Balancing act

Presentation of the national budget (2007-08), the first by the eight-party interim government, is only two weeks away. This budget will also mark the end of the 10th Five-Year Plan and commencement of the Three-Year Interim Plan. The upcoming budget is bound to be a tough balancing act, not only because of the fast-growing demands coming from the myriad groups, but also because of the different priorities of the various constituents of the government. Added to this will be the heavy burden of reconstruction and rehabilitation, plus the constituent assembly polls. Therefore, the upcoming budget will have to be substantially larger than the previous budget — it is expected to hover at around Rs.160 billion. As the average economic growth rate during the past several years (including this year’s estimated rate of 2.5 per cent) has barely kept pace with the population increase, the country has hardly grown in net terms.

This implies that the foreign aid component of the budget will have to swell. As issues of uplift of the disadvantaged communities and development of backward regions have come into sharp focus, these are likely to force the eight parties’, and therefore the government’s, special attention. There is also a pressing need to make bigger allocations for the social sector, particularly health and education, to make these services accessible to the under-privileged. The government is also under heavy pressure from other sectors such as industry and agriculture for more money, and even from its employees for pay hike. It may have to consider substantial grants for the local bodies where the elective vacancies may shortly be filled by nomination. Because, over the years, almost every sector of the national economy has suffered from huge problems emanating from the conflict and its effects, such special push for greater government attention is not unnatural.

To stimulate the sluggish economy should constitute a principal task of the government. Finance minister Dr Ram Sharan will also have to give the budget something of an “inclusive” character at a time of inclusive politics. The interim government’s Common Minimum Programme (CMP) could provide some common ground. Inclusiveness also means that the constituent parties should be widely consulted and the outcome should reflect their consensus. In view of the too many competing needs, much more than in the past years, and the limited resources, there is also a danger that the resources could be thinly scattered. Finance ministers in Nepal have not had to deliver on their promises, and their emphasis has been on making the budget sound impressive at the time of presentation. Just look at the development budget of every year and at the wide gap between promise and performance. Even the quantum of estimated foreign aid and actual disbursement may well differ. Besides, failure to cut down on wasteful expenditure and to crack down on financial corruption can send the best-laid plans haywire. This has been one of the weakest points of successive governments.