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As the government struggles to expedite capital expenditure and meet the revenue target, Prime Minister Pushpa Kamal Dahal on Tuesday instructed the government secretaries to put all their efforts into achieving the revenue target as well as improving development expenditure. The Prime Minister, who has been meeting secretaries of various ministries since Monday, gave 30-point instructions to them on Tuesday. Dahal, who has inherited a weak economy, directed secretaries to be sensitive to the fact that the revenue is not rising as per the target and capital expenditure is weak as the end of the sixth month of the fiscal year approaches. The federal budget has set a target of Rs 1,403 billion in revenue collection for this fiscal. However, after five and half months, around a quarter of the annual target ( 25.1 percent) has been collected. Given the current state of the revenue collection, it will become difficult for the government to raise the expenditure for daily administration and development expenses. The government has spent only 27.82 percent of the budget in the first five months. According to the Financial Comptroller General Office (FCGO), the government’s spending stood at Rs 499 billion till December-end. As per the FCGO data, the government’s capital expenditure has remained dismal. The government has utilized only 11 percent of the total capital expenditure in the first five and half months. Meanwhile, capital expenditure till December-end stood at Rs 42.45 billion. "There are some reasons for the decrease in revenue, such as economic recession, and decrease in imports. However, income tax has not been raised as per the target. "What's more, the fact that we have to wait in long queues to pay the monthly taxes shows the level of our service delivery," said Dahal. In his direction, PM Dahal asked the secretaries to think about the slow capital expenditure and urged them to bring proposals if there are any problems at the policy level. "The government's development expenditure is only 11 percent. What are the reasons for not being able to spend on development? Who is responsible? If the cause of slow development expenditure is not found and solved now, when will it be done? If there is a problem at the policy level, bring proposals for improvement based on facts," said Dahal. PM Dahal warned that weakness in the budget implementation cannot be tolerated any longer. "On the one hand, revenue has not increased as per the target and capital expenditure is low, and on the other hand, the issues of arrears are there. This has made the whole cycle of fiscal administration problematic. It is important to be sensitive about it," said Dahal. Dahal has instructed the National Planning Commission to immediately prepare a plan to speed up the pace of physical progress of development progress. According to Dahal, if the funds allocated for development projects cannot be spent, they will be transferred to projects that can be spent elsewhere, and arrangements will be made to link the work of officials who are responsible for revenue collection and development work according to the target with their performance evaluation.

The price of gold has increased by Rs 300 per tola in the domestic market on Wednesday. According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 102, 900 per tola today. It was traded at Rs 102, 600 per tola on Tuesday. Meanwhile, tejabi gold is being traded at Rs 102, 400 per tola. Similarly, the price of silver has dropped by Rs 10 and is being traded at Rs 1, 400 per tola today.

The Supreme Court of India on Monday upheld the Narendra Modi government’s decision to demonetize the notes of 500 and 1,000 denominations.  In November 2016, the Indian government had taken a controversial move of outlawing InRs 500 and InRs 1,000 currency notes in a bid to rein in black money. The move was challenged in the Indian Supreme Court. 

But on Monday, India’s apex court not only upheld the decision, but went on to state that it cannot be reversed. The demonetization move had also impacted Nepal, where Indian currency is widely accepted. The Nepali government has been requesting the Indian authorities to exchange the demonetized notes held by Nepali individuals, banks and financial institutions.

Several rounds of meetings have taken place between the officials of the two countries, but to no avail.  With the latest court verdict, chances of the demonetized Indian bills getting exchanged appear slim. One of the reasons India has shown reluctance to exchange the demonetized notes held by Nepalis is the issue of counterfeit bills.   According to Nepal Rastra Bank, banks and financial institutions hold demonetized bills worth InRs 33.6m.

For over two decades, Nepali handicraft businesspersons have been participating in international handicraft fairs. They have been doing decent business, say the organizers. The stats also prove that. Nepali traders started to take part in the Artigiano Fair of Italy from 2002. They participated in the fair with five stalls in the first year and over the years, Nepalis has had huge involvement.

Nowadays, there are over 100 stalls of Nepali handicrafts.  Due to the unique make and reflection of Nepali culture, Nepali handicrafts have been the first choice for the international buyers, says Keshav Jung Thapa of Krish Enterprises. “International fairs play a very significant role in advancing the sales of handicraft items.” Despite the contribution of these traders, they face a few problems which are hampering their business.

According to the Nepal Rastra Bank (NRB), a person can exchange $500 for foreign travel. For that too, s/he has to show a valid passport with a visa. But for international fairs, NRB allows any company any amount as per their demand. However, the company needs to submit the required documents and invoice. Thapa says the central bank has issued a directive that there will be no Tax Deduction at Source (TDS) for sending the money to international organizers.

However, few banks are unaware of this and they ask for 15 percent TDS. “I don’t know if the central bank sends different circulars to different banks or why is this a problem?” says Thapa.   Bashudev Bhattarai, director of Foreign Exchange Management Department of the central bank agrees that the NRB circular doesn’t ask for TDS.

“I have noted this issue and asked the department to ensure that all banks follow the circular,” he adds.  Also, the cargo companies have been bearing loss when sending handicrafts abroad. Janak Pyakurel of Speedmark Cargo Pvt Ltd, says only a couple of airlines carry huge cargo. “To manage all these logistics, we have to make a special request for which they charge extra fees.”

Similarly, Nepali traders have to pay 21 percent Value Added Tax (VAT) to export goods.  Pyakurel says Nepali companies, for instance, can’t register themselves in Italy. “If the fair organizers offer some subsidies, it will help us.” 

According to the former President of Federation of Nepalis Chamber of Commerce and Industry (FNCCI) Bhawani Rana, the demand for handicraft items is very high in international markets. “If only investments could be increased, Nepali traders can export more items to earn foreign currency.” The government should encourage and help traders participate in these events, she says.