Budget should focus onsocial spending

Bharat Mohan Adhikari, a senior leader of ruling CPN-UML, was the finance minister for nine months when CPN-UML was in power in 1995-96. He was the first finance minister of the CPN-UML. Adhikari has some words of advice for Surendra Pandey — his fellow party leader, who is heading the finance ministry and preparing budget for the fiscal year 2009-10. The budget has to be presented before the fiscal year ends, but Pandey is likely to present the budget a little later than usual due to the deadlock in the parliament.
Adhikari talks to Kuvera Chalise on what the budget’s priorities, size and focus should be.

What should be the top priority of the budget?
The guiding principle of the budget should be state, private sector and cooperatives. There should be consensus on these three pillars that can drive Nepali economy. Apart from that, the budget should focus on creating conducive environment to speed up the economic development that could bring inclusive growth. Only growth with social justice can bring peace in this country. Social network in the rural areas has to be created and strengthened.

Every government brings its own programmes making the people more confused. Should the budget bring more new programmes or give continuity to the programmes of the past governments?
It’s not necessary to impose new programmes every time. If the programmes of the past governments have given positive results, why not continue them. When I presented the budget almost one-and-a-half decades ago, I brought ‘nau-sa’ programmes to accelerate the economic activities in the rural areas. It cost government little but generated economic activities that increased rural growth. Such programmes should be continued as Nepal has more villages, where we need to generate economic activities that can fuel economic development. The tested and widely beneficial programmes should be continued.

Which programmes of the past governments you think are worth continuing?
The programmes that Dr Baburam Bhattarai brought in his budget like the opening of cooperative shops in every village should be continued. Such programmes will encourage the cooperatives, provide villagers with goods at reasonable price and curb price hike. But Dr Bhattarai’s Literacy Programme needs to be improved upon. It should be launched as a national campaign for at least three to five years, not for a short period. The Youth Self-Employment Programme could also be continued with certain changes. The Afno Gau Afai Banau programme generated lots of activities in the rural areas and has to be continued. The cooperatives have to be strengthened by amending the Acts. They should be actively involved in production and distribution. Budget should ensure social spending. Free health care for women and children will help boost social security. The budget must encourage education in the rural areas by providing free snacks and uniforms for the children from Dalit, backward and marginalised groups. Similarly, primary health care should be guaranteed.

What should be the size of the budget?
It should be around Rs 300 billion. Roughly, the capital expenditure — expenses for development activities — will be around Rs 125 billion, current expenditure will come to around Rs 150 billion, as the salaries of the employees will go up.

Economists say Rs 260-billion budget will be ideal. Revenue generation target cannot be more than last year’s and the Maoist-led government failed to spend on development, though it succeeded in meeting the ambitious-revenue target of Rs 141 billion. Can the finance minister dare to bring Rs 300-billion budget?
The government has to follow Dr Bhattarai on revenue target. Dr Bhattarai did a remarkable job on that front and proved that revenue can be generated, though he failed on development front and the government has a surplus of Rs 22 billion. He met the target of Rs 141 billion. New budget should set a target of at least Rs 183 billion. An ambitious target will encourage the bureaucracy to work more efficiently. Had I been the finance minister, I would have set up a separate mechanism to spend on development activities and sent the budget to the villages for whom it was meant.

Dr Bhattarai blamed other political parties for not being able to spend the development budget due to absence of representatives in the local bodies. What kind of mechanism can take the place of local bodies?
There should be a high level committee headed by the Prime Minister to look into the development activities. The committee should review its task every three months and submit the report to the parliament and to the people. People have every right to know what their representatives are doing for their development.

If all the committees are headed by the Prime Minister how can he do justice to them?
He has to prioritise. For example, there is no need for the PM to head the Investment Board as its focus is to lobby and bring investment in the country for mega projects. Such committees should be headed by a political figure who has a good international reputation, who can convince foreigners to invest in the country.

Talking of investment, Nepal has barely seen any investment in the recent past. How should the private sector be ecouraged to invest more?
The reason for Nepal’s poverty is low production and little investment. Policies should be framed to encourage the private sector to bring more investment and generate employment. It should be encouraged to invest in fast track roads and Tarai and Lhasa-Kathmandu railway. The budget must announce a clear policy on domestic raw material-based industries like cement and hydropower. The special economic zones, like in Panchkhal, have to be speeded up.

Despite Nepal being rich in water resources, the country is reeling under long hours of power outages? How can industries operate?
The budget should spell a clear policy on hydropower generation. It has to form a policy to attract foreign investment in mega hydel projects that need FDI. Other micro, small and medium-scale hydro projects that are under review have to be immediately finalised and Nepal Electricity Authority should enter into Power Purchase Agreement without wasting any time. There have been continuous disruption of the hydro power projects by the locals, as they feel they are being denied the ownership of their natural resources. The problem can be solved by ensuring the locals’ participation as shareholders and sharing the benefits with them by constructing schools, hospitals and roads and providing them with employment. Tehri Dam project of India is the best example how the project can benefit the locals also.

Nepal is an agricultural country and most of the Nepalis are dependent on agriculture for their livelihood but the productivity is decreasing every year and there is food scarcity. How can budget ensure food sovereignty and modernise agriculture?
The budget should give priority to land reforms, land tilling, accessibility of loan to the farmers, subsidy on fertilizers and improved seeds, apart from the irrigation facilities. The modernisation and commercialisation of agriculture is yet another aspect the budget should address in all seriousness.