Sunday, September 21, 2008

Bhattarai introduces Nepal's Budget plus Commission on Land Reform

KATHMANDU (AFP) — Nepal's Maoist-led government has delivered an ambitious budget aimed at lifting millions of rural poor out of poverty, but critics say the former rebels face an uphill task to implement it.

The budget announced Friday plans to cancel loans for small farmers, funnel between 20,000 to 40,000 dollars into each of Nepal's 4,000 villages and hike social security spending by 440 percent.

"With this budget I have tried to make people feel change is here," Finance Minister Baburam Bhattarai said as he announced the 3.5-billion-dollar budget -- a 900-million-dollar increase on last year.

"This is just a first step and we've thousands of miles to go," said the minister, who, until a landmark 2006 peace deal between rebels and political parties, was an alleged terrorist with a price on his head.

Impoverished, aid-dependent Nepal is beginning to recover from a devastating decade-long civil war waged by the Maoists that decimated an already weak economy and killed thousands.

"The budget is aimed at the grassroots level of people who have been isolated from the economic mainstream in the past," said Prem Khanal, economic columnist for the Kathmandu Post.

"It has some challenging aims, but it has not spelled out a clear mechanism to achieve them," he said.

Nepal will ask international donors for 877 million dollars, while Bhattarai vowed to shake up the taxation system to fund its ambitious plans.

The government plans to amass 1.9 billion dollars through revenue collection, a 31 percent increase on last year, to fund the plans.

But Tilak Rawal, a former governor of Nepal's National Bank, called such a revenue-raising programme unrealistic.

"They have set near to impossible targets for revenue collection and double digit growth over the next three years," Rawal said.

"Last year, revenue collection increased by just 13 percent so it will be a huge challenge for them to collect such an increased amount with only the same resources available," he said.

Following their pre-election pledge of "revolutionary land reform," Maoist second-in-command Bhattarai also announced the formation of a commission "for the abolition of feudal land ownership."

Close to 79 million dollars has been earmarked for agricultural reforms, a 70 percent increase over last year in the sector that employs just over two-thirds of Nepal's 28 million people.

In addition, 17 million dollars will be spent repairing the infrastructure damaged or destroyed during the civil war that killed at least 13,000 people and ended with the landmark 2006 peace deal.

The last two years have seen a remarkable rise to power for the Maoists, who in 1996 launched their "people's war" aimed at toppling the monarchy and establishing a communist republic.

After signing up for peace, they won a surprise victory in elections for a body that officially abolished the world's last Hindu monarchy in May, and they now head the country's coalition government.

Although the Maoist minister announced plans in the budget to encourage investment to revitalise Nepal's struggling private sector, the focus was firmly on rural development.

A leading businessman said such a focus was unlikely to provide the jump start that the economy badly needs.

"The role of the private sector has been minimised," said Binod Chaudhary, chairman of Nepal's food-to-steel Chaudhary conglomerate.

"Instead of grooming the private sector this budget has discouraged it," said Chaudhary, who also heads the Confederation of Nepalese Industries.

Following their pre-election pledge of "revolutionary land reform," Maoist second-in-command Bhattarai also announced the formation of a commission "for the abolition of feudal land ownership."

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