Some of the major highlights of the Budget of Nepal for Financial year 2077-78

  • Budget allocation of NRs. 41.40 Billion is made for agriculture and NRs. 25.96 billion for the irrigation project.
  • Budget allocation of NRs. 1.26 Billion for tourism infrastructure development.
  • NRs. 100 billion refinancing facilities shall be provided for SMEs, tourism and agriculture sectors. The interest rate will be 5 % on these types of loan.
  • Budget allocation of NRs. 2.46 Billion is made for the Sunkoshi Marine Diversion Multipurpose project.
  • The government will provide a loan of NRs. 3.60 Billion to the co-operative sector with the objective of making unemployed youths self-employed.
  • Budget allocation of NRs. 11.60 Billion is made for Prime Minister Employment Program to provide employment to 2,00,000 people through this program.
  • Budget allocation of NRs. 6 Billion is made for President Educational Reform Program.
  • 40 percent of the population will be brought under health insurance coverage. Budget allocation of NRs 7.50 Billion is made for the health insurance scheme.
  • Budget allocation of NRs. 6 Billion in order to disburse immediate COVID-19 treatment tools.
  • Budget allocation of NRs. 1 Billion for skill development and training programs for those who have lost their jobs or employment.
  • Budget allocation of NRs. 67.50 Billion is made for social security.
  • All types of social security allowances that the government has been providing have been given continuity.
  • Emphasis is given on virtual classroom operation. Budget allocation of NRs. 2.76 Billion in order to provide free books to the students.
  • Budget allocation of NRs. 1.25 Billion to build infrastructure and start educational programs of Madan Bhandari Science and Technology University.
  • Budget allocation of NRs. 2.23 Billion for the mobilization of 6,000 health volunteers.
  • Allocation of NRs. 13.96 Billion is made to provide 50% subsidy on insurance premiums against COVID-19 disease.
  • Free health insurance of insured amount up to NRs. 5,00,000 for all health workers and security personnel serving against coronavirus and other contagious diseases.
  • Budget allocation of NRs. 43.10 Billion is made for drinking water and sanitation.
  • Budget allocation of NRs. 8.66 Billion for railway sector.
  • Post-earthquake reconstruction works to be completed in coming fiscal year for which NRs. 55 Billion is allocated.
  • 130 industrial village is to be established, for which NRs 2.64 Billion is allocated. Industries will be provided 50% rebate in electricity use during the lockdown.
  • Budget allocation of NRs 5.89 Billion for sewage management.
  • 1300 MW electricity production to be added in the upcoming fiscal year.
  • Single women, old age person, children, disabled people will be provided free legal services.
  • Only frontline workers involved in Corona pandemic will be provided allowance.
  • The tourism-related subject shall be included in the curriculum above secondary level education.
  • Bank and Financial Institutions will be encouraged to be merged and acquired.
  • Saving and credit-based cooperatives will be encouraged to merge with each other.
  • Prime Minister Agriculture Modernization Program will be strengthened.
  • Travel allowance and other allowance to the employee, procurement of engine, furniture, new vehicles etc. will face cut in the budget.
  • Free treatment of senior citizens with Alzheimer’s and rehabilitation for persons with physical and intellectual disabilities.

Budget highlights and impacts of the 2077/78 budget over various industries:

A. BANKING INDUSTRY

  • Government plans to increase the access to banking service to a maximum number of citizens. With the increase in banking facilities and reach of banking service to a greater population, growth opportunities in various other sectors and industries will also increase.
  • Restructuring and further expansion of convenient loan ( 5% lending rate) provided by the banking sector to corona hit industries may help in credit growth. Although the clear explanation and interpretation not given, this helps to restore some amount of hope to the badly hit industries.
  • Trading of debt instruments issued by the banks in the secondary market will make them attractive to the investors,  enabling more  BFIs to go for debentures.  This will give banks the option to manage liquidity efficiently.
  • The digitization of NEPSE can provide a big opportunity for the banking sector in terms of expanding their services in the stock trading business. Also, this will help brokers, share traders and analysts.

B. HOTEL INDUSTRY

  • Tax rebate,  interest subsidy to be provided to hotels will help to reduce the incurred loss by decreasing their expenses.
  • 20%  exemption in tax for the hotel sectors will give some financial relief.  However,  for the hotels listed in Nepse, it is more likely that they will register loss for this year due to lockdown brought about by pandemic.

C. INSURANCE INDUSTRY

  • Access to insurance service,  especially health insurance,  will be expanded,  thereby opening growth opportunities.
  • The fund allocation for insurance coverage for 40% of the population of each local body will impact the health insurance business. This could have a huge positive impact on growth in the insurance sector.  However,  it depends upon the modality which government uses to implement this program, i.e. self-operated by government or through existing insurance companies.
  • The business of an insurance company is expected to grow as the insurance facility will be made affordable and accessible to the general public.
  • Non-life insurance will be benefited from the promotion of agro insurance and microinsurance.
  • The government policies support the expansion of the market reach of the insurance sector, hence, the increment in business and subsequently, the profitability of the insurance companies can be expected.
  • Extension in the insurance of industries and public transportation affected by lockdown might increase the claim ratio and expenses of the insurance companies.
  • Free  Corona  Virus  Insurance of  Rs.  100,000  to all the permanent and temporary government employees of   Nepal   Government might give opportunity in business increment for the government-owned non-life insurance company,   i.e. Rashtriya Beema Company Ltd if the government decides to insure through it.

D. HYDROELECTRICITY INDUSTRY

  • Construction of 400  KV  capacity inter-nation electricity transmission line will reduce the evacuation risk of electricity generated for hydropower projects. This will also encourage new hydro projects in the country.
  • By discouraging and cancelling the licenses of hydropower companies holding a license for a long period without construction will force timely construction of the projects.
  • Competitive method for the  PPA might negatively impact on the profitability of new projects. However, this might also enforce companies to improve operational efficiency.

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