Development outlay to stagnate

Gopal Tiwari

Kathmandu, June 15:

The budget for the forthcoming fiscal 2004-05 is just a month away. However, the would-be chief of the treasury is yet to be sworn in. The ministry of finance officials themselves are currently burning the midnight oil preparing a budget even without the ‘guiding spirit’.

Government sources predict that the budget size is expected to be Rs 112 billion, about 10 per cent more compared to the 2003-04 budget of Rs 102 billion.

Of the total Rs 102 billion budget for 2003-04, Rs 42 billion had been allocated for regular expenditure while the rest Rs 62 billion had been earmarked for development. Out of the total Rs 62 billion set aside for development, it is doubtful whether even 50 per cent has been spent on development. This has hit economic growth and mobilisation of resources in conflict-hit areas.

Prof Madan K Dahal, head of Tribhuvan University, department of economics, said that the targeted development spending is unlikely to be met in this fiscal, due to myriad problems compounded with a weak implementation mechanism. Statistics reveal that only about Rs 13 billion has been spent on development till now, said Prof Dahal to The Himalayan Times. Prof Dahal emphasised on the need for spreading development programmes and increase local-level participation. “To meet new challenges, revision of programmes with special focus on rural-oriented programmes is needed in the forthcoming budget.”

“Development spending in this fiscal has remained so low that there is no possibility to see sustainable growth,” opined Prof Bishwambher Pyakuryal, president of Nepal Economic Association (NEA). “Even in urban areas, allocated budgets have not been spent. This has raised questions over long-term development process,” Pyakuryal felt. “Expenses on infrastructure, health, social, primary health care have been pathetic,” he said. “Despite government claims to high expenditure on development, the budget document does not reflect it,” he added. “The millennium development goals (MDGs) will be difficult to meet by 2015 due to low spending on social sector,” Pyakuryal commented.

The private sector is furious over the way the government and donors are working. Binod Bahadur Shrestha, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) attacked government bodies for low development spending. The government can not use conflict and weak governance as excuses for low spending on development segment, he added. “Despite the private sector’s contribution to the economy being over 76 per cent, donors and the government have not given it full recognition”, Shrestha complained. Prof Pyakuryal singled out ‘weak governance’ from the centre to the local level for hindering development programmes. Under the present circumstances, he added, decreasing regular expenditure and increasing spending on development are a distant dream. “A clear road-map is urgently sought to expedite development,” he suggested. Prof Dahal stressed on reconciliation programmes at the local level to expedite development. He hoped that revenue collection would improve, estimated at Rs 62 billion.

So far, the government has already collected about Rs 50 billion, according to the ministry of finance (MoF). The revenue figures are satisfactory despite the conflict taking its toll across the nation. The growth rate of 4.5 per cent, projected by the government, also seems unlikely to materialize, commented Dahal. Rameshwore Khanal, joint secretary at the ministry of finance, who is the chief of budget making section, commented that the government would easily collect Rs 62 billion by the end of this fiscal, going by the current trend. However, development spending remains unsatisfactory during this fiscal, according to him.