Balancing revenue and expenditure

We are living beyond our means.  Our current expenditure is increasing every year, while our domestic revenue doesn’t seem to grow apace.

The country’s domestic revenue is projected to increase by 12.5 percent from 3.6 percent in the last fiscal year.  At the same time, current expenditure is estimated to grow by 14 percent.

The Constitution mandates our internal resources to meet recurrent expenditures.  There is a need to close the gap between revenue and expenditure.  In an ideal situation, growth of domestic revenue should be equal to that of current expenditure.  Better if domestic revenue is higher.

The main reason behind the sluggish growth of domestic revenue is the troubled economy and adverse balance of payment situation.  It may be difficult for a country that imports almost everything to balance revenue and expenditure, but try we must.

Revenue from Dungsam Cement, Dagachhu project and Chukha hydropower’s revised energy tariff will help pull up domestic revenue growth.  But our expenditure will also grow.  The finance secretary has asked budgetary agencies to keep their budget requirements within the ceiling provided.  Budget officials must ensure that the budget proposals are reviewed and discussed thoroughly.

However, these are only temporary measures.  We need to have a permanent solution.

The problem of adverse balance of payment is not a new problem that we are facing today.  As a country that does not produce much to trade with the countries in the region and beyond, our domestic revenue has always been small.  We import everything, from food to cars to building materials, from India.  That way, our expenditure is huge.

The rate of growth of current expenditure is outstripping that of domestic revenue.  If the trend of revenue growth does not improve while our expenditure increases by many folds, then we are in for another economic upheaval.  The country has just begun to come out of the recent economic slump.  It will be an expensive affair if we do not look for ways to improve our revenue earnings.


2 replies
  1. irfan
    irfan says:

    It’s true that the country needs the present and the next generation of entrepreneurs to think out of the box to create not just new businesses, but industries that can generate domestic revenue. We have seen the way the hydro power sector has contributed to the economy, but the power sector infrastructure needs to be utilized a lot more in generating domestic revenues through other industries.

    What shouldn’t be overlooked is the cost of maintenance in our projects from roads to remote school buildings. Every structure in a project will need maintenance, but cost that incurred due to poor quality or sacrificed quality should be avoided when we are spending a lot more than our domestic revenues. I am not trying to question the quality, but what we notice or observe with the infrastructures shouldn’t be overlooked. Infrastructure development is a long term capital investment for the country and we need top quality that demands less maintenance. Otherwise, the cost of developing an economy around such infrastructure will be going up and it will always force us to spend more than our local revenue.

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