Economy faces challenge due to political turmoil

KATHMANDU 6, August:

The government has been facing challenges in creating an investment friendly environment and propelling economic activities due to the lengthening political uncertainty.

“Lack of political consensus has added challenges in creating investment friendly climate,” said finance secretary Krishna Hari Baskota releasing the annual evaluation report of Finance Ministry here today.

“Despite the increasing foreign aid commitment, the government’s absorptive capacity has not increased,” Baskota said, adding that the process 

of privatisation and divestment of public enterprises — that do not need to be operated by the government — has also slowed down due to lack of political consensus.

Baskota also accepted that the government has failed in controlling non-budgetary expenses and unproductive capital expenditures, and expedite productive spending on development work. “However, the government should make the project heads responsible by signing agreements with them and enhance the capacity of the project staff to expedite the productive capital expenditure,” he suggested, adding that mid-term funding has to be changed into mid-term budgetary evaluation process.

He also did not forget to promise to check revenue leakage that has become chronic in recent years, bleeding the government coffers dry.

The Finance Ministry investigated 518 suspicious firms involved in the VAT scam 

and fixed Rs 6.59 billion revenue in the last fiscal year. The ministry is committed to checking the leakages, the finance secretary said.

Each and every ministry has to prepare its annual progress report and submit it to the Prime Minister’s Office (PMO) under the Good Governance Act 2064. Finance Ministry is the first to prepare and submit its annual report to the Prime Minister’s Office, whereas other ministries have sought a month’s time to submit their annual progress report.

Govt expands tax net

Government has expanded its tax net. By end of fiscal year 2011-12, a total of 955,737 firms were registered at tax office, said finance secretary Krishna Hari Baskota. “Some 539,098 are registered under income tax, 113,627 under VAT, 271,606 under PAN, and 31,406 have been registered under excise,” he said, adding total number could be less as the same person could have registered under PAN and VAT depending on the income level. “However, the number is also low on the basis of total population of the country,” he said.

Source: The Himalayan Times