Accord Top Priority To Poverty Alleviation

Poverty in Nepal is coming down, which is a matter of satisfaction. During the 1990s, the rate of poverty was over 40 per cent. The first national living standard survey (NLSS-I) was held in 1995/96. As per the survey, the rate of poverty was 41.8 per cent. In the meantime, the government focused on poverty alleviation. As a result, the rate of poverty came down to 30.9 per cent eight years later as corroborated by the NLSS II conducted in 2003/04. 

As per the NLSS IV of 2022/23, the rate of poverty came down to 20.27 per cent in 2023 vis-à-vis 25.2 per cent in 2011 (as per the NLSS III). During the 12 years, the rate of poverty was reduced by 4.89 per cent as against the government’s target of 15 per cent. Given the efforts of the government as well as positive factors such as an increasing amount of remittances sent back to the country, the reduction was dismal. However, the country had to go through a rough patch during this 12-year period. The earthquakes of 2015 and the COVID pandemic were the main factors that played havoc with the economy of the country. 

Calculation criteria 

The criteria for calculating the rate of poverty were also responsible for an increase in poverty. The calculation of 2010/11 was based on the minimum cost of daily needs which was reckoned to be Rs. 42,845 per head per annum. In 2022/23, the minimum cost was put at Rs. 72,908 per head per annum. The minimum cost would cover the fulfilment of needs for food and non-food items. The new minimum cost was adopted as a criterion for setting the poverty line in consideration of changes in consumption patterns, a corresponding increase in spending and a rise in wages and salaries. If the criterion of Rs. 42,845 had been applied, the rate of poverty would have been just 3.57 per cent in 2023. 

The average annual spending on consumption rose by 66 per cent during the 12-year period. It was Rs. 75,902 in 2011, which shot to Rs. 126,172 in 2023. Likewise, spending on non-food items was 38 per cent of the total spending in 2011, which jumped to 47 per cent in 2023. The survey also shows that the poor spend mostly on food items, whereas the rich spend a significant part of their income on non-food items. Also, spending on food items is below 50 per cent in the Kathmandu Valley, whereas it is 57 per cent elsewhere. During the 12-year period, the consumption of cereals decreased, whereas the consumption of fruit and vegetables increased.   

The latest calculation of the rate of poverty is based on a survey among 9,600 households across the country. There is a big chasm between urban and rural poverty. In urban areas, the rate of poverty is 18.34 per cent, whereas it is 24.66 per cent in rural areas. The figures were 27.4 per cent and 15.5 per cent respectively during the NLSS III.  Province-wise, Sudurpaschim Province has the highest rate of poverty at 34.16 per cent. On the other hand, Gandaki Province has the lowest at 11.88 per cent.     

Nepal has made progress in poverty reduction since the 1990s. One of the major contributory factors to reducing poverty is remittance money. There are many migrant Nepali workers working in various foreign countries. Thousands of people are leaving the country on a daily basis for foreign employment. The remittance money is mostly spent on consumption, social events, payment of loans and sometimes construction of houses. Experts say that the remittance money is not invested in the productive sector. However, there are some returnees who have started business with the remittance money. 

Nepal's economy is based, inter alia, on remittances. But remittances are not a stable source of earnings. Such earnings are contingent upon Nepali workers working abroad and sending back money. As long as the countries of employment keep on taking on Nepali workers, the country will keep receiving remittances. If they have to return for one reason or the other, the economic condition of theirs and of the country may be affected. So depending too much on remittances may not bode well for the country in the long run. It is a no-brainer that with a large number of people migrating abroad for employment, the agriculture sector has been left in a shambles.

Import mentality

Without a doubt, self-reliance on agriculture would obviate the need for importing agricultural products. Development of the agricultural sector would lead to development of other sectors such as industry. The country is rich in natural resources, which have remained untapped owing to the government’s apathy. The government seems to have an import mentality. The government focuses on collecting taxes. That is why, there is a huge gap between imports and exports. Still, the government seems to be complacent. Poverty is a multi-dimensional phenomenon. The government should adopt appropriate policy towards minimising poverty by prioritising domestic production and exports. Nepal has high potential for exporting hydropower to India and other neighbouring countries. 

Likewise, agricultural produce can also be exported by boosting its production. For this, infrastructure needs to be developed or upgraded. On the one hand, domestic produce is rotting away, while on the other such produce is being imported from India and other countries. What an irony! As the government is gearing up for the 16th periodic plan, a viable poverty alleviation strategy should be encapsulated in the plan. The focus should be on boosting agricultural and other production, reviving factories, stimulating the service sector, creating job opportunities within the country itself and bridging the gaping chasm between urban and rural poverty.     

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