Development economics: poverty, inequality, unemployment and human resource development

A composite index that measures a country's average achievement in three basic dimensions of human development — health (life expectancy), education (mean and expected years of schooling) and standard of living (GNI per capita) — developed by the UNDP.

Unemployment refers to a situation in which persons who are able and willing to work at the prevailing wage rate cannot find work. In other words, it is the gap between the labour force and the number of available jobs. In Nepal, unemployment is mostly structural and disguised in nature, and it is measured mainly through the unemployment rate:

$\text{Unemployment Rate} = \frac{\text{Number of Unemployed}}{\text{Total Labour Force}} \times 100$

Steps to minimize unemployment in Nepal:

1. Rapid industrial development: Cottage, small and medium-scale industries should be established in rural and semi-urban areas using local raw materials. This creates jobs at low capital cost and reduces dependence on agriculture.

2. Agricultural modernization: Agriculture employs about two-thirds of the labour force but suffers from disguised unemployment. Commercialization, irrigation, use of improved seeds and fertilizers, and agro-based industries will raise productivity and absorb surplus farm labour.

3. Development of tourism and service sectors: Nepal's natural and cultural heritage can generate employment in hotels, trekking, transport and handicrafts. Tourism is labour-intensive and suited to remote areas.

4. Human resource development: Education and technical/vocational training should be made skill-oriented so that the growing labour force becomes employable. Skill mismatch is a major cause of unemployment among educated youth.

5. Promotion of self-employment and self-employment loans: Youth should be encouraged to start their own enterprises through easy credit, subsidies and entrepreneurship development programmes rather than depending only on salaried jobs.

6. Population control: High population growth continuously adds to the labour force. Effective family planning and awareness programmes help balance labour supply with job creation.

7. Foreign employment management: Since the domestic economy cannot create enough jobs in the short run, foreign employment should be made safe, skill-based and well-regulated through proper manpower agencies and pre-departure training.

8. Infrastructure and rural development: Construction of roads, hydropower, irrigation and communication facilities generates both direct and indirect employment and helps reduce rural-urban migration.

Conclusion: Unemployment in Nepal is a deep-rooted problem caused by low investment, slow industrialization, rapid population growth and lack of skills. A combined effort of the government, private sector and individuals in the above directions can gradually reduce it.

Nepal's current plan is the Sixteenth Plan (FY 2081/82 – 2085/86 BS), which follows the long-term vision of "Prosperous Nepal, Happy Nepali". Five of its main priorities are:

1. High, sustainable and inclusive economic growth. Raising production and productivity in agriculture, industry, energy, tourism and services, so that growth benefits all regions and groups.

2. Productive and decent employment. Creating jobs within the country through the development of agriculture, tourism, information technology and small and medium enterprises, so as to reduce dependence on foreign employment.

3. Quality physical infrastructure. Building roads, bridges, airports, railways, hydropower and transmission lines, irrigation and communication networks to connect markets and raise productive capacity.

4. Human resource development and social protection. Improving the quality of education, health and skills, and extending social security to the poor, vulnerable and informal-sector workers.

5. Good governance and effective service delivery. Making public administration transparent, accountable and corruption-free, and strengthening federalism by clarifying the roles of the three tiers of government.

Sustainable Development Goals and Nepal

The 2030 Agenda adopted by the UN in 2015 sets out 17 Sustainable Development Goals (SDGs) with 169 targets, balancing economic growth, social inclusion and environmental protection. Nepal, as a signatory, has localised them through the SDG Implementation Plan and the National Planning Commission's periodic progress reports. Four goals are especially relevant to Nepal:

1. SDG 1 — No Poverty

Target: Eradicate extreme poverty (below Rs 200 per person per day) by 2030. Progress and examples: The national poverty headcount fell from about 25 per cent in 2010/11 to about 19 per cent in 2017/18 (NLSS IV), and multidimensional poverty also declined sharply. Programmes such as the Prime Minister Employment Programme, Social Security Allowance for the elderly and single women, and Karnali Employment Programme are the main instruments. Evaluation: Progress is real but fragile. Remittances (about a quarter of GDP) have pulled many households above the line without creating productive jobs at home; the COVID-19 shock and the 2023–24 floods pushed vulnerable households back. Poverty is also unevenly spread — Karnali and Sudurpaschim provinces remain far behind, so the goal is unlikely to be fully met by 2030.

2. SDG 2 — Zero Hunger

Target: End hunger and ensure access to safe, nutritious food for all. Progress and examples: Stunting among children under five declined from 36 per cent (2016) to about 25 per cent (2022), and food distribution through the Nepal Food Corporation and Food for Work reaches remote districts. Mid-day meals in community schools support child nutrition. Evaluation: Nepal still imports a large share of its food grain, and districts such as Humla, Jumla and Bajura face food deficits for several months a year because of poor roads, low irrigation coverage and climate shocks. Hunger is thus more a problem of access and purchasing power than of total availability.

3. SDG 4 — Quality Education

Target: Ensure inclusive, equitable and quality education and lifelong learning. Progress and examples: Net enrolment in primary education is now above 95 per cent and the gender gap has narrowed. The School Education Bill, the School Education Sector Plan (2022–2032) and free basic education with scholarships for Dalit, Janajati and girl students are key measures. Evaluation: Enrolment has improved, but learning outcomes have not kept pace — a large share of students in grades 5 and 8 cannot read a simple text or do basic arithmetic at their grade level. High teacher absenteeism, weak community-school monitoring and heavy out-migration of educated youth limit the returns on education spending.

4. SDG 8 — Decent Work and Economic Growth

Target: Promote sustained, inclusive growth and decent work for all. Progress and examples: Nepal's GDP growth has averaged only about 4 per cent in recent years (3.9 per cent in FY 2023/24). Remittance inflows of over Rs 1,200 billion a year keep consumption stable, while the Prime Minister Employment Programme and skill-training schemes aim to create domestic jobs. Evaluation: Growth has been neither job-rich nor inclusive. Around 2,000 Nepalis leave for foreign employment every day, and most work in low-paid, informal and often unsafe jobs abroad. The domestic private sector is constrained by policy instability, weak infrastructure and low productivity in agriculture, which still employs about 60 per cent of the workforce.

Conclusion

These goals are interdependent: without quality education and decent domestic employment, poverty and hunger cannot be removed, and climate vulnerability (SDG 13) threatens gains in all of them. Nepal's main challenge is not target-setting but implementation — better spending efficiency, federal–local coordination and productive job creation at home.

Life expectancy at birth and literacy rate

Two objectives of the Sixteenth Plan are:

1. To achieve high, sustainable and inclusive economic growth and create productive employment.
2. To develop quality physical and social infrastructure, and to reduce poverty and inequality through social justice and balanced regional development.

SDG 6 (Clean Water and Sanitation)

SDG 6 aims to ensure availability and sustainable management of water and sanitation for all by 2030.

Introduction: Rural Nepal has abundant land, forest, livestock and labour but very little off-farm employment. Advising the Rural Municipality, I would suggest the following five activities, which use local resources and create both wage and self-employment.

1. Commercialisation and modernisation of agriculture The village's main resource is land. Shifting from subsistence grain farming to commercial farming of vegetables, fruits, spices, tea, coffee and off-season crops, with irrigation, improved seeds, mulching and plastic tunnels, raises output and income. Vegetable pockets, nurseries and seed production need labour for planting, weeding, harvesting, grading and packing, so employment is generated both on the farm and in the marketing chain. Agro-vets and extension services also create technical jobs.

2. Livestock, poultry and dairy development Livestock rearing (cattle, buffalo, goat, poultry, pig, fish) is suited to small farmers and needs little land. A dairy collection centre, a goat fattening programme, poultry hatchery and fish ponds in the local river or pond create employment for herders, milk collectors, feed suppliers and meat traders. Milk chilling, cheese and yoghurt making add value and create jobs for women in particular.

3. Agro-based and forest-based small industries Raw produce loses value if sold unprocessed. Small and cottage industries such as rice, oil and flour mills, fruit juice and jam units, pickle and snack production, dairy processing, and herbal (jadibuti) processing of chiraito, timur, allo and lokta create employment in processing, packaging and transport. These units use local raw material, so they are cheap to start and link the village to urban markets.

4. Rural tourism, homestay and eco-tourism If the village has natural beauty, a lake, a temple, a trekking route or ethnic culture, homestay tourism can be promoted. Tourists need lodging, local food, guides, porters, horse or mule transport, cultural programmes and handicraft souvenirs. This generates employment for youth as guides and cooks, for women as homestay operators, and for farmers who supply vegetables, milk and meat. It also creates demand for local products and reduces out-migration.

5. Skill-based micro-enterprises, handicrafts and rural infrastructure works Vocational training in tailoring, carpentry, plumbing, masonry, electrical repair, driving, mobile repair, weaving and handicrafts enables youth to start micro-enterprises or work as skilled wage earners. Alongside this, the Rural Municipality's own construction works — rural roads, irrigation canals, drinking water, suspension bridges, school and health-post buildings, and renewable energy (micro-hydro, solar, biogas) — use local labour and local contractors. Biogas and improved cooking stoves also save women's time and create jobs for masons and technicians.

Conclusion: These five activities — commercial farming, livestock and dairy, agro- and forest-based industries, rural tourism, and skill-based enterprises with local infrastructure — are interlinked: farming supplies raw material to industries, tourism creates market demand, and infrastructure and skills make all of them possible. Together they generate wage employment, self-employment and rural entrepreneurship, raise village income and check out-migration.

The Fifteenth Plan (FY 2076/77 – 2080/81 BS) had the vision "Prosperous Nepal, Happy Nepali" and aimed at high, inclusive growth, employment and poverty reduction. Its COVID-19 period, 2020 onward, strongly affected results. The achievements are evaluated below (figures are approximate).

Achievements (positive aspects)

• Infrastructure and energy: installed electricity capacity increased substantially (to about 2,500–3,000 MW), the Kathmandu–Terai Fast Track, the Tribhuvan International Airport and Pokhara and Bhairahawa airports, and road and transmission works advanced; electricity export to India began.
• Social indicators: life expectancy rose to about 71 years, literacy and school enrolment improved, and access to drinking water, electricity and mobile/internet services expanded.
• Poverty: income poverty fell from about 25 per cent (2010/11) to about 20 per cent (2022/23), and multidimensional poverty declined.
• Social security and federalism: social security allowances, the Prime Minister Employment Programme and health insurance expanded, and the three-tier federal structure became functional.
• Remittance and financial inclusion: remittance inflows and bank and digital payment access grew, supporting household incomes and foreign exchange reserves.

Shortcomings (negative aspects)

• Growth targets missed: the plan aimed at average growth of about 9.6 per cent, but actual average growth was only about 4 per cent, with the economy contracting in 2019/20 because of COVID-19.
• Poverty target missed: the target was 16.7 per cent poverty headcount, but the achieved figure remained above 20 per cent.
• Employment: the economy did not create enough jobs; many youths left for foreign employment.
• Capital spending: capital expenditure was low and many projects were delayed and exceeded cost.
• Per capita income and trade: per capita income stayed far below the target, imports greatly exceeded exports, and the trade deficit remained large.
• Inequality and regional gaps: Karnali, Sudurpaschim and Madhesh remained behind.

Conclusion The Fifteenth Plan achieved progress in infrastructure, energy, social indicators and federal institutions, but fell short of its main targets on growth, employment, poverty and per capita income, owing to COVID-19, weak project implementation, low capital spending and political instability. Better implementation, monitoring and productive job creation are needed in the next plan.

Two measures to reduce inequality are:

1. Progressive taxation: taxing the rich at higher rates and using the revenue for the welfare of the poor.
2. Investment in education and health: giving low-income groups equal access to quality education and health services, which raises their earning capacity.

Goal 5

Goal 5 of the UN Sustainable Development Goals (SDGs) is "Gender Equality" — it aims to end discrimination against women and girls and ensure equal access to education, health, and economic opportunity.

Causes of Increasing Unemployment in Nepal

Unemployment in Nepal is largely structural — the economy creates far fewer jobs than the number of people entering the labour force each year. The five most important causes are evaluated below.

1. Rapid growth of population and labour force. Nepal's population grows at about 1.1–1.3 per cent per year, and roughly 400,000–500,000 new workers enter the labour market annually. Since the economy grows at only around 3–4 per cent and job creation is much slower, the gap between labour supply and labour demand widens every year. This is the most fundamental supply-side cause.

2. Lack of industrialisation and low capital formation. Nepal's industrial base is small and largely confined to cottage and small-scale units. Low domestic saving, low investment, shortage of electricity and infrastructure, and the high cost of doing business discourage large industries that could absorb surplus labour. As a result, the secondary sector contributes only about 12–14 per cent of GDP and employs a very small share of workers.

3. Over-dependence on agriculture and disguised unemployment. Agriculture engages nearly 60 per cent of the workforce but contributes only about 24 per cent of GDP. Family farms are overcrowded, so the marginal productivity of extra workers is almost zero — a clear case of disguised unemployment. Because agriculture cannot absorb more workers productively, surplus labour spills over into unemployment and underemployment.

4. Defective and theoretical education system. Nepal's education system is largely academic and degree-oriented, producing general graduates rather than technicians, engineers and skilled workers demanded by the market. There is a serious mismatch between the skills supplied and the skills required, leading to educated unemployment among youths. This cause is especially damaging because it wastes the country's most productive human resource.

5. Political instability, weak governance and capital flight. Frequent changes in government, policy inconsistency, strikes and bandhs, corruption and delays in project implementation discourage both domestic and foreign investment. Uncertainty reduces the creation of new enterprises and jobs. Moreover, the resulting lack of opportunity pushes skilled manpower abroad, deepening the shortage of jobs at home.

Other contributing factors: rural–urban migration without matching urban jobs, use of capital-intensive technology, absence of proper manpower planning and reliable unemployment data, and the slow growth of tourism and the service sector.

Conclusion: Unemployment in Nepal is thus the combined result of high labour-force growth, weak industrialisation, agrarian backwardness, an irrelevant education system and political instability. Since these causes are interlinked, a lasting solution requires industrial expansion, skill-based education, political stability and effective manpower planning together.

The current plan of Nepal is the Sixteenth Plan (FY 2081/82 – 2085/86 BS).

Two national objectives

1. To achieve high, sustainable and inclusive economic growth, with productive employment and reduction of poverty.
2. To develop quality physical and social infrastructure and ensure social justice and balanced regional development.

Three national strategies

1. Increasing production, productivity and employment: through the development of agriculture, industry, energy, tourism and services.
2. Developing infrastructure: expanding roads, hydropower, irrigation, transmission and communication networks and connecting remote regions to markets.
3. Human resource development and inclusion: improving education, health and skills and extending social protection, so that the benefits of development reach the poor and marginalised.

Human Development Index (HDI) is a composite statistical index that measures a country's average achievement in three basic dimensions of human development: health (life expectancy at birth), education (mean and expected years of schooling), and standard of living (GNI per capita, PPP). It was introduced by the UNDP in 1990 and ranges from 0 to 1.

SDG 14 – Life Below Water

Nepal is a landlocked country with no coastline or marine waters, so SDG 14 (conserving oceans, seas and marine resources) is not directly relevant to Nepal.

Government Efforts for Poverty Reduction in Nepal — An Evaluation

Introduction Poverty has remained the central challenge of Nepal's development planning. Based on the Nepal Living Standards Survey, the poverty headcount rate fell from about 42% in 1995/96 to 25.16% in 2010/11 and further to 20.27% in 2022/23. The government has adopted a series of strategies and targeted programmes to bring about this decline.

Major Efforts Made

1. Poverty-focused periodic plans: Since the Sixth Plan (1980–85), poverty reduction has been a stated objective. The Eighth Plan (1992–97) made it the principal goal, the Tenth Plan (2002–07) was formulated as a Poverty Reduction Strategy Paper (PRSP), and the Fifteenth Plan set a target of reducing poverty to 16.7%.
2. Direct employment and self-employment programmes: Karnali Employment Programme (2006), Prime Minister Employment Programme (2018) with a 100-day employment guarantee, Youth Self-Employment Programme, and "One House One Employment" campaign.
3. Targeted poverty alleviation: Poverty Alleviation Fund (2003), now the Nepal Poverty Alleviation Fund, which works through community organisations in deprived areas.
4. Social security and protection: Old-age allowance, single women, disability and Dalit allowances, child grants, and the contribution-based Social Security Scheme (2019), covering a large number of poor households.
5. Access to credit: Deprived Sector Lending by banks, Small Farmers' Development Programme, Grameen and Rural Development Banks, Self-Reliance Fund and cooperatives.
6. Basic services: Free basic education and scholarships, mid-day meals, free basic health services, Aama Suraksha, health insurance, rural roads, drinking water, rural electrification, Janata Awas housing and land reform for landless squatters.
7. Inclusion and affirmative action: Reservation for women, Dalits, Janajatis and Madhesis in education and public employment, and special programmes for Karnali and other backward regions.

Evaluation

Positive aspects:

• Nepal achieved the MDG target of halving extreme poverty by 2015, and income poverty has continued to decline.
• Social security coverage has expanded to a very large number of households, giving direct income support to the elderly, disabled and single women.
• Employment guarantee and micro-credit programmes have raised incomes and created self-employment in rural areas.
• Remittances, supported by an open labour-migration policy, have been the single largest factor in reducing poverty.

Weaknesses:

• Uneven reduction: poverty is still concentrated in Karnali, Sudurpaschim and Madhesh provinces, and among Dalits, landless and marginal farmers.
• Fragmentation and duplication of programmes, weak targeting, leakage and corruption reduce their effectiveness.
• Low capital expenditure and political instability mean that allocated budgets are often not spent, so benefits do not reach the poor.
• Many programmes are project-based and not sustainable after external funding ends; monitoring and evaluation is weak.
• Growth has been jobless and urban-biased, and dependence on foreign aid and remittances makes poverty reduction vulnerable to external shocks.

Conclusion The government's efforts have produced a measurable and substantial fall in poverty, but the achievement is partial and uneven. What is needed is better targeting, de-duplication of programmes, higher and timely capital spending, and productive use of remittances so that growth creates employment and the benefits reach the poorest regions and groups.

Two measures to reduce poverty:

1. Generate employment and self-employment opportunities through agriculture, small and cottage industries and skill training.
2. Provide free or subsidised education, health care and social security (old-age and other allowances) to the poor.

Goal 10 (Reduced Inequalities) of the Sustainable Development Goals is related to reducing inequality within and among countries.

Inequality in Nepal appears in income, wealth, opportunity, and between regions, gender and communities. Five suggestions to reduce it are:

1. Progressive taxation and redistribution: higher tax rates on high incomes and wealth, with the revenue spent on the poor, narrows the income gap.
2. Inclusive and quality education and health: free, good-quality schooling and basic health services in remote areas and for marginalised groups give equal opportunity to all.
3. Employment generation and agricultural reform: labour-intensive industries, skill training, commercialisation of agriculture, and effective land reform raise incomes of the poor and landless.
4. Balanced regional development: investing in roads, electricity, markets and communication in the hill, mountain and Terai backward areas reduces regional disparity.
5. Social security and inclusion: old-age, disability and single-women allowances, together with the reservation and inclusion provisions for women, Dalits, Janajatis and other disadvantaged groups, support vulnerable people and reduce social inequality.

Strong implementation, good governance and reduced corruption are needed so that these measures actually reach the poor.

Unemployment caused by a mismatch between the skills or location of workers and the available jobs, arising from changes in the structure of the economy.

Structural unemployment is long-term in nature. It occurs when industries decline or technology changes, so the skills workers possess no longer match the skills employers demand (for example, handloom weavers thrown out of work by power looms).

Two policies of the Sixteenth Plan aimed at reducing the population below the poverty line are:

1. Creating productive employment and self-employment, supported by skill development, especially for the poor and youth.
2. Expanding targeted social protection and inclusive development programmes, such as social security allowances and special programmes for backward regions and marginalised groups.

Two roles I can play to achieve gender equality in education by 2030 in Nepal:

1. Awareness and advocacy: Educate parents and community members to give equal priority to sons and daughters at home and in school and to discourage gender-based discrimination.

2. Motivation and support: Motivate girls to continue their education by acting as a role model, helping them with studies, and discouraging school dropout among girls.

Measures to Reduce Increasing Economic Inequality in Nepal (5 marks)

1. Progressive taxation and effective enforcement. Make the tax system more progressive by raising rates on high incomes, luxury goods, land and property, while widening the tax net and strictly curbing evasion. The additional revenue should fund pro-poor programmes. This directly narrows the gap between the rich and the poor.

2. Investment in education and health for the poor. Expand free, quality school education, scholarships, and skill-based technical training, and improve access to basic health services in rural and remote areas. Since inequality largely arises from unequal access to human capital, this raises the earning capacity of poor households in the long run.

3. Employment generation and inclusive economic growth. Promote labour-intensive industries, agriculture modernisation, tourism, and small and medium enterprises, with priority to backward regions and marginalised groups. Guaranteeing productive employment (e.g., through employment schemes) gives the poor a steady income and reduces dependence on unequal wages.

4. Targeted social security and poverty-alleviation programmes. Strengthen targeted schemes such as cash transfers, old-age and single-woman allowances, food security programmes, and subsidised credit for the poor and small farmers. These provide a safety net and reduce vulnerability to shocks that deepen inequality.

5. Land and asset reform with balanced regional development. Ensure fair distribution of land and productive assets, provide land to landless and landless tillers, and invest in infrastructure (roads, electricity, irrigation, markets) in lagging provinces. Reducing concentration of assets and spreading growth across regions narrows both income and wealth inequality.

Conclusion: These measures — progressive taxation, human capital investment, employment generation, targeted social security, and asset/regional reform — together promote inclusive growth and social justice, thereby reducing economic inequality and its adverse effects on Nepal's social, political and economic life.

Steps to Formulate an Effective Development Plan in Nepal (5 marks)

Nepal has completed more than a dozen periodic plans since 1956, yet development outcomes remain weak. The main reasons are poor plan formulation and weak implementation. The following steps can make plan formulation effective:

1. Realistic and need-based planning. Plans must be prepared on the basis of actual resource availability, needs of the people and reliable data. Over-ambitious targets, based on foreign aid expectations rather than domestic capacity, should be avoided. The plan size must match the country's resource gap.

2. Proper identification and selection of projects. Projects should be selected only after feasibility studies, cost–benefit analysis and environmental assessment. Projects should be chosen on the basis of priority, comparative advantage and backward–forward linkage, not on political pressure. A project bank should be maintained.

3. Broad participation and decentralisation. Planning should be prepared from the bottom up — from ward and local levels to province and federal levels — so that local needs, resources and priorities are reflected. Participation of farmers, workers, women, ethnic groups, the private sector and experts should be ensured.

4. Coordination among the three tiers of government. Since federalism, the federal, provincial and local governments must have clearly divided roles and a common national goal. Duplication of projects and overlapping responsibilities must be removed through effective coordination.

5. Adequate resource mobilisation and management. Domestic resources should be increased through improved tax administration, revenue leakage control and mobilisation of remittances into productive sectors. Foreign aid should be accepted only on concessional terms and used in priority sectors.

6. Strong institutional and administrative capacity. Planning bodies such as the National Planning Commission should be made technically strong, autonomous and politically neutral. Skilled manpower, training and a stable planning team are necessary for quality plans.

7. Monitoring, evaluation and accountability. Clear physical and financial targets, time schedules and indicators must be fixed for every programme. Regular monitoring, mid-term evaluation and independent audit should be carried out, and responsibility fixed for delay and cost overrun.

8. Political stability and continuity. Plans should not be changed with every change of government. A long-term vision with continuity in policies, commitment of political leadership and control of corruption are essential for effective formulation and implementation.

Conclusion: Thus, effective development planning in Nepal requires realistic targets, bottom-up participation, coordination among all tiers of government, adequate resource mobilisation, capable institutions and strong monitoring with political commitment.

Foreign Employment and the Unemployment Problem in Nepal

Foreign employment has become the principal safety valve for Nepal's surplus labour. It has provided immediate relief to the unemployment problem, but the same process, if continued unchecked, creates serious structural problems for the future. Both sides are explained below.

A. How foreign employment solves the unemployment problem (4 points)

1. Absorption of surplus labour: Nepal's agriculture holds a large amount of disguised unemployment, and the non-farm sector cannot create enough jobs. Foreign employment absorbs this surplus unskilled and semi-skilled labour abroad, reducing both open and disguised unemployment at home.

2. Rise in income and living standard: Remittance raises household income, enabling families to meet food, education, health and housing expenses. This directly reduces poverty and raises the standard of living of migrant households.

3. Increase in foreign exchange and national income: Remittance is a major source of foreign currency for Nepal. It strengthens the balance of payments, supports the exchange rate, adds to national income and finances imports of capital goods.

4. Skill and technology transfer: Workers learn new skills, modern techniques, work discipline and foreign languages abroad. On return, this experience can be used in domestic enterprises, raising productivity and creating self-employment.

B. Problems the country will face in future (4 points)

1. Brain drain and shortage of productive manpower: It is mostly young, active and increasingly skilled manpower that migrates. As a result, agriculture is left with the elderly and women, and industries and construction face labour shortage. The country loses the return on the money it spent on educating and training these workers.

2. Excessive dependence on remittance (Dutch disease): The economy becomes dependent on remittance rather than on production. Remittance is largely spent on consumption and imported luxury goods, causing inflation and a widening trade deficit. If host countries face recession, war or policy change (as during COVID-19), remittance falls sharply and the whole economy is destabilised.

3. Decline in agriculture and productive sectors: Large areas of cultivable land are left barren because of the absence of active workers. Food production falls, food grains and even vegetables have to be imported, and food insecurity increases. Industrial and service sector output also suffers from labour shortage.

4. Social and demographic imbalance: Migration of young males leaves behind an ageing population, single women, and children without proper care. This leads to family breakdown, neglect of children's education, increased burden on women, and social evils such as trafficking and exploitation of migrants. Remittance also widens inequality between remittance-receiving and non-receiving households.

Conclusion: Foreign employment should therefore be treated as a temporary relief, not a permanent solution. Nepal must use remittance for productive investment, develop domestic industries, agriculture and tourism, and create employment within the country so that migration becomes a matter of choice rather than compulsion.