Benefits and challenges of urbanization

Urbanization in Nepal has accelerated in recent years. The number of municipalities increased dramatically from 58 in fiscal year 2013/14 to 293 by 2017/18. Consequently, the population residing in municipalities surged from 17 percent to 66 percent. This sharp rise in urban areas is largely a result of reclassifying rural areas as urban, based mainly on population criteria. However, a significant concern remains the rapid migration from rural regions to Kathmandu Valley, turning it into an overcrowded city.

Urbanization is driven by both economic and non-economic factors. In rural areas, subsistence agriculture often fails to meet basic needs, pushing people to cities in search of better jobs and higher wages. The decline of rural industries, which once provided employment for many, has also led to increased rural unemployment and poverty, prompting migration to urban centers. Additionally, social factors such as caste-based discrimination, exploitation, and social inequality motivate rural residents to seek better opportunities in urban areas. Natural disasters like floods, landslides, and droughts, which destroy property and livelihoods, further compel people to relocate. Beyond escaping rural hardships, people move to cities for access to better education, healthcare, and modern amenities.

Benefits of urbanization

While urbanization has contributed to overcrowding in Kathmandu Valley, some economists, such as Arthur Lewis and T.W. Schultz, argue that it has positive effects on agricultural development. Growing urban incomes boost demand for agricultural products like milk and vegetables, which in turn stimulates agricultural production and rural incomes. Urbanization also increases the availability of capital, which can be used for farm expansion and modernization. Rural migrants working in cities often send remittances back home, further supporting rural economies and promoting capital formation.

Urbanization also brings opportunities for education and exposure to new ideas, expanding the horizons of rural people and making them more open to change. Returning migrants, having experienced urban life, can introduce innovations such as new crops and farming techniques in their home villages.

However, the nature of rural challenges has shifted. With much of the younger population migrating to cities, rural areas are increasingly populated by the elderly and disabled. As a result, once-valuable agricultural land is left barren, and rural marketplaces are often deserted except for occasional festivals like Dashain.

Costs of urbanization

On the other hand, some economists argue that urbanization can have negative consequences for both urban and rural economies. As urban populations grow, competition for limited jobs intensifies, contributing to urban poverty and unemployment. Social problems such as crime, prostitution, pollution, and inadequate housing also increase in overcrowded cities like Kathmandu. The rise in theft, robbery, and other crimes in the valley underscores these concerns.

Urbanization also strains public services such as housing, safe drinking water, sewerage systems, electricity, and transportation. Kathmandu’s growing water and sewage issues are clear examples. Due to budget constraints, the government struggles to keep up with the demand for improved public services. Additionally, urbanization can reduce agricultural output as rural labor declines, a significant issue for a country like Nepal that increasingly relies on imported food grains.

Strategies to slow urbanization

Unlike earlier views that saw urbanization as beneficial, many now consider it a contributing factor to urban underemployment and a symptom of underdevelopment. To curb excessive urbanization, it is essential to strike a balance between rural and urban economic opportunities by reducing the focus on urban areas.

Rural development initiatives that boost incomes and create jobs can help reduce migration to cities. As rural areas become more attractive, people are less likely to leave. Therefore, comprehensive rural development programs aimed at increasing production and improving quality of life offer a sustainable solution to excessive rural-urban migration.

Since agriculture remains the backbone of Nepal’s economy, modernizing agriculture is an effective strategy to generate employment and raise rural incomes. To retain young people in rural areas, farming must be made an attractive and viable career option. Agricultural modernization—encompassing diversification and commercialization—can increase incomes and act as an incentive for young people to stay in their villages.

Another key strategy is to promote rapid industrialization, focusing on both large- and small-scale industries. In a labor-abundant country like Nepal, developing agro-based industries and rural enterprises should be a priority. These industries not only strengthen the agricultural sector but also create jobs. However, it is crucial to adapt traditional skills and products to meet changing market demands. If young people have access to better income opportunities and higher social status in rural areas, they will be less inclined to migrate to cities.