Nepal is one of the least developed but high remittances recipient countries in the world. Nepal received remittance from US$ 8.1 billion in 2016 and it is ranked 23rd among the remittance receiving countries in the world. Remittance income is one of the major sources of capital formation in the context of Nepal. It is directly related with the labour migration in a country which in return enhances foreign employment. Remittances have become a major contributing factor to increasing household income as well as country’s GDP. About 30 percent of Nepal’s GDP comes in the form of remittance money which is sent home by Nepalese working abroad and it helps to reduce country’s poverty rate. Poverty reduction took place in Nepal from 42 percent (1995/96) to 25.2 percent (2010/11). Nepal’s remittance recipients reached 31.5 percent GDP in 2015. The total amount of remittance in the country is 259 billion and among which 20 percent is internal sources, 11 percent from India and 69 percent from Gulf countries. Remittance received by the households is mainly used for daily consumption (79 percent) and remaining other purposes. Moreover, Nepal’s economic status mostly depends on remittance received which is therefore migration driven economy.

Trade is essential for economic development, employment creation and poverty reduction of the country. It is necessary to look forward towards the import and export sector of the country for prosperous economic growth. Nepal has undertaken extensive trade liberalization since 1990. The volume of World Trade in terms of goods and services increased by 2.2 percent in 2016 and reached around 3.8 percent in 2017. The World economy increased by 3.6 percent in 2018 and is expected to grow by 3.3 percent in 2019. The GDP at basic price increased by 6.3 percent in 2018 and it is estimated to increase by 6.8 percent in 2019. Similarly GDP at producer price was 6.7 percent in the 2018 and 7.0 percent in 2019. The contribution of non-agriculture sector to GDP is estimated to be 73 percent in 2018/19. Due to improvement in trade and services, the non-agriculture sector is estimated to expand by 7.5 percent in 2018/19. In Nepal, the first trade policy was introduced in 1983 with the slogan “Exports for Development”. Also a new trade policy was brought in 1992. Due to changes in development and growth, trade policy was again revised in 2009. Various challenges were faced in order to decrease poverty and increase economic growth so the government introduced a new trade policy, 2015. The poverty reduced to 42 percent in 1996 against 31 percent in 2004 and 25.2 percent in 2011. Similarly, per capita income is increased by 1.7 percent and poverty is decreased by 1.4 percent every year. This study therefore focuses on the contribution of each sector to maintain balance in trade. Export oriented growth is the concrete impact on poverty reduction.

The non-agricultural sector has made a significant contribution to the Nepalese economy. The non-agriculture sector now contributes 76.1 percent of GDP. In the fiscal year 2078/2079, the per capita income rises by 10.8 percent as a result of this contribution. In the fiscal year 2078/2079, itis anticipated that this income would rise to US$ 1381. The per capita income for the fiscal year2077/2078 was only US$1246. GDP growth rates from the industrial and service sectors are 5.05percent and 4.43 percent, respectively, in the non-agriculture sector. Average percentage of total GDP for the previous five years: 65.7 percent, 65.9 percent, 68.6 percent, and 74.9 percent for 2059/60 to 2063/64, 2064/65 to 2068/69, 2069/70 to 2073/74, and 2074/75 to 2078/79respectively.The average growth rate for this industry over the thirteenth plan period is 3.4percent. Likewise, 37.2 percent of revenue in 2010/11 came from industries outside than agriculture. In Nepal, 21.6 percent of the population continues to live in poverty. Thus, it is intended to reduce poverty from 21.6 percent to 18 percent by the end of the 14th plan period and to eradicate it entirely by 2030. As a result, the non-agricultural sector will assist Nepal in moving from a less developed to a middle-income country. Hence, this study focuses on the contribution of non-agriculture sector in economic development of Nepal.

Hom- based workers are the most significant component of informal economy in Nepal. In Nepal, 70percent of the economically active population is involved in the informal economy. Employment in the non-agricultural informal sector is 70 percent of total non-agricultural employment. The employed population in the non-agricultural sectors grew by 29.3 percent. About 30 percent of then on-agricultural workers aged 15 and above are home based workers and home-based work is the major source of employment for women. The share of non-agriculture sector to GDP is highly increasing in recent years; its average annual growth is 7.4 percent in 2018/19. In this study, more than 76 percent of home-based workers are from Tribal/Native/Adibasi ethnicity. Also, the 76 percent home based workers have their own house as ownership. The 86 percent of home-based workers have houses with well window facilities and 99 percent of the houses are facilitated with electricity,41 percent of the households have source of water, 30 percent to hand pump and 6 percent to wells. The 95 percent of home based workers have latrine facilities in their house. The income earned is highly spent on food expenses (54 percent) and remaining is used for other purposes.

Poverty is one of the main problems in Nepal. In order to alleviate poverty various attempts have been implemented for poverty reduction. As per the policies of the periodic plan that started six decades ago different programmes are conducted. Both national as well as international organizations are carrying out research activities to alleviate poverty. According to the 9th plan (1997-2002), the percent of population under poverty line was 38 percent which was aimed to reduce to 30 percent as per the 10th plan (2002-2007) but remained unsuccessful. While in the 12th plan (2012-2017) the percent of population under the poverty line was successfully reduced to 25.2 percent. According to the NLSS survey report the percent of population under the poverty line in the year 1995/96, 2003/04 and 2010/11 was 41.8 percent, 30.9 percent and 25.2 percent respectively. With long term economic growth poverty, inequality and unemployment can be eliminated. But it is definitely a challenge. However, the 13th plan (2070/71-2072/73) and 14th plan (2073/74-2075/76) reduced the poverty percent to 21.6 percent and 18.7 percent respectively. Similarly, in the 15th plan (2076/77-2080/81) targeted to reduce the poverty from 18.7 percent to 11.0 percent. Finally, poverty is assumed to be zero by the year 2100/01 (NPC 15th Plan2076/77-2080/81). But this is a big challenge due to the Covid-19 pandemic and its second wave, because Nepalese living below the poverty line are highly vulnerable due to Covid pandemic.