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Nepal is stuck in a dangerous cycle. Corruption is increasing, and the gap between the rich and the poor is getting wider every day. Many people have lost trust in the government because they feel ignored, cheated and left behind. Even though Nepal has become a democracy and given more power to local governments, real control still lies with a small group of wealthy and powerful people. Most citizens, especially the poor and those living in rural areas, continue to struggle just to survive.

Corruption is present at every level—national, provincial, and local. Money meant for important services like schools, hospitals and roads often disappears due to theft, misuse or waste. Politicians and officials make big promises, but many development projects are only started to make money for themselves and their friends. Budgets are often made larger than needed, so that extra money can be secretly siphoned off. Contracts for construction are not always given to the most qualified companies, but to those with political connections. This leads to weak, unsafe buildings or projects that are never finished.

Even when work begins, a large amount of money is lost before it reaches the people. It is believed that only about 35 percent of the capital budget is used properly. Corrupt politicians, dishonest contractors and some government employees devour the rest. Because of this, roads break apart within months, schools lack basic furniture and qualified teachers, and hospitals do not have enough doctors, medicine or even potable water.

This situation hurts poor people the most. Many laborers working on these projects are paid very low wages—and sometimes, they are not paid at all. Their problems are ignored, and they have no real way to raise their demands or seek justice. Meanwhile, rich people keep gaining more power by using their money to influence politics and business. This unfair system keeps poor people stuck in poverty and gives the rich even more control over the country’s future.

Another big problem is how government jobs are given. Instead of hiring people based on education, skills or experience, jobs often go to relatives, friends or political supporters. This means that many important offices are run by people who are not qualified for the jobs at hand. As a result, government services become slow, unfair and ineffective. Honest and capable people are often pushed aside, which creates frustration among the youth. Many young people lose hope in the system and choose to leave the country to find better opportunities abroad. This “brain drain” is a big loss for Nepal, as it loses skilled and educated workers, who could have helped develop the country.

Even the institutions that are supposed to fight corruption are failing. Organizations like the anti-corruption commission and other watchdogs are often under the grip of powerful leaders. They are not truly independent, and they rarely investigate or punish those in high positions. When corrupt leaders go unpunished, it sends a message that stealing public money is acceptable. This creates a culture where corruption becomes normal and expected.

The seriousness of this problem can be seen in the numbers. According to OXFAM, Nepal’s Gini coefficient—which measures income inequality—rose from 0.49 in 2010-11 to 0.58 in 2019. This shows that the gap between the rich and the poor is growing quickly. Another number, the Palma Ratio, shows that the top 10 percent of the population earns three times more income than the bottom 40 percent. This level of inequality is dangerous for any country.

Inequality is not just about income. It also affects access to good education, healthcare, housing, justice and job opportunities. Poor families cannot afford to send their children to private schools or pay for treatment at private hospitals. The legal system is slow and expensive, and poor people often cannot afford lawyers or do not have the connections needed to get justice. Over time, this creates anger, hopelessness and frustration, especially among young people, who feel their future has been stolen.

When people believe that the system is unfair and corrupt, they stop trusting democracy. They stop voting, stop getting involved and stop believing that change is possible. This weakens society as a whole.

Corruption also hurts Nepal’s economy. Investors, both local and foreign, are unwilling to put their money into a country where bribes are expected and laws are not enforced. Small businesses—which create most of the jobs—cannot survive if they are constantly blocked through unfair rules, heavy taxes or competition from companies that enjoy political protection. As a result, unemployment increases, and more and more young people leave the country to find work abroad.

If this situation continues, Nepal is most likely to face serious problems in the future. Poverty may rise, social unrest could grow and public services may collapse. Protests and instability could become more common, and more people could lose hope in the idea of a better future.

Solving this problem is not easy. Passing new laws alone is not enough. Real change needs to happen in how the system works and how leaders think. Government offices must be honest and open about how they spend money. Public jobs should be given to people based on their skills, not their political connections. More importantly, citizens need to be able to ask questions, demand answers and take part in decision-making.

The media, civil society and youth movements can play an important role in the fight against corruption. Educating young people about honesty, fairness and responsibility can help build a new generation that refuses to accept corruption as normal. Technology can also help by making government systems digital and easy to track, so that money is not stolen as easily.

In conclusion, corruption in Nepal is not just one problem. It is the root cause of many other problems, including poverty, poor public services, slow development and a weak democracy. If we don’t take it seriously, the rich will keep getting richer, the poor will suffer more and Nepal will fall even further behind. The country needs honest leaders, strong institutions and active citizens who work together to build a fairer and more hopeful future.

Nepal is experiencing a growing economic disparity between its urban and rural areas, where rapid development in cities contrasts sharply with the stagnation in rural regions. The concentration of infrastructure, services and job opportunities in urban centers exacerbates inequality, while rural areas remain underdeveloped and lack basic facilities. This uneven development has led to a significant rural-to-urban migration, with people leaving villages in search of better opportunities in cities, further depleting rural economies.

Urban centers have become magnets for rural populations due to the concentration of essential services such as education, healthcare and employment opportunities. The hope of improving living conditions drives internal migration, as rural residents believe cities offer a better standard of living. This urban-centric development model not only leaves rural areas behind but also accelerates the growth of overcrowded cities, contributing to further challenges like rising unemployment and inadequate housing.

In response to this issue, Nepal adopted a federal system of governance to decentralize power and resources. The goal was to empower provincial and local governments, assuming that they would be better equipped to address local needs and promote equitable development. By transferring authority and funds to local governments, it was hoped that development would be more localized and tailored to the specific needs of rural areas. Unfortunately, the anticipated benefits have not fully materialized.

Despite the decentralization of power, rural development has not seen significant improvements. In many cases, local governments have struggled to use the funds effectively, and instead, the transfer of power has led to the decentralization of corruption. Local authorities have misused public resources meant for development, often siphoning off funds for personal gains. This problem, which was initially concentrated in the central government, has now spread to local levels, undermining the objectives of decentralization.

Corruption at the local level has further deepened economic inequality. Political elites and well-connected individuals in both urban and rural areas often benefit from the misuse of state resources, while ordinary citizens continue to face hardship. Funds that could have been used for infrastructure development, job creation, education and healthcare are diverted through corrupt practices, leaving rural communities trapped in poverty and underdevelopment. This corruption weakens public trust and limits the potential for inclusive growth, which could have uplifted the rural population.

Moreover, the lack of transparency and accountability in local governance has made it difficult to ensure that development projects are carried out effectively. In many cases, development funds are not properly monitored, and there is little oversight to ensure that they reach the intended communities. Without effective monitoring mechanisms, local leaders are often able to exploit the system for personal gains, while the rural poor continue to suffer from a lack of access to essential services.

The failure to achieve equitable development and inclusive growth can also be attributed to weak governance structures at the local level. Local leaders often lack the capacity to manage development effectively, and there is a significant gap in skills and knowledge required to implement projects that could drive real change. In the absence of strong institutions and effective leadership, rural areas continue to miss out on the benefits of federalism and decentralization.

To address the growing disparity between urban and rural areas, Nepal needs comprehensive reforms. One of the most critical steps is to strengthen anti-corruption mechanisms at both the local and national levels. Transparency in how development funds are allocated and spent is crucial to ensure that resources are used effectively. Independent bodies should be established to monitor the use of public funds and hold local leaders accountable for any misuse. Additionally, capacity-building programs for local leaders and administrators are essential to improve governance and ensure that development projects are implemented effectively.

Another important reform is the improvement of infrastructure and services in rural areas. This can be achieved through better planning, prioritizing rural development and ensuring that basic services such as healthcare, education, and transportation are accessible to all. Rural communities should not be left behind in the pursuit of national development, and government policies must reflect this commitment to equitable growth.

Furthermore, local governments must be provided with the tools and training necessary to manage development funds effectively. Capacity building should focus on transparency, financial management and project implementation to ensure that rural areas benefit from the decentralization of power.

In conclusion, Nepal’s growing economic inequality, fueled by the urban-rural divide, requires urgent action. The decentralization of power through federalism has not led to the expected improvements in rural development, largely due to corruption, mismanagement, and weak governance. To bridge the gap between urban and rural areas, Nepal must strengthen its institutions, promote transparency and build the capacity of local leaders. Only then can the country achieve true inclusive development and provide equal opportunities for all its citizens, regardless of where they live.

Nepal is facing serious problems, with politicians often fighting both on the streets and in the House of Representatives. This situation is causing a lot of frustration among the people. What’s even more troubling is that many of the promises politicians made during the election seem to have been forgotten. They had promised to work for the improvement of the poor and disadvantaged, to provide better governance, and to control the widespread corruption in the country. They also talked about creating jobs for the unemployed and building a prosperous future for everyone.

Forgetting these promises, political leaders appear more focused on their own fights and struggles for power rather than working on the issues that really matter to the people. This leaves the citizens feeling neglected and disappointed, as they see little change in their lives.

Critical issues surrounding economic development in Nepal remain largely sidelined by the political ambitions of its leaders. Instead of tackling the pressing challenges that the country faces, political parties focus on activities that primarily serve their own interests, elevating their short-term popularity. These pursuits, however, often come at the expense of long-term progress and stability. The result is an economy that remains stagnant, with little hope for meaningful advancements. In fact, Nepal’s economic trajectory is increasingly concerning, as it is not only stagnant but also showing signs of deterioration.

A significant indicator of this stagnation is the excess liquidity in the country’s banks. The banking sector holds a substantial amount of idle capital, which could be utilized to drive growth and development. Instead of channeling this surplus into projects that could boost local industries, create jobs or improve infrastructure, banks continue to sit on their excess reserves. Political leaders who should be guiding the economy toward prosperity fail to intervene or prioritize this issue. Rather than focusing on using these resources effectively to stimulate the economy, their attention remains on consolidating state power and enriching themselves and their allies. This self-serving approach undermines the potential for long-term economic improvement and leads to further inefficiency in financial systems.
 

This cycle of mismanagement has persisted for decades, as political parties swap power but offer little in terms of vision or action to address the nation’s economic challenges. There is a glaring lack of leadership when it comes to creating comprehensive and sustainable economic policies that could foster growth and reduce inequality. The political establishment is not concerned with building a robust economic foundation; rather, it is preoccupied with gaining and retaining power, a pursuit that fails to benefit the nation at large.

As a result, Nepal has witnessed a prolonged period of stagnation, with the country’s economic growth hovering around a meager four percent annually over the past three decades. This rate of growth is insufficient to meet the needs of a growing population, and it has left many people—especially the youth—facing limited prospects. The consequences of such stagnation are profound. Employment opportunities remain scarce, particularly for the younger generation, which has significantly contributed to a migration trend. Young people, regardless of whether they are skilled, semi-skilled or unskilled, are increasingly compelled to seek better job prospects abroad. This exodus has become a key issue, as the country’s brightest talents leave in search of opportunities that Nepal fails to provide.
 

The outflow of skilled labor is particularly damaging, as it depletes the nation of its human capital—one of the most important resources for driving economic growth. This not only exacerbates the immediate problem of unemployment but also hinders the country’s long-term development. Skilled workers who might have contributed to the local economy through innovation, entrepreneurship or professional expertise are instead investing their talents in foreign markets. This brain drain leaves Nepal with a weakened workforce and a limited ability to compete in the global economy.

At the heart of this crisis lies a fundamental failure of leadership. The absence of a coherent and forward-thinking economic strategy has created a vicious cycle where the political class remains disconnected from the needs of the people. Rather than working to create a sustainable economic environment that could provide jobs and opportunities for future generations, leaders remain mired in power struggles and self-interest.

It is evident that Nepal needs a shift in priorities. Political leaders must refocus their efforts on creating a long-term vision for economic development that goes beyond short-term gains. This includes harnessing financial resources effectively, investing in industries that can generate employment and fostering an environment conducive to innovation and entrepreneurship. Only by addressing these issues with a clear, unified approach can Nepal hope to break the cycle of stagnation and build a future that offers prosperity for all its citizens.

In such times, the public may lose trust in the government, and it can be difficult for the leaders to inspire hope. The promises made to improve the living conditions of the poor and to address corruption should not be forgotten. It’s also crucial that politicians remember their pledge to ensure good governance and create jobs for the neediest.

Politicians must focus on actions that directly benefit the citizens to regain the latter’s trust. The politicians need to stop fighting among themselves and start working together for the common good. It’s important for them to take responsibility and make real efforts to fulfill the promises they made during their campaigns. Transparency and accountability are key. The people of Nepal deserve leaders, who are dedicated to making their lives better and improving the country's future.

Ultimately, the people should not feel ignored. Political leaders must be reminded of their duty to serve the citizens and improve their well-being. If they focus on their promises and take meaningful steps toward change, they can restore the trust and hope of the public.

Poverty in Nepal remains widespread, especially in rural areas. Many poor people struggle to earn enough to meet their basic needs, relying on small, often unproductive pieces of land. This land doesn’t produce enough crops or generate enough income, making poverty more severe in rural areas compared to urban ones.

In 2010-11, about 25 percent of Nepal’s population lived below the poverty line. By 2023-24, this number had decreased to 20.3 percent, a reduction of 18.8 percent. While this shows some progress, many people still struggle to make ends meet. A 19 percent reduction in poverty over a decade is but a small improvement. Progress has been slow, and many still face difficulties, especially in rural areas. Efforts to fight poverty have not been strong enough to make a significant impact. According to a recent World Bank report, most of the poverty reduction can be attributed to remittances. This suggests that government efforts alone have not been enough to bring significant change.

This highlights the need for more action within Nepal to tackle poverty. There should be more local job opportunities, better access to education and healthcare, and better support for farmers so that people can improve their lives without having to migrate. While remittances help, they are not a long-term solution to poverty. The government and relevant organizations need to address the root causes of poverty and provide local opportunities for growth.

To reduce poverty further, Nepal must improve conditions for rural communities. This includes better access to education, healthcare, and technology, as well as improving farming practices. It’s also important to create more job opportunities outside of farming, so people don't have to rely solely on agriculture for survival.

Meanwhile, inequality in income or spending has decreased. In 2010-11, the Gini coefficient (GC), which measures income distribution, was 0.33. By 2023-24, it dropped to 0.30, a three percent decrease. The Gini coefficient ranges from zero (perfect equality) to one (extreme inequality). A GC of 0.3 shows that while inequality has decreased, it is still at a moderate level, meaning there is still a gap between the rich and the poor in how resources are shared.
Although the reduction in inequality is a positive sign, more work is needed. The three percent decrease suggests that efforts to reduce inequality are moving in the right direction, but there is still a long way to go to ensure fairer distribution of wealth and opportunities across Nepal. The government and organizations must focus on policies that help reduce inequality further. This could include improving access to education, healthcare and job opportunities for everyone, especially those in rural areas or from poorer backgrounds. By creating more equal opportunities, Nepal can continue to reduce inequality and move toward a more balanced society.

In conclusion, while poverty and inequality have decreased in Nepal, the changes are still not enough. Stronger and more effective efforts are necessary, particularly in rural areas. Remittances have played a key role, but they are not a long-term solution. The government needs to create more local opportunities for people to improve their lives and address inequality to ensure a fairer distribution of resources and opportunities across all communities.

Nearly five decades ago, when I was a student of economics at the Tribhuvan University, all master’s level students had to serve in rural areas of the country—they had to perform social work and teach in schools under the program called National Development Service (NDS). Normally, master’s degree programs took two years to complete, but the NDS component turned into a three-year program.

My assignment was at a lower middle school in Khurkot (Sindhuli district) and I was the first NDS student to be sent to this school, where I received a warm welcome from the teachers and villagers.

Our primary task was to help build a toilet at the school, as there was none. Local people and teachers came together, pooled in necessary resources and built the toilet in three months. In addition, I organized an inter-school quiz competition, launched an awareness campaign encouraging parents to send their daughters to school and worked to reduce anti-social activities.

A bridge between the hills and the Tarai, Khurkot, located at the foot of the Mahabharat range and on the banks of the Sunkoshi river, has been a center for trade and commerce between the people of the hills and the Tarai for centuries. These days, Khurkot, with roads all around it, namely the Dhulikhel-Bardibas road (west), Khurkot-Manthali road (north) and the Khurkot-Katari road (east), has transformed into a bustling small town on the Sunkoshi banks with shops, hotels and lodges.

Despite these changes on the outside, there has not been any marked improvement in the life of its residents. The most visible change, perhaps, is the replacement of thatched roofs with zinc sheets. What struck me was that many of the shops, hotels and lodges that have sprung up in Khurkot do not belong to the local people; they belong to outsiders.

Primarily, Khurkot is home to Chhetri and Bahun (Brahmin) communities, most of whom are farmers, with a handful in civil service. Many youths from these communities have gone abroad for work to support their families, leaving behind the once fertile land near the Sunkoshi that is now home to nearly 1,000 families.

This is a departure from the past when people used to live off less fertile land, particularly on the lap of the Mahabharat range, growing crops like maize, paddy and wheat. In those times, they used to grow crops three times a year.

Close by Khurkot are the fertile farmlands of Jhagajholi, Ratmata, Mulkot and Khalte that support the livelihoods of around 5,000 households. But during my recent visit to Khurkot, I saw a disturbing trend from Ghurmi and beyond: the conversion of fertile farmlands into residential plots everywhere—across the hills, the valleys and the Tarai.

While taking a break from the journey in Khurkot, I had the opportunity to strike a conversation with some locals in a shed, which is a popular hangout. When I took up the issue of loss of farmland through its conversion into residential plots, they acknowledged that the farmlands could have supported a thriving agricultural economy. They lamented that they no longer had fertile land for farming.

Mulkot too has lost its fertile land and turned into a concrete jungle.

In summary, Khurkot and Mulkot point at an alarming rate of loss of fertile land across the country, a phenomenon that has caused a drastic decline in food production and increased our dependence on food imports, exacerbating food insecurity and landlessness.

Time has come to reverse this disturbing trend. 

Political chaos

Governments, whoever is a head to lead in support of different political parties, have frequently been changing in Nepal, thanks to a stubborn will to capture—and remain in—power. Nonetheless, these parties have no concrete plans and programs to make Nepal livable. Ethics, principles and values are what guide us to do something better, but what do the parties do with these ideals? They throw these ideals in the trash box, time and time again. 

Followers of our political parties and their leaders are visionless, political power is what the latter hanker for. And all that these visionless leaders do is misuse the resources at their disposal to fulfill petty interests of a small group at the expense of development agendas that benefit the country and the people. The leaders easily change their colors and ignore guiding principles to gain and remain in power. 

By ‘working’ tirelessly for the sake of power, these leaders have been pushing the country toward a state of lawlessness. 

It is foolish to dream of socio-economic development amid a deepening political instability exacerbated by our leaders, who have neither any rationality to use resources in the gainful sector nor critical thinking to push the development agenda forward.

Economic woes

Nepal’s ailing economic sectors hardly have any job opportunities for the youths. This is a far cry from a not-so-distant past, when the farm sector used to provide seasonal employment to a sizable population. Apart from agriculture, other sectors capable of rejuvenating the national economy, namely cottage industries, tourism and hydropower are also not performing well. 

The private sector can play a vital role in speeding up development but what can it do in the absence of a policy to bring it into the mainstream of development? 

For want of employment opportunities at home, youths are flying to foreign shores in search of jobs while about 60m people (roughly 20 percent of the national population) continue to live under absolute poverty. Add to it relative poverty, which roughly accounts for over 60 percent of the national population. 

This grim scenario is forcing young people to head abroad for jobs and become the source of remittance, making it the mainstay of the domestic economy. 

Education flaws

That our education sector has not been firing on all four cylinders (to say the least) is a given. In a sharp contrast, the India education system has been producing highly-skilled human resources not only for the home country but for the whole world. Most of the chief executive officers of global giants are from India. 

Two probable factors ail Nepal’s education system: Lack of a calendar to conduct exams and publish results, and low-quality education. The latter is the result of heavy politicization of institutions responsible for delivering higher education. A conducive environment for learning, teaching and undertaking research is lacking as evidenced by a decline in enrollments. 

Poor governance

Corruption and smuggling scandals come to the surface all too often, presenting a clear proof of weak governance. Probes into these cases show the involvement of politicians and bureaucrats. These cases are the result of politicians using power to divert public money for private gains. 

Bribery, corruption and smuggling are rampant because of poor governance and rent-seeking behavior on the part of our ruling elites. Because of this behavior coupled with favoritism and nepotism, commoners are not getting effective services from relevant state institutions. 

Given this context, the people need to raise their voices and make the ruling elites accountable if they want to make this country livable. 

Modern governments have a primary duty and obligation of providing social protection to their citizens.  Governments around the globe make budgetary allocations for this purpose every year. 

There is a huge gap across regions and countries with respect to budgetary allocations and coverage of population. Europe has the highest level of social security expenditure (nearly 25  percent of its GDP), followed by 21 percent in OECD, 16.6 percent in North America, seven percent in the Asia-Pacific and 4.3 percent in Africa. In sub-Saharan Africa and South Asia, social security coverage ranges from five percent to 10 percent of the population. Middle-income countries have social security coverage ranging from 20 percent to 60 percent of their respective populations, whereas in developed countries the coverage is nearly 100 percent. In the Asia-Pacific, social security schemes cover 44.1 percent of the total population of the region. 

Neighboring countries are ahead of Nepal with respect to coverage of people under social security. China has medical insurance coverage for 95 percent of its population whereas India and Bangladesh have 24.4 percent and 28.4 percent of their populations under their social security nets. But Nepal has a paltry 17 percent of its population under different kinds of social security programs. 

It is important to note here that the expenditure on social security exceeds capital expenditure in Nepal because of a low coverage of its population under social security. A trend over the years shows that the government expenditure on social security exceeds capital expenditure. This was evident in the fiscal 2021-22 and 2022-23, for example. Expenditure on social security in 2021-22 was Rs 252bn whereas capital expenditure was Rs 216bn. Fiscal 2022-23 saw a similar trend whereas in the fiscal 2023-24, Rs 253bn and Rs 234bn have already been spent under the topics of social security and capital expenditure, respectively. 

Both expenditure on social security and capital expenditure are important for Nepal’s entry into the club of middle-income countries, which is easier said than done. If Nepal desires to join the grouping of middle-income countries, its capital expenditure should exceed expenditure on social security. 

This is because capital expenditure helps increase production and productivity of the whole population, which are crucial for achieving targeted economic growth and creating employment opportunities for the masses, thereby driving the country toward prosperity and sustainability. 

Capital expenditure in Nepal leaves much to be desired as most of our rural and urban roads, which are muddy and dusty, show. Air pollution is high in the Kathmandu valley not because of the presence of industries but because of unmanaged traffic movement along highly-congested and dusty roads. Blacktopping these roads means spending capital. 

But funds for such works are hard to come by  with an increased focus on social security for targeted sections. 

Capital expenditure helps create employment opportunities for the masses, including the poor, the downtrodden, unskilled, semi-skilled and skilled youths, among others. 

Whereas expenditure on social security helps increase the consumption of targeted people such as the poor and the downtrodden, elderly citizens, malnourished children and single women. Of course, both capital expenditure and expenditure on social protection are primary duties of a modern government. 

While social protection is a must, it cannot be a substitute for capital expenditure. Thus, it is necessary to maintain discipline while spending money. Transfer of funds from one purpose to another is a common practice of the government of Nepal. 

Summing up, a government committed to social welfare and conducting development activities for sustainable economic growth must make rational decisions when it comes to spending its hard-earned capital.

Our economy is not in the best of shapes as relevant indicators suggest. 

According to the macroeconomic report of ADB, the GDP growth rate was 1.9 percent in 2023, which is lower than the average growth rate of the current decade. Agriculture and manufacturing sectors are going from bad to worse, a far cry from the times when both sectors were booming. In 2023, the growth rate of the agriculture and the manufacturing sector was 2.7 percent and 0.6 percent, respectively.

The country is importing food and grains to meet a growing demand, in urban areas as well as in villages. This points at a large scope for growing crops for consumption in villages, mainly in the hills where farmlands have been lying barren for decades. Reviving the farm sector will require structural transformation through the use of modern methods, including enough investment and incentives.

Despite deepening dependencies, a mid-term evaluation of the budget and monetary policy for the fiscal year 2023-24 shows economic indicators on a positive trend. Among others, Nepal has reasonably healthy foreign currency reserves, providing some relief to the government. 

There will surely be differing views vis-a-vis comfortable forex reserves, but I think it will have stronger negative effects than positive ones. In all likelihood, excess forex reserves will raise both liquid and total debt, pull interest rates down, cause a decline in consumption and move labor to tradable sectors from non-tradable ones.

In this context, it will be relevant to put forth some of the findings of the fourth living standard survey. 

Per the survey, the last 12 years have seen a meager reduction in poverty. 

Estimated on the basis of threshold per capita per year income of Rs 19,261, a quarter of the population (25 percent) was under deprivation in 2011. On the contrary, the poverty rate is being calculated on the basis of the threshold per capita income of Rs 72,908 per year in 2023. This level of income was considered as the minimum income required to fulfill basic needs of the people such as food and non-food items. On the basis of this threshold income, the poverty rate has come down to 20 percent, a  paltry 0.16 percent reduction in 12 years. 

Per the survey, Far-Western and Gandaki provinces have the highest (34.16 percent) and lowest (11.88 percent) poverty rates, respectively. Also, poverty runs deeper in rural areas than in urban areas. The poverty rate in rural areas is 24.66 percent against 18.34 percent in urban areas, according to the findings of the survey. These data stress the need for serious efforts to reduce poverty, which is pervasive and deeply-rooted.

Notably, there is a significant change in consumption expenditures between the third and fourth living standard surveys.The average expenditure on consumption of nonfood and food items was 38 percent and 62 percent, respectively in the third survey. It stands at 47 percent for nonfood items and 53 percent for food items in the fourth survey, showing that people have increased consumption expenditure on nonfood items compared to food items over 12 years. The household consumption expenditure as percentage of GDP in 2023 was 88.2 percent while the same was 85 percent  in 2011, an increase of 3.7 percent. It reveals that Nepal has consumed all of its income rather than making long-run investments for achieving sustainable development goals.

In 2011, remittance inflow stood at $4.22bn while in 2023 it swelled to $9.3bn, marking an increase of a whopping 120 percent in 12 years. In 2011, remittance’s contribution to Nepal’s GDP was 19.54 percent, which soared to 22.7 percent (an increase of 16.1 percent) in 2023. During the 12-year reporting period, the poverty rate has come down to 20 percent from 25 percent. 

Apparently, remittance inflow is behind a marginal reduction in poverty and increased forex reserves. 

Without a doubt, a constant inflow of remittances over the past 2-3 decades has been keeping the Nepali economy afloat.