Role of Fiscal Policy in Formulation of Budget

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Role of Fiscal Policy in Formulation of Budget in Nepal.:

Role of Fiscal Policy in Formulation of Budget in Nepal. Group: B Date: 5 th August

An overview of Agriculture in Nepal:

An overview of Agriculture in Nepal 66.66% of the total population are involved in agriculture exploiting only 21% of cultivable land for their livelihood. The sector’s current 33 % share in national GDP (largest contributing source) is declining, although there is considerable scope for increasing productivity and value-added.

Nepal: Fiscal Policy :

Nepal: Fiscal Policy Nepal has adopted several fiscal policy measures in order to boost economic activity and growth. This policy has been introduced with the view of increasing revenue, rationalizing recurrent expenditure, maintaining public debt and enhancing public investment to encourage private sector economic activities for public private partnership.

Major Policies in Agriculture Sector:

Major Policies in Agriculture Sector ‘One Village, one Product Program’ – based on the concept of Public-private partnership Farmers will be provided concessions with regard to necessary fertilizer, seed, agricultural tools, cold storage and irrigation-related electricity tariff. Private sector will be encouraged to establish livestock farms. Bird-flu and other Veterinary disease control Program Cooperatives in Rural Urban Areas- One Household one Employment Example: Cooperative Farming Program Manual, 2065

Major Policies (cont’d):

Major Policies (cont’d) Fair price Cooperative Store (to ensure that the farmers get appropriate price for their products, agricultural wholesale market based on cooperatives will be expanded.) Perspective plan for agriculture development to be implemented. Provision of subsidy will be made with regard to the price and transportation of chemical fertilizers as well as commercial production of organic fertilizers.

Policies (cont’d):

Policies (cont’d) special priority will be accorded to the implementation of small and medium-sized irrigation projects. Big irrigation projects will be implemented as multi-purpose projects. Sunkoshi -Kamala Diversion and Bheri-Babai Diversion will be undertaken in this context. River training programs will be launched as a campaign to protect loss of lives and property to generate employment as well as to promote resettlement programs for the landless people by reclaiming the land.


Budgeting A major portion of public sector expenditure was spent on transport, communications, electricity and industrial development. At present the emphasis has been given on making a prosperous Nepal through bringing revolution and radical change in agriculture sector. For this government has been allocating huge portion of the total annual budget for agricultural sector development.

Role of Fiscal Policy in Budgeting:

Role of Fiscal Policy in Budgeting Based on the fiscal Policy adopted, Government has allocated budget for the programs, projects and activities to be carried out for the given fiscal year. Fiscal Policy has been serving as the guideline for the budget formulation in Nepal. However Government has not been able to allocate expenditure on specific particular activities. A sound financial planning is lacking in the budget formulation.



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