KATHMANDU: Delay in the budget passing process is leading Nepal into failed state status, economists said. It is the first step toward becoming a failed state, they said in an interaction organized at Reporter's Club here today.

Budget is the political manifesto of the government. If it is not passed on time there will be no government in principle, said Dr Chiranjivi Nepal. "The situation is alarming. Urgent action is required," he said. The delay in passing the budget has affected basic services of 26 district hospitals and government-run schools and colleges.

Eight ministries, including Local Development, Finance, Home Affair, Defense, Commerce and Supply are badly affected due to fund crisis. The delay is affecting development works and the financial market also. The Nepali financial market has been facing liquidity crunch, with inter-bank transaction at 10.4 per cent. Banks borrowed Rs 6 billion from Nepal Rastra Bank on Monday.

Professor Bishwomber Pyakural projected the crisis would affect social safety as well. "If the crisis deepens, it will create anarchy and chaos," he said. The budget crisis has affected 4,50,000 people -- civil servants, police and army -- and 2,00,000 pension holders and their families numbering around 3 million people. Millions of people are facing the problem of bread and butter, he added.

Pyakurel advised the government to create a special fund to support regular expenditure of the government. "It will be better to create a special fund for the crisis," he said, "If an alternative is not devised in time, Nepal will surely become a failed state."

Pro-Maoist economist Dr Dilli Khanal said, "We want to solve the budget problem with other political issues also," he said. The Maoists wants a package deal in budget and annulling President Dr Ram Baran Yadav's move which reinstated Nepal Army chief Gen Rookmangad Katuwal, he added.

Nepali Congress CA member Dr Narayan Khadaka voiced doubts about the Maoist's package deal. "What is the package?," he asked, "This is only a game that the Maoists are playing." He warned the Maoists not to play with people's sentiments. "The Maoists should admit the responsibility for the deepening crisis and its consequences." He suggested the government to go for ordinance after November 20. "The government can't be bound by the demands of a political minority ," he said.

However, Keshav Acharya, advisor to Finance Minister Surendra Pandey, said, "The budget will be passed in parliament on Friday in harmony," he said, "As far as I know, the Unified CPN-Maoist has agreed to it."