Budget Of Rs. 1.75 Trillion Presented For Fiscal Year 2080/81 [2023-24]

May 30, 2023 | Investopaper

The government unveiled a budget of Rs 1.75 trillion on Monday, for the upcoming fiscal year 2080/81 [2023-24]. Compared to the budget of the current fiscal year, the budget size for the next fiscal year is 2.37 percent smaller.

A significant portion of the total budget, amounting to Rs. 1.14 trillion or 65.2 percent, has been allocated for recurrent expenditure, which covers regular expenses such as salaries and allowances. Likewise, Rs. 302 billion or 17.25 percent of the budget has been earmarked for capital spending, aimed at constructing projects and essential infrastructure. Furthermore, the government has set aside Rs. 307 billion, accounting for 17.55 percent of the total budget, for financing purposes.

The government has targeted a 6 percent growth rate for the next fiscal year and aims to maintain inflation below 6.5 percent.

The budget places significant emphasis on the agriculture sector, with a substantial allocation of Rs 30 billion for subsidizing chemical fertilizers.

Other notable points of budget, include a 39 percent tax on individuals with annual incomes above Rs 5 million, the construction of the Nijgadh international airport once the investment modality is determined, efforts to create a sustainable environment for the extraction and export of stones and aggregates, a feasibility study on cannabis farming for medicinal purposes, the upgrade of eight airports, the revival of the controversial Constituency Development Fund, facilitating the entry of Non-Resident Nepalis (NRNs) into the country’s capital markets, the addition of 900MW electricity to the national grid, the decision not to increase salaries of civil servants and old-age pensions, and a ban on the use of plastic as packaging material for tobacco products.

According to Finance Minister Dr. Prakash Sharan Mahat, the government plans to generate revenues of Rs. 1.24 trillion, receive Rs 49.94 billion in foreign grants, acquire Rs. 212 billion in external loans, and obtain Rs. 240 billion in internal loans.

Despite some positive aspects, economists argue that the budget fails to address the core issue of economic slowdown. The decline in tax revenues poses a significant challenge for policymakers during this fiscal year.

While some programs in agriculture and infrastructure have been praised, economists believe that the budget is expansionary and achieving the targeted inflation rate of 6.5 percent is a lofty goal.

Nevertheless, there is some encouragement for the private sector in the budget. The government plans to launch programs to promote domestic production, employment, and the concept of ‘Make in Nepal.’ However, the effectiveness of these measures in practice remains to be seen.