Nepal Agriculture Public Expenditure Review: Successes and Challenges in Aligning Impact and Spending Krishna Prasad Pant, Nepal Government Mona Sur, The.
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Nepal Agriculture Public Expenditure Review: Successes and Challenges in
Aligning Impact and Spending
Krishna Prasad Pant, Nepal GovernmentMona Sur, The World Bank
mr u
B h
u
M ua
D pu
o i
Dad eld hura
KalikotAchham
Mu st angKanch anpur Dailekh
Kailali
Jajarkot
Surkhet
Rukum
Manang
Myangd iBardiya
Gorkha
Salyan
Bag lung KaskiRolpaLamjung
Banke
Parbat
Pyuth anRasuwa
Dhading
Dang
Gulmi
Syangja
Sindhupalchowk
Dolkha
TanahunArghakhanch i
Solu khumbu
NuwakotPalpa
Tapleju ng
Sankhu wasabha
Nawalparasi ChitwanKapilb astu
Rupendehi
Kathmandu
Ram echhapKavre
Bhaktapur
Makawanpur
Lalitpur
Okhaldhu nga
Parsa
Bhojpur
Pan
cht
ha r
SindhuliKhotang
BaraTerhat hum
RautahatSarlah i
DhankutaUdayapu rMaho ttari Ilam
DhanushaSiraha
SaptariMo rangSun sari
Jh apa
NEPAL
China
India
Kathmandu
Agriculture in Nepal• Employ 2/3 of labor force• Involves 3.36 million households• Average land holding 0.79 ha• Contributes 32% of GDP
% Contribution to the AGDP
1. Crops 66.16
2. Livestock 25.68
3. Forestry 8.07
4. Fisheries (inland) 0.09
GDP growth and agriculture
-6
-4
-2
0
2
4
6
8
2002 2003 2004 2005 2006 2007 2008
Fiscal year ending
%
Agriculture IndustryGDP (at producer's price)
Budget Process
Ministry of Agriculture and Cooperatives
National Planning Commission
Ministry of Finance
Dept. Agri
Dept. Livestock
Dept. Food Tech
Dept. Coop
Program Directors
Program Directors
Program Directors
Program Directors
Regional level Offices (Agri., Livestock, Food Tech, Coop)
District Agencies
Allocation of the budget higher than ceiling depends on
• Strength of the proposed program• Political favor of the Ministers• Favor given by the Ministry of Agriculture
while negotiation• Strength and lobby of the Departments• Strength, lobby and personal influence of
the Program Director• Intention and ability of the program director
to consume the fund
Recurrent expenditure in agriculture (nominal)
0
500
1,000
1,500
2,000
2,500
3,000
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
Rs
mill
ion
AgricultureIrrigationForest
Capital expenditure in agriculture (nominal)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
Rs
mill
ion
AgricultureIrrigationForest
Government expenditures (nominal)
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
Rs
bill
ion
Total
Agriculture
Expenditure in agriculture as percent of total expenditure
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
1990
/91
1991
/92
1992
/93
1993
/94
1994
/95
1995
/96
1996
/97
1997
/98
1998
/99
1999
/00
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
Per
cen
t
Government expenditure
ODA
Synthesis• Nobody denies the role of agriculture in Nepalese
economy• Public expenditure in agriculture is insufficient• Allocation of expenditure to different sub-sectors not
based on analysis, but on hunch and power play• Recurrent public expenditure in agriculture is increasing
faster than the capital expenditure• Expenditure in agriculture is not increasing as it increased
in other sectors• ODA is not in favor of agriculture• DFID-ARD Analysis of Public Expenditures in
Agriculture derives some hard facts.
Nepal - Public Expenditures by Sector, 1999-2003
Public expenditures on Ag/Ag GDP= 4%
0.7%1.9%
2.9%3.8%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Ed
uca
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n
Ext
ern
al L
oan
Pay
men
t
Inte
rnal
Lo
an P
aym
ent
Mis
cell
aneo
us
Def
ense
Po
lice
Ele
ctri
city
Ro
ad T
ran
spo
rtat
ion
Lo
cal
Dev
elo
pm
ent
Hea
lth
Irri
gat
ion
Dri
nki
ng
Wat
er
Ag
ricu
ltu
re
Gen
eral
Ad
min
istr
atio
n
Fo
rest
Co
mm
un
icat
ion
s
Co
nst
itu
tio
nal
Bo
die
s
Oth
ers-
So
cial
Ind
ust
ry
Lan
d R
efo
rm a
nd
Su
rvey
Impact of Agricultural Public Expenditures on Household Welfare & Agricultural Production
NE: No Effect; NA: Not Applicable; IV: Instrumental variable; SE: Simultaneous equations
Outcome Variable Data Methodology Irrigation Agriculture Roads
Maize value District level IV NE 14.85% 4.39%
Rice value District level IV NE 13.84% 6.34%
Wheat value District level IV NE NE 5.17%
Vegetables value District level IV NE NE NE
Plot values Cross-sectional household data Jacoby 16.62% - 36.86% NA 26.41% - 60.78%
Consumption per capita Panel data IV 3.92% 0.92% 6.43%Agricultural Income per capita Panel data IV NE NE NEConsumption per capita
Cross-sectional household data SE 9.61% 1.36 - 2.98% 30.25%
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