Print Edition - 2015-01-20 | Development
A poor start all over again
- Govt spending pattern in the first half of last 4 fiscal years slow and unproductive
Jan 19, 2015-Development expenditure has remained poor in the first half of the current fiscal year, as was the case in the previous years. Though the government presented the budget on time and announced a number of reform measures to boost the capital expenditure, looking at the expenditure figure as of January 14—the closing day of the sixth month of this fiscal, the expenditure has stood at just 12.60 percent of the capital budget. The expenditure by the same period last fiscal year was at 13.7 percent.
According to the Financial Comptroller General Office, capital expenditure as of January 18 this year stood at Rs 15 billion. With the government failing to spend the capital budget, its treasury is holding a huge amount of money. Due to surplus budgetary situation, the government has yet to raise the internal loans. In the last fiscal year too, the government did not raise internal loans worth Rs 25 billion.
There has not been any change in poor capital expenditure pattern in the first half of the fiscal, if we compare the spending figures of the last four years. The figure has not crossed 15 percent in the last four years which, as usual, leaves a large chuck of development budget for spending in the latter half of the year. And the government has failed to spend the entire capital budget, even by the end of the fiscal.
For the past few years, around 70 percent of the budget is being spent in the last four months of the fiscal, according to the Finance Ministry. Officials themselves admit that the tendency of spending in the later months of the fiscal has resulted in poor quality of development works.
Until two years ago, the blame was put on either delayed budget presentation or late budget endorsement. The government presented the budget in time this fiscal and the previous one. Despite that, the expenditure pattern remained the same.
Officials claimed that procedural delay in project approval and contract awarding, allocation of budget without project preparedness, shortage of pebbles and sands due to strikes by crusher entrepreneurs, the government officials’ lack of enthusiasm to do work and contractors’ failure to use mobilisation advance in the contracted project led to the low capital expenditure this time.
They also pointed out high number of projects against low number of human resources to monitor the project’s progress, officials not taking decision due to fear of the Commission for Investigation of Abuse of Authority, lack of competent human resources in the government offices and problem in acquiring land for the development project as unfavourable elements.
Finance Secretary Suman Sharma said during the first half of the year, project approval process, bid document preparation and contract award process take much time for the projects that are not being undertaken under multi-year contract. “This automatically results in low capital expenditure in the first half of the year,” he said. “This is also the time when the government officials are transferred, and rainy season and festivals also stand as other factors affecting the construction work.”
Sharma, however, admitted that the level of expenditure during the first half was much less than what was expected.
While procedural delay has long been the problem, the ongoing projects are also facing various problems that have resulted in low expenditure.
For example, there are hardly any national pride projects that have met the targeted progress. According to the Prime Minister’s Office (PMO), national pride projects are facing the problems concerning land acquisition, contractors and technical staff, among others.
Of the 15 out of 21 national pride projects that presented their progress report to the PMO, three projects including North South Highways are facing lack of technical staff.
In Melamchi, contractor’s work has not been monitored properly and it has been facing the shortage of construction materials as well. East-West Electric Railway is facing land acquisition related problem and lack of technical manpower. Mid-Hill Highway has also been obstructed due to a dispute concerning use of forest area.
Getting approval for annual programme delayed in Pashupati Area Development Trust resulted in zero progress report. Only two projects that reported one hundred percent progress were Bhairahawa Airport and Pokhara Airport, but the latter is also facing land acquisition related problem of late.
While highly prioritised projects that remain in constant scrutiny are not performing well, government agencies are facing problem monitoring the projects that are in large numbers.
“The projects are many and the budget allocated to them is not sufficient,” said Devendra Karki, joint secretary at the Ministry of Physical Infrastructure and Transport.
Officials said that the projects are selected based on the political pressure and the resources are scattered. As a result, tangible results are very hard to come by.
“The Finance Ministry allocates just Rs 3 million for a motorable bridge, though it knows that the amount is insufficient,” said Karki. “Moreover, the Finance Ministry does not release the additional budget in time. It is in the final months of fiscal when the budget is made available.”
There was a time when even a rural road would get Rs 4 million which has now come down to Rs 60,000, according to Karki, explaining how scattered resources has been affecting the development results.
A senior official said that the anti-graft body has created fear among the government staffers. “It has also failed to give confidence to the officials who are ready to do work,” he added.
In order to address the procedural delay, the government had a plan to introduce the budget for this fiscal year a month earlier. But due to political disagreement, it was presented at the end of the last fiscal year.
The government plans to introduce early budget for the next fiscal as well. It also plans to approve all the programmes before new budget is presented, unlike the present system of approving them after budget presentation, which takes more than three months.
To fast track the contract award process and to address the low bidding related issues, the government is also introducing new Public Procurement Act. And to address the delay caused due to problems seen in land acquisition process, the government is introducing new Land Acquisition Act which aims to provide compensation for the acquired land at the market rate.
Former National Planning Commission Vice-chairman Shankar Sharma said that there should be provision in the new Act that once 80 percent of people approve the compensation, the amount should be enforced to all.
Published: 20-01-2015 12:34