Poverty, income inequality, and low domestic production capacity are significant issues in the country. Import rates are rising rapidly, while export growth remains sluggish. Both the agricultural and industrial sectors face inadequate investment. Additionally, the economy is hampered by insufficient physical infrastructure, energy crises, and political instability. The reliance on imported goods leads to a prominent trend of marginal consumption. Furthermore, the weak investment multiplier and low capital formation contribute to the challenges faced by the economy.

Nepal is currently facing various macroeconomic problems such as low economic growth, truncated capital expenditure, high trade deficit, dwindling revenue, rising public debt, and falling demand. Likewise, industrial businesses have not been able to operate at full capacity, with some industries even reaching the point of closure.

Expenditure made by the government on infrastructure and development projects is referred to as public capital expenditure. This spending is primarily focused on areas such as roads, bridges, buildings, communication, energy, and irrigation. Capital expenditure plays a crucial role in boosting production, income, and employment within the economy.