The government has, through this budget, tried to address one of the enduring and worsening problems of our economy -- growing trade deficit. The trade deficit (the country’s exports minus imports) reached a record level of Rs 317.66 billion during the last fiscal year, which is 26.8 percent of the Gross Domestic Product. This is an unsustainable trend. Without a sustained remittance inflow there was no way we could afford this scale of deficit; however, there are growing indications that even remittance inflow is not going to cover the widening deficit for ever.
The budget´s announcement of about one billion rupees worth of export subsidy is unlikely to turn our trade deficit around, but it will definitely be of some help to the fledgling export sector. The budget has also tried to address the long standing security concerns of the industrial sector. The government has pledged to station five armed security personnel at every industrial establishment employing more than 500 people. The interest rate and insurance subsidy announced to promote the livestock industry is another welcome program in the budget. Nepal imported Rs 15 billion worth of meat and meat items during last fiscal year.
The budget has, however, proposed some ambitious infrastructure projects that may look good on paper but are difficult-- almost impossible-- to implement in practice. It vows to establish a Railway and Metro Department to steer the development of a mass transport system linking different parts of the country. Such a department, according to the budget, will work to gear up the development of an east-west and Kathmandu-Pokhara railway network, and also take initiative to develop underground train services in Kathmandu Valley.
The budget has raised allocations for infrastructure projects such as the Mid-hill Highway, Kathmandu-Tarai fast track road, Upper Tamakoshi hydropower and Sikta irrigation. We don´t have enough resources to complete, or even begin, some of these projects without foreign financing. And to expect foreign aid or foreign investments for the proposed projects would be unrealistic unless we first achieve a modicum of political stability in the country. But then, every budget comes with some unrealistic promises, and Finance Minister Surendra Pandey had an incentive not to make this one any different -- he won´t be there to implement them.
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