The budget is moderate. The budget size for the next fiscal year has been slightly increased compared to the current fiscal year. But revenue mobilization target and administrative cost are almost equal. This has raised the question whether the government has prioritized revenue collection. The budget does not emphasize increasing domestic production, there is no sufficient budget allocated for the purpose.
Our capital expenditure capacity is very weak. We barely spent around 35 percent of the total capital expenditure target. Low level of capital expenditure is the biggest disadvantage for the economic sector of the country. It is because without enough mobilization of capital in the market, economic activities cannot get momentum.
In the budget for the next fiscal year, the government has introduced some positive provisions as well such as in the area of start-up . We need a law for receivables management, which we don’t have at the moment. The government should also translate its commitment regarding receivables management into reality.
At the same time, the budget has some contradictory provisions. Take, for instance, the plan to bring into operation the Biratnagar Jute Mill. One fiscal policy states one thing about the industry while the other introduces a different policy. This type of unstable policies by the government does not give a clear position of the government to run industries. No industry, whether it is government-run or privately owned, should face the problem of unpredictable policies.
Predictable environment and policies are prerequisite for any industry for enabling business environments. But our policies are not predictable.
Even in the steel and iron industry, the entire sector has been a victim of the government’s unpredictable policies. The government unveiled a budget with one kind of provision for sponge iron and billet iron. Now another Finance Minister from the same party just reversed the provision. But, Nepali industrialists had already invested billions to set up melting units for sponge iron. Some 18 industries have already spent in billions to set up melting units. Those industrialists had to bear the loss due to the government’s unstable policies. We are quite confused whether Janardan Sharma’s policy was right or Barshaman Pun’s policy is right. This type of unpredictable environment must be ended. This type of situation also creates an environment of trust deficit to the government’s policies. This also raises the question on the attitude of the government.
Unpredictability is nothing new in Nepal. The thing to worry about is that it is becoming a norm. The government lacks accountability, no government takes responsibility for policy inconsistency.
Industries are also facing challenges such as power outages. But the budget has not explicitly mentioned anything about such problems. When the government chooses to remain silent on such a crucial issue, the private sector cannot invest more. Credibility issue is also one of the major areas to be worried about.
Predictable policies, and consistency in financial planning are very crucial factors for investment. This is not the case with Nepal. We have the largest burden of social welfare. Our fiscal policies are populist. It has been no different this year.
Suyesh Pyakurel is immediate past president at Chamber of Industries, Morang.
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