Low Development Spending


Once again, the government is reported to have failed to spend all the budget allocated for capital expenditure. As per the available data, the capital expenditure for the fiscal year that came to an end Saturday amounted to only around 65 per cent of the budget set aside for development works. This is far below last year’s spending of 80 per cent (actual expenditure was 60 per cent of the total) and this year’s target of 85 per cent. The government’s inability to spend the entire budget earmarked for development projects is a recurrent problem in the country. Successive governments have pledged to increase the development expenses and introduced various plans, but the ground reality has remained more or less similar; a large portion of the budget set aside for development projects goes unspent while the national economy fails to achieve the expected level of economic growth. Late announcement of budget was considered as the reason behind low absorption of development budget. To overcome this problem, the government decided to unveil the budget early so that funds could be disbursed by the time the new financial year begins. Accordingly, the government unveiled the budget for last fiscal year early. Besides, the Finance Ministry had made public an elaborate plan to shore up the national economy through aggressive implementation of development projects and maximum utilisation of available development budget. However, there is little tangible result. Out of Rs. 311 billion allocated for the capital expenditure, only Rs. 202 billion had been spent by the end of the fiscal year Saturday. This trend of low capital expenditure has a direct bearing on the growth of national economy so the government needs to trace the reasons behind this worrisome phenomenon and address them as early as possible for the economy to turn around.    

First, there are systemic problems in the selection of development projects; often they are selected with political motives, without making a thorough study and necessary preparations. So they are frequently abandoned as they are not feasible. Oftentimes the projects are discarded also because a new government comes to power which has other interests and agendas to push. So, some projects may be held back just like that despite being feasible and beneficial for the country. Second, there is excessive delay in approval and release of the budget. Nepal remains underdeveloped because the political leadership and bureaucracy don’t bother much about getting things done. They take decisions and unveil policies and programmes but they rarely monitor the progress about those decisions. The bureaucracy is rather incompetent; besides, it creates hassles in the implementation of the government programmes for fiduciary benefits rather than working wholeheartedly for their success. Finally, the contractors deliberately delay the projects as there is no provision of reward and punishment. Often there are reports that unscrupulous contactors in collusion with politicians and bureaucrats enjoy compensation benefits despite the delay in execution of the projects as the government fails to fulfil certain conditions on time. This rot is so entrenched that the routine work won’t make any difference in the dismal state of affairs. For things to improve, first the political leadership must be honest and should act with commitment for the benefit of the people. Then it should be able to command and mobilise the bureaucracy for tangible results in the real world while the contractors must be made accountable through strict enforcement of reward or punishment. Now that local level elections have been held and newly elected representatives have assumed office, it should be easier for the government to expedite development works and meet the target of capital expenditure. 


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