Nepal Agriculture Public Expenditure Review: Successes and Challenges in Aligning Impact and Spending Krishna Prasad Pant, Nepal Government Mona Sur, The World Bank

m ru Bh u Mu a Dp u oi Dadeldhura Kalikot Achham Mustang Kanchanpur Dailekh Kailal i Jajarkot Surkhet Rukum Manang Myangdi Bardiya Gorkha Salyan BaglungKaski Rolpa Lamjung Banke Parbat Pyuthan Rasuwa Dhading Dang Gulmi Syangja Sindhupalchowk Dolkha Tanahun Arghakhanchi Solukhumbu Nuwakot Palpa Taplejung Sankhuwasabha NawalparasiChitwan Kapilbastu Rupendehi Kathmandu Ramechhap Kavre Bhaktapur Makawanpur Lalitpur Okhaldhunga Parsa Bhojpur P a n c h t h a r Sindhuli Khotang Bara Terhathum Rautahat Sarlahi Dhankuta Udayapur MahottariIlam Dh anusha Siraha Saptari Morang Sunsari Jhapa 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 Livestock Forestry Fisheries (inland)0.09

Budget Process Ministry of Agriculture and Cooperatives National Planning Commission Ministry of Finance Dept. Agri Dept. Livestock Dept. Food Tech Dept. Coop 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

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, Public expenditures on Ag/Ag GDP= 4%

Impact of Agricultural Public Expenditures on Household Welfare & Agricultural Production NE: No Effect; NA: Not Applicable; IV: Instrumental variable; SE: Simultaneous equations