Budget Outline of 2071-72

Presented ByHeemani GurungSuraj SimkhadaBudget Outline of 2014-15

ContentsFinance Minister Dr. Ram Sharan Mahat presented expenditure plan of Rs 618.10 billion for the fiscal year 2071-72 (517.24 billion previous year).promises to end power cuts in the next three years,provide income tax holidays of up to five years for large-scale industries, extend massive subsidies and tax exemptions to the agriculture sector improve road connectivity.

Next year budget will be 19% higher than current budget.Investor friendly budget

Goals of the budgetachieve economic growth rate of six per cent in the next fiscal.

promoting economic growth, reducing the level of absolute poverty, creating jobs and base for sustained socio-economic development.

Bill endorsed by Parliament This Appropriation Bill Financial Bill Bill to Raise Public DebtExpenditure of budgetRecurrent Expenditure like salary payment of civil servants, grants to local bodies and debt servicing - Rs. 398.95 billion Capital expenditure like building physical infrastructure projects - Rs 116.75 billion Financing Provision like investment in state-owned enterprises and principal repayment- Rs 102.39 billion

Finance of the budgetFinance through tax and non-tax revenue- Rs 422.90 billionForeign Grants- Rs 73.38 billion Principal repayment- Rs 1 billion Foreign loans-Rs 49.52 billion Domestic loans-Rs 52.75 billion

Another Rs 18.53 billion of leftover of this fiscal will also be used to finance expenses of the next fiscal.

Major HighlightsManufacturing industries set up with capital of over one billion rupees and firms related to tourism sector and airline companies established with capital of over Rs. 2 billion will be subject to income tax holiday for the first five years from operation and 50% discount thereafter for the next three years.

Major Energy HighlightsHydropower projects that generate electricity till 2022-2023 can enjoy an income tax holiday for 10 years and 50% discount thereafter for the next five years.Hydropower development that evacuate power to national grid will get incentive of Rs 5 million per megawatt of power generation and those who evacuate power by 2017-18 will get additional 10% of that amount.

Energy HighlightsGovernment to generate 28 megawatts of hydroelectricity and 25 MW of solar energy in 2014-15.Government to complete Upper Tamakoshi, Kulekhani III, Chamelia and Upper Trishuli hydroelectric projects and generate 560 MW of electricity in the next three years. Forty-two hydro projects being developed by the private sector to add another 628 MW of electricity to the grid within that period.Project development agreements with 900MW Upper Karnali, 900MW Arun III, 650MW Tamakoshi III and 600MW Upper Marshyangdi II hydroelectric projects to be concluded. West Seti hydroelectric project to be implemented soon.

Agro highlights.Interest on loans extended for commercial vegetable, poultry, mushroom and herbs farming, fishery, dairy business, establishment of storage facilities, meat business and slaughter houses not to exceed six per cent.Fifty per cent interest subsidy on loans acquired for the purpose of carrying out commercial farming in 10 hectares of land in hilly region and 20 hectares of land in the Terai region. Seventy-five per cent interest subsidy on loans extended by cooperatives operated by small and marginalized farmers. Seventy-five per cent subsidy on crop and poultry insurance premiums.Agro HighlightsOne per cent duty on imports of hand tractor, power tiller, feeder machine and milling machine.Farmers conducting dairy business with over 20 hybrid cows to get 50 per cent rebate on purchase of milking machines.Fifty per cent value added tax rebate for tea industries Rs 5.48 billion allocated to extend 255,000 tonnes of subsidized chemical fertilizer in the next fiscalGovernment to introduce Contract Farming Bill to commercialize agricultural sector.Infrastructure DevelopmentProject or ActivitiesAmountMid Hill Highway Rs 2 billionNorth South Corridors Rs 1.18 billionPostal Highway Rs 2 billion Rs 2 billionRing Road Improvement Project Rs 1.19 billionKathmandu Valley word widening Rs 1.8 billionTrade route improvement Rs 1 billionMaintenance of 16,788 km roads Rs 4.5 billionSimara-Bardibas railway construction Rs 1.35 billion125 bridges construction Rs 7.3 billionRoad links to 815 VDCs Rs 1.2 billionRoad connection to 815 VDCs Rs 1.2 billionUpgrading of 55,000 km rural roads Rs 2.25 billionEducation HighlightsThe budget allocation was 13.91 per cent of the total budget this year, lowest of the decade.Announce to pass the Education Act, bring an umbrella act for universities and do the needful to establish open universities in the country. The government is also observing the new fiscal year as the Year of eradication of illiteracy. announce grants for 2,000 more teachers in Higher Secondary Level. It also plans to merge 200 schools during the new fiscal.Education Highlightsencourage Public-Private Partnership to improve school education. It has also assured facilities for private schools that support government schools in improving the quality of education. announce more incentives for Dalit, Chepang and Raute kids in terms of incentives ranging from Rs 1,500 to Rs 3,000 for higher education .Skill oriented training for youths and vocational education in all constituencies were the other programmes of government.One school one library one science lab program

Health Highlights plan to decrease infant and maternal mortality rate and to provide qualitative maternal services.decided to begin mid-wifery education this year.Develop the prerequisites of health institutions with modern equipment. New concepts will be brought to facilitate the coordination between private and government sector for capacity building in government hospitals. Highly facilitated wards will be established at Bir hospital to provide qualitative service to the heads of state and government, and senior officialsHealth Highlights.drugs will be provided for free round-the-clock in government hospitals and health centres, besides upgrading sub-health posts and health posts by the next fiscal.ICU will be established in five zonal hospitals and geriatric ward will be established in all zonal hospitalsNew vaccine for pneumonia will be provided, Doctors will be sent to remote areas and will be provided allowance.500 health posts and 300 primary health posts will begin with check-up.Sports HighlightsAs per the programme of having at least one sports ground in each constituencies, I have set aside budget for 53 constituencies in the upcoming fiscal year.Allocate Rs 200 million to construct the international-standard parapet at the Mulpani Cricket Stadiumplanning to construct a cricket ground in Bhairahawa and other potential areas.

Other Highlights.Government to frame policies to promote knowledge-based service industries.Introduce 4G service.All government-owned vehicles should mix 10 per cent ethanol on petroleum products from next fiscal. Rs 1.59 billion for reconstruction and rehabilitation of infrastructure damaged during conflict and launch special programmes at conflict-affected areas. Budget allocated for housing and security for female lawmakers.Government to write off loans of up to Rs one million acquired by people, who became martyrs. The government to write off interest, fees and other fines of people who have disappeared, on condition that their family members pay the principal amount.

Other HighlightsGovernment to provide income tax holiday for 10 years to those who develop resorts alongside Rara Lake and other popular lakes. Government to extend seed money of Rs 500 million to non-resident Nepalis and the private sector to set up venture funds and raise small and medium enterprises access to finance Government to set up price stabilization fund, with seed money of Rs 500 million, to adjust prices of petroleum productsVAT rebate for textile industries

Effects of the budgetRubber and plastic soles, radar equipment are getting cheaper.Potato chips, cigarettes, alcohol, gas regulator valve, imported cement and clinker are getting costlier.Income tax exemption limit for couples raised to Rs 300,000 from existing Rs 250,000 and for singles raised to Rs 250,000 from Rs 200,000.Ten per cent hike in salary of civil servants, along with 25 per cent increment in local allowance and 50 per cent increment in field allowance keeping inflation allowance increment constant.