There is no rationale for increment: Economists

KATHMANDU, May 2: Economists say it is almost impossible to pay Rs 5,000 allowance for elderly allowance immediately and Finance Minister Yuba Raj Khatiwada is silent on the matter and may have little space for increasing that much.

But Deputy Prime Minister and Minister for Defense Ishwor Pokhrel seems hell-bent on increasing allowance by whopping 150 percent to Rs 5,000. Minister Pokhrel has announced the government's plan of increasing allowance twice in this week. Speaking at a program in Bardibas on Tuesday he repeated his statement at Bardibas Sindhuli but he has not given rationale for this.

Economists say the statement either may have come to pile pressure the FM Khatiwada to do things he does not like to do or make him unpopular. Despite the clear promise of Rs 5,000 elderly allowance in the election manifesto of the ruling party, Khatiwada resorted to only announce mandatory health insurance for the people aged above 70. He was heavily criticized for not increasing the allowance in the budget tabled in May last year for the current fiscal year.

Former Finance Secretary and Economist Rameshore Khanal said that the statement is an uncommon thing when another minister is now making budget. Khanal also blamed Minister Pokhrel hatching a conspiracy to make Finance Minister unpopular and remove from post. Prime Minister KP Oli picked Khatiwada as Finance Minister, a coveted post while sideling the Minister Pokhrel to the Defense Minister. Economists also say that the Khatiwada has to face resources crunch when revenue collection has not grown as expected.

“Increasing elderly allowance to Rs 5000 is not possible in any way at the time government's revenue has dwindled,” said Khanal adding that Khatiwada has also to increase civil servant's wages, which has not increased in the last two years. “More Importantly he has to allocate more budgets for Kathmandu Tarai Expressway, Mid Hill Highway and other big projects that are in need of more budgets in the next year,” added Khanal. Such announcement of the budget and policy programs are taken as secret and not in general made public specific contents of the budget before tabling in the parliament.

The government has allocated Rs 41.15 billion for the total social security schemes for the current fiscal year increasing the allowance for elderly may at least increase the volume of social security budget by about 50 percent minimum, according to officials involved in making budget in the Ministry of Finance.

Keshav Acharya, another economist, said that increasing elderly allowance is not an issue of today and it cannot be a priority of the government in any when the life expectancy has been increasing. Life expectancy was 70.94 in 2018 and periodic plans have announced to increase to 73 in two years. “This fancy idea of increasing elderly allowance will only cut the budget of education and health as well as development projects will see resources crunch for the development projects,” added Acharya.

Acharya believes that the FM Khatiwada has a track recording of choosing rationale over any popular agenda therefore he may not choose this though others in the government wants this.

The first government of Nepal Communist Party in 1995 had announced few popular programs including elderly allowance and the party is credited for bringing this elderly allowance scheme. Khatiwada has also claimed that he was the architect behind the elderly allowance scheme at that time recently. Bharat Mohan Adhikari, erstwhile finance minister, had expressed unhappy with the statement of Khatiwada and wrote opinion pieces in newspapers claiming the idea was of no other than himself last year. Adhikari died on March 2.

Few weeks before leaving the government, previous government led by Sher Bahadur Deuba had decided to lower the eligibility age to 65 in 2018. The decision was received with heavy criticism from all quarters and incumbent government did not implement citing it is not practical.

 
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