Shiva Chandra Shrestha

Despite the growing political uncertainties and stalled economic reforms communist finance minister Bharat Mohan Adhikary under Prime Minister Sher Bahadur Deuba laid extra emphasis on budget formation in 2004-05. Interestingly, the same budget was modified twice. Then came the Royal proclamation dismissing the Deuba government and the King formed a new cabinet under his chairmanship. Within three years, we had four governments and an equal number of finance ministers.

All budgets, including this one, have some common features. It is a ritual in the sense of continuity of past legacy and practices; it has certain positive as well as negative aspects; it has certain cosmetic provisions in line with the past budgets. The budget may be appreciated or criticised as usual by different groups in relation to poverty alleviation issues or good governance or macro-economic management (in terms of revenue generation through tax proposals and expenditure management, etc.). But the budget faces tough challenges in its implementation. The reasons are obvious. The bureaucratic machinery is the legacy of the same political culture and the heads/members of the constitutional bodies are all nominees of the same political personnel in the guise of the Constitutional Council. The mental make-up of these officials would not change so rapidly.

The implementation of a budget is somewhat comparable to the construction of a building by a man with limited means. The chances of leakages, waste, and corruption are all there in the absence of honest and skilful hands in different operational areas. The misuse of resources and over-spending in materials and labour charges would make a lot of difference. The principle of basic economics — maximum output with minimum cost — does not work in the present environment which is based on the notion of deficit financing or on the concept of reaping maximum benefits by hook or by crook. The “status quo” attitude of privileged politicians/bureaucrats needs to change but this is difficult as radical reforms are not palatable and there is a tendency to avoid conflict with the vested interest groups.

Economists differ widely over the appropriate quantum of internal borrowings as a percentage of Gross Domestic Product (1pc, 2pc or 3pc, etc). The management of expenditures has not been very clear in terms of the unavoidable expenditures and variable expenditures for development projects/programmes due to the lack of clear strategies relating to declared policy statements. Equally unclear is the case of the adjustment of the use of cash balances in the year 2003-04 and 2004-05. One has to see the co-ordination between the findings of the Economic Survey and the budget on the one hand and the correlation between the budget and the Tenth Plan on the other. Numerous issues can be raised on social and economic development budget allocations, too. But what is significant is the development outlay and whether or not it reaches the poor.

The major challenges facing the implementation of the budget lie within the government agencies. Successful implementation, therefore, depends on the restoration of peace and security and efficient administration untarnished by widespread corruption. But whether these can be ensured is a moot question.

Shrestha is a former comptroller general