Prime Minister Pushpa Kamal Dahal resigned on May24, 2017, paving way for the major coalition partner Nepali Congress to form a new government as per the agreement reached between the two parties at the time of formation of the current dispensation in July\August last year. Tendering his resignation just five days ahead of the annual budget date and twenty one days ahead of the second phase local polls in the remaining forty one districts, Dahal claimed that he broke the long standing tradition of lack of morality in Nepali politics. He went on to claim that none of the power sharing deals had been implemented in the past resulting in mistrust among the political forces. A shrewd politician Dahal decided to take a graceful exit at a time when the first phase polls had concluded successfully and the economy is likely to grow impressively this year. He too cannot be denied some credit emanating from an end to hour’s long power cut, signing of One Belt One Road initiative with China, finalizing deal on 1200 MW Budhigandaki hydropower project and delimitation of local units under federal setup. Dahal also managed to get twenty two more units added in the southern plains of Nepal, hoping that the disgruntled leaders of Madhesh-centric parties will come on board the election process. The government chose to do this even at the cost of being accused of violating the constitution, the election code of conduct and established national and international practices. Even as head of a caretaker government, Dahal remained very active overseeing formulation and presentation of the annual budget and doing everything possible to ensure smooth holding of second phase polls under the leadership of his political partner, Mr. Sher Bahadur Deuba, who is almost certain to become in a few days the prime minister of this country for the fourth time. Deuba is likely to face a tough time with the major opposition UML still resorting to occasional House obstructions and the Sanghiya Gathabandhan, led by Rashtriya Janata Party (RJP-N), still showing no encouraging signs of participation in the polls.

The major opposition party UML took a break from House disruption activity and allowed President Bidya Devi Bhandari on May 25 to read the government’s policies and programs that provided guidelines to the Ministry of Finance to frame the annual budget for 2017\2018.It indicated that a big chunk of fund is likely to be allocated to empower the local bodies.UML quickly resumed the disruption, not even allowing the House to formally thank the President for reading the annual paper. The Election Commission (EC) also did disappoint the government by stating that it was not possible to hold polls on June 14 in the newly created 22 local units. Adding insult to injury, The Supreme Court issued an interim order against government’s decision to increase the number of local units in Terai, stating that the decision to increase the number of units and revise their boundaries was against the Local Level Election Act 2017.The decision of the Sanghiya Gathabandhan to launch fresh protests, which came hours before the Supreme Court ruling, basically to disrupt the polls also was disturbing. In the changed context, any decision to be made by the duo (Deuba\Prachanda) will have to take into consideration the fact that the government is under tremendous pressure from the agitating parties which do not look fully committed to polls despite withdrawal of protest programs and the major opposition that can disrupt the House as it did to protest against the impeachment motion filed against Chief justice Sushila Karki, government’s decision to increase the number of local units and its efforts to amend the constitution. It did disrupt the House again lately to protest the Bharatpur Metropolitan City vote counting disruption. Supreme Court’s verdict and EC’s reluctance to accommodate the increased number for the polls on June 14 further complicated the situation. Even without the apex court’s ruling that stayed the decision to increase the number of local units, the government would have to either postpone the election or decide to have a third phase for the added units after the conclusion of the second phase polls in 41 districts of Provinces 1,2,5 and 7.It is wise on the part of the government that it has rescheduled second phase of local level elections for the third time on June 28.Weather and religious festivities permitting, looks like the government is prepared to reschedule voting any number of times to ensure participation of the agitating forces. It is a matter of commonsense that election in Terai will be very difficult to organize if the agitating Madheshi forces decide to foil the polls and even if they are held by any chance, they will be meaningless politically without the participation of Madhesh-centric parties. Looks like the ruling coalition has realized this fact and took the decision to delay the second phase polls. Although it does not look the agitators would oblige the ruling parties easily, they must be aware that the political cost that would flow from nonparticipation in polls is not something to be brushed aside easily. Clouds of uncertainty certainly hang over the elections to be held.Prachanda must be feeling uneasy at times that he has to operate as a caretaker Prime Minister in these unpleasant times and may also be praying that he does not have to wait long for Deuba to replace him formally through parliamentary process. Hope he does not have to work like Mr.Madhav Kumar Nepal, senior leader of UML, who continued for months as a caretaker prime minister in the past.Prachanda,however, need not be too disappointed because in the midst of confusion and uncertainty, people have begun to see a ray of hope with the resumption of House proceedings on Saturday (May 27) following the decision of the two ruling parties (NC and Maoist Center) to withdraw an impeachment motion their lawmakers had registered against Chief Justice. This facilitated immediate commencement of discussions on government policies and programs and paved way for other annual rituals like reading of survey report and making public the annual estimates of revenue and expenditure. With rescheduling of polls and assurances that the election laws will be amended, so that the new parties are registered and get election symbols, it looks like the agitating parties will participate in the second phase polls even without amending the constitution for now. The agitating parties are also hopeful that government would make a move to vacate the apex court’s May 26 verdict that stayed government’s decision to increase the number of local units in Terai.UML has also shown some flexibility that they are not against amending the election laws to accommodate the agitators but the major opposition party is against constitution amendment and increasing the number of local units before the polls. Despite some hiccups that are surfacing intermittently, things appear to be moving positively ahead albeit slowly. Government’s policies and programs have been approved and budget has been presented in the Parliament.

The government made public on jestha 15 (May29) its annual budget with a total outlay of Rs.1278 billion of which 62.8 percent is set aside to meet recurrent expenditure, while capital expenditure and financial management account for 26.2 and 11 percent of the budget respectively. It may be noted that National Planning Commission (NPC) had advised the government early on to cap the budget at Rs.1156 billion for the coming fiscal year but the Resource Committee headed by vice chairman of NPC decided to inflate the size by 22 percent, basically listening to the argument of authorities at the Ministry of Finance who have set aside large sum for federal units and have a target of collecting Rs.730 billion as revenue. It is interesting that money that is likely to remain unspent this year (Rs.102.7 billion) is helping the budget for the next fiscal year. It could be a permanent source, looking at the trend, because last year it happened, it has happened this year as only  52 percent of the budget has been spent and a meager 34 percent of the capital expenditure (Rs. 311 billion) is expended thus far. It is interesting that along with foreign grant (Rs 72 billion), internal debt (Rs.145 billion) and foreign loan (Rs.214 billion), unspent money is also appearing as a significant source. Another fact to be noted is that capital expenditure has been marginally hiked (Rs.335 billion), compared to last year’s allocation. Indeed, it is unwise to simply allocate more under a head when inability to spend is emerging as a major impediment. Looking at this poor performance of the government on this front, one wonders how the ill-equipped and capacity-lacking newly-formed local bodies will be able to spend meaningfully the sum ofRs.Rs.225 billion allocated in the budget. Those concerned must not forget that capacity creation\enhancement is urgently needed to take optimal benefit of these kinds of fiscal transfers from the center. If the execution part of the budget is paid proper attention to right from the beginning, it should not be too difficult to achieve the hoped 7.2 percent growth next year but the fact to be remembered is that next fiscal year will have to battle with a robust, healthy current year, unlike the lucky this year which is currently facing the weak and feeble last fiscal year when the economy stagnated. Much depends on the state of political stability in the country and the level of attention that the economy receives from the concerned. It appears that the government is prepared for anything doable to get the participation of agitating parties. The RJP-N leaders may wish not to ignore the wise counsel given over lunch by Mr. Puri, Indian envoy, to them that the party should take part in the second phase of polls without insisting on constitution amendment, which looks impossible currently due to lack of consensus among the major parties. Let us pray that the situation does not deteriorate alarmingly.