The amount of Rs 200,000 pledged for each household losing their hones in the earthquake is not included in the budget for reconstruction.
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Finance Minister Ram Sharan Mahat will table the budget for the next fiscal year in parliament Tuesday, and the focus will be on reconstruction. Emphasis will also be given to local elections. Holding local elections will be a priority for the budget as elected local governments have been taken as a pre-condition for proper implementation of reconstruction projects.
Following the earthquakes in April and May, the government had revised its budget plan, adding Rs 106 billion for reconstruction and raising the budget ceiling to Rs 841 billion. Officials say the total budget for next fiscal year will be between Rs 820 billion and 825 billion.
The budget will have sector-wise projects in the earthquake-affected districts but there will not be any new projects in districts other than the quake-hit ones. There will be needed budget allocations for all the natioanl pride projects and priority projects.
Some projects for quake-hit districts have been worked out by the ministries concerned and are to be announced in the budget, but major projects will be devised later by the National Reconstruction Authority, a special authority for quake reconstruction.
Officials at the Ministry of Finance say that there won't be any major changes in taxation as the government itself is still unaware of the effects of the earthquake on different sectors. The damage and losses caused by earthquake were assessed at Rs 701 billion, and the needs assessment for rebuilding has been put at Rs 670 billion.
The government has received pledges from international agencies and bilateral and multilateral donors amounting to Rs 440 billion. The government's major source of funds is revenue and this is projected to see a shortfall of 8 percent from the target of Rs 422 billion.
Officials say that the revenue target for next year will be about Rs 480 billion, with a target of at least 20 percent increment over last year's target. It is also learnt that the government will not effect any major changes in taxation, except for some nominal reconstruction tax on incomes and corporate earnings for two fiscal years. Officials say that there will be some relaxation in tax rates on the production of reconstruction materials. The room for internal burrowing will be around Rs 60 billion, or three percent of total GDP, which is the norm. The remaining amount is to be met by mobilizing foreign assistance.
