Budget preparation is regular mandatory work of the government. Budget in a simple format includes a statement of income and expenditure in order of actual, revised projection/estimation. It is the finance minister who leads and directs the overall policy design with a mission and vision as the reflection of party manifesto/coalition agreement/team spirit, etc., depending on the prevailing situation. However, if the team leader cannot perceive the overall layout/design of the presentation style, it is difficult to expect from the bureaucrats, who in any case neither dare suggest nor prefer to work hard for any change on their own and simply follow the cut-and-paste ritual. Also, it is the finance minister in reality who would be responsible for the credit or discredit of the overall budgetary preparation. Obviously, it is the skill and talent of the finance minister that can make the budget more comprehensive, readable, transparent and comparable so that the people could easily assess the budgetary targets.

The budget should not merely be guided by theoretical justification of expenditure first on an ad hoc basis making the whole process irresponsible at the end without the support of dependable resources. Recurrent expenditure by nature is of fixed type, and it is the capital expenditure that needs rigorous exercise in setting realistic physical targets. Recently, the political scenario is being developed towards solutions with the fast track commitments on interim constitution and government. Obviously, the situation is not so easy given the divergence of views and sensitivity of the major stakeholders as well as the people’s aspirations. As such, budgetary preparation at the moment should try to reconcile the seven parties and the CPN-Maoist coalition culture on a broader base even though there are disputes in dealing with many issues. It is natural for the finance minister to try and convince all the parties concerned on the budgetary policy and resource allocation. It is also an opportunity for the finance minister to show realistic vigour and the selection of development priorities based on dependable financial resources in consultation with all since the forthcoming budget will be an interim budget. Also, the Maoists should understand that they are not eligible for most of the foreign assistance.

With the broader consensus of all the stakeholders, the finance minister can make use of unprecedented policy reform. The budget should focus on the issues of (i) priority of reconstruction and rehabilitation for the destroyed and displaced (ii) consolation relief package to families for the loss of innocent family member(s) as a result of internal conflict (ii) reduction of security and palace related expenditure (iii) rapidity of the capital expenditure with dependable resources (iv) expansion of the base of domestic taxes like value added tax (VAT), excise tax, etc. (v) mechanism of bringing informal trade into formal channels with India and Tibet through customs reform and lowering of VAT for small quantity items (vi) immediate actions against the wilful defaulters on hierarchical basis of loan amount for the recovery of bank loans which can be used for the development work (vii) nationalisation of feudal/royal property and (viii) exploration of the bank balance, financial investment and real estate property abroad of the Nepali citizen(s) by appealing to the potential agencies/countries.

This is the right time for the government to build consensus and seek other countries’ cooperation in building a new Nepal. The political parties should not take the issues confronting the country as their prestige issues. Moreover, the SPA government should be able to give a good message nationally and internationally. If a radical reform agenda is postponed, national enthusiasm and international support will lose the spirit and the regressive forces will get the opportunity of a level playing field.

The budget should also set quantifiable and comparable physical targets for every development programme so that the implementation part could easily be assessed. Similarly, capital expenditure should be allocated on the basis of per unit cost for each programme. The indicative targets, among others, for the roads on their types are to be given in kilometres, drinking water for exact number of persons, basic health services for exact number of persons, education for the additional enrolment, irrigation for how many additional hectars, social safety net for how many people, poverty reduction for whom and how are some of the examples.

The present situation can be referred to as a benchmark record for every sector. The theme of the budget speech is to give clear- cut and visible targets with the support of facts and figures. The government should genuinely estimate the overall investment so that the growth path can be less prone to error. The finance minister should not feel any humiliation in speaking the truth and presenting a realistic scenario.

Dr Paudel is ex-economic advisor, NRB