End Overdependence On Remittance


Nepal is a country which is preponderantly dependent on remittances, taxes and imports to get its economy rolling. Remittances contributes greatly to the gross domestic product (GDP). In 2022/23, the contribution of remittances to the GDP stood at 22 per cent. Remittances have transformed the country, especially rural areas. Increasing inflows of remittance money from abroad through the labour of the country’s migrant workers have increased savings for poor rural households. As a matter of fact, remittances have the lion’s share in reducing poverty, thus creating economic security for the households receiving remittances on a regular basis. 

The poverty rate of the country was 25.2 per cent in 2010, which came down to 16.6 per cent in 2019. As per the Economic Survey of 2022/23, the poverty rate stands at 15.1 per cent. According to the survey by the Nepal Rastra Bank (NRB) in 2014/15, 23.9 per cent of the remittance money is spent on essentials such as food, clothing and health.  Besides, remittances have helped increase foreign currency reserves, investments and consumption. Remittances also play a pivotal role in stabilising currency, managing the balance of payments (BOP), bringing about stability in imports and maintaining economic resilience. All this has bolstered the economy of the country. It is said that but for remittances the economy of the country would have collapsed.  

Improved living standards 

On the one hand, remittances have greatly contributed to improving the standard of living of the poor households, while on the other the country is facing a shortage of manpower for agricultural, construction and other development activities. The rural areas are mostly devoid of youths with the elderly, women and children left behind. Although young women are also working abroad as migrant workers, their number is limited vis-à-vis that of male youths. It is estimated that out of those going abroad for employment, men constitute 81 per cent, and women 19 per cent. 

Nepal has over two hundred years of history of migration to foreign countries to work and to take part in wars. Many Nepali youths went to India for jobs and to serve as soldiers during World Wars I and II. As per the Department of Foreign Employment, 3,605 Nepalis left the country for foreign employment in 1993/94. The situation changed drastically in 2000, when the Maoist insurgency was at its peak. In 2000/01, upwards of 55,000 Nepalis left the country for foreign employment.   

In recent years, Nepalis are leaving the country for foreign employment in hordes. In 2022/23, over 750,000 people left the country. Since the outbreak of the COVID-19 pandemic, economic activities have got roiled in the country. There has been a slump in business and commercial activities. The people have grown frustrated. This may have added to the number of Nepalis going abroad for job opportunities. Needless to say, the country is unable to create adequate job opportunities.

Although remittances are lucrative, some negative social impacts have also debouched. Social consequences regarding family and gender relations are profound owing to the remittance factor. Men being away from home, some women may indulge in immoral activities with other men, or they may elope with other men. Or, they may make off with the money received from their husbands. All this may lead to family breakdown. Divorces are also on the rise among the migrant families. Health issues such as the incidence of HIV-AIDs may also arise owing to promiscuous behaviour of both men and women. It is reported that the incidence of HIV-AIDA among the migrant workers is higher than the national average. 

Another negative aspect – and which is worrying- is declining agricultural yield. Foreign employment has affected the agriculture sector to a great extent. Agricultural land in the rural areas is lying barren for lack of manpower, affecting agricultural production and productivity. Despite having remittance money, the remittance-receiving households do not show interest in engaging in agriculture. Such households should invest in agricultural machinery and technology to give a boost to agriculture and allied activities. 

However, migration of men abroad has played a crucial role in empowering women in some parts of the country. The women are forced to look after household affairs and engage in community activities. They are taking both household and community decisions on their own. The women’s participation in community activities has improved maternal health. The maternal mortality is declining. 

Gaping trade deficit

In this age of globalisation, migration for foreign employment should be taken as a normal activity. However, overdependence on remittances is not desirable. The migrant workers are sending money back home. But it has also hampered economic activities in the country. Now, a shortage of manpower has been felt. The country has turned from an exporter of agricultural products to an importer. The imports preponderate over the exports, resulting in a gaping trade deficit. Prioritising imports by neglecting agricultural, industrial and other activities does not bode well for the economy of the country in the long run. Further, paradigm shifts in global economic activities and migration may affect the remittance sector on an unprecedented scale.           

If the trend of the exodus of Nepalis continues, a time may come when the country will have to hire workers from foreign countries. So the government should adopt a policy of retaining youths in the country. For this, job opportunities should be created in the country itself. The government should pay attention to agricultural and industrial sectors. These are the sectors that can create job opportunities. Further, the government should also prioritise the service sector. 

(Maharjan has been regularly writing on contemporary issues for this daily since 2000.)

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