KATHMANDU, July 1: The Confederation of Nepalese Industries (CNI) has urged the government to come up with a full-fledged budget stating that incomplete fiscal policy would destabilize the entire economy.
The umbrella body of the private sector has, however, stressed the need for striking consensus among leading political parties prior to announcing the budget.
These statements from the private sector come at a time when leading parties such as the Nepali Congress and the CPN (UML) are opposing the caretaker government´s preparations to come up with a full-fledged budget.
“To attract investment, the country must ensure economic independence of the government, regardless of the party leading the government. In this regard, there should be parity between economic policies and development modalities and strategies of the mainstream political parties,” CNI President Narendra Kumar Basnet told at an interaction held at the finance ministry on Sunday and urged all political parties to introduce a mechanism to ensure timely budget even if there is a change in government.
Addressing the interaction, participated by Finance Minister Barshaman Pun and Finance Secretary Krishna Hari Banskota, Basnet, however, urged the government not to introduce populist policies through the budgetary program that focus on doling out funds.
His comments stemmed from the trend observed in the past three to four years, which shows hike in non-budgetary and recurrent expenditures, but inability to fully consume capital, or development, budget.
“This only indicates that policies of the past and incumbent governments were focused on distributing funds rather than on economic growth,” Basnet said, asking the government to raise development budget and enhance the pace of development spending. He also blamed the government of failing to promote industrialization and domestic production.
“This is probably because the government is feeling comfortable with the higher amount of revenue that it is generating from rising imports,” Basnet said. “But such practice, on one hand, is widening trade deficit, while, on the other, increasing our dependence on foreign countries for daily essential goods.”
He, however, said one of the biggest hurdles to promoting industrialization and attracting investment is power shortage.
“Although it will take a long time to address this issue (through development of hydropower projects), one of the stopgap solutions is the use of diesel powered engines,” Basnet said.
In this regard, CNI has requested the government to scrap dual-pricing policy on sales of diesel. “Besides, the government should also ensure smooth supply of electricity for industries that employ at least 50 people but are located outside the industrial areas by establishing feeders,” Basnet said.
He also urged to government to reduce corporate taxes from 20 percent and 25 percent to 10 percent and 15 percent.
Budget will be private sector friendly: FM
Finance Minister Barshaman Pun on Sunday said that the government will come up with a budget that would promote the private sector.
“You will see it for yourself when we launch it (the budget),” he said. He also said the government will come up with a full-sized budget of around Rs 429 billion -- the ceiling set by the National Planning Commission.
“We are holding discussions with political parties (to come up with a full-fledged budget) in this regard,” he said.