--By Sanjeev Sharma

 

Nepal is preparing to elect Constituent Assembly (CA) members for the second time. Though political analysts are skeptic about the ability of this CA to deliver new constitution, economists have claimed that this CA election will boost the national economy. 

 

Financial experts have claimed that CA election will spur the national economy. Government and non-government officials have claimed that the national economy will benefit from the expenditure made by the government, political and non-political organizations and electoral candidates.

 

  “The expenditures in election can be taken as investment in the country’s economy,” says Finance Minister Shanker Prasad Koirala. He said that the upcoming election will boost economic activities of political parties and help to flow their savings in the market.

 

 “The money being used in the election process will ultimately go to the private sector,” said Koirala adding, “The election process is also likely to increase the recurrent expenditure and that will positively impact Nepal’s economy.” 

 

However Koirala noted that the election process is unlikely to boost the capital expenditure citing that most of the government funded projects are halted for the time being. 

 

Dr Chiranjivi Nepal, Economic Advisor at the Ministry of Finance, also expressed similar views. “Injecting extra money into the market, increase in demand and supply of goods and services will lead to increase in domestic production,” he said.  However, Dr Nepal also cautioned of rise in inflation as more money is being poured into the market. 

 

Election campaign expenditures of election candidates is another contributor in spurring the local economy. Aggressive electoral campaign of CA candidates have shown significant activities in the service sector that includes businesses such as hotels/restaurants, airlines and transport services. The campaigns have also considerably raised the print business in the recent days along with the increase in the supply of paper, utensils and printing materials. The Election Commission (EC) has capped the campaigning expenditure of a candidate in each constituency at Rs 1 million. With 240 constituencies, the total campaigning expenses is estimated to be around Rs 240 million, even if it is assumed that only a single candidate is contending.  

 

Expenditures are high also on the government’s end. The government has allocated Rs 16 billion budget for entire CA election process in the current fiscal budget. The first CA election held on April 10, 2008 saw a disbursement of Rs 6 billion from the government fund. According to the Election Commission of Nepal (EC), the expenditure also includes hiring of temporary security personnel to assist in the elections. On October 22, the government recruited 45,000 temporary police personnel for a 45-day time period. This temporary employment will also boost the domestic economy.