KATHMANDU, July 27: "When will the consensus government be formed?" asked Suraj Vaidya, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), at an interaction held by Society of Economic Journalists in Kathmandu on Thursday.
The query, put forth on behalf of the private sector, demonstrates the desperation in the private sector following the government´s failure to bring a full-fledged budget.
"As the chances of the current government introducing a full-fledged budget are nil, it is our belief that organized efforts should be made for formation of a consensus government," Vaidya said.
He said formation of such a government can only rejuvenate the economy and boost private sector´s confidence.
Although the incumbent government tried to come up with a complete fiscal policy, it was not able to do so due to opposition from parties outside the government.
Ultimately, Finance Minister Barshaman Pun came up with a one-third budget of Rs 161.24 billion with allocations for debt servicing, constitutional bodies, election and integration of ex-Maoist combatants, among others.
Of the amount, Rs 80.02 billion has been allocated for recurrent expenditure, that includes salary expenses of government employees, and another Rs 20.96 billion has been separated for capital expenditure, which includes amount to be spent on development works.
Going by the spending pattern of the last fiscal year, it could be said that the funds allocated under the recurrent expenditure would dry up in three-and-half months. So possibilities of financial strain on the government even to pay salaries of employees in the next three-month time cannot be ruled out.
Besides, allocation of mere Rs 20.96 billion for development activities indicates only few priority projects would be executed. This means development activities would come to a virtual standstill in the days to come.
Although many legal experts told Republica that the government can come up with another one-third budget if it falls short of cash, high-ranking officials at the Ministry of Finance said it would be morally wrong to take such a course.
"The constitution definitely does not specify the number of times one-third budget can be introduced, but doing so would be a violation of existing laws," a high-ranking finance ministry official told Republica. "So there is no alternative but to come up with a full-fledged budget by mid-November."
Even if the government follows the advice of legal experts and comes up with another one-third budget, it is almost certain the situation would not be any different.
"This will deteriorate the investment climate," senior economist Chiranjivi Nepal said.
The current fiscal policy has hit the Rs 400-billion construction sector, which used to be one of the major job creators, the hardest.
"The sector created 2.2 million jobs annually," Jaya Ram Lamichhane, president of the Federation of Contractors Association of Nepal, said. "But ever since the government came up with one-third budget, no new construction projects have been announced."
Lamichhane said contraction in flow of funds in one sector affects other sectors as well, which means private sector´s investment in infrastructure will also go down by about 50 percent this year.
"This will raise the number of unemployed, who will, in turn, resort to measures like protests, which will ultimately make the situation even worse," he said, urging all concerned to do all they can so that the country gets a full-fledged budget.