Govt to propose 290b budget, revenue targeted at 175b

KATHMANDU, July 12: The CPN-UML led government is likely to propose expenditure of around Rs 290 billion for the upcoming fiscal year of 2009/10, with a vow to propel the Gross Domestic Product (GDP) to above the Rs 1,000 billion mark. The growth rate target has been set at 5.5 percent for the fiscal year. [break]

Budget aims to

* Raise volume of GDP beyond Rs 1,000 billion

* Earmarks highest Rs 50 billion for education

* Reintroduce subsidy to agriculture

* Hike salary by 15 percent

According to the information gleaned by myrepublica.com from various sources, the budget has aimed to add at least Rs 60 billion worth of national output in coming fiscal year on the top of total volume of GDP expected to reach Rs 940 billion this year on market price. The budget is also aiming to lower the inflation to 7.5 percent next year from this year´s expected rate of over 12 percent.

In the expenditure front, highest slice of budget, as usual, will go for financing recurrent expenditures. The coalition government is likely to earmark around Rs 165 billion for recurrent headings. One third of amount will go for paying hiked salaries and pensions - expected to be 15 percent - for around 450,000 incumbent employees and 150,000 pensioners, said a source. Likewise, proposed reintroduction of subsidies in agriculture, mainly for fertilizer and small irrigation, which is estimated to cost three billion rupees has also fueled the expenditures, added the source.

Similarly, capital expenditure that mainly finances development activities is likely to hover around Rs 106 billion. Apart from ongoing mega projects, mainly Melamchi Drinking Water Project, large chunk of the budget will to used in financing four core projects of national pride that includes 86-Km Kathmandu-Hetauda Fast Track and 122-MW Upper Seti Hydropower projects, among others.

Among sources, revenue is expected to contribute Rs 175 billion, over 24 percent increment compared to current year´s mobilization. Likewise, the budget aims to mobilize Rs 80 billion worth of foreign aid and loans and around Rs 35 billion through internal borrowing.

In short, the budget continue its populist outlook, ambitious in some front like raising revenue mobilization by another 25 percent following this year´s spectacular 31 percent growth and but it will have renewed focus on raising youth employment through enhanced development activities, said a source.

Sector wise, education will continued to be a largest absorber of the fiscal budget for next year, followed by local development and infrastructure development. The budget has allocated around 50 billion for the education sector and of the allocation, 95 percent will go for recurrent expenditure, like paying perks and benefits for around 150,000 teachers.

Likewise, ministry of local development will get around Rs 36 billion, of which over 23 billion will be earmarked for development activities at the local level. Apart from increased investments for rural development activities to generate employment, more than 50 percent increment in the central grant to District Development Committees mainly to compensate the loss of revenue after annul of scrap tax is one of the reasons for nearly 45 percent increment in the budget for Ministry of Local Development, said a source.

Similarly, Ministry of Physical Planning, which is the key ministry that handles mega development projects, likely to get around Rs 27 billion while Ministry of Health and Ministry of Defense will get around Rs 18 billion and Rs 16 billion respectively.