In fact, by announcing numerous hollow promises that are easy to pronounce but hard to implement, the budget has unnecessarily fueled the already high aspirations of the lower and middle classes - the most vulnerable groups. Most likely, the budget architects had no time to think over what will happen when the poor and middle classes find that all the ´big dreams´ were simply a means to fool them once again.
Despite the announcement of some policy reforms, the budget has grossly failed to recognize that the existing administration mechanism is not capable of executing big development projects like the construction of highways, hydropower projects and airports. The government agencies neither have competent experts for mega projects nor enthusiasm for finding any because there is hardly a difference between bureaucrats performing their duty and not performing. Not that we didn´t have resources or programs last year, yet we spent less than 80 percent of the budget earmarked for development, leaving a huge amount -totaling over ten billion rupees- unused in the state coffer.
Not that the budget has all bad things. Reintroduction of a subsidy on fertilizers to farmers is one of the few bright parts of the budget. There are hardly differing opinions that the Nepali Congress´s decision to end such a subsidy a decade ago was a mistake due to which Nepal´s agro products lost their competitiveness with Indian products, which continued to enjoy hefty state subsidies. But the problem is that the budget, which has earmarked Rs 1.50 billion for the purpose, has not put a policy in place to ensure that the subsidized fertilizer benefits real farmers and enhances the competitiveness of their agro products. Not big so-called farmers, but real farmers, need subsidized fertilizers.
Likewise, allowing Nepali businesses to invest overseas is another admirable step, for some business houses in Nepal have already gained both technical and financial potentialities to be Nepal´s multinational companies.
However, some of the programs incorporated in the budget are wonkishly heroic. For example, the budget has unveiled a program to provide state privileged identity cards for families living below the poverty line, but barely mentions what will be the methodology to identify such families. The state will have to launch a nation-wide survey to pin-point such families living below the poverty line if the government really wants such a mechanism to work. But it will be too costly and time consuming, and no programs to provide special care to the poor will come into operation as long as a clear-cut identification of such families is not in place. Likewise, the people´s residences program, which aims to build 1,000 low cost homes for Dalits in three Tarai districts, will start with a bang and end in a whimper.
Similarly, the budget has failed to take a concrete step to reform Nepal´s rigid labor law. Though, the budget has mentioned some vague steps to improve worsening industrial relations, which have caused business confidence to deteriorate alarmingly in recent years. Like past budgets, it vowed to stop industrial disruptions but remained mum on how it is going to do so. It has proposed two types of wages for industrial laborers that are increasable based on performances, but it has neither consulted with the labor unions nor with the industrialists on the proposal. It has also turned down businessmen´s long-running demand to simplify procedures to close down loss-making industrialists.
In addition, the budget has raised the income tax exemption amount for individuals and families and will raise the disposable income of the salaried group, thus enhancing their purchasing capacity. It is a good ´stimulus´ package to raise demand of goods and services in a yawning economy, but the budget doesn´t seem to have paid attention to what will happen to the already nasty 12 percent inflation when millions of rupees come into market.
The budget has spent some good words on emphasizing the need and strategies to develop hydropower in the country, but a completely hollow vow to produce 25,000 MW of power in two decades, more than double the Maoists´ target, has made it a joke.
prem@myrepublica.com
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