New budget boosts rural development, cuts king’s income

The Nepalese government on Wednesday presented a new national US $1.9 billion “peace budget” that will boost rural development and leave the monarch with less cash in the fiscal year 2006/07. Presenting the budget to parliament in the capital, Kathmandu, Finance Minister Ram Sharan Mahat said the government was committed to rural development at a time when the country was moving towards peace. “Economic activities, suspended during the period of conflict, insecurity and absence of peoples’ representatives, are waiting to pick up. The rural areas need new opportunities for employment and income generation,” the minister said, referring to the impact of the decade old conflict between Maoist rebels and the government on the country’s development. There’s been optimism in Nepal that the shaky peace process, born out of a ceasefire two months ago, will lead to improved security and access in rural areas as well as more public money for development programmes. Mahat said that around $17 million had been allocated to the Poverty Alleviation Fund, which will implement 667 income-generating programmes and 379 community infrastructure development programmes in the poorest 25 districts of the country. The new programmes aim to benefit over 50,000 low-income households. The minister also said that around $54 million had been set aside for irrigation development, a key sector in a country where agriculture remains a major economic activity, employing over 76 percent of the population. In addition, around $122 million has been earmarked for the purpose of rural infrastructure development, including building roads in 20 remote districts of the Himalayan kingdom. The interim government also cut King Gyanendra's allowance by 70 percent. Mahat said the royal palace would get $3.1 million for 2006/07, down from $10.5 million in the fiscal year about to end. The move follows the government stripping the king of most of his powers, including his crucial control over the army. All in all, the government said that it has allocated around $700 million for education, health and drinking water supply projects. In addition, around $24 million has been earmarked for rural electrification to benefit over 200,000 poor households.