Government should not Take Decision on the Basis of Cost and Revenue Analysis of Any Project.

 In economics, before produce any new product and services, some matters must be researched about what to produce, how to produce and whom to produce. Otherwise, after making new products, those products may not be sold in the market. For example, if somebody opens a new beef shop in Kathmandu, without market research then that shop may be closed within 1 month because of religious belief, most of the Nepalese people don’t eat beef. That’s why before produce any new products, market research must be done to find out the future demand of new products in targeted area otherwise company may get huge loss in future.

 

In perspective of private company, production cost must be analyzed before starting to produce new product, otherwise in future company may get huge loss due to cost price. In the beginning to survive company, the minimum selling price should be equal to the total cost of the new product otherwise the company may not survive. So, the private company should analyze between total cost price of the product and market selling price of product before starting to produce any new product. But in the government perspective, the cost of project and revenue of any project should not be analyzed. The government always should make products, services and necessary infrastructure on the basis of priority for the citizen. For example, in village A, there are 200 homes but there is no water supply system yet. They have been bringing water from the river which river is 1 kilometre far from the village. In that situation, government should not analyze the cost price of project and revenue income of water distribution to the villagers, the government must take a decision on the basis priority of citizens. So that government should make the water system in this village.

 

After understanding the above example, we can say that government should give first priority for food, water, electricity, health, education, road etc.  Step by step, government should take decision on the basis of priory of their citizen. The huge number of people are dying due to lack of food, but the government are taking a decision to make aeroplane company by investing huge money then that decision is not a good decision of any good government. So that government always should take a decision on the basis of priority of the citizens and the private company should take the decision on the basis of future demand of the new product as well as analyzing cost and market price of that product.

Before making any new product and infrastructure, so many analysis must be done either a private company or the government. I just give a simple example of taking decision by a private company or the government on the perspective of cost analysis and priority analysis.

 

 Thank You For Reading.