Remittance and its Impact on Nepalese Economy

Abstract

This paper assesses the current remittance status and its impact on Nepalese economy. Secondary data from various sources were used for study. Statistical techniques including descriptive statistics and correlation was used. The number of Nepalese citizen for foreign employment is increasing year after year. Malaysia is the primary destination of Nepali migrants followed by Qatar, Saudi Arabia, UAE and others respectively. Nepal ranks 19 th position in top remittance receiving countries of the world and it ranks 4th position when remittance is compared as a percentage of GDP. Percentage increase in inflation was lower in comparison with the proportion of remittance as compared with GDP. Result showed insignificant relationship between remittance inflow and increase in agricultural land. Remittance has played several positive roles in Nepalese economy like reduction of poverty and unemployment, maintaining foreign exchange reserve and correcting balance of payments. Positive and significant correlation was found between GDP and remittance inflow per year at 10% level of significance. Remittance as compared with percentage of GDP and share of agriculture, forestry and fishing were negatively and significantly correlated. The share of agriculture, forestry and fishing to GDP of country was found to be diminishing but proportion of remittance when compared with GDP was increasing. Problem of labor shortage in agricultural as well as non-agricultural works is a genuine problem as active youths are involved in foreign employment. As volume of remittance is being increased rapidly, dependency of people on remittance is increasing and Nepalese economy is gradually becoming consumption oriented. Also, Nepalese economy is transforming from agriculture based economy to remittance based economy. So, formulation and implementation of appropriate policies which tap and utilize received remittance into productive sector is recommended.Remittance is that part of earning sent by individuals from migration destination to their home country or their place of origin, which is a vital source of foreign income for developing countries like Nepal. Although remittance can be sent in the form of kind but the term usually limited to represent monetary and cash transfers sent by international migrant workers to their place of origin [1]. Remittance covers large portion of financial flows to developing countries like Nepal. Remittance is important source in labour exporting countries to maintain foreign exchange reserve and to correct Balance of Payments. Remittance implies household income from foreign inflow mainly from momentary or permanent migration of people to those economies [2]. According to World Bank [3] remittance enables households to increase their level of consumption, ensure better health facilities, nutrition, education and other facilities.In developing countries, remittance is three times more than official development assistance [4] and it ranks second largest source of external finance after foreign direct investment [5...

Impact of Remittance on Rural Areas Livelihood: A Case of Tilottama, Rupandehi, Nepal

“…Remittance inflows are crucial for improving rural communities' economic standing and promoting more financial stability and prosperity. After the inflow of the remittance, the economic status of the remittance receipting families increases, so they can afford good, education, health facilities, education for themselves which conforms previous study [19][20][21][22][23].…”

“…More about the poverty is directly linked with the availability of food as per necessity. After the inflow of remittance in the receiving family, the security of the food increase which is the positive aspects from the concept of livelihood similar to that of previous study [19][20][21][22][23].…”

The Effect of Migration on Family in Nepal: A Review on the Family Structure, Livelihood, Education, Aging Parents, Reproductive Health and Marital Relationship

“…Malaysia is the primary destination of Nepali migrants workers followed by Qatar, Saudi Arabia, UAE and others respectively that ranks Nepal in the19th position of top remittancereceiving countries of the world and 4th position when the remittance is compared as a percentage of GDP (Katuwal Chhetri et al, 2020). In the last decade, migration and remittances continuously increased, with remittances counting for almost 26.923% of Nepal's gross domestic product (GDP) in 2019 (The World Bank, 2016).…”

Impact of Remittances on the Nepalese Economy: Opportunities and Challenges

“…Another study by Chhetri et al (2020) shows that Nepal ranks 19th position in top remittance receiving countries of the world whereas its percentage in contribution in GDP ranked it in the 4th position. Remittance as a percentage of Nepal's GDP is increasing while agriculture, forestry and fishery as a percentage of GDP is decreasing.…”