Economy & Policy

At a time when the state of emergency eclipses the whole nation and the country’s media- ever brimming with lurid tales and sensational headlines, at times, riding a bit too far holding no bar- are effectively muzzled and left with little or no ingredients to spice up their stories with, the news of Deuba administration deciding to throw four SOEs- State Owned Enterprises-into liquidation received unusual coverage in the broadsheet dailies, last week.

The dry and drab media tried to put journalistic mantra into the bread & butter story to make it a little more palatable to the readers. However, the macabre tales that infallibly ran across front pages of print media in series over months have spoilt the readers’ taste. They seem to have been sadistically addicted to the killings and looting melodrama.

Nevertheless, the closing down of state owned enterprises trigger a little brainstorming among a small section of people whose pathological optimism see ray of hope beaming across the clouds of darkness and uncertainty.

The whole of the SOEs liquidation story that figured with paramount importance in the vernacular dailies spilled out a few paradoxical realities- a constant conflict of mind and heart of those who hold the rein of state.

The story revealed that DFID- Britain’s international development agency holding carrot and stick- has threatened to pull away the carrot if the government didn’t push through the privatization scheme in a quicker pace. The British agency will dangle carrot only if the government agrees to toe DFID lines. And if it doesn’t, then the British agency will lend no financial crutches for the cash-strapped government to lean on.

The government made of over three dozen and half ministers can’t withstand the threat. The overstaffing and the treacherously handled SOEs are already taxing heavily on the government- the government that live under a fear psychosis of being crushed under its own load, some day.

Deuba government on its own can’t rescue the SOEs- the white elephants- from deep mires of inefficiency, malpractices, corruption, and the unbearable load of politically obliged recruitment. It can’t rid of them without DFID carrots.

On contrary, privatization under duress finds no slots in the Congress socialist economy to fit in though many Congressmen in Indian socialist jacket- dining and drinking in Kathmandu’s discotheques- can understand the anachronism.

For true socialists- the number diminishes dramatically in the Congress- they can’t take delight in Congress government selling off the SOEs.

In heart, the ruling Congress still pretends to be an ardent socialist- ostentatiously clinging to cold war socialist dogmas.

However, when they shift to Singh Durbar’s hot seat of power from the chills and damps of Teku, they place dynamic socialism ahead of democratic socialism, one that lured voters to trust them.

In Teku, they make a hair-splitting of BP Koirala’s socialist dogmas, when someone else occupy hot seat of power. No sooner, they spring up to that seat, they infuse all their stupidity, nonsense to what they unabashedly call BP’s dynamism and unsuccessfully try to rationalize their follies under this very dynamic socialism.

Congress hesitates to disrobe itself of the socialist jacket for fear of losing its political identity. The party still adhere to Willy Brandt and Papendreu’s doctrines.

No one in the Congress has demonstrated enough guts yet to disagree with B P Koirala’s democratic socialism in principle, though in practice hardly any one is there to literally abide by his ideals.

The Congress is caught in a fierce wave of global capitalism which has wreaked its socialist boat. The ruling Congress and those steering it along the power corridor at the moment know that the Congress heart that spoke out in election manifesto is disliked by the riders of liberalism who want the state quit from the demand and supply arena. Let the market take care of it and the government only workout the regulatory mechanism.

The Congress in heart- those in Teku office - hate to see what they have been told the "third wave" of future being dashed by currents of global capitalism. Unfortunately for the Congress party, the heart is often left at the chills and damps of Teku, and it is only its mind that remains in the hot seat of Singh Durbar. The survival instinct - inherent component present in mind- act in haste, and the heart left at Teku repents at leisure. This has been the paradoxical dilemma of the Congress whose men neither want to shake off the socialist rag nor can resist the temptation of global capitalism.

Under dynamic socialism if not under democratic socialism, the Congress in power can rationalize the under-pressure-closing down of state owned enterprises telling people that they want to be frugal, and therefore, take on austerity measures.

That sounds plausible! The government can’t afford to keep pumping in money into a machine that feeds unproductive manpower but produces nothing. And when some one out there is willing to pay to junk these rusted machinery, why not go ahead of it?

Deuba government and its Finance Minister are doing no bad job with no bad intentions.

But, the question is, who should be held accountable for the terrible mess? Who of us are to be held responsible for bogging down these SOEs into the unretrievable mires? What made these SOEs downside and eventually die down within a decade of post-democracy?

The answer must be found. DFID may not be interested in digging out the buried corpse! But, the taxpaying citizen of this country must know where in the whole system did the python slithered in and swallowed so many of our SOEs?

Studies and surveys have pointed at over-staffing, irregularities and misappropriation of resource as the main causes behind the sinking of these SOEs.

Now the question that hangs is, who overstaffed them? The taxpaying citizens or the elected executives!

Who misappropriated the fund? The party cadres politically appointed or the career professionals?

How did the over-staffing occur? The more the ministers are the greater the number of staff become in SOEs. A simple mathematics can explain it. If a ministry is run by one minister, the inflow of minister-recruited staff in the SOE is lesser than if the ministry is run by three ministers- Minister, State Minister and Asst. Minister. Three Minister obviously mean more pressure than the SOE can withstand.

Coincidentally perhaps, in the history of governance in Nepal, one who has headed jumbo-sized government is Prime Minister Sher Bahadur Deuba. During his earlier stint as Prime Minister, Deuba headed a forty-eight minister cabinet. This time, the number is reduced by six, a remarkable achievement!

Given the reality, can Deuba administration, heading huge shape & size government, justify even under what they may call dynamic socialism its hyped frugal ways and austerity measures?

Why not the tax-paying citizen ask what the money earned by selling off those SOEs will be used for? Will they not be used in feeding the huge shape & sized government?

The government is shedding the load of the nation! But, can the nation of 23 million people bear the load of over three and half dozen ministers?

Or perhaps, the government is acting the way the donkey rider did. To ease the load burden of the beast, the rider placed some of the load on his shoulder sitting astride the ass. And people around gave him a big clap.

The Fate of Sound & Sight

By Ramesh C Arya, PhD

At the very beginning, I confess that I am not very close to Media. Neither have I long experience working with it if we intend to record the continuous attachment to the profession and living on it. A few occasional articles in print media, in dailies and a few others, though from as early as the early ’70s! Handful of occasional interviews conducted or interviewed at the Radio Sagarmatha! And, running an interview based weekly programme over another FM station.

After about six months I discontinued talking over the radio. Partly because I was not very happy with what little facilities the management offered and partly because I took up an assignment which required me to be at a township away from Kathmandu for my professional services! Towards the end of my attachment with the FM, the management often complained that the FM was losing its audience due to my programme. The regular listeners switched off when I was on the air. I don’t know how true he was! He might be because the audience of that FM received musical and other light entertainment programmes for most of the time. The FM was true to the very musical theme as it kept on repeating and reminding that "Music is your Life". I hope the listeners were mostly youngsters, perhaps as young as the radio jockeys who cared more on the style than on the substance aired. My programme was intended for the audience with different choice- perhaps the serious ones! The only improvement the FM station had introduced over the past few months of its going into the air was that the very musical mantra. For about 40 percent of its time, the FM was providing musical entertainment in English. The musical mantra was chanted in English. It was later changed into Nepali.

I was presenting a dialogue- based program that covered "everything but politics". Had he paid serious attention to the proposal I had presented, the "not-so-musical" (it covered some artistes, though) -dialogue based program, he would have anticipated some "disturbance" for sometime until the serious people too could have entered into listenership for that particular period. Due publicity about the program would have helped. His budget did not permit it to reach any other channel. The young and light-minded radio jockeys would not play the pre-recorded fill up that would introduce my program. There must be some admirers too. But there was hardly any media to communicate the likes and dislikes for the new program. Radio Sagarmatha had at a time expressed appreciation for the one that had revealing information on Late Laxmi Prasad Devkota.

Unfortunately all the newer FM stations that came after the Radio Sagarmatha were going on the same beaten track of just playing music for all the hours they are on the air. While I had proposed that FM stations needed something other besides just music, the top management immediately agreed to give me a break. It also may be, because he did not have enough items. And he won’t pay me because he was giving me "the break" through the one-hour at the FM. Perhaps, due to what I was offered by my new employer, the sudden parting off with the FM management was quite smooth, if not very amicable.

The FMs are capable of playing stereophonic music and the "gossips" that youngsters mostly like to hear over the radio. The conventional "short wave: and the medium waves" did not have the swinging stereophonic notes. Till then the FM stations were not taken as powerful informative/thought-provoking media, except for the "non-commercial" Sagarmatha (its not fully non-commercial now!). For its distinctive broadcast the latter still stands apart from the other FMs. I must be responsible for my failure. Perhaps my choice of the very FM station was to be blamed. The FM was 100 percent musical.

But the idea was not that wrong. In a given frequency, different subjects could be covered and therefore catered to the interests of the different listeners. Perhaps I intended to promote other Sagarmathas too. In the later days, to my pleasure, I noticed that several FM stations -even those having a heavy dose of the light entertainment- had introduced interviews in their regular programmes. Till then the FM station was not taken as a powerful informative/thought-provoking media. It was capable of playing stereophonic music and the "gossips" that youngsters mostly like to hear over the radio. The conventional "short wave: and the medium waves" did not do so. Till then the "non-commercial" Sagarmatha only could talk serious and hence was the only favourite FM station for the seniors though this one too had mostly youngsters at the radio station.

A study on radio-listeners had hardly been conducted, whether for the modern FMs or the short and medium wave transmission is therefore desirable where one could see the changes gradually introduced in the programmes, the age group of the audience and shifting pattern responding to the changes so introduced. Of course the study could cover many more fields, such as the most popular programmes, the most "boring" programmes (such as the one I had been conducting then) etc. The same applies to the TV broadcasts. Nepal Television is nor 17 years old. NTV runs more or less on a non-competitive basis, at least in a much stronger manner than the FM stations. But while some FM stations are serving on 24-hour a day, the NTV visuals are still available for very limited time. The sudden ban of alcohol and tobacco based advertisement was enforced with very little compensation to the audio-visual media. The loss of revenue must have affected the TV glamour. The government is keen on expanding its area coverage no matter what the quality is and how many really watch the media. If I fall on an average watch group, the media has lost the TV watchers. For different reasons, how many have moved away for good from radio of television media or the vice versa?

There are reasons. You see a 30- minute long interview with a person no lesser than the prime minister who keeps on harping the same note "n" number of times for being questioned "n" times. The interviewer was definitely intending to bring out something concrete from his target somehow or other. The person repeating the answers to the repeated questions was modest enough, who gracefully avoiding the boredom in front of the TV camera. He had no choice. But the one watching the program could definitely switch it of unless he too expected something to come out in course of the marathon boredom. The question could, for example, be "what will you do if the Maoist across the dialogue table would compromise for nothing lesser than a Republic (and not Democracy) " and how the patient Deuba would be answering the solution to the "unconstitutional" conditions. Like many others, I wasted my time watching the inconclusive interview. But definitely the PM’s time was more valuable!

The audio-visual media, however "boring" the program may be, show the camera friendly faces. But even these essential advantages are denied to the viewers sometime. The particular day when the PM was at the idiot box, the program came to an abrupt end followed by dance. The producer did not offer a pause by way of introduction to the change of scene or sequence. The host went of showing the 4 or 5 dance tapes without introducing the artistes. For twenty minutes of the presentation, the host never appeared and suddenly there was Sriman Gambhir … and the expected blackout over the screen.

However limited, the consumers have at least a choice over the radio stations- from Sagarmatha to KATH97.9. Unlike that between the MTV and the Discovery Channel, the Nepali viewers of the Black Box, on the other hand, have practically nothing to really choose between the Nepal Television and Channel Nepal.

Nothing could be more painful for the media with more than 17 years of experience! There is no thrill when the TV media matured from childhood to youth.

Did the years, we call experience, bring down to decay of the two power media, inviting predominance of imported pleasure for sound and sight?

Sharp Fall in Foreign Cash Grants

The first two months of the fiscal year 2001/02 have been marked with a very marginal growth of monetary aggregates. Government expenditure also grew slowly due mainly to a decline in both the regular and development expenditures. In spite of an increase in revenue collection, resource mobilization declined mainly due to a sharp fall in foreign cash grants and non-budgetary receipts net, thereby resulting in budgetary deficit. The rate of inflation on point to point basis went up mainly due to a rise in the price of vegetables and fruits and sugar and related products, despite a decline in the prices of grains and cereals products as well as pulses under the food and beverages group. In the external front, both exports and imports declined compared to a year earlier level. Trade deficit narrowed down further during the review period mainly as a result of decline n imports. The foreign exchange holdings of the banking system increased substantially due to a surplus in the balance of payments emanating from the growth in net transfer income as a decline in the trade deficit. The foreign exchange reserve was sufficient to cover merchandise import of twelve months. In the money market, treasury bills rate remained at 3.78 percent whereas the inter-bank rate stood at 2.62 percent.

During the first two months of the fiscal year 2001/02, broad money registered a growth of 0.4 percent (Rs 787 million) amounting to Rs 214600.5 million compared to a growth of 0.3 percent (Rs 468.0 million) during the same period last year. An increase in net foreign assets as well as net domestic assets is attributed to the growth in broad money. Narrow money increased marginally by 0.1 percent (Rs 102.6 million) during the review period compared to a decline of 1.8 percent (Rs 1105.6 million) during the same period last year.

During the review period, total domestic credit of the banking sector increased by 0.1 percent (Rs 148.3 million) as a result of an increase in the growth of credit flow to the government enterprises as well as to the private sector. Such credit had declined by 0.6 percent (Rs 924.7 million) during the same period last year. The flow of bank credit to the private sector increased by 1.2 percent (Rs 1476.3 million) during the review period as against an increase of 0.9 percent (Rs 940.0 million) during the same period last year.

On the fiscal front, total government expenditure registered a slower growth of 9.7 percent amounting to Rs 6253.5 million during the review period as against an increase of 26.0 percent during the same period last year. Of the total government expenditure, regular expenditure declined by 4.3 percent to Rs 3662.4 million, development expenditure by 11.0 percent to rs 761.9 million whereas freeze expenditure increased by 80.1 percent to Rs 1829.2 million during the review period. Despite a decline in both the regular and development expenditures, total government expenditure increased due mainly to a sharp rise in the freeze expenditure. In the previous year, Dashain expenses provided to the government employees during this period had pushed the regular expenditure up whereas such expense not being disbursed during the review period led to the decline in the regular expenditure compared to that in the previous year. The late release of the development expenditure as a consequence of delay in budget approval is attributed to the decline in development spending during the review period.

Resource mobilization in the review period declined by 1.1 percent to Rs 6156.8 million in contrast to a growth of 26.9 percent during the same period last year. Revenue collection, the major resource to finance the budget, stood at Rs 6194.7 million marking a 13.5 percent growth compared to a lower growth of 9.9 percent in the previous year. However, a sharp decline in the receipts from foreign cash grants and non-budgetary income resulted in the lower resource mobilization and subsequently a budgetary deficit of Rs 96.7 million. To meet the deficit, the government, in addition to mobilizing foreign cash loan worth Rs 741.5 million, received Rs 18.6 million under the ‘other’ heading of the government account and subsequently there was a surplus of Rs 663.4 million in the central treasury during the review period.

The National Urban Consumer Price Index, on point to point basis, recorded a rise of 4.0 percent during the review period compared to an increase of 1.0 percent during the same period last year. Of the overall price index, price index of food and beverages group increased by 3.4 percent as against a decline of 4.4 percent in the preceding year. Despite a sharp increase in the prices of vegetable and fruits, sugar and relate products, oil and ghee, restaurant meat, fish and eggs, beverages, spices, milk and milk products, the declining prices of grains and cereals products as well as that of pluses contributed for such a low price rise of food and beverages group. However, the price of non-food and services group increased only by 4.7 percent during the review period as against a growth of 8.1 percent in the previous year. The rise in the price of non-food and services group was mainly due to the upward movement in the prices of housing, transport and communication, and medical and personal care. Regionwise, the price index of Kathmandu valley, Hills and Terai increased by 3.8 percent, 4.7 percent and 3.9 percent respectively.

On the external front, exports registered a decline of 5.1 percent to Rs 8558.0 million in the review period in contrast to a growth of 38.0 percent during the same period last year. During the review period, the growth of export to India decelerated to 24.9 percent from 73.6 percent in the previous year whereas that to the third countries declined by 29.8 percent as against a growth of 18.2 percent during the same period last year. Export of jewelry to third countries increased whereas that of woolen carpet, readymade garments, pashmina, pulse and tanned skin exhibited a significant decline.

During the review period, imports declined by 5.0 percent to Rs 16690.7 million, as against a growth of 6.6 percent during the same period last year. The import of cement, electrical equipment, medicine, chemical fertilizer, petroleum products M.S. billet, M.S. wire rod and pesticides from India and petroleum products, betelnut, medical equipments, electrical equipments, telecommunication equipments increase compared to that of the previous year.

During the review period, in spite of a decline in both the exports and imports by a similar rate, trade deficit narrowed down by 4.8 percent to Rs 8132.7 million owing to the larger base of imports than that of exports. In the previous year, the trade deficit had declined by 14.1 percent. The export/import ratio which was 51.4 percent in the previous year, remained similar at 51.3 percent in the review period.

Based on the available annual balance of payments statistics for the preceding year 2000/01, the balance of payments remained favourable by Rs 5762.8 million. During the review period, in spite of a decline in net services income, current account deficit declined by 20.2 percent to Rs 7154.9 million due mainly to a decrease in trade deficit and an increase in current transfer receipts compared to that of the previous year. However, a significant inflow of official capital net and miscellaneous capital helped the balance of payment to remain positive.

Based on the monetary statistics for the second month of the fiscal year 2001/02, the overall balance of payment recorded a surplus of Rs 373.8 million. Subsequently foreign exchange holding of the banking system increased by 8.4 percent to Rs 105185.6 million at mid September 2001. Of the total reserves 76.1 percent was accounted for by convertible currencies.

In the share market, capitalization of the companies listed in the stock exchange squeezed to Rs 37.05 billion at mid-September 2001 from Rs 43.96 billion in the previous month. Likewise, NEPSE share price index decreased from 322.15 in the previous month to 265.22 at mid-September 2001.

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Shedding the Load Sitting Astride

By Prakash Dahal

The Fate of Sound & Sight

By Ramesh C Arya, PhD

Sharp Fall in Foreign Cash Grants