By DR. TILAK RAWAL

When I remember what I had written about the forthcoming budget –Dr Ram Sharan Mahat is not expected to move mountains- a couple of days before it was read in the reinstated parliament, I do not get frustrated mainly because of minimal gap between my expectation and realization. Frankly, anyone with some knowledge of the conflict-torn economy would not expect miracles from Dr. Mahat who took charge of managing almost-empty state coffers about two months before the budget was made public. Like budgets in the past, this budget is here to run day-to-day state affairs and is little bit different in the sense that it has attempted to provide some solution to the conflict-born issues including rehabilitation of displaced people and rebuilding of destroyed infrastructures. The budget with a total outlay of Rs 144 billion, an increase of about 28 percent over the last year’s figure, does not look ambitious and difficult to implement at a time when normalcy seems to be returning and there is so much demand for resources almost for every thing. Increased allocations for social sector and doubling of resources for economically dormant village committees are encouraging. As confessed in the document itself, the successful implementation of the budget, however, is contingent upon prevalence of peace in the country. It will not at all be difficult to spend Rs 44 billion set aside under capital outlays head and also garner around Rs 40 billion from foreigners – as loans and grants – who are expected to be generous with resources in the changed democratic environment, hopefully stable also. Based on certain premise, the budget is definitely optimistic in various projections. The expectation that the economy would grow by 5 percent may not be a wishful thinking notwithstanding the fact that our economy’s performance in the last five years was very disappointing, registering a growth of around 2 percent in most years and even contracting in one. With stable environment in the offing, however, Nepal could seriously think about walking the path that would help the nation reach the “middle income country” status in not too distant future.

In our case at the moment, more than anything else the growth propeller is peace/stability. Dr. Mahat may, therefore, wish to make sure that this important aspect is given due consideration while garnering and allocating resources. In the past years, economy stagnated and inflation remained low but now inflation is on the rise, about 9 percent, while the economy is yet to come out of the mess, which has made the life of common people all the more miserable. Still more threatening on the inflation front is the unabated rise in prices of crude oil on the global market and the need at home for making unproductive expenditures for holding elections to the constituent assembly and thereafter parliamentary polls. We can simply wish Nepal Rastra Bank luck in trying to contain inflation at 6 percent as declared in its recent monetary policy announcement. Getting the economy out of stagflation, rising prices and stagnating economy, is the challenge confronting Dr. Mahat and his team. I personally feel that there is no need to critically scrutinize the budget from different angles e.g. gap between commitment and disbursement: ability to generate resources, internally and externally, and ability to achieve the targeted growth because like budgets in the past, this one is bound to have usual gaps between estimates, revised estimates and actual under different heads. Judged from fiscal discipline, strategic resource allocation and operational efficiency angles, what was said about budgets earlier can be said also about this budget brought out in a very challenging and difficult time after the momentous political change.

The annual ritual of presenting the budget and commenting on it having been more or less performed, it is now time to think about issues that warrant urgent attention of present government and political forces of this country. Mention worthy here would be my urging before the budget that Dr. Mahat may kindly wish to assure devastated Nepalis, preferably in consultation with the CPN (Maoist), that they will have the freedom to indulge in economic pursuits of their choice in a fearless environment and that nobody’s property will be taken away illegally. On these important issues, the budget has remained more or less silent nor have the Maoists been specific in their public deliberations on these issues. Further, it is equally perplexing to hear that the Maoists have decided to return the confiscated property of party workers only. A question one is tempted to ask in this context is- what about politically inactive people whose property is also confiscated? Why should they be discriminated against by the Maoists? Learned men in the party need not be told that unless people are given an opportunity to engage themselves in economic activities freely, prosperity of a nation is not possible. Lessons can be learnt from China which has leapfrogged many nations to become the fourth largest economy in the world today. What China has achieved today in terms of economic prosperity is the result of economic reform program that the country embarked upon some twenty five years ago. In the past, China had nothing substantial to offer to its people except preaching of Mao Another glaring example would be India, already recognized as a global economic power, where the impressive growth of the economy is attributed to the creation of an environment in which Indians and foreigners alike could be engaged in productive activities without any fear or uncalled for intimidation. Through reform only, which facilitated creation of a liberal economic environment, was India able to get the economy out of the stagnating growth rates popularly known as the Hindu Rate of Growth. These two countries have created enough wealth for them to launch social distribution programs in a meaningful manner basically to address still very serious problems of rural poverty there. In our case, however, if there is anything that can be distributed in an egalitarian manner, it is rampant poverty. Even if there are assets to be distributed socially, it has to be done by enacting progressive laws and not taken away forcibly. This is essential to stop the flight of capital from this poor nation and to bring in investment from outside.

Understanding that peace is the prelude to growth and development and assuming that it is going to be further consolidated in times to come, it is time for us to look into the future and think in terms of generating resources, mostly from external sources, required for long term sustainable development of Nepal. Mobilized resources should be spent giving priority to reconstruction of destroyed physical as well as social infrastructures and on building new ones giving priority to relatively underdeveloped regions of Nepal . Equally important is the need to create employment opportunities and an overall environment for gainful engagement of rural mass, which can pave way for stability and sustainable development of rural Nepal . We have to learn lessons from our failure in the past to take advantage of relief programs, debt and poverty related programs, launched by multilateral and bilateral agencies and waste no time in converting into tangible assistance the sympathy and assurance showered upon us by donors who desperately want stability in Nepal . May be we should not compete with African nations in attracting the attention of donors pursuing Africa-centric policy/ programs but we can always build strong cases for them to pay a reasonable level of attention to us. Everybody wants stability, a prerequisite to development, in Nepal . Initial hiccups are bound to surface in negotiating peace deal here as they have in other conflict-hit areas of Africa, Europe and Asia but important thing for us is to make sure that these differences do not culminate into full fledge war as has been the case in Sri Lanka where a huge sum pledged by donors has not been delivered due to want of peace. Let us hope that the Maoist’s objection over the government letter sent to UN on decommissioning of arms is tactfully handled without hurting the prospects of much awaited permanent peace. Uncertainty is there but it can be hoped that it does not engulf the nation and the economy permanently. Maoists definitely have no small a contribution to make on this front.

(Dr. Rawal is former governor of Nepal Rastra Bank)