Budget Niti

The budget session of the parliament is due and every body is hoping that the politicians would reconcile their differences and not lead to another impasse. A country with a 22 million population and just around a $ 5 billion GDP has not many choices in terms of formulating the budget. The dependence on foreign aid and borrowings only increase in absence of increased revenues to fund the growing expenditure. Regular expenditure bloats and development expenditure gets neglected. An ailing revenue management system cannot lead to increased revenue collection in increased revenue collection in the country. In this context the Finance Minister would have very little choices in terms of providing a reform oriented, yet a popular budget.

A leaf of learning must be taken from the Indian budget 2001which has created a platform of another economic resurgence. Reforms are a must to accelerate the pace of economic growth but at the same time the control over the reform process also becomes important.

The focus of the government should once again be on handling its own core competencies like security, foreign policy and regulation rather than trying to have its finger in every pie. The only way government can cut its large force of employees is to exit from certain sectors. For instance, with the advent of decentralisation, it may not be necessary for the government to continue taking the burden of a hundred thousand plus teachers in its payroll. Similarly, there has to be a sincere effort in rationalising the number of government departments and ministries. Lip service is not going to axe the burden on the state. In a scenario where there are limitations on revenue increases, the only way to go about is slashing expenditure. The politicians may not like the decisions, but one needs to understand that populism leads to bankruptcy.

One issue this budget would have to delve into into is privatisation. There is no worthy cause left for state owned enterprises (SOE) to exist apart from being a breeding ground for corruption. The government has to stop allocating funds for the bleeding enterprises and hand them over to people who can manage them. No one is convinced of the fact that a government that cannot manage its own party can manage business. The protection bestowed upon political money-churning in these enterprises has to be stopped and efficiency restored.

The issue of revenue management has been discussed enough in public and private. The fact that the Finance Ministry has to depend on the army to ensure revenue collection talks of the plight of our machinery. A long-term plan is required on Revenue Management. A strong cadre of civil servants should be created that would purely look after revenue management. The current system of transferring ‘revenue ignorant’ persons to revenue departments from various other government agencies at the behest of political pressures should stop. Over a period of time what Nepal needs is a strong set of civil servants whoare conversant in the aspect of revenue management and deal with matters in a professional way.