NPC asks ministries to get P1 projects approved

KATHMANDU, JULY 24:

The National Planning Commission (NPC), the apex body that formulates country’s development plans, has instructed all the ministries to immediately send their Priority One (P1) project proposals for endorsement, a measure aimed at boosting capital spending.

The order was issued after the NPC failed to receive a single proposal from different ministries even though they were given the authority to start spending money allocated through the annual budget a week ago. This has once again generated doubts about full utilisation of this fiscal year’s capital budget that is generally spent on projects like infrastructure development. The government, as of now, has categorised projects into P1, Priority Two (P2) and Priority Three (P3). It has undertaken 301 P1 projects, 129 P2 projects and 22 P3 projects this fiscal year, and has allocated a budget of Rs 85.10 billion for their implementation.

As per the rule, different ministries can spend budget allocated for P2 and P3 projects without taking prior approval of any government body. But in the case of P1 project approval of the NPC is required before implementing the P1 projects.

Since P1 projects comprises big development projects with the ability to employ hundreds of thousands of people, the Finance Ministry last Tuesday had instructed all ministries to immediately start sending project proposals for endorsement to ensure there are no delays in their implementation.

But even after a week of issuing the order no ministry, other than the Finance Ministry, has forwarded proposals for approval, NPC joint secretary Gopi Nath Mainali told The Himalayan Times. “Following this, we have sent letters to every ministry yesterday asking them to get their projects approved immediately,” Mainali said, adding, “These proposals have to be accompanied by project output indicators, procurement and monitoring plans, and a copy of approval letter extended by

ministerial-level meeting for the project implementation, among others.”

It is, in fact, an annual ritual for ministries to drag their feet in getting projects endorsed on time. When contacted they only say preparations are underway, but such lethargic approach is one of the reasons why development projects do not get completed on time. This in the end results in low capital spending, which not only hurts the government’s development endeavours but affects the job market as well.

The Asian Development Bank, in a report published

in April, had said: “For a developing country with tremendous need to scale up infrastructure investments to tackle head-on the binding constraints to accelerated economic activities, reduced as well as underspent capital budget is a cause of concern.” It further said: “Scaling up both quantum and quality of capital spending is vital to creating the foundations for the lackluster growth to take off on sustainable path.”

Yet, capital budget does not get spent on time. And usually till the first half of the fiscal year only minuscule mount gets utilised. An example of this is the spending of only Rs 7.7 billion of Rs 66.1 billion allocated for capital spending in the first six months of the last fiscal year. Many attribute this to delay in introduction of a full budget. But even when a full budget was introduced on time in 2010/11, only Rs 9.6 billion was spent in the initial six-month period.

Source: THT