Finance Minister Dr Ram Saran Mahat Thursday presented the interim government’s budget estimate of 168.99 billion rupees for the Fiscal Year 2007/08.
Presenting the budget estimate in the legislature parliament, Dr Mahat said free and fair election to constituent assembly election, peace and security, poverty alleviation and infrastructure development would be given top priority in the new Fiscal Year.
Of the total budget, Rs. 93.74 billion has been earmarked for general expenditure and Rs 75.25 billion for development programmes.
The government aims to manage Rs 99.60 billion from current source of revenue, Rs 27.47 billion from foreign grants, and around Rs 17.37 billion from foreign loan. The estimated budget deficit this year will be around Rs 24.56 billion.
The budget is higher by 17.4 percent as compared to total allocation of Fiscal Year 2006/07 and 28.2 higher than the revised estimate of the same period.
The government has earmarked Rs 3.5 billion for the constituent assembly election, pledging additional support from the Peace Trust Fund. With security being of of the priorities, the government has allocated Rs 9.59 billion for the police and Rs 10.89 billion for the army.
Mahat’s budget speech comes as another setback for the royal palace as it scrapped all the allowances given to King Gyanendra and his family. The budget statement made no mention of any allowance to the palace, but vowed to implement the decision of the government to nationalise the properties of the royal palace and utilise the properties of late King Birendra and his family on a time-bound basis.
The budget announced 27 percent salary hike for government employees including 10 percent allowance provided last year. Retired civil servants above 75 years will get additional 10 percent raise in their pension.
The Rs 1 million annual grant to VDCs has been given continuity in the new Fiscal Year.
The income tax ceiling for the individual has been fixed at Rs 125 thousand from the earlier ceiling of Rs 115 thousand and Rs 1.40 lakhs for couples from Rs 1.25 lakh.
The government has allocated 28.39 billion for the education sector and Rs 12.18 billion for the health sector.
Mahat said the education budget would cover appointment of 12,000 schoolteachers, scholarships for girls and students form backward communities. Mainstreaming of the education provided in Madarsas and Buddhist Gompas and establishment of two agriculture and forestry universities in Chitwan’s Rampur will also be given priority.
The Local Development Ministry has received substantial amount of budget (Rs 13.8 billion) for the Fiscal Year 2007/08.
For the Peace Trust Fund the government has set aside Rs 1 billion, part of which will be spend on management of the Maoist army. Mahat said the government hoped for contribution from the international donors to the Fund.
Similarly, Rs 9.34 billion has been allocated for development of road connectivity across the country while Rs 2.13 billion will be spent on expansion of communication services. Minimum two telephone lines will be installed in each of the 1700 VDCs that remain out of communication network.
The government has allocated Rs 5.82 billion for the agriculture sector (47.3 percent increase from last year’s allocation) and additional Rs 3.99 billion for irrigation projects. Rs 7.65 billion will be spent for hydropower development.
Likewise, Rs 1.71 has been earmarked for Poverty Alleviation Fund, to be spent chiefly on income generation projects in rural areas. Dr Mahat claimed that women would have direct involvement in development and economic projects worth Rs 19.9 billion in the new Fiscal Year.
Stressing on security to the industrial sector, the Finance Minister pledged to introduce laws banning blockage of highways. He also said strict laws would be introduced to end syndicate system in service-oriented businesses. The government will provide sops to small industries, export-oriented ventures and non-resident Nepalis (NRN) investment, he further said.
The budget has also announced relief scheme for internally displaced people. Rs 1.8 billion has been set aside for the reconstruction of infrastructures destroyed during the conflict.
The Finance Minister said that lack of visible improvement in the law and order situation and investment climate, and also due to the adverse weather, the production of major crops has declined resulting in the estimated GDP growth rate of only 2.5 percent at actual producers' prices. The consumer price rise is expected to stand at 6.6 percent compared to the 8 percent of the
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