The policy, which was incorporated in the budget by former Finance Minister Surendra Pandey, bars the government from spending more than 40 percent of the total capital expenditure during the last quarter. It also restricts government from spending more than 20 percent of the budget in the last month of the fiscal year.[break]
“We are mulling over relaxing this policy, as it has surfaced as a major constraint in giving momentum to already slow development works,” said a source at the Finance Ministry.
Data of MoF shows that the government has managed to spend just Rs 32 billion in development budget over the first three quarters of the current fiscal year. The amount is less than 25 percent of what the government allocated for the year. Officials doubt the government would be able to spend even half of Rs 129 billion set aside for development projects this year
“We all know the delayed announced of full-fledged budget has hurt the development dearly. Slow spending has amplified liquidity crunch in financial system and hit employment and income opportunities,” said the official.
As large number of medium and small scale development projects have just started to come into implementation, officials said they are under pressure to give them continuity and also release funds for programs approved recently.
“There is a growing demand to give momentum to the development spending, and apparently there seems to be no alternative as well,” said the source, elaborating on the reason behind relaxation of the policy.
However, withdrawing or relaxing the provision can also invite evils. “It will open space for the government, whereby ministers can dole out money in undue projects and areas,” said the source.
The practice of final hour approval of programs and release of budget for politically sensitive smaller projects that cannot be implemented with the fiscal year were widely seen in the past.
While such generosity usually aim to serve political interest of the leaders in or close to the government, experts claim a majority of money disbursed in such projects go in the pocket of the local leaders or elites, leaving the villagers deprived.
Commission for Investigation of Abuse of Authority (CIAA) -- the anti-graft watchdog -- too had raised serious questions over the use of fund thus allocated and instructed the government not to dole out fund for fresh projects during the last quarter of the fiscal year. It had also asked the government to adopt measures through which development budget could be spent at the earliest and fairly throughout the year.
“We had capped the last quarter expenditure based on the CIAA´s instruction. But given the state of poor development spending, there seems to be no option but to relax it now,” said the source.
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