Lacking Deliberations
Nation lacks the extensive debate and deliberations that should precede the budget as economy is consigned to back-seat
By SANJAYA DHAKAL
When Finance Minister Dr. Ram Sharan Mahat spoke in an interaction program last week on the top of this year's budget, he looked quite forlorn as he complained about the lack of focus on economy from political leadership as well as civil society.
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As the nation is fixated on the Constituent Assembly elections, issues of everyday concern, issues related with bread and butter, issues related with jobs have all been consigned to the back-seat.
"All the political forces must realize that economy is the primary issue. It is all about improving investment climate, generating jobs and taking the nation on the path towards prosperity," Dr. Mahat said, addressing a pre-budget discussion program organized by Management Association of Nepal on Wednesday.
"It is true that economic statistics are not favorable. But they are all due to non-economic factors. The conflict, social indiscipline, anarchy and demands galore about consumptions have derailed the economy," he said.
Just recently, a new report has been released by the Central Bureau of Statistics (CBS), which states that due to decline in production of food stuffs and delay in political resolution, the economic growth rate has come down to 2.5 percent this fiscal year.
Such a disastrous news, however, were not taken very seriously. No political leader worth his salt responded to this disturbing trend.
This rate of 2.5 percent growth is the least growth rate witnessed in the last five years. A year ago, the economy had grown by 2.8 percent.
The sharp decline in growth rate comes on the backdrop of budget prediction of this fiscal year which had said there would be 4.5 percent growth in economy. However, the CBS report says that production of food stuffs decreased by 2.78 percent this year while wholesale and retail trade also came down by 2.6 percent.
The report painted a further bleak picture stating that the industrial sector attained a minimal growth of 2.16 percent in the face of bandhs, lack of infrastructure, power cuts, labor disputes and so on. The agriculture sector grew marginally by 0.7 percent – compared with 1.1 percent growth previous fiscal year. Likewise, non-agriculture sector also grew by 3.7 percent – compared with 4.6 percent growth previous year.
The report also had some positive indications. According to it, because of new base year and procedural adjustments, the per capita GDP of Nepalis is estimated to have increased to $383 from $350 last year and the per capita income is estimated to have increased to $456 from $420 last year.
During the interaction program, Dr. Mahat conceded that productions have not increased, there are no new investments and even existing capacities in industrial and tourism sectors were not being utilized.
In an uncharacteristic frankness, the Finance Minister – who will have to prepare the budget for the forthcoming fiscal year 2007/08 based on the Common Minimum Program agreed upon by eight parties – urged for consensus on political issues. "Competitive democracy, free market economy, human rights and rule of law are some of the fundamental issues in which there is a global consensus. We can also proceed by adhering to these widely accepted norms," he said.
Dr. Mahat said that if there is a consensus on inviting big investments in hydropower sector, that alone could set off the whole new trend. "If we can get one big investment then that will open the floodgate. Otherwise, nobody will believe our credibility," he said.
The Finance Minister believed that the exuberance and positive feeling among people of villages in the aftermath of Jana Andolan must be tapped to bring about building of new Nepal. Spelling out the few achievements of economy, Dr. Mahat said that in the eleven months of the current fiscal year, the capital expenditure has increased by 50 percent – compared with the same period previous year. "Revenue has grown consistently at around 20 percent because of which we could manage despite having to dole out Rs 4-5 billion in extra-budgetary topics," he said.
At the same program, Professor Dr. Madan Dahal of Central Department of Economics, Tribhuwan University talked at length about "Issues and Challenges" for the coming budget. "Our economy is in crisis. It suffers from conflict, recession and corruption," he said.
Likewise, industrialist Rajendra Khetan also presented a paper giving suggestions for the coming budget. "Industries are closing down, investment has stopped whereas 200,000 new labor force enters the market every year looking for jobs. Isn't it contradictory?" he asked.
