Has Any Budget Been Implemented Totally?
The first annual estimate of the income and expenditure, or budget, after the promulgation of the new constitution on September 20, 2015 has been unveiled. Finance Minister Bishnu Paudel announced a budget of Rs. 10, 048 billion in the parliament on May 28 for the upcoming fiscal year of 2073/2074 BS (2016/17).
Given the size of the budget, which is 28 per cent larger than that of the previous year, and the way the budget has been allocated to different sectors, economists have expressed mixed reactions. Some have termed it ok, but others have termed it as being populist. Even then, there is one thing common among them all: they have expressed doubt about its implementation. And this doubt is genuine, given that no annual budget has been fully implemented for the last few decades due to the government’s poor capacity to spend the capital outlay.
Inability to spend the development expenditure has dragged behind the expected economic growth and development as a whole. In this sense, the question about implementation is nothing new although it is a genuine one.
It is a simple logic that when a person earns less than what he spends, he or she is going to be in debt. The budget presented indicates the same trend: more expenses, less income. The budget expects to collect around Rs. 565 billion through revenue collection and Rs. 10 billion through principal repayment. This means, a total expected income of Rs. 575 billion. But the government has allocated Rs. 617 billion for regular expenditure, i.e. the salary of the government employees including civil servants, teachers, security forces, pensions and loan/interest payment.
The regular expenditure can hardly be avoided because salaries must be paid. But revenue collection depends on various factors, and the target may not be achieved. Even then, in simple terms, the government is making an income of 575 billion rupees and spending 617 billion rupees. There is a gap of 42 billion rupees. This means what the amount collected in revenue cannot cover the sum of the salary of the employees and for loan/interest payment. Hence, this is a matter of great concern to all.
So where is the money for development activities? Are we condemned to keep begging for grants and loans from the international community to carry out our development programmes perpetually? And each and every one of us is already burdened with a debt of over Rs. 20,000.
Indeed, the budget is fine because it has included all the previous programmes, added some new ones and also increased the salary of the government employees by 25 per cent. Enough outlay has been made for reconstruction of quake-ravaged houses and infrastructure. The social security allowance - to the elderly, single women and the physically challenged - has been doubled. Now they will be getting Rs. 2,000 a month. But alas! No increment has been made in the incentives that the government gives to the students under different categories such as dalits, ethnic people or nationalities, girls and physically challenged in the community schools.
It is good that the amount for Afno Gau Afai Banau (Build your village yourself) has been doubled. But then the amount for the Constituency Development Fund (CDF) has also been increased. The CDF was widely criticised, but the government has turned a deaf ear to the public outcry. The parliamentarians are thus forced to be involved in and carry out projects in their constituencies. But what could be a greater anomaly than this: the referees are the players, and rule makers are to implement the rules?
The way the government has focused on and allocated substantial budget for projects of long-term as well as national importance and interest should be lauded. They include the construction of the Kathamndu-Nijgadh fast track, upgrading of the east-west highway, expediting the construction of the postal road in the Terai and the mid-hill highway, expediting the study of and construction of the east-west electric railway.
It is also interesting to note that the government has also focused on the Rasuwa-Kathmandu-Pokhara-Lumbini railway. The government has aimed to complete the detailed project report within two years and start its construction. The way the government has announced in the budget that initiative would be taken to construct the Karnali Chisapani multipurpose project, which is of over 10,000 megawatts, as a trilateral friendship project among Nepal, India and China should also be lauded.
It is a unique and laudable idea to pool funds from the sale of petroleum products. The government has announced it would collect Rs. 5 per litre of petroleum products for the Budhigandaki hydropower project and thus earn around Rs. 7 billion in a year. Although some may frown upon this idea in the beginning, they will be happy once they are made clear about the way it will ultimately help national development. Such an innovative idea of ensuring investment from those who have gone abroad for jobs is also needed to build other projects. Innovative ways to mobilise remittances will check unnecessary imports of luxurious goods and services and thus fuel development.
In addition to corruption, tax evasion is a major chronic problem with regard to revenue collection. The government has announced programmes to check low pricing at the customs. If there is coordination among the government agencies such as the customs office and tax offices, such a problem can be largely solved.
A recent report showed that everyone in the country had a mobile phone set, that means there were around 30 million such sets. Can the government calculate whether it was able to collect revenue from them all over the past years?
Now, how and to what extent the budget is implemented depends much on political stability. This also affects whether the targets of controlling inflation at 7.5 per cent and increasing growth by 6.5 per cent will be attained or not by the end of the upcoming fiscal year. For this, the coalition partners of the present government should have a good understanding to implement it. Otherwise, there is likelihood that the budget will only increase inflation and bring about financial anarchy as termed by the opposition parties.