Private sector for adopting sustainable federal model

KATHMANDU, Aug 6 :

At a time when the country is about to embrace federal setup, private sector has complained that there have been little deliberations on issues like decentralization and balance economic opportunities in the Constituent Assembly and public forums.

Speaking at a discussion program on ´Federal Economic Model of Nepal´ here on Wednesday, President of Confederation of Nepalese Industries (CNI) Narendra Basnyat said economic viability of federal units should be considered during state restructuring. “The new constitution should protest people´s right to do business and earn profit. We should adopt a balanced and sustainable federal model,” he added.

Presenting a paper on ´Federalism: Economic Perspective´, CNI Vice President Anuj Kumar Agrawal said that the country should develop its own district economic model for federal set up to ensure mutual economic development among federal units with balanced economic opportunities and resource distribution.

Statistics shows combined revenue of four districts contributes more than 80 percent in total revenue collection of the country. Kathmandu generates 40 percent of the total revenue, followed by Parsa (25 percent) and Morang (8 percent) and Rupandehi (7 percent).

Referring to the statistics, private has demanded with the government to define how it intends to share tax and administrative expenditure among the federal units. They have also asked the government to clarify what sort of control the central government will have on resources. They have also proposed to the government to not impose any tax when a product from one federal unit enters the another unit.

Though the government has introduced Local-Self Government Act to decentralize fiscal management, it is still highly centralized. The Interim Constitution-2007 states that there will be progressive restructuring of financial management through allocation of means, resources and power to the provinces.

Talking to Republica, Senior Economist Prof Bishwambher Pyakuryal said economic resources should be considered while delineating federal units to ensure equitable resource distribution.

Meanwhile, business leaders have said tax administration, sharing infrastructures and public debt, competition amongst states, inter-governmental transfers of revenue are among the key issues to be settled by the constitution.

Source: Republica