Pinching pennies

November 22, 2017 02:00 AM

Capital expenditure 

The folly of low capital spending for most of the year followed by a mad rush to spend all that remains at year-end is being repeated this fiscal, too. In the first four months of this fiscal, the government has been able to spend a woeful 6.25 percent of capital budget, which, though an improvement on 5 percent expenditure for comparable period last year, is hardly promising. Interestingly, the government this year had brought the budget on time and it had also cut short the lengthy project approval process—and yet the spending is so poor. Contrast this with recurrent expenses, which are used to pay salaries of lawmakers and bureaucrats, among other things, which is already 22.74 percent of the total budgeted amount. We are most certainly not suggesting that civil servants should not get their salaries on time. But, clearly, the disparity in capital and recurrent expenditures is as strong an indication as any of the misplaced priorities, and the self-serving nature, of our planners and policymakers. If they spend evenly all-year-round, then their chance of misusing government coffers is drastically cut—and hence the year-end rush to complete outstanding projects.   

When questioned, senior government officials make all kinds of excuses for poor capital spending. In 2015, it was the earthquakes and the blockade. In 2016, too, the blockade was blamed, coupled with lack of progress on post-quake reconstruction. But what explains the poor outlay in 2017? Elections, perhaps? The real culprit is corruption and the lethargic ways of our bureaucrats. Talk to the folks at the Investment Board of Nepal, for instance, and they will tell you how our bureaucrats have become masters at delaying projects—for the want of the right paperwork, or because they don’t stand to personally profit. Countless investors have run back home after being stymied in the projects they were supporting. This is not how a 21st-century bureaucracy works. And this is not the way to boost our anemic economic growth. The growth forecast at the start of the year was around 7 percent, and it has been steadily declining. This is large because there has been zero political commitment to push through vital projects. The attention of the political class has been firmly on the three tiers of elections, to the exclusion of all the other important duties.  

What is the way out then? Perhaps there could be a system that rewards the politicians and bureaucrats who are good at timely and judicious capital spending. But there should also be a concomitant system to punish the civil servants who shun work or needlessly sit on important files for months on end. More than that, things won’t improve until and unless the country’s political leadership can demonstrate the political will and long-term vision for development. This is why, in the upcoming elections, people should only vote for those candidates who have solid record of public service, or for new candidates who offer a credible way out of the current state of inaction and inertia.

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