Federalism becomes costly
How serious is the country’s economic health, it becomes clear from Prime Minister Sher Bahadur Deuba’s recent remarks that the country is in a situation of seeking foreign debt in managing civil servicemen’s salaries.
The other remarks he made were that civil servicemen are not honest and they don’t perform duty properly. This is a revelation that how partisan politics has destroyed the country’s permanent government known to be the civil service.
If a country takes loans for general expenditure or say non-productive sector expenses, we must understand that the economic health of the country is serious. Foreign debt is necessary for less developed and developing countries to manage the fund for infrastructural investments. Investments in the infrastructure sector pay returns after a certain period, therefore, such debts are considered a positive investment.
Since Nepal adopted federalism, the country’s nonproductive expenditure has skyrocketed while managing salaries, allowances, and other facilities for one federal and seven provincial governments and 652 local bodies. The present system has turned people’s representatives into salary-receiving employees. The country’s entire population is just around 30 million but if we talk about salary receiving people’s representatives, they are thousands counting from top to bottom -- one President to 27 thousand ward members. Out of them, some VIPs receive a post-service monthly salary, allowances and security guards.
In the past five years, the provincial governments have proved that they have no significance except for enjoying, exploiting and misusing power. Almost all provincial assembly members have become ministers and they always fought for the ministerial post. Violating the recommendation for not exceeding the number of ministries, existing ministries were split into many ministries just to manage share for the assembly members. Such a trend continued even after the announcement of the election date. Another example is that the provincial governments have spent billions of rupees just for the maintenance of vehicles, forgetting about the misuse of authorities in other sectors. If we remove the provincial structure, the nation could save a huge amount of unnecessary expenditure. The central government and local governments are enough to manage the administration and carry out development activities.
Compared to the total GDP, the country’s debt has reached 41.47 percent which was just 22.5 percent seven years ago. The domestic and foreign debt has reached 200 billion rupees and the government is spending 125 billion rupees as an installment of the principal amount and interest amount per year. In the last five years, the loan burden was added by 140 billion rupees but there has not been seen any significant achievement the country has made from this debt amount but the repayment amount has reached almost half amount of the total capital expenditure of the country. The truth is that under the present system, the government is compelled to take debt every year to manage general sector expenditure. This is the symptom that our economy is heading toward a negative path and if timely efforts are not made, the country will face bankruptcy shortly.
Efforts for reducing general sector expenditure, reducing imports, increasing domestic products and substituting imports and promoting exports have to be started without any delay. Besides, optimum utilization of our fertile land and becoming self-reliant on agro-products, industrialization and employment generation efforts have to be made to save the country from a possible crisis. Areas should be identified for making the country self-reliant.
A more serious situation is that the ongoing tussles between Russia and the USA and also China and the USA have already affected the global economy adversely. The war between Russia and Ukraine has been prolonged and NATO’s visible involvement has been seen in this war. An economic recession has already started in the West. Such an adverse scenario will surely be going to affect the Nepali economy. Moreover, India has imposed an additional 20 percent export tax on rice, which is also going to hurt our economy. Viewing all these global scenarios, the Nepal government should remain alert and take necessary moves to overcome the worst possible scenario. Just saying federalism is beautiful is not enough. Whether we can sustain it or not, all should think and take a proper decision without any delay. When we have no source of income to run such a large number of provinces, when we have no funds for managing the government expenditure, there are no alternates except removing the present white elephant political system and returning to the 1990 constitution if we have a little sense and if we have a little love for this nation!