Development spending on downward course

Published On: June 29, 2016 01:15 AM NPT By: Rudra Pangeni  | @rudrapang

KATHMANDU, June 29:Development spending is on a downward trend over the past five years, government statistics shows.

The government has managed to spend only 28 percent of development budget till the 11th month of 2015/16, compared to 60 percent in the same period five years ago.

Capital expenditure holds great significance as it creates demand for construction materials and as well as jobs. But spending figures of the first 11 months of the current fiscal year shows that the government has failed to create demand for construction materials and create jobs despite setting ambitious spending targets.

The budget allocated for development works was nearly doubled to Rs 208 billion in the current fiscal year. The government had hoped to instigate development spending by initiating reconstruction works. It had even declared 2015/16 as 'Budget Implementation Year'. But spending figures are disappointing.

The government has managed to spend only Rs 58 billion of development budget so far. Spending hereafter is termed 'development in hurry' and effectiveness of such spending will have little or zero impact. As much as Rs 150 billion allocated for development works lying idle in government treasury.

Experts say the government missed the opportunity of creating jobs by spending the amount in infrastructure projects like roads and hydropower plants. Development spending of amount of Rs 150 billion would have added at least added Rs 300 billion in GDP, they added.

In the last fiscal year, the government had managed to spend only Rs 48 billion, or 42 percent, of the allocated Rs 116 billion.

Financial Comptroller General Rajendra Nepal admitted that spending figures till mid-June is the lowest in five years.

Financial Comptroller General Office keeps record of all government spending.  
Spending in the 12th month has shot spending to up to 75 percent in the past. “But this is not possible by any means this time around,” said Nepal.

Government officials and project managers put blame on various factors to defend their poor performance. This year, they have cited last year's earthquake and Indian blockade as the factors that affected development spending.

Infrastructure Policy Expert Surya Raj Acharya said government's performance in development spending is worsening with each passing year. “We urgently need reforms in laws and working modality. Project managers need support from all quarters. But I have found that there is no proper communication between project managers and authorities in Singhadurbar,” he said, adding: “Managers cannot take risk, fearing oversight agencies like the Commission for the Investigation of Abuse of Authority (CIAA) and parliamentary committees."

Low government spending has also discouraged private sector. Demand for construction materials was expected to go up significantly as the government had allocated sizeable fund for reconstruction works. But it did not happen.

“We had expected demand for cement to surge because of reconstruction works. But demand fell by about 20 percent this year," Pashupati Murarka, promoter of Arghakhanchi Cement Pvt Ltd, said.

Only 5,000 families have received Rs 50,000 as the first tranche of the housing grants of Rs 200,000 announced for quake-hit families so far. Other 170,000 households are still awaiting disbursement.

The government has allocated Rs 91 billion, or 43 percent of total budget, for reconstruction works in 2015/16.

“The government is also a big consumer. Its failure to implement development projects has failed to create demand for industrial products,” Murarka, who is also president of Federation of Nepalese Chamber of Commerce and Industry, said.

Leave A Comment