Nepali Times
ARTHA BEED
Economic Sense
Budget boredom


ARTHA BEED


When we worthy denizens of the Management Association of Nepal got together last week for our annual ritual, we naturally discussed the end of the fiscal year and the upcoming budget. Of course, the equally worthy denizens of parliament may not allow the budget session to go along its conventional, boring route, but we are traditionalists: we took as a given that Government Would Work. In between all the other fun, we heard and presented interesting papers and asked cutting questions. The finance minister also spoke-mainly to explain precisely how his hands are tied. All in all, I think we had a better time than we would at any boring old budget session.

The wonderful thing about this country is that the government can function without a budget and the budget, which works in mysterious ways, can function without the government. In preparing the budget, we stick to the old ways and magic numbers like 1.6. But perhaps it is time to be hard-nosed economists. Every year, trade bodies, business and professional associations and others go through the rigmarole of suggesting to the government what would be best for the country. This has become another public ritual and the hordes of hastily-prepared documents pile up at the finance ministry like so many dead lemmings. The ministry, pressed for time, cuts and pastes and behold! another budget speech is ready.

It might be worthwhile, given all this, to perhaps extend out economic horizons beyond the boundaries of the fiscal year. We have long-term debt repayment obligations that we ignore or forget at our own peril. As for five-year plans, those arbitrary products of mostly unsuccessful Soviet-style planning and India's confused mixed economy, they really have no utility in Nepal. As for quantitative analysis, this is a number soup that is neither understood nor expelled.

If the budget is to have any real meaning, it must stop being an exercise in doling out largesse to MPs and other cronies who inveigle themselves into development projects that are already products of political opportunism rather than economic sense. Regular expenditure is soaring and revenue increases will never keep pace. The rising budget deficits are funded by domestic and foreign borrowings: from the bread line into the debt trap. The finances of the government are no different from those of its numerous ailing corporations. Each year, expenditure balloons out of control, mainly due to personnel-related spending. Like in ailing state-owned enterprises (SOE), revenues cannot increase unless the flawed and unplanned collection system is not amended. Again like in SOEs, there is no sense of accountability.

It's time for us to grow up and examine the planning process, explore different ways of moving the grassroots to the national level. We need to think hard about what is the responsibility of the state and what is not. Which is more important for the government: investing and repeatedly bailing out ailing tobacco or airline companies, or finally building that road to Jumla? The Local Governance Act, the Agriculture Perspective Plans and the proposed Tax laws envisage decentralisation-where does this fit into the planning paradigm? What is the role of the regulatory agencies like the Securities Board in the planning and implementation process?

The list of questions is endless. I have this sneaking suspicion that discussing hot to deal with them will be nothing at all like a predictably dull and hysterical session in parliament. In fact, I think it might even be more fun that we had at the Management Association of Nepal do.

Readers can post their views at arthabeed@yahoo.com



LATEST ISSUE
638
(11 JAN 2013 - 17 JAN 2013)


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