Spending on Battle Against Covid Important, So Is Wooing Voters—FM’s Rs 1.65 Trillion Budget Message

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Spending on Battle Against Covid Important, So Is Wooing Voters—FM’s Rs 1.65 Trillion Budget Message

Sagar Ghimire
Kathmandu, May 30:
Minister for Finance Bishnu Prasad Paudel has introduced the budget for the upcoming fiscal year (2021/22) with a plan to spend a total of Rs 1,647.57 billion.
The budget—introduced in the form of ordinance in the absence of the parliament—ramps up spending on healthcare, plans to finance vaccination, raises social security allowances for the elderly people and salary to government employees and gives continuity to the funding of ongoing major development programs and projects.
This is the fourth budget of the current KP Oli-led government that rose to power in February 2018 after an electoral alliance of his party CPN (UML) and CPN (Maoist-Center) swept parliamentary elections in December 2017. The previous three budgets were delivered by former Finance Minister Yuba Raj Khatiwada.

Focus on fight against Covid-19
As Covid second wave rages, Finance Minister Paudel announced a spending of Rs 37.53 billion to combat the pandemic. This is in addition to Rs 122.78 billion earmarked to the Ministry of Health and Population for the health-related spending.
He said that the government will expand free test and treatment from government-owned hospitals and labs, 50 percent capital subsidy for private hospitals to install oxygen plants, procurement of ICU, HDU, ventilators and test kits among other medical equipment for the treatment of Covid-19 patients. While continuing the risk allowance for frontline staff, Finance Minister Paudel also announced the government plan to mobilize retired or interning doctors, nurses and health workers with 50 percent risk allowance and full salary in one year contract.  
To provide Covid-19 jabs to the people at free of cost, Finance Minister Paudel allocated Rs 26.75 billion for the vaccination.  
The budget delivered by the Finance Minister Paudel amid devastating second wave of coronavirus and closure of economy due to prohibitory orders imposed in many parts of the country also includes some relief measures to the private sector as well as general public and put the economy on the track of recovery.
In addition to giving continuity to ‘Business Continuity Loan Scheme’ and pledging to expand the sectors and fund under the central bank-administered refinancing facility, Finance Minister Paudel also announced a raft of tax rebates and waivers for businesses and firms.
The government set a target to achieve 6.5 percent of economic growth in the upcoming fiscal year.
 
‘Populist and Distributive’ Budget
Finance Minister Paudel shrugged off widespread pressure to not introduce the full-fledged budget through ordinance when the House dissolution case is subjudice at the Supreme Court.  In his budget, he presented his spending plan that is designed to appease and influence voters, say opposition leaders and experts.  
Baburam Bhattarai, a former Prime Minister and Chairman of Janata Samajwadi Party, is one among them. Bhattarai, who is also a former Finance Minister, came down heavily on the government for introducing the populist budget. In his tweet post, Former Prime Minister Bhattarai said that the Finance Minister read out the ‘election manifesto’ of ruling CPN (UML) as a budget speech that promises to distribute ‘lollipops’ to innocent voters. 
Dissolving the House of Representatives on May 21, the government has announced the mid-term elections for November 12 and 13.  
All types of social security allowances have been raised by 33 percent. As announced by Prime Minister Oli recently, Finance Minister Paudel increased the monthly allowance to senior citizens by Rs 1,000 to Rs 4,000.
From a scheme to offer loans to college and university students for the purchase of laptops at one percent interest to a plan of free medical treatment to journalists, the budget incorporates various populist programmes.  
“On the one hand, Finance Minister Paudel has announced setting up of the Pay Commission for the longer-term pay and perks reforms, and on the other, he has also raised the salary by Rs 2,000 per month for government employees,” Krishna Gyawali, a former government secretary, told New Business Age. “This short-term staff incentive measure is appeasingly illogical and highly unconvincing, which only justifies the allegations that, though cautiously guarded, it is still a populist and election-oriented budget,” said Gyawali, who had also worked as a joint secretary in the Ministry of Finance.   
However, the Finance Minister decided to scrap the Local Infrastructure Development Programme. The programme, commonly known as Constituency Development Fund, was drawing criticism for giving funds directly to lawmakers to be invested in their constituencies with little or no transparency and oversight on spending. The termination of the programme also comes in the wake of dissolution of the House of Representatives and announcement of mid-term elections. Despite calls to discontinue such pork barrel funding, the government, in the current fiscal year, had allocated a total of Rs 6.6 billion for the programme to distribute Rs 40 million to each lawmaker to spend money in their constituencies.
There are concerns not only in the process of introducing the budget with no parliamentary scrutiny, but also in the government’s capacity to implement it.

“The government will face immense political and systemic challenges to implement this budget not only because there is no robust institutional departure with regard to resetting the rules and routes of implementation but also because this budget is devoid of ‘political legitimacy’. The budget suffers from a likely lack of needed political support for creating a conducive implementation climate on the ground,” said Gyawali.
 
 Job Creation Targets
Creation of employment opportunities also seemed to be a priority in the budget. As thousands of workers have either lost their jobs due to the pandemic, the government plans to generate 200,000 jobs in the upcoming fiscal year through the Prime Minister Employment Programme with a plan to spend Rs 12 billion.
He also said that the government will provide skill training to 100,000 youths who have lost their jobs or returned from foreign employment. For the training on handicraft, plumbing, carpentry, vehicle and mobile repairing, beautician, Finance Minister announced a spending of Rs 400 million.  
In the budget, the government also expects 350,000 jobs creation from its partnership with the private sector. It has also set a target of creating 12,000 new jobs from its Youth Self Employment Fund.   
 

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