In the National Budget presented on Friday for the remaining ten months of the fiscal year 2008-09, Finance Minister Dr Baburam Bhattarai has adopted a can-do approach by sharply increasing the size of the budget over the previous year’s - a proposed total outlay of Rs.236 billion compared with Rs.168 billion. The previous year’s amount itself had represented an increase of 28 per cent over the year before. As a result of the bloated current budget, a whopping rise in revenue collection has been projected, as well as in receipts of foreign grants; the size of internal borrowings has also swelled in the process. This has led a number of economic experts to call this budget over-ambitious. Against the assessment that such a huge jump within a space of one year is unrealistic that the budget has mainly come in for criticism. The question is, what has led the Finance Minister to sound so highly confident about his figures?
The budget has led to fears that a considerable increase in spending could lead to an inflationary spiral, despite the minister’s projection of inflation rate at about seven percent at a time when it is hovering at a two-digit figure in neighbouring India. Besides, the estimate of seven percent economic growth rate has struck a number of economists as unfeasible in the present situation. Besides, they have also doubts whether the Budget has been able to maintain sound macro-economic balances, as well as consistencies and complementarities between various important economic targets. On this count, it seems, the Finance Minister could have improved things - perhaps he did not receive enough sound inputs from Finance Ministry bureaucrats and professional economists. One should also make allowance for the short time during which Dr Bhattarai has had to present the Budget, in less than a month after taking office. In the past few years, too, growth targets had been set much higher in the Budget proposals than the actual rates that happened later on, leading to revised estimates. Similarly, allocations for recurrent expenditure were almost always used up, and at times they overshot the targets, while a considerable part of development budget almost always remained unused.
Can this government change the pattern for the better? Admittedly, for several programmes, budget allocations appear too small. In this sense, it might appear that the budget has somewhat been scattered. But higher spending in social services like health and education will yield long-term benefits for the country. Similarly, certain measures aimed at providing a degree of social security for the disadvantaged, such as the old, should be regarded as the duty of the state. Even experienced Nepali finance ministers have had to revise their budget estimates in a significant way, such as growth, expenditure and revenue targets. If Dr Bhattarai has to revise the estimates as the months unfold, he should do so without hesitation, in the process deciding what is essential and what can wait. Not much should be expected from a government that has taken office after the new fiscal year has already started. However, it has demonstrated a willingness and determination. If it could move significantly towards the chosen direction, it would deserve kudos.