The Tenth Five-Year Plan came to a close with the end of the last fiscal year. Now, a Three-Year Interim Plan is to come into force as soon as the Cabinet approves the draft. The plenary session of the National Planning Commission (NPC), chaired by the Prime Minister, on Monday sent the draft to the Cabinet. The Plan has to address special needs under special conditions, and it may not even complete its three-year period, if the transition period ends sooner. How well the Plan can meet its objectives under these circumstances will chiefly determine the extent of its success. The execution of the Plan is still a huge and challenging task, as the law and order situation in the country has to improve a lot before one can rest assured on this front. This plan has the added task of post-conflict reconstruction of damaged or destroyed property and rehabilitation of people. Naturally, this requires huge resources. Indeed, donors are ready to contribute substantially to the task.

But, a chronic problem in Nepal has been the low capacity of government to spend. That is why a good proportion of development budget has often remained unused, whether the money were available or not. Therefore, at the end of the day, there has always been a wide gap between budget and expenditure. Besides, how much expenditure has gone into actual development is a separate topic for analysis and discussion. NPC vice-chairman Dr Jagdish Chandra Pokharel recently warned of an ‘interruption in the aid flow unless the government boosted its capacity to spend’. It is a great paradox that this low aid absorption exists amid

the country’s huge needs of development in every sphere. Non-use of any development budget is an opportunity lost. Worryingly, this state of affairs has not changed much since the first Five-Year Plan was launched in 1956.

Dr Pokharel recently said that an additional $2.06 billion would be needed to meet the objectives of the Interim Plan. The donors may ask with justification why the government needs more money if it cannot spend all of it. Recent reports have indicated that the government’s regular expenditure is increasing at more than a normal rate while its revenue is not keeping pace. There is also the tendency among politicians and bureaucrats to try to use up as much remaining budget as possible towards year-end just to prevent the money from being frozen, which has often led to unwise uses of the money. Government’s emphasis has always been on more funds without taking corresponding measures to ensure their

proper utilisation by coming down heavily on corruption and irregularities. Mere spending

does not guarantee commensurate development. The Interim Plan’s annual economic growth target of 5.5 per cent and its objective of cutting absolute poverty by seven per cent in three years look a shade too ambitious in the light of all statistics and the conditions in which these are to be attained. Indeed, we have often fallen behind our economic targets, all the more so in recent years.