Federal Budget 2020/21 Highlights

Federal Budget 2020/21

Minister for Finance Dr. Yuba Raj Khatiwada presented the budget estimates for the fiscal year 2020/21 at the federal parliament on Thursday.

The government has presented an annual budget of Rs 1.47 trillion for the fiscal year 2020/21. Last year, the government had presented a budget of Rs 1.53 trillion.

Unveiling the federal budget, Finance Minister Dr. Yuba Raj Khatiwada said the government has allocated Rs 352.91 billion for capital expenditure, Rs 948.94 billion for recurrent expenditure, and Rs 172.79 billion for financing.

Rs 889.62 billion will be financed from revenue, Rs 60.52 billion from foreign grants, Rs 299.5 billion from foreign loans, and Rs 225 billion from internal loans.


The government has increased the budget in the health sector to 90.69 billion for the fiscal year 2020/21, prioritizing the prevention and control of the coronavirus pandemic (COVID-19). The budget in the health sector in the last fiscal year was Rs 68.78 billion.

The government has aimed to ensure health service to all Nepalis, enhance the quality of health service, develop and upgrade health infrastructure and develop human resources.

According to Khatiwada, Rs 6 billion has been allocated to combat the pandemic. Under the program, the government will expand the scope of testing, increase quarantine facilities and manage health facilities, medicines and equipment. The government has also announced free health insurance to health workers involved in the treatment of the virus. The allowance of health workers has also been doubled.

A total of Rs 12.46 billion has been allocated to develop health infrastructures. Under the program, the National Public Health Laboratory will be developed into an international standard lab. Modern and well-facilitated health labs will be developed in all province capitals. A 300-bed infectious disease hospital will be built in Kathmandu Valley and 50-bed infectious disease hospitals will be built in all the province capitals. 250-bed ICU units will be built in all the government hospitals in both inside and outside the valley.

Rs 14.2 billion has been set aside to build 272 basic hospitals with 5-15 beds at all local levels. Arrangements will be made to provide Rs 5.1 billion to health institutions at local levels to provide fundamental health services alongside checkups on non-communicable diseases. Forty percent populace at all local levels will be brought under the insurance policy in the next FY. Nutritious food programs will be run at all health institutions.

Pokhara and Karnali Health Sciences Academy and Koshi, Narayani, Bharatpur, Bheri and Dadeldhura Hospitals will be upgraded into expert hospitals.

Plans to expand necessary labs in all health facilities and establish disease remedy and pharmacy as well as set up health desk with the necessary equipment at main entry points in the states for compulsory health examination of abroad returnees is also included in the budget.


The budget for the Prime Minister Employment Program has been doubled to 11.60 billion. Last year Rs 5.1 billion was allocated for the program with a target to create 60,000 jobs.

According to Khatiwada, the government will create at least 200,000 jobs under the employment program.


The government has allocated a budget of Rs 8.93 billion for the Kathmandu-Terai fast track project, with an aim to complete the national pride project within the next three years.


Prioritizing the agriculture sector, the government has allocated Rs 41.40 billion for the agriculture sector and 27.96 billion for irrigation.

The government has allocated 3.22 billion for one local unit one product pocket area program. Under the program, the government plans to restructure the Prime Minister Agriculture Modernization Project and run one local unit one product pocket area program based on the local prospects. The government plans to develop an additional 250 agriculture and livestock pocket area to ensure at least one agriculture pocket area in a local unit.

The government has increased the budget to 11 million to ensure adequate chemical fertilizers. Organic farming will be branded and promoted.

Market infrastructures will be developed in each local unit. The government has also allocated a budget to build 78 wholesale markets in all seven provinces and establish provincial standard agricultural hub markets.

Rs 1 billion has been allocated to local units to build 200 food storage centers in order to ensure food security and strengthen the supply management system.

Rs 950 million has been allocated to promote sugarcane production. A fund has also been established to produce more than five million units of fruit saplings in the next fiscal year.

Rs 2.32 billion has been allocated to set up 5000 shallow tube wells and 247 deep tube wells in 25 districts of Terai and inner Madhes in order to expand underground irrigation in additional 22,000 hectors of fertile land under the Prosperous Terai-Madhes Irrigation Special Program.

Mahakali Irrigation Project will be promoted as a national pride project, while other irrigation projects including Rani Jamara Kulariya, Sikta, Bheri-Babai Diversion, Praganna and Badkapath, Bagmati, Palungtar, Great Dang Valley will be implemented. For the purpose, the government has allocated a budget of Rs 10.25 billion.

Rs 2.46 billion has been set up to construct the tunnel of the Sunkoshi-Marine Diversion Multi-purpose Project.

Rs 1.31 billion has been allocated for lift and solar-based irrigation in hilly and mountain regions.


The government will establish land banks in 300 local levels in the next fiscal year in joint collaboration with the State and local level governments targeting the youths who will be returning home confined to the rural parts of the country due to the pandemic.

The government will any barren land as well as government-owned land for the purpose. The land will be leased out to those who wish to do farming and cultivation.

Such individuals or agencies will receive agro tools as incentives from the government. A budget of Rs. 500 million has been allocated for share investment in the land banks.


The government has given special priority to the energy sector in this budget as well.

1,300-MW electricity will be added to the national power grid of the country within the next fiscal year. A goal has been set to complete ongoing hydropower projects and expedite the under-construction projects.

The government is planning to accomplish the ongoing construction of Upper Tamakoshi, Rasuwagadhi, Sanjen and Madhyabhotekoshi hydropower projects in the upcoming fiscal.

The construction of 456-MW Upper Tamakoshi project has so far witnessed 99.5 percent progress in terms of physical development. The 111-MW capacity Rasuwagadhi hydropower project is also making speedy progress.

The upper Sanjen (14.8-MW), lower Sanjen (42.5-MW), Madhyabhotekoshi (102-MW) are also progressing in a way to get completed in the upcoming fiscal year.

The lockdown enforced by the government to stem the COVID-19 has deferred the progress in the construction of the projects.

According to the budget speech, the government has laid emphasis on the construction of hydropower projects with reservoir and semi-reservoir for energy mixture and security.

Meanwhile, the government has allocated a budget of Rs 4.13 billion for the promotion of alternative energy.


The government has earmarked a budget of Rs 19.42 billion for the expansion of aviation sector infrastructure in the country for the upcoming fiscal year.

The government has allotted the budget for the construction of the second terminal building in the Gautam Buddha International Airport and Pokhara Regional International Airport. Likewise, the budget has been allocated for the shifting of communities in the boundary of Nijgadh International Airport. Budget has also been appropriated for the enhancement of the capacity of Tribhuvan International Airport.

The budget has put forth a plan for the construction and up-gradation of different airports including in Surkhet, Bharatpur, Chandragadhi, Dhangadhi, Janakpur, Biratnagar, Nepalgunj, Chuhandanda and Narayanpur.

The budget has also mooted a new aviation policy to make the flight service quality and competitive. Among other measures included in the budget are restructuring of Civil Aviation Authority of Nepal, separation of the regulatory and service-providing status of the Authority, construction of meditation center with the capacity of 5,000 people, implementation of Greater Lumbini concept and Ramgram master-plan, expediting the process to keep Tilaurakot in the world heritage list and tourism sector infrastructure development.

The government has announced the establishment of a fund of Rs 50 billion to help remunerate the employees of the industrial establishment including tourism enterprises.


A budget of Rs 12.21 billion has been allocated to expand East-west Highway. The highway will be upgraded into Asian highway standard within the next three years.

Rs 8.27 billion has been separated to complete the under-construction Pushpalal Highway within three years.

Rs 7.1 billion has been allocated to complete the construction of Postal Highway within three years. Likewise, Rs 3.7 billion has been allocated to complete the Madan Bhandari Highway within the next five years.

The government will expedite the construction of Karnali corridor to connect all the district headquarters to road network and upgrade Muglin-Pokhara, Kohalpur-Surkhet and Siddhartha Highway. For the purpose, the government has allotted Rs 5.57 billion.

To implement the constituency strategic road program that connects at least one local unit to every constituency, a budget of Rs 3.30 billion has been allocated.

Rs 2.36 billion has been established to continue the ongoing road projects under the Devghat, Chatara and Ramayan Circuit.

Rs 8.93 billion has been set up to complete the Kathmandu-Nigjadh fast track project within three years. Likewise, 1.96 billions has been allotted to upgrade the roads connecting major trade points at the southern border with East-West Highway into industrial corridor and trade routes. Also, Rs 1.20 billion has been administered for upgrading Suryabinayak-Dhulikhel road section and to complete the construction work of Kantipath Highway.

A fund has also been set up to begin the second phase of Kathmandu Chakrapath road expansion, to build Nepal’s first flyovers at three different places of Kanalki-Koteshwor road section and to expand the urban roads in major cities including Kathmandu.

Likewise, Rs 6.42 billions has been issued to construct tunnel roads at various places including Naghdhunga, Siddhababa section of Butwal-Palpa road section, Khurkot-Chiyabari, BP Nagar-Khutiya-Dipayal, Thankot-Chitlang, Lambagar-Lapche, Kulekhani-Bhimphedi, Tokha-Chahare and Betrawati-Syafrubesi road sections.

The government has also allocated a fund to begin the tunnel road and flyovers in Tinkune-Koteshwor-Jadibuti road sections, underpass in Baneshwor and ease the traffic at Tripureshwar-Maitighar road section.

Similarly, the government has also allocated Rs 10.91 billion to build 250 bridges including 10 special bridges, complete the ongoing construction works at ongoing 300 bridges and construct 1,300 local bridges.


The government has appropriated a budget of Rs 5.46 billion for the Melamchi Drinking Water Project. It aims to complete the groundwork of the project this year and initiate distributing drinking water in the Kathmandu Valley from the beginning of the upcoming fiscal year.

The government has unveiled its target to provide with basic services of drinking water to 94 percent population in the upcoming fiscal year.

A budget Rs 5.89 billion has been set aside for Kathmandu Upatyaka Khanepani and sewerage systems.  Minister Khatiwada said that the budget has been allocated to construct and repair drinking water projects and make the drinking water distribution systematic in all states.

Likewise, Rs 6 billion has been allotted for the completion of under-construction climate change adaptation and lift and sub-projects in dry areas, the minister said.