Highlights from the Budget of Nepal 2078/79

Highlights from the Budget of Nepal 2078/79

How about we talk about the Budget of Nepal 2078/79? Might not be a fun topic to discuss or much boring it would be to sit through the hours-long ‘Budget Bhasan’, wouldn’t it? Well, whatever the case, the fact is the budget 2078/79 has been announced and it sure as hell affects each and every one of us.

As our country is grappling with the second wave of Covid and political crisis, the government has announced the budget of Nepal 2078/79 through an ordinance by the president. Now, as the unconditional circumstances demand unconditional measures, can we as a citizen expect that this year’s budget would address the crisis that we are facing in a multitude of ways? And if yes, in what ways and if no what are the lapses in the budget?

Let’s find out by weighing in the budget of Nepal 2078/79. For further information on budget, go to this link.

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Budget of Nepal 2078/79

The total budget in the financial year 2078/79 is whooping Rs 1.647 trillion which is bigger than last year’s budget of approximately Rs.1.46 trillion. First, before going into any further detail, let’s get to know some basics about the budget itself.

In simple terms, a budget is an estimation of the income and expenses over a period of time; usually, a year-which is occasionally reevaluated and compiled on a periodical basis (Usually Quarterly basis). Now, as we have a general idea of what a budget is, it’s imperative now to keep in mind these two words namely sources of fund and uses of fund.

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The sources of the budget are how one allocates the financial resource-namely the fund to meet the estimation of budgetary expenses in a certain year. For instance, make reference to the figure below, the budget source of 2078/79 is divided into four parts-Revenue which covers 61% of the total budget expenditure, followed by foreign loan at 20%, then the internal loan financing at 15% and foreign grants covers 4%.

Highlights from the Budget of Nepal 2078/79
Source: Crowe

Now, let’s get into the uses of fund, namely the estimation of expenditure of the allocated funds. The recent budget has estimated 64% of expenditure in recurrent/administrative related expenses, followed by 24% in capital expenditure which includes the expenditure in the physical infrastructure projects like hospitals, roads and so on, and finally 12% in financing activities which includes loan and interest repayments.

Highlights from the Budget of Nepal 2078/79
Source: Crowe

Positive Takeaway from Budget 2078/79

Health Sector and Covid Response

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The allocation of expenditure in the health sector has increased in this year’s budget totaling the amount of approximately Rs. 1.4 trillion. The expenditures are focused on building the health infrastructures and improvement of current health infrastructures.

Apart from this, the government has allocated separately to address Covid related expenses which are as follows:

  • Covid-19 vaccines: Rs 26.75 billion
  • Covid-19 control and treatment: Rs 37.53 billion

Along with that, the government has increased the monthly allowance by Rs. 12000 and set out the budget for the Ministry of Health and Population for Rs. 122.77 approximately.

Education, Science, and Technology

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The allocated expenditure for Education, Science and Technology are whooping Rs. 1.8 Trillion. The major takeaway from this year’s budget is that they expect to hugely spend on the physical infrastructure projects in Education, Science, and Technology.

For instance, the government has planned to spend to build physical infrastructures for 1500 public schools and campuses across the nation, allocating Rs 10 billion. Further, the government has set the minimum salary for education-related personnel to Rs.15000 monthly.


The government has allocated approximately Rs. 1.22 trillion in the energy sector. Ranging from developing physical infrastructure projects to hydroelectricity projects to invest in alternative energy sources like solar.


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Though not that radical steps, but the government has addressed the issue of the environment and allocated 14.13 billion which includes the investment in the alternative energy source of fossil fuel like electric vehicles, and accordingly subsidize the trade-related with the electric vehicles.

Social Security Benefits

The takeaway for senior citizens for this budget has been positive as the monthly allowance increased from Rs.3000 monthly to Rs.4000. Along with that, the government has decided to increase by 33% all social security allowances.

Now, the increase in social security has been a debatable topic as many intellectuals have opposed the increment of government spending on social security benefits claiming it to be a populist gimmick of government targeted towards the election.

Governmental Staffs Salary

The governmental personnel salary has risen to Rs.2000. Again, this is another area of debate.

Relief and Waiver for Small Scale Industries and Startups

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The budget has addressed the small-scale industries and startups in the schemes relating to the tax, administrative support, financing, and refinancing option and special support for the industries hit hard by Covid like film, handicraft, aviation, media, advertising, health club, beauty parlor. Some of the schemes are mentioned as follows:

  • The income tax waiver ranging from 50%-90% with reference to the earnings. For instance, the companies who have less than 20 Lakh in earnings are waived up to 90% in income tax.
  • The startups will be waived in their income tax for the next five years.
  • The refinancing budget to help the industries budget is allocated for Rs. 13 billion
  • The hardest-hit sectors like film, aviation, advertising, media, handicraft, health club, beauty parlor have been given additional support by waiving on the renewal and license fees.
  • Similarly, additional support such as waiver in electricity bill and drinking water bill is also introduced for small household and industries.

Loan Subsidy

The loan subsidy schemes have directed many eyeballs in the recent budget announcement. Some of the arrangement mentioned in the budget are:

  • Subsidy for students equal to Rs. 80,000 to buy a laptop.
  • The startups will be given up to Rs. 2.5 million loans at a 1% interest rate.
  • The students are to be given a loan of up to Rs. 2.5 million at a 5% interest rate on the basis of academic credentials; for instance, the bachelor’s degree as collateral.

Those were the positive takeaways of the Budget 2078/79, now let’s talk about the criticism and lapses of the budget.

Lapses/Criticism of Budget 2078/79

Government Failure in Expenditure of Previous Years Budget

There is a huge discrepancy between the rosy pictures shown by the government and the actual action in place. For instance, take the previous year’s humongous budget, data suggests that just 58% of previous years’ budget has been spent and out of which the capital expenditure is further low to just 37%.

Now, this clearly indicates the failure of the government to act and laughable in a sense to just present the rosy picture in the paper and utter failure in the action.

As the current budget 2078/79 is humongous and bigger than the previous year’s budget, the question is, if the government can’t spend or have no ability to spend the allocated amount, the budget seems just a rosy picture in the paper.

Practicality and Implementation of the Budget

The economist Bishwomber Pyakurel citing the Schemes of government in the budget 2078/79, pointed out the technical aspect in questioning the government plan and any structural mechanisms to address such schemes. Moreover, while pointing out that the paper budget looks fine and hard to criticize, but it all comes to effective implementation and without it, the budget is just papers with provisions and schemes.

Budget as Populist and Election Centered

The current budget seems to have addressed the issues of the public in a way to appease the public, and why? Opposition and some intellectuals argue because there is a political crisis looming and the government is using the resource of the humongous budget as a means for the election. Take, for instance, the scheme of social security, PM Employment Scheme, Refinancing and Loan schemes, and the like.

The argument is further strengthened by the government allocation of the budget under the heading of Miscellaneous Expenditure which includes election expenses for whooping Rs. 2.52 trillion approximately. The striking argument is if the current government is an ad hoc government, there is pushback from the ex-election commission officers stating the sheer magnitude of the budget will give undue power and influence to the government over the opposition in the election.

Finally, under the political upheaval, the budget of Nepal 2078/79 has been declared through the ordinance and we tried to highlight some aspects of the current budget.

Further, let’s reinforce the idea that though budget 2078/79 has included really good schemes on paper, and it feels really good reading all those schemes, the larger picture is that the question must prevail and we must hold government accountable if they are not working in par to what they have promised. If not, we will all be lost just like in the rosy dreamland of fiction.

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