Govt to collect DRP arrears
Targets to raise Rs 1.78 in current fiscal year

By Sanjay Neupane

KATHMANDU, Feb 13 : The government has initiated necessary procedures to collect arrears arising out of the Duty Refundable Procedure (DRP) from the Indian government, which in the past three years accumulated to Rs 900 million.

As per the present system, the excise duties that Indian products are subjected to is refunded to Nepal annually to the extent of export of such goods. The rate of excise collection is deducted on the customs duty imposed by Nepal.

According to a source of the Ministry of Finance, the Indian government has been freezing 20 per cent of the total amount that is to be handed over to Nepal. However, the Indian government now claims that it is freezing only upto 10 per cent of the amount, said the source. The government has targeted to get DRP worth Rs 1.78 billion during the current fiscal year.

Nepal has been silent on the issue since the last three years due to the strong economic and trade relation that the two countries. However, due to the growing financial difficulties lately as a result of the skyrocketing security expenses, Nepal has put up the issue strongly with the Indian government, said the source.

"The government has started looking into all possible resources to bridge the growing mismatch between available resources and expenditure," said the source.

He also informed that the government needs to expand internal resources just to create a ‘Matching Fund’ - a mandatory fund that the aid recipient country has to manage to absorb foreign loans and grants for the development projects. As a result of growing diversion of the government fund into the security, it has already downscaled the number of development projects.

Despite several rounds of negotiation between the customs officials of both the countries, no concrete solution has yet been made. According to the source, during the last round of negotiation held about one and half month ago, the Indian officials did not even supply the detailed information about the past transactions and arrears that it has to give Nepal.

"The Indian side is ready to handover the arrears. However, the lingering final auditing is the core problem," informed the source. Nepal, so far, has received Rs 600 million during the current fiscal year.

The Indian government is positive towards the Nepal’s request and the problem could be settled in the next round of negotiations, said Madhav Ghimire, Director General of Department of Customs.

The present system, which has been under practice since 1960, is not applicable on goods imported from India through payment in foreign currency.