already been printed, discussed and elaborated about the recently announced Nepali Budget for the upcoming fiscal year. This piece of article will not talk every details of the Budget, but some major portions of the budget that have direct relations to the investment of the general public. To start with, the first encouraging thing would be that the budget has come very close to the declaration of Policies and Programs of Nepal. This will lit-up some hope about the long-awaited coordination in the national programs. And, the practically accepted fact would be that Nepal has not targeted over-ambitious growth rate.

Poverty and Inflation are two major dimensions I would like to focus first. Nepali documents proudly show that the poverty rate has been decreased from almost 49 percent during 8^th plan period to 23.8 percent currently but many times, the average figures are ambiguous. Many times average values make worst things look good, in the same way, a very distinct example is that the rich-poor gap has increased tremendously in the same period, it is almost 43 percent in far-western region. Coming to inflation, the government has a plan to control inflation to around 9% which is again not possible without controlling food price inflation which is officially around 11%, but to everybody’s knowledge it crosses 15%. I understand that increasing the size of tax bracket enhance people’s income but in a way, it also says that sorry, food inflation can’t be controlled so you can pay higher now with increased tax-brackets. The condition would rather be better if the government could develop a provision in the staffs to make a quota-driven mandation in financial investments which could at least secure the future of the public.

Like in earlier budgets, the stock market has been the focus. Though government is unable to assure the social security benefits to the public, it could at least provide alternatives for the investment. With the regime of Nepali Congress came the inflow of continuity of Economic Reform, the strategy is good but the only concern would be that institutional investors have been encouraged with tax subsidies, interest subsidies but government is yet to assure the investment alternatives for the individual investors. Established but not being able to flourish well, the mutual funds, sector has also not been able to attract attention of government.

Carteling and Syndicates have not been addressed strictly which has traumatized the general livelihood in people. The recent example would be of the farmers throwing their tomatoes on streets rather than selling to people. Over 30 public enterprises which were adding financial burden to country of about Rs. 28 billion made profit, because exchange rate came down. Agricultural Research has been mentioned but institutional commodification of agricultural products has yet not been prioritized.

Note: This article was published in Perspectives of The Himalayan Times on 20 July, 2014.