The political impact of Rameshwor Khanal's financial decisions

Finance Minister Rameshwor Khanal has decided to postpone 'fragmented' and 'non-priority' projects from the current fiscal year's budget.

This decision has not only economic but also political implications.

The interim government, which took the responsibility of conducting elections after the Janajati–Gini movement, has planned to save around one trillion rupees by suspending such projects.The government plans to use the saved amount for the reconstruction of government structures damaged during the movement, which will be declared on Falgun 21.

However, the government has not clearly stated which projects it intends to cut and what the political implications might be, according to officials from the Ministry of Finance and the finance minister himself. The finance minister has formed a task force under the leadership of budget section chief Suman Dahal to identify such fragmented projects. Only after this task force submits its report will it be clear which projects will be cut.

Finance Secretary Ghanshyam Upadhyay stated that a task force has been formed to distinguish which projects should be prioritized and which should not. According to him, projects that are already prepared and are under development will not be postponed. He mentioned that small projects and those that are incomplete will be deferred for now.

The spokesperson of the Ministry of Finance, Tank Pande, also stated that it can only be clearly said which projects have been cut after the study of the task force.Before the budget for the current fiscal year comes out, the National Planning Commission had committed that the federal government would not invest in small projects costing less than three crore rupees. However, in practice, hundreds of such small projects have been included in the budget.Projects that are not ready refer to those that have not undergone environmental impact assessment or have not secured land. According to Finance Minister Khanal's decision, it is understood that mainly such projects will be suspended.

Many have praised Finance Minister Khanal's decision, stating that it will help control the budget amount that has been dispersed in small projects, as he has been in the Ministry of Finance for a long time and understands the country's economics and politics well. However, this has not only economic implications but also political significance. We spoke with some current and former employees of the Ministry of Finance about what kind of impact such project suspensions could have. According to them, in the past, fragmented projects often became a means for budget misuse through party mechanisms. Small projects implemented in villages were usually led by party activists. They argue that Finance Minister Khanal made this announcement to establish financial discipline by stopping such practices.

On one hand, this will not only prevent budget misuse through party mechanisms, but it will also increase pressure on parties to go to elections on the specified date after the lower-level workers face a loss of income.Looking at some of the projects included in the budget, the reasons for postponing them are also confirmed.

For example, the Ministry of Physical Infrastructure has allocated only five hundred thousand rupees for 213 bridges for the current year. While it costs more than three crore rupees to build a standard 20-meter bridge.Similarly, the Ministry of Urban Development has allocated seven hundred eighty million rupees in the name of Ganeshman Singh, which includes 45 different projects ranging from 1.3 million to 8 million rupees. Most of these are related to parks, gardens, study institutions, and memorial buildings.

The Ministry of Industry has allocated 480 million rupees for roads outside its jurisdiction. Most of these are concentrated in the home district of the then ministers, Baitadi.Such small projects are considered beyond the responsibility of the federal government.The budget bill has strict provisions that do not allow projects costing less than 30 million to enter the bank. The National Planning Commission also currently recognizes only 1,327 projects as feasible, which cost more than 30 million rupees. The remaining approximately 9,000 projects are of fragmented nature.

Finance Minister Khanal stated that he has decided not to implement projects that were selected solely based on political connections, despite not being fully prepared when he assumed office. He estimates that around one trillion rupees could be collected from projects that are not fragmented and prioritized.