It seems the government is oblivious of the current economic and social issues, such as erosion of confidence in the financial sector, need for job creation and transformation of agriculture, inflationary pressures, increasing cost of doing business, external sector vulnerability, declining quality of basic public services, corruption and, most importantly, the culture of political hooliganism. It is strange that there is no mention of the terror that organized and protected gangsters are spreading all over the country, threatening freedom of speech and the right to practice one´s vocation. There is not a word on the shameless corruption that is tarnishing Nepal´s image in the international community, corruption to the extent of sending four-wheeled boxes to Sudan in lieu of armored vehicles. No mention either of broad daylight shootings of individuals in Lazimpat and elsewhere in capital and other parts of Nepal. This is in astonishing contrast to US President Barrack Obama´s 2011 State of the Union address which he begins by talking of ´tragedy in Tucson”. Scores of unarmed civil servants have been killed; some are missing and their whereabouts not known since months, but the government has just proposed a concept of “strong people-to-people relations and effective public security for strong national unity”. Only gunmen can possibly understand the meaning of that, I couldn´t.
Not everything is frustrating, however. There is mention of good things in the policies and programs albeit without succinct analyses of the current context and clear definition of the goals that the government would like to achieve in one year. Some people may prefer to disagree, but the policy approach to correct the current financial sector anomalies is headed in the right direction. Due care should be taken while relaxing the financial disclosure provision, which has been proposed to attract people to the formal financial sector. The proposal on setting up a special institution to implement mega projects is good. It is not clear how the “people´s hydropower” program will be implemented, but the concept itself seems to be good, and no less important is the proposal for retail distribution of electricity through local bodies. This change to retail distribution modality was mooted in the past as well.
But the local bodies were least prepared for it. If it is implemented, local bodies will not only have an additional source of revenue but also enhance their capacity to increase the yield from existing sources of revenue, such as integrated land tax and business tax. The proposal for fine-tuning the Churiya Protection Program is good as it encourages ownership and dedication of the local communities. It is not clear what objective the “Model Educational Village” would have and how this concept will be implemented, but if it is done with the objective of making Nepal an international educational hub where the government provides land and invites prestigious foreign universities to set up campuses for advanced education, it will help Nepal in many ways. But in a country where “foreign at local” is looked at with contempt, how practicable will this idea be.
A small program but of great significance is the frequent exchange of visits by residents of one geographic region to another so that they get to know each other better and will not just be swayed by what their leaders say about discrimination. Programs of this nature can strengthen friendship between different communities. The proposal to set up an “Empowered Commission for Karnali Development” is good, but if it is also to be manned by political clowns just seeking positions it may become yet another dysfunctional government institution.
The proposal for exploration of natural gas is good, but it should not remain a false promise. The work must begin soon and any foreign interest should be welcome.
There are also programs that apparently add to the confusion. The statement talks about free basic health services in nine remote districts. Basic free health services in all districts were promised in the past also and it is the right direction, but why only nine now? Is it a reversal of policy? Work on the promised Bheri-Babai diversion and Sunkoshi-Kamala diversion is moving at lackluster speed and now the government promises more: Tamor-Morang, Sunkoshi-Tawa, Sunkoshi-Marin, Trishuli-Chitwan, Kali Gandaki-Tinau and Seti-Kailali. Two more Sunkoshi diversions schemes, Tamor and Seti, were never discussed in the past. Trishuli and Kaligandaki were discussed but only as some wishful thinking. Nobody knows whether they are feasible at all. High ambition is good, but without the competence it might only arouse unnecessary expectations. The best approach would have been to complete on time the projects already begun.
Barely a month ago, the government had proposed to set up an “Energy Development Bank”. The concept was generally hailed as good. However, there is now a proposal for setting up a “Hydropower Development and Investment Company”. Nepal´s private sector and local communities are ready for the implementation of midsized hydropower projects. There is technical competence and proven experience within the country. What is needed is institutional mechanism with the wherewithal to provide long-term financing for hydropower ventures. In this context the Energy Development Bank was a good concept but under a solid public-private partnership modality. The new proposal replacing that month-old concept only adds to the confusion, making one to think that the company would not only finance the ventures but also develop them on its own. If this is the case, it is certainly not a right move.
Most of the other sectoral programs are repetitions of programs announced in the past.
There are some policy indications of the government´s intention of becoming populist and distributive. It is not clear how the “Peace Campaign at People´s Initiative” would be implemented. Will it be used for distributing money in the name of peace? Why should money be given to establish co-operatives when there are already a number of good small farmers´ co-operatives and other producers´ co-operatives? Successful co-operatives need better arrangements for wholesale loans and infrastructure support, such as storage, market and processing facilities. The government can better use its resources to cater to these needs and not just dole out money to form new co-operatives. Throughout the world, co-operators´ co-operatives have been a success story and government co-operatives have only discredited the co-operatives philosophy.
It may be premature to conclude just by reading the policies and programs that the upcoming budget will be distributive and spendthrift in nature. We will have to wait and see how the government intends to implement these policies and programs through the budget. But one thing is clear. Without a broader political consensus, there will be difficulties in getting the budget through. And this is what government needs to avoid at any cost. Normally, the government´s annual policy and programs also express its intentions on offering business to the legislature-parliament. This time, the government has not announced any proposal for submitting bills or amending existing laws which are needed for improving the investment climate, preventing crime and corruption, implementing the international convention that have been ratified, and so on.
The private sector and potential investors do not want or expect much at this time. They just want that a budget is in place and gets going smoothly.
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