Govt hopes to reach its target of a higher economic growth

KATHMANDU: The government has announced the fiscal year 2023–2024 budget at Rs 1.751 trillion, significantly more than the NPC’s (National Planning Commission) cap.

The NPC had set the ceiling for the budget for the upcoming fiscal year at just Rs 1.688 trillion, citing the significant decline in government revenue collection. The government, however, went over the threshold set by the planning authority by Rs 63 billion.

At a time when government revenue has largely decreased, it was anticipated that the government would reduce the budget size by a sizable amount.

For the most part, the government has relied on domestic borrowing to cover its financial obligations.

However, compared to the current fiscal year, the government reduced the budget by a nominal amount of Rs 42 billion.

The government set aside Rs 1.793 trillion for the current fiscal year, which it later reduced through the mid-term review by 14% to Rs 1.549 trillion.

Amounts of Rs 1.141 trillion (65 point 20 percent) and Rs 302 billion (17 point 25 percent) have been designated for recurrent and capital expenses, respectively, of the fiscal year 2023–2024 expenses that have been announced. The budget for financial management is Rs 307 billion.

The budget for recurrent expenses has increased significantly, even though the government has talked about implementing austerity measures to reduce the unproductive costs of the government entities.

By adding an additional Rs 387 billion for wasteful spending in the upcoming fiscal year, the fund for administrative uses has increased from Rs 753.40 billion.

Despite the fact that the economy has been in a deep recession, the government has set a goal of achieving a growth rate of 6% for the upcoming fiscal year.

Surprisingly, the government has decreased the development budget from Rs 380 billion to Rs 302 billion in the fiscal year 2023–24.

According to economists and the private sector, the government has scaled back its capital expenditure because it is worried about how effectively it will use the money while also having a significant lack of funds to invest in infrastructure projects.

The Confederation of Nepalese Industries’ president, Vishnu Agrawal, expressed his displeasure with the decreased capital expenditure. For the government, he claimed, even the following year, the goal of revenue collection will be reduced to a nutshell.

The amount set aside by the government for financial management is Rs 307.45 billion, which is a significant increase over the Rs 231.22 billion that was allotted under that heading for the current fiscal year.

The significant increase in funds under the heading indicates that the government must set aside significant sums of money just to pay the principal and interest on the public debt. .

The government intends to finance Rs 1.248 trillion from revenue collection and Rs 49.94 billion from foreign grants to cover the outrageous expenses. In order to cover the shortfall, 212.65 billion rupees will be borrowed from abroad and 240 billion rupees from domestic sources.

The government’s expectation for revenue collection for the upcoming fiscal year appears to be very difficult given the revenue collection for this year, which represents a Rs 276 billion shortfall in public spending in the first 10 months.

This demonstrates unequivocally that in order to pay for the government’s sizable recurrent expenses, the public debt will rise significantly in the upcoming fiscal year.

The budget announced by the government, according to Rajendra Malla, president of the Nepal Chamber of Commerce, is more distributive than productive. The implementation of the announced budget is challenging, he said, because of how much the economy has shrunk.