Government misses revenue target by Rs 16billion

Nepal witnessed a sharp reversal in revenue collections and missed targets by well over Rs 16 billion in 2010/11, thanks to a sharp rise in cross-border smuggling and drop in imports of major revenue contributors like vehicles.

According to MoF, the government mobilized just about Rs 200 billion in revenue in the last fiscal year, whereas the target was set at over Rs 216 billion. The ministry last month had claimed that it would mobilize at least Rs 206 billion.

But final figures show we failed to realize even the revised target, said Finance Secretary Krishna Hari Baskota.

He along with senior revenue officials attributed the drop, which was witnessed for the first time since Nepal bolstered revenue administration four years ago, to decline in imports of vehicles and petroleum products that make huge contribution in revenue.

“Amid realty slump, the consumption of vehicles dropped sharply, leaving heavy impact in the collections,” said a senior official with the Department of Customs.
However, not all revenue officials agree with him.

“Everyone knows cross-border smuggling rose like never before with poor governance and weak leadership at the helm of MoF. That fundamentally caused the revenue loss,” said a MoF official.

Senior officials of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) also admit publicly that smuggling, which increased sharply, could have gone up to the equivalent of 60 percent of official trade in 2010/11. Officials at Nepal Rastra Bank agree with them, and cited the pressure they are facing to meet the soaring demand for Indian currency (IC) as a fallout.

"Latest data show consumption stands strong, but government figures show domestic productions have grown only nominally. So where is the supply coming from?" questioned a NRB source.

For instance, NRB data show country´s gold import has shrunk to Rs 9 billion in the eleven months of 2010/11 from Rs 39 billion recorded in the same period of the previous year. But dealers openly admit that consumption of gold still remains high and demand is being met through smuggled supply from India.