Nepali Times: Revenue collection this quarter is 35 per cent up from last year. Is this because you started from a low base, or did you really have to crack the whip?

Baburam Bhattarai: We gave ourselves an annual revenue target of Rs 141 billion and divided it to monthly targets, which we have met. We issued strict instructions to check leakage, we replaced the old team with a new one to eliminate the entrenched bureaucratic malpractices. There was a lot of legalised corruption, we stopped that. We also announced an incentive that led to a 200 per cent increase for customs officials in salary based on performance indicators. We took that to all revenue departments. It worked well. The Revenue Investigative Department has rounded up people, even big shots. I have instructed them not to listen to anyone, in fact they have instructions to be even stricter on those who use our party sources. They are not our people, they are opportunists. They seek political patronage.

But what about the big fish, the wilful defaulters?
I am reviewing the situation of small and medium entrepreneurs affected by the conflict. If they are genuinely affected and have difficulty repaying loans, we are setting a taskforce to look at their problems. But we won't let wilful defaulters go.

There is deep despair in the business sector due to militant labour, power shortages and security. What can you say to reassure them?
We take these problems seriously. But the situation is not hopeless. And I don't think it is getting worse. When there aren't expected improvements, people naturally get worried. Regarding minimum wages for labour, we have requested entrepreneurs to implement it and after that we don't allow workers to close down industries. The cabinet will take a decision to ban strike actions soon. We will strictly enforce the law against closing down highways and against striking in essential services such as industry, heath and electricity companies.

But investors are really demoralised.
If we allow this instability to escalate it will worsen the investment atmosphere for sure. To encourage and increase investment, we have proposed an Investment Board under the chairmanship of the prime minister on which the cabinet will decide soon. Once that is up and running there will be a single window policy for foreign direct investment for mega projects and the overall investment climate will improve.

And the power crisis?
We have prepared a 35-point strategy which envisages ending or minimising load shedding within this fiscal year. For this there was no alternative but diesel to help meet the current 300MW shortfall. Therefore, we call on the private sector to set up diesel and thermal plants, solar and bio-diesel plants. Then, we have waived taxes on medium-term hydro projects to be completed in 2-3 years.

How can that happen with this instability?
We must have a minimum common understanding with all the political parties on three things. First, the geo-strategic location of our country means we are a buffer state. Instead of playing China and India against each other, we must take advantage of their proximity and be a vibrant bridge between the two fastest-growing economies. If Chinese delegates come to Nepal, India should not get agitated and when Indian delegates come to Nepal, China should also not be disturbed.

Second is the question of democracy. We have a consensus on fundamental democratic principles like multiparty competition, human rights, rule of law and so on. However, within this we have to decide on our own model of a democratic system. In my opinion, we need a consensual model within a competitive multiparty system with elections and all-party government. This alone will give us stability. A majority government and minority opposition invites instability, which is what is happening now when what we need is a political consensus.

Third common understanding should be on economic development. We want growth with justice. Big investors in power, infrastructure, tourism will stimulate growth while the small cooperative model will uplift farmers and small and medium entrepreneurs. These two approaches will bring growth with equity and alleviate poverty. If we achieve this, I believe Nepal then can make qualitative change within 10 years. If this does not happen, I see the danger of ethnic conflict that will threaten our sovereignty.

Aren't you frustrated that five months after taking office things are moving so slowly?
People had high expectations from us. It took us some time to learn as we had no administrative experience. But we have a budget, and the delays in its implementation are structural. We will start seeing results in development and delivery from next month.

But you haven't been able to spend on development.
This is true. Spending is low because the budget was delayed and the procedural formalities delayed it further. But it is also because of the absence of local bodies. Now, we have an understanding with UML that the local bodies would be set up within this month. Once that happens, development activities will pick up once they get their Rs 3 million grants.

Another reason for the delay was because the NC decided to stay in the opposition. And within the government we have to satisfy all our coalition partners. This delayed the decision-making process. Yes, there have been hold-ups but I am not frustrated and no one should be.

Isn't your own party also working at cross purposes? Your militant unions are sabotaging your own plans to be investor-friendly.
Yes, we are worried about that. But you have to understand that this is a transition. We have been through revolutionary phase and the cadres at the grassroot levels were not educated. We didn't have time to politically mould them. But there is no duality in our party line. There should not be any doubt about that. There is one policy. It is our commitment, not a tactical ploy. We want to assure the international community about that.

Is there any change in your priority for foreign aid?
We have received a commitment of Rs 39 billion for coming year, most of it as grant. We are preparing for the conference of Nepal Development Forum to be held in March in Kathmandu. A team of experts that includes the head of National Planning Commission is working out our aid policy and development parameters. We now want to move away from the term 'aid'. Aid should not increase dependency, it should create an environment for development, investment and trade. And our development partners support us in this, they want Nepal to have our own national priorities and not impose it from outside. There has to be a sense of ownership.

Outside, we see nothing but pessimism. Here inside Singha Darbar you seem to be optimistic.
I am optimistic. I call it a revolutionary optimism. We should not forget the fact that this change has come after 1,000 years. We have been through an epochal change, not just a change in government. Things will take time to
settle down.

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#433 (09 JAN 2009 - 15 JAN 2009)