Kathmandu: Balendra (Balen) Shah now leads a government backed by a massive popular mandate, a direct result of the elections fuelled by last September’s “Gen-Z” movement.
Taking the helm on the auspicious occasion of Ram Navami, Balen entrusted the keys to the national treasury to Dr Swarnim Wagle, an economist renowned for his intellectual depth and expertise. Wagle is no stranger to the corridors of power; he played a pivotal role in budget drafting during the Nepali Congress era, served as both a member and Vice-Chairman of the National Planning Commission, and worked extensively as an economic consultant for international agencies.
Given Wagle’s stature and perhaps because he is more seasoned and experienced than the relatively young Prime Minister, public expectations were sky-high. This was Wagle’s golden opportunity to etch his name into history alongside the few legendary finance ministers of the past. The public anticipated what Wagle himself often calls a “paradigm shift,” a budget that would direct the massive popular mandate toward economic prosperity and take the nation’s economy to new heights.
However, when Wagle stood before Parliament at 4 PM on Friday to deliver his 90-minute budget speech, the initial cheerful atmosphere failed to translate into lasting excitement for stakeholders.
Critics are already noting that the budget missed the mark on a paradigm shift. Rather than managing the pile of existing economic issues through a fresh policy departure, the Balen-Wagle budget seemed devoid of a transformative vision. Despite the Rastriya Swatantra Party (RSP) promising a “break from the status quo,” this budget remains fundamentally indistinguishable from those of previous governments. This suggests that the current administration may lack the actual capacity to uplift living standards through genuine economic transformation.
For the upcoming fiscal year, Finance Minister Wagle presented a budget of Rs 2.124 trillion. While this is a 25.2% increase over the current year’s revised estimates, the lack of revenue sources compared to expenditures has resulted in a staggering deficit of over Rs 650 billion.
The budget is also riddled with contradictions. On one hand, it claims to encourage the use of electric vehicles (EVs); on the other, it increases taxes on them, a move previously highlighted as a serious policy manipulation. Similarly, while aiming to increase electricity consumption, the government has slapped a 5 percent VAT on domestic consumers using more than 50 units. This will not only likely result in lower overall revenue collection but will certainly increase the financial burden on the poor.
Such provisions expose a disconnect between Wagle’s expertise and his understanding of the state’s responsibilities. Despite his reputation as a “pro-private sector” figure, he has added a 3 percent “Health and Education Equity Fee” on private schools and hospitals, effectively passing the burden of inflation onto the public.
Balen Shah, who won hearts by championing the cause of the poor, now presides over a cabinet where the Finance Minister has gifted the poor inflation instead of relief. Ironically, Wagle has simultaneously offered tax breaks to the middle and upper classes. This raises suspicions that the Balen government is becoming a government for the wealthy, leaving the underprivileged to shoulder the economic burden.
On Saturday, activist Durga Prasai slammed the government, claiming the budget confirms that the Balen administration serves the rich while inflicting further pain on the poor.
The “highlight” of Wagle’s budget appears to be the aggressive restructuring of tax rates. From the government’s perspective, this is their achievement. However, Balen and Swarnim seem to have ignored whether these changes actually benefit the state or provide any relief to the common citizen.
Is this all the public expected from a powerful government with such a massive mandate? The answer is a resounding no.
While historical budgets brought the economy to its current state, Wagle’s budget lacks a clear vision for the future. Though filled with jargon and eloquent phrasing, it fails to properly identify or solve core problems.
Looking back at Nepal’s budgetary history, Subarna Shumsher (1951) prioritized education and health; Rishikesh Shah (1961) focused on cutting public expenditure; and Dr Prakash Chandra Lohani laid the foundation for liberal policies. Those reforms were later institutionalized by Mahesh Acharya and Dr Ram Sharan Mahat, creating the framework that has kept the economy afloat until now. But that old engine has reached its limit. It needs a massive overhaul to move faster.
In 1991, Mahesh Acharya brought the “paradigm shift” of privatization; in 1994, Bharat Mohan Adhikari introduced popular social security like elderly pensions; and in 2008, Dr Baburam Bhattarai left a mark with ambitious revenue targets.
The public expected a similar, if not greater, policy shift from Wagle. But he lacked the courage to introduce a budget with far-reaching impact. Consequently, the RSP, Balen, and Wagle have failed to meet the public’s desire for rapid prosperity. The government has stumbled on its very first step. As hope in the RSP begins to fade, the consequences will be felt not just by their party members but by the entire nation.
Furthermore, this budget fails to incentivize the private sector. It has not handed over major infrastructure projects to private players, nor has it figured out how to generate state income by letting the private sector manage existing ones. Large projects like the Fast Track and the Nagdhunga Tunnel are nearing completion, yet the budget offers no plan to monetize them through private management.
By insisting that the government remains the sole engine of the economy, the administration is ignoring the vital role of the private sector. Expecting the economy to accelerate under such a “state-heavy” mindset is wishful thinking.
It is a tragic missed opportunity. A government that came to power promising to solve problems in a “new way” has instead lost itself in the continuity of the old ways. This budget suggests that, despite the labels, the “new” players are no different from the “old” ones.
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