Dr. Khatiwada presents Rs. 1.3 tr. budget

Employment and infrastructure development priority

Kathmandu, May 29:

Finance Minister Dr. Yubaraj Khatiwada on Tuesday unveiled a Federal budget of Rs. 1,315 billion for the coming fiscal year 2018/19.

He pledged more than one third of the resources would be channelled to the provinces and local governments.

The budget has given priority to basic and modern physical infrastructure, such as roads, railways, irrigation and electricity projects, employment generation, reconstruction of the structures damaged in the 2015 earthquake, good governance and investment in agriculture, water resources and tourism.

Finance Minister Dr. Khatiwada's budget is just Rs. 36 billion higher than the current year's. 

He failed all speculations of the media and economists, even the Finance Ministry high officials, that the government was going to come up with a budget higher than Rs. 1,500 billion.

Within a couple of weeks of the assumption of the post of Finance Minister, he had indicated that he might not like higher numbers in the budget as he had adjusted the actual size of the current fiscal year 2017/18 budget by lowering the total expenditure estimates to Rs. 1,082 billion from Rs. 1,278 billion.

Major Indicators:

Budget: Rs. 1,315 billionExpenditure:Current expenditure: Rs. 845.44 billionCapital expenditure: Rs. 313.99 billionFinancial management: Rs. 155.71 billion Sources of Income Income:Revenue: Rs. 831.3 billionForeign grants: Rs. 58.81 billionForeign loans: Rs. 253 billionDomestic borrowing: 172.7 billion

Next year's capital budget is lower than that of the current fiscal. Dr. Khatiwada has set aside Rs. 313.99 billion for development budget against the current fiscal's 335.27 billion.

However, more than 33 per cent of the budget, allocated to the provinces and local bodies as fiscal equalisation, conditional, matching and special grants, will push the size of the development budget higher since the larger part of it goes for local development and small infrastructure projects.

According to him, the current expenditure comprises 64.3 per cent and financial management 11.8 per cent with Rs. 845.44 billion and Rs. 155.71 billion respectively. The share of capital expenditure is 23.9 per cent.

Dr. Khatiwada has planned to generate revenue of Rs. 831.3 billion, manage foreign grants worth Rs. 58.81 billion to manage the expenditures.

He said that the remaining Rs. 425 billion would be supplemented by Rs. 253 billion from foreign loans and the rest - Rs. 172.7 billion - from domestic borrowings.

Major allocations:

·         Health: Rs. 56.4 billion
·         Education, Science and Technology: Rs. 134.5 billion
·         Energy: Rs. 83.8 billion
·         Urban Development: Rs. 33.3 billion
·         Transport Infrastructure: Rs. 109.3 billion
·         Post-quake reconstruction: Rs. 151 billion 

One third to local govts

FM Dr. Khatiwada has allocated more than one third of the budget to the local governments in a bid to implement federalism in the country.

Approximately Rs. 442.6 billion has been set aside for the provinces and local governments as fiscal equalisation, conditional, matching and special grants, which is almost 34 per cent of the total budget.

All four types of grants are being executed for the first time after the implementation of federalism. The budget of the current fiscal year has only mobilised unconditional and conditional grants while next year's budget has applied the four types of grants in a scientific way, as recommended by the National Natural Resources and Fiscal Commission (NNRFC).

The size of the fiscal equalisation grant for the province and local governments is Rs. 135.5 billion. 

It is provided on the basis of the human development index, condition of infrastructure development, requirement of resources, revenue capacity and social conditions of the respective provinces and local bodies.

Similarly, the provinces and local bodies have received Rs. 63.1 billion and Rs. 109.8 billion conditional grant respectively. This amount should be spent on the pre-defined programmes and projects, mostly in current expenditures.

The provinces and local bodies will get Rs. 114.2 billion as their share in the Value Added Tax (VAT) and excise duty of goods produced in the local bodies. It will be distributed on the basis of population, area, human development index, infrastructure development and resource requirement of the respective unit.

Likewise, Rs. 20 billion has been allocated as special grant to the local bodies to support them in special projects.

Economy to grow by 8 pc

Finance Minister Dr. Khatiwada said that the economy of the country would grow by 8 per cent in the next fiscal against 5.9 per cent this year.

According to him, the budget's major objectives are alleviating poverty, rapid economic and human development and construction of economic, social and physical infrastructure, and creating a socialism-oriented economy.

The budget has programmes for entrepreneurship, industrial, educational and health development.

Special Attention

·         Prime Minister Employment Programme

·         Health institution in each ward

·         Citizen Health Programme

·         Madan Bhandari Science and Technology Academy

·         Rs. 100,000 insurance for citizens above 70 years of age

·         Alternative domestic airport in Kavrepalanchowk

·         More subsidies in agriculture

·         One bio-pesticide laboratory in each province

·         20 industrial villages in each province

·         Merger of Nepal Food Corporation and National Trading Limited

·         Preparation of Visit Nepal 2020

·         National Sanitation Campaign year

·         Energy Decade 2018-2028

·         3,000 MW hydro project with people's investment

·         East-west and north-south transmission lines

·         Rs. 50 thousand housing grant for people below poverty line

·         Madan Bhandari Highway (Shantinagar, Jpaha – Rupal, Dadeldhura)

·         Special programme for road infrastructure in Terai-Madhes

·         Optical fibre to each local unit

·         Think tank to provide policy recommendation to government

Published in The Rising Nepal on 30 May 2018.