Low spending: Govt sitting on Rs 95b

  • As of January 18, capital expenditure came to Rs 15 billion out of the budget of Rs 117 billion allocated for this fiscal year
Low spending: Govt sitting on Rs 95b

Jan 20, 2015-

The government has been sitting on a pile of money amounting to more than Rs 95 billion because it has nowhere to spend it. The state treasury has probably never held so much cash in the past, government officials said.

The reason why the vaults are overflowing with money is low capital spending. As of January 18, capital expenditure came to Rs 15 billion out of the capital budget of Rs 117 billion allocated for this fiscal year.

Finance Secretary Suman Sharma admitted that low capital expenditure was the main reason why the treasury held such a large sum of money. “The unspent amount became so large because it also includes last year’s unspent budget of Rs 25 billion,” said Sharma.

“Compared with last year’s figure for the corresponding period, the amount remaining in the treasury this year is less.” According to him, the treasury contained Rs 77 billion at this stage in the last fiscal year and this year the figure is around Rs 72 billion.

However, the figures for this year and the past year show that expenditure has been poor in both the years. In fact, capital expenditure has not crossed 15 percent of the allocated amount during the first half of the fiscal since the fiscal year 2011-12.  

According to the Finance Ministry, in addition to low capital expenditure, swelling revenue collection during the second quarter and an increase in reimbursements by donors also resulted in the huge amount of money in the government’s vaults.

“People pay one instalment of their taxes before the second quarter-end,” said Sharma. “While closing the year in December, donors also release their pledged aid amounts based on the expenditure here.”

With capital expenditure consistently remaining poor, the government has initiated a mid-term review of the expenditure by the executing agencies under various ministries having a high capital budget.

Reviews of the expenditure of the Physical Infrastructure, Local Development, Energy, Agriculture and Education ministries, among others, will be carried out, said the Finance Ministry.

Sharma said that the move was aimed at finding problems in the early stages and diverting unused resources from underperforming projects to others making good progress. There is a tendency of diverting resources on a big scale in the final months of the year to increase capital spending, but the quality of work has been compromised as a result.

Officials have been pointing to issues like procedural delays in approving the project and awarding the contract, a tendency among contractors not to work after receiving the mobilization fund in advance, frequent transfers of technical and top level staffers at the project and fear of the Commission for the Investigation of Abuse of Authority as some of the key reasons why the expenditure pattern has not improved.  

Although these problems have remained consistent for the last several years, capital spending was also affected as development projects were hindered by a shortage of construction materials like pebbles and sand in the last fiscal year due to strikes held by crusher plants.

A senior official of the National Planning Commission said that pebbles and sand may not emerge as a problem in this fiscal year as the government has extended the deadline for following the set standard until the end of this fiscal year.

Published: 21-01-2015 09:35

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