Thursday, May 30, 2019

Quick thoughts on Nepal’s FY2020 budget

Here are my quick thoughts on FY2020 budget:

On 29 may 2019, Finance Minister Dr. Yuba Raj Khatiwada presented FY2020 budget (mid-July 2019 to mid-July 2020) to a joint assembly of the federal parliament. This is the second budget of the government that commands two-thirds majority in the parliament. It is designed to placate the dissatisfied NCP politicians that were batting for more discretionary funds and to adhere to party’s election manifesto, particularly increasing cash-based social security allowances. The finance minister argues that FY2020 budget focuses on institutionalizing the achievements of FY2019, fair distribution of resources, and strong social security regime. 

This was an opportune time to consolidate social security schemes, streamline scattered and incoherent projects and enhance allocative efficiency of capital spending, institute sound governance regime while awarding and implementing projects, take transformative measures to bring about growth-enhancing structural changes in agriculture, labor and industrial markets, and institute some fiscal discipline. However, these were overshadowed by the urge to bring out a distributive and populist budget. Given the deteriorating state of fiscal, financial and external sectors, the focus of FY2020 budget should have been on allocative efficiency, targeted social security assistance under one framework, and fiscal discipline. 

The budget is notable in four ways:

First, in FY2019, the finance minister tried his best to maintain fiscal discipline by resisting pressure from NCP leaders to increase social security allowances and by not overblowing the already high government expenditure. However, this year the finance minister yielded to intense pressure to increase cash allowances and funds for parliamentarians that are used to finance incoherent pet projects without much governance and oversight. The finance minister increased discretionary funds to be used by parliamentarians to Rs60 million, up from Rs40 million. Even senior party leaders from NCP itself were against allocating funds to the parliamentarians, terming it a waste of taxpayers’ money and a breeding ground for misappropriation.

Meanwhile, the government increased cash allowance for 70 years and above by Rs1000, making it a total of Rs3000 per month (plus Rs1000 medical benefit). There are about 1.3 million people registered to get that benefit. The government has to allocate at least Rs15 billion additional money for this purpose. Similarly, single woman (60 years and older, either divorced or unmarried), fully and partially disabled, and indigenous people will also get an additional Rs1000 per month, making it a total of Rs2000 per month. 

Second, compared to revised estimate of FY2019 budget, the FY2020 budget outlay increased by about 27%. Total federal budget is about 38.3% of GDP, marginally higher than 38% of GDP in FY2019. Here I assume nominal GDP to increase by 15.4% in FY2020 (if you increase this growth rate of nominal GDP like the government did in its latest version of MTEF to show 8.5% real GDP growth, then the size of budget will appear smaller). Fiscal deficit is expected to be about 10.7% of GDP. This is too high and a deficit binge expenditure model will exacerbate inflation as well as liquidity situation in the financial market, which then affects interest rates and crowds out the private sector. 

Fiscal discipline is at stake here. The revised estimates for FY2019 shows that tax and non-tax revenue is projected to barely cover recurrent spending (24.8% of GDP vs 24.4% of GDP, respectively). In FY2020, revenue is projected to be 26% of GDP and recurrent spending is projected to be 23.9% of GDP. Net domestic borrowing is about 4% of GDP and fiscal deficit is about 10% of GDP.

Third, the revision of public employees’ wages and compensation (which happens every two years) contributed to the large size of the budget. Salary went up by 18% (for gazetted officers) to 20% (for non-gazetted officers). However, this increase is far higher than the average inflation rate during the same period. Raising public sector wages drastically affects private sector wages too and exerts inflationary pressures.

Fourth, there are no new programs as such but existing ones are too scattered too. There are some efforts to bring scholarship assistance under one framework and to introduce conditionality on the use of assistance to ensure accountability and greater impact (such as giving payment to mothers of child that need day meal in schools). Similarly, the government has committed to bring all social security assistance under one framework. Melamchi project has been allocated additional money to continue the stalled work. Crucial airport construction and infrastructure works are prioritized. The commitment to consolidate the number of BFIs and to design a revenue regime that favors domestic production is commendable. The private sector seem happy with the budget but are suspicious of its implementation. 

More on these later, but first let us look at the macroeconomic specifics:

Budget outlay

The total expenditure outlay for FY2020 is NRs1532.9 billion (an estimated 38.8% of GDP), which is 27% higher than the revised expenditure estimate for FY2019. The government expects to spend 91.8% of NRs1215.1 billion allocated in FY2019. However, given the expenditure trend so far, it is highly unlikely. 

FY2020 budget outlay comprises of NRs957.1 billion as recurrent expenditures (62.4% of the total outlay), NRs408.1 billion as capital expenditures (26.6%), and NRs167.5 billion as financial provision. 

As a share of GDP, total budget amounts to 38.3%, including just 10.2% for capital spending. As per FY2019 revised estimates, the government now expects to spend just 92.6% of planned recurrent budget and 86.9% of planned capital budget. Compared to the revised estimates, recurrent spending is up by 22.3% and capital spending by a whopping 49.6%. Capital budget has been increased at a time when its absorption rate is lower than in FY2018. Without a viable implementation plan, it is not going to fully spent. 

FY2020 budget overview
GDP growth target (%)

Inflation target (%)

Budget allocation for FY2020
Rs billion
Projected total expenditure
Financial provision

Projected total revenue
Foreign grants

Projected budget surplus (+)/deficit (-)

Projected deficit financing
Foreign loans
Domestic borrowing


A total revenue target of NRs1,112 billion (27.8% of GDP) has been set for FY2019 (or NRs981.1 billion if revenue sharing with subnational governments is excluded). Foreign grants are expected to be NRs58 billion (1.5% of GDP). Total revenue plus foreign grants less sharing of revenue with subnational governments leaves the government with NRs1039.1 billion. The government will share, based on monthly collections, 30% of VAT and internal excise duty, and 50% of royalties from natural resources with subnational governments. The revised estimate for federal revenue mobilization (including grants) in FY2019 is 25.7% of GDP. Compared to the revised estimate, revenue growth target for FY2020 is 29.5%, which is ambitious and was achieved just once in the last decade. The government had a similar target in FY2019 but failed to achieve it.  

Given that the GDP growth target itself is overly ambitious, and revenue administration reforms along with tinkering of import tariff on some non-essential items have its limit in increasing import-based revenue, it needs to be seen how this government will achieve the revenue target.

Nepal’s revenue mobilization is already one of the highest among low-income countries and about 45% of it comes from taxes on imports. Tax revenue is projected to be around 25.2% of GDP in FY2020, up from 22.4% of GDP in FY2019. Non-tax revenue is projected to be 2.6% of GDP.

Deficit financing

Considering federal expenditure and its share of revenue in total revenue mobilization, the budget deficit turns out to be NRs493.5 billion, which is financed by foreign loans equivalent to NRs298.3 billion and domestic borrowing of NRs195 billion. This is going to exacerbate liquidity crunch in the financial market and raise interest rates. The government had an ambitious plan to raise NRs136.9 billion in FY2019, but its bill and bonds are undersubscribed at the moment. 

The government is planning to increase net foreign borrowing by 45.7% to NRs272 billion (6.8% of GDP) and net domestic borrowing by 13.3% to NRs136.9 billion (3.9% of GDP). Again, without substantial improvement in budget execution capacity, it is unlikely that the government will be able to borrow the targeted amount. 

Overall, fiscal deficit is projected to be about 10.7% of GDP. Fiscal deficit is the difference between revenue including grants and expenditure including net lending.

Where is recurrent budget going?

Almost 53.5% of planned recurrent budget of NRs957.1 billion is going to provincial and local governments in the form of fiscal transfer (fiscal equalization, conditional, complementary and special grants) and unconditional grants. This is where pet projects of politicians are usually embedded in as these grants are to cover both recurrent and capital spending at subnational level. The other big ticket item is the compensation of employees, which takes up about 15.2% of total recurrent budget. The government has earmarked NRs157.3.1 billion (3.9% of GDP) for social security spending and NRs73.6 billion for use of goods and services. Use of goods and services consists of (i) rent & services; (ii) operation and maintenance of capital assets; (iii) office materials and services; (iv) consultancy and other services fee;(v) program expenses; (vi) monitoring, evaluation and travel expenses; (vii) recurrent contingencies; and (viii) miscellaneous.

Where is capital budget going?

Almost 57.5% of the planned capital budget of NRs408.1 billion is going for civil works, 22.1% for constructing or purchasing building, and 6.9% for land acquisition. Compared to the FY2019 revised estimate, capital spending has been increased by 49.6%. Some of this expenditure also include post-disaster related reconstruction activities.

Subnational governments

Grants to provincial and local governments (under federal government’s recurrent expenditure) consist of revenue sharing as mandated by the constitution, NNRFC Act, and Intergovernmental Fiscal Management Act. The central government needs to share 30% of VAT and internal excise duty (15% each to local and provincial governments) mobilized in a given year. Similarly, it has to share 50% of royalties generated from natural resources (mountaineering, electricity, forests, mines and minerals). In addition, on expenditure side, it categorically allocates fiscal equalization and conditional as well as unconditional grants. 
Total grants or transfers to subnational governments is projected to be NRs463 billion and revenue sharing of NRs130.9 billion. Some local governments are using these grants to purchase vehicles and other goods instead of using them in local level capital projects. There are high fiduciary risk when local governments use such grants without much oversight and institutional capacity to execute projects. 

Grants to sub-national governments
Rs billion
Total grants
Fiscal transfer
Province government
Fiscal equalization
Local government
Fiscal equalization

Major takeaways from FY2020 budget

First, the finance minister has tried to give continuity to the programs and projects he launched in FY2019 budget. However, some of the projects were never initiated, indicating allocative inefficiency. Rationalization of recurrent expenditures— especially to streamline subsidies and allowances, and to avoid duplicate, incoherent and wasteful projects—  is missing too. This could have been transformative in setting the course of budget formulation. He could have also facilitated closure of defunct public enterprises that are not in operation or not making any profit for a long period of time. There is no point in keeping employees of such public enterprises in the payroll. Similarly, steps could have been taken to root out redundant temporary/contractual staff, often in lower tier jobs in government offices, who were hired by politicians without a work plan. 

Second, the finance minister succumbed to political pressure and increased allowances as well as funds for parliamentarians. Each directly elected representative will now be able to spend Rs60 million in projects of over Rs1 million. This kind of piecemeal funding to construct substandard youth clubs, temples, covered halls, playground, local roads, bridges, etc without coordination with other agencies and projects is an utter waste of taxpayers’ money. Indirectly, this is an avenue to distribute money to party supporters and party-affiliated contractors. Similarly, increasing elderly allowance is another bait to attract voters at the cost of fiscal prudence. 

Third, like in the previous budget, a robust, credible and a time-bound implementation plan to spend the earmarked money is missing. So, improvements in allocative efficiency in budget preparation, and its impact on budget execution, remain a far cry. Granted that the budget speech would not ideally elaborate on implementation plan. However, since this lies at the heart of the chronically low capital spending in the first place, it should have been briefly elaborated. In the past, the MOF released an implementation plan few day after the budget speech. But, that also didn’t work. The core issues for chronically low capital spending (structural weaknesses in project preparation and implementation, low project readiness, bureaucratic hassle in approving and reapproving projects, poor project management and contractor capacity, high fiduciary risk in project implementation at subnational level, and political interference both at planning and operational levels) and bunching of spending in the last quarter (note that over 40% of actual capital spending happens in the last month of fiscal year) are hardly addressed in the budget, as always. This raises doubt over timely budget execution in FY2020 as well. As an example, hiring project head from outside of government service does not add much value if person has to go through the same bureaucracy to get routine approvals and authorizations. 

Fourth, revenue target also seems to be a bit ambitious given that the government failed to achieve the target in FY2019. Compared to revised estimate of FY2019, revenue growth target is set at around 29% (compared to FY2019 budget estimate, growth target is just 18% but this is not the right comparison here). This target is going to go up if the government is unable to mobilize Rs757.5 billion revised estimate for FY2019 (which is 91% of the FY2019 budget target). The government really has to up its game in plugging leakages and also hope that economic activities accelerate as expected to meet the revenue target. Tax rates are unchanged except for some adjustment in custom duties and additional tax on petrol and diesel to fund road maintenance (by the way, government has been already levying similar tax for road maintenance and for construction of Budhi Gandaki). Custom duty on imported chicken is up from 10% to 30%, and custom and excise duty on sugary products have increased. Same with alcoholic drinks and cigarettes. Some of the agricultural goods on which tariffs have been raised (such as sugar) raises the possibility of higher domestic prices. The manipulation of sugar prices by domestic produces by forcing the government to impose quantitative restrictions in import is already a hotly debated issue. 

There are three ways to increase revenue: (i) a higher GDP growth rate means accelerated economic activities, which means higher tax and nontax revenue; (ii) plug revenue leakages like under-invoicing of imported goods, selective tax waivers either due to corruption or political pressure, automated revenue administration, enhance capacity of local bodies to raise local revenues (they know the locality better, for instance, house or land or services tax), etc.; and (iii) a tax regime that promotes formal economy (exorbitantly high income and corporate tax rates encourage informality and narrows tax base). 

Fifth, the fiscal deficit (and primary deficit) is at alarming level. Higher deficit exerts inflationary pressure, raises interest rates, crowds out private sector and fuels imports. Expansionary fiscal and monetary policies need to be managed well. 

Sixth, the government seems overly optimistic in its ability to raise money from the domestic market. In FY2019, it was unable to sell its bills and bonds as the financial market committed to buy just half of what it proposed to sell in May. On the one hand, the government wants to borrow more from domestic market to meet its ballooning expenditure needs. On the other hand, tight liquidity situation in the financial sector continues unabated as BFIs are close to the credit to core capital-cum-deposit (CCD) ratio of 80. In this situation, trying to raise more money from the domestic market will further push up interest rates and crowd-out the private sector. [That said, with high interest rates amidst tight liquidity, BFIs are maintaining profit margin.]

Seventh, GDP growth target of 8.5% is too ambitious. GDP growth (at basic prices) will likely be between 6.0% and 6.5% (at producers’ prices between 6.4% and 6.8%). Unfavorable monsoon (expected to be below average for much of the country) will lower agricultural growth, but industrial sector will likely grow at a robust pace. Specifically, post-earthquake reconstruction work will continue to act as a stimulus (government is bankrolling most of the reconstruction work even for private houses) and hydroelectricity generation will nearly double as 456 MW Upper Tamakoshi, 40 MW Khanikhola-1, 42.5 MW Sanjen, 111 MW Rasuwagadhi, and 82MW Lower Solu, among others are expected to be completed by mid-July 2020. Similarly, provided that public capital spending accelerates as expected (which means completion of the hydropower projects as well as notable progress in Melamchi, GBIA, PIA, national highways, etc), construction activities will pick-up pace lost in FY2019. Meanwhile, adequate and stable supply of electricity, and implementation of the investment-friendly laws and regulations will likely support manufacturing activities. Services sector growth will continue to be high, underpinned by wholesale and retail trading activities and tourism activities (Visit Nepal 2020 will draw in more number of tourists). The downside risks to the forecast are slow public capital spending as in the past, continued tight liquidity in the financial sector and an adverse investment climate due to security risks. 

Eighth, the government really needs to work on two fronts to boost GDP growth rate: (i) enhance public budget execution capacity, and increase private investment by implementing the recently enacted laws, which need to be supplemented by policies, regulations, guidelines, and institutional framework; and (ii) ensure sound governance and security. Better budget execution means faster project completion, which stimulates economic activities. This in turn will increase revenue and create jobs. On promotion of private investment, so far industrial policy and export promotion incentives are like tokens given to the private sector because they complain a lot. They need relatively and reasonably good business-friendly policies (it would have been better if the government set a target to climb few notches up the annual Doing Business ranking), and an ecosystem where there is a steady flow of investment in enhancing human capital and institutions. 

Unfortunately, except for the usual high-sounding commitments, there is no structured viable vision or policy to promote backward and forward linkages in industrial and agribusiness sectors. Private sector needs an enabling environment to flourish: infrastructure (like good roads network), adequate and reliable electricity supply, sensible tax regimes so that raw materials are not taxed higher than final goods produced out of it, strong financial sector, adequate labor pool and human capital, clear and stable policies, etc. Furthermore, we also need to think of how we can lower electricity tariff for industries as we move from deficit to surplus production by FY2020. It could also encourage use of electric vehicles and promote innovation, especially in SME sector. Additionally, it could promote import-competing production and help to lower trade deficit. A meaningful structural transformation that forms the basis for sustained and inclusive growth as well as adequate jobs creation requires transformative thinking, incentives and policies. 

Overall, FY2020 budget is not too bad given the demand for NRs100 million for discretionary spending by parliamentarians and higher social security allowances. It has also given continuity to previous programs and projects, including commitment to improve investment climate and government operations. However, it doesn’t rein in on scattered projects, enhance allocative efficiency and promote fiscal prudence given the alarmingly high fiscal deficit. This could be a big ask from the finance minister given that he is under intense political pressure to bring out a distributive and populist budget that is consistent with NCP’s election manifesto. 

Friday, May 17, 2019

तीव्र तथा दिगो वृद्धिको महत्त्वाकांक्षा

यो बिचार कान्तिपुरमा जेठ १, २०७६ प्रकाशित भएको थियो। 

राष्ट्रपति विद्यादेवी भण्डारीद्वारा प्रस्तुत सरकारको नीति तथा कार्यक्रम कर्मकाण्डी खालको लाग्छ । त्योभन्दा पनि आर्थिक वृद्धि किन सरकारले तोकेको ८ प्रतिशत लक्ष्यभन्दा कम भयो ? आर्थिक वर्ष २०७६/७७ को बजेटका लागि स्रोत निक्र्योल भइनसक्दै प्रधानमन्त्री केपी शर्मा ओलीले सामाजिक सुरक्षा भत्ता, कर्मचारीको तलब र निर्वाचन क्षेत्रका नाममा सांसदको बजेट बढाउने घोषणा किन गरे ?

यी दुई विषयले अर्थतन्त्रमा कस्तो असर पर्छ भन्नेमा विचार-विमर्श भएको छैन । दुुई तिहाइ मत प्रँप्त सरकारको आधार वर्षमै अर्थमन्त्री युवराज खतिवडाले राखेको लक्ष्यभन्दा कम आर्थिक वृद्धि हुँदैछ । स्थिर सरकार भएकाले काम फटाफट गर्ने विश्वाससाथ २०७५/७६ को बजेटमा ८ प्रतिशत आर्थिक वृद्धिको लक्ष्य राख्दा प्रायः अर्थशास्त्री र नीति विश्लेषकहरूले महत्त्वाकांक्षी भनी उल्लेख गरेका थिए ।

अर्थमन्त्री खतिवडाले ‘यो सरकार पहिलेको जस्तो होइन र बजेट विनियोजन पहिलेको जस्तो छैन’ भन्दै आर्थिक वृद्धिको लक्ष्य कुनै हालतमा पुरा गरिछाड्ने दाबी गरेका थिए । यो लक्ष्य किन भेटिएन भनी नीति तथा कार्यक्रममा केही बोलिएन । ‘मेरो सरकारले लिएका आर्थिक नीतिहरूको कार्यान्वयनबाट उत्साहजनक परिणाम देखिन थालेको छ । पछिल्ला दुई वर्ष औसत ६ प्रतिशतभन्दा माथि र यो वर्ष ७ प्रतिशत आर्थिक वृद्धि हुने भएकाले दोहोरो अंकको आर्थिक वृद्धिको आधार तयार भएको छ’, यतिमात्रै भनियो ।

सरकारले बजेट ल्याउँदा आर्थिक वृद्धि आधारभूत मूल्यमा ८ प्रतिशत हुने लक्ष्य राखेको थियो । अहिले आर्थिक वृद्धि ७ प्रतिशत भयो र लक्ष्य नजिक पुग्यौँ भन्दैछ । सरकारले लिएको लक्ष्य आधारभूत मूल्यमा थियो । अहिले भनेको ७ प्रतिशत वृद्धि उत्पादक मूल्यमा हो । आधारभूत मूल्यमा वृद्धिदर ६.८ प्रतिशत हुने प्रारम्भिक अनुमान गरिएको छ ।

उत्पादकको मूल्यमा आधारित वृद्धिदर आधारभूत मूल्यमा भन्दा बढी हुन्छ । यसमा कर जोडेर सहुलियत घटाइन्छ । अझ आफू अनुकूल तथ्याङ्क व्याख्या गर्नैका लागि ‘पछिल्ला दुई वर्ष औसत ६ प्रतिशतभन्दा माथि र यो वर्ष ७ प्रतिशत आर्थिक वृद्धि’ भनिएको छ, जबकि पछिल्ला दुई वर्ष पनि औसत ७ प्रतिशत वृद्धिदर थियो ।

उद्योगको असर

लगातार तीन वर्ष ६ प्रतिशतभन्दा माथिको आर्थिक वृद्धि पहिलोपटक हो । यो गौरव गर्नलायक उपलब्धि हो । सरकारले आर्थिक आधारहरू तयार भइसकेकाले अब केही वर्षमै दोहोरो अंकको वृद्धि हुन्छ भन्दैछ । तर यसै आर्थिक वर्षमा लक्ष्यभन्दा कम आर्थिक वृद्धि हुनुुको मुख्य कारण औद्योगिक क्षेत्रको सुस्तता हो । समयमै मौसमी वर्षा, भूकम्पपछिको पुनर्निर्माणमा भएको प्रगति, सेवा क्षेत्रमा पर्यटन र खुद्रा व्यापार (जुन आयातमा निर्भर छ) ले ६.८ प्रतिशत वृद्धि पुर्‍याएको हो । यो वृद्धिमा कृषि क्षेत्रको १.६ प्रतिशत बिन्दु, औद्योगिक क्षेत्रको १.३ प्रतिशत बिन्दु र बाँकी सेवा क्षेत्रको योगदान छ । सेवा क्षेत्रभित्र पनि थोक तथा खुद्रा व्यापारको वर्चस्व छ । अर्थतन्त्रमा थोक तथा खुद्रा व्यापारको आकार औद्योगिक क्षेत्रको बराबर नै हो ।

औद्योगिक क्षेत्रमा ४ वटा आर्थिक क्रियाकलाप पर्छन् । खानी तथा उत्खनन, उद्योग, विद्युत, ग्यास तथा पानी र निर्माण । निर्माण सम्पन्न भई केही साना तथा मझौला विद्युत आयोजनाबाट राष्ट्रिय प्रसारण प्रणालीमा विद्युत थपिँदा र वर्षा राम्रो भएकाले खोलाको बहाव बढ्दा भइरहेका विद्युत आयोजनाले धेरै विद्युत उत्पादन गर्दा यो क्षेत्रको वृद्धि सर्वाधिक १२.४ प्रतिशत हुने प्रक्षेपपण गरिएको छ । भूकम्पपछिको पुनर्निर्माणमा चाहिने ढुङ्गा, गिटी, बालुवा र माटो उत्खननले यो क्षेत्रको वृद्धिदर ८.५ प्रतिशत हुने आँकलन गरिएको छ ।

तर निर्माण र उद्योग क्षेत्रको वृद्धिदर घटेको छ, जसले समग्र औद्योगिक क्षेत्रको वृद्धिदर अघिल्लो वर्षको ९.६ प्रतिशतबाट घटेर यो वर्ष ८.१ प्रतिशतमा पुग्यो । माथिल्लो तामाकोशी, मेलम्ची खानेपानी आयोजना र राष्ट्रिय गौरवका आयोजनामा अपेक्ष्ँितभन्दा ढिला काम हुँदा निर्माण क्षेत्रको वृद्धिदर ८.९ प्रतिशतमा सीमित भएको छ । निजी क्षेत्रको घट्दो लगानी वा विश्वासको संकट र आन्तरिक तथा बाह्य बजारमा हाम्रो उद्योगको बढ्दो लागत तथा घट्दो गुणस्तरले उद्योग क्षेत्रको वृद्धिदर ५.८ प्रतिशतमा सीमित भएको छ ।

सरकारले निजी क्षेत्रको विश्वास जित्न नसकेको यो तथ्यांकले देखाउँछ । उत्पादनको प्रतिस्पर्धात्मक क्षमता बढाउन पूर्वाधारको पर्याप्ततादेखि व्यवसाय सहजीकरणमा निर्णायक कदम चाल्नसकेको छैन । डेढ महिनाअघि बजेट ल्याएर पनि खर्च गर्ने क्षमता र पद्धतिमा नयाँपन ल्याउनसकेको छैन । नयाँपनका नाममा प्रधानमन्त्री, अर्थमन्त्री र विभागीय मन्त्रीहरूले सचिव, सहसचिव र आयोजना प्रमुुखलाई भेला पारेर निर्देशन दिनेभन्दा बाहेक केही गरेको देखिँदैन ।

वित्तीय संघीयतालाई प्रभावकारी कार्यान्वयन गर्न प्रदेश र स्थानीय सरकारलाई आयोजना हस्तान्तरण गरेको छैन । क्षमता विकास र आवश्यक सबै कानुन र संस्थागत संरचना बनाइदिएको छैन । यसैकारण कुल सरकारी स्थिर पुँजी निर्माणको वृद्धिदर यो वर्ष ८.१ प्रतिशतमा झर्दैछ । अघिल्लो वर्षको यस्तो वृद्धिदर २९.४ प्रतिशत थियो । काममा ढिलासुस्ती, बजेट तयारी र कार्यान्वयनको कर्मकाण्ड र आश्वासन धेरै गर्ने तर उपलब्धि थोरै भए पनि बढाइ-चढाइ आफ्नै गुणगान गाउने संस्कृतिको परिणाम हो यो ।

तीव्र वृद्धिको महत्त्वाकांक्षा

सरकाद्वारा बहुप्रचारित ‘अर्थतन्त्रको जग बलियो भइसक्यो र अब रफ्तारमा आर्थिक वृद्धि हुन्छ, आउने वर्ष करिब ९ प्रतिशत र त्यपछि १० प्रतिशतभन्दा माथि’बारे चर्चा गरौँ । आर्थिक, प्रशासनिक र संस्थागत आधारहरू बलियो भइनसकेकाले यस्तो उपलब्धि हुने कम सम्भावना छ । ७ प्रतिशतभन्दा माथि आर्थिक वृद्धि लगातार २५ वर्षभन्दा बढी समयसम्म १५ भन्दा थोरै देशले गरेका छन् । चीन, वोत्सना, ब्राजिल, जापान, द. कोरिया, सिंगारपुर जस्ता मुलुक यस कोटीमा पर्छन् ।

आर्थिक रूपान्तरण गर्ने पाँच तत्त्व छन् । विश्व व्यापारका अवसरलाई आफ्नो हित हुनेगरी नीति ल्याउनु र प्रतिस्पर्धी उत्पादन गर्नु । आर्थिक स्थिरता र वित्तीय अनुशासन कायम राख्नु । उच्च बचत तथा लगानी दर कायम राख्नु । बजार अर्थव्यवस्थालाई स्रोतहरूको उचित परिचालन गर्नदिनु र प्रतिबद्ध, विश्वसनीय तथा सक्षम सरकार हुनु ।

यी पाँच तत्त्वमध्ये स्थिर सरकार बाहेक हामीसँग भरपर्दा आधार छैनन् । त्यसैले आर्थिक वृद्धि तीव्र हुने आधार तयार भइसक्यो भनी विश्वास गर्न गाह्रो छ । २०३७/३८ सालमा आर्थिक वृद्धि ८.९ प्रतिशत थियो, तर त्यसले निरन्तरता पाएन । त्यसको अघिल्लो वर्ष ०.३ प्रतिशत आर्थिक वृद्धि भएको थियो । अघिल्लो वर्षको न्यून वृद्धिको प्रभाव थियो, आर्थिक चमत्कारले भएको थिएन ।

भूकम्पपछिको आर्थिक वृद्धिदर पनि यस्तै थियो । जसलाई सरकारले दिगो भइसकेको देखाउन तीन वर्ष ६ प्रतिशतभन्दा माथिको वृद्धिदर भनी अर्थ्याइरहेको छ । २०७३/७४ मा ७.७ प्रतिशत वृद्धि अघिल्लो वर्षको आधार अति नै कम (नाकाबन्दीका कारण ०.२ प्रतिशत वृद्धि) भएर र दुई चरणको स्थानीय निर्वाचन खर्चबाट हुनगएको थियो । २०७४/७५ मा ६.३ प्रतिशत वृद्धि केन्द्रीय र प्रादेशिक चुनावको खर्च, विद्युत आपूर्तिमा सुधार र पुनर्निर्माणका कामले गर्दा भएको थियो ।

यो वर्षको ६.८ प्रतिशत वृद्धि अनुकूल वर्षा, पुनर्निर्माण र पर्यटन र थोक तथा खुद्रा व्यापारले भएको हो । चुनाव र पुनर्निर्माण सधैं हुंँदैनन् र यिनले गर्दा हुने आर्थिक वृद्धि दिगो हुन्न । प्रायः आर्थिक वृद्धि मनसुनी तत्त्व र विप्रेषण आय (रेमिटान्स) ले धानेको आयातित वस्तुको खपतबाट भएको छ । यो संरचना चाँडै परिवर्तन हुनेवाला छैन ।

त्यसो भए गर्ने के त ?

उच्च तथा दिगो आर्थिक वृद्धि धान्न सरकारले वितरणमुखी बजेटभन्दा आपूर्ति क्षमता बढाउने वित्तीय र मौद्रिक नीति ल्याउनुपर्छ । चालु खर्च बढेर, राजस्व परिचालन लक्ष्यभन्दा कम भएर बजेट घाटा धान्नै नसक्ने अवस्था छ । आयात बढेर चालु खाता घाटा अहिलेसम्मकै सबैभन्दा उच्च भइसक्यो । विस्तारित र कमजोर मौद्रिक नीतिले ऋण वृद्धि निक्षेप वृद्धिभन्दा धेरै छ । बजारमा उत्पादनशील क्षेत्रमा कर्जाको अभाव छ । कथंकदाचित कर्जा उपलब्ध भए पनि व्याज चर्को छ ।

विस्तारित नीतिले आयातको खपत बढाएको छ, भुक्तानीको सन्तुलनमा घाटा भएको छ । कुनै क्षेत्रमा कर्जा धेरै गएको छ, तिनीहरूले आयात गरेका सामान वा कच्चा पदार्थ आयात गरेर बनाएका सामान नबिकेर गोदाममै थन्किएका छन । यसो गर्दा बैंकको ऋण तिर्न गाह्रो हुन्छ र खराब ऋण बढ्दै जान्छ । समग्र बैंकिङ क्षेत्रको वित्तीय जोखिम बढ्छ । मौद्रिक नीति बैंकिङ जोखिम कम गर्ने, ब्याज स्थिर राख्ने, उत्पादक क्षेत्रमा बढी ऋण परिचालन गर्ने र तरलता समस्या सम्बोधन गर्ने खालको हुनुपर्छ । अनि मात्र आर्थिक वृद्धि उच्च र दिगो हुने सम्भावना रहन्छ ।

अन्तर्राष्ट्रिय मुद्रा कोषले सरकारलाई विस्तारित बजेट र मौद्रिक नीति नल्याउन सुझाव दिइसकेको छ । नत्र भविष्यमा अचानक समायोजन गर्नपर्‍यो भने अर्थतन्त्रमा नराम्रो असर पर्न सक्छ । राष्ट्रपतिले नीति तथा कार्यक्रममा प्रतिबद्ध गरेका वितरणमुखी कार्यक्रम अन्तर्राष्ट्रिय मुद्राकोषले दिएको सुझाव विपरीत छ । मौलिक हक पूरा गर्ने भन्दैमा अर्थतन्त्रले धान्नै नसक्नेगरी वितरणमुखी बजेट ल्याउन हुन्न । वित्तीय अनुशासन पालना भएन भने अर्थतन्त्रमा नराम्रो असर पर्छ । अबको बजेटले चालु खर्चलाई कित ‘फ्रिज’ गर्ने नत्र भने घटाएर पुँजीगत खर्च बढाउने हो । सामाजिक सुरक्ष्ाँमा रकम वितरण गर्ने वैकल्पिक बाटो खोज्नुपर्छ । विकास निर्माणमा सांसदको भूमिका तजविजी खर्चको अधिकार हैन, संस्थागत संरचनामै भूमिका बलियो बनाउनेतर्फ लाग्नुपर्छ । क्षेत्रगत कार्टेलभन्दा निष्पक्ष बजार व्यवस्थालाई प्रबद्र्धन गर्ने नियामक तथा संस्थागत संरचनालाई प्रोत्साहित गर्नुपर्छ । प्रायः सबै क्षेत्रमा संरचनात्मक परिवर्तनको आवश्यकता छ ।

Thursday, May 9, 2019

Reliability of India's new GDP series data

Pritam Bhattacharya writes in Mint on how and why experts are questioning the reliability of India's GDP statistics:

Over the past few years, a growing number of economists and analysts have raised questions about India’s new gross domestic product (GDP) series. One of the key bones of the contention is related to the use of a new database on companies, MCA-21. Critics had pointed out that this database could include ghost firms that exist only on paper, and had demanded that the database be made public.
[...]Historically, the CSO relied on a sample survey conducted by the RBI to compute estimates for the corporate sector. The RBI sample consisted of only a few thousand companies, and hence the estimates were blown up (or multiplied) in proportion to the coverage of the paid up capital of the sample companies to the total number of companies registered with the ministry of company affairs (MCA).
This methodology was questioned, among others, by the Rangarajan Commission, which pointed out that the presence of a large number of fictitious or shell companies in the MCA records tended to lend an over-estimation bias in the GDP numbers.
Ahead of the base-year revision in 2015, a sub-committee appointed by the Advisory Committee on National Accounts (ACNAS) suggested the use of a new database, MCA-21, to construct the new GDP series. But instead of using the estimates generated from the database directly, as agreed upon by the sub-committee, the CSO scaled up even these estimates to account for non-reporting companies, which had declared returns in earlier years.
[...]The root of the problem was that no one really knew, or bothered to ascertain, the true size of the universe of genuine companies in India. Nor was any attempt made to verify the extent to which MCA-21 data was accurate, or to validate it using other databases (such as the Annual Survey of Industries, or ASI). As it turns out, NSSO field staff has now found that many companies reported to be “active" companies by the MCA are actually ghost companies that exist only on paper.
[...]There were other questions raised about the new methodology, including the use of formal sector indicators to estimate informal sector growth, such as using growth rates of the organized manufacturing industry to estimate growth for unorganized manufacturing. Others pointed to the potential mis-classification of industries, which meant that growth in one sector might well have been attributed to another. Still others argued that the use of inappropriate deflators tended to overstate the real GDP growth numbers, i.e., the GDP growth adjusted for inflation.
[...]“Our official statisticians know that the costs of under-estimating GDP growth are far higher than that of over-estimating," said one of the former NSC members cited above. “If the numbers are being jacked up, either because of depressed deflators, or any other reason, you are less likely to be questioned."

Government says there is no impact of MCA-21 irregularities on GDP estimates.  

“It is emphasised that there is no impact on the existing GDP/GVA estimates for the corporate sector as due care is taken to appropriately adjust the corporate filings at the aggregate level based on the paid up capital," the ministry of statistics and programme implementation (MoSPI) said on Thursday adding the data shortcomings are known. 
“The issue of coverage, quality and timeliness of the MCA database vis-à-vis the Annual Survey of Industries had been discussed in detail in the various meetings of the Advisory Committee on National Accounts Statistics and adopted only thereafter,” it said pointing out that the methodologies followed for the 2011-12 series and also the back-series calculations are there in public domain.