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essay on poverty in nepal pdf

  • > Poverty, Inequality, and Inclusive Growth in Asia
  • > Poverty and Inequality in Nepal: An Empirical Analysis

essay on poverty in nepal pdf

Book contents

  • Frontmatter
  • Preface and Acknowledgments
  • Contributors
  • Abbreviations, Acronyms, and Symbols
  • Tables, Figures, and Boxes
  • 1 Poverty, Inequality, and Inclusive Growth in Asia
  • Part A Measuring Inequality and Poverty
  • Part B Selected Policy Issues for Inclusive Growth
  • Part C Country Studies
  • 9 Growth, Inequality, and the Labor Market: The Philippines
  • 10 Poverty and Inequality in Nepal: An Empirical Analysis
  • 11 Decomposing Income Inequality: People's Republic of China, 1990–2005
  • 12 Evolution of Income Mobility: People's Republic of China, 1991–2002
  • 13 Occupational Segregation and Gender Discrimination in Labor Markets: Thailand and Viet Nam
  • 14 Inclusiveness through Food Security: The Philippines' National Food Program

10 - Poverty and Inequality in Nepal: An Empirical Analysis

from Part C - Country Studies

Published online by Cambridge University Press:  05 March 2012

Introduction

Nepal made significant progress in reducing poverty between 1995– 1996 and 2003–2004, despite political instability. However, poverty incidence remains high–estimated at about 31% in 2003– 2004–and inequality also increased during this period. Based on the Gini coefficient, inequality rose from about 34.2 in 1995–1996 to about 41.4 in 2003–2004, the highest in South Asia. Such trends seem to suggest the limited inclusiveness of Nepal's recent economic growth. Given that poverty and inequality are considered among the most significant drivers of recent internal conflicts, it is important that a new growth strategy opens up economic opportunity to excluded groups.

Inclusive growth not only generates economic opportunity, but also ensures equal access. Hence, growth is said to be inclusive when it allows all members of society to participate in, contribute to, and benefit from the growth process on an equal basis, regardless of individual circumstance (Ali and Zhuang 2007). This is a particularly relevant question for Nepal, where exclusion remains an important development hurdle (World Bank and DFID 2006).

This chapter assesses the inclusiveness of Nepal's recent economic growth and examines what factors helped certain groups of households escape poverty between 1995–1996 and 2003–2004. The findings of the analysis will assist policy makers in formulating measures to enhance the inclusiveness of growth and poverty reduction. The empirical analysis is based on data from the Nepal Living Standards Surveys conducted in 1995–1996 (NLSS I) and in 2003–2004 (NLSS II).

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  • Poverty and Inequality in Nepal: An Empirical Analysis
  • By Yoko Niimi , Population Anchor Unit, World Bank
  • Edited by Juzhong Zhuang
  • Book: Poverty, Inequality, and Inclusive Growth in Asia
  • Online publication: 05 March 2012
  • Chapter DOI: https://doi.org/10.7135/UPO9780857288066.012

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Provincial Poverty in Nepal

Profile image of Gokarna Prasad Gyanwali, PhD

Poverty is not only the severe economic condition of people but it is also the cultural, ethical, social, political, psychological and economic imperative of mankind. It is one of the distressing circumstancesof people in developing countries have to contend with in their daily lives. It is common among the low and middle income class in these countries like Nepal.This research is based on the multidimensional poverty index (MPI) such as those related to education, health, material wellbeing, energy, water and sanitation, structure of house, and access to other services, varies considerably in seven provinces of Nepal. It illustrates the importance of location-specific data in the development of effective poverty reduction strategies of federal and provincial governments.The MPI shows that, the 28.6% of the people of Nepal are still multi-dimensionally poor meaning that their lives are battered by several deprivations simultaneously. This paper also discusses about the trends and me...

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Taking on Poverty and Inequality in Nepal

Faris hadad-zervos.

An enumerator conducts Living Standards Survey in Nepal

Nepal’s recovery from the COVID-19 pandemic is underway.  Domestic demand for investment and consumption has recovered, tourists are beginning to return to Nepal as borders reopen, and the numbers of migrant workers leaving the country for overseas employment have returned to pre-pandemic levels.

With growth averaging 4.5 percent per year over the last decade, Nepal also achieved lower middle-income status in 2020 and is aiming for graduation from Least Development Country status by 2026. Improvements are visible in access to electricity and drinking water, increasing primary and secondary school enrollment, and reducing infant mortality. Also, the advent of federalism has meant that the Nepali people not only saw their lives improved but can also aspire for something greater for their children.

Yet, that’s not the whole story of Nepal’s development over the last decade.

The lack of official data on poverty since 2010 has hindered our collective understanding of whether and how growth has translated into improvements in economic welfare for Nepali households over the last decade.

The economy has also sustained several shocks over this time, including the Gorkha earthquake and fuel crisis in 2015, floods in 2017, landslides, and the COVID-19 pandemic in 2020.

COVID-19 induced substantial jobs and income losses in Nepal, and the recovery has been unequal and is incomplete. By the end of 2021, close to a fifth of job losses had not been recovered, and women and those in agriculture and lower skill occupations, were recovering more slowly.

This recovery is also taking place within a weak domestic labor market that relies overwhelmingly on informal and subsistence jobs, as well as pre-existing spatial inequalities in access to human capital and limited social assistance for the poor.  

The Nepali people are well-known for their resilience, and thankfully so. Vulnerability to shocks – both economic and climate – remains an enduring feature of the country’s development story.   As risks from climate change and global economic shocks increase, the livelihoods of ordinary Nepali families will continue to be fragile.

So, to sustain development gains, Nepal’s development path must be inclusive of poor and rural households, adapt to a changing climate, and be responsive to shocks. According to the recent Nepal Climate Change Diagnostic Report , about 80 percent of the population is at risk from natural and climate-induced hazards. And vulnerable communities, particularly poorer households and those relying on subsistence agriculture, as well as remote, mountainous municipalities face the highest risks. 

To sustain development gains, Nepal’s development path must be inclusive of poor and rural households, adapt to a changing climate, and be responsive to shocks.

An opportunity to capitalize on the promise of federalism How Nepal responds to these dual challenges of vulnerability and inequality will shape its development storyline.   This is because these challenges also present opportunities for shifting the nation’s development investments towards green, resilient, and inclusive growth.

These opportunities are further amplified by the move to federalism. The inherent promise of federalism is the potential for more inclusive and pro-poor governance across the country  , through more equitable distribution of resources, greater transparency, and accountability.

The development of a federal data ecosystem that can produce the data needed to inform this transition, and the proactive use of this evidence to design the right policies will therefore be critical to deliver on this promise of improved inclusion and resilience in the country.

Charting the Course  After a long gap of 12 years, the fourth Nepal Living Standards Survey (NLSS-IV) is currently being rolled out in the field. Over the course of a year, 9,600 Nepali households will be interviewed on a range of topics – health, education, jobs, migration, social protection – to provide the data for a much-needed update of Nepal’s poverty statistics, including poverty estimates at the provincial level for the first time.

Thus, the NLSS-IV will provide an evidence baseline for a policy framework to support the fight against poverty and inequality.   The World Bank, with the UK Government’s Evidence for Development Program are proud partners of the Central Bureau of Statistics (CBS) in the implementation of the NLSS IV. Many other development partners are equally engaged and committed to this agenda.

After a long gap of 12 years, the fourth Nepal Living Standards Survey (NLSS-IV) is currently being rolled out in the field to provide the data for a much-needed update of Nepal’s poverty statistics, including poverty estimates at the provincial level. 

The 2015 Constitution also put in place a fundamental shift in Nepal’s data governance architecture, placing local governments at the forefront of date collection, analysis, and reporting. This is a big shift that will take time to be realized as federalism rolls out and takes hold. It will need careful prioritization to design a decentralized data architecture, one that allows for the right data to be generated, transmitted, and used across all three levels of government.

Given that the move from a centralized to a federal system of governance was largely meant to address historical inequalities,  it will be critical to ensure that local data systems integrate citizens voices from the start  . Such an emphasis can improve the quality of the data and promote participation and accountability within Nepal’s emerging governance system. 

Nepal has demonstrated its commitment to address the challenges to inclusive development, including those posed by climate risks.  The government and its development partners adopted the Green, Resilient, and Inclusive Development (GRID) approach in 2021.

The government at all levels is taking concrete steps to integrate climate strategies and actions into development policies, programs, and budgets. The recent World Bank Group’s Country Climate and Development Report for Nepal further supports the government’s GRID approach. The end game is to strengthen household and community resilience.  Making this happen requires better governance for climate change and disaster risk management. 

While federal institutions need to create the right enabling environment and policy frameworks for a green, resilient, and inclusive Nepal, provincial and local governments will be at the forefront taking action – to protect the vulnerable and excluded, to identify and address emerging risks, and to respond in near time to shocks.

And while federal institutions need to create the right enabling environment and policy frameworks for a green, resilient, and inclusive Nepal, provincial and local governments will be at the forefront taking action – to protect the vulnerable and excluded, to identify and address emerging risks, and to respond in near time to shocks.

A concerted effort to strengthen their capacity to use data and evidence to respond to the dual challenges of vulnerability and exclusion could not come at a better time. It also allows the country to engage in regional and global analysis and comparisons of the impacts of climate change and other shocks, an important precursor to taking collective action with other countries. The World Bank is here to support this historic transition.  

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World Bank Country Director for Maldives, Nepal and Sri Lanka

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  1. (PDF) Poverty in Nepal: A Causal Analysis

    Poverty means sweat. In Nepal, it takes 3 hours and 21 minutes to earn. enough money to buy a kilo of rice, 4 hours and 26 minutes for a liter of. milk, 4 hours and 52 minutes for a kilo of sugar ...

  2. PDF Poverty Reduction in Nepal: Issues, Findings, and Approaches

    Table 1.1 shows the head count, poverty gap, and squared poverty gap indexes for Nepal as a whole, for the country's three ecological zones, and for the urban vs. the rural sector. At the national level, poverty incidence is estimated at 42%, poverty intensity at 12%, and poverty severity at 0.05%.

  3. Poverty Reduction in Nepal: Issues, Findings and Approaches

    This report forms an integral part of the Asian Development Bank's (ADB's) continuing efforts to focus on poverty in Nepal. ADB has launched a series of initiatives to analyze the nature and causes of poverty in Nepal and to develop better approaches to reduce it, following adoption of poverty reduction as ADB's overarching goal in November 1999.

  4. PDF Poverty in Nepal: Characteristics and Challenges

    4. Nepal in global poverty map By virtue Nepal belongs to least developed region with high poverty, persistent inequality and deprivation from basic facilities of health, education and economy. Despite the progress Nepal has made in recent days, the stories of poverty and deprivation are still popular and remain popular for other several decades.

  5. PDF Country Poverty Analysis

    Poverty incidence at $2 per day has similarly declined from 89.0% in 1996 to 77.3% in 2004 and 57.3% in 2011 (Figure. 4. Despite the remarkable decline in overall poverty level, poverty in rural Nepal is still higher than urban Nepal, even though rural poverty is declining at a faster pace than urban poverty.

  6. 10

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  7. PDF Poverty Dynamics in Nepal between 2004 and 2011: An Analysis of Hybrid

    Recent years, poverty in Nepal has famously declined. This is warranted by a sharply decreasing trend in poverty incidence - from 41.8% in 1996 to 30.9% in 2004 and to 25.16% in 2011 (CBS, 2005; 2011). Many economists question this dramatic change in poverty levels. However, the intention of this paper is not to join the debate on the level

  8. [PDF] Poverty in Nepal: Characteristics and Challenges

    The official data as of 2010/11 affirms around 25 percent Nepali live under absolute poverty line. The poverty line is derived at annual per capita earning of $225 as of 2013 December. There are debates whether the poverty line really defines basic necessities of survival. On contrary, the Human Poverty Index shows 44 percent of Nepali are deprived of basic education, health and access to ...

  9. [PDF] Poverty in Nepal: A Causal Analysis

    This short essay discusses the issue of poverty in Nepal. Despite a number of poverty-reduction programs run by a myriad of actors, poverty in Nepal is still rampant, and the country remains one of the poorest countries in the world. In this essay, I argue that many poverty alleviation programs in Nepal failed because they isolated poverty as an economic and growth problem, whereas, poverty ...

  10. PDF NEPAL National Review of Sustainable Development Goals

    Nepal has been able to gear up a high growth rate, reduce poverty and macroeco-nomic stability during the period. The peri-odic plans have been focused on promoting growth, employment, infrastructure, human development and building resilience. The current l5th Plan has been fully aligned with the SDGs and provides a clear roadmap to-

  11. PDF Poverty Reduction and Growth Nepal

    The Poverty Reduction and Growth Facility. The Poverty Reduction and Growth Facility (PRGF) is the IMF's lending window for low-income countries (for terms of the PRGF, see Box 1). Like all support from the IMF, it is intended to alleviate balance of payments pressures and is not designed to support the government budget.

  12. PDF Nepal: Poverty Reduction Strategy Paper

    the poverty level in Nepal from 38% of the population at the beginning of the Plan period to 30% by the end of the Tenth Plan, and to further reduce the poverty ratio to 10% in about fifteen years' time. 2 The reduction of poverty to 30% by the end of the Tenth Plan is a daunting task by itself.

  13. (PDF) Poverty in Nepal: A Causal Analysis

    This figure stood at 68% in 1996 and 53.1% in 2004 (CBS 2011). Even when using the national poverty line, poverty has fallen "at an accelerated pace from 41.8% to 30.9% between 1996 and 2004 and further to 25.2% of the overall population in 2011" (Asian Development Bank 2013: 1). The devil, however, is in the details.

  14. (PDF) Urban Poverty in Nepal

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  15. PDF Sustainable Roads for Poverty Alleviation in Nepal

    largely been ignored in the assessment of poverty in Nepal. The paper will thus, explore the links between roads and poverty alleviation, its challenges, and opportunities to long term plans, precisely the 15th plan and SDG to attain sustainable poverty reduction. The 15th plan and SDG recognize that sustainable development cannot be complete ...

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  17. [PDF] Urban Poverty in Nepal

    Urban Poverty in Nepal. S. Bakrania. Published 1 February 2016. Geography, Sociology, Economics. This research report tracks various aspects of poverty in Nepal across geographical areas and evaluates the rise of squatter settlements. It also looks at various dimensions of poverty, resilience for the same, and the impact of government policy ...

  18. (PDF) Provincial Poverty in Nepal

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    Taking on Poverty and Inequality in Nepal. Nepal's recovery from the COVID-19 pandemic is underway. Domestic demand for investment and consumption has recovered, tourists are beginning to return to Nepal as borders reopen, and the numbers of migrant workers leaving the country for overseas employment have returned to pre-pandemic levels.

  20. Poverty In Nepal Essay

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