A Cabinet meeting on 29 March 2020 took a number of decisions to alleviate the impact of COVID-19 on households. These pertain to social protection, subsidy, employment, and compliance relief. There still is not much in terms of relief to MSMEs hit by COVID-19 pandemic.
Here are the major highlights:
Food subsidy and quarantine
- Local governments are responsible for supplying food to the needy and quarantine. For this they will have to prepare data on unorganized sector workers and establish fund to provide relief for them during the lockdown period.
- In case of insufficient funds, they can request budget from the central government. Households have to register their names at respective ward offices to get relief.
Employment protection
- Employers are ordered to pay salaries of employees during the lockdown period. They can use welfare funds to make payments until the resumption of business.
- Nepal government will deposit SSF contribution by both workers and employers for the month of Chaitra (mid-March to mid-April).
- Migrant workers who returned back but could not go again may register at employment service center at local level to avail employment opportunities through PM employment program.
Other measures
- Exemption of one month of house rent if landlords exempt one month’s rent for workers in unorganized sectors.
- 10 percent discount on food items at government operated food companies
- 25 percent discount in internet and electricity up to 150 units. Deadline for utility bill payment extended till May 13. Similarly, tax payment deadline has been extended till May 7. Vehicle registration and driver’s license renewal deadline extended till May 13.
- NRs 2.5 million free insurance for medical personnel
- Private schools must exempt all fees up to secondary level except boarding for a month
- No customs duty for any government, private and community sector importing medical equipment
- Import limit to prevent rapid depletion of forex: 10kg gold import limit; bank on vehicles worth over US$50,000; bank on import of betel nut, black pepper, peas among other
- Procurement agreements and bank guarantee time extended by a month
Budget management
- Government will use existing funds from the budget and those collected by the three tiers of government under various relief funds.
- Government will accept NRs 3.48 billion concessional loan from the WB, NRs13.9 billion no-interest loan from the IMF, and US$50 million aid package from the ADB
The biggest challenge is on implementation right now. A majority of these packages are open-ended and lack ascertained budget.
- Given the lockdown, how are affected people going to go to local governments to register to get relief. Also, how ready are local governments on this regard? Who is going to identify a particular households as needy/poor?
- Nepal’s public distribution system is in a shamble. The idea of selling lower priced goods from its stores is not going to much effective. Also, what about mobility restriction to reach the stores?
- Tax exemption on rent is not a good enough incentive to encourage landlords to exempt rent of tenants. Tax on rent is far less than the rent amount.
- The PM employment fund is not that effective. It remains to be seen how many workers will actually register for employment under the scheme.
- Many companies do not have their own welfare funds as they are required by law to make deposits in SSF.
