KATHMANDU, April 3: The process of distributing cash incentive for exporters has been affected due to budget crunch.
The government has allocated Rs 300 million for the purpose in this fiscal year. [break]
“The allocated amount has already been distributed,” Uday Raj Pandey, president of Garment Association of Nepal (GAN), said. “Fresh incentive claims have already topped Rs 150 million.”
At a time when government officials are talking about increasing incentive to boost exports, shortage of fund for the purpose has discouraged people involved in the export business.
Traders have demanded that the government allocate at least Rs 250 million for cash incentive in the full-fledged budget that the government is preparing for the current fiscal year.
“We have requested the government to put aside Rs 250 million keeping in view the fresh claims that may come in the remaining months of the current fiscal year,” added Pandey.
Finance Minister Shankar Koirala, who also looks after Commerce and Supplies portfolio, had told an interaction a few days ago that the government was mulling over increasing cash incentive to boost exports so as to tame ballooning trade deficit.
Data compiled by Trade and Export Promotion Center (TEPC) shows trade deficit increased by 28.5 percent to Rs 295.96 billion over the first seven months of the current fiscal year compared to the amount recorded in the same period of the last year.
Meanwhile, Pandey voiced objection to the proposal to reduce minimum incentive to one percent of the total export amount.
A high-level committee led by Deependra Bahadur Kshetri, vice-chairman of National Planning Commission (NPC), had recently proposed to the government to reduce minimum incentive to one percent of the total export amount.
Traders have been demanding cash incentive of at least 2 percent of total exports.
The government has been providing cash incentive to exporters making value addition of at least 30 percent.
Under the existing cash incentive scheme, exporters of goods having value addition of 30-50 percent are entitled to two percent cash incentive. Similarly, exporters of goods with value addition of 50-80 percent value addition get three percent cash incentive. Exporters of goods with over 80 percent value addition can claim cash incentive of four percent.
“The committee, in its draft guidelines, has proposed minimum cash incentive of one percent to exporters. But it has yet to be endorsed by the cabinet,” Finance Secretary Shanta Raj Subedi, who is also the member of the high-level committee, said. “The existing provision will be applicable until the new guideline is enforced.”
Nepal Rastra Bank Governor Dr Yuba Raj Khatiwada and Commerce Secretary Lal Mani Joshi were the other members of the committee.
Subedi accepted that fund crunch was affecting cash incentive distribution process. He, however, expressed commitment to arrange budget for the purpose if demand comes from the concerned agencies.
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