January 16: The government is likely to announce a more ambitious budget for the upcoming fiscal year aligning it with the 16th five-year plan. The government is reportedly preparing an ambitious budget after endorsing the 16th five-year plan prepared by the National Planning Commission.
The NPC is preparing to draft a plan within a month and present it to the Council of Ministers.
The National Planning Commission has not yet prepared the program for the base year of the 16th Plan, i.e. the next fiscal year. But the NPC officials say that they are under pressure from Prime Minister Pushpa Kamal Dahal to finalize the plan immediately as the government will formulate budget based on the NPC’s plan.
The prime minister has repeatedly said that he will make the budget a different one from the traditional budget.
The Ministry of Finance is already engaged in the homework to prepare the next fiscal year's budget. Sources say that in this situation, Prime Minister Dahal is pressuring the commission to prepare draft quickly. The commission has not yet been able to figure out how to fulfill the unlimited obligations of the state.
Yamlal Bhusal, joint secretary of the commission, said that the final draft has not been prepared yet. According to him, the commission is working to prepare a plan within mid-February.
“We are under a bit of pressure because the Prime Minister has said that he will make the budget based on this plan. We are ready to prepare the plan by mid-February. It will be completed within the stipulated period," he told New Business Age.
According to Joint Secretary Bhusal, the commission will finalize the plan and send it to the National Development Council for approval. After getting approval from the council, it will be forwarded to the Council of Ministers. The plan will come into effect after the Cabinet approves it.
Even though the economic activities in the country have slumped, the 16th plan prepared by the National Planning Commission has set ambitious goals. On the basis of those goals, the government is doing homework to prepare the annual budget.
In the draft plan published by the commission, the goal is to increase the size of the gross domestic product (GDP) by about Rs 3000 billion within the next 5 years. At present, the size of the GDP at basic prices is equal to Rs 5381 billion. By the end of the 16th plan, the target is to achieve GDP of around Rs 8000 to 8600 billion.
The draft aims to maintain the economic growth rate, which was 1.86 percent in the last fiscal year, at an average of 7 to 8.5 percent by the end of the new periodic plan.
The goal of increasing domestic production and productivity is also ambitious. In order to increase the domestic production, the draft has set a target of bringing 17 industrial zones into operation, declaring 140 industrial villages, and increasing the number of Special Economic Zones (SEZs) from two to three. Similarly, the draft has also set a target of increasing the installed capacity of hydroelectric power, which is currently around 2,800 megawatts, to around 11,800 megawatts, and increasing per capita electricity consumption from 380 kilowatt hours to 700 kilowatt hours.
By the end of the new periodic plan, the goal is to export electricity worth Rs 41 billion annually and to reduce the overall trade deficit to about 4 percent by increasing the contribution of the energy sector.
The population benefiting from basic level drinking water service is currently 96 percent, and the goal is to increase it to 99 percent. In the same way, the periodic plan has set the goal of creating jobs of around 1.2 million annually, raising the minimum wage of workers to Rs 25, 000 per month, increasing the number of beneficiaries of social security fund to 2 million and increasing the number of destination countries .
According to officials of the Ministry of Finance, if the budget is prepared according to the periodic plan prepared by the Planning Commission, next year’s budget will be bigger in size than the current fiscal year’s budget.
Even now, the government’s expenditure has exceeded its income, said a senior finance ministry official. According to him, it is not possible to prepare an ambitious budget. The implementation part of the budget is very weak if we look at the situation up to six months. The federal government had announced to spend Rs 1751 billion this year, but has spent only 32 percent of the target so far.
By the end of the first six months of the current fiscal year, government has spent only Rs 566 billion. The government has allocated Rs 1141 billion for current expenditure, and has spent around Rs 450 billion under this heading.
Likewise, it has earmarked Rs 302 billion for capital expenditure and has spent only 16 percent of the budget. Meanwhile, the government has spent Rs 80 billion for fiscal management.
Similarly, the government had set a target of collecting Rs 668 billion in revenue in the first six months of current FY, but it managed to collect only Rs 515 billion.
Economist Keshav Acharya says that when the government has failed to implement the current budget, the next budget should not be ambitious and large in size. According to him, the implementation of the budget will not be effective until the government changes its working style. It is necessary to make the budget implementation-oriented.
