Nepali Times
Economic Sense
Beyond budgets


The budget is much like the annual Machendranath Jatra. It comes, people talk about it, the chariot is built, the vest shown, and everything dismantled, to be forgotten until the next year. It's ironic that though we think the budget is a panacea for all economic ills, we treat it similarly. A great many people make their annual media appearance with opinions they likely forget before the year is up. As for the budget itself, like the feast at a jatra, the menu and recipes are predictable.

No Nepali understands why the budget speech is broadcast live on television. Well, it's a ritual like the showing of the vest. Of course, you could do like the Beed and download and read the document before the finance minister has finished his speech. But most people, whether in Nepal or the US, just don't know why there is a budget. Like election manifestoes, the budget is a wish list of unchecked grandiosity. And the outcome is usually measured in terms of the column centimetres later devoted to the Rs 150 given to a needy segment or a few millions allocated for a social cause. In this feudalistic culture, a budget is the means by which a state can extract taxes from the rich to paternalistically give to the poor. It's a return gift from those who were put into power by other people or a supplementary gift to those doled out during elections.

Readers have certainly noticed that seminars, workshops, and columns on the economy start appearing a month before the budget and disappear right after it is presented. Pow-wows are organised by venerable members of the private sector's apex bodies to provide in advance suggestions that are hardly implemented, and make comments later that find their way to the trashcan. Through this farce the budget remains a good mechanism for individuals to get favours their way.

Budgets in Nepal are isolated documents that don't dovetail with long-term economic policies or plans, or even the short-term measures that the government often brings in. There are no quarterly performance reviews, which means there is a big rush to expedite the formalities at the start of the monsoon. Of course, there are budgets that can be carried forward, but this year's budget is par for the course - it can't be. For example, national revenue targets are based on targets given to individual tax offices, which means that people who are transparent and pay their taxes are squeezed for all they've got.

It helps to think of the budget as a statement in the present continuous. It constantly talks about legislation being enacted and policies being framed, and if one compares the budgets of the last ten years, there are many issues that are regular fixtures. Cut and paste, anyone?

So what do we need? The ability to look at the economic agenda beyond the budget. A budget is nothing in isolation. It's part of a larger budgetary control mechanism that maintains the state's fiscal discipline. Economic policies aren't about annual rituals, but constantly fine-tuned long-term and mid-term policies in tune with specific goals and objectives. To bridge the equity gap we must look at the larger issue of economic resilience and plan to bring about economic opportunity that will perhaps save Nepal from another phase of war.

(11 JAN 2013 - 17 JAN 2013)