Accelerating development work has always been the priority for the government since long. However, implementation of such projects has perennially remained weak. The government declared the current fiscal year as the ‘budget implementation year’, but ironically, the government has been able to spend just 23 per cent of the total allocated capital budget worth Rs 311.95 billion. In this context, Pushpa Raj Acharya of The Himalayan Times caught up with Min Bahadur Shrestha, Vice Chairman of the National Planning Commission — apex planning body of the government — to learn what the government is doing to cope with this disappointing expenditure performance.
Interview with National Planning Commission vice chairman Dr Min Bahadur Shrestha at Singha Durbar, Kathmandu, on Sunday, March 26, 2017. Photo: Balkrishna Thapa Chhetri
Capital expenditure has always been very slow since long. What is the National Planning Commission actually doing to cope with this challenge? We are aware about this challenge since long and we have also identified the reasons responsible for the slow capital expenditure. Though the budget was presented one-and-a-half months before the start of the current fiscal year calendar, the existing execution mechanism and legal frameworks were found to be the major bottlenecks for the proper implementation of the development budget. Since the new government was formed in August, it has taken some actions to ramp up capital expenditure. Necessary legal frameworks have been prepared and enforced like the Public Procurement Rules has been issued plugging all the loopholes capitalised on by the contractors in the past. Monitoring has also been intensified. In fact, the prime minister himself has started monitoring the progress of national pride projects. The National Development Action Committee meeting led by the prime minister has assigned seven members of the NPC to monitor the projects in each proposed province. Performance contract based on ‘reward and punishment’ system for the departments and project chiefs will also go a long way in ending the trend of not taking any initiative. I think these measures have set the foundation to expedite development works and we can expect results by the end of this fiscal. You have mentioned monitoring as an effective tool to expedite development expenditure but the performance of national pride projects has been dismal. What do you have to say on this? Effective monitoring is a powerful tool to ramp up project performance. Regular monitoring creates pressure on the project chiefs and contractors to deliver results within the desired timeframe. Simultaneously, we do provide necessary facilitation for the projects. For instance, we recently monitored the Gautam Buddha International Airport where works have slowed due to a dispute between the main contractor and local contractor. The local contractor, who apparently has strong political nexus, has taken money from the main contractor but has not worked accordingly. We spoke to the main contractor and told them that if the works are further stalled then we will have to terminate the contract. The monitoring team thus can find the exact reason for the stalemate in the project and take the right decision on time. We have realised that development works gather pace after the monitoring team warns the contractor of terminating the contract for their negligence. The monitoring mechanism has also built an environment of coordination among various stakeholders and government agencies to expedite the development works. Likewise, NPC has been preparing the implementing procedure for the implementation of national pride projects. A committee has been formed under the leadership of a member of NPC to develop the procedure. The national pride projects will be separated and we have envisioned fast track mechanism for proper coordination among various stakeholder agencies to sort out the issues — environmental, forest and procurement related, among others — for the timely completion of national pride projects. NPC and Ministry of Finance had announced that it would transfer resources from non-performing projects to well-performing projects from mid-March. How much resources are going to be transferred to the well-performing projects? As many of the projects including priority projects are moving at a slow pace, it is understood that the resources allocated for them will not be spent. Against this backdrop, we have guaranteed the resources to the well-performing projects so that the works need not be halted till next fiscal due to lack of resources. The ministries themselves can transfer up to 25 per cent of the allocated funds from non-performing to well-performing projects and they have been doing accordingly. As we have guaranteed resources, the well-performing projects can work without any uncertainty of resources. This will help boost capital expenditure and we will be able to spend 85 per cent of the total allocated development budget worth Rs 311.95 billion. We have intervened in the practical and policy related bottlenecks of slow capital expenditure and it will help accelerate capital expenditure not only in this fiscal but also in the coming years. Likewise, the local election, which is going to be held in the near future, will also create a positive atmosphere for development. It will generate jobs, revitalise economic activities at the local level and the country will move towards a self-reliant economy as production activities will be enhanced. There will be more demand for resources from next year as local bodies themselves will implement local level projects and there will be competition among local bodies to deliver development targets. NPC had given a budget ceiling of Rs 1,156.04 billion to the ministries for the next fiscal year before the local bodies restructuring was endorsed from the Cabinet. Will NPC now review this ceiling? The budget ceiling was given to the ministries before the local level restructuring was endorsed and local election was declared. Ministries have been asked to propose programmes within the given ceiling and to recommend national level projects only as we are going to provide huge grant to the local bodies. Local level projects are going to be selected, approved and implemented by the local bodies. Local election has been scheduled for May 14 and the budget for next fiscal will be presented by the end of May. For next fiscal, municipalities will implement programmes concerning them and which were recommended to the district development committee before the local level restructuring was endorsed from the budget they will receive in next fiscal. As the local bodies will have people’s representatives from next fiscal, implementation of local level projects will also be effective. As local bodies lack expertise in selection of projects, project preparation, procurement management, among other necessary works, how can we assume effective delivery of development works? This is a valid concern and is the reason why NPC, Ministry of Finance, and the Ministry of Federal Affairs and Local Development have planned to jointly conduct training programmes for civil servants of the municipalities in the near future on planning, selection of projects, project preparation and budget estimation. Related laws need to be followed while implementing projects and there needs to be project monitoring for which we will provide training. I am not saying that we will provide a complete solution during the training. Some problems may occur during implementation, which we will solve gradually. After the elected body is formed in the municipalities, they will set up municipal councils to select priority projects and to award contracts. The projects implemented by the local bodies will be monitored by central level as well. Under what structure will the government provide grant to the local bodies as the development needs and cost of development may vary with each local body? The Natural Resources and Financial Commission is going to be established which will provide the methods to allocate the budget based on the development need, cost of development and potential of resource generation at the local level. By mid-December there will be provincial election and province level institutions will be set up. Then the provinces will be responsible for provincial planning and executing the projects. Lastly, what would be the major national level projects in the next fiscal? We have prioritised a few projects under road and transport, energy, and information and communication technology (ICT). Kathmandu-Tarai expressway is a major priority, which is going to be developed under either the company or development committee model. Bidding process of this expressway will probably begin this year and the contract will be awarded by dividing the 78-km road project into at least three sections. Three contractors will work in parallel and the country can build this project by allocating Rs 20 billion to Rs 30 billion per year within four to five years. The Second International Airport (Nijgadh), upgradation of mid-hill highway and east-west highway, north-south corridors, east-west railway project and acceleration of post earthquake reconstruction works will be given high priority. Likewise, high capacity transmission line and some of the mega hydropower projects will get required resources. Similarly, utilising ICT in service delivery will be another priority area of the budget.  Through implementation of budget, we will be able to achieve transformative results in coming years.