Pandey failed to present strong commitments to labor reforms

Finance Minister Surendra Pandey´s budget for 2009/10 featured numerous programs to enhance public service delivery. Still, it was weak in terms of giving impetus to reforms long pushed on the sideline. So much so, reforms commitment expressed in policies and programs such as petroleum sector liberalization did not feature in the budget. “Reforms initiated in two large public banks - Rastriya Banijya Bank and Nepal Bank Limited - will be continued,” said Pandey, presenting the budget in the parliament on Monday. He also announced measures to encourage loan defaulters to repay their loans and promised to implement an action plan to inject required capital in the banks within the next two years. However, Pandey failed to present strong commitments to labor reforms. He remained silent on labor commission and other steps mooted by the past governments to achieve labor reforms. Rather the budget gave emphasis on job security. The budget, however, promised to put in place legal arrangement to compensate industries from losses incurred due to highway closures. “The organizers of such bandas will be made to compensate the industries.” In a bid to enhance service delivery, the budget announced the program of registering all land records in computers at 68 Land Revenue Offices within the new fiscal year, and awarding land-ownership certificate through computer. Under the public transport and management reform, the budget announced that an electronic record management of drivers´ license will be completed the next fiscal year and new vehicle registration, route permit and driver´s license will be distributed and renewed electronically starting from November 16, 2009. Pandey also promised to put in place special facilitation measures at the international airport for the departure and arrival of the overseas workers. In order to motivate the traffic police to fully enforce traffic rules, he proposed to raise the existing penalty for the defaulters by 25 percent and make a provision to distribute the additional amount raised to the traffic police concerned as an incentive. He unveiled "People´s Residences Program", offering low cost modern houses in Siraha, Saptari and Kapilvastu districts to provide housing facilities to 1,000 households in each district to disadvantaged and underprivileged communities such as Dom, Musahar, Chamar, Dusadh, Khatwe, other Dalits and Muslims. Pandey admitted public enterprises have been adding liability to the state, however, he refrained from citing privatization, which was once among the top priority of the government. Under the Public Enterprises (PEs) Reform program, he rather pushed for increasing the people´s ownership in the PEs and hydropower projects to be built by state-owned enterprises. As an initiation of reform in the judiciary sector, he allocated Rs 1.41 billion for strengthening the capacity of the judiciary, which is still traditional. In a step to cushion low-income group, the budget allocated Rs 7.78 billion for social security purposes. It also introduced a grant of Rs 100,000 to encourage inter caste marriage and Rs 50,000 to promote widow marriage. The government also vowed reforms to make public administration accountable, capable, impartial, transparent and compatible with state restructuring. “Strategic plan against corruption will be implemented strictly and policy of zero tolerance will be adopted besides strengthening Commission for the Investigation of Abuse of Authority (CIAA) and National Vigilance Center and other agencies concerned with justice management,” said Pandey. The government has decided to formulate programmes to develop 25,000 MW in the next two decades. The previous government led by UCPN (Maoist) had projected development of 10,000 MW in the next ten years. The allocated budget for hydropower is Rs. 14 billion 690 million for this fiscal year. This marks a 131 percent rise compared to the revised estimates of the previous fiscal year. Construction work at the 130 MW Upper Seti, a reservoir type hydro project will be initiated as a project of national priority and pride. Likewise, work on the 456 MW Upper Tamakoshi Hydropower Project -- the first big project being implemented with domestic investment -- will be initiated. It is expected to be complete in fiscal year 20122013. Meanwhile the government has also stated it will expedite construction of various middle scale hydropower projects including the 60 MW Upper Trishuli, 30 MW Chameliya and the 27 MW Rahughat among others. Preliminary work on Pancheswor Multip-urpose Project will be initiated by developing infrastructure like access road to the project site and ropeway construction. Construction of Naumure Hydroproject will be initiated along with other multi-purpose projects like Sunkoshi-Kamala diversion and Bheri-Bababi diversion. The private sector will be encouraged to construct large scale projects such as Arun III, Upper Karnali, and West Seti. The government will give emphasis to feasibility studies of new projects along with extension and repair of transmission lines. Immediate import of 30 MW from the second circuit of Kataia-Kusaha and 30 MW from the point of Surajpura will be initiated. Extension lines will be constructed in Birgunj, Biratnagar, and Kusaha for additional import of power. According to hydro expert Gyanendra Lal Pradhan, in overall terms the budget looks good, but it does not reflect a clear cut policy for implementation of VAT subsidy on construction materials like cement and iron rods. "The government´s plan to develop 25,000 MW in the next 20 years is unrealistic and has been mentioned in the budget just to make it populist. The government should have continued with the Maoist proposal of 10,000 MW and worked on implementing that successfully," he said. Likewise, the government should have proactively involved the private sector along with the international sector for construction of hydropower projects. Pradhan also underscored the need to revise the Power Purchase Agreement to lure the private sector towards hydropower development through a new policy.