BUDGET SPEECH OF THE FISCAL YEAR 1999

Development Policy and Programs

Rt. Hon'ble Speaker,

27. For the next few years, it is imperative to put all our efforts with patience to achieve the above-mentioned objectives. It is also apparent to create an environment whereby these policies and programs are well understood by the general public to ensure their close participation in the campaign for development. In this light, in addition to, paying special attention to institute public ownership of development projects, I have proposed the following policies and programs.

Poverty Alleviation.

28. I overly has been a serious impediment to social change and our development efforts. Major theme of this budget, therefore, is to relieve majority of our rural population entangled in the vicious circle of poverty. Toward this efforts, I have considered villages, the poverty ridden farmer, women who are the symbol of hard labor, and our agriculture sector as the main strides of poverty alleviation program.

29. From the next year, a nationwide poverty reduction campaign called "Bishweshar with the Poor" will be launched targeted to absolutely poor people, who are deprived of minimum basic necessities like cloth, shelter, food, basic health services and education and whose access to land, capital, skills employment opportunities are non existent. In the next fiscal year, about 100 absolute poor families from each parliamentary constituency will be identified totaling about 20,500 families all over the country. Those families would be extended with the loan of up to RS. 30,000 per family at 5 percent interest rate so as to enable them to have an access to integrated facilities of shelter, income generating scheme or livestock asset, educational opportunity and health facility for their,children. The program will contribute to get rid from the vicious circle of poverty of about 2OO,000 absolutely poor families.

30.In the next fiscal year, a "Poverty Alleviation Fund" will be established with the aim of developing resources and enhancing institutional capabilities to directly facilitate the poverty alleviation program. In addition to the execution of local infrastructure like small rural road schemes, irrigation channels that complement production facilities, the fund will be utilized for the growth of markets through cooperatives, conduct training programs, and micro financing. All poverty alleviation related programs would be integrated and coordinated through this Fund.

31. Since last year a 'Special Area Program' has been launched in 2S districts. Construction of rural roads, execution of schemes like channels, water tracks and other alternative means of irrigation, erection of micro hydro plants, implementation of agricultural and livestock programs, promotion of herbs and training programs are being carried out under the program. I have set aside the budget for the implementation of this program with full commitment.

32. A Small Farmer and Cooperative Bank will be established in the next fiscal year to benefit small farmers. Different

programs under implementation through Grameen Bikash Bank, Agricultural Development Bank and national and international governmental organizations will be intensified and oriented towards achieving the goal of poverty alleviation. Continuum will be provided to the reform program initiated by the Agriculture Development Bank for raising its investment capability. Accordingly, its stock capital will be raised. Marginal farmers will be benefited by marketing promotion of agricultural produces through cooperatives. Crop insurance scheme will be introduced by conducting studies on that system to protect farmers from the unforeseen havoc of crop losses. Livestock insurance system will be expanded to village level. Pre cooperative and business training will be imparted to farmers by maintaining working level harmony among the Cooperative Department, National Cooperatives Association, and National Cooperatives Development Board. Cooperative marketing system will be developed and promoted to ensure right price as well as market for produces. Terms of, Reference will be worked out to resolve the problem of landless people (Sukumbasi) within the next fiscal year. Programs and projects like Poverty Alleviation Project in Western Terai (PAPWT), Remote Area Development Program (RADP), and Integrated Rural Development Projects will be streamlined in a coordinated manner.

Hon'ble Speaker

33. Currently, some people have displaced themselves from their families and the society as a result of their indulgence in evil path of criminal and terrorist activities. It is but natural to realize and regret their mistakes by many of those whose emotions were possibly flared or caused to be flared at the moment of disappointments concerning their own lives and their uncertain future. I have allocated budget for the rehabilitation program under 'Ganeshman Peace Campaign' to provide amnesty and financial assistance for livelihood of those who surrender with their weapons to live the life of law-abiding citizens by giving up the evil path of crime and murder.

34. To honor the International Year of the Elders, I have proposed an increase in the allowance to RS. 15O from RS. 1OO being provided to senior citizens above age of 75, widows and helpless people. However, to ensure transparency of the uses of such fund, names and descriptions of the recipients of allowance and details of expenditures should be made public.

35. Beginning academic session of the next fiscal year, the mechanism of free of cost textbooks distribution of up to grade five will be streamlined. 36. Programs in operation to uplift the socially and economically backward people, like the depressed and ethnic class, will be continued by providing impetus and taking ahead the program aimed at providing debt relief to Kamaiyas (crop sharing laborers).

37. The provision of free education to the children of martyrs of people's revolution will be continued. An appropriate program will be launched with a target of providing 225,000 scholarships within the next five years for children belonging to weaker economic situation and socially backward section of the society. Scholarships to backward areas, ethnic community, depressed class and handicapped students will be made available to provide them the opportunity of higher studies.

38. The program of providing collateral free loan of up to RS. 2O,000 through the Social Welfare Council for creating employment opportunities to blinds, deaf and handicapped people, will be taken ahead effectively.

Employent Promotion

39. An effective youth training program will be initiated from the next year with an aim to train youths on various skills and profession. Under the program, 18,000 youths (both males and females) will be imparted with self-employment creating vocational training. In addition, they will be encouraged to engage themselves in productive employment by providing them with self-employment exploration allowance for two months.' Necessary an~angements will be made to provide confessional loans to such trained youths.

4O. An arrangement will be made to involve poor people in small-scale businesses by providing them with the skill oriented and vocational training. As employment and income could be received through such small businesses, investments from Agriculture Development Bank will be directed towards such businesses.

41. His Majesty's Government will make it mandatory to use labor intensive and environmental friendly techniques particularly on road construction activities costing up to RS. 2.O million in order to promote employment opportunity. A manual for this purpose will be prepared.

42. In the next year, training programs conducted by various line ministries will be streamlined to avoid duplications and make them action oriented. Similarly, successful trainees in the field of agriculture and health will be encouraged by making arrangement of concessional loan to get them self employed.

43. It is firmly believed that employment opportunities for educated youths would be increased within the country as a result of policy reform measures initiated in industry, commerce and tourism sectors, and development of information technology as well. Also, employment opportunities abroad will be enhanced by exploring such potentials, and supported by the provision of appropriate training programs. Necessary arrangements will be made in the government sector to reap maximum benefit from such' opportunities and also to protect rights and interests of the Nepalese people.

Empowerment of Women and Development

44. The national campaign of poverty eradication cannot be thought of if strength and capacity of women is not utilized in the crusade against the magnitude of poverty and' social inequality prevalent in the country. Women of this country have been burdened with more than their share of poverty and pain of inequality. From the next year, an income generating program for women (called 'Jagriti') will be initiated as a national campaign by bringing women leadership on the forefront with their participation, making women power a medium of economic and social change initiatives. Under the program, groups will be formed comprising 65,400 women of 940 VDCs of the country who will be trained on group education, skill.development, self-employment, public health, and cooperatives. Income generating programs for those women will be launched with the micro-credit facilities through the establishment of institutional relationship with the Agriculture Development Bank. This program is expected to benefit 380,000 women in the next five years.

45. In view of the prevalence of lower women literacy rate in the country each girl students of 18 districts who use feeder hostel facilities, now receive RS. 550 and 650 for accessible and remote districts respectively to encourage them to attend schools. From the next year, these stipends 'have been raised to RS. 850 and RS. 1,050 respectively.

Financial Sector Reform

46. Development of financial sector and capital market is necessary to provide sustainable support to the economic growth of the country. Despite positive indicators observed in the expansion of financial sector in the past, monitoring and healthy development of this sector is getting increasingly challenging. In view of these facts, extensive financial reform measures will be initiated in the next fiscal year. In this process, a bill will be submitted to the current session of the parliament to amend Nepal Rastra Bank Act for making it propitious and strengthening its existing supervision capacity. Necessary amendments will be made in related Acts for well-managed and healthy growth of banking as well as non-banking financial transactions and to direct, supervise and monitor financial companies including cooperatives.

47.Necessary reform measures will be taken in order to initiate gradual increase of private sector participation in the Rastriya Banijya Bank. Arrangements will be made for the transaction of its shares in the capital markets. In view of the benefits of developing Nepal as an International Financial Center, this august house has already passed the Bill in the previous fiscal year. In the next year, environment for the establishment of such financial center will be created after the completion of necessary infrastructure.

48. Past efforts on reducing the existing higher spread between deposits and lending of commercial banks would be effectively pursued and such difference will not be allowed to widen by more than 5 percent. A strong legal base for loan repayments would be in place after the formulation of a Bill on repayment of loans. Also, a Bill related to Bankrupt agency would be formulated.

49.Past positive gains achieved in the financial sector as a result of liberalization efforts to fulfill growing investment requirements of the country would be sustained and promoted. For this, foreign share-ownership of 50 percent in Joint Venture (JV) banks will be reviewed and that proportion will be raised. Information on conditions and working procedures concerning granting of permission for the operation of the branch of internationally recognized banks would be made public. This measure is expected to enhance competition in the banking sector thereby ensuring better banking services to the public. Moreover, I am confident that this arrangement would contribute to the long term national development of the country by facilitating in fulfilling larger long-term low interest rate investment requirements in the areas of industry, hydropower, tourism, health, infrastructure development and so on.

50. Housing loans will be made available by the Employees Provident Fund (Karmachari Sanchaya Kosh) to civil servants on their group collateral. Loan, would be made available also to housing construction companies on credit guarantee to execute housing development plans.

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