The role of public expenditure is crucial to expedite the economic development of a country. Increased government expenditure, especially the capital spending, will have both direct and indirect impacts on increasing private investments and creating new jobs in the country. On the one hand, it supplies liquidity in the market to finance various economic activities while on the other, it attracts more private investments, creating favourable environment to speed up development. Principally, the role of capital expenditure is highly sought as a catalyst to boost economic activities when the economy is reeling from the condition of stagnation and recession.
At the present difficult situation, where almost all sectors are feeling the adverse impact of the prolonged COVID-19 pandemic, the role of government expenditure is important to boost economic activities. Smooth budget spending also ensures availability of financial capital for the use of other productive sectors in the economy. Moreover, the government’s budget spending capacity will also be boosting confidence of the private sector, which must collaborate with the government for development, and lead the economy towards economic revival in the post pandemic period. However, if we analyse the daily report of the Financial Comptroller General Office (FCGO), the situation is not encouraging. By Monday, only 6.95 per cent of the total allocated budget has been spent while the revenue collection during the period stands at 17.26 per cent of the annual target.
The trend of the revenue remaining unspent may have adverse effect on the goal of achieving 7 per cent growth target aimed by the government for the current fiscal year 2021/22. Despite this challenging situation, it is noteworthy that the government is framing various measures to boost government spending especially the capital budget spending. To achieve the targeted budget spending, the government aims to spend 10 per cent of budget each month in the remaining months of the current fiscal year.
To this effect, Finance Minister Janardan Sharma has directed the secretaries of the government to immediately formulate action plans on the tasks of their respective ministries to meet the monthly spending goals. Addressing a high-level discussion about the effective implementation of budget at the Ministry of Finance on Monday, Minister Sharma expressed his commitment that there would be no delay in the work to be done by the Ministry of Finance regarding budget implementation and capital expenditure. He also directed the officials of the Ministry to expedite the process of finalising the old, pending files within seven days and new files within three days.
A decision has been made to determine monthly work progress to increase capital expenditure and complete the work immediately on the issues that need to be decided through inter-ministerial coordination. However, working under the current mechanism, it is not easy to achieve the targeted progress in budget spending. In order to meet the budget spending target, the current process-oriented spending procedures should be made result-oriented and the mindset of the civil servants should also be changed, making them more accountable. In addition, an action-oriented mechanism, which will facilitate, follow up and monitor the working of the development projects, should be put in place by the Finance Ministry to increase budget spending.