'Partial budget will hurt export prospects, infra development'
KATHMANDU, July 12: Government officials and business people have said that export promotional programs, including cash incentives to exporters, and development of industrial infrastructure will be severely affected in the absence of full-fledged budget.
“As per the provision of one-third budget, the government can spend only one-third of the amount spent in respective headings during the current fiscal year. This means programs launched to boost exports and industrial activities, among others, will be badly affected due to fund crunch,” Rajan Khanal, spokesperson of the Ministry of Finance (MoF), told Republica on Wednesday.
Though the government allocated a total of Rs 600 million over the last two fiscal years to provide incentives to the exporters who made higher value addition in their products, only around Rs 110 million have been distributed to about four dozen business organizations so far.
“If partial budget is issued, the government can provide a maximum of Rs 36.7 million for the purpose,” added Khanal.
Insufficient allocations will also take its toll on execution of industrial infrastructure development programs that are crucial in creating industrial and investment climate within the country.
In the current fiscal year, the government has allocated Rs 740 million for industrial infrastructure development programs that include construction of Special Economic Zone (SEZ) and construction of connecting roads as well as arrangement of electricity for around a dozen cement factories that are under construction.
“We have spent around half of the total budget allocated for the industrial infrastructure development programs in the current fiscal year. It would be difficult to continue such programs in the absence of full-fledged budget,” said Yam Kumari Khatiwada, spokesperson of the Ministry of Industry (MoI).
Khatiwada said the process of awarding contract for those programs would be affected, leading to the delay in completion of the programs.
The MoI has demanded around one billion rupees for industrial infrastructure development for the coming fiscal year.
Suraj Vaidya, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said failure of political parties to forge consensus on full-fledged budget will leave economic vacuum in the county. “The private sector is becoming hopeless. Every sector of the economic will be affected in the absence of full-fledged budget,” Vaidya told Republica.
He said the absence of full-fledged budget will further aggravate energy crisis, deteriorate investment environment, bring development programs to a grinding halt and discourage exporters.
Despite strong lobbying from the private sector for full-fledged budget, the political parties on Tuesday decided to bring partial budget for the coming fiscal year.
Contractors against partial budget
Construction entrepreneurs have criticized the government´s move to announce ´one-third´ budget for the coming fiscal year, stating that shortage of fund will bring infrastructure development works to a grinding halt.
“Infrastructure development works will come to a grinding halt in the lack of sufficient fund, inflicting huge loss on entrepreneurs," Jaya Ram Lamichhane, president of Federation of Contractors´ Associations of Nepal (FCAN), said.
He said this would directly affect 17,000 contractors across the country.
“Meager budgetary allocation for development works will leave around 2.2 million workers jobless and equipment worth over Rs 400 billion useless," said Lamichhane.
Issuing a press statement, FCAN has urged all the political parties to forge consensus on full-fledged budget to give continuity to development works.