Contemporary Features of Nepalese Economy
1. Low per capita income:
The basic problem of the Nepalese economy is low per capita income. The estimated per capita income of Nepal for the fiscal year 2019/20 is US $ 1097, which is very low compared to neighbour countries like India and China.
2. Mass poverty:
In Nepal, there is mass poverty. The % of population living below the poverty line is 16.67. these people are not able to fulfil even their basic needs like food, clothing, shelter, etc. In Nepal, 2144 calories of energy intake from food are considered as poverty line.
3. Excessive dependency on agriculture:
Agriculture sector is regarded as the backbone of Nepalese economy. This sector has highest contribution in GDP and employment generation. Its contribution to the GDP is around 27.5% and around 60.4% of population is dependent in this sector.
4. Underutilization of natural resources:
Nepal is rich in natural resources like water resources, forest resources and mineral resources. But there is no proper utilization of these natural resources. For example, Nepal has about 6000 rivers and rivulets with potentiality generating 83000 MW hydroelectricity. But Nepal has only produced 1233 MW hydroelectricity which is about 1.5% of total potentiality. Thus, there is underutilization of natural resources in Nepal.
5. High trade deficit:
Due to rapidly increasing imports and very slowly increasing exports, Nepal is facing the problem of high trade deficit. In the fiscal year 1990/91, the trade deficit of Nepal was Rs. 18.2 billion, which increased to Rs. 1321.4 billion in the fiscal year 2018/19. It shows that the trade deficit of Nepal is rapidly increasing. To reduce this trade deficit, Nepal should increase production of those goods and services, which have comparative and competitive advantages.
6. Dualistic and mixed economic system:
Nepalese economy is dualistic in nature. There is both traditional and modern sectors. traditional subsistence agriculture in rural areas and on the other hand, there is modern market-led manufacturing sector in urban areas. Similarly, a mixed economic system prevails in the country, where there are 37 public enterprises operating in the economy and on the other hand, market system has been given free hand to play.
7. High population growth:
In Nepal, there is high population growth. According to population census 2011, population growth rate of Nepal is 1.35%, which is very high in comparison to developed countries. The main causes of high population growth in Nepal are poverty, illiteracy, early marriage, social and religious belief and so on.
8. Remittance-based economy:
Because of lack of employment opportunities in the country, large number of Nepalese youths have migrated in foreign countries in search of job or employment. The total number of Nepalese migrant workers by the end of mid-march of fiscal year 2019/20 was 47,92,009 and the remittance received from the migrant workers was Rs 879 billion, i.e. 25.4% as of GDP in the fiscal year 2018/19. It is helping to finance import, improve living standard of people and reduce poverty. Therefore, Nepalese economy is also known as the remittance economy.