Nepal | May 30, 2020

Devil is in details: The budget

Hisila Yami
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Precisely because this budget is the product of a long drawn transitional period it has to do away with many bottlenecks that hamper implementation of programs and projects

Budget. Illustration: Ratna Sagar Shrestha/THT

Amidst three tires of elections to be held within January 2018 the present budget 2017-18 has been declared. This budget is worth watching, as it is still the product of a long drawn political transitional period. Also it has been promulgated by a caretaker government with the code of conduct tied because of the waiting for the second phase of election. Hence it has lots of limitations. This budget is interesting as it is the product of two political parties having different opposing ideologies. This budget may be full of expectations, as the GDP of the country has risen to 6.9 point. It has come with an announcement of nearly a Rs. 1300 billion budget which is about 22% bigger than the previous one. Once again the age-old question seems to be valid: do we have enough infrastructure, manpower and resources to make the budget implementable? Hope it will not be once again a dream-distribution session that has been the annual pastime of traditional parties. In short the devil lies in details and not in dreams.

It is to be noted that the last budget had allotted around Rs.1000 billion. And today after completing eight months, only around Rs. 400 billion total expenditure has been spent. Assuming that in the remaining four months the expenditure comes to Rs. 300 billion, the total expenditure comes to Rs. 700 billion, which leaves a Rs. 300 billion surplus. Thus increasing to nearly Rs. 1300 billion for the coming budget will mean we are inviting another non-spending of huge amounts.

In a way the code of ethics imposed due to the election should have been a blessing in disguise. Instead of increasing the size of the budget and new programs it could have focused on micromanaging the old unfinished projects and programs. The government should have been more focused on making conducive laws, bylaws, rules and regulations to facilitate the smooth functioning of the bureaucracy and removing bottlenecks in implementing big national projects. For instance completing land use plan for the whole country should have been the first priority, accordingly the land acquisition act should have been modernized so that it can be effectively used for big national projects.

The hallmark of the present budget is it has now waded into the swimming pool of federalism by taking the first step of reaching the local body by diverting the money from central ministries to local bodies. This is a welcome step. This means now the money flow will have less central bureaucracy hassle allowing money to flow directly to the elected local bodies. It is more likely for capital expenditure to take place at the people’s level. However, it is also important to note that appropriate measures must be taken to see how the money is going to be utilized through scientific working procedures coupled with a strong monitoring system. Otherwise resources, tenders and facilities will be siphoned away by the syndicate system of political parties in the past. Corruption at the central level may simply pass on to the grassroots level. This is particularly true, as some politicians have been voicing that the present allotted money to the local body does not yet match with the work and responsibilities given to these bodies since substantial development work is now being allotted at the local level. Already the elected mayors and chairmen of village councils have started competing with each other to increase social expenditure without the procedure of expenditure and monitoring mechanism.

Secondly it has allocated substantial fund for the major projects “Rastriya Gaurav Ayojana”. This is welcome but it has not done enough homework to make sure money is spent and the work gets done. Let it not be another stunt whereby the present government siphoned unspent budget on new unmonitored projects leaving the old monitored projects gaping for money undertaken by the parliament’s account committee. Only 30% of the budget was spent on capital expenditure last year.

Thirdly, opening banking units in all the local bodies  is a welcome sign to see that the government is trying to cover all the people under the monetary system by encouraging them to open bank accounts. It is to be noted that Banijya bank branch will be opened at each local body which is a welcome step, provided it is feasible.

This will not only encourage productivity based on monetary transaction but it will also help in netting wider economic activities under revenue collection without having to increase revenue percentage. Also it has emphasized the need to bring remittance through banking channels by making it mandatory to have bank accounts before going abroad for work.

The government could have brought all the projects related to poverty alleviation distributed in different ministries under one umbrella thus making it more focused, transparent and effective.

Precisely because this budget is the product of a long drawn transitional period it has to do away with many bottleneck hurdles that hamper implementation of programs and projects. While step-by-step restructuring of the state is taking place as per the new constitution, it is high time government undertook restructuring of the bureaucracy. Otherwise let the present budget not be like cheap declaration of 265 municipalities without providing required infrastructure to qualify them as municipalities, thus making them burdensome for the local people.

A version of this article appears in print on June 07, 2017 of The Himalayan Times.

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