Confusing Politics and the Budget

<br>Dr. Tilak Rawal

July 24, 2011, 5:45 p.m. Published in Magazine Issue: Vol.: 05 No.-3 July 22-2011 (Shrawan 06,2068)<BR>

Politics of Nepal is still very much confusing. Soon after the second extension of CA, peace and constitution writing work proceeded smoothly and it looked top leaders were serious about it. Maoist chairperson Prachanda, despite reservations of some influential leaders within the party, took a bold decision that led to return to cantonments of Maoist combatants providing security to their leaders. This, however, did not last long and his speed was decelerated by no other than his own colleagues in the party. In fact, the pressure exerted on Dahal by Vice chairmen duo (Baidya and Bhattari) was so significant that Prachanda at one point looked on the verge of conceding power. He said he would relinquish the position of parliamentary party leader, as demanded by the duo, at an appropriate time, provided he gets support for peace and constitution drafting. It has  been reported lately that the duo have failed to garner enough signatures, contrary to initial reports, in support of their power sharing proposal. Further, it is difficult to say how long the alliance between peace and constitution (Bhattari) and revolt (Baidya) will last. As usual, Prachanda is expected to emerge victorious in the intra-party feud and people have no problem as long as the victor remains genuinely committed to peace and constitution. No less confusion to the macro political scenario has been added by Nepali Congress (NC) whose senior leader Deuba has launched a campaign to replace Poudyal as the parliamentary party leader to lead, Deuba camp believes, a national unity government with strong support and participation of UCPN Maoist. Lately, Deuba camp has also blamed party president Koirala for breaching the reported secret deal reached between the two top leaders of NC that helped Koirala get his long-stalled proposal of appointing Poudyal as vice president and Sitaula as secretary general through the central committee of NC. Deuba’s desire to become prime minister one more time has been thrown much cold water upon by Koirala who has not only denied having made any deal but repeatedly observed that premiership was not the priority of NC. Expectedly, Deuba camp is serious, furious and busy chalking out future strategy. With UCPN Maoist attaining the height not attained by any party in factionalism in recent years, squabbles in UML do not merit much attention these days. Perplexing, however, was influential leader K.P.Oli’s recent remarks that there was threat to his life by no other than his own party and the government led by his party chairman. All this should be enough to profusely confuse Nepali commoners desperately wanting stable peace and the constitution.


Desperately wanting to present budget of one kind or the other (supplementary, early and full fledged) ever since his appointment as deputy prime minister and finance minister, Bharat Mohan Adhikary has been very lucky in that he could organize pre-budget discussions, got president Dr.Yadav to read Government’s policies and programmers in the parliament and made the budget public before the fiscal year ended. He could not, however remain lucky in presenting the annual budget on the stipulated date(July 14th) as Speaker Nembang had to adjourn the house session that day following a threat by the United Democratic Madhesi Front(SUDMF) to obstruct the session if their demands remained unheeded. Printing of budget details by some dailies hours before the formal presentation of the budget further complicated the situation, causing delay in budget presentation and interruptions by opposition lawmakers some of whom even demanded resignation of prime minister and finance minister. The display of budgetary details in official website minutes after finance minister began reading the document around 5.30pm further disturbed the agitated lawmakers who considered leaking of information as a serious financial crime as well as disrespect to the parliament and interference in parliamentary prerogatives. Finance minister Adhikari must now be breathing a sigh of relief that he was allowed to read the budget after confession of mistake by him and formation of a parliamentary committee to look into the leak and suggest necessary actions. All these adequately show how badly the ministry of finance is managed under weak and feeble Adhikari. The Legislature Parliament on Saturday unanimously passed the vote on account that allows the government to spend one-third of the budget estimates.


No less confusing is the current budget, with a total outlay of Rs 385 billion, which approximates 26 percent of the estimated GDP of Rs. 1513 billion. Total expenditure constituted 23 percent of GDP last fiscal year. The budget touches upon almost everything a Nepali could conceive of under the sun but is directionless and is not likely to achieve even a modest growth of 5 percent. It has also ignored limits set by the Three Year Plan (TYP) on several fronts. TYP wanted fiscal deficit to remain at 15.8 percent and revenue and grant together should constitute 84.2 percent of total expenditure but those remained at 17 and 81 percent, respectively in the current budget. This budget has clearly embarked upon an expansionary path, which will further fuel the persistent double digit inflation. Budget’s unrealistic reliance on foreign grant (Rs.49billion) and foreign loan (Rs.29.65billion) is difficult to digest especially in view of the fact that government in the last couple of years has been getting on average 53 and60 percent of the targeted loan and grant, respectively. Some positive aspects of the budget include emphasis given to rapid implementation of hydro power projects through provision of income tax exemption and emphasis given to physical infrastructure development, mainly road. Point to be noted, however, is that this is not the time to create a hydro power company in the public sector as envisaged but to ease flow of concessional loans on easy terms to entrepreneurs wanting to work in the sector. Likewise, the budget is not clear as to how and when the billion dollar projects (express way and the international airport at Bara) repeatedly stated by earlier governments to be done by foreigners under BOOT, will get off the ground in a meaningful way. Laughable is also a provision in the budget that inspection and supervision of cooperatives with an annual transaction of Rs. 50 million or more will be done by Department of cooperative, lacking technical and financial resources, and the central bank, accused of not being able to effectively discharge its supervisory function. Paying some more attention to widows, minorities and other marginalized groups is praise worthy and these kinds of things together with provision for their access to drinking water, education and health services constitute the human face of the budget. Hope what has been promised is delivered to the needy.


Dr. Rawal is a CA member and former governor of Central Bank.
Courtesy (New Spotlight)
 


 

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