ENCOUNTER

There is no responsibility towards the nation among our leaders

-Dr. Badri Pokharel

Dr. Badri Pokharel (43) is a well-known economist in Nepal. A Ph. D. degree holder from Banaras Hindu University, India, he has a wide interest in the study of Hinduism and in Nepalese literature. He has also authored a number books in economics and literature. However, his ultimate goal is to win the Nobel Prize in Economics. He says his dream of getting this prize was evoked when India’s Amartya Sen was awarded with this world famous prize some years back. Specialized in Public Finance and Revenue Administration, Dr. Pokharel is presently working as the chief tax officer at Bhaktapur Tax Office. He spoke with The Independent last week on various economic issues. Excerpts:

Q. After more than four years, a majority government has been formed in Nepal. When this government was formed, both the economists and businessmen seemed very enthusiastic that the stability of the present government would ensure economic development in the country. But, in the past six months, Nepal’s economic condition hasn’t shown any positive indications. How do you view the present situation?

A. In the past, we had no political stability and therefore we didn’t have a clear vision of economic development. The present majority government of Nepali Congress did show different ways to augment the economy and to boost  the economic situation. They also  presented the 9th Five Year Plan with many programmes to uplift the economy of the country. For the development of the country its political leaders should have some patriotism and love for the nation. We do not find any signs of patriotism and responsibility towards the nation in our leaders.

Thus, the plans and programmes outlined for the development has remained only in the papers. If the plans and programmes that the government put into document were implemented well, the situation would have been different.

Q. Are you satisfied with the plans the present government has put forward for  economic development?

A. Of course, yes. But the main problem is in their sound implementation. We are lacking implementation and monitoring of our plans and projects. For example, we all know that corruption in our country is quite wide and rampant. But the corruption control measures have not yet been developed. The situation is similar in other fields also. I see no positive signals in our economy.

Q. What do you think are the major hindrances for the government for not being able to implement its plans in a well organized manner?

A. First of all the accountability to the people should be there. The political leaders and high-level government officials and administrators who are not accountable to the people should  be penalised for their wrong doings. This would ensure they will become aware and conscious of their duties and responsibilities. 

Q. After almost three years after the implementation of Value Added Tax (VAT), there still remains many kind of confusion at different levels. How can the problems related to it be solved?

A. There is not doubt that Value Added Tax is the improved and sophisticated tax system. Now it has entirely replaced four types of taxes in our country. This tax is quite good in theory. But there are still lots of problems regarding its implementation. When the present government of Nepali Congress came to  power it showed its strong commitment to implement this tax system. It also made necessary amendments in the acts. This is a positive indication. When we talk about the confusions associated with this taxation system at different levels, we should also consider the geopolitical condition of our country to implement and impose this tax.

The problem is that some  businessmen and industrialists are always looking for the weak points of the government to earn more profit. For example, when we go to the market, shopkeepers show you two types of bills one inclusive of VAT and another exclusive of VAT. The government is trying to trace out these kinds of businessmen.

In the coming few weeks, the tax officials are going to go to the market and check such anomalies. The government is committed to penalize these businessmen and they must be penalized. To a great extent this will smoothen the implementation of VAT. However, until and unless the open border problem is solved, VAT will have difficulties.

Q. Price hike is a regular phenomena in Nepal. Why?

A. Price hike must have some causes. First of all, poverty creates poverty. For the consumption of goods and services, Nepal has to import lots of things by paying foreign exchange. Day by day our currency is devaluating as inflation is quite rampant in Nepal.

Secondly, our government is not strong. In many cases, businessmen try to increase the price and the government endorses it, and the people have to pay higher price than that actually is there in the international market. The government has acted very poorly in the matter of checking the exact prices of the goods and services in the international market.

Q. What sort of programmes should the government bring about to control price hike and inflation?

A. The government should first of all make clear the situation under which the price hike is taking place. The government should govern the people in a democratic way. The government should have some clear vision regarding the measures to control price hike and inflation. It should control unnecessary import of goods and services. It should consider the country’s overall production and consumption before importing goods. The balance between export and import should be maintained.

Secondly, the government should monitor the market starting from the grass root level, that is the local market. The local administration should be strong enough to do this.

Beside that, our government is a welfare government. In some situation, the government should also provide subsidies. However, the government should have a clear vision regarding the subsidies too. Subsidy must be directed towards the people under the poverty line.

Q. Beside price hike, inflation and VAT what challenges do you see in the economic sector?

A. Presently, we have a very low growth rate. The economy as a whole is moving very slowly. In this scenario, we must consider achieving higher growth as our major challenge in the economic sector. Without achieving higher economic growth rate, take-off of our economy is not possible. In order to achieve high growth rate, problems like unemployment should be first solved. All sorts of economic situation should be activated. Beside that, very little has been done in the fields of comparative advantage, like hydro-power. 

Q. How should the government tackle these challenges?

A. The government should concentrate its efforts in the fields where we have comparative advantage. It should not waste its time by engaging in other sectors. It should set the target to achieve higher rate of growth and be committed towards achieving it.

The present world is an inter-dependent world. We should keep exploring the new items and services to be offered in the international market in which we can get more comparative advantages.

Q. What is the situation of revenue administration in Nepal?

A. Revenue administration is going to improve in our country. The government has paid serious attention towards it. If internal resources are not mobilized, our dependency to external sources will grow more and more. To minimize and curtail the foreign assistance and loans, we have only one alternative and that is the mobilization of internal resources. Thus it is  high time to increase the capacity of revenue administration. For this, the government has been involved in training its personnels and studying to broaden the tax net. For example, the government is deducting the rate of tax but expanding the base to include more tax payers.

Only last year, the number of the direct tax payers were increased by more than 17,000. This year we put the target of increasing the number of tax payers by almost 25,000, which is quite possible.