Friday, 24 May, 2024

Scanty Budget Spending

Once again, the government has been unable to spend the budget allocated for capital as well as recurrent expenditure. According to a news report in this daily, government expenditure in the first two months of the current fiscal year stood at a meagre 4.59 per cent, with capital expenditure being scant at 1.3 per cent. Though this is only the beginning of the new fiscal year, assessed against the saying ‘Morning shows the day’ such low spending may have an adverse impact on government’s plan to achieve a high growth rate over 8.0 per cent. The government’s inability to spend the budget, development budget in particular, is a perennial problem in Nepal. Successive governments have pledged to improve the situation and introduced various plans, but the ground reality remains more or less similar; a large portion of the budget set aside for development projects goes unspent costing a lot for the national economy.

Until some years ago, low development spending was attributed to late announcement of budget. To overcome this problem, a decision had been made to unveil the budget early so that funds could be disbursed by the time the new fiscal year began. Accordingly, the government unveils the budget one-and-a-half-months in advance. However, the spending trajectory has not budged at all. Out of the total budget of Rs. 1532.96 billion announced for the first two months of 2019/20, only Rs. 70.3 billion has been spent. The share of capital expenditure is only Rs. 5.33 billion against recurrent expenses of Rs. 63.7 billion. This trend of low capital expenditure has a direct bearing on the growth of national economy, so the government must trace the reasons behind this dismal scenario and address them effectively for the economy to thrive.

First, there are systemic problems in the selection of development projects; often they are selected with political motives, without making a thorough study and necessary preparations. So they are frequently abandoned as they are not feasible. Oftentimes the projects are discarded also because there is a change in government/ministry leadership which has other interests and agendas to push. So some projects may be held back just like that despite being feasible and beneficial for the country. Second, there is excessive delay in approval and release of the budget. Nepal remains underdeveloped because the political leadership and bureaucracy don’t act with a sense of urgency for getting things done quickly. The bureaucracy is notoriously slow; besides, it often creates hassles in the implementation of the government programmes for pecuniary benefits rather than working wholeheartedly for their success. Finally, the contractors deliberately delay the projects in absence of strict enforcement of reward and punishment. Often there are reports that unscrupulous contactors in collusion with politicians and bureaucrats enjoy compensation benefits despite the delay in execution of projects as the government fails to fulfil certain conditions on time.

This vice is so entrenched that the usual way of working won’t make any difference in the woeful state of affairs. For things to improve, first the political leadership must be upright and should act with commitment for larger benefit of the country and its citizens. Then it needs to command and mobilise the bureaucracy for tangible results in the real world while the contractors must be made accountable through strict enforcement of reward and punishment. Now that strong elected governments are in place both at the centre as well as the local levels, development works are expected to gain momentum while the capital budget should not remain unspent at the end of the fiscal year.