Nepal’s recently announced budget for the fiscal year 2025/26 (2082/83 BS) offers some benefits for government employees, though it does not include a general salary hike.
- Dearness Allowance (Cost-of-Living Allowance): The Direct Benefit
- The Increase: The most tangible benefit is the increase in the monthly dearness allowance from Rs 2,000 to Rs 5,000. This is a significant jump of Rs 3,000.
- Purpose: This allowance is specifically designed to help civil servants cope with the rising cost of living due to inflation. While not a basic salary increase, it directly boosts their disposable income.
- Context: The Finance Minister explicitly stated that a general salary hike wasn’t possible due to “lack of financial resources.” This highlights the government’s fiscal constraints and indicates that the dearness allowance increase is a pragmatic response to employee concerns without overstretching the budget. It also indicates that this increase is a lump sum, not tied to job level, ensuring all government employees receive the same additional amount.
- Timing: This revised allowance will be effective from mid-July, coinciding with the start of the new fiscal year (2025/26).
- Annual Clothing Allowance: A Continued Perk
- Government employees will continue to receive an annual clothing allowance of Rs 10,000. This is a recurring benefit that provides a fixed amount for their attire needs. While not a new benefit, its continuation is important for civil servants.
- Social Security Programs: Broader Impact, but Also for Employees
- Increased Allocation: The budget has allocated a substantial Rs 109 billion for social security programs.
- Integration and Streamlining: A key focus is on integrating the numerous scattered social security schemes under a single framework. This aims for greater efficiency, transparency, and to prevent duplication of benefits.
- National ID Requirement: Beneficiaries of social security programs will gradually be required to possess a national identity card. This is a move towards better management and targeting of benefits.
- Health Insurance Program: A significant portion of the social security allocation, Rs 10 billion, is specifically for the Health Insurance Program. While this is for all citizens, government employees are included and benefit from this. There’s a push to bring all government employees under the national health insurance program, which would provide comprehensive health coverage. The government aims to gradually increase the benefits package for insured individuals.
- Senior Citizen Allowance (with a change): While the age for receiving the general elderly allowance has been raised from 68 to 70 years (due to fiscal sustainability concerns), senior citizens from remote, marginalized, and Dalit communities will continue to receive it at the earlier age of 60. This highlights a nuanced approach to social welfare.
- Other Indirect Benefits and Contextual Points:
- Focus on Economic Growth and Stability: The overall budget aims for an economic growth rate of 6% and to limit inflation to 5.5%. A stable economy indirectly benefits all citizens, including government employees, by maintaining purchasing power and job security.
- Recurrent vs. Capital Expenditure: A significant portion of the budget (around 60.1%) is allocated for recurrent expenditure, which includes salaries and administrative costs. This ensures the smooth functioning of government operations and consistent payment of salaries and allowances.
- Internship Opportunities: The budget mentions providing internship opportunities for students in public institutions. While not a direct benefit for current employees, it creates a pipeline for future government employment and potentially offers learning opportunities within government departments.
- Fiscal Prudence: The government’s decision to not increase basic salaries, despite demands, underscores a focus on fiscal discipline and resource management. This approach, while potentially disappointing for some, aims to ensure long-term financial stability.
In summary, while there isn’t a widely anticipated basic salary increase, the Nepalese budget for 2025/26 provides a notable boost to government employees’ purchasing power through the increased dearness allowance. Furthermore, the commitment to strengthening social security and health insurance programs offers broader welfare benefits that include civil servants. The overall budgetary strategy appears to be a balancing act between addressing immediate cost-of-living concerns and maintaining fiscal responsibility.