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The government’s budget contradicts with its own plan to increase the domestic consumption of electricity and achieve economic growth of seven percent by imposing the value added tax (VAT) on users.

Through the budget for the Fiscal Year (FY) 2026/27, the government has stepped up to impose 5 percent VAT on the electricity consumption even by the households if it crosses the threshold of 50 units per month. The government has been reiterating its commitment time and again to facilitate domestic electric consumption to prevent wastage of the produced electricity.

While the import bills on petroleum products have been escalating, the new provision on electricity cost may not help reduce the imports, according to experts. On the other hand, the government has also raised taxes on imported electric vehicles, which is supposed to worsen the government’s plan to transition into renewable energy uses.

The general public also expressed their dissatisfaction over the government’s new decisions. “While the government talks on providing subsidies on electricity induction cookers, it imposes an additional burden of tax on consumption above 50 units per month—is it fair?,” questions Bishnu Aryal on social media.

“On the one hand, the government is prioritizing green energy and green technology. But in practice, policy and action do not seem to match each other. There is neither sufficient tax exemption on importing solar panels nor in electric vehicles. Green energy cannot be driven by rhetoric, but by practical policies and long-term thinking,” writes Roshan Adhikari.

The government has set an ambitious target to achieve a seven percent economic growth rate for the upcoming FY, while aiming to cap inflation at six percent.

In addition, the government aims to generate 30,000 MW of electricity within the next decade, by 2036, stepping up from previous targets of 24,500 MW. The strategy relies heavily on hydropower and solar projects, coupled with plans to export 15,000 MW and boost domestic consumption to 1,500 units per capita. “How will the new policies help increase electricity consumption?,” questions Madan Gyawali.