FNCCI gives mixed reaction on new budget  

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By A Staff Reporter,Kathmandu, June 6: The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has given a mixed reaction on the new budget saying it had increased the possibility of long-term investment, but failed to adopt measures to mitigate the impact of the current economic recession.

Presenting its views over the budget unveiled by the government last week, the FNCCI commented that considering the current year's revenue pressure, the provision of the budget increases the burden on businessmen and consumers in the coming year by reviving the tax rates.

According to the Federation, the expansion of the tax rate and nets without evaluating the impact on the general public and businessmen in the budget would not only support maintaining the recession in the market but would have more negative effects.

"If measures to increase capital expenditure and increase demand cannot be adopted immediately, there is little hope of improvement in the economy, which has been in recession for a year and a half, in the next fiscal year," read the statement.

"The possibility of maintaining an economic growth of 6 per cent and an inflation rate of 6.5 per cent is slim," it said.

The Federation has requested to be sensitive to the demands of the private sector and to make the economy sustainable.

The Federation has said that due to the increase in customs duties on raw materials of industries such as vegetable ghee, oil and other products, the consumer price has increased and the production has been discouraged.

"For the sustainable promotion of domestic industries, the demand of the private sector that there should be at least two levels of difference between raw materials and finished products has been ignored," it said.

It has stated that the provision of value added tax on transport may be negative, and consumer prices have increased after the introduction of VAT on some primary agricultural products and fruits, which were previously exempted.

"If the consumers are in trouble, the demand in the market will slide further," the statement said, "this system needs to be amended." An unnecessary luxury tax imposed on various goods and services will further reduce demand and create a negative impact on the economy."

The Federation has demanded reforms in the arrangements made in the budget which discourage businesses during the recession.

The provision of budget to improve the business environment, environmental impact assessment, land acquisition, use of wood and prospecting of other mines, including Dhaubadi are positive, it said.

"After stone, gravel, sand mining and extraction from suitable places without affecting the environment will be opened, which will help in reducing the trade deficit," it said.

The Federation believes that provisions such as using domestic goods even though they are 20 per cent more expensive, road grading, support for domestic production in projects, development of special economic zones and industrial zones, cultivation on barren land will help in import substitution.

"The promotion of various funds for startup development, cash incentives, and the facilitation in opening companies will allow new entrepreneurs to enter the market," the statement said.

According to the Federation, the provision of opening up electricity trade for the private sector and facilitating the construction of hill stations near India would help in earning foreign currency.

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