Amid slowing growth and weakening private sector confidence, the government unveiled a full-fledged budget worth Rs 517.82 billion for fiscal year 2013/14 on Sunday with hefty allocations to crucial sectors like agriculture, infrastructure, energy, irrigation, education and health.
This was the first budget in three years to be announced right at the start of new fiscal year. The timely announcement and various incentives for businesspeople have boosted the confidence of the private sector. Though the budget has given continuity to most programs of the previous government, it has tried to win the confidence of private sector through the creation of a more investment-friendly climate. Shunning hard political ideologies, the budget has emphasized three pillars of the economy: Public, Private and Cooperative. [break]
Many of its targets are eye-catching, if unrealistic. The budget has a target of 5.5 percent economic growth, which will be extremely challenging given slow industrial growth, monsoon-dependent agriculture sector and ballooning trade deficit. Even achieving the target of capping inflation at 8 percent will be a tall order as rising cost of production and recurrent supply deficit of essential commodities will continue to jack up commodity prices.
The double digit rise (18 percent along with monthly allowance of Rs 1,000) in the remuneration of government employees will also drive up inflation, adding to the hardships of non-service holders. The election government has expressed its commitment to hold CA elections on time, for which it has set aside Rs 16 billion. In keeping with the past, recurrent expenditure dominates the outlay, with 68 percent of total allocation, while capital expenditure is set at 16.45 percent. Worse, the track record of weak spending in development activities will continue to pose a big challenge.
The private sector has hailed the budget, stating that it has attempted to address most of the concerns raised by business community. Indeed, this budget has tried to resolve problems of energy, poor labor relations and weak domestic industries to enhance supply capacity in international trade in order to reduce growing trade deficit. However, in the absence of political consensus in budgetary programs, this bureaucratic government can’t implement the budget even though the budget has tried to address pertinent economic and social issues.
The government has to emphasize implementation by forging consensus among major political forces. Even so, since the budget has been announced by a nonpolitical government, there is no guarantee that the future government that comes into office after the scheduled CA polls (assuming they actually take place) will be compelled to implement it.
Even in normal times, the problem has seldom been absence of good programs and policies; it is the implementation part which has proven problematic. Despite media’s repeated cautioning, practices like blacktopping roads in the middle of monsoon to spend the available budget at the eleventh hour continue unabated. In the absence of an elected government that can be held accountable by the people, the implementation part is expected to further suffer.
There is not much to fault in the new budget. But just like the proof of the pudding is in the eating, a proper assessment of the budget can only be made on the basis of its implementation, or lack thereof.
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