First federal budget of Rs. 1.279 tr. unveiled

current expenditure Rs. 803.53 billion
capital expenditure Rs. 335.27 billion 
financial management Rs. 140.28 billion 

Kathmandu, May 29: Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara Monday unveiled a budget of Rs. 1.279 trillion for the coming fiscal year 2017/18, with special priority to federalism implementation, large infrastructure projects including hydropower, and post-quake reconstruction.

This is the first federal budget of the country that aims at implementing federalism and strengthening the local bodies.

The size of the budget is 21.9 per cent higher than the budget of last fiscal year 2016/17, and about 36.6 per cent larger than the revised estimates of the budget of the current fiscal.

Last year, the then finance minister Bishnu Paudel had presented a budget of Rs. 1.048 trillion with special focus on reconstruction, infrastructure and constitution implementation.

According to Mahara, current expenditure comprises Rs. 803.53 billion and capital expenditure Rs. 335.27 billion while Rs. 140.28 billion has been set aside for financial management.

The share of the current and capital expenditure and financial management is 62.8 per cent, 26.2 per cent and 11 per cent respectively.

“The objective of the budget is to support constitution implementation, achieve sustainable, inclusive and high growth, maintain macro-economic stability, and enhance access of the common citizen to public service,” he said.

FM Mahara plans to generate Rs. 730 billion in revenues, principal repayment of Rs. 15 billion, foreign grants worth Rs. 72 billion and foreign loans of Rs. 214 billion to manage the expenditures.

The size of the budget deficit is Rs. 461 billion.

Meanwhile, revenue mobilisation in the current fiscal year is estimated to reach Rs. 581 billion, which is 103 per cent of the target.  

As per the estimates of the income and expenditure for the next fiscal year, the country will witness a Gross Domestic Product (GDP) growth rate of 7.2 per cent while inflation will be below 6 per cent.

DPM Mahara claimed that about 400,000 additional jobs will be created with the implementation of the budget.

Local bodies get 17.6 pc

The total budget for the local bodies makes about 17.6 per cent of the total expenditure.

As per the new provision, every rural municipality will receive Rs. 100 million to 390 million, municipality Rs. 150 million to Rs. 430 million, sub-metropolitan city Rs. 400 million to Rs. 630 million, and metropolitan city Rs. 560 million to Rs. 1.24 billion in grants.

“As the natural resources and finance commissions are yet to be formed to recommend financial transfer, revenue allotment and grant to the local bodies, the local units will receive the grant money according to the size of population, status of development and cost integrated area for the next fiscal,” the budget speech read.

In addition to such unconditional grants, the local bodies will get conditional grants, which could be as much as Rs. 172 million for a rural municipality, Rs. 312 million for a municipality, Rs. 310 million for a sub-metropolitan city and Rs. 783 million for a metropolitan city.

FM Mahara has allocated Rs. 76.41 billion for the purpose.

 “I have set a provision of direct fund transfer for the creation of the institutional structure needed for the provincial government because the elections for the provincial bodies will be held next fiscal year,” he said.

The budget has handed over various projects like some activities of the Prime Minister Agriculture Modernisation Project, agriculture market infrastructure, fisheries development programme, small irrigation, forest development, community development, urban roads, local tourism infrastructure, waste management, livelihood programmes and other various programmes related to education and health to the local bodies.

Priority to reconstruction and infrastructure

While Rs. 146.18 billion has been allocated for post-quake reconstruction, the budget aims at enhancing the capacity of the stakeholders of reconstruction works.

The budget also aims at expediting the works of the national pride projects by formulating new legal and procedural provisions.

The second international airport, Bhairahawa Airport, Pokhara Airport, Budhigandaki Hydroelectricity Project, Kathmandu-Terai Fast-track, Postal Highway, North-South corridors, East-West railway, irrigation and Thankot-Naubise tunnel have received priority in the budget.

The government also aims at producing 17,000 megawatts of electricity in the next seven years under the ‘Nepal’s’ Water, Nepalis’ Investment’ programme.

Education programmes up to class 10 have been handed over to the local bodies, and budget has been allocated to establish Bidushi Yogmana Ayurveda University and Higher Institute for Engineering and Technology.

DPM Mahara also said that an Infrastructure Development Bank will be established in participation with national and international banks to promote domestic and foreign investment in infrastructure development.

The Infrastructure Development Bank has been the topic of every budget for the last decade but has not been established yet.