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Kathmandu Friday April 20, 2001 Baishakh 07, 2058.
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ADB, govt clash over
irrigation subsidy
By Prem Khanal & Bhaskar Sharma
KATHMANDU, April 19 – The government and
the Asian Development Bank (ADB), Nepal’s principal foreign lender in the
agricultural sector, are likely to clash on the issue of providing subsidy to the ground
water micro irrigation schemes.
Talking to The Kathmandu Post today, Dr Richard
Vokes, Resident Representative of ADB for Nepal said, "ADB will not support
government’s attempt to reintroduce subsidy in ground water micro irrigation schemes…
at least not in the present context."
Vokes further emphasized, "Giving
subsidies, without enough financial resources, would only act as a constraint to supply.
Moreover, inadequate subsidies would only benefit the wrong people, particularly the well
offs, leaving the needy aside," he said.
By approving such a wrong policy we do not want
the government to face a fiscal crisis, he said.
Only Wednesday Hari Shankar Tripathi, Member of
National Planning Commission, had told The Kathmandu Post that the government had made up
its mind to reintroduce the subsidy in shallow tube wells (STWs). "We have even
discussed the issue with the ADB," he had said.
Despite ADB’s refusal, another member of
the National Planning Commission Dr Shankar Sharma told this newspaper today that the
government stands by its design to reintroduce subsidy.
Dr Sharma argued that given the present scenario
of heavily shrinking installation of STWs, government is left with no option but to
reintroduce subsidy. "Since the development of agriculture decides the fate of
national economy and the livelihood of majority of Nepali people, state cannot and should
ignore its role in assisting agricultural sector."
Since the government continues to subsidize
large-scale surface irrigation schemes it should not hesitate to subsidize STWs, Sharma
added.
The government had completely scrapped subsidy
on STWs since fiscal year 1999/00 as it was one of the major preconditions of the Second
Agriculture Program Loan that the government obtained from the ADB.
Asked if the government have had formal talks
with the ADB over the subsidy issue, Dr Vokes said, " The government and the ADB have
discussed the issue." However, Dr Vokes did not categorically say what the ADB’s
stand would be if the government decides to reintroduce subsidy.
The ADB had maintained a rigid posture on
subsidy issue in the past. It had even put on hold the release of second trench of
Agriculture Program Loan unless the government completely scrapped the subsidy on STWs and
chemical fertilizer.
However, Dr Vokes admitted that ADB itself would
conduct a review of its policy in the agricultural sector. He informed that a Policy
Review Mission for Community Ground Water Irrigation Project is slated to visit Nepal next
month, which is expected to look into the issue of STWs subsidy.
The ADB, arguing for subsidy removal had earlier
said that inadequate allocation of budget for subsidies was the major damper in the rapid
expansion of STWs. By the same analogy it had argued that STWs installation would increase
with subsidy removal.
However, contrary to the expectations, the
installation of shallow tube wells (STWs) shrunk drastically after the subsidy revocation.
Not even 20 per cent of the total targeted installation of 8800 STWs were met last year.
More disturbing is the figures for the current year. So far only 20 STWs have been
installed, out of the total targeted installation of 4300.
It is mainly the growing reluctance of the
farmers towards installing the unsubsidized STWs - a major thrust of the 20-year long
Agriculture Perspective Plan for achieving rapid irrigation - that is pressing the
government for reintroducing subsidy.
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