Many have described the pandemic situation as a great equalizer among the rich and the poor and everyone in between. But in reality, the unfathomable circumstances have been anything but that.
Just last month, the government let out the list of an iota of the economic wheels who are allowed to carry on with their functioning to meet the needs of the public. However, the segregation of the sectors has caused many to feel the unequal opportunity to earn their living and has resulted to become downright preposterous. With sources covering the news of funds allocated to support the businesses and the people whose lives depended on the daily income, we can ‘assume’ there is enough wealth to go around but what do you do when you’re outside the ring of support? Also, the questionable brows can be raised in the matters; are that financial assistance enough to support the local businesses to rise from the unimaginable losses?
One of the sectors bearing unprecedented losses has to be small and medium enterprises (SMEs) and startups. They play a significant role in the national economy contributing 90% of the total industrial GDP. The sector contributes about 70-80% of the total industrial value addition providing 80% of the Industrial employment and 70% of the total national export (fncsi). And this has therefore fared well to contribute significantly to the nation’s economy with the existence of 275,433 formally registered SMEs in Nepal. All in all the sector employs a large portion of young and emerging entrepreneurs but has often failed to achieve much attention circling the discussions around the policy-making surrounding the economy.
In the midst of all, the budget announcement for this year was one of the crucial moments for the people. Presenting the Rs.1.474 trillion budgets for the fiscal year 2020/21, Finance Minister Yubaraj Khatiwada assured that the government has set up an Rs. 50 billion fund for the tourism industry and Small and medium enterprises (SMEs). However, disappointments attested to the plans were that in regards to the admirable potential of the small businesses and the startups, the government has allocated Rs. 500 million to fund investments. This is rather gruesome planning as these are not an equity investment but a soft loan with a 2 percent interest rate and this is merely enough to compensate any relief measures. To make things worse, the announcement that all individuals and businesses clear the taxes by June 7 which was followed by outcries of many pointing that the decision was rather irresponsible and unempathetic. The deadline is now shifted to June 29 with the deadline for Value Added Tax (VAT) and excise duty by June 21, however, it will be one of the toughest tasks for many as the business has been on halt and there are no earnings whatsoever.
Not sidelining the fact that Nepal’s grasp on the fiscal policy is already weak, presumably, the government cannot even support some of the instances as providing direct money or much more relief packages. And here itself is the need to refresh the policies, the restructuring is needed in the form of easing the process of doing business, and tax payment procedures, etc.
Adjoining the funds and the opportunities of gaining relief packages and the likes, only the formal and the people with linkages may be able to entertain them leaving behind many who have no reach to put forward their voices to make the most of the little coming their way. Hence, in order to be resilient in the coming years, to recover and well function from this impending and inevitable economic slump, the policymakers must adhere to restructure the economy and the financial system to address the inequality and the gaps and incorporate aforementioned policies in which everyone can rejoice their rights and earn their livelihood. We’re facing a defining moment in which people can work together, support each other and accept that the policy and plans are in the dire needs of an overhaul.
Photo Credit: Kishor Jyoti (Young flame artist)