By P.R. Pradhan
His name is Swarnim, which means “golden”. So far, this scribe has not heard allegations of ministers—or even the Prime Minister—being directly involved in controversial financial deals, except for the accusations levelled against Finance Minister Swarnim Wagle. He has been blamed for favouring certain business interests while presenting the budget for the fiscal year 2026/27. It has also been alleged that he earned billions of rupees by leaking customs tariff provisions on vehicle imports before the budget was unveiled.
Wagle, a former employee at the World Bank, enjoys the reputation of an accomplished economist. However, his recent policies suggest a limited understanding of the changing dynamics of the global economy. Certainly, he is well versed in the conventional principles of economics, such as liberalisation, the free market, and structural adjustment. Yet his policy choices appear disconnected from the realities of today’s economic challenges.
On the one hand, he faces allegations of profiting from leaked budget provisions; on the other, his budget has imposed additional tax burdens on ordinary taxpayers.
We advocate socialism and a self-reliant economy that gradually substitutes imports with domestic production. In contrast, Wagle’s fiscal policies discourage local investors by imposing additional taxes. We believe that relying on electricity exports to India could further deepen Nepal’s economic dependence on its southern neighbour. Instead, priority should be given to expanding domestic electricity consumption and promoting industrialisation at home. However, Wagle appears more interested in earning foreign exchange through electricity exports to India while simultaneously discouraging domestic consumption. Since the beginning of the new fiscal year on July 17, households consuming more than 50 units of electricity have been required to pay an additional five percent tax on every unit above that threshold.
Parents who choose private schools for their children, and patients who seek treatment at private hospitals, do so out of necessity, as government schools and hospitals lack adequate modern facilities. (Following widespread criticism, the government has withdrawn its decision to impose a 3 percent “Equality Tax” on private education and healthcare services.
Prime Minister Balendra Shah (Balen) announced on Tuesday afternoon through his social media accounts that the 3 percent Equality Tax will not be implemented for the time being.)
The budget had introduced an additional three percent tax on tuition fees charged by private schools. Patients receiving treatment at private health institutions must also pay an additional three percent tax, while purchasers of gold and silver are now subject to an additional five percent tax.
The tourism sector has long demanded the removal of VAT on domestic and international air travel to encourage tourism. The government should have granted tax exemptions on the procurement of aircraft and spare parts to support the growth of the aviation and tourism sectors. Instead of responding to these demands, Wagle has doubled the annual royalty to be paid by casino operators, from Rs 150,000 to Rs 300,000, a measure that is likely to discourage the tourism industry. In a country where efficient public transportation remains inadequate, the government has also imposed an additional five percent tax on ride-sharing services. At the same time, following salary increases for civil servants, market prices have surged, yet there appears to be little effort to control inflation.
Before becoming Finance Minister, Wagle, as a leader of the Nepali Congress, strongly opposed state-owned enterprises. He argued that the government should not engage in business activities. As an example, he cited the closure of the Bansbari Shoes and Leather Factory, claiming that replacing it with a heart hospital had saved many lives. While it is true that an excellent cardiac hospital now operates there, the closure of the factory also deprived hundreds of workers of their livelihoods. The hospital could have been established without shutting down the factory; alternatively, the factory could have been relocated or transformed into a public-private partnership. Instead, many state-owned enterprises were closed under the influence of political leaders belonging to the Nepali Congress who preferred privatisation and commission-based opportunities over preserving productive industries.
Knowingly or unknowingly, Wagle’s current policies appear to be weakening Nepal’s economic foundations. The present loktantra, in our view, has evolved in a manner that keeps Nepal economically fragile by increasing dependence on foreign borrowing and pushing the country into a cycle where new loans are taken merely to repay old ones. Politicians such as Wagle, who are perceived by critics as being aligned with Western economic thinking, are seen as advancing those interests. Perhaps this is the new definition of “socialism” under the present constitutional order—a form of neo-socialism that bears little resemblance to the ideals it claims to uphold.
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