Friday, March 25, 2016

Last trimester sees surge in spending, despite ceiling

The government spends more than half the development budget of any given fiscal year in the last four months of the fiscal year, and almost 40 per cent of it in the very last month.
The average development spending in the last four months over the last three fiscal years has been 'not surprisingly' 57.42 per cent on an average, according to data from the Financial Comptroller General's Office (FCGO).
While the government's eroding capacity to spend and lack of coordination among the key stakeholders have been largely blamed for the low level of development spending, it is more a case of 'political failure', according to former chief advisor to the Finance Ministry, Keshav Acharya.
The last month of the fiscal year sees around 40 per cent of the development spending despite the ceiling, he said, adding that lack of coordination among the prime minister, the vice-chairman of the National Planning Commission (NPC), the finance minister and the ministers at the implementing ministries has been a major problem in expediting the use of the development budget, he said, adding that the spending has been particularly low when a coalition government is in power.
According to FCGO data, successive governments have been able to spend only 6.33 per cent of the development budget on an average in the first four months, whereas the second four-month period sees an average of 15.26 per cent development spending. The spending all of a sudden surges to an average of 57.42 per cent in the last trimester, the data shows. Within the last trimester also, the very last month witnesses the spending of around 40 per cent of the development budget, Acharya added.
FCGO data also shows that the total average development spending in the last three fiscal years has stood at 78.96 per cent.
Joint Financial Comptroller General Kewal Prasad Bhandari attributes the low development spending to lack of seriousness in the bureaucracy and the absence of adequate budget law. "There is no schedule for budget spending," he said, adding that the lack of a carrot and stick policy has also left the officials responsible not in any hurry to spend.
The story is going to be repeated in the current fiscal year, 2015-16 too.
According to FCGO, the government has been able to spend only 13.83 per cent of the total development budget as of yesterday. "The remaining four months will as usual see a spike in the spending," Acharya said, adding that the government, meanwhile, has the convenient excuse of the earthquake and the Indian economic blockade for not being able to spend adequately.
The government now has a challenging task of spending Rs 1.66 billion out of the development budget every single day, if it is to meet the expenditure target for the current fiscal year.
According to FCGO data, the government has been able to spend only Rs 28.88 billion, or just 13.83 per cent, of the development budget so far as of March 24. Only 108 days remain in the current fiscal year, which ends in mid-July, and the government still has to spend Rs 179.99 billion development budget. The arithmetic means the government will have to spend Rs 1.66 billion ever day to meet the target for development spending.
Dr Ram Sharan Mahat, who was finance minister in the last government, had allocated Rs 208.87 billion for development spending for the current fiscal year. However, the post-earthquake situation and the fuel shortage caused by the Indian blockade following the promulgation of the new constitution on September 20, 2015, rendered the government simply unable to spend its development funds.
Mahat last July 14 had presented a budget of Rs 819.47 billion for the current fiscal year, and the incumbent government has been able to spend only Rs 274.55 billion, or 33.50 per cent, of the total budget, according to FCGO.
The budget allocated Rs 484.27 billion for recurrent expenditures such as salary payments for civil servants, grants to local bodies and interest payment; Rs 208.88 billion for capital expenditure such as spending on civil works, purchase of land, building construction, procurement of furniture, vehicles, plants and machinery; and Rs 126.32 billion for the financing provision, which includes lending to state-owned enterprises and repayment of principal.
According to FCGO data, the government has been able to spend Rs 201.50 billion, or 41.61 per cent, under the recurrent budget, and Rs 44.15 billion or 34.95 per cent under the financing provision.
The budget has also allocated Rs 91 billion for the reconstruction of structures damaged by devastating earthquakes in April and May. But the incumbent government and the National Reconstruction Authority (NRA) are in no hurry to provide shelter to the homeless despite their plight in the winter that is going to be worse in rainy season in a month. They have already announced that the reconstruction work will only start after April 25, which will mark the first anniversary of the devastating earthquake.

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