'Unveil programs to end power crisis by 5 years'

KATHMANDU, April 25: As the government expedites preparation of budget for fiscal year 2011/12, experts and industrialists on Monday demanded it to come up with concrete programs to end country´s power crisis by the next five years.



They also sought introduction of differential tariffs on raw materials and finished goods, incentives to exports and hire-and-fire law at least in manufacturing industry to enhance competitiveness of Nepali goods in domestic as well as international markets.[break]



“Cash incentive to third country exports announced through budget for the current fiscal year was a good program, but it has not been implemented yet. We request the government to implement it, expanding the incentives to exports to India as well,” said Jagadish Prasad Rathi, member of Federation of Nepalese Chambers of Commerce and Industry (FNCCI).



In his presentation, Rathi strongly demanded the government to tap alternative power sources like thermal plants and waive off customs duty and VAT on imports of machinery used in power generation. Rathi along with other entrepreneurs also asked the government to arrange finances to the industrial sector at 10 percent interest rate.



“Apart from regular power crisis, labor problem and extortion, liquidity crunch and high interest rate have surfaced as new evils to the private sector. The new budget should address this problem with high priority,” said Rathi.



Industrialists also suggested the government to provide income tax and interest concessions to industries like cement, iron rod and agro-processing units that make substantial contribution in import displacement.



Rathi even proposed the government to provide incentives to remittance senders, particularly from India, so that they could be attracted toward formal transfers and contribute to ease pressure on supply of Indian currency.



However, senior economist Prithvi Raj Ligal did not agree with Rathi´s idea of raising tariff on imports and providing subsidy on exports. “This prescription of fiscal devaluation works only temporarily and is not sustainable because of high cost of subsidy,” said Ligal.



Instead, he suggested the government to revalue Nepali currency, which is pegged with Indian currency, for addressing problems like IC shortage and lack of competitiveness of Nepali exports.



“Fiscal devaluation is politically palatable and currency devaluation will be unpleasant choice because of pressure it exerts on inflation. But we cannot defer it for long because it stands at the crux of problems seen in trade and currency market,” said Ligal. He further urged the political parties not to fan labor issues, and pushed for improvement in investment climate.



Finance Secretary Krishna Hari Baskota, meanwhile, said the upcoming revenue policy will focus on simplification of tax system and also announce programs to promote good taxpayers.



“The new budget will largely focus on economic stability and containing inflation, attracting investment, creating employment and increasing social security,” he added.

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