The government on Friday announced a plan to create employment for 50,000 persons, but without correcting weaknesses that hit the implementation of Youth Self-Employment Scheme that Dr Babu Ram Bhattarai announced during his tenure as Finance Minister three years ago.

The first major glitch that hit the program was that it was too politicized. Although the Ministry of Finance (MoF) had planned loans for 15,000 persons in the first year, almost 135,000 youths had applied for it. Not surprisingly, majority of the applicants were close to UCPN (Maoist).

It drew such intense political pressure that MoF could not decide whom to select and whom to reject. “Selecting the beneficiary became so difficult that we preferred to linger the whole program. This rendered the program defunct in the first year,” said a MoF official.

Secondly, the government, while promising the youths loans without collateral at low interest rate, ignored loans recovery mechanism so blatantly that banks and financial institutions (BFIs) simply refused to participate in it. They were not convinced that the loans that they issue will be repaid.

As a result, except for the state-run Small Farmers Development Bank, none of the BFIs came to the fore to contribute in the Self-Employment Fund. This affected arrangement of finances as well as disbursement of loans.

Although efforts of the past two fiscal years have to some extent helped the government overcome the financial problem, concerned officials said the implementation of the program might still face a roadblock unless effective mechanism to deal with undue political pressure is put in place.

However, good side of the program is that the Youth and Small Enterprise Self-Employment Fund Secretariat (YSESEFS) - that implement the program -- has so far brought in 20 BFIs into its net. They have funneled in well around Rs 3 billion into the fund, which is counted as deprived sector loans. Apart from that, the government has separately provided Rs 1.10 billion to the fund, including Rs 255 million allocated for this fiscal year.

“We already have well over Rs 4 billion in the fund and more banks are responding to our calls positively of late. So, money will not be a problem to fulfill the target set in the relief package,” said Mohan Raj Aryal, program officer at YSESEFS.

However, sources said possible political pressure from different quarters could make management of the demand difficult.

“The secretariat had just started to function normally and had issued loans to about 1,000 persons. Now that the program has again been blown up politically, we fear the secretariat might face political problem yet again,” said the source.

Officials, interestingly, disclosed that providing self-employment to 50,000 persons was not a fresh target though. “We had set this target in the beginning of this fiscal year and had even signed a loan agreement of over Rs 1 billion with Small Farmers Development Bank for issuing self-employment loans to 10,000 persons before this government was formed,” said the source.

That is not all. Most of the financial programs that the government announced as a relief package were already there, either through budgetary announcement or customarily.

For instance, cut in prices of essential commodities like rice, sugar and salt by state-owned enterprises -- announced every year targeting the Dashain festival -- were already finalized by the Ministry of Commerce and Supplies. Similarly, opening mobile and fixed fair-price shop in the Valley as well as other parts of the country too is a seasonal program.

“Dark side of the relief package is that it has made no new offering. But the bright side is; it has conveyed to the people what the new government is focusing at, assuring them that the programs that otherwise might have lost momentum will be implemented with a full zeal now,” said the source.

Published on: 10 September 2011 | Republica