The government is working on a “back-up plan” for revenue recovery as the collections remain far behind the target.

Against the target of Rs162 billion for mid-Dec, the collections as of Dec 4 stood at Rs103 billion, as imports slumped by more than Rs100 billion as of the fourth month of the fiscal year.

Imports, the key revenue source of the government, have been affected due to India’s blockade for nearly three months now.

“We have prepared a draft back-up plan,” said a senior Finance Ministry official. “We will explore alternative sources of revenue to meet the country’s resource needs.”

The official said the government was considering measures such as cutting down expenditure in the unproductive sector and recovering dues. The government also plans to identify other fiscal spaces such as better utilising foreign aid and internal loans. Only 45 percent, or Rs.55.37 billion, was mobilized against the target of Rs123 billion towards foreign resource mobilisation in 2014-15.

Although revenue collation had been impressive in recent years along with rising imports, the government failed to meet the target last fiscal year for the first time in years as economic activities slumped after the April 25 earthquake. Last year, the government collected Rs405.85 billion against the target of Rs423 billion.

The situation worsened this fiscal year due to prolonged Tarai unrest and Indian embargo. Nepal’s total trade declined by 37.5 percent to Rs 141.48 billion in the first four months of the fiscal. The government spending, particularly capital expenditure, has remained poor, with just 5.17 percent of allocated budget spent as of December 12.

“Most of the development projects have remained closed and tax collection from transactions to build them have come down,” said the ministry official.