Government Grapples with Soaring Deficit: Borrowing Stands as Solution Amidst Stagnant Revenue

As of the end of Ashwin in the fiscal year 2080/81, the government is grappling with a growing deficit, raising concerns about fiscal sustainability. Despite ambitious targets, the first quarter has witnessed a yawning gap between revenue and expenditures, compelling the government to resort to borrowing.

The government's expenditure has surged to a staggering Rs. 2.80 Kharba, while revenue lags significantly at Rs. 2.43 Kharba. This imbalance has given rise to a daunting fiscal challenge, necessitating loans to bridge the widening deficit gap.

In an effort to cover its expenses, the government has aggressively taken internal loans during the first quarter. The recurrent expenditure alone has devoured Rs. 2.13 Kharba, representing 18.69% of the annual target, which stands at Rs. 11.78 Kharba. On the capital front, the government's spending remains at a mere Rs. 17.83 Arba, a mere 5.9% of the desired Rs. 3.2 Kharba target for the fiscal year.

The fiscal management landscape remains worrisome, with the government having already spent 16.05% of the budget in the first quarter, amounting to Rs. 49.34 Arba. The target for fiscal management this year is Rs. 3.7 Kharba.

Adding to the challenge is the lackluster revenue collection in the first quarter, which has only reached 15.4% of the target, typically expected to be between 25% to 30%. The government has set a revenue collection target of Rs. 14.22 Kharba, but up to Ashwin, it has only been able to collect Rs. 2.19 Kharba. Furthermore, the government has received only Rs. 6 Crores in grants, and the rest of the revenue comes from other sources, totaling Rs. 2.34 Kharba.

As the fiscal year progresses, the government will need to take decisive actions to balance the budget and enhance revenue collection, ensuring long-term fiscal stability and economic growth.