BUDGET PREPARATIONS
Eyes On Rural Region
Dr. Mahat reiterates he would focus on rural areas in the budget. How he does that remains to be seen
By SANJAYA DHAKAL
In fact, no finance minister in recent memory has ever said that his budget would not focus on rural development. As such, the repeated comments being made by Finance Minister Dr. Ram Sharan Mahat that he will focus on rural areas in the forthcoming budget is nothing new or exciting revelation. What could be new is the programs he would put for achieving his aims.
“I would go to rural areas in the budget. Building better schools, better health facilities, rural infrastructures, electrification and hydropower development would be the focus areas of the budget,” said Dr. Mahat, addressing a seminar “Peace, Democracy and Development” organized jointly by Asian Development Bank (ADB) and Nepal Economic Association (NEA) last week.
Rural reconstruction is an issue that has gotten a wide consensus approval from all sections of society including economists, political leaders, civil society and common people. Battered for over a decade by brutal conflict, rural areas of Nepal do need immediate attention. If the budget, as Dr. Mahat claims, achieves in doing that, it would be the minister’s singular success. However, beyond rhetorics it is pretty much unclear how the new government would go about in implementing its lofty programs, particularly at a time when the Maoists are pushing for its replacement by an interim government.
It is indeed both “best of times” as well as “worst of times” for Nepalese economy to borrow the quote by Charles Dickens. As the country stands in the crossroads, it is staring at an uncertain future that can be molded by the policies it adopts today.
“Currently, Nepal is witnessing a sharp decline of GDP from the average of 5 percent in the period of seven years before 2002 to around 2 percent now – hovering around the population growth rate. One-third of population is below poverty line with many more coming in an out of poverty based on whims of man and nature. Fifty-five percent of children below five years of age are stunted by malnutrition. Net enrollment rate is among the lowest while infant mortality at 82/1000 live births is among the highest. These issues will not go away no matter what happens in other areas,” said Sultan H. Rahman, country director of ADB/Nepal Resident Mission. He added that the huge increase in remittances and location between two fastest growing countries in the world are some of the positive features for Nepal.
“After having traveled to different parts of Nepal and studying economics of Nepal, I feel this country has better chances of becoming a middle-income country than other countries of this region,” said Rahman. He stated that Nepal can achieve $875 per capita income in 15 years if it can grow at 7 percent. Likewise, if it can grow at 8 percent, per capita income can grow to $845 in 13 years (2018) and to $858 in 12 years if it can grow at 9 percent. At present, the cut-off point for middle-income countries is $ 805 per capita. He called for ‘tearing down walls’ that constraint ‘creativity’; increasing the share of non-agriculture in GDP; and faster opening up of economy particularly on service sector, in order to achieve those targets.
Rahman also suggested developing dozens of “urban hubs” between Mahendranagar and Kakarvitta. But the ultimate success, he stated, depended on two preconditions: “the country has to be governed extremely well and there has to be peace.”
Like Rahman said, the country needs good governance to steer off the current difficulties. The fact that the country is staring into exciting possibilities is made clear by the overwhelming demands for budget allocation this year. According to a news report, various ministries and departments have flooded the Finance Ministry with demands for budget allocation of over Rs 450 billion for the coming fiscal year. The demand is very high compared to the last fiscal year’s budget that was just around Rs 126 billion. As such, Dr. Mahat will need to walk a tightrope to be able to both satisfy the people’s aspirations and ensure that reforms continue and economic growth accelerates.
