Holding Budgetary Criticisms On A Scanner

 

Dr. Narad Bharadwaj

 

The coalition government of the CPN (UML) and Maoist Unity Centre unveiled a budget of 1048.92 billion rupees for fiscal year 2016/17 on Saturday, breaking the glass ceiling of 909 billion rupees set up by the National Planning Commission. This has provoked criticism from the opposition parties, which are saying that this budget is doomed to crumble away under the burden of its own size and that it would bring inflationary pressure, trigger a price rise and escalate fiscal indiscipline. Another point of criticism is that the budget is difficult to implement because of the poor spending records of the previous fiscal years and the political instability looming ever larger on the political horizon.

 

Universal rituals

It is understandable that the opposition parties are, for reason of being out of power, required to say something negative about whatever the ruling party may propose in the budget. It is also customary for them to say that they would do something differently if they were in power.  These are the universal rituals which need to be performed by political forces out of power to survive the turbulent path of opposition politics. But the Nepali Congress and Madhes-based parties appear to have gone beyond that ritual in their attack against the principle and the thematic constituents of the budgetary allocations.

Everyone does not study economics. Nor is the theoretical analysis of economic matters every one’s cup of tea.  But the common people who are compelled to live with the effects of the economic policies know which economic measure taken by the government serves their interest and which does not. Today’s reality of life is that irrespective of whether the opposition parties like it or not, the budget announcement has brought a wave of positive vibes in a wide spectrum of the Nepalese society. Judging from the level of its acceptability among the masses, I have no hesitation to say that this budget may be hailed in the future as the ‘starting gate’ from where the race for Nepal’s socio-economic transformation had started.

The budget is the first formal economic response of the Nepal government to address the devastating consequences brought about by the mega-earthquake of April 25, 2015 and the crippling effects of the five-month-long Madhes agitation and the Indian embargo against Nepal.  If viewed from the context of the compelling national and international situation prevailing in our part of the world, there are more reasons to welcome the budget than opposing it.

One of the most outstanding features of this budget is its huge size. For the first time in history, the budgetary amount has hit the trillion figure. The huge budget has raised the confidence of the people subdued for decades in the face of ever mounting difficulties. In being able to scrape together such a huge amount of resources, the present government is clearly seen to have mobilised what is known in Keynesian views as a ‘spare capacity’, a capacity of a state which remains unused until need-based demands arise.

The second important feature of this budget is its priority to a number of mega development projects which had never before received priority allocations on this scale. The budget of fiscal year 2016/17 has earmarked resources for the construction of the Fast Track to Nijgadh, construction of roads to link the northern borders, completion of the DPR for a railway linking Rasuwagadi with Kathmandu, Pokhara and Lumbini, while budget for the reconstruction of the infrastructure damaged by the earthquake has been increased and construction of large hydro- electricity projects have received pre-eminent attention.

The previous governments of the Nepali Congress never dreamed big in matters of investing in mega infrastructure projects and expected the private sector to take up the responsibility for them. It always repeated the refrain of globalisation and liberal economic policies and took no drastic measures to salvage the sinking ship of the Nepalese economy.

This budget, which appears to have tried to find an out of the box solution, rejecting the stereotypical framework of the previous governments,  has instilled popular confidence that  this government has taken the right steps towards attaining self-reliance, and through it, safeguarding the sovereignty and independence of the country.

The third imaginative feature of this budget is its focus on social welfare. For the first time in Nepal’s budgetary history, this current budget has allocated funds for health insurance for the elderly citizens with a convincing plan for setting up a system of health insurance to all the citizens in the future. The monthly allowance for the senior citizens, widows and differently able people has been doubled. This has brought to the fore the humanitarian facet of the government, transmitting the message to the general population that the budget has an unmistakable socialist orientation and is guided by a sense of social justice.

The socialist undertone of the budget is also visible in its prioritisation of agricultural development. The current coalition government has come out with a clear roadmap for attaining self-sufficiency in agricultural products by implementing the ‘Prime Minister Agricultural Modernisation Project’. The allocation of 5 billion 78 crore rupees for the agricultural sector indicates that this sector is in for a big leap forward. In this context, the provision which the budget has laid out for insurance of agricultural products and pension for those farmers must be considered bold initiatives for a country which is trying to rise up from the ruins of devastation.

 Among a number of bold budgetary steps taken by the incumbent coalition, the decision to raise the salary scale of the civil servants by 25 per cent must be appreciated as a timely move to enhance the moral, motivation and efficiency of the civil servants. Though critics have denounced this step saying that this would bring inflationary pressure, raising salary was a must in view of the increasing price of consumer goods, sagging morale of the bureaucracy and the need to lift the level of perks and emoluments of the government employees to that of other South Asian countries. It should be noted here that the salary scale of the civil servants of Nepal is still the lowest in South Asia.

Allocation of funds to address the perpetual energy shortage in the country is yet another bright side of the budget.  The allocation of budget for supporting projects leading to the generation of 10,000 megawatts of electricity within ten years and the expansion of transmission grids, including one linking Chilime with Keirong in Tibet, is a great strategic step towards self-sufficiency in clean energy. The initiatives to build a network of high KVA transmission lines will facilitate accessing markets for generated electricity in the future. 

In addition to the above features, the budget has also envisaged an innovative approach to bring about qualitative transformation in the field of education. Importance has been given to programmes designed for the empowerment and dignity of women. Ample consideration has been given to further instutionalise the freedom of press. Last but not least, the budget has also allocated funds attaching high priority to the development of the sports sector. For an unbiased observer, this budget has succeeded to encapsulate the dream of the Nepalese people for a prosperous and peaceful future. 

The opposition parties have been criticising this budget as populist, distributive and highly fragmented to be able to keep itself within the agreed national framework of development priorities. These criticisms are, however, against the general sentiment of the society. The widespread support it has received shows that this budget is not populist but immensely popular.

 

Poplar accessibility

The senior citizens have taken out celebration rallies in welcoming the budget. The employees, media persons, farmers, marginalised groups and business community have hailed it as a ground breaking initiative. These are sound enough signals of the practicality of the budget. The opposition should, therefore, think that the soundness of economic policies are not always achieved by religiously following the script of classical economics but by being able to adapt these principles with the objective realities reflected in popular acceptability.

 

 

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