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Rudra Pandey

HIKE

A Stupid Son

There once lived a man who was a multi-millionaire but had an extremely stupid son. The father himself was very entrepreneurial and believed in working hard, being creative, taking risks and not squandering money. Though the father tried hard to instill the same values in his son from early childhood, his son somehow chose a different path, being influenced more by his spoiled friends than his father’s teachings. Gradually, as the son went through high school and college, the distance between him and his father grew further. After the son graduated from college, he got a job which paid reasonably well. His salary would have been more than enough to manage a family of three even at an upper-middle class standard. But the son would spend his salary in its entirety in the first week, and then go to ask his father for pocket money for the rest of the month. The son was also a free loader in his father’s house. The father was worried, but the mother did not care much. She boasted about her son’s lavish ways when she was with other housewives. She loved talking about her son’s “prince-like” lifestyle which made her feel like royalty. The dad felt sick every time he heard the mother and son talk.

One day, the son came to the father and said that he wanted to start a new venture. The father said, “It is good that you are finally thinking of doing something on your own.” The son smiled and said, “I need money to start the new venture.” Being the kind of man he was, the father was very straightforward in his reply and told his son that those who cannot manage their own pennies should never ask for a dollar from others, let alone convince others that they could take their venture to a successful end. The father said, “You can’t even manage your own salary, how can I expect you to manage a business?” He added, “Look at your room. How messy is it? Look at your car’s trunk, how dirty you keep it. You never pay your bills, it is always past due, and your mom needs to remind you. How can you think of starting a multi-million dollar venture when you can’t manage your own private affairs? I do not believe you are capable of doing something of that scale. Do not invite more trouble for yourself, my son. I am ashamed of having you as a son. Somehow your upbringing was faulty despite my best efforts.”

The son still did not get the message. He replied, “Father, if you don’t give me the money, I can borrow it from someone else. But I am disappointed that you care more about your money than your son.” The father said, “Good luck – go do the fishing – you can’t win if you do not learn how to manage your own pennies. I have seen enough.”

I wanted to use the above anecdote to illustrate the case of the current Nepali government. The government has a total revenue of Rs. 70 billion and Rs. 30b more in promised grants and donations. With Rs. 100 billion in the national treasury, the government simply fails to do a good job managing that. This is not that large a budget to manage. In terms of dollars, this is just US $ 1.35 billion. A good-sized university in the US has a budget of this amount. Even mayors of small towns manage budgets of this size beautifully. We do not need to look that far – Indian IT companies Wipro and Infosys both had revenues of more than US $ 2 billion in the fiscal year ending March 2006. Nepal’s budget is les than that. On top of it, there are hundreds of economists working for the government for the National Planning Commission and Ministry of Finance, advising the politicians on how to manage the budget. There are also a large number of advisors who discuss about the planning and budgeting. Yet the government fails to manage the revenue in a better way. They need foreign advisors to manage this tiny budget. Our government can be compared to the stupid son in the above example. And us citizens are like the wary father. How shameful of these politicians who do not know how to manage their own pennies but run around asking for dollars to spend!

This week, the media in Nepal have been engrossed in providing details about how PM Koirala secured monetary support from India. The total multi-year package is less than 10% of Nepal’s annual revenue and still Mr. Koirala and his advisors like to think of it as a big win. To put it simply, this is begging. What’s more, India has not given this without thinking of extracting some huge benefit in return from Nepal. This simply enhances their negotiating power on bilateral security and natural resource issues. Soon the Indian side is bound to say, “Remember we gave you tons of money when your PM begged for it, and in return now you guys need to listen to us when we need you.” Our politicians who think begging is the best alternative of all will simply give in and agree to treaties that may weaken Nepal for a long time to come. This is unfortunate and the government needs to learn from the simple Indian saying:

मुफ्त मे तो भाई थ्प्पड भि नहि मिल्ति .

What then should the government have done? I believe that they should first learn to mange their own pennies. Very simple – they should do what they can afford. The government should cut expenses and divert revenue to income generating development projects. Massive operation costs should be cut and money should be diverted to development activities. This can be related to a small start-up company. A company in the start-up period spends a lot of money in development and very little in operations. As the company grows and the product is developed, the operation costs go up. Nepal is still in the start-up period. The government should therefore cut operation related costs and should learn to live with what they have. Once they learn to do so, only then should they go and borrow money which they ought to invest in infra-structure development and law enforcement. The government should learn to be profit oriented. They should always borrow in the best possible terms. We can’t build a nation on grants and donations. Borrowing and paying on time teaches us to be financially disciplined; grants and donations spoil us.

To conclude, I would say that learning to live on our own pennies is the most important first step towards growth and prosperity. This applies to a person as well as to a nation. Those who think that they can beg and survive will never prosper. Prosperity follows those who have self-esteem and self-respect and who know how to turn their own pennies to a dollar. As is often said, before going shopping, you should watch your own pocket first.