BUDGET PREPARATIONS

Uphill Task

The government is hard pressed to come up with a budget that can satisfy all sections of society

By SANJAYA DHAKAL

Finance Minister Dr. Ram Sharan Mahat is no stranger to working under pressure. Having prepared budget a number of times in the past, he knows he cannot satisfy all sections of society by his document. And that is exactly what everyone is expecting from him.

The government needs to announce the budget for the fiscal year 2006/07 sometime in the middle of July. And the Ministry of Finance is working overtime to compile what Dr. Mahat calls as ‘inclusive’ budget.

Even though this year the finance minister will get more space of maneuvering as he does not need to allocate huge resources for defense and security and even though there is optimism of durable peace in the horizon, his challenges will be anything but less.

As a minister of the government that was installed following the People’s Movement II, Dr. Mahat will need to satisfy various sections of society including the radical leftists. “This is a time when the country is in transition. So, the government needs to consult with all including us when formulating budget,” said Dina Nath Sharma, a Maoist leader. Sharma, in fact, added that the job of formulating full-fledged budget should be left to the forthcoming interim government.

Following the visit to New Delhi , Dr. Mahat was encouraged by the assurances by the Indian government regarding budgetary support and other assistance. Riding on the successful transition to democracy, the government does enjoy good rapport with the donor community at present. The donor community has assured the government of all kinds of support. However, the government is still not able to formulate strategies and priorities based on which the donors can support.

“The donors have demanded specific strategy and priority of the government, without which they would not release assistance,” said Dr. Shankar Sharma, former vice chairman of the National Planning Commission (NPC). Unfortunately, even after one and a half month, the government has not yet appointed members of the NPC – the premier planning body of the country. Since it takes anything up to five months to formulate comprehensive strategy, the support from donor could get delayed. The absence of NPC leadership could also be affecting the process of budget formulation. Besides, since Tenth Plan is set to expire next year, process should be afoot by now to discuss and deliberate on next plan.

Meanwhile, the business community has started to present their suggestions for the coming budget. The Nepal Chamber of Commerce (NCC) has urged the government to form a Revenue Authority to resolve revenue-related disputes/problems and advise relevant policies on revenue. In a memorandum it submitted to Dr. Mahat in view of forthcoming budget, NCC has urged the government to form the Revenue Authority through the coming budget. It has also urged the government to simplify tax payment procedures. The chamber has presented a comprehensive set of recommendations related with revenue, tax, export, import, custom duties, industrial promotion and so on.

As the government currently is suffering from low collection of revenue, it is desperately searching for support. This fiscal year the government would be collecting only Rs 73 billion as revenue whereas its recurrent expenditure alone would reach Rs 83 billion – a deficit of Rs 10 billion.

Last week, after meeting with a delegation of International Monetary Fund (IMF), Dr. Mahat said that in order to generate more resources in the forthcoming budget, he would be seeking their help. “We had a fruitful discussion with the IMF for the continuation of the Poverty Reduction Growth Facility (PRGF) program, under which bigger amount will be lent compared to previous years,” he told The Himalayan Times daily. Earlier, IMF had provided a loan of $72 million to Nepal .

Economy: Maoist Perspective

As the air of suspicion regarding the Maoists' economic policy prevails in the business/industry sector, a senior Maoist leader and a member of the Maoist talks team has said the Maoists would not go for blanket nationalization of big industries and that they have no problem with liberal economic policies while the main focus will be on revolutionary land reform and promotion of small industries.

"The only way to economic transformation of society is through an industrialized economy. The industry sector was not allowed to grow in the past," Gurung said in an interview to Aajako Abhiyan weekly, adding, "The policies in the past lapped up foreign multi-national companies and allowed them to capture the market, take away cheap raw materials and then market their products here. This should not happen now."

Further elaborating the Maoist economic policy, Gurung said his party was in favor of internal competition between national capital, major industries and cottage industries as domestic capital cannot compete with foreign capital and domestic industries cannot compete with multinationals and same goes with small industries and big national industries in terms of competition should there be no control. He said small industries need protection.

"We are not saying we don't want multinational companies or to prevent them from investing here. We have to see where they want to invest and under what conditions. If it is in the national interest only then we should allow them in," the rebel leader said and added that the Maoists were not in favor of servile capitalist ventures or foreign 'broker capitalism'.

The Maoists, he said, would encourage a self-reliant domestic economy by using local resources and would be ready to encourage and assist the mercantilist class and industrialists.

The economic policies of the CPN (Maoist) will be based on the 75-point program passed by the party a few years back which stressed on radical land reform, nationalization of land owned by trusts and servile capitalists – without any compensation – and the state's control on forests, major rivers, lakes and mines and trade of essential goods as well as foreign trade, among others.

The 75-point program ratified at the meeting of the United Revolutionary People's Council, the administrative body of the Maoists, also pledged to make the industry sector the mainstay of the economy and sideline the brokers and servile capitalists from the industry sector, promote small industries and ensure the involvement of laborers in the management of industries.

Gurung explained that the revolutionary land reform would be focused on Terai where most of the cultivable land is owned by Shahs and Ranas. He said the land would go to the tillers but the landlords will be allowed to keep up to 10 bighas of land for their upkeep, as "they are also Nepali citizens".

The World Trade Organization (WTO) provisions, he said, are not in favor of smaller economies and the interest of the poor nations should get more priority in the global trade body.

Meanwhile, in a separate interview with Rajdhani daily, Gurung said the Maoists are not going with the policy of nationalizing the industries and that his party would adopt liberal economic policy. However, there will be provisions regarding protection in some areas.

According to Gurung, the state should not promote industries like alcohol, tobacco and coca cola that are not in the best interest of the society and the state should adopt policies to control such industries and such investment should be channelled to productive sector.

"We are not saying that liberal policy means total freedom; there should be some limitations. The Nepalese industry sector, market and the capital is very backward," he maintained. "It is disproportionate at present and it should be open and competitive with some protection policies."

Saying that Nepal 's agro-based industries have not flourished, Gurung pointed out the foreign monopoly in the Nepalese market. "The national capital is squeezed because of the monopoly of foreign capital." (Courtesy: nepalnews.com)

UN Concerned Over Maoist Abuse Of Human Rights

Stating that the Maoists have continued murder and abduction even after ceasefire, the UN Office of the High Commissioner for Human Rights (OHCHR) has expressed deep concern.

The Office has stated that since ceasefire, nine people have been killed by the Maoists in different parts of the country. It has said that the Maoists were taking action against what they call as ‘criminals.’ The OHCHR has asked the Maoists not to take unilateral action against ‘criminals’ but hand them over to the government agencies.

The OHCHR has also asked the Maoists to form an internal monitoring committee at national-level to investigate these incidents and take action against the culprits.

Meanwhile, the Maoists have subjected two UML leaders to mental harassment after the latter refused to go to Maoists’ People’s Court in Kathmandu . The two UML leaders Damodar Aryal and Dr. Krishna Adhikari refused to go to the so-called People’s Court where a case had been filed against them. The two said they would not go to illegitimate court. Later on, the Maoists visited Aryal’s residence in Sukedhara and threatened them. The UML valley coordination committee has issued a statement condemning the incident and has asked the Maoists to dissolve their “People’s Court.”