The country is under the pressure of a fragile economy and a prolonged political transition. Investment is falling, major infrastructure projects running short of budget. The business community is losing confidence and most importantly farmers already fear low harvest of major food crops. Neglecting the pressing issues of the country, the political parties, civil society, and in some cases, the media are divided on whether the government should bring a full budget in the absence of a parliament. In my view, at this critical juncture the Bhattarai-led government has to come up with a full budget, whatever compromises it has to make.
Prime Minister Dr Baburam Bhattarai, in his sanctimonious public speeches, has been making false promises of double-digit growth ever since he became finance minister in 2008. It is normal for a political leader to sell optimistic agendas, provided that they are consistent with ground realities. If PM Bhattarai is honest, given his failure to hold CA polls on Nov 22, he has to leave Baluwatar immediately and let the country have a full-fledged budget. The PM has no moral ground to urge other parties to forge consensus on full budget.
PHOTO: PRACTICE FUSION
Now let’s come to some of the things PM Bhattarai has done to distract public attention from his gross failure. In this attempt, PM Bhattarai set up an Economic Advisory Council to the Prime Minister and deployed people of questionable qualifications who have in it. Overshadowing the role of National Planning Commission (NPC), the PM made a hollow attempt at correcting the country’s economic course. His attempt might have been initially welcomed, but with time it has been proven that the council was set up just to gain public sympathy.
Forgetting the task he was assigned, he started forming different institutions that would have long-term impact in the country’s economy. For instance, he wanted to kick start the economy with the announcement of the Investment Board of Nepal (IBN). PM Bhattarai publicly announced that the country would see an inflow of foreign direct investment (FDI) worth US $ 1 billion in the first six months of the current fiscal year. The IBN, which is chaired by PM Bhattarai himself, has not even been able to kick-start the much-touted Investment Year, let alone bring US$ 1 billion in FDI.
There have been other questionable moves. On May 27, political parties were busy grappling with tough constitutional questions. People had gathered outside the CA in droves, hoping the parties would be able to settle on a constitution. But the same day PM Bhattarai was holding a cabinet meeting to hand over 14 mega projects, including five hydroelectricity projects to the IBN, pressing for their fast-track completion. Unfortunately, the office of the IBN is without sufficient human resources to analyze the projects and their cost estimations, forget implementing them. The office of IBN has developed a project development agreement (PDA) for hydropower projects above 500 MW—perhaps its only meaningful decision in over one year of its existence—which has been criticized by power-project developers currently engaged in generation of 2,400 MW power in the country.
In fact, the Bhattarai government has been neglecting the very issues that underpin the Maoist party and its agendas. Preliminary estimations of the Ministry of Agriculture Development indicate paddy output will fall by 14 percent in the fiscal year 2012/13 compared to a year earlier owing to acute shortage of fertilizers. Ironically, farmers are reeling under a fertilizer shortage when UCPN (Maoist), the party which waged a decade-long insurgency in the name of the poor and marginalized, is in power.
PM Bahttarai’s hollow rhetoric on double-digit growth is also not based on ground realities. Low business confidence due to prolonged political instability, energy crisis and lack of responsive governance, declining FDI inflow and deteriorating labor market indicate the government has failed to ensure basic investment climate, even in the much-touted Investment Year. In this climate, the cost of not bringing a full budget will be high, with adverse long term consequences for the country.
The budget is not merely a document of income and expenses. Rather it’s a politico-economic document which guides the country’s fiscal priorities. Most of the major infrastructure projects such as Kathamandu-Tarai fast Track, East-West Highway, Mid-Hill Highway among others have been running short of budget. In the absence of a complete budget, multilateral and bilateral development partners are finding it difficult to implement their projects and programs. Currently, two megaprojects on strategic bridge and road constructions, funded by World Bank and Asian Development Bank respectively, have been stalled due to the absence of a full-fledged budget.
The government, despite its caretaker status, has started making decisions that have long-term impact. More importantly, yes, there should be a common minimum economic agenda to steer the country’s development but it shouldn’t be drafted by the government which has lost the moral ground to stay in power. Bhattarai’s rhetoric is nothing more than reflection of a communist manifesto which has long gone out of use. The least he could do now is step down and allow for the passage of a full budget.
The author is a business correspondent at Republica
bhoju.poudel1@gmail.com
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