| September 18, 2020

Similar to past expansionary budgets that upped inflation: Acharya

KATHMANDU, June 2: Former finance minister Mahesh Acharya of Nepali Congress has said that the government has "bloated up the budget" disproportionately and that its high growth target is unachievable.

Speaking in Parliament on Wednesday during the budget discussion, the opposition party leader compared the income and expenditure estimates of the government tabled by Finance Minister Bishnu Prasad Paudel with the budgets presented by then finance ministers Bharat Mohan Adhikari in 1994 and Baburam Bhattarai in 2008. Adhikari was finance minister in the Man Mohan Adhikari government.
The bloated budget of Rs 1,048 billion for the next fiscal year has features similar to the two past budgets in terms of expansionary approach and high growth targets and it is also likely to similarly result in low achievement and high inflation, said Acharya.

"Ahdikari had brought in an expanded budget aiming for high growth but agriculture contracted by 0.33 percent from 2.8 percent growth while non-agricultural growth was 5.2 percent, down from 8.12 percent," said Acharya. Similarly, growth plummeted to 3.8 percent from the previous 8.8 percent and inflation spiked to 12.6 from 6.2 percent during Bhattarai's tenure as finance minister, added Acharya.

"Paudel has followed suit and increased the target for revenue mobilization by 32 percent to Rs 566 billion from the revised target of this fiscal year. Targets for foreign grants and loans have been increased by whopping 58 percent to Rs 106 billion and 236 percent to Rs 195 billion respectively," he added. The growth target of the new budget is 6.5 percent and it has a challenging aim of capping inflation at 7.5 percent.

Increasing budgetary figures and the growth target alone do not help achieve higher growth, given the current context of low utilization of funds allotted for development projects, low production and productivity, and low confidence among private sector investors, he further said.

Acharya also suggested moving priority away from too many projects to concentrate better and facilitate target achievement.

However, CPN-UML leader Rabindra Adhikari defended the budget, saying it has something more than the numbers and development is its centerpiece. Adhikari argued that the salary hike for civil servants by 25 percent is for increasing spending performance and that the budget has taken a forward approach with its programs focused on agriculture and urban development particularly in the southern plains.

"The focus of the budget is on infrastructure, production and higher growth, including plans to improve connectivity in the country with the postal highway in the tarai and north-south roads to connect China and India," added Adhikari.

CPN (Maoist Center) lawmaker Ram Karki aka Surendra Kumar Karki said the Nepali Congress was in the government for roughly 18 years after 1990 and therefore it should take responsibility for the current economic situation.

He expressed dissatisfaction over the social security schemes meting out unequal treatment although the budget described the country's economy as socialism-oriented. "Social security schemes treat the father of Binod Chaudhary and a bonded laborer Chaudhary in Bardiya in the same way and the 25 percent flat salary hike for all civil servants means little more monetary increment for low level staff and much more for the higher levels such as secretaries," he said.