House endorses vote on account bill

KATHMANDU, July 17: Parliament on Saturday endorsed by a majority the government´s vote on account bill tabled by Finance Minister Bharat Mohan Adhikari.



While three other bills -- appropriations bill, bill on mobilizing national debt and bill on debt and collateral -- related to the annual budget were tabled for deliberations, the vote on account bill was endorsed Saturday, the day the current fiscal year ends. [break]



Endorsement of the vote on account bill allows the government to spend up to one-third of the actual expenditure in the fiscal year that is ending and enforce new rates of taxation in the new fiscal year.



Earlier, during the budget discussions, lawmakers from opposition parties tagged the budget for 2011/12 ´distributive´ and lacking focus and direction.



Opposition lawmakers said the government had not accommodated their suggestions as promised, and some even demanded the resignation of the finance minister for not maintaining the secrecy of the budget and crucial tax rates.



“The new budget has failed to set out clear national priorities while trying to appease everyone,” said Dr Ram Sharan Mahat of Nepali Congress (NC). He asked the government to review its distributive programs, saying that merely distributing money to the poor will not yield growth in output.



He also demanded that the government bring in a special program to spur financial mergers to do away with the liquidity crunch and unhealthy competition.



Dr Prakash Chandra Lohani of Rastriya Janashakti Party said that the government has not properly planned for funding even as it has sharply jacked up spending. “This will hurt the fiscal balance. Furthermore, a big budget will increase inflation,” he added.



He also flayed the government for making no substantial allocations for the three-year Lumbini Development Master Plan, which could help Nepal establish itself as a major spiritual centre and attract tourists. Dr Lohani demanded transparency in spending by the Peace and Reconstruction Ministry.



UCPN (Maoist) lawmaker Hari Roka, on the other hand, lauded the budget for prioritizing cooperatives, saying that will help capital formation at local level.



However, he flayed the finance minister for slashing the capital gains tax on income from land, housing and stock transactions. “The government has burdened general consumers with 13 percent value added tax, but has slashed tax on income from speculative investments; this is unfair,” said Roka and urged the government to roll back the decision.



Private sector players, meanwhile, raised concern over the government tying to project cooperatives as the main pillar of the economy, saying this has raised doubts over the role of the private sector.



Responding to lawmakers´ queries, Finance Minister Adhikari said the budget was not directionless, but aims to achieve three objectives -- increasing agricultural productivity, promoting investment and ensuring social justice.



He also said his prioritization of cooperatives did not mean he is undermining the private sector. “I have provisioned various tax incentives and other packages for the private sector. I have even proposed declaring industrial areas a peace zone,” he said.



He also added that his decision to promote cooperatives ssuits the spirit of the Interim Constitution and other policy documents of the Constituent Assembly which cite cooperatives as one of the three pillars of the economy.



"I do not see cooperatives and the private sector clashing or competing with each other. Instead, they will complement each other. I also feel that development of cooperatives can help us address long-running economic woes," he said.



Adhikari said that he has promised subsidized fertilizer, seeds and irrigation, seed capital and duty incentives for cooperatives mainly because the development of production cooperatives can boost economic output, create jobs and help income opportunities at local and rural levels.



“Cooperatives can be a vehicle for capital formation at local level and transform the lives of underprivileged people at grassroot level, besides contributing to attaining self-sufficiency in meat, dairy products and major foods items,” said Adhikari.



Adhikari admitted that a sharp rise in employee salaries may cause inflation to go up. “But there was no other option as the government had not adjusted salaries for the last two years,” he stated.



On the proposed National Hydropower Company, Adhikari said the body was envisioned not for any short-term purpose, but to create an investment friendly environment in this sector.



"The private sector, non-resident Nepalis (NRNs) and foreign investors are all eager to put their money in the sector. The company can be instrumental in channelizing this capital," said Adhikari.

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