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Nepal axes King's plans to splurge on arms

The Nepal Parliament was told that reckless spending by the royal regime had brought the country on the brink of an economic crisis.

india Updated: May 16, 2006 11:50 IST

Facing economic collapse and a plummeting growth rate, Nepal's new government has axed King Gyanendra's plans to splurge on arms, aircraft and additional troops, pledging instead to reconstruct a nation racked by communist insurgency and political instability.

Newly-appointed Finance Minister Ram Sharan Mahat Monday told Parliament that profligate and reckless spending by the royal regime had brought the country on the brink of an economic crisis, with GDP growth rate dropping to 1.8 per cent from 5.1 in 2002 and inflation shooting to eight per cent from four.

According to Mahat, the government's priority will be reconstruction, rehabilitation and relief.

The government will slash the palace's allowances and drop plans to buy weapons, vehicles and helicopters for the Royal Nepalese Army and recruit additional soldiers.

Besides slashing the king's allowances and security spending, the government also plans to control junkets abroad by government officials.

The king, who began controlling the government from 2002 and last year seized direct control with the help of the army, gave himself a 16 per cent raise last year alone.

Four years ago, when there was an elected government, the palace was allocated Nepali Rs 126.3 million. But in the nine months of this fiscal, the royals have spent Nepali Rs 751.1 million.

Mahat's 17-page white paper tabled in parliament says that during his 15-month direct rule, Gyanendra and Crown Prince Paras spent Rs 1.72 billion on visits abroad, with many of the trips being unofficial.

The King's foreign minister, Ramesh Nath Pandey, spent Rs 13.3 million on visits to Qatar, Geneva, Pakistan, Russia, China and the US.

In 2002, Nepal's security budget was Rs 12.08 billion. Under the king, it shot up to Rs.18.99 billion.

The royalist government spent over Rs 1.43 billion to buy helicopters and recruit over 40,000 additional soldiers.

This year, the King spent Rs 1 billion to suppress demonstrations against his rule.

Last month, when anti-king protests began mounting nationwide, the home ministry was allocated Rs 500,000 daily to quell them.

The royal regime also spent Rs.280 million to hold local elections in February, though both the parties and a majority of voters stayed away from the controversial exercise.

The polls were declared null by the new government last month.

The King's government also distributed largesse among state and private media organisations, spending Rs 23 million to win their support.

The state-run Nepal Oil Corp, the sole importer of petroleum products, cost the country Rs 1 billion from non-budgeted allocations, to bail out the loss-making entity.

The royal rule pushed up inflation to eight percent in the first eight months of the current fiscal from the four per cent last year and now there is a revenue shortfall of Rs 8 billion.

Admitting that the government may be unable to meet its expenditure through existing revenue sources, Mahat is asking donors and multilateral agencies to release the assistance they had suspended last year after the royal coup.

He is also asking them for direct budgetary support to address the "cash crunch" and "liberal support", a plea that drew strong criticism from economists.

First Published: May 16, 2006 11:50 IST