No Disruptions Again

Ever since assuming responsibility at the ministry of finance, Mahat looked disturbed by the low level of capital expenditure, which was hindering growth not only this fiscal but in the previous fiscal years, too.He may have also remembered the 5.8

June 25, 2014, 5:45 p.m. Published in Magazine Issue: Vol: 08 No. -2 June. 20- 2014 (Ashar 6, 2071)

In the previous Constituent Assembly that saw its unceremonious death without delivering the much promised output, new constitution.CA members at regular intervals took turn to disrupt house proceedings on pretexts of their choices. The members of new CA created in November were expected to be rational and they did behave quite well until recently when the opposition parties, mainly CPN-Maoist and RPP, Nepal, decided to boycott the parliamentary business protesting spending billions by the present government through budget transfers from one heading to another. Business was blocked for twelve days without letting the accused, finance minister, have his say on the subject. His frustration and restlessness was understandable because he knew he had done nothing illegal and the amount transferred this time was less than what was done by governments headed by other parties. For example, in2008/09 Rs. 45.07 billion, highest in five years, was spent and in2012/13 Rs. 38.47 billion was spent through budgetary transfer. As a proportion of total budget outlay, these two figures occupy a higher ranking than the RS.35.31 billion transferred in the current fiscal year. Perplexing was to find even NC lawmakers voicing their concern against the alleged illegal transfer of funds.

Ever since assuming  responsibility at the ministry of finance, Mahat looked disturbed by the low level of capital expenditure, which was hindering growth not only this fiscal but in the previous fiscal years, too.He may have also remembered the 5.8 percent growth, highest in recent years, in the year before he relinquished charges to the victorious Maoists, after the formation of CA, and the temptation of pushing growth above 5 percent one more time may have encouraged him to go for transfers. Top priority accorded in recent times by world leaders to economic agenda may also have attracted his attention. In India, Narendra Modi got his party victorious on economic agenda, citing wonderful performance of the economy in Gujarat which he administered as chief minister for twelve years. Russian President Putin’s desperation to withstand and minimize adverse impact on the economy of the economic sanctions imposed by the West following Ukrainian crisis must also have been noted by people who love to keep themselves abreast of global development. Putin turned towards China, the largest energy- hungry country, and signed with his counterpart a multi-billion dollar thirty-year deal under which China will buy gas from Siberia of Russia. After ten years of tough negotiation, the deal was finalized in favour of both nations because China is reported to have succeeded in extracting some concessions denied earlier and for Russia it was a shot in the arm at a time when sanctions imposed by EU over Ukrainian issues had begun to hurt Russian economy. It may be noted that as a result of sanctions imposed by the West,   capital flight on a huge scale has taken place and the Russian economy has slide into recession.Therefore, despite the 400-billion dollar gas deal providing economic and political boost for Putin, he has taken a softer approach in fragile eastern Ukraine by not openly supporting the separatists there because he cannot even dream of totally closing the door on EU, Russia’s great market next door.  EU also cannot afford to be hard on its natural resource- rich neighbour because for them finding an alternative to Russian gas is unthinkable in the near future. Their respective economic interest will not, therefore, let economic and political relations completely collapse.Further, EU has its own problem of ‘lowflation’ and leaders there are worried that it might get into Japanese- style deflation if the deflationary pressures are not timely handled. A long period of low inflation as is prevalent in EU is not good for growth and employment so is the persistently high level of inflation, as is the case in Nepal, bad for our economy with low growth and huge trade gap, growing by above 25 percent in recent years, as its inherent features. High level of inflation, mainly food inflation, is making life of low income people, witnessing a decline in their real income, miserable. Parliamentarians have to voice their concern over relevant issues but disrupting business for twelve odd days over the issue of traditionally-practiced budget transfer is highly unbecoming of the members who have the challenging task of delivering the new constitution without wasting time.  Indeed, political issues have already consumed lots of our time and we are already late to create the right kind of investment climate for capital to get into Nepal and be used in a productive way. Massive investment in infrastructure is a must to attain these level of growth required to take Nepal to developing country status by 2022.Getting 13-18 billion dollars , estimated by World Bank, through 2011-2020 is an uphill task in the present time where countries are competing with each other to get capital reported to be in short supply globally. Let us realize what Modi has done in India is a vivid manifestation of the fact that sound performance on economic front automatically leads to creation of huge political capital for the individual and the party concerned. Modi’s restlessness to galvanize the slowing Indian economy is understandable because without creation of wealth in the nation, welfare schemes for the poor cannot be launched and the nation lags behind in defense preparedness also. In light of these realities, Mahat very well deserves benefit of doubt that he did not want to indulge in crumb- spreading for cheap popularity but was definitely pursuing ways to increase the level of economic activities, which he thought could be effected little bit through budget transfers even at the end of the fiscal year.

It may be noted that there are still some thorny issues related to religion and state restructuring, which may need considerable time and efforts for resolution. Although inter-party differences related to naming and number of states seem to be narrowing down,Prachanda has warned ruling parties against deciding the contested issues through voting, taking a U turn from his stand in the earlier CA where he was all for voting much to the dislike of NC and UML.Further,recently held convention of RPP,which has elected Kamal Thapa as its chairman, has made a decision that a new constitution that does not recognize Hindu identity will be unacceptable, reiterating their oft-repeated stand for restoring Nepal as a Hindu nation. These issues will definitely need lengthy discussion and are bound to take considerable amount of time before a solution is worked out, but utmost care should be taken to avoid the recurrence in the new CA of numerous disruptions that we saw in the previous CA.In the midst of confusion created by positions and views of political parties and their leaders, the CPN-Maoist, which boycotted the second CA election, has officially expressed its desire to be a party to the constitution making process through a national political assembly, proposed by them, which would embrace political forces both in and outside CA to discuss vital agenda of the constitution to be formulated. The eight-point outline presented by the party in its meeting with heads of three parties is being studied by leaders. This is indeed a very positive development and is likely to ensure political stability and the resultant constitution, provided the talks to be followed remain as positive as they were on the first day of the meeting. Another positive development worth mentioning is that all most all major political forces seem to have now jettisoned the idea of ethnicity-based states. Let us also hope that the three-party quarrel over who should chair the controversial high level political committee does not create serious problems in the absence of prime minister Koirala who has left for the United States for the routine checkup of his previously treated tongue and some more examination of his not-so-healthy lungs. Let leaders be guided by economic realities in making major decisions without being distracted by the kind of disruptions that we witnessed recently. No more disruptions, please!

Dr. Tilak Rawal

Dr. Tilak Rawal

Dr. Rawal is former governor of NRB.

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