Assessing 2001-02 Budget

While presenting the budget proposal for the fiscal year 2001-02, the finance minister surprised everyone that the budget figure was less than Rs. 100 billion. And he seems to have managed to do so with much difficulty as the figure is only Rs. 208 million less than the wonder number. To achieve the feat in number-saving, the finance minister had to axe hundreds of on-going development projects. But most of the savings are diverted to regular expenditure to finance the bureaucracy. The government’s efforts to reduce the bureaucracy during the last one decade have all been futile, or even suicidal, as is evident from the finance minister’s acceptance that the bloating regular expenditures were largely due to forced early retirement of the civil servants who are to be paid pensions that total up to an astronomical sum.

Though the finance minister could not refrain this year from being ‘populist’, this time it was more focused populism. As one economist commented, this budget has kept in mind the coming local elections scheduled this year and allocated handsome budget for the local bodies, though there are enough revenue sources handed over to them already.

Despite such an anomalous situation developed, the business sector has in an opinion survey by New Business Age, welcomed the budget calling it ‘good’ overall.

And the reasons are obvious. The budget has proposed 1% additional levy on import duty and income tax for security expenses. Still, the business sector is happy that it is promised to be used for beefing up security - one major concern of the business community despite political climate developing to resolve Maoist insurgency. Similarly, the budget has promised to clear the duty drawback arrears by paying in government bonds and introduced a system to avoid a situation of similar arrears in the future.

The other most welcomed points in the budget are the promise to set up Export Processing Zone, to provide cheap export credit and 80% rebate on import duty for Pashmina wool and the promise for rehabilitation of sick units.

But doubts are expressed about whether the promises are really going to be implemented. The doubts are based mainly on the government’s past record of broken promises and also because the revenue targets set to finance the expenses are unrealistically high. Low budget for development expenditure would not be that bad if the money allocated is actually spent. But if the gap between the budgeted amount and actual expenditure is high, it is the genesis for doomsday. And that is exactly what has been happening year after year culminating into the current crisis, it can be argued.

1. How do you view the imposition of 1% additional as income tax and import duty to finance security expense?

2. How do you view the revenue targets?

3. How do you view the increased export duty on some items (soybean oil, vegetable ghee, plastic goods, copper oil)?

4. How do you see the arrangements announced for export promotion (EPZ, duty drawbacks, cheap credit, 80% import duty rebate on Pashmina wool etc.)?

5. How do you see the arrangement announced for the rehabilitation of the sick units ( duty rebate on m/c imports, cheap additional finance, facility on tax payment etc.) ?

6. How do you see the new arrangements for effective implementation of VAT (buyer to get partial refund etc.)?

7. How do you view the capital gain tax proposed to be imposed on trading of securities?

8. Do you agree with the finance minister’s view that budget 2000-2001 is business-friendly?

Business news | Legal side | I-Tech | Corporate | Cover Feature | HR Focus | Economy & Policy | Editorial | Personality | Showbiz | Interview | Last Word | Sectoral | Marketing | World Trends | Stock Taking | No Laugh | Poll | Tourism | Main | Past |

Send your feedback to the editor: bizline@mos.com.np 1999 © Mercantile Communications Pvt. Ltd. P.O. Box 876, Durbar Marg, Kathmandu, NEPAL. Tel : 977 1 220 773, 243 566 . Fax: 977 1 225 407. Reproduction in any form is prohibited without prior permission. No part of the articles which appear in the internet version on NEW BUSINESSAGE may be reproduced without the permission of Mercantile Communications Pvt. Ltd. For reprinting rights, please write to us.  Send us your feedback:contact us . This site is best viewed at : 800 X 600 resolution