Women working to plant saplings in Rupani VDC of Nepal. These women get Rs 2 per sapling planted and they plant around 500 to 600 saplings a day. This has made them economically empowered. When women are economically empowered, they empower their family. Women get voice from economic freedom. When they do not have this work, they find work as labourers.

Distributive Budget, Populism, and Crony Capitalism

CESIF Nepal Blog / Article, Blog / Article, Democracy and Federalism, Good Governance Leave a Comment

The main opposition Nepali Congress has remarked that budgets presented by provincial governments were distributive in nature and gave continuity to programmes and policies of the past years.[1] Earlier, critics claimed that the budget of the federal government did not address the economic reality of the country and would not bring any reforms. Amidst depleting financial resources, the country would be pressed to make a lot of borrowings, both external and internal, to pay for the increased salary of government employees. The NCP government, with a super majority, did not make any attempts towards increasing productivity or increasing imports.[2] Ironically, trade deficit has ballooned, and outflow of money surpassed the inflow by Rs 90.83 billion in the first 11 months of the past fiscal year, an increment of 17.2 per cent for the same period in the previous year.[3]

The policy and programmes presented on May 21 in the federal parliament claimed that the government will adopt a policy to not import goods and services that will have adverse impact on people’s health, promote unnecessary consumption, and damage domestic industries. But the Budget for the fiscal year failed to include any such programmes supporting the policy.[4] With the limited resources in hand, most of the budget allocated will be spent on the employees’ salary. A large chunk of the budget has been allocated on the recurrent expenditure and is low on development expenditure. The state coffers would be exhausted on populist programs such as the constituency development programme.[5] The provinces, as well, have followed the same line in their budget allocation. The provincial lawmakers have been allocated as much as nine per cent of the total budget.[6]

The NCP government, which centers on nationalism, has made no paradigm shift and has announced distributive budget, failing to deliver its agenda of prosperity.[7] Without economic nationalism, the government cannot succeed on its agenda of ‘Happy Nepali, Prosperous Nepal’. The budget, unfortunately a populist one,[8] has no hopes for economic transformation of the country. With the NCP in power, crony capitalism rose in the country. Most recently, the government has been giving away construction contracts to Maoist-affiliated contractors without following public procurement procedures.[9] The cabinet, in its recent decision, approved a contract amounting Rs 43 cores without any competitive bidding.[10]

Since the country became a democratic nation, Nepal has been synonymous as a crony capitalist state. The political parties since 1950s have all promoted some form of socialism, but political parties, big business, and bureaucracy have been in a nexus for systematic corruption. Political parties and big businesses go hand in hand in awarding big contracts and bending regulations in order to unfairly extract benefits from the state and the market, all the while stamping out competition.[11] The public procurement regulation was amended for the eighth time to benefit the private businesses.[12]

On incidents of corruption that came to light in the past few months including the NCell tax evasion, wide body scam, and Baluwatar land grab, leaders of both the ruling party and the main opposition have remained silent. As with every accusation regarding scams in the country, the top leaders, who have been on the helm, one after the other for the last 2-3 decades have been mired with the business elites, sharing the loot extracted from corruption. The private companies who have evaded their tax liabilities are equally culpable. The political parties and the companies have cleverly managed subversion of rule of law. Despite public aspiration from a historical government of a super majority, the ruling party is failing to deliver its promises of prosperity and is falling prey to crony capitalism. The hope wanes with every passing day.


[1] https://thehimalayantimes.com/nepal/seven-provincial-governments-present-budgets/

[2] https://www.spotlightnepal.com/2019/06/07/new-budget-realty-vs-populism/

[3] https://thehimalayantimes.com/business/country-records-balance-of-payments-deficit-of-rs-90-83-billion/

[4] http://therisingnepal.org.np/news/24140

[5] https://www.spotlightnepal.com/2019/06/07/new-budget-realty-vs-populism/

[6] https://www.kantipurdaily.com/news/2019/06/17/156073502112268929.html

[7] https://www.recordnepal.com/category-explainers/samajbadi-party-nepal-explained/

[8] https://aarthiknews.com/news/2150

[9] https://sagarmatha.tv/2019/07/24/25368/

[10] https://aarthiknews.com/news/4770

[11] https://myrepublica.nagariknetwork.com/news/vision-for-prosperity-1/

[12] https://myrepublica.nagariknetwork.com/news/contractors-hail-eighth-amendment-to-public-procurement-regulations/

Author: Milan Karki

Photo: Pratik Gurung

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