National 4 (Spotlight Weekly)

"This Government Has No Mandate To Announce Budget"

Dr. Narayan Khadka

Dr. Narayan Khadka is a former vice chairman of the National Planning Commission (NPC). A renowned economist, Dr. Khadka is a leader of the Nepali Congress (Democratic). He spoke to SANJAYA DHAKAL on various issues relating to the recent budget. Excerpts:

What are your impressions on this budget?

Actually I have both political and economic comments. Politically, this government has no mandate at all to announce the budget leave alone bring new programs. It is not clear whether this is the RPP government or not and who this government is accountable to. On the economic front, the budget has announced too many programs and is trying to achieve too many things. But reality is such that this government has no real authority or the machinery to implement the programs. For a minister who doesnít know how long he is going to stay in office, this budget will be pretty hard to translate into action. All he should have done was give continuity to the Tenth Plan, make realistic projections about revenue and expenditure and not announce new programs.

How do you see the reforms measures in the budget? How is it linked with the Tenth Plan?

My party Nepali Congress (Democratic) stands for social democracy, which means it does not advocate liberal and open system only. It advocates the mixture of private and public sector. It stands for social inclusion, equality and justice. Apart from that, let me also speak from the standpoint from my brief tenure as the vice chairman of NPC. The finance minister has said that economic reforms is one of the six major pillars on which his budget stands -- four others being the goals set by the Tenth Plan and the sixth one being the focus on reconstruction. He has linked his budget with the Tenth Plan objectives, there is no doubt about it. However, my question is who will implement it. The political machinery is very weak.

Setting aside the question of political legitimacy, do you think the programs mentioned in the budget are implementable economically?

There are some things that are implementable. For example, the Medium Term Expenditure Framework (MTEF) for which the political parties and bureaucracy has already expressed commitment, will be easier to put into practice. There are other things like public-private partnership, creation of employment bank, and so on, which are also achievable. The new programs may not be achievable whereas the continuation of past programs may be.

Does the absence of elected representatives at the local bodies also deal a blow to the governmentís capability to deliver development at the grass-roots level?

Certainly, it will make the development efforts more challenging. We have examples from the history how in the absence of accountable and locally elected bodies, development goals could not be met during the Panchayat era. More interestingly, just look at the example of the last nine months since the Kingís steps of October 4. In the ensuing political vacuum, the social development has been unsatisfactory and less than 15 kilometer of road could be constructed. So, when politics is kicked out of development mainstream, grass-roots programs will be hampered. The functioning of cooperatives will be affected and so on. Such an ambitious plan cannot be implemented by bureaucracy at the district level.

As an economist, what type of programs do you prefer for a country like Nepal?

In terms of economic programs, we have limited option. There are only few things like agriculture, tourism, small industrial sector and hydro that one can play with here. Tomorrow even if I become the finance minister, these are the sectors I have to focus on. So, the programs and policies we have adopted are not bad or improper. Our only problem has been in the implementation front. Of late, we have seen that by mobilizing local people through community participations and users groups, development goals can be met more easily.

What are your observations about the foreign aid?

Nepal has become too much dependent on foreign aid. Things are coming to such a pass that donors are directing us to do this and that. We are gradually losing our economic sovereignty and this is too bad. In the name of economic reforms we are creating more and more spaces for donors to interfere. Our leverage in using resources in the way we want has been curtailed drastically. In fact, in the current budget, too, the finance minister has included reform initiatives to please the donor community.

What about the state of Public Enterprises?

The problem is in the management of these enterprises. The time has come for the government to go for divestment. There are some corporations that have been useful in import substitution. To keep them in tune with the market economy, they have to be revamped. If some of them are redundant, they need to be dissolved. In case of other public enterprises, the government has to either give complete autonomy or privatize them.