Budget focuses on infrastructural projects, but implementation a mammoth task

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Kathmandu, May 29, 2016: The budget unveiled at the parliament has focused key infrastructural projects and needful resource allocation for roads, hydropower projects and town development programs.

Finance Minister Bishnu Prasad Poudel has allocated Rs 10 billion budget for the much-talked Kathmandu Tarai Madesh Fast Track.

According to the budget speech, the work of Budhigandaki Hydropower Project will start within six months through establishing an entity.

The entity will complete all resettlement of the project-displaced families within six months and begin works thereafter.

An amount of Rs 5.33 billion has been earmarked for paying compensation of the lands and houses. The amount would be very little as the project’s total cost for compensation of the land and resettlement is estimated to be about Rs 60 billion.

Likewise, works in Fast Track will be started this year and also a specialized project office with needful technical manpower will be set up to execute the project, according to the budget.

Likewise, the budget has concentrated to make the country self-reliant at least in agro products is another good project.

Though major sectors and projects are its focus but the budget has failed to assure implementation.

Experts worry over its implementation and their concern. Failure to spend in development projects will be costlier for the country as there will be no job creation and spending spree by those receivers of the salary increment and grants will drive inflation to a higher point.

“Government has distributed resource generously, but it lacks a focus on increment in production and productivity as well as employment generation,” said Pitamber Sharma, former vice-chairman of National Planning Commission.

He explained that spending on development projects picked by parliamentarians in their constituencies and similar other spending won’t generate any jobs.

The budget for such projects for the parliamentarians has been increased by three times to Rs 300 million for each constituency. Such spending has been found ineffective and also received criticism.

Sharma expressed a serious concern that the budget won’t increase income of working class. Budget has increased salary of government employees by 25 percent.

Former Finance Secretary Rameshwore Khanal welcomed the programs in agriculture as well as towns development programs which can generate employment.

“But, there is no assurance of implementation in the budget and its unknown how implementing agencies work,” added Khanal.

There is a chapter ‘budget implementation’ in the budget to explain about how the projects will be implemented. But, they lack concrete steps to
address why the spending in the meaningful projects has not been made.

A project monitoring team led by Prime Minister has been proposed, but it alone won’t assure implementation as similar mechanism exists already.

The chapter also says that a system will be developed to make the projects implemented in given time and cost as well make contractors accountable for quality works.

Contractors hereafter will have to be responsible for maintenance of any development works for up to five years after project completion. At present, contractors are responsible for only a year for such maintenance.

Government also has announced to curb recurring strikes and protests affecting the projects and industries. Industrial estates, project sites, highways and public sector will be declared a strike prohibited area and this was what the private sector was demanding since many years. Any damages or loss due to protest in the area will be recovered from protest organizers.

Progress in spending on the development projects is very low.

Such spending is only at around 70 percent of the amount allotted. Capital Expenditure has been targeted at Rs 311 billion up from Rs 208 in the current fiscal year.

Infrastructure tax for Budhigandaki Hydropower Project

Government has announced infrastructure tax on import of fossil fuels to collect fund for financing Budhigandaki Hydropower Project.

Nepal Oil Corporation has to pay Rs 5 per liter on import of petrol, diesel and Air Turbine Fuels from the customs point.

However such tax should not be charged on fossil fuel consumers, the budget document says.

Government has estimated to collect about Rs 7 billion for the project from this source.

Besides this, energy is one of top priority of the government in the budget as it has announced to minimize load-shedding hours significantly in the next fiscal year. And the target is to eliminate power outage within two years as per energy development plan 2016-2026 announced in February.

The government has focused to generate energy by completing the undergoing projects including Chameliya and Upper Trishuli 3A as well as start construction works of Budhigandaki Hydropower Project in next fiscal year.

Likewise, as part of reforms, government has planned to expedite pending plans of unbundling Nepal Electricity Authority by establishing National Hydropower Generation Company and National Electricity Trading Company.