Sunday, 14 July, 2024

Boost Capital Spending

It is disheartening to note that the spending of capital budget was not satisfactory in the first six months of the current fiscal year. Learning from the past, the government had improved the budget implementation procedures to boost capital expenditure. However, no remarkable progress was made during the review period. As per the daily budgetary report of the Financial Comptroller General Office under the Ministry of Finance, the capital expenditure stood at only 16.20 per cent by January 14 this year as compared to 17.68 per cent in the same period last year. Of the total of Rs. 345.52 billion allocated under capital expenditure, only Rs. 58.39 billion was spent during the first six months, starting from July 17, 2019 to January 14, 2020. Similarly, out of a total of Rs. 943.01 billion allocated, the government’s recurrent expenditure reached 32.83 per cent during the review period. It may be recalled here that the recurrent expenditure was 35.08 per cent during the same period last year.

The government had unveiled a total budget of Rs. 1,532.96 billion for the current fiscal year in May last year. But only Rs. 400.89 billion (26.1 per cent of the total budget) was spent during the review period. This shows that the performance of the different government bodies was not so encouraging. Economists often point out a weak project preparation, lack of effective project monitoring and various obstacles in project implementation as the main factors behind the low capital expenditure. The sluggish pace of work in the national pride projects as well as other projects could also be another reason behind the poor capital expenditure. The government came up with a few measures ranging from signing contracts with the relevant authorities and officials to revising policies to increase capital expenditure. To simplify the process of spending capital budget, the Public Procurement Act has already been amended. There has been a tendency among the government offices to spend a major chunk of the budget in the last month of the fiscal year. However, the Finance Committee has discouraged this trend in a bid to check misuse of the budget. As per the direction of the parliamentary panel, the public offices cannot spend more than 10 per cent of the total capital budget in the final month of the FY.

The government must put in efforts to hold the authorities and officials concerned accountable. There should be provisions of reward and punishment in the laws. Such provisions must be enforced accordingly. Being a developing nation, Nepal has been unable to set aside more capital budget. And its low spending clearly indicates that we hardly have major physical infrastructures. Keeping this in mind, Prime Minister KP Sharma Oli has laid much focus on increasing the capital budget and its spending as the nation is moving ahead with the motto of “Prosperous Nepal, Happy Nepali”. Such an important national commitment will be translated into reality only when the capital budget is spent properly as scheduled. There should be effective coordination and cooperation among the elected representatives, bureaucrats and contractors for carrying out development projects in time.