Revenue collection likely to hit budget target

Post Report

KATHMANDU, May 10 - Coupled with healthy economic growth rate for the second consecutive year, the continued double-digit growth in revenue collection has heightened the chances of achieving the budgetary revenue target.

The healthy growth of 18.8 per cent in the first nine months of the current fiscal year has bolstered the confidence of the government officials of achieving revenue target set for the current year.

"The current trend of revenue mobilization strongly indicates that the budgetary revenue target for the current year would be gained. And, we are confident about it," said Bhoj Raj Ghimire, Chief of the Revenue Department at the Ministry of Finance.

Finance Minister, in his budget for the fiscal year 2000/01, had set a target of Rs 52.98 billion revenue collection, which was termed by some as the ‘mission impossible’. Critics said the revenue target was ‘deliberately over estimated’ to balance the skyrocketing regular expenditure swelled by an unexpected rise in the pay of civil servants and soaring security expenses.

According to the statistics of Ministry of Finance (MoF), the total revenue collected by mid-April has touched almost Rs 33 billion, which is 62 per cent of the targeted revenue of the current fiscal year and almost 19 per cent more than the amount collected during the same period last year.

Though the officials are confident about hitting the target, the challenge to accumulate around Rs 23 billion during the rest four months must not be underestimated, particularly, at a time when the current growth rate is still falling behind of the budgetary growth target of 22 per cent.

"As the revenue collection in the last quarter always speeds up and the performance of the customs revenue after army mobilization has been encouraging, we are much optimistic of hitting the target," an MoF official said.

An analysis of the total revenue collection breakdown, reveals that tax revenue, which commands a lion’s share of 80 percent in the total national revenue, is satisfactory as compared to the non-tax revenue.

Rs 27 billion has been collected, which is 63.3 per cent of the targeted tax revenue of Rs. 42.48 billion and it is 17.5 per cent more compared to the same period last year. Despite an impressive growth of 25.3 per cent, the achievement in the non-tax front is not much admirable. Out of the targeted Rs 10.5 billion, just Rs 5.78 billion was collected by mid-April.

Despite the plunging imports, the customs tax collection has been increased by 14.1 per cent and has reached Rs 8.84 billion, which is 66 per cent of the total target.

Value added tax (VAT) collection registered an increment of over 17.3 per cent. Out of the targeted Rs 13.50 billion, Rs 8.84 billion has been collected till the end of third quarter, however, with drawback of Rs 825 million, the net VAT collection is little over Rs 8 billion.

Similarly, the collection of income tax, the third largest contributor to the total revenue, remained moderate. Of the targeted Rs 10.6 million, the accumulation by the mid April has touched Rs 6.15 billion, which is 58 per cent of the target and 26.8 per cent more than that of the corresponding period last year.

With a rise of over 22 per cent compared to last year, the excise duty revenue has touched Rs 2.7 billion, which is over 72 per cent of the budgetary target of Rs 3.75 billion.

Dev Credit Bank gains Rs 1.2m

Post Report

KATMANDU, May 10 - Development Credit Bank Limited, the first national level bank, has netted an operation profit of Rs 1.2 million in its first 100 days of operation.

According to the information given at a program here, the total deposit of the bank has scaled Rs 350 million, out of which total loans commitment has touched to Rs 320 million and actual loan investment has crossed Rs 270 million.

Established under the Development Bank Act 2052, with authorized capital of Rs 320 million and issued capital of 160 million, the bank is soon going to issue public shares equivalent to 30 per cent of the paid up capital.

Speaking on the program, Sudhir Khatri, President of the bank appreciated most of the provisions in the recently issued central bank’s directives. However, he reiterated his demand that development banks should also be allowed to operate deposits in the current account and carry out transaction of foreign exchange. "At least we should be given permission to operate current accounts of our borrowers, which would be helpful to monitor real financial situation of the creditors," he said.

He further said that newly imposed single borrow limit of 25 per cent of the total capital is not enough for the development banks, whose basic objective is to make long-term infrastructure investment.

Regarding the issuance of bonds by the bank, he said that necessary homework is going and the bank will implement the plan in the near future.

IT development needs high thrust in next budget

By Ram Sharan Sedhai

KATHMANDU, May 10 - The government’s objectives of creating employment opportunities, attracting foreign investments and exporting software worth billions of rupees annually through information technology (IT) industry has remained nothing more than a rhetoric.

Since IT is a knowledge-based industry, which does not require natural resources, huge investments and has nothing to do with the geography, it is the most suitable and affordable sector to a cash-strapped and resource-poor country like Nepal, at least in the foreseeable future.

But lack of farsightedness and the government indifference has largely dampened the expansion of one of the most lucrative industries, which despite being capable of earning huge foreign currencies.

If the government is really serious about promoting the industry, it should exempt all customs duty on IT-related goods and applications and provide short-term subsidy in software exports in the forthcoming budget.

Currently, the government imposes over 25 per cent tax, including the value added tax (VAT), on IT equipment import, which is one of the prime cause for the high prices of computers, making them inaffordable to a larger section of the society.

If the government can provide indirect subsidies on the tourism industry and in the agriculture sector, there is no reason it cannot subsidize the IT industry.

Subsidy is inevitable to enhance the competitiveness of our industries and to grapple with the trickle down effect of US economic slowdown, the largest IT market, as it hits the exports of software.

As India has waived customs duty and income tax for 10 years to all IT industries, it will be well-nigh impossible for our products to compete with Indian products in the international market.

Software export can be one of the potential measures to narrow the ever-widening trade deficit, as the export of carpet, garment and pashmina is witnessing a downward trend and their stability is not predictable. So the government should be serious towards promoting the software industry and its exports.

Likewise, all the IT industries should be given tax holiday at least for five years and the government needs to lower the tariff rates of electricity and telephone to promote the use of internet and email. High telephone tariff has discouraged the people with lower income bracket to acquire global information.

The government, through the forthcoming budget, should provide loans to the IT industries at concessional interest rates and simplify the procedures of company registration.

Because of 10-year long tax holiday and exemption of customs duty plus other incentives given by the Indian Government, revenue generation from the IT sector in India has extensively been increased.

In 1995/96, IT generated a revenue of IRs 98.9 billion, which almost doubled in the next year after the Indian government exempted taxes. The revenue India gets from the IT sector has gone up to IRs 5.5 billion in the fiscal year 2000/01.

If Nepal can learn from India, it will greatly help in achieving the target set in the IT Policy.

Likewise, it has been high time to restructure our decade-old development priority concentrated only on seeking foreign assistance to the construction of roads and bridges and look into possibility of establishing IT related universities with foreign help, which in the long run, would lay golden eggs.

The Ministry of Science and Technology has to be proactive and submit its annual plan in an articulate manner to the Finance Ministry before the latter allocates resources in the forthcoming budget.

The Finance Minister is also equally responsible for pushing ahead the agendas for IT development as it distributes the money and has the right to waive taxes and provide incentives to the industry.

Since IT is the fastest growing industry, if the government fails to allocate necessary budget this year aagin, it will make the sector lag behind for ten years. Budget earmarked for IT in the past years are quite negligible. Therefore, the concerned minister should accord top priority in the forthcoming budget to reap the benefit IT can bring to the country.