“If The Morale Of Business Community Is Not Boosted, It Will Be Difficult To Attain Five Percent Growth”
-- RAJENDRA KUMAR KHETAN
RAJENDRA KUMAR KHETAN is a noted industrialist. Vice president of Confederation of Nepalese Industries (CNI), Khetan spoke with SPOTLIGHT on issues related to recent budget and the overall economic condition. Excerpts:
In brief, how do you assess the recent budget from the perspective of business community leader? Does the budget lack anything?
Budget has tried to cover all aspects of development of society. It is like a regular budget. It, however, lacks policy issues. It also depends on a number of things as politically we are in transition period. Besides, the rebel force has not accepted it. However, the country needs resources to meet expenses. The country and administration has to go on come what may. If the budget has been formulated for the full year and if it had to be compatible with five year plan, then, yes, it lacks a lot of issues, which could have brought rapid growth.
Many experts say the budget has “scattered resources” and, therefore, not implementable. What do you say?
I agree with this assessment. That's why, I have been saying that this budget is “Jack of all and master of none.” It tries to address each and every issue but manages to do so in only few cases. It also suffers from the problem of fluid political situation.
Did the budget meet the expectations of business community?
Not at all. For us there is nothing new in this budget. Instead of stopping leakage on revenue front, it has rather imposed tax on domestic products. There are a few mistakes like imposing more tax on low-alcohol-based beverages and less tax on high-alcohol-based beverages, which seems like an institutional corruption committed by revenue administrators.
Do you think the budget is over- ambitious regarding revenue target and foreign aid expectations?
In the revenue front, it is ambitious as business environment is still down. Foreign aid may come but it also depends on where and how we want to use it. Amount expected on aid front is not ambitious.
Do you think this budget can be implemented given the uncertain political course?
The manner in which the CPN (Maoists) has reacted against the budget, it seems the government would face difficulties to implement the same. But if this can become seven party's proposal and could add what Maoists want on economic front, probably it can become a common document and, therefore, be able to implement.
What is your most important suggestion to the Finance Minister?
I want to suggest the Finance Minister to establish Special Economic Zones (SEZs); develop more sectors for investment, allow export houses to work for SMEs and develop Nepal as SAARC hub, among others.
Would the Minister achieve growth target of 5 percent that he has set?
It is not a difficult target. But morale of business community is down as trade union movement is picking up on the one hand, and new and more taxes are being imposed, on the other hand. If industry's morale couldn't be boosted, it may be difficult to attain 5 percent growth.
The Minister claims that this budget will help rural areas. Do you agree?
Yes and No. Yes, because it touches upon subjects like rural road access and agriculture development. No, because until the political settlement at VDC level is achieved, the fund can't be used.
“Priority To Rural Development Is A Plus Point”
-- DR. SHANKAR SHARMA
DR. SHANKAR SHARMA , former vice chairman of National Planning Commission (NPC), is a renowned economist. He spoke to SPOTLIGHT about the current budget and its implications to the economy. Excerpts:
What are the plus points of the budget?
The increased allocation to villages in an attempt to distribute peace dividend is a plus point. Likewise, the security expenses, which had been increasing for the past few years, have now been decreased. There is palpable feeling about reconstruction and rehabilitation.
What are minus points, then?
The major minus point is the uncertainty of its implementation. Amid usual bureaucratic problems and weak mechanisms, it will be difficult to implement the budget programs.
Do you think this budget has made ambitious expectation regarding foreign aid?
Indeed. Apart from India , none of the donors have yet made commitment for budgetary support. They are only implementing ongoing projects and programs. The government has not formulated its strategy and priority to convince the budget yet. Given this situation, the expectation for foreign aid is ambitious.
What about financial sector reforms?
The budget has made some commitments on issues like addressing bank loan default, petro price fixing, labor laws and service sector.
The budget is silent about developing Nepal as transit corridor. What do you say?
Well, it may not have stated about transit economy but it has committed to build Syaphrubesi road, which would be crucial for developing North-South corridor.
“Budget Cannot Be Implemented Without Minimum Understanding”
-- PROFESSOR DR. BISHWAMBHER PYAKURYAL
PROF. DR. BISHWAMBHER PYAKURYAL is the president of Nepal Economic Association. A well-known economist, Dr. Pyakuryal spoke to SPOTLIGHT about economic situation and budget. Excerpts:
Since there are talks about forming interim government and interim parliament. How do you see this uncertainty hitting the budget?
There will be problem in its implementation. In fact, the Finance Minister should have consulted with the Maoists during pre-formulation phase because they will have increasing stake in the decision-making process in the days to come. Even now he should reach minimum understanding to implement the budget.
Do you think the budget is ambitious?
Well, in a similarly war-torn country, budget (in post-conflict) period tend to be much larger. In Afghanistan , budget for reconstruction was three times more than regular budget. From that logic, this budget is small. But here we have big problem regarding absorption capacity. Last year, only 20 percent of resources allocated to VDCs could be spent. Likewise, only 40 percent of resources allocated to education and 35 percent of that allocated to health could be spent.
What kind of budget is this?
This is a “sure to please every one” kind of budget. It has scattered resources. Unfortunately, it has also increased discretionary spending, which would have inflationary pressure on the economy.
What about its target of foreign aid?
Till now, only India has come forth with Rs 1.6 billion of budgetary support. Others have not done so. Therefore, it appears as ambitious target to raise Rs 40 billion of foreign assistance.
