Annual Rituals Performed

In addition to what is stipulated in the deal, basically in relation to transitional justice mechanism, UML’s agreement to hand over the government leadership to UCPN(Maoist) soon after the endorsement of the budget is said to have lured Prachanda in

June 2, 2016, 5:45 p.m. Published in Magazine Issue: Vol.9 No 22, June 3,2016 (Jesth 21)

Very well known for changing positions and words too often, the smart player of Nepali politics,Prachanda, broke his understanding with NC president Deuba to dislodge the current dispensation led by Oli.The two contrasting decisions, regarding withdrawal and continuity of support, were made by him in less than twelve hours. Some strategic moves by leaders of the two coalition partners(UML and Maoist) were instrumental in breaking the about-to-be executed deal. Taking a sharp turn, Prachanda reached a nine-point agreement with UML.Oli is said to have assured him that he would take concrete steps to address the concerns raised by the UCPN(Maoist).In addition to what is stipulated in the deal, basically in relation to transitional justice mechanism, UML’s agreement to hand over the government leadership to UCPN(Maoist) soon after the endorsement of the budget is said to have lured Prachanda into backtracking from its earlier understanding with Deuba.Although it is difficult to say how sustainable will be this tactical success , it has definitely provided Prime Minister Oli with an opportunity to let his trusted near and dear ones perform the annual rituals that normally take place before the closure of a fiscal year.

The first ritual of this fiscal year was performed by President Bidya Devi Bhandari who read in the Legislature-Parliament government’s policies and programmes for the upcoming fiscal year. The document that Prime Minister handed her over for recital stated that the coming year will be marked as the year of constitution implementation and year of journey towards prosperity. It also stated that elections will be held at the local bodies, which have been without elected representatives for the last fourteen years. Not only lawmakers of NC, but those belonging to UCPN (Maoist) also ruled out the possibility of holding local bodies’ elections in November\December. NC asserts that conducting local elections under the old structure is meaningless.

Another periodic ritual performed was the unveiling of basic approaches and features of the Fourteenth Three Year Plan, which is to be implemented from the coming fiscal year. Current plan had a target of achieving 6 percent growth, but ended achieving only 2.92 percent.Likewise,current year had a target of achieving 6 percent growth, but is likely to achieve o.77 percent. In the backdrop of this dismal performance of the economy in the recent past, one can simply wish the formulators, hope some of them continue in position to oversee implementation, good luck in achieving the wished 7.1 percent average growth during the plan period.

This year’s second ritual was performed by finance minister Bishnu Poudyal who presented in Parliament Economic Survey 2015-2016.The setback that development activities suffered is blamed on Tarai unrest, Indian blockade along with earthquake and energy crisis. Many sectors of the economy were hit very hard, pushing the economy into a very disappointing state of growth (0.77 percent), the lowest in fourteen years. There was no resource crunch as is abundantly manifested by unspent capital expenditure and mounting cash reserves at Nepal Rastra Bank. Capital spending has remained low since long but this year it further went down on account of adverse externalities and poor governance. It may be noted that only 10 percent of the capital budget was spent during first eight months of the fiscal as against 24 percent during the same period last year.  Stating that per capita income in dollar terms has gone down on account of low growth, the ritual performer looks skeptical that the goal of graduating to a developing nation status by 2022 may be difficult to achieve.Bishnu Poudyal need not worry because he was not involved in setting this target with a timeline.

The most important annual ritual of making public the budget was performed by finance minister Bishnu Poudyal who read in the Legislature Parliament, taking more than two hours, the document that contained estimates of expenditures and sources of financing under different heads. The budget with a total outlay of Rs. 1048.42 intends to use around 59 and 30 percent of it to meet regular and capital expenditure requirement, respectively, while Rs.119.81 has been set aside for debt servicing. It expects to generate Rs.566 billion as revenue, Rs.302 billion as foreign grant and loans and borrow Rs. 111billion internally. In addition, the government will make use of its unspent reserves of around Rs 69 billion. Expectedly, Oli-led government has included some populist programmes such as health insurance, extension of People’s housing programmes,hike in  social security allowance and initiatives for employment guarantee. Hike in salary of government employees by 25 percent and substantial increase in budget for Constituency Development Fund (3o million) are some other items that the current dispensation could make some political capital out of. While not much can be said about the hike in salary of employees whose real wages have gone down on account of double digit inflation, increase in Constituency Development Fund is bound to remain controversial unless the concerned put an implementable mechanism in place to prevent its misuse. It may be noted that wages and salary increased by 4.6 percent, lowest in a decade, while inflation was at 9.5, causing real wages to decline during the current year. Continuation of capital subsidy and other kind of subsidies such as those on fertilizer and reduction and wavier of taxes to enhance activities in vital sectors of the economy should be taken positively, but one has every right to be skeptical because observers do not see suitable and adequate arrangement for the satisfactory implementation of this huge budget that has exceeded the ceiling of Rs.978 billion prescribed by National Planning Commission. People are curious to know why the sum allocated for subsidy remained unspent and they would have liked to hear something about the Three Year Rice Production Programme launched more than a year ago, before talking about self sufficiency in eggs, meet and fruits. It may be noted that rice production has continued to decline, coinciding with the rice programme, and wheat production is at its lowest point in seven years. When variables affecting the economy, including the political one, have not changed much, will the mere lifting of the blockade help the government spend the huge allocations productively without creating undesired inflationary pressures? All said and done, in view of the past performance of the economy and continuing highly unstable situation, one finds it difficult to believe that all those so beautifully laid down in the document, including the growth of 6.5 percent, will be achievable. People are curiously waiting to see whether Nepal Rastra Bank sticks in its monetary policy announcement to the fixation of 7.5 percent inflation level by this expansionary budget. The situation is certain to be further complicated after the endorsement of the budget basically because of the highly controversial nine-point agreement signed between UML and UCPN (Maoist), now renamed Maoist Center.Indeed,some of the points in the deal have attracted serious attention of people and agencies both at home and abroad.

 Representatives of various conflict victim groups have demanded that some of the points included in the agreement should be scrapped. They have raised strong objections to points 3, 5 and 7 in the deal. International human rights groups have condemned the deal between the two ruling parties to withdraw war-era cases from court and grant amnesty to those involved in serious human rights abuses. To be seriously noted is the recent observations of Chairman of the National Human Rights Commission who has categorically mentioned that the political deal cannot override the order issued by the Supreme Court related to human rights violations during the armed insurgency period. Representatives of the international community in Nepal have requested political parties to make sure that mechanism to provide justice to conflict victims meets Nepal’s national and international legal obligations, including but not limited to those determined by the February 2015 ruling of the Supreme Court. On the other side of the fence, Maoists are hopeful that the incumbent government would facilitate settlement of war-era cases by transitional justice mechanism and not by regular courts. In fact,Prachanda and his associates misses no opportunity these days to mention that conflict-era cases should be resolved in the spirit of  the Comprehensive Peace Agreement signed in 2006,which envisioned settlement of insurgency cases on the basis of a reconciliation approach. Any attempt, they argue, to file cases in contravention of its spirit will drag not only Maoists but some other leaders of other parties, too. Indeed, the country is caught in a difficult dilemma because voices of the concerned against withdrawal, amnesty and clemency regarding politically motivated cases dating back to the conflict era cannot be fully ignored and at the same time complete neglect of the urging of Prachanda is likely to further shake the nation, which is receiving jolts of various nature and magnitude, both natural and man-made, since long. It is going to be a tight rope walks for Oli because his actions\inactions are likely to fuel the already burning fire. His continuity in power and implementation of government plans(annual and periodic) will depend on his ability to strike a balance between two groups currently confronting government and other agencies with conflicting demands, which is very difficult. In addition to some destabilizing points contained in the deal, the much talked about gentleman’s agreement reached the same night is likely to create abundant scope for breaking the cooperation between the two parties months before the current dispensation completes its first year. With conflicting views coming from the stalwarts of two parties on the gentleman’s agreement, it is more than certain that handover of power is not going to be easy and smooth. Formal debate and discussions between the two coalition partners are likely to happen after the approval of the budget. Trading of accusations and their refusal could consume months, obstructing execution of development activities and inflicting further injury on the economy. It is also certain that Deuba of NC will not remain a spectator watching the feud between the two collaborators from a distance because he is not likely to waste time leaking his Prachanda\Oli-inflicted fresh political wounds. Further, Deuba, who could be harbouring thoughts of revenge, is likely to get support of the agitating parties (Madhes-centric) if he seriously decides to dislodge the government. People will not dislike an intervention if it is not highly destabilizing because we want peace in Nepal which recently organized the Third International Buddhist Conference.

Dr. Tilak Rawal

Dr. Tilak Rawal

Dr. Rawal is former governor of NRB.

Budgets Of Federal Nepal
Jun 30, 2019
Season Of Annual Rituals
May 21, 2019
Globally Difficult Situation
Mar 29, 2019
Facts about Our Economy
Jan 26, 2019
Stronger Headwinds Ahead
Nov 23, 2018

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