Karnali Province Faces Revenue Challenges and Budget Implementation Issues

The Karnali province government has managed to generate only three billion rupees in internal revenue over the past six years. Despite the establishment of the provincial government five years ago, the internal income till the end of May of the current financial year has reached just Rs 2.86 billion.

Minister for Economic Affairs and Planning, Mahendra KC, disclosed that the internal revenue collection for the fiscal year 2022-23 was Rs 2.24 billion, achieving 94.8 percent of the total revenue target. However, the internal revenue for the fiscal year 2023-24 stands at a mere 61.97 million, which is only 74.10 percent of the projected target.

The total budget of the Karnali provincial government over the past six years amounts to Rs 66.66 billion. Minister KC elaborated on the budget structure, noting that 37.46 percent of the funds were allocated towards current expenditures, while 62.54 percent were directed towards capital expenditures. Despite these allocations, the province has only spent 62.71 percent of the budget on the operational side and 55.01 percent on capital projects, resulting in an overall expenditure of 57.90 percent.

With just one month remaining in the current fiscal year, the government’s budget implementation remains weak. Minister KC, while presenting the budget for the upcoming fiscal year in Parliament, highlighted that the expenditure up to the end of May 2023-24 was 49.38 percent for operational expenses and 29.87 percent for capital expenses, culminating in an overall expenditure of 37.93 percent.

From the fiscal year 2018-2019 to 2023-24, Karnali province received a total of Rs 27.52 billion in conditional, supplementary, and special grants from the federal government. Despite these significant grants, the province continues to struggle with internal revenue generation and effective budget implementation, posing a substantial challenge for its economic growth and development.