Kathmandu, October 14

The government has failed to meet almost 50 per cent of the customs revenue collection target due to the protests in the Tarai that have prolonged for two months an indication that the state’s income will take a hit this fiscal year.

The Department of Customs (DoC) had set revenue collection target of Rs 32.17 billion for the Nepali months of Bhadra and Asoj (mid-August to mid-October). But as of Asoj 26 (October 13), different customs offices across the country had raised only Rs 16.18 billion in revenue, show the DoC data.

Inability to meet the target for two consecutive months is expected to affect the income of the government this fiscal year. This is because customs duty makes a contribution of around 20 per cent to the government’s revenue, while almost half of the value added tax and a good chunk of excise duties are also raised from customs points.

Yet, DoC Director General Sishir Kumar Dhungana is hopeful about recovery in the latter part of the fiscal year.

“I agree that consumption of commodities, like petroleum products which contributes to around 27 per cent of the customs revenue cannot be deferred. But consumption of capital goods and durable goods, such as cars, can be deferred. So, we hope revenue collection will rise in the coming days,” Dhungana said.

He, however, added recovery in revenue collection will largely depend on the improvement of the situation in the Tarai.

Parts of the Tarai have remained tense for the last two months because of protests launched by different Madhesi parties and groups. The Tarai adjoins Nepal-India border, from where most of the goods enter Nepal and from where most of the customs revenue is generated.

In the last few days, the situation, however, has eased at many border points. However, protests have not ended in Birgunj, which contributes to around 51 per cent of the country’s customs revenue.

“So until protests end in Birgunj, total customs revenue collection will not go up,” Dhungana said.

Customs revenue collection dropped drastically in the Nepali month of Asoj (mid-September to mid-October) because of agitations in Birgunj, which also houses the country’s only dry port with direct railway link with Kolkata, from where most of the third-country goods bound for Nepal enter.

The DoC had set a target of raising Rs 7.64 billion in customs revenue from Birgunj, including the dry port located there, in the first 26 days of Asoj. But till that period only Rs 1.98 billion was raised.

As a result, the government generated income of only Rs 4.94 billion from all customs points in the first 26 days of Asoj, as against the target of Rs 10.84 billion.

However, customs revenue generated in 26 days of Asoj this year is almost 48 times more than in the same month last year. This is because Dashain, the biggest festival of Hindus, had fallen in Asoj last year.

Since trading comes to a virtual halt during Dashain, the government had set revenue collection target of Rs 12.32 million in Asoj last year, but had raised Rs 102.93 million, beating the target by around eight times, DoC data show.