By Shanker Man Singh
Promotion of the private sector, agriculture, energy, tourism, information technology, industrial development and infrastructure construction, inclusiveness and social security, promotion of good governance, education and health are the main priorities of the social sector in the development budget 2081/82.
Customs duty on imports of some agricultural products including onions and apples has been abolished. Also, it is certain that the food industry will be in trouble due to the advance income tax on food and the price of food will increase and it will not be able to cope with Indian production. Even if the Nepalese government keeps the price increase at around 6 percent, it is said that this policy will exceed the government’s limit. For this reason, it is said that the private sector did not like the budget prepared by the finance minister, who has been saying that he will take a policy of encouraging the private sector and the manufacturing industry.
“Investment Decade in Agriculture” has been declared from 2081 to 2091. Similarly, it is said that easy loans will be provided on the mortgage of agricultural produce.
Farmers will get a discount on insurance premiums in agricultural insurance. Upgrading programs will be seen in developing countries by 2026. With Nepal’s budget 2081/82, the government has again been given the responsibility to improve the agricultural sector, in agriculture – price realization – focus on cluster development – high allocation in the agricultural processing sector, etc. could not be done.
Unlike the manufacturing and service sectors, it is very difficult for the government to entrust the private sector with the responsibility of financing, supporting and improving agriculture.
About 60 percent of the GDP is related to agriculture.
Budget planning can’t do much about these problems in the least – some things are too hard to plan for. Other sectors such as transport/industry/services etc. are also important contributors to the economy – so should they all have separate budgets, this only leads to strife.
To show how budget planning may not have much impact, look at a major problem in Nepali agriculture: A major weakness of the agricultural sector in Nepal is fragmented land holdings, with an average land area of the order of single digits owned by ordinary farmers. At this level, it is almost impossible for agriculture to be economically viable. In a democratic system, we cannot forcibly take away land from some farmers and give it to others/corporations so that suitable land is available for farming.
It would not be an exaggeration to say that Nepali agriculture is in crisis, but a separate budget or plan can only be an aesthetic solution. Solving the problems facing Nepali agriculture requires more than cosmetic changes.
To overcome the crisis through innovation, a radical change in the existing economics – improving the underlying structure/market structure etc. is not possible without united efforts. If these are put in place, a separate budgeting exercise is not required, even the existing setup can yield results.
The private sector, which had been waiting for the government’s plan to rise from the economic contraction in Nepal, became disappointed with the release of the budget for the next financial year 2081/82.
It is said that more than half a dozen industrial and commercial sectors have become depressed due to the policies taken by the finance minister through the budget. Although the government claims that the country is aiming for an economic growth of 6 percent, it will take the private sector along with it, but there is an illusion that this is not the case in reality.
Due to the policy adopted by the budget, iron rod producers, traders selling and distributing electronic goods and gold traders are not so enthusiastic. Besides, rice, dal and flour producers have also opposed the budget policy, while disappointment has been seen in the fodder and poultry sector. On the other hand, the budget gives importance to agriculture, the increased customs and excise duties on the import of agricultural equipment and materials is the main cause of dissatisfaction.
Similarly, crusher (sand, gravel and stone) businessmen have shown dissatisfaction. It was expected that there would be at least one level of customs duty difference between the import of manufactured goods and industrial raw materials. But there is only 1.5 percent advance income tax on the import of flour. Whereas, there is an advance income tax of 2.5 percent on the import of wheat. The government has imposed 10 percent advance income tax on pulses and dahlan. Similarly, there is 2.5 percent advance income tax on corn, rice and wheat. It is said that the Nepali dal, rice, flour and grain industry will be completely destroyed by this. The private sector has developed along with the development of human civilization. Even today, how many possibilities and challenges does the private sector carry? How can the role of the private sector be accepted in the economy? Debate on this should focus on achieving the goal of the overall social and economic development of the country. However, we are wrong about this. The private sector is a part of the economy that is run by individuals and companies for profit and is not controlled by the state. The role of the private sector in Nepal is 70 percent. This includes all for-profit businesses that are not owned or operated by the government. Government-run companies and corporations charities and other non-profit organizations are part of the voluntary sector. The private sector economy includes all privately owned, for-profit businesses. The private sector occupies a large part of the economy in a free market, capitalist society. Private-sector businesses can also collaborate with government agencies in arrangements called public-private partnerships.
The private sector is the segment of the national economy that is owned, controlled and managed by private individuals or enterprises. A private sector organization is created by forming a new enterprise or by privatizing a public sector organization. Private sector businesses drive down the prices of goods and services as they compete for consumers’ money. In theory, customers don’t want to pay more for something when they can buy the same item elsewhere for less. Frequent political changes and instability affect investor confidence.
Nepal’s location between India and China can create geopolitical tensions. The private sector is facing challenges related to skilled manpower. The risk of earthquakes and other natural disasters affects business continuity. In short, the Nepali private sector has strengths and opportunities to contribute to sustainable development while facing challenges. Addressing vulnerabilities and mitigating threats will be critical to its long-term success. In this era of globalization and expansion of the world, about 1 billion 200 million people in the world are suffering from extreme poverty. The average income of such people is less than one US dollar per person per day. In the case of Nepal, even from the point of view of its own measuring devices, one in every five people is poor.
The Sustainable Development Goals, reflected in international development, have set specific goals to eradicate poverty. In this sense, if there is an increase in the income of the poor people and if they can get better access to health and education services, then the goal of the Sustainable Development Goals will be considered to have been achieved.
For the development of the private sector, the economic agenda should be included in the constitution. At the same time, the private sector has been giving the opinion from time to time that the first thing to do to improve the economy is to boost the morale of the private sector.
The confidence of the common people has decreased and the morale of the businessmen has been lost. This problem has arisen because both the government and the private sector are unable to increase investment.
If the private sector also tries to establish itself as the leader of the economy, it is necessary to immediately change the existing character of criticizing the government and getting immunity from all its faults.
In Nepal, as in most independent economies, the private sector accounts for a large share of the economy, compared to countries with greater state control over their economies, which have a larger public sector. For example, the United States has a strong private sector because of its free economy, while China, where the state controls many of its corporations, has a large public sector.
The private sector is the sector outside the government that produces and distributes goods and services to make a profit in the field of competence. The private sector is also called the market sector. As the main mechanisms of the market sector are private entrepreneurs, it is also considered a synonym of the market. The private sector considers the consumer as God and is active in the production and distribution of goods and services according to his wishes.
The heart of any country’s economic success is the private sector. Sustainable development is also possible due to private investment and an increase in productivity.
It has been found that the private sector’s contribution to Nepal’s economy is 81 percent. A study report jointly prepared by the International Finance Corporation (IFC) and the private sector has shown that the contribution of the private sector to the economy is 81.55 percent. Overall, a rebound in the agriculture sector is expected.
The views expressed in this article are the author’s own and do not necessarily reflect People’s Review’s editorial stance.
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