In their first ever budget speech, the Maoists promise to build the infrastructures and propel the economic growth that they mercilessly destroyed and pushed back in the name of revolution during the decade-long insurgency
By Prem Khanal
the Kathmandu Post
The first fiscal-year budget of the Democratic Republic of Nepal unveiled yesterday by the Maoists-led government was extraordinarily ambitious both in mobilization of resources and in expenditures.
The budget for fiscal year 2008/09, which vows to start building a solid platform for putting the economy onto a double-digit growth track in two years, proposes to spend Rs 236 billion – almost Rs 647 million per day. However, experts say that the budget, which plans to raise expenditure by 45 percent in a single year, lacks concrete plans for improving the poor capacity for implementation of development projects, a key factor in the low absorption of allocated budgetary amounts.
Similar is the story on the resource mobilization front. The budget plans to raise the revenue growth rate to 32 percent from last year’s 21 percent and mobilize Rs 141.7 billion. According to a highly placed government source, the premise of the targeted growth is that a massive soon-to-be-launched campaign to plug existing revenue leakages will be fruitful. The budget has also proposed to restrict the sale of liquor from ordinary groceries and has fixed sales hours and age limits for consumers.
Presenting the budget for fiscal year 2008/09, Finance Minister Dr. Baburam Bhattarai, whose party has a revolutionary history, offered a number of new grassroots-centric programmes, probably to reward core supporters who voted the Maoists to power. These programmes prompt public-private partnership for large projects and cooperatives for rural projects.
“At a time when there is an urgent need to lure huge investments from the private sector; the budget seems more inclined towards government agencies and cooperatives,” said Binod Kumar Choudhary, president of the Confederation of Nepalese Industries.
The budget has proposed to constitute Local Literacy Volunteers in each ward of each Village Development Committees through the recruitment of a total of 35,000 youths, and the cost of the program has been estimated at one billion rupees.
In an indication of a reversal of the country’s long-running privatization policy, the budget has allocated Rs 300 million to bring closed state-owned enterprises back into operation under public-private partnership. In order to ensure a conducive industrial environment, the budget has also assured uninterrupted power supply to the industrial sector, but remains silent on how such arrangements are to be implemented.
The budget also proposed to raise the monthly salaries of government employees by a flat amount of Rs 2,000, much less than what the employees have demanded.
In line with the country’s desperate need to establish road connectivity with the rural sector and kick-start development there, the budget has announced a whopping 77 percent increment in investment in the transport sector to almost 14 billion rupees. However, there is huge mismatch between the nature of the projects and the budgets allocated. For instance the budget has allocated just Rs 150 million for the construction of an east-west electric railway in the Terai. Similarly, the earmarking of Rs 125 million for construction of north-south highways is another example.
The budget has also proposed to provide a bank guarantee for the purchase of two large aircraft for ailing Nepal Airlines Corporation, something that has long been demanded by tourism entrepreneurs.
The establishment of a high-level power sector development board under the chairmanship of the prime minister to achieve the Maoist target of producing 10,000 MW of hydropower in the next 10 years is another feature of the budget.
With Rs 38.98 billion earmarked for it, the education sector continues to be the largest absorber of budgetary resources. Free of cost education up to grade 8, gradual reduction and eventual phasing out of tuition fees for grades 8 to 10 to, and launching of a national campaign for the promotion of vocational education are some of the major programs of the budget.
Likewise, the health budget has also witnessed an impressive rise of 54 percent to Rs 15.5 billion while the budget for the drinking water sector also increased, to Rs 7.96 billion.
In order to promote self-employment among youths, a fund of Rs 500 million has been created along with other arrangements, and non-collateral loans of up to Rs 200,000 at concession rates have been provided for. The budget includes a range of measures against bank defaulters and also vows to take action against those who have defaulted bank loans amounting to less than Rs 500 million.