Public institutions, which were formed to provide a sense of a welfare state, have been heavily criticized in Nepal. Most of the institutions here have not been in the news for positive reasons such as production, service delivery, expanding citizens' access to the state, and job creation.

Instead, they are being defamed for reasons such as the fact that the state has to make investments, that they continue to run at a loss, that they continue to become a hotbed of corruption, and that employees take unnatural service facilities. A three-member task force formed by the government under the coordination of former Deputy Auditor General Ramu Prasad Dotel has concluded that public institutions and establishments are exploiting state resources by arbitrarily determining service facilities for employees.

The report, which was prepared after a comparative study of the rules, regulations and legal provisions of 60 public institutions/bodies, mentions that up to 41 types of allowances are being given to employees. The tendency of institutions not to be promoted but the list of service facilities contrary to government policies, rules and instructions remains long is unacceptable. Therefore, it is clear that extensive changes are needed in the operating system of public institutions to prevent them from becoming further hollow. The report of the task force states that regulatory bodies, institutions, boards, committees and public corporations funded by the state treasury are providing services and facilities to employees contrary to the instructions of the Ministry of Finance, the Commission for the Investigation of Abuse of Authority, various parliamentary committees, etc. Employees are being provided with facilities such as water allowance, reconciliation allowance, key allowance, tailor allowance, regulation allowance, incentive allowance, educational allowance, efficiency allowance, project allowance, risk (difficult work) allowance, clothing allowance, telephone allowance, lunch allowance, transportation allowance, housing allowance, house rent, overtime allowance, anniversary allowance, fund allowance, productivity allowance, business promotion/motivation allowance.

Although the government has adopted a policy not to provide allowances other than local and expensive to employees, the corporations have not followed it. Similarly, it has been found that there is a huge disparity in the monetary (salary, allowance, bonus, gratuity and pension) and non-monetary facilities provided by corporations to employees. This has led to a situation where employees of different corporations receive different salaries and facilities, and that too against clear standards.

Due to the burden of unnatural service facilities, the employees are getting 'fatter' while the institutions are getting 'weaker'. In institutions with weak financial capacity, when employee service facilities are unnatural, the institution itself is exploited. For example, the Nepal Airlines Corporation, which is in a huge loss, is providing medical treatment expenses equivalent to three months' salary every year. Other institutions are also providing similar facilities. In such a situation, it is challenging to manage administrative expenses and employee facilities. Therefore, in some cases, the government has to provide assistance through loans or grants. This increases the long-term liabilities of the institutions.

As a result, internal problems become the main problem, and the task of delivering targeted products/services is not a priority. A vicious cycle is created where expenses and debts increase but the ability to manage them does not increase or cannot be increased at all. This is the common fate of many institutions that are currently running in losses. There is not enough number of employees, there is debt, there is no production or service flow that reaches profit, there are various obstacles to qualitatively increasing production or service flow through a streamlined structure using high technology. Due to all these reasons, the corporations themselves have become a burden.

Even when in a weak position, the corporations have been ignoring the instructions of the Ministry of Finance, the Commission for the Investigation of Abuse of Authority, various parliamentary committees, etc. The Ministry of Finance had issued a circular to provide service facilities only with the approval of the Ministry of Finance. The Office of the Auditor General had directed that the remuneration and facilities of the board of directors of the corporation should be determined by the Government of Nepal and that the situation of conflict of interest should be ended while determining remuneration and facilities.

The Public Accounts Committee had directed that the facilities of the employees should be reviewed/caused only with the consent of the Government of Nepal, and that the standards should be made and implemented to provide allowances based on performance indicators. But they have not been implemented. Not only that, the acts brought by the government have also been ignored. Even though the ‘Contribution-Based Social Security Act, 2074’ and the ‘Pension Fund Act, 2075’ have been implemented, the practice of providing pension and gratuity facilities continues. Even though the Ministry of Finance has issued a circular to stop it, implementation is being neglected. References show that public institutions and establishments are bodies above the government. Therefore, a strong system of regulation and monitoring and implementation are indispensable.

To improve the situation, a situation should be created where the policies taken by the government are strictly followed. Strict monitoring and regulation should be done on the institutions that manage retirement facilities in an opaque manner to circumvent it. To increase transparency and accountability in the institutions, all institutions should develop a system to make public the salaries, allowances, facilities, bonuses and rules/regulations of employees. Similarly, the work of submitting a report to the Ministry of Finance annually and controlling opaque systems such as employee welfare or provident funds should be made mandatory.

A public institution financial accountability law should be formulated and a uniform set of rules and regulations should be made to ensure that no monetary or non-monetary benefits are determined without the consent of the Ministry of Finance. The tendency of the institution to provide high benefits to employees despite its own weak financial condition should be discouraged and a bonus or performance-based incentive system should be implemented based on performance indicators only.