After striking a deal with Madhesi parties, Deputy Prime Minister and Finance Minister Bharat Mohan Adhikary presented the budget for the fiscal year 2011/12 at the parliament on July 15.
He unveiled Rs 384.90 billion-strong budget – more by nearly Rs 50 billion compared to last year.
The budget has increased the salaries of hundreds of thousands of government employees by up to 43 percent.
The salary hike coming together with fuel price hike could further increase inflation in the coming year by double digit despite the budget projection of taming it at 7 percent.
“The budget focuses on production, investment and social justice,” said FM Adhikary.
The budget target is mainly dependent on handsome growth in revenue. This remains uncertain though.
In the fiscal year 2010/11, the government collected Rs 206 billion as revenue – short by Rs 10 billion from the target of Rs 216 billion. Undeterred by the decrease in revenue growth rate, this year the budget aims to collect Rs 241 billion as revenue.
If this target is not met, it could undo several other budget targets.
The budget has tried to relax the real estate sector by increasing the amount for which people need to show source.
But if the stiff opposition he faced before and during budget speech is sustained, the Finance Minister will be facing uphill task to implement the budget.
“Poverty, yes they can distribute, but not wealth,” says Dr. Bhola Chalise, former secretary and an economist.
He says that the word equitable and equality are used as cover by the political parties to consolidate their hold over the population.
“It is the innate nature of human beings that they use their knowledge, art and skill. In the name of attaining equality, the parties want to suppress this quality and turn the population into pliant herd of cattle,” Dr. Chalise said.
But one thing is certain. The debate between the two will not provide any clear single winner. In fact, similar debate has been raging in the international arena since the global financial crisis was triggered in 2008.
Even the US government had to wear the cap of strict controller at some points to tame the financial distress.
Does that mean the mixed economy is the right recipe for Nepal? There is no clear answer yet. Country’s own experiment with mixed economy during Panchayat regime had not been successful.