KATHMANDU, June 8: Minister for Finance Yuba Raj Khatiwada has defended his first budget for the upcoming Fiscal Year 2018/19, saying that the budget was a course correction by the government.
Speaking at a post-budget interaction organized by Confederation of Nepalese Industries (CNI) and Society of Economic Journalists- Nepal (SEJON) in Kathmandu on Thursday, Finance Minister Khatiwada also claimed that the budget is an entry point to 'prosperity'.
“Our economy is largely based on imports, consumption fuelled by remittances and revenue supported by the import. Now, with the stable government in place, we will embark on course correction,” Khatiwada said, adding: “This budget is an entry point for the country's economic prosperity.”
Amid dissatisfaction among business leaders that the budget speech has not adequately addressed various concerns of the private sector, he said that the government was ready to move ahead in partnership with the private sector.
Citing various provisions in the budget to promote private sector investment, he said that the government has announced to open industrial zone in each province and at least one industrial village in each local unit in collaboration with the private sector.
The finance minister also defended the economic growth target of 8 percent, stating that capital spending, as announced in the central government budget, and spending by provincial governments and local units would result into total capital expenditure of Rs 650 billion.
“The growth target is attainable. This growth will create 400,000 jobs while other programs announced in the budget will add some thousands more,” said Khatiwada.
According to Khatiwada, the government is rolling out its time-table for budget implementation in a couple of days. “The Prime Minister is giving instruction to government agencies on Friday for proper implementation of budget. There will be a time-bound plan for budget execution of the budget,” he said, adding: “We cannot afford to dilly-dally on budget execution.”
While lauding the budget speech which has given place to some demands of private sector, business leaders said that many policy issues are yet to be addressed.
“We could not feel that that there were policies and resources for promotion of industries as we had expected,” CNI President Haribhakta Sharma said in the interaction. “Industrial Enterprises Act offers various facilities for industries and enterprises. But, we are yet to receive many such facilities due to lack of policies and working procedures.”
He also demanded needful revision of old laws and regulations that have become barriers for the private sector in doing businesses.
“There are many laws and regulations that need to be either changed or amended. Some of them should be scrapped,” he added.
Also speaking at the interaction, business leaders from various sectors expressed dissatisfaction over the announcement to impose new tax and raise tax rates.
Internet service providers rued the government decision to impose 13 percent value added tax (VAT) on Internet service. “There were already different taxes and service charges on Internet service. We were taken aback by the decision to impose VAT on Internet service,” Bijay Jalan of World Link Communications said in the interaction. “It's going to increase cost of Internet which has become an essential service.”
However, the budget has elated some industries and businesses like pashmina industry by increasing cash incentive on exports. The government has increased cash incentive for export industries to 5 percent from existing 2 percent.