Comments on Budget for FY 2009 (2066)

Siddhi B. Ranjitkar

On July 13, 2009, Finance Minister of Prime Minister Madhav Nepal defeated in two constituencies but successfully rebounded back to power tricking Chairman Jhalanath Khanal winner in the two elections but made inept to be Prime Minister to tear down the elected government and make him the Prime Minister. The Finance Minister has started reading out the budget one and a half hour late without apologizing to the members of the parliament and to the TV viewers for one-and-a-half hour delay in presenting the budget for the fiscal year 2009 (2066). So, we can imagine what sort of the budget prepared by such a Finance Minister and supervised by such an unscrupulous politician will be.

First of all, the Finance Minister has included the then-Deputy Prime Minster Madhav Nepal’s programs called “nine s” and “build your village yourselves” in the budget of the Federal Democratic Republic of Nepal. In 1994, then-Deputy Prime Minister Madhav Nepal had implemented these two programs causing tremendous resource losses. He himself had participated in digging a rural track on TV cameras. At that time it had just reminded me the program called “back to village campaign” launched by the then Panchayat regime causing huge resource losses. Initially, every state employee needed to go to a village and work there for fifteen days following this so-called national campaign. Later on, it was reduced to three days. The programs called “nine s” and “build your village yourself” did not differ much in the implementation and the results thereof from it. So, Prime Minister Madhav Nepal and his Finance Minister have been repeating the same past mistakes.

The minister duo is committing another grave mistake in the budget putting back the subsidy on fertilizers. Never in the past has the subsidy on fertilizers had either increased the agricultural products and productivity or had benefited the farmers except for some wealthy farmers. The beneficiaries had been the Ministers and other officials involved in the fertilizer business and certainly the smugglers as the fertilizers in Nepal became cheaper than in the neighboring countries. So, it is intriguing why the coalition government of twenty-one and a half political parties has decided to go back to introducing the subsidy on fertilizers.

The current government has allocated one billion and 500 million rupees for the subsidy on fertilizers. Surely, the government is going to waste one billion and 500 million rupees of the Nepalese taxpayers’ money in the fiscal year 2009. The government will not be able to import the required quantity of fertilizers and the results will be acute shortage of fertilizers. Who authorized this government often dubbed as an unconstitutional by the Maoists to reinstate the subsidy on fertilizers? The parliamentarians need to stop the government from wasting the taxpayers’ money if they are really representing the people.

About ten years ago, the then-government had scrap the subsidy on fertilizers. The international community had put tremendous pressure on the then-one government after another for discarding the subsidy on fertilizers, as it had been a great financial burden on the government, and its impact on the agriculture negative.

The government has targeted to produce 25,000 MW in 20 years when the life of the current government is counted in months not even a year. When the Maoist government had put forward the idea of producing 10,000 MW in 10 years; the whole world had laughed at them. Now, the government of Madhav Nepal has surpassed even the incredible Maoists. It is not a surprise that Nepalis have been living in darkness for so many years because of such eccentric politicians running the administration. If such politicians continue to make fun of targeting unrealistic projects Nepalis will need to live without electricity in the next winter, too, as even in this rainy reason Nepalis have been living in darkness for two hours daily at night.

Nepalis would not need to live in darkness if the CPM-UML leaders including Madhav Nepal had agreed on building a 200 MW diesel plant proposed by the then-Maoist government to mitigate the power shortage. Saying the power generated by a diesel plant will be too expensive, the so-called pragmatic leaders of the CPN-UML had sent a letter to the Maoist government opposing its plan on building a diesel plant, which is for supplementing the power to reduce or even end the power cut at that time. They had either not understood the opportunity cost Nepalis had to pay for not having power at any cost or they simply wanted to stop the Maoists doing anything good for the people, as the Maoist always used to complain about them while the Maoists were in government.

Another funny thing the current government is going to do is to scratch hills for building a fast track between Kathmandu and Nizgad. The Finance Minister has said that quite a long time has been taken for negotiating with the companies for building a fast track between Kathmandu and Nizgad but nothing has happened so far; so, the government will launch the building of nationally prestigious fast track on its own and has allocated 252.3 millions rupees (to the multi-billion dollars project); the Nepali Army will start digging the road on July 16, 2009. If the Finance Minister is serious then the Nepali Army must have started digging the fast track.

This is a wet season and mid monsoon, rains will not allow to work in fields. Everybody avoids fieldwork except for the farmers in this season. The government cannot finish the fast track just simply the army men scratching the hills; you need a highly expensive tunnel to build it if you are really serious about it. President of Federation of Nepal Chambers of Commerce (FNCCI) Kush Kumar Joshi has said that the FNCCI in cooperation with the non-resident Nepalis have proposed to build the fast track but the government has not responded it.

The current government’s plan on building a fast track between Kathmandu and Nizgad reminds me the then-government’s plan on building the east-west highway on its own in mid sixties. At that time without knowing the scale and size of the east-west highway, we students had responded the call of the then-government for donating a few dollars worth of foreign money to buy a bulldozer that had never used for building the highway. We have seen that not a single donor has built the east-west highway but a number of donors had done the job for the Nepal government.

In the budget speech, the Finance Minister has said that the government is going to distribute “state-benefit cards” to the people living below the poverty line for providing them with cheap goods and services and some even gratis. In the past also the government has attempted to issue such poverty identification cards but the concerned government agency needed to issue such cards indiscriminately to all under the pressure of the political leaders. So, this time, too, the CPN-UML government will certainly issue such cards to their cadres whereas the NC and Maoist cadres will oppose it. The poor will remain not served for anything they are made entitled by the Finance Minister. The culture of the Nepalese government officials and politicians has been to enjoy maximum possible benefits in the name of the poor.

The Finance Minister has said that the government will rehabilitate the people displaced during the conflict, and provide them with compensation for their property seized and damaged during the conflict between the state and the Maoists. The NC leaders and CPN-UML leaders have strongly objected when the Maoist government proposed the paying of compensation for the property seized during the conflict saying the government should not use the taxpayers’ money for the property seized by the Maoists. However, the government of the same leaders who had once opposed the scheme has proposed the same scheme for paying compensation for the property seized and damaged by the Maoists using the taxpayers’ money. Are these leaders sincere in their saying and doing, too?

The Finance Minister has allocated Rs 100 millions for the mobilization of the youth volunteers for deploying them in every village to provide the local people with the technical assistance for small infrastructure development, health service, literacy, peace, social harmony and other programs concerning the creation of awareness. This program will bring conflict between the youth force of the CPN-UML and the Taruna dal of the NC as both the youth organizations will attempt to get maximum benefits for themselves from it whereas the YCL of the UCPN-Maoist will also claim a major share in it. In such a case, will the local people benefit from such a program?

In the 161 paragraph of the budget speech, the Finance Minister has said that the government will build one thousand modern homes each in Siraha, Saptari, and Kapilbastu under the “People’s Residence Program” for the underprivileged people. The government has allocated Rs 300 million for three thousand homes to be built for three thousand families. It is hard to believe that what sorts of these modern houses will be built at the cost of Rs 100,000 each at the current prices of construction materials. This program is fishy.

The proposed capital grants to the private slaughterhouses in Kathmandu and to fish-cold stores made in the budget will be only the means of wasting the taxpayers’ money for benefiting some people.

Some positive aspects of the budget for FY 2009

In the 132 paragraph of the budget speech, the Finance Minister has said that the government will end the syndicate system of the public transport and let the public transport run on the full-scale competition. The syndicate system of the public transport has been a nuisance to the Nepalese household economy, as the transporters have been charging the high transport fares set by the transporters themselves. The syndicate does not allow other transporters other than its members to run public transport. So, Nepalis have been paying high prices for transportation of goods. One of the reasons for the high prices of all goods in Nepal is the high price of transportation charged by the members of the syndicate. However, the government will need to face the wrath of the syndicate members, as they may protest against the government ending the syndicate of transporters.

In the 133 paragraph of the budget speech, the Finance Minister has said that the government will formulate a bill on making the business companies registered in Nepal possible to invest in other countries on certain conditions.

In the 134 paragraph of the budget speech, the Finance Minister has said that the government will issue special identity cards to non-resident Nepalis and encourage them in using their skills and capital in the economical and social development of Nepal safeguarding their rights and benefits.

The government will issue seen billion rupees worth of “foreign employment bonds” for enabling the Nepalis working in other countries to buy such bonds at the exchanged rates of currencies set by the central bank called Nepal Rastra Bank so that Nepalis working abroad will not have the problem of sending the money home. Nepalis can buy such bonds at the Nepalese embassies in South Korea, Malaysia, United Arab Emirates, Saudi Arabia and Qatar.

The government will remove the illegally built temporary shelters on the riverbanks of the Kathmandu urban areas, will identify the homeless people living there and make an appropriate arrangement for them.

The government will ensure the rights of the consumers to receive goods and services at competitive prices taking actions against the alliance of business companies or groups formed to control production, competition and prices of goods and services.

The government will make the education quality-oriented, skill-oriented and occupation-oriented, and make all Nepalis children possible to receive primary education in their mother tongues, and will gradually provide all Nepalis children with free education up to 10 grade.

The government will impose a mandatory third-party insurance on all the public and private vehicles for providing the family of a person died in a road accident with the compensation of Rs 500,000 making effective on August 15, 2009.

In the 258 paragraph of the budget speech, the Finance Minister has said that the government will adopt the policy of zero-tolerance of corruption. The irony is that it has been possible for Madhav Nepal to be a Prime Minister only after the ceremonial President has corrupted the Interim Constitution of Nepal of 2007.

The government has allocated two billion rupees for repairing roads in the fiscal year 2009. However, the government needs to do away with the current wrong practice of repairing the roads in the last month of the fiscal year not to waste the money allocated to the repair of roads. Currently, if you are in Kathmandu you will see the roads are repaired disregarding the rains just to finish off the budget of the fiscal year 2008, which has ended on July 15, 2009. This practice of repairing roads at the end of a fiscal year is not in the interest of anybody but in the interest of the concerned minister and the officials. Nobody has time to check the volume of work done and the prices and quality of work done. So, in the beginning of the next fiscal year, commuters find the road with potholes again and then need to wait for a fiscal year end to get those potholes filled.

The current government has relapsed into the bad working habits of the governments of the previous regime that Nepalis had removed in 1990. The then governments used to distribute the taxpayers’ money to the local agencies made of their people and relatives. Similarly, the current government is throwing out billions of rupees to the local agencies in different names. In absence of elected local governments, none can anticipate that such money will be spent on achieving the intended objectives. The political cadres will get fattened from this budget and political parties will amass money for spending on the elections to be held after the writing of a new constitution. So, this budget is a political budget with a high-sounding target of building power plants for 25,000 MW in the next two decades until then whether the NC and CPN-UML will survive or not.

July 18, 2009.

Note: the government needs to stop the bad habit of mentioning two calendar years for a single fiscal year. The fiscal year 2009 starts on July 16, 2009 and ends on July 15, 2010.