Finance Minister Presents Budget for Fiscal Year 083/84, Focus on Middle and Upper Classes

Finance Minister Dr. Swarnim Wagle has presented the budget in the house for the upcoming fiscal year 083/84. Various discussions, criticisms, support, or praise are currently being held from different angles regarding the new budget brought by the government led by Rastriya Swatantra Party's senior leader Balendra Shah. The intention of this article is to express one's opinion regarding the new budget itself.

Primarily, this budget has neglected the poor and low-income individuals and is a budget that is confused about which sector of the economy to prioritize.

The Finance Minister has presented a budget of 21 kharba 24 arba 34 crore with a target of achieving 7 percent economic growth in the upcoming fiscal year. Specifically, the budget has provided more benefits to the middle class, and the Finance Minister has been stating that it aims to expand the stable middle class. Consequently, while income tax exemption was provided for income up to 5 lakh in the current fiscal year, it has now been doubled to 10 lakh, meaning no tax needs to be paid.

In other words, those who can earn up to 90 thousand per month have benefited, and this provision has also reduced expenses for those earning more than that. This means that this provision has benefited the middle and upper-income individuals. Secondly, the salaries of government employees have increased by 21 percent. This might have been increased because it was insufficient for them, and there is no particular objection to that. However, how much the country's existing revenue sources can sustain this and how much it will increase consumer inflation will only be known after the budget is implemented.

However, just as the budget has paid attention to the middle class, upper class, and government salary earners, the budget has not thought even a little about the low-income and poor and unemployed class. However, it should be noted that according to the data from the National Statistics Office a few months ago, 20.27 percent of people in Nepal are below the poverty line. In Nepal, with a population of approximately 30 million (29.1 million), more than 6.26 million people, or 1 in every 5 people, are poor. However, this national budget has not thought even a little about providing them with relief, supporting their upliftment, and creating employment.

Furthermore, informal studies suggest that the population in the low-income group (earning 30-60 thousand per month) and the poor class, which is one level below the middle class, exceeds fifteen million in Nepal. Overall, this budget has not adequately touched about fifteen million people, nor has it opened its coffers to provide additional benefits.

In reality, the government or the state is needed more by the poor and helpless than by the rich. Because the rich are capable in themselves, and wealth is also power in itself.

It is being claimed with great fanfare, in a Goebbels-style propaganda, that the poor class is also being looked after by merely providing social security allowance and nutritional allowance to Dalit children, which has been provided since the past. However, the budget has primarily provided nourishment to permanent employees and the upper class earning more than one lakh per month, and to large import-export businesses. It has forgotten the state's responsibility towards social justice and the poor people.

In reality, the government or the state is needed more by the poor and helpless than by the rich. Because the rich are capable in themselves, and wealth is also power in itself. Wealthy people can earn from anywhere and in any way. They can go anywhere, domestically or abroad, to fulfill their needs.

They can do anything with the power of money. But the poor are in a 'do or die' situation. Therefore, the government must look after them. Because the country also belongs to them; this air, water, geography, soil, resources, and wealth are common to all. Calling it mine and yours is merely bankruptcy. This Earth is not just for the 8 billion humans, but a common platform for all living beings and souls. Therefore, the leadership holding the reins of the state must have a broad vision.

For example, some have questioned the Finance Minister about the budget being ambitious and where the resources will be found. However, it is not bad for the budget to be ambitious. Moreover, if the borrowed amount is used correctly, it can be good. There is no reason why past governments could take public debt and this government cannot. Furthermore, the government is stating that it will take 6.5 kharba in public debt in the upcoming fiscal year, of which more than half, i.e., more than 3 kharba, is for repaying old debts.

Moreover, 27 national pride projects of utmost importance are under construction. Ensuring resources for them is the primary responsibility of any government. The more the construction of these projects is delayed, the more the cost will increase and the productivity will decrease. Therefore, instead of finding revenue sources by burdening the public and imposing taxes in various dimensions, it is wise to complete infrastructure development with domestic and external loans with a long-term perspective. Infrastructure, once built, does not require major cost to rebuild.

Furthermore, this budget is not transformative as the Finance Minister has been claiming. Because a transformative budget dares to change the main structures of the economy, such as agriculture, industry, and import-export, at a new speed. This budget has not done that. Instead, it sees a future in sectors like AI and IT. Primarily, there is no strategic clarity in the budget regarding which sector will drive the economy. There is no clear plan for industrial expansion. The policy to link labor with production is weak.

Although budget has been allocated for startups and innovation, concrete programs have not been brought. Primarily, the government did not appear proactive this year in solving the unemployment problem and developing entrepreneurship among the youth.

However, the government has allocated 70 billion for the expansion of transmission lines, providing direction for energy trade. That is an excellent job. Because trade is not possible without expanding the energy highway. Furthermore, Nepal's potential sectors are agriculture, energy, and tourism. Among these, the budget has done well for the development and expansion of the hotel, tourism, and energy sectors. The government also aims to add 1,040 megawatts of electricity to the national transmission line in the upcoming fiscal year. Therefore, the budget for energy is correct.

Although budget has been allocated for startups and innovation, concrete programs have not been brought. Primarily, the government did not appear proactive this year in solving the unemployment problem and developing entrepreneurship among the youth. However, the demands of established industrialists and traders in the private sector have been addressed this time.

Specifically, customs duty on the import of 273 raw materials for the industrial sector has been reduced. A 50 percent tax exemption has been given on income earned from exports. Excise duty imposed on 360 items has been removed. Only a few limited items related to the objective of excise duty remain. The government has provided additional facilities for large hotels and tourism promotion. It has been stated that legal arrangements will be made to involve non-resident Nepalis in the stock market.

Consequently, expressions of happiness have been received from umbrella organizations of the private sector, including the Federation of Nepalese Chambers of Commerce and Industry, Nepal Chamber of Commerce, and EPAN. Their concern is that the budget should be implemented. Furthermore, the government has reduced 22 ministries to 18 and abolished 31 government bodies, which is a good step in terms of the government's administrative expenses. Similarly, the budget this time has also made efforts to reduce training, travel, and administrative expenses, which is good.

Overall, Finance Minister Swarnim Wagle's budget is targeted at the middle and upper classes.

Despite all this, the 3 percent tax on school fees and 5 percent tax on electricity consumption (above 50 units) imposed by the government this time is not a necessary measure. Because at a time when electricity consumption needs to be increased and other energy alternatives need to be reduced, the government has discouraged it, making the livelihood of the people more expensive.

The budget has also discriminated between large and small farmers. For example, it is stated that farmers investing a minimum of 2 crore will be given incentive grants up to 40 crore. However, the budget has completely neglected poor farmers who do not have 2 crore, or even two-four lakh.

The budget allocated for sectors like education and health is the same as in previous years. However, the budget for agriculture, which has supported the country's economy the most and on which 52 percent of people depend, has been reduced this year. The budget for agriculture has been reduced by more than 10 billion to 46 billion 52 crore. This is also a wrong move. Similarly, only limited taxes have been increased on tobacco products and alcohol, on which taxes should have been increased.

Thus, overall, Finance Minister Swarnim Wagle's budget is targeted at the middle and upper classes. Sectors like AI and information technology have been overemphasized compared to agriculture, the labor market, and tourism, which are the mainstays of our economy. This budget has forgotten or neglected social justice towards those struggling with poverty and unemployment and the government's responsibility towards the poor people. The budget has been brought targeting those who can speak and the well-dressed.

(Gautam is an economic writer and analyst.)