Submit your Article

Finance Minister Barshaman Pun on Tuesday unveiled a Rs 1.86trn budget for the upcoming fiscal year 2024/25. The government has allocated Rs1.14tn of the total budget for current expenditure, Rs 352bn for capital spending, and Rs 367bn for financing. 

The government has announced the fiscal year 2024/25 as a year of economic reforms and planned the budget accordingly. 

“The budget aims to address long-standing challenges in the economy, including an imbalance in public finance, the increasing size of public debt, limited capital expenditures, and the lack of revenue collection as per the targets. These initiatives will be undertaken through the implementation of fresh programs for economic reforms,” Minister Pun told the federal parliament during his budget speech.

Strategies and priorities for economic reforms

Pun announced that the provinces will be developed as economic hubs in the upcoming financial year. He also revealed plans for the creation of a specialized financial center in coordination with the private sector. 

According to him, Koshi Province will be developed as an economic hub for industry, Madhes for agriculture, Bagmati for information technology, Gandaki for tourism, Lumbini for small and medium enterprises, Karnali for herbs, and Sudurpaschim for religious tourism.

Minister Pun also announced that legal arrangements will be made for commercial production of marijuana for medicinal purposes. Although a similar announcement was made in the current budget and the Ministry of Home Affairs conducted discussions to formulate criteria for allowing the cultivation of marijuana, these efforts were unsuccessful.

The budget estimates for the upcoming fiscal year aim at achieving five objectives: increasing production, productivity, and employment; securing investment and growth; accelerating economic activities by boosting private sector morale; achieving human resource development; and alleviating economic disparities and poverty through balanced resource mobilization and effective public service delivery.

It also identifies economic reforms and private sector encouragement, construction of industrial infrastructure (such as in agriculture, energy, and information technology), development of social sectors like education and health, promotion of inclusion and social security, and enhancement of public service systems as priority areas.

Pun announced five government strategies for economic reforms including structural reforms, improvement in the business environment, reforms in the public finance system, financial sector reforms, and reforms in public administration. He said a high-level task force will be established to provide recommendations to the government for structural reforms of the economy.

The financial plan for the upcoming fiscal year also pledges introduction of favorable policies, complete country rating, and elimination of dual taxation to create a business-friendly environment in the country.

Rs 567bn for subnational governments

The federal government is set to allocate Rs 567bn to the provincial and local governments in the upcoming financial year 2024/25. According to Pun, based on the recommendation of the National Natural Resources and Fiscal Commission (NNRFC), the federal government has earmarked Rs 60bn for the provinces and Rs 88bn for the local level toward fiscal equalization grants.

A conditional grant worth Rs 25.84bn has been allocated for the provinces and Rs 28.88bn for the local level. Additionally, Rs 6.2bn has been allocated to the provinces and Rs 7bn to the local level as supplementary grants. Similarly, Rs 4.4bn has been allocated for the provinces and Rs 8.5bn for the local level as special grants.

Finance Minister Pun emphasized that arrangements will be made to transfer conditional, supplementary, and special grants based on performance. The government estimates that Rs 159bn will be transferred to the provincial and local levels as part of revenue sharing.

Tourism promotion

The government has allocated a budget of Rs 11.91bn to the tourism sector, with Pun emphasizing that the tourism sector will be given priority in the upcoming fiscal year.

The government aims to attract 1.6m tourists in the next financial year. Pun mentioned that tourism services will be provided through a one-door system. He said that there will be targeted programs to promote tourism in neighboring countries such as China and India.

He also announced the government plans to build ‘eco-hill stations’ at major tourist destinations from Chure to the Himalayas. Infrastructure projects, including the Great Himalayan Trail, Mundum Trail, and Guerrilla Trail, will also be developed.

The government will allocate a separate budget to reduce risks in the tourism sector. Additionally, May 29 will be celebrated as Sagarmatha Day, honoring local and foreign citizens involved in promoting Nepal’s tourism sector.

Triangle project​​​​​​​

The government has unveiled plans to implement the Gandaki Economic Triangle Project, connecting Bharatpur, Pokhara, and Butwal. Pun emphasized that this project would serve as a model development initiative, adhering to the principles of integrated development. Industrial revitalization and the creation of quality employment opportunities will be fostered through the establishment of an industrial ecosystem in collaboration with the private sector.

According to the budget, the expansion of the Narayangadh-Butwal and Muglin-Pokhara road sections, currently under construction, will be completed within the upcoming fiscal year. Finance Minister Pun stated that the Butwal-Pokhara road will be widened into a dedicated two-lane route, and a comprehensive transportation network will be developed to support industrial growth along the three corridors of the triangle.

Under this project, the Narayangadh-Butwal road section will be developed as a hub for construction materials and heavy industries, the Muglin-Pokhara section as a center for agriculture and food processing industries, and the Pokhara-Butwal section as a hub for electronic equipment, footwear, clothing, carpets, and domestic goods and services ​​​​​​​industries.

A budget of Rs 2m has been allocated for the implementation of this project, which aims to establish it as a model initiative through public-private partnership. Additionally, the budget outlines plans to develop the areas surrounding the east-west highway from Nijgadh to Dhalkebar as the Nepali carpet corridor, with provisions for public agencies to procure such carpets.

Hydropower expansion​​​​​​​

The government has set a target to enhance the capacity of the national grid to 4,500 megawatts by the upcoming fiscal year. It anticipates increasing the per capita consumption of electricity from 380 kilowatts to 450 kilowatts. 

Additionally, the government aims to begin exporting Nepal’s electricity to Bangladesh, expanding beyond the current export to India.

The promotion of reservoir-based projects has been prioritized to meet power demands during winter, with plans to implement the construction of the 1200 megawatts Budhigandaki Hydroelectricity Project. The government also plans to develop the 625 megawatts Dudhkoshi, 417 megawatts Nalgadh, and the 280 megawatts Naumure projects are also on the cards.

Further, the government plans to launch the development of the 77.5 megawatts Ghunsha Khola and 70.3 megawatts Simbua Khola hydroelectricity projects, securing investments from Nepalis in foreign employment.

Under the People’s Hydroelectricity Program, construction is slated to commence for the 106 megawatts Jagadulla, 99.9 megawatts Tamakoshi V, and 210 megawatts Chainpur Seti Hydroelectricity Project. Moreover, plans include determining the investment framework for the Sunkoshi III Hydropower Project and conducting a feasibility study for the 10,800 megawatts Karnali Chisapani Hydropower Project. 

The government has set a goal of promoting clean and renewable energy to replace traditional energy sources, aiming for zero carbon emissions by 2045. It plans to encourage the production, storage, and use of green hydrogen, while also concluding the construction of the Dhalkebar-Inaruwa and Barhabise-Khimti-Lapsifedi transmission lines within the next fiscal year.

Initiatives are also in place to initiate the construction of the Seti Corridor, Bheri Corridor, and Budhigandaki Corridor Transmission Lines, as well as concluding the construction of the New Butwal-Gorakhpur Transnational Line. 

Additionally, budgets are allocated for the construction of the Inaruwa-Poornia and Dododhara-Bareli Transmission Lines. Finance Minister Pun informed the house that the government has allocated a budget of Rs 50.7bn to the energy sector in the upcoming fiscal year.

Agriculture investment decade​​​​​​​

The government has announced a ‘decade of investment in agriculture’ for the development of the agricultural sector from 2024 to 2034. Finance Minister Pun said that special areas will be designated based on geography, market potential, and agricultural produce. 

“The government will promote contract farming in collaboration with farmers and businesspeople,” he said, adding that those who process and export agricultural produce will receive loan interest subsidies, grants, and fertilizer seeds based on their production.

The budget also states that those engaged in commercial farming and animal husbandry will receive tax exemptions on the purchase of machinery and spare parts, as well as interest subsidies on loans.

Employment bank​​​​​​​

The government has announced its intention to establish an employment bank. It has been mentioned that this bank will compile integrated records of employment-related information. The budget also highlights the integration of employment and labor market demands into an automated system. Additionally, the budget outlines plans for conducting employment programs.

The Prime Minister Employment Program will continue, with provisions for engaging the unemployed listed at the local level in public maintenance work. Approximately 200,000 individuals will be provided employment for a minimum of 100 days through this program.

Pun announced that orientation training provided to individuals before foreign employment will be made free of charge. 

Finance Minister Pun said that labor contracts will be signed with three additional destination countries starting from the fiscal year 2024/25. He added that emphasis will be placed on sending skilled workers.

Pun also mentioned that the scope of benefits from the welfare fund for dependent families of workers engaged in foreign employment will be expanded.

Budget for roads​​​​​​​

The government has expressed its commitment to expedite the construction of highways in the next fiscal year, although the budget allocation for this purpose is comparatively lower. 

A sum of Rs 29.88bn has been allocated for the expansion of the East-West highway, while Rs 22.54bn has been earmarked for the Kathmandu-Tarai Fast Track project. Regarding the latter, it has been stated that the construction of Mahadebtar, Dhedre, and Lendanda tunnels will be completed in 2024/25, along with an accelerated pace for the construction of 57 bridges.

Furthermore, Rs 3.64bn has been allocated for the Madhya Pahadi Lokmarga, which will facilitate the construction of 75 kilometers of blacktoppings and 10 bridges under this allocation. Additionally, Rs 4.4bn has been set aside for the development of the Koshi, Kaligandaki, and Karnali corridors.

Stadiums in national pride project​​​​​​​

The government has allocated a budget of Rs 3.5bn for the Ministry of Youth and Sports. Pun announced that Rs 1.3bn has been earmarked solely for the development of infrastructure in the sports sector. He also revealed plans to organize 80 national-level sports events in the next financial year.

“The standard of TU cricket ground will be improved, and Gautam Buddha Stadium will be constructed in cooperation with the provincial and local levels,” Pun said. 

Additionally, projects to enhance Mulpani Stadium in Kathmandu and Girija Prasad Stadium in Biratnagar will be promoted as national pride initiatives. 

Pun disclosed that Rs 600m has been allocated to organize the Tenth National Games in Surkhet. Furthermore, he emphasized that teachers will receive sports training and sports promotion activities will be conducted in schools. 

Training for media workers​​​​​​​

Minister Pun has said that complete freedom of the press will be guaranteed while ensuring the right of citizens to be well informed. By making the mass media sector fair, competitive, and inclusive, he said arrangements will be made for the timely communication of news of public importance. 

Training programs to increase the capacity of media workers have also been introduced in the budget. The government also plans to regulate advertising through digital platforms. 

A budget of Rs 7bn has been allocated to the Ministry of Communication and Information Technology to implement these plans.

Key takeaways from budget​​​​​​​

• Six percent economic growth, 5.5 percent inflation forecast
• Rs 1.5bn for the program of Nepali Army bunkers and barracks
• Rs 5.63bn for the construction of tunnels, intersections and flyovers
• Abolition of additional tax on potatoes, onions and apples
• Rs 2.46bn to build ‘signature bridge’ on Narayani and Tinau river
• Compulsory issue of shares will be made to companies with more than certain capital
• A sovereign wealth fund will be established from remittances
• Rs 1.16trn for social security allowances
• College in the memory of late Sita Dahal, wife of Prime Minister Pushpa Kamal Dahal
• Rs 170m budget to establish knowledge park

The task force formed for the formation of a parliamentary probe committee submitted its report to Prime Minister Pushpa Kamal Dahal on Tuesday.

After an agreement was reached in the meeting of the task force held at the Law Ministry this morning, the task force member submitted the report to Prime Minister Dahal in Singha Durbar. After that, the report was made public.

The Prime Minister’s Secretariat said that a four-point agreement was signed in the task force to end the long-standing dispute between the ruling and opposition parties and House deadlock.

According to the agreement, the tenure of the parliamentary probe committee formed to investigate the misuse of cooperative funds will be of three months. There will be seven members in the committee.

Minister for Law, Justice and Parliamentary Affairs Padam Giri, lawmakers Jeevan Pariyar, Mahesh Kumar Bartaula, Shishir Khanal, Hit Raj Pandey and Gyanendra Bahadur Karki signed the agreement.

The main opposition Nepali Congress has agreed to form a parliamentary probe committee without mentioning the name of Deputy Prime Minister and Home Minister Rabi Lamichhane.

The Parliamentary Party meeting held on Tuesday decided to form a parliamentary probe committee without mentioning the name of any particular person in the cooperative fraud scam.

After the meeting, Nepali Congress Chief Whip Ramesh Lekhak said that the task force would give the final shape.

The meeting was held under the chairmanship of former General Secretary Krishna Prasad Sitaula after party President Sher Bahadur Deuba was not feeling well.

Lekhak said that the names of additional members will be sent to the parliamentary secretariat after the terms of reference (ToR) of the committee is finalized.

Currently, Deputy General Secretary Jeevan Pariyar and Gyanendra Bahadur Karki are in the task force from Nepali Congress.

Leader Lekhak claimed that a proposal will be tabled in the Parliament meeting at 4 pm today to endorse the agreement along with ToR.

The Congress has long been obstructing the House proceedings demanding formation of a parliamentary probe committee by mentioning the name of Home Minister Lamichhane in the cooperative fraud case.

Now, the House obstruction will be cleared from today after the Congress expressed its readiness to form a parliamentary committee without mentioning the name of any particular person.

Of late, a very intense and interesting discourse is taking place in Nepal among the intellectuals, academicians and politicians over the present electoral system in general and the proportional representation (PR) system in particular. Some intellectuals and politicians associated with big political parties are arguing against the present PR system by portraying it as a ‘main cause’ of frequent changes in government. They are trying to spread the message that the first-past-the-post (FPTP) system is the only way to ensure stable governance in the country. But their line of argument is scientifically and democratically unjustified, incorrect and against the concept of inclusive democracy, something which our Constitution has upheld.

The context: Before the introduction of a mixed electoral system, Nepal was practicing the FPTP system. After decades-long practice, the country opted for a mixed electoral system to minimize the demerits of the FPTP system, mainly in view of the role of money, muscles and caste factors in the elections. Inclusivity or mainstreaming of marginalized communities, groups and regions, a mandate of the 12-point understanding signed between the then Seven-Party Alliance and the Maoist rebels in 2005, the Comprehensive Peace Accord (CPA) signed in 2006, the Interim Constitution and TOR documents of the ‘revolution’, was another factor behind a switch to the mixed system.

Discourse during statute-drafting: As a member of the then Constituent Assembly (CA) and one of the active members of the Constitution Drafting Committee, let me recall that there was a hot debate and interactive discussion on the electoral system, and a general agreement in the end that continuing with the FPTP system as the sole electoral system was neither possible nor appropriate. So, the main focus and stress was on the ratio of FPTP and the PR system, though some members sought the FPTP system while some others sought the PR system and not a mix of both. Initially, the PR percentage was 60, which was reduced to 40 percent in the present Constitution.

Positions of political parties: Back then, the Nepali Congress and the CPN-UML were for giving more weightage to the FPTP system, whereas the Maoists and Madhes-based parties were for giving more weightage to the PR system. With different arguments and counter-arguments coming, it was a very hot, hard and sometimes unfriendly conversation.

A compromise formula: The present mixed system is a compromise between two schools of thoughts, a marriage between modernity and traditionality, that is, a marriage between inclusive and participatory democracy, and formal democracy (representing a handful of people). Back then, the electoral system was one of the core issues of contention and it was resolved at the last moment of Constitution promulgation.

Causes of instability: The politicians rooting for the elimination of the PR system are trying to convince the people that the PR system is the main cause behind a frequent change of guard. But does this logic hold water? In fact, it’s a false statement and a false premise as the history of governance in Nepal shows along with the history of other countries with similar experiences. 

Let’s look at the contemporary history of Nepal to shed more light on this topic. 

In the general elections held after the restoration of multiparty democracy with constitutional monarchy in 1990 under the FPTP system, the Nepali Congress won a resounding mandate to form a government. But his government collapsed in July 1994, barely three years after its formation as it failed to get a vote in the Parliament regarding the budget, pushing the country into midterm elections. 

History repeated itself as the KP Sharma Oli-led majority government, installed on the basis of the mixed electoral system and supposed to rule for a full five years, collapsed toward the end of July, 2016, hardly nine months after its formation, following the breakup of the coalition.

These examples show that the electoral system has not much to do with the stability of a government or a lack thereof. Rather, stability or instability is a political issue, not necessarily a function of the electoral system. It has more to do with factors like the political leadership of the day, government’s performance and good governance and far less to do with the electoral system. 

The perils and the way forward: Calls for doing away with the mixed system are coming from some short-sighted leaders of big political parties. The ongoing debate over the electoral system is welcome, but the prescription for doing away with the PR system is extremely bad.

Doing away with the PR system, especially with regard to the elections for the House of Representatives, may be counterproductive and may cause political conflict and instability because it is an emotive issue connected with inclusivity and mainstreaming in a multicultural, multiracial, multilingual and multi-geographic country whether class, race, region and gender-related oppression and discrimination persist, among others. An inclusive state is the demand of the time and so is an  inclusive Parliament. Therefore, the PR system must continue. However, it is very important to eliminate the role of money and favoritism in the selection of candidates under the PR system, for which serious discussions are necessary. 

Views are personal. The author can be reached at [email protected]