Nepal's caretaker government has finally managed to bring out the annual budget by issuing an Ordinance after a delay of four months from the date the fiscal year strated. Giving continuity to most of the ongoing programs, Finance Minister Surendra Pandey, announced the budget of Rs 337.9 billion for the fiscal year 2010/11. It is an increment of 18 per cent compared to last year's budget of Rs 285.9 billion.

The government has allocated 56.3 per cent of the total budget for recurrent expenditure, 38.3 per cent for capital expenditure and 5.4 per cent for principal repayment. The estimated spending is 30.4 per cent more than the revised estimate of expenditure of the previous year. In terms of the structure of the expenditure, recurrent expenditure has increased by 25.8 per cent and capital expenditure by 44.8 per cent.

To meet the expenditures, the government aims to mobilize Rs 216.64 billion from revenue and Rs 65.35 billion from foreign grants. Deficit of Rs 55.91 billion is expected to be covered from foreign loans of Rs 22.23 billion and domestic borrowings of Rs. 33.68 billion. The amount of proposed foreign loans is 2.6 per cent of the estimated GDP.

A review of the first quarter's revenue collection of the current fiscal year makes it challenging to meet the revenue target of the budget. It, therefore, seems an uphill task to meet the target of 4.5 per cent economic growth. Last year's budget had targeted 5.5 per cent economic growth but the actual achievement was 3.5 per cent. The new budget expects inflation to be around 8 per cent. It is higher than this year's monetary policy's target of 7.5 per cent.

01. More allocations for the infrastructure projects
       like Kathmandu-Terai fast track road, Mid-hills
       highway, Sikta and Ranijamara irrigation,
       Syafrubesi-Rasuwagadi road track, Upper
       Tamakoshi hydropower, etc.


02. Rs 500 thousand cash for the organizers of
       seminar or workshop involving more than 100
       foreign passport holders entering Nepal
       through air-route once at a time


03. Provision of sub health post and police post
       for the productive industry that offers
       employment to more than 500 Nepali workers.


04. Black-topped roads reaching the premises of
       manufacturing companies employing more
       than 100 Nepali people.


05. Lands to be classified into six categories:
      agricultural, industrial, forestry, commercial,
      residential and public community. Ownership
      certificates to be issued accordingly.


06. Construction of large and medium sized
       reservoirs based hydropower projects at least
       one in every Development Region.


07. Two per cent incentive on equivalent Nepali
       currency to exporters on submission of bank
       documents showing that they have received
       convertible currencies earned from the
       exports. Incentive will be three percent and
       higher if the value addition of exported
       commodities exceeds 50 per cent or higher.
       They will also get 25 per cent income tax
       exemption.


08. Door opens for Non-resident Nepalis to invest
       in the capital market.


09. E-tendering made mandatory from 14 April
      2011 onwards for all the contracts and tenders
      of more than Rs 20 million.


10. Merger of banks, finances and insurance
       companies encouraged. Changes in the
       provision of taxing assets and liabilities as
       deposal after merger will be introduced to
       make it non-taxable, and special
       arrangements have been made for share
       holders, managers and employees.