The annual budget is a signal of government priorities. Prior to the budget, the government had already announced that the upcoming fiscal would be a 'reconstruction year'. So the budget unveiled by Finance Minister Ram Saran Mahat on July 15th was clearly prepared with the goal of rebuilding lost infrastructure; not only rebuilding, but Building Back Better. The designated agency for this vast undertaking, estimated to cost US $6.7 billion (Rs 670 billion), is the National Reconstruction Authority, a special government body set up to expedite reconstruction activities by bypassing the sluggish bureaucratic channels. But the long delay in the appointment of its CEO and other key officials is a sign that timely reconstruction, in sharp contrast to the repeated assurances of the prime minister and his minister of finance, is not a government priority. Finance Minister Mahat, during his budget speech, gave no indication of when the authority will get its office-bearers. He instead raised a troubling prospect. Until the authority takes shape, he said, line ministries will carry out all reconstruction activities. Of the Rs 91 billion set aside for reconstruction, the line ministries will initially be given a tranche of Rs 17 billion, with the remaining Rs 74 billion to be spent by the new authority.It is clear that the longer the appointments take, the more power the line ministries will have over how the pot of Rs 91 billion (and possibly much more) will be spent. This defeats the purpose of the autonomous reconstruction authority: we wouldn't need it if our line ministries were efficient. But since our line ministries are notoriously sluggish and opaque, the vital task of rebuilding the country, it was felt, should be entrusted with a powerful reconstruction authority that had both the political autonomy and the resources for the big job. Another big letdown in the budget was the increase in the (euphemistically named) Constituency Development Fund, from Rs 1 million to Rs 1.5 million, to be given to each directly elected lawmaker. They will get an additional Rs 2 million each to be spent in select programs. The lawmakers have complete freedom over how they use these funds, and there is zero oversight. This provision, inserted after sustained pressure from lawmakers, makes a mockery of the democratic process and rule of law.
Twelve percent (Rs 98.6 billion) of the budget has been set aside for education, while health gets five percent (Rs 41.33 billion). In education, there are some laudable programs like vocational training for 75,000 youths who will be trained to meet the needs of the modern job market. In health, the government is pursuing an ambitious but worthy goal of a 'doctor for every VDC'. The private sector should be buoyed by the decision not to increase business taxes; the senior citizens feel vindicated in the increase in their monthly allowance from Rs 500 to Rs 1,000. As is the norm with Nepali budgets, there were bits and bobs for nearly everyone, bar, for a change, the perennially jaded civil servants. Even with this budget, the target of six percent annual growth is achievable if the budgetary process is speeded up and the reconstruction authority set up on time. Size of the budget is rarely the problem in Nepal; it's the intent of its users that is really problematic.
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