In our country, there is no capital expenditure called development expenditure. Such expenditure is often minimal in quarterly or semi-annual reports.
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The details of every updated report of the government on capital expenditure are disappointing. Which highlights our unique situation. Because, we have an appetite for development projects but do not have enough budget for it. In such a situation, whatever budget is available, it should be spent soon.
In our country, there is no capital expenditure called development expenditure. Such expenditure is often low in quarterly or half-yearly reports. Although the government has allocated Rs 47.54 billion under the capital heading for the current fiscal year, Rs 47.54 billion has been spent in six months. This is only 11.66 percent of the annual target. Even if there is a slight fluctuation, low expenditure is a common problem every year. Such a trend confirms that there is a serious problem in the policy and work system. Which needs immediate treatment.
Issues from plan selection, contract process and implementation to payment are directly related to capital expenditure. We have problems in all these processes. There is no scientific standard in plan selection. There is also no practice of looking at long-term benefits. Aspects such as how much employment the investment in such plans creates, how much it contributes to capital formation, and how much it increases people's productivity are not considered. Even after starting the contract process, there is a situation where work cannot be done for a long time.
There is also a problem in the regular payment process, from ‘site clearance’ to regular payment. There is always a misunderstanding between the government and the contractor. The government formed after the Gen-G movement broke contracts already made in many projects such as roads, irrigation, buildings, and assembly halls. Although breaking contracts for dilapidated projects cannot be called unnatural, new contracts have not been signed since then. And, the projects have been left behind. The problem of payment is the same. This shows that capital expenditure is low. Improvements are needed in all these aspects.
On the other hand, interest is not given to starting the contract process at the beginning of the financial year. Due to this, work on development construction does not even start. There is no satisfactory expenditure either. And at the end, pressure is created on the government to show that capital expenditure has increased. As a result, construction work is being done with the intention of meeting the budget during the monsoon season. It is also seen that roads are being blacktopped during the monsoon season. It increases the cost by a few percent but does not ensure quality. In such a situation, the people do not get to benefit from the development construction structures on time, and citizens' taxes are also misused for substandard work. Unsustainable projects cannot contribute to capital formation. Instead, after some time, additional reconstruction budgets must be spent. We have been trapped in this vicious cycle for years.
In a country where only a small budget is allocated and only a small portion of it is allocated for capital expenditure, caution should be exercised when selecting projects. The construction work of such projects should be completed as soon as possible, capital can be built, employment can be created, more and more people can benefit, economic activity can be increased, experience can be gained, and self-confidence for the construction of large projects can be increased. If projects are selected in this way, not only will capital expenditure increase, but it can also be easily measured that development and construction work is underway. This ultimately increases loyalty to the state. Therefore, it is necessary to make the process from project selection to payment systematic and scientific.
Another indicator that is currently disappointing is revenue collection. In the first 6 months, the government has collected only Rs 581.40 billion. 72 million in revenue. Whereas, the government had set a target of collecting Rs 711.20 billion by mid-December. Although it is about 2 percent more than the same period of the previous fiscal year, it is not an encouraging collection.
Our overall economic situation is responsible for the failure to collect revenue. The investment environment in the country has not been created. The amount that can be given as loans has been accumulated in banks. When investment does not increase, imports decrease, and as imports decrease, revenue collection decreases. Therefore, the government should create an investment environment. A significant increase in capital expenditure is also a way to increase the investment environment.
Similarly, there is a problem at the revenue collection point. Although half of the revenue is collected through customs, there is a problem of leakage. Therefore, initiatives should be taken to reduce leakage. Nepal has an open border with India, which is its main trade, and informal imports and exports continue to occur. If this can be made systematic, there may be some improvement in revenue collection. Government systems and agencies should be made agile and strong, especially in all revenue centers, including border areas. The use of technology should be given high priority.
Revenue leakage can be minimized by increasing surveillance through technology. Similarly, it is necessary to make the revenue collection target practical. Setting revenue targets without considering the country's economic activities is always bound to result in low achievement. In order to set a high target and collect it accordingly, the government must increase the capacity of its mechanisms to achieve the target. It is clear that positive achievements cannot be achieved by keeping the country's economic environment the same, keeping the mechanisms the same, and setting unrealistic targets.
