Nepal's dev process will not move ahead as long as the govt fails to spend the capital budget as per its desire
When the new constitution was promulgated by the second Constituent Assembly on September 20, 2015, all the political parties had agreed that the fiscal budget should be presented on Jestha 15, two months before the end of the fiscal year. This provision was included in the constitution with a view to endorsing the fiscal budget by the House of Representatives before the end of the current fiscal year so that the capital expenditure allocated through the budget speech could be implemented immediately with the start of the new fiscal year that begins from July 16. The constitution-makers had envisaged that the first three months – from July 16 to October 15 – would be spent on awarding the government contracts of various development projects so that the contractors could start their works after October and complete them within nine months or one week before the end of the fiscal. But this has not happened, and most of the development works are carried out at the end of the fiscal, resulting in sub-standard work. A large portion of the development works are carried out towards the end of the fiscal year. The very purpose of the constitution has remained unmet, largely because of poor monitoring from the concerned government ministries.
As of Saturday, the government spent had Rs 1.238 trillion out of the total allocated budget of Rs 1.633 trillion, as per the Financial Comptroller General Office (FCGO). On Saturday alone, Rs 25.56 billion was released from the government treasury, which is the highest amount compared to the funds released in the previous months. As per the rules, the capital budget is frozen a week before the end of the fiscal year. In this case, the government has violated the Financial Procedure and Accountability Liability Rules-2020. Despite spending such a huge amount of money on a single day, the government has not been able to meet its capital spending target. As of Sunday, the government spent only Rs 189.48 billion, or 50.11 per cent, of the Rs 378.10 billion allocated for capital budget for the current fiscal. However, the government has spent Rs 948.61 billion, or 89.05 per cent, of the total allocated Rs 1,065.29 billion for the recurrent budget.
Failure to spend the capital development budget is a perennial problem no government has been able to do away with. Political interference and a lethargic bureaucracy are to blame for the poor spending of the development budget. It is the development budget that creates job opportunities for tens of thousands of skilled and unskilled people within the country. Had the government been able to spend upto 80 per cent of its capital expenditure, many people would have been employed in the construction and service sectors, helping to lift them out of poverty. The tendency of spending a large chunk of the allocated development budget towards the end of fiscal has resulted in poor quality development works. This is a trend that benefits only the contractors, politicians and high-ranking bureaucrats. Nepal's development process will not move ahead as per the desire as long as this tendency continues. But the main question here is: who will bell the cat? This problem will remain unchanged unless the government leadership is honest in spending the capital budget in a time-bound manner.
Rampant smuggling
That there is rampant cross-border smuggling would be stating the obvious. Despite decades of efforts to control it, it carries on through the 1,000-kilometre-long porous border with India, allowing goods of daily consumption and construction materials to enter unhindered. This could not have happened without the collusion of the police personnel on either side of the border and customs officials. This naturally affects revenue collection, a reason why many customs points are unable to meet annual revenue targets. Smuggling in Rauthat, for instance, is taking place right under the nose of the customs office, with goods entering freely through the main gate and no security personnel or employees there to stop it.
It has come to light that, as elsewhere, both the Nepal Police and Armed Police Force (APF) personnel are paid on a weekly or monthly basis to allow goods to enter Nepal unhindered. Likewise, sources blame the Indian border security forces of abetting the illegal traffic of goods. It would be in the interest of both the countries to swing into immediate action. Failure to do so could have disastrous consequences, should it impact the security of either country.
A version of this article appears in the print on July 12, 2022, of The Himalayan Times.
