Budget Must Stimulate Economy


The budget is announced every year like it happens in virtually all the countries of the world. It is no different in Nepal and we have to accept the fact that without `the announcement' of the budget, the country cannot move on without any fiscal targets. Though time and again entrepreneurs and experts give different views on the content of the budget, mostly we have found nothing unique or extraordinary in the many budgets we have seen so far. Taxes are always increased in certain items and just to make it populist, the salaries of civil servants are also increased. No mention is made of how the market prices also increase as soon as the salaries of the civil servants are raised. 

And also no thought is given to the fact that the lucky enough individuals who work as civil servants make up only about ten per cent of the entire population. Others have to depend on the meagre salaries that they are being given in whatever sector they work in, the decision of the government just does not touch whatever organisation or individuals they work for. So one pleasing factor this time when the announcement of the budget is only months away, is the strong statement of Prime Minister Pushpa Kamal Dahal Prachanda, as reported in this daily, is that he will 'terminate' the tradition of copying previous budgets.

Right observation

According to the report, in a discussion with the experts related to development and planning held last week in Kathmandu, PM Prachanda argued that the traditional budget system had been an 'obstruction' to the transformation of the nation. This is a right observation and in spite of the budget announcement we have seen year in and year out, the nation has not seen many changes or drastic transformation in its economy. Therefore, the focus must be on not only making populist budgets or budgets that constantly increases taxes only on certain sectors, but also in having a long term target to improve the overall economy of the country. 

Just making a handful of civil servants or businessmen happy is not enough. The common people may have to go through rough times for some period, but the Nepali people are well known for their perseverance and they will bear with the tough times if they know the future will be better. In this regard, the Prime Minister is absolutely right in saying that every year new budgets would be introduced as the 'photocopy' of the previous year's budget, therefore he is committed that this time the government would prepare the budget on priorities after debating, holding discussions and soliciting suggestions from all the sectors on the government's policies, programmes and the budget.

There is no doubt that the suggestions of the experts and also the big tax paying industrialists are important to make any fiscal policy of the government a success. On this account, the voice of the general citizens may go unheard. But what the planners and the architects of the budget must not forget is, they just cannot keep on burdening the common people with more taxes. Putting taxes on luxury items is quite understandable, but not to the extent that these items mostly become out of the reach of the ordinary masses.

There was once a time when a similar policy was implemented by India, but after the introduction of a free market policy, look at how that country's economy has made progress by leaps and bounds. So only increasing taxes will not be enough, let the market decide on how it can flow smoothly and still contribute significantly towards the country's economy. The same can be said about China. The government there may have still put on certain restrictions, but after it opted to go for a free market economy, it has taken a huge leap forward, more than what its founder rulers did. In fact now, China and India are two of the largest economic powers of the world and they did this with sound policies and not only raising taxes.

Lesson from neighbours 

Nepal can learn and also benefit from the experiences of two of its neighbours. It can see much economic development by just hanging on to the enormous economic gains made by these nations which are now major players in the international economy. For instance, we can just look at the stable currency of both these countries, which have made them very competitive in the international scenario. Also look at how these countries have focused on local production rather than imports alone and contributed more to their national economy. For example, vehicles were much cheaper here in Nepal in the past, but due to hikes in taxes, they cost much more than the locally produced international brands of vehicles available in both these countries. 

Of course, we cannot expect to see a drastic scenario in our economy at the wave of a wand, but some pragmatic policies have to start sometime or the other. That is why the budget must not be taken as only the summing up of the expenditures of the government for one fiscal year. The experts and planners must see to it that the budget also has a far-reaching effect on the economy in the years to come. Just bringing out a balance sheet of expenditures will not make the economy healthy and robust. For the entire people to see prosperity and progress, more long-term ideas will have to be implemented. If we have to learn from other countries, including our two immediate neighbours, so be it, especially for our national interest and even if we have to tighten our belts for some time to come, we must be prepared for such times. 

(The author is former chief editor of this daily.)

How did you feel after reading this news?

More from Author

China’s Focus On New Energy Industry

Mediation Works When Conflict Situation Is Ripe

Pragmatic Budget

Need For Digital Detox

Wrestling in Kalapathar

Himalayan Literature Festival concludes