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On/Off the Record

By P.R. Pradhan

Already, we are in a trade trap. If the country curtails imports of vehicles taking above 240% tax on them, the country’s revenue target cannot be met. The country’s domestic revenue is not sufficient even to meet its general sector expenditure, as it has to feed around 40 thousand people elected representatives and their aides, advisors, and others. As the government has inclined the revenue target for the customs offices, it has not been able to meet the revenue target, and the budget deficit in the previous fiscal year was around four trillion rupees. The government is compelled to raise domestic and foreign debt to meet the budget expenditure. Every month, the government is taking debt. In the past five years, the total debt had become double the entire debt taken by the government in previous years. Currently, the debt ratio against the total gross domestic products has reached 43%. Although it is not a serious threat for developed countries, for Nepal, like underdeveloped countries, it is an alarm. At present, the government has already reached the situation that it needs to take debts to pay back interest and installments of the previous debts.

Since the government adopted the present federal structure, unnecessary and unproductive political expenditure has increased enormously. Despite imposing a heavy taxation of 22% on its citizens, an expensive taxation rate among South Asian countries, the government is unable to meet the general sector expenditure. If we do not scrap the present political system, it is sure that the debt volume will continue to increase.

Prime Minister K.P. Sharma Oli and his party are lauding the slogan of prosperous Nepal and happy Nepalis. The nation’s prosperity and happiness of people will be achieved only if we are able to reduce the unproductive sector’s expenditure, reduce the taxation rate, and increase the government’s investment in the productive sector. Reducing general sector expenditure and increasing capital expenditure are the main formulas for transforming the nation into a prosperous country, and making people happy.

The present Nepali Congress and UML government are talking about amendments to the constitution, but we believe, we can never achieve prosperity from the present constitution, therefore, we suggest the political leaders scrape the present constitution and return to the 1990 constitution.

Political leaders, especially the three leaders — K.P. Sharma Oli, Sher Bahadur Deuba, and Pushpakamal Dahal – are becoming the prime ministers turn by turn. They are spending all their energy on how to topple the government and how to become the prime minister. They are unable to think about the nation’s prosperity and making the Nepali people happy. The present political system has aimed at managing party workers, or, say, providing employment to them.

Every day, thousands of youths are leaving the country due to a lack of employment opportunities. This has adversely affected the nation’s economic and social structures. The nation is moving towards a deindustrialization path, and it has turned into an import-reliant nation. If imports are stopped for one day, from the next day, there will be a scarcity of products for daily consumption, including food items. Nepal is an agricultural country, but every year, we import agro-products from foreign countries. We don’t have enough products to export to foreign markets.

Priority should have been given to producing items that would substitute imports, but the bitter reality is that if we produce such items within the country, they will not be imported from abroad, and the customs office cannot get revenue through customs duty. This is called the trade trap. This trade trap is pushing the country towards the debt trap, and finally, the nation can be declared a failed nation. Presently, it is just an alarm, that if the political leaders don’t try to understand the economic reality, obviously, the nation is going to suffer.

The present global trend is that developed nations and international financial institutions have already started to cut off grants and insist on debts. As Nepal is going to graduate to a developing nation from a less developed nation, the grant support that Nepal is receiving is also going to be reduced. Furthermore, Nepal’s illusive foreign policy has also adversely affected the nation’s prosperity.