Big Bang Budget and Nepali Politics: Fiscal Expansion, Political Incentives, and Governance Issues

Abstract

 A national budget is much more than just an economic tool because it embodies the ideological beliefs of a government. In Nepal, there is an emerging trend in preparing big and extravagant national budgets, which are popularly known as “Big Bang Budgets.” Despite the development ambitions, there is uncertainty about their feasibility and viability, apart from the political motives behind them. The fundamental issue that is addressed in this paper is the lack of connection between budgetary ambitions and Nepal’s institutional and economic capabilities. This paper tries to understand the political economy of Big Bang Budgets in Nepal through the identification of the factors responsible for preparing such budgets and their economic impact. The focus will be on the political dynamics of coalition politics, reorganization of federal structures, electoral politics, and patron-client relations in shaping the budget and its economic impact. The research method used in this study is qualitative research based on the review of government budget documents, scholarly literature, and official publications. While there have been many academic inquiries into Nepal’s fiscal policy, public finance, and federalism, less work has been done on the connection between big budgets and political dynamics from a political economy perspective. It is precisely this area that will be analyzed in this research with the aim of filling the existing research gap. In particular, it will be argued that although big budgets are presented as the tools for development and growth of Nepal, they suffer from problems of inadequate mobilization of revenues, poor implementation capabilities, and politics. As such, it can be said that Big Bang Budgets may undermine fiscal sustainability, effectiveness of governance, and even public trust.