Violation of Financial Discipline Taking Economy Down

June 1: Former Finance Minister Dr Ram Sharan Mahat has said that economy is persuading towards risk due to violation of financial discipline in forming large size budget. In the upcoming FY budget meeting held in Legislature-Parliament, he said that large size budget will not only increase market price but also increase trade deficit.

He opines that formation of budget with current expenses unable to meet by internal revenue itself signals threat. The government has targeted to raise revenue of Rs 565.89 billion while has allocated Rs 617.16 billion for general expenses.

In the current FY, the government has targeted to raise revenue of Rs 475 billion but forty days prior end of the current FY, it has been able to raise Rs 369 billion (77.78 percent) revenue only. “In such circumstances, the large size budget brought by the government lashing out the reality is the worst of an example of financial discipline,” he said. “Economic crisis starts with the need of borrowing to manage current expenses. It will make economy unsteady rather than progressive.”

Similarly, the government, failing to evaluate affects of accumulated internal loan of Rs 88 billion in the current FY, has planned of raising internal loan of Rs 111 billion in the upcoming FY. Mahat argues that investment for private sector will be difficult due to increase in interest rate if the government raise loan from internal market. He welcomed the decision of increasing social security allowance and suggested for institutional development of local governing body in order to distribute social security allowance transparently.