Budget analysis: Informal businesses, workers pose a challenge to economic revival

Kathmandu, May 30

The country has about a million business establishments, but only half of them are registered in any of the government agencies at the federal or local level. Agriculture engages about 60 per cent of population and almost all of them are informal workers.

About 401,236 micro, cottage and small enterprises were registered by mid-March 2020 which created 2.88 million jobs. If it is compared against the Central Bureau of Statistics’ Economic Survey 2018, approximately 2.88 million people are working in the informal sector.

These are the sectors that need most the government support during the hard times like the coronavirus pandemic, but they are missing from most of the government documents like the Economic Survey as well as the budgetary programmes and relief operations.

If there is one critical sector the budget of the coming Fiscal Year 2020/21 misses, it is supporting and formalising the informal businesses.

Informally run businesses do not pay the taxes, jobs in these enterprise are not safe, secure and are vulnerable. Both the enterprises and employees do not pay the taxes which rationalises the government indifference to these businesses.

The government is not obliged to save them since it does not recognise them, but they are critically important in terms of employment generation and mobilising the local economy. The government, including the sub-national ones, and the private sector organisations like the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Federation of Nepalese Cottage and Small Industry (FNCSI) seem unaware about this situation.

The FNCSI alone has the membership of about 35,000 enterprises. In a talk with The Rising Nepal recently, its Vice-president Anjana Tamrakar said that the cottage, small and medium scale enterprises (CSMEs) needed separate and special attention of the government and development partners.

Vice-president of the FNCCI, Shekhar Golchha, has been vocal in taking up the issues of the CSMEs. He has asked the government to formulate an effective programme to rescue and support them.

The government-announced relief package for the businesses will support a small number of formal enterprises since most of the options to have the facility are in the form of refinancing, interest rate subsidy and concessional loan.

For example, only about 5 per cent of the women entrepreneurs have obtained the bank loan, according to the Federation of Women Entrepreneurs’ Association of Nepal (FWEAN). According to the Economic Census, as many as 247,880 enterprises (29.8 per cent) are owned and run by women. It means only 12,000 enterprises run by women will be eligible for the government relief and support.

The Economic Survey of the current fiscal year 2019/20 maintains that the country has 41 per cent employments in the informal sector while about 40 per cent have partial participation in employment.

Finance Minister Dr Yuba Raj Khatiwada has not presented concrete programmes to address the informal sector business and jobs in the budget for the next fiscal.

“We aim to create 500,000 additional jobs next year,” he said in an interaction with the media on Friday afternoon while rough estimates predict that about 2 million to 2.5 million youths would be forced out of job due to the coronavirus pandemic and measures put into effect to save lives from the crisis.

Apart from the private sector businesses, government runs Prime Minister Employment Programme, poverty alleviation, youth self-employment and education-based loan programmes. But the statistics of the current fiscal year does not promise inspiring future – the PMEP employed about 188,000 people but with only 12.4 days of average employment while the education loan was mobilised to only 404 individuals.

Meanwhile, government-run poverty reduction programmes have largely failed due to poor execution and high rate of corruption.

Experts said in pre- and post-budget interactions that the government must consolidate the employment and poverty alleviation budget scattered over various programmes and use a single-door policy to dole out the funds and expertise. Current modality of mobilising the funds for self-employment has high rate of misuse so far.

It is discouraging that the topic of informal business and their plight does not get space in the discussion of the experts, including the former finance ministers Dr Ram Sharan Mahat, Surendra Pandey and Dr Baburam Bhattarai, who also had been the prime minister briefly, and economists.

In the post-budget discussions, they expressed happiness over the financial support to the formal businesses but forgot mentioning the ‘missing half’.

Published in The Rising Nepal daily on 31 May 2020. 

Enough options for relief to business: Dr. Khatiwada

Kathmandu, May 29 

Finance Minister Dr. Yuba Raj Khatiwada has said that the government would mobilise about Rs. 60 billion in relief being offered to the business and industries.

"The relief will be provided in the forms of cash, subsidy, tax and fine discounts and concessional loans and the cumulative amount would reach Rs. 60 billion," he said in the post-budget interaction with journalists at the Ministry of Finance Friday afternoon.

According to him, the refinancing facility to the businesses amounts to Rs. 20 billion and the government has to mobilise Rs. 14 billion to subsidise the interest of the business loans. The budget for the coming fiscal year 2020/21 has announced to provide business loan at 5 per cent, and the rest of the interest, about 6-7 per cent, will be paid to the banks and financial institutions by the government.

The Finance Minister said that the tax discount would benefit the business community with Rs. 6.5 billion. Likewise, demand charges on electricity for industries are waived off and water supply and irrigation facilities would get the energy at 50 per cent discount in the normal charges. The energy bill is also discounted for the individual households as well.

"The government will pay the social security of the private sector workers for the lockdown period," said Dr. Khatiwada. We have to mobilise large investments to achieve high growth, private sector investment is key to it, he added.

He said the budget was labour-centred and aims to create jobs, provide social security and relief to the workers.

"We aim to create about 500,000 additional employments in various sectors like business, industries, infrastructure and self-employment. Opportunity of jobs in Nepal should be given to Nepali citizens," he said. "It is also critical as the country is going to have a large number of migrant youths who immediately need jobs."

The Prime Minister Employment Programme has received about Rs. 14 billion which is expected to create more than 200,000 employment. FM Dr. Khatiwada also expressed intention to collaborate with the private sector in developing skills of youth so that they would have better opportunities.

"Employment is another priority sector. A large number of people have lost their jobs and at the same time migrant Nepali workers will return from foreign land. There is a need to create at least a million job," he said.

He maintained that the budget included cautious moves and immediate programmes to address the economic bruises as well as social and business needs.

According to him, the budget aimed at creating competing economy and sustainable development and mobilising large amount in the social sectors like health, education, labour and welfare of senior citizens and children.

Budget to health and agriculture has gone up significantly for the next fiscal year.

Dr. Khatiwada praised the local bodies' roles during the coronavirus. "Local bodies' work during the coronavirus crisis is highly appreciable. They need more resources to strengthen their governance. Therefore, I have not cut down their share in the budget," he stated.

He expressed confidence at managing the foreign loan and grants as stated in the budget. "About Rs. 125 billion is available as the budgetary support while multilateral donors have pledged to provide more support. Meanwhile, some bilateral donors also have shown interest in supporting the small and medium enterprises and agriculture."

Regarding the increased customs duty of electric vehicles, he said that there was a trend of importing expensive and luxury vehicles which was against the government intention to discourage the luxury goods. "Extremely low duties will ultimately result in the import of a large number of expensive vehicles which will fail the government policy to discourage the import of luxury vehicles," he said.

Published in The Rising Nepal daily on 30 May 2020. 

FM Khatiwada unveils Rs 1.47 trillion budget for FY 2020/21

Kathmandu, May 28

Finance Minister Dr Yuba Raj Khatiwada has announced Rs 1.47 trillion budget for the next Fiscal Year 2020/21 with a focus to creating robust health infrastructure, reviving the business affected by the coronavirus pandemic, creating jobs and maintaining social security. 

The budget has also given priority to the expansion of quality health service and creating health infrastructure, rehabilitation of the production and supply chain disturbed due to the measures put in to check the spread of the coronavirus, creation of jobs and food security, completion of delayed infrastructure projects, expansion of information technology and strengthening of good governance.

This is first time in the recent history that the country has witnessed a budget that is smaller than the budget of the previous year. Dr Khatiwada had unveiled the budget of Rs 1.53 trillion for the current fiscal with an aim of completing the reconstruction work and back-log projects, the two targets which couldn't be achieved.

Next FY's budget is 3.81 per cent smaller than that of the current fiscal.

Capital budget reduced

Almost two-thirds of the budget, Rs 948.94 billion or 64.4 per cent, is earmarked for the recurrent expenditure. Likewise, Rs 352.91 billion is allocated for capital expenditure and Rs 172.79 billion will go to financial management. The capital and financial management has the share of 23.9 per cent and 11.7 per cent respectively.

The recurrent budget has gone up from 62.4 per cent and capital budget come down from 26.6 per cent.

Likewise, the resources for the expenditures will be managed primarily through the revenue and domestic and foreign loans.

"Rs 889.62 billion will be raised through revenue and Rs 60.52 billion from foreign grant. The remaining deficit of Rs 524.5 billion will be arranged through loans," Dr Khatiwada said while presenting the budget at the joint session of the Federal Parliament.

The size of foreign and domestic loan will be Rs 299.5 billion and 225 billion respectively.

The Finance Minister has maintained that the budget is a creation that aimed at treating the multiple bruises caused by the coronavirus pandemic.

Infrastructure like railway, bridges and roads, irrigation and hydroelectricity, airports, flyovers and tunnels, programmes like Digital Nepal Framework, urban development, digital education, broadband internet to all and insurance to all are included in the budget which are announced amidst a global health crisis and economic breakdown caused by the execution of lockdown and travel restrictions to save human lives.

Dr Khatiwada also said at the parliament that the national aspirations of leading the country on the path of development and prosperity propelled by two years' achievement and high economic growth were shattered due to the coronavirus outbreak.

He said that he had felt the responsibility of saving the lives and giving impetus to the economy, which obviously are the contradictory aims given the poor health infrastructure and human resources in the country.

 

7% growth target

Despite the bleak economic environment, FM Dr Khatiwada has set the GDP growth target of 7 per cent for the coming fiscal year.

His hopes are based on the projects that could be completed within a year and yield immediate economic benefits, expectations that the delayed and sick projects would be expedited, post-quake reconstruction would be completed and the service would be expanded.

"Although it is difficult to gauge the impact of the COVID-19 now, I hope that the economy will catch its rhythm after the situation becomes normal. Therefore, I hope that the country will embark on the path of growth of last three year's average of 7 per cent," said Dr Khatiwada.

Inflation target has also gone up to 7 per cent against this year's 6 per cent.

 

Budget to local bodies

States and local bodies will get Rs 55.19 billion and Rs 90.5 billion respectively under the equilisation grant and Rs 36.35 billion and Rs 161.8 billion respectively for conditional grant from the federal government.

About Rs.122.14 billon revenue will be distributed to the states and local bodies based on their area, demographic, human development and low-development indicators.

Likewise, Rs 9.96 billion is allocated for the matching grant to fund the projects executed by the sub-national governments. Rs 9.97 is allocated for special grant.

 

Only 70% budget to be used

Due to the crisis created by the coronavirus, only 70 per cent budget of the current fiscal year is likely to be utilised.

Saying that the pandemic had affected both income and capital expenditure, FM Dr Khatiwada has revised the budget of the current fiscal which puts the actual budget at Rs 1073.35 billion.

Of the total allocation, recurrent expenditure will be 73.3 per cent and capital expenditure will touch 58.6 per cent.

Similarly, revenue mobilisation will be 74.4 per cent, Rs 827 billion of the target of Rs 981.13 billion, foreign grant will be reduced to Rs 32 billion from Rs 58 billion, foreign loans to Rs 121 billion from Rs 298.83 billion and domestic borrowing will be Rs 193 billion against Rs 195 billion target.

 

Budget in Numbers

Budget: Rs. 1,474.64 billion

Expenditures

Recurrent: Rs. 948.94 billion (64.4%)

Capital: Rs. 352.91 billion (23.9%)

Financial Management: Rs. 172.79 billion (11.7%)

Income

Revenue: Rs. 889.62 billion

Foreign Grant: Rs. 60.52 billion

Foreign Loan: Rs. 299.5 billion

Domestic Borrowing: Rs. 225 billion

Published in The Rising Nepal daily on 29 May 2020. 

COVID-19 likely to cause a loss of 168 billion: NRB

Kathmandu, May 27

The Nepal Rastra Bank (NRB) has estimated that the COVID-19 pandemic would have Rs. 168 billion damage to the economy in the current fiscal year 2019/20.

"The NRB has estimated 7 per cent growth for this year but due to coronavirus outbreak, the Central Bureau of Statistics has projected 2.28 per cent growth. It means the country will witness Rs. 168 billion loss," said the central bank in its third quarterly review of the Monetary Policy of FY 2019/20.

While the country was expecting to continue with the high growth trajectory as it achieved in the last three years, the recent health crisis has posed challenges to the management of economy.

"Commodity, labour and financial markets might lose their balance due to the recession in economic activities, shocks in the foreign employment and uneasiness in the supply chain," said the NRB.

Although the monetary expansion was within the expected limit till the end of the third quarter and external sector looked normal, the uncertainty in production and supply management is exerting pressure on food price inflation while there will be pressure on external sector as the major labour markets were badly affected by the pandemic.

The central bank said that the ratio of consumption against the Gross Domestic Product (GDP) would be increased and the former was likely to go up to 81.9 from last years 81 per cent. Likewise, the ratio of national savings and GDP will go down to 46 per cent this year from last year's 48.9 per cent.

Likewise, inflation would cross the earlier projections of 6 per cent as the average inflation rate for the three quarters is 6.5 on an average.

Export trade has increased by 129 per cent and import went down by 7.5 per cent in the review period which narrowed the gap of trade deficit by 8.9 per cent.

The country has foreign reserves enough to cover the import of goods and services for 9.5 months against the monetary policy's target of 7 months.

 Similarly, current account is in Rs. 135.54 billion deficit and balance of payment is in Rs. 36.6 billion surplus. "Increment in export and foreign direct investment, and mobilisation of external loan have contributed in BoP surplus," read the review report.

Published in The Rising Nepal daily on 28 May 2020. 

Jobs should be a top priority in the budget

Kathmandu, May 25

The current time has been turbulent for everyone with the mounting cases of coronavirus in the country. Businesses and industries are closed, people’s movements paused, workers have lost their jobs and are forced to stay home, and most development works have been stalled indefinitely.

Meanwhile, contractors say the public construction work cannot be resumed before November this year and business leaders have stressed on an economic stimulus equal to 5 per cent of the Gross Domestic Product (GDP).

The economy is severely hit by the coronavirus pandemic when the development work was gaining momentum with the completion of first half of the Fiscal Year 2019/2020 and the government has managed to collect only Rs 612.83 billion revenue of targeted Rs 1112.03 billion while only Rs 667.75 billion is spent against the target of Rs 1532.9 billion by May 24, with merely one-and-a-half months of the year remaining. The economic growth target is lowered to 2.28 per cent from the earlier projection of 8.5 per cent.

Finance Minister Dr Yuba Raj Khatiwada is presenting the budget on Thursday at the Federal Parliament amidst these uncertainties and coronavirus pandemic inflating the crisis in future. He has a challenge to allocate the scanty resources to traditional development sectors and necessities created by the pandemic that need an immediate address or overhaul.

The first challenge Dr Khatiwada has to face is the revival of the economy through the rehabilitation of business and restoration as well as creation of jobs. Months-long lockdown has severed about 2.5 million people from their jobs in and out of the country.

The country that is reeling from years of resource constraints cannot go on with relief distribution for long, so it must focus on reviving the business activities and creating jobs. When people get jobs, government's burden for relief distribution will automatically be reduced.

Private sector organisations – Federation of Nepalese Chambers of Commerce and Industry, Confederation of Nepalese Industries, Nepal Chamber of Commerce and various commodity and sectoral associations – have, for weeks, been urging the government to facilitate them in resuming the industries and businesses.

Although the Cabinet had decided to allow the industry to open, lack of policy guideline in reviving the supply chain, import of raw materials, financial arrangement and lockdown in India has discouraged the entrepreneurs. Only about a quarter of industries, primarily those dealing in food, medicine and other essential items, are in operation but just about 40 per cent of their capacity.

Despite experiencing decades of neglect, agriculture is the primary sector that can accommodate a large number of workers and businesses. The main opposition party Nepali Congress in its budget recommendations to the government has suggested promoting agriculture and tourism for job creation and providing at least 100-day employment to the people who lost their jobs. An individual can earn Rs 51,700 from that job.

Former Finance Minister Dr Ram Sharan Mahat said that local infrastructure development programmes can employ about 700,000 people. Better economic cooperation between the federal and local governments can help in effective mobilisation of resources and execution of works that can generate employment.

Likewise, bringing the cottage, small and medium scale industries into operation is critical to the economy as this sector employs the largest number of people after agriculture. "The government should provide concessional loan to the youth, including the foreign-returnees, on the basis of skills they possess. Foreign Employment Welfare Fund should be mobilised in this programme," said the NC.

But the government should first have a database of the skilled, semi-skilled and unskilled youth, and foreign-returnee workers. Finance Committee of the Federal Parliament has suggested establishing a Rs 50 billion fund for youth employment. After discussions with multiple government agencies including the National Planning Commission, the committee said that the development of agriculture sector can address the demand for job and food security.

The Federation of Nepalese Cottage and Small Industry's recommendation to support group enterprise and promote cottage and small industries by the local governments can also be effective in creating jobs.

Establishment of cold storage, agriculture processing industries, increased use of machines in the field and efficient market linkages can propel the primary sector as an enterprising sector.

In his document of Principles and Priorities of the upcoming budget, Finance Minister Dr Khatiwada has hinted at the rehabilitation of lost jobs, and support for small and medium enterprises, agriculture and service sector to create more jobs.

He also said that the budget would give priority to the family, social and economic interest of the worker and invent labour-intensive programmes to engage the informal sector workers. He has a couple of days to stand true to his promises.

Published in The Rising Nepal daily on 26 May 2020. 

Tamakoshi installs 373-metre vertical shaft

Dolakha, May 24

Development of 456 megawatt Upper Tamakoshi Hydroelectricity Project is moving ahead without intervention despite coronavirus pandemic. It recently completed the installation of 373-metre long vertical shaft which considered highly complex yet important work in the construction of the largest hydroelectricity project to be completed so far.

Austrian company Andritz has successfully completed the fitting last 1.5-metre long penstock pipe in the vertical shaft on Saturday morning, said Dr. Ganesh Neupane, Spokesperson of the project.

He said that in the lower vertical shaft 73 pieces 5-metre long and a 1.5-metre long pipe were installed. The completion of the installation of the vertical shaft has drawn the commencement date of energy generation nearer.

Similarly, Railway Engineering of Indian contractor company Texma has completed the installation of 246-metre penstock pipe in 310-metre long vertical shaft. Dr. Neupane said that that remaining 64-metre work will be finished by the third week of July.

As the most complex phase of work at the project was delayed, the energy generation date was postponed multiple times.

The first penstock pipe was installed in the upper vertical shaft in July last year. The 5-metre long 27 tons heavy penstock pipe are being lowered in the shaft with the help of Gantry crane.  

As most of the workers and technicians working at the site are Chinese, Italian, Indian and Nepal and have been working before the coronavirus outbreak in the country, there is no risk of infection and the work is going without interruption.

However, Dr. Neupane said that all possible safety and cautions had been applied to save the workers from the infection. Currently, more than 400 workers and staff are working at the project. Civil works are performed by Chinese Sino Hydro, electromechanical work is being done by Andritz, hydromechanical by Railway Engineering and substation and transmission lines by Indian company KEC.

Upper Tamakoshi had successfully performed the test of dam and head works.

About 99.5 per cent work in the project is completed. Concrete lining in the tunnel is about to finishing and chemical grouting is underway at some locations.

The picking run of the river project was started about a decade ago and its earlier estimated budget of Rs. 49 billion has reached Rs. 72 billion with interest.

Delay in the work by the contractor company, earthquake, Indian blockade, rising price of US dollar, increasing price of construction materials, administrative costs and interest of loan have caused the cost overrun of the project.

Published in The Rising Nepal daily on 25 May 2020. 

NRB to issue 5-year bond of Rs. 4 billion

Kathmandu, May 24

Nepal Rastra Bank is issuing a bond worth Rs. 4 billion with 5-year maturity period.

The sales of the Citizen Bond 2082 will be open till June 3 and will be issued on June 7.

The bond will bring 9 per cent interest which would be paid on a half yearly basis. However, the interest money will be taxable. The bond can be used as collateral to obtain loan from other banks and financial institutions.

Interested Nepali investors can start from Rs. 10,000 to any amount that is divisible by it within the limit of the bond. Application forms are available at the market maker BFIs or can be downloaded from the central bank's website.

Investors outside the Kathmandu Valley can also apply for the bond and submit the application at the local branches of BFIs that have market maker status.

The bond can be taken as stock or promissory note but it should be clearly mentioned in the application. Stock certificate would be provided to the illiterate investors.

PUblished in The Risiing Nepal daily on 25 May 2020. 

Shakya wins ‘Ambassador of the Year’ title

Kathmandu, May 24

Nepal's Ambassador to Israel Dr. Anjan Shakya has been awarded with the 'Ambassador of the Year 2019-2020' by the Ambassadors' Club of Israel.

She was selected among the 90 Heads of Mission representing their countries in Israel for her contribution to the enhancement of Nepal-Israel relationship. The award was presented to her on May 18 on the occasion of the 72^nd Independence Day of Israel.

According to President of the club Yitzhak Eldan, Dr. Shakya was honoured for her excellent performance as a diplomat serving the interests of Nepal in Israel as well as advancing the relations between the two countries.

The 'Award of excellence in Diplomacy/Ambassador of the year' is the highest distinction discerned by the club to foreign diplomats.

Ambassador Dr. Shakya expressed happiness and said, "This honour conferred on Nepal and Nepali people has increased the reputation of the country."

Stating that the award has made her more responsible to fulfil her duty on behalf of the country in Israel, she expressed her commitment to taking the bilateral relationship to a newer height.

Dr. Shakya was appointed ambassador of Israel in February this year. After reaching there, she played an important role in signing an agreement for business exchanges between the Nepal-Israel Chamber of Commerce and Isreal Chamber of Commerce.

She has proposed with the Israeli President Reuven Rivlin to support in establishing high-tech training centres in all seven States in Nepal as par the standards of Israel.

Published in The Rising Nepal daily on May 25, 2020. 

HRSN wants a tripartite cooperation to pay workers' wages

Kathmandu, May 22

Human Resources Society Nepal (HRSN) has recommended to forge a tripartite cooperation among the government, private sector and workers and share the equal burden to pay the salary and wages.

"In the short term, the enterprises should provide 50 per cent and rest should be borne by the government and workers. The government should subsidise the economic burden of the private sector businesses," it said.

President of the society Mohan Ojha said that people and workers look up to the government during the difficult times.

The society has also proposed that the enterprises should pay 80 per cent salary of the first month during the lockdown, 60 per cent in the second month, 40 per cent in the third month and 20 per cent for the next three months and the rest should be provided by the government as per the availability of the resources.

It also suggested to run the industry and employ human resources interchangeably. "This society is of the view that the work should be resumed and workers also should not be worried about their daily need."

The society maintained that the government can use Rs. 33.40 billion which it collected in the name of social security tax in the last decade to support the workers during the critical time.

"The government should study and analyse the economic stimulus package announced by various countries around the world and bring out such programme to support the private businesses," it said.

Published in The Rising Nepal daily on 23 May 2020. 

Budget to have programme to continue education in crisis

Kathmandu, May 21

The Ministry of Education, Science and Technology (MoEST) Thursday said that education would  get a priority in the upcoming budget to ensure that children continue to learn and ensure their wellbeing.

It will also include programme to create a national framework to guide safe reopening of schools.

“We are looking at new modalities and approaches that ensure children continue to learn and at the same time ensure their wellbeing,” stated Dr. Sanjay Sharma, Secretary of MoEST. “We expect that education will be a priority sector in the upcoming budget given the COVID-19 pandemic and will look at means to expedite programmes and coordinate amongst all levels of government and stakeholders on a national framework that guides safe reopening of schools.”

Dr. Sharma made the comment following the Budget Review Mission (BRM) of the government’s flagship School Sector Development Programme (SSDP) which completed on Wednesday.

The BRM was conducted under the leadership of the MoEST with joint financing and non-joint financing partners including the World Bank, USAID, Asian Development Bank, Finland, Norway, European Union, JICA, Global Partnership for Education, REACH MDTF and UNICEF, and other stakeholders.

The review assessed progress and achievements of the plan’s fourth year of implementation, annual work plan and budget and allocation of resources for the final year, together with an assessment of the impact of COVID-19 on the SSDP, said the World Bank.

Prior to the budget review, virtual consultation and information sharing sessions were organised with the provincial and local government leaders, Teachers Union, Association of INGOs, Consortium of Civil Society Organisations and other stakeholders.

It is expected that the shocks to education from the COVID-19 pandemic could lead to increased dropout rates, learning loss and heighten the inequality with the most vulnerable students disproportionately bearing the impact of the shock, said the WB.

“The COVID-19 pandemic threatens to reverse the progress made to date on Nepal’s education outcomes impacting children and young people, especially the poor and vulnerable,” stated Faris Hadad-Zervos, World Bank Country Manager for Nepal. “It is critical to counter these impacts through appropriate policy responses and turn this crisis into an opportunity to build back better.”

USAID Acting Mission Director Adriana Hayes urged the MoEST to ensure that the fiscal year's education budget and work plan incorporate the activities identified in the Education Cluster Contingency plan so that local governments can receive funds and continue to provide access to education during this unprecedented crisis. 

Published in The Rising Nepal daily on 22 May 2020. 

Second report of Economic Census released

Kathmandu, May 19

A business entity in Nepal earned Rs. 947,000 in an average in 2017/18, concluded the second report of the National Economic Census 2018.

According to the report, 922,445 enterprises across the country had earned Rs. 2.91 trillion in a year and spent Rs. 2.06 trillion thus earning Rs. 853 billion in profits. It puts the ratio of sales and profit to 29.3 per cent.

Each person involved in economic activities earned Rs. 274,000. The first result of the census had shown that as of April 2018, about 3.40 million people were engaged in business activities – 2.04 million male and 1.36 female. Nepal has about 32 business establishments per 1000 people.

The report published on Monday showed that electricity, gas and air conditioner suppliers, communication and information, construction, transportation and warehouse, financial intermediaries and insurance, and real estate are the top grossing sectors.

A unit in electricity and gas sector earned Rs. 113.24 million a year with the profit of 22.2 million. Communication and information sector company earned Rs. 84.9 million and grossed profit of 19.8 million. Likewise, constrruction and transportation sector enterprise earned Rs. 57.3 million and Rs. 49.7 million respectively.

Agriculture and education are the highest profit yielding sectors with each enterprise spending Rs. 1.09 million and profit earning of Rs. 1.3 million in agriculture sector and profit of Rs. 3.04 for Rs. 3.5 million spending in education.

Published in The Rising Nepal daily on 20 May 2020. 

NEPSE shuts operation

Kathmandu, May 14

The share market of the country has been shut for the entire lockdown period after a brief opening on Tuesday and Wednesday.

The Securities Board of Nepal (SEBON) had last week directed the Nepal Stock Exchange (NEPSE), share brokers, and merchant bankers to resume operation with priority to online transactions.

However, NEPSE on Thursday decided to close the securities transactions in lockdown.

The decision to allow the market opening has been revoked owing to the growing number of coronavirus patients this week.

The share market that resumed operation after more than one-and-a-half months after the announcement of lockdown, witnessed the closure of transaction with circuit breaker on both the days, following which, large investors had demanded to close the market.

There was a transaction of 106,000 units of shares, worth Rs 104 million, of 87 companies on Tuesday.

Similarly, 10,526 units of shares worth Rs 3.6 million were traded on Wednesday.

Meanwhile, the SEBON has cancelled all the vehicle passes it issued till Wednesday. It had issued the passes to facilitate the share brokers, investors and other stakeholders and has cancelled as the market operations were shut.

Board's Spokesperson Niraj Giri said that passes were provided to NEPSE, CDS and clearing and brokerage firms and investors. However, new passes have been provided to the needy organisations from Thursday.

Published in The Rising Nepal daily on 15 May 2020.

COVID-19 Batters Hopes Of Sound Economic Growth

Economic Survey 2076/77

Kathmandu, May 27: By the end of the first eight months of the Fiscal Year 2019/20, economic indicators remained satisfactory, according to the Economic Survey of the current fiscal presented by Finance Minister Dr Yuba Raj Khatiwada at the Federal Parliament on Tuesday.

“Inflation, foreign trade, balance of payment, investment and financial indicators have gone up due to the political stability. Absolute poverty rate is expected to go down to 16.67 per cent from 18.7 per cent a year earlier,” said the Finance Minister.

Nepal aims to lower the poverty rate to 5 per cent by 2030 and zero by 2043, as per the long-term vision prepared by the National Planning Commission. Increase in export and decline in import of goods has limited trade deficit and improved the reserve of the foreign exchange. The share of export in the foreign trade has increased to 7.5 per cent from 6.4 per cent in the last fiscal 2018/19.

Goods import till mid-March has decreased by 2.6 per cent while export increased by 22.3 per cent. Export of palm oil, cardamom, ayurvedic medicines, herbals and jute has increased. Trade deficit in the last fiscal increased by 24.4 per cent and reached Rs 887.8 billion but it decreased by 4.3 per cent in this fiscal to reach Rs 849.3 billion.

Likewise, financial and insurance indicators registered positive results with the branches of banks and financial institutions reaching 9,640 – one branch catering to 3072 individuals on an average, and insurance reach increasing to 26 per cent – 4 per cent contribution by the foreign employment term employment.

Balance of payment witnessed Rs 37.84 billion surplus in the first eight months of this fiscal against Rs 58.99 billion deficit last year.

However, the growth rate of remittance has slowed this year. It grew by 1.8 per cent against 23.4 per cent of the last fiscal. In monetary terms, the country received Rs 592.4 billion remittance this year while the amount was Rs 582.1 billion.

Despite the slowed growth rate of remittance, the foreign exchange reserve is increased by about Rs 97 billion compared to a year earlier, it was Rs 1136.5 billion in mid-March.

But the positive economic signs have been disturbed by the coronavirus pandemic which affected the businesses, specially the tourism and hospitality sector, as early as January 2020 and the lockdown put in practice to save the lives of people from march 24 has sent more than three-fourths of the industries and businesses out of operation. Most of the development works are also suspended.

“The overall economy before the advent of COVID-19 was on a growth track and development works were moving ahead satisfactorily but its impact on toruism, industry, construction, trade and other sector has slowed down the progress,” said Dr Khatiwada.

The economic growth rate is lowered to 2.3 per cent from earlier projection of 8.5 per cent as the pandemic is ravaging the economy. The first blow was on tourism and the Visit Nepal Year 2020 miserably failed and the government was forced to terminate the campaign, subsequenetly.

In the last three years the coutnry has boarded on a high growth rate trajectory with average 7.3 per cent increment in the Gross Domestic Price in producers’ price.

Rs 20 bl development budget spent in lockdown

Government expenditure went up by 12.9 per cent to Rs 610.6 billion in this fiscal including Rs 450.7 billion recurrent and Rs 96.48 capital expenditure.

Meanwhile, Rs 20.3 billion capital budget was spent after the lockdown. According to the Financial Comptroller General, the capital expenditure has reached Rs 116.8 billion by Monday. Recurrent expenditure stands at Rs 605.2 billion and financial management Rs 74 billion.

Likewise, government income till mid-March is Rs 546.8 billion, a 9.4 per cent increase from the same period of the previous year. The income has gone up by Rs 90 billion by Monday and reached Rs 616.8 billion.

Nepal has received Rs 109.2 billion foreign support – Rs 16.19 billion in grants and Rs 93.09 billion in loans. The country has Rs 1047.9 billion loan outstanding. 

Published in The Rising Nepal daily on 28 May 2020. 

Federal Budget For Next Fiscal Today

Kathmandu, May 28: Finance Minister Dr Yuba Raj Khatiwada is presenting the budget for the Fiscal Year 2020/21 on Thursday at the Federal Parliament. 

The budget is expected to address the challenges created by the COVID-19 pandemic and put the economy battered by the crisis back on track with the announcement of economic stimulus for the business, job creation for the youth and relief for the needy people.

Since the pandemic hit the country at the period when development activities and revenue collection would increase, the government is likely to face resource crunch to fund next year’s programmes. Due to the uncertainty of closure and restrictions on movement, it would be difficult to predict next year's economic situation.

Dr Khatiwada faces the challenge to strike a balance between the capital formation projects and funding for the coronavirus affected sectors with the scanty available resources. 

However, he is confident of the management of resources and said that about Rs 150 billion foreign support had already been secured for the next year's programmes and projects.

While industries and entrepreneurs are expecting economic stimulus as large as 5 per cent of the Gross Domestic Product (GDP), local governments are looking up to the federal government for funds to mobilise in the coronavirus affected sectors, relief works and development projects.

The Finance Minister has hinted that he would give priority to the creation of disaster prepared mechanism across the country, create sound health infrastructure to fight the crisis like coronavirus pandemic, rehabilitate the business and industry and alleviate poverty.

In his principles and priorities of the budget presented in the Federal Parliament earlier, he also said that sufficient resources would be mobilised in the infrastructure projects.

Although, the actual size of the upcoming budget is not made public, the Finance Committee of the parliament, before the advent of the pandemic, had fixed the ceiling at Rs 1.7 trillion. It also recommended revenue target of Rs 1 trillion without increasing the tax rate, however.

Meanwhile, the business sector has asked the government to subsidise the salary to the workers with 25-50 per cent monetary support. This is Dr Khatiwada's third budget. He had announced Rs 1.53 trillion budget for the current fiscal year 2019/20 with priority to poverty alleviation, infrastructure development and good governance.

He had allocated Rs. 957.10 billion, for recurrent expenditure, Rs. 408.05 billion for development expenditure and Rs. 167.86 billion for financial management. Rs. 464.56 billion was allocated for the subnational governments.

Sources of the current FY's budget were revenue Rs 981.13 billion, foreign grant Rs. 58 billion, foreign loan Rs 298.83 billion and domestic loan Rs 195 billion.

States and local bodies will announce their budget later – states on the first day of the next fiscal year and local governments 10 days thereafter.  

Published in The Rising Nepal daily on 28 May 2020. 

Launch Publicity Campaign On New Map, Dhungel Tells Govt

Kathmandu, May 23: Former Secretary Dwarika Nath Dhungel has suggested the government to create a pool of documents and experts on Kalapani issue in order to present Nepal’s status on the matter and counter aggressive Indian propaganda.

“The government should immediately launch a publicity campaign on the rationality of the newly issued map of Nepal. It should reach out the international organisations and community with solid 
evidences and comments,” he said in an interview with The Rising Nepal on Friday.


He said that the publicity campaign should be started with the diplomatic missions and international NGOs based in Kathmandu and organise national and international interactions and dialogues on the matter.


The second step would be to send the map to the United Nations. “We must know whether we can send the map to the global body. If yes, when and how?” he stated.


According to Dhungel, another item in the to-do list should be amending the digitised maps available in Google and other online platforms. The Ministry of Law should take initiative on it.


Google displays a map of Nepal with demarcation on Kalapani area but not Limpiyadhura and Lipulek while the area of Nepal is changed to 147,516 square km from 147,181 sq. km in Wikipedia.


“Another thing that the government must immediately be prepared on is forming a strong team for dialogue with India. Since dialogue is the best and effective way to resolve the bilateral issues, enough care should be paid to hire the experts in the team rather than the henchmen,” said Dhungel.


The team should work to gather additional evidences from the sources in Nepal, India, the United Kingdom and elsewhere. He said that Nepali mission in New Delhi should also be mobilised to collect the proof.


He said that a report was prepared by Shanta Bahadur Manandhar and a team that went to London to conduct research on Kalapani area. The report could be a good source in terms of collecting evidence.


“The government must act proactively and promptly. India has come forward aggressively because it had forcefully encroached Nepali land but we should be well equipped with evidences and well-versed with comments,” he said.


Dhungel also said that although it was early to internationalise the issue, the government should call Nepali experts in other countries, especially in Europe and the USA and take their help in making our voice stronger.


“This is a big issue but there are chances of our win if we continuously work through both political and diplomatic channels,” he said.

Published in The Rising Nepa on 24 May 2020. 

COVID-19 Poses Formidable Challenge To Finance Minister As He Frames New Budget

Kathmandu, May 26: The current time has been turbulent for everyone with the mounting cases of coronavirus in the country. Businesses and industries are closed, people’s movements paused, workers have lost their jobs and are forced to stay home, and most development works have been stalled indefinitely.

Meanwhile, contractors say the public construction work cannot be resumed before November this year and business leaders have stressed on an economic stimulus equal to 5 per cent of the Gross Domestic Product (GDP).

The economy is severely hit by the coronavirus pandemic when the development work was gaining momentum with the completion of first half of the Fiscal Year 2019/2020 and the government has managed to collect only Rs 612.83 billion revenue of targeted Rs 1112.03 billion while only Rs 667.75 billion is spent against the target of Rs 1532.9 billion by May 24, with merely one-and-a-half months of the year remaining. 

The economic growth target is lowered to 2.28 per cent from the earlier projection of 8.5 per cent.

Finance Minister Dr Yuba Raj Khatiwada is presenting the budget on Thursday at the Federal Parliament amidst these uncertainties and coronavirus pandemic inflating the crisis in future. 

He has a challenge to allocate the scanty resources to traditional development sectors and necessities created by the pandemic that need an immediate address or overhaul.

The first challenge Dr Khatiwada has to face is the revival of the economy through the rehabilitation of business and restoration as well as creation of jobs. Months-long lockdown has severed about 2.5 million people from their jobs in and out of the country.

The country that is reeling from years of resource constraints cannot go on with relief distribution for long, so it must focus on reviving the business activities and creating jobs. When people get jobs, government's burden for relief distribution will automatically be reduced.

Private sector organisations – Federation of Nepalese Chambers of Commerce and Industry, Confederation of Nepalese Industries, Nepal Chamber of Commerce and various commodity and sectoral associations – have, for weeks, been urging the government to facilitate them in resuming the industries and businesses.

Although the Cabinet had decided to allow the industry to open, lack of policy guideline in reviving the supply chain, import of raw materials, financial arrangement and lockdown in India has discouraged the entrepreneurs. Only about a quarter of industries, primarily those dealing in food, medicine and other essential items, are in operation but just about 40 per cent of their capacity.

Despite experiencing decades of neglect, agriculture is the primary sector that can accommodate a large number of workers and businesses. 

The main opposition party Nepali Congress in its budget recommendations to the government has suggested promoting agriculture and tourism for job creation and providing at least 100-day employment to the people who lost their jobs. An individual can earn Rs 51,700 from that job.

Former Finance Minister Dr Ram Sharan Mahat said that local infrastructure development programmes can employ about 700,000 people. Better economic cooperation between the federal and local governments can help in effective mobilisation of resources and execution of works that can generate employment.

Likewise, bringing the cottage, small and medium scale industries into operation is critical to the economy as this sector employs the largest number of people after agriculture. 

"The government should provide concessional loan to the youth, including the foreign-returnees, on the basis of skills they possess. Foreign Employment Welfare Fund should be mobilised in this programme," said the NC.

But the government should first have a database of the skilled, semi-skilled and unskilled youth, and foreign-returnee workers. Finance Committee of the Federal Parliament has suggested establishing a Rs 50 billion fund for youth employment. After discussions with multiple government agencies including the National Planning Commission, the committee said that the development of agriculture sector can address the demand for job and food security.

The Federation of Nepalese Cottage and Small Industry's recommendation to support group enterprise and promote cottage and small industries by the local governments can also be effective in creating jobs.

Establishment of cold storage, agriculture processing industries, increased use of machines in the field and efficient market linkages can propel the primary sector as an enterprising sector.

In his document of Principles and Priorities of the upcoming budget, Finance Minister Dr Khatiwada has hinted at the rehabilitation of lost jobs, and support for small and medium enterprises, agriculture and service sector to create more jobs.

He also said that the budget would give priority to the family, social and economic interest of the worker and invent labour-intensive programmes to engage the informal sector workers. He has a couple of days to stand true to his promises. 

Published in The Rising Nepal daily on 27 May 2020. 

British-India Time Documents Name Mahakali As Border River

Kathmandu, May 24: Senior Advocate Prof Dr Yubaraj Sangroula has presented historical evidences from the days of the British-India that clearly show the entire Kalapani region, including Lipulek and Limpiyadhura, belongs to Nepal.

"The British war with Nepal in 1814 and 1816 were imperialistic interventions into our territory. 

Kumaun and Gadhwal were under Malla kings of western Nepal and they were not the lands annexed through encroachment but brought under Nepal in a unification process," he wrote in an article published in Gorkhapatra daily on Saturday.


Dr Sangroula said that Nepal should have received Kumaun and Gadhwal after the treaty of 1950 as per the international law because these two provinces were also liberated as India and were Nepal's territory annexed to India by the British rulers.


However, then Rana rulers who were counting their days in power did not care about protecting the land that actually belonged to Nepal so we must consider the colonial suppression while marking the international borders, he said.


"It means the border at the Mahakali River between Kumaun and Nepal is not a matter to be settled as per Indian opinion. The basis of the international border between Nepal and India would be Nepal's view on it because the land was snatched away from Nepal and was not returned," said Dr Sangroula.


According to him, the very right to Nepal is given by the international laws. Captain Woodbridge, in his book Military Sketches of the Gorkha War, has said that the British rulers in India wanted to end the war after Nepal lost it at multiple fronts by taking the land between the Mahakali River and Sutluj River and leaving land East of Mahakali to Nepal.


This is the proof that the Mahakali, the first river east of Kumaun, is Nepal's western border. But India has termed a small stream, east of Limpiyadhura and Lipulek, artificially created by it as the Kali River.


"This is the expansionist act of India. We must accept the border set by the earlier documents exchanged between British India and Nepal. Not accepting it would not be good for India as well," said Dr Sangroula.


He has urged India to review the facts presented in those documents and decide whether the land it encroached belonged to it.


An agreement was signed between Amar Singh Thapa and David Ochterlony in Malong on 15 May 1815 which names the Kali River as the border. "If India does not accept that decision, it should not accept any agreement with British-India; there would be newer discussions in such a situation," he said.

Cartographic exercises started immediately after the Malong convention and the maps clearly stated that the river flowing down from Limpiyadhura was the Kali, not a small brook east of it.

Published on 25 May 2020. 

Multiple Ministries Work Together To Facilitate Business Operation, Save Jobs

Kathmandu, May 21: Minister for Industry, Commerce and Supplies Lekh Raj Bhatta said that his ministry was in communication with other concerned ministries to find practical ways to run the industries, save jobs and engage youth returning from foreign employment.

The ministry is in close collaboration with the Ministry of Labour, Employment and Social Security, Ministry of Finance, Ministry of Agriculture and Livestock Development and Ministry of Federal Affairs and General Administration to offer support to the private sector to resume businesses and industries, he said.

He made the comment at a webinar on ‘Industry and Labour’ organised by the Confederation of Nepalese Industries (CNI) with an aim of finding possible solution to respond to, rescue, restart and reinforce the economy.

“We are discussing the possible modality for the solution. We consider the private sector entrepreneurs as a part of the ministry and are working together to find solutions through dialogue. The ministry level policy and programmes also focus on saving businesses as well as saving creating jobs,” he said.

According to Minister Bhatta, the ministry will soon discuss with the private sector organisations like the Federation of Nepalese Chambers of Commerce and Industry, Nepal Chamber of Commerce and CNI to resolve the current challenges they are facing in resuming the operation of industry.

However, he criticised some business associations for their motive to use the pandemic as an opportunity to expand their membership base for their own benefits and urged for fairer dealings between the government and the private sector.

“We are strongly advocating for the policy to promote the use of Nepali raw materials and industries that use locally available materials,” he said while adding that a proper supply chain should be in place to send Nepali vegetables and fruits to the market.

Vegetables arrive from Maharastra but Nepali farmers are unable to supply the domestically produced vegetables and fruits.

Chief Political Advisor to the Prime Minister, Bishnu Rimal, said that PM KP Sharma Oli was going to address the nation soon, and in his speech he would address the demands of the private sector as well.

He suggested a humanitarian approach while making any decision about the wages or salary of the workers.

Immediate Past President of CNI Hari Bhakta Sharma said that the private sector was looking up to the government for its support and guidance in the process to revive the business and support people in their livelihood during the crisis.

“Although the government allowed various types of industries to open but the bureaucratic processes at three layers of government had discouraged them. They lack liquidity, pass to make movements and human resources to run the factories,” he said.

He maintained that if the industries paid salary to the workers who did not go for the work, it would discourage those who were working at the time of the crisis.

“This is a tricky question which demands immediate attention of both the business orgaisations and the government,” he said. President of CNI Satish Kumar More appealed to run the industries and businesses cautiously and safely in cooperation among the private sector, government and the public.

If a worker gets coronavirus infection, the entrepreneur must not be punished as it’s been proposed earlier, the industries will report the case and apply the utmost safety measures, he said.
He also demanded for the facility to keep workers in reserve for at least six months. Many counties have suspended the labour acts citing the special situation due to the pandemic, he said.

Country Director of the International Labour Organisation in Nepal Dr Richard Howard said that social dialogue should be given priority as it takes a back seat during challenging times.

He said that the ILO would support in economic restructuring and enterprise and income.

Secretary at the Ministry of Labour, Employment and Social Security Binod KC said that the government had devised a strategy to dole out relief in the form of employment through the Prime Minister Employment Programme.

“Most of the businesspersons are scared due to the uncertainty, for a couple of months is not an issue, as I understood from the dialogue with the industry leaders,” he said.

He stated that industries must run, only then the workers and the government will be benefitted and pledged that no businessmen would be punished or jailed due to the crisis created by the coronavirus.

Former Secretary Krishna Gyawali said that the government must not linger about offering solution to business rehabilitation and the private sector should also be innovative to apply measures to address the situation. 

Published in The Rinsing Nepal daily on 22 May 2020.