A government cannot exist without a budget. After making repeated pitches for a full budget, the Maoist-Madheshi coalition government has presented the one-third budget of Rs. 161.24 billion, faced with opposition from other parties. Although government shutdown has been averted for now with this partial budget, it must either lead to resolve the problems troubling the country or leave before this partial budget runs out.
Let me start with the good news that came with the budget. The economy grew up by 4.6 percent. Rise in agricultural production by 4.9 percent and increase in remittances contributed most to the growth. The per capita income increased by US $26 over the previous fiscal year and reached US $742 (at US $1=Rs.79.273). Infant mortality dropped by 9 percent and primary school enrolment increased by 0.6 over last year’s 94.5 percent.
But the other half of the story is not as pretty. At the current exchange rate (US $1=Rs. 88.15), the income went down to around US $667. The inflation of 8 percent has eaten away a chunk of the income making the average Nepali worse off in 2011/12 than a year earlier in real terms. Road and power recorded dismal performance. Most of the growth came from remittances at a huge social cost of our youth toiling in alien lands and from a weather fluke, not policy intervention, which boosted paddy production.
To create jobs in the country for the youth and expedite growth, it is critical to have political stability in which government can fashion and implement pro-growth policies with some certainty and investors feel confident about the security of their investment. A full-fledged budget would have contributed to this effect. But the Maoist-Madheshi coalition government, as the opposition claimed, wanted to present a full budget to sprinkle it with election year goodies to bribe voters to support them rather than promote growth.
As there is no parliament, opposition parties could not discuss and approve or disapprove the budget. So they asked President Yadav not to approve the government’s high-handed, full-year election budget. The government could have been closed if a full-fledged budget had been presented and the president had refused to approve it. Due to differences between the president and Congress, the US has witnessed several such shutdowns.
But the government agreed to present a partial budget averting the prospects of its shutting down. However, it has allocated resources to conduct CA elections, even though opposition parties have declared that the polls could not be held in the current political climate. Prime Minister Baburam Bhattarai, a Maoist leader, had called the elections to the CA for November this year, hours before the CA was dissolved.
Elected for two years to write a new constitution, the CA extended its term by another two years and still could not produce the law of the land because of the sharp differences on a highly emotive issue of federal structure.
Hill Janajati demanded single ethnic states in the hills. Madheshis fought for a single multi-cultural state for the entire Terai. Hill Brahmin-Chhetri-Dashnamis wanted multicultural states, preferably abutting both neighbors to the north and south. The Nepali Congress (NC) and CPN- UML supported multicultural states despite opposition from Hill Janajatis and Madheshis in their ranks. The Maoists, who were supporting single ethnic states, agreed to multicultural provinces with the NC and UML in marathon negotiations only to come out and nix their agreement immediately.
Two considerations prompted the Maoist-Madheshi government to let the CA die without amending the Interim Constitution and to announce fresh elections for the CA without consulting other parties. First, once the CA was dissolved, the government could continue as long as it wanted in defiance of the five-point understanding under which it had to resign. Second, if the elections were at all held, both the Maoist and Madheshi parties hoped to increase their strength riding the crest of ethnic federalism.
As a result, the country is caught in a vicious circle. The election cannot be held without amending the Interim Constitution. The constitution cannot be amended without reinstating the Constituent Assembly. The assembly cannot be restored without consensus among political parties. And the coalition government does not want to quit until there is consensus and opposition parties would not negotiate until the government resigns in accordance with the five-point understanding.
While politicians stare at each other in this standoff, people are suffering from unspeakable hardships. Farmers do not have fertilizer in this planting season because the government failed to procure and supply it on time. Blackout and brownout has become a permanent feature. Drinking water is rationed in Kathmandu, making it available once a week for a few hours. Shortage of cooking gas and petrol continues to haunt families and motorists almost every day. Corruption has sky-rocketed. Investors are hesitant to invest in this climate of uncertainties.
Since the budget had to be presented to keep the government going—the fiscal year ends in mid-July—it became a battleground for the government and opposition parties in their standoff. Now that the tree months’ budget is in place, parties ought to work to prevent another budget imbroglio and to find resolution to the political and constitutional issues at hand.
Experts and analysts have argued in favor of fresh elections and of reinstating the CA to finalize and approve a new constitution or to remove the current constitutional vacuum by amending the Interim Constitution. Politicians have also said they are open to both options. But concrete progress will not happen unless all political protagonists compromise on their postures.
The Maoists are harping on the elections knowing that the elections will not take place without amending the Interim Constitution and it will prolong the life of their government. They have lost the initial zeal for the vote in November, because they now fear a serious backlash from a large number of voters who do not support ethnic states and who blame the Maoists and Madheshis for foisting the current constitutional crisis.
Recent opinion polls have shown that about 70 percent of people do not support ethnic states and blame the Maoist-Madheshi government for the dissolution of the CA without giving a constitution or amending the Interim Constitution for fresh elections.
The NC and UML were already unwilling to participate in the “unconstitutional elections.” They also fear that Hill Janajatis and Madheshis in their ranks could either support the Maoists tactically for ethnic states or join them altogether. Madheshis and Hill Janajatis are reluctant to find consensus outside the CA, which cannot be restored with unlimited timeframe.
Elections must be held constitutionally, but they cannot be postponed indefinitely. They are indispensable for acquiring a fresh mandate from the people. But they should preferably be for the parliament, not for the CA, because yet another vote for the CA will be an avoidable wastage of time and resources with the stark possibility of repeating the failure of the dissolved CA.
There can be no election without reinstating the CA to amend the Interim Constitution and pass laws to facilitate the vote. If agreement could be reached on the outstanding issues of the new constitution, the restored CA could promulgate the new constitution rather than amending the Interim Constitution, and open the avenue for the general elections for parliament.
To make this happen, the current government must undertake a serious initiative to find consensus on government and on the disputed issue of federal structure. If it cannot do so, it must resign and clear the deck for another government. Once the agreement is reached, the government, together with other major parties, should ask the president to reinstate the Constituent Assembly for a week to 10 days just to formalize the agreement on federation, promulgate the new constitution, and announce general elections for parliament.
The government must undertake serious initiative for consensus on government and federalism. If it cannot do so, it must clear the deck for another government.
If no agreement is reached on the structure of federalism, parties should agree on holding a referendum in which people should be asked whether they want single ethnic or multicultural states. The restored CA should promulgate the new constitution pending the structure of federation to be included based on the referendum result. As in the US, the general elections and the referendum should be held together to avoid extra cost.
The agreement on the one-third budget has opened the window to compromise on larger political issues troubling the country. In four months, the budget will run out and the government may shut down. Universally, the government, not the opposition parties, has the primary responsibility to prevent such shutdown and find consensus on contentious issues.