In the eight months of the current fiscal year, the import of vehicles and parts decreased by 57 percent to Rs 32.66bn. The import of aircraft parts decreased by 26.4 percent to Rs 3.5bn. “The reduction in the import of capital goods means there will be little capital formation in the current fiscal year,” said an economic analyst. “As Nepal largely does not produce most of the capital goods, it should rely on imports.
Observers say that the decline in the import of machinery also suggests that construction activities in the country have decreased sharply. “It is also due to the government’s failure to spend the capital budget,” said the analyst. Usually, government spending also encourages the private sector to make new investments. As of March 26, only 24.12 percent of the capital budget has been spent, according to the Financial Comptroller General Office (FCGO). The import control measures imposed a year ago were largely aimed at controlling the import of consumer goods. But, a decrease in the import of capital goods also suggests a slump in domestic economic activities. Nepal’s economy grew by just 0.8 percent, hitting a seven-year low in the first quarter of this fiscal year, particularly due to the negative growth in five sectors- construction, mining and quarrying, wholesale and retail, and repair of motor vehicles, transport and storage, and education, according to the National Statistics Office. The office previously known as the Central Bureau of Statistics said mining and quarrying and the construction industry suffered the most, as they reported 29.2 percent and 24 percent negative growth, respectively. The Confederation of Nepalese Industry (CNI), a private sector body, said in its survey report in December last year that overall demand for goods slumped by 28.28 percent during the first quarter of the current fiscal year. According to the report, demand for cement decreased by 40.2 percent and turnover in the engineering and construction sector suffered a decline of 43.7 percent. With the domestic economic activities also decreasing, the government's inland revenue collection has also suffered along with import-based revenue. According to the Inland Revenue Department (IRD), the revenue collection as of March 14 this fiscal year stood at 79.68 percent of the target. The government collected Rs 281.99bn as of May 14 against the target of Rs 353.91bn. The collection is poorer than the total inland revenue collection during the same period last fiscal year 2021/22. IRD collected Rs 284.88bn during the same period last fiscal year.
