Lumbini and Bagmati provincial governments are preparing to reduce the budget size for the upcoming fiscal year due to low internal revenue collection and increased dependence on federal grants.
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Provincial governments are busy preparing the budget for the upcoming fiscal year. Provincial governments, which have started preparing the budget by demanding the necessary plans, are preparing to reduce the size of the budget for the upcoming year.
The Lumbini provincial government has also started preparing the budget. The provincial government has started work related to budget preparation by forming a revenue advisory committee in coordination with the Ministry of Economic Affairs and Planning.
The Lumbini government, which has been setting a deficit budget every year, has also formed subcommittees to study it, claiming to reduce the size of the budget in the upcoming fiscal year.
The Lumbini government had brought a budget of 38.91 billion for the current fiscal year. The Ministry of Economic Affairs and Planning, the Planning Commission and various subcommittees are working to prepare a budget of 32 billion for the upcoming fiscal year.
The preliminary revenue projection of the province has been submitted to the Federal Ministry of Finance and the Finance Commission in accordance with the rules of the provincial financial procedures. Based on that, the Finance Commission has recommended the federal government to provide Rs 8.56 billion 26 million as financial equalization grant to the Lumbini provincial government for the coming year. Which was Rs 7.60 billion 36 million in the current fiscal year.
After the federal government increased the grant by nearly Rs 1 billion from the current fiscal year, the provincial Ministry of Economic Affairs is also preparing a ceiling on the same basis to send to the provincial government ministries and local levels.
The provincial Revenue Advisory Committee has formed three subcommittees and is working on budget preparation. According to Suman Poudel, spokesperson and senior branch officer of the Ministry of Economic Affairs and Planning, the budget preparation work is being done by forming separate subcommittees with representatives from the ministries of forest, transport and agriculture. The subcommittee under the Ministry of Transport is preparing a report on determining the resources for the coming fiscal year, focusing on the province's vehicle and transport revenue.
He said that the subcommittee under the Ministry of Forests is focusing on revenue from forests and rivers, and the subcommittee under the Ministry of Agriculture is preparing a report on revenue sources including agriculture and real estate.
The process of collecting suggestions has been taken forward with the aim of making the revenue system more effective, transparent and accountable, and the ministry is also conducting a study to expand the scope of resources of the province, Minister for Economic Affairs and Planning Dhanendra Karki said. ‘We have also sought suggestions on overall revenue administration reforms while formulating the financial act of the Lumbini Province government for the upcoming fiscal year,’ he said. ‘The Revenue Advisory Committee has urged the private sector, government bodies, subject experts, civil society and all concerned parties to submit their suggestions by Chaitra 30.’
He said that after receiving the suggestions of the subcommittee and stakeholders, the budget will be prepared at a fast pace. He said that the process that has been started now will include the suggestions received on tax system reform, expansion of tax scope, control of revenue leakage, simplification of service delivery, etc. in the upcoming financial act and the budget will be prepared based on that.
Lumbini Provincial Government Spokesperson and Minister for Agriculture, Land Management and Cooperatives Dinesh Panthi claimed that the government will prepare the budget for the upcoming fiscal year by prioritizing the production-oriented sector, employment creation, agricultural modernization, tourism promotion and infrastructure development. ‘The internal revenue collection rate for the last three years has not been as expected,’ he said, ‘Therefore, the budget for the upcoming year will not come in the form of a deficit budget like in previous years. He said that the size of the budget for the upcoming year will be small because the growth of the internal revenue sources of the province has not been as expected, and some ministries are becoming accustomed to carrying over payments to the next year.
Preparations to reduce the budget by 17 billion in Bagmati
The Bagmati Provincial Government has started the budget preparation process for the upcoming fiscal year 083/084. The Ministry of Economic Affairs and Planning has prepared a preliminary draft of the budget after completing the resource estimate and evaluation.
According to preliminary estimates, the budget for the coming year will decrease by about Rs 17 billion, or about 26 percent, compared to the current year, an official of the Ministry of Economic Affairs and Planning said. The budget for the coming year is estimated to be limited to around Rs 50 billion. The budget of Rs 67.47 billion for the current fiscal year is being implemented.
It is expected that Rs 30.89 billion will be received from revenue sharing in the revenue structure, which is more than half of the total budget. Federal grants are projected to be limited to Rs 13.81 billion and domestic income is projected to be only Rs 4.12 billion. According to Minister for Economic Affairs and Planning Prabhat Tamang, only about Rs 5 billion will remain in cash after the current fiscal year.
He said that the Gen-G movement, disaster management expenses and elections have affected revenue collection and the reduction in federal grants has put additional pressure on the budget. The need to return more than 2 billion rupees in unspent grants has also increased the resource squeeze. In this situation, the provincial government is preparing to make the upcoming budget realistic and focused on priorities. The ministry is also preparing to send the reduced budget ceiling to the departmental ministries soon.
