EDITORIAL: Perennial problem

Budget must be allocated to those projects whose DPRs have already been completed and are at the final stage of bidding

It is already eight months into the current fiscal 2018/19. But the government has just been able to spend around 29 per cent of the total budget allocated for capital expenditure. Out of the total Rs 313 billion earmarked for capital spending, the government has spent just around Rs 91 billion in development works. The remaining budget needs to be spent within the last quadrimester, that too close to the onset of the monsoon. Low capital spending results in the government’s failure to boost capital formation. This is a perennial problem the country has been struggling with since the first ever fiscal budget was unveiled in 1951. Fielding questions from lawmakers in the parliamentary Finance Committee on Monday, Finance Secretary Rajan Khanal acknowledged that budget spending had not been as expected though the spending has improved slightly compared to the previous years. He said the government could not increase capital spending as expected as the government was focussed on implementing fiscal federalism and formulating necessary laws to govern the three tiers of government.

As a result of the government’s dismal performance in spending the capital budget, it has now scaled down the capital spending to Rs 265 billion, 15 per cent less than the estimated capital spending. The government has also scaled down the recurrent expenditure to 5.57 per cent to Rs 798.4 billion from Rs 845.5 billion. This means some development projects whose progress report is below expectation will be scrapped. Many development programmes are selected under political pressure without conducting detailed feasibility studies.

The general perception about the fiscal budget, especially related to capital expenditure, is that it is allocated only for the sake of allocation. Nobody, even the lawmakers, believes the budget allocated for a specific project will be spent within the given fiscal. Most of the lawmakers who expressed their views at Monday’s meeting said that the budget should not be distributive and should instead aim at providing benefits to a large section of society and at creating job opportunities. The railway project, for example, is a case in point. Billions of rupees have been earmarked for this project, whose detailed project report (DPR) has yet to be finalised. The Finance Ministry should allocate enough budget to those projects whose DPRs have already been finalised and are at the final stage of awarding contracts. The government has also not been able to develop an effective budget disbursement mechanism, as a result of which the contractors who have completed their works within the deadline are not reimbursed on time. Secretary Khanal claims that the government has targeted 80 per cent capital expenditure by the end of the fiscal. The government is thinking of achieving its target after wasting so many precious months. A large chunk of the development budget is spent just before the monsoon, resulting in poor quality work. The rainy season is a bane for all works. But this repeats every year. This happens due to a nexus among the politicians, bureaucrats and contractors in misusing the funds for capital spending.

Unwanted pregnancies

When there are unintended pregnancies to the tune of 539,000 annually, the government can no longer afford to be nonchalant and must haul those in charge of providing family planning services over the coals. The figures reported by the Guttmacher Institute and Centre for Research on Environment, Health and Population Activities in Nepal are disquieting, as most of the pregnancies are said to result from an unmet need for modern contraceptive methods. Among Nepali women of reproductive age, 44 per cent do not use contraceptives, even if they want to avoid a pregnancy.

One of the fallouts of such unintended pregnancies is that women take recourse to abortion, which has become big business in Nepal. Extending modern contraceptive services comes at a cost, running into billions of rupees. But the study shows that for every additional rupee spent on expanding modern contraceptive use, the country saves Rs 200 on maternal and newborn health care, helping to reduce maternal and infant mortality and disability. Had the government shown some seriousness in expanding contraceptive use across the country, just imagine how this would have slashed Nepal’s population, said to touch 30,260,000 next year.