The government witnessed slump in revenue mobilisation in the first four months of the current fiscal year 2019-20 due to fall in imports.
The revenue mobilisation growth rate stood at just 3.56 per cent in the first four months, compared to the average growth rate of 20.85 per cent in the same period in the last five fiscal years, according to the Finance Minister.
The Finance Ministry has been able to mobilise Rs 256.77 billion – an increase of 3.56 per cent from Rs 247.94 billion last year’s four months – in the four months of the current fiscal year due to failing imports as the key source of revenue is imports.
The revenue mobilisation dropped due to reduced imports of diesel, petrol, cement clinkers and vehicles, which in the previous fiscal years contributed massively to the state coffers. According to the Trade and Export Promotion Centre (TEPC), import of petroleum products decreased by 15.4 per cent, iron and steel by 26.5 per cent, and transport vehicles and their parts by 6.3 per cent in the first four months of the current fiscal year. “These account for three of the top four products, alongwith cement, in terms of import value,” the centre said, adding that overall imports during the first four months decreased by 6.9 per cent.
Due to fall in imports – which the government claims to be its success – customs duty also decreased by R 2.43 billion and import-based value-added tax (VAT) mobilisation also dropped by Rs 3.94 billion. The heavy slump in average growth rate in revenue mobilisation will be a serious cause for concern as it will force the finance minister to down size the budget alongwith revenue mobilisation target like in the last fiscal year. Despite massive imports in the last fiscal year, finance minister Dr Yuba Raj Khatiwada faced a revenue shortfall of Rs 114.34 billion.
Apart from government failing to meet revenue mobilisation target, the reduced imports of construction materials and equipment also suggest that the economy is not performing well as the construction – that can create not only employment but also help capital formation in future – is slowing down.
The slowdown will lead to a vicious cycle of undergrowth, according to the economists. The government has projected 8.5 per cent economic growth in the current fiscal year but economists claim that the shrinking economic activities – also due to government policy failure – will bring the economic growth down. The World Bank has projected a more modest growth rate of 6.4 percent, though other development partners have also projected the growth rate to be around 5 per cent to 6 per cent.
However, revenue secretary Sishir Kumar Dhungana claimed that the reduced imports will ultimately help reduce the ballooning trade deficit. “The government is focusing on boosting domestic revenue and controlling leakages in customs-based revenue,” he said, adding that the government is focusing on increasing non-tax revenue including royalty, rent, property income, dividends, sales of goods and services, and administrative fees.
Dhungana, however, claimed that the fall in revenue mobilisation has not hit the government’s capacity to finance development projects. “There has not been much pressure on the government due to slow spending of grants provided to provincial and local governments and low expenditure in post-earthquake reconstruction.”
The revenue mobilisation growth rate stood at just 3.56 per cent in the first four months, compared to the average growth rate of 20.85 per cent in the same period in the last five fiscal years, according to the Finance Minister.
The Finance Ministry has been able to mobilise Rs 256.77 billion – an increase of 3.56 per cent from Rs 247.94 billion last year’s four months – in the four months of the current fiscal year due to failing imports as the key source of revenue is imports.
The revenue mobilisation dropped due to reduced imports of diesel, petrol, cement clinkers and vehicles, which in the previous fiscal years contributed massively to the state coffers. According to the Trade and Export Promotion Centre (TEPC), import of petroleum products decreased by 15.4 per cent, iron and steel by 26.5 per cent, and transport vehicles and their parts by 6.3 per cent in the first four months of the current fiscal year. “These account for three of the top four products, alongwith cement, in terms of import value,” the centre said, adding that overall imports during the first four months decreased by 6.9 per cent.
Due to fall in imports – which the government claims to be its success – customs duty also decreased by R 2.43 billion and import-based value-added tax (VAT) mobilisation also dropped by Rs 3.94 billion. The heavy slump in average growth rate in revenue mobilisation will be a serious cause for concern as it will force the finance minister to down size the budget alongwith revenue mobilisation target like in the last fiscal year. Despite massive imports in the last fiscal year, finance minister Dr Yuba Raj Khatiwada faced a revenue shortfall of Rs 114.34 billion.
Apart from government failing to meet revenue mobilisation target, the reduced imports of construction materials and equipment also suggest that the economy is not performing well as the construction – that can create not only employment but also help capital formation in future – is slowing down.
The slowdown will lead to a vicious cycle of undergrowth, according to the economists. The government has projected 8.5 per cent economic growth in the current fiscal year but economists claim that the shrinking economic activities – also due to government policy failure – will bring the economic growth down. The World Bank has projected a more modest growth rate of 6.4 percent, though other development partners have also projected the growth rate to be around 5 per cent to 6 per cent.
However, revenue secretary Sishir Kumar Dhungana claimed that the reduced imports will ultimately help reduce the ballooning trade deficit. “The government is focusing on boosting domestic revenue and controlling leakages in customs-based revenue,” he said, adding that the government is focusing on increasing non-tax revenue including royalty, rent, property income, dividends, sales of goods and services, and administrative fees.
Dhungana, however, claimed that the fall in revenue mobilisation has not hit the government’s capacity to finance development projects. “There has not been much pressure on the government due to slow spending of grants provided to provincial and local governments and low expenditure in post-earthquake reconstruction.”
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