The government reports state that foreign debts have increased by four times within a decade; the public debts have reached nearly 27 trillion rupees; the government raised 64 billion rupees worth of debts within a month; the government is compelled to slash down development sector expenditure to fulfill its compulsory responsibilities – paying back debt installments and interests and fulfilling social security responsibility; the government is unable to meet the general sector expenditure from the revenue received by it.

The government lacks the necessary funds to complete the budget. Therefore, the Ministry has chosen to slash down the development budget. When the government cuts down the budget on the infrastructural sector, we should understand that there are problems in our economy. The government is widening the taxation net, from which, the market has faced a regressive impact. Due to the excessive taxation, investors are fleeing away and also businessmen are afraid of taking loans from banks. Due to the political and economic hurdles, investors are not keen on establishing new industries. The government has encouraged an import-based economy discouraging investors from establishing industries. Nepal’s private sector had established a vehicle assembling industry. Strong vehicles like Mustang and Sherpa, among others, were produced in Nepal. When the government refused to give subsidies for imports of spare parts, the company was shut down. Others also attempted to establish vehicle assembling plants but due to the adverse government policies, they stopped the idea. There is no encouraging discount on imports of raw materials and spare parts. Ultimately, there is no sound environment for investors in the market. Ultimately, such a trend has led the nation towards the collapse of the economy. Meanwhile, the developed nations are likely to cut down the grant assistance to underdeveloped countries. US President Donald Trump already said that America is not going to distribute American taxpayers’ money to other countries without a benefit for the USA. Similarly, the United Kingdom has decided to fund NATO by cutting down grants to less developed countries. This trend will lead to a massive cut down on foreign grants for Nepal-like countries. Viewing all these developments, Nepal needs to reduce its non-productive sector expenditure without any delay. The main reason for increasing debts is the introduction of the present expensive structure of federalism. If we continue the present system, it is obvious that soon our economy is going to be collapsed ultimately leading the country a failed state.