Old-Fashioned Budget Aims for 6 Percent Economic Growth

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Old-Fashioned Budget Aims for 6 Percent Economic Growth

Bijay Damase

May 30: Despite its call for economic reforms, most of the programmes included by the government in the budget announced for the next fiscal year (FY 2023/24) are old programmes.

The government unveiled the budget on Monday with the slogan “second phase of economic reform” but ironically has re-introduced the controversial Parliamentary Development Fund which was discarded by former Finance Minister Bishnu Poudel.

The general public was expecting the government to introduce new and production-oriented programmes at a time when the economy was in crisis.

Finance Minister Dr Prakash Sharan Mahat presented the budget which was less than the previous budget by Rs 42 billion.

Most of the programmes included in the budget of Rs 1751.31 billion are continuity of old programmes. For the current fiscal year, the government had announced a budget of Rs 1793 billion which was later downsized to Rs 1549 billion through the mid-tern review.

Finance Minister Dr Mahat has allocated Rs 1141 billion for current expenditure, Rs 302 billion for capital expenditure and Rs 307 billion for financial management. The government intends to collect revenue of Rs 1248.62 billion to meet this expenditure. Similarly, the government has set a target to raise Rs 49.94 billion from foreign grants, Rs 212.75 billion from foreign loans and Rs 240 billion from internal loans.

The budget has given top priority to agriculture, tourism and incomplete projects instead of new ones. The budget has not announced any new construction projects. There is no programme focused on job creation.

The budget has set a target of achieving economic growth of 6 percent but it has no concrete plan to achieve the growth target.

Apart from trying to give newness by giving many slogans, there is no programme in the budget to meet the aspirations of the private sector and common citizens who are on the verge of economic crisis.

Former finance minister Bishnu Paudel said that the budget could not address the issue of economic crisis.

“The budget did not cover the current problem. There is no way to solve the crisis of the economy," he said adding that there is no guarantee of resource management in the budget.

Finance Minister Mahat has revived the constituencies-focused program of federal parliamentarians, which was canceled two years ago on the grounds that the budget was misused and against the spirit of federalism. The parliamentarians have been pushing to start the 'Infrastructure Development Partnership Program' where a certain amount is allocated to each constituency and will be spent at the discretion of the MPs.

Finance Minister Mahat has allocated Rs 8.25 billion for the Parliamentary Constituency Development Fund. Under this heading, Rs 50 million will be allocated for each constituency and the money will be spent on the direct involvement of the respective MPs.

Nepali Congress MP Udaya Shumsher Rana claimed that the budget allocated for the constituencies will help expedite the infrastructure development programmes that are yet to complete.

In addition to canceling 20 government bodies, the budget mentions that institutions of similar nature will be merged with each other. This program is not new. Even in the previous budgets, government boards and institutions were announced to be scrapped, but it does not seem to have worked so far.

While the debate is going on about the legalization of marijuana, the government has announced in the budget that it will study the feasibility of marijuana cultivation in the coming year.

Dr Mahat has announced that he will make a law to open a company with an authorized capital of Rs 100. It is also said that arrangements will be made to do this work online.

Finance Minister Mahat announced that all types of incentives, allowances, overtime allowances have been cancelled for government employees. However, in the absence of incentives, there is a danger that the bureaucracy will not cooperate in the implementation of the budget brought by the government.

In the budget, it is mentioned that new vehicles and furniture and furnishings will not be purchased for government offices and public institutions, and new buildings will not be constructed except for essential ones.

Also, the government will maintain austerity measures in administrative expenses such as fuel and office supplies. It is said that foreign visits will be discouraged except for necessary visits.

Although such slogans have been put forward before, the implementation aspect is very weak. In order to control the increasing expenses incurred in the operation and management of government vehicles, it is said that officials will be given lump sum cash instead of vehicles.

The finance minister said that new structures and posts will not be created in government services, regulatory bodies and public institutions in the coming year.

"The existing structure and positions of public administration will be reviewed," Finance Minister Mahat said. He said that there is an arrangement that service contracts cannot be taken in excess of the approved number of posts.

It has also been announced in the budget statement that the old and unused vehicles and other goods in the government agencies will be auctioned within six months.

A program to establish an infrastructure fund with the participation of foreign investors has been introduced. The Minister of Finance announced that a law will be made regarding the establishment of an infrastructure fund with the participation of domestic and foreign investors to mobilize private capital in infrastructure projects.

Vishnu Aggarwal, president of the Confederation of Nepalese Industries (CNI), said that although investment incentives were expected, the budget did not address many issues. According to him, the budget has failed to encourage investment.

Former Governor of Nepal Rastra Bank, Chiranjeevi Nepal, said that it seems that the next year's budget is trying to adress the current problem. In addition, Nepal said that it seems that the agriculture sector has been given a little more priority in order to encourage a self-sufficient economy.

Former Executive Director of Nepal Rastra Bank Nar Bahadur Thapa said that there seems to be some improvement in the budget. "It seems that the government is trying to reform something in the next year's budget," he said.

Rajendra Malla, president of Nepal Chamber of Commerce, said that the budget is distributive in a country with limited resources.


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