Finance Minister Bishnu Paudel presented the budget for fiscal year 2078/79 on Saturday. The budget for this year is Rs 1 trillion, 646 billion, and 570 million (16 kharba 47 arba and 57 crore rupees). It was Rs 1 trillion 474 billion and 464 million last year.
41.2 percent, or Rs 678.61 billion, has been set aside for regular spending, while 22.7 percent, or Rs 347.29 billion, has been set aside for capital/development spending. 12.6 percent of the budget is designated for financial management, with the remaining 23.5 percent designated for state and municipal governments.
We’re not going to repeat the entire budget speech here. So, without further ado, let’s get right to the point. Most businesses, tech aficionados, and creative brains may be wondering if there is anything in store for their assistance this year or not!
The economy appears to have come to a halt as a result of the emergence of Covid-19 and its current second wave (primarily for the hotel and tourism sector). According to one report, the private sector loses Rs 2 billion per day. In this scenario, a budget has been prepared to mitigate economic losses and regulate the situation caused by the Covid-19 epidemic.
Allocation for Technology, Digitization, Innovation and Startups
Since technology, innovation, and entrepreneurial activities have been demonstrated to be the key drivers of the economy in most countries, the budget for FY 2078/79 appears to be continuing to provide room for their development. In this article, we will look at how the new fiscal strategy has prioritized digitalization and technology progress in its budget allocation.
This fiscal year’s budget (FY 2078/79) mentions some of the inclusive considerations for the following sectors:
A total of Rs 37.5 billion has been set aside for Covid-19 treatment and the purchase of Covid-19 relief supplies and vaccine. In terms of health care, it has been announced that an emphasis will be placed on the operation of telemedicine and mobile health services. Similarly, the National Health Laboratory’s capacity would be expanded to allow for the testing of any sort of medical sample in Nepal.
Digitization has also been implemented in the education sector. It is hoped that within the next two fiscal years, every community school in Nepal will have access to broadband internet. In this regard, around 60% of the work is expected to be done within a year. Similarly, Nepal Television plans to launch a distant education channel for individuals who are unable to attend school owing to financial or health constraints. In addition, students at secondary and high school in community schools would be given a loan of up to Rs 80,000 with a 1% interest rate for two years to purchase a laptop to help them with their studies. Similarly, all students over the age of 16 would be given a free SIM card.
3. Agriculture and Land Reform
For effective soil testing in agriculture, a digital soil mapping system would be established. Similarly, it is stated that any commercial business that operates a biological chemical plant would receive around half of the subsidy.
Continuing the agenda established in the previous budget, focus has been restored this time on the implementation of a mobile application for giving farmers with multidimensional information about farm goods and their prices, as well as the availability of seeds, insecticides, and agricultural supplies.
The “Mero Kitta” technology, which permits digital mapping of areas, would be fully deployed.
In this area, it is hoped that GIS mapping would soon be used to classify all of Nepal’s roadways. Similarly, the requirement to have a Digital Driving License will be maintained.
- Emphasis would be given towards installing radio frequency aided embossed number plates in the transportation vehicles of every state
- An E-ticketing system would be applied in the public transport
- Within a year, Sajha Yatayat would operate a minimum of 100 electric buses in its main routes
- Essential steps would be taken with the Public-Private partnership towards installing around 500 electric vehicles charging station, terminal building, and other infrastructures
- Emphasis would be given towards replacing petroleum-based vehicles with electric vehicles by the end of the year 2088.
5. Industries and Startups
To help the economy recover from the ongoing effects of the pandemic, this fiscal policy has done its utmost to support industries and startups at the policy level in the following ways:
- With the collaboration of the private sector, the government would give emphasis on “Made in Nepal” and “Make in Nepal” campaigns thereby promoting the local products and fostering their marketing.
- Virtual Trade Shows would be organized timely for promoting the products of SMEs and MSMEs
- The government has decided to provide lease-free land to the innovators who are into the work of producing electric vehicles and their parts
- The SAARC Handicraft Design Center in Tripureshwor would be ready for operation within a year
- The e-commerce policy would be implemented for guiding the e-commerce industry
- The sportsmen would get some waiver in the business they run after they are retired
- About Rs 13 billion has been allocated to provide an interest subsidy of 5% to SMEs and MSMEs, women-run businesses, and commercial farming.
- The students with a minimum undergraduate degree can obtain a loan up to Rs 25 lakhs with a maximum of 5% interest against the collateral of their educational certificates
The government has emphasized entrepreneurship by allowing adolescents to receive seed investment of up to Rs 25 lakhs (with 1% interest) against the collateral of their business plan. Similarly, the registration, renewal, and other services would be supplied to startups at no cost through a one-door policy. In addition, a Rs 1 billion challenge fund has been formed to lure FDI into Nepal’s startup ecosystem.
6. Science and Technology
- Soon the government would form the “Science, Technology and Innovation Council” to foster scientific research and innovation
- In the coming year, Madan Bhandari Science and Technology University would be brought into operation
- A total of Rs 180.4 billion has been allocated for the collective development of education, science, and technology.
In terms of energy, this initiative sought to provide solar and wind energy to around 50,000 homes. Customs duties on the import of electric products such as induction stoves, refrigerators, microwave ovens, and dishwashers have been cut.
8. Communication and Information Technology
Could this budget speech possibly end without referencing the “Digital Nepal Framework?” Certainly not. The Digital Nepal Framework-2075 would be fully implemented at a faster rate. According to the Digital Economy target, it is hoped that all local level schools, governmental offices, and police stations will be properly equipped with broadband internet connectivity within the next two years. And for that, work on putting optical fiber beneath the Information Superhighway has been ongoing across the country.
Similarly, there are additional noteworthy points such as:
- 4G services would be accessible in every 753 local levels
- The National Cyber Security Reporting Portal would be made effective
- Almost all the governmental services would be integrated within “Nagarik App” to ease in delivery of the governmental services
- “Mobile Device Management System” would be into operation from Shrawan 1 to detect and control mobile theft and its misuse in criminal activities
- Any natural person using mobile, landline, and internet of Nepal Telecom network would get a 22% share of the company. This would be applicable for those who remain users of NTC till Poush, 2078.
- All the revenue collection by the government and payments of Social Security Contribution and other transfer payments would be channeled through banking services
- The National Payment Switch would be operated from the next year to bring interoperability among the payment cards, retail payment, QR code payment, and other digital payment systems.
- The remittance would be collected via the banking system. And the banking customers who place their remittance inflow in the fixed deposit account are entitled to additional one percent interest for the same.
- Those who pay through debit card, credit card, QR code, or any digital system would get instant 10% cashback on the VAT amount they pay during the purchase of goods and services
The primary goal of fiscal policy 2078/79 is to manage the ongoing devastation caused by Covid-19 while also directing the economy as much as possible toward recovery. Given the current economic disaster, this strategy has not implemented many popular goals. However, several elements, like as the promotion of electric vehicles, tax exemptions for startups, and the strengthening of the execution of the Digital Nepal Framework, have provided some type of silver lining at this trying period. Having said that, some of the provisions appear to be extremely ambiguous, and every entrepreneur’s mind silently begs for greater explanation. For example, e-commerce entrepreneurs are debating the creation and execution of e-commerce policy. The question is whether this policy will help or hurt the burgeoning e-commerce industry.
In a nutshell, it has become a yearly tradition for Nepal to get an extremely ambitious budget plan, despite the fact that it consistently underperforms. So, how would this fiscal policy differ from prior ones in the midst of the current crisis? Is the government capable of carrying out all of the promised measures and plans to the best of its abilities? What about the upcoming presidential election? Isn’t this going to stymie the execution of policies and the completion of projects? How successfully will the incoming monetary policy support the implementation of this Fiscal Policy in order to maintain the economy’s current growth rate? Many Nepalese minds are likely to have been preoccupied with these myriad issues. If you have any thoughts on the FY 2078/79 budget, please share them in the comments section.