Budget For FY 2001-2002
Pretty Good In Given Reality

By Gandhi Raj Kafle

THE national budget for the Fiscal Year 2001-2002 has already been presented to both the Houses of Parliament. Besides the lawmakers, the budget which is one of the important economic document for the nation, is also open to common people for discussions. Meanwhile, the country’s economists and businessmen too have already made their comments on it. This all, in fact, shows that budget holds all around curiosity and response.

With the budget stealing all the limelight, it is natural for people to be keen about the responses it has been getting. The lawmakers may hold different views because the ruling party MPs have to support it for backing up the fiscal year policy and programmes presented by their own government. The opposition party MPs have the liberty to make fierce comments for opposing the socio-economic policy and programmes included in the national budget. This is actually the parameter for both the ruling and the opposition MPs to participate in the House debate. Yet, it would be better to make balanced views on development issues including the budget while practising democratic rights in the parliament.

The current budget has given its due emphasis on ideas of sustainable economic development. Dr Ram Sharan Mahat, the Finance Minister of the nation himself has left no stone unturned to express the government’s commitment for facing the current economic challenges. But, how can sustainability be truly achieved? For it, the budget aims at reducing unsustainable expenditures gradually. This is because the government has been worrying about the general expenditure, which is continuously expanding every year. Therefore, Dr Mahat in his budget speech this year has hit hard this aspect of the Nepalese economy mentioning clearly the government’s concrete measures to contain it as far as possible.

The new budget for the first time in the history of civil service mentions the measures to set up a fund to be contributed jointly from the government itself and the concerned new entrant civil servants for giving long term benefit to them. The government is also eager to downsize its administration and it knows this target can’t be met if the ratio of retirement is not made more than the recruitment. But, for this too, only a resourceful government can advance because it depends on the financial strengths of the nation to clear liability. So, the question today is when does the country gain such a position? Traditional sources of income for the government are not enough to do it. In this context, setting a fund in time may be a wise decision.

But, civil service is not only an area, where government feels resource paucity. Pick up an example of the road sector. How much money does the government spend in road maintenance? Is it in a position to do the job on its own? The Department of Road is not prompt and the nation’s almost all motorable roads are poorly maintained. The government, there are instances, has even sought help from the donors for this purpose too. In this financial condition to construct a road for vehicles with the nation’s own resources becomes naturally impossible.

Dr Mahat, however, prescribes a handy formula for it too. He is for setting a permanent fund to maintain roads of the country. Besides this the government is also interested to merge public offices and project set ups, if they bear the resemblance of duplication. Save the money - one rupee saved is one rupee earned - seems to be the ultimate motto for the government, which right now is facing massive challenges for speeding up the pace of economic development throughout the nation.

The budget actually envisions a process of economic development in which the country’s own capabilities to fund development projects build up gradually. This also includes smooth and sustainable management of public bureaucracy, for which the government targets to develop a system to pay employees their long term benefit in time of retirement. Fund setting proposal mentioned in the budget this year is certainly a positive aspect. It attempts to find solution to the burdensome government bureaucracy.

But, the question of achieving sustainability in matters of the country’s income and expenditure is linked with so many things. First of all, national investment must yield high return and for it there must be investment friendly atmosphere in the country. The second important thing is that the fund which we allocate for social sectors like health, education, social service, youth development and manpower planning must generate qualitative impact in the long run. Quality in social sectors determines the success of investment made by the country also in economic sectors like agriculture, industry and commerce.

Today, what we see in Nepal is a sluggish economic condition everywhere. Industrial production remains unsatisfactory, marketing aspects of agriculture have not been dealt seriously to tap the potential growth from it and tourism, which is the largest foreign currency paying sector of the country has come to an abnormal situation of a stagnation. These signs indicators are not certainly encouraging. Furthermore, the bitter truth for the government is that it can’t cut anything to reduce its liabilities.

That’s why the size of national budget has grown tremendously. Last Year’s Rs. 83 billion fiscal year proposal has now almost touched Rs 100 billion mark, which is the 19.9 per cent rise in the previous budget. Last year the government raised pay scale of all employees, which automatically left a heavy burden to bear the liabilities for pension adjustment to retired civil servants, school teachers, and police and army personnel. The government, which expresses commitment to democratic ideals, can not also keep welfare schemes aside. In this situation, how can the expenditure be cut?

Yet, the reality today, there is no doubt, is to rationalise public expenditure, But, the government should equally be cautious about income side too. For it, corruption is a great hindrance, which needs to be checked with great care. Revenue administration needs efficiency and encouragement, for which budget proposal of reward and punishment, if activated properly, may help to achieve revenue target. But, only this is not enough to meet the greater needs of economic advancement.

This is a globalised world, so a traditionally closed economy in itself is unsustainable. Nepal still has a long way to go ahead to benefit from globalisation. So, the Nepalese economy needs boost from all sides, for which both government and the private sectors require each other’s cooperation. The present budget has laid its thrust on investment. This is perhaps good and right emphasis on the way to sustainability. But, the economy does not move itself, the movers are again the government and the private sector players. So, for the good results, it all depends on their sincerity and commitment to current economic issues, which the nation is facing today.

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