The new Maoist Nepalese Budget.

Here is what you all have been waiting for the new Maoist Nepalese Budget! The title is rather confusing if not contradictory. The Maoists themselves are frank in calling the policy one of developing capitalism as a means of developing an economy that in many ways was almost feudal. However, the budget is also very much people oriented and tries to make living conditions much better for the Nepalese people. Many of the policies certainly have socialist aspects but at the same time the Maosits welcome foreign capital and joint public private developments. At the end of the article there are a few critical comments by various groups.


Maoist New Nepal: Industrial Capitalism Covered by Socialism
Posted on October 1st, 2008 by UWB
By Bishnu Pathak and Neil Horning
The reactions to the budget from the nation’s policymakers and critics are often guided by four motives. Those who made the budget in the past regard it as imbalanced and untenable and heap praise on their own budget. Others who suffered defeat in the CA polls from the Maoists are scared of the perpetual marginalization that stares them in the face and wish to see their Maoist rivals failing and faltering on all fronts and to stand thus vindicated. Another group of intellectuals, those affiliated to political parties other than the Maoist, appear inordinately critical in expounding their techno-statistical expertise on the budget and dub it as overtly ambitious and populist. The Maoists and the intellectual professionals close to them, however, claim the budget as a historical document, regarding it to be achievable, pro-poor, and growth-oriented, and blame their critics as feudal-minded. The donors, in general, remain neutral, at present, and the people are waiting for the budget to deliver in the field. For, that is where its ultimate test will lie.
“Ambition is imperative for launching Nepal into a new era” stated Dr. Baburam Bhattarai, Finance Minister, as he presented a total Rs. 236.15 billion to the Constituent Assembly (CA) for the Fiscal Year 2008/09 on September 19, 2008; 45% up from the last budget. Recurrent expenditure, estimated at Rs. 128.51 billion, comprises more than half 54.41% of the total allocation, with capital expenditure at Rs. 91.31 billion or 38.66%. For repayment of loans, Rs.16.19 billion (6.85%) is allocated. This estimated expenditure will be higher than the total allocation of last year by 39.7% and 44.5 % more than the revised expenditure. Recurrent expenditure will be increased by 40.6 % and capital expenditure by 64.5 % compared to the revised expenditure. Principal payments will be decreased by 1% against the revised expenditure. Out of the total expenditure, Rs.111.82 billion (47.38%) is allocated for general administration and Rs. 124.19 billion (52.62%) for development programs. Of the estimated financing for the current year, Rs. 129.21 billion (54.72%) will be borne by current sources of revenue. Out of the total foreign assistance of Rs. 65.79 billion (27,86%), Rs. 47.93 billion (72.85%) shall be borne by foreign grants, and the remaining Rs. 18.7 billion (27.15) by foreign loans. There shall be a net budget deficit of Rs. 41.11 billion (17.4%) that will be covered by mobilizing both sources.
The first Maoist-led Government of Nepal clearly put the people at the center of their strategy to institutionalize the federal democratic republic, arrive at a logical conclusion to the peace process, accelerate the process of socio-economic transformation, achieve higher economic growth for geographical and regional balance, create social justice and employment opportunities, and provide relief to the people to lay the foundation of a self-reliant and independent economy, optimally relying on national capital and indigenous resources.Priority policies and programs
• For the rational conclusion to the peace process, a relief package shall be provided to the families of the martyrs, the disappeared, conflict-affected persons, and the wounded. Subsistence support and allowances to the Peoples’ Liberation Army (PLA) shall be made available. People, who were involved in the peoples’ movement and the Madhesi movement, shall have relief provided to them as well.
• It is expected that double-digit growth shall be achieved within the next three years, ensured by high priority on building infrastructure of strategic significance and developing social infrastructure of human resource development such as in education and health.
• Social security shall be ensured to classes, ethnicities, regions, women, senior citizens, differently abled, widows, dalits, and endangered ethnicities.
• It shall give a top priority towards radical structural change of the agriculture sector, on which relies more than two-thirds of the country’s population, away from subsistence-oriented and feudal based production relations.
• Focusing on expansion of tourism, a triangular infrastructure between Kathmandu, Pokhara and Lumbini shall be developed, while constructing new airports of international and regional level in the next couples of years.
• Physical infrastructure for roads, railways and communication of strategic and long-term significance, such as East-West Railways, Kathmandu-Tarai Fast Track, Mid-Hill Highway and North-South Highway, shall be hastened
• Unlike the small scale support providing by previous governments, the new government shall allocate a Rs. 7.8 billion grant for a minimum of Rs. 1.5 million to a maximum of Rs. 3.0 million to be given to each VDC under the slogan of Hamro gaun ramro banau (make our village better and beautiful).
• With the slogan of “In clean water lies Nepal’s power,” the budget shall give a priority to producing capacity for 10,000 MW worth of hydropower in the next decade, irrigation (tarai and hill) and drinking water.
• “New Nepal, learned Nepal” and “New Nepal, healthy Nepal” shall be the new slogans of building competent human resources and investing huge efforts in education and health. The government intends to eradicate illiteracy in two–years and give universal access to basic health services.
• Public-private partnerships (PPP) shall be launched, prioritizing national industrialization. Special support shall be provided to sick industries on commercial footing through adopting the scheme and encouraging the development of mineral, agricultural and forest-based industries. Foreign investment will be encouraged for the exploration of minerals where feasibility studies have been already completed. Multinational companies will be invited for the exploration and extraction as well as production of petroleum products.
Theoretical Underpinnings
Finance Minister, Baburam Bhattarai, published “The Politico-economic Rationale for Peoples War In Nepal” in 1998 and “The Nature of Underdevelopment and Regional Structure of Nepal: A Marxist Analysis,” a cursory reworking of his much earlier PhD thesis, in 2003. The former work is to great extent an encapsulation of the larger (by orders of magnitude) latter work, just as the current budget reflects, to a major extent, the fulfillment of the ideas contained in both. It is important to note that both were completed long before the Maoists had officially accepted Multi-party Democracy.
It’s acceptance has apparently had little impact on Bhattarai’s policy proscriptions other than in their dilution among demands of coalition partners and post-conflict programs. The thrust of the New budget and that of Bhattarai’s previous work are essentially the same. “The Politico-Economic Rationale…” stresses that “In general, since the development of productive forces is faster and the development of production relations takes place at much slower pace, at some stage of development of society the productions relations block the development of the productive forces and this leads to retardation and distortions in society. Under such a situation it becomes necessary to smash the old production relations and to develop new production relations in their place.” “Productive forces” refers to available technology and “productive relations” to the social system’s allocation of roles (Landlord to peasant, industrialist to worker, etc). The piece considers Nepal’s productive relations to be semi-feudal. It determines the country’s “internal social and special” problems and outlines economic development policies and programs to address them as described in the following synopsis. Salient excerpts from the new budget have been provided.
• Semi-Feudal Relations and Retardation in Agriculture
“Under Nepal’s tenancy system specially in the share-cropping system, tenants are forced to till other’s land for bare subsistence needs rather than to earn capitalistic profit, the rights of tenants are not secure, the rate of rent is high, the tenants are bonded to the landlord with the high interest on loans and other labour service conditions apart from the rent on land. Because of all these, this labour-relation is of a semi-feudal type and of a retrogade nature. It is thus clear that the principal mode of surplus extraction in Nepali agriculture (and involving all sectors of economy) is the semi-feudal relation and the same relation plays the principal role in the underdevelopment and retrogation of the Nepalese agriculture (and by implication the whole economy).”
Development of agricultural productive forces has been stagnant due to semi-feudal production relations. Because the surplus value generated by agricultural production has been largely used to enrich the families of wealthy landlords rather than develop agricultural technology or irrigation, agricultural productivity has actually decreased over time and the vast majority of the population remains impoverished and engaged in traditional labor intensive subsistence farming. Attempts at reforming this system have largely gone to waste due to their oversight by a ruling class interested in maintaining the same productive relations.
• Decline of Industry and Expansion of Comprador and Bureaucratic Capital
In order for national industrial capitalism to develop, there must be a “capitalist class” who can invest capital and develop industry, a “free proletarian class” who are not bound to the land and can thus sell their labor any place at will and a “free market” where subsistence goods and means of production can be bought and sold. If one or all of these are lacking it is impossible to develop industrial capitalism. Unfortunately:
“historically in Nepal, as the primitive accumulation of capital from agriculture and trade sector has been centralized in the hands of the big feudals of the ruling classes and India-based comprador bourgeoisie and because up till now their hegemony in the economy still continues, the development of the national industrial capitalist class has been marred.”
The centralization of capital in the hand of feudals, royals, and foreigners has resulted in an industrialization distorted toward production of luxury goods (beer, wine, cigarettes, soft drinks) and others with few indigenous roots or added value, rather than basic goods (cement, electricity, irrigation) or intermediate goods (construction material, thread, paper). Feudal production relations have prevented a market from developing either for basic/intermediate goods or labor. Where a market has developed, “Comprador and Bureaucrat capital” has assisted in foreign products out competing local ones. Comprador and bureaucratic capital has played a doubly negative role by both blocking the development of free industrial capitalism and transferring capital out to industrialized nations. While tourism is an important source of foreign exchange, most of the materials it consumes are imported and 50% or the earnings go back to foreign countries.
• Regional Inequality and the Nationality Question
While the vast majority of the population remains in the countryside, the overwhelming majority of economic and infrastructure development has take place in the few urban centers owing to the capital investment there of the few rural elites. Although there has been a vast migration of labor, it has been primarily from the hills to the terai and from agricultural to agricultural production rather than agricultural to proletarian production. Thus regional tensions have been exacerbated in the tarai and mountainous regions developed even less. Underdeveloped regions are disproportionately inhabited by indigenous nationalities, and thus questions of regional inequality become intertwined with questions of identity.
• Economic Development Policyo Revolutionary Change of Production Relations
“Nepalese society the retrograde semi-feudal and semi-colonial relations have become the main obstacle in the development of a new and higher form of capitalist mode of production. In this situation the attempts at placing emphasis only on the productive forces (or, capital and technology, and that too foreign!) and keeping the old relations of production intact would not only be completely retrograde but have in practice, too, proved a failure. Thus the main policy of the revolution would be to confiscate the means of production that have been in the hands of the reactionary classes, mainly land which has been in the hands of the feudals and capital in the hands of the comprador and bureaucratic capitalist classes, and then to hand them over to the progressive forces (i.e. workers, peasants, petty bourgeoisie and national bourgeoisie)…However, because of the backward semi-feudal state and a very low level of development of productive forces in Nepal, the principal form of the new production relations would not be socialism at the outset but of a capitalistic type and only after going through a transitional stage that a socialist transformation would be carried out. In the New Democratic stage big and basic industries and financial companies would be under social ownership of the state, some of the larger means of production would be jointly owned by the state and the individual and in agriculture, the largest sector of the economy, there will be private ownership by the peasants and in small and medium industry and trade there will be ownership by the industrialists and traders. ”
o Independent and Self-reliant Development
“instead of the present extraverted and dependent development policy an inward-looking and self-reliant development policy relying upon its own natural resource, capital, labour, technology and market would be followed. This does not at all mean that there would be no economic ties with foreign countries or there would be no utilisation of modern science and technology as falsely alleged by the imperialists or their agents. There would be the policy of maintaining trade and other relations with all on the basis of equality, mutual benefit and national needs and of utilising modem technology to the extent possible.”
o Planned Development
“The other important policy would be to make a planned development of the economy through a scientific assessment of the available and potential resources of the country and physical and cultural needs of the society.”
o Balanced Development
“Balanced development in the country will be achieved by ending pre-capitalist and bureaucratic capitalist: monopoly in the economy, by granting national and regional autonomy to the oppressed nationalities and regions and geographical regions, and by pursuing the overall planned development strategy. The main strategy of balanced development would be based on treating industry as the leading sector and agriculture as the foundation in the development of the economy, and in the context of regional development, pursuing the policy of ‘urbanisation of the countryside’ and not the ‘ruralisation’ of the cities.”
o Revolutionary Land Reform
“The principal strategy of land reform would be to usher in capitalist relations by destroying completely feudal, semi-feudal and bureaucratic capitalist relations prevalent in agriculture. It would be primarily based on the policy of “land to the tiller”. In other words, the land of those feudals (and also guthis) who do not put their labour or capital on the land would be confiscated without compensation and distributed to the landless and poor peasants and the tillers would be made owners of the land. However, the land belonging to the middle or rich peasants (who may have hired their land out to others due to various reasons) will not be confiscated, but a ceiling to landownership, tenancy right and the rate of rent will be fixed and implemented. Together with this all forms of debt incurred by landless and poor peasants would be completely nullified and labour-services and other forms of payment forced upon them would be cancelled.”
Salient Excerpts
? Principal for debts amounting up to Rs. 30,000 and interest of debts up to Rs. 100,000 of borrowers effected directly by natural disasters and the conflict, small farmers below the poverty line and household entrepreneurs shall be waived (estimated total cost Rs. 9.18 billion) within the next 10-years. The budget allocates Rs. 400 million for the purpose this year.
? The government has waived out the interests and all kinds of penalties for those electricity bill payers who could not pay during the time of armed conflict.
? A High Level Scientific Land Reform Commission shall be formed for the abolition of feudal land ownership and production relations. A sum of Rs. 60 million shall be allocated to record land ownership and such records shall be published by mid-May 2009. Haliyas (ploughmen; bonded labor) shall be rehabilitated, with Rs. 150 million allocated.
• National Industrialization
“Main stress would be on harnessing the immense hydropower potential of the country through small hydro-electricity projects for the supply of necessary industrial energy and to ensure self-reliant, pollution-free and sustainable development. From the beginning, adequate attention would be paid to the primary and medium level technical education for the production of skilled labour and technical manpower which would be increasingly needed along with the process of industrialization. As per the market for raw materials and finished products, a policy of primarily relying on the internal market would be pursued. At one end, supply of raw materials would be ensured by enhancing production of medicinal herbs, animal husbandry, horticulture, cash crop production, processing of minerals, etc., taking full advantage of the geographical diversity and, at the other end, necessary market would be created for the industrial products by eliminating existing socio-economic inequalities and increasing the purchasing power of the general masses Thus the creation of a big market for the means of subsistence and means of production for the general masses instead of the current narrow market for the luxurious goods meant for only the limited upper class of people would accelerate the process of industrialization…”
Salient Excerpts
? Rs. 20 million shall be generated for herbal collection facilitation in conflict affected districts such as Jumla, Banke, and Salyan for self-employment. Rs. 10 million shall be allocated for the plant in the Karnali zone.
? State owned Agriculture Tools Factory of Birgunj and Hetauda Textile Mills will be brought back into operation in this Fiscal Year. Once these factories are operationalized, fixed percentage of shares will be sold to the laborers and, also to the public. In order to ensure markets for the textiles to be produced, Heatuda textile mills will be developed as a factory producing textiles to be used by Nepal police, Armed Police and the Nepalese Army.
? A High-Level Power Sector Development Committee shall be formed under the chairmanship of the Prime Minister to produce and utilize 10,000 MW of hydro power within 10 years for which 5.38% (Rs. 12.69 billion; 113% more than last year) of the budget shall be allocated this year. For rural electrification, Rs. 1.52 billion shall be allocated for the implementation of small hydro power projects as alternative energy programs. At dry ports in Biratnagar and Birgunj there shall be established a thermal plant on a public-private partnership initiative to establish uninterrupted power supply. Rs. 843.3 million shall be allocated for the construction of industrial corridor up to Pathliya-Birgunj Dry Port.
? The construction of Upper Tamakoshi- 456 MW, Upper Trishuli A-60 MW, Rahughat– 30 MW and Naumure 245 MW, totaling 791 MW, shall be started this year. Likewise, necessary works shall be initiated to start the construction of Upper Trishuli 3 B - 40 MW, Tamor-Mewa - 110 MW, Upper Seti - 127 MW, Dudhkoshi - 300 MW, Tamakoshi 2 and 3 - 500 MW, West Seti - 750 MW, totaling 1827 MW from both the government and private sectors. The legal provision of not requiring licenses for the production of up to 1 MW hydro power projects shall be extended up to 3 MW.Rs.
? 5.91 billion (69% up than the last year) shall be allocated for an “agricultural revolution.”
? A sum of Rs. 5.8 billion (42.6% up than the last year) shall be allocated for irrigation, where an additional 2,275 small irrigation projects shall be implemented
? Ten million labor days (to 100,000 people for 100-day) shall be earmarked in Rs 1.75 billion for small irrigation and drinking water projects, construction of agricultural roads and bridges through local User’s Groups.
? A total of 5.89% (Rs. 13.91%) shall be allocated for construction and maintenance of roads. Rs. 275.2 million shall be allocated for a Food for Work Program to construct a 125 km motorable road.
? Rs. 7.96 billion (66% up from the last year) for drinking water and sanitation. For self-employment opportunities to the youths, a Rs. 500 million “Youth Self-Employment Fund” shall be established to provide up to Rs 200,000 periodic loans.
• Regional Balance and Integrated Development
“Principal strategy for this would be: (1) to accelerate the pace of social development by making maximum use of the productive potentials of different geographical regions; (2) to make the economy self-reliant and to protect it from the danger of external interference and oppression through decentralisation in economic and geographical terms; (3) to orient the society towards more advanced and democratic stage by checking social and geographical polarisation; (4) to ensure sustainable development through interdependence among different social sectors and geographical regions; etc. For regional balanced and interdependent development, such programmes would be implemented as: controlling the polarisation between city and countryside; developing settlement system based on interdependence of big, medium and small towns and villages; developing interactive relations between Hill and Terai regions by ascertaining the division of labour between them; establishing production zones based upon integrated development of big and small industry and agriculture; enforcing national autonomy in oppressed nationality-dominated areas; implementing regional autonomy and local self-government in the oppressed and remote areas; etc.”
Salient Excerpts
? The ongoing construction of 1700 kms-long mid-hill Highway, connecting Hiyabhanjyang, Panchthar in eastern region to Jhulaghat, Baitadi in the western region shall be named Puspa Lal Lok Marga.
? Electric Railways from Mechi to Mahakali and Kathmandu to Pokhara shall be constructed with Rs. 150 million.
? Rs. 13.91 billion (77% up than the last year) shall be allocated for transport sector, which shall indeed mad the current fiscal year a “Year of Construction.” Trolley bus and cable car shall be developed as alternative means of transportation.
? Rs. 300 million shall be allocated to Gorakhapatra Corporation (State Newspaper) for inclusiveness; i.e. local dialects.
? For ILO Convention No. 169 and the international manifesto regarding the rights of tribal and indigenous people, the Nepal Government shall allocate Rs. 167.8 million to uplift and empower indigenous people, neglected, oppressed, dalit, muslim and backward communities.
? Rs.32.91 billion (14% of the total budget) is allocated in programs that work toward gender equality.
? Rs. 2.98 billion shall be allocated to the Poverty Alleviation Fund focusing on disadvantaged communities.
? The Act relating to the special economic zones will be enacted in this Fiscal Year. Necessary provisions are made in the accompanying Finance Act for providing customs and income tax exemption facilities in the special economic zones.
? For ILO Convention No. 169 and the international manifesto regarding the rights of tribal and indigenous people, the Nepal Government shall allocate Rs. 167.8 million to uplift and empower indigenous people, neglected, oppressed, dalit, muslim and backward communities.
? Social security shall be increased by Rs. 4.41 billion (440 % up from the last fiscal year). Monthly Rs.500 shall be allocated to people from endangered ethnicities, dalits, single woman, and Karnali zone residents above age 60 and to others above 70. Monthly Rs.1000 for fully handicapped/disabled and Rs. 300 for partially handicapped/disabled shall be provided.
? An additional 175 tele-centers in rural areas, schools and Post Offices shall be established with Rs.57.5 millions.
• The Process of Revolutionary Transformation
o Dialectical Process of Destruction and Creation
“It is necessary to destroy the old mode of production bit by bit starting from its weakest spots and to create the new mode of production systematically from the same place (i.e. a strategy of protracted People’s War). To put it in concrete terms, as the contradiction is the sharpest in the rural areas the process of destroying the old structure and creating a new one should commence from there.”
Salient Excerpts
? A sum of Rs. 5 million shall be allocated for the Jaljala area conservation and the same amount to be for the development of a model settling in Thawang – center of the people’s liberation campaign. To honor the political sacrifice, a sum of Rs. 248.5 million shall be allocated.
? Rs. 4.5 billion shall be estimated for reconstruction of public buildings, bridges, communication towers, and airports damaged at the time conflict for which Rs. 1.28 billion shall be allocated in this Fiscal Year.
o Transitional Capitalism and Continuous Revolution
“New Democratic system is basically a capitalist system. However, in the present era of imperialism and in a situation of intensely backward state of productive forces as in Nepal, it is impossible to develop the capitalist system in the old form and to make it stable. Specially it is not possible for the owners of small parcels of land and small capital to increase productivity by labouring individually and to protect themselves from the monopolistic assaults of the big capital. Hence it is only through gradual co-operativisation of agriculture and through state protection for industry, or by systematically moving ahead in the path of socialisation that the large number of small producers can preserve their existence and increase their productivity.”
Salient Excerpts
? About 4,000 VDCs shall receive Rs. 1.5 million to 3 million for the remaining 10-months of this fiscal year for development activities. Besides this, each VDC shall establish Consumer Cooperatives to provide up to Rs. 100,000 to laborers, dalit, the poor and students at a subsidized rate.
? Dalits, socially poor and disadvantaged ethnicities, women, homeless, freed Kamaiyas and landless shall be involve in Cooperatives through the slogan “Cooperatives in every village, food storage in every house” with the allocation of Rs. 85 million.
Other Salient Excerpts
• Salary of all classes of civil servants shall be increased by Rs. 2000 effective from September 17, 2008.
• The people who lost their lives in the course of the People’s War, People’s movement and Madhesi movement, shall be initially provided a lump-sump of Rs. 100,000 each as compensation and a scholarship shall be provided for education of the children of lost family members. Rs. 12 million shall be allocated for the development of ‘Living Together” (Sahajivan) settlements to the families of internally displaced due to the armed conflict. Rs. 1.62 billion shall be allocated for the purpose.
• For the Nepal Peace Trust Fund, Rs.2.5 billion shall be allocated. Similarly, necessary budget for the reintegration, rehabilitation and arms management of the Maoist people’s liberation army shall be started before mid-March 2009. The Nepal army shall be made democratic and inclusive for which the Government shall allocate 5.1 % (Rs. 12.03 million) of the total budget. The army shall be deployed for peace and security, development work, natural disaster relief, and other causes benefiting world peace.
• A code of conduct of the security forces shall be formulated and implemented before mid-December 2008. A local peace committee shall be constituted comprising security forces, local administration, political parties, and representatives of civil society for which Rs. 105 million shall be allocated.
• Under the Rural Reconstruction and Rehabilitation Sector Development Program, construction, income generating and livelihood training programs in 20 districts and drinking water projects in 38 districts shall be conducted with Rs. 820 million allocated for the purpose.
• To provide immediate relief to the starving, Rs. 1.22 billion shall be earmarked.
• A necessary preparation shall be made to declare 2011 as “Nepal Tourism Year” to revolutionize the tourism sector.
• A National Information Bank shall be established in the cost of Rs. 230 millions.
• A 0.5% registration fee shall be charged for buying and selling land within the municipalities of the Kathmandu Valley to clean the Bagmati, Dhobikhola and Bishnumati rivers.
• Rs. 2.21 billion (62% up than the last year) shall be used for housing and urban development.
• Rs. 38.98 billion (44.5% up from the last year) which comprises 16.52 % of the total budget shall be allocated for the education sector under the slogan of “basis of new Nepal, education as a universal fundamental right.” Additional 3500 Child Development Centers shall be established. Meals program for the 24000 Children of the Karnali Zone shall be continued. School education up to class 8 shall be made free and fees for class 9 to 10 shall be reduced gradually to make them free. Free education opportunities shall be provided to all public school students of Karnali Zone and such a privilege shall extend up to class 12 in the public school for all Dalit students across the nation. A National literacy campaign shall be launched with the slogan of ”Know letters, be civilized” that eradicates illiteracy within two years. A total of 35,000 youths shall get employment from this program with the cost of Rs. 1.4 billion. More than 91% of people shall have access to primary education in the current Fiscal Year.
• Rs. 15.58 billion (6.6% of the total budget), which exceeds last years allocation by 54%, shall be allocated for the health sector. A national program shall be launched for the treatment of uterus prolepses. Martyr Gangalal Heart Center shall provide a free of cost operation service to children below the age of 15, senior citizens above the age of 75, and endangered ethnic citizens. Free dialysis through the National Kidney Center shall be provided to endangered ethnic citizens and to senior citizens above 75 years of age.
Conclusion
The principal duties and responsibilities of the government are to draft and promulgate a new constitution to achieve a logical conclusion of the peace process, security, rule of law, less discrimination, employment and so forth. The budget has succeeded in including a wide circle of poor people along with unemployed youths for the first time in Nepal. It has ensured a plethora of opportunities for youth, but the NC has a reason to fear that the Maoists shall adopt the same tactics that the NC had in the past by providing such opportunities only to their cadres.Due to high expectations of the people, the Maoists-led government is compelled to allocate a populist budget despite huge challenges in generation of revenue, bridging of the budget deficit, procurement of foreign grants, anti-Maoists bureaucracy (polarized particularly with NC), lame diplomacy, and a “wait and see” donor policy. The budget is not clear on whether it intends to make the poor rich or make the rich richer or make the rich poor. This is due to the variety of backgrounds, objectives, and political doctrines of the political parties participating in the government.
Besides the Maoists, all political parties are in confusion as to there core values, missions and goals. Therefore, the Maoists have again taken on a great challenge, equal or greater to the 10-year armed struggle.
The budget has mentioned double-digit growth in the coming years. Double digit, rapid growth can only be possible if the country attempts to consolidate agricultural lands, promote tourism, welcome hydro-power investors and initiate cement industries. Yet the Maoists are currently concerned with distributing private and public lands to squatters. Nepal lacks infrastructure, services and manufacturing goods. About 2.25 million Nepali youth are working aboard, particularly in the form of unskilled labor. Remittances are only aggravating the trade deficient, particularly with India, which amounted to 196 billion this year. The vocational training that the government has projected is not sufficient. While the budget includes plans for cement plants, it has not approved a clear cut industrial security policy on how to attract both Chinese and Indian industrialists for these endeavors. Some of the critical comments on the budget from experts are given below:
“Budget seems populist, imbalanced, and politically hegemonied that would bear a clatter to the existing economic capacity of the country. It’s blown up like a ballon and has crossed the limit of financial indiscipline. Dr. Bhattarai’s over ambitious estimation of increasing Rs. 34 billion tax revenues and Rs. 31 billion (almost double the previous year’s estimation) foreign assistance is also censured of posing very serious side effects for the economy.”- Dr. Ram Saran Mahat, Former Finance Minister
“The budget is quite bold but with innate challenges; raising revenues to meet swelling expenditure, weak absorbing capacity for developing spending, and possible macroeconomic side effects. The government, it seems, is trying to lead the country towards the greater role of the state and many more ambitious programs, however the process and the success are not easy as it is said.”
- Dr. Jagdish Chandra Pokharel, former vice-chairman NPC
“The budget is the over ambitious and over-programing in nature. Finance minister, unlike their saying to the public, increased foreign assistance, which leads dependency. However the inclusion of cooperatives, infrastructure development programs’ implementation is quite appreciable. The budget have included nearly all sectors, but it won’t be sustainable and its can easily been predicted. The estimated revenue would not reach higher than Rs. 10-11 billion and at least Rs. 2-4 billion would be overdraft and thus rise inflation.”
- Dr. Shanker Sharma, former vice-chairman, NPC
The budget has included every sector which will bring short term benefit but the state’s mechanism can not expand the allotted budget. Expansion allocation by revenue is over-ambitious as Rs. 30-32 billion cannot be invested. The budget itself declared two month late and it will take a lengthy interval to reach to the assigned units. The new budget touched many such sectors which were not getting right notification earlier like health, employment and hydropower. This is an expansionary budget and it might result in inflation.
- Prof. Bishwambher Pyakurel
“With the vision of a radical transformation and the associates critical even to come together in minimum consensus sometime, the Maoists-led government presented an ambitious and people based budget of an ample legacy, popular programs, and over ambitious targets. The budget is expansionary one and constrained by limited fiscal capacity both in terms of revenue generation and implementation due to existing polarized bureaucratic mechanism and weak absorption capacity of local bodies. The commitments of the government and the forces of revitalizing and restructuring the operation mechanism can be instrumental and the success lies on this part.”
- Surendra Uprety, PhD student (youth)
The crux of the matter is that if this poor and marginalized affiliated and business promoted budget succeeds in their objectives, the political base of NC shall shrink again due to its previous policy of “elite protected and poor neglected” despite its claimed political doctrine of“ socialism.” If the Maoists-led government fails to introduce its own brand of socialism to Nepal, it may fail to achieve stability, as the Maoists party will be rejected as well, while the disadvantaged ethnicities, dalits, and madhesis would initiate communal violence owing to their desire for ethnic based, culture based and region based federal structure of government.
The greatest enemy of peace, justice, security, and development of Nepal is corruption. Neither has the government any policy to investigate financial irregularities of politicians, the bureaucracy, or security forces, nor has the judiciary any commitment for corruption eradication. When Biswo Kanti Mainali, Central President, Nepal Bar Association, said, “The work of judges is the license to corruption,” the full bench of the Supreme Court suspended him from attending court for six-months.Immediately after the budget speech, the market soared up by 20-30%, because the budget does not talk of controlling it. Indeed, while the budget attempts to protect and promote the poor, disadvantaged and vulnerable communities one way or another, it has tried to stop capital flight from Nepal and attract business communities, providing opportunities for joint investment through PPP policy. Yet, it lacks confidence and reassurance measures. Such communities have interests in continuing to hold a dominant role in politics.
Therefore, the budget espouses the policy of economic revolution on the one hand, and equally reassures the bourgeois on the other. Still, the budget opens the era of industrial capitalism in the name of socialism in Nepal, ousting the NC from its original stranglehold, as in the CA election. In fact, the budget aspires to what the great poet Laxmi Prasad Devkota said, “We should aim to fly high and touch the moon.”
==============Author: Bishnu Pathak PhD and Neil HorningAssisted by: Surendra Uprety (PhD student), Rushma Shakya, Rita Chaudhary, Ganga Puri and Meena Siwakoti
Filed under: nepali economy

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