Usable ‘full budget’

This article was originally published by Dr. Hemant Dabadi in Setopati on May 29, 2017.

The budget time is here. The Finance Minister (FM) of the country is expected to deliver his maiden budget (he was not the FM during the last budget presentation) speech on 29th May. Unlike previous years, this time around there is no furor among business tycoons and  economy pundits on what the finance minister has up his sleeve in the budget and what must be done to propel Nepal toward ‘prosperity’. In previous years, the numerous television channels and newspapers would have been awash with coverage of the impending budget speech.

Two things seem to have dampened the spirit of budget enthusiasts.

First, the country is in local election mode. The first phase of the election is over and preparations for the second phase are on. The nation is more interested in knowing who wins and who loses in the arithmetic of polls, than in the statistics of budget allocation. So,there is no desire or space for budget related arguments in the media.

Secondly, there seems to be something called an ‘election code of conduct’ that has to be ‘followed’ by the parties, candidates and the government (although this scribe subscribes to the opinion that nobody wins the election by following them) during the election period. As the code of conduct is in force, the government cannot announce new policy initiatives, programs and projects as that may affect the decision of the voters (god knows, what thing in the budget does not affect us, the voters).

Furthermore, the Prime Minister (PM) has already resigned. In the Westminster system that we have adopted, ministers are supposed to be responsible to the PM. The government, therefore, automatically becomes caretaker government as soon as the PM resigns, and it is a common practice that policies and programs with long-term implications are not taken up. In countries with the Westminster system, in situations when a caretaker government is in place, the action would have been a vote-on-account whereby, the government would be allowed to withdraw money from the national coffers for expenses that are deemed absolutely necessary.

In our current situation, the financial year’s closure is still one and half months away, and the government can withdraw money from the state coffers at this point of time based on the budget of the current fiscal year itself. Budget presentation has been necessitated by the provision in the constitution that says that the center shall present a budget on 15thJestha (29th May in 2017) each year before the joint session of federal parliament. Probably, Nepal is the only country with the Westminster system, where even a budget date is fixed in the constitution itself. In most countries, it is decided by the government of the day. Budget is unveiled on a fixed date based on convention and not even by law. The other funny part is that this 15th Jestha is also a Republic Day, a public holiday and the parliament generally does not sit on a public holiday. We also do not know what is going to happen if there is no lower house of the parliament on that day when the lower house has been dissolved and new has not yet been elected.

The framers of our constitution put this provision on the demand of the business community and pundits of the economy. In the 10 years after the people’s movement (Jana Andolan) of 2006, which led to the abolishment of monarchy and rise of the federal republic, we have had change of governments almost every year. There was rarely a year when a full-fledged normal budget would be out at the beginning of the fiscal year. Some years we had no functioning legislature and some years we had a caretaker government. So, a full-fledged budget and associated acts could not be presented and passed by the parliament. We have even witnessed three budgets in a year, a vote-on-account at the beginning (as the government was a caretaker government), a full budget after a full-fledged government and a supplementary one to meet new requirements toward the end of the fiscal year. Most of the years, we had to rely on ordinances with a maximum life span of six months. As this sort of affair was continuing every year, the businessmen and pundits demanded budget on a fixed date and our constitution makers obliged accordingly.

This year, the annual budget has to be presented by a caretaker government while also following the code of conduct of the electoral process. The FM was reported to have told the media as well as leaders of the political parties, that his budget will be a full budget but will not contain any provisions that can be considered a breach of the election code of conduct. So, the budget statement of this year will be a full budget for the entire year but sans announcement of new policy initiatives and new projects and programs. We, in Nepal, have learnt to call such budgets as ‘Kam Chalau‘ in our vernacular tongue, which loosely translates into usable or sometimes mediocre. How can there be a full-fledged budget without any new program? After all, government expenditure is a continuing process. In any given year, some programs and projects get completed and some new ones are initiated. So, how can a budget without any new program be full?

The budget in Nepal is not merely a statement of estimated income and expenditure allocation to various headings and programs. It contains a lot of announcements about the changes in policies, laws, rules, regulations and procedures. So, the budget is a promise-making exercise of the government.

Last year, the then finance minister had announced a host of policy and program intentions. If he were to be believed, bills for Foreign Investment and Technology Transfer Act, Insolvency Act, Mine Act, Petroleum Product and Natural Gas Act, Accreditation Act, Electricity Regulatory Commission Act, Energy Crisis Prevention and Amendment Act, Electricity Act & Electricity Leakage Control Act, and Employment Guarantee Bill would have been submitted to the parliament in this fiscal. But most of these bills are yet to see the light of the day in the parliament. He had also promised numerous projects to be started this fiscal year. The commencement of construction of Budhi Gandaki I reservoir-based hydro-electricity project was one of such promise. Only a few days back, the government has announced to hand over this project to a Chinese state-owned firm. Other large construction projects to be initiated this fiscal was the Kathmandu-Nijgadh Fast-track, which the government has recently handed over to the army. If he were to be believed, the fencing of Nijgadh airport would have been complete. Similarly, Industrial Center of excellence would have been established in Chitwan and the Integrated Check-post in Birgunj made operational. One can go on and on with un-kept promises and unmet targets included in the budget speech.

In last year’s budget, the then FM was announcing programs for five and ten years. At that time everybody already knew that he was there for only a few days. His coalition partners had switched side from treasury benches to the opposition in the middle of the budget session, and some of the bills associated with the budget could not be passed before the start of the fiscal year. Was he making a genuine promise or an unrealistic one?  For he knew he could always say, “I wanted, but others did not allow me.” There is a famous phrase in English “Promises are made to be broken and lies are meant to be kept.” Will our current FM go against this phrase? Will he make the budget really usable and not mediocre? Let us hope, but not count on that.