नेपालको ग्रामीण आर्थिक स्थिति

Rural entrepreneurship is the process of identifying, creating, and managing a business venture in a rural area by using the local resources, skills, and labour of that area to produce goods or services for the local market or beyond. It is the setting up and running of an enterprise by a rural entrepreneur, mainly to generate employment, use local raw materials, and improve the economic condition of rural people. In short, it is entrepreneurship that takes place in villages and rural surroundings, where the entrepreneur innovates and takes risk to start a venture based on rural resources and rural needs.

Four characteristics of rural entrepreneurship:

1. Use of local resources – It depends mainly on locally available raw materials, labour, and skills (agriculture produce, forest products, handicrafts, livestock, etc.), so the cost of production stays low.

2. Small scale and labour intensive – Rural enterprises are generally small in size and use more labour than machinery, which suits the abundant labour supply of rural areas.

3. Agro-based and rural-need based – Most rural enterprises are linked to agriculture and allied activities (dairy, poultry, food processing, handloom) and produce goods that meet the daily needs of rural people.

4. Family or community involvement – The business is usually run with the help of family members or the local community, with simple organisation, limited capital, and a close personal relationship between the owner and the workers.

(Other acceptable points: low capital investment, use of indigenous technology, seasonal or part-time operation, local market orientation, and support from government schemes.)

Disguised Unemployment and Measures to Reduce Underemployment

1. Meaning of Disguised Unemployment

Disguised unemployment (also called underemployment) is a situation in which more people are engaged in a job than are actually required, so that the marginal productivity of the extra workers is zero or negligible. The workers appear to be employed, but they do not add to total output; if some of them are withdrawn from the work, total production does not fall.

It is a typical feature of the agricultural sector in developing countries like Nepal, where family members work on a small farm even though the work could be done by fewer hands. For example, if 8 people cultivate a plot of land that needs only 4 workers, the remaining 4 are disguisedly unemployed — they share the same output and each one's income falls.

2. Objective Measures to Reduce Underemployment

(a) Expansion of non-farm employment:

• Promote agro-based and cottage and small-scale industries (food processing, handicrafts, dairy, poultry) in rural areas.
• Develop rural tourism, forestry, and herbal processing to create off-season jobs.

(b) Development of infrastructure:

• Construct roads, irrigation canals, drinking water, and rural electrification through labour-intensive public works programmes (e.g., the Prime Minister Employment Program and local rural road and trail construction).
• This absorbs surplus farm labour during the lean season.

(c) Human capital formation:

• Provide skill development and vocational training (plumbing, carpentry, tailoring, driving, computer skills) so that workers can shift to non-farm occupations.
• Strengthen technical education and rural employment counselling.

(d) Promotion of labour-intensive industries:

• Encourage industries that use more labour and less capital, such as construction, small manufacturing, and service sectors.

(e) Encouragement of self-employment and micro-enterprises:

• Provide easy credit, subsidies, and technical support through banks and cooperatives for starting small businesses.
• Promote cooperatives and micro-finance in rural areas.

(f) Agricultural modernisation and diversification:

• Adopt commercial farming, horticulture, livestock, and fisheries to raise productivity and income.
• Reduce dependence on subsistence farming so that surplus labour is released for other sectors.

(g) Population control and education:

• Reduce the growth rate of the labour force through family planning and education, so that the number of job-seekers matches available jobs.

(h) Balanced regional development:

• Develop rural growth centres and market towns to reduce migration to cities and create local employment.

Conclusion

Disguised unemployment is a serious problem of the rural economy of Nepal. It can be reduced only through a multi-pronged strategy — expanding non-farm employment, developing infrastructure, building skills, promoting labour-intensive and micro-enterprises, and controlling population growth — so that surplus agricultural labour is productively absorbed in other sectors.

Connecting Annual Budget Programs with People's Livelihood (5 marks)

The annual budget of Nepal allocates funds under headings such as agriculture, employment, education, health, infrastructure and social security. These programs benefit the general people only when they are designed, delivered and monitored in a practical way. Five practical measures are:

1. People-centred planning (bottom-up budgeting): Programs should be prepared on the basis of the real needs identified by ward and village/municipal assemblies. Local people, women's groups, farmers' groups and cooperatives should be involved in project selection so that the budget funds the work that actually supports their livelihood.

2. Skill-based employment and self-employment: A large part of the budget should go to vocational and technical training (agriculture, livestock, tourism, construction, ICT) along with soft loans and seed capital. This turns the youth from job-seekers into job-creators and raises household income.

3. Direct income and social security transfer: Programs such as the Prime Minister Employment Program, employment guarantee schemes, old-age allowance, single-woman allowance and scholarships should be delivered on time, without leakage, through bank accounts and digital payment. This gives poor and vulnerable households a steady minimum income.

4. Market linkage and value addition for local products: Budget support for rural roads, irrigation, cold storage, collection centres, cooperatives and market information helps farmers get a fair price for their produce. Value addition (processing, packaging, branding) of local products creates more income per unit of output.

5. Transparent implementation and monitoring: Public disclosure of budget details, social audit, public hearing, citizen monitoring and a strong grievance-hearing system reduce corruption and ensure that the allocated money actually reaches the target group. Timely completion of projects also prevents cost overruns.

Conclusion: When budget programs are planned with the people, aimed at skills and employment, supported by timely transfers, linked to the market and monitored transparently, they directly raise the income, employment and living standard of the general people.

An entrepreneur is a person who establishes a business or enterprise, arranges and utilises the factors of production, bears the risks and uncertainties involved, and earns profit by producing goods or services.

(a) It provides small loans to the rural poor without heavy collateral and encourages self-employment through income-generating activities such as livestock, farming and small shops.

(b) It promotes small savings among rural households and empowers women and disadvantaged groups by giving them access to credit and decision-making.

Rural indebtedness refers to the situation in which rural households—especially farmers and landless labourers—are caught in a cycle of borrowing, usually from informal sources at high interest rates, and are unable to repay their loans from their current income. It is a chronic problem in developing countries like Nepal, where small farmers borrow for both production and consumption needs but rarely escape the debt trap.

Causes of rural indebtedness (six points):

1. Low and unstable farm income: Agriculture in rural areas depends on monsoon, so income is irregular. A single crop failure or natural disaster (flood, drought, landslide) leaves farmers without enough income to repay loans.

2. Small and uneconomic landholdings: Most rural households own tiny, fragmented plots that cannot generate a surplus. The produce is barely enough for subsistence, forcing farmers to borrow even for seeds, fertilisers and tools.

3. Lack of institutional credit: Banks and cooperatives are concentrated in towns and demand collateral and paperwork. Rural poor farmers cannot meet these conditions, so they turn to moneylenders who charge very high interest rates.

4. High expenditure on social customs: Expenses on marriage, death rites, festivals, dowry and religious ceremonies are heavy in rural society. These are met by borrowing, and the loans are not used for any productive purpose.

5. Inherited debt and the debt trap: Once a farmer borrows, high interest makes the amount grow faster than income. Many families inherit their parents' debts, and to repay one loan they take another, creating a vicious cycle of indebtedness.

6. Poverty, illiteracy and lack of alternative employment: Rural people have low literacy and few non-farm jobs, so they cannot earn extra income or understand loan terms. Poverty itself compels them to borrow for daily consumption, medicine and education.

These causes together keep rural households permanently in debt, which is why rural indebtedness is treated as a major obstacle to rural development.

Unemployment

Unemployment refers to a situation in which persons who are able and willing to work at the prevailing wage rate cannot find gainful employment. In other words, it is the gap between the labour force and the number of available jobs. In Nepal, unemployment is largely structural and disguised in nature — structural because the economy cannot absorb the growing labour force, and disguised because more people work on farms than are actually needed, with very low productivity.

According to the Nepal Labour Force Survey, the unemployment rate in Nepal is around 11 per cent, and underemployment is even higher. Youths form the largest share of the unemployed.

Mitigation Measures of Unemployment in Nepal

1. Development of agriculture: Agriculture employs about 60 per cent of the population but contributes only about 24 per cent to GDP. Commercialisation, modern technology, irrigation, and agro-based industries can create employment in rural areas and reduce disguised unemployment.

2. Promotion of labour-intensive industries: Small, cottage, and medium-scale industries that use more labour and less capital should be encouraged. This absorbs surplus labour at low investment cost.

3. Development of tourism: Nepal's natural beauty, trekking routes, and cultural heritage have high potential. Promoting tourism creates jobs in hotels, transport, guiding, and handicrafts.

4. Expansion of education and skill training: The education system should be made practical and employment-oriented. Technical and vocational training (CTEVT) should be expanded so that youths become skilled and self-employed.

5. Promotion of self-employment: Providing soft loans, subsidies, and training to educated youths encourages them to start their own enterprises rather than depend on salaried jobs.

6. Development of infrastructure: Construction of roads, hydropower, and irrigation projects generates both direct and indirect employment.

7. Balanced regional development: Since unemployment is concentrated in rural and remote areas, balanced development of all regions reduces migration and unemployment.

8. Population control: Rapid population growth increases the labour force faster than job creation. Effective family planning and education can help balance this.

9. Foreign employment management: Foreign employment has been a safety valve, but it should be made safe, legal, and skill-based so that remittances are productive.

10. Good governance and investment climate: Political stability, control of corruption, and a favourable environment for domestic and foreign investment are essential to create jobs.

Conclusion: Unemployment is a serious challenge for Nepal. A combined effort of the government, private sector, and individuals — focusing on skill development, industrialisation, and commercial agriculture — is necessary to mitigate it.

A self-help group (SHG) is a small voluntary group of people with similar economic and social conditions, usually 10 to 20 members, who save regularly, lend to one another and work together to solve their common problems. SHGs support rural development in the following ways:

1. Promoting savings and credit — members pool small savings and give each other loans at low interest, reducing dependence on moneylenders.
2. Poverty reduction and income generation — loans are used for livestock, vegetable farming, small shops or crafts, which raises household income.
3. Empowering women and the marginalised — leadership, decision-making and confidence grow, especially among women, Dalits and other disadvantaged groups.
4. Capacity building — training in skills, literacy, bookkeeping and enterprise management.
5. Collective action and social development — members work together on sanitation, education, health and community works, and act as a base for cooperatives and linkage with local government and banks.

About 20.3% of Nepal's population lives below the poverty line (20.27% in the Nepal Living Standards Survey 2022/23, using the cost of basic needs approach). It was about 25.2% in NLSS 2010/11.

Food security means that all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.

Unemployment refers to a situation in which people who are able and willing to work at the prevailing wage rate cannot find jobs.

The informal sector (informal field) in economic development refers to the unorganised, unregistered part of the economy where workers are engaged in small-scale, self-employed or wage activities that are not regulated by the government or covered by formal social security. It includes activities such as street vending, domestic work, small workshops, and home-based enterprises.

Market linkage. Rural marketing connects rural producers with consumers and markets.

Agriculture and allied activities (crop farming, livestock, poultry) and non-farm activities such as rural industries, trade, and wage labour.

Rural households in Nepal draw their livelihoods mainly from two broad sources: farm-based activities (crop production, livestock, forestry) and non-farm activities (rural industries, small trade, and wage employment).

Rural Entrepreneur

A rural entrepreneur is a person who identifies a business opportunity in a rural area, mobilises local resources (raw materials, labour, savings and local skills), and sets up and manages an enterprise in the rural setting, bearing the risk of the business with the aim of earning profit and generating local employment. Such an entrepreneur usually operates on a small scale, uses local technology and inputs, and serves the local market while helping to reduce rural poverty, unemployment, and migration to cities. In short, a rural entrepreneur is one who carries out entrepreneurial activities within a rural area, using local resources for local benefit.

Three major characteristics of a rural entrepreneur

1. Local resource base: He/she depends mainly on locally available raw materials, labour, capital and traditional skills, and therefore the enterprise is closely linked with the local economy and environment.
2. Small scale and simple technology: The enterprise is generally small in size, requires low capital investment, and uses simple, labour-intensive technology, making it easy to start and manage.
3. Local market orientation and employment generation: Production is mainly aimed at the nearby rural or semi-urban market, and the enterprise provides employment and income to local people, thereby reducing poverty and rural–urban migration.

A rural market is a place where rural people buy and sell goods and services. Its main types are:

1. Permanent (daily) markets — Shops and stores open every day in market centres or large villages, selling food, clothes, tools and household goods.
2. Periodic markets (haat bazaar) — Held on fixed days of the week, fortnight or month at a regular place. Traders move from one market to another, and villagers sell farm produce and buy daily needs. In Nepal, weekly haat bazaars are common in the Terai and hills.
3. Fairs and festival markets (mela) — Seasonal markets held on religious or cultural occasions, such as Janakpur or Pashupati melas, with large crowds and trade in cattle, crafts and goods.
4. Agricultural collection and wholesale markets — Places where farmers and collectors bring grains, vegetables, fruits, milk or livestock for sale to traders and wholesalers who send them to towns.
5. Mobile or itinerant trading — Hawkers and travelling traders bring goods to remote villages by carrying them or by vehicle.

Together, these markets link farmers with consumers, give fair prices and encourage production.