Nepal’s development dilemma entails many complex sides of economic administration. The country lacks sufficient resources to boost economic growth, jobs and social security schemes. Mostly it depends on foreign loans, aid and grants to enhance the economic sector as a whooping amount of budget goes to meet the recurrent expenditure of the state. Amidst this tight scenario, the country faces a fiscal irony – it lacks the institutional capacity to spend the development budget. Every year, the state mechanisms fail to meet the target of the development expenditure. A large portion of budget remains idle or frozen only to deal a blow to the public expectations. Many parts of country are in dire need of infrastructure development and public amities. As the development budget is not well spent, the economic cycle is disrupted with rise in unemployment, inflation, poverty and other social ills. Now the situation has become more challenging as we are practicing federalism with three-tier government –federal, provincial and local governments. Scores of political, economic and administrative rights have been devolved to seven provinces and 766 local body governments. This requires that the three-layer of governments work in close coordination to spur development through judicious allocation of resources and incomes.
Against this backdrop, the federal government has stepped up efforts to collaborate with the provincial governments to increase capital expenditure. According to this daily, Finance Minister Dr. Yuba Raj Khatiwada sought to meet economic goal through the activation of the Intergovernmental Fiscal Commission and Inter-province Council. He also held interactions with Economic Affairs ministers of provinces to this end. This is right step towards implementing the fiscal federalism as all provinces and local units need sufficient budget and its effective spending. The Intergovernmental Fiscal Commission is expected to define the economic jurisdiction of provinces while the Inter-province Council seeks to establish sound relations between the federal and provincial government. Now it has become urgent to operationalise these two vital mechanisms in order to set the federal system in motion. The Council should hold its meeting to minimise the misunderstanding between the centre and provinces. Economic Affairs Ministers of provinces should work in tandem with the Finance Ministry to increase the development budget. Even the local governments should update the status of the development expenditure in order to have accurate data on it. This year there is improvement in the capital spending compared to the last fiscal year.
The capital expenditure of the government till Sunday was 10.92 per cent, which is almost 3 per cent higher than of the same period last year. The government has earmarked Rs. 313.99 billion for the capital expenditure for the current fiscal year. While it is praiseworthy initiative on the part of the Finance Minister to mobilise the constitutional instruments to increase the development spending, the stress should also be given to the people’s participation in the development works so as to ensure transparency, integrity and inclusiveness. At the same time, development projects should be effectively monitored to check possible irregularities.