Nepal Federal Budget FY 2019-20: Highlights & Announcements

Amid high expectations from industry and public, Nepal Government has announced its much-awaited Federal Budget for FY 2019-20 (2076-77) on May 29, 2019.

Finance Minister Yubaraj Khatiwada presented an NPR 1.53 trillion budget for the new fiscal, up from NPR 1.315 trillion for FY 2018-19.

Speaking at the budget unveiling event, Minister Khatiwada said that a foundation has been laid to achieve close to the two-digit economic growth of 8.5 percent through the new budget.

The newly-released budget aims to end absolute poverty and involve locals’ participation in development projects.

Nepal Federal Budget FY 2019-20: Key Highlights

Sources Of Finance

The Nepal Government has set a revenue collection target of NPR 981 billion to implement the budget. Besides, it has targeted to draw a grant and borrowed capital of NPR 57.99 billion and NPR 298 billion, respectively. Additionally, the budget aims to collect NPR 195 billion as domestic borrowing.

Budget Breakdown Sector Wise FY 2019-20

Here is a sector-wise breakdown of Nepal Federal Budget FY 2019-20:

Nepal Budget Key Highlights – FY  2019-20

• The introduction of the new budget has further eased the non-taxable income limit, up from NPR 3,50,000 in FY 2018-19 to NPR 4,00,000 in FY 2019-20. In case of couples, the non-taxable ceiling has been increased up to NPR 4,50,000

  [Latest: 2019-20 Income Tax Slabs, Rates, and Concessions]

• The government has resolved to nationalize encroached public land within the upcoming fiscal year 2019-20
• The new budget will facilitate a tunnel along the Tinkune-Koteshwar-Jadibuti route, an underpass in New Baneshwor and a flyover between Tripureshwar-Maitighar
• A budget of NPR 7.7 billion has been allocated for rail, metro rail, and monorail
• The FY 2019-20 budget will facilitate the construction of a domestic airport in Kavre district
• The government will connect all administrative centers of all local levels with blacktopped roads within four year
• The budget will also provision a 15 percent increment on public welfare advertisement fund
• It also provisions a health insurance coverage for those joining the government’s health insurance scheme by 100 percent
• With the introduction of the new budget, girls studying in public schools will be provided free sanitary pads

1) Agriculture

The government has introduced grants for the purchase of agricultural products & technology and fertilizers, schemes for gaining self-sufficiency in dairy, fresh vegetables, and poultry. It also aims to encourage organic farming, double fruit cultivation in the next five years and set up food quality labs in every province.

A sum of NPR 500 million has been set aside for community farming.

Likewise, 34 billion has been devoted to agriculture. Furthermore, a budget of NPR 23.6 billion has been allocated for irrigation programs in Tarai.

The Nepal Government plans to develop Sunkoshi Marine as National Pride Project at a budget allocation of NPR 2.05 billion.

2) Banking, Private Sector, and Capital Market

The budget FY 2019-20 will be mobilized to promote the merger of big Banking Financial Institutions (BFIs) and insurance companies. It will be used to promote the National payment gateway.

Electricity and drinking water payments will be made digital, besides the PAN system will be implemented in the share market. SEBON and NEPSE will also be promoted through the budget.

The budget will also promote NRN’s participation in the capital market.

3) Education

As part of the Annual Budget Statement 2019, the Nepal government allocated NPR 163 billion budget for education and science & technology.

The budget for FY 2019-20 also introduced the President Educational Fund and unveiled the ‘One School, One Game Teacher’ campaign with a budget of NPR 5 billion for the campaign.

An amount of NPR 8 billion has been allocated to construct 300 school buildings. Additionally, NPR 3.89 billion has been allocated for scholarship.

Other Nepal Budget 2019-20 education sector highlights include:

• Provision of free education up to secondary level
• To achieve full literacy in 70 districts
• Provision of colorful textbooks for primary level students
• Provision of free day meals for 2.2 million school children
• Provision of free sanitary pads for female public school students

4) Elderly Allowance

The government increased the elderly allowance from NPR 2,000 to NPR 3,000 under the FY 2019-20 Budget.

As per Minister Khatiwada’s announcement, people above 70 years will be entitled to an allowance of NPR 3,000 per month. The government scheme will cover more than 130,000 individuals.

Besides, the budget also covers health insurance worth NPR 100,000 for elderly citizens.

5) Electricity

He also said that electricity production will double in the coming fiscal year. A budget of NPR 55.30 and NPR 89.95 billion has been allocated for provinces and local units, respectively.

6) Health Insurance

The Federal budget FY 2019-20 provisions health insurance to all citizens and has allocated NPR 5 billion for the same.

Additionally, the budget also allocated NPR 6 billion for child health reforms. Through the budget, the government aims to build at least one health institution in all local units and has allocated NPR 5 billion for this reason.

NPR 400 million has been set aside for the construction of Bir Hospital at Bhaktapur’s Duwakot. Overall, a budget of NPR 68.78 billion has been dedicated to the health sector.

Other Nepal Federal Budget 2019-20 health sector highlights include:

• Increase in grants for eight severe illnesses
• Allocation of NPR 2 billion for new mother’s travel expenses
• Allocation of NPR 3,000 annual allowance for 52,000 female community health volunteers
• Allocation of NPR 400 million for improvement of Bir Hospital
• Absolute ban on drinking and smoking in public places
• Allocation of more than 43 billion for drinking water and hygiene
• Provision of social security allowance to pregnant women
• Provision of employment schemes for people with disabilities
• Establishing the new fiscal year as the Youth Mobilization Year

7) Irrigation

A budget of NPR 23.63 billion has been allocated for the irrigation sector. Rani Jamara and Bheri Babai division have been given NPR 2.5 billion. A total of NPR 960 million has been allocated for irrigation projects in the Tara-Madhes region.

8) Land Management

As part of the new budget, the government will also introduce sustainable utilization of land, bringing of encroached lands under government rule in the next fiscal year and online issuance of land-ownership certificate within the next two years.

9) Media Industry

The new budget will support the integration of Radio Nepal and NTV. It will also make cybersecurity laws more stringent. The government will also work on establishing Nepal’s own satellite. The Digital Nepal framework will also be promoted and brought into operation.

10) Science and Technology

The Nepal Government has allocated more than 110 billion for Madan Bhandari Science and Technology University. Besides, it also plans to establish a science-tech lab in every province. A sum of NPR 6 billion has been allocated for free insurance in all districts.

11) Tourism

NPR 22.68 billion has been allocated as the budget for Nepal tourism sector for FY 2019-20, which will be used to celebrate and promote the government’s biggest tourism campaign ‘Visit Nepal 2020’. The newly-introduced budget will also be mobilized to promote the one tourism door policy, Nepal’s adventure tourism and internal tourism.

Additionally, the government has also emphasized promoting Meeting, Incentive, Conference and Exhibition (MICE) tourism to bring high spending to the country. As part of the budget, it laid focus on building roads and meeting venues to promote MICE tourism.

“The government will expedite development of infrastructure, identify new tourism products and promote existing products as part of the preparation for the Visit Nepal Year 2020 campaign,” said Minister Khatiwada.

Other Nepal budget 2019-20 tourism sector highlights include:

• With top priority set on tourism, the government has laid emphasis on infrastructure to develop main tourist areas
• Construction of a trail between Darchula-Taplejung
• Introduction of Cable-Cars in mountainous regions
• Encouraging private and cooperative sectors for necessary commodities’ production
• Achieving self-sufficiency in the production of at least two dozen products
• Increasing the efficiency of Hetauda and Udayapur cement factories
• Import of luxury goods
• Establishment of Economic Zones in Kavre and Nuwakot
• Granting 50 percent concession for electricity to Nepali textile industry
• Developing infrastructure at northern trade transit points
• Commencement of business with third world countries via Chinese port
• Completion of pending works related to the import of petroleum products by the end of next year

12) Transportation

The government has given transportation top priority through the new budget by allocating a sum of NPR 163 billion to the sector.

Finance Minister Yubaraj Khatiwada said that the government would utilize the new budget to build tunnel highways, flyovers, and waterways in the country. The government also plans to invest in building railways and airports.

• NPR 19.18 billion has been allocated to expand the East-West Highway into a four-lane road
• NPR 12.20 billion is set aside for blacktopping of the 435 km-section of the Mid-hill Highway
• NPR 12.63 billion is allocated for blacktopping of Hulaki Highway, connecting several Terai districts
• NPR 5.06 billion has been dedicated for key corridor projects such as Koshi, Kaligandaki, Karnali and Mechi
• NPR 4.82 billion is set aside to Madan Bhandari Highway, connecting Chatara, Dharan, Gaighat, Hetauda, Katari and Sindhuli
• NPR 1.81 billion is being invested for Ring Road expansion and NPR 610 for completion of Kanti Highway, connecting Satdobato with Buddha Chowk

13) Urban Development

In relation to urban development, the Nepal Government envisions:

• Conducting a feasibility study for the development of mega and smart cities.
• Developing a convention center in Kathmandu Valley with a capacity to accommodate 3,000
• Construction of City Halls at the local level
• Provision of footpaths and underground cable management
• Allocation of NPR 530 million to replace 20,000 houses’ thatched roofs
• Allocation of NPR 4.3 billion for construction of 30,000 houses under the housing project
• Allocation of NPR 47.7 billion for housing and urban development
• Increase in MP’s constituency budget to NPR 60 million
• Allocation of NPR 1 billion for Darahara reconstruction
• Allocation of NPR 1.4 billion and 9 billion for reconstruction and infrastructural development in each electoral constituency
• Issuing Online Visas for foreigners
• Establishment of National Defense University
• 18-20 percent increase in Public Service personnel salary
• Establishment of National Convention Center at Khumaltar
• Upgrading Tribhuvan International Airport to a boutique airport
• Commencement of operation of Gautam Buddha International Airport
• Keeping contractors in charge of their projects even five years after completion
• Introduction of the improved taxation system to make VAT and other taxes more effective, changes in customs rate and reduction in import reliance

14) Gautam Buddha International Airport

An amount of NPR 3.34 billion has been allocated for completion of Gautam Buddha International Airport’s remaining works and NPR 8 billion for the currently Pokhara Regional International Airport.

15) Budget FY 2019-20: Other Schemes & Programs

In the new budget announced on May 29, 2019, the government also announced several special schemes for the education, employment, tourism, and several other sectors. Let’s take a look.

Hike in Government Officials Salary & Social Security Allowance

The Finance Minister announced an increase in the salary of non-gazetted government officials by 20 percent. Besides, officials in the gazetted third class and above get a hike of 18 percent.

After the announcement, gazetted officials get a minimum of NPR 9,824 and non-gazetted officials, NPR 3,245. The increment covers civil servants, Nepal Police, Armed Police Force and Nepal Army personnel along with those receiving allowances from state coffers.

With this decision, civil servants are getting a raise in pay after a gap of two years.

The government has also raised social security allowance by NPR 1,000 per individual.

16) Prime Minister Employment Program

The government has decided to give more emphasis for the effective implementation of the Prime Minister Employment Program (PMEP) through the FY 2019-20 budget.

Minister Khatiwada said that unemployed people who have been listed under the Employment Service Centers throughout Nepal will be employed for public works.

“Such unemployed people will also be utilized in infrastructure and construction works implemented by using fiscal equalization fund and special grants provided by the federal government to sub-national governments,” said Khatiwada.

The government has set aside a budget of NPR 5.1 billion for the specialized employment program.

It has also promised to provide seed capital for self-employment and entrepreneurship.

The government is also promoting Afno Gaun, Aafai Banaun campaign for development works, creating more jobs at the local level.

17) Post-Quake Reconstruction

A budget of NPR 141 billion has been allocated for post-earthquake reconstruction activity in all affected districts.

During the announcement, Minister Khatiwada informed that the government will conduct a resurvey to see if there were any earthquake victims that were left out during the previous survey.

“Re-survey will be conducted in order to identify the victims who have not been included in the list of beneficiaries of the housing reconstruction and retrofitting grant,” said Minister Khatiwada.

However, the new budget allocated for reconstruction activity NPR 141 billion is less than the previous year’s budget allocation of NPR 151 billion.

NRA officials say that the reconstruction work will not be affected due to the less budget allocation.

Hope the new budget 2019-20 (2076-77) will help the government make some landmark achievements as we have seen in the last fiscal year!

Also Read:-

• Nepal Federal Budget FY 2076-77: Income Tax Slabs, Rates, and Concessions