National budget : Support education through internal revenue

The government is now preparing the national budget for 2007-08. It must be hard for the Ministry of Finance (MoF) to allocate the limited resources to satisfy the needs of every sector. In the context of dismal economic growth in the last five years, it has been almost impossible to fulfil all the expectations of the people. Nor is it feasible to allocate resources for development activities at the cost of meeting the basic needs of the people. This dilemma needs to be clarified and consultations should be carried out before finalisation of the budget. On the one hand, neither should the finance minister lie to the public by showing a voluminous budget dependent much on still-to-be-committed foreign assistance nor should he try to be a populist by preparing an unrealistic developmental agenda.

At a time when the country is preparing for the CA polls, money for development activities has to be invariably curtailed. In this context, internal revenue possibilities for education sub-sector needs to be analysed. This has been aptly demonstrated by the allocation and expenditure guidelines of the past years. Sometimes, they have not allowed for the appointment of even a single new school teacher, sometimes they have curtailed the teachers’ quota and sometimes ordered the Ministry of Education and Sports (MoES) not to take any initiative on teachers’ behalf that might have financial implications. The other fact is that the MoES seeks money from the MoF on an ad hoc basis under the pressure of the donor agencies.

The MoES and MoF authorities have seen how developmental partners in education raise a hue and cry when the government tries to put a budget ceiling, either through MTEF (Medium term expenditure framework) and/or other budgetary exercises. We notice this at the state of prioritisation of projects for education. For its investment in P1 (priority one) projects, each partner remains busy meeting high-level officials of the National Planning Commission (NPC), MoF and MoES.

New donors appear with the purse at the end to incorporate their programme in the new budget. These activities of the developmental partners clearly demonstrate that neither the NPC nor the MoES have any specific agenda for development of education and that they are hugely influenced by donor agencies.

The question is if we can generate our own resources to facilitate educational development. There are several possibilities. If we are to look into donations and loans flowing in the education sector in the last five years, we are actually receiving around $1,000 million for Education For All (EFA), Secondary Education Support Project and Higher Education Project, in addition to the assistance provided by the members of the Association of International NGOs. Based on these estimates, the MoF has been allocating around 16% of national budget for education, although the demand of the education sector is close to 20%. But percentages become meaningless when we consider that almost 90% of the budget is consumed as salaries. This is the reason we always fail to meet the set targets, be it our national plan, the Millennium Development Goals or the EFA programme. In certain cases, it might appear that we are well on our way towards meeting quantitative targets, but when quality is considered, there is no recourse but to put our hands on our head and repent.

Thus it is essential that we generate more resources at home in order to sustain the education system on our own. Indeed, there are many sources the government might utilise. For example, if private schools and colleges are brought under a tax system on per student basis, the government stands to collect billions of rupees every year.

Similarly, making tobacco and alcohol companies pay a percentage on their transactions would generate another billion a year. If the government raises education tax from land revenue and registration of transportation, there is a possibility of another billion for education sector each year.

It is doubtful if necessary resources for education can be raised only by charging two percentage VAT. There are many other possibilities to raise money for education by following the example of developmental activities running in VDCs, DDCs and municipalities. Another huge chunk can be made by the establishment of a maintenance fund for education. In other words, to ensure sustainability of educational projects, it should be made mandatory through law for each development partner to allocate 20% of the total project cost for the fund. Only if the NPC, MoF and MoES start thinking about these possibilities, we will be spared from spreading our hands as beggars in front of the international community in order to develop our education system. Seeking donations for development of education is not harmful in itself, but in the name of loans and donations, it is completely wrong to design our educational establishment as per the donors’ interest.

Dr Wagley is Dean, School of Education, KU