KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
Melting industry at risk due to volatile tax policy
The smelting industry in Nepal, which produces prepared iron by importing scrap and sponge iron, is facing significant challenges due to changes in tax rates introduced through the Economic Bill, 2081 by the government.
The recent adjustments have increased the customs tax on these raw materials, placing substantial financial pressure on the industry, which has seen billions of rupees in investments.
This move has sparked criticism, with concerns that around a dozen industries could be at risk due to the increased tax burden.
Finance Minister Barshman Pun’s adjustments in the fiscal budget 2024/025 have raised the customs duty on sponge iron imports to 2.5 percent from 1 percent and from zero customs duty to 1 percent.
This is a reversal of the previous finance minister Janardan Sharma’s decision, who had reduced the customs duty on sponge iron to 1 percent. Despite these changes, the 5 percent customs duty on billets, used as semi-finished goods in the iron industry, remains unchanged, although the excise duty on these items has been canceled.
In parallel economic developments, the price of gold continues its upward trend, reflecting broader market dynamics.
Additionally, the government approved the use of land for the construction of transmission lines for three hydropower projects and granted permission to remove trees and poles to facilitate these developments.
The non-life insurance sector has reported earnings of Rs 33 billion in insurance fees over the past ten months, indicating strong performance in this area.
NOC slashes prices of petrol and diesel
The Nepal Oil Corporation (NOC) announced a reduction in the prices of petrol and diesel, effective from midnight on Friday. Petrol prices have been cut by Rs 3 per liter, while diesel prices have been reduced by Rs 1 per liter. This move comes in response to the Indian Oil Corporation’s recent decision to lower fuel prices, with petrol prices reduced by Rs 4.42 per liter and diesel by Rs 2.45 per liter.
This price adjustment by the NOC is likely to have a positive economic impact by reducing transportation costs for consumers and businesses. The price cuts provide some financial relief, especially for those heavily reliant on these fuels.
However, the price reduction is less significant than the Indian Oil Corporation’s cuts, indicating that while the NOC is responsive to regional market trends, it is also maintaining a more conservative pricing strategy.
Interestingly, the NOC has decided not to change the prices of aviation fuel and LP gas. This suggests a selective approach to pricing, possibly to ensure financial stability or due to different market dynamics for these products.
Gold price increases by Rs 1,700 per tola
The price of gold in the local market has surged by Rs 1,700 per tola, setting a new record amid a continuous upward trend. According to the Nepal Gold and Silver Traders Federation, the price of gold, which was Rs 140,500 per tola on Thursday, has risen to Rs 142,200 per tola today.
Similarly, tejabi gold saw an increase from Rs 139,800 per tola on Thursday to Rs 141,500 per tola today.
In contrast, the price of silver has decreased by Rs 25 per tola. Silver, which was traded at Rs 1,900 per tola on Thursday, has been fixed at Rs 1,875 per tola today.
The surge in gold prices marks a significant rise, setting a new record amidst a continuing upward trend. This increase, as reported by the Nepal Gold and Silver Traders Federation, reflects the escalating value of gold.
These sharp increases indicate strong market demand and possibly reflect broader economic uncertainties or global market trends influencing the local market.
Rs 40 lakh subsidy for betel nut processing in Jhapa
A subsidy of 40 lakh rupees has been allocated for betel nut processing in Jhapa. Krishi Gyan Kendra has provided this grant to seven betel nut industries in the district to aid in the construction of betel nut machines and towers.
The Koshi state government has distributed between Rs 500,000 to Rs 750,000 to farmers as part of the ‘Betel Processing Industry Infrastructure and Equipment Support’ program.
(Compiled and prepared by Srija Khanal)
Economic Digest is a daily morning economic digest, basically relatable summations of the most important business news, and happenings from Nepal into easy-to-understand summaries.
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