By IANS,
Kathmandu : Hampered by a power crisis, poor rainfall, double-digit inflation and internal turmoil, Nepal’s trade deficit with foreign countries is going to rise in the current fiscal, with the gap in its business with India alone, its biggest trading partner, expected to rise to 57.3 percent.
Nepal’s Finance Minister Surendra Pandey, who presented an ambitious Nepali Rs.285.9 billion budget Monday, has warned that in the current fiscal the country would face a 28.2 percent drop in trade amounting to over Rs.208 billion.
In the last fiscal, there was an imbalance of about 40 percent in trade with India. More than 60 percent of Nepal’s external trade is with the southern neighbour.
India, also among Nepal’s biggest investors and donors, dominates the new budget with many of the special measures pledged by the coalition government intended for Indians.
The duty-free shops at Kathmandu’s Tribhuvan International Airport, the lone international airport so far, will now be allowed transactions in Indian currency besides American dollars and Nepali rupees.
Earlier, Nepal’s association of tourism agencies said that the government has also directed airlines to receive fares in Indian currency.
Pandey made a direct reference to his giant neighbours China and India, saying the government would give top priority to building a north-south highway connecting Nepal’s border with China in the north to India in the south so that the republic can take advantage of the “fast economic development of the two rising economies”.
Nepal will get a new international airport at Nijgadh town in Bara district on the Indo-Nepal border.
The new government has also heeded the pleas of Nepali investors to be allowed to invest outside Nepal, with India being a prime destination.
Pandey said the government will enact new investment laws to allow that under certain conditions.
Eclipsing the previous Maoist government’s bid to generate 10,000 MW from hydropower projects in one decade, the government of Madhav Kumar Nepal said it will generate 25,000 MW in 20 years.
As part of that initiative, Pandey said high-voltage transmission lines would be put in place with joint investment by Nepal and India.
Also, mega hydropower projects with Indian investment, like the 402 MW Arun III project awarded to Satluj Hydro Electric Project of India, 300 MW Upper Karnali, to be developed by the GMR Group, and the 750 MW West Seti project, in which IL&FS has 15 percent stake, will be given priority as well as the 240 MW Naumure project which India has offered to build as grant in assistance for Nepal.