An overview to Nepalese Economy:- Problems and challenges

Nepal is an agricultural country employing about 65 percent of the population and providing 31.7 percent of Gross Domestic Products (GDP), where remains Nepal’s main economic activity.

But only about 21 percent of the total area is as cultivable land; 29 percent area is forested, 12 percent pastureland, 10 percent is covered with shrubs, 7 percent arable but abandoned and 3 percent of the total land is marsh or swampland.

During the past three decades, the economy of Nepal is largely dependent also on remittances as a shifted occupation from agriculture. The country has, however, made progress toward sustainable economic growth and poverty alleviation specially from the democratic set up of 1990 and opened the country to economic liberalization and obtained significant achievements. After the democracy reinstated, hundreds of thousands work-force have been continuously leaving the country for overseas employment, apart from India. Most of the remittance comes from least paid manual jobs.

During aforementioned period of past three decades Nepal has developed enough infrastructure throughout the country. Nepal achieved considerable progress in energy sectors and got rid of power shortage and load shedding. Such prerequisites have ensured entrepreneurs for safe investment in productive sectors, as a result economic growth and prosperity in the country.

The Government of Nepal has identified mainly five leading sectors regarding industrial sectors as the main pillars of economy and for employment as well: 1. agriculture sector, 2. Manufacturing sector, 3. Construction sector, 4. Tourism sector, and 5. Water Resources/Energy sector. Water is the country’s most important natural resource with about 6,000 rivers and rivulets totaling 45,000 KMs in length.

Production of Cement, brick and construction materials, electric goods, soap/detergent, furniture and flooring/furnishing goods, Carpet/Pashmina production, garment, handicraft, sugar, herbs farming/pasteurizing, jute, rice mill are other viable sectors deserve in large industrial scale.

In a recently released Human Development Index (HDI), which was prepared as a country focused report after six years with the assistance of UNDP, Nepal has improved in human standard, but with persisting risks. According to the report, Nepal has entered the stage of mid-level of HDI.

Nepal has now surpassed some countries in South Asia in HDI, gender development index and gender equality index, which is understood is the result of Government’s investment that indicates improve of quality of life. The HDI however has made it clear that Nepal is still in risk and facing challenges, such as unequal human development, especially in rural-urban, and among province set-ups.

Although Nepal is still lagging behind on income indicators, it has met the indicator on human capital and financial risk; It has achieved considerable progress in poverty alleviation, where per capita income has been estimated $1048 (2019).

However, Nepal still remains one of the least developed country in South Asia, and where 25 percent population is still living below the international poverty line. This has enlisted Nepal still one of the poorest countries in the world. 1975-2015 economic growth of Nepal was 2.3 percent while China and India in this period were 8.3 percent and 4.0 percent respectively. Rates of disease and epidemic, malnutrition and child mortality are still high even though it has gained encouraging achievements.

Problems and challenges:-

1. Around one-third portion of GDP obtain from agriculture sector where 2/3 population are engaged. Agriculture has to be borne overburden.

2. Yes, delays in customs and transshipment, high costs of transport and power, a rigid and formal labor market, lack of labor–employer cooperation, terrorism, and poor work ethic of the labor force are there as hindrances of investors.

3. Real state price is increasing is the prime killer of investment.

4. Curbing informal economic activities like illegal imports and exports; illegal transactions of foreign currencies; illegal money transfers, and illegal financial transactions, and bring them into the formal economy is a daunting challenge.

5. Enhancing capacity for productive and capital expenditure through prioritization of expenditures, maintaining financial discipline and transparency, and making public expenditure management result oriented through effective monitoring and evaluation processes have been challenging tasks.