Distributive budget of Rs 1,048.9 bn launched

Kathmandu, May 28

The government, which has not been able to meet 50 per cent of the annual expenditure target even ten-and-a-half months into this fiscal, has expanded the size of the budget for the next financial year by 28 per cent to Rs 1,048.9 billion.

At a time when the economy is chronically ill and private investor confidence is low, higher public spending is necessary to create jobs and give impetus to economic growth. But the distributive programmes incorporated in the next fiscal year’s budget, launched on Saturday by Finance Minister Bishnu Prasad Paudel, are only expected to benefit certain groups in the country and stoke inflation.

“The budget — although positively aspirational — reeks of populist gamble, as the document doesn’t contain provisions to introduce radical reforms and is fraught with the risk of not meeting the revenue target and traditional execution challenges,” Swarnim Wagle, senior economist and former member of the National Planning Commission, told The Himalayan Times.

One example of the distributive programme incorporated in the budget is the decision to raise grants, under the Constituency Development Programme, for each of around 596 lawmakers to Rs 5 million from the existing Rs 2 million. Also, each of the 240 electoral constituencies will receive Rs 30 million under the Constituency Infrastructure Special Programme in the next fiscal — up from existing Rs 15 million.

Funds extended through these programmes, government officials say, have had very little developmental impact because lawmakers use the money to build small projects, or use it to serve their vested interest or secure vote banks.

Yet the government has raised the budget for these programmes to please the lawmakers, which is expected to increase financial burden on the government by at least Rs 5.4 billion.

The government’s plan to dole out fund in this manner will push up spending on grants by around 27 per cent in the next fiscal year to Rs 262.7 billion. This amount accounts for 25 per cent of the next financial year’s budget.

Also, the government has decided to raise the salary of civil servants by 25 per cent in the next fiscal year. This will cause government spending on salaries and benefits to jump by 26.9 per cent to Rs 132.3 billion. This amount accounts for 12.6 per cent of next fiscal year’s budget.

Govt presents annual budget of Rs 1.049 trillion