Sunday, January 21, 2018

Civil servants adjustment in federal set up and more

More than 75 percent of the total civil servants will be deployed to the provincial and local levels for their full-fledged functioning. The High Powered Federal Administration Restructuring Committee led by Kashi Raj Dahal, chairman of the Administrative Court, has recommended that over 75 percent of the total 83,200 civil servants be deployed to the provincial and local levels. This will leave only one-fourth of the existing government employees under the federal government. Broadly, some 40 percent staffers will be deployed to the 753 local federal units while around 35 percent will work under the provincial governments

The Local Level Restructuring Commission had suggested 70 officials on an average in each local government under the command of a joint-secretary at the metropolitan city and under-secretary at the lower level. The secretary (called provincial chief secretary) will lead the bureaucracy in the province. According to Article 302 of the constitution, civil servants will be deployed at the three levels in the new arrangement. The Civil Servant Adjustment Act endorsed by parliament three months ago sets the broader criteria for management and deputation of the staffers within six months. The constitution provisions the provincial Public Service Commission to hire civil servants in the state and the local bodies under it.

The booming construction works in the highlands has been attracting a large number of Indian workers due to the lack of Nepali workers. Hundreds of young Nepalis are still flocking abroad, taking out huge loans to work overseas. The locals said that the shortage of labour in construction sector has been luring workers from the southern neighbour. These workers usually work in road, hydroelectric and other construction projects. Road construction works has been rapidly progressing at Terhathum section. The length of Mid-hill Highway is 1,776 km connecting east to west. In Dhankuta, Indian workers are working for Sindhuwa Road project, Basantapur-Taplejung Road project and a bridge project over Tamor River. They are also involved in the construction of the governmental buildings in different rural municipality and headquarters. 

Indian workers get a pay of Rs600 to Rs1000 daily — which roughly amounts to Rs18,000 to Rs22,000 monthly salary. Workers are not required to make any investment in projects except their physical labour. Machines and equipments required for the work are supplied by the respective construction company. An increasing number of youths from Terhathum have been leaving for foreign jobs. Each of them have been paying at least Rs150,000 to manpower agencies. However, their jobs are not secured and are forced to work in dire conditions. 

All regions in South Asia are expected to have higher growth rate except for Nepal

IMF’s South Asia Regional Update, January 2017The deceleration in growth in 2017 to 6.5 percent reflects primarily weaker activity in India, where the economy was hit with two temporary shocks—the country’s currency exchange initiative and glitches in implementation of the national Goods and Services Tax. Growth was broadly stable or accelerated in other countries, primarily driven by domestic demand. In 2018, growth is expected to accelerate, other than in Nepal, to 7.1 percent in aggregate for the region reflecting continued strong consumption and investment, supported by favorable financial conditions and improving external demand.

Nepal: GDP is expected to grow at 5% in FY2018 (ends in mid-July 2018).  Inflation is projected to be 6% in FY2018. The challenge now is to maintain the momentum and avoid falling back to the relatively low average historical growth of about 4 percent per annum through steady implementation of structural reforms. At the same time, with the fiscal stance becoming more expansionary, monetary policy needs to be tightened to keep inflation and balance of payments pressures in check. Fiscal policy should focus on higher and better-quality public investment and prudent implementation of fiscal decentralization through sustainable intergovernmental fiscal arrangements and the need to build public financial management capacity at the sub-national level. Hasty implementation of fiscal decentralization could strain government finances and weaken fiscal policy’s stabilization function.

India: GDP is expected to grow by 6.7% in FY2018 (ends in March 2018) and 7.4% in FY2019. Inflation is projected to rise to 5% in FY2018. The Government of India implemented multiple structural reforms in 2016. The emphasis is now likely to shift to addressing implementation of policy rather than new policy measures. Key recent measures include: adoption of a formal medium-term inflation target (4 percent median CPI inflation with a symmetric 2 percent band) in August 2016; passage of the GST constitutional amendment in August 2016; passage of a new Bankruptcy Code in May 2016; supply-side measures to contain food inflation; and improvements in financial inclusion and domestic bond markets. The government also announced a major decision in October to recapitalize state-owned banks, committing to provide about two-thirds of the total financing of 1.3 percent of GDP. The longawaited nationwide GST is a major reform of the Indian tax system. Focus should remain on further streamlining the rate structure and improving the supporting infrastructure to ease implementation costs particularly for SMEs. Other key reform priorities include credible reforms in the banking sector to ward off recurrent balance sheet problems particularly in the public banks, labor market reforms to facilitate greater and better quality job creation, and agricultural sector reforms to reduce production risk and improve competitiveness. These reforms and others already in train should help raise medium-term GDP growth rates in India above 8 percent.