Budget not to address the coronavirus hit economy By Pushpa Raj Pradhan The nation is passing through a critical phase due to the coronavirus pandemic. The nation has entered into the third month of lockdown. All economic, social, educational, cultural activities have been virtually halt. The economic sector has seriously hit. In such a situation, one cannot expect excellent budget, although, the budget, presented on 28 May by Finance Minister Yubaraj Khatiwada seems unable to inject the coronavirus hit economy. The budget 2020/21 is based on hypothetical assumptions on revenue as well as expenditure sides. The targeted government revenue, foreign loan and domestic loan seem not realistic. At a time, when the size of the economy has reduced, target of 7 percent economic growth seems impossible. Accordingly, the Minister has not identified foreign loan providers as well.

NEPALI ECONOMICS

Khatiwada has aimed collecting revenue worth 889 billion 620 million rupees from the domestic market, which is challengeable as we are unaware about financial damage created by the coronavirus pandemic and also we are unable to know how long the pandemic impact will remain in the country. Still the Finance Minister is claiming for achieving 2.5 percent economic growth, contrarily to that, economic experts are assuming zero percent and even minus economic growth in the present fiscal year. At a time, when the entire globe is suffering from the pandemic, obviously, the donor countries’ economy too has been hit seriously. In such a situation, receiving foreign grant worth 60 billion 520 million rupees and foreign loan worth 299 billion 500 million rupees could be an ambitious plan. Nevertheless, Khatiwada, considering the crisis, has introduced small-sized budget, which is appreciable. Khatiwada has presented the budget worth 14 trillion, 74 billion 640 million rupees allotting 948 billion 940 million (64 percent of the total budget) rupees as general sector expenditure, whereas, 352 billion 910 million rupees as capital expenditure. This is an unhealthy structure of the budget as like in the past. The general sector expenditure is less than the domestic revenue, which means, the government spending much more in the non-productive sector than the productive sector. The government has planned to raise domestic loan to manage fund for development sector. Minister Khatiwada has announced cut-down of budget on unnecessary expenditures such as vehicle purchase, furniture fixture, administrative expenditure, travel allowances, allowances for the civil servicemen, etc. The budget, however, doesn’t speak on cut-down of allowances and facilities of the people’s representatives and those people assigned by people’s representatives as their advisors and aides, which is not justifiable. Along with introduction of federalism, the government has taken additional financial burden. Introduction of seven provinces along with 753 local bodies has become an addition financial burden for the nation. More seriously, the province governments have not been able to show their significance even in managing the ongoing pandemic crisis. Considering the size and population of the country, we don’t need the province structure and also we don’t need such a large number of local bodies. By removing or reducing these unnecessary organs, the government could save a huge amount of unproductive expenditure. The government has continued to provide special fund to the MPs to spend that in their electoral constituencies. This trend has obviously intervened the authority of local bodies as well as misuse of such fund by the MPs. This time, by showing the pandemic, the Finance Minister had the opportunity to scrap this fund, however, he is unable to do so. At a time, when the Armed Police Force has proposed for construction of around 150 Border Out Posts (BOP), the Minister has allotted fund for construction of only 39 BOPs. Protecting Nepali territory from continuous encroachment by the Indians is the prime duty of the government. However, the government has given less priority on the security issue. Establishment of National Defence University is important and the Minister has assured for it. The government has aimed at distribute land for those landless people. It sounds good but the real landless people will rarely be rewarded as fake landless people or say political workers may exploit the plan. Therefore, experts have suggested to give employment to the landless people rather than distributing land. The government has given stress on the Prime Minister Employment Programme with the fund worth 11 billion 600 million rupees. In the past, the fund was misused and real people seeking employment were not benefited from the programme. Imposing tax on fertilized import, on which, Nepal is totally relied on foreign countries, will not encourage the government goal for being self reliant on agriculture products. The Finance Minister is saying that to check smuggling of petro-products, he is compelled to impose additional tax of Rs. 10 per litre. Why the government is unable to control smuggling, it is very much shameful. The government is selling petrol at 96 rupees per litre by receiving it just at 21 rupees. When the government is taking excessive profit margin, what the society will learn! The government has increased tax on gold and silver also. What we believe that the government, instead of imposing tax on imports of gold and silver, should have encourage people to export readymade ornaments in foreign markets, including India! Sorry to state that at a time when the entire globe is heading towards the clean energy and in the near future, the nation is going to produce more electricity than the need of the country, the government has increased tax and excise duty on e-vehicles. This is against the policy of consuming domestic energy by substituting imports of petro-products saving foreign currency. To conclude, even during the crisis period the minister has introduced a budget alike in the normal situation. Even after above two months’ lockdown, the government is unable to control spread of the coronavirus pandemic. Instead, in recent days, the spread rate has increased and how long will it take to get back to the normal situation, the government is unaware. The fact is that the government is unable to estimate economic loss for the nation due to the pandemic. Economic experts believe that the budget is thus focused out from the reality. As previous fiscal years’ budgets were unable to achieve the target goals, the present budget too seems to face the same fate. Priority is given for agriculture, health, tourism, local industries, employment generation but the government has not been able to identify problem and solution in these sectors. Every year, farmers face shortage of fertilizers. Why the government cannot solve this problem, it is surprising. We talk about being self sufficient on agro-products but how to support and encourage farmers with new technology of farming, how to manage market for agro-products, these are the problems to be resolved. The government’s small initiative with good intention would boost agriculture as well as industrial sectors. However, the government has failed to develop such an environment.