MONDAY, SEPTEMBER 14, 2020 | 04

OPINION

EDITORIAL With the disease comes added debt

Net the ‘big fish’ In many ways, developing
The CIAA must begin cracking down on large-scale countries can be likened to
corruption issues with a system-based approach. upstart companies with a
lot of growth potential.
It’s been almost a year since Ramhari Subedi, a non-gazetted
official at the Kalanki Land Revenue Office, committed sui-
cide after spending 42 days in custody after the Commission PABAN RAJ PANDEY
for Investigation of Abuse of Authority (CIAA) accused him
of taking Rs1,000 in bribe from a service seeker. Subedi was
acquitted posthumously by the Special Court on July 14, a
fact that came to light only last week. Having driven a public
servant to self-destruction, the commission, on its part, failed
to even furnish adequate evidence to support its accusation.
All it had to say was that Subedi was caught on CCTV taking The Covid-19 pandemic has thrown a
curveball to the global economy in the
the money. Subedi’s suicide and the acquittal that followed most unexpected fashion. Trade, travel,
epitomise the modus operandi of the CIAA over the years, tourism, you name it, have all been
hounding people accused of petty crimes and passing over adversely impacted. Well-heeled busi-
the crimes of the mighty. nesses have suddenly ceased to operate,
The man under whose leadership the CIAA incarcerated an people’s livelihoods have been thrown
into disarray and the government’s
innocent official on fake charges retired on Sunday. If any-
revenue sources have taken a hit on
thing, Nabin Ghimire’s stint as the chief commissioner was multiple fronts. Rich countries, poor
unremarkable, even controversial. Under Ghimire, the com- countries—no one is spared. Fiscal
mission continued to lose its independence as a constitution- deficit has become the norm, even as
al body mandated to be a corruption watchdog and turned governments whose accounts were
into a government lapdog instead. There is no dearth of already awash in red ink are having to
run a bigger deficit. It is a double
Chinese whispers among Kathmandu politicos and intelli- whammy—receipts are down while
gentsia that Ghimire played along as cabals within the ruling expenditures are up. The resulting mis-
Nepal Communist Party used the commission as a weapon to match is forcing many governments
silence rabble-rousers within the party itself. But he was into a budgetary juggling act. Nepal is
nowhere to be seen when the time came to investigate large- not an exception.
Last fiscal, the KP Oli government POST FILE PHOTO
scale corruption cases including the purchase of wide-body
initially aimed at growing the economy higher. In recent years, reliance on debt over 250 percent and holds the world come. In recent years, countries such
aircraft and security printing press among others. at 8.5 percent. As the year progressed, has gone up meaningfully. As of record, while in the US it exceeds 100 as Austria, Mexico and Argentina, and
To be fair to him, Ghimire is not a lone wolf when it comes this was already proving ambitious. mid-July this year, the outstanding gov- percent. But these are also developed companies like Walt Disney and Coca-
to commissioners denting the public image of the anti-graft Then the pandemic hit. Now, the econo- ernment debt stood at Rs1,420 billion— countries that are capable of printing Cola, have issued 100-year bonds. Nepal
body; he belongs to the league of the heavyweights who sys- my is expected to have grown at a pace with the country owing Rs806 billion their own money, with the US, in par- lacks a developed fixed income market.
of 2.3 percent. In the current fiscal externally and Rs614 billion internally. ticular, enjoying the benefit of more Multilaterals such as the World Bank
tematically corroded its legitimacy. Lokman Singh Karki,
year, the government—once again— A year before that, the government than three-fifths of the world’s reserves and the Asian Development Bank make
arguably the most controversial in the commission’s history, has set itself a lofty goal of 7 percent owed Rs1,048 billion. Five years ago, in being held in US dollars. Nepal does not up nearly 90 percent of the total funds
had to be unseated from the position of the chief commis- growth, which obviously assumes 2014-15, debt totalled Rs545 billion, of have this luxury. Hence the importance coming from outside Nepal; being a
sioner by the Supreme Court in 2017 as he did not hold the growth will pick back up in short order. which Rs343 billion was external and of how a rupee borrowed gets spent or, least developed country, Nepal receives
‘high moral character’ required to lead the CIAA and did not Two months into the year, the virus is Rs202 billion internal. Thus, within better yet, invested. Of the proposed concessional loans. Private foreign
meet the criteria set to head the constitutional body. Raj still going strong. Daily lives continue five years, the debt load jumped 161 Rs1,475-billion budget, Rs949 billion is investors, on the other hand, tend to be
to get disrupted. If the growth target percent, with external rising 135 per- earmarked for recurrent expenditures, fickle and leave at the slightest signs of
Narayan Pathak, who faced a corruption case and had to step proves unrealistic—and it probably cent and domestic debt 204 percent. As Rs353 billion for capital expenditures trouble. Plus, the share of internal debt
down for taking a bribe of Rs7.8 million to settle a dispute will—this will have adverse repercus- of mid-July, as a percent of the GDP, and Rs173 billion for financial manage- is high. One reason why Japan’s debt
over ownership of the Changunarayan-based Nepal sions for the government’s revenue debt made up 40 percent, which is not ment—respectively 35 percent, 48 per- bubble has not popped is that most of it
Engineering College. Deep Basnyat faced corruption charges objectives. prohibitively high. But, given the cent and 31 percent over 2019-20. is held within the country.
over his role in transferring the land at Lalita Niwas in recent trend, it does need to be watched The problem is that the government The Oli government’s increased bor-
Debt-to-GDP ratio not prohibitive closely. routinely fails to spend the allocated rowing has put upward pressure on the
Baluwatar as well as amassing properties illegally, and
In late May, the federal government In the early 2000s, when the Maoist budget. In the last fiscal year, Rs239 debt-to-GDP ratio. But what is impor-
money laundering, and letting go of several high-profile peo- presented a budget of Rs1,475 billion. insurgency was taking a heavy toll on billion was spent in capital expendi- tant to monitor at this stage is the cost
ple who were facing various charges. This compares with the initial alloca- the economy, Nepal’s debt-to-GDP ratio tures, versus the initial planned outlay of capital. Debt service burden becomes
Officials of the commission, including the new chief com- tion of Rs1,533 billion in the last fiscal exceeded 60 percent. That conflict of Rs408 billion. Presently, one major acute when scarce resources are divert-
missioner who takes over in the days to come, have a lot of year. This fiscal, the budget plans to ended in 2006, and the ratio gradually way the government could ease the ed toward principal and interest pay-
work to do before they salvage its public image. They must raise Rs950 billion in revenue, includ- headed back down. Besides, there is no pain wrought by Covid-19 is by increas- ments. The likes of Nigeria and Angola
ing Rs60 billion in grants. The result- optimal debt-to-GDP ratio, which essen- ing investments in infrastructure. This dedicate upwards of 40 percent of gov-
ensure that they help the commission fulfil its mandate rath- ing deficit of Rs525 billion will be tially measures a country’s ability to will not only add to the nation’s capital ernment revenue to interest payments,
er than work for the political masters who appoint them. bridged by borrowing, made up of pay back its debts. Simplistically, the stock but also create jobs during a diffi- which is not on a sustainable path. In
There is no end to the current regime trying to use the com- Rs300 billion raised externally and lower this ratio, the better. At the same cult time. The new budget has set aside Nepal, in the last fiscal, out of total
mission to serve its political interests rather than let it do its Rs225 billion internally. In the 2019-20 time, there is good debt and there is bad Rs125 billion for road and bridge con- interest payment of Rs26 billion, Rs5.2
constitutionally mandated work. As things stand today, the fiscal year, the budget deficit totalled debt. If an entity—be it an individual, struction, up from Rs81 billion in the billion was paid to external creditors.
Rs267 billion, so the red will have risen company or government—takes out a last fiscal year. Even if we assume the At least until it graduates to develop-
commission is certain to come under a fresh controversy as
significantly this year. The current loan at, say, 5 percent and earns a allocated amount is spent in its entire- ing-nation status, the policymakers’
the government once again pushes for the third amendment plan is to raise Rs913 billion in taxes, return of 7 percent on that loan, it does ty, this is probably not aggressive focus should be on these loans. Nepal
to the CIAA Act which proposes allowing the anti-corruption which will have risen substantially make sense to leverage. In many ways, enough considering the current need. has room to borrow, and it should, pro-
watchdog to investigate wrongdoings in the private sector. from Rs750 billion in the last fiscal year. developing countries can be likened to Of Rs125 billion, Rs67 billion will be vided the majority goes toward capital
Meanwhile, the public must continue to remain vigilant so Hence the importance of growth upstart companies with a lot of growth sourced from abroad. expenditures and not toward recurrent
that the commission begins cracking down corruption issues assumptions built into this year’s potential. Debt can help, if exercised expenditures.
budget. judiciously. Cost of capital an important factor
with a system-based approach rather than on the whims of If growth and revenue targets fall In other words, the debt-to-GDP ratio Interest rates are low worldwide; they Pandey talks markets, money and mac-
those at the helm of power. short, borrowing is likely to go even is not the be-all and end-all. Japan’s is will probably stay low for some time to roeconomics on hedgopia.com.

India’s silenced parliament

The legislature risks being ineptitude with a variety of public-re-
lations stunts, including a bizarre

reduced to a noticeboard recent photo-shoot of Modi feeding

peacocks in his garden. The official

for the decisions of the response to failure is denial, as with

Modi’s recent claim that India had lost

government. no territory to China, despite satellite

SHASHI THAROOR
After a nearly six-month hiatus, the
Indian parliament will reconvene in
mid-September at a time of deepening
national crisis. But I fear that it may
be unable to hold the country’s failing
government to account.
Parliament is obliged to meet now,
because India’s constitution limits the
gap between sessions to six months,
and the Covid-19 pandemic has forced
all sessions to be suspended since
March. With 4.5 million cases to date,
India is now the world’s second
worst-affected country, surpassing
Brazil and Russia and behind only the
United States.
Moreover, infection rates are rising,
especially in rural areas where testing
had not been adequately extended ear-
lier. Fortunately, the Covid-19 mortali-
ty rate remains relatively low, at 55 per
million people, representing just 1 per-
cent of deaths from all causes.
But if lives have not ended, liveli-
hoods have, owing to draconian but
ineffective lockdowns introduced in
March. GDP collapsed by 23.9 percent
year on year in April-June, making
India the world’s worst-performing
major economy. Unemployment is
rife—some 21 million salaried jobs
have been lost during the pandemic,
and millions more in the informal
sector, especially among day labour-
ers, who are now unable to make ends
meet. Small and micro enterprises are
being shuttered throughout the coun-
try. And the millions of migrant work-
ers who trudged home in despair dur-
ing the lockdown have found them-
selves no better off in their home vil-
lages’ stagnant economies.
Prime Minister Narendra Modi’s
government seems utterly helpless to
stop the economic meltdown, as if
paralysed by the plummeting indica-
tors in every sector. A much-hyped
fiscal stimulus turned out to be less
than one-tenth of the size that Modi
had claimed, and failed to alleviate
nationwide distress. The budget
adopted just before the lockdowns is
in tatters, its every assumption ren-
dered irrelevant.
As if all this weren’t bad enough, a
major crisis has erupted on the coun-
try’s disputed border with China,
where 20 Indian soldiers were brutally
killed in June in the icy Himalayan
heights of Ladakh. Talk of disengage-
ment has failed to translate into with-
drawals, and both sides have sent rein-
forcements to the tenuous Line of
Actual Control that divides their forc-
es. This week, the two countries’ for-
eign ministers announced a new
agreement to disengage, although it
remains to be seen whether this will
be realised.
Meanwhile, Pakistan has stepped up
its cross-border militancy in Kashmir,
which is seething with unrest follow-
ing last year’s clampdown by Modi’s
government. Many increasingly fear
that India may be facing a two-front
war before the year is out.
All this should normally make for a
lively parliamentary session. But the
legislature will itself meet in abnor-
mal and straitened circumstances,
reflected in the extraordinary meas-
ures announced in advance of the
session. No MP may enter the premis-
es without a Covid-negative certificate
from a test administered within three
days of the session. Inside, social dis-
tancing will apply in the usually
cramped chambers, with MPs distrib-
uted throughout the upper and lower
houses and the visitors’ galleries.
As a result, the two houses will take
turns meeting for a half-day each in
sessions lasting four hours instead of
the usual six, and on all seven days of
the week rather than the traditional
five. Worse, the government and the
presiding officers have decided that,
given the shorter sessions, they will
dispense with Question Hour, the only
opportunity for MPs to demand
unscripted answers from ministers on
a variety of subjects. (In response to
the outcry, the government has agreed
to accept written questions two weeks
in advance, to which ministers will
SAIKAT PAUL/SHUTTERSTOCK.COM
provide written answers.)
Suspending Question Hour is typi-
cal of a government that abhors being
questioned. Modi has not held a single
press conference in India in his six
years in office, and is notorious for
granting interviews only when the
questions are pre-approved. Protesters
questioning the government in the
streets are charged with sedition, and
critics are denounced as anti-national.
A prominent lawyer who tweeted his
objections to recent Supreme Court
decisions was convicted of criminal
contempt. And the mainstream news
media, far from interrogating the gov-
ernment’s performance, has recently
been fixated on the lurid details of a
Bollywood actor’s suicide and the con-
spiracy theories swirling around it.
In the meantime, the government
stumbles on and tries to mask its
pictures and evidence on the ground
that clearly indicate otherwise.
China has gleefully seized on this
statement to deny that it has
encroached on over a thousand square
kilometres (386 square miles) of land.
China’s leaders are not the first to
realise that they can get away with
anything with this Indian govern-
ment, as long as Modi can claim victo-
ry at home.
Parliament, therefore, has a vital
job on its hands, but many MPs fear
that it will be unable to do it. The gov-
ernment will use its crushing majori-
ty to pass the bills it wants, particular-
ly those converting a dozen ordinanc-
es or executive orders issued during
the last six months into law, while
sidestepping debate on the issues that
matter.
The government’s tendency to use
its parliamentary majority as a rub-
ber stamp was already apparent in
previous sessions. And this session
could be cut short at any sign of
Covid-19—one MP has died from it
since March.
The visible measures necessitated
by the pandemic—face masks, greater
distance between MPs, and plastic
partition screens—may not be all that
is different about this parliamentary
session. I fear that our democracy’s
highest legislative body will be
reduced to a noticeboard for govern-
ment decisions. There is a genuine
risk that while India will honour the
outward forms of parliamentary pro-
cess, the spirit of debate, discussion,
disagreement, and deliberation will
be missing.
Tharoor, a former UN under-secre-
tary-general and former Indian
Minister of State for External Affairs
and Minister of State for Human
Resource Development, is an MP for
the Indian National Congress.
—Project Syndicate

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