Govt mulls delaying budget as it waits for Indian budget

KATHMANDU, July 2:

Though the Ministry of Finance is preparing to present the new budget in the parliament on July 11, officials say the ministry could wait for one or two days to analyze the Indian budget and adopt compatible policies in the budget for the new fiscal year.

Indian media on Wednesday reported that the Narendra Modi-led government was preparing to present the new budget on July 10. As India is Nepal´s largest trading partner, its budget directly makes impact on tariff rates, tax and subsidies, among others.

As India presents its Union Budget in April, Nepali officials used to prepare budget after analyzing Indian budget. But this year the Indian government presented only the interim budget in April due to Lok Shabha Elections.

“It would be a wise decision to include necessary policies in the budget after analyzing Indian Budget,” Chandra Mani Adhikari, member of the National Planning Commission (NPC), told Republica. “The newly elected government in India might take some crucial decisions to cope with huge budget deficit.

Modi´s commitment to provide subsidy to agriculture sector can make direct impact in Nepal.”However, economists say the decision to wait for Indian budget wouldn´t be politically correct. “How can a sovereign nation wait for another country´s budget for formulating its fiscal policy?” questioned Dr Posh Raj Pandey, executive chairman of South Asia Watch on Trade, Economics and Environment.

He also informed that marginal duty difference had created severe problem of unauthorized trade of gold and mustard oil in past.

Nepal had increased customs duty on gold in line with the duty hike in India in the middle of fiscal year 2009/10. At that time, Nepali traders used to import gold from other countries and send it to the Indian market because of low customs duty here. Traders were involved in unauthorized trade of gold to cash in on the duty difference between the two countries.

The government is planning to present budget worth Rs 600 billion for fiscal year 2014/15. Officials at finance ministry have fixed budget ceiling at Rs 600 billion because of lower than expected revenue mobilization and foreign aid commitment.

Source: Republica