Report By Prem Khanal
KATHMANDU, July 10 – In yet another blow to the embattled monarchy, Finance Minister Ram Sharan Mahat has removed the state allowance for the king and royal family in the budget he is slated to table in the interim parliament Thursday.
The budget will, however, arrange for the perks and allowances of over 700 royal palace staff and other essential expenses like maintenance and security. The government had this year allocated Rs 32.7 million as allowance for the king, queen, crown prince, crown princess and the queen mother.
Minister Mahat is proposing an annual budget of around Rs 170 billion and a 15 percent rise in government employees’ salaries, but there will be no major tax changes.
According to government sources, the upcoming budget will earmark over Rs 100 billion under the recurrent heading — mainly a regular expenditure — which is 13.6 percent higher than this year’s revised estimate. “Constituent Assembly poll and increase in government employees’ salary are the two major factors that swelled the recurrent expenditure,” said the official.
The budget is likely to allocate around Rs 4.5 billion for the CA poll (Rs 1.70 billion for the Election Commission and the remaining amount for the home ministry for arranging security), said the source. However, a major chunk of the CA poll budget will go for recruiting some 75,000 temporary police for a period of roughly three months. The Election Commission and the Home Ministry had demanded Rs seven billion for the poll.
In addition to adjustment into regular salary of a 10 percent dearness allowance for government employees announced last year, the budget will propose a 15 percent increment in their basic salary. “The adjustment plus increment in salary will add around Rs 4 billion to the state’s financial burden,” said the official.
Sector-wise, education will continue to be the largest absorber of budgetary resources. The government is planning to allocate some Rs 28 billion for the sector. Apart from financing increased salary for teachers, a major chunk of the education budget will go into recruiting 12,000 teachers this year, according to the source. The health sector is expected to get some Rs 11 billion next year.
The budget will also earmark some Rs 12 billion for the army, 11 billion for the police and over one billion for the Maoist combatants living in 24 cantonments.
The budget will allocate Rs 55 billion for capital expenditure for financing mainly development activities. The capital expenditure budget for next fiscal year will be almost 44 percent higher than the revised estimate this year.
Reconstruction and rehabilitation of infrastructure and road construction will be the major focus of the budget and will absorb half the allocation.
A major project is on the cards to initiate a 1,200 km mid-hills highway connecting Ilam in the east to Baitadi in the west and opening up an alternate road linking the capital and the terai, said the source. Reversing past anti-subsidy policy, the government is also launching a major support program for shallow tube-wells in the terai region.
“On the whole, the budget will be slightly populist and ambitious on some fronts, particularly in enhancing expenditures in the rural sector in the areas of infrastructure, despite weak absorptive capacity of the local bodies,” the source said.
On the revenue front, the budget has a total revenue target of Rs 103 billion, almost 20 percent higher than the revised estimate this year. Of the total, the government is expecting to generate Rs 3.67 billion from divesting its 15 percent share in Nepal Telecom.
Likewise, the budget will target mobilization of over Rs 21 billion in internal loans and attempt to mobilize around Rs 45 billion through foreign loans and grants.
( Source:The Kathmandu Post, July 11,2007)