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What else could have been done in Budget 2078/79?

10 MIN READ

What else could have been done in Budget 2078/79?
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Citizens of Nepal have been separated into two groups since the government of Nepal announced the budget for Fiscal Year (FY) 2078/79 B.S.

One group cheers the budget because it has more to give this year, while the other slams it as a populist budget, claiming it was prepared solely for election purposes rather than practical implementation.

The budget seemed to have covered all areas and left nothing on the table. The majority of citizens agree that this budget is pleasing.

The government appears to be trying to win citizens’ hearts by raising the social security fund by 33%, raising government officials’ salaries by Rs. 2000, and investing a chunk of money in Pashupatinath temple and other sites where people’s sentiments are connected.

However, we must be appreciative of the government for prioritizing the health sector as a top priority. The health sector has been allocated a total budget of Rs. 1 Kharba Rs. 22 arba 77 crores.

The budget has waived the renewal taxes for five years if anyone wants to convert their existing internal combustion engine vehicle to an electric one. 

NRs 4 billion has been set aside for the purchase of medical equipment that hospitals will need to treat COVID-19 patients while Rs 26.5 billion has been allocated for procurement of medical goods. Furthermore, the government is also deploying retired medical personnel and medical interns, which is appreciated.

Despite the budget’s positives and a budget to “respond “to the current situation created by the crisis, there are a few downsides. The government could work further on the following areas that could help “rebound ” the economy: 

Green Growth Package: Green growth with a focus on climate change has been a need of the 21st century and 126 countries around the globe have committed to carbon neutrality, with the goal of achieving net carbon emissions by 2050.

By prioritizing green growth, the government can generate new job opportunities, new growth and new skills for citizens.

It appears that private sectors were consulted during the preparation of the budget and they have shown general support. Such consultation should be a regular forum and a permanent High-Level Public-Private Consultation forum could be established. 

There are a lot of development partners and donors providing grants and loans for green growth. Henceforth, the government could be visionary and introduce green growth packages. 

The upcoming FY’s budget has some initiations for green economic growth such as shifting to Fully Electric Vehicles by 2088 B.S. (2031 A.D.), operating 100 electric buses in Kathmandu, encouraging top vehicle companies to assemble electric vehicles in Nepal, and exempting taxes on electric vehicles.

The budget has waived the renewal taxes for five years if anyone wants to convert their existing internal combustion engine vehicle to an electric one. 

The budget restricting plastic bags to less than 40 microns from next year is another welcome move. If this is properly enforced, Nepal will make significant progress in combating plastic pollution.

Furthermore, the government could have delegated to the private sector the responsibility of converting the transportation system to electric and establishing cum managing infrastructure for charging stations.

The government should bundle the available resources with stronger policies and commitments and package it as a “Green Growth Stimulus Package” by mobilizing external funding, mostly grants so that new sectors of growth can be created.

Hope the government recognizes this need and responds with a robust green growth package either during the implementation stage of the budget or the next time around.

Quality equally important as Quantity:  The upcoming budget has committed to building 300-bedded hospitals in Kathmandu and Infectious disease hospitals in all seven provinces.

We frequently see the government putting a greater emphasis on quantity while neglecting to consider quality. This is where things go wrong and do not help the country to move to a higher level. 

The state of government hospitals all around Nepal is in miserable condition. Even the basics of the infrastructures are missing.

Not just the government hospitals but even many of the private hospitals lack good quality medical services. Due to lack of quality treatment, people are obliged to go abroad for treatment of severe diseases. Hospitals like Medanta, Apollo in India are some familiar names in Nepal. 

While opting to expand the number of hospitals, the government should have prioritized their quality and provide a “ quality benchmark”. The quality of health care and services is equally crucial in this Covid-19 era.

Therefore, the government should concentrate on providing high-quality healthcare so that we do not have to travel to India or Bangkok in quest of better treatment.

 It would also be desirable for the government to make a strong commitment to technology, the current status is “ the country is far behind ”. Adopting, adapting, and leapfrogging on the best technology choices in all sectors should be promoted.

Expansion of Public-Private Partnership: Public-Private partnership is key to a country’s development. The budget could have brought more programs to enhance public-private partnerships.

The government needs to grant freedom to the private sector in numerous areas of development where the private sector could be more efficient and effective.

Although this year’s budget included some funds as a relief package for the private sector, it could have done more by reducing spending in low-priority areas (for the time being).

The IT sector has been one of the most rapidly growing platforms, with many young people expressing an interest in it. Because Nepal’s IT sector isn’t up to the mark, the government should have delegated most of the responsibilities to the private sector.

Of course, the government will have to assist them as needed, but it should ultimately contribute to future growth. Similarly, there are also plenty of other areas where the government should give the private sector more flexibility.

It appears that private sectors were consulted during the preparation of the budget and they have shown general support. Such consultation should be a regular forum and a permanent High-Level Public-Private Consultation forum could be established. 

Appropriate Budget Allocation: Although the budget for FY 2078/79 covers all categories, it falls short of allocating adequate funds on a need basis.

The government could utilize a chunk of the budget that they have allocated in numerous development projects which may not be priority projects

Although this year’s budget included some funds as a relief package for the private sector, it could have done more by reducing spending in low-priority areas (for the time being).

The government has allocated Rs. 10.3 billion allocated to railways, Rs. 20.31 billion for construction and strengthening the infrastructure of four international airports and other domestic airports, Rs 2.34 billion allocated for ring road expansion and improvement, and Flyover construction at Gwarko, Satdobato, and Ekantakuna chowks. Similarly, the government increased the budget in the sports sector to Rs 2.74 billion.

True, running development projects is equally vital, but given the current circumstances, where enterprises are shutting down due to lockdown and economic crisis, the government should have allotted a bit less money for these places and spent more on relief programs.

The more effectively the budget is implemented, the more the country develops and grows. As a result, the government must take the necessary steps to reinforce the implementation of the budget, plans, and policies in order to ensure a brighter future.

By allocating the budget more appropriately and on needy sectors, the government could’ve brought more effective stimulus packages for the needy.

Moreover, the budget allocation paints a picture of the “ Implementation Challenge ”. It’s more of a populist budget than a budget that can be implemented. This, therefore, possesses a risk of budget freezing. 

Implementation and Execution: Yes, it is just as important to spend a budget as it is to allocate it, particularly when it comes to capital expenditures.

The government announces a budget using taxpayer funds but fails to produce and implement the budget as planned. This has been a consistent problem in Nepal. 

To ensure that the budget is implemented properly in accordance with the plans and policies, the government should consider establishing a “delivery unit” at the highest level. For this, there are models and practices in other countries which could be considered.

The more effectively the budget is implemented, the more the country develops and grows. As a result, the government must take the necessary steps to reinforce the implementation of the budget, plans, and policies in order to ensure a brighter future.

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